ZK International Group Co., Ltd. Announces Record Revenue of $49.66 Million, an Increase of 15.77% for the First Half of Fiscal Year 2023

WENZHOU, China, Sept. 29, 2023 /PRNewswire/ — ZK International Group Co., Ltd. (ZKIN) ("ZK International" or the "Company"), a designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products primarily used for water and gas supplies, today announced its unaudited financial results for the six months ended March 31, 2023. 

Financial Highlights for the First Half of Fiscal Year 2023

For the Six Months Ended March 31,

($ millions, except per share data)

2023

2022

% Change

Revenue

$

49.66

$

42.89

15.77

%

Gross profit

$

3.17

$

3.97

-20.13

%

Gross margin

6.38

%

9.25

%

-2.87

% pp*

Income from operations

$

0.14

$

0.24

-41.91·

%

Operating margin

0.29

%

0.57

%

-0.28

% pp*

Net income (loss)

$

(0.06)

$

0.001

0.00

%

Diluted earnings per share

$

0.00

$

0.00

0.00

%

Net book value per share

$

2.85

$

2.89

-1.45

%

* pp: percentage point(s)

  • Revenue increased 15.77% to a record $49.66 million for the six months ended March 31, 2023 from approximately $42.89 million for the six months ended March 31, 2022. During the first fiscal half of 2023, we observed an increase of raw materials, especially the price of nikel which is an important component of stainless steel. To minimize the impact the rise of raw material price, we increased our weighted average selling price ("ASP") during the period. The increase of sales is also attributable to the recovery of domestic demand and we achieved an overall increase in sales volume during the six months ended March 31, 2022.
  • Gross profit decreased by 20.13% to $3.17 million. Gross margin was 6.38%, compared to 9.25% for the same period of the prior fiscal period. The decrease of gross profit was primarily due to increased raw material cost, especially the cost of stainless steel coil which is the main material for our products. Though we have increased ASP of our products, we supplied to certain customers on fixed price basis that cannot be adjusted until the existing contract expires.
  • Income from operations was $0.14 million, compared to income from operations of $0.24 million for the same period of the prior fiscal year. Operating margin was 0.29%, compared to 0.57% for the same period of the prior fiscal year. The decrease of operating margin was primarily due to decreased gross margin of our sales.
  • Net loss was $0.06 million. This compared to net income of $0.001 million for the same period of the prior fiscal year.
  • Net book value per share was $2.85 as of March 31, 2023, compared to $2.89 as of September 30, 2022.

Financial Results for the First Half of Fiscal Year 2023

Revenue

Revenue increased by $6,764,742 or 15.77%, to $49,655,399 for the six months ended March 31, 2023 from $42,890,657 for the six months ended March 31, 2022. During the first fiscal half of 2023, we observed an increase of raw materials, especially the price of nikel which is an important component of stainless steel. To minimize the impact the rise of raw material price, we increased our weighted average selling price ("ASP") during the period. The increase of sales is also attributable to the recovery of domestic demand and we achieved an overall increase in sales volume during the six months ended March 31, 2022.

Gross Profit

Our gross profit decreased by $798,467, or 20.13%, to $3,168,642 for the six months ended March 31, 2023 from $3,967,109 for the six months ended March 31, 2022. Gross profit margin was 6.38% for the six months ended March 31, 2023, as compared to 9.25% for the six months ended March 31, 2022. The decrease of gross profit was primarily due to increased raw material cost, especially the cost of stainless steel coil which is the main material for our products. Though we have increased ASP of our products, we supplied to certain customers on fixed price basis that cannot be adjusted until the existing contract expires.

Selling and Marketing Expenses

We incurred $963,655 in selling and marketing expenses for the six months ended March 31, 2023, compared to $930,052 for the six months ended March 31, 2022. Selling and marketing expenses increased by $33,602, or 3.61%, during the six months ended March 31, 2023 compared to the six months ended March 31, 2022. This slight increase is primarily due to increased marketing expenses to promote our product portfolio.

