omniture

Shineco, Inc. Reports Second Quarter of 2018 Financial Results

2018-02-13 06:55 526

BEIJING, Feb. 13, 2018 /PRNewswire/ -- Shineco, Inc. ("Shineco" or the "Company"; NASDAQ: TYHT), a producer and distributor of Chinese herbal medicines, organic agricultural produce, specialized textiles, and other health and well-being focused plant-based products in China, today announced its financial results for the second quarter ended December 31, 2017.

Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, commented, "We are proud of all that we have accomplished in the first two quarters of our fiscal year and are pleased to report the second quarter of 2018 financial results with a 26.3% increase in net income as compared to the second quarter of 2017. We believe that our investment in our Apocynum Industrial Park and Institute of Chinese Apocynum Industrial Technology Research continues to strengthen the long-term outlook of Shineco as a positive long-term investment. In the short term we have seen tremendous growth in our Luobuma product line and are pleased that we have grown to become a high margin business, with revenues grown 327% compared to the second quarter ended December 31, 2016, and have achieved impressive results following our expansion over this past year. The past six months have been immensely positive for Shineco and we are excited to tackle the challenges and opportunities that the next six months will bring, as we anticipate continued future growth in our revenues and net income."

Second Quarter of 2018 Financial Highlights

   

For the Three Months Ended December 31

($ millions, except per share data)

 

2017

 

2016

 

% Change

Revenue

 

14.13

 

11.22

 

25.9%

Luobuma products

 

3.89

 

0.91

 

327.0%

Chinese medicinal herbal products

 

3.66

 

3.50

 

4.8%

Other agricultural products

 

6.58

 

6.82

 

-3.4%

Gross profit

 

4.82

 

3.95

 

21.9%

Gross margin

 

34.1%

 

35.2%

 

-1.1%

Operating income

 

3.24

 

2.53

 

28.2%

Operating margin

 

22.9%

 

22.5%

 

0.4%

Net income attributable to Shineco

 

3.60

 

2.85

 

26.3%

EPS

 

0.17

 

0.14

 

26.3%

  • Revenues increased by 25.9% to $14.13 million for the three months ended December 31, 2017 from $11.22 million for the same period of last year, mainly due to increases in sales from Luobuma products and Chinese medicinal herbal products and partially offset by decreased sales from other agricultural products.
  • Gross profit increased by 21.9% to $4.82 million for the three months ended December 31, 2017 from $3.95 million for the same period of last year. Gross margin decreased by 1.1 percentage points to 34.1% from 35.2% for the same period of last year.
  • Net income attributable to Shineco increased by 26.3% to $3.60 million, or $0.17 per basic and diluted share, for the three months ended December 31, 2017 from $2.85 million, or $0.14 per basic and diluted share, for the same period of last year. The increases in net income earnings per share were primarily a result of the increase in gross profit, partially offset by the increase in general and administrative expenses.

Second Quarter of 2018 Financial Results

Revenues

Revenues for the three months ended December 31, 2017 increased by $2.91 million, or 25.9%, to $14.13 million from $11.22 million for the same period of last year, mainly due to increases in sales from Luobuma products and Chinese medicinal herbal products and partially offset by decreased sales from other agricultural products.

   

For the Three Months Ended December 31

   

2017

 

2016

($ millions)

 

Revenues

 

COGS

 

Gross
Margin

 

Revenues

 

COGS

 

Gross
Margin

Luobuma products

 

3.89

 

1.87

 

51.7%

 

0.91

 

0.44

 

51.0%

Chinese medicinal herbal products

 

3.66

 

2.75

 

24.6%

 

3.50

 

2.48

 

29.1%

Other agricultural products

 

6.58

 

4.67

 

29.0%

 

6.82

 

4.33

 

36.4%

Business and sales related taxes

 

-

 

0.03

 

-

 

-

 

0.02

 

-

Total

 

14.13

 

9.31

 

34.1%

 

11.22

 

7.27

 

35.2%

Revenues from Luobuma products increased by $2.98 million, or 327.0%, to $3.89 million for the three months ended December 31, 2017 from $0.91 million for the same period of last year, mainly due to establishment of new subsidiary, Xinjiang Taihe, which generated revenue of $2.93 million.

