Attached files
| file | filename |
|---|---|
| 8-K - YUHE INTERNATIONAL, INC. | v202591_8k.htm |
| EX-99.2 - YUHE INTERNATIONAL, INC. | v202591_ex99-2.htm |
Exhibit
99.1
|
Contact:
|
|
|
Yuhe
International, Inc.
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CCG
Investor Relations
|
|
Mr.
Vincent Hu, Chief Financial Officer
|
Mr.
Athan Dounis
|
|
Phone:
+86-536-7300-667
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Phone:
+1 (646) 213-1916
|
|
Email:
vincent.hu@yuhepoultry.com
|
Email:
athan.dounis@ccgir.com
|
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www.ccgir.com
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Mr.
Jason Wang, Director of Investor Relations
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|
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Phone:
+1-765-409-1844
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Email:
jason.wang@yuhepoultry.com
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|
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www.yuhepoultry.com
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Yuhe
International, Inc. Announces Third Quarter 2010 Results
~Revenues
Increased 62.4% to $21.4 Million~
~Net
Income and Diluted EPS Increased 75.7% and 73.1%, Respectively~
Weifang, Shandong Province, P.R.C.
November 15, 2010 –Yuhe International,
Inc. (NASDAQ: YUII) (“Yuhe” or “the Company”), a leading supplier of day-old
chicken raised for meat production, or broilers, in the People’s Republic of
China (“PRC”), today announced its financial results for the quarter ended
September 30, 2010.
Third
Quarter 2010 Highlights
|
·
|
Net
revenue increased 62.4% to $21.4 million
year-over-year
|
|
·
|
Sales
volume increased 34.2% to 40.3 million
birds
|
|
·
|
Gross
profit increased 67.6% to $8.7
million
|
|
·
|
Gross
margin increased 130 basis points to
40.4%
|
|
·
|
Operating
income increased 73.9% to $7.4
million
|
|
·
|
Operating
margin increased 230 basis points to
34.6%
|
|
·
|
Net
income increased 75.7% to $7.3
million
|
|
·
|
Diluted
EPS increased 73.1% to $0.45
|
|
·
|
Yuhe
purchased five breeder farms in Liaoning Province, with a total production
capacity of 430,000 sets of parent breeders, and Yuhe became the largest
supplier of day-old broilers in China in terms of production
capacity.
|
“Our
strong third quarter sales growth was driven by an increase in both volume and
average selling prices,” commented Mr. Zhentao Gao, Chairman and Chief Executive
Officer of Yuhe. “We are particularly pleased with our gross margin performance
which benefited from higher average selling prices and our ability to optimize
our input costs by locking in favorable fixed prices for external eggs when the
market was not as strong as it is today. Yuhe’s management team, based on
its many years of experience and industry expertise, correctly forecast the
current supply shortage and took action to capitalize on the
opportunity. As a result, we are benefiting from a situation where
average selling prices are rising at a faster rate than our input
costs. The current average selling price of day-old-broilers is
approximately RMB 3.4 and we expect this favorable supply/demand imbalance to
persist into at least the first half of next year.”
Third
Quarter 2010 Results
Net
revenue for the third quarter of 2010 increased 62.4% to $21.4 million, compared
to $13.2 million for the same period last year. The increase was mainly driven
by a 34.2% gain in sales volume of day-old broilers to 40.3 million from 30.1
million in the comparable period last year. The average selling price per
broiler was RMB 3.28 in the third quarter of 2010, up 15% from RMB 2.85 in the
same period last year. Sales of broilers accounted for $19.5 million
or 90.8% of the Company’s net revenue.
Gross
profit increased 67.6% year over year to $8.7 million, compared to $5.2 million
in the same period last year. Gross margin increased 130 basis points to 40.4%
from 39.1% in the same quarter last year. The increase in gross
margin was mainly attributable to the increase in the average selling price per
broiler compared to the same period last year.
