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ZK International Group Co., Ltd. Announces Record Revenue of $52.89 Million, an Increase of 6.5% for the First Half of Fiscal Year 2024

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ZK International Group Co., (ZKIN) reported record revenue of $52.89 million for the first half of fiscal year 2024, a 6.5% increase from the same period last year. The company, which manufactures stainless steel and carbon steel pipe products, saw increased demand due to real estate market recovery. Despite higher revenue, ZKIN experienced a net loss of $0.48 million, compared to a $0.06 million loss in the previous year. Gross profit rose by 5.68% to $3.35 million, but gross margin slightly declined to 6.33% due to rising raw material costs. The company's financial condition shows a current ratio of 1.55 as of March 31, 2024, with cash and equivalents totaling $5.06 million.

ZK International Group Co., (ZKIN) ha riportato un fatturato record di $52,89 milioni per il primo semestre dell'anno fiscale 2024, con un aumento del 6,5% rispetto allo stesso periodo dell'anno scorso. L'azienda, che produce tubi in acciaio inossidabile e acciaio al carbonio, ha visto un aumento della domanda a causa della ripresa del mercato immobiliare. Nonostante l'aumento del fatturato, ZKIN ha registrato una perdita netta di $0,48 milioni, rispetto a una perdita di $0,06 milioni dell'anno precedente. Il profitto lordo è aumentato del 5,68% a $3,35 milioni, ma il margine lordo è leggermente calato al 6,33% a causa dell'aumento dei costi delle materie prime. La situazione finanziaria dell'azienda mostra un rapporto corrente di 1,55 al 31 marzo 2024, con liquidità e equivalenti pari a $5,06 milioni.

ZK International Group Co., (ZKIN) reportó ingresos récord de $52.89 millones para la primera mitad del año fiscal 2024, un aumento del 6.5% en comparación con el mismo período del año anterior. La empresa, que fabrica productos de tubos de acero inoxidable y acero al carbono, vio un aumento en la demanda debido a la recuperación del mercado inmobiliario. A pesar del aumento de ingresos, ZKIN experimentó una pérdida neta de $0.48 millones, en comparación con una pérdida de $0.06 millones en el año anterior. La ganancia bruta aumentó en un 5.68% a $3.35 millones, pero el margen bruto disminuyó ligeramente al 6.33% debido al aumento de los costos de las materias primas. La situación financiera de la empresa muestra un ratio corriente de 1.55 hasta el 31 de marzo de 2024, con efectivo y equivalentes totalizando $5.06 millones.

ZK International Group Co., (ZKIN)은 2024 회계연도 상반기에 대한 $52.89백만의 기록적인 수익을 보고했으며, 이는 작년 같은 기간에 비해 6.5% 증가한 수치입니다. 스테인리스강 및 탄소강 파이프 제품을 제조하는 이 회사는 부동산 시장 회복 덕분에 수요가 증가했습니다. 수익이 증가했음에도 불구하고, ZKIN은 $0.48백만의 순손실을 경험했으며, 이는 작년의 $0.06백만 손실과 비교됩니다. 총 이익은 5.68% 증가하여 $3.35백만에 이르렀으나, 원자재 비용 상승으로 인해 총 이익률은 6.33%로 약간 감소했습니다. 2024년 3월 31일 기준으로 회사의 재무 상태는 1.55의 유동 비율을 보여주며, 현금 및 기타 자산은 총 $5.06백만입니다.

ZK International Group Co., (ZKIN) a rapporté un chiffre d'affaires record de $52,89 millions pour le premier semestre de l'exercice fiscal 2024, soit une augmentation de 6,5% par rapport à la même période de l'année précédente. L'entreprise, qui fabrique des produits en acier inoxydable et en acier au carbone, a vu la demande augmenter en raison de la reprise du marché immobilier. Malgré la hausse des revenus, ZKIN a subi une perte nette de $0,48 millions, par rapport à une perte de $0,06 millions l'année précédente. Le bénéfice brut a augmenté de 5,68% pour atteindre $3,35 millions, mais la marge brute a légèrement diminué à 6,33% en raison de l'augmentation des coûts des matières premières. La situation financière de l'entreprise montre un ratio courant de 1,55 au 31 mars 2024, avec des liquidités et équivalents totalisant $5,06 millions.

