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ZK International Group Co., Ltd. Announces Earnings Results for the First Half of Fiscal Year 2025

1. ZK International's revenue dropped 24.37% to $40M compared to last year. 2. Gross profit decreased by 34.63% influenced by higher raw material costs. 3. Net loss increased 66.48% to $0.80 million in the first half of 2025. 4. The real estate market's slow recovery hindered demand for piping products. 5. Cash and equivalents fell significantly from $4.16 million to $1.61 million.

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FAQ

Why Very Bearish?

The significant revenue drop and net losses reflect poor performance, similar to past declines during market downturns.

How important is it?

The reported financial results indicate ongoing struggles that are crucial for investor sentiment and stock performance.

Why Short Term?

Immediate effects are visible through financial losses; long-term recovery depends on market conditions.

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, /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, 2025.  Financial Highlights for the First Half of Fiscal Year 202 5 For the Six Months Ended March 31, ($ millions, except per share data) 2025 2024 % Change Revenue $ 40.00 $ 52.89 (24.37) % Gross profit $ 2.19 $ 3.35 (34.63) % Gross margin 5.47 % 6.33 % -0.86 % pp* Income loss from operations $ (0.49) $ (0.16) 197.83 % Operating margin (1.22) % (0.31) % -0.91 % pp* Net loss $ (0.80) $ (0.48) 66.48 % Diluted earnings per share $ (0.02) $ (0.01) - * pp: percentage point(s) Revenue decreased by 24.37% to $40.00 million for the six months ended March 31, 2025 from $52.89 million for the six months ended March 31, 2024. During the first fiscal half of 2025, we faced a decrease in demand for our piping products, mainly due to the slow recovery in the real estate market (such as reduced construction projects and weakened investment momentum) during the fiscal half period. Despite our efforts to manage costs related to raw materials (including nickel, a key component of stainless steel), the dampened market demand not only lowered our sales volume but also limited our ability to adjust pricing. As a result, the combined effect of weaker sales and challenging market conditions led to the revenue decline for the six months ended March 31, 2025. Gross profit decreased by 34.63% to $2.19 million. Gross margin was 5.47%, compared to 6.33% for the same period of the prior fiscal period. The falling revenue, along with increased raw materials costs (particularly for stainless steel which is a key component of our products), has outpaced our cost optimization efforts which led to a decline in gross margin. Loss from operations was $0.49 million, compared to loss from operations of $0.16 million for the same period of the prior fiscal year. Operating margin was (1.22)%, compared to (0.31)% for the same period of the prior fiscal year. Net loss was $0.8 million. This compared to a net loss of $0.48 million for the same period of the prior fiscal year. Financial Results for the First Half of Fiscal Year 202 5 Revenue Revenue decreased by $12,890,784.00 or 24.37%, to $39,996,372 for the six months ended March 31, 2025 from $52,887,156 for the six months ended March 31, 2024. During the first fiscal half of 2025, we faced a decrease in demand for our piping products, mainly due to the slow recovery in the real estate market (such as reduced construction projects and weakened investment momentum) during the fiscal half period. Despite our efforts to manage costs related to raw materials (including nickel, a key component of stainless steel), the dampened market demand not only lowered our sales volume but also limited our ability to adjust pricing. As a result, the combined effect of weaker sales and challenging market conditions led to the revenue decline for the six months ended March 31, 2025. Gross Profit Our gross profit decreased by $1,163,908, or 34.74%, to $2,186,102 for the six months ended March 31, 2025 from $3,350,010 for the six months ended March 31, 2024. Gross profit margin was 5.47% for the six months ended March 31, 2025, as compared to 6.33% for the six months ended March 31, 2024. The decrease of our gross profit was mainly attributable to the revenue decline amid real estate market sector. Moreover, persistent raw materials costs (particularly for stainless steel, a key component of our products) have outpaced our cost optimization efforts, which led to a decline in gross margin. Selling and Marketing Expenses We incurred $881,686 in selling and marketing expenses for the six months ended March 31, 2025, compared to $880,824 for the six months ended March 31, 2024. Selling and marketing expenses increased by $862, or 0.10%, during the six months ended March 31, 2025 compared to the six months ended March 31, 2024. General and Administrative expenses We incurred $1,396,466 in general and administrative expenses for the six months ended March 31, 2025, compared to $2,010,566 for the six months ended March 31, 2024. General and administrative expenses decreased by $614,100 or 30.54%, for the six months ended March 31, 2025 compared to the same period in 2024. The decrease is primarily due to reductions in consulting expenses and employee related costs. Research and Development Expenses We incurred $396,934 in research and development expenses for the six months ended March 31, 2025, compared to $622,805 for the six months ended March 31, 2024. R&D expenses decreased by $225,871, or 36.27%, for the six months ended March 31, 2025 compared to the same period in 2024. Income (loss) from Operations As a result of the factors described above, we incurred operating loss of $488,984 for the six months ended March 31, 2025, compared to operating loss of $164,185 for the six months ended March 31, 2024, an increase of operating loss of $324,799. Other Income (Expenses) Our interest income and expenses were $4,052 and $349,499, respectively, for the six months ended March 31, 2025, compared to interest income and expenses of $7,868 and $411,045, respectively, for the six months ended March 31, 2024. Net Income (loss)  As a result of the factors described above, we incurred net loss of $802,028 for the six months ended March 31, 2025, compared to net loss of $481,753 for the six months ended March 31, 2024, an increase in net loss of $320,275.  