American Lorain Corporation Reports 2011 First Quarter Financial Results

2011-05-16

JUNAN COUNTY, ChinaMay 16, 2011 /PRNewswire-Asia-FirstCall/ — American Lorain Corporation(NYSEAmex: ALN) (“American Lorain” or the “Company”), an international processed snack foods, convenience foods, and frozen foods company based in the Shandong ProvinceChina, today announced financial results for its first quarter ended March 31, 2011.

Q1 2011 Operational Highlights

  • Each product segment increased by over 16% in sales year-over-year
  • Convenience food segment continued to grow as a percent of total revenue
  • Company's international sales continued to improve, increasing 49.2%

Q1 2011 Financial Highlights

  • Total revenues of $30.4 million, an increase of 24.0% year over year
  • Gross margins decreased slightly to 22.2%, compared to 23.3% year-over-year and 22.7% at 12/31/2010
  • Net income attributable to common stockholders of $2.4 million, up 30.4% year-over-year
  • Diluted earnings per share of $0.07
  • Operating cash flow of $3.8 million for the period ended March 31, 2011

2011 Operations and Market Overview

Sales by categories of product consisted of the following as of March 31, 2011 and 2010:

Category

3/31/2011

3/31/2010

% Increase

Chestnut

$

15,050,594

$

12,960,561

16.1%

Convenience food

10,003,660

7,089,176

41.1%

Frozen food

5,395,552

4,510,479

19.6%

Total

$

30,449,805

$

24,560,216

23.9%

Categories of product as a percentage of sales as of March 31, 2011 and 2010:

Category

3/31/2011 % of Total Revenues

3/31/2010 % of Total Revenues

% Difference

Chestnut

49.4%

52.8%

(3.4%)

Convenience food

32.9%

28.9%

4.0%

Frozen food

17.7%

18.3%

(0.6%)

Total

100%

100%

American Lorain's Chairman and CEO, Mr. Si Chen, stated, “We are extremely pleased with the performance of the Company in the first quarter.  We believe the largest contributor to our growth in the coming months will be the continued expansion of our convenience foods segment, as was the case in the first quarter.  We continue to focus on both diversifying our lines to include a wider variety of food products and leveraging our known brand name among different segments, as evidenced by our expansion in the instant rice market.”

“Although the first quarter is seasonally one of our weakest due to the chestnut business, American Lorain's highly competitive cost structure, coordinated sales and marketing platform, and continued diverse food operations allowed us to deliver another solid quarter.  Over the past two years, American Lorain has made significant improvements to the balance sheet and cash generation.  We reported $3.8 million in operating cash flow during the period. We believe that the Company is appropriately capitalized to grow organically in the coming months.”

2011 First Quarter Financial Review

American Lorain Corporation

Selected Financial Statements in USD ($ in 000s)

3 months ended

3 months ended

% Increase

3/31/2011

3/31/2010

Sales

$30,449,805

$24,560,216

24.0%

Cost of Revenues

($23,674,895)

($18,836,126)

25.7%

Gross Profit

$6,774,910

$5,724,090

18.4%

Gross Profit Ratio

22.2%

23.3%

Income from operations

$3,936,277

$3,335,286

18.0%

Earnings before tax

$3,463,759

$2,690,841

28.7%

Net income attributable to common stockholders

$2,426,288

$1,860,531

30.4%

Diluted earnings per share

$0.07

$0.07

0.0%

Weighted average diluted shares outstanding

35,155,958

26,730,651

31.5%

  • The Company reported sales for the 2011 first quarter of $30.4 million, an increase of 24.0% compared to $24.6 million in the first quarter of 2010.
  • Gross profit increased 18.4% to $6.8 million from $5.7 million in the prior-year period.  Gross margin declined slightly to 22.2% for the three months ended March 31, 2011, from 23.3% for the prior-year period. The decrease is primarily due to a higher percentage of sales from the American Lorain's convenience foods, which typically sell at a slightly lower margin than the Company's chestnut business.  However, American Lorain expects that its margins will remain relatively stable and in the 20-25% range in the coming months.
  • Income from operations during the period was $3.9 million, an increase of 18.0% from $3.3 million reported in the prior year period.  Operating margin for the 2011 first quarter was 12.9% compared with 13.6% in the prior year.
  • The Company had net income attributable to common shareholders for the fourth quarter of 2010 of $2.4 million, or $0.07 per diluted share based on 35.2 million diluted shares outstanding, compared to $1.9 million, or $0.07 per diluted share based on 26.7 million diluted shares outstanding in the prior-year period.  The Company's net margin for the period improved to 8.0% from 7.5% in the prior year period, largely because of lower interest expenses.

