WEIFANG, Shandong, China, May 18 /PRNewswire-Asia-FirstCall/ -- Yuhe International, Inc. (OTC Bulletin Board: 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 strong financial results for the first quarter of its 2009 fiscal year.
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 March 31, 2009. For comparison purposes, the Company has provided a pro forma consolidated statement of operations for PRC Yuhe and Taihong for the three months ended March 31, 2008. These pro forma results are presented (in Table 4 below) and discussed because the Company considers them useful for investors as more indicative of the underlying performance of the business as currently constituted for the periods presented.
First Quarter 2009 Highlights
-- Revenue for the quarter was $10.9 million, up 320.6% compared to pro
forma revenue in the first quarter of 2008
-- Gross profit for the quarter was $4.1 million, up 961.3% from pro forma
gross profit in the same period last year
-- Operating income was $3.2 million, up from a pro forma operating loss
of $0.1 a year earlier
-- Net income was $2.9 million, or $0.19 per basic and diluted share, up
from a pro forma net loss of $0.1 million, or a loss of $0.01 per basic
and diluted share for the same period in 2008
"We are pleased to start out our 2009 fiscal year with such strong top and bottom line growth," stated Mr. Zhengtao Gao, chief executive officer of Yuhe International Inc. "In the first quarter of 2009, the broiler market remained strong despite the macro economic slowdown in China. With our mature breeder stock and recently expanded operations, we were able to take full advantage of favorable market conditions and generate excellent financial results in the quarter."
First Quarter 2009 Results
Total reported revenue for the first quarter of 2009 equaled $10.9 million, up 320.6% from $2.6 million in pro forma revenue for the three-month period ended March 31, 2008. The increase in revenues was driven by the increase in sales volume to 23.1 million day-old broilers in the first quarter of 2009 from 4.8 million birds in the same period a year earlier. The increase in sales volume was partially offset by a decrease in selling price to RMB 2.99 per bird in the first quarter of 2009 from RMB 3.27 per bird one year ago. The increase in sales volume was the result of an expansion in production capacity as well as an increase in parent breeder volume at the end of 2008.
Gross profit increased 961.3% to $4.1 million in the first quarter of 2009, compared to $0.4 million in pro forma gross profit in the prior year period. Gross margin was 37.2% compared to pro forma gross margin of 14.8% during the same period in 2008. The increase in gross margin was mainly attributable to the Company reaching a normal level of productivity in 2009 versus a low level of productivity in the first quarter of 2008.
Selling, general and administrative expenses for the first quarter of 2009 were $0.8 million, up 81.5% compared to pro forma operating expenses of $0.5 million for the first quarter of 2008. Selling expenses were $93,000 compared to $78,000 in the same period of 2008. The increase in selling expenses was primarily due to an increase in sales volume. Administrative expenses were $0.7 million in the three months ended March 31, 2009, up from $0.4 million in the same period of 2008. The increase in administrative expenses was mainly attributable to expenses associated with being a public company.
Operating income for the first quarter of 2009 totaled $3.2 million, up from a pro forma operating loss of $0.1 for the same period in 2008. Operating margin was 29.6% for the first quarter of 2009.
Net income for the three months ended March 31, 2009 was $2.9 million, or $0.19 per diluted share, up from a pro forma net loss of $0.1 million, or a loss of $0.01 per basic and diluted share, for the same period last year. For the first quarter of 2009 there were 15.7 million fully diluted weighted shares outstanding versus 10.1 million fully diluted weighted shares outstanding in the prior year period.
Financial Condition
As of March 31, 2009, the Company had $18.1 million in cash and cash equivalents, up from $13.4 million at December 31, 2008. Working capital was $18.7 million and the Company had a current ratio of 2.7 to 1. Shareholders equity stood at $44.8 million compared to $41.6 million at the end of 2008. Cash flows from operating activities in the first quarter of 2009 were $4.4 million.
The company plans to utilize its increase in cash for upcoming capital construction projects.
