China Integrated Energy Reports Fourth Quarter and Full Year 2010 Financial Results

-- Q4 2010 Sales Increase 26.6% to $118.0 million, Net Income Increases 28.0% to $15.3 million with EPS of $0.39

-- FY 2010 Sales of $438.7 million, up 51.5% from 2009, Net Income up 42.1% to $53.8 million with EPS of $1.28

-- Cash flow from operations up over 1,234% to $58.2 million YOY

-- Management to Host Earnings Conference Call on March 10, 2011 at 10:00am ET

Mar 10, 2011, 04:00 ET from China Integrated Energy, Inc.

XI'AN, China, March 10, 2011 /PRNewswire-Asia/ -- China Integrated Energy, Inc. (Nasdaq: CBEH), a leading non-state-owned integrated energy company in the People's Republic of China, today reported financial results for the fourth quarter and year ended December 31, 2010 and provided revenue guidance for 2011.

SUMMARY FINANCIALS

Fourth Quarter 2010 Results

Q4 2010

Q4 2009

CHANGE

Sales

$118.0 million

$93.3 million

+26.6%

Gross Profit

$18.3 million

$13.5 million

+36.3%

Net Income

$15.3 million

$12.0 million

+28.0%

EPS (Fully Diluted)

$0.39

$0.30

+ 30.0%

Full Year 2010 Results

FY 2010

FY 2009

CHANGE

Sales

$438.7 million

$289.6 million

+51.5%

Gross Profit

$63.2 million

$41.5 million

+52.4%

Net Income

$53.8 million

$37.9 million

+42.1%

EPS (Fully Diluted)

$1.28

$1.04

+23.1%

Fourth Quarter of 2010 Financial Results

Sales - Fourth quarter 2010 sales were $118.0 million, an increase of 26.6% from $93.3 million in the fourth quarter of 2009. The increase was due to strong growth in biodiesel sales as newly acquired capacity was brought online, in addition to strong retail gas sales, which were driven by new locations supported by growth at existing locations. China Integrated Energy, Inc. reports revenue under three business segments - Wholesale Distribution of Finished Oil and Heavy Oil Products, Production and Sale of Biodiesel, and Operation of Retail Gas Stations:

Fourth Quarter 2010 Revenue Breakdown

Q4 2010

Q4 2009

CHANGE

Wholesale Distribution of Finished Oil and Heavy Oil Products

% of Sales

$68.6 million

58.1%

$66.1 million

70.8%

+3.8%

Production and Sale of Biodiesel

% of Sales

$21.2 million

18.0%

$15.7 million

16.8%

+35.7%

Operation of Retail Gas Stations

% of Sales

$28.2 million

23.9%

$11.5 million

12.4%

+144.6%

Total Sales

$118.0 million

$ 93.3 million

+26.6%

"Our fourth quarter results demonstrate our ability to continue executing on our growth plans by increasing biodiesel production to drive incremental, high margin revenues," stated Mr. Gao Xincheng, Chief Executive Officer of China Integrated Energy, Inc. "Sales growth was driven during the quarter by a combination of increased sales volume and higher average selling prices. Biodiesel sales increased 35.7% for the fourth quarter of 2010, compared to the fourth quarter of 2009, while retail gas station sales increased 144.6% due to 3 newly acquired or leased gas stations in 2010, strong consumer demand across 13 stations, as well as higher fuel prices at the pump."

Gross Profit and Gross Margin - Gross profit was approximately $18.3 million for the fourth quarter of 2010, an increase of $4.9 million, or 36.3%, as compared to the same period of 2009, and represented gross margins of approximately 15.5% and 14.4% in the respective periods. During the fourth quarter of 2010, gross margins for the wholesale distribution of finished and heavy oil products increased approximately 0.4% to 11.0%, benefiting from an increase in sales of heavy oil products which have higher margins. Gross margins for biodiesel were 30.9% and 31.2% in the fourth quarter of 2010 and 2009, respectively. Retail gas stations generated gross profit margin of 14.9% in the three months ended December 31, 2010 compared to 13.5% for the comparable period of 2009, as the company started to benefit from favorable retail pricing increases in the fourth quarter of 2010.

