WEIFANG, Shandong, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) ("Shengtai Pharmaceutical" or "the Company"), a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today reported financial results for the three months ended March 31, 2008.
Third Quarter of Fiscal 2008 Highlights
-- Sales increased 64.8% to $20.7 million
-- Gross profit rose 37.2% to $4.5 million
-- Gross profit margin was 21.7%
-- Operating income increased 30.4% to $2.9 million
-- Net income increased 5.2% to $ 1.9 million
-- Weighted avg. diluted shares outstanding were 19.8 million vs. 10.1
million
-- Fully diluted EPS was $0.10 versus $0.18
Third Quarter of Fiscal 2008 Results
For the third quarter of fiscal 2008, sales increased 64.8% to $20.7 million from $12.6 million for the third quarter of fiscal 2007.
Cornstarch sales were $7.1 million in this quarter, up 212.5% from $2.3 million in the same period of 2007, sales of glucose products were $7.9 million in this quarter, down 4.3% from $8.3 million in the same period of 2007 and sales of other products were $5.6 million, up 177.5% from $2.0 million in the same period of 2007.
The increased sales of cornstarch resulted in a higher proportion of total cornstarch sales compared to the same reporting period last year. Along with an improving utilization rate of the new cornstarch manufacturing plant, the Company manufactured and sold more cornstarch with lower gross profit margins to generate necessary working capital and funds for construction of its new glucose complex. The significant growth of its other products business was mainly attributable to more sales of higher margin sodium gluconate and cornstarch byproducts associated with the greater operational size of the cornstarch business.
"The sales kept growing during this quarter due to more cornstarch production, higher product prices and increased sales of higher-value products. We were pleased with our sales this quarter despite seasonal softness due to the Chinese Spring Festival, the snow storm in February, and machine maintenance incurred in this quarter," said Chairman and CEO, Mr. Qingtai Liu, "We believe our business will continue to grow significantly in the next several quarters since we successfully launched trial production at the new glucose complex."
Gross profit for the three months ended March 31, 2008 was $4.5 million, up 37.2% from $3.3 million for the same period of the prior year. The increased gross profit was mostly due to economies of scale resulting from the expansion of production output and enhanced operating efficiencies. Gross margin for the third quarter of fiscal 2008 was 21.7%, a decrease from 26% for the same period of 2007 due to an increase in the price of raw materials and a higher proportion of cornstarch with lower profit margins.
Selling, general and administrative expenses for the three months ended March 31, 2008 were $1.6 million, up 51.4% compared with the corresponding period in 2007. The increase in selling, general and administrative expenses was attributable to increased administrative expenses such as stock-based compensation and professional and listing fees of being a listed company.
Shengtai Pharmaceutical's operating income in third quarter of fiscal 2008 increased 30.4% to $2.9 million from $2.2 million in the same period of prior year, while the operating margin was 13.9% versus 17.6% in the third quarter of fiscal 2007.
Net income for the three months ended March 31, 2008 was $1.9 million. The increase in net income was due to greater sales volume and revenue, and the fast expansion of new products. Weighted average diluted earnings per share were $0.10 for the three months ended March 31, 2008, compared to $0.18 for the three months ended March 31, 2007. The diluted weighted average shares was 19.8 million in the third fiscal quarter of 2008 versus 10.1 million for the same period of last year, primarily due to a private placement of stock in May 2007.
Financial Condition
As of March 31, 2008, Shengtai Pharmaceutical had cash and restricted cash of $5.7 million and working deficit of $20.6 million. During the three months ended March 31, 2008, the Company generated $12.7 million in cash flow from operations. As of March 31, 2008, the Company had $45.8 million in total debt, and $42.5 million of shareholders' equity.
Business Outlook
In October 2007, Shengtai Pharmaceutical completed a new cornstarch production facility with maximum annual capacity to produce 240,000 metric tons, which is close to its existing glucose production plant and new glucose production complex. Currently, the cornstarch production facility produces cornstarch to satisfy the Company's own glucose production needs, and the some excess cornstarch is sold to outside customers.
The Company has been upgrading its existing glucose facilities and is expected to reach projected annual production capacity of about 90,000 metric tons in first half of 2008. It is currently utilizing more cornstarch internally for the production of pharmaceutical glucose and other higher value-added products. The new cornstarch production facility ensures the adequacy and quality of the cornstarch as the main material of pharmaceutical glucose and lower shipping costs to improve its profit margins. During the nine months ended March 31, 2008, we estimate that by using cornstarch manufactured internally, we have saved $1.0 million.
Shengtai Pharmaceutical nearly finished the construction of the new glucose production complex with expected annual production capacity of 120,000 tons. The new facility is now equipped with most of the major high-tech operational machines and the Company will apply its international quality control standards over the production. The new facility successfully commenced trial production at the beginning of May 2008.
