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UNR Holdings Announces Third Quarter 2012 Financial Results

Dec 5 2012 12:00AM

Marketwire

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ORLANDO, FL -- (Marketwire) -- 12/05/12 -- UNR Holdings, Inc. (OTCQB: UNRH), ("UNR" or the "Company"), a leading commercial and residential real estate development and construction company operating principally in the city of Moscow and its suburban communities, and also a provider of infrastructure construction services for government oil and gas projects in the Russian Federation, today announced its financial results for the three and nine months ended September 30, 2012.

UNR Holdings CEO Alexey Kim stated, "Our third quarter revenues were disappointing due to what we believe are temporary issues related to our sales channel, but we are very pleased to report another strong quarter of earnings due to favorable pricing and margin trends and the recognition of interest recovered on the Marshal Rybalko project." CEO Kim continued, "Based on current market conditions, we expect to see improved sales momentum in the fourth quarter and we go into 2013 with a very sizable portfolio of completed projects. Our focus will be on converting this inventory to revenues so as to take advantage of continued favorable pricing trends for real estate in Moscow and its environs."

Results of Operations for the Three Months Ended September 30, 2012

Revenues

Total revenues for the three months ended September 30, 2012 decreased to $18.6 million, or 70%, as compared to $62.6 million for the three months ended September 30, 2011. The decrease was a result of a decline we experienced mostly in our construction and development business in 2012 in connection with the Marshal Rybalko project, offset by an increase in prices for apartments and commercial space.

Cost of Sales

Cost of sales decreased by $37.2 million, or 83%, to $7.7 million for the three months ended September 30, 2012, from $44.9 million for the three months ended September 30, 2011. Cost of sales decreased substantially during the third quarter of 2012 as compared to the comparable quarter in 2011 primarily due to a decrease in revenues from our construction and development business. Cost of Sales percentage decreased primarily due to the increase in prices for apartments and commercial space while costs remained constant.

Selling, General and Administrative Expenses

Selling, general and administrative costs decreased by $0.4 million to approximately $0.8 million for the three months ended September 30, 2012, as compared to approximately $1.1 million for the three months ended September 30, 2011. This was primarily due to decreases in professional fees and administrative overhead.

Income from Operations

Income from operations decreased to approximately $10.0 million for the three months ended September 30, 2012, compared to approximately $16.5 million for the comparable period in 2011, primarily due to decreases in sales offset by decreases in cost of sales percentage during the three month period ended September 30, 2012.

Other Income

Other income was approximately $5.5 million for the three months ended September 30, 2012, as compared with $0.7 million for the three months ended September 30, 2011, primarily due to an increase in interest income of approximately $4.6 million paid by the Russian Ministry of Defense.

Provision for Income Taxes

Provision for income taxes decreased to $3.1 million for the three months ended September 30, 2012 as compared to $3.5 million for the three months ended September 30, 2011. The decrease is primarily due to lower net income during the three months ended September 30, 2012.

Net Earnings

Net earnings decreased to $12.4 million for the three months ended September 30, 2012 as compared to $13.9 million for the three months ended September 30, 2011. The Company attributes the decrease in earnings primarily to a decrease in sales offset by an increase in interest income paid by the Russian Ministry of Defense during the three month period ended September 30, 2012.

Results of Operations for the Nine Months Ended September 30, 2012

Revenues

Total revenues for the nine months ended September 30, 2012 decreased to $69.4 million, or 50%, as compared to $138.0 million for the nine months ended September 30, 2011. The decrease was a result of a decline we experienced mostly in our construction and development business in 2012 due to delayed profit recognition from the Marshal Rybalko project resulting from prolonged litigation with the Russian Ministry of Defense, offset by an increase in prices for apartments and commercial space.

Cost of Sales

Cost of sales decreased by $63.9 million, or 68%, to $30.0 million for the nine months ended September 30, 2012, from $93.9 million for the nine months ended September 30, 2011. Cost of sales decreased substantially during the first three quarters of 2012 as compared to 2011 primarily due to a decrease in revenues from our construction and development business. Cost of sales percentage decreased primarily due to the increase in prices for apartments and commercial space while costs remained constant, confirming the Company's view that the Russian Real estate market is on track for a sustainable recovery.

Selling, General and Administrative Expenses

Selling, general and administrative costs decreased by $3.2 million to approximately $2.8 million for the nine months ended September 30, 2012, as compared to approximately $6.0 million for the nine months ended September 30, 2011. This was primarily due to decreases in professional fees, administrative overhead and approximately $2.0 million of costs incurred in 2011 in connection with expenses incurred in the Middle East project that was discontinued during 2011.

Income from Operations

Income from operations decreased to approximately $36.6 million for the nine months ended September 30, 2012, from income of approximately $38.1 million for the comparable period in 2011, primarily due to decreases in sales offset by decreases in the cost of sales percentage and a decrease in overhead during the nine month period ended September 30, 2012.

