China Marine Reports Fourth Quarter and Full Year 2012 Financial Results

   China Marine Reports Fourth Quarter and Full Year 2012 Financial Results

PR Newswire

SHISHI, China, March 26, 2013

SHISHI, China, March 26, 2013 /PRNewswire/-- China Marine Food Group Limited
(NYSE MKT: CMFO) ("China Marine" or the "Company"), a manufacturer of
Mingxiang® seafood-based snack foods, Hi-Power® marine algae-based beverages
and a distributor of frozen marine catch, today announced its financial
results for the fourth quarter and full year ended December 31, 2012.

Financial Summary

Fourth Quarter 2012 Results
                            Q4 2012             Q4 2011            CHANGE
Net Sales                   $50.2 million       $64.3 million      -22.0%
Gross Profit                $12.3 million       $7.3 million       +69.4%
Net Income                  $1.7 million        $1.1 million       +50.8%
Diluted EPS*                $0.06               $0.04              +50.0%
Adjusted Net Income**       $4.6 million        $2.3 million       +96.0%
Adjusted Diluted EPS**      $0.15               $0.08              +87.5%
* Diluted EPS calculated for the period is based on 29.7 million shares on
December 31, 2012 and December 31, 2011.
** Adjusted Net Income and Diluted EPS are non-GAAP calculations and do not
include $0.6 million of non-cash, amortization of intangible assets related to
the Company's acquisition in Q4 2012 and Q4 2011, $0.6 million of after-tax
non-cash stock-based compensation expenses in Q4 2011 and $2.2 million of
non-cash intangible assets impairment in Q4 2012. For more information about
the non-GAAP financial measures contained in this press release, please see
"About Non-GAAP Financial Measures" below.

"We closed 2012 with very strong results from our two primary businesses-
Mingxiang® seafood snacks and Hi-Power® beverages," started Mr. Pengfei Liu,
Chairman and CEO of China Marine. "For the second consecutive quarter, sales
of our seafood snacks increased year-over-year, reflecting strength in our
brands and a rebound in the marketplace. We see continued growth opportunities
ahead, driven by further improvements in the market for our products and
expanded distribution in existing and select new markets."

Fourth Quarter 2012 Results

For the quarter ended December 31, 2012, total net revenues, including
Mingxiang®-branded seafood snack foods, Hi-Power® beverages and marine catch
was $50.2 million, down approximately 22.0% from $64.3 million in the prior
year's period. However, sales grew significantly year-over-year in both the
seafood snacks and Hi-Power® beverages businesses.

Seafood Snack Food Segment

China Marine's sale of processed and packaged seafood snack foods generated
$15.9 million in revenue, a 41.6% increase from the fourth quarter of 2011,
representing the second consecutive quarter of year-over-year growth in
seafood snacks revenue. Overall seafood snack food sales have been gradually
recovering to pre-earthquake levels. Sales were particularly higher in Fujian
province as a result of continuous market penetration efforts and marketing
support. Seafood snack foods accounted for 31.7% of total revenues in the
fourth quarter of 2012.

China Marine has maintained its product line of 27 Mingxiang®-branded seafood
jerky snacks sold to consumers at retail locations. Retail points for seafood
snack foods include major supermarket chains, convenience store chains,
general food stores, campus canteens and local corner shops in Fujian,
Zhejiang, Guangdong, Shandong and major prefectures like Shenzhen.

Hi-Power® Beverage Segment

Revenues from the Hi-Power® algae-based beverage line were $15.0 million in
the fourth quarter of 2012, a 154.7% increase compared to $5.9 million in the
fourth quarter of 2011. Hi-Power® sales were negatively affected in the
year-ago period due to consumer concerns regarding plasticizer contamination
in the beverage industry. Sales increased year-over-year both in Fujian and
Zhejiang provinces.

The total numbers of retail end-points for Hi-Power® were about 14,000 on
December 31, 2012. Since 2011, the Company has focused on increasing sales
growth in existing distributors. Hi-Power® beverages are sold and promoted in
major international retailers such as Walmart®, China-based supermarkets like
Trust-Mart®, convenience stores, bars, restaurants, school canteens and local
corner stores which carry Hi-Power® beverages, and certain locations where
Mingxiang®-branded seafood products are also sold.