Operating
income increased 73.9% to $7.4 million, compared to $4.3 million in the same
period of 2009. Operating margin increased 230 basis points to 34.6%, compared
to 32.3% in the same quarter of 2009. The increase was primarily due
to operating leverage from higher sales.
Net
income increased 75.7% to $7.3 million from $4.1 million in the same period last
year. Diluted earnings per share increased 73.1% to $0.45 from $0.26
in the prior year period.
Nine
Month Results
In the
nine months ended September 30, 2010, Yuhe reported net revenues increased 34.5%
to $45.7 million, from $34.0 million in the nine months ended September 30,
2009. Gross profit grew 38.7% year-over-year to $16.7 million, with a gross
margin of 36.5%, as compared to 35.4% in the same period of 2009. Operating
income rose 41.3% to $13.5 million, with an operating margin of 29.6%. Net
income increased 45.0% to $13.3 million, or $0.82 per diluted share, compared to
$9.2 million, or $0.57 per diluted share, in the same period of
2009.
Financial
Condition
As of
September 30, 2010, the Company held $27.4 million in cash and cash equivalents,
as compared to $14.0 million at year-end 2009. Working capital was $16.4 million
with a 1.8:1 current ratio. The Company had $73.2 million in shareholders'
equity compared to $55.3 million at year-end 2009. Yuhe generated $16.1 million
in operating cash flow in the nine months ended September 30, 2010.
Recent
Developments
|
·
|
In
October and November 2010, Yuhe sold 4,140,000 shares of its common stock
in aggregate in a public offering at $7.00 per share for aggregate gross
proceeds of approximately $29.0 million. The Company intends to
use the net proceeds from the sale of the common stock for future
acquisitions, capital expenditures and general corporate and working
capital purposes.
|
|
·
|
Between
May and July 2010, Yuhe signed a series of supply contracts with two
suppliers to purchase external eggs to be produced by 420,000 sets of
parent breeders at fixed prices of between RMB 1.45 and RMB 1.50 per
egg.
|
|
·
|
In
July 2010, Yuhe announced that its wholly owned subsidiary, Weifang Yuhe
Poultry Co., Ltd., entered into an asset purchase agreement with Liaoning
Haicheng Songsen Stock Farming and Feed Company Limited to purchase five
breeder farms in Haicheng City, Liaoning Province. The payment included
RMB 21.3 million (approximately $3.2 million) in cash and approximately
300,000 restricted shares of Yuhe common stock calculated at a price of
$10 per share. The restricted shares are subject to a six-month lock-up
period. The five breeder farms have a total production capacity of 430,000
sets of parent breeders.
|
Outlook
Mr. Gao
added, “We are pleased to announce that we began to generate revenues from the
new parent breeders that we purchased in Shangong Province in 2009 and early
2010. Of the 13 farms purchased, nine have begun operations and the
other four farms are expected to commence operations by the end of the
first quarter of 2011. We also completed the construction of our new
hatchery in September 2010. Given our increased capacity and the
higher average selling prices in the market, we believe our full year 2010
broiler output and net income will surpass our previously provided
forecast. For 2011, we continue to expect broiler output of
approximately 250 million.
“Our
acquisition of the five breeder farms in Liaoning Province provides us with a
production base outside of Shandong Province and is an important milestone in
our path toward becoming the leading company in the national broiler market in
China. We are in the process of upgrading the facilities and training
the employees at these farms and plan to put the first four farms into
production by the end of the first quarter of 2011 and the fifth farm into
production by the end of the second quarter of 2011. Upon full
operations of all of our acquired farms, we expect to have in total 430,000 sets
of hatchers with a hatching capacity of 43 million broilers per
year.
“The
capital we raised in our recent financing, combined with our internally
generated cash resources, provides us with flexibility to capitalize on
potential acquisition opportunities within our industry. We continue
to view this as a very attractive time to make acquisitions and are currently
evaluating additional targets that represent a total capacity of between 1.0
million and 1.2 million sets of parent breeders. We are committed to
delivering sustainable growth in shareholder value and keeping this principle
foremost in our mind when evaluating any potential future
acquisitions."
