Yew Bio-Pharm Reports Improved Financial Results for 2017 Second Quarter

2017-08-15 04:05 2519

EL MONTE, Calif., Aug. 15, 2017 /PRNewswire/ -- Yew Bio-Pharm Group, Inc. ("Yew Bio" or the "Company") (YEWB), a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine, handicraft products made from yew timber and yew candle and soap made with yew essence oil in China, today reported financial results for three- and six-months ended June 30, 2017.

2017 Second Quarter Results

	Three Months Ended June 30,		Percentage
	2017	2016	Change
Revenues:
TCM Raw Materials	$11,536,786	$9,146,345	26.14%
Yew Trees	-	21,741	(100.00)%
Handicrafts	1,004	79,223	(98.73)%
Others	4,066,586	6,812,801	(40.31)%
Total Revenues	$15,604,376	$16,060,110	(2.84)%

Total revenues for the second quarter of 2017 decreased 2.84% to $15.6 million from $16.1 million a year ago. Sales of TCM raw materials amounted to 73.93% of total revenues; sales of handicrafts amounted to 0.01% of total revenues and sales of "Others" segment consisting with the yew candles, pine needle extracts, essential oil soaps and dietary supplement amounted to 26.06% of total revenues. We did not make sales of yew tree in the second quarter of 2017 due to the Company's strategy adjustment to reserve more yew trees for future TCM raw materials sales.

For the three months ended June 30, 2017, gross profit was $10.6 million, or 67.9% of total revenues, compared with $1.6 million, or 10.3% of total revenues for the comparable 2016 quarter. The increase in the gross profit margin was primarily attributable to the higher gross margin yields of TCM raw materials.

Operating expenses decreased 12.1% to $299,915 for the quarter ended June 30, 2017, from $341,257 in the year-ago quarter. The decreasing was primarily attributable to the decreases in professional fees.

Net income for the three months ended June 30, 2017 increased 685.0% to $10.3 million from $1.3 million in the same quarter last year due to the decrease in cost of revenues from TCM raw material. Earnings per diluted share for the three months ended June 30, 2017 was $0.19, as compared to $0.03 for the three months ended June 30, 2016.

Six Month 2017 Financial Results

	Six Months Ended June 30,		Percentage
	2017	2016	Change
Revenues:
TCM Raw Materials	$14,071,047	$17,189,810	(18.14)%
Yew Trees	-	23,246	(100.00)%
Handicrafts	2,368	96,473	(97.55)%
Others	9,406,425	7,370,950	27.61%
Total Revenues	$23,479,840	$24,680,479	(4.86)%

Total revenues for the first six months of 2017 decreased to $23.5 million from $24.7 million a year ago. Sales of TCM raw materials amounted to 59.93% of total revenues; sales of handicrafts amounted to 0.01% of total revenues and sales of "Others" segment consisting with the yew candles, pine needle extracts, essential oil soaps and dietary supplement amounted to 40.06% of total revenues. We did not make sales of yew tree in the first half of 2017 due to the Company's strategy adjustment to reserve more yew trees for future TCM raw materials sales.

For the six months ended June 30, 2017, gross profit was $11.1 million, or 47.3% of total revenues, compared with $3.0 million, or 12.3% of total revenues for the comparable first six months of 2016. The increase in the gross profit margin was primarily attributable to the higher gross margin yields of TCM raw materials.

Operating expenses decreased 9.0% to $598,318 for the six months ended June 30, 2017, from $657,157 for the same period last year. The decreasing was primarily attributable to the decreases in professional fees.

Net income for the first six months of 2017 increased 342.4% to $10.4 million from $2.4 million for the same period last year. Earnings per diluted share was $0.19, as compared to $0.05 for the six months ended June 30, 2016.

