Attached files
| file | filename |
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| 8-K - FORM 8-K - HQ SUSTAINABLE MARITIME INDUSTRIES, INC. | d8k.htm |
| EX-99.2 - PRESS RELEASE - HQ SUSTAINABLE MARITIME INDUSTRIES, INC. | dex992.htm |
 Listed on the NYSE Amex:
HQS
Exhibit 99.1 |
 This
presentation
contains
forward-looking
statements
within
the
meaning
of
the
safe-harbor
provisions
of
the
Private
Securities
Litigation
Reform
Act
of
1995.
Such
forward
–looking
statements
includes,
but
not
limited
to,
statements
regarding
our
management's
expectations,
hopes,
beliefs,
intentions
or
strategies
regarding
the
future,
including
our
financial
condition,
the
growth
of
our
business,
the
proposed
initial
public
offering
of
our
marine
bio
and
healthcare
products
segment,
our
future
biomass
production,
our
new
re-processing
plant
and
new
fry
breeding
and
genetics
facility.
Such
statements
involve
known
and
unknown
risks,
uncertainties
and
other
factors
that
could
cause
the
actual
results
of
the
Company
to
differ
materially
from
the
results
expressed
or
implied
by
such
statements,
including
changes
from
anticipated
levels
of
sales,
future
national
or
regional
economic
and
competitive
conditions,
changes
in
relationships
with
customers,
access
to
capital,
difficulties
in
developing
and
marketing
new
products,
marketing
existing
products,
customer
acceptance
of
existing
and
new
products,
and
other
factors.
Accordingly,
although
the
Company
believes
that
the
expectations
reflected
in
such
forward-looking
statements
are
reasonable,
there
can
be
no
assurance
that
such
expectations
will
prove
to
be
correct.
The
Company
has
no
obligation
to
update
the
forward-looking
information
contained
in
this
presentation.
2 |
 Overview
Completely integrated global operations
Five wholly
owned
subsidiaries
HQ Sustainable
Maritime Industries Inc. 2010
3
Jiahua
Health products store, Haikou China |
 Current
Operations Tilapia Biomass Market
Growth Plans
Financial Review
4
HQ Sustainable Maritime Industries Inc. 2010
Jiahua new Beauty and beauty within cosmeceutical products |
 5
HQS Tilapia Biomass Production Methods |
 6
HQS Operations
HQ
Seafood
HQ
Health
Products
HQ Feed
Products
HQ
Marketing
HQ Fry
Genetics |
 7
FOOD SAFETY
ENVIRONMENT
FAIR TRADE
HQ Sustainable
Maritime Industries Inc. 2010 |
 Corporate Presentation
November 2008
8
Current Operations
Tilapia Biomass Market
Growth Plans
Financial Review
HQ Sustainable
Maritime Industries Inc. 2010
HQ Sustainable Seafood Processing plant, Wenchang
China |
 Tilapia Demand
Trends Fastest growing quality protein
Completely sustainable protein
Relatively low per capita penetration in USA
Low cost protein solution
Adapts well to value added products
Similar demand trends in Europe
Protein powders from Tilapia are increasingly
in demand
9
2000
2008
CAGAR
Chicken
77.4
85.4
1%
Beef
67.5
65.1
0%
Pork
50.8
50.3
0%
Shrimp
3.2
4.0
3%
Tuna
3.5
2.6
-3%
Salmon
1.5
2.2
4%
Tilapia
0.0
1.6
63%
Pollock
1.6
1.6
0%
Catfish
1.1
1.0
-1%
Cod
0.8
0.4
-7%
US Per Capita Annual Consumption (lbs)
Source: The Food and Agriculture Organization (FAO).
Lillian’s Healthy
Gourmet prepared
foods |
   Tilapia
“Green Food” Tilapia is the alternative sustainable
source to wild caught white fish
Ocean caught whitefish supply has
declined by 50%
Almost 50% of today’s seafood is
from aquaculture (all incremental
growth)
Tilapia’s Green Production Attributes
Grows Rapidly in low oxygen levels
Fresh water inland farmed.
Disease and chemical free grow
out using natural methods
Low feed conversion ratio
Source: The Food and Agriculture Organization (FAO).
8
4
3
3
1.50
10 |
 New Directions
in Biomass Consumption in the United States
By 2020, according to the USDA fish proteins
consumed will increase by over 20%
All of this growth will come from aquaculture
Organic proteins are growing by 20% per year
Only farmed animals can be organic
Similar demand trends in Europe (France legislates
25% organic for school age children)
Total Expenditure Per Year 1 Trillion USD
Source: The US Department of Agriculture (USDA).
