American Lorain Corporation Reports 2011 Second Quarter Financial Results

2011-08-15

JUNAN COUNTY, ChinaAug. 15, 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 second quarter ended June 30, 2011.

Q2 2011 Operational Highlights

  • Each product segment increased by over 19% in sales year-over-year
  • Convenience food segment continued to grow as a percent of total revenue
  • Continued channel building efforts and progress such as sales to railway system

Q2 2011 Financial Highlights

  • Total revenues of $35.7 million, an increase of 22.3% year over year
  • Gross margins decreased slightly to 21.4%, compared to 23.0% year-over-year and 22.7% at 12/31/2010
  • Net income attributable to common stockholders of $3.3 million, up 21.8% year-over-year
  • Diluted earnings per share of $0.09

2011 Operations and Market Overview

Sales by categories of product consisted of the following for the three months ended June 30, 2011and 2010:

                     Three months ended

Category

6/30/2011

6/30/2010

% Increase

Chestnut

$

17,719,636

$

14,868,240

19.2%

Convenience food

12,807,758

10,269,991

24.7%

Frozen food

5,199,255

4,080,083

27.4%

Total

$

35,726,650

$

29,218,314

22.3%

Categories of product as a percentage of sales for the three months ended June 30, 2011 and 2010:

                  Three months ended

Category

6/30/2011 % of Total Revenues

6/30/2010 % of Total Revenues

Difference

Chestnut

49.6%

50.9%

(1.3%)

Convenience food

35.8%

35.1%

0.7%

Frozen food

14.6%

14.0%

0.6%

Total

100%

100%

American Lorain's Chairman and CEO, Mr. Si Chen, stated, “We are satisfied with the Company's performance in the second quarter, during which we have achieved solid growth in each of our three business lines despite various difficulties such as the general inflation. We believe the largest contributor to our growth in the coming months will be the continued expansion of our convenience foods segment, as well as the chestnut food segment as we enter the seasonally strong quarters. We believe the continuous focus on product quality and building our distribution channels and brand equity is key to the Company's success in a competitive landscape and will continue to execute on these strategies in the coming months.”

2011 Second Quarter Financial Review

American Lorain Corporation

Selected Financial Statements in USD ($ in 000s)

3 months ended

3 months ended

% Increase

6/30/2011

6/30/2010

Sales

$35,726,650

$29,218,314

22.3%

Cost of Revenues

($28,070,066)

($22,499,645)

24.8%

Gross Profit

$7,656,584

$6,718,669

14.0%

Gross Profit Ratio

21.4%

23.0%

Income from operations

$4,974,450

$4,591,463

8.3%

Earnings before tax

$4,747,488

$3,729,113

27.3%

Net income attributable to common stockholders

$3,262,451

$2,679,613

21.8%

Diluted earnings per share

$0.09

$0.10

(10.0%)

Weighted average diluted shares outstanding

35,030,343

26,750,592

31.0%

  • The Company reported sales for the 2011 second quarter of $35.7 million, an increase of 22.3% compared to $29.2 million in the second quarter of 2010.
  • Gross profit increased14.0% to $7.7 million from $6.7 million in the prior-year period. Gross margin declined slightly to 21.4% for the three months ended June 30, 2011, from 23.0% for the prior-year period, due to inflation pressure. 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 $5.0 million, an increase of 8.3% from $4.6 million reported in the prior year period. Operating margin for the 2011 second quarter was 13.9% compared with 15.7% in the prior year.
  • The Company had net income attributable to common shareholders for the second quarter of 2011 of $3.3 million, or $0.09 per diluted share based on 35.0 million diluted shares outstanding, compared to $2.7 million, or $0.10 per diluted share based on 26.8 million diluted shares outstanding in the prior-year period. The Company's net margin for the period was 9.1% compared with 9.2% in the prior year period.

Balance Sheet Highlights and Financial Position

(in millions)

6/30/2011

12/31/2010

% Increase

Cash and Cash Equivalents

$

9.6

$

12.7

(24.5%)

Restricted Cash

7.1

2.3

206.0%

Working Capital

74.8

57.4

30.3%

Total Liabilities

43.2

45.6

(5.4%)

Stockholders' Equity

138.7

129.3

7.3%

The Company had a book value per share at June 30, 2011 of $4.03.

