China Armco Metals (NYSE AMEX:CNAM)

SAN MATEO, Calif., Jan. 5, 2012 /PRNewswire/ -- China Armco Metals, Inc. (AMEX: CNAM) ("China Armco" or the "Company"), a distributor of imported metal ore and metal recycler with a new state of the art scrap metal recycling facility in China, today provided an update on its trading business.

By December 31, 2011, China Armco had secured and shipped three orders to deliver chrome ore to trading firms serving iron and steel producers in China. The orders included a combined volume of 24,000 tons with an aggregate value of approximately $3.89 million. 2 additional shipments of a combined volume of 8,000 tons with an aggregate value of approximately $1.72 million are to be delivered by the end of the first quarter of 2012.

Commenting on the company's performance, Mr. Kexuan Yao, Chairman and CEO of China Armco stated "While China's economy is experiencing many challenges in a variety of sectors, we are working hard to adjust our operations and to reallocate our resources in response to this changing environment. As a result of our management team's efforts, we are pleased to be seeing a steady progress in our trading business. With iron ore price stabilizing to a certain degree in the fourth quarter of 2011, we are cautiously optimistic about the strengthening of our businesses as China's economic conditions improve and its monetary policies are relaxed. Capitalizing on our more than 10 years of experience, our growing brand name excellence in the industry and strong relationships with over 150 customers in China, we remain well positioned to benefit from the long-term growth associated with the Chinese steel industry."

Second Quarter 2011 Results

• For the quarter ended June 30, 2011, net revenue advanced 82% to $31.0 million, led by a 251% increase in metal recycling sales to $22.1 million.
• Net loss for the second quarter of 2011 was $1.3 million, or $0.08 per diluted share, compared to a $0.2 million loss, or $0.02 per share, in the same period last year.

Business Updates

The scrap metal recycling business resumed normal operations in January 2011 after the provincial government eliminated power restrictions that were in effect from September to the end of December of 2010. In addition, sales increased substantially from the first six months of 2010 to approximately 62,000 MT in the first six months of 2011. The Company ended the quarter with 10,000 MTs of recycled scrap steel yet to be delivered. Management continues to believe that the secular shift to more environmentally friendly energy production materials and methods will drive the underlying demand for recycled steel.

In June 2011, the Company signed an operating agreement with Lianyungang Hebang Renewable Resources Co., Ltd., an unrelated third party, to lease storage and production capacity at Hebang's facilities located in Guanyun City, Jiangsu province. The agreement allows China Armco to secure and store raw materials at a reasonable cost while reducing the cost of transportation. Guanyun City is located approximately 60 miles (direction) from the Company's metal recycling facilities in Lianyungang.

SAN MATEO, Calif., June 7, 2011 (GLOBE NEWSWIRE) -- China Armco Metals, Inc. (NYSE Amex:CNAM) ("China Armco" or "the Company"), a distributor of imported metal ore and metal recycler with a new state of the art scrap metal recycling facility in China, today announced the preliminary unaudited operating results for the first two months of the second quarter of 2011.

In April and May of this year, China Armco sold 25,000 metric tons (MT) of recycled steel products to 3 customers. The Company has recognized approximately $14 million of net sales in its recycled steel business through the first two months of the second quarter. Approximately 80% of the tonnage sold in April and May were completed using pre-selling contracts.

In addition, the Company recorded $7.1 million of revenue in its metal ore trading business. Client activity remained solid, as reflected in the 41,000 MT of metal ores sold during the first two months of the second quarter.

"Our recycling business picked up from a seasonally slow first quarter," said Mr. Kexuan Yao, CEO and Chairman of China Armco. "We are seeing continued interest from customers to increase the amount of recycled metals purchased. So far this year, we have signed 2 new recycling customers who agreed to our pre-selling strategy. As we increase production and make further improvements in our operational efficiencies, we expect measured improvements in our profitability."

First Quarter Results:

• For the quarter ended March 31, 2011, compared to same period of 2010, net revenue rose 479% to $49.7 million due to strong trading revenues.