Gross margin was 38.7% in the fourth quarter of 2012, down 0.5% from 39.2% in
the same period last year due primarily to the increased costs of raw
materials, packaging materials and manufacturing overhead.

Marine Catch Trade Segment

China Marine's frozen marine catch business segment generated $19.3 million in
the fourth quarter of 2012 compared to $47.2 million in the same period a year
ago. The Company purchases and sells marine catch to distributors on an
opportunistic basis. Gross profits were $1.6 million in the marine catch
business during the three months ended December 31, 2012 compared to $1.8
million in the same period a year ago.

Consolidated costs of goods sold totaled $37.9 million for the quarter, or
75.5% of net revenues for the period ended December 31, 2012, which consists
of the cost of raw materials, packaging materials, direct labor and
manufacturing overhead.

Gross profit in the fourth quarter of 2012 was $12.3 million compared to $7.3
million in the fourth quarter of 2011. Consolidated gross margins increased to
24.5% for the fourth quarter of 2012, up from 11.3% for the three months ended
December 31, 2011. Gross margin improvements were a direct result of higher
sales of seafood snacks and Hi-Power® beverages, and lower sales of marine
catch at relatively lower margins.

GAAP net income attributable to China Marine shareholders was $1.7 million in
the three months ended December 31, 2012 compared to $1.1 million net income
in the same period a year ago. Excluding the non-GAAP financial measure as
mentioned above, adjusted net income for the fourth quarter of 2012 were $4.6
million, with adjusted earnings per share of $0.15.

Full Year 2012 Results

FY  2012 Results
                           FY 2012             FY 2011             CHANGE
Net Sales                  $157.3 million      $143.9 million      +9.3%
Gross Profit               $35.8 million       $31.7 million       +12.9%
Net Income                 -$4.5 million       $8.6 million        -152.4%
Diluted EPS*               -$0.15              $0.29               -151.7%
Adjusted Net Income**      $3.4 million        $12.8 million       -73.2%
Adjusted Diluted EPS**     $0.12               $0.43               -72.1%
* Diluted EPS calculated for the period is based on 29.7 million shares on
December 31, 2012 versus 29.5 million shares on December 31, 2011.
** Adjusted Net Income and Diluted EPS are non-GAAP calculations and do not
include $2.5 million of non-cash, amortization of intangible assets related to
the Company's acquisition in FY 2012 and FY 2011, $0.6 million and $1.7
million of after-tax non-cash stock-based compensation expenses in FY 2012 and
FY 2011, respectively, $2.6 million of non-cash goodwill impairment and $2.2
million of non-cash intangible assets impairment in FY  2012. For more
information about the non-GAAP financial measures contained in this press
release, please see "About Non-GAAP Financial Measures" below.

Net revenues for the twelve months ended December 31, 2012 were $157.3 million
compared to $143.9 million in the corresponding period a year ago,
representing a 9.3% increase. The primary reason for the year-over-year growth
in net revenues was a 55.7% increase in sales of Hi-Power® beverages.
Mingxiang®-branded seafood products, Hi-Power® beverages and marine catch
accounted for approximately 32.7%, 29.4% and 37.9% of total sales in fiscal
2012, respectively.

Gross profits were $35.8 million during the full year of 2012, representing a
gross margin of 22.8%, compared to $31.7 million and 22.0%, respectively,
during 2011. The Company was able to partially offset higher raw materials and
packaging costs through manufacturing efficiencies and an improvement in
product mix.

Operating expenses were $39.1 million for the twelve months ended December 31,
2012, up 82.9% compared to $21.4 million in the full year 2011. Sales and
marketing expenses increased from $14.0 million in 2011 to $27.0 million in
2012, reflecting ongoing investments in advertising, marketing and promotions.
The Company had an operating loss of $3.2 million in 2012 compared to an
operating income of $10.4 million in 2011. Excluding $0.6 million of after-tax
non-cash stock-based compensation expenses, $2.5 million non-cash amortization
expense, $2.6 million of non-cash goodwill impairment and $2.2 million of
non-cash intangible assets impairment related to prior acquisition, adjusted
operating income for the twelve months ended December 31, 2012 was $4.7
million.

