HARBIN, China, April 13, 2011 /PRNewswire-Asia/ -- China Green Material Technologies, Inc. (OTCQB Market: CAGM; "CAGM" or "the Company"), a China-based leader in developing and manufacturing starch-based biodegradable, disposable containers, tableware and packaging materials, today announced financial results for the full year ended December 31, 2010.
Full Year of 2010:
Revenues – Total revenues increased 49.5% to $20.0 million for the year ended December 31, 2010 from $13.4 million in the year ended December 31, 2009. The increased revenues reflect strong reorders from existing customers, orders from seven new customers, and expansion in the supermarket sector. The Company increased average selling prices by approximately 6.4% and tons of volume sold by 40.6% in the year ended December 31, 2010. 99.4% of revenue was derived from the domestic China market and 32.6% came from customized product orders.
Mr. Su Zhonghao, Chief Executive Officer of the Company, declared, "We experienced further acceleration in our revenue growth to 49.5% for the year ended December 31, 2010. This strong momentum reflects growing demand from new and existing customers in China, particularly for the product categories of disposable cups, containers and plates. As we continue to introduce new branded products, which are stronger and less expensive than those from our competitors, we are poised to capture additional market share in the rapidly growing RMB 2.5 billion biodegradable products market in China."
Gross Profit - Gross profit increased 38.3% to $8.8 million for the year ended December 31, 2010 compared to $6.4 million in the year ended December 31, 2009, while gross margin was 43.9% in 2010 versus 47.4% a year ago. The decrease in the gross margin percentage was largely due to an increase in overall production costs by 13.5%, which were mainly caused by higher raw material prices and depreciation and amortization costs.
Operating Expense - Operating expenses totaled $2.1 million, or 10.3% of revenue, for the year ended December 31, 2010 versus $1.0 million, or 7.7% of revenue, for the year ended December 31, 2009. Selling expenses were constant at $0.2 million year-over-year while general and administrative expenses increased to $1.6 million compared to $0.8 million in 2009. The increase in operating expenses included a $0.2 million increase in salaries of non-production personnel and related costs, Zhonghao Bio start-up costs of $0.2 million, and professional fees of $0.4 million for the year ended December 31, 2010.
Operating Income – Operating income increased 26.5% to $6.7 million for the year ended December 31, 2010 from $5.3 million for the year ended December 31, 2009. The operating margin was 33.6% in 2010 versus 39.7% a year ago. Excluding stock compensation, the operating margin was 34.4%, down 5.3% compared to 2009.
Other Income (Expense) - Other expenses were $0.6 million in the year ended December 31, 2010 versus $0.43 million for the year ended December 31, 2009.
Net Income - Net income was $5.2 million for the year ended December 31, 2010 compared to $4.2 million for the year ended December 31, 2009. Adjusted net income (non-GAAP) was $5.8 million, an increase of 26.5% over 2009 adjusted net income. Net income per diluted share was $0.21 for the year ended December 31, 2010 versus net income per diluted share of $0.22 for the year ended December 31, 2009 based on weighted average shares of 24.6 million and 18.7 million, respectively. Adjusted net income per diluted share (non-GAAP) was $0.24 in the year ended December 31, 2010. The increase in share count reflects the issuance of 6.9 million common shares in two private placements completed in the first and second quarters of 2010.
The Company's effective tax rate was 15.0% for the year ended December 31, 2010 versus 15.1% for the year ended December 31, 2009.
"We are focused on expanding our capacity to meet the robust demand for our products. During the year, we substantially completed construction of our new state-of-the-art facility which is located in the Harbin Economic and Technological Development Zone. The new facility brings our production capacity to 20,000 tons of finished products annually, an increase of 122%. To the extent we are able to scale up towards full capacity during 2011; our revenues should increase this year. The facility also allows us to operate more efficiently and provides the ability to fill larger orders from our growing base of domestic and international customers. I am extremely excited about the future growth outlook for our Company," concluded Mr. Su.
