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First Quarter 2009 Highlights
-- Revenue increased 21.6% year-over-year to $21.2 million
-- Gross profit increased 30.8% year-over-year to $5.2 million
-- Gross margin was 24.4%, compared to 22.7% for the first quarter of 2008
-- Net income increased 1.4% to $1.8 million, compared to $1.7 million
for the first quarter of 2008
-- Diluted earnings per share were $0.070, compared to $0.066 for the
first quarter of 2008
-- Domestic sales totaled $16.9 million and accounted for 79.6% of
revenue
"During the first quarter of 2009, we continued to focus on our domestic sales, increasing sales in all three of our product categories. As we expanded sales into new territories in China, our operating expenses increased as well," said Mr. Si Chen, Chairman and Chief Executive Officer of American Lorain. "We view these expenses as an investment in our future growth as we want to develop a strong presence in China. In March, we introduced several new bean products in our convenience food segment, which we believe will become the backbone of our convenience food segment in the future because of their versatility and marketability. So far, we have conducted trial sales to large customers in different regions of China, some of which have already committed to larger orders."
First Quarter 2009 Results
Revenue for the first quarter of 2009 increased to $21.2 million, an increase of 21.6% from $17.4 million for the first quarter of 2008. Sales of chestnut products increased 15.2% and accounted for 59.8% of total revenue, compared to 62.9% for the first quarter of 2008. Frozen, canned, and bulk food products revenue increased 36.9% and accounted for 35.4% of total revenue, compared to 31.4% for the same period of 2008. Revenue from convenience food products increased 4.0% and accounted for 4.9% of revenue, compared to 5.7% for the corresponding quarter of prior year. As the new bean products were introduced to the market in March 2009, the Company expects to see stronger growth in the convenience food segment during the following quarters.
American Lorain's revenue growth in the first quarter of 2009 was mainly the result of strong domestic sales in all three product segments. Domestic sales accounted for 79.6% of revenue for the first quarter of 2009, compared to 73.6% for the first quarter of 2008. Exports decreased 6.5% to $4.3 million for the first quarter of 2009 from $4.6 million for the first quarter of 2008.
Gross profit amounted to $5.2 million for the first quarter of 2009, an increase of 30.8% from $3.9 million for the first quarter of 2008. Gross profit margin was 24.4% for the first quarter of 2009 compared to 22.7% in the corresponding quarter for 2008. The increase in gross profit margin was mainly due to lower raw material costs.
Total operating expenses for the first quarter of 2009 were $2.1 million, or 10.1% of revenue, compared to $1.2 million, or 6.7% of revenue, in the first quarter of 2008. The increase in operating expenses was mainly due to increased selling and marketing expenses because of increased domestic sales and an expansion of distribution from 19 provinces to 26 provinces, the introduction of new convenience food products, and marketing and promotional campaigns for chestnut, convenience food and frozen, canned and bulk food products. Consequently, operating income for the first quarter of 2009 was $3.0 million, an increase of 8.3% from $2.8 million for the first quarter of 2008.
Earnings before taxes were $2.5 million for the first quarter of 2009, an increase of 9.9% from $2.3 million for the corresponding quarter of 2008.
Net income for the first quarter of 2009 was $1.8 million, or $0.070 per diluted share, an increase of 1.4% from $1.7 million, or $0.066 per diluted share, for the first quarter last year. Basic and diluted weighted average number of shares outstanding was 25,177,640 for the first quarter of 2009.
Financial Condition
As of March 31, 2009, American Lorain had $12.2 million in cash and cash equivalents, short-term bank loans of $29.1 million and $0.6 million in long-term debt. At quarter end, the Company had a current ratio of 1.6 and $26.9 million in working capital. Days sales outstanding for the quarter ended March 31, 2009 were 104 days, while days inventory outstanding were 147 days for the same period, compared to 165 days and 114 days respectively for the quarter ended March 31, 2008. For the quarter ended March 31, 2009, the Company's inventories totaled $27.7 million, as the Company accumulated chestnuts during the harvesting season ending in January. Shareholders' equity stood at $70.4 million as of March 31, 2009 compared to $67.7 million as of December 31, 2008.
During the first quarter ended March 31, 2009, the Company used $0.5 million in cash for operating activities mainly due to an increase in inventories and a reduction in accounts payable. Net cash used in investing activities totaled $0.4 million in the first quarter, 2009, while net cash provided by financing activities was $9.4 million, mainly from bank borrowings.
