BEIJING, May 11 /PRNewswire-Asia/ -- Yongye Biotechnology International, Inc. (OTC Bulletin Board: YGYB) ("Yongye" or the "Company"), a leading developer and distributor of plant and animal nutrient products located in the People’s Republic of China, today announced its financial results for the quarter ended March 31, 2009.
First Quarter 2009 Highlights
-- Revenue was $12.4 million, an increase of 30.5% from the first quarter
of 2008
-- Gross profit was $6.5 million, a 29.5% increase from the first quarter
of 2008, with gross margin of 52.5%
-- Net income was $3.1 million, an increase of 176.6% from the first
quarter of 2008, or $0.14 per diluted share
-- Appointed Mr. Sam Yu as the Company’s Chief Financial Officer
-- Expanded independently owned store network to 2,000 branded stores, up
from 350 in the first quarter of 2008
-- Brought an additional 1,500 stores into the sales network on a trial
basis, bringing the total number of stores selling its ‘Shengmingsu’
plant nutrient product to 3,500
First Quarter 2009 Results
"We are pleased to report another quarter of growth for the three month period ended March 31, 2009. The first quarter of every year is normally one of the slowest periods of the year for our product sales. However, an expanded sales network and lower operating expenses allowed us to begin 2009 with revenue and earnings growth," said Mr. Zishen Wu, Chief Executive Officer of Yongye.
Revenue was $12.4 million in the quarter ended March 31, 2009, an increase of 30.5% from $9.5 million in the same period of 2008. There was a 32.0% increase in plant product revenue and a 22.0% increase in animal product revenue in the quarter.
In the first quarter of 2009, the Company’s sales network consisted of approximately 2,000 Yongye branded retail independent network stores, compared to 350 Yongye branded stores in the first quarter of 2008. About 1,500 stores were brought into the network on a trial basis at the end of 2008 and beginning of 2009, bringing the total number of stores selling "Shengmingsu" plant nutrient products to approximately 3,500 retail stores by the end of the quarter.
Gross profit was $6.5 million in the first quarter of 2009, a 29.5% increase from $5.0 million in the first quarter of 2008. Gross margin was 52.5% compared to 52.9% in the same period of 2008. Gross margin was relatively unchanged primarily because the Company’s fixed rate contract with its finished goods supplier has remained at a constant price since it was established.
Operating expenses were $3.3 million in the three months ended March 31, 2009, compared to $3.5 million in the three months ended March 31, 2008. These expenses as a percentage of sales were 26.0%, compared to 37.0% in the first quarter of 2008. Operating expenses were lower in the first quarter of 2009 compared to the first quarter of 2008 because there were large one-time expenses associated with becoming a public company in the first quarter of 2008. During the first quarter of 2009, the Company incurred $0.3 million in research and development expenses, part of its planned increase in business scope.
Income from operations was $3.3 million in the first quarter of 2009, with operating margin of 26.4%, compared to $1.5 million, with operating margin of 15.7%, in the first quarter of 2008.
Net income increased 176.6% to $3.1 million in the first quarter of 2009, or $0.14 per diluted share, compared to net income of $1.1 million, or $0.10 per diluted share, in the first quarter of 2008.
The diluted weighted average number of shares outstanding increased from 11,444,775 in the first quarter of 2008 to 22,760,258 in the quarter ended March 31, 2009 because of additional shares being issued in private placements in April and September 2008.
Financial Condition
As of March 31, 2009, the Company had total assets of $37.3 million, compared to $34.5 million as of December 31, 2008. Working capital was $27.3 million, total current liabilities were $3.2 million and the Company had $291,498 in long-term liabilities. Stockholders’ equity was $32.6 million as of March 31, 2009, compared to $29.4 million at the end of 2008.
As of March 31, 2009, cash totaled $1.4 million, compared to $4.5 million on December 31, 2008. Cash decreased primarily because of higher accounts receivable, inventory accumulation, and payment for production equipment associated with the Company’s September financing. As of March 31, 2009, accounts receivable totaled $6.1 million, up from $2.7 million as of December 31, 2008, due to sales growth in the period. Accounts receivable as of March 31, 2009 includes $2.2 million remitted by a customer on March 30, 2009 but not received by the Company until April 1, 2009 due to an elongated cross bank transfer process.
Inventory increased 7.2% to $22.2 million in the first quarter of 2009 from the first quarter of 2008. Based on past experience, the Company expects strong demand for its plant and animal nutrient products from distributors in the second quarter of 2009, and has accumulated inventory to ensure it is able to meet distributors’ growing needs.