Revenues from Chinese medicinal herbal products increased by $0.17 million, or 4.8%, to $3.66 million for the three months ended December 31, 2017 from $3.50 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers for the three months ended December 31, 2017 than the same period in 2016.

Revenues from other agricultural products decreased by $0.23 million, or 3.4%, to $6.58 million for the three months ended December 31, 2017 from $6.82 million for the same period of last year. The decrease was mainly due to the decrease in revenue of storage services, partially offset by the increased sales of yew trees.

Gross profit and Gross Margin

Total cost of goods sold increased by $2.04 million, or 28.1%, to $9.31 million for the three months ended December 31, 2017 from $7.27 million for the same period of last year. Gross profit increased by $0.86 million, or 21.9%, to $4.82 million for the three months ended December 31, 2017 from $3.95 million for the same period of last year. Overall gross margin decreased by 1.1 percentage points to 34.1% for the three months ended December 31, 2017, compared to 35.2% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 51.7%, 24.6%, and 29.0%, respectively, for the three months ended December 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 51.0%, 29.1%, and 36.4%, respectively, for the same period of last year.

Operating income

Selling expenses increased by $0.05 million, or 9.6%, to $0.55 million for the three months ended December 31, 2017 from $0.50 million for the same period of last year, primarily due to the acquisition of new subsidiary, Tajite, in October, and increased promotion expenses, partly offset by decreased rent expense of warehouses and service fees of e-commerce websites. General and administrative expenses increased by $0.10 million, or 11.2%, to $1.03 million for the three months ended December 31, 2017 from $0.92 million for the same period of last year. The increase in general and administrative expenses was due to the incorporation of new subsidiaries, Tiankunrunze, Xinjiang Taihe and Tajite in 2017. As a result, total operating expenses increased by $0.15 million, or 10.7%, to $1.58 million for the three months ended December 31, 2017 from $1.43 million for the same period of last year.

Operating income increased by $0.71 million, or 28.2%, to $3.24 million for the three months ended December 31, 2017 from $2.53 million for the same period of last year. Operating margin was 22.9% for the three months ended December 31, 2017, compared to 22.5% for the same period of last year.

Net income

Net income increased by $0.68 million, or 23.6%, to $3.58 million for the three months ended December 31, 2017 from $2.90 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the three months ended December 31, 2017 was $3.60 million, or $0.17 per basic and diluted share. This compared to net income attributable to common shareholders of $2.85 million, $0.14 per basic and diluted share, for the same period of last year.

Six Months Ended December 31, 2017 Financial Results

   

For the Six Months Ended December 31

($ millions, except per share data)

 

2017

 

2016

 

% Change

Revenue

 

21.94

 

17.59

 

24.7%

Luobuma products

 

4.93

 

1.65

 

199.4%

Chinese medicinal herbal products

 

6.93

 

6.68

 

3.8%

Other agricultural products

 

10.08

 

9.27

 

8.8%

Gross profit

 

6.91

 

5.87

 

17.7%

Gross margin

 

31.5%

 

33.4%

 

-1.9%

Operating income

 

4.20

 

3.59

 

17.0%

Operating margin

 

19.1%

 

20.4%

 

-1.3%

Net income attributable to Shineco

 

4.85

 

4.20

 

15.7%

EPS

 

0.23

 

0.21

 

11.1%

Revenues

Revenues for the six months ended December 31, 2017 increased by $4.35 million, or 24.7%, to $21.94 million from $17.59 million for the same period of last year, mainly due to increases in sales across all the products.

   

For the Six Months Ended December 31

   

2017

 

2016

($ millions)

 

Revenues

 

COGS

 

Gross
Margin

 

Revenues

 

COGS

 

Gross
Margin

Luobuma products

 

4.93

 

2.45

 

50.1%

 

1.65

 

0.81

 

50.4%

Chinese medicinal herbal products

 

6.93

 

5.33

 

23.1%

 

6.68

 

4.92

 

26.0%

Other agricultural products

 

10.08

 

7.21

 

28.4%

 

9.27

 

5.96

 

35.6%

Business and sales related taxes

 

-

 

0.04

 

-

 

-

 

0.03

 

-

Total

 

21.94

 

15.04

 

31.5%

 

17.59

 

11.72

 

33.4%

Revenues from Luobuma products increased by $3.29 million, or 199.4%, to $4.93 million for the six months ended December 31, 2017 from $1.65 million for the same period of last year, mainly due to revenue generated by a new subsidiary, Xinjiang Taihe, of $2.93 million and increased sales volume of our health awareness related products. The Company also enhanced online sales promotions during the six months ended December 31, 2017, which contributed to more sales.

