China Direct Reports Record Financial Results for the Fourth Quarter and Full Year...

China Direct Reports Record Financial Results for the Fourth Quarter and Full
Year of Fiscal 2007
- Full year revenue reaches $174.24 million

DEERFIELD BEACH, Fla., March 31 /PRNewswire-FirstCall/ -- China Direct,
Inc. (Amex: CDS), a U.S. company that owns controlling stakes in a diversified
portfolio of Chinese entities and assists Chinese businesses in accessing the
U.S. capital markets, announced today the Company's audited financial results
for the fourth quarter of 2007 and the full year ended December 31, 2007.
Financial Highlights
The Full Year Financial Performance
Revenues for 2007 increased to $174.24 million, as compared to revenues of
$13.98 million for 2006.
Gross profit for 2007 was $18.79 million, as compared to $1.47 million for
2006. Total operating expenses for 2007 increased to $4.48 million, as
compared to $1.93 million for 2006. Operating expenses as a percentage of
gross profit declined in 2007 to 23.8% down from $131.3% in 2006. Operating
income was $14.31 million for 2007 versus a loss of $459,207 for 2006,
yielding an operating profit margin of 8.2% in 2007.
Net income for 2007 increased to $11.83 million as compared to net income
of $169,322 in 2006. The basic earnings were $0.75 per share as compared to
$0.02 per share for 2006 on a weighted average basis. On a fully diluted
basis, the earnings per share for 2007 were $0.67 per share as compared to
$0.01 per share for 2006 on a weighted average basis. The net profit margin
in 2007 improved to 6.8% from 1.2% in 2006.
Marc Siegel, President of China Direct, stated, "We continue to be very
pleased with the financial performance of our four segments in 2007, and we
are particularly encouraged by the synergies we are starting to realize from
the recent acquisitions to our magnesium segment. We believe the expansion of
our magnesium segment has brought us significantly closer to achieving our
goal of becoming the global leader in the production and distribution of
magnesium. We continue to seek acquisitions in this segment that allow us to
drive growth through manufacturing cost savings and distribution reach."
The Fourth Quarter Financial Performance
Revenues for the fourth quarter ended December 31, 2007 increased to
$58.27 million as compared to revenues of $13.50 million in the fourth quarter
ended December 31, 2006. The increase in revenues was mainly attributable to
increased sales from our Magnesium and Clean Technology segments acquired
during 2007, as well as a strong performance from both Lang Chemical and our
Consulting segment. Additionally, revenue in the fourth quarter of 2007
increased 31% sequentially from revenues of $44.58 million in the third
quarter of 2007, driven by our magnesium business.
Gross profit for the fourth quarter of 2007 was $6.82 million as compared
to $1.33 million in the fourth quarter ended December 31, 2006. Total
operating expenses for the fourth quarter of 2007 increased to $1.68 million
compared to $819,336 in the fourth quarter of 2006. The increase in operating
expenses in the fourth quarter of 2007 reflects the continued increases to our
operations in China associated with our new subsidiaries and staff additions
both in the U.S. and China associated with the financial management and
integration of our expanding operations. The Company also experienced
increases in travel expenses, professional consulting fees, professional
insurance premiums, as well as non-cash option charges for employees,
management, and professional advisors. Operating income was $5.14 million and
$514,266 for the fourth quarter of 2007 and 2006, yielding operating margins
of 8.8% and 3.7%, respectively.
Net income for the fourth quarter of 2007 increased to $4.71 million, or
$0.23 per basic share, as compared to net income of $557,153 or $0.05 per
basic share for the fourth quarter of 2006. On a fully diluted basis,
earnings per share for the fourth quarter of 2007 were $0.20 per share as
compared to $0.04 per share for the fourth quarter of 2006. Additionally, net
income was up 59% sequentially from net income of $2.98 million in the third
quarter of 2007. The net profit margin improved to 8.1% in the fourth quarter
of 2007 from 4.1% in the fourth quarter of 2006.
Balance Sheet
At December 31, 2007, total assets were $88.29 million, an increase of
324% from $20.84 million at December 31, 2006. At December 31, 2007,
shareholder equity reached $42.82 million, an increase of 630% from $5.86
million at December 31, 2006. At December 31, 2007, cash and cash equivalents
were $20.39 million and working capital was approximately $40.88 million, an
increase of 570% and 502% from cash and cash equivalents of $3.03 million and
working capital of approximately $6.79 million at December 31, 2006,
respectively.
2008 Financial Guidance
The Company sees continued robust growth in both revenue and earnings for
2008 and will provide updated earnings guidance for 2008 during its conference
call today, March 31, 2008 at 4:30 PM EDT.
Mr. Siegel concluded, "We remain focused on generating internal growth of
at least 30% in 2008, as we integrate our recently acquired business
operations. We see continued improvement in our average contract price for
magnesium in 2008 as pre sold contracts from 2007 expire and new sales
contracts are made at current price levels. We are confident we can continue
to make strategic and opportunistic acquisitions in China and believe we have
gained substantial experience in 2007. Throughout the past year we have
steadily built a cohesive team which has positioned China Direct to continue
its expansion in 2008 and beyond. We remain excited by the opportunities in
China and continue to work responsibly and aggressively on behalf of our
shareholders. We believe 2008 will be another record breaking year for China
Direct."
China Direct Conference Call to discuss the Company's financial results
for the fourth quarter of 2007 and the full year of 2007 ended December 31,
2007 as well as provide updated financial guidance for 2008.
The conference call will take place at 4:30 p.m. EDT on Monday, March 31,
2008. Anyone interested in participating should call 1-800-762-8779 if calling
within the United States or 1-480-248-5081 if calling internationally
approximately 5 to 10 minutes prior to 4:30 p.m. EDT. Participants should ask
for the China Direct 2007 Fourth Quarter Financial Results conference call/
Conference ID 3856868. There will be a playback available until April 15,
2008.
To listen to the playback, please call 1-800-406-7325 if calling within the
United States or 1-303-590-3030 if calling internationally. Please use the
pass code 3856868 for replay.
This call is being webcast by ViaVid Broadcasting and can be accessed at
China Direct's website at http://www.chinadirectinc.com . The webcast may also
be accessed at ViaVid's website at http://www.viavid.net . The webcast can be
accessed through April 15, 2008 on either site. To access the webcast, you
will need to have the Windows Media Player on your desktop. For the free
download of the Media Player, please visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp

