SkyPeople Fruit Juice Reports Third Quarter 2013 Financial Results
By: Robert Diamond Nov. 13, 2013
XI'AN, China, Nov. 13, 2013 /PRNewswire/ SkyPeople Fruit Juice, Inc. (SPU) ("SkyPeople" or "the Company"), a producer of fruit juice concentrates, fruit juice beverages and other fruit-related products, today announced its financial results for the third quarter ended September 30, 2013.
Third Quarter 2013 Summary:
- Revenue was $19.5 million, a decrease of 32% year-over-year
- Gross profit was $7.2 million, a decrease of 15% year-over-year
- Gross profit margin was 37% as compared to 30% for the same period of 2012
- Income from operations was $4.6 million, a decrease of 31% year-over-year
- Net income attributable to the Company was $3.0 million, a decrease of 40% year-over-year
- Revenue from the fruit juice beverage segment was $12.8 million, an increase of 23% year-over-year
- Cash and cash equivalents were $87.2 million as of September 30, 2013
"We recorded disappointing financial results for the third quarter of 2013 attributable to the limited supply of fresh fruit needed for the production of our products. As each of our manufacturing facilities generally focus on fruit products made from specific fruit grown in those proximities, we have been able to lock-in supply when possible. However, difficult growing seasons that limited raw materials for several of our product lines made this a challenge in the current quarter," said Mr. Hongke Xue, Chief Executive Officer of SkyPeople.
"Our fruit juice beverages segment continued to perform well in the quarter and is a key growth area that we intend to expand even further. For the third quarter, revenue from our fruit juice beverages segment grew 23% year over year which contributed substantially to the quarter's aggregate gross profit level. We currently sell our fruit juices to over 100 distributors and more than 20,000 retail stores in approximately 20 provinces in China.
"We are making progress with all of our new and exciting projects so as to ensure the company's future growth. Our projects to establish facilities to produce kiwi fruit in Mei County, develop an orange processing zone in Yidu,Hubei Province and to establish a vegetable and fruit processing facility in Suizhong, Liaoning Province are all on track. These growth initiatives are a key element of our strategic plan to diversify our product platform, leverage our core competencies and secure future cash flow.
"With rising incomes and younger demographics, we continue to believe that a transition in consumer tastes in China towards healthier lifestyles and improved nutrition will occur. Given the relatively low domestic consumption rate of fruit juice beverages, we believe that our branded fruit juice beverages are very well positioned to meet this potentially fast growing market demand," Mr. Hongke Xue concluded.
Third Quarter 2013 Financial Results
Revenue. Revenue for the three months ended September 30, 2013 was $19.5 million, a decrease of 32% from $28.6 million for the same period in 2012. This was primarily due a decrease in sales from product lines except fruit juice beverages. The fruit juice beverages segment rose 23% in the third quarter of 2013 as compared to the year ago quarter in 2012. The fruit juice beverage and concentrated pear juice segments comprised substantially all of the Company's revenue for the third quarter.
|
Third Quarter 2013 and 2012 Revenue by Segment | |||||
|
(In $000's) | |||||
|
Three Months Ended September 30 | |||||
|
2013 |
2012 |
% of change | |||
|
Concentrated apple juice and apple aroma |
55 |
3,962 |
(99%) | ||
|
Concentrated kiwifruit juice and kiwi puree |
269 |
399 |
(33%) | ||
|
Concentrated pear juice |
6,156 |
11,382 |
(46%) | ||
|
Fruit juice beverages |
12,844 |
10,460 |
23% | ||
|
Fresh fruits and vegetables |
1 |
707 |
NA | ||
|
Other |
147 |
1,653 |
(91%) | ||
|
Total |
19,472 |
28,563 |
(32%) | ||
Revenue by Segment. The fruit juice beverages segment comprised 66% of the Company's total revenue for the third quarter for 2013 as compared to 37% for the same period of 2012, and was a large factor in mitigating the decrease in total revenue from the Company's other product segments for the third quarter of 2013. The concentrated pear juice segment comprised 32% of total revenue for the third quarter, a decrease from the 40% it comprised for the same period of 2012. These two segments accounted for 98% of the third quarter's total revenue.
Revenue from our fruit juice beverages were $12.8 million in the third quarter of 2013, an increase of 23% from $10.5 million for the same period of 2012, primarily due to market share gains attributable to our continued sales channel expansion efforts.
Sales of concentrated pear juice were $6.2 million in the third quarter of 2013, a decrease of 46% from $11.4 million in the same quarter of 2012.
