Yew Bio-Pharm Group Reports 2016 Second Quarter Financial Results

2016-08-15 20:05 2738

EL MONTE, Calif., August 15, 2016 /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 made with yew essence oil in China, today reported financial results for three- and six-months ended June 30, 2016.

2016 Second Quarter Results

		Three Months Ended June 30,		Percentage Change
		2016	2015	Percentage Change
Revenues:
	TCM Raw Materials	$9,146,345	$3,909,314	134%
	Yew Trees	21,741	344,919	(94)%
	Wood ear mushroom	-	405,483	(100)%
	Handicrafts	79,223	7,206	999%
	Others	6,812,801	-	100%
	Total Revenues	$16,060,110	$4,666,922	244%

Total revenues for the second quarter of 2016 increased by 244% to $16.1 million from $4.7 million a year ago. Sales of TCM raw materials amounted to 57% of total revenues; sales of yew trees amounted to 0.1% of total revenues; sales of handicrafts amounted to 0.5% of total revenues and sales of the "Others" segment consisting yew candle and dietary supplement amounted to 42.4% of total revenues. The Company did not make sales of wood ear mushroom in the second quarter of 2016, as this is still a newly introduced product category for the Company and they are still seeking for various customer resources for this segment.

For the 2016 second quarter, gross profit was $1.6 million, or 10.3% of total revenues, compared with $2.4 million, or 51% of total revenues for the comparable 2015 quarter. The decrease in gross profit margin was primarily attributable to the lower gross margin yields of the wood ear mushroom and the "Others" segments.

Operating expenses decreased by 29.6% to $341,257 for the quarter ended June 30, 2016, from $484,475 in the year-ago quarter. The decrease was primarily attributable to the decreases in compensation and related benefits.

Net income for the three months ended June 30, 2016 decreased by 34.9% to $1.3 million from $2.0 million in the same quarter last year due to the cost increase of the TCM raw materials and the "Others" segments. Earnings per diluted share for the three months ended June 30, 2016 was $0.03, in line with the same period last year.

Six Month 2016 Financial Results

		Six Months Ended June 30,		Percentage Change
		2016	2015	Percentage Change
Revenues:
	TCM Raw Materials	$17,189,810	$4,866,320	253%
	Yew Trees	23,246	1,043,671	(98)%
	Wood ear mushroom	-	1,304,672	(100)%
	Handicrafts	96,473	94,714	2%
	Others	7,370,950	-	100%
	Total Revenues	$24,680,479	$7,309,377	238%

Total revenues for the first six months of 2016 increased to $24.7 million from $7.3 million a year ago. Sales of TCM raw materials amounted to 69.6% of total revenues; sales of yew trees amounted to 0.1% of total revenues; sales of handicrafts amounted to 0.4% of total revenues and sales of the "Others" segment consisting yew candle and dietary supplement amounted to 29.9% of total revenues. The Company did not make sales of wood ear mushroom in the first half of 2016, as this is still a newly introduced product category for the Company and they are still seeking for various customer resources for this segment.

Gross profit was $3.0 million, or 12.3% of total revenues, compared with $3.9 million, or 52.7% of total revenues for the comparable 2015 quarter. The decrease in gross profit margin was primarily attributable to the lower gross margin yields of TCM raw material and Others segments.

Operating expenses decreased by 31.3% to $657,157 for the six months ended June 30, 2015, from $956,541 for the same period last year. The decrease was primarily attributable to the decreases in compensation and related benefits.

Net income for the first six months of 2016 decreased by 20.5% to $2.4 million from $3.0 million for the same period last year. Earnings per diluted share was $0.05, in line with the same period last year.

"Revenue for the quarter increased by 244% compared to last year due to the sales increases in the TCM raw materials and the 'Others' segments which includes the sales of yew candles, pine needle extracts and our dietary supplement with the brand name 'Auri Essence', and therefore offset the decreases in sales of yew tree and wood ear mushroom," said Mr. Zhiguo Wang, Chairman and Chief Executive Officer of Yew Bio-Pharm Group, Inc. "The sales of TCM raw materials maintained a sustained growth in the past half of 2016 as our related party, Yew Pharmaceutical, continues their technology development with yew ingredients that obviously lead to the sales increasing of the TCM segment."

"The 'Others' segment consists of products that are recently added to the Company's business category. By the end of June, 2016, we have added three new products including yew candle, pine needle extract and dietary supplement to the segment. We also continued to change our business model from agriculture-focused to a more diversified business model. As we mentioned in the previous announcement, our new B2C E-commerce website is expected to be launched in the middle of September, and we believe the website operation will become a new source of revenues for the Company. Meanwhile, we will continue to enrich our product mix and develop more value-added products 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.

