China Linen Textile Industry, Ltd. Reports Outstanding 2010 Results; Revenues Increase 67.1% to $49.1 Million, Net Income Increases 66.9% to $9.6 Million with Basic Earnings Per Share of $0.47

HARBIN, China, April 4, 2011 /PRNewswire-Asia-FirstCall/ -- China Linen Textile Industry, Ltd. (OTC Bulletin Board: CTXFD) ("China Linen" or the "Company"), a China-based company engaged in the production and sale of linen yarn and various types of linen fabric, today announced financial results for the fiscal year ended December 31, 2010.

-- 2010 revenues increased 67.1% from $29.4 million to $49.1 million.

-- 2010 gross profit increased 74.6% from 8.7 million to $15.2 million.

-- 2010 net income increased 66.9% from $5.7 million to $9.6 million; basic earnings per share up from $0.28 to $0.47.

-- For 2011, the Company expects revenue to be in the range of $58 million to $63 million and net income to be in the range of $11.5 million to $12.6 million.

SUMMARY FINANCIALS

Fiscal Year Ended December 31, 2010 Financial Results

Revenue for the year ended December 31, 2010 totaled $49.1 million, up approximately 67.1% from $29.4 million for the year ended December 31, 2009. The increase in revenue was primarily attributable to increased sales volume of linen fabric and linen yarn, increased sales from acquisition, increased sales from new products and new customers.

Gross profit for 2010 was $15.2 million, up 74.6% from $8.7 million for 2009, which was driven by sales growth. Gross margin for the year ended December 31, 2010 was approximately 31.0% as compared to gross margin of approximately 29.6% for the year ended December 31, 2009.

Operating expenses increased 129.1% to $3.7 million in 2010 from $1.6 million in 2009, mainly due to an increase in general and administration expenses such as legal, audit fees and acquisition expense.

Operating income increased 62.1% to $11.5 million for 2010 from $7.1 million in 2009. Income before tax increased 66.0% from $7.9 million in 2009 to $13.1 million. Income taxes totaled $3.5 million for 2010, as compared to $2.1 million for 2009, primarily attributable to increase in income before tax.

Net income was $9.6 million for the year ended December 31, 2010 as compared to $5.7 million for the year ended December 31, 2009, representing an increase of approximately 66.9%. Basic Earnings per share in 2010 was $0.47, an increase of 67.9% from $0.28 in 2009. Diluted Earnings per share in 2010 was $0.39, an increase of 39.3% from $0.28 in 2009. Diluted shares outstanding in 2010 include about 4.6 million shares from issuing the convertible note in November 2010.

"We are very pleased with our results for 2010, which included outstanding revenues and earnings growth and improved gross margin," stated Mr. Gao Ren, Chairman and CEO of China Linen. "As a leading producer and exporter of linen in China, we continued to expand markets and produce new and competitive products.  We were excited to see increases in demand from both domestic and international markets, for both linen fabric and linen yarn during the year. We were able to add almost 50 new direct customers and open up new markets including India and Turkey. Going forward, we will continue to penetrate European market, expand sales in new markets like India and Turkey, and increase sales domestically.

"2010 marked a number of milestones for China Linen. We completed the purchase of Lanxi Tianxianfang Linen Co., Ltd. which increased our linen yarn and linen fabric production capabilities and also included a bleaching factory, a critical addition to our production process as we aim to become vertically integrated throughout the entire value chain. In December, we commenced operations at our newly upgraded linen yarn dyeing facility to produce higher margin higher demand new products," Mr. Gao continued.

"We remain optimistic into 2011 as macro trends seem to continue to favor the linen industry. While pure linen products are usually considered higher-priced and higher-end products than traditional textile products, record high cotton and chemical fiber prices have closed the price gap between the two. With increased interest and demand for linen products globally, combined with our expanded production capacity and our new capabilities, we are well positioned to take advantage of opportunities to gain market share in the linen industry," concluded Mr. Gao.

Balance Sheet and Cash Flow

As of December 31, 2010, the Company had cash and cash equivalents of $4.2 million, compared to $2.3 million at December 31, 2009. Accounts receivable balance was approximately $13.3 million on December 31, 2010, versus approximately $8.8 million on December 31, 2009. Days sales outstanding (DSO) for the twelve months of 2010 were approximately 81 days, compared to 111 days for the same period in 2009 mainly due to increased collection effort. Working capital at year-end 2010 totaled $22.0 million. The Company had total stockholders' equity of $32.2 million at December 31, 2010, with total assets of $51.6 million versus total liabilities of $19.5 million.

For the year 2010, the Company generated $5.4 million in cash from operations, an increase of 55.0% from $3.5 million in the same period last year, and spent $2.9 million on capital expenditures in 2010, as compared to $0.87 million in the same period last year.

Fiscal Year 2011 Guidance

For the fiscal year 2011, the Company expects revenue to be in the range of $58-63 million, and net income to be in the range of $11.5-12.6 million.

Note

On March 30, 2011 the market took effect a 3.5:1 reverse split for the Company's shares. The new symbol on the date was CTXFD. Please note that a "D" has been appended as the 5th character for 20 business days including the effective date. Furthermore, the "F" was moved back in tandem with adding the "D". After 20 business days the symbol will revert back to the original CTXIF.

The above financial results discussion is on a pre-split basis. The pro forma number of ordinary shares and earnings per share in the financial statements reflect a post-split effect.

Conference Call

The Company will host a conference call to discuss its year end 2010 financial results on Monday, April 4, 2011 at 4:30 p.m. EDT. Interested participants should call +1-877-941-4774 within the United States, or +1-480-629-9760 if calling internationally. The conference ID is 4427035. It is advisable to dial in approximately 5-10 minutes prior to 4:30 p.m. EDT.

A playback will be available through April 11, 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 4427035 for the replay.

This call is being webcast by ViaVid Broadcasting and can be accessed at ViaVid's website at http://www.viavid.net or at the following link: http://viavid.net/dce.aspx?sid=00008355. To access the web cast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp.

About China Linen Textile Industry, Ltd.

China Linen Textile Industry, Ltd. (http://www.chinalinentextile.com/) is principally engaged in the production and sale of linen yarn and various types of linen fabric. The Company is also involved in consultation and R&D related to linen technology and linen products. The Company carries on all of its business activities through its subsidiary, Heilongjiang Lanxi Sunrise Linen Textile Industry Co., Ltd. ("Lanxi Sunrise"), established in June 2002 and located in Lanxi County, the "Homeland of Flax in China," near Harbin City in China. Lanxi Sunrise has one yarn-spinning factory, one bleaching factory and two fabric weaving factories in its 35,120 square meters of building area with a staff of 1,400 and 430 sets of world-class, advanced production machinery. Annual production capacity totals approximately 2,220 tons with 50 different types of yarn and 10 million meters of fabric with 110 types. Approximately 50 percent of its products are exported to more than 10 countries.

Forward-looking statements:

The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances, and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based.

For further information, contact:

China Linen Textile Industry, Ltd.
Ms. Jodie Zheng Wehner, CFO
Tel: +1-310-890-8048
Email: [email protected]

Mr. Xiao Weixing, IR Manager
Tel: +86-137-9600-2690
Email: [email protected]

HC International, Inc.
Scott Powell, Vice-President
Tel: +1-917-721-9480
Email: [email protected]
Web: www.hcinternational.net

SOURCE China Linen Textile Industry, Ltd.