Sales from concentrated kiwifruit juice and kiwifruit puree were $0.269 million for the third quarter of 2013, a decrease of 33% from $0.399 million in the same quarter of 2012.
Sales from apple related products decreased by $3.9 million to $0.055 million for the three months ended September 30, 2013 from $4.0 million for the same period of 2012.
Gross Profit. The consolidated gross profit for the three months ended September 30, 2013 was $7.2 million, a decrease of 15% from $8.5 million generated for the same period of 2012 primarily due to lower gross profit generated from our concentrated pear juice and apple-related products segments.
The consolidated gross profit margin for the three months ended September 30, 2013 was 37% as compared to 30% for the same period of 2012, primarily due the fruit beverage and concentrated pear juice segments, which comprised substantially all of the Company's total gross profit for the third quarter.
|
Third Quarter 2013 and 2012 Gross Profit by Segment | |||||||
|
(In $000's) | |||||||
|
Three Months Ended September 30 | |||||||
|
2013 |
2012 | ||||||
|
Gross profit |
Gross margin |
Gross profit |
Gross margin | ||||
|
Concentrated apple juice and |
(20) |
(36%) |
679 |
17% | |||
|
Concentrated kiwifruit juice and |
187 |
70% |
189 |
47% | |||
|
Concentrated pear juice |
2,213 |
36% |
3,469 |
30% | |||
|
Fruit juice beverages |
4,846 |
38% |
3,951 |
38% | |||
|
Fresh fruits and vegetables |
- |
- |
218 |
31% | |||
|
Other |
(9) |
(6%) |
19 |
1% | |||
|
Total |
7,217 |
37% |
8,525 |
30% | |||
Gross Profit by Segment.The gross profit margin of the concentrated pear juice segment rose to 36% in the third quarter of 2013 from 30% in the year-ago period of 2012 mainly due to the lower cost of raw materials for the current period as compared to the same period of 2012. The gross profit margin of the fruit juice segment of 38% had remained stable in the third quarter of 2013 from the year-ago quarter. These two product segments comprised substantially all of the Company's gross profit for the third quarter of 2013, resulting in an increase in the overall gross margin for the Company.
The gross profit margin of the concentrated kiwifruit juice and kiwifruit puree increased to 70% for the third quarter of 2013 from 47% for the comparable period of 2012, primarily due to the lower cost of fresh kiwi purchased in the current quarter as compared to the same period of 2012.
The gross loss margin of concentrated apple juice and apple aroma was 36% for the three months ended September 30, 2013 compared to a gross profit margin of 17% for the same period of 2012 primarily due to a significantly lower selling price of concentrated apple juice.
Operating Expenses. Operating expenses for the third quarter of fiscal 2013 was $2.6 million, or 13% of sales, which were higher than that of the same period of 2012, when operating expenses represented 6% of sales. General and administrative expenses increased 70% to $1.6 million in thethird quarter of 2013 as compared to $1.0 million for the same period of 2012, mainly due depreciation for property, plant and equipment in Yingkou ofapproximately $548,000 that was incurred during the current period and charged into general and administrative expenses.Selling expenses increased 36% to $1.0 million as compared to $0.7 million in the same period of 2012, mainly due to an increase in the payroll and related expenses as a result of an increase in the Company's headcount to the handle an increased sales of fruit juice beverages. During thethird quarter of 2013, the Company suspended research and development work and thus did not incur any research and development costs; the Company incurred $142,077 incurred in research and development expenses for the three months ended September 30, 2012.
Income from Operations. Income from operations was $4.6 million for the third quarter of 2013, a decrease of 31% from $6.7 million for the same period in 2012. The decrease in the income from operations was mainly due to a decrease in both revenue as well as gross margin and an increase in operating expenses.
Net Income and Earnings per Share. Net income attributable to SkyPeople Fruit Juice was $3.0 million for the third quarter of 2013, a decrease of 40% as compared to $5.0 million for the same period in 2012, while diluted earnings per share was $0.11 as compared to $0.19 for the same period in 2012.
Financial Condition
As of September 30, 2013, the Company had $87.2 million in cash and cash equivalents, up from $77.6 million as of fiscal year end 2012. The Company's working capital was $77.8 million. As of September 30, 2013, the Company had total liabilities of $37.8 million, which included $18.9 million in a short-term bank loan, $1.5 million in notes payable to a bank and an $8.0 million short-term payable to a related party. As of September 30, 2013, stockholders' equity attributable to SkyPeople Fruit Juice was $167.5 million as compared to $156.5 million as of fiscal year end 2012.
