Attached files
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| 8-K - FORM 8-K - Feihe International Inc | feihe_8k.htm |
Exhibit 99.1
Feihe International, Inc. Reports First Quarter 2013 Financial Results
BEIJING, May 15, 2013 — Feihe International, Inc. (NYSE: ADY; “Feihe International,” the “Company,” “we,” “us” and “our”), one of the leading producers and distributors of premium infant formula, milk powder, packed milk, and soybean, rice and walnut products in China, today announced financial results for the first quarter of 2013.
First Quarter 2013 Financial Highlights:
| l | Revenue was $79.8 million in 1Q 2013, an increase of $16.9 million or 26.9% from $62.9 million in
1Q 2012, and a sequential increase of $4.3 million or 5.7% from $75.5 million in 4Q 2012. |
| Ø | Sales from branded milk powder products were $76.4 million in 1Q 2013 vs. $59.4 million in 1Q 2012. |
| Ø | Sales from packed milk products were $0.7 million in 1Q 2013 vs. $0.5 million in 1Q 2012. |
| l | Gross profit was $45.3 million, up $11.3 million or 33.2% from $34.0 million in 1Q 2012, and sequentially up $12.1 million or 36.4% from $33.2 million in 4Q 2012. |
| l | Gross profit margin was 56.8% vs. 54.0% in 1Q 2012. |
| l | Income from operations increased $11.5 million to $9.7 million in 1Q 2013 from a loss from operations of $1.8 million in 4Q 2012. |
| l | Net income was $10.6 million in 1Q 2013, increased $2.3 million or 27.7% from $8.3 million in 1Q 2012, and increased $11.0 million from net loss of $0.4 million in 4Q 2012. |
| l | Diluted net income per share of common stock (“EPS”) was $0.53 in 1Q 2013 vs. $0.40 in 1Q 2012 and a loss per share of $0.02 in 4Q 2012. |
Mr. Leng You Bin, the Company’s Chairman and Chief Executive Officer, stated, “We are pleased to issue our first quarter 2013 financial results today. The increased sales of Feihe branded milk powder, our higher margin products, demonstrate better market recognition and brand awareness. This is a good start for the next fifty years for Feihe International, Inc. We will continue to concentrate on producing premium quality milk powder from secured raw milk sources.”
The Company’s revenue was $79.8 million in the first quarter of 2013, an increase of approximately $16.9 million, or 26.9%, from approximately $62.9 million in the first quarter of 2012. This increase was primarily due to an increase in sales of milk powder of approximately $17.0 million and sales of packed milk of approximately $0.3 million, offset by a decrease in sales of raw milk powder of approximately $0.3 million and rice cereal of $0.4 million.
The Company’s gross profit was $45.3 million in the first quarter of 2013, up $11.3 million, or 33.2%, from $34.0 million in the first quarter of 2012, and sequentially up $12.1 million, or 36.4%, from $33.2 million in the last quarter of 2012. Gross margin for the first quarter of 2013 was 56.8% compared to 54.0% in the first quarter of 2012. This increase was primarily attributable to a general increase in the gross profits of all of our milk powders.
Sales and marketing expenses increased approximately $11.7 million, or 62.2%, from approximately $18.8 million for the first quarter of 2012 to approximately $30.5 million for the first quarter of 2013. This increase was primarily related to increases in advertisement fees of approximately $3.1 million, or 114.8%, from approximately $2.7 million for the first quarter of 2012 to approximately $5.8 million in the first quarter of 2013. Marketing promotion expenses increased approximately $2.3 million, or 29.1%, from approximately $7.9 million for the first quarter of 2012 to approximately $10.2 million in the first quarter of 2013. Staff cost of promoters and marketing staff increased approximately $4.6 million, or 82.1%, from approximately $5.6 million for the first quarter of 2012 to approximately $10.2 million in the first quarter of 2013.
The Company had income from operations of approximately $9.74 million in the three month period ended March 31, 2013, representing an increase of approximately $0.03 million, or 0.31%, from approximately $9.71 million in the three month period ended March 31, 2012.
The Company’s net income attributable to the Company for the first quarter of 2013 was $10.6 million, or diluted EPS of $0.53, up $2.4 million, or 29.3%, from the net income of $8.2 million or diluted EPS of $0.40 in the first quarter of 2012, and a significant increase from a net loss of $446,000 or diluted loss per share of $(0.02) in the fourth quarter of 2012.
As of March 31, 2013, the Company had cash and cash equivalents of approximately $14.9 million and total current assets of approximately $221.6 million, compared to cash and cash equivalents of $9.8 million and total current assets of $194.8 million as of March 31, 2012. The Company had a working capital of approximately $46.6 million as of March 31, 2013 compared with $18.6 million as of March 31, 2012.
