American Lorain Corporation Reports Financial Results for the Second Quarter 2010
JUNAN COUNTY, China, Aug. 10 /PRNewswire-Asia-FirstCall/ -- American Lorain Corporation (NYSE Amex: ALN) ("American Lorain" or "the Company"), an international processed snack foods, convenience foods, and frozen foods company based in Shandong Province, China, today announced its financial results for its second quarter ended June 30, 2010.
Second Quarter 2010 Highlights
-- Revenue was $29.2 million, up 21.9% from 2Q2009 with convenience food
sales improving 62.6% year over year
-- Gross profit was $6.7 million, up 27.0% from 2Q2009 with gross margins
of 23.0%, a 90-basis point improvement over 2Q2009
-- Operating income margin was 15.7% for the quarter, a 255-basis point
improvement over 2009
-- Net income was $2.7 million, up 44.4% from 2Q 2009 and earnings per
diluted shares were $0.10 based on 26.8 million shares
Second Quarter 2010 Results
2Q 2010 2Q 2009 CHANGE
Net Sales $29.2 million $24.0 million +21.9%
Gross Profit $ 6.7 million $5.3 million +27.0%
Net Income $ 2.7 million $1.9 million +44.4%
EPS (Diluted)* $0.10 $0.07 +35.9%
* Weighted average shares outstanding for Q2 2010 was 26,750,592 and for
Q2 2009 was 25,177,640
"Sales of chestnut and convenience food products remain the driving force of our operating performance," began Chairman Si Chen of American Lorain. "Chestnut sales benefitted from a return of export orders in key Asian markets which helps level the seasonality of chestnut in China in the first half of the year. We are confident that our new frozen chestnut products will contribute to revenue in the third quarter and are pleased to report we have begun shipping our frozen chestnut raw materials to our Lorain branded retail counters in China, Japan and the Korean market. Convenience food products remain an exciting growth category for our Company. After a series of new product launches, including lunch box entr¨¦es, bean products and cold dishes, we are pleased to report that customers have been purchasing popular items in each product family and we thus expect strong re-orders for these items through the balance of the year."
Second Quarter 2010 Revenue Segments
Three Months Ended June 30,
$ millions of USD
2010 2009 % Change
Chestnut 14.9 13.9 7.3%
Convenience food 10.3 6.3 62.6%
Frozen foods 4.1 3.8 7.7%
Total $29.2 $24.0 21.9%
Total revenue for the second quarter of 2010 ended June 30, 2010 was $29.2 million, up 21.9% from $24.0 million for the quarter ended June 30, 2009. The increase was primarily due to a higher sales contribution from the convenience food segment, which grew by 62.6% quarter over quarter. In the second quarter of 2010 revenues from convenience food products were 35.1% of total revenues for the quarter, up from 28.9% of total revenues for the quarter ended March 31, 2010. Products in American Lorain's convenience foods product line include "ready to eat" meals and snack foods, "ready to heat" lunch box entrees and "self-heating" meals for military personnel. As of the period ending June 30th 2010, American Lorain has developed and launched more than 100 convenience type foods in the Chinese market and is leveraging its long-standing distributor and retail networks to introduce Lorain(R)-branded convenience foods throughout 5,200 retail points in 26 provinces it currently sells Lorain(R)-branded snack foods.
American Lorain's core product line includes more than 50 varieties of chestnuts and chestnut-based snack. Sales in this category increased 7.3% from the second quarter 2009 and met management expectations. American Lorain's chestnut business accounted for 51% of the Company's revenues and is derived from a combination of domestic and international sales of chestnuts and chestnut-based snack foods. For the quarter, China accounted for 75.4% of chestnut sales. Export markets accounted for the balance of revenues in which Japan, Korea and the United Kingdom remained the largest export markets for the Company.