During the nine months ended September 30, 2013, the Company's operating activities generated a net cash inflow of $31.4 million, as compared to $20.3 million for the same period in 2012. Net cash used in investing activities were $39.2 million for the nine months ended September 30, 2013 as compared to $5.3 million for the same period in 2012. For the nine months ended September 30, 2013, cash flow generated from financing activities totaled $15.6 million as compared to $5.2 million for the same period in 2012. Historically, the Company has financed its capital expenditures and other operating expenses through cash on hand, operating cash flows and bank loans.
Project Updates
In the third quarter of 2011, SkyPeople entered into a Letter of Intent with the People's Government of Suizhong County, Liaoning Province, to establish a fruit and vegetable industry chain and processing zone in Suizhong County, Liaoning Province. The Suizhong project may include the construction and operation of fruit juice production lines, a vegetable and fruit flash freeze facility, a refrigeration storage facility and warehouse, a world-class food safety testing center, fruit and vegetable finished products processing center, etc. The implementation of the project is subject to government approval of the project.
During the nine months ended September 30, 2013, the Company finished the feasibility study of the project and submitted a detailed project proposal to the local government. Both parties decided to continue with the project. The Company paid RMB 52 million (approximately $8.5 million) as partial payment to acquire the land use rights from the local government.
In the fourth quarter of 2012, SkyPeople (China) entered into an investment/service agreement with the Yidu Municipal People's Government in Hubei Province of China. The total amount of RMB 300 million (approximately $48 million) will be mainly used to establish the distribution center and the deep processing zone on the project land of approximately 280 mu (approximately 46 acres). The Yidu Municipal People's Government is in the process of demolition buildings on land designated for the project.
During the nine months ended September 30, 2013, the Company has made partial payment of RMB 75 million (approximately $12 million) as consideration to acquire the land use rights. The Company is actively working with various bodies of the Yidu Municipal People's Government and making preparations for the start of the project.
In the second quarter of 2013, SkyPeople (China) announced an agreement to manufacture and market kiwi products, entering entered into an investment agreement with the Managing Committee of Mei County National Kiwi Fruit Wholesale Trading Center, which has been authorized by the People's Government of Mei County to be in charge of the construction and administration of the Mei County National Kiwi Fruit Wholesale Trading Center. Pursuant to the investment agreement, the Company will be responsible for construction and financing with a total investment of approximately $71.9 million in buildings and equipment.In addition, the Company agreed to pay a fee of RMB 0.3 million per mu for the land use rights.
During the nine months ended September 30, 2013, the Company has made partial payment of RMB 98 million (approximately $16 million) as consideration to acquire the land use right and construction facilities. The Company is actively working with the Committee to make preparations for the start of the project.
Conference Call
The Company will hold a conference call on Friday, November 15, 2013 at 9:00 am Eastern Time to discuss its financial results for the third quarter ended September 30, 2013. The Company's Chief Executive Officer, Mr. Hongke Xue, and Chief Financial Officer, Mr. Xin Ma, will host the call.
To attend the live conference call, please dial in at least 10 minutes before the call to ensure timely participation.Please use the dial-in information below.
|
Date: |
Friday, November 15, 2013 |
|
Time: |
9:00 am Eastern Time, US |
|
Conference Line Dial-In: |
+1-877-407-0778 |
|
International Dial-In: |
+1-201-689-8565 |
To access the replay, please dial 1-877-660-6853 within the United States or 1-201-612-7415 when dialing internationally and enter the pass code 13572505 for the replay. The replay will be available on November 15 at 12:00 pm.
About SkyPeople Fruit Juice, Inc.
SkyPeople Fruit Juice, Inc., a Florida company, through its wholly-owned subsidiary Pacific Industry Holding Group Co., Ltd. ("Pacific"), a Vanuatu company, and SkyPeople Juice International Holding (HK) Ltd., a company organized under the laws of Hong Kong Special Administrative Region of the People's Republic of China and a wholly owned subsidiary of Pacific, holds 99.78% ownership interest in SkyPeople Juice Group Co., Ltd. ("SkyPeople (China)"). SkyPeople (China), together with its operating subsidiaries in China, is engaged in the production and sales of fruit juice concentrates, fruit beverages, and other fruit related products in the PRC and overseas markets. Its fruit juice concentrates are sold to domestic customers and exported directly or via distributors. Fruit juice concentrates are used as a basic ingredient component in the food industry. Its brands, "Hedetang" and "SkyPeople," which are registered trademarks in the PRC, are positioned as high quality, healthy and nutritious end-use juice beverages. For more information, please visit http://www.skypeoplefruitjuice.com.
Safe Harbor Statement
Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.