Balance Sheet Highlights and Financial Position

(in millions)

3/31/2011

12/31/2010

% Increase

Cash and Cash Equivalents

$

18.6

$

12.7

46.5%

Restricted Cash

4.9

2.3

113.0%

Working Capital

70.8

57.4

23.4%

Total Liabilities

47.3

45.6

3.6%

Stockholders' Equity

133.4

129.3

3.2%

The Company had a book value per share at March 31, 2011 of $3.87.

Outlook for 2011

Mr. Chen concluded, “Chestnut sales (both domestically and internationally) have remained strong throughout the first four months of the year when compared to last.  While it is always a challenge to precisely assess customer demand for our products, we are optimistic about fiscal 2011 based on what we are seeing thus far.  The efforts of our management group in all three business segments are producing greater efficiencies in both the operating infrastructure and costs control which will help us as we continue to grow.  We are in a very basic business, supplying easy, ready-to-eat food to individuals across the globe. In tough economic times, people tend to cook at home by shopping at their local grocer.  This is our core business and, along with our international presence, we should be better positioned than many of our local competitors in this regard.  We are optimistic about the outlook of our market growth in China and abroad because of growing demand, improving brand recognition, and balanced supply.  We will continue to execute on the Company's core strategies of driving growth through each of our business segments.”  

Conference Call

The Company will also discuss these results in a conference call tomorrow morning (May 17, 2011) at 9:00 a.m. ET.

Participant Dial-In Numbers: 

(In the United States):  877-407-8031 

(International):  201-689-8031

Webcast

The call will also be simultaneously broadcast over the Internet.  To listen to the live webcast, please go to http://www.americanlorain.com and click on the conference call link, or go directly to: http://www.investorcalendar.com/IC/CEPage.asp?ID=164281.  The Company will also have an accompanying slide presentation available in PDF format on its website prior to the conference call.

Phone Replay Information

A recorded replay of the call will be available until 11:59 p.m. ET on May 23, 2011.  Listeners may dial:

(In the United States):  877-660-6853

(International):  201-612-7415

The following replay passcodes are both required for playback: 

Account #: 286 

Conference ID #: 371500

About American Lorain Corporation

American Lorain Corporation products include chestnut products, convenience food products and frozen food products. The Company currently sells over 240 products to 26 provinces and administrative regions in China as well as to 42 foreign countries. The Company operates through its five direct and indirect subsidiaries and one leased factory located in China. For further information about American Lorain Corporation, please visit the Company's website at http://www.americanlorain.com.

Forward-Looking Statements

This press release contains certain “forward-looking statements” that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the PRC, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. 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.

AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2011 and 2010

(Stated in US Dollars)

March 31,

March 31,

2011

2010

Net revenues

$

30,449,805

$

24,560,216

Cost of revenues

(23,674,895)

(18,836,126)

Gross profit

$

6,774,910

$

5,724,090

Operating expenses

Selling and marketing expenses

(1,362,686)

(1,372,352)

General and administrative expenses

(1,475,947)

(1,016,452)

(2,838,633)

(2,388,804)

Operating income

$

3,936,277

$

3,335,286

Government subsidy income

293,093

181,421

Interest income

2,475

2,804

Other income

44,609

119,277

Other expenses

(159,572)

(27,523)

Interest expense

(653,123)

(920,424)

(472,518)

(644,445)

Earnings before tax

$

3,463,759

$

2,690,841

Income tax

(895,868)

(671,992)

Net income

$

2,567,891

$

2,018,849

Net income attributable to:

-Common stockholders

$

2,426,288

$

1,860,531

-Non-controlling interest

141,603

158,318

$

2,567,891

$

2,018,849

Earnings per share

– Basic

$

0.07

$

0.07

– Diluted

$

0.07

$

0.07

Weighted average shares outstanding

– Basic

34,419,709

26,075,413

– Diluted

35,155,958

26,730,651

AMERICAN LORAIN CORPORATION

CONSOLIDATED BALANCE SHEETS

AT MARCH 31, 2011 AND DECEMBER 31, 2010

(Audited)

