2008 Revenue Rose 46.6% to $242.3 million
2008 Net Income Rose 56.9% to $17.1 million
TAIYUAN, China, March 16 /PRNewswire-Asia-FirstCall/ -- Puda Coal, Inc. (OTC Bulletin Board: PUDC), a supplier of China's high grade metallurgical coking coal used to make coke for the purposes of steel manufacturing, today announced its fourth quarter and full year financial results ended December 31, 2008.
Fourth Quarter 2008 Highlights
-- Fourth quarter revenue reached $64.5 million, up 31.0% year-over-year
-- Operating income totaled $4.5 million, down 28.5% year-over-year
-- Net income was $3.4 million or $0.03 per fully diluted share, down
22.3% year-over-year from $4.3 million, or $0.04 per fully diluted
share, in the same quarter of 2007
-- Sales of cleaned coal totaled 571,000 metric tons (MT), down 2.4%
year-over-year
-- Average selling price of cleaned coal rose 24.5% year-over-year to $113
per MT
Full Year 2008 Highlights
-- Net revenue climbed to $242.3 million, up 46.6% from 2007
-- Operating income rose to $24.9 million, up 6.5% from 2007
-- Net income totaled $17.1 million, or $0.16 per fully diluted share, up
56.9% from $10.9 million, or $0.11 per fully diluted share, in 2007
-- Sales of cleaned coal reached 2.3 million metric tons, up 16.3% from
2007
-- Average selling price of cleaned coal was $103 per MT in 2008 and $89
per MT in 2007 (after adjusting for exchange rate differences)
-- Launched its new corporate web site, under the domain name
http://www.pudacoalinc.com
-- Successfully Presented at the Rodman & Renshaw Annual Global Investment
Conference held on November 10-12 at the New York Palace Hotel in New
York City; conducted a non-deal roadshow in the U.S. the week of the
conference
-- Signed letter of intent to restructure six coal mines and construct a
coal gangue power plant in Shanxi Province
'For the full year 2008, we achieved record revenue and net income, generated strong cash flow and closed the year with a healthy balance sheet. However, profitability in the fourth quarter was adversely affected by the slowing economy,' said Mr. Zhu, CEO and President of Puda Coal. 'While we can not predict the duration of the current economic downturn, we are encouraged by the steps taken by the Chinese government to stimulate the economy.'
Fourth Quarter 2008 Results
For the quarter ended December 31, 2008, total revenue was $64.5 million, up 31.0% from $49.2 million in the same quarter last year. This revenue growth was driven by increases in the selling price of cleaned coking coal. Sales of cleaned coal were 571,000 MT, down 2.4% from 585,000 MT in the same period last year. The average selling price was $113, up 24.2% from $91 (after adjusting for exchange rate differences) for the same quarter of 2007.
Gross profit for the quarter was $6.0 million, down 23.4% from $7.8 million for the same period of 2007. Gross margin was 9.3% in the quarter, down from 15.9% in the same period last year. The decline was attributable due to an increase in the average purchase price of raw coal, which rose from $57.7 per ton in the fourth quarter of 2007 (after adjusting for exchange rate differences) to $70.5 per ton in the current quarter. The increase in the average price of raw coal was partially offset by the increase in the average selling price of cleaned coal.
Operating expenses for the fourth quarter of 2008 were $1.5 million, down 1.9% from the same period last year. Selling expenses increased 8.3% in support of the increase in net revenue, while general and administrative expenses declined 11.5%, primarily due to cost saving strategy implemented in the quarter. As a percentage of net revenue, operating expenses were 2.3% in the fourth quarter of 2008, compared to 3.1% in the same quarter last year.
Operating income was $4.5 million, or 7.0% of revenue in the fourth quarter of 2008, down 28.5% from $6.3 million, or 12.8% of net revenue in the fourth quarter of 2007.
Interest expense and debt financing costs totaled $0.2 million in the fourth quarter of 2008, down from $0.7 million a year ago. This decrease was due to lower non-cash expenses related to the amortization of the discount on the Company's convertible notes and warrants in the current quarter.
During the fourth quarters of 2008 and 2007, the Company recorded non-cash gains of $0.05 million and $0.9 million, respectively, for the gain in fair value of the warrants issued in the November 2005 private placement.