Net loss and net loss per share attributable to China Marine shareholders for
the twelve months ended December 31, 2012 were $4.5 million and $0.15,
respectively. Non-GAAP adjusted net income was $3.4 million and non-GAAP
adjusted earnings per share was $0.12. The weighted average shares outstanding
were 29.7 million shares for 2012.

Financial Condition

As of December 31, 2012, the Company had $0.9 million in cash compared to $0.6
million as of December 31, 2011. China Marine had $8.8 million of debt
outstanding at December 31, 2012 as a result of short-term loans used for
optimal pricing of marine catch purchases and to maintain the effectiveness of
the facility lines with the banks. Cash used for operations were $4.2 million
during the twelve months of 2012 compared to $8.4 million in the comparable
period a year ago. The primary cause of the year-over-year improvement is
better accounts receivable collection, partially offset by higher inventories.

Working capital was $72.2 million as of December 31, 2012, up from $70.2
million as of December 31, 2011. The current ratio was 4.7 to 1 on December
31, 2012 compared to 9.0 to 1 on December 31, 2011. Accounts receivable were
$54.0 million as of December 31, 2012 compared to $68.6 million as of December
31, 2011. The accounts receivable takes less than three months to collect on
average. Shareholders' equity was $126.7 million at December 31, 2012.

Fourth Quarter and Full Year 2012 Conference Call

Mr. Pengfei Liu, CEO, and Mr. Marco Ku, CFO, will host the conference call. To
attend the call, please use the dial in information below. When prompted, ask
for the "China Marine Food Q4 2012 conference call".

Date:             Wednesday, March 27, 2013
Time:             8:00 am Eastern Time (DST)
Conference Line   +1-877-317-6776
Dial-In (U.S.):
International     +1-412-317-6776
Dial-In:
Conference ID:    "China Marine" or 10026364
Webcast:          http://webcast.mzvaluemonitor.com/Cover.aspx?PlatformId=1011

Please dial in at least 10-minutes before the call to ensure timely
participation.

A playback of the call will be available until 8:00 am ET on April 3, 2013. To
listen, call +1-877-344-7529 within the United States or +1-412-317-0088 when
calling internationally. Please use the replay pin number 10026364. The
Webcast will be available until March 26, 2014.

About China Marine

China Marine Food Group Limited is a food and beverage manufacturer of
Mingxiang® seafood-based snack foods and Hi-Power® marine algae-based health
drinks, and a wholesaler of frozen marine catch in five provinces in the PRC.
Founded in 1994, China Marine has grown steadily and positioned its brands as
a category leader in 3,500 retail food sales points and 14,000 beverage sales
points in China. The Company has received "The Famous Brand" and "Green Food"
awards. Located in Fujian province, it is one of the largest coastal provinces
in the PRC and a vital navigation hub between the East China Sea and the South
China Sea. The Company is committed to the highest standard of quality control
with the ISO9001, ISO14001, HACCP certification and EU export registration.

Forward Looking Statements

This release contains certain "forward-looking statements" relating to the
business of China Marine Food Group Limited and its subsidiary companies,
which can be identified by the use of forward-looking terminology such as
"believes, expects" or similar expressions. Such forward looking statements
involve known and unknown risks and uncertainties, including all business
uncertainties relating to product development, marketing, concentration in a
single customer, raw material costs, market acceptance, future capital
requirements, competition in general and other factors that may cause actual
results to be materially different from those described herein as anticipated,
believed, estimated or expected. Certain of these risks and uncertainties are
or will be described in greater detail in our filings with the Securities and
Exchange Commission. China Marine Food Group Limited is under no obligation to
(and expressly disclaims any such obligation to) update or alter its
forward-looking statements whether as a result of new information, future
events or otherwise. This press release shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of these
securities in any state or jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of such state or jurisdiction.