As previously disclosed in the September 2008 financing, the Company is restructuring itself by acquiring manufacturing equipment and facilities from its independently controlled predecessor company. The Company acquired the 2,000 Tonnes Per Annum manufacturing equipment from the predecessor company which increased its Property and Equipment balance by 25.0% to $6.7 million in the first quarter of 2009. The Company expects to complete its restructuring process in late 2009, dependent upon receiving necessary approvals from the PRC government.
Recent Events
On March 25, 2009, Yongye appointed Mr. Sam Yu to serve as its Chief Financial Officer.
On April 10, 2009, Yongye appointed Mr. Sean Shao to serve as an Independent Director on the Company’s Board of Directors and as Chairman of Yongye’s Audit Committee.
On May 1, 2009, one of the independently owned Yongye branded retail stores in its sales network set a new record for single day sales. A Yongye branded retail store in Qianjiang City in Hubei Province sold 15,310 bottles of Shengmingsu plant nutrient product on April 30, 2009 for $30,000 in sales. This was the highest single day sales for a Yongye branded retail store in Yongye’s history.
On May 8, 2009, Yongye announced that it closed a private placement financing with institutional and other accredited investors, which included many of the same investors from its April and September 2008 financings. Gross proceeds of approximately $9.0 million were generated through the issuance of 5.83 million shares of common stock.
Business Outlook
"This was a productive quarter for Yongye, in which our financial operational results improved along with our levels of financial oversight and corporate governance," commented Mr. Wu. "The outlook for China’s agricultural industry is favorable, drought conditions have improved significantly, and we expect China’s economic stimulus package to have a positive impact on the economy in the coming months."
"Our community based marketing strategy is a unique driver of our business growth. By stepping up our marketing efforts in existing sales regions, we have been able to increase local farmers’ awareness of the benefits provided by our ‘Shengmingsu’ products and seen a direct impact on demand. Combined with our rapidly growing sales network of independent stores, we anticipate our business will continue to grow at a rapid pace in the rest of 2009."
Revised Guidance
As a result of anticipated increased sales and in conjunction with its May 8th private placement, Yongye revised its revenue and net income guidance. Due to the Company’s expected ability to fulfill additional orders from the working capital provided by the private placement, the Company revised its previously announced 2009 revenue guidance from $66 million to a range from $82 to $84 million, and its previously announced net income guidance from $15.8 million to a range from $23 to $24 million
Conference Call
The Company will host a conference call at 08:00 a.m. Eastern time on
May 11, 2009 to discuss its first quarter 2009 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1-888-419-5570. International callers should dial +1-617-896-9871. The conference pass code is 586 658 26. For those who are unable to participate in the conference call at the time of the call, a replay will be available for fourteen days after the call is held. To access the replay, please dial +1-888-286-8010. International callers should dial +1-617-801-6888. The replay pass code is 931 813 08.
About Yongye Biotechnology International, Inc.
Yongye Biotechnology International, Inc., headquartered in Beijing, is engaged in the development and distribution and sales of fulvic acid based nutrients for plants and animals. The Company’s patent pending processes and proprietary formulas allow it to create products, which increase crop yields and improve the health of livestock. Its sole operating subsidiary, Yongye Nongfeng Biotechnology Company, Ltd., is located in Inner Mongolia. The Company sells its products through distributors and directly to farmers located in ten provinces throughout China.