Business Outlook
For the remainder of 2009, Yuhe will remain focused on its capital construction plan, adding a third hatchery and two additional breeder farms with 100,000 sets of parent breeders each. In addition, the Company expects a new feed plant, currently under construction by Nongbiao Purina, will be finished during the second quarter of 2009. Once operational, Yuhe will perform quality analysis tests on Nongbiao Purina’s feed. If Nongbiao Purina’s feed meets Yuhe’s quality requirements, the production facility will become Yuhe’s sole feed supplier while its current in house feed production facility will cease operations.
For the fiscal year 2009 Yuhe International Inc. is forecasting $50 million in revenues and $13 million in net income with an anticipated sales volume of 110 million day old breeders. This exceeds the Company to meet its make good provision of $41.0 million in revenues and $12.3 million in net income.
"With a positive start to the new year, we look forward to continued growth throughout the remainder of 2009. In 2008, we saw uneven growth throughout the year due to a variety of one time factors. During the third quarter, many of our downstream customers lowered demand as they were forced to shut down due to electricity conservation measures and pollution restrictions put in place by the government due to the Olympics. What’s more, our production was uneven as we ramped up capacity throughout the year. In 2009 we expect to exhibit more consistent results from quarter to quarter now that many of our expansion projects have been completed and are operational," stated Mr. Gao.
"While the recent outbreak of swine flu in North America has heightened concerns over livestock-borne illness, we foresee no imminent threats to our operations or the poultry industry in general in China. On the contrary, after the last outbreak of bird flu several years ago, the government implemented stringent safety and hygiene measures in the broiler industry. Yuhe not only meets, but exceeds these standards as we view product quality and safety as our top priority. As a result, we remain confident about trends in our operations and in the industry as a whole," Mr. Gao concluded.
Upcoming Events
Yuhe International, Inc. will present at the upcoming China Rising Investment Conference to be held on May 18, 2009 at the Yale Club in New York. During the conference, Yuhe’s management will be available for one-on-one meetings.
Conference Call
The Company will host a conference call at 10:00 a.m. eastern time on Monday, May 18, 2009 to discuss results for the first quarter of fiscal year 2009. 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. When prompted by the operator, mention conference pass code 208 590 72. The call will be available to replay beginning at 12:00 p.m. eastern time for fourteen days after it occurs. If you would like to listen to the replay, please dial 1-888-286-8010 or +1-617-801-6888 from outside the US and enter pass code 21975169.
About Yuhe International, Inc.
Founded in 1996, Yuhe is the second 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, 85% of the Company’s sales are in Shandong province with a customer base of 27 local agents. 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.
-FINANCIAL TABLES FOLLOW-
Table 1 YUHE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Stated in US Dollars)
For The Three Months Ended
March 31
2009 2008
Net revenue $ 10,914,390 $ 1,103,551
Cost of revenue (6,852,353) (874,707)
Gross profit 4,062,037 228,844
Operating Expenses
Selling expenses (92,940) (48,540)
General and administrative expenses (743,990) (260,969)
Total operating expenses (836,930) (309,509)
Income (loss) from operations 3,225,107 (80,665)
Non-operating income (expenses)
Bad debts recovery -- 13,145
Interest income 96 158
Other income 15,509 5,900
Interest expenses (325,427) (180,474)
Other expenses (465) (30,545)
Total other income (expenses) (310,287) (191,816)
Net income (loss) before income taxes 2,914,820 (272,481)
Income taxes -- --
Net income (loss) $ 2,914,820 $ (272,481)
Other comprehensive income
Foreign currency translation 48,272 417,921
Comprehensive income $ 2,963,092 $ 145,440
Earnings (Loss) per share
Basic $ 0.19 $ (0.03)
Diluted $ 0.19 $ (0.03)
Weighted average shares outstanding
Basic 15,722,178 10,146,353
Diluted 15,722,178 10,146,353
Table 2 YUHE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (Stated in US Dollars)
