ANDATEE CHINA MARINE FUEL SER CORP Dalian, China--(Newsfile Corp. - November 14, 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 quarter ended September 30, 2014.
Third Quarter 2014 Financial Highlights:
Net Revenues for Q3 2014 totaled $146.3 million, an increase of $84.7 million, or 137.6%, as compared to net revenues of $61.6 million for Q3 2013.
Gross profit in Q3 2014 increased by $2.2 million, or 44.9%, to $7.1 million from $4.9 million as compared to the same quarter in 2013.
Income from operations in Q3 2014 was $4.1 million, more than quadrupling from $0.9 million in Q3 2013.
The Company turned from a net loss of $0.5 million in Q3 2013 to a net income of $0.1 million in Q3 2014.
Basic and fully diluted earnings per share were $0.01.
Our Chairman and Chief Executive Officer, Mr. Wang Hao commented that the Company will continue its efforts to strengthen its bottom line. He further noted that the Company's positive results these past two quarters were a function of the Company's executing its business plan. In early 2014, the Company augmented and refined its business plan whereby the Company allocated more of its resources to its wholesale fuel business and focused on increase sales volume with its distributor customers located in the provinces of Shanghai, Zhejiang and Shandong. Following these steps, the Company's revenues in Q3 2014 have increased significantly as compared to the same quarter in 2013. Year to date revenue at September 30, 2014 grew by 90.5% as compared to same nine month period in 2013, he concluded.
Third Quarter Results for 2014
Revenue
For three months ended September 30, 2014, the Company's revenue increased by $84.7 million, or 137.6%, from $61.6 million in three months ended September 30, 2013 to $146.3 million in 2014. The increase in revenues were directly correlated to the 65,209 tons of increased sales volume of fuel. That is a 53.6% increase, from 121,573 tons for the third quarter ended September 30, 2013 to 186,782 tons for the third quarter ended September 30, 2014.
The most demanded fuels by volume were blends #1, #4 and 120CST, which accounted for 24.1%, 34.5%, and 34.8% of the Company's total fuel sold, respectively. These fuels are very competitively priced in the market as these blends of fuel appeal to a broad range of fishing and cargo vessel.
Gross Profit
The Company's gross profit increased by $2.2 million, or 44.9%, to $7.1 million for the quarter ended September 30, 2014 as compared to $4.9 million in the quarter ended September 30, 2013. As a percentage of revenues, gross profit margin was 4.9% and 8.0% for the third quarter of 2014 and 2013, respectively.
For the three months ended September 30, 2014, the increase in gross margin was largely attributable to increased sales volume as compared to the same period of 2013, as discussed above; however, the decrease in gross profit percentage was due to increased unit costs affected by higher purchase costs resulting from international crude oil price fluctuations, plus the shifting of the Company's sales mix from the retail side to the wholesale side.
Income from Operations
Income from operations increased from $0.9 million in the third quarter for 2013 to $4.1 million in the third quarter of 2014. The primary drivers of the increase were increases in revenues as mentioned above as well the reduction of general and administrative expenses ("G&A"). G&A expenses decreased $971,427, or 27.4%, from $3.5 million for the three months ended September 30, 2013 to $2.6 million for the three months ended September 30, 2014. The reduction in G&A was directly related to the reduction in bad debt expense as result of the Company's efforts to collect outstanding accounts receivable. As a percentage of revenues, general and administrative expenses decreased from 5.8% for the three months ended September 30, 2013 to 1.8% for the three months ended September 30, 2014.
Net Income (Loss) Attributable to the Company
Net income attributable to the Company was $125,282 for the three months ended September 30, 2014 as compared to a net loss of $542,859 for the three months ended September 30, 2013. The change in net income was directly the result of increase in revenues, decrease in general and administrative expenses, as discussed above, and the partial offset brought by an increase in interest expense.
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, the Company's ability to sustain its sales and maintain lower cost/expense structure, as well as its ability to continue execute upon its business plan in the coming fiscal quarters. 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.
ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| September 30, 2014 | December 31, 2013 | |||||
| ||||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 203,019 | $ | 22,638,820 | ||
Restricted cash | 45,561,801 | 99,659,597 | ||||
Accounts receivable, net | 19,936,801 | 45,818,721 | ||||
Inventories, net | 40,498,615 | 3,893,530 | ||||
Advances to suppliers, net | 1,339,646 | 25,930,533 | ||||
Deposits for land use rights | 715,053 | 720,084 | ||||
Deferred financing costs, net | 1,006,589 | 4,373,603 | ||||
Equity investment | - | 1,351,428 | ||||
Other current assets | 5,201,833 | 517,320 | ||||
Total current assets | 114,463,357 | 204,903,636 | ||||
| ||||||
Property, plant and equipment, net | 53,137,119 | 54,292,903 | ||||
Construction in progress | 71,442,451 | 17,781,162 | ||||
Intangible assets, net | 15,810,678 | 16,289,315 | ||||
Total assets | $ | 254,853,605 | $ | 293,267,016 | ||
| ||||||
LIABILITIES AND EQUITY | ||||||
| ||||||
Current liabilities | ||||||
Short-term bank borrowings | $ | 24,051,744 | $ | 27,821,419 | ||
Bank note payable | 133,261,286 | 191,257,528 | ||||
Accounts payable and accrued liabilities | 31,705,917 | 3,156,079 | ||||
Advances from customers | 248,821 | 1,693,875 | ||||
Loan from third parties | - | 98,193 | ||||
Related party loans payable | 876,831 | 1,595,594 | ||||
Taxes payable | 5,020,720 | 6,254,057 | ||||
Other liabilities | 1,817,308 | 1,149,298 | ||||
Total current liabilities | 196,982,627 | 233,026,043 | ||||
| ||||||
Warrant liability | 579,831 | 290,687 | ||||
Total liabilities | 197,562,458 | 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 | 31,612,913 | 29,998,994 | ||||
Accumulated other comprehensive income | 3,930,402 | 6,206,460 | ||||
Retained earnings | 17,606,567 | 17,990,881 | ||||
Statutory reserve | 3,932,585 | 3,932,585 | ||||
Total stockholders' equity of the Company | 56,595,030 | 57,641,483 | ||||
Noncontrolling interest | 696,117 | 2,308,803 | ||||
Total equity | 57,291,147 | 59,950,286 | ||||
Total liabilities and equity | $ | 254,853,605 | $ | 293,267,016 | ||
|
ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
| Three months ended | Nine months ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2014 | 2013 | 2014 | 2013 | ||||||||
| ||||||||||||
Revenues | $ | 146,303,487 | $ | 61,564,873 | $ | 363,789,322 | $ | 190,962,563 | ||||
Cost of revenues | 139,184,245 | 56,652,979 | 344,657,658 | 178,635,410 | ||||||||
Gross profit | 7,119,242 | 4,911,894 | 19,131,664 | 12,327,153 | ||||||||
| ||||||||||||
Operating expenses | ||||||||||||
Selling expenses | 405,810 | 367,616 | 876,962 | 1,184,647 | ||||||||
General and administrative expenses | 2,576,353 | 3,547,780 | 7,254,659 | 7,684,547 | ||||||||
Total operating expenses | 2,982,163 | 3,915,396 | 8,131,621 | 8,869,194 | ||||||||
| ||||||||||||
Income from operations | 4,137,079 | 996,498 | 11,000,043 | 3,457,959 | ||||||||
| ||||||||||||
Other income (expense) | ||||||||||||
Interest income | 229,186 | 58,744 | 1,364,216 | 283,792 | ||||||||
Interest expense | (2,341,001 | ) | (737,667 | ) | (10,731,892 | ) | (2,818,881 | ) | ||||
Income from equity investment | - | 12,418 | - | 28,768 | ||||||||
Loss from disposal of equity method investee | (53,339 | ) | - | (41,942 | ) | - | ||||||
Change in fair value of warrants | (307,746 | ) | (270,539 | ) | (289,144 | ) | (260,389 | ) | ||||
Other expense | (20,134 | ) | (193,101 | ) | (42,229 | ) | (193,270 | ) | ||||
Total other expense, net | (2,493,034 | ) | (1,130,145 | ) | (9,740,991 | ) | (2,959,980 | ) | ||||
| ||||||||||||
Income (loss) before income tax provision | 1,644,045 | (133,647 | ) | 1,259,052 | 497,979 | |||||||
| ||||||||||||
Provision for income taxes | 1,523,361 | 408,053 | 1,666,920 | 877,307 | ||||||||
| ||||||||||||
Net income (loss) | 120,684 | (541,700 | ) | (407,868 | ) | (379,328 | ) | |||||
Less: net loss attributable to noncontrolling interest | (4,598 | ) | 1,159 | (23,554 | ) | (92,025 | ) | |||||
Net income (loss) attributable to Andatee China Marine Fuel Services Corporation | $ | 125,282 | $ | (542,859 | ) | $ | (384,314 | ) | $ | (287,303 | ) | |
| ||||||||||||
Comprehensive income (loss) | ||||||||||||
Net income (loss) | $ | 120,684 | $ | (541,700 | ) | $ | (407,868 | ) | $ | (379,328 | ) | |
Foreign currency translation adjustment | 17,332 | (115,317 | ) | (415,652 | ) | 1,499,734 | ||||||