About Adjusted Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements, which
statements are prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: non-GAAP adjusted net income, and
non-GAAP adjusted diluted EPS. The presentation of this financial information
is not intended to be considered in isolation or as a substitute for, or
superior to, the financial information prepared and presented in accordance
with GAAP. The Company uses these non-GAAP financial measures for financial
and operational decision making and as a means to evaluate period-to-period
comparisons. Management believes that these non-GAAP financial measures
provide meaningful supplemental information regarding the Company's
performance and liquidity by excluding certain expenses and expenditures that
may not be indicative of "recurring core business operating results", meaning
operating performance excluding non-cash amortization charges for intangibles,
after-tax non-cash stock-based compensation expenses, and non-cash goodwill
and intangible assets impairment. China Marine believes that both management
and investors benefit from referring to these non-GAAP financial measures in
assessing performance and when planning, forecasting and analyzing future
periods. These non-GAAP financial measures also facilitate management's
internal comparisons to historical performance and liquidity as well as
comparisons to competitors' operating results. The Company believes these
non-GAAP financial measures are useful to investors both because (1) they
allow for greater transparency with respect to key metrics used by management
in its financial and operational decision making and (2) they are used by our
institutional investors and the analyst community to help them analyze the
health of the business.

- Financial Statements Follow -

CHINA MARINE FOOD GROUP LIMITED
CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars ("US$"))
                                                  December 31,
                                                  2012           2011
ASSETS
Current assets:
Cash and cash equivalents                         $ 880,259      $ 586,914
Accounts receivable, net                            54,045,852     68,643,678
Inventories                                         36,415,013     8,886,234
Prepaid expenses and other current assets           400,664        849,419
Total current assets                                91,741,788     78,966,245
Property, plant and equipment, net                  35,737,296     11,199,244
Land use rights, net                                2,966,805      3,023,569
Construction in progress                            158,702        22,923,143
Intangible assets, net                              15,616,259     20,225,220
Goodwill                                            -              2,553,757
TOTAL ASSETS                                      $ 146,220,850  $ 138,891,178
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings                             $ 8,760,375    $ 2,550,257
Accounts payable, trade                             4,227,177      2,583,549
Amount due to a shareholder                         -              50,361
Income tax payable                                  321,306        174,525
Accrued liabilities and other payables              6,217,260      3,424,288
Total current liabilities                           19,526,118     8,782,980
Commitments and contingencies
Shareholders' equity:
Preferred stock, $0.001 par value; 1,000,000
shares authorized;
 0 shares issued and outstanding as of          -              -
December 31, 2012 and
 2011
Common stock, $0.001 par value; 100,000,000
shares authorized;
 29,722,976 and 29,697,976 shares issued and    29,723         29,698
outstanding as of
 December 31, 2012 and 2011
Additional paid-in capital                          50,097,677     50,074,952
Statutory reserve                                   9,696,177      9,696,177
Accumulated other comprehensive income              12,946,218     11,897,382
Retained earnings                                   53,568,622     58,053,435
Total China Marine Food Group Limited               126,338,417    129,751,644
shareholders' equity
Non-controlling interests                           356,315        356,554
Total shareholders' equity                          126,694,732    130,108,198
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $ 146,220,850  $ 138,891,178



