omniture

Feihe International, Inc. Reports First Quarter 2012 Financial Results

2012-05-10 18:30 2324

BEIJING and LOS ANGELES, May 10, 2012 /PRNewswire-Asia-FirstCall/ -- Feihe International, Inc. (NYSE: ADY; "Feihe International" or the "Company"), one of the leading producers and distributors of premium infant formula, milk powder, and soybean, rice and walnut products in China, today announced financial results for the first quarter of 2012. The Company will hold a conference call today at 8:00 am ET.

First Quarter 2012 Financial Highlights:

  • Revenue of $62.9 million in 1Q 2012 vs. $67.7 million in 1Q 2011:
    • Revenue from branded milk powder products was $59.4 million, or 94.4% of total sales, in 1Q 2012 vs. $47.9 million, or 70.8% of total sales, in 1Q 2011
    • Revenue from raw milk powder was $0.9 million, or 1.4% of total sales, in 1Q 2012 vs. $16.1 million, or 23.8% of total sales, in 1Q 2011, and $24.8 million, or 28.5% of total sales in 4Q 2011
  • Gross profit increased to $34.0 million, or 39.3%, in 1Q 2012 vs. $24.4 million in 1Q 2011, and up from $30.9 million in 4Q 2011
  • Gross margin was 54.0% in 1Q 2012 vs. 36.0% in 1Q 2011, up from 35.5% in 4Q 2011
  • Income from operations was $9.7 million in 1Q 2012 vs. $5.0 million in 1Q 2011, and up significantly from a loss of $3.8 million in 4Q 2011
  • Net income was $8.3 million in 1Q 2012 vs. $4.7 million in 1Q 2011, and up significantly from a loss of $10.5 million in 4Q 2011
  • Diluted net income (loss) from continuing operations per common share ("EPS") was $0.40 in 1Q 2012 vs. $0.23 in 1Q 2011, and up significantly from $(0.31) in 4Q 2011

Mr. Leng You Bin, the Company's Chairman and Chief Executive Officer, stated, "We are extremely pleased with our first quarter results. Our high margin and strongly improved net income demonstrated the effectiveness of our decision to concentrate on the sales of our premium branded infant formula products. In particular, sales of AstroBaby grew 203.2% and Feifan grew 74.6% compared to the first quarter of 2011. Net income improved 179.0% in the first quarter of 2012 compared with the fourth quarter of 2011. We will remain focused and committed to expanding sales of our premium infant formula."

The Company's revenue of $62.9 million in the first quarter of 2012 represents a decrease of $4.8 million compared to the first quarter of 2011. This decrease was primarily attributable to a $15.2 million decrease in sales of raw milk powder and a $1.5 million decrease in sales of soybean powder, offset in part by sales of milk powder of $11.5 million. This decrease more broadly reflects the Company's decision to decrease the production of raw milk powder, which generated a negative margin during the first quarter of 2012.

The Company's gross profit was $34.0 million in the first quarter of 2012, up 39.3% from $24.4 million in the first quarter of 2011, and up 10.0% sequentially from $30.9 million in the fourth quarter of 2011. Gross margin for the first quarter of 2012 was 54.0%, compared to 36.0% in the first quarter of 2011, up from 35.5% in the fourth quarter of 2011. The increase in the Company's gross profit for the first quarter of 2012 was primarily due to increased sales of premium and super-premium milk powder and decreased cost of raw milk powder.

The Company's income from operations increased to $9.7 million in the first quarter of 2012, up from $5.0 million in the first quarter of 2011, and up significantly from a loss of $3.8 million in the fourth quarter of 2011. Sales and marketing expenses increased $2.8 million, or 18.2%, to $18.8 million in the first quarter of 2012 from $15.9 million in the first quarter of 2011, and decreased 24.8% compared to $25.0 million in the fourth quarter of 2011. General and administrative expenses decreased to $5.6 million in the first quarter of 2012 from $5.7 million in the first quarter of 2011, and decreased $4.1 million, or 42.3%, compared to $9.7 million in the fourth quarter of 2011.

The Company's net income attributable to the Company for the first quarter of 2012 was $8.3 million, or diluted EPS of $0.40, an increase from $4.7 million, or diluted EPS of $0.23, in the first quarter in 2011, and a significant increase from the net loss attributable to the Company of $10.5 million, or diluted EPS of $(0.31), in the fourth quarter of 2011.