"We were pleased to continue to deliver strong operating and financial results through our increased sales and business strategy adjustment since the year of 2016." said Mr. Zhiguo Wang, Chairman and Chief Executive Officer of Yew Bio-Pharm Group, Inc. "Our net income for the second quarter increased 685.0% compared to last year due to the decrease in cost of revenues from TCM raw materials, which illustrates the success of our company strategy in another way. Since 2016, we changed our strategy to decrease our yew seedling sales and to grow the seedlings for picking leaves, which will be finally made to TCM raw materials. From the second quarter of 2017, we reserved enough leaves to pick without cutting down the whole grown trees and our TCM raw materials unit cost decreased accordingly."

"As we also mentioned in prior announcement, our new e-commerce website officially went live on June 7, 2017 under the URL: http://www.yewshop.com, and the new website had begun to generate revenues from June, 2017. We expect the newly added business section will contribute more revenues in the following months. Meanwhile, our two new cosmetic series products, which contain yew oil ingredient, are expected to deliver by the end of August. We believe these new developed cosmetic products will greatly enrich our product mix and to increase our potential revenues in the future."

ABOUT YEW BIO-PHARM GROUP, INC

Yew Bio-Pharm Group, Inc., through its operating entity, Harbin Yew Science and Technology Development Co., Ltd. (HDS), is a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine (TCM) and products made from yew timber in China. Raw material from the species of yew tree that the Company grows contains taxol, and TCM containing yew raw materials has been approved as a traditional Chinese medicine in China for secondary treatment of certain cancers. The Company uses a patented, accelerated growth technology to speed the growth and maturity and commercialization of yew trees and believes that it is one of the few companies possessing a permit to sell them. Yew Bio-Pharm also recently established a division to focus on organic foods and dietary supplements with the aim of developing new business opportunities in related industries. To learn more, please visit www.yewbiopharm.com.

SAFE HARBOR

This press release forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements involve a number of risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our ability to collect from our largest customers; our dependence on a small number of customers for raw materials, including a related party; our ability to continue to purchase raw materials at relatively stable prices; our dependence on a small number of customers for our yew trees for reforestation; our ability to market successfully raw materials used in the manufacture of traditional Chinese medicines; and our ability to receive continued preferential tax treatment for the sale of yew trees and potted yew trees. From time to time, these risks, uncertainties and other factors are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K. Yew Bio does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

Company Contacts:
Henry Pang
Yew Bio-Pharm Group, Inc.
Tel: (626) 401-9588
hpang@yewbiopharm.com

(financial tables follow)
YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

	June 30, 2017		December 31, 2016
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	2,437,554	$	278,991
Accounts receivable		12,091,226		14,467,852
Accounts receivable - related party		11,597,870		6,941,931
Inventories, net		14,330,750		10,296,792
Prepaid expenses - related party		65,921		76,035
Prepaid expenses and other assets		82,085		75,743
VAT recoverables		1,399,774		1,655,954

Total Current Assets		42,005,180		33,793,298

LONG-TERM ASSETS:
Long-term inventories, net		6,922,600		7,151,613
Property and equipment, net		659,849		692,116
Land use rights and yew forest assets, net		9,605,585		4,558,234

Total Long-term Assets		17,188,034		12,401,963

Total Assets	$	59,193,214	$	46,195,261

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	878,697	$	2,700,148
Accounts payable - related parties		505,746		638,318
Accrued expenses and other payables		668,163		379,294
Notes payable		1,184,908		1,156,444
Taxes payable		4,770		16,520
Due to related parties		786,746		883,596
Short-term borrowings		4,671,148		1,723,865

Total Current Liabilities		8,700,178		7,498,185

NONCURRENT LIABILITIES:
Deferred income		345,291		120,973
Total Noncurrent Liabilities		345,291		120,973

Total Liabilities		9,045,469		7,619,158

SHAREHOLDERS' EQUITY:
Common Stock ($0.001 par value; 140,000,000 shares authorized; 51,875,000 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively)		51,875		51,875
Additional paid-in capital		9,721,372		9,654,024
Retained earnings		37,499,437		27,074,624
Statutory reserves		3,762,288		3,762,288
Accumulated other comprehensive loss		(887,227)		(1,966,708)

