SHENZHEN, China, March 23, 2007 (PRIME NEWSWIRE) -- New Dragon Asia Corp. (AMEX:NWD), one of China's leading producers of instant noodles, flour-related products and soybean-derived products, today announced its financial results for the fiscal year ended December 25, 2006.
Li Xia Wang, Chief Executive Officer of New Dragon Asia Corp., said, "We are encouraged by the continued strong sales of our expanding product lines in China as well as in new markets in Asia and Europe. Despite considerable investments in the business during the year, we were able to report a 17% increase in EBITDA. However, primarily due to significant non-cash stock-based compensation cost in fiscal 2006, fully-diluted EPS reflected a loss of $0.10 per share.
"At the same time, we were able to identify new sources of demand for our products overseas. We exported 654,000 cases of instant noodles in fiscal 2006, which was a 38% increase over fiscal 2005. We also exported 134 and 87 tons of our soybean powder and seasoning products, respectively, during fiscal 2006; we did not have any such exports during fiscal 2005. Additionally, we believe that we continue to meet the evolving demands of our customers with high-quality products, such as our newly-developed ginger powder. In the coming year, we expect this new addition to our product portfolio to drive further growth in our export business."
Peter Mak, Chief Financial Officer of New Dragon Asia Corp., added, "Fiscal 2006 is now the third consecutive year that New Dragon Asia Corp. has reported net revenue growth in the double digits. This track record of robust top-line performance is evidence of the continued successful expansion of our product offerings and distribution network in China and abroad. While additional investments and expenses resulted in a net loss for the year, our EBITDA margin, a key measure of the efficiency of our operations, remained solid at 19%. We are confident that our continued dedication to seeking value-adding opportunities in China and investing in our production, distribution and sales capabilities worldwide will continue to drive shareholder value over the long term."
Fiscal Year 2006 financial highlights
Net revenue for the fiscal year ended December 25, 2006 was $53.4 million, an increase of $9.2 million, or approximately 21%, as compared to $44.2 million for the prior year. Approximately 20% of the increase was due to the growth in the market demand for flour and instant noodles, and the remaining 80% of the increase was derived from the addition of the soybean products business. The selling prices for all of our products remained stable.
Cost of goods sold for the fiscal year ended December 25, 2006 was $43.4 million, an increase of $7.2 million, or 19.9%, as compared to $36.2 million for the prior year. The increase was primarily due to the increase in net revenue. As a percentage of revenue, cost of goods sold remained stable at 81.2% for the fiscal year ended December 25, 2006, as compared to 81.8% for the prior year. Accordingly, gross margin increased slightly to 18.8% in fiscal 2006 as compared to 18.2% for fiscal 2005.
General and administrative expenses increased by $8.5 million, to $10.9 million for the fiscal year ended December 31, 2006, as compared to $2.4 million for the prior year. The increase was primarily due to a non-cash stock-based compensation cost of $8.1 million in fiscal 2006. As a result, net loss for fiscal 2006 was $2.6 million, or $0.10 per share, a decrease of $4.4 million, as compared to net income of $1.75 million or $0.02 per share for fiscal 2005.
EBITDA increased 17.2%, to $10.2 million in fiscal 2006, as compared to $8.7 million for fiscal 2005. EBITDA as a percentage of revenue remained relatively stable at 19% for fiscal 2006.
Fiscal Year 2006 Balance Sheet Information
New Dragon Asia Corp.'s cash and cash equivalents as of December 25, 2006 were $10.3 million, a decrease of approximately $4 million as compared to $14.3 million at the end of fiscal 2005. The decrease was mainly due to the acquisition of Chengdu Plant and the establishment of Longyuan Packaging Plant.
The Company's working capital increased to $17.6 million as of December 25, 2006, as compared to $14.5 million at the end of fiscal 2005. The increase in working capital was primarily due to the growth and profitability of the business and improved collections of accounts receivable during fiscal 2006. The Company believes that it has adequate sources of liquidity to finance its business operations for the foreseeable future.
Net cash provided by operating activities for fiscal 2006 was $2.49 million, as compared to $0.95 million for fiscal 2005. The increase was consistent with our business growth in 2006. Net cash provided by financing activities of $0.90 million for fiscal 2006 was primarily due to the proceeds from the exercise of an option to purchase 1 million shares of common stock.
Conference Call
Mr. Peter Mak, Chief Financial Officer, will host a conference call on Friday, March 23 at 9:00 AM (New York)/1:00 PM (London)/9:00 PM (China) to review the results. The conference call will also be available via webcast at www.newdragonasia.com and will be archived on the Company's website for 90 days from the date of broadcast.
The dial-in information for the conference call is as follows:
In North America: Dial-in: +1 480 293 1744 Replay: +1 303 590 3030 Passcode: 3715316 In Europe: Dial-in: +44 20 7190 1596 Replay: +44 207 154 2833 Passcode: 3715316 In Asia: Dial-in: +81 3 357 08179 Replay: +852 2287 4304 Passcode: 094110
The replay will be available for one week following the conclusion of the live call.
About New Dragon Asia Corp.
New Dragon Asia Corp., a Florida corporation (AMEX:NWD), is headquartered in Shandong Province, China, and is engaged in the milling, sale and distribution of flour and related products, including instant noodles and soybean-derived products, to retail and commercial customers. As the fourth largest instant noodle manufacturer in China, New Dragon Asia Corp. markets its well-established Long Feng brand through a network of more than 200 key distributors and 16 regional offices in 27 Chinese provinces. It has an aggregate production capacity of approximately 195,000 tons of flour, more than 1.1 billion packages of instant noodles, and 4,500 tons of soybean powder and protein powder per year. New Dragon Asia Corp. products are exported to Hong Kong and South East Asia, including Singapore, Malaysia, South Korea and Australia, as well as to Europe since mid-2006. The Company has approximately 2,000 employees.
