- 1Q09 Sales Increase 191% to $113.8 Million vs $39.1 Million in
1Q08 - BEIJING and LOS ANGELES, May 14 /PRNewswire-FirstCall/ --
American Dairy, Inc. (NYSE Arca: ADY) ("American Dairy" or the
"Company"), one of the leading producers and distributors of
premium infant formula, milk powder and soybean, rice and walnut
products in China, today announced financial results for the first
quarter 2009. Sales increased 191.1% to $113.8 million in the first
quarter 2009 from $39.1 million in the first quarter of 2008. Sales
performance reflects the Company's expanding market areas and
distribution network through China and increased demand for high
quality products, as well as an increase in sales quantities of the
Company's high profit margin products, such as infant formula and
other milk powders. Specifically, the Company's milk powder sales
increased 318.4% from the prior year period to $107.6 million, and
contributed to 94.5% of total sales in the first quarter of 2009,
up significantly from contributing 65.7% of total sales in the
first quarter of 2008. Mr. Leng You-Bin, the Company's Chief
Executive Officer, stated, "Our first quarter 2009 sales reflect
consumers' flight to quality at the height of the melamine crisis
in China. Feihe's consistent quality standards, trusted brand name,
secure raw milk supply and ability to meet increased demand,
allowed us to drive revenue growth and report record financial
results caused by the short-term disruption in the market. The
first quarter's growth rate was exceptional, and we expect the
second and third quarters to trend in line with historical results,
in which we deliver year over year growth. We are focused on
consistent and sustainable growth over the long term, particularly
measured on an annual basis and not quarter to quarter." Mr. Leng
continued, "We believe the addressable market for infant formula is
currently about $5.5 billion in China, and is projected to grow to
around $12.0 billion through 2014. Our goal is to capture as much
of this addressable market as possible and to build American Dairy
into the leading infant formula provider in China. To achieve these
goals, we intend to enhance our distribution capabilities into
first-tier PRC markets, strengthen our premium-quality brand
awareness particularly in southern and western China, expand our
production capabilities by investing in world-class production
processes, and strategically align sourcing, production and
distribution by region." Gross profit increased 401.5% to $72.6
million in the first quarter of 2009 from $14.5 million in the
first quarter of 2008. Gross margin for the first quarter of 2009
was 63.76%, compared to 37.02% in the prior year's period. Gross
profit margin performance reflects increasing sales of higher
margin infant formula products. Income from continuing operations
increased 523.1% to $32.0 million in the first quarter of 2009 from
$5.1 million in the prior year period. Sales and marketing expenses
increased 322.3% to $31.6 million in the first quarter of 2009 from
$7.5 million in the first quarter of 2008. General and
administrative expenses increased 384.5% to $9.0 million in the
first quarter of 2009 from $1.9 million in the first quarter of
2008. Operating expenses in the first quarter of 2009, as compared
to the first quarter of 2008, reflect a number of new initiatives
to reposition the Company's brand on a nationwide basis, in Tier I,
II and III cities in China, as well as increased headcount versus
the prior year period. The Company recognized other expenses of
$370,000 during the first quarter of 2009, compared to other income
of $3.9 million in the first quarter of 2008. The year over year
change is primarily attributable to a decrease in gain on
derivatives of $9.0 million offset by a decrease in interest and
finance costs of approximately $3.7 million. Net income for the
first quarter of 2009 increased 282.0% to $27.8 million, or $1.55
per diluted share, from $7.3 million, or $0.41 per diluted share,
in the prior year's period. As of March 31, 2009, the Company had
cash and cash equivalents of $54.1 million and total current assets
of $184.3 million, compared with cash and cash equivalents of $11.8
million and total current assets of $151.9 million as of December
31, 2008. The Company believes that cash generated from operations
and existing cash on hand is sufficient to fund current
obligations. The Company paid $15.3 million in April 2009 related
to the restructuring of its 1% Guaranteed Senior Secured
Convertibles Notes, and remaining payments include $15.3 million
due July 2009 and $46.0 million due October 2009. The Company also
has access to a line of credit with the Construction Bank of China