Safe Harbor Statement
This press release contains certain statements that may include
"forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company’s periodic reports that are filed with the Securities and Exchange Commission and available on the SEC’s website ( http://www.sec.gov ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
- Financial Tables Follow -
YONGYE BIOTECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Yongye
Biotechnology
International,
Inc. and
Subsidiaries Yongye Nongfeng
For the Three For the Three
Months Ended Months Ended
March 31, 2009 March 31, 2008
(Unaudited) (Unaudited)
SALES $12,435,775 $9,528,055
COST OF SALES 5,902,607 4,484,261
GROSS PROFIT 6,533,168 5,043,794
SELLING EXPENSES 2,620,298 3,192,797
RESEARCH & DEVELOPMENT EXPENSES 288,572 --
GENERAL AND ADMINISTRATIVE EXPENSES 345,157 357,192
INCOME FROM OPERATIONS 3,279,141 1,493,805
OTHER EXPENSES
Interest expenses 5,958 --
Other expenses 441 97
TOTAL OTHER EXPENSES 6,399 97
INCOME BEFORE PROVISION FOR INCOME
TAXES AND NON-CONTROLLING INTEREST 3,272,742 1,493,708
PROVISION FOR INCOME TAXES 155,447 373,427
NET INCOME 3,117,295 1,120,281
LESS: NET INCOME ATTRIBUTABLE TO THE
NON-CONTROLLING INTEREST 18,522 --
NET INCOME ATTRIBUTABLE TO YONGYE
BIOTECHNOLOGY INTERNATIONAL, INC. 3,098,773 1,120,281
OTHER COMPREHENSIVE INCOME
Foreign Currency
Translation Adjustment 47,945 30,531
COMPREHENSIVE INCOME $3,146,718 $1,150,812
Net income per share:
Basic $0.14 $0.10
Diluted $0.14 $0.10
Weighted average shares
used in computation:
Basic 22,760,258 11,444,755
Diluted 22,760,258 11,444,755
YONGYE BIOTECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2009 December 31, 2008
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $1,424,268 $4,477,477
Accounts receivable, net 6,128,346 2,748,042
Inventories 22,201,250 20,708,193
Advance payments 62,937 44,051
Due from related party 274,758 192,741
Prepaid expenses 91,968 189,478
Other receivables 256,554 680,752
Total Current Assets 30,440,081 29,040,734
PROPERTY AND EQUIPMENT, NET 6,717,213 5,368,074
INTANGIBLE ASSETS, NET 92,918 95,453
TOTAL ASSETS $37,250,212 $34,504,261
CURRENT LIABILITIES
Long-term loan -
current potion $166,448 $167,652
Accounts payable -
related party 90,169 46,739
Taxes payable 508,262 366,981
Advance from customers 82,037 1,869,400
Accrued expenses 1,636,175 583,880
Other payables 697,806 626,911
Total Current Liabilities 3,180,897 3,661,563
LONG-TERM LOANS 291,498 230,121
STOCKHOLDERS’ EQUITY
Capital stock: par value $.001;
75,000,000 shares authorized;
26,760,258 shares issued and
outstanding at March 31, 2009
and December 31, 2008 26,760 26,760
Additional paid-in capital -
Common stock 13,976,900 13,976,900
Additional paid-in
Capital - Warrants 3,883,432 3,883,432
Retained earnings 12,801,489 9,984,085
Statutory reserve 1,489,281 1,207,912
Accumulated other
comprehensive income 379,045 331,100
Total Stockholders’ Equity 32,556,907 29,410,189
Non-controlling interest 1,220,910 1,202,388
Total Equity 33,777,817 30,612,577
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY $37,250,212 $34,504,261
YONGYE BIOTECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Yongye
Biotechnology
International,
Inc. and
Subsidiaries Yongye Nongfeng
For the Three For the Three
Months Ended Months Ended
March 31, 2009 March 31, 2008
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $3,098,773 $1,120,281
Adjustments to reconcile net income
to net cash (used in)/provided by
operating activities
Depreciation and amortization 107,236 42,784
Reversal of bad debt provision (73,701) --
Net income attributable to the
non-controlling interest 18,522 --
Changes in assets and liabilities:
Accounts receivable (3,302,662) (7,200,057)
Inventories (1,466,830) (4,556,216)
Advances payments (18,828) --
Due from related party (72,763) 138,693
Prepaid expense 97,734 --
Other receivables 424,992 (86,738)
Accounts payable-related party 43,366 6,967,770
Taxes payable 140,799 381,255
Advance from customers (1,789,453) 80
Accrued expenses 1,051,410 3,371,935
Other payables 70,298 14,853
Total Adjustments (4,769,880) (925,641)
Net Cash (Used in)/Provided
by Operating Activities (1,671,107) 194,640
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (1,446,782) (213,919)
Net Cash Used in Investing
Activities (1,446,782) (213,919)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans 89,534 --
Repayment of bank loans (29,870) --
Proceeds from share capital -- 150,000
Net Cash Provided by Financing
Activities 59,664 150,000
EFFECT OF FOREIGN CURRENCY
TRANSLATION ON CASH 5,016 26,858
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (3,053,209) 157,579
CASH AND CASH EQUIVALENTS - BEGINNING 4,477,477 --
CASH AND CASH EQUIVALENTS - ENDING $1,424,268 $157,579
Supplemental cash flow information:
Cash paid for income taxes 22,464 --
Cash paid for interest expense payment 9,833 --
Non-cash investing and financing activities:
During the three months ended March 31, 2008, the minority shareholder of
Yongye Nongfeng contributed a patent valued at $100,000 to that company.
For more information, please contact:
Yongye Biotechnology International, Inc.
Mr. Larry Gilmore-VP of Corporate Strategy
Phone: +86-8232-8866 x8880
Email: larry.gilmore@gmail.com
CCG Investor Relations, Inc.
Mr. Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com