omniture

China Green Material Technologies, Inc. Reports Second Quarter 2010 Financial Results

    HARBIN, China, Aug. 16 /PRNewswire-Asia-FirstCall/ --

    -- Q2 2010 revenues increased 26.6% to $4.5 million
    -- Q2 2010 gross profit increased 29.1% to $2.2 million with gross margins 
       of 48.8%
    -- 1H Adjusted EPS of $0.06(1) on an additional 6.9M shares(2) 
    -- 1H10 cash flow from operations $2.6 million

    (1) Adjusted net income and adjusted net income per diluted share are 
        non-GAAP financial measures that are explained in the table at the end 
        of this press release. The Company uses adjusted net income and 
        adjusted net income per diluted share to provide information about its 
        operating trends and the Company's management considers these non-GAAP 
        financial measures to be important metrics in evaluating the Company's 
        business. The Company calculates these figures by excluding the impact 
        of certain non-recurring and non-cash items.  
    (2) The Company issued common shares during the first and second quarter 
        of 2010.


    China Green Material Technologies, Inc. (OTC Bulletin Board: CAGM; "CAGM" or "the Company"), a Chinese leader in developing and manufacturing starch-based biodegradable containers, tableware and packaging materials, today announced financial results for the second quarter ended June 30, 2010.

    Second Quarter 2010:
    Revenues - Second quarter revenues increased 26.6% to $4.5 million compared to $3.5 million in the second quarter of 2009. The results reflect growing demand for the Company's products from existing customers, as well as the successful penetration of new customers and new geographic markets. 
    Gross Profit - Gross profit in the second quarter of 2010 increased 23.9% to $2.2 million compared to $1.8 million in the second quarter of last year, while gross margin was 48.8% versus 49.8% a year ago. The decrease in gross margin was largely due to an increase in amortization expenses of intangible assets and an increase in packaging costs, partly offset by greater efficiencies due to the effects of higher revenues and certain fixed-cost components of the cost of revenues.
    Operating Expense - Operating expenses in the second quarter of 2010 totaled $0.9 million, or 20.6% of sales versus $0.3 million, or 7.3% of sales in the second quarter of 2009. Selling expenses were down 42.2% year-over-year, while general and administrative expenses increased to $0.9 million in the second quarter of 2010 compared to $0.2 million in 2009. The $0.7 million increase was due to a 45% increase in overall salary and related costs and stock compensation expenses.  
    Operating Income - Second quarter income from operations decreased 16.1% to $1.3 million compared to $1.5 million in the 2009 period. Operating margin was 28.2% in the 2010 period versus 42.5% a year ago. Excluding the stock compensation and pre-opening expenses, operating margin was 38.7%, down 3.8% compared to the same period last year.   
    Other Income (Expense) - Other expenses were $0.1 million in the second quarter of 2010 versus none in the second quarter of 2009.  
    Net Income - Net income in the second quarter of 2010 was $1.0 compared to $1.3 million in the second quarter of 2009. Adjusted net income (non-GAAP) was $1.5 million, an increase of 24.5% versus a year ago. Net income per diluted share was $0.04 in the second quarter of 2010 versus net income per diluted share of $0.07 in the second quarter of 2009 based on weighted average shares of 24.3 million and 18.7 million, respectively. The increase in share count reflects the issuance of 5.0 million and 1.9 million common shares in private placements completed in the first and second quarters of 2010, respectively. Adjusted net income per diluted share (non-GAAP) was $0.06 in the second quarter of 2010.
    The Company's effective tax rate was 16.2% in the second quarter of 2010 versus 15.0% for the same period in 2009.
    Mr. Su Zhonghao, Chief Executive Officer of China Green Material Technologies, stated, "The 28% increase in revenues in the first half of 2010 reflects strong demand from new and existing customers in both China and abroad. We are beginning to see the benefits from the investments we have made to acquire intellectual properties, in addition to the expansion of our sales and marketing team which is supporting a broader distribution footprint. With a healthy pipeline of new products and the ability to produce customer orders, we are excited about our ability to become a stronger global competitor in the large and growing biodegradable products market."

