China Marine Food Group Limited Reports Record Results for its Fourth Quarter and Fiscal Year 2009, Company Exceeds 2009 Guidance
SHISHI, China, March 22 /PRNewswire-Asia-FirstCall/ -- China Marine Food Group Limited (NYSE Amex: CMFO) ("China Marine" or the "Company"), a China-based manufacturer of Mingxiang(R) seafood-based snack foods, "Hi-Power" marine algae-based beverages and distributor of frozen marine catch, today announced record financial results for its fourth quarter and fiscal year ended December 31, 2009.
Fourth Quarter Fiscal Year 2009 Highlights:
-- Revenue was $24.9 million, up 85.0% from Q4 2008.
-- Gross profit was $5.8 million, up 54.7% from Q4 2008.
-- Operating income was $4.8 million, up 71.0% from Q4 2008.
-- Net income was $4.4 million, up 74.1% from Q4 2008.
-- Earnings per share were $0.18 based on 24.4 million shares.
Fiscal Year 2009 Highlights:
-- Revenue was $69.6 million, up 42.6% from the year ended December 31,
2008.
-- Gross profit was $19.1 million, up 25.9% from the previous year.
-- Operating income was $16.2 million, up 29.8% from the previous year.
-- Net income was $14.6 million, up 30.9% from 2008, with earnings of
$0.60 per diluted share.
-- Completed a new manufacturing facility during Q3 2009 which increased
capacity from 10,000 tons to 20,000 tons per annum.
"China Marine experienced strong demand during the fourth quarter for both our processed seafood-based snack foods and marine catch product lines as retailers prepared for the Chinese Lunar New Year celebrations. The additional capacity we added during the year was instrumental in meeting our sales goals," said Mr. Pengfei Liu, Chairman and Chief Executive Officer of China Marine.
Fourth Quarter Fiscal Year 2009 Results
Total revenue in the fourth quarter ended December 31, 2009 was $24.9 million, up 85.0% from $13.5 million in the prior year's period. Sales growth was driven by increased shipments of Mingxiang(R) snack food products to distributors and by shipments of frozen marine catch to distributors in the Liaoning province. The processed seafood segment contributed $14.5 million of revenues and grew 29.7% from the fourth quarter of 2008. The marine catch product line contributed $10.4 million in revenue and increased over three-fold from Q4 2008. As previously discussed, while the Company's focus is Mingxiang(R) snack foods and beverages, China Marine will take advantage of opportunities to drive incremental revenue growth by selling bulk orders of frozen squid to its established base of marine catch distributors.
Gross profit in the fourth quarter of fiscal year 2009 was $5.8 million, an increase of 54.7% from $3.8 million in the prior year's corresponding period. Gross margins for the processed snack food line were 33.1%, compared to 32.0% in the fourth quarter of 2008. Marine Catch margins were 10.0% versus 8.2% in the fourth quarter of 2008.
Selling, general and administrative expenses in the fourth quarter ended December 31, 2009 were approximately $1.0 million, up 5.8% from $0.9 million in the prior year's period.
Operating income in the fourth quarter was $4.8 million, with operating margin of 19.4%, a 71.0% increase from $2.8 million with operating margin of 21.0%, in the prior year's period.
Net income for the quarter ended December 31, 2009 was $4.4 million, compared to $2.5 million in the prior year's corresponding period. Earnings per diluted share were $0.18 based on 24,391,942 diluted shares outstanding.
Fiscal Year 2009 Results
Total revenue for fiscal year 2009 was $69.6 million, up 42.6% from $48.8 million for the year ended December 31, 2008. In 2009, 74.8% of revenue was generated by sales of processed seafood products, and 25.2% of revenue was generated by sales of marine catch compared to 90.9% and 9.1%, respectively in 2008. Domestic sales accounted for 97.4% of revenue in 2009, compared to 95.1% of revenue in 2008. The Company exceeded its top line revenue guidance of $60.0 million by approximately $9.6 million, or 16.0%.
Gross profit was $19.1 million in 2009, a 25.9% increase from $15.2 million in 2008. In 2009, 90.6% of gross profit was generated by sales of processed seafood products and 9.4% of gross profit was generated by sales of marine catch compared to 97.1% and 2.9%, respectively in 2008. In 2009, sales of processed seafood had a gross margin of 33.3%, and sales of marine catch had a gross margin of 10.3% compared to 33.2% and 9.9%, respectively in 2008.
Operating income totaled $16.2 million in 2009, a 29.8% increase from $12.5 million in the previous fiscal year. The Company's operating margin was 23.2% compared to 25.5% in the prior year. Net income for fiscal year 2009 was $14.6 million, a 30.9% increase from $11.1 million during 2008, with net margins of 20.8% and 22.8% for 2009 and 2008, respectively. Earnings per share were $0.60 per diluted share in fiscal year 2009, compared to $0.48 per diluted share for the year ended December 31, 2008.