Revenues from Chinese medicinal herbal products increased by $0.25 million, or 3.8%, to $6.93 million for the six months ended December 31, 2017 from $6.68 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers.

Revenues from other agricultural products increased by $0.81 million, or 8.8%, to $10.08 million for the six months ended December 31, 2017 from $9.27 million for the same period of last year. The increase was mainly due to the increase in sales volume of yew trees since the public realized the air purification function of the yew trees.

Gross profit and Gross Margin

Total cost of goods sold increased by $3.31 million, or 28.3%, to $15.04 million for the six months ended December 31, 2017 from $11.72 million for the same period of last year. Gross profit increased by $1.04 million, or 17.7%, to $6.91 million for the six months ended December 31, 2017 from $5.87 million for the same period of last year. Overall gross margin decreased by 1.9 percentage points to 31.5% for the six months ended December 31, 2017, compared to 33.4% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 50.1%, 23.1%, and 28.4%, respectively, for the six months ended December 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 50.4%, 26.0%, and 35.6%, respectively, for the same period of last year.

Operating income

Selling expenses decreased by $0.04 million, or 4.2%, to $0.85 million for the six months ended December 31, 2017 from $0.88 million for the same period of last year, primarily due to decreased rent expense of warehouses, salary expenses, and service fees of e-commerce websites, partially offset by increased promotion expenses. General and administrative expenses increased by $0.47 million, or 33.3%, to $1.86 million for the six months ended December 31, 2017 from $1.40 million for the same period of last year. The increase in general and administrative expenses was primarily due to the incorporation of new subsidiaries, Tiankunrunze, Xinjiang Taihe and Tajite in 2017, as well as increased professional service fees, such as attorney's fees, consulting fees and auditing fees.

Operating income increased by $0.61 million, or 17.0%, to $4.20 million for the six months ended December 31, 2017 from $3.59 million for the same period of last year. Operating margin was 19.1% for the six months ended December 31, 2017, compared to 20.4% for the same period of last year.

Net income

Net income increased by $0.56 million, or 13.2%, to $4.84 million for the six months ended December 31, 2017 from $4.28 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the six months ended December 31, 2017 was $4.85 million, or $0.23 per basic and diluted share. This compared to net income attributable to common shareholders of $4.20 million, $0.21 per basic and diluted share, for the same period of last year.

Financial Condition

As of December 31, 2017, the Company had cash of $29.35 million, compared to $23.15 million as of June 30, 2017. Working capital as of December 31, 2017 was $44.27 million as compared to $39.69 million at June 30, 2017. Net cash provided by operating activities was $7.78 million for the six months ended December 31, 2017, compared to net cash used in operating activities of $0.15 million for the same period of last year. Net cash used in investing activities was $0.49 million for the six months ended December 31, 2017, compared to $2.78 million for the same period of last year. Net cash used in financing activities was $1.47 million for the six months ended December 31, 2017, compared to net cash provided by financing activities of $5.79 million for the same period of last year.

About Shineco, Inc.

Incorporated in August 1997 and headquartered in Beijing, China, Shineco, Inc. ("Shineco" or the "Company") is a Delaware holding company that uses its subsidiaries' and variable interest entities' vertically- and horizontally-integrated production, distribution and sales channels to provide health and well-being focused plant-based products in China. Utilizing modern engineering technologies and biotechnologies, Shineco produces, among other products, Chinese herbal medicines, organic agricultural produce and specialized textiles. For more information about the Company, please visit www.tianyiluobuma.com.

