Armco Metals reports financial results for
the second quarter ended June 30, 2014, recording sequential increases across
most of the board as well as year-over-year increases in total sales.
Armco is a U.S.-based company that engages in
the import, sale, and distribution of metal ore and non-ferrous metals in the
People’s Republic of China, recycles scrap metals used by steel mills in the
production of recycled steel, and provides sourcing and pricing services for
various metals to its network of customers.
The company’s second-quarter total revenue
increased 19% to $32.9 million compared to $27.7 million recorded in the
comparable quarter of 2013. The company attributes the gain primarily to
increases in the sales of scrap metals and steel billet, partially offset by a
decline in sales of manganese ore, chrome ore and titanium.
Armco’s recycling business generated revenue
of $26.2 million, a considerable rebound from the segment’s first-quarter 2014
revenue of $2.6 million, and representing 80% of total revenue. Armco’s trading
business generated revenue of $6.7 million, accounting for 20% of total
revenue.
Gross profit for the second quarter of 2014
was $3.1 million as compared to gross profit of $2.4 million in the second
quarter of 2013. Gross margin in the second quarter of 2014 was 9.3% compared
to 8.5% in the second quarter of 2013. The significant increase in gross profit
and gross margin was largely due to a significant improvement in margins in our
trading business.
The company reported a first-quarter net loss
of $0.8 million, or a loss of $0.01 per basic and diluted share, compared to
earnings of $0.9 million, or $0.04 per basic and diluted share, in the same
period of 2013.
Commenting on the company’s second-quarter
performance, Armco chairman and Chief Executive Officer Kexuan Yao pointed to
the company’s strong business model.
“In the second quarter of 2014 we experienced
a strong rebound in sales from our metal recycling business,” he stated in the
news release. “We believe the implementation of our “platform strategy” sales
model in this business, where we work with our customers more closely, lower
our market risks by sharing them with our customers has helped us increase our
sales with less or without additional working capital. We are encouraged by our
return to generating income from both our market segments and will look to
build on this improvement from the first quarter in the second half of 2014.”
For the six-month period ended June 30, 2014,
revenues increased to $42.8 million compared to revenues for the same period of
2013 of $42.0 million.
Gross profit for the first six months of 2014
was $1.9 million compared to $3.0 million in the 2013 period, largely
attributable adverse market conditions in the scrap metal industry. In the first
six months of 2014, Armco’s recycling business contributed 67% and 52% of our
net revenue and gross profit, respectively.
First-half net loss was $4.4 million, or a
loss of $0.11 per share, compared to a net loss of $0.14 million, or a loss of
$0.01 per share, in the first half of 2013.
As of June 30, 2014, the company had $0.7
million in cash and cash equivalents, compared to $0.6 million at year-end of
2013.
Armco also noted that in order to satisfy
initial listing standards with the NYSE MKT, the company is evaluating a change
in the structure of its acquisition of Draco Resources, Inc. The company
continues to pursue a substantial interest in Draco and expects that a
restructured agreement with Draco will be formalized following management discussions.
For more information, visit
www.armcometals.com
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