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General Steel Reports Results for the First Quarter of 2010 First quarter total revenues increased 40.3% year-over-year to $453.0 million; Aggregate shipment volume increased 44.2% year-over-year to 1.03 million metric tons

BEIJING, May 10, 2010 /PRNewswire via COMTEX/ -- General Steel Holdings, Inc.

("General Steel" or "the Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel companies, today announced its financial results for the first quarter ended March 31, 2010.

Highlights from the First Quarter of 2010: -- Total revenues increased 40.3% to $453.0 million from $322.8 million in the first quarter of 2009 -- Aggregate shipment volume increased 44.2% to 1.03 million metric tons from 0.72 million metric tons in the first quarter of 2009 -- The Company's subsidiary General Steel (China) Co., Ltd. entered into a lease agreement with Tianjin Daqiuzhuang Steel Plates Co., Ltd. to reduce the Company's overhead costs while providing a recurring monthly revenue stream of approximately $0.2 million resulting from payments due there under -- The Company's subsidiary Maoming Hengda Steel Group, Ltd., entered into a strategic alliance agreement with Zhuhai Yueyufeng Iron and Steel Co., Ltd. ("Yueyufeng") whereby Yueyufeng will invest approximately $4.4 million to fund construction of a new 400,000 metric tons capacity rebar production line -- Cash and restricted cash remains strong at $317.7 million "We continue to achieve robust top-line growth and greater shipment volume driven by massive, multi-year infrastructure investment in rural China," said General Steel's Chairman and Chief Executive Officer Henry Yu. "It was a challenging quarter as the price for raw materials increased while average selling prices remained relatively flat from January to the middle of March. By the end of March, the market began to improve as average selling prices increased at a rapid rate and we were able to pass our costs onto our customers and achieve a positive gross margin. Going forward, we expect average selling prices to remain at healthier levels and anticipate that the release of the government's newly crafted steel industry consolidation guidelines in the coming months will bring about new growth opportunities." Selected Financial Results for the First Quarter of 2010 Revenues Total revenues in the first quarter of 2010 increased 40.3% to $453.0 million from $322.8 million in the first quarter of 2009.

The year-over-year increase in total revenues was due to a 40.1% increase in shipment volumes at the Company's Longmen Joint Venture ("Longmen JV"). Revenues at Longmen JV comprised approximately 95.9% of total revenues in the first quarter of 2010.

Cost of Revenues Total cost of revenues for the first quarter of 2010 increased 44.3% to $447.3 million from $309.9 million in the first quarter of 2009.

Cost of revenues principally consists of the cost of raw materials, labor, utilities, manufacturing costs, manufacturing-related depreciation and other fixed costs. Cost of iron ore and coke accounted for approximately 80.0% of the Company's total cost of revenues in the first quarter of 2010.

Gross Profit Gross profit for the first quarter of 2010 decreased 55.6% year-over-year to $5.7 million from $12.9 million in the first quarter of 2009. Gross margin for the first quarter of 2010 was 1.3%, compared to 4.0% in the first quarter of 2009 and 3.0% in the fourth quarter of 2009.

The Company noted that gross profit was adversely affected as the cost of iron ore and coke increased while average selling prices of rebar remained relatively flat from January to the middle of March 2010. In addition, General Steel noted that depreciation costs of its two new blast furnaces at its Longmen JV, which were capitalized in the first quarter of 2009, were not capitalized in the first quarter of 2010.

Operating Expenses Selling, general and administrative expenses for the first quarter of 2010 increased 32.4% to $12.1 million from $9.2 million in the first quarter of 2009.

Selling, general and administrative expenses were 2.7% of total revenues in the first quarter of 2010, compared to 2.8% of total revenues in the first quarter of 2009.

A large portion of the increase in selling, general and administrative expenses for the first quarter of 2010 was attributable to increased production volume at the Longmen JV.

Finance and interest expenses for the first quarter of 2010 increased 273.0% to $11.0 million from $2.9 million in the first quarter of 2009. The increase was primarily due to an increase in short-term loans and discounting notes borrowed by the Longmen JV.

Net Income Net loss for the first quarter of 2010 was $5.5 million compared to net income of $7.3 million in the first quarter of 2009. Basic and diluted losses per share for the first quarter of 2010 were $0.11, compared to basic and diluted earnings per share of $0.20 in the first quarter of 2009.

As noted above, increasing raw material costs and relatively stable average selling prices combined with other expenses were the primary reason for the decrease in net income during the first quarter of 2010.