Business Outlook
American Lorain continues to promote its convenience food products domestically to reduce seasonality of revenues, while simultaneously building its brand in the convenience food market. As the convenience food product sales grow, the Company plans to gradually decrease the scope of the frozen, canned and bulk food segment. Consequently, because of increased marketing and selling expenses, the Company's operating expenses may remain high in 2009.
"We are planning to initiate our commercial campaign for various convenience food products this summer," said Mr. Chen. "This campaign consists of nationwide TV commercials in China on CCTV, China Central Television, in addition to advertisements on billboards and in magazines, in an attempt to boost sales of our bean products and other convenience food products. As a result, we expect our convenience food segment to account for approximately 25% of total sales in 2009. We do not plan to make any significant investments to increase production capacity in 2009. Instead, if necessary, we would lease additional deep-freezing and production lines to accommodate for our changing production needs."
In June 2009, $6.5 million of the Company's short-term debt will come due. The Company expects to renew these loans with local banks.
"Because the Chinese government is encouraging banks to lend to businesses, we are confident that we will be able to renew our short-term loans," said Mr. Chen. "We are also exploring alternatives for obtaining long-term working capital financing from local banks."
Conference Call
The Company will conduct a conference call on Friday, May 15, 2009, at 9:00 AM EDT, to discuss its financial results for the first quarter ended March 31, 2009.
To participate in the event by telephone, please dial (888) 419-5570 five minutes prior to the start time (to allow time for registration) and reference the conference ID 251 971 66. International callers should dial +1 617 896.9871.
A digital replay of the call will be available from Friday, May 15, 2009 at 11:00 a.m. EDT for 14 days. To listen to the replay, dial (888) 286-8010 and enter the conference ID number 20124329. International callers should dial 617-801-6888 and enter the same conference ID number. The replay will also be available on the company's website http://www.americanlorain.com .
About American Lorain Corporation
American Lorain Corporation ("American Lorain" or the "Company") is a Delaware corporation that develops, manufactures and sells various food products. The Company's products include chestnut products; convenience foods (including ready-to-cook meals and ready-to-eat meals); and frozen, canned and bulk foods. The Company currently sells over 234 products to 26 provinces and administrative regions in China as well as to 42 foreign countries. The Company operates through its four direct and indirect subsidiaries and one leased factory located in China. For more information about American Lorain, please visit our website at http://www.americanlorain.com .
Forward-Looking Statements
Statements contained herein that relate to the Company's future performance, including statements with respect to forecasted revenues, margins, cash generation and capital expenditures are "forward-looking statements". Such statements involve a number of risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance or achievements to differ materially from those anticipated. Such statements are based on current expectations only, and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the factors that could cause actual results to materially differ include: general business and economic conditions, particularly the current downturn in the worldwide economy; our ability to obtain adequate supplies of raw materials; our ability to manage our expansion strategy; changes in foreign currency exchange rates; government regulation; difficulties in new product development; changing consumer tastes in disparate markets worldwide and our ability to address those changes; our ability to attract and retain highly qualified personnel; and other factors affecting our operations that are set forth in our Annual Report on Form 10-K for the year ended December 31, 2008 filed with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
-FINANCIAL TABLES FOLLOW-
AMERICAN LORAIN CORPORATION
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
(Stated in US Dollars)
2009 2008
ASSETS
Current assets
Cash and Cash equivalents $ 12,243,722 $ 2,841,339