CHINA DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Audited)

ASSETS December 31,
Current Assets: 2007 2006
Cash and cash equivalents $20,394,931 $3,030,345
Notes receivable 1,010,781 942,117
Investment in trading securities - 2,166,603
Investment in trading securities -
related party - 311,611
Investment in marketable securities
held for sale 7,820,500 -
Investment in marketable securities
held for sale-related party 1,315,488 1,325,400
Accounts receivable, net of
allowance for doubtful accounts of
$290,456 and $110,611 for 2007
and 2006, respectively 9,644,880 2,770,062
Accounts receivable-related parties 2,283,600 -
Inventories 5,293,986 5,494,292
Prepaid expenses and other current
assets 12,396,269 1,272,246
Prepaid expenses-related parties 4,150,943 -
Other receivables 3,043,193 -
Due from related parties 1,287,877 -
Total current assets 68,642,448 17,312,676

Restricted cash 646,970 447,713
Property, plant and equipment, net of
accumulated depreciation of
$577,801 and $97,428 for 2007 and
2006, respectively 18,010,524 2,753,468
Prepaid expenses 294,986 321,548
Other assets 138,089 -
Mining rights, net 457,226 -
Property use rights, net 96,078 -

Total assets $88,286,321 $20,835,405

LIABILITIES AND STOCKHOLDERS'
EQUITY

Current Liabilities:
Loan payable-short term $2,570,149 $1,536,064
Loan payable-related party 410,167 -
Accounts payable and accrued
expenses 9,057,790 4,517,354
Accounts payable-related parties 964,114 1,546,880
Advances from customers 6,277,767 916,764
Deferred revenues-short term 685,294 779,900
Other payables 4,097,716 45,623
Income tax payable 560,116 599,699
Deferred Income tax - 440,861
Due to related parties 3,137,233 140,893

