American Lorain Corporation Reports 2011 Third Quarter Financial Results

2011-11-15

JUNAN COUNTY, ChinaNov. 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 third quarter ended September 30, 2011.

Q2 2011 Operational Highlights

  • Chestnut and convenience food sales increased by 15.2% and 20.1% year-over-year, respectively
  • Convenience food segment continued to grow as a percent of total revenue year-over-year
  • Frozen food increased at a slower rate of 7.2%, and represented lower weight in total sales year-over-year
  • Continued channel and brand building efforts

Q2 2011 Financial Highlights

  • Total revenues of $55.6 million, an increase of 15.7% year over year
  • Gross margins decreased slightly to 22.2%, compared to 22.4% year-over-year and 22.7% at 12/31/2010
  • Net income attributable to common stockholders of $7.1 million, up 39.1% year-over-year
  • Diluted earnings per share of $0.20

2011 Operations and Market Overview

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

Three month ended

Category

9/30/2011

9/30/2010

% Increase

Chestnut

$

24,468,233

$

21,233,329

15.2%

Convenience food

22,288,710

18,552,192

20.1%

Frozen food

8,885,098

8,287,703

7.2%

Total

$

55,642,041

$

48,073,224

15.7%

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

Three month ended

Category

9/30/2011 % of Total Revenues

9/30/2010 % of Total Revenues

% Difference

Chestnut

44.0%

44.2%

(0.2%)

Convenience food

40.1%

38.6%

1.5%

Frozen food

16.0%

17.2%

(1.3%)

Total

100%

100%

American Lorain's Chairman and CEO, Mr. Si Chen, stated, “We are satisfied with the Company's performance in the third quarter, during which we have again achieved solid growth in each of our three business lines, despite the tightened credit environment and inflation pressure. We believe the largest contributor to our growth in the fourth quarter will be the continued expansion of our convenience foods segment, as well as the chestnut food segment which is seasonally strong in fourth quarter.  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 Third Quarter Financial Review

American Lorain Corporation

Selected Financial Statements in USD ($ in 000s)

3 months ended

3 months ended

% Increase

9/30/2011

9/30/2010

Sales

$55,642,041

$48,073,224

15.7%

Cost of Revenues

($43,291,417)

($37,293,496)

16.1%

Gross Profit

$12,350,624

$10,779,728

14.6%

Gross Profit Ratio

22.2%

22.4%

Income from operations

$8,200,913

$7,063,609

16.1%

Earnings before tax

$9,779,476

$6,868,892

42.4%

Net income attributable to common stockholders

$7,071,288

$5,084,475

39.1%

Diluted earnings per share

$0.20

$0.16

27.3%

Weighted average diluted shares outstanding

34,605,668

31,679,871

9.2%

  • The Company reported sales for the 2011 third quarter of $55.6 million, an increase of 15.7% compared to $48.1 million in the third quarter of 2010.
  • Gross profit increased14.6% to $12.4 million from $10.8 million in the prior-year period.  Gross margin declined slightly to 22.2% for the three months ended September 30, 2011, from 22.4% 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 $8.2 million, an increase of 16.1% from $7.1 million reported in the prior year period.  Operating margin remained the same at 14.7% for the 2011 third quarter compared with same period in the prior year.
  • The Company had net income attributable to common shareholders for the third quarter 2011 of $7.1 million, or $0.20 per diluted share based on 34.6 million diluted shares outstanding, compared to $5.1 million, or $0.16 per diluted share based on 31.8 million diluted shares outstanding in the prior-year period.  The Company's net margin for the period was 12.7% compared with 10.6% in the prior year period.
  • The increase in net income was largely attributable to a $2.1 million other income we recognized in the third quarter when we sold the land previously carried on our balance sheet as short term investment. Without the effect of the land sale, our net income increased 6.1% to $5.4 million for the three months ended September 30, 2011 from $5.1 million in the same period of last year. Please refer to note 22 to the financial statements for details.

Balance Sheet Highlights and Financial Position

(in millions)

9/30/2011

12/31/2010

% Increase

Cash and Cash Equivalents

$

11.4

$

12.7

-10.2%

Restricted Cash

8.9

2.3

287.0%

Working Capital

83.7

57.4

45.8%

Total Liabilities

40.5

45.6

-11.2%

Stockholders' Equity

148.4

129.3

14.8%

The Company had a book value per share at June 30, 2011 of $4.31.