Mr. Kexuan Yao, Chairman and CEO of China Armco stated, "Our first quarter reflects the strength of a diversified business model and our ability to secure meaningful new customers which culminated into a return to profitability. We expect a ramp up in sales in both our metal trading and recycling businesses under a backdrop of robust steel production and demand across China. Developing strong relationships with strategic customers and suppliers such as Mineracao Usiminas S.A. ("MUSA"), will enable us to fully leverage our operating model to generate incremental revenue and profitability."

• Net income for the first quarter of 2011 was $0.6 million, or $0.04 per diluted share, compared to $0.1 million or $0.01 per share for the same period last year

Fourth Quarter Results:

• For the quarter ended December 31, 2010, net revenue decreased 29% to $24.5 million due to the Lianyungang provincial government imposing power restrictions starting in September 2010

"We made progress during 2010 despite unforeseen industry challenges," said Mr. Kexuan Yao, Chairman and CEO of China Armco. "We finished construction of our state-of-the-art metal recycling production facility and secured new iron ore trading customers. The relationships we are developing with key customers and suppliers worldwide provide a solid foundation in which to grow both of these businesses. As more steel mills in China increase their use of scrap metal to comply with the government's mandate to reduce harmful emissions, we are optimistic in capturing market share while ramping production volumes and associated operating profits."

• Net income for the fourth quarter of 2010 was a loss of $1.6 million, or $0.11 per diluted share, compared to $3.1 million or $0.31 per share for the same period last year.
• Diluted earnings per share was a $0.16 loss and $0.51 for the year ended December 31, 2010 and December 31, 2009, respectively.

Business Outlook

China Armco continues to make steady progress in both its metal trading and recycling businesses. In the fourth quarter of 2010, the Company secured and delivered two orders of iron ore with a combined volume of 42,000 metric tons and an aggregate value of $4.7 million. On March 17, 2011, the Company delivered its first shipment of 150,000 metric tons of iron value valued at $19.8 million from Mineracao Usinimas S.A. ("Usiminas"), one of the largest steel producers in Brazil. The strategic relationship with Usiminas provides China Armco with a significant potential growth conduit as it is the first company to help Usiminas to export its iron ore to China.

The metal recycling business resumed normal operations in January 2011 after the provincial government eliminated power restrictions that were in effect from September to December of 2010. In addition, it has added 6 new metal cutting machines since the beginning of 2011, bringing the total to 18. We expect these machines will allow the Company to reach its designed recycling capacity of one million metric tons per year.

Management began migrating its metal recycling customers to its pre-sold model starting in January 2011. Under this new sales strategy, customers pay China Armco approximately 100% of the total purchase price in advance by issuing a commercial bill from a related bank, thereby locking in a set volume and price. This allows the Company to use the proceeds to pay for raw materials, thereby reducing its working capital needs and providing enhanced visibility into future production volumes. 2 customers have transitioned to the pre-selling model so far, and the Company continues to actively solicit existing and new customers.

SAN MATEO, CA--(Marketwire - January 6, 2011) - January 6th - China Armco Metals, Inc. today announced it has received confirmation that local government imposed power restrictions for energy intensive industries and steel producers will be lifted in January 2011. With the announcement, the Company's scrap metal recycling business can return to full operations.

The central government imposed energy restrictions in at least 18 provinces beginning in September 2010 in an effort to meet the energy consumption and emissions targets set by the National 11th Five Year Plan (2006-2010), which significantly impacted output in the steel industry and the operations at China Armco. 

"We are pleased to receive news that the power rationing will be phased out," said Mr.Kexuan Yao, the Company's Chairman and Chief Executive Officer. "These restrictions temporarily affected our operations in the third and fourth quarters of 2010, and we are encouraged to be operating on a full time basis. We will now be able to rapidly accelerate our growth in this area of great potential."

China consumes over 500 million tons of steel annually and is the largest in the world. 100 million tons of scrap steel are utilized in this production per year and currently Chinese producers only meet 60% of this demand annually. The Company's recycling operations, which can process up to one million tons of metal scrap per year, is expected to contribute substantially to the company's revenues.

SAN MATEO, CA--(Marketwire - December 21, 2010) -  China Armco Metals, Inc. today announced it expects the Company to produce and sell approximately 25,500 tons of recycled steel with an aggregate value of approximately $12 million in the fourth quarter of 2010.