Operating Expenses - Selling, general and administrative expenses for the fourth quarter of 2010 were approximately $3.1 million compared to $1.7 million for the same period in 2009, an increase of 82.4%, as a result of higher professional fees related to an increase in year-end audit fees as a result of the appointment of a new auditor, ongoing Sarbanes Oxley compliance implementation and employee compensation expenses related to the employee stock option incentive plan.

Net Income – For the quarter ended December 31, 2010, net income was $15.3 million as compared to $12.0 million in the same period of 2009, an increase of $3.3 million, or 28.0%. Diluted earnings per share grew to $0.39 from $0.30 in the fourth quarter of 2009.  

Full Year 2010 Financial Results

Sales - Sales for the full year of 2010 were $438.7 million, a 51.5% increase from the $289.6 million reported in the same period in 2009. Balanced growth across all revenue segments drove the increase. The company continued to expand into new sales channels and territories, with its oil products being sold in 16 provinces and municipalities as of December 31, 2010, including but not limited to Shaanxi Province, Henan Province, Shandong Province, Sichuan Province, Beijing and Shanghai.  The company has also increased penetration in its existing sales territories, with the number of customers in its wholesale distribution segment growing to over 1,200 in 2010. 

Full Year 2010 Revenue Breakdown

FY 2010

FY 2009

CHANGE

Wholesale Distribution of Finished Oil and Heavy Oil Products

% of Sales

$273.1 million

62.2%

$195.9 million

67.6%

+39.4%

Production and Sale of Biodiesel

% of Sales

$74.9 million

17.1%

$55.8 million

19.3%

+34.3%

Operation of Retail Gas Stations

% of Sales

$90.7 million

20.7%

$37.9 million

13.1%

+139.2%

Total Sales

$438.7 million

$289.6 million

+51.5%

Gross Profit and Gross Margin - Gross profit was $63.2 million for the year ended December 31, 2010, an increase of $21.7 million compared to approximately $41.5 million for the same period in 2009, representing gross margins of approximately 14.4% and 14.3%, respectively.  For the year ended December 31, 2010, the gross profit margin for biodiesel oil was 30.5%, up from 28.4% in the same period of 2009, due to favorable pricing adjustments by the NDRC reflecting rising global oil prices and economics of scale through enhanced biodiesel production. The gross profit margin for wholesale distribution of finished oil and heavy oil products and retail gas stations was approximately 10.4% and 10.5%, respectively, for 2010 and 2009, respectively. Gross margin for retail gas stations was 13.1% and 13.5%, respectively, for each year, with the 40 basis point decrease being attributed to the sales promotion in the first quarter of 2010 for the newly acquired or leased gas stations.  

Operating Expenses - Selling, general and administrative expenses for the full year ended December 31, 2010 were $8.9 million compared to $3.9 million for the same period in 2009, an increase of $5.0 million or 124.8%, due to $4.3 million in non-cash stock-based compensation charges, increases in labor costs to support growth, and the expansion of distribution channels and territories.  Total operating expenses as a percentage of sales was 2.0% and 1.4% for the year ended December 31, 2010 and 2009, respectively.

Net Income –Net income for full year 2010 was $53.8 million compared to $37.9 million in the same period in 2009, an increase of $15.9 million or 42.1%. Diluted earnings per share for the full year of 2010 were $1.28 compared to $1.04 in the same period of 2009.

Liquidity and Capital Resources

Cash and cash equivalents were $90.3 million as of December 31, 2010 compared to $62.4 million as of December 31, 2009. Working capital was $137.0 million at December 31, 2010 compared to $121.1 million at December 31, 2009, an increase of 13.0%.  The current ratio was 5.6 to 1 at December 31, 2010.  Net cash from operations was $58.2 million in the full year of 2010, compared to $4.4 million for 2009. The $53.8 million net cash flow increase during 2010 was primarily attributable to the increase in profitability and prudent management of the balance sheet.

Corporate Income Tax

China Integrated Energy, located in Xi'an City, Shaanxi Province, is exempt from the corporate income tax through the end of calendar year 2011. However, our newly acquired Chongqing Tianrun biodiesel plant, located in Chongqing City, is subject to a 25% corporate income tax rate.  

Financial Outlook for 2011

Based on the strong results recorded for the full year of 2010, management expects to report sales of $588.1 million and net income of $72.2 million for the year ended December 31, 2011.

