Financial Highlights -- Net revenue from continuing operations rose 27.7% year-over-year to $33.2 million; -- Gross margin was 41.0%; -- Earnings before interest, taxes, depreciation and amortization (EBITDA),a non-GAAP measurement, was $13.1 million, up 24.5% from the same quarter in 2009; -- Operating income increased by 21.0% year-over-year to $11.5 million, with a 34.5% operating margin; -- Net income from continuing operations for the second quarter of 2010 was $7.1 million, representing diluted EPS of $0.13; -- Cash was $110.6 million; -- Net cash from operating activities for the six months ended June 30, 2010 was $20.4 million, up 35.7% from the same period in 2009.
Mr. Xiangzhi Chen, ShengdaTech's Chairman and CEO commented, "Our growth continued in the second quarter of 2010 as our enhanced R&D efforts have created much higher value-added products, which are generating robust sales. Our solid financial performance also comes from the economies-of-scale contributed by our increases in production capacity. We will continue to target the high-end markets and industries ideal for our nano-technology applications."
Mr. Chen further commented, "We believe that with our increased production capacity and on-going acquisition of limestone mining rights, along with our strong R&D support, we are well-positioned to achieve high gross margins. We remain confident in the industry's growth prospects and we are well positioned to sustain our demonstrated leadership and record of success in this sector."
Second Quarter 2010 Financial Results From Continuing Operations
Net revenues from continuing operations in the second quarter of 2010
increased by 27.7% to
For the three months ended
For the three months ended
Gross profit increased 19.7% to
Selling, general and administrative (SG&A) expenses amounted to
Operating income increased by
Interest expense, related primarily to our convertible notes, was
Income tax expense rose to
Net income from continuing operations in the second quarter of 2010
increased to
Fully diluted weighted-average shares outstanding were 54,207,569 in the second quarter of 2010, down from 66,954,996 in the same quarter last year, primarily due to the fact that the number of potential common shares associated with the Company's convertible debt were anti-dilutive during the second quarter of 2010 and therefore were excluded from the diluted earnings per share computation.
EBITDA was
Six-Month Results From Continuing Operations
Total revenue for the first six months of 2010 increased by 35.9%
year-over-year to
Financial Condition
As of
Net cash flow provided by operating activities increased to
Mr.
Recent Developments
The Company has established relationships with more than ten prospective
asphalt customers, and recently received favorable test feedback from these
asphalt producers indicating that its NPCC product for the large modified-
asphalt market in
On
On
Business Outlook
ShengdaTech completed repairs and maintenance, as well as equipment and
technological upgrades, at its recently acquired NPCC facility in Chaodong,
The total planned annual NPCC production capacity for 2010 is expected to
reach approximately 300,000 metric tons by year end with the addition of new
lines totaling 40,000 metric tons in Zibo and the 10,000 metric tons
production facility in
The Company maintains its 2010 guidance for revenue and net income from
continuing operations to be in the range of
Conference Call
The Company will host a conference call, to be simultaneously web cast, on
A replay will be available shortly after the conclusion of the conference
call until
About ShengdaTech, Inc.
ShengdaTech is engaged in the business of manufacturing, marketing, and
selling NPCC products. The Company converts limestone into NPCC using its
proprietary and patent-protected technology. NPCC products are increasingly
used in tires, paper, paints, building materials, and other chemical products.
In addition to its broad customer base in
Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release made by ShengdaTech constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the tire industry, changes in composition of tires, the Company's ability to meet the planned expansion schedule for its NPCC capacity, the Company's ability to identify acquisition targets, changes to government regulations, risk associated with operation of the Company's new manufacturing facility, ability to attract new customers, ability to increase its product's applications, ability of its customers to sell products, cost of raw material, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. You are urged to consider these factors care in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
About Non-GAAP Disclosure
The Company has included in this press release certain non-GAAP financial measures. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the performance of the Company and when planning and forecasting future periods. Readers are cautioned not to view non-GAAP financial measures on a stand-alone basis or as a substitute for GAAP measures, or as being comparable to results reported or forecasted by other companies, and should refer to the reconciliation of GAAP measures with non-GAAP measures also included herein.