Outlook for 2011

Mr. Chen concluded, “We are optimistic about the second half of 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. Despite the current uncertainties weighing on the global economy, we remain optimistic about the outlook of our market growth in China and as well as 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 (August 16,2011) at 8:00 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=165541.

Phone Replay Information

A recorded replay of the call will be available until 11:59 p.m. ET on August 19, 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 #: 377216

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.

For more information, please contact:

American Lorain Corporation

Mr. David She, CFO

+86-10 8411 3393

david.she@americanlorain.com

www.americanlorain.com

AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE AND SIX MONTHS ENDEDJUNE 30, 2011 and 2010

(Stated in US Dollars)

Three months ended June 30,

Six months ended June 30,

2011

2010

2011

2010

Net revenues

$

35,726,650

$

29,218,314

$

66,176,455

$

53,778,530

Cost of revenues

(28,070,066)

(22,499,645)

(51,744,961)

(41,335,771)

Gross profit

$

7,656,584

$

6,718,669

$

14,431,493

$

12,442,759

Operating expenses

Selling and marketing expenses

(1,088,768)

(1,194,996)

(2,451,454)

(2,567,348)

General and administrative expenses

(1,593,366)

(932,210)

(3,069,313)

(1,948,662)

(2,682,134)

(2,127,206)

(5,520,767)

(4,516,010)

Operating income

$

4,974,450

$

4,591,463

$

8,910,727

$

7,926,749

Investment income

589

589

Government subsidy income

302,259

196,003

595,352

377,424

Interest and other income

102,372

8,901

149,457

130,982

Other expenses

(21,483)

(44,714)

(181,055)

(72,237)

Interest expense

(610,111)

(1,023,129)

(1,263,235)

(1,943,553)

Earnings before tax

$

4,747,488

$

3,729,113

$

8,211,247

$

6,419,954

Income tax

(1,277,553)

(857,604)

(2,173,421)

(1,529,596)

Net income

$

3,469,935

$

2,871,509

$

6,037,826

$

4,890,358

Other comprehensive income:

Foreign currency translation gain

1,875,108

400,424

3,107,991

419,885

Comprehensive income

$

5,345,043

$

3,271,933

$

9,145,817

$

5,310,243

Net income attributable to:

-Common Stockholders

$

3,262,451

$

2,679,613

$

5,688,739

$

4,540,144

-Non-controlling Interest

207,484

191,896

349,087

350,214

Net income

$

3,469,935

$

2,871,509

$

6,037,826

$

4,890,358

Earnings per share

–        Basic

$

0.09

$

0.10

$

0.17

$

0.17

–        Diluted

$

0.09

$

0.10

$

0.16

$

0.17

Weighted average shares outstanding

–        Basic

34,427,582

26,075,413

34,427,582

26,075,413

–        Diluted

35,030,343

26,750,592

35,030,343

26,750,592

AMERICAN LORAIN CORPORATION

CONSOLIDATED BALANCE SHEETS

AT JUNE 30, 2011 AND DECEMBER 31, 2010

(Audited)

At June 30,

At December 31,

ASSETS

2011

2010

Current assets

Cash and cash equivalents

$

9,605,538

$

12,730,626

Restricted cash

7,064,127

2,308,898

Short-term investment

6,769,421

9,447,585

Trade accounts receivable

27,002,950

33,226,612

Other receivables

1,841,750

1,492,850

Inventories

41,097,859

29,807,198

Advance to suppliers

8,027,308

7,744,976

Prepaid expenses and taxes

467,407

434,061

     Deferred tax asset

106,100

103,713

Security deposits and other Assets

628,998

693,858

Total current assets

$

102,611,458

$

97,990,377

  Non-current assets

Investment

464,181

Property, plant and equipment, net

73,771,569

72,095,007

Land use rights, net

4,911,645

4,877,438

Deposit

169,911

20,297

TOTAL ASSETS

$

181,928,763

$

174,983,119

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Short-term bank loans

$

16,428,735

$

25,164,469

Long-term debt – current portion

56,089

218,935

Notes payable

3,868,173

4,249,977

Accounts payable

4,091,972

6,284,532

Taxes payables

1,357,095

3,266,502

Accrued liabilities and other payables

1,463,710

1,335,947

Customers deposits

586,415

89,370

Total current liabilities

$

27,852,188

$

40,609,732

Long-term liabilities

Long-term debt

15,330,667

5,030,930

TOTAL LIABILITIES

$

43,182,855

$

45,640,662

(Audited)