Mr. Liu Hua, the Company’s Vice Chairman and Chief Financial Officer, stated, “We are pleased with our first quarter financial results. Our net income and EPS demonstrate our efforts to expand sales of higher margin products and improve the efficiency of our distribution network. In particular, sales of milk powder was $76.4 million compared to $59.4 million in the same period of last year and sales of our Feifan series was $49.3 million compared to $38.0 million in the first quarter of 2012. We will continue to focus our efforts on the sales of higher margin products.”
About Feihe International, Inc.
Feihe International, Inc. (NYSE: ADY) is one of the leading producers and distributors of premium infant formula, milk powder, packed milk and soybean, rice and walnut products in the People’s Republic of China. Feihe International conducts operations in China through its wholly owned subsidiary, Feihe Dairy, and other subsidiaries. Founded in 1962, Feihe International is headquartered in Beijing, China, and has processing and distribution facilities in Kedong, Qiqihaer, Gannan, Longjiang, Shanxi. Using proprietary processing techniques, Feihe International makes products that are specially formulated for particular ages, dietary needs and health concerns. Feihe International has over 200 company-owned milk collection stations, five production facilities with an aggregate milk powder production capacity of approximately 2,020 tons per day and an extensive distribution network that reaches over 105,000 retail outlets throughout China. For more information about Feihe International, Inc., please visit http://ady.feihe.com.
Cautionary Note Regarding Forward-Looking Statements
This document contains forward-looking information about the Company’s operating results and business prospects that involve substantial risks and uncertainties. Statements that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words “may,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “targets,” “could,” “would,” and similar expressions. Because these forward-looking statements are subject to a number of risks and uncertainties, the Company’s actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading “Risk Factors” in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2012, as amended, and in other reports filed with the United States Securities and Exchange Commission and available at www.sec.gov. The Company assumes no obligation to update any such forward-looking statements.
CONTACT
In the U.S.: renyi@feihe.com
In China: Renee Ren
+861084574688 x8810
FEIHE
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
| March 31, | December 31, | |||||||
| 2013 | 2012 | |||||||
| US$ | US$ | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 14,892,735 | 40,425,310 | ||||||
| Restricted cash | 1,465,359 | 8,081,061 | ||||||
| Trade receivables, net of allowance for doubtful accounts of $1,459,309 and $1,454,741, as of March 31, 2013 and December 31, 2012, respectively | 18,952,195 | 24,535,601 | ||||||
| Notes and loans receivable, net of allowance for doubtful accounts of $3,350,056, as of March 31, 2013 and December 31, 2012, respectively | — | — | ||||||
| Due from related parties | 24,075 | 20,191 | ||||||
| Advances to suppliers | 12,956,338 | 14,805,607 | ||||||
| Inventories, net | 29,137,477 | 30,838,292 | ||||||
| Prepayments and other current assets | 37,352 | 43,779 | ||||||
| Recoverable value-added taxes | 1,393,997 | 1,269,443 | ||||||
| Loans and advances to third parties | 60,879,155 | 30,473,435 | ||||||
| Consideration receivable | 75,907,867 | 78,274,528 | ||||||
| Deferred tax assets | 3,425,598 | 3,425,598 | ||||||
| Investment in mutual funds – available-for-sale | 119,483 | 117,210 | ||||||
| Assets held for sale | 2,416,333 | 2,408,770 | ||||||
| Total current assets | 221,607,964 | 234,718,825 | ||||||
| Investments: | ||||||||
| Investment at cost | 289,821 | 288,914 | ||||||
| 289,821 | 288,914 | |||||||
| Property, plant and equipment: | ||||||||
| Property, plant and equipment, net | 113,265,430 | 114,990,808 | ||||||
| Construction in progress | 21,021,622 | 17,996,885 | ||||||
| 134,287,052 | 132,987,693 | |||||||
| Other assets: | ||||||||
| Advances to suppliers – non-current | 11,989,369 | 10,149,090 | ||||||
| Long term loan receivables | 79,266,427 | 79,018,330 | ||||||
