HQ Sustainable Maritime Industries, Inc. (HQS) Announces Third Quarter 2010 Financial Results
SEATTLE, WA–(Marketwire – 11/09/10) – HQ Sustainable Maritime Industries, Inc. (AMEX:HQS – News) (“HQS” or the “Company”), a leading producer of functional, sustainable Tilapia biomass, including fish and personal healthcare products, today reported financial results for the third quarter ended September 30, 2010.
Third Quarter 2010 Results
For the third quarter of 2010, sales increased 27% to $28.2 million, compared to $22.2 million for the third quarter of the prior year. The increase in sales was primarily the result of strength from the new feed products added in late 2009.
Aquaculture product segment sales decreased by 4% to $13.4 million, compared to $14.0 million in the third quarter of 2009. The aquaculture product segment sales decrease is primarily related to an overall volume reduction of shrimp and ocean caught fish products sold in third quarter of 2010 compared to the third quarter of 2009, slightly offset by an increase in tilapia sales.
Health and bio-product segment sales increased by 6% to $8.6 million in the third quarter of 2010, compared to $8.1 million in the same period last year. In addition, the Company’s new feed mill generated sales of $6.2 million.
Gross profit for the third quarter of 2010 decreased 3% to $9.5 million, compared to $9.8 million in the third quarter of the prior year. The Company’s gross profit ratio decreased to 34% in the third quarter of 2010 versus 44.0% in the third quarter of 2009. Although higher sales were recognized in the third quarter of 2010, the gross profit ratio decreased mostly due to a lower mix of segment gross profit from the feed products operations in the third quarter of 2010.
For the third quarter of 2010 operating income increased by $2.9 million or 60% to $7.8 million compared to $4.9 million in the same period of the prior year. The operating income increase experienced in the third quarter of 2010 was primarily due to the recovery of bad debt, as the aging of receivables improved compared to the prior year period, which was slightly offset by lower gross profit. In the third quarter of 2010, the Company realized a recovery of $2.0 million in doubtful accounts compared to the recognition of a potential loss of $1.3 million in doubtful accounts in the third quarter of 2009.
EBITDA for the third quarter of 2010 increased 63% or $3.1 million to $8.0 million, compared to $4.9 million for the same period last year.
Net income for the third quarter of 2010 increased by 70% or $2.8 million to $6.9 million, or $0.40 per diluted share calculated on 16.6 million diluted shares compared to net income of $4.0 million, or $0.27 per diluted share calculated on 14.8 million diluted shares in the third quarter of 2009. Although the overall gross profit was less in the third quarter of 2010, the bad debt recovery had the most significant positive impact on the current quarterly results.
“We are extremely pleased with our third quarter financial performance. Our management team continues to execute on our operational and strategic initiatives for growth,” said Norbert Sporns, HQ Sustainable Maritime’s President and Chief Executive Officer. “We believe we have laid the groundwork for future financial and operational successes through our vertically integrated approach to all-natural Tilapia aquaculture bio-mass product development and distribution. We are very optimistic about our outlook for the remainder of 2010 and more importantly fiscal 2011 as we focus on long-term profitable growth and strong cash flow generation.”
Nine Month 2010 Results
For the first nine months of 2010, sales increased by 29% to $63.2 million compared to $49 million for the same period last year. The sales increase is primarily related to the growth in sales from the Company’s new feed product segment. Gross profit decreased 2% to $20.4 million compared to gross profit of $20.8 million for the first nine months of 2009. Operating income increased by 36% to $11.9 million compared to $8.7 million for the first nine months of 2009. Net income increased by 55% to $9.7 million, or $0.58 per diluted share, compared to net income of $6.2 million, or $0.47 per diluted share for the same period last year.
Balance Sheet
As of September 30, 2010, cash and cash equivalents were $64.5 million, compared to $37 million at December 31, 2009. As of September 30, 2010 the Company had no long term debt, except derivative liabilities mostly related to the warrants issued in August 2010, and which are non-cash.
