Andatee China Marine Fuel Reports 2011 Third Quarter And Nine Month Financial Results

Company to Hold Quarterly Conference Call with Accompanying Slide Presentation on Tuesday, November 15, 2011, at 9 a.m. ET

Nov 14, 2011, 16:40 ET from Andatee China Marine Fuel Services Corporation

DALIAN, China, Nov.14, 2011 /PRNewswire-Asia/ -- Andatee China Marine Fuel Services Corporation (NASDAQ: AMCF) ("Andatee" or "the Company"), a leading producer, distributor, and retailer of quality marine fuel for small cargo and fishing vessels in China, today announced financial results for its third quarter and nine months ended September 30, 2011.

Q3 2011 Financial Highlights

  • Total revenues of $65.8 million, an increase of 14.3% year over year
  • Net income attributable to shareholders of $2.3 million, compared to $2.6 million in the prior-year period
  • Earnings per share of $0.23

Nine Months 2011 Financial Highlights

  • Total revenues of $173.2 million, an increase of 31.8% from the prior-year period
  • Net income attributable to shareholders of $5.9 million, compared to $6.7 million in the prior-year period
  • Earnings per share of $0.61

Operational Highlights

  • Total sales volume (metric tons of blended fuel) in Q3 increased 5% year over year to 90,000 tons
  • Higher demand for fuel products as a result of operations at new blending facilities in Zibo City, Shandong province, and Panjin City, Liaoning province, which were completed in May 2011 and June 2011, respectively

Outlook for 2011 (Excludes any acquisitions that the Company may consummate this year)

  • Reiterates revenue guidance of between $225 million and $275 million and raises net income guidance to between $7 million and $9 million (from between $5 million and $8 million) for the year ending December 31, 2011, as a result of a more stable global economic environment causing fewer fluctuations in costs of inventory (significant increases and decreases in oil prices)
  • Expects total sales volume to increase between 7% and 24% for the year ending December 31, 2011

Mr. Fengbin An, Chairman, CEO, and President of Andatee China Marine Fuel Services Corporation, stated, "We are pleased to report continued top-line growth during the 2011 third quarter, with Andatee's revenues growing over 14% and total sales volume growing over 5% from the prior-year period. During the third quarter, we typically experience seasonality caused by restrictions on boats and vessels from fishing during the period from June to September, which is the breeding season for many varieties of fish. However, we believe that increased oil prices and continued oil price fluctuations were the primary reasons behind reduced demand for our fuel products during the period. As our competitors find it more and more difficult to operate in a tightening economic environment, we feel that our customers and suppliers increasingly recognize the value of our 'Xingyuan' brand's consistent level of quality, service, cost-efficiency, and reliability. Positive word-of-mouth feedback from customer to customer ultimately translates into an overall positive impression of our 'Xingyuan' brand, which we believe is critical to the success of our business. With the support of our customers and suppliers, we continue to build our share in a highly fragmented market with new customers across China. We remain committed to improving all aspects of our operations, which includes expanding our supplier network for procuring raw material, expanding our blending capacity by building and acquiring additional facilities, and improving distribution."

Operational Review

During the third quarter of 2011, the Company's sales volume of its blended fuel products increased 5% to 90,000 tons from 86,000 tons in the prior-year period. This increase was primarily the result of increased sales of the Company's #4 blended marine fuel product, which was contributed by additional capacity at the new blending facilities in Zibo City, Shandong province, and Panjin City, Liaoning province, and is utilized by smaller fishing vessels. At November 14, 2011, the Company offered six separate blended fuel products, which service smaller fishing vessels to larger handysize cargo ships.

For the nine months ended September 30, 2011, sales volume of its blended fuel products increased 11% to 228,000 tons from 205,000 tons in the prior-year period. This increase in sales volume was primarily driven by overall high demand for the Company's blended fuel products, specifically increased demand for the Company's #4 blended fuel product in the third quarter of 2011, demand driven by the new blending facilities in the Shandong and Liaoning provinces, expansion of the Company's existing distribution network, and ongoing efforts in promoting its #1 blended marine fuel product. To continue the growth in sales volume through the end of the year, the Company remains focused on enhancing its marketing efforts tailored to "retail", or individual, operations and expanding its distribution base in southern China.

The Company continues to make progress in ensuring that the necessary personnel and equipment are in place at its new blending facilities in Shandong and Liaoning provinces, which began contributing revenues during the 2011 third quarter. The Company expects to continue ramping up these two facilities with both fully operational by the end of the year. Andatee expects these facilities to substantially improve its production capabilities in blending, while also reducing the cost of transporting raw materials from major suppliers in these provinces.