Forward-Looking Statements

This press release contains information about Shineco's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in Shineco's registration statement and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

Tina Xiao
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com

 

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 
           

ASSETS

         
 

December 31,

 

June 30,

 

2017

 

2017

   

(Unaudited)

     

CURRENT ASSETS:

         

Cash

$

29,351,613

 

$

23,154,551

Accounts receivable, net

 

15,068,392

   

14,480,004

Due from related parties

 

529,816

   

448,833

Inventories

 

2,502,196

   

2,346,273

Advances to suppliers, net

 

3,230,843

   

2,396,123

Loans to third parties, net

 

-

   

830,090

Other receivables, net

 

981,808

   

535,700

Short-term deposit

 

230,201

   

158,894

Prepaid expenses

 

138,967

   

375,459

TOTAL CURRENT ASSETS

 

52,033,836

   

44,725,927

           

Property and equipment at cost, net of accumulated depreciation and amortization

 

11,670,890

   

10,320,396

Land use right, net of accumulated amortization

 

1,385,421

   

1,346,631

Investments

 

6,280,999

   

5,695,080

Deposit for business acquisition

 

124,474

   

2,065,686

Distribution right

 

1,134,099

   

-

Long-term deposit and other noncurrent assets

 

116,633

   

112,883

Prepaid leases

 

3,698,929

   

3,784,533

Deferred tax assets

 

285,917

   

233,834

Goodwill

 

2,152,975

   

-

TOTAL ASSETS

$

78,884,173

 

$

68,284,970

           
           

LIABILITIES AND EQUITY

         
           

CURRENT LIABILITIES:

         

Short-term loans

$

1,203,764

 

$

2,663,628

Accounts payable

 

1,740,791

   

158,068

Advances from customers

 

105,785

   

5,439

Due to related parties

 

343,655

   

257,880

Other payables and accrued expenses

 

2,057,436

   

337,107

Taxes payable

 

2,024,768

   

1,608,926

Deferred tax liability

 

283,525

   

-

TOTAL LIABILITIES

 

7,759,724

   

5,031,048

           

Commitments and contingencies

 

-

   

-

           

EQUITY:

         
           

Common stock; par value $0.001, 100,000,000 shares authorized; 21,034,072 and 21,034,072 shares issued and outstanding at December 31, 2017 and June 30, 2017

 

21,034

   

21,034

Additional paid-in capital

 

22,737,302

   

22,737,302

Statutory reserve

 

3,727,672

   

3,484,449

Retained earnings

 

43,675,155

   

39,064,743

Accumulated other comprehensive loss

 

(155,024)

   

(3,140,982)

Total Stockholders' equity of Shineco, Inc.

 

70,006,139

   

62,166,546

Non-controlling interest

 

1,118,310

   

1,087,376

TOTAL EQUITY

 

71,124,449

   

63,253,922

           

TOTAL LIABILITIES AND EQUITY

$

78,884,173

 

$

68,284,970

           
           

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

                       
 

For the Six Months Ended
December 31,

 

For the Three Months Ended
December 31,

 

2017

 

2016

 

2017

 

2016

               

REVENUE

$

21,941,696

 

$

17,589,730

 

$

14,132,202

 

$

11,223,066

                       

COST OF REVENUE

                     

    Cost of product and services

 

14,994,212

   

11,687,306

   

9,288,701

   

7,251,134

    Business and sales related tax

 

41,337

   

33,964

   

25,724

   

18,419

          Total cost of revenue

 

15,035,549

   

11,721,270

   

9,314,425

   

7,269,553

                       

GROSS PROFIT

 

6,906,147

   

5,868,460

   

4,817,777

   

3,953,513

                       

OPERATING EXPENSES

                     

    General and administrative expenses

 

1,863,924

   

1,398,341

   

1,028,373

   

924,577

    Selling expenses

 

845,219

   

882,354

   

550,283

   

502,036

          Total operating expenses

 

2,709,143

   

2,280,695

   

1,578,656

   

1,426,613

                       

INCOME FROM OPERATIONS

 

4,197,004

   

3,587,765

   

3,239,121

   

2,526,900

                       

OTHER INCOME

                     

    Income from equity method investments

 

350,652

   

401,768

   

202,194

   

240,586

    Purchase rebate income

 

779,935

   

592,628

   

411,132

   

352,638

    Other income

 

139,975

   

159,308

   

54,356

   

73,407

    Interest income (expense), net

 

(31,324)

   

40,538

   

(12,139)

   

7,785

          Total other income

 

1,239,238

   

1,194,242

   

655,543

   

674,416

                       

INCOME BEFORE PROVISION FOR INCOME TAXES

 

5,436,242

   

4,782,007

   

3,894,664

   

3,201,316

                       

PROVISION FOR INCOME TAXES

 

595,035

   

505,387

   

312,178

   

303,751

                       

NET INCOME

 

4,841,207

   

4,276,620

   

3,582,486

   

2,897,565

                       

    Less: net income (loss) attributable to non-controlling interest

 

(12,428)

   

80,177

   

(15,259)

   

49,829

                       

NET INCOME ATTRIBUTABLE TO SHINECO, INC.