Other Income

Other income was approximately $6.3 million for the nine months ended September 30, 2012, as compared with $1.7 million for the nine months ended September 30, 2011, primarily due to an increase in interest income of approximately $4.6 million paid by the Russian Ministry of Defense ordered by the appeal court in connection with the court ordered settlement.

Provision for Income Taxes

Provision for income taxes increased to $8.6 million for the nine months ended September 30, 2012 as compared to $7.9 million for the nine months ended September 30, 2011. The increase is primarily due to a higher net income during the nine months ended September 30, 2012.

Net Earnings

Net earnings increased to $34.3 million for the nine months ended September 30, 2012 as compared to net earnings of $31.8 million for the nine months ended September 30, 2011. The Company attributes the increase in earnings primarily to an increase in gross profit during the nine month period ended September 30, 2012, a decrease in operating overhead and interest earned from the settlement with the Russian Ministry of Defense.

Liquidity and Capital Requirements

We had a working capital surplus of approximately $126.2 million and stockholders' equity of approximately $88.3 million as of September 30, 2012. Cash and cash equivalents decreased by approximately $32.8 million for the nine months ended September 30, 2012 from fiscal year end 2011. The decrease is primarily attributable to an increase in inventories of approximately $172.5 million offset by an approximate $97.4 million in accounts payable and $11.2 million from marketable securities.

Trade and other receivables, net of allowances, were $23.8 million at September 30, 2012, compared to approximately $10.2 million at December 31, 2011. The increase is primarily due to a majority of sales of residential units during the first nine months of 2012 having occurred in March 2012 and payments not expected to be received until the fourth quarter. Inventories were $638.1 million at September 30, 2012, as compared to $466.0 million at December 31, 2011, due primarily to the increase in construction during the nine months ended September 30, 2012 to keep up with the increased real estate sales activity in Russia.

Accounts payable were $456.4 million at September 30, 2012, compared to $359.0 million at December 31, 2011. The Company attributes the increase primarily to the increase in inventory to support the Company's increased construction activity offset by payments to creditors made by the Company. Advances from customers were $71.5 million at September 30, 2012 compared to $64.0 million at December 31, 2011. We attribute the increase to an increase in sales activity during the latter part of 2012.

About UNR Holdings, Inc.

UNR Holdings is a holding company that has a 68% ownership in its subsidiary, 494 UNR. 494 UNR is a diverse construction company with more than 40 years of success serving the Russian construction market. The Company specializes in general and infrastructure construction services, such as designing and building multi-story apartment buildings for middle and upper middle class families, office buildings, highways, bridges, and production of a road base infrastructure construction product. While UNRH is involved in complex construction projects, the Company also assists the Russian government with infrastructure projects for oil and gas corporations, such as GAZPROM and TRANSNEFT. 494 UNR is one of the oldest and most established construction companies located and operating in Moscow and the Moscow area of the Russian Federation.

More detailed information on the housing projects is available at the UNR Holdings corporate website: http://www.unrholdings.com.