    First Six Months of 2010:
    Revenues - Revenues increased 28.4% in the first six months of 2010 to $7.3 million compared to $5.7 million in the same period of 2009.  
    Gross Profit - Gross profit in the first half of 2010 increased 23.9% to $3.4 million compared to $2.7 million in the second half of last year, while gross margin decreased 1.7% to 46.2%. Improvements in operating efficiency were more than offset by increased packaging costs and higher levels of amortization of intangible assets. The Company expects to reduce production costs and improve gross margins when its new manufacturing facility comes on line in the second half of this year. 
    Operating Expense - Operating expenses in the first six months of 2010 totaled $1.2 million, or 16.6% of sales versus $0.5 million, or 8.1% of sales in the first six months of 2009. Selling expenses during the first six months of 2010 were down 25.0% compared to the comparable period of 2009, while general and administrative expenses increased to $1.1 million in the 2010 period compared to $0.3 million in the 2009 period. The $0.8 million increase was due to increases in overall salaries, and professional fees, stock compensation expenses, and pre-opening expenses for our new manufacturing facility. 
    Operating Income - Income from operations for the first six months of 2010 decreased 4.7% to $2.2 million compared to $2.3 million in the 2009 period. Operating margin was 29.6% in the 2010 period versus 39.9% a year ago. Excluding stock compensation expense, operating margin was 36.1%.   
    Other Income (Expense) - Other expenses were $0.5 million in the first six months of 2010 while the same year ago period contained negligible expenses. 
    Net Income - Net income for the first six months of 2010 was $1.4 compared to $1.9 million in the first six months of 2009. Net income per diluted share was $0.06 in the first six months of 2010 versus net income per diluted share of $0.10 in the first six months of 2009 based on weighted average shares of 23.4 million and 18.7 million, respectively. Adjusted net income (non-GAAP) was $2.3 million, an increase of 17.6% versus a year ago. Adjusted net income per diluted share (non-GAAP) was $0.10 for both the first six months of 2010 and the first six months of 2009. The increase in share count reflects the issuance of 6.9 million common shares in private placements completed during the first six months of 2010.  

    Liquidity and Capital Resources:
    As of June 30, 2010, the Company had $10.3 million in cash and cash equivalents, an increase of $3 million from the end of 2009, primarily due to net proceeds from private placements completed during 2010, offset by $4.4 million of cash advances to suppliers of equipment for the new manufacturing facility. Cash flow from operations in for the first six months of 2010 totaled $2.6 million. The Company made progress on improving its accounts receivable turnover, with Days Sales Outstanding decreasing from 187 days in the first quarter to 140 days in the second quarter of 2010. The Company had $15.1 million in working capital and no long-term debt as of June 30, 2010.
    "We continue to leverage our intellectual property assets and low-cost manufacturing advantage to develop more products and further expand to new geographies," continued Mr. Su Zhonghao. "We are on track to complete the construction of our new state-of-art manufacturing facility in Harbin, which will not only increase our capacity by 45% to 13,000 tons per annum, but should also improve gross margin across all product lines."  
    Mr. Su Zhonghao concluded, "Looking ahead, we are focused on two key areas of growth: 1) expanding our presence in China and entering key overseas markets, including the U.S., Italy, France, the U.K., Israel, Korea and Japan; and 2) developing new product categories such as disposable trash bags, shopping bags and medical products. We are especially excited about the long-term opportunity for biodegradable packaging, which is estimated by the International Association of Packaging Research Institutes to surpass $60 billion in total sales during 2010."

    About China Green Material Technologies, Inc. 
    Website: http://www.sinogreenmaterial.com
    China Green Material Technologies, Inc. (OTCBB: CAGM) is a China-based manufacturer of starch-based biodegradable containers, tableware and packaging products. Headquartered in Harbin city of China, the Company currently has 153 employees. The Company has developed proprietary biodegradable food packaging materials technologies.

    Safe Harbor Statement
    This press release contains certain statements that may include 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipate," "optimistic," "intend," "will" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors 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 risks and other factors, including the risk that the Company may not successfully open its planned new production facility in 2010 and those risks and other factors discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission, including the Annual Report on Form 10-K filed April 12, 2010. 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.



            CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIES         
                      CONDENSED CONSOLIDATED BALANCE SHEETS                  
                                                                             
                                                   June 30,     December 31, 
                                                     2010           2009 
                                                  (Unaudited)            
                       Assets                                                
    Current Assets:                                                          
      Cash and equivalents                       $10,279,530    $7,321,276   
      Cash - restricted                               47,474         3,443   
      Accounts receivable, net                     6,873,164     6,524,510   
      Inventories                                    740,987       456,970   
      Accrued receivables                             66,265       549,288   
      Other receivables                              266,958        19,210   
      Deferred income tax assets                      90,921         4,918   
      Prepaid expenses                                53,300        29,434   
      Other current assets                                --        78,863   
    Total Current Assets                          18,418,599    14,987,912   
                                                                             