Business Outlook for 2011

China Integrated Energy, Inc.'s management plans to focus on growing each of its three businesses; biodiesel production, wholesale distribution, and retail gas stations with a focused expansion on biodiesel production. On the wholesale distribution and retail side, the company benefits from its strategic location, well-established supplier relationships as well as an extensive distribution network that has valuable railway access to reach remote parts of China that other distribution companies cannot currently reach. China Integrated Energy is the only non-state-owned integrated biodiesel producer with a distribution license in China. The company operates 13 gas stations surrounding Xi'an city and expects to increase that number during 2011.

The company successfully doubled its biodiesel production capacity from 100,000 tons to 200,000 tons with the newly-constructed 50,000-ton biodiesel production facility in Tongchuan City, Shaanxi Province coming online. The facility began testing in the first quarter of 2011 and is expected to be operating at 25% - 30% capacity in the second quarter of 2011 and 70% capacity in the third quarter, ramping to a 100% utilization rate by the fourth quarter. For the full-year 2011, the new facility is expected to contribute approximately $21.6 million in revenue and $5.4 million in net income. At full production, this facility is expected to generate at least $9.0 million in net income at current prices.

On January 3, 2011, the company announced plans to expand its biodiesel production capacity by acquiring assets, including but not limited to infrastructure, land use rights to 15 acres of land, and storage tanks with 15,000 cubic meters of storage capacity in Lin Gao County, Hainan province, for approximately $9.0 million in cash. The company is performing due diligence, and expects to complete the acquisition by the end of the first quarter of 2011.

The company announced plans to build a 300,000-ton biodiesel plant at this facility and has revised its phase one expansion plan to construct a 200,000-ton production facility, from the previously announced 100,000-ton facility. The estimated construction cost of phase one is approximately $37 million and is expected to take eighteen months to complete, which would be  in the third quarter of 2012.

The company continues to invest in developing new biodiesel production technology to further increase the flexibility in feedstock application which it expects to reduce raw materials costs and improve margins.

"Throughout 2010, we witnessed broad-based growth in each of our three business segments, while bringing on new biodiesel capacity online. We are well positioned to capture further market share across our business segments during 2011, said Mr. Gao Xincheng, Chief Executive Officer of China Integrated Energy, Inc. "With our strong balance sheet and cash flow, we intend to augment organic growth with opportunistic acquisitions, such as the Tianrun biodiesel plant and the Hainan Lin Gao Chemical Co. With our products now being sold in 16 provinces and municipalities, we believe we will continue to gain market share by adding new customers and increasing volume to existing ones. With an insatiable appetite for energy to meet China's domestic growth needs, we are well positioned to support our revenue, net income and working capital targets moving forward."  Although additional working capital is required to support the growth of all three business segments, the company believes that it has adequate capital to support its current growth strategies.

Conference Call Information

The conference call will take place at 10:00 a.m. EST on Thursday, March 10, 2011. Interested participants should call 1-877-941-4778 when calling within the United States or 1-480-629-9763 when calling internationally (pass code 4418282).

This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on this link: http://ir.stockpr.com/chinaintegratedenergyinc/conference-calls, or visiting http://www.chinaintegratedenergy.com, where the webcast can be accessed through March 17, 2011.

A playback will be available through March 17, 2011. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 when calling internationally. Utilize the pass code 4418282 for the replay.

About China Integrated Energy, Inc.

China Integrated Energy, Inc. is a leading non-state-owned integrated energy company in China engaged in three business segments: the production and sale of biodiesel, the wholesale distribution of finished oil and heavy oil products, and the operation of thirteen retail gas stations. The Company operates at 200,000-ton biodiesel production capacity with two plants located in Tongchuan City, Shaanxi Province and one plant in Chongqing City, China. The Company utilizes a distribution network covering 16 provinces and municipalities, established over the past 11 years, to distribute both heavy oil and finished oil, including gasoline, petro-diesel and biodiesel. For additional information on the Company please visit http://www.chinaintegratedenergy.com.

