Andatee China Marine Fuel Services Reports Third Quarter Financial Results

November 14, 2013 6:00 PM EST | Source: Andatee China Marine Fuel Services Corporation

Dalian, China--(Newsfile Corp. - November 14, 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 third quarter ended September 30, 2013.

Third Quarter 2013 Highlights

  • Revenue in the third quarter of 2013 was $61.5 million, a 95% increase from the second quarter of 2012

  • Gross profit increased around 6900% year over year to $4.9 million as compared to $0.07 million in the same period of 2012, while gross profit margin during the quarter improved 780 base points year over year to 8% from 0.2%

  • Operating income in the third quarter of 2013 was approximately $1.0 million, a 159% increase from the corresponding period in 2012

  • The Company ended the quarter with cash balance of approximately $11.3 million and restricted cash of $69.3 million.

"We are excited to report a strong quarter to our shareholders," commented Mr. Fengbin An, Chairman & CEO of Andatee Marine Fuel Services Corporation, "Our strong focus on wholesaler business as well as continuing effort to enhance our top line and bottom line growth are the main causes of our strong financial performance during the quarter. Recently, we are beginning to see some noticeable improvement in terms of shareholder confidence and interests. Going forward, the management will continue to strive to build our shareholder value by delivering solid financial performance," he concluded.

Third Quarter of 2013 Results

Revenue increased by $30 million, or 95%, from $31.5 million for the third quarter ended September 30, 2012 to $61.5 million for the third quarter ended September 30, 2013. The increase in the Company's revenue was mainly due to the increase in sales volume. The increase in our sales volume was primarily driven by increased customer demand for our 180CST, #1, #2 and #4 blended fuel oil which has a relatively competitive market price targeting a broad range of fishing boat and cargo vessel customers. Among our total sales volume in the third quarter of 2013, approximately 25.5% was from sales of our 180CST fuel oil, about 28.5% was from sales if our #1 fuel oil, about 20.1% was from sales of our #2 fuel oil and about 10.3% was from sales of our #4 fuel oil. On the other hand, among our total sales volume for the nine months ended September 30, 2013, approximately 16.1% was from sales of our 180CST fuel oil, about 15.1% was from sales of our #1 fuel oil and about 45.6% was from sales of our #4 fuel oil.

Cost of revenues increased by $25.2 million, or 80%, from $31.4 million for the third quarter ended September 30, 2012 to $56.6 million for the third quarter ended September 30, 2013 primarily due to increased sales volume from 39,533 tons for the third quarter ended September 30, 2012 to 121,573 tons for third quarter ended September 30, 2013.

Gross profit increased by $4.83 million, or 6389%, to $4.9 million for the quarter ended September 30, 2013 as compared to $75,700 in the quarter ended September 30, 2012. As a percentage of revenues, our gross profit margin was 8% and 0.2% for the third quarter of 2013 and 2012, respectively.

Total operating expenses from continuing operations for the third quarter of fiscal 2013 were $3.9 million, an increase of 116.7% from $1.8 million in the prior year period.

Selling expenses increased by $35,337, or 11%, from $332,279 for the third quarter of 2012 to $367,616 in the third quarter of 2013. This increase is mainly due to our increased sales promotion efforts to target large wholesalers during third quarter of 2013 in order to bulk sales fuel oils to them. As a percentage of revenues, selling expenses decreased from 1.1% for the third quarter of 2012 to 0.6% for the third quarter of 2013.

General and administrative expenses increased by $2.11 million, or 135%, from $1.43 million for the third quarter of 2012 to $3.54 million for the third quarter of 2013. The increase was caused by increases in the depreciation expense, bad debt reserves, professional service fees, consulting fees and stock-based compensation expense. As a percentage of revenues, general and administrative expenses increased from 4.5% for the third quarter of 2012 to 5.8% for the third quarter of 2013.

Interest expense decreased by $1.27 million, from $2 million for the third quarter ended September 30, 2012 to $0.74 million for the third quarter ended September 30, 2013. The decrease in interest expense was due to amortization of prepaid interest expense incurred on the bank acceptance bills and short-term bank loans for the three months ended September 30, 2013.