At June 30,

At December 31,

2011

2010

STOCKHOLDERS' EQUITY

Preferred Stock, $.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at December 31, 2010 and 2009, respectively

Common stock, $0.001 par value, 200,000,000 shares authorized; 34,419,709 and 30,240,202 shares issued and outstanding as of December 31, 2010 and 2009, respectively

34,445

34,420

Additional paid-in capital

52,676,854

52,371,481

Statutory reserves

12,069,925

11,340,739

Retained earnings

53,647,928

48,688,375

Accumulated other comprehensive income

12,535,972

9,475,745

Non-controlling interests

7,780,784

7,431,697

TOTAL STOCKHOLDER'S EQUITY

$

138,745,907

$

129,342,457

TOTAL LIABILITIES AND

STOCKHOLDER'S EQUITY

$

181,928,763

$

174,983,119

AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010

(Stated in US Dollars)

Three months ended June 30,

Six months ended June 30,

2011

2010

2011

2010

Cash flows from operating activities

Net income

$

3,469,935

$

2,871,509

$

6,037,826

$

4,890,358

  Stock and share based compensation

131,671

205,943

305,373

454,949

  Depreciation

669,969

322,416

1,141,935

687,985

  Amortization

49,549

33,341

94,435

69,061

  Write down/(gain) on short-term investment

(92,673)

(47,763)

  (Increase)/decrease in accounts & other receivables

(5,627,103)

4,205,909

6,371,808

8,294,930

  (Increase)/decrease in inventories

(2,366,929)

1,798,055

(11,290,660)

(7,675,643)

(Increase)/decrease in prepayment

(77,666)

972,209

(315,679)

734,094

  (Increase)/decrease in deferred tax asset

(1,411)

(2,388)

  Increase/(decrease) in accounts and other payables

(1,583,873)

(1,648,161)

(3,974,205)

(1,950,117)

  Net cash (used in)/provided by operating activities

(5,428,531)

8,761,221

(1,679,318)

5,505,617

Cash flows from investing activities

Proceeds from short-term investments

467,879

2,166,220

22,227

(Increase)/decrease in restricted cash

(2,205,347)

376,613

(4,755,229)

558,448

Payment of construction in progress

(90,840)

(471,105)

Payment of land use rights

(76,740)

(18,318)

(128,642)

(33,205)

Payments for purchase of equipment & plant

(1,567,871)

(9,618,218)

(2,347,391)

(10,045,753)

Decrease (increase) in deposit

(154,034)

(84,754)

Net cash used in investing activities

(3,626,952)

(9,259,923)

(5,620,902)

(9,498,283)

Cash flows from financing activities

Bank borrowings

6,733,544

5,297,856

18,183,012

23,151,602

Repayment of bank loans

(9,406,948)

(2,900,729)

(20,980,396)

(20,861,829)

Notes payable

763,347

3,816,736

Issue of common stock

25

25

Net cash provided by/(used in) financing activities

$

(1,910,033)

$

2,397,127

$

1,019,377

$

2,289,773

Net Increase/(decrease) of Cash and Cash Equivalents

(10,965,515)

1,898,425

(6,280,842)

(1,702,893)

Effect of foreign currency translation on cash

and cash equivalents

1,967,781

(89,298)

3,155,754

(69,848)

Cash and cash equivalents–beginning of period/year

18,603,272

8,529,664

12,730,626

12,111,532

Cash and cash equivalents–end of period/year

$

9,605,538

$

10,338,791

$

9,605,538

$

10,338,791

Three months ended June 30,

Six months ended June 30,

2011

2010

2011

2010

Supplementary cash flow information:

Interest received

$

7,879

$

3,998

$

10,355

$

6,802

Interest paid

$

610,675

$

1,018,530

$

1,263,799

$

1,938,954

Income taxes paid

$

1,816,289

$

649,208

$

3,845,257

$

2,489,131

SOURCE American Lorain Corporation