Message #12 From:
NewsBot Date: November 14, 2006 01:01:00 PM
ADY News American Dairy Reports Third Quarter 2006 Financial Results
BEIJING--(BUSINESS WIRE)--American Dairy, Inc. (NYSE Arca: ADY), one of the leading producers and
distributors of milk powder and soybean products in China, today
announced third quarter 2006 financial results. The Company plans to
file its SEC Form 10-Q today.
Financial highlights from the third quarter of 2006 versus the third
quarter of 2005 include:
Net income increased 154% to $5.5 million, or $0.32 per diluted share
in 3Q06, from $2.2 million, or $0.14 per diluted share in 3Q05
Revenue increased 129% to $32.6 million in 3Q06 from $14.3 million in
3Q05
Gross profit grew 157% to $17.3 million in 3Q06 from $6.7 million in
3Q05
Gross margin increased to 53.2% in 3Q06 from 47.3% in 3Q05
Income from operations increased 122% to $5.2 million from $2.4
million in 3Q05
Leng You Bin, Chief Executive Officer and President of American Dairy
stated, “Today we are reporting the best
operating results in the history of our Company, driven by demand for
our leading infant formula and milk powder products in China. Our record
results reflect the fundamental strength of American Dairy, and we are
particularly pleased with our sequential financial performance from the
second quarter of 2006. For example, despite the seasonal slowness
associated with the third quarter’s hot summer
months, we increased our net income by 35% excluding the $1.2 million of
VAT rebates recognized in the second quarter of this year. We also
continued to reinvest in our business with a focus on solidifying the
Feihe brand and on our ongoing construction projects, which enable us to
capitalize and deliver on anticipated future growth.”
Quarter Ended September 30, 2006
Net income increased 154% to $5.5 million in the third quarter of 2006
from $2.2 million in the third quarter of 2005. Earnings per diluted
share increased 129% to $0.32 in the third quarter of 2006 from $0.14 in
the third quarter of the previous year. During this period, diluted
shares outstanding increased to 17.7 million from 15.8 million in the
third quarter of 2005. On a sequential basis, net income increased 5%
from $5.3 million in the second quarter of 2006, or up 35% excluding the
$1.2 million of VAT rebates recognized in other income during the second
quarter. Net income performance reflects continued revenue growth and
gross margin improvement.
Revenue for the third quarter was $32.6 million, an increase of $18.3
million or 129% from $14.3 million in the third quarter of 2005. The
increased popularity of the Feihe brand in mainland China continued to
drive revenue growth in the third quarter. Sales quantities increased
101% to 7.6 million kilograms in the third quarter of 2006, up from 3.8
million kilograms in the prior year period, driven by increased sales
quantities of major products. Specifically, sales volume for the Company’s
milk power with nucleotides increased 688%, rice powder increased 82%,
CPP series increased 115%, and the Ca+Zn product increased 202% as
compared to the third quarter of 2005.
Gross profit increased $10.6 million, or 157%, to $17.3 million from
$6.7 million in the third quarter of 2005. Gross margin of 53.2%
compared to 47.3% in the prior year’s period
reflects an increase in sales volume and higher average selling unit
prices that exceeded increases in cost of sales.
Income from operations increased $2.9 million, or 122% to $5.2 million
from $2.4 million in the third quarter of 2005, despite increased
distribution and general and administrative expenses. The Company’s
distribution expenses, which grew 233% during the third quarter on a
year over year basis, reflect continued advertising and promotional
efforts, as well as transportation costs associated with improving
distribution capacity. General and administration expenses, which
increased 68% during the third quarter of 2006 compared to the prior year’s
period, reflect costs associated with increased business activities.
The Company benefited from $477,000 of other income in the third quarter
of 2006 due to sales of raw materials to third parties. Interest and
finance costs were $212,206 during the third quarter, related to
additional convertible debt issued in the third quarter of 2005.
Nine Months Ended September 30, 2006
For the nine months ended September 30, 2006, revenue increased 99% to
$84.6 million from $42.4 million in the first nine months of 2005.
During this same time period, gross profit improved 120% to $44.1
million from $20.0 million. Income from operations increased 84% to
$14.4 million from $7.8 million in the first nine months of 2005, and
net income improved 104% to $15.6 million, or $0.91 per diluted share,
from $7.6 million, or $0.49 per diluted share, in the first nine months
of 2005.
