Andatee China Marine Fuel Services Reports Second Quarter Financial Results

August 15, 2013 8:30 AM EDT | Source: Andatee China Marine Fuel Services Corporation

Dalian, China--(Newsfile Corp. - August 15, 2013) - Andatee China Marine Fuel Services Corporation (NASDAQ: AMCF), a leading independent operator engaged in the production, storage, distribution, trading of blended marine fuel oil for cargo and fishing vessels in China, today announced its unaudited financial results for the second quarter ended June 30, 2013.

Second Quarter 2013 Highlights

  • Revenue in the second quarter of 2013 was $75.8 million, a 9.6% increase from the second quarter of 2012

  • Gross profit increased 44% year over year to $3.9 million as compared to $2.7 million in the same period of 2012, while gross profit margin during the quarter improved 120 base points year over year to 5.2% from 4%

  • Operating income in the second quarter of 2013 was $1.1 million, a 2.0% increase from the corresponding period in 2012

  • The Company ended the quarter with cash balance of approximately $3.5 million and restricted cash of $46.9 million.

"I am pleased to see the steady growth in our revenue as we have undertaken some initiatives, such as facilities investment and product line expansion, in a bid to provide our customers with easier access to Andatee’s products and services," commented Mr. Fengbin An, Chairman & CEO of Andatee Marine Fuel Services Corporation, "During the quarter, we continued to expand our market coverage beyond our traditional Northern China region to more extended geographic areas, such as Shanghai and Zhejiang Province. Going forward, we will not only focus on attracting new customers to our current product offering, but also exploring various potential growth opportunities to enhance our growth rate as well as profit margin," he concluded.

Second Quarter of 2013 Results
Revenue increased by $6.6 million, or 10%, from $69.12 million for the second quarter ended June 30, 2012 to $75.7 million for the second quarter ended June 30, 2013. The increase in the Company’s revenue was mainly due to the increase in sales volume as well as selling price on certain key products.

For the three months ended June 30, 2013, #1 marine fuel represented 4.9% of the Company’s sales, #2 marine fuel represented 6.7% of sales, #3 marine fuel represented 4.3% of sales, #4 marine fuel represented 64.7% of sales, 180CST represented 19.4% of sales and no sales were reported on 120CST.

Cost of revenues increased by $5.4 million, or 8%, from $66.4 million for the second quarter ended June 30, 2012 to $71.8 million for the second quarter ended June 30, 2013 primarily due to increased sales volume from 74,353 tons for the second quarter ended June 30, 2012 to 83,896 tons for second quarter ended June 30, 2013.

Gross profit increased by $1.19 million, or 44%, to $3.9 million for the quarter ended June 30, 2013 as compared to $2.7 million in the quarter ended June 30, 2012. As a percentage of revenues, gross profit margin was 5.2% and 4% for the second quarter of 2013 and 2012, respectively.

Total operating expenses from continuing operations for the second quarter of fiscal 2013 were $2.8 million, an increase of 64.7% from $1.7 million in the prior year period.

Selling expenses decreased by $51,535, or 13%, from $409,510 for the second quarter of 2012 to $357,975 in the second quarter of 2013. This decrease is mainly due to reduced sales promotion expenses and lease expenses. As a percentage of revenues, selling expenses decreased from 0.6% for the second quarter of 2012 to 0.5% for the second quarter of 2013.

General and administrative expenses increased by $1.22 million, or 98%, from $1.25 million for the second quarter of 2012 to $2.48 million for the second quarter of 2013. The increase was caused by increases in the depreciation expense, bad debt reserves, professional services fees and consulting fees. As a percentage of revenues, general and administrative expenses increased from 1.8% for the second quarter of 2012 to 3.3% for the second quarter of 2013.

Interest expense increased by $1.9 million, from $0.92 million for the second quarter ended June 30, 2012 to $2.84 million for the second quarter ended June 30, 2013. The increase in interest expense was due to the increased bank acceptance bills for the second quarter ended June 30, 2013 as compared to the second quarter ended June 30, 2012.

Net loss attributable to the Company increased by $1.94 million, from a net income of $217,449 for the second quarter ended June 30, 2012 to net loss of $1.81 million for the second quarter ended June 30, 2013. The increase in net loss was mainly the result of increase in cost of revenue, increase in operating expense and increase in interest expense for the period indicated.

Financial Condition

As of June 30, 2013, the Company had cash balance of approximately $3.5 million, and an addition to $46.9 million in restricted cash.

About Andatee China Marine Fuel Services

Andatee China Marine Fuel Services Corporation is a leading independent operator engaged in the production, storage, distribution, and trading of blended marine fuel oil for cargo and fishing vessels in China. Headquartered in the City of Dalian, a key international shipping hub and an international logistics center in Northern China, Andatee maintains operations in Liaoning, Shandong, Zhejiang Provinces and Shanghai area. Additional information about the Company is available via the Company filing with The Securities Exchange Commission at www.sec.gov.

Safe Harbor Relating to the Forward Looking Statements

Statements contained in this press release not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule under the Private Securities Litigation Reform Act of 1995. All forward-looking statements included herein are based upon information available to the Company as of the date hereof and, except as is expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. As a result, investors should not place undue reliance on these forward- looking statements. To the extent that any statements made here are not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "may," "anticipates," "believes," "should," "intends," "estimates" and other words of similar meaning. The Company may also make written or oral forward-looking statements in its periodic reports filed with the U.S. Securities and Exchange Commission and other written materials and in oral statements made by its officers, directors or employees to third parties. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by these forward-looking statements. Such risk factors include, without limitation, our ability to properly execute our business model, to address price and demand volatility, to counter weather and seasonal fluctuations, to attract and retain management and operational personnel, potential volatility in future earnings, fluctuations in the Company's operating results, our ability to expand geographically into new markets and successfully integrate future acquisitions, our ability to integrate and capitalize on the acquisitions in various markets, PRC governmental decisions and regulation, and existing and future competition that the Company is facing. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the Company's filings with the Securities and Exchange Commission under the caption "Risk Factors" in such filings.

