JUNAN COUNTY, Shandong, China, May 19 /Xinhua-PRNewswire-FirstCall/ -- American Lorain Corporation (OTC Bulletin Board: ALRC) ("American Lorain" or the "Company"), an international packaged foods company based in Shandong Province, People’s Republic of China ("PRC"), today announced its financial results for the first quarter ended March 31, 2008.
First Quarter 2008 Highlights
-- Net revenues increased 46.5% year-over-year to $17.4 million
-- Gross profit increased 34.0% year-over-year to $3.9 million
-- Net income increased 13.3% year-over-year to $1.7 million, or $0.07 per
diluted share
"We are very excited about the direction of our company. Last May, we went through a reverse merger transaction and private placement. The financing allowed us to expand our operations," said Mr. Si Chen, Chairman and CEO of American Lorain. "We have seen tremendous growth in revenues, especially from our convenience foods product line. In addition, our expansion plan includes sales of our products to the international markets."
Recent Highlights
-- Announced business expansion; signed two contracts with Harbin Gaotai
Food Co. Ltd., ("Gaotai"), a food distributor in China, to supply
chestnuts to the European market
-- Received the National Leading Enterprise in Agricultural
Industrialization ("NLEAI") award recognizing the Company’s
advancements in agricultural industrialization
First Quarter 2008 Results
Net revenues for the first quarter of 2008 totaled $17.4 million, up 46.5% from $11.9 million in the three month period ended March 31, 2007. Chestnut products accounted for 63% of total sales in the first quarter, canned food accounted for 36% of total sales in the first quarter and convenience food accounted for 1% of total sales in the first quarter. The increase was mainly attributed to the success of the Company’s marketing strategies, operational enhancements, expansion of sales markets, both domestically and internationally. Sales to France and Belgium increased 100% compared with the same period last year.
Gross profit for the first quarter of 2008 was $3.9 million, an increase of 34.0% from $2.9 million for the three months ended March 31, 2007. The increase was attributed to increase in sales. Gross margin was 22.7% for the first quarter of 2008, compared to 24.8% for the prior year period. The slight decline in gross margin for the first quarter 2008 was due to the percentage decrease of chestnut products to 63% compared to 74% for the same period prior quarter. Chestnut products tend to have higher margins, at 28%, compared to the Company’s other two product lines.
Operating expenses were $1.2 million in the first quarter of 2008, compared to $0.5 million for the same period prior year. Selling, general and administrative expenses for the first quarter of 2008 totaled $0.6 million, compared to $0.1 million a year ago. The increase was due to the increased transportation costs related to the Company’s expanded business as well as the expenses related to staffing a growing company.
Operating income for the first quarter of 2008 totaled $2.8 million, a 13.2% increase from $2.5 million for the same period prior year.
Net income to common shareholders, for the first quarter of 2008 was $1.7 million, or $0.07 per fully diluted share, an increase of 13.3%, compared to net income of $1.5 million, or $0.09 per fully diluted share, for the first quarter of 2007. Earnings per share were calculated using a diluted weighted share count of 26.1 million shares for the first quarter of 2008 and 17.9 million shares for the first quarter of 2007. The increase in weighted average shares reflects the impact of the reverse merger transaction and private placement financing completed in May 2007.
Financial Condition
As of March 31, 2008, the Company had cash and cash equivalents of $6.3 million and working capital of $19.7 million. Accounts receivable were $31.2 million, and days sales outstanding were 167. Inventory was $16.1 million and days inventory outstanding were 115. At March 31, 2008, the Company had short-term bank loans of $21.8 million and stockholders’ equity of $47.2 million.
Recent Events
Recently, the Company signed two new contracts with Gaotai, worth $2.3 million in sales for 48 containers of processed chestnuts, which will be distributed to the European market via the French food processing company, Gyma Surgeles, a Gaotai customer. The Company also won the prestigious NLEAI award, recognizing the Company’s advancement in agricultural industrialization. This award entitles the Company to numerous benefits, including privileges and support from the government when applying for government funding, credit lines and approval for new projects. In addition, NLEAI award recipients are eligible for a three-year corporate income tax exemption, effective immediately. Since 2000, only 800 enterprises in China have received the NLEAI award.
Business Outlook
"In 2008, we expect to expand sales to the international markets, especially sales of chestnut products to European countries. We also plan to increase sales of our convenience food products in China, as we introduce new products that cater to the local palette. In addition, we plan to continue with our aggressive marketing campaign to gain higher visibility and recognition of our ‘Lorain’ and ‘Yimeng Lorain’ brands in the domestic market," said Mr. Si Chen, CEO of American Lorain.
The Company reaffirms its "make-good" provision of $12.956 million, in after-tax net income, for fiscal year 2008 made at the time of the May 2007 private placement deal.
Conference Call
American Lorain will conduct a conference call, Monday, May 19, 2008, at 10:00 a.m. EST, to discuss the Company’s financial results for its first quarter. Joining Mr. Si Chen, Chairman and Chief Executive Officer of American Lorain, will be Mr. Tomas Wu, Chief Financial Officer, and Mr. Liu Gang, Director of Investor Relations. Please dial 866.800.8648 five to ten minutes prior to the conference call start time (to allow time for registration) and reference the conference ID 426 381 64. International callers should dial 617.614.2702 and use the same conference ID. A replay of the call will be available starting, Monday, May 19, 2008, 12:00 p.m. EST, and ending 14 days later. To listen to the replay, please dial 888.286.8010 and enter the conference ID number 26981330. International callers should dial 617.801.6888 and enter the same conference ID number.
