BEIJING, May 15, 2014 (GLOBE NEWSWIRE) -- 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 first quarter of 2014 ended March 31, 2014.
First Quarter 2014 Financial Highlights:
- Total sales in Q1 2014 decreased by 22% to $42 million from $53.6 million in Q1 2013
- Gross profit in Q1 2014 decreased by 17.6% to $2.86 million from $3.47 million in Q1 2013. Gross margin increased from 6.5% in Q1 2013 to 6.8% in Q1, 2014
- Income from operations in Q1 2014 was $0.3 million as compared to $1.36 million in Q1 2013
- Net loss increased by $3.8 million, from net income of $334,972 for Q1 2013 to net loss of $3.42 million for Q1, 2014
Mr. Wang Hao, Chairman and Chief Executive Officer of Andatee China Marine Fuel Services Corporation, commented, "The general slow-down of the Chinese economy, seasonality's impact on the fishing industry, as well as the global crude oil price fluctuation in the aggregate resulted in a decrease in our sales in Q1 2014 and caused a net loss of $3.42 million. Notwithstanding the foregoing, however, we intend to remain active in the efforts to increase our share of retail sales, acquire our own retail facilities, build retail points in strategic locations to capture a majority of active local markets and add more products to our current product line."
"Going forward, with the fishing industry back to normal production conditions and our strategic strength being built up, we intend to improve our performance and realize sustainable long-term growth in 2014 and beyond."
First Quarter of 2014 Result
Revenue decreased by $11.7 million, or 22%, from $53.6 million in three months ended March 31, 2013 to $42 million in 2014. The decrease in revenue was mainly caused by decreased quantity sold and decreased selling price. The quantity sold decreased from 63,193 tons in three months ended March 31, 2013 to 54,205 tons in three months ended March 31, 2014, which was primarily caused by decreased sales demand for the Company's #2, #3 and #4 blended fuel oils due to reduced fishing activities as a result of holiday season's impact and severe winter weather in 2014. The average selling price for #1 fuel decreased from RMB 6,375 per ton in three months ended March 31, 2013 to RMB 4,480 per ton in three months ended March 31, 2014, a decrease of 29.7%, the average selling price for marine fuel #3 decreased 13.7% from RMB 4,953 per ton in three months ended March 31, 2013 to RMB 4,275 per ton in three months ended March 31, 2014. The decrease in selling price for these products led to the overall decrease in sales revenue. For the three months ended March 31, 2014, #1 marine fuel represented 24.4% of our sales, #2 marine fuel represented 8.6% of our sales, #3 marine fuel represented 5.9% of our sales, #4 marine fuel represented 50% of our sales, 180CST represented 5.8% of our sales and 120CST represented 5.4% of our sales, while for the three months ended March 31, 2013, #1 marine fuel represented 14.4% of our sales, #2 marine fuel represented 11.7% of our sales, #3 marine fuel represented 12.4% of our sales, #4 marine fuel represented 58.5% of our sales, 180CST represented 0.8% of our sales and 120CST represented 2.2% of our sales.
Cost of Revenue decreased by $11 million, or 22%, from $50.2 million for three months ended March 31, 2013 to $39.1 million for the three months ended March 31, 2014 primarily due to decreased sales volume and global oil price fluctuation.
Gross Margins decreased about $0.60 million, or 17% primarily due to decreased revenue. However, our gross profit% increased from 6.5% in three months ended March 31, 2013 to 6.8% in three months ended March 31, 2014. The increase in gross profit% for the quarter ended March 31, 2014 was affected by product mix sales changes (normally 120CST and 180CST only have gross profit% of 1% to 2%, #1 and #2 fuel have gross profit% of 6% to 7%, and #3 and #4 has gross profit% of 3% to 5%), because different product has different selling price, cost of sales and gross profit%. For three months ended March 31, 2014, about 24.4% of our sales were from higher margin #1 fuel oils, which was higher than the same period of 2013. In addition, we strengthened our efforts to import fuel oils from the overseas market since the second half of 2013, which enabled us to avoid incurring higher purchase costs from domestic suppliers only. This led to the costs of purchase to decrease and gross profit% to increase.
