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From the Wires
Skystar Bio-Pharmaceutical Announces Results for Third Quarter Fiscal Year 2012
Veterinary Medication Facility Resumes Production and Distribution; Veterinary Vaccine Facility Receives Initial GMP Certification
By: Marketwired .
Nov. 15, 2012 05:30 AM
XI'AN, CHINA -- (Marketwire) -- 11/15/12 -- Skystar Bio-Pharmaceutical Company (NASDAQ: SKBI) ("Skystar" or the "Company"), a China-based manufacturer and distributor of veterinary medicines, vaccines, micro-organisms and feed additives, today reported unaudited third quarter fiscal year 2012 earnings, for the period ended September 30, 2012. Third Quarter 2012 Highlights
Nine Month 2012 Highlights
Mr. Weibing Lu, Skystar Bio-Pharmaceutical's Chairman and Chief Executive Officer, commented, "Skystar has made significant strides in moving its infrastructure forward in support of manufacturing capacity for the Company's veterinary medication and vaccine lines providing a solid outlook in the medium and long term. "Skystar has resumed production and distribution of its primary veterinary medicine following GMP recertification by the Ministry of Agriculture. In addition, Skystar's animal and aquaculture vaccine production facility passed initial GMP certification, and, when it operates and reaches its full production levels, is expected to generate at minimum $15 million in annual sales. "Once operational, the much anticipated vaccine facility will allow Skystar to mass produce vaccines currently produced by hand in large quality controlled batches. Both the certification of the veterinary medicine and vaccine plants are significant milestones for Skystar and are vital in supporting the Company's growth in upcoming years." Mr. Lu concluded, "In terms of Skystar's performance for the 3rd quarter of 2012, it is noteworthy that, in spite of China's 'soft' economic performance which is partly attributable to fiscal policies designed to control inflation, Skystar has been able to maintain and, at times, marginally increase sales pricing for its products. With this in mind, Skystar's 3rd quarter revenue and bottom line largely reflect a revenue drop in its veterinary medication business in the 3rd quarter, which accounts for nearly 60% of Skystar's revenues in any given period. This is a short term effect related to the closure of Skystar's veterinary medication facility during the pendency of the GMP recertification process. Now that Skystar has resumed production at this facility, Skystar can continue its commitment to maintaining bottom line profitability in its organic business in order to fund growth and expansion initiatives internally for years to come."
Forecast
Financial Summary Gross profit third quarter 2012 was roughly $5.3 million, down 52% from third quarter 2011. Gross margin for the period was higher at 59% compared to 52% in the year ago period, due to the change in available product mix for sale. Total operating expenses for third quarter 2012 was $1.6 million, or 18% of total revenue, compared with $1.9 million or 9% of total revenue in the year ago period. Research and development costs totaled roughly $200,000 for the period, as compared to roughly $91,000 for the three months ended September 30, 2011, an increase of 118%. Selling expenses totaled $690,000 for third quarter 2012 as compared to $1.2 million for the comparable year ago period this was a decrease of roughly $480,000 or 41%. General and administrative expenses totaled $730,000 in the third quarter of 2012 as compared to $602,000 for the year ago period, an increase of $128,000 or 21%. Operating income decreased 59% year over year and was $3.6 million in the third quarter of fiscal 2012 as compared to $9.0 million in the year ago period, operating margin remained level at 41% as compared to 43% from the year ago period. Net income for the third quarter of 2012 was $2.7 million, or $0.36 per fully diluted share. This compares to net income of $7.7 million or $1.08 per fully diluted share in the same quarter of 2011. As of September 30, 2012, Skystar had approximately $2.7 million in cash and current assets of $73 million and current liabilities of $20 million.
Conference Call & Webcast Information
Webcast
Phone dial-in 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, using conference ID # 398886. An archived replay of the conference webcast will also be available on investor relations section of the Skystar corporate website at http://www.skystarbio-pharmaceutical.com. To be added to the Company's email distribution for future news releases, please send your request to skystar@grayling.com.
