Company Reports Record Revenue Increase of 68% Year-Over-Year and Record Net Income Increase of 88% Year-Over-Year
XI'AN, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- SkyPeople Fruit Juice, Inc. (OTC Bulletin Board: SPFJ) ("SkyPeople" or "the Company"), a leading processor and manufacturer of concentrated apple, kiwifruit, pear and other fruit juices and fruit products in the People's Republic of China, today announced its financial results for the third quarter of fiscal year 2008.
Third Quarter Fiscal 2008 Highlights
-- Total revenue increased 68.3% to approximately $6.3 million for the
third quarter of fiscal 2008, compared to approximately $3.8 million
for the third quarter of fiscal 2007, as the result of an increase in
production capacity and market demand for the Company's products
-- Gross profit margins increased by 37.4% to 47.8% in the third quarter
of fiscal 2008, from 34.8% in the same year-ago period, due to a
decrease in the price of fresh fruits during this quarter
-- Income from operations increased by 99.1% to approximately $1.6 million
for the third quarter of fiscal 2008 from $819,828 for the same year-
ago period, due to a significant increase in total revenue, which was
offset by an increase in operating expenses
-- Net income increased $555,866, or 88.3%, to approximately $1.2 million
in the third quarter of fiscal 2008, compared with $629,217 for the
third quarter of fiscal 2007
-- Launched the large-scale production of concentrated mulberry juice at
the Company's Jingyang production base in September 2008
"Our third quarter performance clearly demonstrates the substantial operating leverage inherent in our business model, as evidenced by the very strong growth in operating income, relative to revenue," stated Mr. Yongke Xue, CEO of SkyPeople Fruit Juice. "While we were pleased with the growth in sales of our existing products, we are also excited about new additions, particularly concentrated mulberry juice, which we are now able to produce at our Jingyang base, as of September of this year. As the fruit juice market continues to evolve, we are confident that our superior quality and diverse line of products will continue to satisfy increasing demand, fueling sustainable growth for the future."
Revenue for the three months ended September 30, 2008 was approximately $6.3 million, an increase of approximately $2.6 million or 68.3%, when compared to the same sales period of the prior year. This increase was primarily attributable to the increase in sales of concentrated pear juice, fruit beverages and concentrated kiwifruit juice and kiwifruit puree, due to the increase in acceptance of the Company's products in both the international and national markets and an increase in the market demand for juice related products in general. In the third quarter of fiscal year 2007, the Company did not have any sales of concentrated apple juice, but did have sales of $38,766 of apple aroma. As a result, revenues from the sale of concentrated apple juice and apple aroma increased by 804.0% to $350,429 in the third quarter of fiscal 2008 as compared with the same period last year.
Overall gross margin as a percentage of revenue increased by 37.4% for the three months ended June 30, 2008, from 34.8% to 47.8%, compared to the same period of fiscal 2007. In terms of dollar amount, gross margin in the three months ended June 30, 2008 was approximately $3.0 million, an increase of approximately $1.7 million or 131.2 %, compared to approximately $1.3 million in the same period of fiscal 2007, primarily due to a significant increase in sales.
The increase in gross margin as a percentage of revenue in the third quarter of fiscal 2008 was primarily due to an increase in the gross margin of concentrated pear juice, kiwifruit juice and kiwifruit puree and fruit beverages, which was offset by a decrease in the gross margin of concentrated apple juice and apple aroma. In the third quarter of fiscal year 2008, we saw a large decrease in the general price of fresh fruits. As weather conditions in the beginning of this squeezing season were better than in the third quarter of fiscal 2007, there was an abundant harvest of pear and kiwifruit in the third quarter of fiscal 2008. As a result, the general price of pear and kiwifruit decreased in the third quarter of fiscal 2008, which in turn significantly improved our gross margin in pear and kiwifruit related products. However, the gross margin of concentrated apple juice and apple aroma decreased by 68.6% compared with the same quarter of last fiscal year due to a reduction in the average selling price of our apple related products as the result of strong competition in apple related products in the market.
