HQ Sustainable Maritime Industries, Inc., producer of functional, sustainable Tilapia biomass, including fish and personal healthcare products, reported financial results for the fourth quarter and full year ended December 31, 2009.
For the fourth quarter of 2009, net sales increased 8.2% to $23.3 million, compared to $21.5 million for the fourth quarter of 2008.
The increase in net sales was primarily the result of a strong performance in the health and bio-product segment.
"The Company successfully expanded its sales of high quality, health and bio-products made from Tilapia by-products, in response to a landmark shift in China food safety legislation passed in March of 2009, which caused the closure of several of China's health and food product manufacturing facilities.
“This unprecedented opportunity for our company in China has resulted in a short term increase in receivables and higher marketing expenses in our health and bio-product segment," said Norbert Sporns, HQ Sustainable Maritime's President and Chief Executive Officer.
"In 2010, we believe our efforts to reposition our company behind higher margin product categories combined with increased operating efficiencies from our vertically integrated operations will enable us to realize an exceptional period of strong sales, margin expansion, and long-term profitable growth."
Full year 2009 results
For the full year of 2009, net sales increased 6.7% to $72.3 million compared to $67.7 million in 2008. The 2009 increase in net sales compared to 2008 is primarily the result of an increase in volume and average sales price originating from new products in the health and bio-product segment.
Aquaculture product segment net sales increased 0.3% to $45.5 million, compared to $45.4 million in the full year of 2008.
In 2009, the value of the company's tilapia sales were reduced mainly due to a reduction in the average market price of the company's products slightly offset by increased volume compared to 2008.
HQ’s aquaculture net sales in 2009 and 2008 were realized from three sources including tilapia, shrimp and ocean caught fish.
Health and bio-product segment net sales increased 14% to $25.5 million in the year 2009, compared to $22.4 million in the same period last year.
The health and bio-product net sales increase is primarily related to an increase in volume from new product introductions.
Gross profit for the full year of 2009 increased 11.3% to $30.2 million, compared to $27.1 million in the full year of 2008.
Gross profit margin increased 170 basis points to 41.8% in the full year of 2009 versus 40.1% in the same period last year. The increase in gross profit margin is primarily due to margin expansion in both the aquaculture and bio-product segments.
Operating income down
Operating income for the full year of 2009 decreased to $11.1 million, from $15.0 million in the same period of the prior year. EBITDA for the full year decreased to $12.5 million, compared to $16.5 million for the same period last year.
Net income for the full year of 2009 was $8.1 million compared to net income of $10.0 million in 2008. Net income during the full year of 2009 was affected by increases in doubtful accounts of approximately $3.6 million and an increase in marketing and advertising expenses by approximately $3.1 million from the health and bio-product segment.
In December of 2009 the Company's new state-of-the-art feed mill began to generate revenue with net sales for the fourth quarter of 2009 of $1.3 million.
HQS received ISO 9001 and 22000 certifications for both the seafood and feed mill plants in the fourth quarter of 2009.