American Metal & Technology, Inc. Reports Fourth Quarter and Full Year 2007 Financial Results

HEBEI, China, March 25 /PRNewswire-FirstCall/ -- American Metal & Technology, Inc. (OTC:AMGY) (BULLETIN BOARD: AMGY) ("American Metal," the "Company"), a leading manufacturer in the People's Republic of China engaged in the development, manufacture and sale of high-precision metal casting and metal fabrication products to European and U.S. markets and microprocessor- controlled electronic circuit boards in China, today announced its financial results for the fourth quarter and full year ended December 31, 2007. Fourth Quarter 2007 Highlights -- Net sales increased 58.4% year-over-year to $3.4 million -- Gross profit increased 40.2% year-over-year to $0.7 million -- Net income increased 71.7 % year-over-year to $0.7 million -- Increased production capacity through the addition of 10 new high- precision lathe machines Full Year 2007 Highlights -- Net sales increased 34.1% year-over-year to $10.7 million -- Gross profit increased 45.0% year-over-year to $3.1 million -- Net income increased 38.2% year-over-year to $2.2 million -- Became a U.S. public company via reverse acquisition on May 22, 2007 -- Raised $3.3 million in gross proceeds via the completion of the private placement financing of its common stock Significant Events In February 2008, the Company announced plans to invest $3 million to build additional facilities at its Langfang manufacturing center. The new facilities mark the second phase of a four-phase plan to transform the Company's capacity and capabilities for the foreseeable future. This second phase of American Metal's four-phase expansion plan will add two buildings totaling 10,900 square meters, increasing annual capacity for casting products by 50% to 3,600 tons from 2,400 tons. Phase two will also enable the Company to enhance its capabilities for the development and manufacturing of circuit board solutions. Construction is due to be completed in December 2008, with full production beginning in January 2009. During the fourth quarter ended December 31, 2007, the Company began the second phase of the expansion plan. This included the acquisition of 16 new high-precision lathe machines, 10 of which were delivered and became operational during the fourth quarter of 2007. The remaining six machines are expected to be delivered and become operational in the first quarter of 2008. Once the machines are installed, the total machines in use will be 56, compared to 40 lathe machines a year ago. Also during the fourth quarter, as American Metal strengthened relationships with some of its long-term customers, it added to its casting activity, which requires the Company to take ownership of cast parts, increasing both revenues and cost of goods sold. This activity changed the sales mix of the Company, increasing absolute dollar profits while reducing gross margin percentage. Fourth Quarter 2007 Results In the fourth quarter ended December 31, 2007, net sales increased 58.4% to $3.4 million from $2.2 million in the fourth quarter of 2006. The increase was attributed to increased capacity during the quarter via the addition of 10 new precision lathe machines, which allowed the Company to fill additional orders. "We made considerable progress during the quarter, as the initial phase of our plan to expand capacity resulted in a substantial increase in new orders from our existing customers, and we saw substantial growth in our manufactured parts business," said Mr. Chen Gao, Chairman and Chief Executive Officer of American Metal. Gross profit during the quarter was $0.7 million, or 20.2% of sales, up 40.2% from gross profit of $0.5 million, or 22.8% of sales, in the same quarter a year ago. The decline in gross margin was caused by an increase in orders for cast parts, which required the Company to purchase its own materials before using machine time. Operating expenses for the quarter declined as a percentage of sales, to $70,611, or 2.0% of net sales, from $57,230, or 2.6% of net sales, a year ago. Operating expenses included several one-time expenses related to the first phase of the Company's capacity expansion, as it upgraded equipment at its manufacturing facility in Hebei, China. Operating income in the fourth quarter increased 42.4% to $0.6 million, or 18.2% of sales, from operating income of $0.4 million, or 20.2% of sales, during the same quarter of 2006. Total other income was $0.1 million, compared to a negligible loss the prior year. Other income included interest income during the quarter of roughly $74,000, as a result of an increase in the Company's cash balance and investment