For more information, please contact: Andrew Chen Chief Financial Officer ShengdaTech, Inc. Phone: +86-21-5835-8738 Email: Andrew.chen@shengdatech.com Kevin Theiss Investor Relations Grayling Phone: +1-646-284-9409 Email: kevin.theiss@grayling.com - Tables Follow - SHENGDATECH, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2010 2009 ASSETS Current assets: Cash $110,631,199 $115,978,763 Accounts receivable 6,027,253 4,600,722 Inventories 2,128,634 2,018,283 Prepaid expenses and other receivables 2,777,109 3,947,086 Income tax refund receivable 1,455,906 1,455,906 Debt issuance costs 1,117,162 -- Current assets of discontinued operations 805,351 801,983 Assets held for sale 1,725,693 1,718,475 Total current assets 126,668,307 130,521,218 Property, plant and equipment, net 124,784,177 123,099,860 Land use rights 31,587,224 15,432,743 Intangible assets 247,822 280,329 Debt issuance costs -- 1,720,209 Deposit for mining rights 105,749 Total assets $283,393,279 $271,054,359 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $3,781,929 $3,998,532 Accrued expenses and other payables 4,604,115 4,737,356 Long-term convertible notes, current portion 82,651,856 -- Payable for acquisition -- 3,803,060 Income taxes payable 2,049,552 60,573 Due to related parties 715,118 1,572,427 Current liabilities of discontinued operations 42,339 42,068 Total current liabilities 93,844,909 14,214,016 Long-term convertible notes -- 79,298,539 Non-current income taxes payable 1,911,791 1,598,237 Note payable to related party -- 601,631 Deferred income tax liabilities 2,072,621 4,443,810 Non-current liabilities of discontinued operations 295,945 294,708 Total liabilities 98,125,266 100,450,941 Shareholders' equity: Preferred Stock, par value: $0.00001, authorized: 10,000,000, outstanding, nil -- -- Common Stock, par value: $0.00001, authorized: 100,000,000 issued and outstanding: 54,202,036 542 542 Additional paid-in capital 37,132,442 37,132,442 Statutory reserves 8,455,328 8,455,328 Retained earnings 124,857,064 111,197,045 Accumulated other comprehensive income 14,822,637 13,818,061 Total shareholders' equity 185,268,013 170,603,418 Commitments and contingencies Total liabilities and shareholders' equity $283,393,279 $271,054,359 SHENGDATECH, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the Three Months For the Six Months Ended June 30, Ended June 30, 2010 2009 2010 2009 As restated Net sales $33,237,656 $26,018,533 $63,464,370 $46,690,886 Cost of goods sold 19,605,230 14,632,413 37,134,149 26,817,640 Gross profit 13,632,426 11,386,120 26,330,221 19,873,246 Operating expenses: Selling 616,325 531,028 1,136,378 847,836 General and administrative 1,558,390 1,388,545 3,023,083 2,646,522 Total operating expenses 2,174,715 1,919,573 4,159,461 3,494,358 Operating income 11,457,711 9,466,547 22,170,760 16,378,888 Other income (expense): Interest income 76,680 346,101 171,157 527,230 Interest expense (3,399,506) (2,355,005) (6,665,422) (4,803,912) Gain on extinguishment of long-term convertible notes -- -- -- 1,624,844 Other expense, net (10,741) (57,570) (13,818) (59,827) Other expense, net (3,333,567) (2,066,474) (6,508,083) (2,711,665) Income from continuing operations before income taxes 8,124,144 7,400,073 15,662,677 13,667,223 Income tax expense 1,044,217 769,192 1,880,489 1,682,540 Income from continuing operations 7,079,927 6,630,881 13,782,188 11,984,683 Discontinued operations Loss from discontinued operations before income taxes (65,174) (95,716) (122,169) (173,878) Income tax expense -- -- -- -- Loss from discontinued operations (65,174) (95,716) (122,169) (173,878) Net income $7,014,753 $6,535,165 $13,660,019 11,810,805 Basic earnings per share: Income from continuing operations $0.13 $0.12 $0.25 $0.22 Loss from discontinued operations $(0.00) $(0.00) $(0.00) $(0.00) Net income per share $0.13 $0.12 $0.25 $0.22 Diluted earnings per