      Deposits to suppliers of property and                      
       equipment                                   4,428,794            -- 
      Property and equipment, net                 12,879,161    10,394,584   
      Intangible assets, net                       5,032,177     5,060,559   
      Know-how right, net                          2,116,802     2,160,533   
      Investment - at cost                            17,421       310,419   
                                                                             
                                                           
    Total Assets                                 $42,892,954   $32,914,007   
                                                                             
        Liabilities and Stockholders' Equity                                 
    Current Liabilities:                                                     
      Accounts payable and accrued expenses         $992,152      $302,786   
      Customer deposits                                   --         4,213   
      Due to stockholders/officers, net              313,346       300,793   
      Taxes payable                                  501,735       430,408   
      Other current liabilities                    1,493,125     1,469,121   
    Total Current Liabilities                      3,300,358     2,507,321   
                                                                             
    Stockholders' Equity                                                     
      Common stock, $0.001 par value, 
       100,000,000 shares authorized,                                                  
       25,629,515 and 18,711,388 shares
       issued and outstanding at June 30, 2010
       and December 31, 2009, respectively            25,630        18,711   
                                                           
      Additional paid-in capital                  25,495,900    17,895,324   
      Reserve funds                                1,318,116     1,152,569   
      Retained earnings                            8,923,903     7,709,729   
      Accumulated other comprehensive income       3,829,047     3,630,353   

    Total Stockholders' Equity                    39,592,596    30,406,686   
                                                           
    Total Liabilities and Stockholders' Equity   $42,892,954   $32,914,007   
 
    The accompanying notes are an integral part of the financial statements.
  


            CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIES             
                UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF                      
                        INCOME AND COMPREHENSIVE INCOME                                     
                                                                         
                          Three Months Ended             Six Months Ended 
                                June 30,                    June 30,         
                            2010            2009           2010       2009 
                                                                         
    Revenues          $4,493,784      $3,549,446     $7,283,182  $5,671,566 
    Cost of revenues   2,300,315       1,779,453      3,916,105   2,953,284 
                                                                         
    Gross profit       2,193,469       1,769,993      3,367,077   2,718,282 
                                                                         
    Operating                                                            
      Expenses Selling                                                        
       expenses           44,556          77,127         87,279     116,256 
    General and                 
     administrative       
     expenses            882,088         183,337      1,124,849     341,166
    Total Operating                                            
     Expenses            926,644         260,464      1,212,128     457,422 
                                                                         
    Income From                                                
     Operations        1,266,825       1,509,529      2,154,949   2,260,860 
                                                                          
    Other income                                                         
     (expense):                                                          
      Interest income      1,412           1,327          2,939       1,994 
      Net rental          
       income/
       (expenses)        (28,103)          6,015        (66,030)     12,025
      Loss on                                              
       investment        (96,153)             --       (293,251)         -- 
      Loss on disposal
       of property                                                        
       and equipment         (32)         (1,012)      (125,689)     (1,012)
      Other expenses 
       - net             (17,544)           (320)       (18,220)       (456) 
    Total other                                              
     income (expense)   (140,420)          6,010       (500,251)     12,551
                                                                         
    Income Before                                              
     Income Taxes      1,126,405       1,515,539      1,654,698   2,273,411 
                                                                         
    Provision for                                                     
     income taxes        181,584         228,124        274,978     342,015 
                                                                         
    Net Income           944,821       1,287,415      1,379,720   1,931,396 
                                                                         
    Foreign currency      
     translation          
     adjustment          195,224          14,094        198,694     (31,147)
                                                                         
    Comprehensive                                       
     Income           $1,140,045      $1,301,509     $1,578,414  $1,900,249 
                                                                         
     Net Income Per                                                      
      Common Share                                                       
       basic               $0.04           $0.07          $0.06       $0.10 
       diluted             $0.04           $0.07          $0.06       $0.10 
                                                                         
     Weighted Common                                                     
      Shares                                                             
    Outstanding                                                          
      basic           24,037,098      18,733,388     23,230,924  18,733,388 
      diluted         24,282,098      18,733,388     23,354,101  18,733,388 
                                                                         
    The accompanying notes are an integral part of the financial statements.
 


            CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIES         
           UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS         
                FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009              
                                                                             
                                                   Six Months Ended June 30,  
                                                      2010           2009  
    Cash flows From Operating Activities:                                    
      Net Income                                  $1,379,720     $1,931,396   
      Adjustments to Reconcile Net Income to                         
       Net Cash                                                                
      Provided by Operating Activities                                   
        Depreciation and amortization                671,836       651,929   
        Changes in deferred tax                      (85,546)           --   
        Bad debt expenses                              1,568           649   
    Stock based compensation                         471,601            -- 
        Loss on long-term investment                 293,251            --   
        Loss on disposal of fixed assets             125,689         1,012   
      Changes in operating assets and                                
       liabilities                                                             
        Accounts receivable                         (313,947)     (118,122)
        Inventories                                 (280,176)     (140,290)   
        Accrued receivables                          483,509           201   
        Prepaid expenses and other                                       
         receivables                                (191,109)      (87,097)
        Other current assets                              --      (163,427)
        Accounts payable and accrued                                        
         expenses                                    (96,541)      (45,814)   
        Customer deposits                             16,249           890 
        Taxes payable                                 68,692       403,077   
        Other current liabilities                     10,909         2,705   
    Net Cash Provided by Operating Activities      2,555,705     2,437,109   
                                                                             
    Cash Flows From Investing Activities:                                    
        Restricted cash                              (44,011)           --   
        Advance to suppliers of property                          
         and equipment                            (4,406,602)           -- 
        Purchase of property and                         
         equipment                                (3,221,890)      (63,242)  
        Proceeds from disposal of fixed                          
         assets                                      117,214        18,293   
    Net Cash Used in Investing Activities         (7,555,289)      (44,949)  
                                                                             
    Cash Flows From Financing Activities:                                    
        Payment to shareholders/officers                    
         loans                                            --    (1,024,787)  
        Proceeds from shareholders/
         officers loans                                   --        12,344   
        Advance from third party                     776,545            -- 
        Proceeds from stock                              
         issued                                    7,135,895            --   
    Net Cash Provided by (Used in) Financing                
     Activities                                    7,912,440    (1,012,443)   
                                                                             
    Effect of Exchange Rate Changes on Cash and                          
     Equivalents                                      45,398        (6,248)  
                                                                             
    Net Increase in Cash and Equivalents           2,958,254     1,373,469   
                                                           
    Cash and Equivalents at Beginning of Period    7,321,276     4,245,044   
                                                                             
    Cash and Equivalents at End of Period        $10,279,530    $5,618,513   
                                                                             
    SUPPLEMENT DISCLOSURES OF CASH FLOW                                  
     INFORMATION                                                             
        Cash paid for Interest                           $--           $--   
        Cash paid for Income taxes                  $311,895           $--   
 
    The accompanying notes are an integral part of the financial statements.


    About Non-GAAP Financial Measures
    This press release contains non-GAAP financial measures which Company management uses for financial and operational decision making, and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures are useful to investors because they exclude a loss on the disposal of fixed assets and a loss on long-term investments that our management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of CAGM. Accordingly, management excludes these losses when making operational decisions. The Company believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods. In addition, it allows investors to evaluate the Company's performance using the same methodology and information as that used by our management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, our management compensates for these limitations by providing the relevant disclosure of the items excluded.
    The following table provides a reconciliation of non-GAAP earnings per share to the equivalent GAAP measure.



    3 Months Ended June 30, 2010:
                                                        Second Quarter Ended   
    (in thousands, except per share data)              30-Jun        30-June  
                                                         2010           2009 

    Net income                                           $945         $1,287 
    Loss on investments                                   $96             -- 
    Non-cash stock compensation expense                  $472            
    Adjusted net income (non-GAAP)                     $1,513         $1,287 
    Adjusted diluted earnings per share (non-GAAP):                      
      Basic                                            $0.063          $0.07 
      Diluted                                          $0.062          $0.07 
                                                                         
                                                                         

    6 Months Ended June 30, 2010:
                                                          Six Months Ended     
    (in thousands, except per share data)              30-Jun        30-June  
                                                         2010           2009 

    Net income                                         $1,380         $1,931 
    Loss on disposal of fixed assets                     $126             -- 
    Loss on investments                                  $293             -- 
    Non-cash stock compensation expense                  $472             -- 
    Adjusted net income (non-GAAP)                     $2,271         $1,931 
    Adjusted diluted earnings per share (non-GAAP):                      
      Basic                                             $0.10          $0.10 
      Diluted                                           $0.10          $0.10 


    For more information, please contact:

    In China:

     Low Yan Seong, CFO
     China Green Material Technologies, Inc.
     Email: cfo@sinogreenmaterial.com
     Web:   http://www.sinogreenmaterial.com

     Feng Peng
     HC International, Inc.
     Phone: +86-138-12271616
     Email: feng.peng@hcinternational.net

    In the U.S.:

     Ted Haberfield
     HC International, Inc.
     Phone: +1-760-755-2716
     Email: thaberfield@hcinternational.net
     Web:   http://www.hcinternational.net

Source: China Green Material Technologies, Inc.
Related Stocks:
OTC:CAGM
collection