Our operating expenses consist of general and administrative, selling expenses, research and development expenses and accrued liquidated damages. Operating expenses increased by 184.7% to $1.4 million for the three months ended September 30, 2008, from $491,143 for the corresponding period in fiscal 2007.
General and administrative expenses increased by $287,456, or 69.3%, to $702,385 for the three months ended September 30, 2008, from $414,929 for the same period in fiscal 2007. The increase in general and administrative expenses in the third quarter of fiscal 2008 compared with the same quarter of fiscal 2007 is mainly due to an increase of $132,971 in legal and auditing expenses related to the compliance of related rules as a public company, an increase of $83,554 in depreciation and amortization expenses due to an increase in fixed assets, and an increase of $43,607 in payroll and related expenses as the result of a larger headcount to handle the rise in sales volume.
Selling expenses increased by $249,811 or 402.1% for the three months ended September 30, 2008, from $62,120 for the same period of fiscal 2007. This was mainly due to an increase in freight and transportation expenses as a result of the increase in sales.
Research and development expenses increased by $161,337 or 1,144.7%, to $175,431 for the three months ended September 30, 2008, from $14,094 for the same period of fiscal 2007. The increase in research and development expenses was attributable to outsourcing our research and development of new fruit related products to a third party in the third quarter of fiscal 2008.
We accrued $208,658 as of September 31, 2008 as liquidated damages due to the failure to meet the timetables provided for in the Registration Rights Agreement.
In the third quarter of fiscal 2008, income from operations increased by $812,114, or 99.1%, to $1.6 million, from $819,928 for the third quarter of fiscal 2007. As a percentage of net sales, income from operations was approximately 25.7% for the third quarter of fiscal 2008, an increase of 18.3% as compared to 21.7% for the same period in fiscal 2007. The increase in income from operations in the third quarter of fiscal 2008 was primarily due to an increase in sales in the third quarter of fiscal 2008, which was offset by an increase in operating expenses.
Net income was $1.2 million for the three months ended September 30, 2008, an increase of $555,866 or 88.3% compared to the same period in fiscal 2007, primarily due to an increase in sales, as previously discussed.
Balance Sheet Highlights
As of September 30, 2008 cash was $12.8 million, working capital was $6.6 million and stockholders' equity was $35.3 million.
Business Outlook
Mr. Xue stated, "We experienced strong global growth trends in the fruit juice market this quarter, and expect this trajectory to continue for the remainder of fiscal 2008, heading into fiscal 2009. We feel our superior product mix and operational strengths position us well to continue capitalizing on this growth to expand market share. With this objective in mind, SkyPeople's focus for the fourth quarter of fiscal 2008 and beyond is to maintain our aggressive development strategy, investing in the R&D for of our new line of products for the next squeezing season, with the end goal of improving our profit margin. Concurrently, we plan to significantly increase the production capacity of each of our three main production bases through the end of fiscal 2008, heading into fiscal 2009, while continuing to focus on strategic acquisitions. Our plan to acquire an additional apple juice production base will add an expected 6,000 tons of capacity, increasing our total production capacity to 21,000 tons by the first half of 2009."
About SkyPeople Fruit Juice, Inc.
SkyPeople Fruit Juice, Inc. is a holding company for Shaanxi Tianren Organic Food Co., Ltd. Shaanxi Tianren is a company organized according to the laws of the People's Republic of China. SkyPeople's main products are concentrated apple, kiwifruit, pear and other fruit juices for domestic and international consumers. Its brand, HEDETANG, is positioned as a high quality, healthy and nutritious juice concentrate and clear juice product used both as an ingredient component in other products and an end-use juice concentrate product. Shaanxi Tianren owns the largest kiwifruit plantation in China and is a leading worldwide producer of concentrated kiwifruit juice. For more information, please visit http://www.skypeoplefruitjuice.com .
