- 2nd Quarter revenue reaches a record $77.6 million DEERFIELD
BEACH, Fla., Aug. 7 /PRNewswire-FirstCall/ -- China Direct, Inc.
(NASDAQ:CDS), a U.S. company that owns controlling stakes in a
diversified portfolio of Chinese entities and assists Chinese
businesses in accessing the U.S. capital markets, announced today
the Company's financial results for the second quarter of 2008.
Financial Highlights Revenues for the second quarter ended June 30,
2008 increased to $77.6 million as compared to revenues of $40.5
million in the second quarter ended June 30, 2007. The increase in
revenues was mainly attributable to increased sales from our
magnesium segment as a result of acquisitions and our investment in
additional production facilities. Gross profit for the second
quarter of 2008 was $13.5 million as compared to $3.7 million in
the second quarter ended June 30, 2007. Gross profit increased by
over 30% sequentially from $10.5 million in the first quarter of
2008. Total operating expenses for the second quarter of 2008
increased to $2.6 million as compared to $847,417 in the second
quarter of 2007. The increase in operating expenses reflects the
costs associated with our expanded operations both in the U.S. and
China associated with the financial management and integration of
our expanding operations. On a sequential basis, operating
expenses, excluding non-cash items, were up fractionally over the
first quarter of 2008. The Company also experienced increases in
travel expenses, professional consulting fees, professional
insurance premiums, as well as non-cash option charges for
employees, management, and professional advisors. Operating income
was $10.9 and $2.9 million for the second quarter of 2008 and 2007,
respectively, yielding operating margins of 14.0% and 7.0% over the
relevant periods. The increase in operating margins was largely a
result of a shift in the company's business mix in its magnesium
operations towards higher margin production sales as compared to
primarily distribution sales in the second quarter of 2007. Results
were also strengthened by a strong performance from the consulting
segment in the second quarter of 2008. Net income for the second
quarter of 2008 was $7.5 million as compared to $2.3 million in the
second quarter of 2007. Non-GAAP earnings per basic share were
$0.34, excluding non-cash items, as compared to $0.18 per basic
share in the second quarter of 2007. On a GAAP basis, earnings per
basic share were $0.29, as compared to $0.16 in the second quarter
of 2007. On a diluted basis, excluding non-cash items, non-GAAP
earnings per share for the second quarter of 2008 were $0.26 per
share as compared to $0.15 in the second quarter of 2007. For the
first six months of 2008 earnings per basic share on a non-GAAP
basis were $0.59, excluding certain non-cash items, as compared to
$0.33 per basic share for the same period in 2007. On a GAAP basis,
earnings per basic share were $0.27, as compared to or $0.31 per
basic share in the first six months of 2007. On a diluted basis,
non-GAAP earnings per share for the first six months of 2008 were
$0.54 per share as compared to $0.29 per share for the same period
in 2007. Non-cash items excluded in all non-GAAP amount are set
forth in the reconciliation of GAAP to non-GAAP net income set
forth below. This record performance for the first six months of
2008 was driven by a strong first half performance in our magnesium
and consulting segments. Magnesium, the largest driver of earnings
for the first six months of 2008, reached $6.7 million, a 488%
increase from earnings of $1.2 million recorded in the first six
months of 2007. In the second quarter of 2008 our consulting
segment added its most substantial client to date with the addition
of China Armco Metals, Inc., a metals distributor in China which
plans on launching a scrap steel recycling operation in 2009.
Balance Sheet At June 30, 2008, total assets were $123.7 million,
an increase of 40.1% from the $88.3 million at December 31, 2007.
At June 30, 2008, shareholder equity reached $70.0 million, an
increase of 63.6% from the $42.8 million at December 31, 2007. At
June 30, 2008, cash and cash equivalents were $26.4 million and
working capital was $70.1 million as compared to cash and cash
equivalents of $20.4 million and working capital of $40.9 million
at December 31, 2007, respectively. 2008 Financial Guidance The
Company sees continued robust growth in both revenue and earnings
for 2008 and will discuss its outlook for the remainder of 2008
during its conference call today, August 7, 2008 at 4:30 PM EDT.