An online investor kit including a company presentation, press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.chinaintegratedenergy.com. To subscribe to future releases via e-mail alert, visit http://www.chinaintegratedenergy.com/alerts

Safe Harbor Statement

This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. For example, statements about the future use of the proceeds are forward looking and subject to risks. China Integrated Energy, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For more information, please contact:

China Integrated Energy, Inc.

Susan Zhou

Vice President, Investor Relations

Tel:   +1-305-393-5536

Email: susan.zhou@cbeh.net.cn

Web:   http://www.chinaintegratedenergy.com

HC International, Inc.

Ted Haberfield, Executive VP

Tel:   +1-760-755-2716

Email: thaberfield@hcinternational.net

Web:   http://www.hcinternational.net

CHINA INTEGRATED ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2010

December 31, 2009

ASSETS

Current assets

Cash and cash equivalents

$

90,257,218

$

62,415,443

Accounts receivable

6,329,446

3,099,587

Inventories

23,266,835

20,954,851

Prepayments to suppliers

39,648,018

34,544,100

Lease prepayments

3,787,878

2,835,097

Prepaid expenses and other current assets

3,280,433

7,541,991

Total current assets

166,569,828

131,391,069

Property, plant and equipment, net

34,590,509

7,561,907

Intangible asset, net

18,440,860

-

Land use right

12,609,242

-

Lease prepayments

28,523,075

24,620,685

Goodwill

3,738,220

-

Total assets

$

264,471,734

163,573,661

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Short-term bank loans

$

6,515,152

$

4,395,025

Accounts payable

1,188,574

-

Income tax payable

320,183

-

Receipts in advance from customers

16,661,950

1,903,124

Accrued expenses and other payables

4,925,306

3,943,919

Total current liabilities

29,611,165

10,242,068

Deferred tax liabilities

4,422,813

-

Total liabilities

34,033,978

10,242,068

Stockholders' equity

Series A Convertible preferred stock, $.001 par value (aggregate involuntary liquidation preference $10).   Authorized 3,000,000 shares; issued and outstanding 989,000 shares as of December 31, 2010 and 1,000,000 shares as of December 31, 2009

989

1,000

Series B Convertible preferred stock, $.001 par value (aggregate involuntary liquidation preference $3.65).  Authorized 7,000,000 shares; issued and outstanding 1,605,753 shares as of December 31, 2010 and 2,115,753 shares as of December 31, 2009

1,605

2,115

Common stock, $.0001 par value.  Authorized 79,000,000 shares; issued and outstanding 36,049,807 shares as of December 31, 2010 and 33,269,091 shares as of December 31, 2009

3,605

3,326

Additional paid-in capital

94,658,021

75,858,994

Statutory reserves

4,920,114

4,920,114

Retained earnings

120,891,625

67,072,624

Accumulated other comprehensive income

9,961,797

5,473,420

Total stockholders' equity

230,437,756

153,331,593

Commitments and contingencies

Total liabilities and stockholders' equity

$

264,471,734

$

163,573,661

CHINA INTEGRATED ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

Years ended December 31,

2010

2009

Sales

$

438,682,654

$

289,572,053

Cost of sales

375,498,931

248,101,339

Gross profit

63,183,723

41,470,714

Selling, general and administrative expenses

8,938,859

3,976,121

Income from operations

54,244,864

37,494,593

Other (expenses) income

Interest expense, net

(200,809)

(121,522)

Subsidy income

155,856

541,059

Other expense, net

(154,109)

(43,167)

Total other (expenses) income, net

(199,062)

376,370

Earnings before income tax expense

54,045,802

37,870,963

Income tax expense

226,801

-

Net income

53,819,001

37,870,963

Other comprehensive item:

Foreign currency translation adjustment, net of nil income tax

4,488,377

136,417

Total comprehensive income

$

58,307,378

$

38,007,380

Basic and diluted weighted average shares outstanding

Basic

33,702,792

28,230,461

Diluted

42,199,794

36,254,975

Earnings per share:

Basic

$

1.60

$

1.34

Diluted

$

1.28

$

1.04

CHINA INTEGRATED ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Convertible

