Will do Lexi...added NWD 1.66 +.06 earned .08 vs -.15 on Q3: New Dragon Asia Corp. Reports Strong Growth for the Third Quarter and Nine Months Ended September 25, 2006
Wednesday November 8, 7:04 am ET
SHENZHEN, China, Nov. 8, 2006 (PRIMEZONE) -- New Dragon Asia Corp. (AMEX:NWD - News), one of China's leading producers of instant noodles, flour-related products and soybean-derived products, today announced its financial results for the third quarter and nine months ended September 25, 2006.
Li Xia Wang, Chief Executive Officer of New Dragon Asia Corp. said, ``We are pleased with our results for the third quarter and first nine months of fiscal 2006. New Dragon Asia Corp.'s revenues from flour and noodle sales continue to grow, and the contribution from soybean product sales has been strong. We remain on track to execute our strategy, strengthen our distribution capabilities and increase sales across all product lines within China. We also continue to increase export sales to other parts of Asia and to Europe. We are pleased with our strategic progress and are confident that we can continue our track record of strong, consistent growth.''
Peter Mak, Chief Financial Officer of New Dragon Asia Corp. stated, ``We recorded solid increases in revenue and gross profit and posted net income of $4.8 million for the third quarter and $6.0 million for the nine months ended September 25, 2006. Our margins are strong as we continue to control costs while growing sales. We have signed several new supply agreements for both our noodles and soybean products and continue to shift toward a higher margin sales mix via increases in exports. Our EBITDA margin continues to improve as a result of the growth of the business and sales of higher-margin products.''
Third Quarter 2006 financial highlights
Net revenue for the three months ended September 25, 2006 was $13.0 million, a 12% increase as compared to $11.6 million for the same period last year. The increase in revenues was driven by growth in demand for our instant noodle and flour products combined with the inclusion of results from our soybean business.
Gross profit rose to $2.5 million for the third quarter of 2006 compared to $2.2 million for the third quarter of 2005, an increase of 14%. Gross margin increased to 19.5% in the third quarter of 2006 as compared to 18.5% for the same period in 2005. This increase was the result of the growth of export sales, which generate higher margins.
New Dragon Asia Corp. reported income from operations for the third quarter of 2006 of $1.5 million as compared to $1.6 million for the third quarter of 2005. This slight decrease is due mainly to an increase in general and administrative expenses related to professional fees incurred in connection with the amendment and restatement of New Dragon Asia Corp's financial statements for the year ended December 25, 2005 and the interim periods ended September 25, 2005, June 25, 2006 and March 25, 2006.
Net income for the third quarter of 2006 was $4.8 million as compared to a net loss of $6.4 million for the same period in 2005. This increase was due to the growth of New Dragon Asia Corp.'s business and a gain derived from a change in the fair value of certain derivative instruments deemed to be associated with New Dragon Asia Corp.'s outstanding convertible preferred stock, as compared to a significant charge recorded in the 2005 period for similar fair value changes to the derivative instruments.
EBITDA rose to $3.1 million for the third quarter of 2006 as compared to $2.7 million for the third quarter of 2005, an increase of 15%. EBITDA margin improved to 24% as compared to 23% for the third quarter of 2006 as compared to 2005. These increases were primarily the result of growth in export sales, which generate higher margins.
Earnings per common share were $0.08 (basic and fully diluted) for the third quarter of 2006, as compared to a loss of $0.15 per share (basic and fully diluted) for the same period in 2005.
Nine Months 2006 financial highlights
Net revenue for the nine months ended September 25, 2006 was $35.6 million, a 23% increase as compared to $28.9 million for the same period in 2005. This increase was driven primarily by growth in demand for flour and instant noodles combined with the inclusion of results for the soybean products business in the 2006 period.
Gross profit rose to $6.5 million for the nine months ended September 25, 2006 as compared to $5.1 million for the corresponding period in 2005, an increase of 27%. Gross margin as a percentage of revenue increased to 18% for the nine months ended September 25, 2006 as compared to 17% for the corresponding period in 2005, primarily as a result of an increase in export sales, which generate higher margins.
New Dragon Asia Corp. reported income from operations for the nine months ended September 25, 2006 of $1.8 million as compared to $3.2 million for the nine months ended September 25, 2005. The 2006 figure incorporates a $2.3 million non-cash charge related to stock-based compensation incurred in the first quarter of this year.
Net income for the nine months ended September 25, 2006 was $6.0 million as compared to a net loss of $4.5 million for the same period in 2005. This increase was due to the growth of New Dragon Asia Corp.'s business and a $3.2 million gain derived from the change in fair value of derivative instruments deemed to be associated with New Dragon Asia Corp's outstanding convertible preferred stock, as compared to a significant charge recorded in the 2005 period for similar fair value changes to the derivative instruments.
EBITDA increased to $7.8 million for the nine months ended September 25, 2006 as compared to $5.8 million for the nine months ended September 25, 2005, an increase of 34%. EBITDA margin improved to 22% from 20% for the nine months ended September 25, 2006 as compared to 2005. These increases were the result of the growth in export sales, which generate higher margins.
Earnings per common share were $0.08 basic and $0.07 fully diluted for the nine months ended September 25, 2006, as compared to a loss of $0.11 per share (basic and fully diluted) for the same period in 2005.
Balance Sheet Information
New Dragon Asia Corp.'s cash and cash equivalents as of September 25, 2006 were $14.6 million, an increase of $232,000 from December 25, 2005, reflecting a cash to total asset ratio of 22%. This increase is primarily due to growth in New Dragon Asia Corp.'s product sales.
New Dragon Asia Corp.'s working capital increased to $18.8 million at September 25, 2006 from $14.5 million at December 25, 2005 as a result of the growth of our business and adjustments to the fair value of outstanding preferred stock.
Net cash provided by operating activities for the nine months ended September 25, 2006 was $7.2 million, which was primarily due to the increase in sales during the nine-month period. Net cash provided by financing activities of $1.0 million for the nine months ended September 25, 2006 was mainly attributable to the additional capital generated by the exercise of stock options.
Conference Call
Mr. Peter Mak, Chief Financial Officer, will host a conference call on Wednesday, November 8 at 9:00 AM (New York) / 2:00 PM (London) / 10:00 PM (China) to review the results. The conference call will also be available via webcast at 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: +1 480 629 9564
Replay: +1 303 590 3030
Passcode: 3623521
In Europe:
Dial-in: +44 20 7190 1232
Replay: +44 20 7154 2833
Passcode: 3623521
In Asia:
Dial-in: +81 3 3570 8179
Replay: Please use North American or European replay number and
passcode
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 - News), 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. New Dragon Asia Corp.'s receipt of HACCP approval in June 2006 allowed the exportation of New Dragon Asia Corp. products to Europe, and the Company has begun to receive orders from that region. 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.
Hadn't traded this stock for quite awhile but will give it several days here I believe...tuna |