Liquidity and Capital Resources:
Cash flow from operations for the year ended December 31, 2010 totaled $4.3 million. As of December 31, 2010, the Company had $12.1 million in cash and cash equivalents, an increase of approximately $4.8 million from the end of 2009, primarily due to net proceeds of $7.3 million from private placements completed during 2010 and cash flow from operations, offset by $8.1 million of equipment and property investments for the new manufacturing facility. The Company had $23.9 million in working capital and no long-term debt as of December 31, 2010.
About China Green Material Technologies, Inc.Website: http://www.sinogreenmaterial.com
China Green Material Technologies, Inc. (CAGM.pk) is a China-based manufacturer of starch-based biodegradable, disposable containers, disposable tableware and disposable packaging materials. Headquartered in Harbin city of China, the Company currently has 245 employees. The Company has developed proprietary biodegradable food packaging materials technologies.
Safe Harbor StatementThis press release contains certain statements that may include 'forward-looking statements' as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," "anticipate," "optimistic," "intend," "will" or similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors 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 risks, other factors and those risks and other factors discussed in the Company's periodic reports that are filed with and available from the Securities and Exchange Commission, including the Annual Report on Form 10-K filed April 12, 2011. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
FINANCIAL STATEMENTS.CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBERT 31, 2010 AND 2009As of Dec 31,20102009AssetsCurrent Assets:Cash and equivalents$
7,321,276Restricted cash4,2663,443Accounts receivable, net10,097,5066,524,510Inventories684,534456,970Other receivables203,844549,288Deferred consulting expense108,036-Other current assets570,596127,507Deferred income taxes147,2074,918Total Current Assets23,906,33414,987,912Deposits for construction301,992-Property and Equipment, Net17,372,32510,394,584Intangible Assets, Net5,103,2785,060,559Know-how Right, Net2,000,6952,160,533Investment - Net15,154310,419Total Assets$
32,914,007Liabilities and Stockholders' EquityCurrent Liabilities:Accounts payable and accrued expenses$
307,140Deferred revenue14,6954,213Advances from a third party1,371,042-Due to stockholders/officers, net208,404300,792Warrants liability95,085-Taxes payable738,647430,408Contingent liabilities1,509,9581,464,768Total Liabilities4,477,1062,507,321Commitments and contingenciesStockholders' EquityPreferred stock $0.001 par value, 20,000,000 shares authorized
and 0 shares issued and outstanding--Common stock, $0.001 par value, 100,000,000 shares authorized,
25,701,025 and 18,711,388 shares issued at December 31, 2010
and 2009, respectively25,70118,711Additional paid-in capital25,191,39217,895,324Reserve funds1,699,0621,152,569Retained earnings12,405,7897,709,729Accumulated other comprehensive income4,900,7283,630,353Total Stockholders' Equity44,222,67230,406,686Total Liabilities and Stockholders' Equity$
32,914,007CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOMEYEARS ENDED DECEMBER 31, 2010 AND 2009Years EndedDec 31,20102009Revenues$
13,407,287Cost of Goods Sold11,252,6257,052,854Gross Profit8,789,4006,354,433Operating ExpensesSelling expenses242,378238,274General and administrative expenses1,647,891792,587Stock based compensation167,163-Total Operating Expenses2,057,4321,030,861Income From Operations6,731,9685,323,572Other Income (Expenses)Interest income8,5865,635Interest expense(316)-Net rental (expense)/income(123,163)24,057Impairment of investment(300,595)-Loss on fixed assets disposal and intangible assets written off(126,728)(459,695)Other
(expense) income, net(21,992)567Total Other Expenses(564,208)(429,436)Income Before Income Taxes6,167,7604,894,136Provision for Income Taxes925,207738,810Net Income$
4,155,326Foreign Currency Translation Adjustment1,270,375(20,380)Comprehensive Income$
4,134,946Net Income Per Common Share -Basic and Diluted -Basic$