Company Updates
- In October 2010, the Company expanded distribution of its Lillian’s Healthy Gourmet meals, which are now available in 33 Whole Foods Market and 106 Food City locations, as part of the Company’s retail supermarket chain rollout plan in North America. The Company will continue to work with its sales and marketing team to expand Lillian’s Healthy Gourmet consumer brand awareness and long-term distribution relationships in North America in the coming months.
- In September 2010, the Company opened its own subsidiary and health products retail store in Shanghai as part of its expanded direct outreach to the Chinese consumer. The Shanghai store is the first of several HQS health products retail stores that the Company plans to open in the Shanghai area, as well as additional store openings in other tier 1 cities.
Use of Non-GAAP Financial Information
This press release includes certain financial information EBITDA, which is not presented in accordance with GAAP. EBITDA was derived by taking earnings before financing costs, taxes, fair value change in derivative financial instruments and depreciation and amortization. The Company’s management believes that this non-GAAP measure provides investors with a better understanding of the Company’s historical results by focusing on its core business operations. Non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from non-GAAP information provided by other companies. A table included at the end of the attached financial tables provides a reconciliation of the non-GAAP financial information to the nearest GAAP measure.
Conference Call
The conference call is scheduled to begin at 8:30 a.m. ET on November 9, 2010. The call will be broadcast live over the Internet hosted at the Investor Relations section of HQ Sustainable Maritime’s website at http://www.hqfish.com/, and will be archived online through November 23, 2010. In addition, domestic participants may dial (877) 407-9039 and international participants may dial (201) 689-8470 to listen to the live broadcast.
A telephonic playback will be available from 11:30 a.m. ET, November 9, 2010, through November 23, 2010. Domestic participants may dial (877) 870-5176 and international participants may dial (858) 384-5517 to hear the playback. The passcode is 359589
About HQ Sustainable Maritime Industries, Inc.
HQ Sustainable Maritime Industries, Inc. is a leader in the production and marketing of functional, sustainable, biomass products focused on Tilapia aquaculture through vertically integrated operations. HQS practices cooperative farming of sustainable aquaculture, using all-natural enriched feeds. The Company produces and sells wholesale feed products as well as retail focused nutraceutical and health products including Omojo branded health products through direct and franchise sales in China. Additionally, the Company produces and sells Lillian’s Healthy Gourmet Meals and other fish products in the United States. The Company conducts fish processing, production and sales with operations based in the island province of Hainan, in the South China Sea. The Company holds HACCP and GMP certification from the U.S. FDA and the EU Code assignment of quality, permitting its products to be sold in these international markets. It has also achieved the ISO 9001 quality management system standards certification and the ISO 22000 certification for quality in food safety. The Aquaculture Certification Council, Inc. certified that HQS tilapia farming and processing standards met Best Aquaculture Practices and Moody International Certification Ltd. The Company’s certified co-op farming and processing are in conformity with the new Global G.A.P., the Global Partnership for Good Agriculture Practice, standards for Tilapia. The Chinese government gave organic certification to the Company’s tilapia processing, production, labeling, marketing and management system. The Feed Mill has been producing principally Tilapia feed since December of 2009 and is capable of 100,000 MT annual production. In addition to headquarters in Seattle, HQ has operational offices in Wenchang, Hainan. The Company’s website is: http://www.hqfish.com
Safe Harbor Statement
Certain statements in this press release that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “future,” “may,” “will,” “would,” “should,” “plan,” “projected,” “intend,” and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of HQ Sustainable Maritime Industries, Inc. (the Company) to be materially different from those expressed or implied by such forward-looking statements. The Company’s future operating results are dependent upon many factors, including but not limited to the Company’s ability to: (I) obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company’s control; and (iv) other risk factors discussed in the Company’s periodic filings with the Securities and Exchange Commission, which are available for review at www.sec.gov under “Search for Company Filings.”
HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended
------------------------ ------------------------
September September September September
30, 2010 30, 2009 30, 2010 30, 2009
----------- ----------- ----------- -----------
SALES $28,210,259 $22,156,867 $63,242,341 $49,007,445
COST OF SALES 18,703,247 12,398,275 42,831,177 28,183,355
----------- ----------- ----------- -----------
GROSS PROFIT 9,507,012 9,758,592 20,411,164 20,824,090
SELLING AND DISTRIBUTION
EXPENSES 466,832 417,076 1,255,714 961,378
MARKETING AND
ADVERTISING 1,269,337 1,703,664 3,347,667 4,469,149
GENERAL AND
ADMINISTRATIVE EXPENSES 1,815,708 1,432,869 5,728,567 5,062,834
DEPRECIATION AND
AMORTIZATION 128,082 30,795 332,487 298,335
(RECOVERY OF)/DOUBTFUL
ACCOUNTS (1,977,968) 1,309,803 (2,103,630) 1,328,990
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 7,805,021 4,864,385 11,850,359 8,703,404
FINANCE COSTS 259,567 155,175 266,998 840,400
FAIR VALUE CHANGE IN
DERIVATIVE FINANCIAL
INSTRUMENTS (254,321) (154,200) (619,027) 75,798
OTHER INCOME (60,505) (8,384) (98,319) (47,149)
----------- ----------- ----------- -----------
INCOME BEFORE INCOME
TAXES 7,860,280 4,871,794 12,300,707 7,834,355
INCOME TAXES
CURRENT 993,614 824,360 2,601,108 1,586,831
DEFERRED - - - -
----------- ----------- ----------- -----------
NET INCOME ATTRIBUTABLE
TO SHAREHOLDERS 6,866,666 4,047,434 9,699,599 6,247,524
OTHER COMPREHENSIVE
INCOME
FOREIGN CURRENCY
TRANSLATION
(LOSS)/GAIN 2,108,492 (51,777) 2,391,070 (104,177)
----------- ----------- ----------- -----------
COMPREHENSIVE INCOME $ 8,975,158 $ 3,995,657 $12,090,669 $ 6,143,347
=========== =========== =========== ===========
NET INCOME PER SHARE
BASIC $ 0.420 $ 0.297 $ 0.636 $ 0.491
=========== =========== =========== ===========
DILUTED $ 0.399 $ 0.268 $ 0.577 $ 0.472
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARE OUTSTANDING
BASIC 16,352,132 13,639,455 15,244,167 12,716,956
=========== =========== =========== ===========
DILUTED 16,552,132 14,840,283 15,737,106 13,912,762
=========== =========== =========== ===========
HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2010 2009
(Unaudited) (Audited)
------------- -------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 64,469,046 $ 36,957,303
Trade receivables, net of provisions 52,052,376 58,186,055
Inventories 2,187,885 2,204,931
Prepaid expenses 2,712,784 1,194,910
------------- -------------
TOTAL CURRENT ASSETS 121,422,091 98,543,199
------------- -------------
PROPERTY, PLANT AND EQUIPMENT, NET 20,235,954 20,150,568
CONSTRUCTION IN PROGRESS - 21,384
INTANGIBLE ASSETS 979,031 979,738
OTHER ASSETS
Deferred taxes 113,087 110,936
Deferred expenses 236,821 -
------------- -------------
349,908 110,936
------------- -------------
TOTAL ASSETS $ 142,986,984 $ 119,805,825
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 6,610,552 $ 6,770,470
Tax payable 1,022,718 566,054
Due to directors 830,570 -
Derivative liabilities - 445,694
------------- -------------
TOTAL CURRENT LIABILITIES 8,463,840 7,782,218
LONG-TERM LIABILITIES
Derivative liabilities 2,238,845 -
------------- -------------
TOTAL LIABILITIES 10,702,685 7,782,218
------------- -------------
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000
shares authorized, 100,000 shares issued and
outstanding 100 100
Common stock, $0.001 par value, 200,000,000
shares authorized, 17,884,001 and 14,681,002
shares issued and outstanding as of September
30, 2010 and December 31, 2009 17,884 14,681
Additional paid-in capital 87,441,271 79,281,209
Accumulated other comprehensive income 11,899,826 9,508,756
Retained earnings 24,996,016 15,737,809
Appropriation of retained earnings 7,929,202 7,481,052