Commenting on the quarter, Mr. Siegel, President of China Direct,
Inc. stated, "We are pleased with the strong growth of our
operations in the first half of 2008. The record expansion in
revenue in the second quarter and record profit continues to
demonstrate the power of our business strategy. We are excited to
have added China Armco Metals as a consulting client and anticipate
we will continue to upgrade the clients in our consulting division
as we market to larger organizations in China. We continue to
expand our magnesium segment and anticipate strong top and bottom
line growth in this segment for the foreseeable future. We begin
the second half of 2008 with high expectations for our basic
materials and clean technology segments as projects are expected to
come on-line before year's end. We remain excited by the
opportunities we are seeing in China and are moving closer to
executing on potential acquisitions for the benefit of our
shareholders in 2008 and beyond." China Direct Conference Call to
discuss the Company's financial results for the second quarter of
2008 as well as to discuss its business outlook for the remainder
of 2008. The conference call will take place at 4:30 p.m. EDT on
Thursday, August 7th, 2008. Anyone interested in participating
should call 1-866 394- 7735 if calling within the United States or
1-706-758-1915 if calling internationally approximately 5 to 10
minutes prior to 4:30 p.m. Participants should ask for the China
Direct 2008 First Quarter Financial Results conference call/
Conference ID 57044477. There will be a playback available until
August 21st, 2008. To listen to the playback, please call
1-800-642-1687 if calling within the United States or
1-706-645-9291 if calling internationally. Please use the pass code
57044477 for replay. This call is being webcast by ViaVid
Broadcasting and can be accessed at China Direct's website at
http://www.chinadirectinc.com/ . The webcast may also be accessed
at ViaVid's website at http://www.viavid.net/ or directly at
http://viavid.net/dce.aspx?sid=00005489 . The webcast can be
accessed through August 21, 2008 on either site. 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
About China Direct, Inc. China Direct, Inc. (NASDAQ:CDS) is a
diversified management and advisory services organization
headquartered in the U.S. Our management services division acquires
a controlling interest in entities operating in China. Our
ownership control enables China Direct to provide management
advice, as well as financing to Chinese entities. This
infrastructure creates a platform to expand business opportunities
globally while accessing the U.S. capital markets. Our advisory
services division provides comprehensive advisory and consulting
services to Chinese entities seeking to access the U.S. capital
markets. As a direct link to China, China Direct serves as a
vehicle allowing investors to directly participate in the rapid
growth of the Chinese economy in a diversified and balanced manner.
For more information about China Direct, please visit
http://www.chinadirectinc.com/ . Q2 FY 2008 GAAP Reconciliation
RECONCILIATION OF GAAP to NON-GAAP NET INCOME The following table
reconciles the calculation of net income (loss) per share on a
basic and fully diluted basis from the amounts reported in
accordance with generally accepted accounting principles ("GAAP")
to such amounts before giving effect to the non-cash deemed
dividend deduction related to the Series A Convertible Preferred
Stock and associated warrants (the "Preferred Stock and Warrants"),
the non-cash compensation and depreciation. This disclosure is
being provided as we believe it is meaningful to our investors and
other interested parties to understand our operating performance on
a consistent basis without regard to the anti-dilutive effects of
the timing of the non-cash deemed dividend deduction related to the
Preferred Stock and Warrants, non-cash compensation and
depreciation. The presentation of the non-GAAP information titled
"Net income per share as adjusted" or "Net income per diluted share
as adjusted" is not meant to be considered in isolation or as a
substitute for net income or diluted income per share prepared in
accordance with GAAP. Q2 FY 2008 GAAP Reconciliation RECONCILIATION
OF GAAP to NON-GAAP NET INCOME Three Months Six Months Ended June
30, Ended June 30, 2008 2007 2008 2007 GAAP net income $7,514,875
$2,267,742 $12,267,751 $4,138,611 1. Employee share-based
compensation expense 641,091 112,762 848,364 196,010 2. Fair value