March 31, December 31,
2009 2008
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 18,091,979 $ 13,412,205
Accounts receivable, net of allowances of
$18,845 and $18,845 904 902
Inventories 7,076,604 6,644,961
Advances to suppliers 4,521,030 4,472,509
Total current assets 29,690,517 24,530,577
Plant and equipment, net 26,751,684 27,112,276
Deposits paid for acquisition of long term
assets 2,219,243 2,280,988
Notes receivable, net and other
receivable, net 103,228 74,720
Unlisted investments held for sale 299,804 299,427
Intangible assets, net 2,897,034 2,909,752
Due from related companies 3,669,798 3,706,589
Deferred expenses 596,287 604,973
Total assets $ 66,227,595 $ 61,519,302
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 5,661,377 $ 4,606,055
Current portion of long term loans 292,158 1,356,832
Other payables 1,225,619 937,535
Accrued expenses and payroll related
liabilities 2,000,062 2,125,587
Advances from customers 725,807 673,528
Loan from director 292,158 291,792
Other liabilities 286,107 285,132
Due to related companies 491,095 210,633
Total current liabilities 10,974,383 10,487,094
Non-current liabilities
Long-term loans 10,488,489 9,410,289
Total liabilities 21,462,872 19,897,383
Commitments and contingencies -- --
Stockholders’ Equity
Common stock at $.001 par value; authorized
500,000,000 shares authorized, 15,722,178
equivalent shares issued and outstanding 15,722 15,722
Additional paid-in capital 30,123,728 29,944,016
Retained earnings 13,437,493 10,522,673
Accumulated other comprehensive income 1,187,780 1,139,508
Total stockholders’ equity 44,764,723 41,621,919
Total liabilities and stockholders’ equity $ 66,227,595 $ 61,519,302
Table 3 YUHE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Stated in US Dollars)
For The Three Months Ended
March 31
2009 2008
Net cash provided by (used in) operating
activities $ 4,386,943 $ (2,544,215)
Cash flows from investing activities
Deposit paid and acquisition of property,
plant and equipment (41,133) (248,616)
Advance to notes receivable (335) (11,036,697)
Acquisition of subsidiaries -- (10,567,946)
Proceeds received from related parties
receivables 41,442 --
Advance to related companies -- (208,458)
Net cash used in investing activities (26) (22,061,717)
Cash flows from financing activities
Proceeds from loan payable -- 778,870
Proceeds from related party payable 275,336 1,285,168
Capital contribution by shareholder -- 12,149,750
Proceeds from common stock sale - net of
offering costs -- 12,205,586
Net cash flows provided by financing
activities: 275,336 26,419,374
Effect of foreign currency translation on
cash 17,521 124,985
Net increase in cash 4,679,774 1,938,427
Cash- beginning of period 13,412,205 1,050,168
Cash- end of period $ 18,091,979 $ 2,988,595
Cash paid during the period for:
Interest paid $ 357,632 $ 181,474
Income taxes paid $ -- $ --
Non-cash investing activities:
Transfer of construction in progress to
fixed assets $ 1,831,131 $ --
Table 4 PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
All amounts, All amounts, All amounts,
other than other than other than
percentage, in percentage, in percentage, in
U.S. dollars U.S. dollars U.S. dollars
For the three For the three For the three
months months months
ended ended ended
31-Mar 31-Mar 31-Mar
2009 2008 2008
(Pro forma) (As reported)
Sales revenue 10,914,390 2,594,880 1,103,551
Costs of goods sold 6,852,353 2,212,145 874,707
Gross profit 4,062,037 382,735 228,844
Selling expenses 92,940 77,537 48,540
General and
administrative
expenses 743,990 383,664 260,969
Operating (loss) income 3,225,107 -78,466 -80,665
Bad debts recovery -- 233,038 13,145
Interest income 96 163 158
Other income 15,509 11,504 5,900
Interest expenses 325,427 266,641 180,474
Other expenses 465 30,545 30,545
Income taxes -- -- --
Net income (loss) 2,914,820 -130,947 -272,481
The pro forma financial information above was prepared based on the unaudited financial results for the Company’s Weifang and Taihong subsidiaries for the three months ended March 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.
For more information, please contact:
Yuhe International, Inc.
Mr. Vincent Hu, CFO
Phone: +86-536-7300-667
Email: vincent.hu@yuhepoultry.com
Web: http://www.yuhepoultry.com
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Mr. Graham Reed, Financial Writer
Phone: +1-646-213-1915
Email: graham.reed@ccgir.com
Web: http://www.ccgirasia.com