Common stock

preferred stock

Shares

Amount

Shares

Amount

Additional paid-in capital

Statutory reserves

Retained earnings

Accumulated other Comprehensive income

Total Stockholders' equity

$

$

$

$

$

$

$

Balance as of January 1, 2009

3,465,753

3,465

27,169,091

2,716

44,434,250

4,920,114

29,201,661

5,337,003

83,899,209

Net income

-

-

-

-

-

-

37,870,963

-

37,870,963

Foreign currency translation adjustment, net of nil income tax

-

-

-

-

-

-

-

136,417

136,417

Series B Convertible preferred stock converted

(350,000)

(350)

350,000

35

315

-

-

-

-

Common stock issued for cash (net of issuance cost of $2,378,366November 42009

-

-

5,750,000

575

30,683,559

-

-

-

30,684,134

Stock-based compensation

-

-

-

-

740,870

-

-

-

740,870

Balance as of December 31, 2009

3,115,753

3,115

33,269,091

3,326

75,858,994

4,920,114

67,072,624

5,473,420

153,331,593

Net income

-

-

-

-

-

-

53,819,001

-

53,819,001

Foreign currency translation adjustment, net of nil income tax

-

-

-

-

-

-

-

4,488,377

4,488,377

Series A Convertible preferred stock converted

(11,000)

(11)

50,000

5

6

-

-

-

-

Series B Convertible preferred stock converted

(510,000)

(510)

510,000

51

459

-

-

-

-

Common stock issued in connection with options exercised

-

-

35,000

4

246,396

-

-

-

246,400

Common stock issued for cash (net of issuance cost of $1,035,694) December 29, 2010

-

-

2,185,716

219

12,781,675

-

-

-

12,781,894

Warrants issued in connection with Common stock December 29, 2010

-

-

-

-

1,482,424

-

-

-

1,482,424

Stock-based compensation

-

-

-

-

4,288,067

-

-

-

4,288,067

Balance as of December 31, 2010

2,594,753

2,594

36,049,807

3,605

94,658,021

4,920,114

120,891,625

9,961,797

230,437,756

CHINA INTEGRATED ENERGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31,

2010

2009

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

53,819,001

$

37,870,963

Adjustments to reconcile net income to net cash provided by operating activities:

Loss on disposal of property, plant and equipment

241,031

155,866

Depreciation and amortization

1,638,069

1,145,538

Reversal of temporary differences

(6,056)

-

Stock-based compensation

4,288,067

740,870

Change in operating assets and liabilities, net of acquisitions in 2010:

Accounts receivable

(2,508,895)

5,071,574

Inventories

1,716,004

1,341,491

Prepayments to suppliers

(3,652,584)

(16,564,092)

Lease prepayments

(7,191,595)

(19,449,270)

Prepaid expenses and other current assets

(1,171,155)

(3,242,271)

Receipts in advance from customers

13,544,572

(2,681,291)

Accrued expenses and other payables

(2,535,640)

(28,380)

Net cash provided by operating activities

58,180,819

4,360,998

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

(17,835,522)

(370,564)

Proceeds from disposal of property, plant and equipment

-

1,515,950

Payment for land use rights

(1,118,791)

-

Purchase of intangible assets

(2,854,075)

-

Payment for the acquisitions of subsidiaries, net of cash acquired

(27,094,666)

-

Net cash (used in)/provided by investing activities

(48,903,054)

1,145,386

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from bank loans

6,458,978

4,394,252

Repayment of bank loans

(4,506,264)

(2,249,638)

Restricted cash released

-

919,351

Proceeds from issuance of common stock and warrants

15,300,012

33,062,500

Proceeds from exercise of options

246,400

-

Payment for common stock and warrants issuance costs

(1,035,694)

(2,378,366)

Net cash provided by financing activities

16,463,432

33,748,099

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

2,100,578

41,932

NET INCREASE IN CASH AND CASH EQUIVALENTS

27,841,775

39,296,415

Cash and cash equivalents at beginning of year

62,415,443

23,119,028

Cash and cash equivalents at end of year

$

90,257,218

$

62,415,443

Supplemental Cash flow data:

  Interest paid

$

270,258

$

121,522

  Non-cash activities:

  Financing activities

  Conversion of preferred stock to common stock

$

61

$

-

  Transferring

  Transferring from other receivables and prepaid rents to intangible assets

$

7,994,143

$

-

SOURCE China Integrated Energy, Inc.



RELATED LINKS

http://www.chinaintegratedenergy.com