About Skystar Bio-Pharmaceutical Company
SKYSTAR BIO-PHARMACEUTICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (Unaudited) For Three Months Ended For Nine Months Ended September 30, September 30, ----------------------- ------------------------ 2012 2011 2012 2011 ---------- ----------- ----------- ----------- REVENUE, NET $8,933,005 $20,903,063 $25,730,190 $37,086,158 COST OF REVENUE 3,670,230 10,057,212 11,060,826 18,185,565 ---------- ----------- ----------- ----------- GROSS PROFIT 5,262,775 10,845,851 14,669,364 18,900,593 ---------- ----------- ----------- ----------- OPERATING EXPENSES: Research and development costs 198,838 91,124 533,024 2,180,147 Selling expenses 692,009 1,174,928 2,068,192 2,154,158 General and administrative expenses 730,539 602,248 3,670,254 2,412,339 ---------- ----------- ----------- ----------- Total operating expenses 1,621,386 1,868,300 6,271,470 6,746,644 ---------- ----------- ----------- ----------- INCOME FROM OPERATIONS 3,641,389 8,977,551 8,397,894 12,153,949 ---------- ----------- ----------- ----------- OTHER INCOME (EXPENSE): Other income (expense), net (734) 9,421 55,264 5,054 Interest income (expense), net (199,238) 15,036 (378,779) (54,265) Change in fair value of warrant/purchase option liability 7,000 171,765 29,400 1,267,412 ---------- ----------- ----------- ----------- Total other income (expense), net (192,972) 196,222 (294,115) 1,218,201 ---------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES 3,448,417 9,173,773 8,103,779 13,372,150 PROVISION FOR INCOME TAXES 717,163 1,446,112 1,768,905 2,205,267 ---------- ----------- ----------- ----------- NET INCOME 2,731,254 7,727,661 6,334,874 11,166,883 OTHER COMPREHENSIVE INCOME Foreign currency translation adjustment (198,269) 898,786 484,203 2,494,959 ---------- ----------- ----------- ----------- COMPREHENSIVE INCOME $2,532,985 $ 8,626,447 $ 6,819,077 $13,661,842 ========== =========== =========== =========== EARNINGS PER SHARE: Basic $ 0.36 $ 1.08 $ 0.85 $ 1.56 ========== =========== =========== =========== Diluted $ 0.36 $ 1.08 $ 0.85 $ 1.56 ========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES: Basic 7,604,800 7,172,354 7,426,082 7,171,530 ========== =========== =========== =========== Diluted 7,604,800 7,172,354 7,426,082 7,174,668 ========== =========== =========== =========== SKYSTAR BIO-PHARMACEUTICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2012 2011 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 2,668,532 $ 7,048,968 Accounts receivable, net of allowance for doubtful accounts of $472,483 and $438,678 as of September 30, 2012 and December 31, 2011, respectively 15,457,752 3,391,493 Inventories 15,272,511 14,851,159 Deposits, prepaid expenses and other receivables 3,139,404 3,421,487 Prepayments to suppliers 34,834,548 29,226,961 Loans receivable 2,106,998 964,088 -------------- -------------- Total current assets 73,479,745 58,904,156 -------------- -------------- PROPERTY, PLANT AND EQUIPMENT, NET 28,904,306 28,376,559 CONSTRUCTION-IN-PROGRESS 8,686,322 8,839,055 OTHER ASSETS: Long-term prepayments 1,033,875 1,512,817 Long-term prepayments for acquisitions 177,296 569,788 Intangible assets, net 5,406,479 5,674,206 -------------- -------------- Total other assets 6,617,650 7,756,811 -------------- -------------- Total assets $ 117,688,023 $ 103,876,581 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 4,123,218 $ 1,047,067 Other payables and accrued expenses 3,575,584 5,274,598 Short-term loans 9,181,400 7,366,320 Deposits from customers 1,347,993 1,432,529 Taxes payable 1,238,105 160,081 Due to related parties 386,533 56,273 -------------- -------------- Total current liabilities 19,852,833 15,336,868 -------------- -------------- OTHER LIABILITIES: Long-term loan 1,266,400 - Deferred government grant 395,750 393,500 Warrant/purchase option liability 14,000 43,400 -------------- -------------- Total other liabilities 1,676,150 436,900 -------------- -------------- Total liabilities 21,528,983 15,773,768 -------------- -------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, $0.001 par value, 50,000,000 shares authorized. No Series "A" shares authorized. 