Conference Call to be Held Today at 8:00 am ET BEIJING and LOS
ANGELES, Nov. 16 /PRNewswire-FirstCall/ -- American Dairy, Inc.
(NYSE: 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 third quarter of 2009. Third Quarter 2009
Financial Highlights -- Revenue increased 94.1% to $72.1 million
from $37.2 million in 3Q08 -- Gross profit increased 196.6% to
$37.0 million from $12.5 million in 3Q08 -- Gross margin was 51.3%
in 3Q09 compared to 33.6% in 3Q08 -- Income from continuing
operations increased to $3.9 million from a loss of $8.5 million in
3Q08 -- Net income from continuing operations increased to $11.1
million from a loss of $22.1 million in 3Q08 -- EPS per diluted
share increased to $0.52 from a loss of $1.19 in 3Q08 Mr. Leng
You-Bin, the Company's Chief Executive Officer, stated, "We are
pleased with our third quarter results, which reflected our
strengthening competitive position and our trusted, premium
national brands. In the third quarter we continued our focus on
expanding our presence, consumer education and quality control.
Additionally, we remain focused on driving long term profitability
through the growth of our premium brands, which we continue to
strengthen through our ongoing investment in advertising and media,
including national as well as provincial television commercials."
Revenue increased 94.1% to $72.1 million in the third quarter of
2009 from $37.2 million in the third quarter of 2008. Contributions
from milk powder products, which consist primarily of the Company's
higher margin infant formula products, were approximately $55.9
million, or 77.5%, of sales in the third quarter of 2009, up 209%
from $18.1 million, or 48.7% of sales, in the prior year period.
Revenue performance was primarily attributable to an ongoing demand
for the Company's high quality products, the strong market
acceptance of these products, and the Company's increased
distribution network and presence in new geographic areas in China.
On a year over year basis, the Company continued to increase its
market share in the infant formula market, which was disrupted in
the wake of the melamine crisis. Gross profit increased 196.6% to
$37.0 million in the third quarter of 2009 from $12.5 million in
the third quarter of 2008. Gross margin for the third quarter of
2009 was 51.3%, compared to 33.6% in the third quarter of 2008,
reflecting a product mix shift to higher margin infant formula
products. On a sequential basis, compared to gross margin of 58.6%
in the second quarter of 2009, gross margin for the third quarter
of 2009 reflects an increase in the cost of raw milk and select
nutritional ingredients. Income from continuing operations
increased to $3.9 million in the third quarter of 2009 from a loss
of $8.5 million in the prior year period. Sales and marketing
expenses increased 75.2% to $27.5 million in the third quarter of
2009 from $15.7 million in the third quarter of 2008. General and
administrative expenses increased 7.8% to $5.7 million in the third
quarter of 2009 from $5.2 million in the third quarter of 2008.
Operating expenses reflected costs associated with the Company's
continued expansion of its distribution network throughout China,
efforts to drive brand awareness, and non-cash expenses related to
the issuance of performance stock options under the Company's 2009
Stock Incentive Plan. The Company recognized other income of $5.6
million during the third quarter of 2009, which included a
government tax refund of approximately $7.9 million received in the
quarter. In the prior year period, the Company had other expense of
$16.1 million, which included an $8.7 million non-cash loss on
derivatives. Net income from continuing operations for the third
quarter of 2009 was $11.1 million, or $0.52 per diluted share,
compared to a loss of $22.1 million, or ($1.32) per diluted share,
in the prior year period. Net income attributable to ordinary
shareholders increased to $11.1 million, or $0.52 per diluted
share, from a loss of $20.2 million, or ($1.19) per diluted share
in the prior year's period. Nine Months Ended September 30, 2009
Financial Highlights Revenue increased 100.0% to $227.1 million in
the nine months ended September 30, 2009 from $113.6 million in the
same period of 2008. Contributions from milk powder products, which
consist primarily of the Company's higher margin infant formula
products, were approximately $195.5 million, or 86.0%, of sales in
the nine months ended September 30, 2009, up 215.6% from $61.9
million, or 54.5% of sales, in the prior year period. Gross profit
increased 238.9% to $133.7 million in the nine months ended
September 30, 2009 from $39.4 million in the same period of 2008.
Gross margin for the nine months ended September 30, 2009 was
58.9%, compared to 34.7% in the prior year's period, primarily
reflecting a product mix shift to higher margin infant formula
products and a decrease in sales of low margin raw milk powder.
