-- 2009 revenue rises 31% to $47.2 million, net income grows 22% to
$12.8 million, or $0.81 per fully diluted share
-- 2010 guidance for net income of approximately $17 million
WEIFANG, China, March 31 /PRNewswire-Asia/ -- Yuhe International, Inc. (Nasdaq: YUII) ("Yuhe" or "the Company"), a leading supplier of day-old chickens raised for meat production, or broilers, in the People's Republic of China ("PRC"), today announced financial results for the fourth quarter and fiscal year ended December 31, 2009.
Full Year 2009 Highlights
-- Net revenue was $47.2 million, up 30.8% from 2008 pro forma net revenue
-- Gross profit was $16.7 million, up 26.8% from 2008 pro forma gross
profit
-- Operating income was $13.3 million, up 19.9% from 2008 pro forma
operating income
-- Net income reached $12.8 million, up 19.9% from 2008 pro forma net
income
-- Diluted earnings per share were $0.81, up from pro forma diluted
earnings per share of $0.74 in 2008
-- Completed the construction of 14th new breeder farm in December 2009
-- Entered into a $15.2 million agreement to purchase 13 breeder farms
from Weifang Dajiang Corporation
-- Entered into an agreement to purchase land use rights for a 5.3-hectare
(80 mu) parcel of land at a cost of approximately $2.6 million
"Our 2009 financial results were near our expectations. Our growth this year was driven by the rapid increase in sales volume, resulting from capacity expansions in 2008 and 2009," commented Mr. Zhentao Gao, Chairman and Chief Executive Officer of Yuhe International, Inc. "We sold approximately 110 million day-old broilers in 2009, up 43% from 2008. Although the average selling price for the full year 2009 declined 5.5% year over year to RMB 2.74, we achieved solid growth in net income due to economies of scale and strategic decisions to retire some parent breeders early and purchase high quality eggs at lower costs from outside suppliers."
Summary Fourth Quarter 2009 Results
Net revenue decreased 27.4% to $13.3 million, as compared to $18.3 million for the fourth quarter of 2008. The decrease was due to the 14% decrease in sales volume to 31 million and an 8.4% decline in average selling price to RMB 2.73 per bird for the fourth quarter of 2009. In the fourth quarter of 2008, the Company experienced explosive growth and sold a record 36.1 million day-old broilers because those parent breeders which were added in early 2008 reached their peak productivity.
Gross profit decreased 44.4% year over year to $4.7 million, with gross margin of 35.5%, as compared to 46.3% during the same period in 2008. While the average production cost remained at roughly the same level compared to the fourth quarter of 2008, the decrease of gross margin was mainly attributable to the decline in average selling price of the Company's day-old broilers as mentioned above.
Net income for the three months ended December 31, 2009 was $3.64 million, or $0.23 per diluted share, down 52.7% compared with net income of $7.7 million, or $0.48 fully diluted share, for the same period last year. For the fourth quarter of 2009 there were 16.0 million fully diluted weighted shares outstanding versus 15.9 million fully diluted weighted shares outstanding in the prior year period.
Full Year 2009 Results
Net revenue increased 30.8% to $47.2 million, from pro forma net revenue of $36.1 million in 2008. The increase was primarily driven by the 43% increase in sales volume to approximately 110 million birds from 76 million birds in 2008. The increase in sales volume was partially offset by a decrease in unit selling price. The selling price of day-old broilers decreased slightly from RMB 2.9 per bird for the year ended December 31, 2008 to RMB 2.74, or 5.5%, per bird for the year ended December 31, 2009.
Gross profit grew 26.8% to $16.7 million, as compared to pro forma gross profit of $13.2 million in 2008. Gross margin was 35.4%, compared to pro forma gross margin of 36.6% last year.
General and administrative expenses in 2009 increased 82% year over year to $3.0 million, primarily due to increased expenses associated with public listing as well as a bad debt recovery of $0.8 million recognized in 2008.
Selling expenses mainly comprised of packaging and transportation expenses and decreased 4.5% year over year to $434,056 for the year ended December 31, 2009.
Operating income rose 19.9% to $13.3 million, from pro forma $11.1 million in 2008.
Net income increased 19.9% to $12.8 million, compared to pro forma net income of $10.7 million in 2008. Fully diluted earnings per share were $0.81, up from $0.74 in 2008.