Comprehensive income (loss) | 138,016 | (657,017 | ) | (823,520 | ) | 1,120,406 | ||||||
Less: comprehensive income (loss) attributable to noncontrolling interest | 3,115 | (24,556 | ) | 1,612,686 | (316,411 | ) | ||||||
Comprehensive income attributable to Andatee China Marine Fuel Services Corporation | $ | 141,131 | $ | (632,461 | ) | $ | 789,166 | $ | 1,436,817 | |||
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Weighted average number of shares: | ||||||||||||
Basic | 10,255,813 | 9,860,159 | 10,255,813 | 9,715,858 | ||||||||
Diluted | 10,419,727 | 9,860,159 | 10,255,813 | 9,715,858 | ||||||||
| ||||||||||||
Earnings (losses) per share: | ||||||||||||
Basic | $ | 0.01 | $ | (0.06 | ) | $ | (0.04 | ) | $ | (0.01 | ) | |
Diluted | $ | 0.01 | $ | (0.06 | ) | $ | (0.04 | ) | $ | (0.01 | ) | |
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ANDATEE CHINA MARINE FUEL SERVICES CORPORATION. AND
SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
| Nine months ended | ||||||
| September 30, | ||||||
| 2014 | 2013 | |||||
| ||||||
Cash flows from operating activities | ||||||
Net loss | $ | (407,868 | ) | $ | (379,328 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation | 2,582,533 | 1,813,675 | ||||
Amortization | 338,944 | 393,147 | ||||
Provision for doubtful accounts | 457,730 | 2,915,205 | ||||
Change in inventory reserve | 185,152 | 139,549 | ||||
Deferred tax provision | - | 187,901 | ||||
Amortization of deferred financing costs | 7,424,622 | - | ||||
Stock-based compensation to consulting firm | - | 356,667 | ||||
Stock-based compensation to directors | 102,375 | 136,500 | ||||
Income from equity investment | - | (28,768 | ) | |||
Loss from disposal of equity method investee | 41,942 | - | ||||
Change in fair value of warrants | 289,144 | 260,389 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 24,605,678 | (23,769,140 | ) | |||
Inventories | (36,863,343 | ) | (27,909,845 | ) | ||
Advances to suppliers | 24,968,839 | (819,909 | ) | |||
Other current assets | (4,627,890 | ) | (3,409,281 | ) | ||
Accounts payable and accrued liabilities | 28,942,295 | 16,851,041 | ||||
Advances from customers | (1,435,013 | ) | (5,048,428 | ) | ||
Taxes payable | (1,191,124 | ) | 3,802,579 | |||
Other liabilities | 310,211 | 1,151,546 | ||||
Net cash provided by (used in) operating activities | 45,724,227 | (33,320,502 | ) | |||
| ||||||
Cash flows from investing activities | ||||||
Proceeds from disposal (acquisition) of equity method investee | 1,301,723 | (1,287,581 | ) | |||
Additions to property and equipment | (1,805,175 | ) | (88,554 | ) | ||
Additions to construction in progress | (53,852,932 | ) | - | |||
Addition to intangible assets | (37,753 | ) | (4,452,134 | ) | ||
Cash paid for acquiring noncontrolling interest | (1,903,770 | ) | (1,722,140 | ) | ||
Net cash used in investing activities | (56,297,907 | ) | (7,550,410 | ) | ||
| ||||||
Cash flows from financing activities | ||||||
Proceeds from short-term loans | 27,254,829 | 33,718,535 | ||||
Repayments of short-term loans | (30,834,567 | ) | (15,803,451 | ) | ||
Proceeds from bank notes | 141,564,020 | 128,011,331 | ||||
Repayments of bank notes | (198,294,743 | ) | (31,545,741 | ) | ||
Restricted cash, net | 53,468,281 | (59,167,769 | ) | |||
Deferred financing costs | (4,083,991 | ) | - | |||
Repayment of loan from unrelated parties | (97,629 | ) | (7,210,455 | ) | ||
Proceeds (repayment) of loans from related parties | (708,126 | ) | 2,354,493 | |||
Net cash (used in) provided by financing activities | (11,731,926 | ) | 50,356,942 | |||
| ||||||
Effect of exchange rate changes on cash and cash equivalents | (130,195 | ) | 162,267 | |||
Net (decrease) increase in cash and cash equivalents | (22,435,801 | ) | 9,648,297 | |||
| ||||||
Cash and cash equivalents, beginning of period | $ | 22,638,820 | $ | 1,625,705 | ||
| ||||||
Cash and cash equivalents, end of period | $ | 203,019 | $ | 11,274,002 | ||
| ||||||
Supplemental cash flow information | ||||||
Interest paid | $ | 7,648,577 | $ | 2,593,721 | ||
Income taxes paid | $ | 1,285,953 | $ | 316,835 | ||
Transfer from construction in progress to property, plant and equipment | $ | 694,799 | $ | - | ||
Transfer from advances to suppliers to construction in progress | $ | 53,307,190 | $ | - | ||
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| 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 | |