ZK International Group Co., (ZKIN) berichtete von einem Rekordumsatz von $52,89 Millionen für das erste Halbjahr des Geschäftsjahres 2024, was einem Anstieg von 6,5% im Vergleich zum gleichen Zeitraum des Vorjahres entspricht. Das Unternehmen, das Edelstahl- und Kohlenstoffstahlrohrprodukte herstellt, erlebte eine gestiegene Nachfrage aufgrund der Erholung des Immobilienmarktes. Trotz eines höheren Umsatzes verzeichnete ZKIN einen Nettoverlust von $0,48 Millionen, im Vergleich zu einem Verlust von $0,06 Millionen im Vorjahr. Der Bruttogewinn stieg um 5,68% auf $3,35 Millionen, jedoch sank die Bruttomarge leicht auf 6,33% aufgrund steigender Rohstoffkosten. Die finanzielle Situation des Unternehmens weist zum 31. März 2024 ein Verhältnis von 1,55 auf, wobei Bargeld und Äquivalente insgesamt $5,06 Millionen betragen.

Positive
  • Record revenue of $52.89 million, a 6.5% year-over-year increase
  • Gross profit increased by 5.68% to $3.35 million
  • Increased demand for piping products due to real estate market recovery
  • Current ratio of 1.55, indicating solid short-term liquidity
Negative
  • Net loss widened to $0.48 million from $0.06 million in the previous year
  • Slight decline in gross margin to 6.33% due to rising raw material costs
  • Operating loss of $0.16 million compared to operating income of $0.14 million last year
  • General and administrative expenses increased by 39.26% to $2.01 million

Insights

ZK International's financial results for H1 FY2024 present a mixed picture. The company achieved record revenue of $52.89 million, a 6.5% increase year-over-year, primarily driven by increased demand and higher selling prices. However, this growth was offset by rising raw material costs, particularly nickel, which impacted profitability.

The slight decline in gross margin from 6.38% to 6.33% indicates pressure on profitability. More concerning is the shift from an operating income of $0.14 million in H1 FY2023 to an operating loss of $0.16 million in H1 FY2024. This was largely due to a 39.26% increase in general and administrative expenses.

The company's financial position shows some strain, with short-term borrowings increasing from $9.39 million to $13.34 million. The current ratio has also decreased from 1.74 to 1.55, suggesting a tightening of liquidity. Investors should monitor the company's ability to manage costs and improve profitability in the face of challenging market conditions.

The Chinese real estate market recovery has been a key driver for ZK International's revenue growth. This sector's rebound is significant for the company's piping products demand. However, the sustainability of this recovery remains uncertain, given the ongoing challenges in China's property sector.

The company's strategy of increasing average selling prices (ASP) to offset rising raw material costs demonstrates adaptability but has not fully mitigated the impact on margins. This pricing power, or lack thereof, will be important to watch in future quarters.

The 8.60% decrease in selling and marketing expenses, coupled with increased revenue, suggests improved efficiency in customer acquisition. However, the substantial rise in general and administrative expenses is concerning and may indicate underlying operational challenges or investments for future growth.

Investors should closely monitor the company's ability to capitalize on the real estate market recovery while managing costs and improving operational efficiency in a competitive and cost-sensitive industry.

WENZHOU, China, Sept. 30, 2024 /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, 2024. 

Financial Highlights for the First Half of Fiscal Year 2024



For the Six Months Ended March 31,

($ millions, except per share data)


2024



2023



% Change

Revenue


$

52.89



$

49.66




6.50 %

Gross profit


$

3.35



$

3.17




5.68 %

Gross margin



6.33 %




6.38 %




-0.05% pp*

Income (loss) from operations


$

(0.16)



$

0.14




(2.14) %

Operating margin



(0.31) %




0.29 %




0.60% pp*

Net loss


$

(0.48)



$

(0.06)




-

Diluted earnings per share


$

(0.01)



$

0.00




-

             * pp: percentage point(s)












  • Revenue increased 6.50% to a record 52.89 million for the six months ended March 31, 2024 from approximately $49.66 million for the six months ended March 31, 2023. During the first fiscal half of 2024, we observed an increase of demand for our piping products, primarily attributable to the real estate market recovery during the fiscal period. Raw materials price, especially the price of nikel which is an important component of stainless steel, also increased. To minimize the impact the rise of raw material price, we increased our weighted average selling price ("ASP") during the period.
  • Gross profit increased by 5.68% to $3.35 million. Gross margin was 6.33%, compared to 6.38% for the same period of the prior fiscal period. The rising costs of raw materials, particularly for stainless steel coil which is a key component of our products, has ourpaced the increase of our ASP which led to a slight decline in gross margin.
  • Loss from operations was $0.16 million, compared to income from operations of $0.14 million for the same period of the prior fiscal year. Operating margin was -0.31%, compared to 0.29% for the same period of the prior fiscal year.
  • Net loss was $0.48 million. This compared to a net loss of $0.06 million for the same period of the prior fiscal year. 