Balance Sheet As of March 31, 2010, General Steel had cash and restricted cash of $317.7 million, compared to $274.2 million as of December 31, 2009. Accounts receivable was $26.9 million as of March 31, 2010, compared to $8.5 million as of December 31, 2009.

The Company had an inventory balance of $237.7 million as of March 31, 2010 compared to $208.1 million on December 31, 2009. This balance is comprised of raw material and finished products.

Conference Call General Steel management will hold an earnings conference call at 8:00 a.m. U.S.

Eastern Time on May 10, 2010 (8:00 p.m. Beijing/Hong Kong Time on May 10, 2010).

Management will discuss results and highlights from the quarter and answer questions. The dial-in number and passcode for the conference call are as follows: U.S. Toll Free: +1-800-860-2442 Passcode: General Steel Holdings The conference call will be broadcast live over the Internet and can be accessed by clicking the following link: http://www.visualwebcaster.com/event.asp?id=68668 Additionally, an archived Web cast of this call will be available on the Investor Relations section of the General Steel's website at http://www.gshi-steel.com .

About General Steel Holdings, Inc.

General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 6.3 million metric tons aggregate production capacity, its companies serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit http://www.gshi-steel.com .

Information Regarding Forward-Looking Statements This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company's Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings.

Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

For investor and media inquiries please contact: In China: Ms. Jing Ou-Yang General Steel Holdings, Inc.

