China Marine Food Group Limited Reports Record Results for its Fourth Quarter and Fiscal Year 2009
China Marine Food Group Limited, a China-based manufacturer of Mingxiang seafood-based snack foods, "Hi-Power" marine algae-based beverages and distributor of frozen marine catch, announced record financial results for its fourth quarter and fiscal year ended December 31, 2009, reports http://www.megafishnet.com/ with reference to China Marine Food Group Ltd.
Fourth Quarter Fiscal Year 2009 Highlights:
-- Revenue was $24.9 million, up 85.0% from Q4 2008.
-- Gross profit was $5.8 million, up 54.7% from Q4 2008.
-- Operating income was $4.8 million, up 71.0% from Q4 2008.
-- Net income was $4.4 million, up 74.1% from Q4 2008.
-- Earnings per share were $0.18 based on 24.4 million shares.
Fiscal Year 2009 Highlights:
-- Revenue was $69.6 million, up 42.6% from the year ended December 31,
2008.
-- Gross profit was $19.1 million, up 25.9% from the previous year.
-- Operating income was $16.2 million, up 29.8% from the previous year.
-- Net income was $14.6 million, up 30.9% from 2008, with earnings of $0.60 per diluted share.
-- Completed a new manufacturing facility during Q3 2009 which increased capacity from 10,000 tons to 20,000 tons per annum.
"China Marine experienced strong demand during the fourth quarter for both our processed seafood-based snack foods and marine catch product lines as retailers prepared for the Chinese Lunar New Year celebrations. The additional capacity we added during the year was instrumental in meeting our sales goals," said Mr. Pengfei Liu, Chairman and Chief Executive Officer of China Marine.
Fourth Quarter Fiscal Year 2009 Results
Total revenue in the fourth quarter ended December 31, 2009 was $24.9 million, up 85.0% from $13.5 million in the prior year's period. Sales growth was driven by increased shipments of Mingxiang(R) snack food products to distributors and by shipments of frozen marine catch to distributors in the Liaoning province. The processed seafood segment contributed $14.5 million of revenues and grew 29.7% from the fourth quarter of 2008. The marine catch product line contributed $10.4 million in revenue and increased over three-fold from Q4 2008. As previously discussed, while the Company's focus is Mingxiang(R) snack foods and beverages, China Marine will take advantage of opportunities to drive incremental revenue growth by selling bulk orders of frozen squid to its established base of marine catch distributors.
Gross profit in the fourth quarter of fiscal year 2009 was $5.8 million, an increase of 54.7% from $3.8 million in the prior year's corresponding period. Gross margins for the processed snack food line were 33.1%, compared to 32.0% in the fourth quarter of 2008. Marine Catch margins were 10.0% versus 8.2% in the fourth quarter of 2008.
Selling, general and administrative expenses in the fourth quarter ended December 31, 2009 were approximately $1.0 million, up 5.8% from $0.9 million in the prior year's period.
Operating income in the fourth quarter was $4.8 million, with operating margin of 19.4%, a 71.0% increase from $2.8 million with operating margin of 21.0%, in the prior year's period.
Net income for the quarter ended December 31, 2009 was $4.4 million, compared to $2.5 million in the prior year's corresponding period. Earnings per diluted share were $0.18 based on 24,391,942 diluted shares outstanding.
Fiscal Year 2009 Results
Total revenue for fiscal year 2009 was $69.6 million, up 42.6% from $48.8 million for the year ended December 31, 2008. In 2009, 74.8% of revenue was generated by sales of processed seafood products, and 25.2% of revenue was generated by sales of marine catch compared to 90.9% and 9.1%, respectively in 2008. Domestic sales accounted for 97.4% of revenue in 2009, compared to 95.1% of revenue in 2008.
The Company exceeded its top line revenue guidance of $60.0 million by approximately $9.6 million, or 16.0%.
Gross profit was $19.1 million in 2009, a 25.9% increase from $15.2 million in 2008. In 2009, 90.6% of gross profit was generated by sales of processed seafood products and 9.4% of gross profit was generated by sales of marine catch compared to 97.1% and 2.9%, respectively in 2008. In 2009, sales of processed seafood had a gross margin of 33.3%, and sales of marine catch had a gross margin of 10.3% compared to 33.2% and 9.9%, respectively in 2008.
Operating income totaled $16.2 million in 2009, a 29.8% increase from $12.5 million in the previous fiscal year. The Company's operating margin was 23.2% compared to 25.5% in the prior year. Net income for fiscal year 2009 was $14.6 million, a 30.9% increase from $11.1 million during 2008, with net margins of 20.8% and 22.8% for 2009 and 2008, respectively. Earnings per share were $0.60 per diluted share in fiscal year 2009, compared to $0.48 per diluted share for the year ended December 31, 2008. "We were very pleased to exceed both our revenue guidance of $60.0 million and net income guidance of $14.3 million for the year," said Mr. Pengfei Liu, Chairman and CEO of China Marine. "We leveraged
our growing distribution network of Mingxiang(R) snack foods and significantly expanded our retail network to 2,200 stores from 1,400 in 2008. In 2010, we plan to enter new provinces and develop select export markets in Asia to drive future growth."
Financial Condition
As of December 31, 2009, the Company had $7.1 million in cash. Working capital was $48.4 million, up from $36.8 million as of December 31, 2008. Accounts receivable were $18.8 million, compared to $4.8 million as of December 31, 2008, which was attributed to the increase in sales volume during the year and the extension of credit period to the Company's major customers and consistent with existing market practices. Current liabilities were $8.1 million compared to $6.6 million as of December 31, 2008.
Shareholder's equity was $59.9 million, a 32.9% increase from $45.0 million as of December 31, 2008.
The Company has $26.4 million in notes receivable on December 31, 2009 which was attributable to the convertible loan due from the acquisition's target company, and $2.3 million in prepayment for land use right due to the land cost for development of cold storage facilities.
Recent Events
On January 1, 2010, China Marine exercised an option to purchase 80.0% of the registered capital stock of Shishi Xianghe Food Science and Technology Co., Ltd. ("Xianghe"), the manufacturer of "Hi-Power", an algae-based health beverage. The acquisition consisted of transferring a loan of $26.4 million, which was owed by Xianghe to China Marine, and a payment of $1.4 million from China Marine to the former sole shareholder of Xianghe. 2010 revenues from Xianghe are forecast to be over $20 million with a 20.0% net profit margin.
In January 2010, China Marine announced that it entered into an agreement to sell 4,615,388 shares of common stock at a price of $6.50 per share, generating net proceeds of approximately $28.5 million, which will be used for working capital and general corporate purposes.
Business Outlook and Guidance
"Our acquisition of Xianghe complements our product line and gives us entry into new markets.
Xianghe's "Hi-Power" algae-based drink is popular among health conscious consumers, a growing market segment in China," said Mr. Liu. "China Marine management will take over and manage Xianghe, and we intend to develop additional sales of "Hi-Power" algae-based drink through our Mingxiang(R) existing and expanding distribution network," Liu concluded.
After acquiring Xianghe, the Company increased its fiscal year 2010 guidance to $100.0 million in revenues and $21.5 million in net income. These guidance numbers are subject to change and before any non-cash amortization charges associated with intangible assets generated from the Xianghe acquisition.
About China Marine
China Marine Food Group Ltd. is a food and beverage manufacturer of Mingxiang(R) seafood-based snack foods, "Hi-Power" marine algae-based health drinks, and a wholesaler of frozen marine catch in seven provinces in the PRC. Founded in 1994, China Marine has grown steadily and positioned its Mingxiang(R) brand as a category leader in 2,200 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.