and other Chinese banks to fund its operations. Additionally, the
Company received approximately $32.0 million in May 2009 related to
the sale of the Company's Moveup subsidiary. Please refer to the
Company's Form 10-Q for the first quarter 2009 for additional
details. Jonathan Chou, the Chief Financial Officer of American
Dairy, stated, "We believe much of the dairy market in China is
underserved, particularly with respect to infant formula. We have
successfully capitalized on the increased demand for high quality
products in the recent past, operating our milk production
facilities at maximum capacity, and aggressively branding our
products in the premium and super-premium categories. Going
forward, we believe we can continue to drive market share gains
with increased production capacity and strengthened premium-quality
brand awareness. These efforts will require a degree of
reinvestment in our operations and our revenue performance and cash
generation allows us to invest in key, strategic areas so that we
ultimately drive long-term shareholder value." Chou concluded, "As
we move through the remainder of the year, we are confident that we
have a solid team to navigate the growing dairy market in China. We
recently adopted an option plan so that we attract and retain top
talent across the organization. We have a stronger accounting and
finance team than ever before, and in 2008 we engaged a big four
accounting firm and made several new hires to address areas of
improvement in our internal controls. We also intend to meet
regularly with investors and host an analyst day in the U.S. or in
China later this year." Investor questions and inquiries should be
directed toward management by contacting the Company's investor
relations representatives at 1-203-682-8208. About American Dairy,
Inc. American Dairy, Inc. (NYSE Arca: ADY) is one of the leading
producers and distributors of premium infant formula, milk powder,
and soybean, rice walnut products in the People's Republic of
China. American Dairy conducts operations in China through its
wholly owned subsidiary, Feihe Dairy. Founded in 1962, Feihe Dairy
is headquartered in Beijing, China, and has processing and
distribution facilities in Kedong, Qiqihaer, Baiquan, Gannan,
Shanxi, and Langfang. Using proprietary processing techniques,
American Dairy makes products that are specially formulated for
particular ages, dietary needs and health concerns. American Dairy
has over 200 company-owned milk collection stations, six production
facilities with an aggregate milk powder production capacity of
approximately 1,220 tons per day and an extensive distribution
network that reaches over 50,000 retail outlets throughout China.
For more information about American Dairy, please visit
http://www.americandairyinc.com/. Cautionary Note Regarding
Forward-Looking Statements This document contains forward-looking
information about the Company's operating results and business
prospects that involve substantial risks and uncertainties.
Statements that are not purely historical are forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended. These statements include, but are not
limited to, statements about the Company's plans, objectives,
expectations, strategies, intentions or other characterizations of
future events or circumstances and are generally identified by the
words "may," "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "could," "would," and similar
expressions. Because these forward-looking statements are subject
to a number of risks and uncertainties, the Company's actual
results could differ materially from those expressed or implied by
these forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to,
those discussed under the heading "Risk Factors" in the Company's
annual report on Form 10-K for the fiscal year ended December 31,
2008, quarterly report on Form 10-Q for its first quarter in 2009,
and in current reports on Form 8-K filed with the United States
Securities and Exchange Commission and available at
http://www.sec.gov/. The Company assumes no obligation to update
any such forward-looking statements. CONTACT Integrated Corporate
Relations, Inc. In the United States: Ashley Ammon: 1-203-682-8200
In China: Wei-Jung Yang: 86-10-6599-7968 AMERICAN DAIRY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2009
2008 US$ US$ (unaudited) ASSETS Current assets: Cash and cash
equivalents 54,112,534 11,785,408 Notes and loans receivable, net -
1,493,245 Trade receivables, net of allowance of $3,491,543 and
$670,113, respectively 9,628,016 12,275,497 Due from related
parties 1,902,701 265,479 Employee receivable 596,526 307,249
Advances to suppliers 26,516,230 24,943,046 Receivable from
