Skystar Bio-Pharmaceutical Reports Third Quarter Fiscal Year 2014 Financial Results
Revenue of $18.4 Million; Net Income $4.9 Million; $0.57 Fully Diluted EPS; Conference Call to Be Held Today Friday, November 14, 2014 at 5:30 PM ET
(firmenpresse) - XI'AN, CHINA -- (Marketwired) -- 11/14/14 -- (NASDAQ: SKBI) a China-based manufacturer and distributor of veterinary medicine, vaccines, micro-organisms and feed additives, today reported unaudited third quarter fiscal year 2014 earnings, for the period ended September 30, 2014.
Revenues roughly totaled $18.4 million up 14.8%
Micro-organism products roughly totaled $7.1 million, up 42.9%
Veterinary medicine roughly totaled $10.3 million, an increase of 5.1%
Feed additives totaled $1.0 increasing 56.7%
Veterinary vaccines totaled $1,114, a decrease of 99.8%
Gross margin of 47.7% for the third quarter of fiscal 2014 as compared to 51.4%
Net income of $4.9 million or $0.57 per fully diluted share, compared with net income of $3.7 million or $0.49 per fully diluted share in the year ago period
Fiscal 2014 guidance reiterated at $46 million to $50 million
First nine months 2014 revenue totaled $39.4 million up 20.0% from $32.9 million
Gross margin of 45.5% for the first nine months of fiscal 2014 as compared to 51%
Net income of $8.7 million or $1.08 per fully diluted share, compared with net income of $8.2 million or $1.08 per fully diluted share
Mr. Weibing Lu, Skystar Bio-Pharmaceutical's Chairman and Chief Executive Officer, commented, "Skystar continues to deliver strong quarterly performance while proceeding with operational changes that strengthen the Company's position in the long term. Currently, Skystar is in mid-transition to large scale manufacturing of the Company's animal vaccine and medicine products at one of Skystar's modern GMP production facilities. The transition to modern manufacturing is happening in lock step with production permit application and licensing with China's Ministry of Agriculture as a procedural requirement for GMP certified manufacturers. Skystar's long term goals are to improve key performance metrics including top line growth, blended gross margins and historical bottom line profitability. Skystar believes it is uniquely positioned to participate in the industrialization, standardization and modernization of China's evolving animal husbandry space.
"Skystar's successful efforts to GMP certify its animal vaccine and medicine facilities based in Huxian and Jingzhou under the Ministry of Agriculture's (MOA) stricter regulatory oversight of food and drug manufacturers paves way for a new wave of the Company's growth. This step change was part of China's movement to better regulate food and drug manufacturers by enforcing higher safety and manufacturing standards as outlined in China's 2011-2015 'Twelfth Five Year Plan.' As one of the leading operators in China's animal biopharmaceutical manufacturing space, we believe the stricter regulations have improved Skystar's positioning over the coming quarters as more products are added to the manufacturing line. Skystar also moves forward with its business strategy continuing to onboard more distribution agents and direct customers, increasing revenues generated throughout Skystar's extensive sales network across the 29 farming provinces in China.
"Operationally, we continue making adjustments in order to maximize sales, taking advantage of current production capabilities with each subsequent product launch. We also continue to shift resources, redirecting sales and marketing efforts and creating awareness and demand for both existing products and new products while adjusting marketing strategy such as the bundling of products to customers.
"In terms of Skystar's production facilities, as of this reporting period we have stopped producing our vaccine line by hand and have moved vaccine production to our new and modern GMP vaccine facility in Huxian. We consider the upgraded Huxian vaccine facility to be officially launched now that we are in receipt of three vaccine production permits from the MOA. As of current there are also 5 vaccine production permits in application with the MOA. Additionally, we have already been granted 100 permits to manufacture individual veterinary medications whose production has transitioned to our large scale process automated manufacturing facility. Additionally, Skystar has an additional 56 veterinary medication production permits under review with the MOA.
"Skystar's Kunshan probiotics production facility continues to make good progress in its build out and we are pleased to announce the purchase and installation of equipment there. Equipping the Kunshan probiotics facility is expected to be completed in 2015. Meanwhile, Skystar's probiotics and animal feed production lines at the Company's Sanqiao plant continue to deliver solid output and sales, helping to boost revenues at the group level.
"As we move into the last reporting quarter of fiscal 2014, it is imperative that we continue our operational strategy, such as the shifting of resources towards the sale, marketing and distribution of our high growth, high margin veterinary medications line which is now being manufactured in large scale process automated batches. In line with our operating protocols, as production from Skystar's vaccine line scales up we will review and adjust our sales and marketing strategies to ensure the successful re-launch of one of our most promising product lines.
