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Andatee China Marine Fuel Services Corporation Reports Second Quarter 2014 Financial Results
August 15, 2014 8:25 AM EDT | Source: Andatee China Marine Fuel Services Corporation
Beijing, China--(Newsfile Corp. - August 15, 2014) - 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 financial results for the second quarter of 2014 ended June 30, 2014.
Second Quarter 2014 Financial Highlights:
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Total sales in Q2 2014 increased by 131.67% to $175.5 million from $75.8 million in Q2 2013 |
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Gross profit in Q2 2014 increased by 131.73% to $9.15 million from $3.95 million in Q2 2013 |
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Income from operations in Q2 2014 increased by 495.15% to $6.56 million from $1.10 million in Q2 2013 |
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Net income increased by 3767.40% to $2.9 million, from net loss of $79,414 for Q2 2013 |
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Quarterly diluted earnings per share (EPS) jumped to $0.28 from a loss of $0.01 in the same period last year |
Mr. Wang Hao, Chairman and Chief Executive Officer of Andatee China Marine Fuel Services Corporation, commented, “We had a great quarter as we delivered strong top and bottom line results. We have recently shifted our strategy from retail sales of fuel oil to wholesale sales of fuel oil to large wholesalers located at extended geographic markets, such as in Shanghai and Zhejiang Province, resulting in a net income of $2.9 million. During the quarter, we also diversified our business line by acquiring Qingdao Grand New Energy Co., Ltd., a technology company which has proprietary clean energy technologies and solutions Going forward, we will continue to adjust our strategy to improve our financial performance and maintain sustainable growth in 2014 and beyond. ”
Second Quarter of 2014 Result
Revenue increased by $99.8 million, or 131.7%, from $75.8 million in three months ended June 30, 2013 to $175.5 million in 2014 for three months ended June 30, 2014. For the six months ended June 30, 2014, our revenue increased by $88 million or 68.1%, from $129.4 million in six months ended June 30, 2013 to $217.5 million in 2014. The increase in our revenues was mainly due to increased sales volume. Our overall sales volume increase by 148,598 tons, or 177.1%, from 83,896 tons for the second quarter ended June 30, 2013 to 232,494 tons for the second quarter ended June 30, 2014. For the six months ended June 30, 2014, our overall sales volume increased by 129,793 tons, or 82.7%, from 156,907 tons for the six months ended June 30, 2013 to 286,700 tons for the six months ended June 30, 2014.
Also, we shifted our strategy from retail sales of fuel oil to wholesale sales of fuel oil to large wholesalers located at extended geographic markets, such as in Shanghai and Zhejiang Province. Our wholesales business also helped to increase the sales volume.
Cost of Revenue increased by $94.6 million, or 131.7%, from $71.8 million for the second quarter ended June 30, 2013 to $166.4 million for the second quarter ended June 30, 2014, primarily due to increased sales volume from 83,896 tons for the second quarter ended June 30, 2013 to 232,494 tons for the second quarter ended June 30, 2014. For the six months period, our cost of revenues increased by $83.5 million, or 68.4%, from $121.9 million for the six months ended June 30, 2013 to $205.5 million for the six months ended June 30, 2013 due to increased sales volume from 156,907 tons for the six months ended June 30, 2013 to 286,700 tons for the six months ended June 30, 2014. The increase in our cost of revenue was primarily due to increased sales volume.
Gross Margins increased by $5.2 million, or 131.9%, to $9.1 million for the quarter ended June 30, 2014 as compared to $3.9 million in the quarter ended June 30, 2013. As a percentage of revenues, our gross profit margin was 5.2% and 5.2% for the second quarter of 2014 and 2013, respectively; and increased by $4.6 million, or 62.1%, to $12 million for the six months ended June 30, 2014 as compared to $7.4 million for the six months ended June 30, 2013. As a percentage of revenues, our gross profit margin was 5.5% and 5.7% for the six months ended June 30, 2014 and 2013, respectively. The increase in our gross margin was largely attributable to increased sales volume and decreased unit costs as compared to the same period of 2013. However, the slight decrease in our GP% was due to the shifting of our sales mix from retail side to wholesale side.
Selling Expenses decreased by $118,114, or 33.0%, from $357,975 for the three months ended June 30, 2013 to $239,831 for the three months ended June 30, 2014. This decrease is mainly due to reduced sales promotions, oil storage tank and other facility lease expenses. As a percentage of revenues, selling expenses decreased from 0.5% for the three months ended June 30, 2013 to 0.1% for the three months ended June 30, 2014. And the selling expenses decreased by $345,879, or 42,3%, from $817,031 for the six months ended June 30, 2013 to $471,152 for the six months ended June 30, 2014. 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 six months ended June 30, 2013 to 0.2% for the six months ended June 30, 2014.