Selling Expenses decreased by $0.23 million, or 50%, from $459,055 for the three months ended March 31, 2013 to $231,321 for the three months ended March 31, 2014. This decrease is mainly due to reduced sales promotion and oil storage tank and other facility lease expenses. As a percentage of revenues, selling expenses decreased from 0.9% for the three months ended March 31, 2013 to 0.6% for the three months ended March 31, 2014.
General and Administrative Expenses increased $684,362, or 41%, from $1.65 million for the three months ended March 31, 2013 to $2.31 million for the three months ended March 31, 2014. The increase was due to an increase in depreciation expense, an increase in bad debt reserves, an increase in professional service fees and consulting fees. As a percentage of revenues, general and administrative expenses increased from 3.1% for the three months ended March 31, 2013 to 5.6% for the three months ended March 31, 2014.
Interest Expense increased by $3 million, from $0.9 million for the three months ended March 31, 2013 to $3.93 million for the three months ended March 31, 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 $3.8 million from net income of $334,972 for the three months ended March 31, 2013 to net loss of $3.42 million for the three months ended March 31, 2014. The increase in our net loss was mainly the result of our decrease in revenues, increase in general and administrative expense, and an increase in interest expense as discussed above.
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.
| ANDATEE CHINA MARINE FUEL SERVICES CORPORATION AND SUBSIDIARIES | ||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| March 31, 2014 | December 31, 2013 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | $ 3,578,161 | $ 22,638,820 |
| Restricted cash | 102,891,963 | 99,659,597 |
| Accounts receivable, net | 45,327,389 | 45,818,721 |
| Inventories, net | 22,867,524 | 3,893,530 |
| Advances to suppliers, net | 16,942,585 | 25,930,533 |
| Deposits for land use rights | 714,065 | 720,084 |
| Deferred financing costs, net of accumulated amortization of $5,217,076 and $3,779,111 as of March 31, 2014 and December 31, 2013, respectively | 2,439,592 | 4,373,603 |
| Other current assets | 3,043,086 | 517,320 |
| Total current assets | 197,804,365 | 203,552,208 |
| Property, plant and equipment, net | 53,259,071 | 54,292,903 |
| Construction in progress | 34,525,512 | 17,781,162 |
| Intangible assets, net | 16,013,032 | 16,289,315 |
| Equity investment | 1,346,343 | 1,351,428 |
| Total assets | $ 302,948,323 | $ 293,267,016 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Short-term bank borrowings | $ 25,560,298 | $ 27,821,419 |
| Bank note payable | 193,716,224 | 191,257,528 |
| Accounts payable and accrued liabilities | 18,606,706 | 3,156,079 |
| Advances from customers | 202,256 | 1,693,875 |
| Loan from third parties | 97,373 | 98,193 |
| Related party loans payable | 2,309,622 | 1,595,594 |
| Taxes payable | 3,518,918 | 6,254,057 |
| Other liabilities | 2,739,325 | 1,149,298 |
| Total current liabilities | 246,750,722 | 233,026,043 |
| Warrant liability | 289,451 | 290,687 |
| Total liabilities | 247,040,173 | 233,316,730 |
| Commitments and contingencies | ||
| Stockholders' 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 | 30,033,119 | 29,998,994 |
| Accumulated other comprehensive income | 5,728,182 | 6,206,460 |
| Retained earnings | 14,568,857 | 17,990,881 |
| Statutory reserve | 3,932,585 | 3,932,585 |
| Total stockholders' equity of the Company | 53,775,306 | 57,641,483 |
| Non-controlling interest | 2,132,844 | 2,308,803 |
| Total equity | 55,908,150 | 59,950,286 |
| Total liabilities and stockholders' equity | $ 302,948,323 | $ 293,267,016 |
| ANDATEE CHINA MARINE FUEL SERVICES CORPORATION AND SUBSIDIARIES | ||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||
| Three months ended March 31, | ||
| 2014 | 2013 | |
| Revenues | $ 41,956,641 | $ 53,631,654 |
| Cost of revenues | 39,092,392 | 50,164,236 |
| Gross profit | 2,864,249 | 3,467,418 |
| Operating expenses | ||
| Selling expenses | 231,321 | 459,055 |
