- Revenue Increases 56% to $62.9 Million -
- Net Income Increases 122% to $9.1 Million -
- 2008 Make-good of $28 million net income and $0.73 in EPS reaffirmed -
XI'AN, China, Nov. 11 /Xinhua-PRNewswire/ -- China Bio Energy Holdings Group (OTC Bulletin Board: CBEH), an energy company engaged in the distribution of heavy oil and finished oil products and the production and distribution of bio-diesel fuel, today announced consolidated financial results for the quarter ended September 30, 2008.
For the third quarter of 2008, total sales increased 56% to $62.9 million as compared to $40.3 million in the third quarter of 2007. This increase was mainly due to the addition of new customers, the general increase in demand for fuel in China, and increased bio-diesel production as compared to the third quarter of 2007. For the nine months ended September 30, 2008, sales revenue increased 142% to $156.9 million as compared to $64.8 million in the same period of 2007.
Gross profit increased 107% to $9.2 million in the third quarter of 2008 as compared to $4.4 million in the prior year period, representing gross margins of approximately 14.6% and 11.2%, respectively. Gross margin for bio-diesel fuel was approximately 31.0% and for petroleum products it was 10.6%. The improved gross margin is a result of lower production costs as we increased production of bio-diesel. For the nine months ended September 30, 2008, gross profit increased to $22.7 million, or 208%, versus $7.4 million in the prior year period, representing gross margins of approximately 14.5% and 11.4% respectively.
Operating expenses for the third quarter of 2008 was $391,000, an increase of 37% from the third quarter of 2007. As a percentage of sales, however, operating expenses decreased 11 basis points to 0.6%. This slight decrease was due to effective cost management by the Company. For the nine months ended September 30, 2008, operating expenses were $962,000, a 20% increase from the prior year period.
Operating income increased $4.7 million, or 112%, to $8.8 million for the third quarter of 2008 versus $4.1 million for the same period in 2007. As a percentage of sales, operating income was 13.9% for the third quarter of 2008 as compared to 10.5% for the prior year period. For the nine months ended September 30, 2008, operating income increased 231% to $21.8 million. As a percentage of sales, operating income was 13.9% for the first nine months of 2008 as compared to 10.2% for the prior year period.
Net income for the third quarter of 2008 increased 122% to $9.1 million as compared to $4.1 million in the prior year period. Net margin increased 410 basis points to 14.5% from 10.4%. Diluted earnings per share increased 59% to $0.27, compared to $0.17 in the third quarter of 2007. For the nine months ended September 30, 2008, net income increased $15.6 million, or 241%, to $22.1 million. Net margin for the first nine months of 2008 was 14.1% as compared to 10.0% in the prior year period. Diluted earnings per share increased 152% to $0.68 per share for the nine months ended September 30, 2008 as compared to $0.27 per share in the prior year period.
"We are pleased to report another strong quarter for China Bio Energy," commented Mr. Gao Xincheng, Chief Executive Officer of CBEH. "After another record quarter the gross profit from our petroleum distribution business has now increased more than 60% through the first three quarters of this year as compared to the same period last year. Our bio-diesel business also recorded another very good quarter with both high revenue and gross margin. Our production rate reached full capacity and our feedstock supply remains ample and prices stable such that we continue to enjoy solid gross margins in excess of 30%. The four retail gas stations we obtained in the third quarter, which were previously experiencing difficulties due to interruptions in fuel supply, are all operating regularly with a continuous supply of fuel and are on track to meet the profit objectives we set when we made the investment in those stations. As we look ahead to the future, despite the current global economic environment, we remain confident that the fundamental factors driving growth in our business-China's rapid economic growth combined with a shortage of domestic oil resources, our strategic location in Shaanxi which provides us with an abundant supply of petroleum to sell and feedstock for bio-diesel, our integrated production and distribution platform, and the competitive advantages we possess as a leader in our markets-will continue to provide us with the foundation for rapid growth. During our last round of financing we committed to make-good targets for 2008 of $28 million in net income and $0.73 in fully diluted earnings per share. We expect to meet those targets. Furthermore, with the $14.1 million we received via our recent convertible bond issuance and the exercise of warrants, we have the capital necessary to support further growth. As such, looking a bit farther down the road, we are also confident that 2009 be another year of strong growth for China Bio Energy."