Tel: +86-10-5879-7346 Email: jing.ouyang@gshi-steel.com Mr. Justin Knapp Ogilvy Financial, Beijing Tel: +86-10-8520-6556 Email: gsi@ogilvy.com In the United States: Ms. Jessica Barist Cohen Ogilvy Financial, New York Tel: +1-646-460-9989 Email: gsi@ogilvy.com GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2010 AND DECEMBER 31, 2009 (In thousands, except per share data) March 31, December 31, 2010 2009 A S S E T S (Unaudited) (Unaudited) CURRENT ASSETS: Cash $91,032 $82,118 Restricted cash 226,712 192,041 Notes receivable 24,423 29,185 Restricted notes receivable 24,225 -- Accounts receivable, net of allowance for doubtful accounts of $402 and $490 as of March 31, 2010 and December 31, 2009, respectively 22,174 8,525 Accounts receivable - related parties 4,751 -- Other receivables, net of allowance for doubtful accounts of $10 and $14 as of March 31, 2010 and December 31, 2009, respectively 5,571 5,357 Other receivables - related parties 28,716 32,670 Dividend receivable 3,426 2,372 Inventories 237,695 208,087 Advances on inventory purchases 34,930 29,099 Advances on inventory purchases - related parties 48,791 2,995 Prepaid value added tax 11,502 19,488 Deferred tax assets 5,722 3,341 Total current assets 769,670 615,278 PLANT AND EQUIPMENT, net 552,851 555,111 OTHER ASSETS: Advances on equipment purchases 12,621 8,419 Investment in unconsolidated subsidiaries 20,180 20,022 Long-term deferred expense 1,973 2,069 Intangible assets, net of accumulated amortization 23,565 23,733 Notes issuance cost 400 406 Equipment to be disposed 2,684 3,026 Total other assets 61,423 57,675 Total assets $1,383,944 $1,228,064 L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y CURRENT LIABILITIES: Short term notes payable 323,987 254,608 Accounts payable $159,389 $158,126 Accounts payable - related parties 52,300 48,151 Short term loans - bank 174,655 148,968 Short term loans - others 113,351 110,358 Short term loans - related parties 11,751 Other payables 15,808 16,222 Other payable - related parties 20,989 3,706 Customer deposits 220,623 208,765 Customer deposits - related parties 40,083 3,791 Deposits due to sales representatives 65,843 49,544 Taxes payable 5,676 6,921 Distribution payable to former shareholders 14,519 16,434 Total current liabilities 1,207,223 1,037,345 CONVERTIBLE NOTES PAYABLE, net of debt discount of $2,188 and $2,250 as of March 31, 2010 and December 31, 2009, respectively 1,112 1,050 DERIVATIVE LIABILITIES 19,401 23,340 Total liabilities 1,227,736 1,061,735 EQUITY: SHAREHOLDERS' EQUITY: Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares issued and outstanding 3 3 Common Stock, $0.001 par value, 200,000,000 shares authorized, 51,855,695 and 51,618,594 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively 52 52 Paid-in-capital 96,585 95,588 Statutory reserves 6,162 6,162 Retained earnings (21,919) (16,410) Accumulated other comprehensive income 8,037 8,336 Total shareholders' equity 88,920 93,731 Noncontrolling interest 67,288 72,598 Total equity 156,208 166,329 Total liabilities and equity $1,383,944 $1,228,064 GENERAL STEEL HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31 (In thousands except per share data) Three months ended March 31, 2010 2009 (Unaudited) (Unaudited) REVENUES $317,628 $262,414 REVENUES - RELATED PARTIES 135,395 60,379 TOTAL REVENUES 453,023 322,793 COST OF REVENUES 317,576 252,002 COST OF REVENUES - RELATED PARTIES 129,714 57,870 TOTAL COST OF REVENUES 447,290 309,872 GROSS PROFIT 5,733 12,921 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 12,141 9,168 (LOSS) INCOME FROM OPERATIONS (6,408) 3,753 OTHER INCOME(EXPENSE) Interest income 1,120 879 Finance/interest expense (10,963) (2,939) Change in fair value of derivative liabilities 3,939 4,115 Gain from debt extinguishment -- 2,930 Government grant 3,520 Income from equity investments 1,682 (55) Other non-operating (expense) income, net (4) 510 Total other (expense) income, net (4,226) 8,960 (LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES AND NONCONTROLLING INTEREST (10,634) 12,713 PROVISION FOR INCOME TAXES Current 621 164 Deferred (2,588) 1,222 Total (benefit) provision for income taxes (1,967) 1,386 NET (LOSS) INCOME BEFORE NONCONTROLLING INTEREST (8,667) 11,327 Less: Net (Loss) income attributable to noncontrolling interest (3,160) 3,993 NET (LOSS) INCOME ATTRIBUTABLE TO CONTROLLING INTEREST (5,507) 7,334 OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustments (299) (177) Comprehensive income (loss) attributable to noncontrolling interest 165 (75) COMPREHENSIVE (LOSS) INCOME $(5,641) $7,082 WEIGHTED AVERAGE NUMBER OF SHARES Basic & Diluted 51,652,843 36,285,312 Diluted 51,652,843 36,285,312 (LOSS) EARNINGS PER SHARE Basic & Diluted $(0.11) $0.20 Diluted $(0.11) $0.20 GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (In thousands, except per share data) Preferred stock Common stock Par Par Paid-in Shares value Shares value capital BALANCE, December 31, 2008 3,092,899 $3 36,128,833 $36 $37,129 Net income Adjustment to statutory reserve Common stock issued for compensation, $1.85 109,250 0.109 202 Common stock issued for interest payment, $3.66 152,240 0.152 558 Common stock transferred by CEO for compensation, $6.91 69 Foreign currency translation adjustments BALANCE, March 31, 2009, unaudited 3,092,899 3 36,390,323 36 37,958 Net loss attributable to controlling interest Net income attributable to noncontrolling interest Disposal of subsidiaries Distribution of dividend to noncontrolling shareholders Adjustment to statutory reserve Common stock issued for compensation 487,400 0.77 1,673 Common stock issued for interest