Income from continuing operations increased to $37.0 million in the
nine months ended September 30, 2009, compared to a loss of $3.2
million in the prior year's period. Net income from continuing
operations for the first nine months of 2009 increased to $43.3
million, or $2.21 per diluted share, from a loss of $11.4 million,
or ($0.67) per diluted share, in the prior year's period. Net
income attributable to ordinary shareholders increased to $46.6
million, or $2.38 per diluted share, from a loss of $8.1 million,
or ($0.47) per diluted share in the prior year's period. Balance
Sheet As of September 30, 2009, the Company had cash and cash
equivalents of $43.5 million and total current assets of $181.7
million, compared with cash and cash equivalents of $42.2 million
and total current assets of $160.0 million as of June 30, 2009. In
September 2009, the Company paid down $34.0 million, or 75%, of the
$46.0 million outstanding of its 1% Guaranteed Senior Secured
Convertibles Notes due 2012. The remaining payment, which was
approximately $11.5 million, was completed at the end of October
2009. Additionally, the Company's 7.75% Convertible Notes due 2009
were fully converted as of October 2, 2009 and the Company has no
convertible notes remaining. On August 26, 2009, the Company issued
2.1 million shares of its common stock to Sequoia Capital for an
aggregate purchase price of $63.0 million. The aggregate purchase
price included $47.0 million in cash as well as the conversion of a
$16.0 million bridge loan into equity. Jonathan H. Chou, the
Company's Chief Financial Officer, stated, "We are delighted to
share with investors our financial results and operational
improvements we achieved during the third quarter of 2009. We
strengthened our balance sheet and enhanced our financial
flexibility so that we support our future growth in this unique and
dynamic infant milk formula market." Financial Outlook Today, the
Company adjusted its full year 2009 revenue guidance. The Company
now anticipates that revenue for the full year 2009 will be between
$270 million to $290 million, which represents year over year
growth of 40% to 50%. Mr. Chou concluded, "We believe it is prudent
to adjust our full year revenue expectation today after reviewing
our preliminary October results, combined with recent industry data
that suggests that the seasonal strength we typically experience in
the fourth quarter may be less than previously expected.
Additionally, our fourth quarter comparison is particularly
difficult due to the exceptional growth we exhibited last year, in
the wake of the melamine crisis. With this in mind, our revised
guidance anticipates at least 40% year over year revenue growth,
and we remain confident in our leading competitive position based
on our unique vertically integrated business model. Our addressable
market remains exciting and continues to exhibit strong
fundamentals with compelling long term growth opportunities for
American Dairy." Conference Call Details The Company will hold a
conference call to discuss third quarter results today at 8:00 am
ET. Listeners may access the call by dialing 1-800-211-3767 or
1-719-457-2600 for international callers, access code: 3746752. A
live webcast will also be available through the Company's website
at http://www.americandairyinc.com/ and
http://irpage.net/ady/events_presentations.html. The replay of the
call will be available through November 23, 2009. Listeners may
access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for
international callers, access code: 3746752. About American Dairy,
Inc. American Dairy, Inc. (NYSE:ADY) is one of the leading
producers and distributors of premium infant formula, milk powder,
and soybean, rice and walnut products in the People's Republic of
China. American Dairy conducts operations in China through its
wholly owned subsidiary, Feihe Dairy, and other subsidiaries.
Founded in 1962, Feihe Dairy is headquartered in Beijing, China,
and has processing and distribution facilities in Kedong, Qiqihaer,
Baiquan, Gannan, Longjiang, 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, two dairy farms, 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 90,000 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," "targets," "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 third
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 New York: Ashley M. Ammon: 1-646-277-1227 In
Beijing: Wei-Jung Yang: 86-10-6599-7968 AMERICAN DAIRY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (unaudited) Three months ended Nine months ended September
30, September 30, 2009 2008 2009 2008 US$ US$ US$ US$ Sales
72,110,934 37,153,003 227,119,247 113,568,304 Cost of goods sold
35,129,532 24,685,354 93,427,854 74,119,818 Gross profit 36,981,402
12,467,649 133,691,393 39,448,486 Operating and administrative
expenses: Sales and marketing 27,455,572 15,674,769 79,771,636
32,448,651 General and administrative 5,656,116 5,248,778
16,957,199 10,165,737 Total operating expenses 33,111,688
20,923,547 96,728,835 42,614,388 Income (loss) from Continuing
operations 3,869,714 (8,455,898) 36,962,558 (3,165,902) Other
income (expenses): Interest income 62,248 138,320 273,333 369,739
Interest and finance costs (1,700,702) (5,152,481) (5,114,679)
(15,525,803) Amortization of deferred charges (33,914) (184,897)