Net loss attributable to the Company decreased by $2.44 million, from a net loss of $2,983,148 for the third quarter ended September 30, 2012 to net loss of $542,859 for the third quarter ended September 30, 2013. The decrease in net loss was mainly the result of increase in sales revenue and gross profit margin, decrease in unit cost and interest expense, offset by increased operating expense for the period indicated.

Financial Condition As of September 30, 2013, the Company had cash balance of approximately $11.3 million, and an addition to $69.3 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

    September 30, 2013     December 31, 2012  
             
ASSETS            
Current assets            
     Cash and cash equivalents $  11,274,002   $  1,625,705  
     Restricted cash   69,327,486     9,173,002  
     Accounts receivable, net   40,187,445     18,220,089  
     Inventories, net   37,670,456     9,302,913  
     Advances to suppliers   17,257,774     16,387,613  
     Deposits for land use rights   4,628,121     698,291  
     Prepaid expense and other current assets   3,854,409     558,505  
     Deferred tax assets   672,848     840,540  
Total current assets   184,872,541     56,806,658  
             
     Property, plant and equipment, net   51,958,090     40,880,091  
     Construction in progress   1,477,866     12,860,195  
     Equity investment   1,332,824     -  
     Intangible assets, net   9,392,615     8,953,602  
     Goodwill   1,245,594     1,213,036  
             
Total assets $  250,279,530   $  120,713,582  
             
LIABILITIES AND EQUITY            
             
Current liabilities            
     Short-term bank borrowings $  27,703,540   $  9,314,247  
     Bank note payable   117,880,190     19,679,104  
     Accounts payable and accrued liabilities   24,540,298     8,367,697  
     Advances from customers   3,588,015     8,472,233  
     Loan from third parties   2,365,393     9,413,436  
     Related party loans payable   2,985,843     509,255  
     Taxes payable   6,642,679     2,719,517  
     Other liabilities   3,736,206     1,777,089  
Total current liabilities   189,442,163     60,252,578  
             
Warrant liability   363,225     -  
             
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 September 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   30,503,899     29,888,556  
     Accumulated other comprehensive income   5,358,724     4,297,827  
     Retained earnings   18,637,401     19,513,573  
     Statutory reserve   4,010,828     3,421,960  
Total stockholders' equity of the Company   58,023,019     56,633,833  
     Noncontrolling interest   2,451,123     3,827,171  
Total equity   60,474,142     60,461,004  
             
Total liabilities and equity $  250,279,530   $  120,713,582  
             

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

    Three months ended September 30,     Nine months ended September 30,     Six months ended June 30,  

 

  2013     2012     2013     2012     2013  

 

                             

Revenues

$  61,564,873   $  31,524,045   $  190,962,563   $  139,883,552   $  129,397,690  

Cost of revenues

  56,652,979     31,448,345     178,635,410     133,980,293     121,982,431  

Gross profit

  4,911,894     75,700     12,327,153     5,903,259     7,415,259  

 

                             

Operating expenses

                             

 Selling expenses

  367,616     332,279     1,184,647     1,288,733     817,031  

 General and administrative expenses

  3,547,780     1,432,991     7,684,547     3,838,453     4,136,767  

Total operating expenses

  3,915,396     1,765,270     8,869,194     5,127,186     4,953,798  

 

                             

Income from operations

  996,498     (1,689,570 )   3,457,959     776,073     2,461,461  

 

                             

Other income (expense)

                             

 Interest income

  58,744     217,141     283,792     344,899     225,048  

 Interest expense

  (737,667 )   (2,014,360 )   (2,818,881 )   (4,654,981 )   (2,081,214 )

 Income (loss) from equity investment

  12,418     -     28,768     -     16,350  

 Change in fair value of warrants

  (270,539 )   -     (260,389 )   -     10,150  

 Other income (expense)

  (193,101 )   (68,024 )   (193,270 )   221,848     (169 )

Total other income (expense)

  (1,130,145 )   (1,865,243 )   (2,959,980 )   (4,088,234 )   (1,829,835 )

 

                             

Income (loss) before income tax provision

  (133,647 )   (3,554,813 )   497,979     (3,312,161 )   631,626  

 

                             

Provision for Income Taxes (benefit)

  408,053     (496,583 )   877,307     (459,163 )   469,254  

 

                             

Net income (loss)