"We were very pleased to exceed both our revenue guidance of $60.0 million and net income guidance of $14.3 million for the year," said Mr. Pengfei Liu, Chairman and CEO of China Marine. "We leveraged our growing distribution network of Mingxiang(R) snack foods and significantly expanded our retail network to 2,200 stores from 1,400 in 2008. In 2010, we plan to enter new provinces and develop select export markets in Asia to drive future growth."
Financial Condition
As of December 31, 2009, the Company had $7.1 million in cash. Working capital was $48.4 million, up from $36.8 million as of December 31, 2008. Accounts receivable were $18.8 million, compared to $4.8 million as of December 31, 2008, which was attributed to the increase in sales volume during the year and the extension of credit period to the Company's major customers and consistent with existing market practices. Current liabilities were $8.1 million compared to $6.6 million as of December 31, 2008. Shareholder's equity was $59.9 million, a 32.9% increase from $45.0 million as of December 31, 2008.
The Company has $26.4 million in notes receivable on December 31, 2009 which was attributable to the convertible loan due from the acquisition's target company, and $2.3 million in prepayment for land use right due to the land cost for development of cold storage facilities.
Recent Events
On January 1, 2010, China Marine exercised an option to purchase 80.0% of the registered capital stock of Shishi Xianghe Food Science and Technology Co., Ltd. ("Xianghe"), the manufacturer of "Hi-Power", an algae-based health beverage. The acquisition consisted of transferring a loan of $26.4 million, which was owed by Xianghe to China Marine, and a payment of $1.4 million from China Marine to the former sole shareholder of Xianghe. 2010 revenues from Xianghe are forecast to be over $20 million with a 20.0% net profit margin.
In January 2010, China Marine announced that it entered into an agreement to sell 4,615,388 shares of common stock at a price of $6.50 per share, generating net proceeds of approximately $28.5 million, which will be used for working capital and general corporate purposes.
Business Outlook and Guidance
"Our acquisition of Xianghe complements our product line and gives us entry into new markets. Xianghe's "Hi-Power" algae-based drink is popular among health conscious consumers, a growing market segment in China," said Mr. Liu. "China Marine management will take over and manage Xianghe, and we intend to develop additional sales of "Hi-Power" algae-based drink through our Mingxiang(R) existing and expanding distribution network," Liu concluded.
After acquiring Xianghe, the Company increased its fiscal year 2010 guidance to $100.0 million in revenues and $21.5 million in net income. These guidance numbers are subject to change and before any non-cash amortization charges associated with intangible assets generated from the Xianghe acquisition.
Conference Call
To attend the call, please use the dial information below. When prompted, ask for the "China Marine Call" and/or be prepared to provide the conference ID.
Date: March 23, 2010
Time: 10:00am ET
Conference Line Dial-In (U.S.): 1-877-941-2069
International Dial-In: 1-480-629-9713
Conference ID: 4269718
Webcast link: http://viavid.net/dce.aspx?sid=0000726B
Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through March 30th, 2010. To listen, please call 1-800-406-7325 within the United States or +1-303-590-3030 when calling internationally. Utilize the pass code 4269718 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=0000726B or at ViaVid's website at http://www.viavid.net , where the webcast can be accessed through March 22nd, 2011.
About China Marine
China Marine Food Group Ltd. is a food and beverage manufacturer of Mingxiang(R) seafood-based snack foods, "Hi-Power" marine algae-based health drinks, and a wholesaler of frozen marine catch in seven provinces in the PRC. Founded in 1994, China Marine has grown steadily and positioned its Mingxiang(R) brand as a category leader in 2,200 retail sales points in the PRC. The Company has received "The Famous Brand" and "Green Food" awards. Located in the Fujian province, it is one of the largest coastal provinces in the PRC and a vital navigation hub between the East China Sea and the South China Sea. The Company is committed to the highest standard of quality control with the ISO9001, ISO14001, HACCP certification and EU export registration.
