Armco Metals Holdings Announces Financial Results for the Fourth Quarter and Full Year of 2014
(firmenpresse) - SAN MATEO, CA -- (Marketwired) -- 03/30/15 -- Armco Metals Holdings, Inc. ("Armco Metals Holdings") (NYSE MKT: AMCO), a U.S. based company that engages in the import, sale, and distribution of metal ore and non-ferrous metals in the People''s Republic of China, recycles scrap metals used by steel mills in the production of recycled steel and provides sourcing and pricing services for various metals to its network of customers, today announced its financial results for its fourth quarter and for the fiscal year ended December 31, 2014.
For the fourth quarter ended December 31, 2014, net revenue decreased 26% to $49.2 million due to a significant decrease in sales in our trading business which totaled $9.0 million as compared to $41.1 million in the same period in 2013. largely due to price decline and weak demand for metal ore. Revenues from our recycling business in the fourth quarter of 2014 increased to $40.2 million as compared to $25.1 million in the same period in 2013. Gross profit for the fourth quarter of 2014 was $4.2 million as compared to $2.2 million in the fourth quarter of 2013. We recorded operating income of 2.9 million in the fourth quarter of 2014 as compared to operating income of $0.4 million in the fourth quarter of 2013. Our operations resulted in a net income of $1.4 million or $ 0.29 per diluted share in the fourth quarter of 2014 compared to net loss of ($0.4) million in the fourth quarter of 2013, or $(0.10) per diluted share. Diluted loss per share was $0.39 and ($1.66) for the year ended December 31, 2014 and December 31, 2013, respectively.
Net revenues in 2014 was $124.2 million, a 3.5% decrease from $128.7 million in 2013. By business section, the net revenues from our metal recycling business significantly increased by $40.1 million, or by 62%, to $105.0 million, compared to 2013; our net revenues for our trading business decreased approximately 70.0% in 2014 to $19.2 million, compared to $63.8 million in 2013. The increases in recycling business sales are mainly attributable to the increase in the sale of billet and scrap steel, of which the former product is a new product we carry in 2014. To manage market risk and in responding to the significant price decline and oversupply of metal ores, we significantly decreased our metal ores trading business activities resulted in sharp decline in trading business sales. Our recycling business sold approximately 193,106 metric tons ("MT") scrap metals in 2014, increased 35,334 MT or 22.4%, compared to 2013. In 2014, our production increased by 26.7% to 182,776 MT from 144,239 MT in 2013. Our recycling business accounted for approximately 85% of our total revenue and continued to exceed our trading business as the largest source of our net revenue. Gross profit for the full year 2014 was $14.5 million, an increase of 339% from $3.3 million for the year ended December 31, 2013. Gross margins significantly increased to 11.7% in 2014 compared to 3.0% in 2013, primarily due to the significantly increased margins on our sales of scrap metals in our recycling operations which we sorted out and produced high value of non ferrous scraps from the raw materials of scraps acquired at lower cost. Gross margins were also positively impacted by an inventory reserve of reversal of $0.5 million as result of the price recovered from the write-off in the previous period.
Operating expenses of $6.0 million in 2014 slightly increased by $0.1 million, or 2% compared to 2013, primarily due to the increase in selling expense of $0.13 million and an increase in profession fee of $0.1 million. The increase was partially offset by the decrease of $0.15 million in operating cost of idle manufacturing facility as result of higher output at our facility. General and administrative expenses, one of our major operating costs, remained flat at $3.4 million compared to 2013.
Our net income in 2014 was $1.9 million, compared to net loss of $4.1 million in 2013. The significant improvement in profit is primarily due to the substantial increase in gross profit to $14.5 million with gross margin of 12% in 2014 from $3.3 million with a gross margin of 3% in 2013, partially offset by a $0.1 million increase in total operating expenses, and a $2.9 million increase in total other expenses.
In reviewing the financial performance for the quarter and year ended 2014, Mr. Kexuan Yao, Chairman and CEO of China Armco, was pleased that the company was able to turn around and post profits during this past year. Mr. Yao remarked that, "2014 was a milestone for the company as we achieved first positive annual financial result since our recycling facility putting into operation. While we suffered the effects of rapidly declining prices and weaken market demand, we were able to manage risk and make profits in 2014 by constantly improving operation efficiency, adjusting product line and developing business model in responding to market change. The recycling business continued to be our largest source of revenue and we continue to believe the metal recycling business will continue to be the major growth driver for our company."
Mr. Yao further stated that "We intend to further our improvements in cost control, developing and streamlining our supply chain, and the establishment of long term strategic partnership with key clients. As we position the company for a cyclical recovery in the steel industry we will continue our efforts to obtain additional qualifications and licenses to increase our business, and build our brand in the industry. We have driven gross margin improvement significantly in a very challenging environment while improving operation efficiently and reducing costs significantly. We believe this will serve as a springboard for significant financial improvement when our end markets improve."
As of December 31, 2014, the Company had $1.9 million in cash and cash equivalents, compared to $0.6 million at year-end 2013. The Company had working capital of $15.6 million and a current ratio of 1.38:1 on December 31, 2014 compared to $0.8 million and 1.02:1 on December 31, 2013. As of December 31, 2014, shareholders'' equity was $54.6 million, 28%up from $42.6 million at the end of 2013.