------------- -------------
TOTAL SHAREHOLDERS' EQUITY 132,284,299 112,023,607
------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 142,986,984 $ 119,805,825
============= =============
HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
2010 2009
------------- -------------
OPERATING ACTIVITIES
Net income $ 9,699,599 $ 6,247,524
Non-cash items:
Depreciation and amortization 1,404,021 1,048,345
Loss of disposal of fixed assets 33,708 -
Transfer from construction in progress 14,910 -
Fair value change in derivative financial
instruments (619,027) (75,798)
Financial and other non-cash services - 1,115,823
Change in non-cash working capital items:
Inventories 17,047 (367,571)
Trade receivables, net of provisions 6,133,679 (12,690,375)
Prepaid expenses (1,752,419) (262,416)
Accounts payables and accrued expenses (159,915) 1,512,242
Tax payable 456,664 21,750
------------- -------------
Cash flow generated from (used in) operating
activities 15,228,267 (3,450,476)
------------- -------------
INVESTING ACTIVITIES
Acquisition of property, plant and
equipment (1,118,605) (163,842)
Sales proceeds of disposal of fixed
assets 2,203 -
Construction in progress 6,679 (6,570,719)
Deferred expenses (234,545) -
------------- -------------
Cash flow used in investing activities (1,344,268) (6,734,561)
------------- -------------
FINANCING ACTIVITIES
Net cash proceeds from issuance of common
stock 10,411,077 10,774,720
Due to directors 825,839 (197,803)
------------- -------------
Cash flow generated from financing
activities 11,236,916 10,576,917
------------- -------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 25,120,915 391,880
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 2,390,828 230,881
Cash and cash equivalents, beginning of
period $ 36,957,303 54,920,548
------------- =============
Cash and cash equivalents, end of period $ 64,469,046 $ 55,543,309
============= =============
SUPPLEMENTARY CASH FLOWS DISCLOSURES
Interest paid $ - $ -
============= =============
Taxes paid $ 2,171,657 $ 1,565,081
============= =============
SUPPLEMENTARY DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Common shares issued for services $ - $ 461,624
============= =============
HQ SUSTAINABLE MARITIME INDUSTRIES, INC. AND SUBSIDIARIES
(INCORPORATED IN THE STATE OF DELAWARE WITH LIMITED LIABILITY)
RECONCILIATION OF EBITDA TO GAAP
Three Months Ended Nine Months Ended
----------------------- -----------------------
30-Sep 30-Sep 30-Sep 30-Sep
2010 2009 2010 2009
---------- ---------- ---------- ----------
Net Income Attributable to
Shareholders $ 6,866,666 $ 4,047,434 $ 9,699,599 $ 6,247,524
Income Tax 993,614 824,360 2,601,108 1,586,831
Fair Value Change in
Derivative Financial
Instruments (254,321) (154,200) (619,027) 75,798
Finance Costs 259,567 155,175 266,998 840,400
Deprecation and
Amortization 128,082 30,795 332,487 298,335
---------- ---------- ---------- ----------
EBITDA 7,993,608 4,903,564 12,281,165 9,048,888
========== ========== ========== ==========
TraderPower Featured Companies
Top Small Cap Market News
- $SOBR InvestorNewsBreaks – SOBR Safe Inc. (NASDAQ: SOBR) Closes on $8.2M Private Placement
- $CLNN InvestorNewsBreaks – Clene Inc. (NASDAQ: CLNN) Announces Participation at Two Upcoming Investor Conferences
- $ATBHF Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) Releases Updated Report on Storm Copper Project Drilling Program
- $LGVN InvestorNewsBreaks – Longeveron Inc. (NASDAQ: LGVN) to Present at This Month’s Congenital Heart Surgeons’ Society Annual Meeting
- $LEXX InvestorNewsBreaks – Lexaria Bioscience Corp. (NASDAQ: LEXX) Begins Subject Dosing in Human Pilot Study #3 Evaluating Oral DehydraTECH-Processed Tirzepatide
