TORONTO, ONTARIO -- (Marketwire) -- 09/26/11 -- Hanfeng Evergreen Inc. (TSX: HF) ("Hanfeng" or the "Company") today reported its financial results for the fourth quarter and year ended June 30, 2011. All amounts are in Canadian dollars unless otherwise noted.
Summary Financial Results
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(in thousands in $Cdn except
per share data and average
gross profit per metric ton For the 3 month period For the 12 month period
("MT") ended June 30 ended June 30
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2011 2010 2011 2010
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Sales $53,733 $83,923 $246,800 $270,405
Gross profit 6,961 12,214 30,699 41,765
EBITDA(1) 4,720 11,847 25,964 38,708
Net Income 2,328 9,598 12,404 29,305
Basic EPS $0.04 $0.15 $0.20 $0.47
Diluted EPS $0.04 $0.15 $0.20 $0.47
Non-GAAP EPS(2) $0.05 $0.15 $0.28 $0.49
Avg. gross profit per MT in
RMB-SCR(3) yen 477 yen 430 yen 417 yen 435
Avg. gross profit per MT in
RMB-NE(3) yen 191 yen 207 yen 145 yen 202
(1) Earnings before interest, taxes, depreciation, and amortization
("EBITDA") is a non-GAAP financial measure, which the Company believes
is meaningful information for purposes of performance evaluation and it
allows for comparisons of the Company's performance to the industry as
it eliminates the impact of financing decisions, capital structure and
the cost basis of assets. Hanfeng calculates it by adding (1) net
income, (2) interest expense reported on the income statements (or
deducting interest income), (3) amortization expense reported as part of
cost of goods sold on the income statements, (4) amortization expense
reported as a line item on the income statements; (5) income tax expense
reported on the income statements, (6) Property, plant and equipment and
intangibles write-down and (7) and by deducting foreign exchange gain
(loss). This might not be the same definition used by other companies.
(2) Non-GAAP EPS is calculated by adding back the net of tax impact of non-
cash, fixed asset and intangible write-downs to basic earnings per share
("EPS").
(3) Excludes the gross profit per metric ton for the Indonesian joint
venture operations. RMB refers to the Renminbi of the People's Republic
of China. SCR refers to Slow and Controlled Release fertilizer products.
NE refers to Nitrogen Enhanced Coated Urea.
Sales for the quarter ended June 30, 2011 decreased to $53.7 million from $83.9 million for the same quarter of fiscal 2010. The decrease from the comparative period in 2010 is primarily attributable to the negative impact on production (resulting in lower sales volumes) from the Heilongjiang maintenance turnaround which began in the fourth quarter of fiscal 2011, as well as the permanent shut-down of the NPK prill tower at the Company's Jiangsu facility in the second quarter of fiscal 2011, which were slightly offset by an 11 percent increase in the average selling price for Hanfeng's slow and controlled release fertilizer ("SCR") and an 18 percent increase in the average selling price of its nitrogen enhancer ("NE") product in RMB.
Gross margin per metric ton for SCR was RMB 477, an increase of RMB 47 per metric ton or 11 percent from the comparative period last year and consistent with those reported in the third quarter of fiscal 2011. Gross margin per metric ton for NE products was RMB 191 in the fourth quarter of fiscal 2011, up RMB 27 per metric ton or 16 percent from RMB 164 in the third quarter of fiscal 2011 due to lower nitrogen enhancer material costs and an improvement in selling prices.
EBITDA in the fourth quarter of fiscal 2011 was $4.7 million versus $11.8 million in the fourth quarter of fiscal 2010 due to lower sales revenue, as explained above, the costs of and lost production due to the Heilongjiang maintenance turnaround, as well as increased general and administrative expenses related to the new Indonesia joint venture which is currently in its ramp up phase and not yet operating at normal capacity. Net income in the fourth quarter of fiscal 2011 was $2.3 million as compared to $9.6 million during the same quarter in fiscal 2010. As a result, EPS is $0.04 per share for the fourth quarter of fiscal 2011, compared to $0.15 for the same quarter during fiscal 2010. Non-GAAP EPS was $0.05 per share for the fourth quarter of fiscal 2011.
Sales revenue in fiscal 2011 was $246.8 million compared to $270.4 million in the year ended June 30, 2010. The decrease is primarily the result of a shift in sales mix during the year ended June 30, 2011 from higher-priced SCR products to lower-priced NE products, as well as a reduction in total tons sold, and slightly offset by a higher selling price per metric ton for both SCR (4% higher in fiscal 2011 versus fiscal 2010 in RMB) and NE products (11% higher in fiscal 2011 versus fiscal 2010 in RMB), as well as the negative impact of the maintenance turnaround at Heilongjiang.
