General Steel Reports Fourth Quarter and Full-Year 2014 Financial Results

BEIJING, March 31, 2015 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), a leading non-state-controlled steel producer in China, today announced its financial results for the fourth quarter and full-year ended December 31, 2014.

Henry Yu, Chairman and Chief Executive Officer of General Steel commented, "During the fourth quarter of 2014, particularly in December, China's steel mills accelerated production after the required shut-down during the APEC summit, which caused rapid deterioration in the average selling prices of steel products. We believe the near-term challenges for the steel sector will likely linger, and as such, we are strategically accelerating our business transformation."

"The formation of our RFID joint venture in February 2015, and the joint venture for new petroleum storage facility under-preparation in Maoming City are excellent initial steps in our transformation into the Internet-of-Things and Logistics sectors. We are encouraged by our progress to date, and we anticipate these new joint ventures will drive strong synergies and efficiency enhancements for the whole organization."

John Chen, Chief Financial Officer of General Steel, commented, "Despite the persistently tough steel industry fundamentals, we continued to receive support from our SOE partners and local governments with favorable payment and credit terms that helped us to generate $95.2 million in operating cash flow during the fourth quarter. As we transform our organization, we will proactively review our strategy and asset portfolio and seek to restructure low-efficient, non-core assets, as well as idle land resources to unlock hidden fair value. We aim to transform into a leaner and fitter organization with better profitability, and based on the rapid progress of our recently-formed joint ventures, we believe we are well on our way."

Fourth Quarter 2014 Financial Information

• Sales volume increased by 17.1% year-over-year to approximately 1.35 million metric tons, compared with 1.15 million metric tons in the fourth quarter of 2013.
• Sales totaled $544.4 million, compared with $548.7 million in the fourth quarter of 2013.
• Gross loss was $(34.3) million, or (6.3%) of total sales, compared with $(32.7) million, or (6.0%) of total sales in the fourth quarter of 2013.
• Income from operations totaled $22.7 million, compared with $21.7 million in the fourth quarter of 2013.
• Net income attributable to the Company was $9.4 million, or $0.16 per diluted share, compared with a net loss of $102,000, or $(0.002) per share in the fourth quarter of 2013.
• As of December 31, 2014, the Company had cash and restricted cash of $367.3 million.

Full Year 2014 Financial Information

• Sales volume increased by 6.3% year-over-year to approximately 5.42 million metric tons, compared with 5.10 million metric tons in 2013.
• Sales were $2.3 billion, compared with $2.5 billion in 2013.
• Gross loss narrowed to $(19.2) million, or (0.8%) of total sales, compared with a gross loss of $(55.9) million, or (2.3%) of total sales in 2013.
• Loss from operations was $(6.7) million, compared with income from operations of $34.4 million in 2013.
• Net loss attributable to the Company was $(48.7) million, or $(0.86) per diluted share, compared with $(33.0) million, or $(0.60) per diluted share in 2013.

Fourth Quarter 2014 Financial and Operating Results

Total Sales

Total sales for the fourth quarter of 2014 decreased slightly by 0.8% year-over-year to $544.4 million, compared with $548.7 million in the fourth quarter of 2013. The year-over-year sales decrease was primarily due to a decrease in in average selling price of rebar, partially offset by increased total sales volume.

• Total sales volume in the fourth quarter of 2014 was 1.35 million metric tons, an increase of 17.1% compared with 1.15 million metric tons in the fourth quarter of 2013.
• The average selling price of rebar at Longmen Joint Venture in the fourth quarter of 2014 decreased to approximately $403.5 per metric ton, down by 14.9% from $474.3 per metric ton in the fourth quarter of 2013.

Gross Loss

Gross loss for the fourth quarter of 2014 was $(34.3) million, or (6.3)% of total sales, as compared with gross loss of $(32.7) million, or (6.0)% of total sales in the fourth quarter of 2013. The decrease in gross margin was mainly due to a steeper decrease in average selling price of rebar, compared with the decrease in unit cost of manufactured rebar, as well as higher allowance for inventory during the fourth quarter of 2014.

Operating Expenses and Income from Operations

Selling, general and administrative expenses for the fourth quarter of 2014 were $22.2 million, a decrease of 10.3% from $24.8 million in the fourth quarter of 2013. Driven by effective headcount expense control, general and administrative expenses decreased to $12.8 million in the fourth quarter of 2014, compared with $15.3 million in the fourth quarter of 2013. Selling expenses were $9.4 million in the fourth quarter of 2014, compared with from $9.5 million in the same period of 2013.

Other operating income from a change in the fair value of profit sharing liability during the fourth quarter of 2014 was $79.3 million, compared with $79.1 million recognized in the same period of last year.

Correspondingly, income from operations for the fourth quarter of 2014 increased slightly to $22.7 million, compared with $21,7 million for the fourth quarter of 2013.

