Andatee China Marine Fuel Services Announces Second Quarter 2010 Financial Results
DALIAN, China, Aug. 13 /PRNewswire-Asia/ -- Andatee China Marine Fuel Services Corporation (Nasdaq: AMCF), the leading independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China, today announced financial results for the second quarter ended June 30, 2010
Second Quarter 2010 Highlights -- Revenue increased 58.2% to $44.1 million compared to the second quarter of 2009 -- Gross profit was up 54.7% in second quarter 2010 to $5.3 million compared to same period last year -- Income from operations was $3.9 million, up 63.5% from $2.4 million in the second quarter 2009 -- Operating margin was 8.8% -- Net income attributable to Andatee shareholders was $2.7 million, or $0.28 per diluted earnings per share
"We are delighted to report a strong quarter with top- and bottom-line growth exceeding 50% compared to the same period in 2009. In June 2010, we have achieved a major milestone by signing exclusive agreements with Haiyu Fishery Limited Corporation and Jinghai Group to supply marine fuel, on an exclusive basis, for a period of 10 years. During the second quarter, we also acquired 52% stake in Mashan Xingyuan, which is critical to penetrating the market in Shandong province. Subsequently, we have also acquired 52% stake in Hailong Petrochemical Co., Ltd., which we anticipate will be accretive to our earnings, and instrumental to our geographic expansion into Tianjin, one of the largest port cities in China," said Mr. An Fengbin, Chairman, CEO and President of Andatee China Marine Fuel Services Corporation. "In addition, we are currently building a 'one stop depot' wharf to continue our strategy to become an integrated marine fuel services company providing value-added services, and securing more attractive margins."
Second Quarter 2010 Results
Revenues for the second quarter ended June 30, 2010, were $44.1 million, which represented an increase of approximately 58% as compared with $27.8 million during the same period in 2009. This increase was attributable to an increase in sales volume and to higher average crude oil price prevailing in the marketplace.
Total sales volume during the second quarter of 2010 increased 21.6% to 73,000 tons from 60,000 tons in the corresponding quarter last year as a result of increased fishing activities during the subject period. International crude oil price rose from an average of $63 per barrel in the second quarter of 2009 to $77 per barrel during the subject quarter.
For the Six Months ended June 30, 2010 2009 Sales volume (tons) 120,000 115,500 Retail sales/revenue (% Increase) 48.8% 38% For the Six Months ended June 30, Product Type (% of revenue) 2010 2009 #2 9.5% 8.7% #3 10.1% 10.5% #4 65.1% 70.9% 180CST 10.3% 8.4% 120CST 5.1% 1.5%
Gross profit increased 54.7% in the second quarter of 2010 to $5.3 million from $3.4 million second quarter last year. Gross profit margin was 12.0% for the second quarter of 2010, same as the corresponding period last year.
Selling, general and administrative expenses were approximately $1.4 million in the second quarter of 2010 as compared with $1.0 million during the same period last year. The increase was primarily due to higher compensation expenses as a result of higher sales volume and increased promotional expenses related to marketing the Company's products in the area of Mashan, where its newly acquired subsidiary is located.
Income from operations in the second quarter of 2010 was $3.9 million, representing 63.5% increase from $2.4 million during the same period last year. Operating margin was 8.8% in the second quarter of 2010 compared to 8.5% in the second quarter of 2009.
Net income attributable to Andatee shareholders during the second quarter of 2010 was $2.7 million, or $0.28 per diluted share, compared to $1.7 million, or $0.29 per share, for second quarter of 2009. Diluted weighted average shares outstanding was 9.6 million in second quarter 2010 and 6 million in the same period in 2009.
Financial Condition
As of June 30, 2010, Andatee had $13.4 million in cash and cash equivalents, and approximately $27.3 million in working capital surplus, as compared to $1.5 million in cash and $3.9 million in working capital for the quarter ended December 31, 2009. Stockholders' equity as of June 30, 2010 was $41.8 million, an increase of 137.7% over the $17.6 million recorded as of December 31, 2009.
Six Months ended June 30, 2010 Results
For the first half of 2010, revenue increased to $73.8 million, up 39.1% from $53.1 million in the corresponding period of 2009. The proportion of retail sales as a percentage of revenue was 48.8% during the first half of 2010 compared to 38.0% of revenue in first half of 2009. Gross profit increased 38.1% to $8.8 million, as compared to $6.4 million in the same period one year ago. Gross margin was 12.0% in first half of 2010, same as the corresponding period in 2009. Operating income increased 39.9% to $6.1 million from $4.3 million. Net income was $4.0 million, or $0.45 per diluted share, a 26.9% increase from $3.2 million or $0.53 per diluted share.
