SHISHI, China, May 14 /PRNewswire-Asia/ -- China Marine Food Group Ltd. (OTC Bulletin Board: CMFO), a processor of seafood-based snack foods and distributor of fresh and frozen marine catch, today announced the Company's financial results for the first quarter 2009.
-- Q1 2009 revenues increased by 53.5% to $16.5 million compared to
Q1 2008;
-- Q1 2009 net income increased by 16.4% to $3.2 million compared to the
first quarter of 2008; Q1 2009 EPS was $0.14, compared to $0.11 in
Q1 2008;
-- Company increased distribution to a total of 2,000 retail points in
Q1 2009, compared to 1,200 in Q1 2008;
-- Q1 2009 cash flow from operations was $7.0 million, an increase of over
200% compared to Q1 2008;
-- On March 31, 2009, Company had $33.3 million in net cash (cash and cash
equivalents less debt).
2009 First Quarter Financial Results
Net revenues for the first quarter ended March 31, 2009 reached $16.5 million, an increase of approximately $5.8 million or 53.5% over the same period of prior year. A notable event included bulk sales of frozen squid trading inventory in the quarter. Due to this sale, snack foods were 67.7% of revenues for the first quarter of 2009, compared to 92.1% for the quarter ended March 31, 2008. The Company's core product focus remains seafood-based MingXiang(R)-branded snack foods which increased 12.8% year-over-year and is expected to comprise the majority of revenue growth for the rest of the year; whereas the sale of marine catch for the three months ended March 31, 2009 increased by $4.5 million to $5.3 million year-over-year.
"Demand for our snack-foods remains brisk and the recently-signed agreement between our Shanghai distributor and a major Shanghai-based convenience store chain is expected to be a measurable contributor to growth during 2010. Our roll out to this chain has added a significant number of new retail points which benefit our brand equity in market as well. Our new capacity which has come online will provide the production to meet this increased demand. To further complement growth, we are in discussions with other store chains which will enable us to enter new areas while gaining market share in the geographic regions we currently service," commented Mr. Pengfei Liu, Chairman and CEO. "The market for export sales of processed and frozen marine catch has become more competitive. By anticipating this shift some time ago, we made the decision to service the marine catch segment of our distributor base only if reasonable gross margins can be attained. This strategy will not impact our growth prospects looking forward," Mr. Liu concluded.
Cost of goods sold were $12.4 million yielding gross profits of $4.1 million in the first quarter 2009, which represented an increase of $0.5 million, or 14.0% versus the first quarter 2008. For the first quarter 2009, gross profit margins were 24.8%, versus 33.4% for the same period in 2008. The decrease in gross margin was attributed to the significant increase of marine catch sales in the first quarter 2009, which carried an approximate 8.5% gross margin. Conversely, processed, dried and packaged seafood-based snack foods yielded gross margins of 32.6% for the quarter versus 35.2% for the same period in 2008. The slight decrease being linked to higher costs of product packaging materials which currently account for 13.9% of the category's total costs of goods sold compared to 8.3% in the same quarter prior year. A combination of increased pricing on printed plastic material and newly created packaging for products launched in 2008 are the primary components of the increase. The Company expects the profit margin for processed seafood products can be maintained over 30% for the rest of 2009.
Total operating expenses for the first quarter of 2009 were $0.6 million (3.6% of revenues) compared to $0.4 million (3.5% of revenues) for the same period in 2008. Income before taxes was $3.7 million compared to $3.2 million year over year. China Marine maintains a favorable tax rate of 12.5% as a foreign investment enterprise through the end of 2009. The Company has already applied for newly created tax incentives for 2010 and beyond for industries which it qualifies.
Net income for the first quarter of 2009 was $3.2 million, representing an increase of 16.4% compared to $2.8 million reported in the same period prior year. Corresponding net profit margins were 19.6% for the first quarter of 2009, compared to 25.9% during the same period of 2008. This change was attributed to the different revenue composition from period to period. Based on 23.0 million shares outstanding, earnings per diluted share were $0.14 for the first quarter of 2009, compared to $0.11 for the first quarter of 2008.
For the full year 2009, China Marine has released guidance of $60.0 million in revenues and $14.3 million in net income.
Balance Sheet and Cash Flow Discussion
Cash and cash equivalents on March 31, 2009 were $37.5 million. Accounts receivable stood at $7.1 million on March 31, 2009, with corresponding 33 days sales outstanding. Inventories were $1.2 million on March 31, 2009. The Company reported $4.1 million in short term borrowings: China Marine has no long term debt and uses short term financing to support working capital each fiscal year and to maintain favorable lending and deposit rates with the banks. For the first quarter of 2009, the Company generated $7.0 million in net cash from operations, an increase of 242% from the same period of 2008.
Conference Call
The Company will host a conference call on May 14, 2009, at 10:00 a.m. ET. To attend the call, please use the dial information below. When prompted, ask for the "China Marine Call" and/or be prepared to provide the conference ID.
Date: May 14, 2009
Time: 10:00am ET
Conference Line Dial-In (U.S.): 1-877-941-6012
International Dial-In: +1-480-629-9744
Conference ID: 4076666
Webcast link: http://viavid.net/dce.aspx?sid=0000644B
Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through June 1, 2009. To listen, please call 1-800-406-7325 within the United States or +1-303-590-3030 when calling internationally. Utilize the pass code 4076666 for the replay.
