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:
- 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.
- Sales from branded milk powder products were $76.4 million in
1Q 2013 vs. $59.4 million in 1Q 2012.
- Sales from packed milk products were $0.7 million in 1Q 2013
vs. $0.5 million in 1Q 2012.
- 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.
- Gross profit margin was 56.8% vs. 54.0% in 1Q 2012.
- 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.
- 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.
- 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.
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
CONTACT In the U.S.: Email Contact In China: Renee Ren
+861084574688 x8810
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