Business Outlook
Sea freight shipping activities at ports in China remained relatively strong, driving steady growth in the marine bunkering industry in China. Fishing activities also picked up during the second quarter 2010 due to the warmer weather conditions suitable for fishing activities. Andatee believes its success in implementing its business strategies to increase market share for retail sales, to acquire retail facilities to reduce risk during volatile oil prices periods, and to build retail points in strategic locations to capture market growth continue to strengthen the Company's market position in the marine fuel services industry in China.
"Given the highly fragmented nature of the marine fuel industry for fishing and smaller vessels, we are committed in our effort to expand our geographic footprint to capture market share and build our 'Xingyuan' brand. In addition to pursuing acquisition candidates to accelerate our growth, we expect to open a representative office in Shenzhen to distribute our #2 fuel blend to extend the reach of our brand and to benefit from the mild winter in Southern China to mitigate the seasonality in our existing markets," said Mr. An. "We remain committed to establishing a solid foundation for our marine fuel business, while expanding into a higher margin product and service offering platform related to our 'one-stop marine depot' business model to create higher value for our shareholders," concluded Mr. An.
Conference Call
Andatee will conduct a conference call at 9:00 a.m. ET on Friday, August 13, 2010 to discuss its second quarter 2010 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 272-5391. International callers should dial (706) 634-4940. When prompted, please mention conference passcode: 92718445
If you are unable to participate in the call at this time, a replay will be available for 14 days starting on August 13, 2010 at 10:00 a.m. Eastern Daylight Time. To access the replay, dial (800) 642-1687. International callers dial 706-645-9291, and enter passcode 92718445.
About Andatee China Marine Fuel Services
Andatee China Marine Fuel Services Corporation is a leading independent operator engaged in the production, storage, distribution, wholesale purchase and sale of blended marine fuel oil for cargo and fishing vessels in Northern China. Headquartered in the City of Dalian, a key international shipping hub and an international logistics center in Northern China, Andatee maintains operations in Liaoning, Shandong and Zhejiang Provinces in the People's Republic of China.
Andatee China Marine Fuel Services provides customers with value-added benefits, including single-supplier convenience, competitive pricing, logistical support and fuel quality control. Its products are substitutes for diesel used throughout the east China fishing industry. Backed by core facilities, such as storage tanks, marine fuel pumps, blending facilities and berths (the space allotted to a vessel at the wharf) and small to medium sized cargo vessels, its sales network covers major depots along the towns of Dandong, Shidao and Shipu along the east coast of China. Additional information about the Company is available at http://www.andatee.com .
Safe Harbor Relating to the Forward Looking Statements
Statements contained in this press release not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule under the Private Securities Litigation Reform Act of 1995. All forward-looking statements included herein are based upon information available to the Company as of the date hereof and, except as is expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. As a result, investors should not place undue reliance on these forward- looking statements. To the extent that any statements made here are not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "may," "anticipates," "believes," "should," "intends," "estimates" and other words of similar meaning. The Company may also make written or oral forward-looking statements in its periodic reports filed with the U.S. Securities and Exchange Commission and other written materials and in oral statements made by its officers, directors or employees to third parties. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by these forward-looking statements. Such risk factors include, without limitation, our ability to properly execute our business model, to address price and demand volatility, to counter weather and seasonal fluctuations, to attract and retain management and operational personnel, potential volatility in future earnings, fluctuations in the Company's operating results, our ability to expand geographically into new markets and successfully integrate future acquisitions, our ability to integrate and capitalize on the recent acquisitions in Mashan and other markets, PRC governmental decisions and regulation, and existing and future competition that the Company is facing. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the Company's filings with the Securities and Exchange Commission under the caption "Risk Factors" in such filings.