CHINA MARINE FOOD GROUP LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Currency expressed in United States Dollars ("US$"))
                                              Year Ended December 31,
                                              2012             2011
REVENUE, NET
Processed seafood products                    $ 51,441,395     $ 58,967,200
Marine catch                                    59,657,283       55,304,114
Algae-based beverage products                   46,218,669       29,676,358
                                                157,317,347      143,947,672
COST OF REVENUE (INCLUSIVE OF DEPRECIATION
AND AMORTIZATION)
Processed seafood products                      (36,376,898)     (41,411,881)
Marine catch                                    (56,673,983)     (53,057,915)
Algae-based beverage products                   (28,436,881)     (17,753,909)
                                                (121,487,762)    (112,223,705)
GROSS PROFIT                                    35,829,585       31,723,967
OPERATING EXPENSES:
Depreciation and amortization                   (2,782,333)      (2,714,603)
Sales and marketing                             (26,968,313)     (14,045,894)
General and administrative                      (3,864,245)      (2,576,019)
Stock-based compensation                        (667,246)        (2,034,197)
Goodwill impairment                             (2,571,488)      -
 Intangible assets impairment                 (2,223,879)      -
TOTAL OPERATING EXPENSES                        (39,077,504)     (21,370,713)
(LOSS) INCOME FROM OPERATIONS                   (3,247,919)      10,353,254
OTHER INCOME (EXPENSES):
Subsidy income                                  15,866           14,719
Rental income                                   198,940          101,326
Interest income                                 86,517           154,515
Interest expense                                (439,848)        (11,483)
(LOSS) INCOME BEFORE INCOME TAXES               (3,386,444)      10,612,331
INCOME TAX EXPENSE                              (1,098,608)      (2,048,956)
NET (LOSS) INCOME                               (4,485,052)      8,563,375
Less: net loss attributable to                  239              240
non-controlling interests
NET (LOSS) INCOME ATTRIBUTABLE TO CHINA       $ (4,484,813)    $ 8,563,615
MARINE FOOD GROUP LIMITED
Other comprehensive income:
- Foreign currency translation gain           1,048,836        4,494,800
COMPREHENSIVE (LOSS) INCOME                   $ (3,435,977)    $ 13,058,415
Net (loss) income per share attributable to
China Marine Food Group Limited
- Basic                                     $ (0.15)         $ 0.29
- Diluted                                   $ (0.15)         $ 0.29
Weighted average shares outstanding
- Basic                                       29,708,768       29,514,744
- Diluted                                     29,708,768       29,514,744



CHINA MARINE FOOD GROUP LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars ("US$"))
                                                Year Ended December 31,
                                                2012            2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                               $ (4,485,052)   $ 8,563,375
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization                     3,327,840       3,014,783
Stock issued for service                          22,750          51,800
(Reversal of) Allowance for doubtful accounts     (73,356)        101,071
Loss on disposal of property, plant and           -               22,045
equipment
Compensatory stock awards                         -               2,646,000
Goodwill impairment                               2,571,488       -
 Intangible assets impairment                   2,223,879       -
Changes in operating assets and liabilities:
Account receivable                                14,671,182      (20,214,210)
Inventories                                       (27,528,779)    1,106,636
Prepaid expenses and other current assets         448,755         (743,779)
Accounts payable, trade                           1,643,628       (1,181,173)
Income tax payable                                146,781         (363,226)
Accrued liabilities and other payables            2,792,972       (1,434,406)
Net cash used in operating activities             (4,237,912)     (8,431,094)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment         (172,991)       (36,717)
Cash paid to construction in progress             (2,133,528)     (10,968,232)
Net cash used in investing activities             (2,306,519)     (11,004,949)
CASH FLOW FROM FINANCING ACTIVITIES:
Repayment of amount due to a shareholder          (50,361)        (211,428)
Proceeds from short-term borrowings               8,750,099       2,550,257
Repayment on short-term borrowings                (2,570,327)     -
Net cash provided by financing activities         6,129,411       2,338,829
NET CHANGE IN CASH AND CASH EQUIVALENTS           (415,020)       (17,097,204)
Effect of exchange rate changes in cash and       708,365         2,127,346
cash equivalents
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR      586,914         15,556,772
CASH AND CASH EQUIVALENTS, END OF YEAR          $ 880,259       $ 586,914
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for income taxes                      $ 951,827       $ 2,412,182
Cash paid for interest                          $ 439,848       $ 11,483
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING TRANSACTIONS
Transfer from construction in progress to       $ 24,897,969    $ 1,812,921
property, plant and equipment
Accrual of property, plant and equipment        $ 737,798       $ -

For more information, please contact:

COMPANY

Mr. Marco Hon Wai Ku, CFO

China Marine Food Group Limited
Suite 815, 8th Floor, Ocean Centre, Harbour City, Tsimshatsui, Kowloon, HONG
KONG
Tel: +852-2111-8768
Email: marco.ku@china-marine.cn
Web: www.china-marine.cn

INVESTOR RELATIONS

John Mattio, SVP
MZ North America
Tel: +1-212-301-7130
Email: john.mattio@mzgroup.us
Web:www.mzgroup.us

SOURCE China Marine Food Group Limited

Website: http://www.china-marine.cn
Website: http://webcast.mzvaluemonitor.com/Cover.aspx?PlatformId=1011
Website: http://www.mzgroup.us
 
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