China Armco's fourth quarter orders to sell 25,500 tons of recycled steel are from 5 customers. The central government recently announced that the power rationing for energy intensive industries and steel producers will be phased out and the Company is optimistic about being able to be operating on a full time basis in the near term.

"We are encouraged by recent actions by the central government to relax the power restrictions," remarked Mr.Kexuan Yao, the Company's Chairman and Chief Executive Officer. "Recycled steel produced through our state-of-the-art production facility, which uses less electricity and emits less air pollution than steel produced through traditional iron ore processing, is poised to benefit from the central government's new policies. We are working diligently to secure additional scrap metal in order to service the pent up demand for recycled steel in China." 

Through November 30, 2010, China Armco has secured and shipped three orders to deliver iron ore to trading firms serving iron and steel producers in China. The orders include a combined volume of 112,000 tons with an aggregate value of approximately $17.1 million. "We are seeing a steady progress in our trading business," said Mr. Kexuan Yao, Chairman and CEO of China Armco.

"With iron prices stabilizing in recent months, steady industrial production growth in China, and the ending of current power conservation plans enacted by the government for the steel industry, we are cautiously optimistic about the recovery. Our diverse and stable supply of metal ores and non-ferrous metals from 10 international suppliers, our more than 10 years of experience and strong relationships with over 150 customers in China position us well to capitalize on the long term secular growth of the Chinese steel industry."

China Armco Metals, Inc. today announced that the Jiangsu Provincial Government has recently initiated additional rolling blackouts for the Lianyungang enterprise zone where its wholly owned subsidiary, Armet Renewable Resourced Co., Ltd., operates its metal recycling facility. As referenced in our September 10, 2010 press release, the power restrictions were initiated by the province to meet annual central government industrial energy usage targets. The energy usage targets are part of China's Eleventh Five Year Plan (2006-2010) which ends on December 31, 2010. While the facility will still have access to power when the restrictions are in place, it is unclear at this time as to the number of hours per day and days per week when power will be available and whether the restrictions will be in place for the remainder of 2010. Similar power restrictions have been implemented by at least 18 other provinces in China affecting numerous industries.

The energy restrictions will significantly reduce our recycling capabilities in the fourth quarter and has also impacted our distribution business. As steel manufacturers throughout China are also experiencing similar restrictions, we are seeing reduced demand in the markets for a number of ores and companies delaying purchase decisions. Due to the uncertainties as to the extent and duration of the current power disruptions, management cannot estimate its financial performance for the remainder of 2010 and is therefore withdrawing its financial guidance for the full year of 2010. On January 1, 2011 China's Twelfth Five Year Plan (2011-2015) will become effective eliminating the need for the current restrictions.

Commenting on the announcement, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated, "While the government's decision to restrict power will further the negative impact on our 2010 performance and we do not have sufficient clarity to assess the full impact in 2010, we do know that it will certainly end before the beginning of 2011. We believe there will be sufficient demand in 2011 for our scrap metal to enable us to quickly recover following this interruption and we intend to rapidly ramp up our production utilization rates in the coming quarters."

China Armco Metals announced that the Jiangsu Provincial Government has scheduled rolling blackouts in September for the Lianyungang enterprise zone where its wholly owned subsidiary, Armet Renewable Resourced Co., Ltd., operates its metal recycling facility.  The power restrictions are being initiated by the province to meet annual central government industrial energy usage targets.

The energy restrictions will significantly reduce our recycling capabilities in the fourth quarter which is expected to impact its revenue in 2010 by as much as $40 million.  This has caused management to revise its financial guidance for the full year of 2010 which is now expected to exceed $140 million with net income exceeding $8 million.
 
Commenting on the announcement, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated "While the government’s decision to restrict power will negatively impact our performance over the course of this month, we believe our recycling operations will quickly recover following this interruption as we ramp up our production utilization rates.  With current steel prices remaining favorable to our operations, we see a strong outlook for the quarters ahead after this short term interruption is behind us.”

Revenues for the second quarter of 2010 were $17.0 million compared to the $22.5 million recorded in the second quarter of 2009.