Total current liabilities 27,760,346 10,524,038

Loan payable-long term 166,573 22,793
Deferred revenue-long term - 779,900

Minority interest 17,535,909 3,644,350

Stockholders' Equity:

Preferred Stock: $.0001 par value,
10,000,000 authorized, no shares
issued and outstanding - -
Common Stock; $.0001 par value,
1,000,000,000 authorized,
20,982,010 and 12,868,433
issued and outstanding for
2007 and 2006, respectively 2,098 1,287
Additional paid-in capital 30,257,644 4,927,343
Deferred compensation (55,000) (226,840)
Accumulated comprehensive income 162,045 532,379
Retained earnings 12,456,706 630,155

Total stockholders' equity 42,823,493 5,864,324

Total liabilities and
stockholders' equity $88,286,321 $20,835,405

CHINA DIRECT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Audited)

For the Year
Ended December 31,
2007 2006

Revenues $169,696,524 $13,467,337
Revenues-related party 4,539,059 517,000
Total revenues 174,235,583 13,984,337

Cost of revenues 155,448,012 12,515,035

Gross profit 18,787,571 1,469,302

Operating expenses:
Selling, general, and
administrative 4,479,967 1,900,111
Selling, general, and
administrative-related party - 28,398

Total operating expenses 4,479,967 1,928,509

Operating income (loss) 14,307,604 (459,207)

Other income (expense):
Other income 1,090,709 44,336
Interest income (expense) 280,342 (6,624)
Unrealized gain on trading securities - 600,339
Realized gain on sale of marketable
securities 616,045 81,170
Realized (loss) gain on sale of
marketable securities-related party (41,885) 85,774

Net income before income taxes 16,252,815 345,788

Income taxes expense (727,479) (176,466)

Income before minority interest 15,525,336 169,322

Minority interest in income of
subsidiaries (3,698,785) -

Net income 11,826,551 169,322

Foreign currency translation gain 1,314,343 137,443

Unrealized loss on marketable
securities held for sale, net of
income taxes (174,212) -

Unrealized (loss) gain on marketable
securities held for sale-related party,
net of income taxes (1,510,465) 349,636

Comprehensive income $11,456,217 $656,401

Basic earnings per common share $0.75 $0.02

Diluted earnings per common share $0.67 $0.01

Basic weighted average common shares
outstanding 15,841,560 10,572,745

Diluted weighted average common
shares outstanding 17,605,664 13,849,556

About China Direct, Inc.
China Direct, Inc. (Amex: CDS) is a diversified management and advisory
services organization headquartered in the U.S. Our management services
division acquires a controlling interest in entities operating in China. Our
ownership control enables China Direct to provide management advice, as well
as financing to Chinese entities. This infrastructure creates a platform to
expand business opportunities globally while effectively and efficiently
accessing the U.S. capital markets. Our advisory services division provides
comprehensive advisory and consulting services critical to the success of
Chinese entities seeking to access the U.S. capital markets. As a direct link
to China, China Direct serves as a vehicle allowing investors to directly
participate in the rapid growth of the Chinese economy in a diversified and
balanced manner. For more information about China Direct, please visit
http://www.chinadirectinc.com .
Safe Harbor Statement
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based on current expectations or beliefs,
including, but not limited to, statements concerning the Company's operations,
financial performance and, condition. For this purpose, statements that are
not statements of historical fact may be deemed to be forward-looking
statements. The Company cautions that these statements by their nature involve
risks and uncertainties, and actual results may differ materially depending on
a variety of important factors, including, but not limited to, the impact of
competitive products, pricing and new technology; changes in consumer
preferences and tastes; and effectiveness of marketing; changes in laws and
regulations; fluctuations in costs of production, and other factors as those
discussed in the Company's reports filed with the Securities and Exchange
Commission from time to time. In addition, the company disclaims any
obligation to update any forward-looking statements to reflect events or
circumstances after the date hereof.
SOURCE China Direct, Inc.

Investor Relations, Alan Sheinwald, Partner, HC International, Inc.,
+1-914-669-0222, Alan.Sheinwald@HCinternational.net; Company, Richard
Galterio, Executive Vice President, China Direct, Inc., +1-877-China-57,
Richard@cdii.net