Shineco, Inc. Reports Fourth Quarter and Full Year 2017 Financial Results

BEIJING, Oct. 13, 2017 /PRNewswire/ -- Shineco, Inc. ("Shineco" or the "Company"; NASDAQ: TYHT), a producer and distributor of Chinese herbal medicines, organic agricultural produce, specialized textiles, and other health and well-being focused plant-based products in China, today announced its financial results for the fourth quarter and full year ended June 30, 2017.

Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, commented, "We are proud of all that we have accomplished in our first full year as an independent publicly traded company and pleased to report the fourth quarter of 2017 financial results with a 68.2% increase in net income and a 57.6% increase in EPS. As we reflect back on the year, we are pleased with the significant progress we have made as we begin to unlock the potential of our businesses by investing to establish the Institute of Chinese Apocynum Industrial Technology Research and Apocynum Industrial Park in Xinjiang. These investments presented headwinds to our sales and profit performance in the short term, we are confident that our strategy will best-position Shineco for continued success for the long term. We expect to sustain good momentum in our financial performance and we anticipate another year of good growth with stable margins and further progress in revenue and net income."

Fourth Quarter of 2017 Financial Highlights

• Net income increased by 68.2% to $2.35 million, or $0.114 per basic and diluted share, for the three months ended June 30, 2017 from $1.40 million, or $0.072 per basic and diluted share, for the same period of last year. The increases in net income and earnings per share were primarily due to lower operating expenses in 2017 versus the same period of 2016.
• Operating income increased by 82.8% to $2.19 million from $1.20 million, for the same period of last year.
• Gross profit increased by 4.0% to $2.27 million for the three months ended June 30, 2017 from $2.18 million for the same period of last year. Gross margin increased by 1.3 percentage points to 28.2% from 26.8% for the same period of last year.
• Revenues decreased by 0.9% to $8.06 million for the three months ended June 30, 2017 from $8.13 million for the same period of last year, mainly due to the price fluctuation of the Chinese Medicine Market.

Fourth Quarter of 2017 Financial Results

Revenues

Revenues for the three months ended June 30, 2017 decreased by $0.07 million, or 0.9%, to $8.06 million from $8.13 million for the same period of last year, mainly due to the decreased sales of products.

Revenues from Luobuma products increased by $0.01 million, or 0.8%, to $0.86 million for the three months ended June 30, 2017 from $0.85 million for the same period of last year, mainly due to the increased sales from online platform.

Revenues from Chinese medicinal herbal products decreased by $0.08 million, or 2.3%, to $3.52 million for the three months ended June 30, 2017 from $3.60 million for the same period of last year. The decrease was primarily due to the price fluctuation in the Chinese Medicine Market. The average currency exchange rates for the three months ended June 30, 2017 and 2016 were 1 RMB to $0.1457 USD and 1 RMB to $0.1531 USD, respectively, which represented a decrease of 4.8%.

Revenues from other agricultural products increased by $0.002 million, or 0.1%, to $3.69 million for the three months ended June 30, 2017 from $3.68 million for the same period of last year. The increase was mainly attributable to the added electronic warehousing.

Gross profit and Gross Margin

Total cost of goods sold decreased by $0.28 million, or 4.6%, to $5.76 million for the three months ended June 30, 2017 from $6.04 million for the same period of last year. Gross profit increased by $0.09 million, or 4.0%, to $2.27 million for the three months ended June 30, 2017 from $2.18 million for the same period of last year. Overall gross margin increased by 1.3 percentage points to 28.2% for the three months ended June 30, 2017, compared to 26.8% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 63.3%, 17.5%, and 31.7%, respectively, for the three months ended June 30, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 57.8%, 15.6%, and 29.0%, respectively, for the same period of last year.

Operating income

Selling expenses decreased by $0.1 million, or 24.8%, to $0.29 million for the three months ended June 30, 2017 from $0.39 million for the same period of last year, primarily due to decreased advertising expenses and promotion expenses. General and administrative expenses decreased by $0.81 million, or 136.6%, to negative $0.22 million for the three months ended June 30, 2017 from $0.59 million for the same period of last year. The decrease in general and administrative expenses was primarily attributable to account receivable collected and expenditure controlled. As a result, total operating expenses decreased by $0.90 million, or 92.1%, to $0.08 million for the three months ended June 30, 2017 from $0.98 million for the same period of last year.

Operating income increased by $0.99 million, or 82.8%, to $2.19 million for the three months ended June 30, 2017 from $1.20 million for the same period of last year. Operating margin was 27.2% for the three months ended June 30, 2017, compared to 14.7% for the same period of last year.

Net income

Net income increased by $0.95 million, or 68.2%, to $2.35 million for the three months ended June 30, 2017 from $1.40 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the three months ended June 30, 2017 was $2.35 million, or $0.114 per basic and diluted share. This compared to net income attributable to common shareholders of $1.40 million, $0.072 per basic and diluted share, for the same period of last year.