  (541,700 )   (3,058,230 )   (379,328 )   (2,852,998 )   162,372  

 Less: net loss attributable to noncontrolling interest

  1,159     (75,082 )   (92,025 )   (245,167 )   (93,184 )

Net income (loss) attributable to Andatee China Marine Fuel Services Corporation

$  (542,859 ) $  (2,983,148 ) $  (287,303 ) $  (2,607,831 ) $  255,556  

 

                             

Comprehensive income (loss)

                             

 Net loss

  (541,700 )   (3,058,230 )   (379,328 )   (2,852,998 )      

 Foreign currency translation adjustment

  (115,317 )   (201,429 )   1,499,734     75,234     1,615,051  

 Comprehensive income (loss)

  (657,017 )   (3,259,659 )   1,120,406     (2,777,764 )      

 Less: foreign currency translation adjustment attributable to non-controlling interest

  (24,556 )   107,555     (316,411 )   (62,530 )   (291,855 )

Comprehensive income (loss) attributable to Andatee China Marine Fuel Services Corporation

  (632,461 )   (3,367,214 )   1,436,817     (2,715,234 )   1,323,196  

 

                             

 

                             

Basic and diluted weighted average shares outstanding

  9,860,159     9,518,967     9,715,858     9,518,967     9,642,103  

Basic and diluted net earnings (loss) per share

$  (0.06 ) $  (0.31 ) $  (0.03 ) $  (0.27 ) $  0.03  

 

                              

ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    Nine months ended September 30,  
    2013     2012  
             
Cash flows from operating activities:            
       Net income loss $  (379,328 ) $  (2,852,998 )
       Adjustments to reconcile net loss to net cash            
       used in operating activities:            
       Depreciation   1,813,675     1,343,388  
       Amortization   393,147     262,740  
       Bad debt provision   2,951,205     305,534  
       Provision for inventory reserve   139,549     -  
       Deferred tax provision (benefit)   187,901     (515,904 )

       Amortization of stock-based compensation to consulting firm

  356,667     -  

       Amortization of stock-based compensation to directors

  136,500        

       Income from equity investment

  (28,768 )   -  

       Change in fair value of warrants

  260,389     -  

       Changes in operating assets and liabilities

           

       Accounts receivable

  (23,769,140 )   3,797,214  

       Inventories

  (27,909,845 )   (14,688,047 )

       Settlement receivable

  -        

       Advances to suppliers

  (819,909 )   12,066,600  

       Prepaid expense and other current assets

  (3,409,281 )   (3,470,866 )

       Accounts payable and accrued liabilities

  16,851,041     (11,027,246 )

       Advances from customers

  (5,048,428 )   7,775,633  

       Taxes payable

  3,802,579     (2,212,452 )

       Other liabilities

  1,151,546     1,043,416  
Net cash used in operating activities   (33,320,502 )   (8,172,988 )
             
Cash flows from investing activities            
       Equity investment in unconsolidated entity   (1,287,581 )   -  

       Additions to construction in progress and property and equipment

  (88,554 )   (588,945 )

       Purchase of land use rights

  (4,452,134 )   -  

       Cash paid for acquiring non-controlling interest

  (1,722,140 )   -  
       Refunds of deposits         643,368  
Net cash (used in) provided by investing activities   (7,550,410 )   54,423  
             
Cash flows from financing activities            
       Proceeds from short term loans   33,718,535     3,283,865  
       Repayment of short term loans   (15,803,451 )   (5,809,915 )
       Proceeds from bank notes   128,011,331     89,595,832  

       Repayment of bank notes

  (31,545,741 )   (91,174,613 )

       Restricted cash, net

  (59,167,769 )   1,162,616  

       Advance from (Repayment of) loan to unrelated party

  (7,210,455 )   14,665,815  

       Proceeds of loan from related party

  2,354,493     3,112,687  

Net cash provided by financing activities

  50,356,942     14,836,287  
             

Effect of exchange rate changes on cash and cash equivalents

  162,267     31,076  
             
Net decrease in cash and cash equivalents   9,648,297     6,748,798  
             
Cash and cash equivalents, beginning of period $  1,625,705   $  3,493,015  
             
Cash and cash equivalents, end of period $  11,274,002   $  10,241,813  
             
Supplemental cash flow information:            
       Interest paid $  2,593,721   $  4,653,830  
       Income taxes paid $  316,835   $  491,902  
             

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