FORWARD LOOKING STATEMENTS
This release contains certain "forward-looking statements" relating to the business of China Marine Food Group Limited and its subsidiary companies, which can be identified by the use of forward-looking terminology such as "believes, expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties, including all business uncertainties relating to product development, marketing, concentration in a single customer, raw material costs, market acceptance, future capital requirements, competition in general and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Certain of these risks and uncertainties are or will be described in greater detail in our filings with the Securities and Exchange Commission. China Marine Food Group Limited is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
- Financial Statements Follow -
CHINA MARINE FOOD GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND 2008
(Currency expressed in United States Dollars ("US$"))
As of December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $7,143,232 $31,640,307
Accounts receivable, net 18,834,062 4,819,434
Inventories 3,876,950 6,679,488
Note receivable 26,399,696 --
Prepaid expenses and other
current assets 151,653 326,977
Total current assets 56,405,593 43,466,206
Property, plant and equipment, net 8,599,977 5,944,515
Land use rights, net 615,355 630,150
Prepayment for land use right 2,274,323 --
Construction in progress -- 1,604,855
TOTAL ASSETS $67,895,248 $51,645,726
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $4,139,121 $4,289,341
Accounts payable, trade 885,286 416,463
Amount due to a stockholder 69,587 170,091
Income tax payable 618,664 362,326
Accrued liabilities and other
payable 2,334,384 1,387,427
Total current liabilities 8,047,042 6,625,648
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value;
1,000,000 shares authorized; 0
shares issued and outstanding as
of December 31, 2009 and 2008 -- --
Common stock, $0.001 par value;
100,000,000 shares authorized;
23,413,639 and 23,026,301 shares
issued and outstanding as of
December 31, 2009 and 2008 23,414 23,026
Additional paid-in capital 16,888,532 16,752,945
Statutory reserve 5,614,517 4,883,700
Accumulated other comprehensive
income 3,576,135 3,448,436
Retained earnings 33,745,608 19,911,971
Total stockholders' equity 59,848,206 45,020,078
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $67,895,248 $51,645,726
CHINA MARINE FOOD GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATION AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(Currency expressed in United States Dollars ("US$"),
except for number of shares)
Years ended December 31,
2009 2008
Revenue, net $69,585,683 $48,798,804
Cost of revenue (inclusive of
depreciation and amortization) (50,456,225) (33,606,972)
Gross profit 19,129,458 15,191,832
Operating expenses:
Depreciation and amortization (79,725) (58,310)
Sales and marketing (608,685) (608,259)
General and administrative (2,276,006) (2,067,802)
Total operating expenses (2,964,416) (2,734,371)
Income from operations 16,165,042 12,457,461
Other income (expenses):
Subsidy income 309,901 68,225
Rental income 82,299 73,941
Interest income 288,687 505,173
Interest expense (230,433) (319,229)
Income before income taxes 16,615,496 12,785,571
Income tax expense (2,051,042) (1,662,761)
NET INCOME $14,564,454 $11,122,810
Other comprehensive income:
- Foreign currency
translation gain 127,699 2,195,540
COMPREHENSIVE INCOME $14,692,153 $13,318,350
Net income per share - basic $0.63 $0.48
Net income per share - diluted $0.60 $0.48
Weighted average shares
outstanding - basic 23,062,839 23,010,842
Weighted average shares
outstanding - diluted 24,391,942 23,010,842
CHINA MARINE FOOD GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
(Currency expressed in United States Dollars ("US$"))
Years ended December 31,
2009 2008
Cash flows from operating activities:
Net income $14,564,454 $11,122,810
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 330,419 237,400
Loss on disposal of property,
plant and equipment 1,386 156,681
Stock issued to an executive 66,975 77,136
Stock issued for service 69,000 96,420
Allowance for doubtful accounts 70,425 3,196
Changes in operating assets and
liabilities:
Accounts receivable (14,085,053) (639,193)
Inventories 2,802,538 (5,492,153)
Prepaid expenses and other
current assets 175,324 (161,449)
Accounts payable, trade 468,823 (20,157)
Income tax payable 256,338 21,232
Accrued liabilities and other
payable 946,957 598,575
Net cash provided by operating
activities 5,667,586 6,000,498
Cash flows from investing
activities:
Purchase of property, plant and
equipment (353,177) (634,069)
Proceeds from disposal of
property, plant and equipment -- 13,906
Cash paid to construction in
progress (995,235) (3,558,441)
Cash paid to prepayment for land
use right (2,274,323) --
Advances to note receivable (26,399,696) --
Net cash used in investing activities (30,022,431) (4,178,604)
Cash flows from financing activities:
Repayment of amount due to a
stockholder (100,504) (92,297)
Proceeds from short-term borrowings 4,139,121 8,844,844
Payment on short-term borrowings (4,289,341) (5,388,690)
Net cash (used in) provided by
financing activities (250,724) 3,363,857
Effect of exchange rate changes
in cash and cash equivalents 108,494 1,977,909
NET CHANGE IN CASH AND CASH
EQUIVALENTS (24,497,075) 7,163,660
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 31,640,307 24,476,647
CASH AND CASH EQUIVALENTS, END OF
YEAR $7,143,232 $31,640,307
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid for income taxes $1,794,704 $1,641,529
Cash paid for interest $230,433 $319,229
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING TRANSACTIONS
Transfer from construction in progress to
property, plant and equipment $2,600,090 $--
For more information, please contact:
COMPANY
Marco Hon Wai Ku, CFO
Suite 815, 8th Floor
Ocean Centre, Harbour City
Kowloon, HONG KONG
Tel: +852-2111-8768
Email: [email protected]
Web: http://www.china-marine.cn
INVESTOR RELATIONS
John Mattio, SVP
HC International, New York
Tel: +1-203-616-5144 (U.S.)
Email: [email protected]
Web: http://www.hcinternational.net
SOURCE China Marine Food Group Limited
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