Our financial performance during 2014 showed substantially higher gross margin in comparison to 2013 as a result of a significant improvement in our recycling operations which we sorted out and produced high value of non ferrous scraps from the raw materials of scraps acquired at lower cost. Looking at 2015, management believes China''s steel demand is expected to grow at a slower pace while China''s crude steel output growth expect to fall in 2015 and domestic steel prices are estimated to remain at cyclically low levels based on the view that the domestic steel production overcapacity and global oversupply of iron ore would continue to exist in 2015. In the middle and long term, we believe that the low income housing construction, ongoing urbanization and increasing domestic consumption in China will continue to support the growth of the steel industry. In additional, recently China''s proposal of building the Silk Road economic belt, aims to better connect the Asian and European markets, would be a mitigation for current excess capacity by assisting with massive infrastructure projects. In the long run, we also expect our recycling business to benefit substantially from the measures and policies to be implemented gradually by the Chinese government according to its 12th Five Year Plan (2011-2015). Under this plan, China intends to restructure its iron and steel industry to be more energy efficient and have increased environmental protection by adopting and developing the most advanced technology in the world. According to China Association of Metal scrap utilization (CAMU), year 2015 to 2020 would be a Climax of automatic and vessels recycling, with the rapid accumulation of the steel scrap and the requirement for energy conservation and emission reduction, extensive use of recycled steel would be foreseeable.
In our trading business we significantly decreased metal ore trading activities in responding to the high volatility and substantial decline in metal ore prices in 2014. The imported iron ore price and other metal ore prices has been declining significantly due to global oversupply and weaken domestic demand in China. We anticipate the price of iron ore may stay at its current low level in 2015 for the reasons described. While we continued to maintain our business relationship with worldwide suppliers and stabilize our supply capacity for metal ore products and believe that our effort to build our supply capacity will benefit us in the long term and strengthen our market position in the industry in the PRC, we have developed and added new products in our trading business product line, such as certain steel products and wood products. We will continue to develop new products to diversify our trading business to reduce volatility and improve profitability.
In our recycling business we achieved strong growth both in sales and gross margin despite weak market for steep scrap in 2014 as described above. Looking forward, in the long-term, we believe the country''s ongoing urbanization process and the implementation of building the Silk Road economic belt will increase new steel demand and eventually drive the steel scrap market during the 13th Five-Year-Plan period. We intend to devote a significant amount of our resources towards the improvement of our operations and if appropriate, its expansion. At the same time, we will continue to pursue our strategy to create a local network of raw material suppliers for our recycling facility and expand our oversea supply channels. In addition, we will continue to develop platform model in recycling business to obtain more customers and business opportunities under the model in the coming years.
The conference call will take place at 5:30 p.m. ET on Monday, March 30, 2015. To attend the call, please use the dial-in information below. When prompted, ask for the "Armco Metals call" and/or be prepared to provide the conference ID.
Monday, March 30, 2015
5:30 p.m. Eastern Time, US
1-877-407-9210
1-201-689-8050
2014 Fourth Quarter and Year End Financial Results Call
The playback of the webcast can be accessed until 06/30/2015
Replay Number (Toll Free): 1-877-660-6853
Replay Number (International): 1-201-612-7415
Replay Passcode needs Conference ID# 13605427
Teleconference will be available for replay until 11:59 PM Apr 14, 2015
ABOUT ARMCO METALS HOLDINGS, INC.
Armco Metals Holdings, Inc. is engaged in the sale and distribution of metal ore and non-ferrous metals throughout China and is in the recycling business in China. Armco Metals'' customers include some of the fastest growing steel producing mills and foundries throughout China. Raw materials are acquired from a global group of suppliers located in various countries, including, but not limited to, Brazil, India, Indonesia, Ukraine and the United States. Armco Metals'' product lines include ferrous and non-ferrous ore, iron ore, chrome ore, nickel ore, magnesium, copper ore, manganese ore, steel billet and recycled scrap metals. For more information about Armco Metals, please visit .
SAFE HARBOR STATEMENT
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Armco Metals Holdings, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") are forward-looking and involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our expectations regarding our revenues and production related to our scrap metal recycling operations, pricing and demand for our product lines and the extent of government imposed energy and monetary policy restrictions and resulting blackouts and associated impact on our trading and recycling operations.
We caution that investors should not place undue reliance on any forward-looking statements herein. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. This press release is qualified in its entirety by the following, including, but not limited to, any expectations with respect to the Company''s revenues and operations, institution of governmental regulations relating to our businesses and the international economic climate, and the cautionary statements and risk factor disclosure contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the year ended December 31, 2014, and our subsequent filing with the Securities and Exchange Commission.
CONTACT INFORMATION:
Armco Metals Holdings, Inc.
US Investor Relations Contact
Christina Xiong
Office: 650.212.7620
Email:
Website:
China
Ripple Zhang
Office: 86-21-62375286
Email:
Website:
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Datum: 30.03.2015 - 15:08 Uhr
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