About American Lorain Corporation
Shandong Lorain, an indirectly owned subsidiary of American Lorain Corp., was founded by Mr. Si Chen, CEO of American Lorain, in Shandong Province, People’s Republic of China, 1995. When American Lorain started its operations in 1995, the Company sold chestnut products. However, in 2002, the Company entered the canned, frozen and bulk foods packaged market and in 2004, the Company entered the convenience foods packaged market. Although, the Company’s chestnut products are mostly for sales to international markets, the convenience food, and frozen, canned and bulk food products are for sale in the domestic market, in China.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This press release contains certain statements that may include ‘forward-looking statements’ within the meaning of federal securities laws. All statements, other than statements of historical facts, included herein are "forward-looking statements." Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release.
The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
-FINANCIAL TABLES FOLLOW-
AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(Stated in US Dollars)
3/31/2008 3/31/2007
Unaudited Unaudited
Net Revenues $17,428,299 $11,898,812
Cost of revenues (13,480,324) (8,952,799)
Gross profit $3,947,975 $2,946,013
Operating expenses
Selling and marketing expenses (618,968) (125,833)
General and administrative expenses (544,450) (359,999)
Operating income $2,784,557 $2,460,181
Government subsidy income 32,750 7,721
Interest and other income 39,083 26,590
Other expenses (10,168) (4,226)
Interest expense (590,297) (565,670)
Earnings before tax $2,255,925 $1,924,596
Income tax (390,381) (329,980)
Income before minority interests $1,865,544 $1,594,616
Minority interests (133,840) (66,754)
Net income 1,731,704 1,527,862
Earnings per share
Basic $0.07 $0.09
Diluted $0.07 $0.09
Weighted average shares outstanding
Basic 24,923,179 17,932,778
Diluted 26,091,382 17,932,778
Foreign Currency Translation
Adjustment 887,843 1,653
Comprehensive Income $2,619,547 $1,529,515
AMERICAN LORAIN CORPORATION
CONSOLIDATED BALANCE SHEET
AT MARCH 31, 2008 AND DECEMBER 31, 2007
(Stated in US Dollars)
3/31/2008 12/31/2007
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $6,262,497 $6,769,973
Restricted cash 1,987,117 2,021,839
Short-term Investment 7,547 7,246
Trade accounts receivable 31,162,508 32,859,688
Other receivables 3,958,096 7,552,976
Inventory 16,114,560 17,903,344
Advances to suppliers 4,526,915 5,357,951
Prepaid expenses and taxes -- 916,774
Total current assets $64,019,240 $73,389,791
Non-current Liabilities
Long-term investment 772,641 --
Property, plant and equipment, net 28,267,573 24,022,181
Land use rights, net 3,151,475 3,047,021
TOTAL ASSETS $96,210,929 $100,458,992
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Short-term bank loans $21,754,028 $24,077,504
Notes payable 5,696,221 2,734,444
Income tax payable 7,753,951 6,251,833
Current maturities of long term debts 228,144 1,121,528
Accrued liabilities and other
payables 6,163,623 16,784,108
Customer deposits 2,736,553 957,642
Total current liabilities $44,332,520 $51,927,059
Long-term liabilities
Long-term bank loans 531,130 102,542
TOTAL LIABILITIES $44,863,650 $52,029,600
Minority interests $4,185,362 $3,887,021
STOCKHOLDERS’ EQUITY
Common Stock, $0.001 par value,
200,000,000 shares authorized;
24,923,178 and 24,923,178
shares issued and outstanding
as of march 31, 2008 and
December 31, 2007 24,923 24,923
Additional paid-in-capital 24,187,268 24,187,268
Statutory reserves 6,087,183 4,497,647
Retained earnings 14,127,990 13,985,824
Accumulated other comprehensive
income 2,734,552 1,846,708
$47,161,916 $44,542,370
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY $96,210,928 $100,458,992
AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(Stated in US Dollars)
3/31/2008 3/31/2007
Cash flow from operating activities:
Net income $1,731,703 $1,527,862
Minority interest 133,840 101,395
Depreciation 360,568 159,763
Amortization 27,481 18,038
(Increase0/decrease in accounts &
other receivables 7,070,972 2,994,953
(Increase)/decrease in inventories 3,536,593 1,086,994
Increase/(decrease) in accounts
and other payables (10,011,750) 1,366,749
Net cash (used in)/provided by
operating activities $2,849,407 $7,255,754
Cash flows from investing activities:
Purchase of plant and equipment (3,237,074) --
Sale of plant and equipment -- 887,995
Purchase of biological assets (115,731) --
Payment of construction in
progress (1,253,155) --
(Increase)/decrease in restricted
cash 34,722 2,221,873
Payment of land use rights (131,935) (1,081,811)
Investment in securities (772,942) (263)
Net cash used in investing activities $(5,476,115) $2,027,794
Cash flow from financing activities:
Bank borrowings 1,066,888 --
Bank repayment -- (3,151,061)
Net cash provided by/(used in)
Financing Activities $1,066,888 $(3,151,061)
Net Increase/(decrease) of Cash
and Cash Equivalents (1,559,820) 6,132,487
Effect of foreign currency
translation on cash and cash
equivalents 1,052,344 1,653
Cash and cash equivalents - beginning
of year 6,769,973 2,316,425
Cash and cash equivalents - end of year $6,262,497 $8,450,565
Supplementary cash flow information:
Interest received $9,378 $3,053
Interest paid 369,077 527,210
Taxes paid 1,705,431 329,980