The Company is also continuing to execute its plan to set up market development offices in large cities. Andatee expects to utilize these offices to establish an effective sales and marketing network to pursue organic expansion possibilities, such as new supply agreements and customer sales, while also providing solid foundations to pursue its acquisition-driven growth strategy in neighboring areas around major cities.

The Company is making progress in the relocation of its headquarters to Shanghai, which provides a more central location for management and sales staff. The Company has taken a gradual approach to this relocation to demonstrate its commitment to continuing close relationships with suppliers in northern China, while beginning to build new relationships with suppliers in central and southern China. The Company will maintain a small staff at offices in Dalian, where Andatee currently has its headquarters.

Market Overview

During the 2011 third quarter, the average international oil price increased to $91 per barrel, compared to $78 per barrel in the prior-year period. Andatee uses oil refinery by-products as raw materials for production, such as tar and heavy diesel, blends the products at its facilities, and then sells its "Xingyuan" brand to customers at a favorable rate to the market.

Mr. An continued, "We continue to closely monitor the movement of global oil prices, in conjunction with demand for our fuel products. Higher oil prices had a positive effect on our revenues during the 2011 third quarter, but like in the 2011 second quarter, we were unable to pass the entirety of the increase to our customers and suffered some adverse effects from increased raw material costs. However, oil prices did not fluctuate as severely this quarter as they did in the previous quarter, which had a positive effect on our margins and demand for our products during the three months ended September 30, 2011."

2011 Third Quarter Financial Review

  • The Company reported revenues for the 2011 third quarter of $65.8 million, an increase of 14.3% from $57.5 million in the third quarter of 2010. The increase was largely due to increased sales volume and higher global oil prices.
  • Gross profit for the 2011 third quarter was $6.3 million, compared to $5.8 million in the prior-year period. Gross margin was 9.5% for the three months ended September 30, 2011, compared to 10.0% in the prior-year period. The decrease was largely due to increased costs of raw materials, which the Company managed to partially pass through to its customers during the 2011 third quarter.
  • The Company's selling, general and administrative (SG&A) expenses for the 2011 third quarter increased 45.7% to $2.8 million, or 4.2% of revenues, from $1.9 million, or 3.3% of revenues, in the prior-year period. This increase in SG&A expenses as a percentage of revenues was primarily due to increased compensation expenses for sales employees as a result of increased sales, an increase in promotional expenses to market the Company's products produced at the new blending facilities in Zibo City and Panjin City, and expenses for relocating the Company's headquarters from Dalian to Shanghai. The Company believes the long-term benefits of these initiatives will more than mitigate any immediate impact on its expense line.
  • The Company reported net income for the third quarter of 2011 of $2.3 million, or $0.23 per diluted share, based on 9.8 million weighted average diluted shares outstanding, compared to net income of $2.6 million, or $0.27 per diluted share, based on 9.8 million diluted shares outstanding, in the prior-year period.

Nine Months 2011 Financial Review

  • The Company reported revenues for the first nine months of 2011 of $173.2 million, an increase of 31.8% compared to $131.4 million in the third quarter of 2010. This increase was largely the result of increased sales volume and higher global oil prices, as mentioned in the third quarter financial summary.
  • Gross profit increased 7.4% to $15.7 million from $14.6 million in the prior-year period. Gross margin was 9.1% for the nine months ended September 30, 2011, compared to 11.1% for the prior-year period. The decrease was primarily due to increased costs of raw materials, as mentioned in the third quarter financial summary.
  • The Company reported net income for the first nine months of 2011 of $5.9 million, or $0.61 per diluted share, based on 9.7 million weighted average diluted shares outstanding, compared to net income of $6.7 million, or $0.72 per diluted share, based on 9.3 million diluted shares outstanding, in the prior-year period. This decrease was primarily the result of increased costs of raw materials and higher SG&A expenses incurred, as mentioned in the third quarter financial summary.

Balance Sheet Highlights

At September 30, 2011, Andatee's cash and cash equivalents (excluding $10.7 million in restricted cash) were $6.3 million, total debt was $27.9 million, and stockholders' equity was $57.6 million, compared to $10.8 million, $36.3 million, and $49.9 million, respectively, at December 31, 2010.