Restricted Cash 1,004,780 3,715,998
Short-term Investment 110,290 113,069
Trade accounts receivable 23,475,617 25,293,326
Other receivables 8,050,484 5,107,719
Inventory 27,688,491 24,827,922
Advance to Suppliers 308,085 415,009
Prepaid Expenses and Taxes 1,323,073 1,228,648
Total current assets $ 74,204,542 $63,543,030
Property, plant and equipment, net 40,010,398 40,201,686
Land use rights, net 4,145,144 3,950,927
TOTAL ASSETS $118,360,085 $107,695,643
Current liabilities
Short-term bank loans $ 29,063,318 $14,414,996
Notes payable -- 5,208,485
Accounts payable 4,297,179 6,072,883
Income tax payable 1,044,540 2,682,658
Accrued liabilities and other
payables 11,600,586 10,291,237
Customers deposits 1,367,453 748,732
Total current liabilities $ 47,373,075 $39,418,991
Long-term bank loans 577,700 576,975
TOTAL LIABILITIES $ 47,950,774 $39,995,966
2009 2008
STOCKHOLDERS' EQUITY
Common Stock, $0.001 par value,
200,000,000 shares authorized;
25,177,640 and 25,172,640 shares
issued and outstanding as of
March 31, 2009 and December 31, 2008,
respectively 25,177 25,172
Additional paid-in-capital 24,187,019 24,187,019
Statutory reserves 5,438,723 5,438,723
Retained earnings 29,504,202 27,748,126
Accumulated other comprehensive
Income 5,968,189 5,178,616
Minority interests 5,286,001 5,122,021
$ 70,409,311 $ 67,699,677
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 118,360,085 $107,695,643
AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Stated in US Dollars)
2009 2008
Net revenues $ 21,200,537 $ 17,428,299
Cost of revenues (16,038,203) (13,480,324)
Gross profit $5,162,334 $3,947,975
Operating expenses
Selling and marketing expenses (1,170,847) (618,968)
General and administrative expenses (976,306) (544,450)
Operating Income $ 3,015,181 $ 2,784,557
Investment income
Government subsidy income 98,589 32,750
Interest income 64,990 39,083
Other income 16,379 --
Foreign exchange loss (87,433) --
Other expenses (24,884) (10,168)
Interest Expense (603,826) (590,297)
Earnings before tax $ 2,478,996 $ 2,255,924
Income tax (580,772) (390,381)
Income before minority interests $ 1,898,224 $ 1,865,543
Net Income Attributable to:
-Parent 1,756,076 1,731,703
-Non-controlling Interest 142,148 133,840
1,898,224 1,865,543
Earnings per share
basic $ 0.0697 $ 0.0695
diluted 0.0697 0.0664
Weighted average shares outstanding
basic 25,177,640 24,923,179
diluted 25,177,640 26,091,382
AMERICAN LORAIN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
(Stated in US Dollars)
2009 2008
Cash flows from operating activities
Net income $ 1,756,076 $ 1,731,703
Minority interest 142,148 133,840
Depreciation 334,454 360,568
Amortization 44,377 27,481
(Increase)/decrease in accounts &
other receivables 1,598,659 7,070,972
(Increase)/decrease in inventories (2,860,568) 3,536,593
Increase/(decrease) in accounts and
other payables (1,485,752) (10,011,750)
Net cash (used in)/provided by
operating activities $ (470,606) $ 2,849,407
Cash flows from investing activities
Purchase of plant and equipment (143,166) (3,237,074)
Purchase of biological assets -- (115,731)
Increase of construction in progress -- (1,253,155)
Payments for deposit (215,905) --
(Increase)/decrease in restricted cash -- 34,722
Payment of land use rights (22,689) (131,935)
Investments in securities -- (772,942)
Sales of securities 2,780 --
Net cash used in investing activities $ (378,980) $(5,476,115)
Cash flows from financing activities
Issue of common stock 5 --
Notes repayment (5,208,485) --
Bank borrowings 14,649,047 1,066,888
Net cash provided by financing activities $ 9,440,566 $ 1,066,888
Net in cash and cash equivalents
(used)/sourced 8,590,979 (1,559,820)
Effect of foreign currency translation
on cash and cash equivalents 811,404 1,052,344
Cash and cash equivalents-beginning of year 2,841,339 6,769,973
Cash and cash equivalents-end of year $ 12,243,722 $ 6,262,497
Supplementary cash flow information:
Interest received $ 64,990 $ 9,378
Interest paid 603,826 369,077
Taxes Paid 580,772 1,705,431
For more information, please contact:
American Lorain Corp
Mr. Alan Jin, CFO
Phone: +86-21-6145-3891
Email: alanjin@americanlorain.com
Web: http://www.americanlorain.com
CCG Investor Relations
Mr. Crocker Coulson, President
Phone: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Ms. Linda Salo, Financial Writer
Phone: +1-646-922-0894
Email: Linda.salo@ccgir.com
Web: http://www.ccgirasia.com
SOURCE American Lorain Corporation
http://www.americanlorain.com
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