General and Administrative Expenses decreased $142,823, or 5.7%, from $2.49 million for the three months ended June 30, 2013 to $2.34 million for the three months ended June 30, 2014. The decrease was because of decreases in bad debt reserves due to our efforts to collect the outstanding accounts receivable and realization of the outstanding advance payments to vendors. Also, due to terminating the oil storage tank lease, amortization on leaseholds decreased as well. As a percentage of revenues, general and administrative expenses increased from 3.3% for the three months ended June 30, 2013 to 1.3% for the three months ended June 30, 2014. However, General and administrative expenses increased by $541,539, or 13.1%, from $4.14 million for the six months ended June 30, 2013 to $4.68 million for the six months ended June 30, 2014. The increase was caused by increases in depreciation expense, professional services fees and consulting fees. As a percentage of revenues, general and administrative expenses decreased from 3.2% for the six months ended June 30, 2013 to 2.2% for the six months ended June 30, 2014.
Interest Expense increased by $3.3 million, from $1.17 million for the three months ended June 30, 2013 to $4.46 million for the three months ended June 30, 2014. And the Interest expense increased by $6.3 million, from $2.1 million for the six months ended June 30, 2013 to $8.4 million for the six months ended June 30, 2014. The increase in interest was due to our increased borrowing of short-term loans and bank notes bills for working capital and capital expenditures.
Net Income (loss) Attributable to the Company increased by $3.0 million, from net loss of $79,414 for the three months ended June 30, 2013 to net income of $2.9 million for the three months ended June 30, 2014. The increase in our net income was mainly the result of our increase in revenues, decrease in selling and general and administrative expense, and affected by an increase in interest expense as discussed above. And the Net loss attributable to the Company increased by $0.8 million, from a net income of $255,556 for the six months ended June 30, 2013 to net loss of $509,596 for the six months ended June 30, 2014. The increase in net loss was mainly the result of an increase in interest expense for the period indicated.
About Andatee China Marine Fuel Services Corporation, Inc.
Andatee China Marine Fuel Services Corporation, through its subsidiaries, engages in the production, storage, distribution, and trading of blended marine fuel oil for cargo and fishing vessels in the People’s Republic of China. It also produces customer specific products using its proprietary blending technology. The company sells its products through distributors to retail customers in Tianjin City, Liaoning, Shandong, Jiangsu, and Zhejiang Provinces. Andatee China Marine Fuel Services Corporation is based in Dalian, the People’s Republic of China.
Safe Harbor Statement
This press release contains certain statements that may include "forward -looking statements." All statements other than statements of historical fact included herein are "forward -looking statements. " These forward -looking statements are often identified by the use of forward -looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties including, among others, our estimates of the Company’s ability to attain and sustain growth in 2014 and beyond. Although the Company believes that the expectations reflected in these forward -looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. These forward -looking statements are based upon our current expectations and projections about future events and generally relate to our plans, objectives and expectations for the development of our business. Although management believes that the plans and objectives reflected in or suggested by these forward -looking statements are reasonable, all forward -looking statements involve risks and uncertainties and actual future results may be materially different from the plans, objectives and expectations expressed in this press release. Accordingly, investors should not place any reliance on forward -looking statements as a prediction of actual results. You should not place undue reliance on these forward -looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward -looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward -looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward -looking statements.