(*) Yuhe's reported financial statements represent the consolidated
results of Weifang Yuhe Poultry Co. Ltd., "PRC Yuhe," and Weifang
Taihong Feed Co. Ltd., "Taihong," the Company's two operating
subsidiaries, from January 1, 2009 to December 31, 2009 and from
February 1, 2008 to December 31, 2008. For comparison purposes, the
Company has provided a pro forma consolidated statement of operations
for PRC Yuhe and Taihong from January 1, 2008 through December 31,
2008 to provide comparable presentation to its reported results for
the twelve months ended December 31, 2009. These pro forma results are
discussed in this release, together with reconciliation to the
reported financial information. Pro forma results are presented and
discussed because the Company considers them useful in assessing
performance between periods and in developing expectations of future
performance.
Financial Condition
As of December 31, 2009 the Company held $14.0 million in cash and cash equivalent. Working capital was $0.8 million with a 1.0 to 1 current ratio, which is lower than the Company's normal level as a result of recent aggressive expansion activities. Yuhe generated $20.6 million in operating cash flow in 2009. Since management expects that the Company will renew its $9.4 million bank loan that is due in the next 12 months, management anticipates that the Company's working capital and 2009 operating cash flow will fund its working capital needs for the next 12 months. The Company had $55.3 million in shareholders' equity compared to $41.6 million at the end of 2008.
2010 Outlook
In March 2010, the Company completed construction of a new breeder farm, bringing its total number of breeder farms to 28, with 15 in operation today. The new breeder farm, along with the 13 additional ones expected to come on-line in the second half of 2010, should increase the Company's ability to meet its 2010 production goal of 150 million day-old broilers. For the fiscal year 2010, Yuhe International is forecasting net income of approximately $17 million.
"We plan to introduce a new hatchery in May 2010 and install 20 sets of hatchers by June 2010 and another 40 sets in the second half of 2010, which will increase our total to 160 sets. These increased hatchers will not only facilitate the expansion of our breeder farms, but also provide us with the flexibility to adjust production based on the price fluctuations of eggs and day old broilers," Mr. Gao commented. "Looking ahead, we will continue to leverage our expertise in the day old broiler industry to expand our market share in Shandong Province and adjacent areas. We believe the demand for high quality day old broilers remains strong. Our solid and stable customer relationships will enable us to achieve our projected 2010 guidance and identify strategic opportunities for horizontal integration."
Conference Call
The Company will host a conference call at 9:00 a.m. Eastern Daylight Time (EDT) on Thursday April 1, 2010, to discuss financial results for the fourth quarter and fiscal year ended December 31, 2009. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 877-509-7549. International callers should dial +1-706-902-4287. The Conference ID for this call is 66044952.
If you are unable to participate in the call at this time, a replay will be available for two weeks starting on Thursday April 1, 2010 at 12:00 p.m. EDT. To access the replay, dial 800-642-1687, international callers dial +1-706-645-9291. The Conference Replay Passcode is 66044952.
About Yuhe International, Inc.
Founded in 1996, Yuhe is the fourth largest day-old broiler breeder in China. The Company's main operations involve breeding, as all broilers are sold within a day of hatching. With headquarters in Weifang, Shandong province, the Company has modern facilities and is led by an experienced team which includes experts in chicken breeding, disease prevention and animal husbandry science. Yuhe has two operational subsidiaries, Weifang Yuhe Poultry Co. Ltd. and Weifang Taihong Feed Co. Ltd. which largely supplies the Company's internal demand for chicken feed. Currently, 90% of the Company's sales of day-old broilers are in Shandong province through 28 local agents there. There are 10 other sales agents in adjacent provinces. The Company has imported state-of-the-art equipment from the United States, Germany and Japan and has passed ISO9001 certification, allowing it to adhere to international standards of operation. For more information on the Company and its products, please visit http://www.yuhepoultry.com .
Cautionary Statement
This press release contains forward-looking statements concerning the Company's business, products and financial results. The Company's actual results may differ materially from those anticipated in the forward-looking statements depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond the Company's control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. The Company undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
For further information, please contact:
Yuhe International, Inc.
Mr. Vincent Hu, CFO
Phone: +86-536-7300-667
Email: vincent.hu@yuhepoultry.com
Mr. Jason Wang, Director of IR
Phone: +1-765-409-1844
Email: jason.wang@yuhepoultry.com
Web: http://www.yuhepoultry.com
CCG Investor Relations Inc.
Shaun Smolarz, Financial Writer
Phone: +1-646-101-7444 (New York)
Email: Shaun.Smolarz@ccgir.com
Ms. Elaine Ketchmere, Partner
Phone: +1-310-954-1345 (Los Angeles)
Email: elaine.ketchmere@ccgir.com
Web: http://www.ccgasiair.com
YUHE INTERNATIONAL, INC.
