omniture

China Marine Food Group Limited Announces First Quarter 2009 Results

2009-05-14 04:25 548

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 $ --

Source: China Marine Food Group Ltd.
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