FINANCIAL TABLES FOLLOW ANDATEE CHINA MARINE FUEL SERVICES CORPORATION COMBINED AND CONSOLIDATED BALANCE SHEETS June 30, December 31, 2010 2009 (Unaudited) (Audited) ASSETS Current assets Cash and cash equivalents $13,426,813 $1,539,009 Accounts receivable, net 2,209,445 2,515,403 Other receivables, net 1,365,753 1,307,474 Inventories 17,051,730 13,302,530 Advances to suppliers 10,859,388 7,691,266 Related party receivable -- 122,667 Deferred expense -- 150,943 Deferred tax assets 113,216 112,743 Total current assets 45,026,345 26,742,035 Property, plant and equipment, net 11,973,600 10,441,246 Construction in progress 456,544 632,202 Intangible assets, net 2,778,511 2,691,974 Goodwill 1,122,619 1,117,923 Total assets $61,357,619 $41,625,380 LIABILITIES AND EQUITY Current liabilities Accounts payable $179,992 $565,802 Short-term loan 5,140,558 10,238,109 Taxes payable 9,828,743 11,001,715 Advances from customers 2,116,712 456,715 Dividends payable 232,835 231,861 Other payable 159,911 287,914 Total current liabilities 17,658,751 22,782,116 Total liabilities 17,658,751 22,782,116 Commitments and contingencies Equity Stockholder's equity of the Company Common stock: par value $.001; 50,000,000 shares authorized; 9,610,159 and 6,000,000 shares issued and outstanding at June 30, 2010 and December 31, 2009 respectively 9,610 6,000 Additional paid-in capital 29,533,555 9,533,619 Other comprehensive income 634,239 488,640 Retained earnings 11,591,168 7,543,994 Total stockholders' equity of the Company 41,768,572 17,572,253 Noncontrolling interest 1,930,296 1,271,011 Total equity 43,698,868 18,843,264 Total liabilities and equity $61,357,619 $41,625,380 ANDATEE CHINA MARINE FUEL SERVICES CORPORATION COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Three months ended June 30, Six months ended June 30, 2010 2009 2010 2009 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues $44,053,481 $27,843,394 $73,834,571 $53,080,312 Cost of revenues 38,781,366 24,435,690 64,982,061 46,671,231 Gross profit 5,272,115 3,407,704 8,852,510 6,409,081 Operating expenses Selling expenses 736,327 436,150 1,473,878 1,255,722 General and admini- strative expenses 676,750 611,243 1,301,045 807,670 Total operating expenses 1,413,077 1,047,393 2,774,923 2,063,392 Income from operations 3,859,038 2,360,311 6,077,587 4,345,689 Other income (expense) Interest income -- (24,560) -- -- Interest expense (131,615) (65,667) (252,079) (65,667) Other expense 2,029 (1,593) 1,857 (1,593) Total other income (expense) (129,586) (91,820) (250,222) (67,260) Net income before tax provision 3,729,452 2,268,491 5,827,365 4,278,429 Tax provision 1,047,664 467,562 1,614,400 974,402 Net income 2,681,788 1,800,929 4,212,965 3,304,027 Net income attri- butable to the noncontrolling interest 24,799 61,022 165,791 114,003 Net income attri- butable to the Company $2,656,989 $1,739,907 $4,047,174 $3,190,024 Foreign currency translation adjustment 166,015 363 145,599 14,542 Comprehensive income attri- butable to the Company 2,823,004 1,740,270 4,192,773 3,204,566 Comprehensive income attri- butable to the noncontrolling interest 24,799 61,022 165,791 114,003 Comprehensive income $2,847,803 $1,801,292 $4,358,564 $3,318,569 Basic and diluted weighted average shares outstanding 9,606,313 6,000,000 9,014,261 6,000,000 Basic and diluted net earnings per share $0.28 $0.29 $0.45 $0.53 ANDATEE CHINA MARINE FUEL SERVICES CORPORATION COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended June 30, 2010 2009 (Unaudited) (Unaudited) Cash flows from operating activities: Net income attributable to the Company $4,047,174 $3,190,024 Adjustments to reconcile net income to net cash provided by operating activities: Noncontrolling interest 165,791 114,003 Option issued for services 63,938 -- Depreciation 253,187 92,038 Amortization 23,119 34,735 Changes in operating assets and liabilities: Accounts receivable 305,806 (764,788) Inventories (3,749,200) (3,190,129) Other receivables (109,917) 1,187,582 Advances to suppliers (3,168,122) (882,440) Prepaid expense 150,943 (13,411) Accounts payable (385,810) 481,323 Advances from customers 1,659,997 275,906 Taxes payable (1,173,445) 609,841 Other payable (195,403) 913,754 Net cash provided by (used in) operating activities (2,111,942) 2,048,438 Cash flows from investing activities Consideration for acquisition (534,618) (2,209,483) Certificate of deposit -- 1,519,750 Purchase of property and equipment (132,708) (3,266) Construction contracts (491,319) (4,898,381) Payment received from related party 122,667 4,357,376 Net cash used in investing activities (1,035,978) (1,234,004) Cash flows from financing activities Proceeds from shareholders 19,989,504 -- Repayment of short-term loans (5,097,551) (876,779) Net cash provided by (used in) financing activities 14,891,953 (876,779) Effect of exchange rate on cash 143,771 6,775 Net increase in cash and cash equivalents 11,887,804 (55,570) Cash and cash equivalents, beginning of period $1,539,009 $4,923,913 Cash and cash equivalents, end of period $13,426,813 $4,868,343 Supplemental cash flow information: Cash paid during the period for: Interest $260,518 $176,259 Income taxes $1,276,549 $653,682 For more information, please contact: Company Contact: Mr. Wen Tong Chief Financial Officer Andatee China Marine Fuel Services Corporation Phone: +86-411-8360-4683 Email: [email protected] Web: http://www.andatee.com CCG Investor Relations Ed Job, CFA Account Manager Phone: +86-21-3133-5075 (China) Phone: +1-646-213-1914 (U.S.) Email: [email protected] Web: http://www.ccgirasia.com
SOURCE Andatee China Marine Fuel Services Corporation
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