Financial Results for the First Half of Fiscal Year 2023

Revenue

Revenue increased by $3,231,757 or 6.50%, to $52,887,156 for the six months ended March 31, 2024 from $49,655,399 for the six months ended March 31, 2023. During the first fiscal half of 2024, we observed an increase of demand for our piping products, primarily attributable to the real estate market recovery during the fiscal period. Raw materials price, especially the price of nikel which is an important component of stainless steel, also increased. To minimize the impact the rise of raw material price, we increased our weighted average selling price ("ASP") during the period.

Gross Profit

Our gross profit increased by 181,368, or 5.68%, to $3,350,010 for the six months ended March 31, 2024 from $3,168,642 for the six months ended March 31, 2023. Gross profit margin was 6.33% for the six months ended March 31, 2024, as compared to 6.38% for the six months ended March 31, 2023. The increase of our gross profit was mainly attributable to the recovery of domestic real estate market, however the rising costs of raw materials, particularly for stainless steel coil which is a key component of our products, has outpaced the increase of our ASP which led to a slight decline in gross margin.

Selling and Marketing Expenses

We incurred $880,824 in selling and marketing expenses for the six months ended March 31, 2024, compared to $ 963,655 for the six months ended March 31, 20223. Selling and marketing expenses decreased by $82,831, or 8.60%, during the six months ended March 31, 2024 compared to the six months ended March 31, 2023. This slight decrease is primarily due to decreased marketing expenses.

General and Administrative expenses

We incurred $ 2,010,566 in general and administrative expenses for the six months ended March 31, 2024, compared to $1,443,743 for the six months ended March 31, 2023. General and administrative expenses increased by $566,823 or 39.26%, for the six months ended March 31, 2024 compared to the same period in 2023. The increase is primarily due to increase in consulting expenses and employee salaries.

Research and Development Expenses

We incurred $622,805 in research and development expenses for the six months ended March 31, 2024, compared to $619,511 for the six months ended March 31, 2023. R&D expenses increased by $3294, or 0.53%, for the six months ended March 31, 2024 compared to the same period in 2023. 

Income (loss) from Operations

As a result of the factors described above, we incurred operating loss of $164,185 for the six months ended March 31, 2024, compared to operating income of $141,734 for the six months ended March 31, 2023, a decrease of operating income of $305,919.

Other Income (Expenses)

Our interest income and expenses were $7,868 and $411,045, respectively, for the six months ended March 31, 2024, compared to interest income and expenses of $25,123 and $386,527, respectively, for the six months ended March 31, 2023.

Net Income (loss) 

As a result of the factors described above, we incurred net loss of $481,753  for the six months ended March 31, 2024, compared to net income of $57,080 for the six months ended March 31, 2023, a decrease in profit of $424,673

Financial Condition

As of March 31, 2024, cash and cash equivalents, restricted cash and short-term investments totaled $5.06 million, compared to $5.05 million as of September 30, 2023. Short-term bank borrowings were $13.34 million as of March 31, 2024, compared to $9.39 million as of September 30, 2023. 

Accounts receivable was $20.56 million as of March 31, 2024, compared to $14.97 million as of September 30, 2023. Inventories were $13.39 million as of March 31, 2024, compared to $17.94 million as of September 30, 2023. Accounts payable was $2.18 million as of March 31, 2024, compared to $2.61 million as of September 30, 2023.

Total current assets and current liabilities were $62.05 million and $40.03 million, respectively, leading to a current ratio of 1.55 as of March 31, 2024. This compared to total current assets and current liabilities were $43.25 million and $24.89 million, respectively, and current ratio of 1.74 as of September 30, 2023.