Outlook for 2011

Mr. Chen concluded, “We remain conservatively optimistic about full year 2011. 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, as well as the tightened credit environment and inflation pressure domestically, we remain confident about the outlook of our market growth in China and are determined to achieve sustainable long-term growth through continued efforts in extending our channels and building our brand recognition.  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 (November 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=166632.

Phone Replay Information

A recorded replay of the call will be available until 11:59 p.m. ET on November 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 #:

383356

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 ENDED SEPTEMBER 30, 2011 and 2010

(Stated in US Dollars)

Three months ended

September 30,

Nine months ended

September  30,

2011

2010

2011

2010

Net revenues

$

55,642,041

$

48,073,224

$

121,818,496

$

101,851,754

Cost of revenues

(43,291,417)

(37,293,496)

(95,036,378)

(78,629,267)

Gross profit

$

12,350,624

$

10,779,728

$

26,782,118

$

23,222,487

Operating expenses

Selling and marketing expenses

(2,538,469)

(2,072,152)

(4,989,922)

(4,639,500)

General and administrative expenses

(1,611,242)

(1,643,967)

(4,680,555)

(3,592,629)

(4,149,711)

(3,716,119)

(9,670,477)

(8,232,129)

Operating income

$

8,200,913

$

7,063,609

$

17,111,641

$

14,990,358

Investment income

Government subsidy income

47,657

321,537

643,009

698,961

Interest and other income

2,135,832

628,008

2,285,288

759,579

Other expenses

(54,269)

(16,269)

(235,324)

(88,506)

Interest expense

(550,657)

(1,127,993)

(1,813,891)

(3,071,546)

Earnings before tax

$

9,779,476

$

6,868,892

$

17,990,723

$

13,288,846

Income tax

(1,887,950)

(1,476,363)

(4,061,371)

(3,005,959)

Net income

$

7,891,526

$

5,392,529

$

13,929,352

$

10,282,887

Other comprehensive income:

Foreign currency translation gain

1,664,668

1,755,844

4,772,659

2,175,729

Comprehensive income

$

9,556,194

$

7,148,373

$

18,702,011

$

12,458,616

Net income attributable to:

 Common Stockholders

$

7,071,288

$

5,084,475

$

12,760,027

$

9,624,619

 Non-controlling Interest

820,238

308,054

1,169,325

658,268

Net income

$

7,891,526

$

5,392,529

$

13,929,352

$

10,282,887

Earnings per share

— Basic

$

0.21

$

0.16

$

0.37

$

0.32

— Diluted

$

0.20

$

0.16

$

0.37

$

0.31

Weighted average shares outstanding

— Basic

34,466,144

31,083,710

34,440,483

30,525,487

— Diluted

34,605,668

31,679,871

34,754,552

31,221,758

AMERICAN LORAIN CORPORATION

CONSOLIDATED BALANCE SHEETS

AT SEPTEMBER 30, 2011 AND DECEMBER 31, 2010

(Audited)