(financial tables follow)

YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

	June 30, 2016		December 31, 2015
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	848,905	$	681,608
Restricted cash		296,830		303,511
Accounts receivable		3,101,446		3,857,968
Accounts receivable - related parties		10,053,176		6,489,495
Inventories		8,659,366		4,665,549
Prepaid expenses - related parties		91,804		106,370
Prepaid expenses and other assets		94,712		64,174
VAT recoverables		2,354,100		699,258

Total Current Assets		25,500,339		16,867,933

LONG-TERM ASSETS:
Long-term inventories, net		14,507,420		12,334,261
Property and equipment, net		633,623		702,764
Land use rights and yew forest assets, net		4,923,817		13,906,379

Total Long-term Assets		20,064,860		26,943,404

Total Assets	$	45,565,199	$	43,811,337

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	73,045	$	11,345
Accounts payable - related party		44,087		41,319
Accrued expenses and other payables		282,365		122,760
Notes payable		593,660		607,022
Taxes payable		16,501		14,261
Due to related parties		748,773		763,162
Short-term borrowings		3,013,500		3,081,332

Total Current Liabilities		4,771,931		4,641,201

Total Liabilities		4,771,931		4,641,201

SHAREHOLDERS' EQUITY:
Common Stock ($0.001 par value; 140,000,000 shares authorized; 51,875,000 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively)		51,875		51,875
Additional paid-in capital		9,787,752		9,622,558
Retained earnings		27,152,111		25,067,733
Statutory reserves		4,034,517		3,762,288
Accumulated other comprehensive income - foreign currency translation adjustment		(232,987)		665,682

Total Shareholders' Equity		40,793,268		39,170,136

Total Liabilities and Shareholders' Equity	$	45,565,199	$	43,811,337

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,
	2016		2015		2016		2015
REVENUES:
Revenues	$	6,913,765	$	1,904,941	$	7,490,669	$	3,439,595
Revenues - related party		9,146,345		2,761,981		17,189,810		3,869,782

Total Revenues		16,060,110		4,666,922		24,680,479		7,309,377

COST OF REVENUES:
Cost of revenues		6,806,861		1,533,314		7,434,844		1,907,359
Cost of revenues - related party		7,603,509		753,806		14,202,413		1,550,730

Total Cost of Revenues		14,410,370		2,287,120		21,637,257		3,458,089

GROSS PROFIT		1,649,740		2,379,802		3,043,222		3,851,288

OPERATING EXPENSES:
Selling		8,835		9,075		12,087		13,763
General and administrative		332,422		475,400		645,070		942,778

Total Operating Expenses		341,257		484,475		657,157		956,541

INCOME FROM OPERATIONS		1,308,483		1,895,327		2,386,065		2,894,747

OTHER INCOME (EXPENSES):
Interest expense		(41,967)		(18,546)		(69,287)		(18,421)
Government grant		-		135,322		-		135,322
Other income (expense)		39,829		(4,457)		39,829		(4,473)

Total Other Income (Expenses)		(2,138)		112,319		(29,458)		112,428

INCOME BEFORE INCOME TAXES		1,306,345		2,007,646		2,356,607		3,007,175
PROVISION FOR INCOME TAXES		-		(1,990)		-		(43,129)
NET INCOME	$	1,306,345	$	2,005,656	$	2,356,607	$	2,964,046

COMPREHENSIVE INCOME:
NET INCOME	$	1,306,345	$	2,005,656	$	2,356,607	$	2,964,046
OTHER COMPREHENSIVE INCOME (LOSS):
Foreign currency translation adjustment		(1,174,091)		123,694		(898,669)		381,547

COMPREHENSIVE INCOME	$	132,254	$	2,129,350	$	1,457,938	$	3,345,593

NET INCOME PER COMMON SHARE:
Basic	$	0.03	$	0.04	$	0.05	$	0.06
Diluted	$	0.03	$	0.03	$	0.05	$	0.05
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		51,875,000		52,125,000		51,875,000		52,125,000
Diluted		51,875,000		57,618,689		51,875,000		57,899,669

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

	For the Six Months Ended June 30,
	2016		2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,356,607	$	2,964,046
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		59,387		76,099
Stock-based compensation		165,194		537,660
Stock issued for professional services		-		12,722
Amortization of land use rights and yew forest assets		8,810,916		535,847
Changes in operating assets and liabilities:
Accounts receivable		682,900		(1,300,729)
Accounts receivable - related parties		(3,763,989)		(629,335)
Prepaid expenses and other current assets		(32,041)		(1,979,257)
Prepaid expenses - related parties		12,413		(120,407)
Inventories		(6,627,197)		(2,350,881)
VAT recoverables		(1,696,123)		-
Accounts payable		62,195		427,058
Accounts payable - related party		3,735		-
Accrued expenses and other payables		187,331		184,955
Advances from customers		-		67,236
Taxes payable		2,467		5,789

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		223,795		(1,569,197)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(4,261)		(7,000)
Payment for land use rights and yew forest assets		-		(588,928)

NET CASH USED IN INVESTING ACTIVITIES		(4,261)		(595,928)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings		1,530,105		1,642,360
Repayment of short-term borrowings		(1,530,105)		-
Proceeds from related party		81		649,500
Repayments to related party		(35,000)		-

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		(34,919)		2,291,860

EFFECT OF EXCHANGE RATE ON CASH		(17,318)		(4,017)

NET INCREASE IN CASH		167,297		122,718

CASH - Beginning of period		681,608		487,940

CASH - End of period	$	848,905	$	610,658

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	41,851	$	18,647
Income taxes	$	6,503	$	-

Non-cash investing and financing activities
Operating expenses paid by related parties	$	24,420	$	4,789