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: bill.wen@andatee.com
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: ed.job@ccgir.com
Web: http://www.ccgirasia.com