American Lorain frozen foods are sold in bulk to commercial customers in export markets and quick service restaurant chains like KFC(R) and Pizza Hut(R) restaurants in China. Sales of frozen foods are sold including frozen vegetables and select fruits accounted for 14.0% of revenues in the second of 2010. American Lorain only services a select group of commercial accounts and it is not actively growing this business segment due to its lower margin profile.
Gross profit for the second quarter of 2010 was $6.7 million, a 27.0% increase from $5.3 million in the second quarter of 2009 as a result of increase in revenue. Overall gross profit margin was 23.0% for the second quarter compared to 22.1% for the second quarter of 2009 due to higher margin chestnuts and convenience foods accounting for a higher percentage of revenues in the quarter ended June 30, 2010. Targeted gross margins for each product category are detailed below:
Gross profit margin (%)
Chestnut 25 - 28
Convenience food 22 - 24
Frozen foods 16 - 18
Operating income for the quarter increased by 45.5% to $4.6 million, with operating margin of 15.7%, versus $3.2 million with operating margin of 13.2% in the second quarter of 2009. Sales and marketing expenses and general and administrative expenses remained flat quarter over quarter at approximately $2.1 million for the quarter.
Net income for the quarter was $2.7 million, an increase of 44.4% from $1.9 million in the same period in 2009. Based on 26,750,592 fully diluted shares outstanding, earnings per diluted share were $0.10 per share, a 35.9% increase over the prior year prior.
Six Months Results
Six Months Ended June 30,
$ Millions of USD
2010 2009 % Change
Chestnut 27.8 26.5 4.8%
Convenience food 17.4 7.3 136.3%
Frozen foods 8.6 11.3 (23.8%)
Total $53.8 $45.2 $19.1%
Total revenue for the first six months of 2010 was $53.8 million, up 19.1% from $45.2 million in the prior year's period. For the first six months in 2010, domestic sales accounted for 81.2% of total revenues while international sales accounted for 18.8% with Japan and South Korea contributing 7.9% and 4.5% of total sales respectively. The trend of increased domestic revenue is consistent with the Company's strategy to gain market share with Chinese consumers.
Gross profit in the first half of fiscal year 2010 was $12.4 million, an increase of 19.0% from $10.5 million in the prior year's corresponding period. The gross profit margin remained constant at 23.1% for the six months ended June 30, 2010 compared to the same period of fiscal 2009.
Operating income in the first half of 2010 was $8.0 million, with operating margin of 14.7%, a 28.5% increase from $6.2 million in the prior year's period.
Net income for the first half of fiscal year 2010 was $4.5 million, compared to $3.6 million in the prior year's corresponding period, a 25.7% increase year over year. Earnings per weighted average diluted share were $0.17 based on 26,750,592 million diluted shares.
Financial Condition
As of June 30, 2010, the Company had $10.3 million in cash, down from $1.8 million as of December 31, 2009; working capital was $45.5 million, on June 30, 2010 and accounts receivable turnover in days for the second quarter of 2010 was 63 days. Cash flow from operations and capital expenditures were $5.5 million and $10.0 million for the first six months of 2010, respectively. With strong cash flow generation and no additional capital expenditures planned for the second half of 2010, the Company expects to end the year in a strong financial position.
Recent Events
June 29, 2010 - American Lorain announced that it has signed a letter of intent to acquire Shandong Greenpia Foodstuff Co. Ltd, a privately-owned food processor specializing in Korean kimchi cold dishes. The deal was valued at approximately $4.3 million with $2.1 million in cash and 731,707 shares of ALN common stock and is expected to be completed in Q3 2010 subject to government approval. The deal is consistent with Management's strategy to allocate more capital to its high growth, high margin convenience food business.
Second Quarter 2010 Conference Call
To attend the call, please use the dial information below. When prompted, ask for the "American Lorain Conference Call" and/or be prepared to provide the conference ID.