Forward-Looking Statements
This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the People's Republic of China, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
-- Financial Tables Follow --
SKYPEOPLE FRUIT JUICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, UNAUDITED
September 30, December 31,
2008 2007
ASSETS (Unaudited)
CURRENT ASSETS
Cash and equivalents $12,796,559 $4,094,238
Accounts receivable 3,625,601 9,153,687
Other receivables 45,075 55,737
Inventories 1,860,384 4,460,149
Prepaid expenses and other current
assets 1,267,956 101,628
Total current assets 19,595,575 17,865,439
RELATED PARTY RECEIVABLES -- 4,970,427
PROPERTY, PLANT AND EQUIPMENT, Net 20,487,126 17,564,147
LAND USAGE RIGHTS 6,490,906 6,138,297
OTHER ASSETS 2,749,985 71,818
TOTAL ASSETS $49,323,592 $46,610,128
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,525,893 $2,997,740
Accrued expenses 716,656 557,577
Accrued Liquidated damages 208,658 --
Related party payables -- 143,366
Income taxes payable 217,426 114,909
Advances from customers 779,961 708,291
Short-term notes payable 9,573,042 6,406,922
Total current liabilities 13,021,636 10, 928,805
NOTE PAYABLE, net of current portion -- 2,053,501
TOTAL LIABILITIES $13,021,636 $12,982,306
MINORITY INTEREST 1,019,710 1,073,364
MINORITY INTEREST-Variable interest
entity -- 6,308,591
STOCKHOLDERS' EQUITY
Preferred Stock, $0.001 par
value; 10,000,000 shares
authorized, 3,448,480 Series B
Preferred Stock issued and
outstanding 3,448 --
Common Stock, $0.01 par
value; 100,000,000 shares
authorized 22,271,684 and
22,006,173 shares issued and
outstanding as of September
30, 2008 and Decembe31,
2007, respectively 222,717 220,062
Additional paid-in capital 13,791,724 10,682,755
Accumulated retained earnings 16,358,755 12,458,632
Accumulated other
comprehensive income 4,905,602 2,884,418
Total stockholders' equity 35,282,768 26,245,867
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $49,323,592 $46,610,128
SKYPEOPLE FRUIT JUICE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME, UNAUDITED
Three Months Ended
September 30, September 30,
2008 2007
(Unaudited) (Unaudited)
Revenue $6,345,778 $3,770,890
Cost of Sales 3,315,431 2,459,919
Gross Profit 3,030,347 1,310,971
Operating Expenses
General and
administrative 702,385 414,929
Selling expenses 311,931 62,120
Research and development 175,431 14,094
Accrued liquidated
damages 208,658 --
Total operating expenses 1,398,405 491,143
Income from Operations 1,631,942 819,828
Other Income (Expense)
Interest expense (179,699) (19,761
Interest expense
Interest income 18,377 4,356
Subsidy income 3,428 --
Other income (expense) (1,119) (677)
Total other income
(expense) (159,013) (16,082)
Income Before Income Taxes 1,472,929 803,746
Income Tax Provision 214,387 127,406
Income Before Minority Interest 1,258,542 676,340
Minority interest 73,459 47,123
Net Income $1,185,083 $629,217
Earnings Per Share:
Basic earnings per share $0.04 $0.03
Diluted earnings per share $0.04 $0.03
Weighted Average Shares Outstanding:
Basic 22,271,684 22,006,173
Diluted 27,720,164 22,006,173
Comprehensive Income:
Net income $1,185,083 $629,217
Foreign currency translation
adjustment 418,071 306,810
Comprehensive Income $1,603,154 $936,027
For more information, please contact:
SkyPeople Fruit Juice, Inc.
Ms. Spring Liu, CFO
Tel: +1-818-390-1272
Email: springliu@skypeoplejuice.com
The Piacente Group, Inc.
Ms. Lesley Snyder
Tel: +1-212-481-2050