Income tax expense declined 40.2% to $1.3 million in the fourth quarter of 2008 from $2.2 million in the year ago period primarily due to a reduction in the income tax rate for the Company's operating company, Shanxi Coal, to 25% from 33%, effective January 2008.
Net income was $3.4 million, or $0.03 per fully diluted share, compared to $4.3 million, or $0.04 per fully diluted share, in the fourth quarter of 2007.
Full Year 2008 Results
Net revenue was $242.3 million for the year ended December 31, 2008, compared to $165.3 million for the year ended December 31, 2007, an increase of $77.1 million, or 46.6%. The tonnage sales of cleaned coal increased approximately 329,000 MT, or 16.3%, from approximately 2,013,000 MT for the year ended December 31, 2007 to approximately 2,342,000 MT for the year ended December 31, 2008. The average selling price of cleaned coal increased $14, or 15.7%, from $89 (after adjusting for RMB appreciation against USD over this period) per ton for the year ended December 31, 2007 to $103 per ton for the year ended December 31, 2008. The increase in the tonnage sales and selling price of cleaned coal were the primary reasons for the increase in net revenue.
Gross profit was $30.3 million for the year ended December 31, 2008, compared to $28.6 million for the year ended December 31, 2007, an increase of $1.7 million, or 6.0%. Gross profit margin for the year ended December 31, 2008 and 2007 were 12.5% and 17.3%, respectively. The decline was attributable due to an increase in the average purchase price of raw coal, which increased $14, or 25.9%, from approximately $54 (after adjusting for RMB appreciation against USD over this period) per ton for the year ended December 31, 2007 to approximately $68 per ton for the year ended December 31, 2008. The increase in the average price of raw coal was partially offset by the increase in the average selling price of cleaned coal.
Operating expenses for the year ended December 31, 2008 were $5.4 million, up 4.0% from last year. Selling expenses were $3.2 million for the year ended December 31, 2008, down 7.3% from $3.0 million for the year ended December 31, 2007. General and administrative expenses were $2.2 million for the year ended December 31, 2008, unchanged from the year ended December 31, 2007.
Operating income was $24.9 million for the year ended December 31, 2008, compared to $23.4 million for the year ended December 31, 2007.
Interest expense and debt financing costs totaled $1.5 million in 2008, down from $4.0 million a year ago. This decrease was due to lower non-cash expenses related to the amortization of the discount on the Company's convertible notes and warrants in the current quarter.
During 2008, the Company recorded a non-cash gain of $0.4 million for the gain in fair value of the warrants issued in the November 2005 private placement. In 2007, the Company recorded a non-cash loss of $0.3 million for the fair value loss of these same warrants.
Income taxes were $6.4 million for the year ended December 31, 2008, compared to $8.3 million for the year ended December 31, 2007, a decrease of $1.9 million, or 22.6%. The primary reason for the decline was a reduction in the income tax rate for the Company's operating company, Shanxi Coal, to 25% from 33%, effective January 2008.
Net income was $17.1 million, or $0.16 per fully diluted share, for the year ended December 31, 2008, up 56.9% from $10.9 million, or $0.11 per fully diluted share, for the year ended December 31, 2007.
Financial Condition
As of December 31, 2008, Puda Coal had $39.1 million in cash and cash equivalents and $67.4 million in working capital and a current ratio of 5.7:1. Long-term debt, excluding current portion, was $7.8 million. The Company repaid the $2.0 million in principal of its convertible notes which matured on October 31, 2008. At year end, shareholders' equity stood at $72.3 million up from $48.6 million at the end of 2007.
The Company generated $26.5 million in cash from operating activities for the year ended December 31, 2008, compared to cash used in operating activities of $4.0 million in prior year. This was primarily due to net income earned in 2008 and a decrease in working capital needs resulting from decreased inventory.
Business Outlook
'In the year ahead, we will focus on satisfying the needs of our existing customers, increasing our market share and pursuing opportunities to move upstream into coal mining,' said Mr. Zhu. 'We believe that the outlook for China's steel making industry remains promising due to China's 4 trillion yuan economic stimulus package, which will encourage the development of infrastructure projects such as railway construction, products of motor vehicle as well as real estate projects, which will drive the coking coal and coal cleaning industry.'