General and Administrative expenses

We incurred $1,443,743 in general and administrative expenses for the six months ended March 31, 2023, compared to $2,232,863 for the six months ended March 31, 2022. General and administrative expenses decreased by $789,120, or 35.34%, for the six months ended March 31, 2023 compared to the same period in 2022. The decrease is primarily due to decrease in consulting expenses.

Research and Development Expenses

We incurred $619,511 in research and development expenses for the six months ended March 31, 2023, compared to $560,216 for the six months ended March 31, 2022. R&D expenses increased by $59,295, or 10.58%, for the six months ended March 31, 2023 compared to the same period in 2022.

Income (loss) from Operations

As a result of the factors described above, we incurred operating income of $141,734 for the six months ended March 31, 2023, compared to operating loss of $243,977 for the six months ended March 31, 2022, a decrease of operating income of $102,243.

Other Income (Expenses)

Our interest income and expenses were $25,123 and $386,527, respectively, for the six months ended March 31, 2023, compared to interest income and expenses of $4,493 and $465,466, respectively, for the six months ended March 31, 2022. The decrease of interest expense is primarily due to the decrease of bank loan interest rate during fiscal half year of 2023. Other income mainly consists of government grant for financial support to the Company under local government’s innovation incentive programs.

Net Income (loss) 

As a result of the factors described above, we incurred net loss of $57,080 for the six months ended March 31, 2023, compared to net income of $1,281 for the six months ended March 31, 2022, a decrease in profit of $58,361.

Financial Condition

As of March 31, 2023, cash and cash equivalents, restricted cash and short-term investments totaled $2.63 million, compared to $8.53 million as of September 30, 2022. Short-term bank borrowings were $18.21 million as of March 31, 2023, compared to $16.26 million as of September 30, 2022. 

Accounts receivable was $20.17 million as of March 31, 2023, compared to $28.36 million as of September 30, 2022. Inventories were $21.98 million as of March 31, 2023, compared to $21.14 million as of September 30, 2022. Accounts payable was $2.41 million as of March 31, 2023, compared to $10.07 million as of September 30, 2022.

Total current assets and current liabilities were $58.26 million and $34.63 million, respectively, leading to a current ratio of 1.68 as of March 31, 2023. This compared to total current assets and current liabilities were $72.09 million and $38.04 million, respectively, and current ratio of 1.90 as of September 30, 2022.

About ZK International Group Co., Ltd.

ZK International Group Co., Ltd. is a China-based designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products that require sophisticated water or gas pipeline systems. The Company owns 33 patents, 21 trademarks, 2 Technical Achievement Awards, and 10 National and Industry Standard Awards. ZK International is Quality Management System Certified (ISO9001), Environmental Management System Certified (ISO1401), and a National Industrial Stainless Steel Production Licensee that is focused on supplying steel piping for the multi-billion dollar industries of Gas and Water sectors. ZK has supplied stainless steel pipelines for over 2,000 projects, including the Beijing National Airport, the "Water Cube", and "Bird’s Nest", which were venues for the 2008 Beijing Olympics.  Emphasizing superior properties and durability of its steel piping, ZK International is providing a solution for the delivery of high quality, highly sustainable, environmentally sound drinkable water not only to the China market but also to international markets such as Europe, East Asia, and Southeast Asia.

For more information please visit www.ZKInternationalGroup.com. Additionally, please follow the Company on TwitterFacebookYouTube, and Weibo. For further information on the Company’s SEC filings please visit www.sec.gov.

Safe Harbor Statement 

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are not guarantee of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict and many of which are beyond the control of ZK International. Actual results may differ from those projected in the forward-looking statements due to risks and uncertainties, as well as other risk factors that are included in the Company’s filings with the U.S. Securities and Exchange Commission. Although ZK International believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized.  In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by ZK International or any other person that their objectives or plans will be achieved. ZK International does not undertake any obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 

 

 

ZK International Group Co., Ltd. and Subsidiaries

Consolidated Statements of Income and Comprehensive Income (Loss)

For the Six Months Ended March 31, 2023 and 2022 (Unaudited)