| General and administrative expenses | 2,334,227 | 1,649,865 |
| Total operating expenses | 2,565,548 | 2,108,920 |
| Income from operations | 298,701 | 1,358,498 |
| Other income (expense) | ||
| Interest income | 192,000 | 211,420 |
| Interest expense | (3,929,734) | (913,528) |
| Income from equity investment | 6,257 | 24,916 |
| Change in fair value of warrants | 1,236 | -- |
| Other income (expense) | (8,357) | 33,327 |
| Total other expense | (3,738,598) | (643,865) |
| (Loss) income before income tax provision | (3,439,897) | 714,633 |
| Provision for income taxes | 121,739 | 416,586 |
| Net (loss) income | (3,561,636) | 298,047 |
| Less: net loss attributable to non-controlling interest | (139,612) | (36,925) |
| Net (loss) income attributable to Andatee China Marine Fuel Services Corporation | $ (3,422,024) | $ 334,972 |
| Comprehensive (loss) income | ||
| Net (loss) income | (3,561,636) | 298,047 |
| Foreign currency translation adjustment | (514,624) | 582,111 |
| Comprehensive (loss) income | (4,076,260) | 880,158 |
| Less: comprehensive loss attributable to non-controlling interest | 175,959 | (231,388) |
| Comprehensive (loss) income attributable to Andatee China Marine Fuel Services Corporation | (3,900,301) | 648,770 |
| Weighted average number of shares: | ||
| Basic | 10,255,813 | 9,610,159 |
| Diluted | 10,255,813 | 9,610,159 |
| (Loss) earnings per share: | ||
| Basic | $ (0.33) | $ 0.03 |
| Diluted | $ (0.33) | $ 0.03 |
| ANDATEE CHINA MARINE FUEL SERVICES CORPORATION AND SUBSIDIARIES | ||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| Three months ended March 31, | ||
| 2014 | 2013 | |
| Cash flows from operating activities | ||
| Net (loss) income for the period | $ (3,561,636) | $ 298,047 |
| Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||
| Depreciation | 608,825 | 479,794 |
| Amortization | 92,612 | 126,205 |
| Provision for doubtful accounts | 552,557 | 525,032 |
| Change in inventory reserve | 98,226 | 21,640 |
| Deferred tax benefit | -- | (253,353) |
| Amortization of deferred financing costs | 3,929,387 | -- |
| Amortization of stock-based compensation | 34,125 | -- |
| Income from equity investment | (6,257) | (24,916) |
| Change in fair value of warrants | (1,236) | -- |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (748,970) | (2,629,394) |
| Inventories | (19,248,657) | (4,328,004) |
| Advances to suppliers | 9,141,457 | (5,030,883) |
| Other current assets | (2,497,715) | (523,678) |
| Accounts payable and accrued liabilities | 16,986,116 | 221,888 |
| Advances from customers | (1,488,648) | (1,935,473) |
| Taxes payable | (2,703,180) | 691,875 |
| Other liabilities | 181,074 | 22,437 |
| Net cash provided by (used in) operating activities | 1,368,080 | (12,338,783) |
| Cash flows from investing activities | ||
| Acquisition of equity method investee | -- | (1,274,514) |
| Additions to construction in progress | (17,020,854) | -- |
| Additions to property and equipment | (24,372) | (66,622) |
| Addition to intangible assets | (978) | -- |
| Net cash used in investing activities | (17,046,204) | (1,341,136) |
| Cash flows from financing activities | ||
| Proceeds from short term loans | 11,037,347 | 19,038,060 |
| Repayments of short term loans | (13,081,300) | (1,752,457) |
| Proceeds from bank notes | 40,610,897 | 11,470,630 |
| Repayments on bank notes | (36,522,990) | (19,754,975) |
| Restricted cash, net | (4,096,080) | 3,400,965 |
| Deferred financing costs | (2,017,564) | -- |
| Repayment of loans to third parties | -- | (174,587) |
| Proceeds of loans from related parties | 733,418 | 76,604 |
| Net cash (used in) provided by financing activities | (3,336,272) | 12,304,240 |
| Effect of exchange rate changes on cash and cash equivalents | (46,263) | 6,682 |
| Net decrease in cash and cash equivalents | (19,060,659) | (1,368,997) |
| Cash and cash equivalents, beginning of period | $ 22,638,820 | $ 1,625,705 |
| Cash and cash equivalents, end of period | $ 3,578,161 | $ 256,708 |
| Supplemental cash flow information | ||
| Interest paid | $ 2,572,226 | $ 227,259 |
| Income taxes paid | $ 732,382 | $ 312,676 |