All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2012 and otherwise in our SEC reports and filings, including the final prospectus for our offering. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.
- Financial Tables Follow -
|
SKYPEOPLE FRUIT JUICE, INC. | ||||||
|
CONSOLIDATED BALANCE SHEETS | ||||||
|
September 30, 2013 |
December 31, 2012 | |||||
|
(Unaudited) |
||||||
|
ASSETS |
||||||
|
CURRENT ASSETS |
||||||
|
Cash and cash equivalents |
$ |
87,176,550 |
$ |
77,560,278 | ||
|
Restricted cash |
813,273 |
- | ||||
|
Accounts receivables, net of allowance |
17,895,932 |
49,435,961 | ||||
|
Other receivables |
938,203 |
201,417 | ||||
|
Inventories |
8,351,708 |
7,278,191 | ||||
|
Deferred tax assets |
419,345 |
90,576 | ||||
|
Advances to suppliers and other |
58,239 |
71,536 | ||||
|
TOTAL CURRENT ASSETS |
115,653,250 |
134,637,959 | ||||
|
PROPERTY, PLANT AND EQUIPMENT, NET |
50,583,734 |
52,180,097 | ||||
|
LAND USE RIGHT, NET |
6,514,383 |
6,508,149 | ||||
|
OTHER ASSETS |
40,565,792 |
1,892,806 | ||||
|
TOTAL ASSETS |
$ |
213,317,159 |
$ |
195,219,011 | ||
|
LIABILITIES |
||||||
|
CURRENT LIABILITIES |
||||||
|
Accounts payable |
$ |
4,873,919 |
$ |
14,399,282 | ||
|
Accrued expenses |
2,316,302 |
2,050,675 | ||||
|
Income tax payable |
1,147,095 |
3,127,245 | ||||
|
Advances from customers |
1,068,004 |
530,437 | ||||
|
Notes payable bank |
1,496,422 |
- | ||||
|
Short-term loan - related parties |
8,000,000 |
- | ||||
|
Short-term bank loans |
18,932,986 |
11,661,761 | ||||
|
TOTAL CURRENT LIABILITIES |
$ |
37,834,728 |
$ |
31,769,400 | ||
|
STOCKHOLDERS' EQUITY |
||||||
|
SkyPeople Fruit Juice, Inc. Stockholders' equity |
||||||
|
Series B Preferred stock, $0.001 par |
- |
- | ||||
|
Common stock, $0.001 par value; |
26,661 |
26,661 | ||||
|
Additional paid-in capital |
59,189,860 |
59,189,860 | ||||
|
Retained earnings |
90,305,651 |
82,793,585 | ||||
|
Accumulated other comprehensive |
17,988,439 |
14,500,860 | ||||
|
Total SkyPeople Fruit Juice, Inc. |
167,510,611 |
156,510,966 | ||||
|
Non-controlling interests |
7,971,820 |
6,938,645 | ||||
|
TOTAL STOCKHOLDERS' EQUITY |
175,482,431 |
163,449,611 | ||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ |
213,317,159 |
$ |
195,219,011 | ||
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SKYPEOPLE FRUIT JUICE, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) | ||||||||||||||||
|
Three Months Ended |
Nine Months Ended | |||||||||||||||
|
September 30, |
September 30, | |||||||||||||||
|
2013 |
2012 |
2013 |
2012 | |||||||||||||
|
Revenue |
$ |
19,472,130 |
$ |
28,563,469 |
$ |
48,433,495 |
$ |
56,394,242 | ||||||||
|
Cost of sales |
12,254,866 |
20,038,559 |
30,221,343 |
38,861,942 | ||||||||||||
|
Gross Margin |
7,217,264 |
8,524,910 |
18,212,152 |
17,532,300 | ||||||||||||
|
Operating Expenses |
||||||||||||||||
|
General and administrative |
1,628,699 |
960,617 |
4,216,128 |
3,092,992 | ||||||||||||
|
Selling expenses |
997,213 |
732,751 |
2,951,300 |
1,779,867 | ||||||||||||
|
Research and development |
- |
142,077 |
18,980 |
427,447 | ||||||||||||
|
Total operating expenses |
2,625,912 |
1,835,445 |
7,186,408 |
5,300,306 | ||||||||||||
|
Income from Operations |
4,591,352 |
6,689,465 |
11,025,744 |
12,231,994 | ||||||||||||
|
Otherincome (expense) |
||||||||||||||||
|
Interest income |
76,775 |
77,846 |
231,295 |
234,551 | ||||||||||||
|
Subsidy income |
194,587 |
615,997 |
981,400 |
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