11 |
 12
Current Operations
Tilapia Biomass Market
Growth Plans
Financial Review
HQ Sustainable Maritime Industries Inc. 2010
HQ Feed Mill, Wenchang China |
 Lillian’s Healthy
Gourmet
products
Omojo
10
th
anniversary
Health Products
HQ Feed Sales
Sales Volume Growth
Margin & Sales Growth from Branding
HQ Fry
Genetics Sales
HQ Fry
Genetics
HQ Feed
Products
13
HQ
Seafood
HQ Health
Products |
 14
Growth Plans
New Re-Processing Plant
Value added production for China market to export
standards
Dates
•
Expected Completion Date Q1 2011
Capacity
•
10 million lbs of Meals and Value Added Products
•
6,500 m2 total construction area
•
Run-Rate Capacity at 80%
Margin
•
Gross Margin Expected to be +/-25%
Investment
•
Estimated Capex $15 mm
•
Working-Capital Need Estimated to be $15mm
HQ Sustainable Maritime Industries Inc. 2010 |
 HQ Sustainable Maritime Industries Inc. 2010
15
Growth Plans
New Fry Breeding and Genetics Facility
Genetics development of Tilapia and other farmed fish,
develop breeding pairs, fry breeding
Dates
•
Expected Completion Date Q3 2010
Capacity
•
Estimated Annual Fry 200 mm
•
Run-Rate Capacity at 80%
Margin
•
Gross Margin Expected to be +/-30%
Investment
•
Estimated Capex $8 mm
•
Working-Capital Need Estimated to be
$8 mm
HQ Fry Breeding and Tilapia farming facility, Sanjiang, China
|
 Proceeds from pre-IPO:
•Accelerate growth
•Flagship Sanya
store
•10 stores in Tier one Cities |
 J
I
A
H
U
A
To use sustainable
marine sourced raw
materials to produce
high quality health and
wellness products
To bring these products
and the understanding of
their use to our
customers |
 The
Opportunity: Unprecedented aging population
18
Population Pyramids, China: 2000 and 2050
2000
2050
Source:
World
Population
Prospects:
The
2004
Revision
(2005).
(New
York:
United
Nations,
2005)
and
WHO.
By
2050
24%
of
the
population
will
be
over
65
with
double
digit
annual
growth
in
disposable
incomes
Highly
fragmented
market
place,
with
more
than
4,000
manufacturers.
June
1
2009
legislation
and
GMP
standards,
now
enforced
reducing
this
number
to
under
3,000. |
 China Retail:
Fragmented but growing China Sales Pie
2012
By 2050, 300 million
Chinese over 65
With double
digit revenue
growth as a
group
spending 50
times more
than today
on health
products
or 35 billion
USD |
 Corporate Presentation
November 2008
20
Current Operations
Tilapia Biomass Market
Growth Plans
Financial Review
HQ Sustainable Maritime Industries Inc. 2010
Fillet processing at HQ Seafood processing plant, Wenchang, China
|
 Nutraceutical
Segment 21
2005
2006
2007
2008
2009
YTD 2009
YTD 2010
Revenues
$9.8
$15.3
$18.7
$22.3
$25.5
$9.0
$9.4
Gross Profit
$8.7
$13.1
$15.6
$16.7
$19.1
$6.9
$6.6
Gross Margin
85%
86%
83%
75%
75%
77%
70%
$9.8
$15.3
$18.7
$22.3
$25.5
$9.0
$9.4
$8.7
$13.1
$15.6
$16.7
$19.1
$6.9
$6.6
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0 |
 Aquaculture
Segment 22
2005
2006
2007
2008
2009
YTD 2009
YTD 2010
Revenue
$17.8
$23.8
$36.2
$45.4
$45.5
$17.8
$18.3
Gross Profit
$2.9
$4.0
$10.0
$12.3
$10.7
$4.2
$3.5
Gross Margin
16%
17%
28%
27%
23%
24%
19%
$17.8
$23.8
$36.2
$45.4
$45.5
$17.8
$18.3
$2.9
$4.0
$10.0
$12.3
$10.7
$4.2
$3.5
$-
$10.0
$20.0
$30.0
$40.0
$50.0 |
 q4
2009 q1 2010
q2 2010
Revenue
$1.3
$3.0
$4.3
Gross Profit
$0.6
$0.4
$0.4
Gross Margin
46%
13%
9%
$1.3
$3.0
$4.3
$0.6
$0.4
$0.4
$-
$1.0
$2.0
$3.0
$4.0
$5.0
Feed Mill Segment |
 24
Summary Income Statement
($ in millions)
2005
2006
2007
2008
2009
YTD 2009
YTD 2010
Revenues
$27.6
$39.1
$55.0
$67.7
$72.3
$26.9
$35.0
Gross Profits
$11.6
$17.2
$25.5
$28.2
$30.2
$11.0
$10.9
Operating Income
$4.6
$7.0
$12.9
$15.0
$11.1
$3.8
$4.0
Net Income to
Shareholders
$3.2
$0.9
$4.5
$10.0
$8.1
$2.2
$2.8
EBITDA
$5.2
$8.1
$14.1
$16.5
$12.5
$4.6
$4.9 |
 25
Balance Sheet
($ in millions)
12/31/2005
12/31/200
6
12/31/2007
12/31/2008
12/31/2009
6/30/2010
Cash and Equivalents
$5.1
$11.4
$47.0
$54.9
$37.0
$43.9