Outlook for 2011

Mr. An concluded, "Andatee is reiterating its revenue guidance for 2011, but is raising net income guidance for the year as we have seen global oil prices become more stable during recent months, ultimately having a more positive effect on our bottom line. We continue to monitor and attempt to mitigate the effects of the fluctuations in raw material costs on our bottom line. While we are pleased with the upwards of 30% growth in revenues for the first nine months of 2011, we remain focused on growing our sales volume and revenues and confident that our improving brand recognition and balanced fleet growth will continue to drive our growth in China's marine fuel market. We also continue to identify and evaluate potential acquisition targets based on a strict set of criteria and conservative approach and, when appropriate, will work to acquire target companies with facilities in areas that fit into Andatee's growth plans. We remain confident in the long-term prospects of our industry and will continue to work hard to achieve balanced and stable growth in our business."

Estimated Financial Results (unaudited) ($ in millions)

For the year ended December 31, 2011

For the year ended December 31, 2010

Total Revenue

$225 - $275

$191.2

Net Income

$7 - $9

$8.9

Conference Call

The Company will discuss these results in a conference call Tuesday morning (November 15, 2011) at 9 a.m. ET.

Participant Dial-In Numbers: (877) 407-9210 (U.S.) (201) 689-8049 (International)

The call will also be simultaneously broadcast over the Internet.  To listen to the live webcast, please go directly to the Company's website at http://www.andatee.com or click on the conference call link, http://www.investorcalendar.com/IC/CEPage.asp?ID=166347. The Company will also have an accompanying slide presentation available in PDF format on its homepage prior to the conference call.

About Andatee China Marine Fuel Services Corporation

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. Andatee 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 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, Tianjin, 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. To the extent that any statements made here are not historical, these statements are essentially forward-looking. The Company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and/or similar expressions to identify forward-looking statements in this press release. Undue reliance should not be placed on forward-looking information. 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, oil price stability, 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. Additional risks that could affect our future operating results are more fully described in our U.S. Securities and Exchange Commission filings, including our Annual Report on Form 10-K/A for the year ended December 31, 2010, filed with the SEC on April 4, 2011, and other subsequent filings. These filings are available at http://www.sec.gov. The Company may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the SEC and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.

CONTACT:

Andatee China Marine Fuel Services Corp. Mr. Wen Tong Chief Financial Officer +86-411-8360-4683 bill.wen@andatee.com http://www.andatee.com

INVESTOR RELATIONS:

The Equity Group Inc. Adam Prior Vice President (212) 836-9606 aprior@equityny.com

Carolyne Yu Account Executive (212) 836-9610 cyu@equityny.com

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

Three months ended September 30,

Nine months ended September 30,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenues

$                     65,751,882

$                     57,530,234

$                   173,152,081

$                   131,364,805

Cost of revenues

59,480,565

51,776,440

157,460,684

116,758,501

Gross profit

6,271,317

5,753,794

15,691,397

14,606,304

Operating expenses

          Selling expenses

1,946,626

1,210,861

3,466,573

2,684,739

           General and administrative expenses

843,131

703,263

2,580,676

2,004,308

Total operating expenses

2,789,757

1,914,124

6,047,249

4,689,047

Income from operations

3,481,560

3,839,670

9,644,148

9,917,257

Other expense

           Interest expense

(404,351)

(330,813)

(1,668,280)

(582,892)

           Other expense

6,756

(47,358)

(1,156)

(45,501)

      Total other expense

(397,595)

(378,171)

(1,669,436)

(628,393)

Net income before tax provision

3,083,965

3,461,499

7,974,712

9,288,864

      Tax provision

927,265

713,577

2,176,547

2,327,977

      Net income

2,156,700

2,747,922

5,798,165

6,960,887

      Net (loss) income attributable to the noncontrolling interest

(116,935)

107,717

(132,778)

273,508

      Net income attributable to the Company

$                       2,273,635

$                       2,640,205

$                       5,930,943

$                       6,687,379

      Foreign currency translation adjustment

661,064

752,872

1,875,614

898,471

      Comprehensive income attributable to the Company

2,934,699

3,393,077

7,806,557

7,585,850

      Comprehensive (loss) income attributable to the noncontrolling interest

(116,935)

107,717

(132,778)

273,508

      Comprehensive income

$                       2,817,764

$                       3,500,794

$                       7,673,779

$                       7,859,358

      Basic and diluted weighted average shares outstanding

9,779,092

9,758,821

9,747,268

9,265,175

      Basic and diluted net earnings per share

$                                0.23

$                                0.27

$                                0.61

$                                0.72

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2011

2010

(Unaudited)

(Audited)

