EX-99.1 2 cnamex.htm PRESS RELEASE OF CHINA ARMCO METALS, INC. DATED MARCH 31, 2010 cnamex.htm
 

 
 
 
China Armco Metals Reports Record Financial Results for the Full Year of 2009
 
Financial Highlights

- Full year 2009 revenue reaches a record $86.9 million, up 57% from 2008
- Full year 2009 net income increases to $5.1 million, up 54% from 2008
- Full year basic and diluted EPS rises to $0.51 per share on 10.1 million shares, up from $0.44 on 7.5 million shares
- Company to provide earnings guidance for 2010 during today's 4:30 p.m. EDT Conference Call
 
SAN MATEO, CA--(MARKET WIRE)--March 31, 2010 -- China Armco Metals, Inc. (AMEX CNAM - News),  a distributor of imported metal ore and growing scrap metal recycler, today announced China Armco's financial results for the year ended December 31, 2009.

 
Full Year Financial Results
 
For the full year of 2009 China Armco generated record revenue of $86.9 million as compared to revenue of $55.4 million for the same period of 2008, an increase of 57%.  The performance for the full year of 2009 reflected a marked improvement in the Chinese economy, particularly in the steel production industry resulting in an increase in demand and prices of metal ore in China Armco’s metal ore distribution business.  Performance was also aided by an increase in capital available to China Armco through various credit facilities obtained throughout 2009.
 
Cost of goods sold for the full year of 2009 were $78.0 million, an increase of $26.8 million compared to the full year of 2008.  Gross margins were 10.3% for the year ended December 31, 2009 versus gross margins of 7.5% in 2008.  Overall margins were favorably impacted by a rising price environment for a number of metal ore distributed by China Armco coupled with China Armco’s effective sourcing capabilities.  China Armco derives profits from sales of several types of ore.  Each type of ore has a target gross margin and when [combined] produced the 10.3%  blended gross profit margin for China Armco. Operating expenses for the full year of 2009 were $1.7 million as compared to $1.3 million for the same period in 2008.  The increase is mainly a result of costs associated with the launching of its metal recycling operations in 2010.
 
Income taxes were $1.2 million for the year ended December 31, 2009 as compared to $787,000 for the full year of 2008. China Armco’s China operations are subject to a statutory tax rate of 17.5% and its Hong Kong distribution operations are subject to Hong Kong SAR income taxes as of January 1, 2008.
 
For the year ended December 31, 2009 net income rose to $5.1 million as compared to $3.3 million in 2008, an increase of 55%.  On a basic and diluted basis, earnings per share for the full year of 2009 were $0.51 per share based on 10.1 million weighted average common shares outstanding as compared to $0.44 per basic and diluted share in 2008 on 7.5 million weighted average common shares outstanding.
 
Balance Sheet Highlights
 
At December 31, 2009, total assets were $59.6 million, an increase of over 106% from the $28.8 million at December 31, 2008. This increase was largely attributable to the utilization of financing facilities obtained throughout 2009 to complete construction and purchase equipment for its metal recycling facility as well as purchase inventory to expand its distribution business. At December 31, 2009, shareholder equity was $17.1 million compared to $15.3 million at December 31, 2008.  Total current assets were $37.8 million with working capital of approximately $5.3 million.  Subsequent to year’s end, China Armco received approximately $6.6 million from the exercise of 1,310,346 warrants in March of 2010.
 
Commenting on this financial performance for 2009, Kexuan Yao, China Armco’s Chairman and CEO stated, “Our efforts to maintain business relationships and work with our customers in the uncertain period late in 2008 and 2009 coupled with our ability to secure necessary credit facilities, enabled us to thrive and expand as China recovered throughout 2009. Commodities sales and metal production continues to increase creating a very favorable environment for the future.  We are excited to launch the operations of our scrap metal facility and believe we have laid the foundation for an extended period of expansion in both top and bottom line performance for the remainder of 2010 and beyond.  Our new scrap metal production capacity places us among the top ten producers in China and we intend to aggressively exploit this opportunity with an eye toward further expansion”.
 