- $FSTTF InvestorNewsBreaks – First Tellurium Corp. (CSE: FTEL) (OTC: FSTTF) Shares Additional Information on the PyroDelta Thermoelectric Generator, Relationship with Subsidiary
- $TMET.V Gold Stutters as Strong US Jobs Data Dampens Expectations of Large Rate Cuts
- $RFLXF JPMorgan Executive Says US Backlash Against ESG Is Exaggerated
- $SFWJ InvestorNewsBreaks – Software Effective Solutions Corp. (d/b/a MedCana) (SFWJ) Releases Report on Series of Acquisitions, Multiple Cannabis Licenses
- $EAWD IEA Hosts G20 Ministers, Influential Personalities to Discuss Clean and Affordable Energy Transition
Recent Posts
- $EAWD IEA Hosts G20 Ministers, Influential Personalities to Discuss Clean and Affordable Energy Transition
- $SFWJ InvestorNewsBreaks – Software Effective Solutions Corp. (d/b/a MedCana) (SFWJ) Releases Report on Series of Acquisitions, Multiple Cannabis Licenses
- $RFLXF JPMorgan Executive Says US Backlash Against ESG Is Exaggerated
- $TMET.V Gold Stutters as Strong US Jobs Data Dampens Expectations of Large Rate Cuts
- $FSTTF InvestorNewsBreaks – First Tellurium Corp. (CSE: FTEL) (OTC: FSTTF) Shares Additional Information on the PyroDelta Thermoelectric Generator, Relationship with Subsidiary
- $LEXX InvestorNewsBreaks – Lexaria Bioscience Corp. (NASDAQ: LEXX) Begins Subject Dosing in Human Pilot Study #3 Evaluating Oral DehydraTECH-Processed Tirzepatide
- $LGVN InvestorNewsBreaks – Longeveron Inc. (NASDAQ: LGVN) to Present at This Month’s Congenital Heart Surgeons’ Society Annual Meeting
- $ATBHF Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) Releases Updated Report on Storm Copper Project Drilling Program
Recent Comments
Archives
- October 2024
- January 2023
- June 2022
- December 2021
- September 2021
- August 2021
- July 2021
- June 2021
- May 2021
- April 2021
- March 2021
- February 2021
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
- March 2020
- February 2020
- January 2020
- December 2019
- November 2019
- October 2019
- September 2019
- August 2019
- July 2019
- June 2019
- May 2019
- April 2019
- March 2019
- February 2019
- January 2019
- December 2018
- November 2018
- October 2018
- September 2018
- August 2018
- July 2018
- June 2018
- May 2018
- April 2018
- March 2018
- February 2018
- January 2018
- December 2017
- November 2017
- October 2017
- September 2017
- August 2017
- July 2017
- June 2017
- May 2017
- April 2017
- March 2017
- February 2017
- January 2017
- December 2016
- November 2016
- October 2016
- September 2016
- August 2016
- July 2016
- June 2016
- May 2016
- April 2016
- March 2016
- February 2016
- January 2016
- December 2015
- November 2015
- October 2015
- September 2015
- August 2015
- July 2015
- June 2015
- May 2015
- April 2015
- March 2015
- February 2015
- January 2015
- December 2014
- November 2014
- October 2014
- September 2014
- August 2014
- July 2014
- June 2014
- May 2014
- April 2014
- March 2014
- February 2014
- January 2014
- December 2013
- November 2013
- October 2013
- September 2013
- August 2013
- July 2013
- June 2013
- May 2013
- April 2013
- March 2013
- February 2013
- January 2013
- December 2012
- November 2012
- October 2012
- September 2012
- August 2012
- July 2012
- June 2012
- May 2012
- April 2012
- March 2012
- February 2012
- January 2012
- December 2011
- November 2011
- October 2011
- September 2011
- August 2011
- July 2011
- June 2011
- May 2011
- April 2011
- March 2011
- February 2011
- January 2011
- December 2010
- November 2010
- October 2010
- September 2010
- August 2010
- July 2010
- June 2010
- May 2010
- April 2010
- March 2010
- February 2010
- January 2010
- December 2009
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009