"We are very pleased to see our successful trial production at the new glucose complex. The official launch of its production should further satisfy strong demand of glucose products, especially for pharmaceutical grade glucose products," said Chairman and CEO, Mr. Qingtai Liu, "We will be shifting more excess cornstarch to be utilized internally to the new glucose complex, which will strengthen our glucose business and improve our profitability. We will also continue to manufacture innovative products and diversify our product lines to meet market demand to pursue higher profit margin and minimize our operating risks."
Teleconference Information
Shengtai Pharmaceutical, Inc. will conduct a conference call at 9:00 a.m. Eastern Time on Friday, May 16, 2008 to discuss the third quarter results of fiscal year 2008.
To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:
800-688-0796. International callers should dial 617-614-4070. When prompted by the operator, mention Conference Passcode 502 870 72.
If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Friday, May 16 at 11:00 a.m. Eastern Time. To access the replay, dial 888-286-8010, international callers should dial 617-801-6888, and enter the passcode 924 807 90.
About Shengtai Pharmaceutical, Inc.
Shengtai Pharmaceutical, Inc. through its wholly-owned subsidiary Shengtai Holding, Inc. (SHI), a New Jersey corporation, and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of glucose products, which include pharmaceutical grade glucose used for medical purposes, and glucose and cornstarch products for the food and beverage industry and for industrial production in China. For more information about Shengtai Pharmaceutical, Inc. please visit http://www.shengtaipharmaceutical.com .
Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by the Company, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding our ability to prepare the company for growth, the Company's planned capacity expansion in 2008 and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large scale implementation of the company's business plan, the ability to attract new customers, ability to increase its product's applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.
-- Financial Tables Follow --
SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
Three months ended Nine months ended
March 31, March 31,
2008 2007 2008 2007
SALES REVENUE $20,701,577 $12,563,088 $65,028,934 $35,472,898
COST OF SALES 16,220,665 9,297,002 50,085,971 26,694,321
GROSS PROFIT 4,480,912 3,266,086 14,942,963 8,778,577
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,603,932 1,059,579 5,114,863 2,989,524
INCOME FROM OPERATIONS 2,876,980 2,206,507 9,828,100 5,789,053
OTHER (EXPENSE) INCOME:
Earnings on equity
investment 43,070 83,182 192,826 105,389
Non-operating income 67,451 1,704 177,160 98,867
Non-operating expense (96,191) (18) (300,035) (2,801)
Interest expense and
other charges (738,634) (323,688) (1,674,515) (692,326)
Interest income 55,697 42,396 154,101 86,041
Other (expense), net (668,607) (196,424) (1,450,463) (404,830)
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,208,373 2,010,083 8,377,637 5,384,223
PROVISION FOR INCOME TAXES 321,220 216,990 1,108,388 518,128
NET INCOME 1,887,153 1,793,093 7,269,249 4,866,095
OTHER COMPREHENSIVE INCOME:
Foreign currency
translation adjustments 1,554,258 130,758 2,966,909 377,729
COMPREHENSIVE INCOME $3,441,411 $1,923,851 $10,236,158 $5,243,824
EARNINGS PER SHARE
Basic $0.10 $0.18 $0.38 $0.48
Diluted $0.10 $0.18 $0.36 $0.48
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 19,069,805 10,125,000 18,967,857 10,125,000
Diluted 19,845,195 10,125,000 19,959,689 10,125,000
SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2008 AND JUNE 30, 2007
A S S E T S
March 31, June 30,
2008 2007
(Unaudited)
CURRENT ASSETS:
Cash $ 3,229,336 $ 6,420,439
Restricted cash 2,490,000 6,128,500
Accounts receivable, net of
allowance for doubtful accounts
of $350,618 and $431,178 as of
March 31, 2008 and June 30, 2007,
respectively 7,530,395 5,779,967
Notes receivable 567,571 984,675
Other receivables 1,416,761 2,984,484
Other receivables - related
parties -- 2,491,656
Other receivables - shareholder -- 1,229,625
Loan to related party -- 657,500
Inventories 6,222,975 4,449,267
Prepayments 805,641 140,376
Total current assets 22,262,679 31,266,489
PLANT AND EQUIPMENT, net 41,998,981 30,178,074
OTHER ASSETS:
Investment in Changle Shengshi
Redian Co., Ltd. 3,395,183 2,675,678
Loan to related party -
non-current 428,400 394,500
Prepayments - non-current 17,979,164 7,429,371
Intangible assets - land use
right, net of accumulated