Conference
Call
The
Company will host a conference call at 9:00 a.m. EST on Tuesday, November 16,
2010, to discuss financial results for the third quarter of 2010. 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 (706) 902-4287. When promoted, enter the
conference passcode: 21983505.
A replay
will be available for 30 days beginning on Tuesday, November 16, 2010 at 10:00
a.m. EST. To access the replay, dial (800) 642-1687. International callers
should dial (706) 645-9291. When prompted, enter the conference passode:
21983505.
About
Yuhe International, Inc.
Founded
in 1996, Yuhe is the largest day-old broiler breeder in China. The Company’s
main operations involve breeding, as all broilers are sold within a day of
hatching. Headquartered 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 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.
- FINANCIAL
TABLES FOLLOW-
YUHE
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(Stated
in US Dollars)
|
September
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
(unaudited)
|
||||||||
|
ASSETS
|
||||||||
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Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 27,359,186 | $ | 14,047,147 | ||||
|
Accounts
receivable, net of allowances of $18,947 and $18,868
|
923 | 838 | ||||||
|
Inventories
|
9,379,174 | 6,560,783 | ||||||
|
Advances
to suppliers
|
395,790 | 359,179 | ||||||
|
Deferred
tax assets
|
11,091 | 17,766 | ||||||
|
Total
current assets
|
37,146,164 | 20,985,713 | ||||||
|
Plant
and equipment, net
|
45,548,163 | 29,556,712 | ||||||
|
Deposits
paid for acquisition of long term assets
|
4,955,473 | 16,082,613 | ||||||
|
Notes
receivable, net and other receivable, net
|
68,726 | 33,635 | ||||||
|
Unlisted
investments held for sale
|
- | 300,172 | ||||||
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Intangible
assets, net
|
2,860,423 | 2,851,411 | ||||||
|
Investment
in direct financing lease
|
414,932 | 382,742 | ||||||
|
Long
term prepaid rent
|
11,618,593 | 6,570,038 | ||||||
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Total
assets
|
$ | 102,612,474 | $ | 76,763,036 | ||||
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current
liabilities:
|
||||||||
|
Short
term borrowings
|
$ | 298,592 | - | |||||
|
Accounts
payable
|
10,847,542 | $ | 5,740,912 | |||||
|
Current
portion of long term loans
|
2,060,286 | 9,433,686 | ||||||
|
Other
payable
|
1,132,788 | 1,343,901 | ||||||
|
Accrued
expenses and payroll related liabilities
|
3,303,062 | 2,366,134 | ||||||
|
Advances
from customers
|
2,496,681 | 678,366 | ||||||
|
Other
taxes payable
|
152,414 | 150,764 | ||||||
|
Loan
from director
|
298,592 | 292,517 | ||||||
|
Other
liabilities
|
146,938 | 143,949 | ||||||
|
Due
to related companies
|
1,208 | 1,208 | ||||||
|
Total
current liabilities
|
20,738,103 | 20,151,437 | ||||||
|
Non-current
liabilities
|
||||||||
|
Long-term
loans
|
8,659,172 | 1,360,206 | ||||||
|
Total
liabilities
|
29,397,275 | 21,511,643 | ||||||
|
Stockholders'
Equity
|
||||||||
|
Preferred
stock, $.001 par value, 1,000,000 shares authorized,
no
shares issued and outstanding
|
- | - | ||||||
|
Common