"The operational changes that are happening now will continue to transform Skystar, allowing us to maintain a leading position in China's animal bio-pharmaceutical space. Skystar to date, continues to be historically profitable, raising the bar with solid quarterly revenue growth and expect to continue this growth trajectory in the upcoming quarters," concluded Mr. Lu.
For the three months ended September 30, 2014, we had revenues of $18.4 million as compared to revenues of $16.0 million for the three months ended September 30, 2013, an increase of $2.4 million or 14.8%. We generated revenue from sales of four product lines: veterinary medications, micro-organism, feed additives and vaccines. Third Quarter Fiscal 2014 revenue breakdown by product line is as follows:
Veterinary medications: $10.3 million
Micro-organism: $7.1 million
Feed Additives: $1.0 million
Vaccines: $1,114
Cost of revenue, which consists of raw materials, direct labor, and manufacturing overhead for our four product lines, was $9.6 million for the three months ended September 30, 2014, as compared to $7.8 million for the three months ended in the year ago period, an increase of 23.3% or $1.8 million.
Gross profit, was $8.8 million for the three months ended September 30, 2014, a 6.7% year over year increase as compared to $8.2 million for the three months ended September 30, 2013. Gross margin for the period decreased to 48% due to increase sale of Skystar's less profitable veterinary medications products.
Operating Expenses, research and development costs totaled $378,487 for the three months ended September 30, 2014 as compared to $324,353 for the year ago period; this 17% increase in R&D expense was primarily due to expenditures of $325,440 on existing R&D projects during the third quarter of 2014 to develop two veterinary medications.
Selling expenses totaled $1.1 million for the three months ended September 30, 2014 as compared to $1.3 for the three months ended September 30, 2013, a decrease of $0.2 million or 14.6%, mainly due to a decrease in sales commissions and shipping and handling as we made efforts to control these expenses.
General and administrative expenses totaled $1.9 million for the three months ended September 30, 2014 as compared to $1.9 million for the three months ended September 30, 2013, an increase of $0.02 million or 1.0%, mainly due to an additional allowance on doubtful accounts during the quarter.
Operating income for the period was $5.4 million, up $0.7 million or 14% year-on-year. Operating margin was 29.4% roughly the same in the year ago period.
Net income for the quarter was $4.9 million or $0.57 per fully diluted share. This compares to net income of $3.7 million or $0.49 per fully diluted share for the year ago period.
As of September 30, 2014, we had unrestricted cash of $14.6 million. Our total current assets were $120.9 million, and our total current liabilities were $48.3 million, which resulted in a net working capital of $72.6 million.
We currently reiterate our fiscal 2014 guidance to be in the range of $46 million to $50 million for the full year.
The Company will host a conference call Friday, November 14, 2014 to discuss its third quarter financial results. Skystar's conference call will begin promptly at 5:30 p.m. ET. Mr. Weibing Lu, Skystar's Chairman and Chief Executive Officer, will host the call, which will be webcast live.
The webcast will be made available at: .
Telephone access to the conference call will be available in North America by dialing +1 (877) 407-8031 or internationally by dialing +1 (201) 689-8031. An audio replay of the conference call will be available approximately two hours following the conclusion of the call and for the following 30 day period. To access the replay in North America, dial +1 (877) 660-6853 or, when calling internationally, dial +1 (201) 612-7415, referencing conference ID # 13595815. Alternatively you can listen to the replay online at . To be added to the Company's email distribution for future news releases, please send your request to .
Skystar is a China-based developer and distributor of veterinary healthcare and medical care products. Skystar has four product lines (veterinary medicines, micro-organisms, vaccines and feed additives) and over 284 products. Skystar has formed strategic sales distribution networks covering 29 provinces throughout China. For additional information, please visit .
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and include, without limitation, the Company's financial projections, and revenue guidance, expectations relating to scaling up of the production and the plant production capabilities, statements relating to the timing of various regulatory certifications, or information regarding the progress of new product development. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the Company's ability to achieve the expected rates of growth and sales at its existing and new facilities, its ability to successfully commercialize and maintain sales leadership position, the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time. These forward-looking statements are based upon our current expectations and projections about future events and generally relate to our plans, objectives and expectations for the development of our business. Although management believes that the plans and objectives reflected in or suggested by these forward-looking statements are reasonable, all forward-looking statements involve risks and uncertainties and actual future results may be materially different from the plans, objectives and expectations expressed in this press release. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results.
Scott Cramer
Director - Corporate Development & U.S. Representative
(407) 645-4433
Christopher Chu
(908) 251-9869
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Datum: 14.11.2014 - 22:00 Uhr
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