HARBIN, China, Aug. 19 /PRNewswire-Asia-FirstCall/ --
-- 2009 Revenues increase 28.1% to $29.4 million.
-- Gross margin for 2009 expands 650 basis points to 29.6% from 23.1%.
-- 2009 Net Income increases 100.6% to $5.7 million; EPS up 86.7% to $0.28.
-- Confirms 2010 revenue guidance of $38.1 million and net income guidance
of $9.3 million, representing year-over-year growth of approximately
29.6% and 63.2% respectively.
China Linen Textile Industry, Ltd. (OTC Bulletin Board: CTXIE) ("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 its financial results for the year ended December 31, 2009.
SUMMARY FINANCIALS
2009 Financial Results (USD)
(year ended December 31,) 2009 2008 CHANGE
Revenues $29.4 million $22.9 million +28.1%
Gross Profit $8.7 million $5.3 million +64.5%
Gross Margin 29.6% 23.1% +650 bps
Net Income $5.7 million $2.9 million +100.6%
EPS (Basic and Diluted) $0.28 $0.15 +86.7%
2009 Full Year Results (audited)
Revenue
Revenue for the year ended December 31, 2009 totaled $29.4 million, up approximately 28.1% from $22.9 million for the year ended December 31, 2008. The company added 7 customers during 2009 and increased sales by 5% in new geographic areas. The increase in revenue was primarily attributable to increased sales volume of linen fabric.
Cost of Goods Sold
Cost of goods sold amounted to $20.7 million for 2009, or 70.4% of revenues, compared to $17.6 million, or 76.9%, of revenues for 2008. The Company was able to drive down cost of materials by further development of the Company's proprietary technology reducing the amount of raw material lost in production process, improving production efficiency and resulting in a product mix with higher gross margins. The Company anticipates that cost of goods sold will remain consistent with 2009 levels or be lower during 2010 due to economies of scale due to the expanded capacity.
Gross Profit
Gross profit for 2009 was $8.7 million, up 64.5% from $5.3 million for 2008. The increase in gross profit was mainly attributable to increased sales in 2009, and to revenue-per-unit outpacing costs. Gross margin for the year ended December 31, 2009 was approximately 29.6% as compared to gross margin of approximately 23.1% for the year ended December 31, 2008.
Operating Expenses
Operating expenses decreased 25.2% to $1.6 million in 2009 from $2.2 million in 2008, which included approximately $0.8 million, or 43.1%, in stock-based compensation which was not present in 2009. Management was able to prudently manage expenses and was able to increase volume.
Operating Income increased 127.5% to $7.1 million for 2009 and operating margins were 24.1% compared to 13.6% in 2008.
Other Income
Other income decreased by 16.5% to $0.8 million for the year ended December 31, 2009 from $1.0 million in the year ago period as a result of decrease in government subsidies received by Lanxi Sunrise, the majority-owned subsidiary through which China Linen conducts all of its business operations. During 2009 and 2010, Lanxi Sunrise received or expects to receive government subsidies on local income taxes paid equal to 40% of its total annual income tax paid for each such year.
Provision for Taxes
Provision for taxes was $2.1 million for 2009, as compared to $1.2 million for 2008, an increase of approximately 77.5%, with an effective tax rate of 27.2% and 29.7% in each respective period.
Net Income
Net income was $5.7 million for the year ended December 31, 2009 as compared to $2.9 million for the year ended December 31, 2008, representing an increase of approximately 100.6%. Earnings per share in 2009 amounted to $0.28, up 86.7% from $0.15 in 2008, based on weighted average shares outstanding of 20.1 million and 19.5 million respectively.
