GLG Reports 2009 Revenue Climbs 323%
One of the primary drivers to the increase in stevia revenues was new production capacity coming on line at the Company's Mingguang and Dongtai facilities during the first quarter.
5 Apr 2010 --- LG Life Tech Corporation, a vertically integrated leader in the agricultural and industrial development of stevia extracts, including research and development, stevia plant growth, high purity extraction, marketing, and distribution, announces financial results for the fourth quarter and fiscal year ended December 31, 2009.
Business Highlights
Full Year 2009 Revenues Climb 323%
For the year ended December 31, 2009, revenue increased $32.0 million, or 323%, to $41.9 million from $9.9 million in 2008. Net income increased $11.4 million to $0.8 million, or $0.04 per diluted share, from a loss of $10.6 million, or ($0.60) per diluted share, in 2008.
Revenues were derived entirely from the sale of GLG's high grade stevia extract products. One of the primary drivers to the increase in stevia revenues was new production capacity coming on line at the Company's Mingguang and Dongtai facilities during the first quarter. Leaf processing increased from 5,000 metric tons ("MT") per year to 41,000 MT. The Company believes that market demand for its stevia products continues to grow as food and beverage makers further develop and launch new products containing the all natural sweetener.
Fourth Quarter Revenue Up 185%
Revenue for the fourth quarter ended December 31, 2009 was $13.3 million, an increase of 185% from $4.7 million in the 2008 fourth quarter. Net income increased $7.6 million to $0.5 million, $0.02 per diluted share, from a loss of $7.1 million, or ($0.40) per diluted share in the year ago period.
EBITDA Continues to Strengthen
For the fourth quarter ended December 31, 2009, EBITDA was $4.6 million, or 35% of sales, versus the negative $0.1 million in EBITDA for the 2008 fourth quarter. EBITDA for the twelve months ended December 31, 2009 was $10.5 million, or 25% of sales, a significant increase from the negative $1.0 million in EBITDA for 2008. Management had previously guided an upper range for EBITDA margin of 22% of revenues for the full year. The main contributing factors to the continued improvement in EBITDA were higher fourth quarter stevia revenues and gross profit, reduction in one-time new facility related start up costs as well as the impact of the Company being able to use its Huinong One proprietary leaf strain, which contains approximately 60% Rebaudioside A.
Product Development and Production
In 2009, GLG continued its focus on product development and production infrastructure. The Company is currently poised to capitalize on the increasing demand and mainstream acceptance of natural stevia plant extracts as an alternative to artificial sweeteners and high fructose corn syrup and as a complement to sugar in a blended capacity for the reduction of caloric content in food and beverages.
New, Fully Operational Leaf Processing Plants: GLG completed food safety audits to bring its two new stevia leaf processing plants into operation during the first quarter of 2009, adding 36,000 MT of processing capacity for a total of 41,000 MT, a 720% increase over 2008 leaf processing capacity.
During the fourth quarter, a new RebpureTM RA97 refining facility in Qingdao, China was completed, providing an additional 1,000 MT of RA97 capacity. The new facility has been constructed following food grade "Good Manufacturing Practice" (GMP) standards and key components were constructed following pharmaceutical grade GMP standards. The plant is currently operational with final certifications expected to be completed during the first half of 2010. This new facility enables GLG easy access to ship, air, and rail for product movement, increased capacity for secondary processing, and positions the Company to further meet current and anticipated demand.
High Grade Stevia Extract Production Quadrupled as Compared to 2008 Average Production Rates: With two new leaf processing facilities in operation in the first quarter of 2009, GLG increased monthly primary processing and extraction from an average of 10 MT in 2008 to 40 MT. With the addition of the Qingdao plant adding additional refining capacity, the Company in 2010 is expect to be able to produce 1,500 MT of RA97 high grade stevia extract.
2010 Harvest: GLG is prepared for and anticipates a successful 2010 harvest and is contracted with more than 200,000 trained farmers within its exclusive stevia growing areas in China. The Company continues to receive significant support from local Chinese government agencies within these areas.
In 2009, GLG successfully completed its stevia seed propagation program with its proprietary strain demonstrating commercial viability in the field as a direct seed plant, eliminating the costly use of greenhouses and seedlings as an intermediary step. More than 10 years of natural breeding technology has generated the GLG proprietary seed, resulting in a leaf that has three times the amount of sweet glucocides of other stevia leaves. This enables the Company to achieve higher yields, greater processing efficiencies and greater batch to batch consistency for final production. GLG anticipates that its seeds could generate up to an estimated 40,000 MT of high quality, proprietary stevia leaf in the 2010 harvest. This would ensure that 100% of the Company's input needs were supplied through its own proprietary crop, which will meet capacity at each of its processing centers.
Business Development
GLG also made progress in its efforts to increase commercial adoption of its high grade stevia extract. Key business development highlights include:
Received US$40.5 Million Stevia Extract Order from Cargill for TRUVIATM: In May 2009, GLG received an initial order from its premier strategic partner, Cargill, valued at US$40.5 million for the delivery of high grade stevia extract beginning October 2009. Further, GLG agreed to make additional product available to Cargill for a possible increase in the order size.
Cargill recently reported that it achieved an eight percent share of the US alternate sweetener market since launching its TruviaTM tabletop product against Splenda, Sweet'N Low and Equal. Cargill also announced it currently has more than 100 stevia-specific projects underway.
GLG Direct Sales Team Announced: In 2009, GLG hired three experienced sales and marketing executives from the beverage and sweetener industries in order to accelerate commercial acceptance of its high grade stevia extracts. The Company appointed Alan Martin and Jack Tokarczyk as Vice Presidents of Sales, and James E. Kempland as Vice President of Marketing. The new additions will focus on the development of RebpureTM RA97 high-grade stevia extract sales for the growing global market.
Corporate Developments
In 2009, the Company took steps to ensure it could invest in growing its operations to meet increasing global demand for its natural stevia plant extracts.
Market Development
The Company believes that growing consumer preference for all-natural products, together with increasing rates of obesity and diabetes, is driving demand for an all-natural, zero-calorie sweetener. Additional consumer, governmental and social pressures are also fueling the need for U.S. food and beverage companies to create better-for-you products that help lower caloric intake.
Stevia natural plant extracts are creating an entirely new category of sweeteners that offer non-caloric and heat-stable sweetening systems with superior taste, and without artificial chemicals. According to research, new product launches and consumer adoption is occurring rapidly which could enable stevia to quickly becoming a mainstream tabletop sweetener and food and beverage ingredient. Additionally, new developments using stevia blended with sugar enables an all natural sweetening system that reduces added calories in food and beverages, while maintaining a positive taste profile and providing consumers a naturally sweetened product.
The European Union is expected to approve the use of stevia extracts as a food ingredient within the first half of 2010. GLG believes that this market could adopt stevia at a faster rate than others, given European consumers' overall healthier dietary habits.
