SkyPeople Fruit Juice Reports First Quarter 2011 Financial Results
XI'AN, China, May 16, 2011-- SkyPeople Fruit Juice, Inc., a processor and manufacturer of kiwifruit, apple, pear and other concentrated specialty fruit juices and manufacturer of Hedetang-branded fruit beverages, announced record financial results for its first quarter ended March 31, 2011.
First Quarter 2011 Highlights
- Total revenue grew 10% to $19.4 million year-over-year
- Gross profit margin expanded 390 basis points to 44.3% year-over-year
- Fruit beverages revenue increased 156% year-over-year
- Net income was $5.7 million, up 185% year-over-year
- Cash flows from operations increased 123% to $13.5 million year-over-year; $65.7 million cash and cash equivalents at March 31, 2011
In the first quarter of the year SkyPeople Fruit Juice launched its Hedetang Juices in a 500ml bottle, added both pear and apple flav! ors to i ts product line and also introduced four, high-fiber, boxed juice flavors branded as Qian Mei Duo (which means "More fiber, better for You" in English) targeted to female consumers 18-29 years old. Corresponding revenues increased 156.1% for the period ended March 31, 2011. Retailers of Hedetang and Qian Mei Duo juices include Walmart, La Cuisine Royale and Juying stores. The Company regards its juice beverages as a key driver for revenue growth in 2011 and a natural fit for its kiwi, apple and pear concentrates manufacturing.
Sales of kiwi concentrates and purees originally forecasted in the fourth quarter of 2010 were sold in the first quarter of 2011. In the first quarter of 2011, Kiwi puree and concentrate sales totaled $3.0 million, an increase of 12% over the same period of 2010. Pear juice concentrates were down slightly due to a shortage of pears during the season. Lower temperatures than normal reduced the availability of pear and subsequently increased the price of concentrated pear juice per ton. SkyPeople sold 3,481 tons of pear juice concentrate in the quarter versus 4,930 in the same period of prior year. For the first quarter of 2011, sales of pear juice concentrate decreased 3.5% to $4.0 million as compared with that of the same period of prior year. Due to a very strong fourth quarter in 2010, the Company anticipated lower apple concentrate revenues in the first quarter of 2011. As compared with the first quarter of 2010, sales from apple-related products of the first quarter of 2011 fell by $0.8 million, or 18%, to $3.7 million due to a shortage of fresh apples as a result of cold weather in the Liaoning Province, the growing area for SkyPeople's apples and the location of the Company's Yingkou facilities.
Total revenue for the first quarter ended March 31, 2011 was $19.4 million, up 10% from $17.7 million for the quarter ended March 31, 2010.
Gross profit for the first quarter of 2011 was $8.6 million, a 20% increase from $7.2 million in the same period in 2010. G! ross pro fit margin expanded by 390 basis points due to higher margins in fruit juice beverages and a shift in the sales mix toward higher margin kiwifruit juice and juice beverages. The Company's gross margins fluctuate based on the availability and price of each type of fruit, but have averaged between 30% and 45% on a consolidated basis for the past three years. SkyPeople's four production and processing plants are located near local farms for each type of fruit it produces, and thus the Company secures fruit supply at competitive market prices.
Operating expenses for the quarter were $1.4 million, or 7% of sales, flat from the same period last year. Operating income increased 25% to $7.2 million while operating margins were 37%, 14% improvement year over year.
Net income and earnings per share for the first quarter of 2011 were $5.7 million and $0.20, respectively, compared to $3.7 million and $0.08, respectively, in the first quarter of 2010. Fully diluted shares were 26.7 million for the first quarter of 2011, versus 20.6 million for the first quarter of 2010, reflecting the sale of 5.2 million shares of the Company's Common Stock in the third quarter of 2010.
Financial Condition
As of March 31, 2011, the Company had $65.7 million in cash and cash equivalents, up from $49.4 million as of December 31, 2010 due to $13.5 million of cash generated from operations. Working capital was $85.6 million, up from $78.6 million as of December 31, 2010. Accounts receivable were $36.2 million, compared to $46.0 million as of December 31, 2010; accounts receivable turnover was 193 days in the first quarter of 2011. There was no accounts receivable over 120 days outstanding as of March 31, 2011 compared to 3.1% of accounts receivable outstanding as of December 31, 2010. Shareholders' equity was $130.0 million as of March 31, 2011, a 6% increase from $123.2 million reported on December 31, 2010. The Company had $12.8 million in short term loans with local and provincial banks ! in Shaan xi and Liaoning Provinces as of March 31, 2011.
Capacity Expansion Updates
The Company's growth plan includes building an integrated manufacturing infrastructure to support higher production volumes for juice beverages and concentrates. The following table presents the capital projects that we intend to finance using the proceeds generated from our public offering consummated in 2010:
Recent Updates:
Huludao Wonder Projects
As of March 31, 2011, SkyPeople has completed the infrastructure construction work for the fruit juice beverage production line and has ordered the necessary machinery. Management expects to complete machinery installation and test the new beverage production line in the second quarter and commence operations in the third quarter of 2011.
In the first quarter of 2011, the Company halted all construction work on its new concentrated apple production line because of the cold weather in Huludao, which regularly suffered sub-zero daytime temperatures. The Company recommenced the infrastructure construction work in April 2011 and expects the project to be completed and production to commence by early 2012.
The Company needs to incorporate new wastewater processing facilities to properly service its apple juice concentrate expansion. This project is expected to commence in the third quarter of 2011 and be completed by early 2013.
SkyPeople plans to start the construction of the refrigeration storage unit for concentrated fruit juices and fresh fruits and vegetables in the third quarter of 2011, and a concentrated fruit juice-mixing center in the fourth quarter of 2011. Both projects are expected to be completed in the fourth quarter of 2011 or early 2012.
As of March 31, 2011, the Company has spent $1.2 million on the construction work of Huludao Wonder. The planned capital expenditures for these projects collectively total $24.8 million.
Qiyiwangguo Projects
! Manageme nt has decided to delay several projects at its Qiyiwangguo factory based on the current market conditions and potential opportunities, including a 24,000 PET bottle/hour fruit juice beverage cold-filling line, concentrated pomegranate juice line, a PET bottle blowing machine, and a refrigeration system.
Other Projects
The Company plans to add another concentrated 20 tons pear juice line as a part of its 2011 capital expenditure plan. The production equipment for a 20 tons/hour line has been ordered and management expects to commence operations during the third quarter of 2011.
In addition, the Company plans to change its 30 ton/hour concentrated apple juice line in the Huludao Wonder factory into a concentrated pear juice line which has an estimated annual capacity of 6,000 tons once the Company completes the 50 ton/hour concentrated apple juice production line in the Huludao Wonder factory. The estimated capital expenditure for this project is $4 million.
Comments