0.22Weight Common Shares Outstanding -Basic and Diluted -Basic24,457,76718,711,388 -Diluted24,621,49018,711,388CHINA GREEN MATERIAL TECHNOLOGIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009For The Years Ended Dec 31,20102009Cash flows From Operating Activities:Net Income$
4,155,326Adjustments to reconcile net income to net cashprovided by operating activitiesDepreciation and amortization1,636,6631,320,118Stock based compensation167,163-Deferred income taxes benefits(139,061)(4,915)Bad debt expense(33,068)5,954 Impairment of long-term investment300,595-Amortization of deferred consulting revenue955,468-Changes in warrants fair value(968,420)-Loss on disposal of fixed assets126,72864,444Loss on disposal of intangible assets-395,251Changes in operating assets and liabilitiesAccounts receivable(3,265,653)(1,180,460)Inventories(208,845)(105,859)Other receivables354,545(19,021)Prepaid expenses-(14,467)Other current assets(429,648)(156,153)Accounts payable and accrued expenses221,558(65,133)Deferred revenue10,128(10,308)Tax payable287,242357,040Net Cash Provided by Operating Activities4,257,9484,741,817Cash Flows From Investing Activities:Restricted cash(701)(3,443)Deposit for construction(295,455)-Purchase of property and equipment(8,061,980)(91,736)Deposit for purchase of know-how right-(732,384)Proceeds from sold the property and equipment118,182158,832Net Cash Used in Investing Activities(8,239,954)(668,731)Cash Flows From Financing Activities: Proceeds from stock issued7,135,894- Advance from a third party1,341,364-Repayments of stockholders/officers loans(99,458)(1,025,338)Proceeds from stockholders/officers loans-29,645Net Cash (Used in) Provided by Financing Activities8,377,800(995,693)Net Increase in Cash and Equivalents4,395,7943,077,393Effect of Exchange Rate Changes on Cash and Equivalents373,275(1,161)Cash and Equivalents at Beginning of Year7,321,2764,245,044Cash and Equivalents at End of Year$
7,321,276SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATIONCash paid for Interest$
-Cash paid for Income taxes$
534,610SUPPLEMENTAL SCHEDULE OF NON-CASHINVESTING AND FINANCING ACTIVITIESIssuance of warrants for IR consulting expenses1,063,506 - Incurred contingent liabilities for purchase of know-how right$
1,464,768About Non-GAAP Financial MeasuresThis press release contains non-GAAP financial measures which Company management uses for financial and operational decision making, and as a means to evaluate period-to-period comparisons. The Company believes that these non-GAAP financial measures are useful to investors because they exclude a loss on the disposal of fixed assets and a loss on long-term investments that our management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of CAGM. Accordingly, management excludes these losses when making operational decisions. The Company believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods. In addition, it allows investors to evaluate the Company's performance using the same methodology and information as that used by our management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, our management compensates for these limitations by providing the relevant disclosure of the items excluded.
The following table provides a reconciliation of non-GAAP earnings and earnings per share to the equivalent GAAP measure.
12 Months Ended December 31, 2010:12 months Ended(in thousands, except per share data)
$5,242 $4,155 Loss on investments
$301-Non-cash stock compensation expense
$167-Loss on fixed and intangible asset disposal
$127$460Start-up costs for Zhonghao Biodegradable Materials Co., Ltd
$166Adjusted net income (non-GAAP)
$6,003 $4,615 Net Income per Common Share, Basic and Diluted
$0.21$0.22Effect of adjustments described above
$0.03$0.03Adjusted diluted earnings per share (non-GAAP):Basic$0.24 $0.25 Diluted$0.24$0.25For more information, please contact: Mr. Low Yan Seong, CFO China Green Material Technologies, Inc. Email: email@example.comWeb: http://www.sinogreenmaterial.com Mr. Buddy Lee, Corporate SecretaryChina Green Material Technologies, Inc.Email: firstname.lastname@example.orgOffice: +86-451-5175-0888
|SOURCE China Green Material Technologies, Inc.|
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