At March 31,

At December 31,

ASSETS

2011

2010

Current assets

Cash and cash equivalents

$

18,603,272

$

12,730,626

Restricted cash

4,858,780

2,308,898

Short term investment

7,794,153

9,447,585

Trade accounts receivable

21,835,538

33,226,612

Other receivables

1,976,234

1,492,850

Inventories

38,730,930

29,807,198

Advance to suppliers

7,467,094

7,744,976

Prepaid expenses and taxes

949,956

434,061

Deferred tax asset

104,689

103,713

Security deposits and other Assets

628,998

693,858

Total current assets

$

102,949,644

$

97,990,377

  Non-current assets

Property, plant and equipment, net

72,782,827

72,095,007

Land use rights, net

4,884,453

4,877,438

Deposit

15,878

20,297

TOTAL ASSETS

$

180,632,802

$

174,983,119

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term bank loans

$

16,139,139

$

25,164,469

Long-term debt – current portion

220,998

218,935

Notes payable

6,106,777

4,249,977

Accounts payable

5,468,206

6,284,532

Taxes payables

1,248,383

3,266,502

Accrued liabilities and other payables

1,780,060

1,335,947

Customers deposits

1,180,590

89,370

Total current liabilities

$

32,144,154

$

40,609,732

Long-term liabilities

Long-term debt

15,126,807

5,030,930

TOTAL LIABILITIES

$

47,270,960

$

45,640,662

STOCKHOLDERS' EQUITY

Preferred Stock, $.001 par value, 5,000,000 shares 

authorized; 0 shares issued and outstanding at March 31, 2011 

and December 31, 2010, respectively

Common stock, $0.001 par value, 200,000,000 shares 

authorized; 34,419,709 and 34,419,709 shares issued and 

outstanding as of March 31, 2011 and December 31, 2010, 

respectively

34,420

34,420

Additional paid-in capital

52,545,183

52,371,481

Statutory reserves

12,060,229

11,340,739

Retained earnings

50,395,173

48,688,375

Accumulated other comprehensive income

10,753,537

9,475,745

Non-controlling interests

7,573,300

7,431,697

TOTAL STOCKHOLDER'S EQUITY

$

133,361,842

$

129,342,457

TOTAL LIABILITIES AND

STOCKHOLDER'S EQUITY

$

180,632,802

$

174,983,119

AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010

(Stated in US Dollars)

March 31,

March 31,

2011

2010

Cash flows from operating activities

Net income

$

2,567,891

$

2,018,849

Stock and share based compensation

173,702

249,006

Depreciation of fixed assets

483,601

365,569

Amortization of intangible assets

44,886

35,720

Write down of short-term investments

44,909

(Increase)/decrease in accounts & other receivables

11,998,911

4,089,021

(Increase)/decrease in inventories

(8,923,732)

(9,473,698)

Decrease/(increase) in advance to suppliers and  prepayment

(238,013)

(238,115)

Decrease/(increase) in deferred tax asset

(977)

Increase/(decrease) in accounts, tax and other payables

(2,390,331)

(301,956)

Net cash (used in)/provided by operating activities

3,760,847

(3,255,604)

Cash flows from investing activities

Purchase of plant and equipment

(791,155)

(427,535)

Payment of construction in progress

(380,266)

Proceeds from short-term investments

1,698,341

22,227

(Increase)/decrease in restricted cash

(2,549,882)

181,835

Payments for the purchase of land use rights

(51,902)

(14,887)

Payments for security deposits

69,279

Net cash used in investing activities

(2,005,585)

(238,360)

Cash flows from financing activities

Repayment of notes

(1,196,589)

Proceeds from issuance of notes

3,053,390

Proceeds from bank borrowings

11,449,469

17,853,746

Repayment of bank borrowings

(10,376,859)

(17,961,100)

Net cash provided by/(used in) financing activities

$

2,929,411

$

(107,354)

Net Increase/(decrease) of Cash and Cash Equivalents

4,684,673

(3,601,318)

Effect of foreign currency translation on cash  and cash equivalents

1,187,973

19,450

Cash and cash equivalents–beginning of year

12,730,626

12,111,532

Cash and cash equivalents–end of year

$

18,603,272

$

8,529,664

Supplementary cash flow information:

Interest received

$

2,475

$

2,804

Interest paid

$

653,123

$

909,715

Income taxes paid

$

2,028,968

$

1,839,950

CONTACT:  Mr. David She, CFO, American Lorain Corporation, +86-10-8411-3393, david.she@americanlorain.com; Investor Relations: Katherine Yao, Account Executive, The Equity Group Inc., +86-10-6587-6435, kyao@equityny.com, or Adam Prior, Vice President, +1-212-836-9606, aprior@equityny.com

SOURCE American Lorain Corporation