Date: August 11, 2010
Time: 9:00am ET
Conference Line Dial-In (U.S.): 1-877-941-1428
International Dial-In: 1-480-629-9665
Conference ID: 4344733
Webcast link: http://viavid.net/dce.aspx?sid=0000793E
Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through August 18, 2010. To listen, please call 1-877-870-5176 within the United States or +1-858-384-5517 when calling internationally. Utilize the pass code 4344733 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=0000793E or at ViaVid's website at http://www.viavid.net , where the webcast can be accessed through August 10, 2011.
About American Lorain Corporation
American Lorain Corporation products include chestnut products, convenience food products and frozen food products. The Company currently sells over 230 products to 26 provinces and administrative regions in China as well as to 42 foreign countries. The Company operates through its four direct and indirect subsidiaries and one leased factory located in China. For further information about American Lorain Corporation, please visit the Company's website at http://www.americanlorain.com .
Forward-Looking Statements
This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the PRC, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
-FINANCIAL TABLES FOLLOW-
AMERICAN LORAIN CORPORATION
CONSOLIDATED BALANCE SHEETS
AT JUNE 30, 2010 AND DECEMBER 31, 2009
(Stated in US Dollars)
At June 30, At December 31,
ASSETS 2010 2009
Current Assets
Cash and cash equivalents $10,338,791 $12,111,532
Restricted cash 741,442 1,299,889
Short-term investment 9,413,040 7,320,248
Trade accounts receivable 17,509,252 23,025,772
Other receivables 5,165,035 7,837,675
Related party receivable 167,484 603,116
Inventory 34,075,760 26,400,117
Advance to suppliers 15,153,714 16,938,872
Prepaid expenses and taxes 171,173 905,266
Deferred tax asset 200,072 199,867
Total current assets $92,935,763 $96,642,354
Property, plant and equipment, net 50,638,174 41,280,407
Land use rights, net 3,835,691 3,871,547
Deposit 16,154 16,088
TOTAL ASSETS $147,425,782 $141,810,396
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term bank loans $37,750,096 $35,488,212
Long-term Debt - Current Portion 309,910 --
Accounts payable 2,209,103 2,614,515
Taxes payable 1,197,417 2,235,341
Accrued liabilities and other
payables 4,571,902 6,422,492
Deferred tax liabilities 2,899 --
Customers deposits 1,354,956 13,842
Total Current Liabilities $47,396,283 $46,774,402
Long Term Liabilities
Long term bank loans 12,851 294,873
TOTAL LIABILITIES $47,409,134 $47,069,275
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value,
5,000,000 shares authorized; 0
shares issued and outstanding at
June 30, 2010 and December 31, 2009 -- --
Common stock, $0.001 par value,
200,000,000 shares authorized;
30,240,202 and 30,240,202 shares
issued and outstanding as of June
30, 2010 and December 31, 2009,
respectively 30,240 30,240
Additional paid-in capital 35,723,552 35,268,603
Statutory reserves 8,895,477 8,895,477
Retained earnings 42,995,493 38,455,349
Accumulated other comprehensive
income 5,998,789 6,068,569
Non-controlling interests 6,373,097 6,022,883
$100,016,648 $94,741,121
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $147,425,782 $141,810,396
AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
Three months ended June 30, Six months ended June 30,
2010 2009 2010 2009
Net revenues $29,218,314 $23,965,924 $53,778,530 $45,166,461
Cost of revenues (22,499,645) (18,675,167) (41,335,771) (34,713,370)
Gross profit $6,718,669 $5,290,757 $12,442,759 $10,453,091
Operating expenses
Selling and marketing
expenses (1,194,996) (1,220,317) (2,567,348) (2,391,164)