(Formerly known as First Growth Investors Inc.)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Stated in US Dollars)
December 31
2009 2008
Net revenue $ 47,245,758 $ 34,626,282
Cost of revenue (30,504,187) (21,572,722)
Gross profit 16,741,571 13,053,560
Operating Expenses
Selling (434,056) (425,460)
General and administrative expenses (2,963,536) (1,725,590)
Total operating expenses (3,397,592) (2,151,051)
Income from operations 13,343,889 10,902,509
Non-operating income (expenses)
Interest income 237 249,738
Other income (expenses) 849 (21,704)
Gain on disposal of fixed assets 24,567 84,663
Investment income 15,522 12,251
Interest expenses (608,789) (702,573)
Total other income (expenses) (567,614) (377,625)
Net income before income taxes 12,776,365 10,524,885
Income tax benefits 17,756 --
Net income $ 12,794,121 $ 10,524,885
Other comprehensive income
Foreign currency translation 106,520 1,139,508
Comprehensive income $ 12,900,641 $ 11,664,393
Earnings per share
Basic $ 0.81 $ 0.74
Diluted $ 0.81 $ 0.73
Weighted average shares outstanding
Basic 15,722,180 14,233,268
Diluted 15,792,540 14,476,504
YUHE INTERNATIONAL, INC.
(Formerly known as First Growth Investors Inc.)
SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended December 31,
2009 2008
(As Reported) (As Reported)
Sales revenue 13,288,765 18,308,019
Cost of goods sold (8,577,489) (9,840,120)
Gross profit 4,711,276 8,467,899
Net income 3,640,155 7,701,436
Weighted average shares
outstanding
Basic 15,722,180 15,669,690
Diluted 15,955,081 15,935,537
Earnings per share
Basic 0.23 0.49
Diluted 0.23 0.48
YUHE INTERNATIONAL, INC.
(Formerly known as First Growth Investors Inc.)
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
December 31,
2009 2008
ASSETS
Current assets:
Cash and cash equivalents $ 14,047,147 $ 13,412,205
Accounts receivable, net of allowances
of $18,868 and $18,845 838 902
Inventories 6,560,783 6,644,961
Advances to suppliers 359,179 4,472,509
Deferred tax assets 17,766 --
Total current assets 20,985,713 24,530,577
Plant and equipment, net 29,556,712 27,112,276
Deposits paid for acquisition of long
term assets 16,082,613 2,280,988
Notes receivable, net and other
receivable, net 33,635 74,720
Unlisted investments held for sale 300,172 299,427
Intangible assets, net 2,851,411 2,909,752
Due from related companies -- 3,706,589
Net investment in direct financing
lease 382,742 --
Long term prepaid rent 6,570,038 604,973
Total assets $ 76,763,036 $ 61,519,302
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,740,912 $ 4,606,055
Current portion of long term loans 9,433,686 1,356,832
Other payable 1,343,901 937,535
Accrued expenses and payroll related
liabilities 2,366,134 2,125,587
Advances from customers 678,366 673,528
Other taxes payable 150,764 141,541
Loan from director 292,517 291,792
Other liabilities 143,949 143,591
Due to related companies 1,208 210,633
Total current liabilities 20,151,437 10,487,094
Non-current liabilities
Long-term loans 1,360,206 9,410,289
Total liabilities 21,511,643 19,897,383
YUHE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Stated in US Dollars)
December 31,
2009 2008
Stockholders' Equity
Preferred stock, $.001 par value,
1,000,000 shares authorized, no shares
issued and outstanding -- --
Common stock at $.001 par value;
authorized 500,000,000 shares
authorized, 15,722,180 shares
issued and outstanding 15,722 15,722
Additional paid-in capital 30,672,849 29,944,016
Retained earnings 23,316,794 10,522,673
Accumulated other comprehensive income 1,246,028 1,139,508
Total stockholders' equity 55,251,393 41,621,919
Total liabilities and stockholders'
equity $ 76,763,036 $ 61,519,302
YUHE INTERNATIONAL, INC.
