Shineco, Inc. Reports Second Quarter of 2018 Financial Results
BEIJING, Feb. 12, 2018 /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 second quarter ended December 31, 2017.
Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, commented, "We are proud of all that we have accomplished in the first two quarters of our fiscal year and are pleased to report the second quarter of 2018 financial results with a 26.3% increase in net income as compared to the second quarter of 2017. We believe that our investment in our Apocynum Industrial Park and Institute of Chinese Apocynum Industrial Technology Research continues to strengthen the long-term outlook of Shineco as a positive long-term investment. In the short term we have seen tremendous growth in our Luobuma product line and are pleased that we have grown to become a high margin business, with revenues grown 327% compared to the second quarter ended December 31, 2016, and have achieved impressive results following our expansion over this past year. The past six months have been immensely positive for Shineco and we are excited to tackle the challenges and opportunities that the next six months will bring, as we anticipate continued future growth in our revenues and net income."
Second Quarter of 2018 Financial Highlights
For the Three Months Ended December 31 |
||||||
($ millions, except per share data) |
2017 |
2016 |
% Change |
|||
Revenue |
14.13 |
11.22 |
25.9% |
|||
Luobuma products |
3.89 |
0.91 |
327.0% |
|||
Chinese medicinal herbal products |
3.66 |
3.50 |
4.8% |
|||
Other agricultural products |
6.58 |
6.82 |
-3.4% |
|||
Gross profit |
4.82 |
3.95 |
21.9% |
|||
Gross margin |
34.1% |
35.2% |
-1.1% |
|||
Operating income |
3.24 |
2.53 |
28.2% |
|||
Operating margin |
22.9% |
22.5% |
0.4% |
|||
Net income attributable to Shineco |
3.60 |
2.85 |
26.3% |
|||
EPS |
0.17 |
0.14 |
26.3% |
- Revenues increased by 25.9% to $14.13 million for the three months ended December 31, 2017 from $11.22 million for the same period of last year, mainly due to increases in sales from Luobuma products and Chinese medicinal herbal products and partially offset by decreased sales from other agricultural products.
- Gross profit increased by 21.9% to $4.82 million for the three months ended December 31, 2017 from $3.95 million for the same period of last year. Gross margin decreased by 1.1 percentage points to 34.1% from 35.2% for the same period of last year.
- Net income attributable to Shineco increased by 26.3% to $3.60 million, or $0.17 per basic and diluted share, for the three months ended December 31, 2017 from $2.85 million, or $0.14 per basic and diluted share, for the same period of last year. The increases in net income earnings per share were primarily a result of the increase in gross profit, partially offset by the increase in general and administrative expenses.
Second Quarter of 2018 Financial Results
Revenues
Revenues for the three months ended December 31, 2017 increased by $2.91 million, or 25.9%, to $14.13 million from $11.22 million for the same period of last year, mainly due to increases in sales from Luobuma products and Chinese medicinal herbal products and partially offset by decreased sales from other agricultural products.
For the Three Months Ended December 31 |
||||||||||||
2017 |
2016 |
|||||||||||
($ millions) |
Revenues |
COGS |
Gross |
Revenues |
COGS |
Gross |
||||||
Luobuma products |
3.89 |
1.87 |
51.7% |
0.91 |
0.44 |
51.0% |
||||||
Chinese medicinal herbal products |
3.66 |
2.75 |
24.6% |
3.50 |
2.48 |
29.1% |
||||||
Other agricultural products |
6.58 |
4.67 |
29.0% |
6.82 |
4.33 |
36.4% |
||||||
Business and sales related taxes |
- |
0.03 |
- |
- |
0.02 |
- |
||||||
Total |
14.13 |
9.31 |
34.1% |
11.22 |
7.27 |
35.2% |
Revenues from Luobuma products increased by $2.98 million, or 327.0%, to $3.89 million for the three months ended December 31, 2017 from $0.91 million for the same period of last year, mainly due to establishment of new subsidiary, Xinjiang Taihe, which generated revenue of $2.93 million.
Revenues from Chinese medicinal herbal products increased by $0.17 million, or 4.8%, to $3.66 million for the three months ended December 31, 2017 from $3.50 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers for the three months ended December 31, 2017 than the same period in 2016.