For more information, please contact:

Company Contact:
Mr. Hao Wang
Chief Financial Officer
Andatee China Marine Fuel Services Corporation
Phone: +86-411-8360-4683

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    June 30, 2013     December 31, 2012  
                                                                   ASSETS            
Current assets            
             
     Cash and cash equivalents $  3,522,403   $  1,625,705  
             
     Restricted cash   46,909,212     9,173,002  
             
     Accounts receivable, net   47,678,251     18,220,089  
             
     Inventories, net   20,732,045     9,302,913  
             
     Advances to suppliers   22,352,330     16,387,613  
             
     Deposits for land use rights   2,332,664     698,291  
             
     Prepaid expense and other current assets   2,320,677     558,505  
             
     Deferred tax assets   1,065,813     840,540  
             
Total current assets   146,913,395     56,806,658  
             
     Property, plant and equipment, net   52,379,442     40,880,091  
             
     Construction in progress   1,452,857     12,860,195  
             
     Equity investment   1,312,450     -  
             
     Intangible assets, net   8,882,727     8,953,602  
             
     Goodwill   1,238,169     1,213,036  
             
Total assets $  212,179,040   $  120,713,582  
             
                                   LIABILITIES AND EQUITY            
             
Current liabilities            
             
     Short-term bank borrowings $  19,357,870   $  9,314,247  
             
     Bank note payable   92,658,589     19,679,104  
             
     Accounts payable and accrued liabilities   19,258,163     8,367,697  
             
     Advances from customers   7,182,189     8,472,233  
             
     Loan from third parties   2,351,293     9,413,436  
             
     Related party loans payable   4,302,092     509,255  
             
     Taxes payable   2,871,938     2,719,517  
             
     Other liabilities   2,090,148     1,777,089  
             
Total current liabilities   150,072,282     60,252,578  
             
Warrant liability   92,686     -  
             
Commitments and contingencies   -     -  
             
Equity            
             
     Common stock, $0.001 par value; 50,000,000 shares authorized; 
     9,860,159 and 9,610,159 shares issued; 9,768,967 and 9,518,967 
     shares outstanding as of June 30, 2013, and December 31, 
     2012,respectively 		 


9,860 		   


9,610 		 
             
     Treasury stock, at cost; 91,192 shares   (497,693 )   (497,693 )
             
     Additional paid-in capital   29,955,806     29,888,556  
             
     Accumulated other comprehensive income   5,621,023     4,297,827  
             
     Retained earnings   19,562,445     19,513,573  
             
     Statutory reserve   3,628,644     3,421,960  
             
Total stockholders' equity of the Company   58,280,085     56,633,833  
             
     Noncontrolling interest   3,733,987     3,827,171  
             
Total equity   62,014,072     60,461,004  
             
Total liabilities and equity $  212,179,040   $  120,713,582  
             

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

    Three months ended June 30,     Six months ended June 30, 2013 ,  
    2013     2012     2013     2012  
                         
Revenues $  75,766,037   $  69,149,363   $  129,397,690   $  108,359,507  
Cost of revenues   71,818,195     66,400,189     121,982,431     102,531,948  
Gross profit   3,947,842     2,749,174     7,415,259     5,827,559  
                         
Operating expenses                        
                 Selling expenses   357,975     409,510     817,031     956,454  
                 General and administrative expenses   2,486,902     1,258,168     4,136,767     2,405,462  
Total operating expenses   2,844,877     1,667,678     4,953,798     3,361,916  
                         
Income from operations   1,102,965     1,081,496     2,461,461     2,465,643  
                         
Other income (expense)                        
                   Interest income   13,628     27,505     225,048     127,758  
                   Interest expense   (1,167,686 )   (928,513 )   (3,757,998 )   (2,640,621 )
                   Income (loss) from equity investment   (8,566 )   -     16,350     -  
                 Change in fair value of warrants   10,150     -     10,150     -  
                 Other income (expense)   (33,496 )   (11,026 )   (169 )   289,872  
Total other income (expense)   (1,185,970 )   (912,034 )   (1,829,835 )   (2,222,991 )
                         
Income (loss) before income tax provision   (83,005 )   169,462     631,626     242,652  
                         
Provision for Income Taxes   52,668     35,520     469,254     37,420  
                         
Net income (loss)   (135,673 )   133,942     162,372     205,232  
                 Less: net loss attributable to noncontrolling interest   (56,259 )   (83,507 )   (93,184 )   (170,085 )
                         
Net income (loss) attributable to the Company $  (79,414 ) $  217,449   $  255,556   $  375,317  
                         
Other comprehensive income (loss)                        
                 Total foreign currency translation adjustment   1,032,940     (33,280 )   1,615,051     276,663  
                 Less: foreign currency translation adjustment attributable to 
                 non-controlling interest 		 
(60,466		 )  
- 		   
(291,855		 )  
- 		 
                 Foreign currency translation adjustment attributable to the Company   972,474     (33,280 )   1,323,196     276,663  
                         
Comprehensive income (loss) $  893,060   $  184,169   $  1,578,752   $  651,980  
                         
Basic and diluted weighted average shares outstanding   9,674,048     9,610,159     9,642,103     9,642,103  
                         
Basic and diluted net earnings (loss) per share $  (0.01 ) $  0.02   $  (0.03 ) $  0.04  
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