(IN U.S. DOLLARS, EXCEPT SHARE DATA)

For the Six Months Ended 
March 31,

2023

2022

Revenues

49,655,399

$

42,890,657

Cost of sales

46,486,756

38,923,548

Gross profit

3,168,642

3,967,109

Operating expenses:

Selling and marketing expenses

963,655

930,052

General and administrative expenses

1,443,743

2,232,863

Research and development costs

619,511

560,216

Total operating expenses

3,026,909

3,723,132

Operating Income

141,734

243,977

Other income (expenses):

Interest expenses

(386,527)

(465,466)

Interest income

25,123

4,493

Other income (expenses), net

162,590

218,277

Total other income (expenses), net

(198,814)

(242,696)

Income (Loss) before income taxes

(57,080)

1,281

Income tax provision

Net income (loss)

(57,080)

$

1,281

Net income (loss) attributable to non-controlling interests

1,663

(9,635)

Net income (loss) attributable to ZK International Group Co., Ltd.

(55,417)

$

(8,354)

Net income (loss)

(57,080)

$

1,281

Other comprehensive income:

Foreign currency translation adjustment

(1,912,369)

871,641

Total comprehensive income (loss)

(1,969,449)

872,922

Comprehensive income (loss) attributable to non-controlling interests

(10,076)

(15,437)

Comprehensive income attributable to ZK International Group Co., Ltd.

(1,979,525)

857,485

Basic and diluted earnings per share

Basic

Diluted

Weighted average number of shares outstanding                                                        

Basic

30,392,940

29,305,828

Diluted

30,518,893

29,431,781

 

 

ZK International Group Co., Ltd. and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2023 and September 30, 2022 (Unaudited)

 (IN U.S. DOLLARS)

2023

(Unaudited)

2022

Assets

Current assets

Cash and cash equivalents

$

2,633,940

$

7,515,147

Restricted cash

101,992

Short-term Investment

915,616

Accounts receivable, net of allowance for doubtful accounts of $266,794 
and $255,322, respectively

20,174,212

28,362,933

Notes receivable

121,731

49,611

Other receivables

4,005,929

2,360,539

Due from related parties

1,868,394

Inventories

21,976,401

21,141,501

Advance to suppliers

7,481,315

6,322,592

Total current assets

58,261,921

66,769,930

Property, plant and equipment, net

7,919,580

7,124,587

Right-of use asset

32,108

30,998

Intangible assets, net

11,398,673

11,415,452

Deferred tax assets

331,628

320,164

Long-term prepaid expenses

10,898,646

10,447,395

Long-term accounts receivable

7,427,498

7,522,188

Long-term investment

25,303,352

25,292,866

TOTAL ASSETS

$

121,573,407

$

128,923,580

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

2,409,043

$

10,066,758

Accrued expenses and other current liabilities

6,300,282

6,949,772

Lease liability – current portion

10,754

Accrued payroll and welfare

1,771,644

1,880,377

Advance from customers

1,740,309

1,758,800

Due to related parties

2,052,403

Convertible debentures

3,291,981

3,352,311

Short-term bank borrowings

18,208,690

16,257,820

Notes payables

702,889

Income tax payable

910,808

817,059

Total current liabilities

34,632,757

43,848,943

Lease liability – long term portion

21,762

10,256

TOTAL LIABILITIES

$

34,654,519

$

43,859,199

Equity

Common stock, no par value, 50,000,000 shares authorized, 30,392,940 and 
30,392,940 shares issued and outstanding, respectively

Additional paid-in capital

70,872,765

70,872,765

Statutory surplus reserve

3,185,983

3,176,556

Subscription receivable

(125,000)

(125,000)

Retained earnings

13,325,184

13,394,137

Accumulated other comprehensive income (loss)

(716,645)

(2,640,753)

Total equity attributable to ZK International Group Co., Ltd.

86,542,287

84,677,705

Equity attributable to non-controlling interests

376,600

386,676

Total equity

86,918,887

85,064,381

TOTAL LIABILITIES AND EQUITY

$

121,573,407

$

128,923,580

 

 

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