Financial Condition As of March 31, 2025, cash and cash equivalents, restricted cash and short-term investments totaled $1.61 million, compared to $4.16 million as of September 30, 2024. Short-term bank borrowings were $11.19 million as of March 31, 2025, compared to $10.26 million as of September 30, 2024.  Accounts receivable was $19.82 million as of March 31, 2025, compared to $22.39 million as of September 30, 2024. Inventories were $15.49 million as of March 31, 2025, compared to $13.53 million as of September 30, 2024. Accounts payable was $2.43 million as of March 31, 2025, compared to $3.13 million as of September 30, 2024. Total current assets and current liabilities were $55.30 million and $45.39 million, respectively, leading to a current ratio of 1.22 as of March 31, 2025. This compared to total current assets and current liabilities were $62.74 million and $24.89 million, respectively, and current ratio of 1.26 as of September 30, 2024. 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 Twitter, Facebook, YouTube, 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, 2025 and 2024 (Unaudited) (IN U.S. DOLLARS, EXCEPT SHARE DATA) For the Six Months Ended March 31, 2025 2024 Revenues 39,996,372 $ 52,887,156 Cost of sales 37,810,270 49,537,146 Gross profit 2,186,102 3,350,010 Operating expenses: Selling and marketing expenses 881,686 880,824 General and administrative expenses 1,396,466 2,010,566 Research and development costs 396,934 622,805 Total operating expenses 2,675,086 3,514,195 Operating income (loss) (488,984) (164,185) Other income (expenses): Interest expenses (349,499) (411,045) Interest income 4,052 7,868 Other income (expenses), net 46,574 92,816 Total other income (expenses), net (298,873) (310,361) Income (Loss) before income taxes (787,857) (474,546) Income tax provision (14,171) (7,207) Net income (loss) (802,028) (481,753) Net income (loss) attributable to non-controlling interests (5,227) - Net income (loss) attributable to ZK International Group Co., Ltd. (796,801) (481,753) Net income (loss) (802,028) (481,753) Other comprehensive income: Foreign currency translation adjustment Total comprehensive income (loss) (802,028) (481,753) Comprehensive income (loss) attributable to non-controlling interests (1,688) (9,284) Comprehensive income attributable to ZK International Group Co., Ltd. (803,716) (472,468) Basic and diluted earnings per share Basic (0.15) (0.11) Diluted (0.15) (0.11) Weighted average number of shares outstanding Basic 5,232,469 4,492,280 Diluted 5,232,469 4,492,280 ZK International Group Co., Ltd. and Subsidiaries Consolidated Balance Sheets As of March 31, 2025 and September 30, 2024 (Unaudited) ( IN U.S. DOLLARS) As of September 30,  2024 2023 Assets Current assets Cash and cash equivalents $ 1,559,434 $ 4,009,387 Restricted cash 46,714 103,917 Short-term Investment - 50,111 Accounts receivable, net of allowance for doubtful accounts and provision for expected credit loss of $7,330,890 and $7,580,664, respectively 19,816,792 22,393,810 Notes receivable 750,672 355,761 Prepayment, deposit and other receivable - current 8,166,269 4,657,014 Inventories 15,487,586 13,528,170 Advance to suppliers 9,469,805 17,641,946 Total current assets 55,297,272 62,740,116 Property, plant and equipment, net 7,957,533 8,104,335 Right-of-use asset – Operating lease 212,915 162,103 Intangible assets, net 1,234,704 1,282,939 Deferred tax assets — Prepayment, deposit and other receivable - Non-current 261,576 271,201 Long-term prepayment — Long-term accounts receivable 4,788,657 5,379,311 Long-term investment 2,037,086 2,046,868 TOTAL ASSETS $ 71,789,743 $ 79,986,873 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,426,968 $ 3,125,104 Accrued expenses and other current liabilities 3,749,209 4,261,080 Operating lease liability - current - 12,280 Accrued payroll and welfare 2,662,269 2,323,244 Advance from customers 10,081,298 14,861,280 Due to related parties 70,500 216,906 Convertible debentures 4,917,683 4,917,683 Bank borrowings - current 11,194,069 10,259,918 Long-term Bank borrowings - current 9,795,775 9,765,447 Notes payables 493,219 124,957 Total current liabilities 45,390,990 49,867,899 Operating lease liability – non-current — Bank borrowings – non-current - 1,802,468 TOTAL LIABILITIES $ 45,390,990 $ 51,670,367 COMMITMENTS AND CONTINGENCIES — Equity Common stock, no par value, 50,000,000 shares authorized, 5,232,469 and 5,163,946 shares issued and outstanding, respectively — Additional paid-in capital 77,886,898 77,886,898 Statutory surplus reserve 3,176,556 3,176,556 Subscription receivable (125,000) (125,000) Retained earnings (Deficits)  (51,245,374) (50,448,573) Accumulated other comprehensive loss (3,449,608) (2,326,968) Total equity attributable to ZK International Group Co., Ltd. 26,243,472 28,162,913 Equity attributable to non-controlling interests 155,281 153,593 Total equity 26,398,753 28,316,506 TOTAL LIABILITIES AND EQUITY $ 71,789,743 $ 79,986,873 SOURCE ZK International Group Co., Ltd. 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