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, 2024 and 2023 (Unaudited)

(IN U.S. DOLLARS, EXCEPT SHARE DATA) 




For the Six Months Ended 
March 31,



2024



2023

Revenues



52,887,156



$

49,655,399

Cost of sales



49,537,146




46,486,756

Gross profit



3,350,010




3,168,642









Operating expenses:








Selling and marketing expenses



880,824




963,655

General and administrative expenses



2,010,566




1,443,743

Research and development costs



622,805




619,511

Total operating expenses



3,514,195




3,026,909









Operating Income



164,185




141,734









Other income (expenses):








Interest expenses



(411,045)




(386,527)

Interest income



7,868




25,123

Other income (expenses), net



92,816




162,590

Total other income (expenses), net



(310,361)




(198,814)









Income (Loss) before income taxes



(474,546)




(57,080)









Income tax provision



-




-









Net income (loss)



(481,753)



$

(57,080)

Net income (loss) attributable to non-controlling interests







1,663









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



(481,753)



$

(55,417)









Net income (loss)



(481,753)



$

(57,080)









Other comprehensive income:








Foreign currency translation adjustment







(1,912,369)









Total comprehensive income (loss)



(481,753)




(1,969,449)

Comprehensive income (loss) attributable to non-controlling interests



(9,284)




(10,076)

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



(472,468)




(1,979,525)









Basic and diluted earnings per share








Basic



-




-

Diluted



-




-

Weighted average number of shares outstanding








Basic



31,445,962




30,392,940

Diluted



31,445,962




30,518,893










 

ZK International Group Co., Ltd. and Subsidiaries

Consolidated Balance Sheets

As of March 31, 2024 and September 30, 2023 (Unaudited)

 (IN U.S. DOLLARS)




2024

(Unaudited)



2023


Assets









Current assets









Cash and cash equivalents


$

4,945,913



$

4,994,411


Restricted cash



65,379




50,995


Short-term Investment



48,650




48,145


Accounts receivable, net of allowance for doubtful accounts of $6,686,864 and
$6,617,485, respectively



20,556,288




14,967,186


Notes receivable



269,424




54,825


Other receivables



6,022,949




383,413


Due from related parties



1,532,776




-


Inventories



13,390,249




17,937,425


Advance to suppliers



15,216,014




4,810,044


Total current assets



62,047,642




43,246,444


Property, plant and equipment, net



7,822,460




7,836,017


Right-of use asset



18,573




43,840


Intangible assets, net



1,446,461




1,437,384


Long-term accounts receivable



5,585,636




5,527,682


Long-term investment



302,760




285,540


TOTAL ASSETS


$

77,223,532



$

58,668,977


LIABILITIES AND SHAREHOLDERS' EQUITY









Current liabilities:









Accounts payable


$

2,178,436



$

2,611,220


Accrued expenses and other current liabilities



1,634,393




4,964,892


Lease liability - current portion



21,977




21,749


Accrued payroll and welfare



1,867,631




1,918,415


Advance from customers



16,847,355




821,694


Due to related parties



128,903




1,111,001


Convertible debentures



4,011,224




4,011,224


Short-term bank borrowings



13,336,426




9,388,706


Notes payables



-




41,118


Income tax payable



-




669


Total current liabilities



40,026,345




24,890,689


Bank borrowings – non-current



8,617,093




8,527,686


Lease liability - long term portion



11,935




11,811


TOTAL LIABILITIES


$

48,655,373



$

33,430,186











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



76,386,898




72,886,898


Statutory surplus reserve



3,176,556




3,176,556


Subscription receivable



(125,000)




(125,000)


Retained earnings



(48,140,252)




(47,666,657)


Accumulated other comprehensive income (loss)



(2,878,739)




(3,190,985)


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



28,419,463




25,080,812


Equity attributable to non-controlling interests



148,696




157,980


Total equity



28,568,159




25,238,792


TOTAL LIABILITIES AND EQUITY


$

77,223,532



$

58,668,977


 

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SOURCE ZK International Group Co., Ltd.

FAQ

What was ZKIN's revenue for the first half of fiscal year 2024?

ZKIN reported record revenue of $52.89 million for the first half of fiscal year 2024, representing a 6.5% increase from the same period last year.

How did ZKIN's net income change in the first half of fiscal year 2024?

ZKIN reported a net loss of $0.48 million for the first half of fiscal year 2024, compared to a net loss of $0.06 million in the same period of the previous fiscal year.

What factors contributed to ZKIN's revenue growth in the first half of fiscal year 2024?

ZKIN's revenue growth was primarily attributed to increased demand for their piping products due to real estate market recovery and an increase in the weighted average selling price to offset rising raw material costs.

How did ZKIN's gross margin change in the first half of fiscal year 2024?

ZKIN's gross margin slightly declined to 6.33% in the first half of fiscal year 2024, compared to 6.38% in the same period of the previous year, due to rising raw material costs outpacing the increase in average selling prices.

ZK International Group Co., Ltd Ordinary Share

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Steel
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Wenzhou