To supplement New Dragon Asia Corp.'s consolidated financial statements presented in accordance with GAAP, New Dragon Asia Corp. discusses its results in terms of financial measures that may be deemed to be "Non-GAAP Financial Measures" under the rules and regulations of the Securities and Exchange Commission. New Dragon Asia Corp.'s management believes that these measures provide meaningful information regarding the Company's performance and liquidity by excluding certain expenses that may not be indicative of its core operating results and facilitate comparisons to its historical operations and competitors' operating results. To the extent such measures are not readily reconcilable to comparable GAAP financial measures contained in its consolidated financial statements, New Dragon Asia Corp. provides detailed reconciliations that permit investors to determine how such non-GAAP financial measures used have been derived.
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, its success with acquisitions, anticipated synergies, and overseas expansion. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products and pricing; changes in consumer preferences and tastes or perceptions; effectiveness of advertising or market-spending programs; changes in laws and regulations; fluctuations in costs of production, foreign exchange and interest rates; and other factors as may be discussed in the Company's reports as periodically filed with the Securities and Exchange Commission.
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
For the years ended December 25,
-------------------------------------
2006 2005 2004
Net revenue $ 53,439 $ 44,180 $ 39,221
Cost of goods sold (43,404) (36,151) (31,887)
-------- -------- --------
Gross profit 10,035 8,029 7,334
-------- -------- --------
Operating expenses:
Selling and distribution
expenses (1,045) (721) (1,178)
General and
administrative expenses (10,908) (2,358) (1,611)
-------- -------- --------
Income/(loss) from
operations (1,918) 4,950 4,545
Other income (expense):
Interest expense -- -- (72)
Other income 144 186 (54)
Interest income 67 10 3
(Loss) on fair value
adjustments to embedded
derivatives (1,434) (4,064) --
VAT refund 2,328 2,158 1,478
-------- -------- --------
Income/(loss) before
income taxes and
minority interests (813) 3,240 5,900
Provision for income
taxes (1,657) (1,487) (1,296)
-------- -------- --------
Income/(loss) before
minority interests (2,470) 1,753 4,604
Minority interests (134) (6) 41
-------- -------- --------
Net income/(loss) $ (2,604) $ 1,747 $ 4,645
======== ======== ========
Accretion of Redeemable
preferred stock (1,882) (454) --
Preferred Stock Dividends (875) (187) --
-------- -------- --------
Income (loss) available
to common stockholders $ (5,361) $ 1,106 $ 4,645
======== ======== ========
Earnings per common share
Basic $ (0.10) $ 0.02 $ 0.10
-------- -------- --------
Diluted $ (0.10) $ 0.02 $ 0.10
-------- -------- --------
Weighted average number
of common shares
outstanding
Basic 51,485 46,051 45,061
-------- -------- --------
Diluted 51,485 46,949 45,061
-------- -------- --------
Reconciliation from Net Income (Loss) to EBITDA
------------------------------------
2006 2005 2004
Net income ($2,604) $1,747 $4,645
Income tax 1,657 1,487 1,296
Interest income (67) (10) 69
Depreciation and
amortization 1613 1266 1187
Loss/ (gain) on fair
value adjustments to
embedded derivatives 1,434 4,064 --
Non-cash stock-based
compensation 8,140 105 --
-------- -------- --------
EBITDA $10,173 $8,659 $7,197
======== ======== ========
EBITDA margin on revenue 19% 20% 18%
NEW DRAGON ASIA CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
December 25, December 25,
2006 2005
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 10,276 $ 14,332
Accounts receivable, net 8,835 6,515
Deposits and prepayments, net 6,586 4,970
Inventories, net 11,598 7,630
Due from related companies 857 679
--------- --------
Total current assets 38,152 34,126
Deposit for property, machinery and
equipment -- 1,000
Property, machinery and equipment, net 24,248 18,315
Land use rights, net 6,983 3,980
Goodwill 125 --
--------- --------
Total assets $ 69,508 $ 57,421
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,723 $ 2,696
Other payables and accruals 3,255 2,298
Taxes payable 3,453 1,854
Due to related companies 28 598
Embedded derivatives at fair value 11,138 12,135
-------- --------
Total current liabilities 20,597 19,581
Due to New Dragon Asia Food Limited 317 137
Due to joint venture partners 102 54
-------- --------
Total liabilities 21,016 19,772
-------- ---------
Minority interests 276 91
-------- --------
Series A & B Redeemable
Convertible Preferred Stock,
$0.0001 par value:
Authorized shares - 5,000,000
Issued and outstanding -
10,162 shares and 13,600 shares at
December 25, 2006 and 2005,
respectively 4,204 3,559
-------- --------
Commitments
Stockholders' equity: Class A Common
Stock, $0.0001 par value:
Authorized shares - 102,000,000
Issued and outstanding -
53,614,723 in 2006 and 49,322,291
in 2005 5 5
Class B Common Stock, $0.0001 par
value:
Authorized shares - 2,000,000 -
none issued and outstanding -- --
Additional paid-in capital 28,411 15,216
Receivable from stockholder -- (49)
Retained earnings 12,668 18,029
Accumulated other comprehensive
income 2,928 798
-------- --------
Total stockholders' equity 44,012 33,999
-------- --------
Total liabilities and stockholders'
equity $ 69,508 $ 57,421
======== ========