(101,742) (554,691) Registration rights penalty - (720,324) -
(2,160,974) Gain (loss) on derivatives (790,000) (8,692,027)
(790,000) 7,015,618 Government subsidy-tax refund (reversal)
7,895,626 (1,495,494) 14,640,034 2,375,240 Other income (expenses),
net 158,410 (22,331) 852,290 421,944 Income (loss) from Continuing
operations before income tax expense and noncontrolling interests
9,461,382 (24,585,132) 46,721,794 (11,224,829) Income tax expense
(benefit) (1,672,167) (2,479,496) 3,502,574 153,879 Net income
(loss) from continuing operations before noncontrolling interests
11,133,549 (22,105,636) 43,219,220 (11,378,708) Noncontrolling
interests 7,548 (14,200) 50,193 (24,402) Net income (loss) from
continuing operations (22,119,836) 43,269,413 (11,403,110)
11,141,097 Net income from Discontinued operations 1,963,565
3,289,908 3,315,595 - Net income (loss) attributable to ordinary
shareholders 11,141,097 (20,156,271) 46,559,321 (8,087,515) Other
comprehensive income (loss): Cumulative currency translation
adjustments 254,556 (3,139,688) 593,949 9,138,266 Change in fair
value of available for sale investments (2,429) (20,159) 40,933
(99,226) Total comprehensive income (loss) 11,393,224 (23,316,118)
47,194,203 951,525 Earnings (loss) per ordinary share - Basic Net
income (loss) from continuing operations 0.57 (1.32) 2.39 (0.67)
Net income from discontinued operations, net of tax - 0.13 0.18
0.20 Net income (loss) 0.57 (1.19) 2.57 (0.47) Earnings (loss) per
ordinary share - Diluted Net income (loss) from continuing
operations 0.52 (1.32) 2.21 (0.67) Net income (loss) from
discontinued operations, net of tax - 0.13 0.17 0.20 Net income
(loss) 0.52 (1.19) 2.38 (0.47) Weighted average ordinary shares
outstanding Basic 19,659,657 16,964,768 18,093,104 16,964,122
Diluted 21,597,188 16,964,768 19,541,775 16,964,122 AMERICAN DAIRY,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) September
30, December 31, 2009 2008 US$ US$ ASSETS Current assets: Cash and
cash equivalents 43,491,803 11,785,408 Notes and loans receivable,
net - 1,493,245 Trade receivables, net of allowance of $1,002,883
and $1,311,331, respectively 32,308,418 12,275,497 Due from related
parties 2,250,874 265,479 Employee receivables 199,563 307,249
Advances to suppliers 27,120,715 24,943,046 Receivable from
discontinued operations - 31,002,897 Inventories, net of allowance
of $546,503 and $575,916, respectively 65,959,828 52,330,333
Prepayments and other current assets 97,218 63,711 Refundable taxes
4,135,779 488,938 Other receivables 6,138,410 4,598,359 Current
assets of discontinued operations - 12,392,384 Total current assets
181,702,608 151,946,546 Investments: Investment in mutual funds -
available for sale 118,437 77,504 Investment at cost 263,249
262,611 381,686 340,115 Property and equipment: Property and
equipment, net 96,780,672 88,289,858 Construction in progress
62,272,749 28,847,959 159,053,421 117,137,817 Biological assets:
Immature biological assets 35,901,697 23,784,479 Mature biological
assets, net 11,589,288 1,483,355 47,490,985 25,267,834 Other
assets: Deferred tax assets 730,491 730,490 Prepaid leases
29,367,017 29,146,748 Goodwill 2,288,380 2,282,838 Deferred
charges, net 5,653 107,396 Long term assets of discontinued
operations - 31,587,018 Total assets 421,020,241 358,546,802
LIABILITIES AND EQUITY Liabilities Current liabilities: Current
maturities of long term debt 3,919,504 4,018,704 Convertible debt
redeemable within one year 4,500,000 17,732,033 Short term debt
11,106,018 73,809,893 Notes and loans payable 39,634,714 8,055,450
Accounts payable 42,127,814 36,643,041 Accrued expenses 9,298,412
10,620,393 Income tax payable 1,367,039 1,185,528 Advances from
customers 3,958,534 9,864,080 Due to related parties 594,057
1,017,399 Advances from employees 469,731 1,016,173 Accrued
employee benefits 2,760,033 2,873,889 Other payable 20,076,776
19,513,681 Current liabilities of discontinued operations -
35,063,603 Total current liabilities 139,812,632 221,413,867 Long
term debt, net of current portion 19,626,770 9,146,034 Long term
tax payable 5,883,747 2,750,887 Deferred income 7,695,346 8,416,492
Contingent share obligation 10,010,000 - Long term liability of
discontinued operations - 395,176 Total liabilities 183,028,495
242,122,456 Commitments and contingencies - - Temporary equity
Redeemable ordinary shares (2,100,000 and 0 shares issued and
outstanding, respectively) 53,780,010 - Equity Shareholders'
equity: Ordinary shares (US$0.001 par value, 50,000,000 shares
authorized; 19,183,492 and 17,253,907 issued and outstanding)
19,184 17,254 Additional paid-in capital 48,366,564 26,758,425
Ordinary share warrants 2,119,485 3,003,448 Statutory reserves
6,861,224 6,861,224 Accumulated other comprehensive income
25,780,937 25,146,055 Retained earnings 100,650,814 54,091,493
Total shareholders' equity 183,798,208 115,877,899 Noncontrolling
interests 413,528 546,447 Total equity 184,211,736 116,424,346
Total liabilities and equity 421,020,241 358,546,802 DATASOURCE:
American Dairy, Inc. CONTACT: New York, Ashley M. Ammon,
+1-646-277-1227, Beijing, Wei-Jung Yang, 86-10-6599-7968, both of
Integrated Corporate Relations, Inc., for American Dairy, Inc. Web
Site: http://www.americandairyinc.com/
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