share: Income from continuing operations $0.13 $0.12 $0.25 $0.21 Loss from discontinued operations $(0.00) $(0.00) $(0.00) $(0.00) Net income per share $0.13 $0.12 $0.25 $0.21 Weighted-average shares outstanding: Basic 54,202,036 54,202,036 54,202,036 54,202,036 Diluted 54,207,569 66,954,996 54,207,601 67,082,801 SHENGDATECH, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30, 2010 2009 As restated Cash flows from operating activities: Net income $13,660,019 $11,810,805 Loss from discontinued operations (122,169) (173,878) Income from continuing operations 13,782,188 11,984,683 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,035,508 1,998,984 Land use rights expense 187,550 158,275 Amortization of debt issuance costs 603,046 614,708 Amortization of debt discount 3,353,317 2,637,671 Gain on extinguishment of long-term convertible notes -- (1,624,844) Deferred income tax (2,371,579) (807,280) Share-based compensation expense -- 12,790 Changes in operating assets and liabilities: Accounts receivable (1,401,821) 542,047 Inventories (101,484) 705,130 Prepaid expenses and other receivables 1,185,488 314,387 Accounts payable 124,841 160,678 Accrued expenses and other payables (150,373) (741,509) Income taxes payable/refund receivable 2,287,544 (817,448) Due to related parties (99,023) (83,743) Net cash provided by operating activities 20,435,202 15,054,529 Cash flows from investing activities: Cash paid for acquisition of Chaodong (3,808,240) -- Purchase of property, plant and equipment, including interest capitalized (5,916,498) (15,763,947) Purchase of land use rights and mining rights (16,291,823) -- Net cash used in investing activities (26,016,561) (15,763,947) Cash flows from financing activities: Payment to extinguish long-term Convertible notes -- (2,535,745) Net cash used in financing activities -- (2,535,745) Cash flows from discontinued operations: Net cash used in operating activities (122,075) (105,334) Net cash used in investing activities -- -- Net cash used in financing activities -- -- Effects of exchange rate changes on cash in discontinued operations 399 29,929 Net cash used in discontinued operations (121,676) (75,405) Effect of exchange rate changes on cash 355,471 31,496 Net decrease in cash (5,347,564) (3,289,072) Cash at beginning of period 115,978,763 114,287,073 Cash at end of period $110,631,199 $110,998,001 Non-cash investing activities: Accounts payable for purchase of property, plant and equipment -- $1,386,232 Due to related parties for purchases of property, plant and equipment -- $139,084 Supplemental disclosures of cash flow information: Cash paid for income taxes $1,964,523 $3,608,212 Cash paid for interest, net of capitalized interest $2,700,810 $1,487,673 SHENGDATECH, INC. AND SUBSIDIARIES Reconciliation of Net Income to EBITDA (Amounts expressed in US$) Three Months Ended Six Months Ended June 30, June 30, 2010 2009 2010 2009 Net Income from Continuing Operations $7,079,927 $6,630,881 $13,782,188 $11,984,683 Income Tax 1,044,217 769,192 1,880,489 1,682,540 Interest Expenses, net 3,322,826 2,008,904 6,494,265 4,276,682 Depreciation and Amortization 1,615,000 1,080,439 3,223,058 2,157,259 EBITDA 13,061,970 10,489,416 25,380,000 20,101,164 YoY Growth 24.5% 26.3% Note: EBITDA is a financial measure that is not defined by US GAAP. EBITDA was derived by calculating earnings before interest, taxes, depreciation, and amortization. The Company's management believes that the presentation of EBITDA provides useful information regarding ShengdaTech's results of operations because it assists in analyzing and benchmarking the performance and value of ShengdaTech's business. The Company's calculation of EBITDA may not be consistent with similarly titled measures of other companies. The table above provides a reconciliation of EBITDA to net income, the most comparable GAAP measure.
SOURCE ShengdaTech, Inc.