SHENZHEN, China, Aug. 7, 2007 (PRIME NEWSWIRE) -- New Dragon Asia Corp. (AMEX:NWD), one of China's leading producers of instant noodles, flour-related products and soybean derived products, today announced its financial results for the second quarter and first six months of fiscal 2007.
Li Xia Wang, Chief Executive Officer of New Dragon Asia Corp. said, "We continued to grow steadily in the second quarter of 2007. Our company once again posted a net profit, and we successfully controlled our costs. Domestically, we continue to consider strategic partnerships, as well as strategic alliances with foreign companies that wish to leverage our strong distribution network. We also continue to expand exports of our products to Europe and other parts of Asia, and seek new export opportunities in these regions."
Peter Mak, Chief Financial Officer of New Dragon Asia Corp. stated, "We are pleased with the stable growth we achieved during the first half of 2007. New Dragon Asia Corp. maintained its track record of top-line growth, and we were able to boost margins via export sales and increasing sales of our soybean products. We continue to diversify our product and sales mix to generate higher margins."
Second Quarter 2007 financial highlights
Net revenue for the three months ended June 25, 2007 was $13.0 million, a 13% increase compared to $11.5 million in the same period last year. The rise in revenues was driven mainly by an increase in sales of soybean protein powder.
Gross profit rose $0.4 million to $2.6 million for the second quarter of 2007 compared to $2.2 million in the second quarter of 2006, an increase of 18%. Gross margin increased to 20% as compared to 19% in the second quarter of 2006, primarily as a result of higher export sales, which generate higher margins.
New Dragon Asia reported income from operations for the second quarter of 2007 of $1.5 million compared to $1.4 million in the second quarter of 2006, an increase of 7% year-over-year. Operating income was also supported by higher margin export sales.
Net income for the second quarter of 2007 was $4.8 million compared to net income of $9.1 million in the same period in 2006. This decrease was due to the fact that the gain derived from changes in the fair value of derivative instruments was considerably less in the second quarter of 2007 compared to the second quarter of 2006.
Earnings per Class A common share was $0.08 basic and fully diluted for the second quarter of 2007, compared to earnings of $0.16 basic and $0.15 fully diluted in the corresponding period last year.
First Half 2007 financial highlights
Net revenue for the six months ended June 25, 2007 was $24.2 million, a 7% increase compared to $22.6 million in the same period last year, driven mainly by growth in New Dragon Asia Corp.'s soybean business during the first half.
Gross profit rose to $4.5 million for the first half of 2007 compared to $4.0 million in the first half of 2006, an increase of approximately 13%. Gross margin as a percentage of revenue increased slightly to 19% in the first half of 2007 as compared to 18% in the first half of 2006, primarily as a result of a higher margin soybean sales and noodle exports.
New Dragon Asia Corp. reported income from operations for the first six months of 2007 of $2.7 million compared to $0.3 million for the first six months of 2006. The 2006 figure incorporates a $2.3 million non-cash charge related to stock-based compensation incurred in the first quarter of last year.
Net income for the first half of 2007 was $8.3 million compared to $1.2 million in the first half of 2006. This substantial increase was primarily due to the fact that no stock-based compensation expenses were incurred in the year 2007 and reflects the impact of the gain derived from changes in the fair value of derivative instruments.
Balance Sheet Information
New Dragon Asia's cash and cash equivalents as of June 25, 2007 were $3.7 million, compared with $10.3 million at June 25, 2006. Net cash used in operating activities for the six months ended June 25, 2007 was $6,742,000, which was primarily due to additional deposits and prepayments of $3,382,000 paid to suppliers for wheat and soybean in order to secure additional supplies in anticipation of prices increase and increase in inventories of $5,939,000 to support the growth of business.