Total Shareholders' Equity		50,147,745		38,576,103

Total Liabilities and Shareholders' Equity	$	59,193,214	$	46,195,261

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
REVENUES:
Revenues	$	4,067,590	$	6,913,765	$	9,408,793	$	7,490,669
Revenues - related party		11,536,786		9,146,345		14,071,047		17,189,810

Total Revenues		15,604,376		16,060,110		23,479,840		24,680,479

COST OF REVENUES:
Cost of revenues		4,058,847		6,806,861		9,360,063		7,434,844
Cost of revenues - related party		955,866		7,603,509		3,010,134		14,202,413

Total Cost of Revenues		5,014,713		14,410,370		12,370,197		21,637,257

GROSS PROFIT		10,589,663		1,649,740		11,109,643		3,043,222

OPERATING EXPENSES:
Selling		66		8,835		331		12,087
General and administrative		299,849		332,422		597,987		645,070

Total Operating Expenses		299,915		341,257		598,318		657,157

INCOME FROM OPERATIONS		10,289,748		1,308,483		10,511,325		2,386,065

OTHER INCOME (EXPENSES):
Interest expense		(35,382)		(41,967)		(87,345)		(69,287)
Other income		1,147		39,829		1,437		39,829

Total Other Expenses		(34,235)		(2,138)		(85,908)		(29,458)

INCOME BEFORE PROVISION FOR INCOME TAXES		10,255,513		1,306,345		10,425,417		2,356,607
PROVISION FOR INCOME TAXES		(604)		-		(604)		-
NET INCOME	$	10,254,909	$	1,306,345	$	10,424,813	$	2,356,607

COMPREHENSIVE INCOME:
NET INCOME	$	10,254,909	$	1,306,345	$	10,424,813	$	2,356,607
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment		775,601		(1,174,091)		1,079,481		(898,669)

COMPREHENSIVE INCOME	$	11,030,510	$	132,254	$	11,504,294	$	1,457,938

NET INCOME PER COMMON SHARE:
Basic	$	0.20	$	0.03	$	0.20	$	0.05
Diluted	$	0.19	$	0.03	$	0.19	$	0.05
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		51,875,000		51,875,000		51,875,000		51,875,000
Diluted		53,041,145		51,875,000		55,034,527		51,875,000

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the Six Months Ended June 30,
	2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	10,424,813	$	2,356,607
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		46,498		59,387
Stock-based compensation		67,348		165,194
Amortization of land use rights and yew forest assets		70,717		8,810,916
Changes in operating assets and liabilities:
Accounts receivable		2,693,028		682,900
Accounts receivable - related party		(4,421,530)		(3,763,989)
Prepaid expenses and other current assets		(5,367)		(32,041)
Prepaid expenses - related party		11,816		12,413
Inventories, net		(7,625,415)		(6,627,197)
VAT recoverables		292,731		(1,696,123)
Accounts payable		(1,858,142)		62,195
Accounts payable - related parties		(146,182)		3,735
Accrued expenses and other payables		302,587		187,331
Due to related parties		(51,602)		-
Deferred income		218,204		-
Taxes payable		(11,869)		2,467

NET CASH PROVIDED BY OPERATING ACTIVITIES		7,635		223,795

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-		(4,261)
Purchase of intangible assets and yew forest assets		(679,387)		-

NET CASH USED IN INVESTING ACTIVITIES		(679,387)		(4,261)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings		6,501,105		1,530,105
Repayment of short-term borrowings		(3,617,764)		(1,530,105)
Proceeds from related party		-		81
Repayments to related party		(75,875)		(35,000)

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2,807,466		(34,919)

EFFECT OF EXCHANGE RATE ON CASH		22,849		(17,318)

NET INCREASE IN CASH		2,158,563		167,297
CASH - Beginning of period		278,991		681,608
CASH - End of period	$	2,437,554	$	848,905

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	86,076	$	41,851
Income taxes	$	18,015	$	6,503
NON-CASH INVESTING AND FINANCIANG ACTIVITIES
Operating expenses paid by related party	$	27,015	$	24,420
Reclassification of inventories to land use rights and yew forest assets	$	4,257,122	$	-