amortization 2,272,278 1,816,021
Total other assets 24,075,025 12,315,570
Total assets $ 88,336,685 $ 73,760,133
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
CURRENT LIABILITIES:
Accounts payable $ 5,224,288 $ 3,807,997
Accounts payable - related
parties 507,612 949,992
Notes payable - banks 4,284,000 8,942,000
Short term loans 21,934,080 18,870,250
Accrued liabilities 135,731 229,643
Other payable 2,407,234 1,526,903
Employee loans 1,651,578 596,516
Employee loan - officer 52,572 --
Third party loan 421,776 318,274
Customer deposit 1,181,468 796,228
Long term loan - current
maturity 414,120 381,350
Taxes payable 4,625,019 2,048,932
Total current liabilities 42,839,478 38,468,085
LONG TERM LIABILITIES
2,965,162
Other payable - noncurrent 3,661,472
Total long term liabilities 2,965,162 3,661,472
Total liabilities 45,804,640 42,129,557
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par
value, 5,000,000 shares
authorized, no shares issued and
outstanding -- --
Common stock, $0.001 par value,
100,000,000 shares authorized,
19,069,805 and 18,875,000
shares issued and outstanding as of
March 31, 2008 and June 30,
2007, respectively 19,070 18,875
Additional paid-in capital 19,828,665 19,163,549
Statutory reserves 1,735,484 1,735,484
Retained earnings 17,154,919 9,885,670
Accumulated other comprehensive
income 3,793,907 826,998
Total shareholders' equity 42,532,045 31,630,576
Total liabilities and
shareholders' equity $ 88,336,685 $ 73,760,133
SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2008 AND 2007
(UNAUDITED)
2008 2007
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 7,269,249 $ 4,866,095
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation 2,076,992 1,295,570
Amortization 38,263 31,992
Allowance for bad debts 16,558 53,445
Gain on equipment disposal (91,480) --
Gain on disposal of land
use right (24,783) --
Compensation expense for
options issued to
employees 158,818 --
Earnings on equity
investment (192,826) (105,389)
Change in operating assets
and liabilities:
Accounts receivable (1,108,695) (2,401,163)
Notes receivable 380,411 147,315
Other receivables 1,987,660 473,493
Other receivables - related parties 2,570,100 (575,729)
Other receivables - shareholder 1,273,495 (20,900)
Inventories (1,404,996) (1,175,968)
Prepayments (620,451) 87,447
Prepayments - related parties -- (746,328)
Accounts payable (595,474) 2,756,521
Accounts payable - related parties (1,252,106) (467,190)
Accrued liabilities (568,922) 169,404
Accrued liabilities - related party 482,160 --
Other payable 362,035 105,702
Other payable - equipment purchase (1,241,003) --
Other payable - discount on
equipment purchase 626,370 --
Other payable - Intercompany -- --
Customer deposit 297,543 1,128,506
Taxes payable 2,261,984 316,605
Net cash provided by
operating activities 12,700,902 5,939,428
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of equity investment -- (904,043)
Purchases of plant and equipment (154,262) (497,603)
Proceeds from equipment disposal 35,266 --
Additions to construction in
progress (7,725,153) (11,697,698)
Acquisition of land use right (324,031) (10,747)
Purchase of software program (5,426) --
Advances on plant and equipment purchase (9,876,385) (1,069,809)
Loan repayment from related party 678,200 --
Proceed from land use right disposal 30,826 --
Net cash used in
investing activities (17,340,965) (14,179,900)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Decrease (increase) in restricted cash 3,407,360 (1,518,640)
Borrowings on notes payable - banks 5,425,600 12,959,405
Payments on notes payable - banks (10,579,920) (11,431,445)
Borrowings on short term loans 12,750,160 17,100,419
Payments on short term loans (11,380,196) (7,550,669)
Borrowings on employee loans 1,412,554 627,960
Payments on employee loans (459,082) (378,336)
Borrowings on employee loan - officer 45,187 --
Borrowings on third party loan 2,898,529 --
Payments on third party loan (2,826,195) --
Payments on long term loans -- (1,334,641)
Cash proceeds from issuance
of common stock 506,493 --
Dividend paid to shareholders -- (395,838)
Net cash provided by
financing activities 1,200,490 8,078,215
EFFECTS OF EXCHANGE RATE
CHANGE IN CASH 248,470 14,494
DECREASE IN CASH (3,191,103) (147,763)
CASH, beginning of period 6,420,439 502,457
CASH, end of period $ 3,229,336 $ 354,694
For more information, please contact:
Company Contact:
Ms. Melody Shi
CFO
Shengtai Pharmaceutical, Inc.
Tel: +1-949-468-7078
Email: shengtaicfo@hotmail.com
Investor Relations Contact:
Mr. Crocker Coulson
President
CCG Elite Investor Relations
Tel: +1-646-213-1915 (NY Office)
Email: crocker.coulson@ccgir.com
Website: www.ccgelite.com