stock, $.001 par value, 500,000,000 shares authorized, 16,109,563 and
15,722,180 equivalent shares issued and outstanding at September 30, 2010
and December 31, 2009, respectively
|
16,109 | 15,722 | ||||||
|
Additional
paid-in capital
|
33,953,555 | 30,672,849 | ||||||
|
Retained
earnings
|
36,586,637 | 23,316,794 | ||||||
|
Accumulated
other comprehensive income
|
2,658,898 | 1,246,028 | ||||||
|
Total
stockholders’ equity
|
73,215,199 | 55,251,393 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 102,612,474 | $ | 76,763,036 | ||||
YUHE
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
(Stated
in US Dollars)
|
For
The Three Months Ended
|
For
The Nine Months Ended
|
|||||||||||||||
|
Sept
30
|
Sept
30
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
revenue
|
$ | 21,443,626 | $ | 13,208,230 | $ | 45,679,174 | $ | 33,956,993 | ||||||||
|
Cost
of revenue
|
(12,787,081 | ) | (8,042,920 | ) | (28,999,187 | ) | (21,926,699 | ) | ||||||||
|
|
|
|
|
|||||||||||||
|
Gross
profit
|
8,656,545 | 5,165,310 | 16,679,987 | 12,030,294 | ||||||||||||
|
Operating
Expenses
|
||||||||||||||||
|
Selling
|
(239,504 | ) | (113,776 | ) | (552,019 | ) | (315,372 | ) | ||||||||
|
General
and administrative expenses
|
(996,607 | ) | (784,402 | ) | (2,627,746 | ) | (2,163,639 | ) | ||||||||
|
|
|
|
|
|||||||||||||
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Total
operating expenses
|
(1,236,111 | ) | (898,178 | ) | (3,179,765 | ) | (2,479,011 | ) | ||||||||
|
Income
from operations
|
7,420,434 | 4,267,132 | 13,500,222 | 9,551,283 | ||||||||||||
|
Non-operating
income (expenses)
|
||||||||||||||||
|
Interest
income
|
86 | 41 | 225 | 182 | ||||||||||||
|
Other
income (expenses)
|
7,032 | (3,130 | ) | 15,116 | 1,531 | |||||||||||
|
(Loss)
gain on disposal of fixed assets
|
1,857 | (1,081 | ) | 1,681 | 26,697 | |||||||||||
|
Investment
income
|
42 | - | 15,657 | 15,509 | ||||||||||||
|
Interest
expenses
|
(141,000 | ) | (115,809 | ) | (256,137 | ) | (441,236 | ) | ||||||||
|
|
|
|
|
|||||||||||||
|
Total
other income (expenses)
|
(131,983 | ) | (119,979 | ) | (223,458 | ) | (397,317 | ) | ||||||||
|
Net
income before income taxes
|
7,288,451 | 4,147,153 | 13,276,764 | 9,153,966 | ||||||||||||
|
Income
tax expenses
|
(991 | ) | - | (6,921 | ) | - | ||||||||||
|
|
|
|
|
|||||||||||||
|
Net
income
|
$ | 7,287,460 | $ | 4,147,153 | $ | 13,269,843 | $ | 9,153,966 | ||||||||
|
Other
comprehensive income
|
||||||||||||||||
|
Foreign
currency translation
|
1,148,461 | 51,919 | 1,412,870 | 103,997 | ||||||||||||
|
Comprehensive
income
|
$ | 8,435,921 | $ | 4,199,072 | $ | 14,682,713 | $ | 9,257,963 | ||||||||
|
Earnings
per share
|
||||||||||||||||
|
Basic
|
$ | 0.46 | $ | 0.26 | $ | 0.84 | $ | 0.58 | ||||||||
|
Diluted
|
$ | 0.45 | $ | 0.26 | $ | 0.82 | $ | 0.57 | ||||||||
|
Weighted
average shares outstanding
|
||||||||||||||||
|
Basic
|
15,992,172 | 15,722,180 | 15,846,775 | 15,722,180 | ||||||||||||
|
Diluted
|
16,199,491 | 15,931,379 | 16,094,677 | 15,931,379 | ||||||||||||
YUHE
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Stated
in US Dollars)
|
For
The Nine Months Ended
|
||||||||
|
Sept
30
|
||||||||
|