Full Year 2017 Financial Results  

Revenues

Revenues for the twelve months ended June 30, 2017 decreased by $1.61 million, or 4.6%, to $33.59 million from $35.21 million for the same period of last year, mainly due to decrease in sales across all of our products. 

Revenues from Luobuma products decreased by $0.76 million, or 17.4%, to $3.62 million for the twelve months ended June 30, 2017 from $4.39 million for the same period of last year, mainly due to both the decreased sales price and decreased sales volume of our products.

Revenues from Chinese medicinal herbal products decreased by $0.79 million, or 5.6%, to $13.25 million for the twelve months ended June 30, 2017 from $14.03 million for the same period of last year. The decrease was primarily due to the depreciation of RMB against USD. The average currency exchange rates for the twelve months ended June 30, 2017 and 2016 were 1 RMB to $0.1468 USD and 1 RMB to $0.1555 USD, respectively, which represented a decrease of 5.6%.

Revenues from other agricultural products decreased by $0.07 million, or 0.4%, to $16.72 million for the twelve months ended June 30, 2017 from $16.79 million for the same period of last year. The decrease was mainly attributable to the depreciation of RMB against USD as mentioned above.

Gross profit and Gross Margin

Total cost of goods sold decreased by $1.27 million, or 5.2%, to $22.85 million for the twelve months ended June 30, 2017 from $24.12 million for the same period of last year. Gross profit decreased by $0.34 million, or 3.1%, to $10.74 million for the twelve months ended June 30, 2017 from $11.08 million for the same period of last year. Overall gross margin increased by 0.5 percentage points to 32.0% for the twelve months ended June 30, 2017, compared to 31.5% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 53.2%, 23.6%, and 34.5%, respectively, for the twelve months ended June 30, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 55.0%, 21.7%, and 34.0%, respectively, for the same period of last year.

Operating income

Selling expenses decreased by $0.27 million, or 15.6%, to $1.48 million for the twelve months ended June 30, 2017 from $1.76 million for the same period of last year, primarily due to decreased advertising expenses, promotion expenses, and service fees of e-commerce websites, partially offset by increased rent expense of warehouses during the twelve months ended June 30, 2017 compared to the same period of 2016. General and administrative expenses decreased by $0.17 million, or 8.8%, to $1.81 million for the twelve months ended June 30, 2017 from $1.99 million for the same period of last year. The decrease in general and administrative expenses was primarily attributable to the recovery of allowance for doubtful accounts as a result of collection, partially offset by the increased general and administrative expenses of our Shineco holding company, which were $1.05 million and nil for the twelve months ended June 30, 2017 and 2016. As a result, total operating expenses decreased by $0.45 million, or 12.0%, to $3.29 million for the twelve months ended June 30, 2017 from $3.74 million for the same period of last year.

Operating income increased by $0.10 million, or 1.4%, to $7.45 million for the twelve months ended June 30, 2017 from $7.34 million for the same period of last year. Operating margin was 22.2% for the twelve months ended June 30, 2017, compared to 20.9% for the same period of last year.

Net income

Net income increased by $0.33 million, or 4.1%, to $8.47 million for the twelve months ended June 30, 2017 from $8.29 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the twelve months ended June 30, 2017 was $8.47 million, or $0.41 per basic and diluted share. This compared to net income attributable to common shareholders of $8.14 million, $0.42 per basic and diluted share, for the same period of last year.

Financial Condition

As of June 30, 2017, the Company had cash and cash equivalents of $23.15 million, compared to $22.01 million as of June 30, 2016. Net cash used in operating activities was $2.74 million for the twelve months ended June 30, 2017, compared to net cash provided by operating activities of $13.29 million for the same period of last year. Net cash used in investing activities was $0.73 million for the twelve months ended June 30, 2017, compared to net cash provided by investing activities of $3.95 million for the same period of last year. Net cash provided by financing activities was $5.38 million for the twelve months ended June 30, 2017, compared to net cash used in financing activities of $0.26 million for the same period of last year.

About Shineco, Inc.

Incorporated in August 1997 and headquartered in Beijing, China, Shineco, Inc. ("Shineco" or the "Company") is a Delaware holding company that uses its subsidiaries' and variable interest entities' vertically- and horizontally-integrated production, distribution and sales channels to provide health and well-being focused plant-based products in China. Utilizing modern engineering technologies and biotechnologies, Shineco produces, among other products, Chinese herbal medicines, organic agricultural produce and specialized textiles. For more information about the Company, please visit http://tianyiluobuma.com/.

Forward-Looking Statements

This press release contains information about Shineco's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in Shineco's registration statement and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

Tina Xiao
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: [email protected]

SOURCE Shineco, Inc