"We are pleased with our financial results for 2009, which included record revenues and net income as well as improved gross and net margins," stated Mr. Gao Ren, chairman and president of China Linen. "We saw an increase in demand from both domestic and international customers during the year, and continued to operate at full capacity, while driving our production costs down. With the goal of capturing a larger share of the growing market for linen fabric and yarn products, we recently expanded our linen fabric production by 26% to 2.1 million meters annually and our linen yarn production capacity by 39% to 620 tons annually. We also added the capability to bleach linen fabric, which is an important part of the value chain and will allow us to better service our customers to generate incremental revenues at higher margins or consistent margins. We plan to further expand our production capacity and will leverage our R&D capabilities to produce new and competitive products. In addition we plan to expand sales nationally and internationally to markets in Europe, the U.S., and the Middle East. As a leading producer and exporter of linen in China, we believe we are well positioned to capitalize on the industry demand and dynamics to generate strong revenue and net income growth with superior margin profiles."
Balance Sheet and Cash Flow
As of December 31, 2009, the Company had cash and cash equivalents of $2.3 million, compared to $10,674 at December 31, 2008. Working capital at year-end 2009 totaled $12.0 million. The Company had total stockholders' equity of $21.5 million at December 31, 2009, with total assets of $36.1 million versus total liabilities of $14.6 million. For the year 2009, the Company generated $3.5 million in cash from operations versus $4.3 million for the same period in 2008.
Fiscal year 2010 Guidance
For fiscal year 2010, management is confirming revenue guidance of $38.1 million, representing growth of 29.6% over 2009, and net income guidance of approximately $9.3 million, representing year-over-year growth of approximately 63.2%. The company expects to report earnings per share of $0.39, representing a 39.3% year-over-year increase.
About China Linen Textile Industry, Ltd.
China Linen Textile Industry, Ltd. ( http://www.chinalinen.cc/ ) 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 and two fabric weaving factories in its 28,000 square meters of building area with a staff of 1,500 and 310 sets of world-class, advanced production machinery. Annual production capacity totals approximately 1,600 tons with 50 different types of yarn and 8 million meters of fabric with 110 types. Approximately 55 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 more information, please contact:
China Linen Textile Industry, Ltd.
Mr. James Shaofeng Qi, CFO
Tel: +86-139-1093-4932
HC International, Inc.
Scott Powell, Vice-President
Tel: +1-917-721-9480
Email: scott.powell@hcinternational.net
CHINA LINEN TEXTILE INDUSTRY, LTD.
CONSOLIDATED BALANCE SHEETS
December 31, 2009 and 2008
(Stated in US Dollars)
Restated
2009 2008
$ $
ASSETS
Current assets
Cash 2,320,656 10,674
Bank checks and commercial paper 1,921,610 1,566,733
Accounts receivable, net 8,762,516 9,374,255
Inventory 4,862,855 8,335,042
Prepaid expenses 2,183,219 1,666,980
Other receivables 100,165 275,888
Due from related parties 2,576,579 1,535,954
Governmental subsidy receivable 1,449,331 1,296,522
Deferred tax assets 228,794 299,193
Total current assets 24,405,725 24,361,241
Non-current assets
Property, plant and equipment, net 9,195,907 8,817,291
Land use right, net 408,134 416,185
Governmental subsidy receivable,
non-current 1,882,593 2,387,837
Deferred tax assets, non-current 238,600 241,706
TOTAL ASSETS 36,130,959 36,224,260
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Bank loans 4,048,583 4,041,291
Accounts payable 2,565,188 2,709,566
Accrued expenses and other payables 1,101,571 1,559,459
Taxes payable 3,729,506 8,804,430
Deferred revenue 423,153 289,527