discontinuing operations 31,041,845 31,002,897 Inventories, net
46,925,871 52,330,333 Prepayments and other current assets 89,776
63,711 Refundable taxes 291,321 488,938 Deposit for equity
investment 2,191,189 Other receivables 1,427,143 4,598,359 Current
assets of discontinuing operations 9,554,368 12,392,384 Total
current assets 184,277,520 151,946,546 Investments: Investment in
mutual funds - available for sale 97,631 77,504 Investment at cost
262,942 262,611 360,573 340,115 Property and equipment: Property
and equipment, net 88,282,947 88,289,858 Construction in progress
39,210,806 28,847,959 127,493,753 117,137,817 Biological assets:
Immature biological assets 19,785,266 23,784,479 Mature biological
assets, net 7,454,456 1,483,355 27,239,722 25,267,834 Other assets:
Deferred tax assets 730,490 730,490 Prepaid leases 29,018,719
29,146,748 Goodwill 2,285,706 2,282,838 Deferred charges, net
73,483 107,396 Long term assets of discontinuing operations
31,626,665 31,587,018 Total assets 403,106,631 358,546,802
LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Current
liabilities: Current maturities of long term debt 4,023,752
4,018,704 Convertible debt redeemable within one year 17,888,021
17,732,033 Short term debts 71,683,981 73,809,893 Notes and loans
payable 13,908,184 8,055,450 Accounts payable 30,133,611 36,643,041
Accrued expenses 14,145,168 10,620,393 Income tax payable 3,309,098
1,185,528 Advances from customers 6,259,924 9,864,080 Due to
related parties 338,211 1,017,399 Advances from employees 484,259
1,016,173 Accrued employee benefits 2,394,168 2,873,889 Other
payables 29,141,932 19,513,681 Current liabilities of discontinuing
operations 32,250,818 35,063,603 Total current liabilities
225,961,128 221,413,867 Long term debt, net of current portion
12,976,584 9,146,034 Long term tax payable 4,154,934 2,750,887
Deferred income 14,997,192 8,416,492 Long term liability of
discontinuing operations 395,176 395,176 Total liabilities
258,485,014 242,122,456 Equity Ordinary shares (US$0.001 par value,
50,000,000 shares authorized; 17,253,907 issued and outstanding as
of March 31, 2009 and December 31, 2008) 17,254 17,254 Additional
paid-in capital 26,899,114 26,758,425 Ordinary share warrants
3,003,448 3,003,448 Statutory reserves 6,861,224 6,861,224
Accumulated other comprehensive income 25,442,002 25,146,055
Retained earnings 81,878,276 54,091,493 Total shareholders' equity
144,101,318 115,877,899 Minority interests 520,299 546,447 Total
equity 144,621,617 116,424,346 Total liabilities and equity
403,106,631 358,546,802 AMERICAN DAIRY, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) For
the period ended March 31, 2009 2008 US$ US$ Sales 113,821,847
39,100,654 Cost of goods sold 41,244,269 24,627,183 Gross profit
72,577,578 14,473,471 Operating and administrative expenses: Sales
and marketing 31,639,888 7,491,684 General and administrative
8,978,204 1,852,921 Total operating expenses 40,618,092 9,344,605
Income from continuing operations 31,959,486 5,128,866 Other income
(expenses): Interest income 92,317 40,809 Interest and finance
costs (1,585,546) (5,276,718) Amortization of deferred charges
(33,914) (184,897) Registration rights penalty - (720,325) Gain on
derivatives - 9,000,786 Government subsidy-tax refund 730,289
560,792 Other income, net 424,137 509,223 Income from continuing
operations before income tax expenses and minority interests
31,586,769 9,058,536 Income tax expenses 3,829,348 1,772,076 Net
income from continuing operations before minority interests
27,757,421 7,286,460 Minority interests 26,148 (13,179) Net income
from continuing operations 27,783,569 7,273,281 Net income (loss)
from discontinuing operations 3,214 (1,776) Net income attributable
to ordinary shareholders 27,786,783 7,271,505 Other comprehensive
income: Cumulative currency translation adjustments 275,917
7,763,882 Change in fair value of available for sale investments
20,030 (46,117) Total comprehensive income 28,082,730 14,989,270
Earnings per ordinary share - Basic Income from continuing
operations $1.61 $0.43 Income from discontinuing operations, net of
tax $0.00 $0.00 Net income $1.61 $0.43 Earnings per ordinary share
- Diluted Income from continuing operations $1.55 $0.41 Income from
discontinuing operations, net of tax $0.00 $0.00 Net income $1.55
$0.41 Weighted average ordinary shares outstanding Basic 17,253,907
16,962,823 Diluted 17,926,990 17,588,852 DATASOURCE: American
Dairy, Inc. CONTACT: United States, Ashley Ammon, +1-203-682-8200,
or China, Wei-Jung Yang, +86-10-6599-7968, both of Integrated
Corporate Relations, Inc., for American Dairy, Inc. Web Site:
http://www.americandairyinc.com/
Copyright