• In the second quarter we experienced a significant decline in metal ore sales as purchasers curtailed orders in light of these policies.

"Management sees these pressures easing in the coming quarters and has already seen a marked pickup in activity from customers.  The decrease in revenue is largely due to a sharp decline in customer demand midway through the second quarter of 2010 resulting from the Chinese government measures to restrain the real estate industry from overheating." 

• Net loss of ($248,000) for the second quarter of 2010 compared to a net income of $3.1 million recorded for the second quarter of 2009. This resulted in a loss per diluted share of ($0.02) as compared to earnings per diluted share of $0.31 in the second quarter of 2009.

"As a result, net The soft demand in the second quarter of 2010 coupled with a declining price environment caused severe pressure on the Company's gross margins resulting in gross profit margins declining to 1.2% in the second quarter of 2010 as compared to 18.3% in the second quarter of 2009."

"Additionally, there was a heavy concentration of sales of lower margin iron ore in the second quarter of 2010 compared to a large high margin shipment of chromium contributing substantially to gross margins in the second quarter of 2009."

Financial Forecast for Full Year of 2010

While performance in the second quarter of 2010 suffered from a number of macroeconomic factors, we have made significant strides in the launch of our metal recycling facility. Installation of equipment along with government approvals was completed in the second quarter of 2010 with some minor delays during our testing phase. However, we were able to deliver approximately 10,500 metric tons of finished product to end customers in the second quarter. Production will accelerate substantially in the third quarter and we are seeing a strong pickup in ore trading activity as well. Based on our current production and delivery schedules in metal recycling, coupled with current quoting activity in our trading operations, we anticipate a very strong performance for the remainder of 2010. The longer than anticipated testing phase in our metal recycling operations and soft second quarter has caused management to revise its financial guidance for 2010. Management now expects revenues for the full year of 2010 to exceed $180 million, with net income exceeding $10 million. Management expects its metal recycling operations to become the largest contributor to revenues, progressively accelerating in the second half of 2010.

Commenting on China Armco Metals' financial performance, Kexuan Yao, its CEO and Chairman, stated, "While the second quarter was particularly challenging, we have launched our recycling operations and see production accelerating. We have significantly strengthened our balance sheet and secured significant additional borrowing capacity, giving us a great deal more financial flexibility to rapidly grow our business. We intend to make every effort to maintain a high rate of production for the remainder of 2010. As we head into our traditionally stronger quarters we believe we are poised for a period of significant earnings growth and we intend to deliver on our aggressive plan for the benefit of our shareholders."

Please note: On July 6, 2010, the GeoTeam® removed all Chinese stocks that were on GeoBargains and GeoSpecial lists to respective Radar lists as we complete our "quality assessment."

***Very Important GeoTeam note. We have yet to verify if the Chinese filings for ChinaHybrid stocks we monitor match respective SEC filings. We are in the process of completing this task. Although we are not totally convinced that SAIC filings are an accurate represenation of financial statements the issue is impacting stock prices. Conservative investors may want to limit exposure or buy put options on stocks, that have this availability, as insurance against long positions, until we publish our findings. Odds are we will identify some promising companies that will fail this litmus test.

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Commenting on China Armco Metals' financial performance, Kexuan Yao, its CEO and Chairman stated, "We are pleased with our performance in the first quarter. While it is traditionally our weakest quarter, we increased sales over 59% from the same period in 2009. We anticipate that as our recycling ramps up throughout the year and our distribution business builds on the favorable trends from the first quarter of 2010, we expect to see record performance for our company in the coming years. We are in the strongest financial position in our history and intend to put our capital to work to further fuel our growth."

As a result of a strong comparative performance in the first quarter of 2010 with continued strong demand in our distribution business coupled with the launch in the second quarter and anticipated ramp up in production at our newly operational scrap metal recycling facility, management is maintaining financial guidance with revenues for the full year of 2010 exceeding $220 million with net income exceeding $12.0 million. Management expects its metal recycling operations to become the largest contributor to revenues progressively accelerating in the second half of 2010.