General and
administrative
expenses (932,210) (914,892) (1,948,662) (1,891,197)
Operating income $4,591,463 $3,155,548 $7,926,749 $6,170,730
Investment income 589 -- 589 --
Government subsidy
income 196,003 97,663 377,424 196,252
Interest and other
income 8,901 127,279 130,982 208,648
Other expenses (44,714) (69,286) (72,237) (181,603)
Interest expense (1,023,129) (744,825) (1,943,553) (1,348,651)
Earnings before tax $3,729,113 $2,566,379 $6,419,954 $5,045,376
Income tax (857,604) (602,706) (1,529,596) (1,183,478)
Net income $2,871,509 $1,963,673 $4,890,358 $3,861,898
Net income
attributable to:
-Common Stockholders $2,679,613 $1,855,628 $4,540,144 $3,611,704
-Non-controlling
Interest 191,896 108,045 350,214 250,194
$2,871,509 $1,963,673 $4,890,358 $3,861,898
Earnings per share
- Basic $0.10 $0.07 $0.17 $0.14
- Diluted $0.10 $0.07 $0.17 $0.14
Weighted average
shares outstanding
- Basic 26,075,413 25,177,640 26,075,413 25,177,640
- Diluted 26,750,592 25,177,640 26,750,592 25,177,640
AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE TH REE AND SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(Stated in US Dollars)
Three months ended June 30, Six months ended June 30,
2010 2009 2010 2009
Cash flows from
operating activities
Net income $2,871,509 $1,963,673 $4,890,358 $3,861,898
Stock and share based
compensation 205,943 -- 454,949 --
Depreciation 322,416 331,026 687,985 665,480
Amortization 33,341 91,615 69,061 135,992
(Increase)/decrease in
accounts & other
receivables 4,205,909 (6,927,729) 8,294,930 (5,234,644)
(Increase)/decrease in
inventories 1,798,055 832,815 (7,675,643) (2,027,754)
Decrease/(increase) in
prepayment 972,209 1,002,431 734,094 908,005
Increase/(decrease) in
accounts and other
payables (1,648,161) (7,086,166) (1,950,117) (8,571,918)
Net cash (used
in)/provided by
operating activities 8,761,221 (9,792,335) 5,505,617 (10,262,941)
Cash flows from
investing activities
Sales (investment) in
short term investment
fund -- (13) 22,227 2,767
(Increase)/decrease in
restricted cash 376,613 -- 558,448 --
Payment of land use
rights (18,318) (98,320) (33,205) (121,009)
Payments for purchase
of equipment & plant (9,618,218) (383,364) (10,045,753) (526,530)
Decrease (increase) in
deposit -- 213,860 -- (2,045)
Net cash used in
investing activities (9,259,923) (267,837) (9,498,283) (646,817)
Cash flows from
financing activities
Bank borrowings 5,297,856 2,886,255 23,151,602 17,535,302
Repayment of bank loans (2,900,729) -- (20,861,829) --
Notes payable -- 1,614,365 -- (3,594,121)
Issue of common stock -- 6,147 -- 6,152
Net cash provided
by/(used in) financing
activities $2,397,127 $4,506,767 $2,289,773 $13,947,333
Net Increase/(decrease)
of Cash and Cash
Equivalents 1,898,425 (5,553,405) (1,702,893) 3,037,575
Effect of foreign
currency translation
on cash and
cash equivalents (89,298) 141,404 (69,848) 952,807
Cash and cash
equivalents-beginning
of year 8,529,664 12,243,722 12,111,532 2,841,339
Cash and cash
equivalents-end of
year $10,338,791 $6,831,721 $10,338,791 $6,831,721
Supplementary cash flow
information:
Interest received $3,998 $1,620 $6,802 $66,610
Interest paid $1,018,530 $744,825 $1,938,954 $1,348,651
Income taxes paid $649,208 $602,706 $2,489,131 $1,183,478
For more information, please contact:
At the company:
American Lorain Corporation
Alan Jin, CFO
Tel: +86-539-731-7959
Email: [email protected]
Web: http://www.americanlorain.com
Investor relations:
John Mattio, SVP
HC International, New York
Tel: +1-203-616-5144
Email: [email protected]
Web: http://www.hcinternational.net
SOURCE American Lorain Corporation
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