ASSETS

Current assets

    Cash and cash equivalents

$                       6,308,556

$                     10,813,103

    Accounts receivable, net

2,946,329

6,203,662

    Other receivables, net

1,007,850

2,909,634

    Inventories

12,093,282

12,542,421

    Advances to suppliers

10,322,198

14,396,859

    Deposit for purchase of land use rights

688,738

1,397,443

    Prepaid expense

209,752

455,700

    Deferred tax assets

46,577

45,004

    Other current assets

-

452,928

Total current assets

33,623,282

49,216,754

Property, plant and equipment, net

40,601,921

21,443,141

Construction in progress

1,808,797

14,622,609

Intangible assets, net

2,874,497

2,839,383

Goodwill

1,196,441

1,156,034

Restricted cash

10,715,348

17,022,770

Total assets

$                     90,820,286

$                   106,300,691

LIABILITIES AND EQUITY

Current liabilities

   Accounts payable

$                       1,965,164

$                       1,445,218

   Short-term loan

4,226,344

4,536,586

   Taxes payable

1,266,668

10,195,420

   Advances from customers

1,613,641

6,900,193

   Accrued liabilities

45,507

193,517

   Dividends payable

248,146

239,766

   Bank notes payable

23,636,221

31,761,396

   Construction project payable

-

480,403

   Other payable

170,560

635,332

Total current liabilities

33,172,251

56,387,831

Total liabilities

33,172,251

56,387,831

Commitments and contingencies

Equity

Stockholder’s equity of the Company

Common stock, $0.001 par value; 5,000,000 shares authorized; 9,610,159 shares issued and 9,518,967 shares outstanding as of September 30, 2011 and December 31, 2010

9,610

9,610

Treasury stock, at cost; 91,192 shares

(497,693)

(497,693)

Additional paid-in capital.

29,888,556

29,827,160

Accumulated other comprehensive income

3,682,019

1,806,405

Retained earnings

22,373,948

16,443,005

Total stockholders' equity of the Company

55,456,440

47,588,487

Noncontrolling interest

2,191,595

2,324,373

Total equity

57,648,035

49,912,860

Total liabilities and equity

$                     90,820,286

$                   106,300,691

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30,

2011

2010

(Unaudited)

(Unaudited)

Cash flows from operating activities:

    Net income attributable to the Company

$                    5,930,943

$                6,687,379

    Adjustments to reconcile net income to net cash  

     provided by operating activities:

        Noncontrolling interest  

(132,778)

273,508

        Option issued for services

61,396

204,953

        Depreciation

869,377

428,433

        Amortization

63,145

51,580

        Loss on disposal of property, plant and equipment

-

52,348

Changes in operating assets and liabilities:

     Accounts receivable

3,252,123

(1,393,253)

      Inventories

449,139

(205,840)

      Other receivables

1,901,784

(2,679,407)

      Advances to suppliers

4,074,661

(3,037,095)

      Prepaid expense

245,948

149,767

      Other assets

452,928

-

      Accounts payable

519,946

(209,637)

      Accrued liabilities

(148,010)

-

      Advances from customers

(5,286,552)

2,029,867

      Taxes payable

(8,930,325)

385,093

      Construction project payable

(480,403)

-

      Other payable

(464,772)

601,225

Net cash provided by operating activities

2,378,550

3,338,921

Cash flows from investing activities

    Consideration for acquisition

-

(1,060,002)

    Cash acquired by acquisition

-

1,253,277

    Certificate of deposit

-

(11,212,135)

    Purchase of property and equipment

(1,018,752)

(2,774,406)

    Construction contracts  

(6,195,593)

(11,737,994)

    Refunds toward purchase of land use right

708,705

-

    Payment received from related party  

-

122,667

Net cash used in investing activities

(6,505,640)

(25,408,593)

Cash flows from financing activities

     Proceeds from Initial Public Offering

-

19,989,504

     Proceeds from short term loans

3,443,688

4,478,136

     Repayment of short term  loans

(3,753,930)

(10,238,109)

     Payment to escrow account for bank notes

6,307,422

-

     Proceeds from bank notes

23,636,221

22,693,002

     Repayment of bank notes

(31,761,396)

-

Net cash provided by (used in) financing activities

(2,127,995)

36,922,533

Effect of exchange rate on cash

1,750,538

834,442

Net increase in cash and cash equivalents

(4,504,547)

15,687,303

Cash and cash equivalents, beginning of period

$                  10,813,103

$                1,539,009

Cash and cash equivalents, end of period

$                    6,308,556

$              17,226,312

Supplemental cash flow information:

     Cash paid during the period for:

          Interest

$                    1,833,163

$                   634,285

          Income taxes

$                    5,868,167

$                1,964,324

SOURCE Andatee China Marine Fuel Services Corporation



RELATED LINKS

http://www.andatee.com


http://www.investorcalendar.com/IC/CEPage.asp?ID=166347