of warrants granted for services 57,344 - 103,708 - 3. Depreciation
494,967 65,989 921,287 122,810 Non-GAAP net income $8,708,277
$2,446,493 $14,141,110 $4,457,431 GAAP Earnings applicable to
common stockholders $6,466,938 $2,267,742 $5,860,892 $4,138,611
GAAP Basic EPS 0.29 0.16 0.27 0.31 GAAP Diluted EPS 0.26 0.15 0.24
0.27 Non-GAAP net income reconciliation total (1)+(2)+(3) 1,193,402
178,751 1,873,359 318,820 Non-cash deducted related to Preferred
Stock issuance: Relative Fair Value of warrants - - 2,765,946 -
Beneficial Conversion Feature - - 2,451,446 - NON-GAAP Earnings
applicable to common stockholders 7,660,340 2,446,493 12,951,643
4,457,431 NON-GAAP Basic EPS 0.34 0.18 0.59 0.33 NON-GAAP Diluted
EPS $0.30 $0.16 $0.54 $0.29 Shares used in basic net income
per-share calculation - GAAP 22,663,337 13,882,955 21,833,388
13,464,666 Shares used in basic net income per-share calculation -
Non-GAAP 22,663,337 13,882,955 21,833,388 13,464,666 Shares used in
diluted net income per-share calculation - GAAP 25,427,385
15,380,420 24,160,683 15,174,110 Shares used in diluted net income
per-share calculation - Non-GAAP 25,427,385 15,380,420 24,160,683
15,174,110 CHINA DIRECT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS June 30, December 31, 2008 2007 ASSETS Unaudited Current
Assets: Cash and cash equivalents $26,424,935 $20,394,931
Investment in marketable securities available for sale 4,732,593
7,820,500 Investment in marketable securities available for
sale-related party 766,019 1,315,488 Accounts receivable, net of
allowance for doubtful accounts of $335,851 and $290,456 at June
30, 2008 and December 31, 2007, respectively 24,415,061 10,655,661
Accounts receivable-related parties 556,687 2,283,600 Inventories
12,286,538 5,293,986 Prepaid expenses and other current assets
21,564,895 15,439,462 Prepaid expenses-related parties 4,821,163
4,150,943 Loans receivable-related parties 1,597,305 - Due from
related parties 14,552 1,287,877 Total current assets 97,179,748
68,642,448 Restricted cash 2,874 646,970 Property, plant and
equipment, net of accumulated depreciation of $1,499,088 and
$577,801 at June 30, 2008 and December 31, 2007, respectively
25,650,264 18,010,524 Prepaid expenses and other assets 234,683
433,075 Property use rights, net 582,733 553,304 Total assets
$123,650,302 $88,286,321 LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities: Loans payable-short term $1,229,663 $1,978,142
Accounts payable and accrued expenses 11,584,094 9,649,797 Accounts
payable-related parties 735,184 964,114 Notes payable-related party
- 410,167 Accrued dividends payable 20,015 - Advances from
customers 5,785,605 6,963,061 Other payables 6,229,216 4,097,716
Income taxes payable 943,779 560,116 Due to related parties 576,890
3,137,233 Total current liabilities 27,104,446 27,760,346 Loans
payable-long term 210,280 166,573 Minority interest 26,351,743
17,535,909 Stockholders' Equity: Preferred Stock: $.0001 par value,
stated value $1,000 per share; 10,000,000 authorized, 1,006 shares
and 0 shares issued and outstanding at June 30, 2008 and December
31, 2007, respectively 1,006,250 - Common Stock: $.0001 par value,
1,000,000,000 authorized, 23,501,056 and 20,982,010 issued and
outstanding at June 30, 2008 and December 31, 2007, respectively
2,350 2,098 Additional paid-in capital 50,654,559 30,257,644
Deferred compensation (33,000) (55,000) Accumulated comprehensive
income 36,076 162,045 Retained earnings 18,317,598 12,456,706 Total
stockholders' equity 69,983,833 42,823,493 Total liabilities and
stockholders' equity $123,650,302 $88,286,321 CHINA DIRECT, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months For the Six Months Ended June 30, Ended June
30, 2008 2007 2008 2007 Revenues $76,215,437 $40,012,970
$135,456,235 $70,511,910 Revenues-related parties 1,344,725 440,000
2,078,646 880,000 Total revenues 77,560,162 40,452,970 137,534,881
71,391,910 Cost of revenues 64,045,927 36,742,381 113,525,741
64,209,395 Gross profit 13,514,235 3,710,589 24,009,140 7,182,515
Operating expenses: Selling, general, and administrative 2,635,633
847,417 4,335,603 1,684,926 Operating income 10,878,602 2,863,172
19,673,537 5,497,589 Other income (expense): Other income 102,521
371,433 296,139 381,369 Interest income 129,470 41,855 220,172
71,021 Realized gain (loss) on sale of marketable securities 3,756
206,236 (35,705) 206,236 Realized loss on sale of marketable
securities-related party - (16,041) - (32,014) Total other income