Balance Sheet
As of September 30, 2006, the Company had $23.5 million of cash,
compared to $13.0 million at December 31, 2005 and $16.2 million at June
30, 2005. American Dairy had working capital of approximately $10.4
million in at September 30, 2006. The Company had long term debt of $5.6
million as of September 30, 2006.
Guidance
American Dairy is reiterating its previously announced financial
expectations for 2006.
The Company continues to expect revenue of $120.0 million, up 76% from
$68.0 million in 2005, as well as net income of $20.0 million, up 72%
from $11.6 million in 2005.
The Company’s diluted sharecount increased to
17.7 million in the third quarter of 2006, from 17.1 million in the
second quarter of 2006. Based on this updated diluted sharecount of 17.7
million shares, the Company expects net income per diluted share of
$1.13 in 2006.
American Dairy’s guidance takes into account
the following expectations:
Increased demand for the Company’s products
in the seasonally strong fourth quarter
Continued marketing and advertising expenditure in 2006
Potential VAT rebates in the fourth quarter 2006
About American Dairy, Inc.
American Dairy, Inc. conducts operations in The People's Republic of
China ("China") through its wholly owned subsidiary, Feihe Dairy.
Founded in 1962, Feihe Dairy is one of the leading producers and
distributors of milk powder and soybean products in China. Feihe Dairy
is located in Kedong County, China, and has been in operation since
2001. American Dairy also has a milk powder processing plant, BaiQuan
Feihe Dairy in Kedong County, and also has a milk powder processing
plant in the city of QiQiHaEr, Heilongjiang Province. http://www.feihe.com/
Certain of the statements made herein constitute forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such statements typically involve risks and
uncertainties and may include financial projections or information
regarding our future plans, objectives or performance. Actual results
could differ materially from the expectations reflected in such
forward-looking statements as a result of a variety of factors,
including the risks associated with the effect of changing economic
conditions in The People's Republic of China, variations in cash flow,
reliance on collaborative retail partners and on new product
development, variations in new product development, risks associated
with rapid technological change, and the potential of introduced or
undetected flaws and defects in products, and other risk factors
detailed in reports filed with the Securities and Exchange Commission
from time to time.
AMERICAN DAIRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
ASSETS
September 30,
December 31,
2006
2005
(unaudited)
Current assets:
Cash
$ 23,463,652
$ 12,958,435
Accounts receivable
Trade-net of allowance for bad debts of $318,448 and $309,461,
respectively
6,562,987
4,132,931
Employees
741,169
488,413
Other
268,022
1,516,105
Inventories
15,164,783
9,622,347
Prepaid expenses
340,373
875,031
Advances to suppliers
1,081,964
1,216,172
Other tax refundable
-
500,892
Total current assets
47,622,950
31,310,326
Property and equipment:
Fixed assets, net of accumulated depreciation
36,443,045
34,685,898
Construction in progress
6,052,521
3,373,833
42,495,566
38,059,731
Total assets
$ 90,118,516
$ 69,370,057
See accompanying notes to condensed financial statements.
AMERICAN DAIRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2006 AND DECEMBER 31, 2005
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30,
December 31,
2006
2005
(unaudited)
Current liabilities:
Accounts payable and accrued expenses
$ 13,710,446
$ 11,855,430
Current portion of long term debt
5,071,045
102,466
Advances from related parties
945,024
932,942
Advances from employees
703,535
947,596
Deferred income
3,937,886
12,073,781
Short-term notes and loans payable
12,846,971
7,323,801
Total current liabilities
37,214,907
33,236,016
Long term debt, net of current portion shown above
509,521
5,543,517
Minority interest
417,057
493,500
Stockholders' equity:
Common stock, $.001 par value; 50,000,000 shares authorized;
14,928,245 and 14,132,824 issued and outstanding at September 30,
2006 and December 31, 2005, respectively
14,929
14,133
Additional paid-in capital
14,339,540
9,208,837
Retained earnings
35,823,500
20,268,793
Accumulated other comprehensive income
1,799,062
605,261
Total stockholders' equity
51,977,031
30,097,024
Total liabilities and stockholders' equity
$ 90,118,516
$ 69,370,057
See accompanying notes to condensed financial statements.