Commenting on this financial performance for 2009, Kexuan Yao, China Armco's Chairman and CEO stated, "Our efforts to maintain business relationships and work with our customers in the uncertain period late in 2008 and 2009 coupled with our ability to secure necessary credit facilities, enabled us to thrive and expand as China recovered throughout 2009. Commodities sales and metal production continues to increase creating a very favorable environment for the future. We are excited to launch the operations of our scrap metal facility and believe we have laid the foundation for an extended period of expansion in both top and bottom line performance for the remainder of 2010 and beyond.

Source: Marketwire (March 31, 2010)

The Supply of Manganese Ore Has Potential of Generating Distribution Revenue of U.S. $180 Million Over Next 16 Months

Commenting on the contract, Mr. Kexuan Yao, CEO and Chairman of China Armco Metals, Inc., stated, "Securing this contract is a significant step forward for our company's metals distribution operation as we move through 2010. With the ability to sell this product into China under favorable terms we have significantly strengthened our overall supply capabilities. Upon successful delivery over the term of the contract, we are in a position to significantly boost our top and bottom line performance for the remainder of 2010 and well into 2011. We look forward to building on our relationships with this and other international suppliers in the coming months as we continue to see a strong environment for industrial metals in China."

Source: Marketwire (March 23, 2010)

Management is witnessing strong sales momentum in the fourth quarter, traditionally the strongest quarter of its distribution business, and now anticipates:

• Full year 2009 revenue ranging between $90 million and $95 million
• Net income ranging between $4.5 million and $ 5 million.
• Management also anticipates that its metal recycling operation will be completed and tested sometimes in December of 2009 and ramp production starting in the first quarter fueling substantial growth in 2010.

This EPS guidance would imply fourth quarter EPS guidance of $0.19 to $0.24

Commenting on the company's financial performance, Kexuan Yao, CEO and Chairman of Armco Metals stated, "We are pleased with the top line performance we achieved in the first nine months of 2009. Our bottom line was adversely affected by two items which we do not anticipate will recur in the future. More importantly we see strong momentum in the fourth quarter coupling with the launch of our metal recycling business setting the stage for what we believe will be a very prosperous 2010. We are excited to enter this new business line and look forward to providing more information about these operations after they are launched in the near future."

Source: Marketwire (November 24, 2009)

We are extremely pleased to have secured this $12 million credit facility. We see continued evidence that the Chinese economy is on the road to recovery and there has been an increasing demand for commodities coupled with a rising price environment. We believe this additional financial flexibility will enable us to opportunistically grow our distribution business and significantly improve our overall operating results.

Our sales efforts in the second quarter benefited from a strong rebound in several key metal markets. We believe this momentum will continue in the coming quarters and we intend to make every effort to improve our operating results further. We believe our expanded credit lines, coupled with the anticipated launch of our scrap metal recycling facility later this year places the company in the strongest financial position in its history and poised for an extended period of exceptional growth for the benefit of our shareholders.

Commenting on this financial performance for 2008, Kexuan Yao, China Armco's Chairman and CEO, stated, "Commodities and metal production experienced a dramatic slowdown across all sectors which peaked in the fourth quarter of 2008. These declines impacted our ability to maintain and grow our revenues in that period. The costs of shipping ores as compared to the price of shipments increased dramatically, having a strong negative impact on operating margins, especially in the fourth quarter. Though we were not immune from this downturn and results were below our earlier expectations, we are encouraged by improvements in a number of metal prices in the first few months of 2009. We intend to work diligently to keep our cost structure low enough to weather this economic downturn and position the company for growth as metal markets rebound. We remain committed to entering a new market segment in steel recycling where there is a huge void in production capabilities and strong governmental support for the recycling metals industry in China."

The company did not provide 2009 financial guidance.

Source: Marketwire (March 26, 2009)

The Company now anticipates its full year net income for the year ended December 31, 2008 will range between $4.4 and $4.7 million. This revised guidance from the previous estimate of $6 million reflects lower than expected revenues due to a global economic slowdown which softened aggregate demand, and created an oversupply of ore in the market. Estimated fourth quarter 2008 net income is now estimated to be approximately $400,000 to $700,000. Based on 8.2 million shares outstanding, full year EPS estimates for 2008 are $0.54 to $0.57 per share.

Source: Marketwire (January 30, 2009)