New Dragon Asia Corp., a Florida corporation (AMEX:NWD), is headquartered in Shandong Province, China and is engaged in the milling, sale and distribution of flour and related products, including instant noodles and soybean-derived products, to retail and commercial customers. As the fourth largest instant noodle manufacturer in China, New Dragon Asia Corp. markets its well-established Long Feng brand through a network of more than 200 key distributors and 16 regional offices in 27 Chinese provinces with an aggregate production capacity of approximately 195,000 tons of flour and more than 1.1 billion packages of instant noodles per year. Instant noodles are also exported to a growing number of countries. For more information, visit the Company's website at www.newdragonasia.com.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, its success with acquisitions, anticipated synergies, and overseas expansion. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; changes in consumer preferences and tastes or perceptions; effectiveness of advertising or market-spending programs; changes in laws and regulations; fluctuations in costs of production, foreign exchange and interest rates; and other factors as may be discussed in the Company's reports as periodically filed with the Securities and Exchange Commission.
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data; unaudited)
Three months ended Six months ended
June 25, June 25,
------------------ ------------------
2007 2006 2007 2006
Net revenue $13,035 $11,544 $24,195 $22,640
Cost of goods sold (10,479) (9,372) (19,717) (18,614)
------- ------- ------- -------
Gross profit 2,556 2,172 4,478 4,026
Selling and distribution
expenses (284) (216) (523) (446)
General and administrative
expenses (757) (552) (1,294) (3,309)
------- ------- ------- -------
Income from operations 1,515 1,404 2,661 271
Other income (expense):
Interest income 9 7 15 23
Other income (expense) 120 (1) 128 4
Gain on fair value
adjustments to embedded
derivatives 3,101 7,112 5,638 605
VAT refund 488 998 540 1,099
------- ------- ------- -------
Income (loss) before
income taxes and minority
interests 5,233 9,520 8,982 2,002
Provision for income taxes (420) (376) (720) (634)
------- ------- ------- -------
Income (loss) before
minority interests 4,813 9,144 8,262 1,368
Minority interests -- (57) -- (133)
------- ------- ------- -------
Net income (loss) $ 4,813 $ 9,087 $ 8,262 $ 1,235
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Accretion of Redeemable
Preferred Stock (378) (479) (756) (986)
Preferred Stock Dividends (178) (219) (356) (465)
------- ------- ------- -------
Income (loss) available to
common stockholders $ 4,257 $ 8,389 $ 7,150 $ (216)
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Earnings per Class A
common share
Basic $ 0.08 $ 0.16 $ 0.13 $ --
------- ------- ------- -------
Diluted $ 0.08 $ 0.15 $ 0.13 $ --
------- ------- ------- -------
Weighted average number of
Class A common shares
outstanding
Basic 53,810 51,448 53,750 50,647
------- ------- ------- -------
Diluted 62,266 61,925 54,838 50,647
------- ------- ------- -------
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
June 25, Dec. 25,
2007 2006
------- -------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,693 $10,276
Accounts receivable, net 8,633 8,835
Deposits and prepayments, net 9,968 6,586
Inventories, net 17,533 11,598
Due from related companies 880 857
------- -------
Total current assets 40,707 38,152
Property, machinery and equipment, net 25,347 24,248
Land use rights, net 7,083 6,983
Goodwill 125 125
------- -------
Total assets $73,262 $69,508
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,105 $ 2,723
Other payables and accruals 2,780 3,255
Taxes payable 1,675 3,453
Embedded derivatives, at fair value 5,499 11,138
Due to related companies -- 28
------- -------
Total current liabilities 14,059 20,597
Due to New Dragon Asia Food Limited 638 317
Due to joint venture partners 112 102
------- -------
Total liabilities 14,809 21,016
------- -------
Minority interests 283 276
------- -------
Series A and B Redeemable Convertible Preferred
Stock, $0.0001 par value:
Authorized shares - 50,000,000
Issued and outstanding - 10,162,000 shares at
June 25, 2007 and December 25, 2006 4,959 4,204
Commitments
Stockholders' equity:
Class A Common Stock, $0.0001 par value:
Authorized shares - 102,000,000
Issued and outstanding - 53,821,234 at June 25,
2007 and 53,614,723 at December 25, 2006 5 5
Class B Common Stock, $0.0001 par value:
Authorized shares - 2,000,000
Issued and outstanding - none -- --
Additional paid-in capital 28,733 28,411
Retained earnings 19,818 12,668
Accumulated other comprehensive income 4,655 2,928
------- -------
Total stockholders' equity 53,211 44,012
------- -------
Total liabilities and stockholders' equity $73,262 $69,508
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