About China Marine
China Marine Food Group Ltd. processes dried and flavored seafood-based snack foods and distributes fresh and frozen marine catch to six provinces in the PRC. Founded in 1994, China Marine has grown steadily and positioned its "Mingxiang" brand as a category leader in 2,000 retail sales points in the PRC. The Company has received "The Famous Brand" and "Green Food" awards. Located in the Fujian Province, it is one of the largest coastal provinces in the PRC and a vital navigation hub between the East China Sea and the South China Sea. The Company is committed to the highest standard of quality control with the ISO9001, ISO14001, HACCP certification and EU export registration.
Safe Harbor Statement:
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. This press release or another written or oral statements made by or on behalf of the Company may include
forward-looking statements that reflect the Company's current views with respect to future events and financial performance. All statements other than statements of historical fact included in this press release are forward-looking statements. Forward-looking statements can generally be identified by the use of forward-looking terminology such as "may," "will," "plan," "expect," "project", "intend," "estimate," "anticipate," "believe" or "continue" or their negative or variations or similar terminology. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. For an explanation of some of the risks and uncertainties facing the Company and its investors, please see our most recent annual report on Form 10K on file with the Securities Exchange Commission. The risk factors contained therein should be considered by prospective investors for their potential impact on forward-looking statements included in this release. These important factors, among others that might not be listed, may cause actual results to differ materially and adversely from the results expressed or implied by the forward-looking statements. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
This press release shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. No offering of securities shall be made except by means of a joint proxy statement/prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
CHINA MARINE FOOD GROUP LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
(Currency expressed in United States Dollars ("US$"),
except for number of shares)
March 31, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 37,457,273 $ 31,640,307
Accounts receivable, net 7,065,662 4,819,434
Inventories 1,246,833 6,679,488
Prepaid expenses and other current assets 192,869 326,977
Total current assets 45,962,637 43,466,206
Property, plant and equipment, net 7,759,442 5,944,515
Land use rights, net 626,856 630,150
Construction in progress 628,141 1,604,855
TOTAL ASSETS $ 54,977,076 $ 51,645,726
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 4,134,042 $ 4,289,341
Accounts payable, trade 730,461 416,463
Amount due to a stockholder 23,780 170,091
Income tax payable 426,828 362,326
Accrued liabilities and other payable 1,336,331 1,387,427
Total current liabilities 6,651,442 6,625,648
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 1,000,000
shares authorized; 0 shares issued and
outstanding as of March 31, 2009 and December
31, 2008 -- --
Common stock, $0.001 par value; 100,000,000
shares authorized; 23,026,301 shares issued
and outstanding as of March 31, 2009 and
December 31, 2008 23,026 23,026
Additional paid-in capital 16,752,945 16,752,945
Statutory reserve 4,883,700 4,883,700
Accumulated other comprehensive income 3,505,391 3,448,436
Retained earnings 23,160,572 19,911,971
Total stockholders' equity 48,325,634 45,020,078
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 54,977,076 $ 51,645,726
CHINA MARINE FOOD GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in United States Dollars ("US$"),
except for number of shares)
(Unaudited)
Three months ended March 31,
2009 2008
Revenue, net $ 16,548,052 $ 10,782,052
Cost of revenue (inclusive of depreciation
and amortization) (12,442,277) (7,179,144)
Gross profit 4,105,775 3,602,908
Operating expenses:
Depreciation and amortization (19,372) (9,420)
Sales and marketing (114,062) (88,584)
General and administrative (465,754) (277,167)
Total operating expenses (599,188) (375,171)
Income from operations 3,506,587 3,227,737
Other income (expenses):
Subsidy income 143,137 --
Rental income 20,375 17,936
Interest income 90,470 39,260
Interest expense (62,708) (81,441)
Income before income taxes 3,697,861 3,203,492
Income tax expense (449,260) (412,481)
NET INCOME $ 3,248,601 $ 2,791,011
Other comprehensive income:
- Foreign currency translation gain 56,955 1,307,829
COMPREHENSIVE INCOME $ 3,305,556 $ 4,098,840
Net income per share - basic $ 0.14 $ 0.12
Net income per share - diluted $ 0.14 $ 0.11
Weighted average shares outstanding - basic 23,026,301 22,972,301
Weighted average shares outstanding -
diluted 23,026,301 25,142,105
CHINA MARINE FOOD GROUP LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Three months ended March 31,
2009 2008
Cash flows from operating activities:
Net income $ 3,248,601 $ 2,791,011
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 73,066 49,989
Allowance for doubtful accounts 11,288 873
Changes in operating assets and liabilities:
Accounts receivable (2,257,516) (466,725)
Inventories 5,432,655 (132,097)
Prepaid expenses and other current assets 134,108 (709,972)
Accounts payable, trade 313,998 440,990
Income tax payable 64,502 80,404
Accrued liabilities and other payable (51,096) (19,949)
Net cash provided by operating activities 6,969,606 2,034,524
Cash flows from investing activities:
Purchase of property, plant and equipment (35,847) (10,600)
Addition to construction in progress (863,616) --
Net cash used in investing activities (899,463) (10,600)
Cash flows from financing activities:
(Repayment to) advance from a stockholder (146,311) 52,872
Proceeds from short-term borrowings 4,134,042 7,658,569
Payment on short-term borrowings (4,289,341) (4,245,752)
Net cash (used in) provided by financing
activities (301,610) 3,465,689
Effect of exchange rate changes in cash and
cash equivalents 48,433 1,137,567
NET CHANGE IN CASH AND CASH EQUIVALENTS 5,816,966 6,627,180
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 31,640,307 24,476,647
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 37,457,273 $ 31,103,827
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes $ 384,758 $ 332,077
Cash paid for interest $ 62,708 $ 81,441
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Transfer from construction in progress to
property, plant and equipment $ 1,840,330 $ --