$

4,853,635

 

$

4,196,443

 

$

3,597,745

 

$

2,847,736

                       

COMPREHENSIVE INCOME

                     

    Net income

$

4,841,207

 

$

4,276,620

 

$

3,582,486

 

$

2,897,565

    Other comprehensive income (loss): foreign currency translation gain (loss)

 

3,030,781

   

(2,514,175)

   

1,561,371

   

(2,317,494)

    Total comprehensive income

 

7,871,988

   

1,762,445

   

5,143,857

   

580,071

    Less: comprehensive income attributable to non-controlling interest

 

32,395

   

36,441

   

9,542

   

9,815

                       

COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC.

$

7,839,593

 

$

1,726,004

 

$

5,134,315

 

$

570,256

                       

    Weighted average number of shares basic and diluted

 

21,034,072

   

20,205,409

   

21,034,072

   

21,034,072

                       

    Basic and diluted earnings per common share

$

0.23

 

$

0.21

 

$

0.17

 

$

0.14

                       
                       

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

           
 

For the Six Months Ended December 31,

 

2017

 

2016

           

CASH FLOWS FROM OPERATING ACTIVITIES:

         

Net income

$

4,841,207

 

$

4,276,620

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

         

Depreciation and amortization

 

295,832

   

299,553

(Recovery of) provision for doubtful accounts

 

(18,931)

   

298,297

Increase in inventory reserve

 

148,043

   

35,930

Deferred tax benefit

 

(41,523)

   

(43,424)

Income from equity method investments

 

(350,652)

   

(401,768)

Interest income from loans to related parties

 

-

   

(87,220)

           

Changes in operating assets and liabilities:

         

Accounts receivable

 

35,996

   

(6,148,928)

Advances to suppliers

 

(733,215)

   

(282,288)

Inventories

 

(145,327)

   

2,530,386

Other receivables

 

(195,516)

   

(399,914)

Prepaid expense and other assets

 

189,270

   

(152,508)

Due from related parties

 

(8,399)

   

240,601

Prepaid leases

 

237,751

   

235,872

Accounts payable

 

1,544,313

   

5,444

Advances from customers

 

17,181

   

79,921

Other payables

 

1,640,458

   

(785,057)

Taxes payable

 

323,744

   

151,820

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES

 

7,780,232

   

(146,663)

           

CASH FLOWS FROM INVESTING ACTIVITIES:

         

Acquisitions of property and equipment

 

(564,937)

   

(31,952)

Payment for construction in progress

 

(602,267)

   

-

Loan advances to third parties

 

-

   

(979,465)

Repayments of loans from third parties

 

830,889

   

-

Loan advances to related party

 

(52,698)

   

-

Repayments of loans from related parties

 

-

   

501,119

Deposit for business acquisition

 

(121,959)

   

(2,074,198)

Deposit for potential investment

 

-

   

(200,000)

Cash of subsidiary acquired

 

22,830

   

-

NET CASH (USED IN) INVESTING ACTIVITIES

 

(488,142)

   

(2,784,496)

           

CASH FLOWS FROM FINANCING ACTIVITIES:

         

Proceeds from short-term loans

 

1,204,533

   

2,697,939

Repayment of short-term loans

 

(2,743,199)

   

(2,414,589)

Stock issuance cost payable

 

-

   

843,844

Proceeds from initial public offering, net of offering costs

 

-

   

4,550,705

Proceeds from advances from related parties

 

73,556

   

109,882

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

 

(1,465,110)

   

5,787,781

           

EFFECT OF EXCHANGE RATE CHANGE ON CASH

 

370,082

   

(1,122,302)

           

NET INCREASE IN CASH

 

6,197,062

   

1,734,320

           

CASH - Beginning of the Period

 

23,154,551

   

22,009,374

           

CASH - End of the Period

$

29,351,613

 

$

23,743,694

           

SUPPLEMENTAL CASH FLOW DISCLOSURES:

         

Cash paid for income tax

$

492,206

 

$

219,682

Cash paid for interest

$

69,498

 

$

71,586

           

 

Source: Shineco, Inc
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