Ziyang Ceramics Reports Financial Results for the First Quarter Ended March 31, 2012

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Ziyang Ceramics Corporation (OTC.BB:ZYCI), a leading manufacturer of high quality interior porcelain tiles in China, announced today its financial results for the first quarter ended March 31, 2012. - First quarter 2012 revenue climbs to $11.4 million, up 52.5% from revenue of $7.5 million recorded in the first quarter of 2011 - First quarter 2012 operating income reaches $3.8 million, up 81.6% from $2.1 million recorded in the first quarter of 2011 - First quarter 2012 net income reaches $3.2 million or $0.42 per share on 7.5 million basic and diluted shares outstanding

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Financial Highlights

For the first quarter of 2012, total revenues reached $11.4 million, up 52.5% from $7.5 million recorded in the first quarter of 2011. The increase in revenue was primarily driven by an increase in sales from of our new line of interior porcelain wall tiles launched in August of 2011 coupled with an increase in sales from our higher priced premium polycrystalline porcelain floor tiles. Gross profit in the first quarter of 2012 increased to $4.3 million, up by 63.3% from $2.6 million achieved in the first quarter of 2011. Gross profit margin increased to 37.8% in the first quarter of 2012, compared to 35.3% in the same period of 2011 primarily due to the increased sales of the higher margin premium polycrystalline floor tiles.

Total operating expenses for the first quarter of 2012 decreased to $465,000, down 11.1% from $523,000 recorded in the same period in 2011. The decrease in operating expenses is largely due to a reduction in retirement insurance expenses and real estate tax expense, partially offset by an increase in employee welfare expenses.

For the first quarter of 2012, net income rose to $3.2 million, up 82.1% from net income of $1.7 million recorded in the first quarter of 2011. Net margin in the first quarter of 2012 also increased to 27.7% from 23.2% recorded in the same period in 2011. In the first quarter of 2012 we achieved earnings per basic and diluted share of $0.42 on 7.5 million weighted average shares outstanding. This compares to earnings of $2.94 per basic and diluted share on 590,033 weighted average shares outstanding. The increase in the number of common shares outstanding in the first quarter of 2012 is a result of the full conversion in January 2012 of two outstanding promissory notes for a total of 8.9 million common shares. The two promissory notes were issued in connection with our acquisition of Ziyang Ceramic Company. As of the date of this release we have 10 million shares outstanding with no additional convertible securities outstanding, excluding those covered under existing company stock option and incentive plans.

At March 31, 2012, total cash was $9.2 million, an increase of 56.9% from $5.9 million in total cash at December 31, 2011. Current assets were $15.9 million at March 31, 2012 compared to current assets of $14.1 million at December 31, 2011. Total shareholder equity increased to $24.9 million, up 14.5% compared to shareholder equity of $21.7 million at December 31, 2011.

Commenting on the financial results for the first quarter of 2012, Mr. Lingbo Chi, CEO of Ziyang Ceramics, stated, "We are extremely pleased with our achievements in this quarter as we set the stage for the remainder of 2012. Our new products and higher end tile offerings are beginning to pay dividends for us as we increase sales margins and our bottom line results. We continue to grow our distribution base and expand our product offerings as we build for our future growth. We are confident that we have the right team and are in the right position to deliver strong top and bottom line growth throughout 2012. We look forward to building our company into one of the leading tile manufacturers in China as we look to maximize the value of our company for the benefit of our stockholders.”

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Dore Perler
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