Deferred governmental subsidy 88,995 88,834
Loans from local government -- 295,001
Due to related parties 74,888 56,470
Deferred tax liabilities 362,333 324,130
Total current liabilities 12,394,217 18,168,708
Non-current liabilities
Deferred governmental subsidy, non-
current 1,792,482 1,855,453
Deferred tax liabilities, non-
current 470,648 596,959
TOTAL LIABILITIES 14,657,347 20,621,120
STOCKHOLDER'S EQUITY
Common stock $0.002 par value,
500,000,000 shares authorized;
20,200,003 shares and 20,100,003
shares issued and outstanding as
of December 31, 2009 and 2008 42,274 42,074
Additional paid-in capital 3,093,816 2,986,212
Statutory reserves 1,593,559 1,019,595
Retained earnings 15,060,004 9,903,449
Accumulated other comprehensive
income 1,683,959 1,651,810
TOTAL STOCKHOLDER'S EQUITY 21,473,612 15,603,140
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 36,130,959 36,224,260
CHINA LINEN TEXTILE INDUSTRY, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME
For the Years Ended December 31, 2009 and 2008
(Stated in US Dollars)
Restated
2009 2008
$ $
Revenues
Net sales 29,386,131 22,945,122
Costs of goods sold 20,675,443 17,648,852
Gross profit 8,710,688 5,296,270
Operating expenses
Selling expenses 615,176 393,348
General and administrative expenses 1,019,025 1,791,741
Total operating expenses 1,634,201 2,185,089
Operating income 7,076,487 3,111,181
Other income (expense)
Interest income 252,355 175,299
Interest expense (314,898) (540,203)
Government subsidies 863,436 1,324,225
Other expense (5,177) (6,819)
Total other income 795,716 952,502
Income before tax 7,872,203 4,063,683
Income tax 2,141,684 1,206,914
Net income 5,730,519 2,856,769
Other comprehensive income
Effects of foreign currency
conversion 32,149 764,910
Comprehensive income 5,762,668 3,621,679
Basic and diluted earnings per share 0.28 0.15
CHINA LINEN TEXTILE INDUSTRY, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2009 and 2008
(Stated in US Dollars)
Restated
2009 2008
$ $
Cash Flows from Operating Activities
Net income 5,730,519 2,856,769
Adjustments to reconcile net income
to net cash provided by operating
activities:
Fair value of contributed common
stock for advisory services 8,984 844,200
Bad debt (recoveries)/expenses (31,313) 31,310
Impairment loss on property, plant
and equipment 4,081 --
Depreciation 506,434 442,381
Amortization 8,795 8,671
Deferred income taxes (15,290) 22,742
Changes in assets and liabilities:
Increase in bank checks and
commercial paper (351,798) (1,155,604)
Decrease in accounts receivable 884,956 2,271,622
Decrease in inventory 3,484,721 1,606,161
Increase in prepaid expenses (620,250) (553,109)
Decrease/(increase) in other
receivables 244,367 (235,926)
(Increase)/decrease in governmental
subsidy, net (484,093) 650,299
Decrease in accounts payable (149,159) (197,951)
Decrease in accrued expenses and
other payables (548,092) (208,028)
(Decrease)/increase in taxes payable (4,310,506) 974,980
Increase in deferred revenue 162,204 16,394
Increase in due from/to related
parties (1,048,002) (3,105,746)
Net cash provided by operating
activities 3,476,558 4,269,165
Cash Flows from Investing Activities
Purchase of property, plant and
equipment (872,962) (2,159,769)
Net cash used in investing activities (872,962) (2,159,769)
Cash Flows from Financing Activities
Proceeds from bank loans 4,043,601 3,936,110
Payments on bank loans (4,043,601) (5,986,251)
Payments on loans from local
government (295,321) (43,353)
Payments on loans from related
parties -- (124,804)
Proceeds from reverse merger -- 141,526
Net cash used in financing activities (295,321) (2,076,772)
Net increase in cash and cash
equivalents 2,308,275 32,624
Effects of foreign currency
conversion on cash 1,707 (25,409)
Cash and cash equivalents - beginning
of year/period 10,674 3,459
Cash and cash equivalents - end of
year/period 2,320,656 10,674
Supplemental Disclosures of Cash Flow
Information
Cash paid during the year for:
Interest 310,895 1,553,494
Income taxes 1,526,428 857,118
Source: China Linen Textile Industry, Ltd.
