China Linen registers record revenue & earnings for Q3

30 Nov '10

5 min read

Fiscal 2010 Guidance

Based on the strong results recorded in the first nine months of 2010, Management raises full year guidance of sales from $38.1 million to $44.0 million, maintains net income guidance of $9.3 million and raises EPS guidance from $0.39 to $0.46 based on 20,215,003 weighted average number of shares outstanding.

Mr. Gao Ren, Chairman and President of China Linen, stated: "China Linen's continued international and domestic market expansion is anticipated to yield additional customers and orders, which will drive incremental growth and support our efforts to further penetrate the existing customer base. We expanded our linen yarn production capacity by approximate 40% and linen fabric production capacity by 26% through the additional of Lanxi Tianxianfang, which provides the foundation to meet our 2011 growth objectives."

Nine months ended September 30, 2010 financial results

For the nine months ended September 30, 2010, revenue increased approximately 53.7% to $31.6 million compared to the same period in 2009, primarily resulting from a 57.5% increase in sales of linen fabric, which represented 94.8% of sales during the period. Gross profit was approximately $9.8 million for the first nine months of 2010, representing an increase of 72.2% from the first nine months of 2009. Gross margins improved 335 basis points to 31.1% for the first nine months of 2010 compared to the year ago period as a result of product mix, price increases and the Company's ability to effectively manage production costs.

Income from operations was $8.1 million for the first nine months of 2010, representing an increase of 60.0% over the first nine months of 2009. Operating margins were 25.8% for the first nine months of 2010, compared to 24.7% for the first nine months of 2009.

Net income was $6.9 million for the nine months ended September 30, 2010, an increase of approximately 59.6% from the same period in 2009. Fully diluted earnings per share increased 58.9% to $0.34 for the first nine months of 2010, compared to $0.21 for the first nine months of 2009, based up on 20.2 million and 20.1 million weighted average number of shares outstanding, respectively.

Balance Sheet and Cash Flow

Cash and cash equivalents totaled $4.4 million on September 30, 2010, compared to $2.3 million on December 31, 2009. Accounts receivable balance was approximately $15.6 million on September 30, 2010, versus approximately $8.8 million on December 31, 2009. Days sales outstanding (DSO) for the first nine months of 2010 were at 114 days, compared to 119 days for the same period in 2009. The Company had a current ratio of 2.4 to 1 and stockholders' equity of $28.9 million, with total assets of $45.6 million versus total liabilities of $16.7 million on September 30, 2010.

For the first nine months of 2010, the Company generated $2.5 million in cash from operations versus $2.3 million for the same period in 2009.

China Linen Textile Industry Ltd

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