EBITDA for the year ended June 30, 2011 was $26.0 million compared to $38.7 million in the year ended June 30, 2010. The decrease in EBITDA is mainly due to reduced gross margins caused by the large volume of discounted product sold to a new customer in the second quarter of fiscal 2011, and increased general and administrative expenses related to the new Indonesia joint venture, as well as the maintenance turnaround at the Heilongjiang plant. Net income decreased to $12.4 million and EPS was $0.20 for the year ended June 30, 2011 versus $29.3 million and $0.47 for fiscal 2010. Non-GAAP EPS was $0.28 per share for fiscal 2011.
Cash was $65.5 million as at June 30, 2011, compared to $49.0 million as at June 30, 2010 and $40.6 million as at March 31, 2011. Additionally, the Company, through its subsidiaries based in China, has two undrawn lines of credit with Chinese banks totaling $98.5 million. As at June 30, 2011, Hanfeng reported a total of $10.5 million in debt related to its pro rata share (34%) of a working capital loan for the Indonesia joint venture facility.
Liquidity and Capital Resources
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In thousands of Canadian dollars except for
ratios June 30, 2011 June 30, 2010
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Current ratio(1) 28.2:1 41.8:1
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Cash 65,517 49,037
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Working capital 185,128 166,695
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Total assets 297,638 286,781
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Total debt(2) 10,527 nil
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Total equity 280,190 282,596
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Total debt / Total equity 3.8% n/a
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Notes:
(1) Current ratio = Current Assets / Current Liabilities
(2) Total debt does not include accounts payable, accrued liabilities,
advances from customers, income tax payable and future income tax
liability.
The Company will hold a conference call to discuss the financial results on Tuesday, September 27, 2011 at 10:00 a.m. Eastern Daylight Time (EDT). Mr. Niral Merchant, CFO and Mr. Loudon Owen, Non-Executive Chairman of the Board of Directors will host the call, and invite analysts and investors to participate in the conference call.
Date: Tuesday, September 27, 2011 Time: 10:00 am, Eastern Daylight Time Dial in Number: 1-888-298-3451 or 1-719-457-2657 Taped Replay: 1-877-870-5176 or 1-858-384-5517 Taped Replay Pass Code: 4337214 Webcast Presentation Link: http://viavid.net/dce.aspx'sid=00008CE0
Hanfeng's yearend financial statements and MD&A have been filed on SEDAR and will be available at www.sedar.com.
About Hanfeng Evergreen Inc.
Hanfeng is a leading producer and supplier of value-added fertilizer solutions in emerging markets. It is the largest producer of slow and controlled release fertilizer in two of world's most significant agricultural markets: the People's Republic of China ("China") and the Republic of Indonesia. As the first company to introduce slow and controlled release fertilizers into China's agriculture market, Hanfeng has established itself both as a market leader and innovator. A Canadian Company, Hanfeng is headquartered in Toronto, Ontario and its shares trade on the Toronto Stock Exchange under the ticker HF. www.hanfengevergreen.com.
This press release contains forward-looking statements based on current expectations. Forward looking statements include, without limitation, statements evaluating market and general economic conditions, and statements regarding growth strategy and future-oriented projected revenue, costs and expenditures. Actual results could differ materially from those projected and should not be relied upon as a prediction of future events. A variety of inherent risks, uncertainties and factors, many of which are beyond Hanfeng's control, affect the operations, performance and results of Hanfeng and its business, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. Some of these risks, uncertainties and factors include the impact or unanticipated impact of: current, pending and proposed legislative or regulatory developments in the jurisdictions where Hanfeng operates, in particular in China and the Republic of Indonesia; changes in tax laws; political conditions and developments; intensifying competition from established competitors and new entrants in the fertilizer industries; technological change; currency value fluctuation and changes in foreign exchange restrictions; changes in Chinese government support or restrictions on foreign investment; general economic conditions worldwide, as well as in China and South East Asia; Hanfeng's success in developing and introducing new products and services, constructing and operating new manufacturing facilities, expanding existing distribution channels, developing new distribution channels and realizing increased revenue from these channels. This list is not exhaustive of the factors that may affect any of Hanfeng's forward-looking statements. Risks and uncertainties about Hanfeng's business are more fully discussed in the Company's disclosure materials, including its annual information form and MD&A, filed with the securities regulatory authorities in Canada. Hanfeng undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results or for any other reason. Readers are cautioned not to put undue reliance on forward-looking statements.
Contacts:
Hanfeng Evergreen Inc.
Niral V. Merchant
Chief Financial Officer
+1 (416) 368-8588
nmerchant@hanfengevergreen.com
www.hanfengevergreen.com
Kevin O'Connor
Investor Relations
+1 (416) 962-3300
ko@spinnakercmi.com