2010
|
2009
|
|||||||
|
Cash
flows from operating activities
|
||||||||
|
Net
income
|
$ | 13,269,843 | $ | 9,153,966 | ||||
|
Adjustments
to reconcile net income to net cash used in operating
activities:
|
||||||||
|
Stock
based compensation
|
545,093 | 545,127 | ||||||
|
Depreciation
|
1,747,501 | 1,556,610 | ||||||
|
Amortization
|
49,332 | 49,144 | ||||||
|
Capitalized
interest in construction in progress
|
(457,511 | ) | ||||||
|
Loss
(gain) on disposal of fixed assets
|
(1,681 | ) | (26,697 | ) | ||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
(66 | ) | (15 | ) | ||||
|
Advances
to suppliers
|
(112,179 | ) | (868,859 | ) | ||||
|
Prepaid
expenses
|
(11,622 | ) | ||||||
|
Inventories
|
(2,635,593 | ) | 676,030 | |||||
|
Deferred
tax assets
|
6,921 | |||||||
|
Deferred
expenses
|
51,488 | |||||||
|
Long
term prepaid rent
|
169,775 | - | ||||||
|
Accounts
payable
|
1,105,592 | 586,255 | ||||||
|
Other
payable
|
(234,245 | ) | 464,785 | |||||
|
Accrued
expenses and payroll related liabilities
|
881,303 | 72,155 | ||||||
|
Advances
from customers
|
1,772,915 | 533,066 | ||||||
|
Other
taxes payable
|
(1,455 | ) | 9,223 | |||||
|
Net
cash provided by operating activities
|
16,105,545 | 12,790,656 | ||||||
|
Cash
flows from investing activities
|
||||||||
|
Deposit
paid and acquisition of property, plant and equipment
|
(3,574,343 | ) | (4,944,105 | ) | ||||
|
Advance
to notes receivable
|
(28,039 | ) | (25,282 | ) | ||||
|
Proceeds
from disposal of fixed assets
|
5,868 | 27,778 | ||||||
|
Advance
to related companies
|
- | 944,874 | ||||||
|
Repayment
of related companies
|
- | - | ||||||
|
Proceeds
from unlisted investments
|
301,088 | - | ||||||
|
Investment
in direct financing lease
|
(23,822 | ) | - | |||||
|
Net
cash used in investing activities
|
(3,319,248 | ) | (3,996,735 | ) | ||||
|
Cash
flows from financing activities
|
||||||||
|
Proceeds
from loan payable
|
293,410 | - | ||||||
|
Repayment
of loan payable
|
(293,410 | ) | - | |||||
|
Proceeds
from related party payable
|
- | 360,094 | ||||||
|
Repayment
of related party payable
|
- | (570,506 | ) | |||||
|
Net
cash flows (used in) provided by financing activities:
|
- | (210,412 | ) | |||||
|
Effect
of foreign currency translation on cash and cash
equivalents
|
525,742 | 40,836 | ||||||
|
Net
increase in cash
|
13,312,039 | 8,624,345 | ||||||
|
Cash-
beginning of period
|
14,047,147 | 13,412,205 | ||||||
|
Cash-
end of period
|
$ | 27,359,186 | $ | 22,036,550 | ||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
paid
|
$ | 636,590 | $ | 1,011,194 | ||||
|
Income
taxes paid
|
$ | - | $ | - | ||||
|
Supplemental
disclosure
|
||||||||
|
Transfer
from construction in progress to fixed assets
|
$ | 2,681,233 | $ | 1,831,131 | ||||
|
Transfer
from advances to suppliers and deposit paid for acquisition of long term
assets to fixed assets
|
$ | 13,522,876 | $ | - | ||||
|
Transfer
from deposit paid for acquisition of long term assets to long term prepaid
rent
|
$ | 4,110,265 | $ | - | ||||
|
Cashless
exercise of 142,816 warrants
|
$ | 87 | $ | - | ||||
|
Issue
300,000 restricted shares for purchase of assets
|
$ | 2,736,000 | - | |||||