About China Bio Energy Holdings Group
CBEH is a distributor of petroleum-related products including gasoline, diesel, and heavy oil, and a manufacturer and distributor of bio-diesel fuel. CBEH's bio-diesel fuel is made at its 100,000-ton capacity facility in Shaanxi province. Feedstock consists of naturally growing non-edible seeds and waste oil from restaurants. CBEH's bio-diesel can be used as a complete substitute for petro-diesel and can be blended with petro-diesel at any ratio. The Company's products are sold via its own distribution network, which includes four fuel depots in Shaanxi that have both road and rail access.
Safe Harbor Statement
This press release contains certain statements that may include "forward- looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. 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 the Securities and Exchange Commission and available on its website ( http://www.sec.gov ). 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.
For The Nine Months Ended For The Three Months
September 30, Ended September 30,
INCOME STATEMENT 2008 2007 2008 2007
Sales 156,878,997 64,834,695 62,891,345 40,263,868
Cost of goods sold 134,134,971 57,453,443 53,740,270 35,857,368
Gross profit 22,744,026 7,381,252 9,151,075 4,406,500
General and
administrative expenses 962,445 801,487 390,950 286,067
Income from operations 21,781,581 6,579,765 8,760,125 4,120,433
Non-operating income
(expenses)
Interest expenses (93,487) (98,848) (34,264) (24,835)
Other income 381,892 -- 381,892 --
Other expenses (2,572) -- (28) --
Financial expenses (46) -- -- --
Total non-operating
income (expenses) 285,787 (98,848) 347,600 (24,835)
Net income 22,067,368 6,480,917 9,107,725 4,095,598
Other comprehensive item
Foreign currency
translation gain 3,189,717 505,895 401,005 145,166
Comprehensive Income 25,257,085 6,986,812 9,508,730 4,240,764
Basic and diluted
weighted average shares
outstanding
Basic 25,454,545 23,954,545 25,454,545 23,954,545
Diluted 32,584,227 23,954,545 33,227,052 23,954,545
Basic and diluted net
earnings per share
available to common
stockholders
Basic 0.87 0.27 0.36 0.17
Diluted 0.68 0.27 0.27 0.17
As of As of
CONSOLIDATED BALANCE SHEETS September 30, December 31,
2008
(Unaudited) 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents 522,013 1,382,371
Restricted cash 200,000 200,000
Accounts receivable 6,814,871 288,589
Other receivables 765,567 1,548,681
Prepaid expenses 6,073,631 2,896,493
Advance to suppliers 18,726,762 16,546,506
Inventories 23,008,301 12,082,962
Due from related party 109,012 593,696
Total current assets 56,220,157 35,539,298
PREPAID EXPENSE - NONCURRENT 6,453,505 --
PROPERTY AND EQUIPMENT, net 10,269,554 8,166,250
TOTAL ASSETS 72,943,216 43,705,548
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable -- 179,617
Advance from customers 3,860,084 499,908
Taxes payable 95,721 125,015
Other payables 3,267,739 3,165,677
Accrued expenses -- 67,875
Bank loans payable 2,200,059 1,370,877
Auto loans payable - current
portion 66,889 67,287
Total current liabilities 9,490,492 5,476,256
AUTO LOANS PAYABLE - NONCURRENT -- 33,655
Total liabilities 9,490,492 5,509,911
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS’ EQUITY
Preferred stock, $.001 par
value; authorized shares
1,000,000; issued and
outstanding 1,000,000
shares 1,000 1,000
Common stock, $.0001 par
value; authorized shares
80,000,000; issued and
outstanding 25,454,545
shares 2,545 2,545
Paid in capital 19,611,938 19,611,938
Statutory reserve 2,051,030 2,051,030
Accumulated other comprehensive
income 5,509,449 2,319,732
Retained earnings 36,276,762 14,209,392
Total stockholders’ equity 63,452,724 38,195,637
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY 72,943,216 43,705,548