 
 
 

 
China Armco Metals Conference Call to discuss China Armco's financial results for the full year of 2009.
China Armco Metals will hold a conference call today to discuss its 2009 results as well as provide its outlook for 2001.  The call information is as follows:
--  Date: March 31, 2010
--  Time: 4:30 p.m. Eastern Daylight Time
--  Dial-in number for US/Canada: (877) 407-6180
--  Dial-In number for international callers: (201) 689-8050
--  Conference ID:  CNAM 2009 Annual Earnings Release Conference Call

This call is being webcast and can be accessed at http://www.investorcalendar.com/IC/CEPage.asp?ID=156911. The playback of the webcast can be accessed through either site until April 6, 2010. To access the webcast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player, please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp
The Teleconference will be available for replay until 11:59 PM April 6, 2010
--  Replay Number (Toll Free) : (877) 660-6853
--  Replay Number (international) : (201) 612-7415
--  Account #: 286
--  Conference ID: 348153

About China Armco Metals, Inc.
 
China Armco Metals, Inc. is engaged in the sale and distribution of metal ore and non-ferrous metals throughout the PRC and has entered the recycling business with the recent launch of operations of a 1-million ton per year shredder and recycler of metals located on 32 acres of land acquired by China Armco.  China Armco maintains customers throughout China which includes the fastest growing steel producing mills and foundries in the PRC. Raw materials are supplied from global suppliers in India, Hong Kong, Nigeria, Brazil, Turkey, and the Philippines. China Armco's product lines include ferrous and non-ferrous ore, iron ore, chrome ore, nickel ore, magnesium, copper ore, manganese ore and steel billet. The recycling facility is expected to be capable of recycling one million metric tons of scrap metal per year which will position China Armco as one of the 10 largest recyclers of scrap metal in China. China Armco estimates the recycled metal market as 70 million metric tons.
 
Safe Harbor Statement
 
In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, China Armco Metals, 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") may be forward-looking and may 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 guidance and expectations regarding revenues, net income and earnings. In addition, any such statements are qualified in their entirety by reference to, and are accompanied by, the following key factors that have a direct bearing on our results of operations:
 
We caution that the factors described herein could cause actual results to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. 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. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This press release is qualified in its entirety by 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, 2009.
 
Contact:

Gary Liu
U.S. Representative
954.363.7333 ext. 318
 

 
 
 

 
CHINA ARMCO METALS, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
                               
 
             
   
December 31, 2009
    
December 31, 2008
  
 ASSETS
                
 CURRENT ASSETS:
                
 Cash
  
$
                   743,810
    
$
                3,253,533
  
 Pledged deposits
    
                   779,169
      
                               -
  
 Accounts receivable, net
    
              28,390,528
      
              16,722,307
  
 Inventories
    
                   496,149
      
                   197,402
  
 Advance on purchases
    
                3,903,782
      
                3,680,872
  
 Prepayments and other current assets
    
                3,513,538
      
                   379,452
  
                 
 Total Current Assets
    
              37,826,976
      
              24,233,566
  
                 
 PROPERTY, PLANT AND EQUIPMENT, net
    
              19,642,861
      
                2,377,816
  
                 
 LAND USE RIGHTS, net
    
                2,158,234
      
                2,208,902
  
                 
 Total Assets
  
$
              59,628,071
    
$
              28,820,284
  
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY
                
 CURRENT LIABILITIES:
                
 Loans payable
  
$
              17,021,558
    
$
                2,914,345
  
 Current maturities of long-term debt
    
                2,193,881
      
                               -
  
 Accounts payable
    
                6,841,584
      
                6,694,534
  
 Advances from stockholder
    
                     35,475
      
                   236,595
  
 Customer deposits
    
                2,453,098
      
                2,613,653
  
 Corporate income tax payable
    
                1,990,277
      
                   787,759
  
 Value added tax and other taxes payable
    
                1,312,455
      
                   251,553
  
 Accrued expenses and other current liabilities
    
                   654,756
      
                     32,899
  
                 
 Total Current Liabilities
    
              32,503,084
      
              13,531,338
  
                 
 LONG-TERM DEBT
    
                6,581,641
      
                               -
  
                 
 DERIVATIVE LIABILITY
    
                3,417,974
      
                               -
  
                 
Total Liabilities
    
              42,502,699
      
              13,531,338
  
                 
 COMMITMENTS AND CONTINGENCIES
                
                 
 STOCKHOLDERS' EQUITY:
                