At September 30,

At December 31,

ASSETS

2011

2010

  Current assets

Cash and cash equivalents

$

11,439,874

$

12,730,626

Restricted cash

8,881,019

2,308,898

Short-term investment

117,074

9,447,585

Trade accounts receivable

35,105,826

33,226,612

Other receivables

6,389,505

1,492,850

Inventories

34,829,858

29,807,198

Advance to suppliers

10,747,976

7,744,976

Prepaid expenses and taxes

396,960

434,061

     Deferred tax asset

107,338

103,713

     Security deposits and other Assets

628,998

693,858

Total current assets

$

108,644,428

$

97,990,377

  Non-current assets

Investment

469,594

Property, plant and equipment, net

74,819,359

72,095,007

Land use rights, net

4,929,838

4,877,438

Deposit

33,812

20,297

TOTAL ASSETS

$

188,897,031

$

174,983,119

LIABILITIES AND STOCKHOLDERS' EQUITY

Short-term bank loans

$

14,824,640

$

25,164,469

Long-term debt – current portion

56,743

218,935

Notes payable

782,656

4,249,977

Accounts payable

4,961,054

6,284,532

Taxes payables

3,146,526

3,266,502

Accrued liabilities and other payables

1,164,310

1,335,947

Customers deposits

33,421

89,370

Total current liabilities

$

24,969,350

$

40,609,732

Long-term liabilities

Longterm debt

15,509,447

5,030,930

TOTAL LIABILITIES

$

40,478,797

$

45,640,662

STOCKHOLDERS' EQUITY

Preferred Stock, $.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively

Common stock, $0.001 par value, 200,000,000 shares authorized; 34,471,801 and 34,419,709 shares issued andoutstanding as of September 30, 2011 and December 31, 2010, respectively

34,472

34,420

Additional paid-in capital

52,823,660

52,371,481

Statutory reserves

12,078,429

11,340,739

Retained earnings

60,710,712

48,688,375

Accumulated other comprehensive income

14,169,939

9,475,745

Non-controlling interests

8,601,022

7,431,697

TOTAL STOCKHOLDER'S EQUITY

$

148,418,234

$

129,342,457

TOTAL LIABILITIES AND

STOCKHOLDER'S EQUITY

$

188,897,031

$

174,983,119

AMERICAN LORAIN CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOW

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

(Stated in US Dollars)

Three months ended

September 30,

Nine months ended

September 30,

2011

2010

2011

2010

Cash flows from operating activities

Net income

$

7,891,526

$

5,392,529

$

13,929,352

$

10,282,887

  Stock and share based compensation

146,806

195,868

452,179

650,817

  Depreciation

333,588

554,385

1,475,523

1,242,370

  Amortization

41,854

40,053

141,997

109,114

  Write down/(gain) on short-term investment

(30,702)

(479,332)

(78,465)

(479,332)

  (Increase)/decrease in accounts & other receivables

(13,203,625)

(12,081,954)

(6,831,817)

(3,787,024)

  (Increase)/decrease in inventories

6,268,000

(979,407)

(5,022,660)

(8,655,050)

(Increase)/decrease in prepayment

(2,650,221)

(5,152,378)

(2,965,900)

(4,418,283)

Increase/(decrease) in deferred tax asset

(1,237)

(3,625)

  Increase/(decrease) in accounts and other payables

2,359,115

(2,425,974)

(1,615,090)

(4,376,091)

  Net cash (used in)/provided by operating activities

1,155,104

(14,936,210)

(518,506)

(9,430,592)

Cash flows from investing activities

Shandong Greenpia acquisition net of cash required

(1,929,773)

(1,929,773)

Sales/(purchase) of short-term investments

(807,647)

(186,966)

1,358,573

(161,739)

(Increase)/decrease in restricted cash

(1,816,892)

(103,792)

(6,572,121)

454,656

Payment of construction in progress

(507,155)

(978,260)

Payment of land use rights

(60,047)

(72,466)

(194,397)

(105,671)

Payments for purchase of equipment & plant

(874,224)

(1,295,379)

(3,221,615)

(11,341,132)

Decrease/(increase) in deposit

136,099

51,345

Sales /(purchase) of land investment

7,502,344

7,502,344

Net cash used in investing activities

3,572,478

(3,585,376)

(2,054,131)

(13,083,659)

Cash flows from financing activities

Bank borrowings

3,853,879

41,717,825

22,036,891

64,869,426

Repayment of bank loans

(5,278,540)

(32,736,075)

(22,060,396)

(53,597,904)

Proceeds from issuance of notes

716,621

782,656

716,621

Repayment of notes

(3,085,517)

(4,249,977)

Issue of common stock

27

8,693,478

52

8,693,478

Net cash provided by/(used in) financing activities

$

(4,510,151)

$

18,391,849

$

(3,490,774)

$

20,681,621

Net Increase/(decrease) of Cash and Cash Equivalents

217,430

(129,737)

(6,063,412)

(1,832,630)

Effect of foreign currency translation on cash

1,616,905

1,676,496

4,772,660

1,606,648

and cash equivalents

Cash and cash equivalents–beginning of period/year

9,605,539

10,338,791

12,730,626

12,111,532

Cash and cash equivalents–end of period/year

$

11,439,874

$

11,885,550

$

11,439,874

$

11,885,550

SOURCE American Lorain Corporation