As of March 31, 2012, the Company had cash and cash equivalents of $9.8 million and total current assets of $194.8 million, compared to cash and cash equivalents of $15.4 million and total current assets of $200.5 million as of December 31, 2011. The Company had working capital of $18.6 million as of March 31, 2012.

Mr. Liu Hua, the Company's Vice Chairman and Chief Financial Officer, stated, "We are pleased to report our first quarter 2012 financial results today. Given our strong growth, we are very confident in our business going forward. In addition, we completed the redemption of all of Sequoia's redeemable common stock in April 2012. We are continuing our plan of focusing on sales of premium products and look forward to bringing value to consumers and our shareholders."

Conference Call Details

The Company will also hold a conference call on May 10, 2012 at 8:00 am Eastern Time to discuss its results. Listeners may access the call by dialing the following numbers:

United States toll free:

1-877-675-4753


Hong Kong toll free:

800-968-835


Northern China toll free:

10-800-714-1511


Southern China toll free:

10-800-140-1377


International:

1-719-325-4917


The replay will be accessible through May 17, 2012 by dialing the following numbers:

United States toll free:

1-877-870-5176


International:

1-858-384-5517


Password:

1811442


About Feihe International, Inc.

Feihe International, Inc. (NYSE: ADY) is one of the leading producers and distributors of premium infant formula, milk powder, and soybean, rice and walnut products in the People's Republic of China. Feihe International conducts operations in China through its wholly owned subsidiary, Feihe Dairy, and other subsidiaries. Founded in 1962, Feihe Dairy is headquartered in Beijing, China, and has processing and distribution facilities in Kedong, Qiqihaer, Gannan, Longjiang, Shanxi, and Langfang. Using proprietary processing techniques, Feihe International makes products that are specially formulated for particular ages, dietary needs and health concerns. Feihe International has over 200 company-owned milk collection stations, six production facilities with an aggregate milk powder production capacity of approximately 2,020 tons per day and an extensive distribution network that reaches over 80,000 retail outlets throughout China. For more information about Feihe International, Inc., please visit http://ady.feihe.com.

Cautionary Note Regarding Forward-Looking Statements

This document contains forward-looking information about the Company's operating results and business prospects that involve substantial risks and uncertainties. Statements that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements include, but are not limited to, statements about the Company's plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "may," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "targets," "could," "would," and similar expressions. Because these forward-looking statements are subject to a number of risks and uncertainties, the Company's actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading "Risk Factors" in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2011 and in other reports filed with the United States Securities and Exchange Commission and available at www.sec.gov. The Company assumes no obligation to update any such forward-looking statements.

CONTACT


In the U.S.:

zhangdongshu@feihe.com

In China:

Doris Zhang


86-10-8457-4688 x8810


zhangdongshu@feihe.com

FEIHE INTERNATIONAL, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)




March 31, 2012



December 31, 2011




US$



US$


Assets









Current assets:










Cash and cash equivalents




9,849,284




15,353,882


Restricted cash




2,777,800




1,056,579


Notes and loans receivable, net of allowance for
doubtful accounts of $3,350,056, as of March 31,
2012 and December 31, 2011




-




-


Trade receivables, net of allowance for doubtful
accounts of $810,323 and $810,864, as of March
31, 2012 and December 31, 2011, respectively




14,119,378




40,690,638


Due from related parties




27,280




194,759


Advances to suppliers




19,270,059




11,841,936


Inventories




33,847,620




33,328,949


Prepayments and other current assets




37,795




50,427


Income taxes receivable




2,020,559




1,406,653


Input value-added taxes




1,388,348




965,685


Other receivables




13,537,187




13,742,625


Consideration receivable- current




95,386,958




79,337,423


Investment in mutual funds - available-for-sale




113,777




111,116


Assets held for sale




2,382,801




2,384,391


Total current assets




194,758,846




200,465,063












Investments:




285,799




285,990


Investment at cost




285,799




285,990












Property, plant and equipment:










Property, plant and equipment, net




127,275,263




128,739,637


Construction in progress




15,505,095




14,895,512






142,780,358




143,635,149












Other assets:










Advance to suppliers - non-current




3,431,727




3,741,454


Long term deposits




67,210,746




46,139,913


Consideration receivables, non-current




-




19,450,201


Deferred tax assets - non-current




9,805,701




9,805,701


Prepaid leases for land use rights




18,165,232




18,280,745


Total assets




436,438,409




441,804,216












Liabilities










Current liabilities:










Short term bank loans




53,150,950




54,616,375


Accounts payable




41,357,588




39,077,499


Accrued expenses




4,144,269




6,943,370


Income tax payable




2,515,408




734,389


Advances from customers




11,626,363




17,899,560


Due to related parties




104,111




86,213


Advances from employees




362,538




415,253


Employee benefits and salary payable




7,211,662




9,777,537


Other payable




33,163,914




39,561,388


Current portion of long term bank loans




5,941,474




5,945,439


Current portion of capital lease obligation




181,296




288,066


Accrued interest




-




395,783


Redeemable common stock (US$0.001 par value,
656,250 and 1,312,500 shares issued and outstanding

as of March 31, 2012 and December 31, 2011)




16,379,092




32,696,658


Total current liabilities




176,138,665




208,437,530












Long term bank loans, net of current portion




5,939,762




5,943,726


Capital lease obligation, net of current portion




278,512




430,180


Other long term loans




49,829,495




32,803,289


Accrued interest




-




170,555


Unrecognized tax benefits - non-current




14,608,179




14,806,768


Deferred income




4,904,508




3,711,033


Total liabilities




251,699,121




266,303,081












Commitments and contingencies (see Note 23)




















Equity










Feihe International, Inc. shareholders' equity:










Common stock (US$0.001 par value, 50,000,000 shares
authorized; 19,714,291 shares issued and outstanding as
of March 31, 2012 and December 31, 2011)




19,714




19,714


Additional paid-in capital




60,019,602




58,920,283


Common stock warrants




1,774,151




1,774,151


Statutory reserves




11,341,427




11,341,427


Accumulated other comprehensive income




42,603,017




42,730,802


Retained earnings




68,939,218




60,696,815


Total Feihe International, Inc. shareholders' equity




184,697,129




175,483,192


Noncontrolling interests




42,159




17,943


Total equity




184,739,288




175,501,135


Total liabilities and equity




436,438,409




441,804,216


FEIHE INTERNATIONAL, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)









Three months ended


March 31,



2012


2011




US$


US$


Sales


62,936,077


67,678,513








Cost of goods sold


(28,957,473)


(43,241,942)








Gross profit


33,978,604


24,436,571








Operating and administrative expenses:






Sales and marketing


(18,768,178)


(15,944,336)


General and administrative


(5,590,235)


(5,720,233)


Total operating expenses


(24,358,413)


(21,664,569)








Other operating income, net


90,454


2,220,451








Income from operations


9,710,645


4,992,453








Other income (expenses):






Interest income


23,473


20,904


Interest and finance costs


(1,145,953)


(1,017,725)


Government subsidy


1,561,348


1,520,150


Income from continuing operations before
income tax expenses and noncontrolling interests


10,149,513


5,515,782








Income tax expenses


(1,882,901)


(1,341,683)


Net income from continuing operations


8,266,612


4,174,099


Income from discontinuing operations, net of tax


-


565,444


Net income


8,266,612


4,739,543


Net income attributable to noncontrolling interests


(24,209)


(42,867)


Net income attributable to common stockholders
of Feihe International, Inc.


8,242,403


4,696,676








Net income


8,266,612


4,739,543


Other comprehensive income, net of tax






Foreign currency translation adjustments


(130,439)


2,299,451


Change in fair value of available for sale investments


2,661


(1,350)


Other comprehensive income


(127,778)


2,298,101


Comprehensive income


8,138,834


7,037,644


Less: comprehensive income attributable to the
noncontrolling interest


(24,216)


(24,432)


Comprehensive income attributable to common stockholders
of Feihe International, Inc.


8,114,618


7,013,212








Net income from continuing operations per share of
common stock






Basic


0.40


0.23


Diluted


0.40


0.23








Net income from continuing operations per share of
redeemable common stock






Basic


0.40


0.18


Diluted


0.40


0.18








Net income from discontinued operations, net of tax per
share of common stock






Basic


-


0.03


Diluted


-


0.03








Net income from discontinued operations, net of tax
per share of redeemable common stock






Basic


-


0.03


Diluted


-


0.03








Weighted average shares used in calculating net income
per share of common stock






Basic


19,714,291


19,671,291


Diluted


19,714,291


19,689,849








Weighted average shares used in calculating net income
per share of redeemable common stock






Basic


879,809


2,625,000


Diluted


879,809


2,625,000


Source: Feihe International, Inc.
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