Contact:
Thomas Yang
Andatee Marine Fuel Services
Corporation Limited
Unit C, No. 68 West Binhai Road, Xigang District, Dalian
Liaoning, China (map)
Phone: 011-86411-8240-8219
Facsimile:
011-86411-8368-8835
Website: www.andatee.com
ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| June30,2014 | December31,2013 | |||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 788,239 | $ | 22,638,820 | ||
| Restricted cash | 53,671,690 | 99,659,597 | ||||
| Accounts receivable, net | 15,184,416 | 45,818,721 | ||||
| Inventories, net | 36,149,447 | 3,893,530 | ||||
| Advances to suppliers, net | 843,089 | 25,930,533 | ||||
| Deposits for land use rights | 714,844 | 720,084 | ||||
| Deferred financing costs | 2,727,307 | 4,373,603 | ||||
| Equity investment | 1,352,960 | 1,351,428 | ||||
| Other current assets | 6,939,575 | 517,320 | ||||
| Total current assets | 118,371,567 | 204,903,636 | ||||
| Property, plant and equipment, net | 53,048,313 | 54,292,903 | ||||
| Construction in progress | 70,357,294 | 17,781,162 | ||||
| Intangible assets, net | 15,940,128 | 16,289,315 | ||||
| Total assets | $ | 257,717,302 | $ | 293,267,016 | ||
| LIABILITIES AND EQUITY | ||||||
| Current liabilities | ||||||
| Short-term bank borrowings | $ | 24,044,710 | $ | 27,821,419 | ||
| Bank note payable | 141,345,529 | 191,257,528 | ||||
| Accounts payable and accrued liabilities | 26,179,240 | 3,156,079 | ||||
| Advances from customers | 167,636 | 1,693,875 | ||||
| Loan from third parties | 97,479 | 98,193 | ||||
| Related party loans payable | 875,512 | 1,595,594 | ||||
| Taxes payable | 4,640,796 | 6,254,057 | ||||
| Other liabilities | 2,975,438 | 1,149,298 | ||||
| Total current liabilities | 200,326,340 | 233,026,043 | ||||
| Warrant liability | 272,085 | 290,687 | ||||
| Total liabilities | 200,598,425 | 233,316,730 | ||||
| Commitments and contingencies | ||||||
| Equity | ||||||
| Common stock, $0.001 par value; 50,000,000 shares authorized; 10,255,813 shares issued; 10,164,621 shares outstanding | 10,256 | 10,256 | ||||
| Treasury stock, at cost; 91,192 shares | (497,693 | ) | (497,693 | ) | ||
| Additional paid-in capital | 31,578,788 | 29,998,994 | ||||
| Accumulated other comprehensive income | 3,914,424 | 6,206,460 | ||||
| Retained earnings | 17,481,285 | 17,990,881 | ||||
| Statutory reserve | 3,932,585 | 3,932,585 | ||||
| Total stockholders' equity of the Company | 56,419,645 | 57,641,483 | ||||
| Noncontrolling interest | 699,232 | 2,308,803 | ||||
| Total equity | 57,118,877 | 59,950,286 | ||||
| Total liabilities and equity | $ | 257,717,302 | $ | 293,267,016 | ||
ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
| Three months ended June30, | Six months ended June30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||
| Revenues | $ | 175,529,194 | $ | 75,766,037 | $ | 217,485,835 | $ | 129,397,690 | ||||
| Cost of revenues | 166,381,021 | 71,818,195 | 205,473,413 | 121,982,431 | ||||||||
| Gross profit | 9,148,173 | 3,947,842 | 12,012,422 | 7,415,259 | ||||||||
| Operating expenses | ||||||||||||
| Selling expenses | 239,831 | 357,975 | 471,152 | 817,031 | ||||||||
| General and administrative expenses | 2,344,079 | 2,486,902 | 4,678,306 | 4,136,767 | ||||||||
| Total operating expenses | 2,583,910 | 2,844,877 | 5,149,458 | 4,953,798 | ||||||||
| Income from operations | 6,564,263 | 1,102,965 | 6,862,964 | 2,461,461 | ||||||||
| Other income (expense) | ||||||||||||
| Interest income | 943,030 | 13,628 | 1,135,030 | 225,048 | ||||||||
| Interest expense | (4,461,157 | ) | (1,167,686 | ) | (8,390,891 | ) | (2,081,214 | ) | ||||
| Income (loss) from equity investment | 5,140 | (8,566 | ) | 11,397 | 16,350 | |||||||
| Change in fair value of warrants | 17,366 | 10,150 | 18,602 | 10,150 | ||||||||
| Other income (expense) | (13,738 | ) | (33,496 | ) | (22,095 | ) | (169 | ) | ||||
| Total other income (expense), net | (3,509,359 | ) | (1,185,970 | ) | (7,247,957 | ) | (1,829,835 | ) | ||||
| Income (loss) before income tax provision | 3,054,904 | (83,005 | ) | (384,993 | ) | 631,626 | ||||||
| Provision for income taxes | 21,820 | 52,668 | 143,559 | 469,254 | ||||||||
| Net income (loss) | 3,033,084 | (135,673 | ) | (528,552 | ) | 162,372 | ||||||
| Less: net loss attributable to noncontrolling interest | 120,656 | (56,259 | ) | (18,956 | ) | (93,184 | ) | |||||