Total Current Assets
$15.0
$30.4
$73.4
$84.1
$98.5
$100.2
Total Assets
$24.4
$41.9
$84.3
$100.2
$119.8
$121.7
Total Current Liabilities
$6.5
$8.4
$11.9
$11.9
$7.8
$6.5
Shareholders' Equity
$17.9
$29.6
$68.8
$88.3
$112.0
$115.2
Total Liabilities and
Shareholders' Equity
$24.4
$41.9
$84.3
$100.2
$119.8
$121.7 |
 26
•
Tilapia Biomass provides products for the future…here today
•
We are participating in the growing global personal healthcare industry
•
We are a “Green Food”
winner by meeting the growing global demand for
environmentally-sensitive products
•
We qualify as a “Natural Food”
and attract the ‘health-smart-dollar’
•
We are focusing on higher volume and higher margin product categories
•
We are a vertically-integrated ACC, Global GAP & ISO certified supplier; necessary
criteria for top Seafood Buyers
Summary |
 27
This
presentation
includes
certain
financial
information
(EBITDA),
which
is
not
presented
in
accordance
with
GAAP.
EBITDA
was
derived
by
taking
earnings
before
financing
costs,
taxes,
depreciation
and
amortization.
The
Company's
management
believes
that
this
non-GAAP
measure
provides
investors
with
a
better
understanding
of
the
Company’s
historical
results
from
its
core
business
operations.
The
non-GAAP
information
is
not
meant
to
be
considered
in
isolation
or
as
a
substitute
for
GAAP
financials.
The
non-GAAP
financial
information
that
the
Company
provides
also
may
differ
from
the
non-GAAP
information
provided
by
other
companies.
The
above
table
provides
a
reconciliation
of
the
non-GAAP
financial
information
to
the
nearest
GAAP
measure.
Appendix: Reconciliation to GAAP
EBITDA
Fiscal Year Ended
2006
2007
2008
2009
Net Income to Shareholders
$ 873,964
$4,486,562
$10,040,688
$8,100,131
Income Taxes
$ 967,968
$2,548,812
$ 2,913,340
$2,212,861
Fair Value Change in Derivatives
Instruments
$(678,378)
Financing Costs
$5,183,567
$5,857,117
$ 2,662,734
$1,097,410
Other expense (Income)
$18
$(42,491)
$(567,876)
$364,472
Depreciation and Amortization
$1,029,672
$1,217,284
$ 1,456456
$1,442,895
EBITDA
$8,055,189
$14,067,284
$16,505,342
$12,539,391 |
 Norbert Sporns,
Harry Wang Hua, Lillian Wang Li –
CEO, COO, Chairman
Co-founders of HQS more than 10 years ago (own 25% of HQS)
Jean-Pierre Dallaire
–
Financial Controller and CFO
Masters degree in Administration
Tony Fish -
Senior Vice President, Sales & Brian Gent VP new Product Development
Extensive sales and club store experience on a national basis
Expert in developing and implementing promotional
programs utilizing a network of brokers and distributors
Corey
Zembruski
–
Managing
Director
Market
Development
Jiahua
Extensive health product development and production experience
Expert in marketing Health Products and cosmeceuticals
Professor WANG Shi-Fan VP Research & Development
Department
of
Pharmaceutical
Engineering
,
School
of
Ocean,
Hainan
University
His
synthetic
organic
chemistry
team
focuses
on
the
development
and
implementation
of
new synthetic methods and strategies for the synthesis of biologically active, naturally
occurring compounds.
Dr. Wang and his team work in final stage validation of new products developed by
Jiahua’s in-house product development teams.
William Su –
International Liaison Manager
Graduate of Beijing Language Institute, Major in Business Administration
28
Management Team
HQ Feedmill
management meeting, Wenchang, China |
 HQ
Sustainable Maritime Industries, Inc. Suite 788, Melbourne Towers
1511 Third Avenue, Suite 788
Seattle, Washington 98101 USA
Tel 206 621-9888
Fax 206 621-0318
http://www.hqfish.com/
sporns@hqfish.com
Auditors:
Schwartz, Levitsky & Feldman,
LLP
Toronto, Canada
Counsel:
Troutman Sanders LLP
New York, New York
29
Contacts
Investor Relations:
ICR
Katie
Turner, Senior
Vice President
tel: 646-277-1228
email: Katie.Turner@icrinc.com
Bryan Gent selling Lillian’s Healthy Gourmet products
at “Expo east”
Boston, USA |