China GengSheng Minerals, Inc. a leading China-based high-tech industrial materials manufacturer producing heat resistant, energy efficient materials for a variety of industrial applications, today announced financial results for the third quarter ended September 30, 2010.
Third Quarter 2010 Financial Highlights:
Revenue increased 12.2% year-over-year and 11.6% quarter-over-quarter to approximately $16.7 million.
Fracture proppant sales were approximately $5.0 million, an increase of 91.4% year-over-year and 62.8% quarter-over-quarter.
Refractories sales were approximately $11.4 million, compared with approximately $12.2 million in the third quarter of 2009.
Newly introduced fine precision abrasive product sales were approximately $0.2 million.
Gross profit increased by 17.1% to approximately $4.9 million, or 29.5% of total sales, compared with approximately $4.2 million, or 28.3% of total sales in the same period a year ago.
Total operating expense increased to approximately $3.5 million, compared with approximately $2.6 million in the third quarter of 2009.
Net income was approximately $0.9 million, or $0.04 per share, compared with approximately $1.7 million in the third quarter of 2009.
Comprehensive income attributable to the Company's stockholders was approximately $1.7 million for the third quarters of 2010 and 2009.
Cash and cash equivalents of approximately $7.5 million, stockholders' equity of approximately $52.8 million and working capital of approximately $23.3 million, as of September 30, 2010.
Third Quarter 2010 and Recent Business Highlights:
Completed commercial launch of fine precision abrasives product line, and began shipping product under its first three supply contracts.
Joined the Federation for International Refractory Research and Education as the organization's first Chinese industrial partner.
Signed operating lease agreement for fracture proppant manufacturing facility, increasing annual capacity to 75,000 metric tons.
Awarded $2.1 million overseas fracture proppant contract with AMSAT International, an advanced ceramics technology company based in Orlando, Florida.
"Our strong sales for the period were led by our fracture proppant business with significant growth in demand driven by increased drilling activity," said Mr. Shunqing Zhang, China GengSheng's Chairman and Chief Executive Officer. "Additionally, the third quarter was notable for the launch and first commercial sales of our fine precision abrasives product line. In addition to the immediate contributions, the introduction of fine precision abrasives gives us access to the sizeable, fast-growing solar market and a number of large, high-profile potential customers.
Financial Results for the Three Months Ended September 30, 2010
For the third quarter of 2010, sales revenue was approximately $16.7 million, an increase of approximately 12.2%, compared with approximately $14.9 million in the third quarter of 2009, or 11.6%, compared with approximately $15.0 million in the second quarter of 2010. The increase was mainly attributable to increased export sales from the Company's fracture proppant segment.
Sales of the Company's core refractory products totaled approximately $11.4 million, or 68% of sales, a decrease of 6.6%, compared with approximately $12.2 million in the third quarter of 2009, and a slight increase over approximately $11.3 million in the second quarter of 2010. The year-over-year decline in refractories sales is mainly related to the slowdown of steel industry in China.
Sales of fracture proppant products totaled approximately $5.0 million, or 30.0% of sales, an increase of 91.4%, compared with approximately $2.6 million in the third quarter of 2009, and an increase of 62.8%, compared with approximately $3.1 million in the second quarter of 2010. The year-over-year and sequential quarter increases in fracture proppant sales are mainly due to increased export sales.
Sales of industrial ceramics products totaled approximately $144,000, or 0.9% of sales, an increase of 31.4%, compared with approximately $109,000 in the third quarter of 2009, and approximately $0.6 million in the second quarter of 2010.
Sales of the Company's fine precision abrasives products, which launched commercially in the third quarter of 2010, totaled approximately $0.2 million, or 1.1% of total sales for the three months ended September 30, 2010.
Cost of goods sold totaled $11.8 million, an increase of 10.3%, compared with $10.7 million for the same period a year ago. The increase in cost of goods sold resulted from an increase in the total revenue of our products.
Gross profit for the three months ended September 30, 2010, was approximately $4.9 million, or 29.5% of revenue, compared with gross profit of approximately $4.2 million, or 28.3% of revenue, in the third quarter of 2009. The increases in gross profit and gross margin for the quarter were mainly driven by increased product sales, a shift in revenue mix within the Company's refractories business toward higher-end products and an increase in export sales of fracture proppants, which carry higher gross margins.
For the three months ended September 30, 2010, total operating expenses were approximately $3.5 million, compared with approximately $2.6 million in the year-ago period.
Financial Results
for the Nine Months Ended September 30, 2010
For the nine months ended September 30, 2010, sales revenue was approximately $43.6 million, compared with approximately $41.7 million for the nine months ended September 30, 2009.
Sales of the Company's core refractory products totaled approximately $33.1 million, or 75.9% of sales, compared with approximately $34.3 million, or 82.2% of sales, for the first nine months of 2009.
Sales of fracture proppant products totaled approximately $9.3 million, or 21.5% of sales, compared with approximately $6.6 million, or 15.8% of sales, for the nine months ended September 30, 2009.
Sales of industrial ceramics products totaled approximately $1.0 million, or 2.2% of sales, compared with approximately $0.8 million for the comparable year-ago period.
Sales of fine precision abrasives products totaled approximately 184,000, or 0.4% of sales.
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