payments 44,065 0.2 187 Common stock issued for repayment of debt, $6.00 300,000 0.3 1,800 Notes converted to common stock 7,045,274 7.05 32,072 Make whole shares issued on notes conversion 1,795,977 1.8 7,085 Common stock transferred by CEO for compensation, $6.91 207 Reduction of registered capital Common stock issued for private placement 5,555,556 5.56 14,607 Foreign currency translation adjustments BALANCE, December 31, 2009 3,092,899 3 51,618,595 52 95,589 Net loss attributable to controlling interest Net loss attributable to noncontrolling interest Distribution of dividend to noncontrolling shareholders Noncontrolling interest acquired Common stock issued for compensation 237,100 0.24 927 Common stock transferred by CEO for compensation, $6.91 69 Foreign currency translation adjustments BALANCE, March 31, 2010, unaudited 3,092,899 $3 51,855,695 $52 $96,585 GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (In thousands, except per share data) Retained earnings Accumu- (deficits) lated Contri- other bution compre- Noncon- Statutory Unre- receiv- hensive trolling reserves stricted able income interests Totals BALANCE, December 31, 2008 $4,902 $10,092 $(960) $8,705 $54,330 114,237 Net income 7,335 3,993 11,328 Adjustment to statutory reserve 260 (260) -- Common stock issued for compensation, $1.85 202 Common stock issued for interest payment, $3.66 558 Common stock transferred by CEO for compensation, $6.91 69 Foreign currency translation adjustments (177) (75) (252) BALANCE, March 31, 2009, unaudited 5,162 17,167 (960) 8,528 58,248 126,142 Net loss attributable to controlling interest (32,579) (32,579) Net income attributable to noncontrolling interest 17,570 17,570 Disposal of subsidiaries (293) (293) Distribution of dividend to noncontrolling shareholders (3,305) (3,305) Adjustment to statutory reserve 1,000 (1,000) -- Common stock issued for compensation 1,674 Common stock issued for interest payments 187 Common stock issued for repayment of debt, $6.00 1,800 Notes converted to common stock 32,079 Make whole shares issued on notes conversion 7,087 Common stock transferred by CEO for compensation, $6.91 207 Reduction of registered capital 960 960 Common stock issued for private placement 14,613 Foreign currency translation adjustments (192) 378 186 BALANCE, December 31, 2009 6,162 (16,412) -- 8,336 72,598 166,328 Net loss attributable to controlling interest (5,507) (5,507) Net loss attributable to noncontrolling interest (3,160) (3,160) Distribution of dividend to noncontrolling shareholders (1,045) (1,045) Noncontrolling interest acquired (1,270) (1,270) Common stock issued for compensation 927 Common stock transferred by CEO for compensation, $6.91 69 Foreign currency translation adjustments (299) 165 (134) BALANCE, March 31, 2010, unaudited $6,162 $(21,919) $-- $8,037 $67,288 $156,208 GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009, 2008 (In thousands except per share data) Three months ended March 31, 2010 2009 (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income attributable to controlling interest $(5,507) $7,334 Net income (loss) attributable to noncontrolling interest (3,160) 3,993 Consolidated net (loss) income (8,667) 11,327 Adjustments to reconcile net (loss) income to cash provided by operating activities: Depreciation and amortization 9,586 6,249 Debt extinguishment -- (2,930) Bad debt allowance (94) (3,518) Stock issued for services and compensation 996 271 Income from investment (1,682) -- Amortization of deferred note issuance cost and discount on convertible notes 68 21 Change in fair value of derivative instrument (3,939) (4,115) Deferred tax assets (2,484) 989 Changes in operating assets and liabilities: Accounts receivable (13,556) (11,764) Accounts receivable - related parties (4,750) -- Notes receivable 4,760 20,838 Other receivables 256 2,759 Other receivables - related parties (389) (1,736) Inventories (36,689) (48,394) Advances on inventory purchases (5,945) 10,249 Advances on inventory purchases - related parties (44,257) (7,552) Accounts payable 1,556 1,285 Accounts payable - related parties 8,699 21,861 Other payables (1,384) 7,230 Other payables - related parties 17,291 8,180 Accrued liabilities 1,614 3,883 Customer deposits 14,521 6,103 Customer deposits - related parties 36,280 (5,121) Taxes payable 9,978 190 Net cash (used in) provided by operating activities (18,231) 16,305 CASH FLOWS FROM INVESTING ACTIVITIES: Acquired long term investment -- (6,593) Dividend receivable (1,554) -- Deposits due to sales representatives 16,894 35,723 Advance on equipment purchases (4,664) 1,198 Cash proceeds from sale of equipment -- -- Equipments purchase (6,713) (41,415) Intangible assets purchase (103) (163) Payments to original shareholders (3,732) -- Net cash provided by (used in) investing activities 128 (11,250) CASH FLOWS FINANCING ACTIVITIES: Restricted cash (34,660) (43,802) Notes receivable - restricted (24,216) -- Borrowings on short term loans - bank 95,015 51,733 Payments on short term loans - bank (69,336) (33,548) Borrowings on short term loan - others 27,945 13,296 Payments on short term loans - others (24,954) (7,151) Payments on short term loans - others-related parties (11,747) -- Borrowings on short term notes payable 251,725 158,810 Payments on short term notes payable (182,369) (120,138) Net cash provided by financing activities 27,403 19,200 EFFECTS OF EXCHANGE RATE CHANGE IN CASH (386) (22) INCREASE (DECREASE) IN CASH 8,914 24,233 CASH, beginning of year 82,118 14,895 CASH, end of year $91,032 $39,128 SOURCE General Steel Holdings, Inc.

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