Forward-looking statements

The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

- Financial Tables Follow -


UNR HOLDINGS, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(IN US DOLLARS) September 30, December 31, 2012 2011 ------------- ------------- (Unaudited)ASSETSRESIDENTIAL AND COMMERCIAL CONSTRUCTION ASSETS Cash and cash equivalents 10,023,217 42,795,147 Marketable Securities 17,898,587 29,144,114 Inventories 637,982,386 465,525,786 Trade and other receivables, net 21,333,387 9,438,081 Property, plant and equipment, net 2,068,354 1,757,392 Other assets 2,508,758 1,417,115 ------------- -------------Total Residential and Commercial Construction Assets 691,814,959 550,077,635ROAD BASE MATERIALS ASSETS: Inventories 113,806 430,171 ------------- ------------- Trade and other receivables, net 2,457,109 752,741 ------------- -------------Total Road Base Material Assets 2,570,915 1,182,912 ------------- -------------TOTAL ASSETS 694,385,874 551,260,547 ------------- -------------LIABILITIES AND EQUITY:RESIDENTIAL AND COMMERCIAL CONSTRUCTION LIABILITIES: Short-term debt 3,305,281 6,262,437 Accounts payable and accrued expenses 441,179,935 351,080,551 Advances from customers 71,463,194 63,975,004 Deferred income tax liabilities 32,444,485 24,557,523 ------------- -------------Total Residential and Commercial Construction Liabilities 548,392,895 445,875,515 ------------- -------------ROAD BASE MATERIALS LIABILITIES Accounts payable and accrued expenses 15,194,397 7,898,548 Advances from customers - - ------------- -------------Total Road Base Materials Liabilities 15,194,397 7,898,548 ------------- -------------Total Liabilities 563,587,292 453,774,063 ------------- ------------- Commitments and Contingencies - -UNR Holdings, Inc. and Subsidiary Stockholders' Equity: Common stock, $0.001 par value; authorized 500,000,000 shares; issued and outstanding 24,464,799 and 24,464,799 shares at September 30, 2012 and December 31, 2011, respectively 24,465 24,465 Additional paid-in capital 99,579 99,579 Retained earnings 95,563,643 71,636,550 Accumulated other comprehensive loss (7,351,186) (6,658,061) ------------- ------------- Total UNR Holdings, Inc. and Subsidiary Stockholders' Equity 88,336,501 65,102,533 ------------- ------------- Noncontrolling interest 42,462,081 32,383,951 ------------- ------------- Total Equity 130,798,582 97,486,484 ------------- -------------TOTAL LIABILITIES AND EQUITY 694,385,874 551,260,547 ------------- -------------UNR HOLDINGS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)(IN US DOLLARS) For the Three Months For the Nine Months Ended Ended September 30, September 30, ------------------------- ------------------------- 2012 2011 2012 2011 ($) ($) ($) ($)Revenues: Sales and other operating revenues 69,445,911 138,024,063 18,546,199 62,544,293Costs and expenses: Cost of sales 29,984,956 93,849,218 7,745,631 44,934,122 Selling, general and administrative expenses: 2,825,679 6,074,159 757,201 1,145,548 ------------ ------------ ------------ ------------ 32,810,635 99,923,377 8,502,832 46,079,670 ------------ ------------ ------------ ------------Income from operations 36,635,276 38,100,686 10,043,367 16,464,623Other income (expense):Foreign currency transaction loss - (64,693) - 192,011Other income (loss) 6,319,069 1,674,860 5,502,919 731,827 ------------ ------------ ------------ ------------ 6,319,069 1,610,167 5,502,919 923,838 ------------ ------------ ------------ ------------Earnings before income taxes 42,954,345 39,710,853 15,546,286 17,388,461Provision for income taxes 8,605,102 7,896,431 3,112,795 3,477,790 ------------ ------------ ------------ ------------Net earnings 34,349,243 31,814,422 12,433,491 13,910,671 ------------ ------------ ------------ ------------Less: Net earnings attributable to the noncontrolling interest 10,422,150 10,476,985 3,134,959 4,614,332 ------------ ------------ ------------ ------------Net earnings attributable to UNR Holdings, Inc. and Subsidiary 23,927,093 21,337,437 9,298,532 9,296,339 ------------ ------------ ------------ ------------Earnings per share - basic and diluted:Earnings per common share attributable to UNR Holdings, Inc. and Subsidiary common shareholders $ 0.97 $ 0.87 $ 0.38 $ 0.38 ------------ ------------ ------------ ------------Weighted average common shares outstanding - basic and diluted 24,464,799 24,464,799 24,464,799 24,464,799 ------------ ------------ ------------ ------------UNR HOLDINGS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)(IN US DOLLARS) For The Nine Months Ended September 30, 2012 2011 -------------- -------------- ($) ($)Cash flows from operating activities:Net earnings 34,349,243 31,814,422Adjustments to reconcile net income to net cash provided by operating activities:Depreciation 115,741 73,117Gain on sale of property, plant and equipment (53,578) -Deferred income taxes 7,886,962 4,056,178Change in operating assets and liabilities (83,073,707) (9,940,932) -------------- -------------- Net cash provided by operating activities (40,775,339) 26,002,785 -------------- --------------Cash flows from investing activities: Purchase of property, plant and equipment (422,840) (866,700) Proceeds from sale of equipment 263,332 - Purchase of marketable securities (37,920,942) (9,711,735) Purchase from sale of marketable securities 49,166,199 10,000,000 -------------- -------------- Net cash used in investing activities 11,085,749 (578,435) -------------- --------------Cash flows from financing activities: Proceeds from loans 14,832,467 - Repayment of loans (17,789,623) - -------------- -------------- Net cash used in financing activities (2,957,156) - -------------- --------------Effect of exchange rate changes on cash (125,184) (306,226) -------------- --------------Net increase (decrease) in cash (32,771,930) 25,118,124Cash - beginning of period 42,795,147 11,234,193 -------------- --------------Cash - end of period 10,023,217 36,352,317 -------------- --------------Changes in operating assets and liabilities consist of: Decrease (increase) in accounts receivable (13,599,674) 17,450,616 (Increase) decrease in inventories (172,848,893) (43,360,974) (Increase) in other assets (1,091,643) (15,604,700) Increase (decrease) in customer advances 7,488,190 30,005,812 Increase in accounts payable and other liabilities 96,978,313 1,568,314 -------------- -------------- (83,073,707) (9,940,932) -------------- --------------Supplementary Information Cash paid during the period for Interest $ 551,550 $ -------------- -------------- Income taxes $ 59,853 $ 45,638 -------------- --------------





Company Contact:

UNR Holdings, Inc.
Serguei Melnik
VP
Phone: 407-210-6541
info@unrholdings.com

Investor Relations Contact:

CCG Investor Relations
David Rudnick
Account Manager
Phone: 1-646-626-4172
Email: david.rudnick@ccgir.com





Source: Marketwire


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