Finance Expense

Finance and interest expense in the fourth quarter of 2014 was $21.9 million, of which, $5.3 million was the non-cash interest expense on capital lease, as compared with $5.5 million in the same period of 2013, and $16.6 million was the interest expense on bank loans and discounted note receivables, as compared with $17.5 million in the same period of 2013.

Net Income/Loss and Net Income/Loss per Share

Net income attributable to General Steel for the fourth quarter of 2014 was $9.4 million, or $0.16 per diluted share, based on 59.8 million weighted average shares outstanding. This compares to a net loss attributable to General Steel of $(102,000), or $(0.002) per share, based on 55.6 million weighted average shares outstanding in the fourth quarter of 2013. The increase in shares count of weighted average shares outstanding was primarily due to the issuance of 5 million Common Stock pursuant to the $7.5 million Private Placement the Company closed in October 2014.

Full Year 2014 Financial and Operating Results

Total Sales

Total sales for the year 2014 decreased by 7.1% year-over-year to $2.3 billion, compared with $2.5 billion in 2013. The year-over-year sales decrease was primarily due to a decrease in in average selling price of rebar, partially offset by increased total sales volume.

• Total sales volume in year 2014 was 5.42 million metric tons, an increase of 6.3% compared with 5.10 million metric tons in 2013.
• The average selling price of rebar at Longmen Joint Venture in 2014 decreased to approximately $422.2 per metric ton, down by 14.0% from $490.7 per metric ton in 2013.

Gross Loss

Gross loss for the year 2014 was $(19.2) million, or (0.8)% of total sales, as compared with a gross loss of $(55.9) million, or (2.3%) of total sales in 2013. The improvement in annual gross margin was mainly attributable to steeper decrease in unit costs of rebar manufactured than the average selling price of rebar.

Operating Expenses and Loss/Income from Operations

Selling, general and administrative expenses for the year 2014 were $78.6 million, a decreased of 6.7% from $84.2 million in 2013. General and administrative expenses decreased to $44.5 million, compared with $50.1 million in the same period of 2013. Selling expenses totaled $34.1 million, unchanged from the same period of 2013.

Other operating income from a change in the fair value of profit sharing liability in 2014 was $91.0 million, compared with $174.6 million in the same period of last year.

Correspondingly, loss from operations for the year 2014 was $(6.7) million, compared with income from operations of $34.4 million in 2013.

Finance Expense

Finance and interest expense for the year 2014 was $96.7 million, of which, $21.3 million was the non-cash interest expense on capital lease, as compared with $20.8 million in the same period of 2013, and $75.4 million was the interest expense on bank loans and discounted note receivables, as compared with $71.1 million in 2013.

Net Loss and Net Loss per Share

Net loss attributable to General Steel for the year 2014 was $(48.7) million, or $(0.86) per diluted share, based on 56.8 million weighted average shares outstanding. This compares to a net loss attributable to General Steel of $(33.0) million, or $(0.60) per diluted share, based on 55.1 million weighted average shares outstanding in 2013.

Balance Sheet

As of December 31, 2014, the Company had cash and restricted cash of approximately $367.3 million, compared to $431.3 million as of December 31, 2013. The Company had an inventory balance of $156.3 million as of December 31, 2014, compared to $212.9 million as of December 31, 2013.

Conference Call and Webcast:

General Steel will hold a corresponding conference call and live webcast at 8:00 a.m. EDT on Tuesday, March 31, 2015 (which corresponds to 8:00 p.m. Beijing/Hong Kong Time on Tuesday, March 31, 2015) to discuss the results and answer questions from investors. Listeners may access the call by dialing:

The call will also be available as a live, listen-only Webcast under the "Events and Presentations" page on the "Investor Relations" section of the Company's Website at http://www.corpasia.net/us/GSI/irwebsite/index.php?mod=event. Following the live Webcast, an online archive of the Webcast will be available for 90 days.

A replay of the conference call may be accessed through April 4, 2015 by dialing:

About General Steel Holdings, Inc.

General Steel Holdings, Inc. is a leading non-state-owned steel maker headquartered in Beijing, China.  With seven million metric tons of crude steel production capacity under management and operations in Tianjin municipality and China's Shaanxi and Guangdong provinces, the Company produces a variety of steel products including rebar and high-speed wire.

In addition to its steel business, the Company also designs, manufactures, and integrates radio frequency identification ("RFID") systems. The Company's RFID technology provides real-time data on supplies, inventory, and goods, thereby greatly enhancing its customers' administration and planning processes, as well as, asset tracking and supply chain management. For more information, please visit www.gshi-steel.com.

To be added to the General Steel email list to receive Company news, or to request a hard copy of the Company's Annual Report on Form 10-K, please send your request to [email protected].

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, including those disclosed in the Company's most recent Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

Contact Us

General Steel Holdings, Inc.Joyce SungTel: +1-347-534-1435Email: [email protected]

Asia Bridge Capital Limited

Carene TohTel: +1-888-957-3362Email: [email protected]

 

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SOURCE General Steel Holdings, Inc.