(Formerly known as First Growth Investors Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS (Stated in US Dollars)
Year Ended
December 31
2009 2008
Cash flows from operating activities
Net income $ 12,794,121 $ 10,524,885
Adjustments to reconcile net income to net
cash used in operating activities:
Stock based compensation 728,833 401,359
Depreciation 2,033,341 1,668,059
Amortization 65,541 59,209
Capitalized interest in construction in
progress (662,711) (437,221)
Bad debts expense (recovery) 56,220 (813,000)
Gain on disposal of fixed assets (24,567) (84,663)
Income from unlisted investment (15,522) (12,251)
Changes in operating assets and
liabilities:
Accounts receivable 66 (25)
Advances to suppliers 4,113,119 (11,781,086)
Inventories 100,646 (1,652,341)
Deferred tax assets (17,756) --
Deferred expenses -- (1,000)
Accounts payable 760,193 (408,001)
Other payable 403,821 (739,165)
Payroll and payroll related liabilities (104,315) 626,620
Accrued expenses 339,891 (459,221)
Advances from customers 3,161 455,983
Other taxes payable 8,866 9,386
Net cash provided by (used in) operating
activities 20,582,948 (2,642,473)
Cash flows from investing activities
Deposit paid and acquisition of property,
plant and equipment (18,187,196) (4,580,275)
Advance to notes receivable -- (3,432,603)
Proceeds from disposal of fixed assets 27,834 118,216
Acquisition of subsidiaries -- (10,567,946)
Proceeds from notes receivable 44,637 4,309,226
Proceeds received from related parties
receivables 3,713,806 1,106,240
Purchase of leased land use rights (5,960,354) --
Net cash used in investing activities (20,361,273) (13,047,592)
Cash flows from financing activities
Proceeds from loan payable 1,067,114 1,300,726
Repayment of loan payable (1,067,114) (1,099,842)
Proceeds from related party payable - 260,454
Repayment of related party payable (209,828) (58,629)
Proceeds from capital lease 594,476 --
Capital contribution by shareholder -- 12,149,750
Proceeds from issuance of common stock,
net of issuance cost -- 15,359,523
Net cash flows provided by financing
activities: 384,648 27,911,982
Effect of foreign currency translation on
cash and cash equivalents 28,619 140,120
Net increase in cash 634,942 12,362,037
Cash- beginning of year 13,412,205 1,050,168
Cash- end of year $ 14,047,147 $ 13,412,205
Cash paid during the period for:
Interest paid $ 1,405,500 $ 1,199,467
Income taxes paid $ -- $ --
Supplemental disclosure
Transfer of construction in progress to
fixed assets $ 4,009,791 $ 7,022,128
Property, plant and equipment in accounts
payable at year end $ 362,802 $ --
Supplemental disclosure of non-cash
investing activities:
Dividend received for increasing the
investments in Hanting
Rural Credit Cooperative $ -- $ 6,074
YUHE INTERNATIONAL, INC.
(Formerly known as First Growth Investors Inc.)
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(TWELVE MONTHS)
Pro forma
for the As reported
period from from
January 1, February 1,
2008 2008
to January to December Pro forma Pro forma
31, 2008 31, 2008 Adjustment Total
Net revenues $ 1,491,329 $34,626,282 $ -- $36,117,611
Cost of revenue (1,337,438) 21,572,722 -- (22,910,160)
Gross profit 153,891 13,053,560 -- 13,207,451
Operating expenses
Selling expenses (28,997) (425,460) -- (454,457)
General and
administrative
expenses 97,198 (1,725,590) -- (1,628,392)
Total operating
expenses 68,201 (2,151,050) -- 2,082,849
Income from
operations 222,092 10,902,510 -- 11,124,602
Non-operating
income (expenses)
Interest income 5 249,738 -- 249,743
Other income 5,604 (21,704) -- (16,100)
Gain on
disposal of
fixed assets -- 84,663 -- 84,663
Investment income -- 12,251 -- 12,251
Interest expenses (86,167) (702,573) -- (788,740)
Total other
income (expenses) (80,558) (377,625) -- (458,183)
Net Income (loss)
before income tax 141,534 10,524,885 -- 10,666,419
Income Tax -- -- -- --
Net income
(loss) $ 141,534 $10,524,885 $ -- $10,666,419
Earnings per
share
Basic $ 0.02 $ 0.74 $ -- $ 0.75
Diluted $ 0.02 $ 0.73 $ -- $ 0.74
Weighted average
shares outstanding
Basic 8,626,318 14,233,268 -- 14,233,268
Diluted 8,626,318 14,476,504 -- 14,476,504
The pro forma financial information above was prepared based on the unaudited financial results for the Company's Weifang and Taihong subsidiaries for the twelve month period ended December 31, 2008.
The pro forma financial information has been prepared based upon available information and assumptions that the Company believes are reasonable. However, the pro forma financial information is presented for illustrative and informational purposes only and does not purport to represent the Company's actual results during the corresponding reporting periods nor is it necessarily indicative of the Company's future performance.