 Preferred stock, $0.001 par value; 1,000,000 shares authorized;
                
 none issued or outstanding
    
                               -
      
                               -
  
 Common stock, $0.001 par value, 74,000,000 shares authorized,
                
 10,310,699 and 10,092,449 shares issued and outstanding, respectively
    
                     10,310
      
                     10,092
  
 Additional paid-in capital
    
                2,556,966
      
                6,942,588
  
 Deferred compensation
    
                 (676,500)
      
                               -
  
 Retained earnings
    
              14,936,915
      
                7,967,064
  
 Accumulated other comprehensive income:
                
 Foreign currency translation gain
    
                   297,681
      
                   369,202
  
                 
 Total Stockholders' Equity
    
              17,125,372
      
              15,288,946
  
                 
 Total Liabilities and Stockholders' Equity
  
$
              59,628,071
    
$
              28,820,284
  
 

 
 
 

CHINA ARMCO METALS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
   
For the Year
    
For the Year
  
   
Ended
    
Ended
  
   
December 31, 2009
    
December 31, 2008
  
                 
 NET REVENUES
  
 $
            86,939,841
    
 $
            55,358,567
  
                 
 COST OF GOODS SOLD
    
            77,995,219
      
            51,226,667
  
                 
 GROSS PROFIT
    
              8,944,622
      
              4,131,900
  
                 
 OPERATING EXPENSES:
                
 Selling expenses
    
                 447,051
      
                 121,362
  
 General and administrative expenses
    
              1,263,957
      
              1,129,442
  
                 
 Total operating expenses
    
              1,711,008
      
              1,250,804
  
                 
 INCOME FROM OPERATIONS
    
              7,233,614
      
              2,881,096
  
                 
 OTHER (INCOME) EXPENSE:
                
 Interest income
    
                  (14,092)
      
                  (15,696)
  
 Interest expense
    
                 526,326
      
                 164,110
  
 Import and export agency income
    
                             -
      
                    (3,367)
  
 Gain from contracts termination
    
                             -
      
             (1,151,453)
  
 Loss (gain) on change in fair value of derivative liability
    
                 166,025
      
                             -
  
 Loss on forward foreign currency contracts
    
                             -
      
                   19,739
  
 Government subsidy
    
                  (52,347)
      
                             -
  
 Other (income) expense
    
                 271,249
      
                (191,097)
  
                 
 Total other (income) expense
    
                 897,161
      
             (1,177,764)
  
                 
 INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
    
              6,336,453
      
              4,058,860
  
                 
 INCOME TAXES
    
              1,212,057
      
                 787,759
  
                 
 INCOME FROM CONTINUING OPERATIONS
    
              5,124,396
      
              3,271,101
  
                 
 DISCONTINUED OPERATIONS
                
 Gain on disposal of discontinued operations, net of tax
    
                             -
      
                   61,514
  
 INCOME FROM DISCONTINUED OPERATIONS
    
                             -
      
                   61,514
  
                 
 NET INCOME
    
              5,124,396
      
              3,332,615
  
                 
 OTHER COMPREHENSIVE INCOME:
                
 Foreign currency translation gain (loss)
    
                  (71,521)
      
                 292,544
  
                 
 COMPREHENSIVE INCOME
  
 $
              5,052,875
    
 $
              3,625,159
  
 
 NET INCOME PER COMMON SHARE - BASIC AND DILUTED:
                
 Continuing operations
  
 $
                       0.51
    
 $
                       0.44
  
 Discontinued operations
  
 $
 0.00
    
 $
 0.00
  
 Total net income per common share
  
 $
                       0.51
    
 $
                       0.44
  
                 
 Weighted Common Shares Outstanding - basic and diluted
    
            10,101,603
      
              7,512,085