235,747 603,483 480,606 626,612 Net income before income taxes
11,114,349 3,466,655 20,154,143 6,124,201 Income tax expense
(705,176) (522,159) (1,157,656) (754,731) Income before minority
interest 10,409,173 2,944,496 18,996,487 5,369,470 Minority
interest (2,894,298) (676,754) (6,728,736) (1,230,859) Net income
7,514,875 2,267,742 12,267,751 4,138,611 Deduct dividends on Series
A Preferred Stock: Cumulative preferred stock dividend (1,047,937)
- (1,189,467) - Relative fair value of detachable warrants issued -
- (2,765,946) - Preferred stock beneficial conversion feature - -
(2,451,446) - Income applicable to common stockholders $6,466,938
$2,267,742 $5,860,892 $4,138,611 Basic and diluted income per
common share after deduction in the first quarter of 2008, of
noncash deemed dividends attributable to Series A Preferred Stock
as described in Notes 3 & 11 of the Notes to consolidated the
Financial Statements: Basic $0.29 $0.16 $0.27 $0.31 Diluted $0.26
$0.15 $0.24 $0.27 Basic weighted average common shares outstanding
22,663,337 13,882,955 21,833,388 13,464,666 Diluted weighted
average common shares outstanding 25,427,385 15,380,420 24,160,683
15,174,110 Safe Harbor Statement In connection with the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
China Direct, 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: -- Our ability to identify and close acquisitions of
operating companies in China in a cost effective manner that
enhance our financial condition. -- Our need for additional
financing which we may not be able to obtain on acceptable terms,
the dilutive effect additional capital raising efforts in future
periods may have on our current shareholders and the increased
interest expense in future periods related to additional debt
financing. -- Our ability to effectively integrate our acquisitions
and to manage our growth and our inability to fully realize any
anticipated benefits of acquired business. -- The value of the
equity securities we accept as compensation is subject to
adjustment which could result in losses to us in future periods. --
The Investment Company Act of 1940 which limits the value of
securities we can accept as payment for our business consulting
services which may limit our future revenues. -- Our acquisition
efforts in future periods may be dilutive to our then current
shareholders. -- Our dependence on certain key personnel. -- The
lack various legal protections in certain agreements to which we
are a party and which are material to our operations which are
customarily contained in similar contracts prepared in the United
States. -- Our ability to assure that related party transactions
are fair to our company. -- Chang Magnesium's chief executive
officer is also chief executive officer of a group of companies
which directly compete with Chang Magnesium. -- The risks and
hazards inherent in the mining industry on the operations of our
basic materials segment. -- The effect of changes resulting from
the political and economic policies of the Chinese government on
our assets and operations located in the PRC. -- The influence of
the Chinese government over the manner in which our Chinese
subsidiaries must conduct our business activities. -- The impact on
future inflation in China on economic activity in China. -- The
impact of any recurrence of severe acute respiratory syndrome, or
SAR's, or another widespread public health problem. -- The
limitation on our ability to receive and use our revenues
effectively as a result of restrictions on currency exchange in
China. -- Our ability to enforce our rights due to policies
regarding the regulation of foreign investments in China. -- Our
ability to comply with the United States Foreign Corrupt Practices
Act which could subject us to penalties and other adverse
consequences. -- Our ability to establish adequate management,
legal and financial controls in the PRC. -- The provisions of our
articles of incorporation and bylaws which may delay or prevent a
takeover which may not be in the best interests of our
shareholders. 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, 2007. DATASOURCE: China Direct, Inc. CONTACT:
Richard Galterio, Executive Vice President, China Direct, Inc.,
1-877-China-57, ; Investor Relations, James Kautz, , or Todd
Atenhan, both of EPOCH Financial Group, Inc., +1-404-806-1393 Web
site: http://www.chinadirectinc.com/
Copyright
China Direct (MM) (NASDAQ:CDS)
Historical Stock Chart
From Jul 2024 to Jul 2024
China Direct (MM) (NASDAQ:CDS)
Historical Stock Chart
From Jul 2023 to Jul 2024