48,000,000 Series "B" shares authorized. No Series "B" shares issued and outstanding - - Common stock, $0.001 par value, 40,000,000 shares authorized, 7,604,800 and 7,161,919 shares issued and outstanding as of September 30, 2012 (Unaudited) and December 31, 2011, respectively 7,605 7,162 Paid-in capital 37,021,085 35,784,378 Statutory reserves 5,708,135 5,708,135 Retained earnings 44,826,905 38,492,031 Accumulated other comprehensive income 8,595,310 8,111,107 -------------- -------------- Total shareholders' equity 96,159,040 88,102,813 -------------- -------------- Total liabilities and shareholders' equity $ 117,688,023 $ 103,876,581 ============== ============== SKYSTAR BIO-PHARMACEUTICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011 (Unaudited) Nine months ended September 30, 2012 2011 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,334,874 $ 11,166,883 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation 920,444 709,749 Amortization 300,589 432,098 Provision for doubtful accounts 31,340 Change in fair value of warrant/purchase option liability (29,400) (1,267,412) Common stock to be issued to related parties for compensation 72,965 Common stock issued under 2010 stock incentive plan 1,037,911 Change in operating assets and liabilities Accounts receivable (12,094,949) (4,566,868) Inventories (336,902) (6,890,055) Deposits, prepaid expenses and other receivables 404,130 151,534 Prepayments to suppliers (5,426,601) (8,750,609) Accounts payable 3,112,002 1,073,204 Other payables and accrued expenses (1,361,439) 710,264 Deposits from customers (92,856) 123,582 Taxes payable 1,078,604 4,234,408 ------------- ------------- Net cash used in operating activities (6,122,253) (2,800,257) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Payments of long-term prepayments (343,960) (357,226) Refund of long-term prepayments 475,560 Loans to third parties (1,941,248) (2,885,501) Collection of loans to third parties 802,270 11,054,921 Purchases of property, plant and equipment (157,782) (58,560) Purchases of intangible assets (46,496) Payments on construction-in-progress (182,774) (7,316,494) ------------- ------------- Net cash (used in) provided by investing activities (1,347,934) 390,644 ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from short-term loans 4,503,728 3,277,016 Repayment of short-term loans (2,726,544) (3,043,340) Proceeds from long-term loan 1,266,400 Repayment of government grants (317,040) Due to related parties 331,158 4,960 ------------- ------------- Net cash provided by financing activities 3,057,702 238,636 ------------- ------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH 32,049 66,298 ------------- ------------- DECREASE IN CASH (4,380,436) (2,104,679) CASH, beginning of period 7,048,968 5,887,831 ------------- ------------- CASH, end of period $ 2,668,532 $ 3,783,152 ============= ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ 508,667 $ 266,797 ============= ============= Cash paid for income taxes $ 971,784 $ 1,271,193 ============= ============= Non-cash investing and financing activities Long-term prepayments transferred to construction-in-progress $ 832,230 $ 5,497,461 ============= ============= Long-term prepayments transferred to plant and equipment $ 4,727,364 ============= ============= Construction-in-progress transferred to property, plant and equipment $ 1,128,662 $ ============= ============= Share issued to settle payables to related parties $ 199,239 $ ============= ============= SKYSTAR BIO-PHARMACEUTICAL COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited) Common stock ------------------ Paid-in Shares Amount capital ---------- ------- ----------- BALANCE, December 31, 2011 7,161,919 $ 7,162 $35,784,378 Share issued under 2010 stock incentive plan 442,881 443 1,236,707 Foreign currency translation Net income ---------- ------- ----------- BALANCE, September 30, 2012 7,604,800 $ 7,605 $37,021,085 ========== ======= =========== Retained earnings ------------------------- Accumulated other Statutory comprehensive reserves Unrestricted income Total ----------- ------------- ------------- ----------- BALANCE, December 31, 2011 $ 5,708,135 $ 38,492,031 $ 8,111,107 $88,102,813 Share issued under 2010 stock incentive plan 1,237,150 Foreign currency translation 484,203 484,203 Net income 6,334,874 6,334,874 ----------- ------------- ------------- ----------- BALANCE, September 30, 2012 $ 5,708,135 $ 44,826,905 $ 8,595,310 $96,159,040 =========== ============= ============= ===========
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