income from a short-term investment in the fourth quarter of 2007. Net income for the fourth quarter of 2007 increased 71.7% to $0.7 million, or $0.08 per diluted share, from net income of $0.4 million, or $0.05 per diluted share, for the fourth quarter of 2006. Earnings per share for both periods have been adjusted for a 1-for-150 reverse stock split, effective December 3, 2007. Full Year 2007 Results Net sales for the 2007 fiscal year increased 34.1% to $10.7 million from $7.9 million in 2006. Gross profit was $3.1 million, or 29.0% of sales, up 45.0% from gross profit of $2.1 million, or 26.8% of sales, the prior year. Operating income climbed 25.2% to $2.1 million from $1.6 million the prior year. Net income during the 2007 fiscal year was $2.2 million, or $0.24 per diluted share, compared to $1.6 million, or $0.21 per diluted share, in 2006. Earnings per share for both periods have been adjusted for a 1-for-150 reverse stock split, effective December 3, 2007. Financial Condition As of December 31, 2007, American Metal & Technology had cash and cash equivalents of $6.0 million, working capital of $8.0 million and shareholders' equity of $11.7 million. During 2007, the Company generated $2.4 million in cash from operations, compared to $0.7 million in 2006. In August 2007, the Company completed a private placement financing of its common stock with a select group of international investors, raising $3.3 million in gross proceeds. The Company utilized this additional capital to begin the second phase of construction to upgrade the Company's manufacturing facility, partially repay the Company's outstanding debt and to increase working capital. Business Outlook For the 2008 fiscal year, the Company expects global industrial demand for its products to remain strong, as its additional capacity comes online targeted at key growth markets. In that light, the Company forecasts full-year 2008 net income of $2.9 million to $3.1 and earnings per share of $0.27 to $0.29. Full-year guidance assumes the effective launch of the second phase of the capacity expansion, which the Company expects to complete during December 2008, a mix of multiple products at varying price points and increased efficiencies as the Company gains additional experience with its growing customer base. "The 2007 fiscal year was one of substantial growth for American Metal, as we increased revenues and net income while greatly expanding our production capacity," Mr. Gao said. "By the end of the first quarter of 2008, we will have added 16 new high-precision lathe machines, which will enable us to take on an even higher rate of orders of both machine-only and investment casting work. We also improved our working capital position through the private placement of our common stock, which enables us to meet the ongoing cash needs of our day-to-day operations and pursue further improvements to our manufacturing facility. This significant expansion plan should allow American Metal to expand its business globally, taking on new international customers and increasing orders from existing customers." About American Metal & Technology, Inc. American Metal & Technology, through its wholly-owned subsidiary American Metal Technology Group ("AMTG"), a Nevada Corporation, and through AMTG's subsidiaries, Beijing Tong Yuan Heng Feng Technology Co., Ltd. and American Metal Technology (Lang Fang) Co., Ltd., is a leading manufacturer of high- precision casting and machined products in the People's Republic of China. The subsidiaries operate in a 53,819-square-foot manufacturing plant with 295 employees. In 2006, AMTG expanded into the design and manufacture of electric circuit boards for home appliances and motion controllers. The Company recently announced facility expansion plans to increase casting product capacity by 50% and enhance the development and manufacturing of its circuit board solutions at its Langfang manufacturing center. To learn more about American Metal & Technology, Inc., please visit the Company's website at: http://www.ammyusa.com/. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain of the statements made in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other unknown factors that could cause our actual results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms "believes," "belief," "intends," "anticipates" or "plans" to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in our reports filed with the Securities and Exchange Commission. Contact: CCG Elite Investor Relations Mark Collinson, Partner Phone: (310) 231-8600 ext. 117 E-mail: - FINANCIAL TABLES FOLLOW - AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME (Amounts expressed in U.S. dollars) Three months Three months Twelve months Twelve months ended ended ended ended December 31, December 31, December 31, December 31, 2007 2006 2007 2006 Net sales $3,445,988 $2,174,880 $10,656,958 $7,945,871 Cost of goods sold (2,749,480) (1,678,249) (7,566,945) (5,815,013) Gross profit 696,508 496,631 3,090,013 2,130,858 Operating expenses Selling expenses (11,905) (11,395) (31,425) (23,972) Operating and administrative expenses (58,706) (45,835) (995,251) (458,280) Total operating expenses (70,611) (57,230) (1,026,676) (482,252) Income from operations 625,897 439,401 2,063,337 1,648,606 Other income (expense) Interest income 17,176 1,666 24,666 3,285 Other income (expense) 73,819 (2,445) 71,401 (2,179) Total other income 90,995 (779) 96,067 1,106 Income before income taxes 716,892 438,622 2,159,404 1,649,712 Provision for income taxes - - - - Income before minority interests 716,892 438,622 2,159,404 1,649,712 Minority interests 11,743 (144,319) 5,099 (83,177) Net income $715,346 $416,587 $2,164,502 $1,566,535 Unrealized gain from available securities 12,401 - 12,401 - Foreign currency translation adjustment 354,925 60,319 717,677 162,844 Comprehensive income $1,082,673 $476,906 $2,894,580 $1,729,379 Basic weighted average shares outstanding 8,988,568 7,615,922 8,998,568 7,615,922 Basic net earnings per share $0.08 $0.05 0.24 0.21 Diluted weighted average shares outstanding 8,988,568 7,615,922 8,998,568 7,615,922 Diluted net earnings per share $0.08 $0.05 $0.24 $0.21 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007 and 2006 ASSETS Current Assets December 31, December 31, 2007 2006 Cash and cash equivalents $6,037,193 $787,444 Accounts receivable - net 1,332,664 908,694 Investment in marketable securities 93,196 - Other receivables 134,275 9,068 Advances to suppliers 974,799 649,394 Inventories 547,579 478,064 Notes receivable - 155,597 Total Current Assets 9,119,706 2,988,261 Property, Plant and Equipment, net 3,020,972 3,052,607 Construction in Progress 377,240 - Intangible Assets, net 692,167 693,801 Total Assets $13,210,084 $6,734,669 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $743,070 $281,314 Accrued liabilities and other payables 75,765 - Amount due to related parties 333,670 571,405 Unearned revenue 12,938 2,333 Total Current Liabilities 1,165,443 855,052 Minority Interests 337,291 342,390 Commitments - - Shareholders' Equity Common stocks; $0.0001 par value, 30,000,000 shares authorized, 10,402,687 shares issued and outstanding 1,040 10,120 Additional paid in capital 5,039,217 1,745,594 Statutory reserve 912,019 532,560 Accumulated other comprehensive income 994,092 264,014 Retained earnings 4,760,982 2,975,939 Total Stockholders' Equity 11,707,350 5,537,227 Total Liabilities and Shareholders' Equity $13,210,084 $6,734,669 AMERICAN METAL & TECHNOLOGY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 2007 2006 Cash flows from operating activities: Net income $2,164,502 $1,566,535 Adjustments to reconcile net income to net cash provided by operating activities: Minority interest (5,099) 83,177 Depreciation and amortization 300,035 271,753 Bad debt expenses 70,311 - (Increase)/decrease in assets: Accounts receivable, net (416,062) (654,066) Note receivable 32,841 - Other receivables 143,594 2,920,391 Inventory (34,645) 52,495 Advance to suppliers (268,590) 333,853 Other assets - 227,447 Increase/(decrease) in liabilities: Accounts payable 488,642 34,429 Other payable and accrued expenses (104,419) (3,437,116) Accrued expenses (21,344) - Unearned revenue 10,015 (744,808) Net Cash Provided By Operating Activities 2,359,781 654,090 Cash flows from investing activities: Additions to construction in progress (353,814) - Cash received from short-term investment (89,383) - Purchase of equipment and leasehold improvements (37,101) (818,198) Net Cash Used in Investing Activities (480,297) (818,198) Cash flows from financing activities: Cash received on stock issuance 3,275,543 119,860 Proceeds(Payments) from(to) loans (184,128) 820,020 Net Cash Provided By Financing Activities 3,091,415 939,880 Effects of Exchange Rate Change in Cash 278,851 (134,951) Net Increase in Cash and Cash Equivalents 5,249,749 640,821 Cash and Cash Equivalents-Beginning Balance 787,444 146,623 Cash and Cash Equivalents-Ending Balance 6,037,193 787,444 Supplemental disclosure of cash flow information: Income taxes paid $- $- Interest expenses paid $488 $2,179 DATASOURCE: American Metal & Technology, Inc. CONTACT: Mark Collinson, Partner, CCG Elite Investor Relations, +1-310-231-8600, ext. 117, , for American Metal & Technology, Inc. Web site: http://www.ammyusa.com/