Puda Coal continues its efforts to enter the coal mining business to increase profitability. Recently, the Company signed a non-binding letter of intent with a local county government located in Shanxi Province to consolidate the County's six coal mines and construct a coal gangue power plant. A formal agreement is contingent upon receiving approval from the provincial government. Management is seeking to identify other appropriate targets to move forward with the strategic move to enter the coal mining segment.
Conference Call
The Company will host a conference call at 9:00 a.m. EDT on Monday, March 16, 2009 to discuss the fourth quarter and full year 2008 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-800-688-0796. International callers should dial +1-617-614-4070. When prompted by the operator, mention Conference Passcode 884-975-08. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Monday, March 16, 2009 at 11:00 a.m. EDT. To access the replay, please dial 1-888-286-8010 and enter the passcode 80538595. International callers should dial +1-617-801-6888 and enter the same passcode 80538595.
About Puda Coal, Inc.
Puda Coal, through its subsidiaries, supplies premium grade coking coal to the steel making industry in China for use in making coke. The Company currently possesses 3.5 million metric tons of annual coking coal cleaning capacity. Shanxi Province provides 20 - 25% of China's coal output and supplies nearly 50% of China's coke. For more information, please visit http://www.pudacoalinc.com .
Forward-Looking Statements
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. For example, our management's expectation about China's continued economic growth and the continued growth of the demand for high-grade coking coal, our business strategies such as our plan to acquire coal mines, and our belief that our management will successfully execute such business strategies, are subject to, among other things, the risks and uncertainties relating to the market condition beyond our control. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
PUDA COAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Twelve Months ended December 31, 2008 and 2007
(In thousands of United States dollars, except for per share data)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
(Unaudited) (Unaudited)
NET REVENUE $64,501 $49,219 $242,338 $165,267
COST OF REVENUE 58,505 41,392 212,002 136,652
GROSS PROFIT 5,996 7,827 30,336 28,615
OPERATING EXPENSES
Selling expenses 796 735 3,191 2,975
General and
administrative expenses 682 771 2,207 2,215
TOTAL OPERATING EXPENSES 1,478 1,506 5,398 5,190
INCOME FROM OPERATIONS 4,518 6,321 24,938 23,425
INTEREST INCOME 322 25 406 83
INTEREST EXPENSE (175) (231) (763) (1,577)
DEBT FINANCING COSTS (38) (501) (778) (2,422)
DERIVATIVE UNREALIZED
FAIR VALUE GAIN/(LOSS) 53 917 394 (343)
OTHER EXPENSE -- -- (719) --
INCOME BEFORE INCOME
TAXES 4,680 6,531 23,478 19,166
INCOME TAXES (1,316) (2,199) (6,417) (8,292)
NET INCOME/(LOSS) 3,364 4,332 17,061 10,874
OTHER COMPREHENSIVE
INCOME
Foreign currency
translation adjustment (445) 1,056 3,498 2,860
COMPREHENSIVE
INCOME/(LOSS) 2,919 5,388 20,559 13,734
NET INCOME/(LOSS) 3,364 4,332 17,061 10,874
LESS: DIVIDENDS
Option holder preference
dividend -- -- -- --
Common dividend -- -- (116) --
UNDISTRIBUTED EARNINGS 3,364 4,332 16,945 10,874
BASIC EARNINGS/(LOSS)
PER SHARE
- Option holder
preference -- -- -- --
- Other common
holders $0.03 $0.04 $0.16 $0.11
$0.03 $0.04 $0.16 $0.11
DILUTED EARNINGS/(LOSS)
PER SHARE
- Option holder
preference -- -- -- --
- Other common
holders $0.03 $0.04 $0.16 $0.11
0.03 0.04 0.16 0.11
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING-BASIC 107,335,759 100,117,465 106,288,598 98,404,914
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING
-DILUTED 107,649,807 113,390,962 106,602,646 100,591,136
PUDA COAL, INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2008 and 2007
(In thousands of United States dollars)
December 31, December 31,
2008 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents $39,108 $16,381
Restricted cash -- 233
Accounts receivable, net 14,645 8,137
Other receivables
- Related parties -- 4
- Third parties 7 6
Advances to suppliers
- Related parties 879 685
- Third parties 5,635 1,363
Inventories 21,589 35,953
Total current assets 81,863 62,762
PROPERTY, PLANT AND EQUIPMENT, NET 13,370 15,018
INTANGIBLE ASSETS, NET 3,399 3,484
TOTAL ASSETS $98,632 $81,264
CURRENT LIABILITIES
Current portion of long-term debt
- Related party $1,300 $1,300
Accounts payable
- Related parties -- 182
- Third parties 4,272 2,140
Other payables
- Related parties 1,030 1,851
- Third parties 2,714 2,916
Accrued expenses 1,991 1,350
Income taxes payable 1,319 2,223
VAT payable 1,726 1,379
Distribution payable 117 1,096
Convertible notes -- 1,841
Derivative conversion feature -- 1,100
Penalty payable -- 1,725
Total current liabilities 14,469 19,103
LONG-TERM LIABILITIES
Long-term debt
- Related party 7,800 9,100
Derivative warrants 4,086 4,480
Total long-term liabilities 11,886 13,580
PUDA COAL, INC.