| Net income (loss) attributable to Andatee China Marine Fuel Services Corporation | $ | 2,912,428 | $ | (79,414 | ) | $ | (509,596 | ) | $ | 255,556 | ||
| Comprehensive income (loss) | ||||||||||||
| Net income (loss) | 3,033,084 | (135,673 | ) | (528,552 | ) | 162,372 | ||||||
| Foreign currency translation adjustment | (81,640 | ) | 1,032,940 | (432,984 | ) | 1,615,051 | ||||||
| Comprehensive income (loss) | 3,114,724 | 897,267 | (961,536 | ) | 1,777,423 | |||||||
| Less: comprehensive income (loss) attributable to non-controlling interest | 1,433,612 | (4,207 | ) | 1,609,571 | (198,671 | ) | ||||||
| Comprehensive income attributable to Andatee China Marine Fuel Services Corporation | 4,548,336 | 893,060 | 648,035 | 1,578,752 | ||||||||
| Weighted average number of shares: | ||||||||||||
| Basic | 10,255,813 | 9,674,048 | 10,255,813 | 9,642,103 | ||||||||
| Diluted | 10,383,420 | 9,674,048 | 10,255,813 | 9,642,103 | ||||||||
| Earnings (losses) per share: | ||||||||||||
| Basic | $ | 0.28 | $ | (0.01 | ) | $ | (0.05 | ) | $ | 0.03 | ||
| Diluted | $ | 0.28 | $ | (0.01 | ) | $ | (0.05 | ) | $ | 0.03 | ||
ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended June30, | ||||||
| 2014 | 2013 | |||||
| Cash flows from operating activities | ||||||
| Net (loss) income | $ | (528,552 | ) | $ | 162,372 | |
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||
| Depreciation | 1,242,318 | 1,079,611 | ||||
| Amortization | 204,826 | 253,656 | ||||
| Bad debt provision | 782,621 | 1,584,462 | ||||
| Recovery of bad debt provision | (529,088 | ) | - | |||
| Change in inventory reserve | 164,605 | 55,864 | ||||
| Deferred tax provision (benefit) | - | (205,650 | ) | |||
| Amortization of deferred financing costs | 5,616,212 | - | ||||
| Amortization of stock-based compensation to directors | 68,250 | 67,500 | ||||
| Income from equity investment | (11,397 | ) | (16,350 | ) | ||
| Change in fair value of warrants | (18,602 | ) | (10,150 | ) | ||
| Changes in operating assets and liabilities: | ||||||
| Accounts receivable | 29,592,905 | (30,016,665 | ) | |||
| Inventories | (32,530,365 | ) | (11,172,857 | ) | ||
| Advances to suppliers | 25,490,658 | (5,904,874 | ) | |||
| Other current assets | (6,376,100 | ) | (1,904,385 | ) | ||
| Accounts payable and accrued liabilities | 24,234,126 | 12,122,383 | ||||
| Advances from customers | (1,517,732 | ) | (1,450,003 | ) | ||
| Taxes payable | (1,571,699 | ) | 95,056 | |||
| Other liabilities | 675,587 | (904,182 | ) | |||
| Net cash provided by (used in) operating activities | 44,988,573 | (36,164,212 | ) | |||
| Cash flows from investing activities | ||||||
| Acquisition of equity method investee | - | (1,282,154 | ) | |||
| Additions to property and equipment | (390,750 | ) | (69,053 | ) | ||
| Additions to construction in progress | (52,838,609 | ) | - | |||
| Addition to intangible assets | (37,753 | ) | (1,602,693 | ) | ||
| Cash paid for acquiring non-controlling interest | (1,905,631 | ) | - | |||
| Net cash used in investing activities | (55,172,743 | ) | (2,953,900 | ) | ||
| Cash flows from financing activities | ||||||
| Proceeds from short-term loans | 19,137,743 | 19,152,176 | ||||
| Repayments of short-term loans | (22,720,980 | ) | (9,406,202 | ) | ||
| Proceeds from bank notes | 141,702,363 | 91,674,012 | ||||
| Repayments of bank notes | (190,344,805 | ) | (19,873,387 | ) | ||
| Restricted cash, net | 45,376,812 | (37,147,199 | ) | |||
| Deferred financing costs | (3,997,672 | ) | - | |||
| Repayment of loan from unrelated parties | - | (7,180,063 | ) | |||
| Proceeds (repayment) of loans from related parties | (709,947 | ) | 3,742,096 | |||
| Net cash (used in) provided by financing activities | (11,556,486 | ) | 40,961,433 | |||
| Effect of exchange rate changes on cash and cash equivalents | (109,925 | ) | 53,377 | |||
| Net (decrease) increase in cash and cash equivalents | (21,850,581 | ) | 1,896,698 | |||
| Cash and cash equivalents ,beginning of period | $ | 22,638,820 | $ | 1,625,705 | ||
| Cash and cash equivalents, end of period | $ | 788,239 | $ | 3,522,403 | ||
| Supplemental cash flow information | ||||||
| Interest paid | $ | 6,664,759 | $ | 2,582,788 | ||
| Income taxes paid | $ | 969,050 | $ | 315,620 | ||
| Transfer from advances to suppliers to construction in progress | $ | 51,483,406 | $ | - | ||