| Deferred tax assets – non-current | 730,163 | 2,568,642 | ||||||
| Prepaid leases for land use rights | 16,429,133 | 16,524,390 | ||||||
| Total assets | 464,599,929 | 476,255,884 | ||||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Notes payable | — | 7,996,533 | ||||||
| Short term bank loans | 61,828,779 | 63,240,345 | ||||||
| Accounts payable | 41,237,423 | 41,115,131 | ||||||
| Accrued expenses | 10,779,092 | 14,193,225 | ||||||
| Income tax payable | 2,393,860 | 2,128,545 | ||||||
| Advances from customers | 16,225,424 | 15,092,328 | ||||||
| Due to related parties | 138,524 | 55,276 | ||||||
| Advances from employees | 80,023 | 225,835 | ||||||
| Employee benefits and salary payable | 10,668,699 | 9,758,312 | ||||||
| Other payables | 25,464,200 | 38,683,732 | ||||||
| Current portion of long term bank loans | 6,023,349 | 6,004,497 | ||||||
| Current portion of capital lease obligation | 139,973 | 137,722 | ||||||
| Total current liabilities | 174,979,346 | 198,631,481 | ||||||
| Capital lease obligation, net of current portion | 301,756 | 296,856 | ||||||
| Other long term loans | 59,222,577 | 59,222,577 | ||||||
| Unrecognized tax benefits – non-current | 12,193,729 | 12,026,563 | ||||||
| Deferred income | 4,254,460 | 4,320,779 | ||||||
| Total liabilities | 250,951,868 | 274,498,256 | ||||||
| Commitments and contingencies (see Note 21) | ||||||||
| Equity | ||||||||
| Common stock (US$0.001 par value, 50,000,000 shares authorized; 19,784,291 shares issued and outstanding as of March 31, 2013 and December 31, 2012) | 19,784 | 19,784 | ||||||
| Additional paid-in capital | 61,762,731 | 61,284,217 | ||||||
| Common stock warrants | 1,774,151 | 1,774,151 | ||||||
| Statutory reserves | 13,450,739 | 13,450,739 | ||||||
| Accumulated other comprehensive income | 46,343,337 | 45,487,528 | ||||||
| Retained earnings | 90,297,319 | 79,741,209 | ||||||
| Total shareholders’ equity | 213,648,061 | 201,757,628 | ||||||
| Total liabilities and equity | 464,599,929 | 476,255,884 | ||||||
FEIHE
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
| Three months ended March 31, | ||||||||
| 2013 | 2012 | |||||||
| US$ | US$ | |||||||
| Sales | 79,753,773 | 62,936,077 | ||||||
| Cost of goods sold | (34,418,752 | ) | (28,957,473 | ) | ||||
| Gross profit | 45,335,021 | 33,978,604 | ||||||
| Operating expenses: | ||||||||
| Sales and marketing | (30,497,803 | ) | (18,768,178 | ) | ||||
| General and administrative | (5,251,069 | ) | (5,590,235 | ) | ||||
| Total operating expenses | (35,748,872 | ) | (24,358,413 | ) | ||||
| Other operating income, net | 158,262 | 90,454 | ||||||
| Income from operations | 9,744,411 | 9,710,645 | ||||||
| Other income (expenses): | ||||||||
| Interest income | 44,365 | 23,473 | ||||||
| Interest and finance costs | (828,942 | ) | (1,145,953 | ) | ||||
| Government subsidy | 5,146,154 | 1,561,348 | ||||||
| Income before income tax expenses and noncontrolling interests | 14,105,988 | 10,149,513 | ||||||
| Income tax expenses | (3,549,878 | ) | (1,882,901 | ) | ||||
| Net income | 10,556,110 | 8,266,612 | ||||||
| Net income attributable to noncontrolling interests | — | (24,209 | ) | |||||
| Net income attributable to common shareholders of Feihe International, Inc. | 10,556,110 | 8,242,403 | ||||||
| Net income | 10,556,110 | 8,266,612 | ||||||
| Other comprehensive income, net of tax | ||||||||
| Foreign currency translation adjustments | 853,909 | (130,439 | ) | |||||
| Change in fair value of available for sale investments | 1,900 | 2,661 | ||||||
| Other comprehensive income | 855,809 | (127,778 | ) | |||||
| Less: comprehensive income attributable to the noncontrolling interest | — | (24,216 | ) | |||||
| Comprehensive income attributable to common shareholders of Feihe International, Inc. | 11,411,919 | 8,114,618 | ||||||
| Net income per share of common stock | ||||||||
| Basic | 0.53 | 0.40 | ||||||
| Diluted | 0.53 | 0.40 | ||||||
| Net income per share of redeemable common stock | ||||||||
| Basic | — | 0.40 | ||||||
| Diluted | — | 0.40 | ||||||
| Weighted average shares used in calculating net income per share of common stock | ||||||||
| Basic | 19,784,291 | 19,714,291 | ||||||
| Diluted | 19,784,291 | 19,714,291 | ||||||
| Weighted average shares used in calculating net income per share of redeemable common stock | ||||||||
| Basic | — | 879,809 | ||||||
| Diluted | — | 879,809 | ||||||