CONSOLIDATED BALANCE SHEETS (Continued)
December 31, 2008 and 2007
(In thousands of United States dollars)
December 31, December 31,
2008 2007
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, authorized 5,000,000 shares,
par value $0.01, issued and outstanding None -- --
Common stock, authorized 150,000,000 shares,
par value $0.001, issued and outstanding
107,335,759 (2007: 105,252,176) 107 105
Paid-in capital 31,555 28,304
Statutory surplus reserve fund 1,366 1,366
Retained earnings 31,752 14,807
Accumulated other comprehensive income 7,497 3,999
Total stockholders' equity 72,277 48,581
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $98,632 $81,264
PUDA COAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 2008, 2007 and 2006
(In thousands of United States dollars)
Years ended December 31,
2008 2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $17,061 $10,874 $1,354
Adjustments to reconcile net income to net
cash provided by operating activities
Amortization of land-use rights 85 78 78
Depreciation 1,650 1,252 953
Provision for doubtful debts 17 1 10
Amortization of debt issue costs -- 6 838
Amortization of discount on convertible
notes and warrants 399 895 8,627
Derivative unrealized fair value (gain)/loss (394) 343 (1,237)
Discount on converted shares and
exercised warrants -- 663 2,898
Stock compensation expense 74 46 --
Issue of common stock for services -- -- 21
Issue of common stock for penalty 379 -- 1,000
Changes in operating assets and liabilities:
Increase in accounts receivable (5,844) (444) (2,972)
Decrease in other receivables 4 41 4
(Increase)/decrease in advances to
suppliers (4,243) (799) 1,819
Decrease/(increase) in inventories 16,600 (18,518) (8,104)
(Decrease)/increase in accounts payable 1,754 (596) 1,426
Increase in accrued expenses 526 289 588
(Decrease)/increase in other payables (991) 660 1,432
(Decrease)/increase in income tax payable (1,042) (415) 1,088
Increase in VAT payable 245 90 887
Increase in penalty payable -- 1,521 204
Decrease in restricted cash 233 -- 382
Net cash provided by/(used in)
operating activities 26,513 (4,013) 11,296
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (2) (6,111) --
Payment for the purchase of equity interest
in Shanxi Coal (893) (1,799) --
Net cash used in investing activities (895) (7,910) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of warrants -- 3,600 1,860
Repayment of long-term debt (1,300) (1,300) (1,300)
Repayment of convertible notes (2,015) -- --
Distribution paid to owners of a subsidiary (1,172) -- --
Net cash (used in)/provided by
financing activities (4,487) 2,300 560
Effect of exchange rate changes on cash 1,596 1,061 1,020
Net increase/(decrease) in cash and
cash equivalents 22,727 (8,562) 12,876
Cash and cash equivalents at beginning
of year 16,381 24,943 12,067
Cash and cash equivalents at end of year $39,108 $16,381 $24,943
For further information, please contact:
Puda Coal, Inc.
Laby Wu, Chief Financial Officer
Tel: +86-10-6439-2405
Email: labywu@gmail.com
Web: http://www.pudacoalinc.com
CCG Investor Relations
Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
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