Revenues from other agricultural products decreased by $0.23 million, or 3.4%, to $6.58 million for the three months ended December 31, 2017 from $6.82 million for the same period of last year. The decrease was mainly due to the decrease in revenue of storage services, partially offset by the increased sales of yew trees.
Gross profit and Gross Margin
Total cost of goods sold increased by $2.04 million, or 28.1%, to $9.31 million for the three months ended December 31, 2017 from $7.27 million for the same period of last year. Gross profit increased by $0.86 million, or 21.9%, to $4.82 million for the three months ended December 31, 2017 from $3.95 million for the same period of last year. Overall gross margin decreased by 1.1 percentage points to 34.1% for the three months ended December 31, 2017, compared to 35.2% for the same period of last year.
Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 51.7%, 24.6%, and 29.0%, respectively, for the three months ended December 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 51.0%, 29.1%, and 36.4%, respectively, for the same period of last year.
Operating income
Selling expenses increased by $0.05 million, or 9.6%, to $0.55 million for the three months ended December 31, 2017 from $0.50 million for the same period of last year, primarily due to the acquisition of new subsidiary, Tajite, in October, and increased promotion expenses, partly offset by decreased rent expense of warehouses and service fees of e-commerce websites. General and administrative expenses increased by $0.10 million, or 11.2%, to $1.03 million for the three months ended December 31, 2017 from $0.92 million for the same period of last year. The increase in general and administrative expenses was due to the incorporation of new subsidiaries, Tiankunrunze, Xinjiang Taihe and Tajite in 2017. As a result, total operating expenses increased by $0.15 million, or 10.7%, to $1.58 million for the three months ended December 31, 2017 from $1.43 million for the same period of last year.
Operating income increased by $0.71 million, or 28.2%, to $3.24 million for the three months ended December 31, 2017 from $2.53 million for the same period of last year. Operating margin was 22.9% for the three months ended December 31, 2017, compared to 22.5% for the same period of last year.
Net income
Net income increased by $0.68 million, or 23.6%, to $3.58 million for the three months ended December 31, 2017 from $2.90 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 December 31, 2017 was $3.60 million, or $0.17 per basic and diluted share. This compared to net income attributable to common shareholders of $2.85 million, $0.14 per basic and diluted share, for the same period of last year.
Six Months Ended December 31, 2017 Financial Results
For the Six Months Ended December 31 |
||||||
($ millions, except per share data) |
2017 |
2016 |
% Change |
|||
Revenue |
21.94 |
17.59 |
24.7% |
|||
Luobuma products |
4.93 |
1.65 |
199.4% |
|||
Chinese medicinal herbal products |
6.93 |
6.68 |
3.8% |
|||
Other agricultural products |
10.08 |
9.27 |
8.8% |
|||
Gross profit |
6.91 |
5.87 |
17.7% |
|||
Gross margin |
31.5% |
33.4% |
-1.9% |
|||
Operating income |
4.20 |
3.59 |
17.0% |
|||
Operating margin |
19.1% |
20.4% |
-1.3% |
|||
Net income attributable to Shineco |
4.85 |
4.20 |
15.7% |
|||
EPS |
0.23 |
0.21 |
11.1% |
Revenues
Revenues for the six months ended December 31, 2017 increased by $4.35 million, or 24.7%, to $21.94 million from $17.59 million for the same period of last year, mainly due to increases in sales across all the products.
For the Six Months Ended December 31 |
||||||||||||
2017 |
2016 |
|||||||||||
($ millions) |
Revenues |
COGS |
Gross |
Revenues |
COGS |
Gross |
||||||
Luobuma products |
4.93 |
2.45 |
50.1% |
1.65 |
0.81 |
50.4% |
||||||
Chinese medicinal herbal products |
6.93 |
5.33 |
23.1% |
6.68 |
4.92 |
26.0% |
||||||
Other agricultural products |
10.08 |
7.21 |
28.4% |
9.27 |
5.96 |
35.6% |
||||||
Business and sales related taxes |
- |
0.04 |
- |
- |
0.03 |
- |
||||||
Total |
21.94 |
15.04 |
31.5% |
17.59 |
11.72 |
33.4% |
Revenues from Luobuma products increased by $3.29 million, or 199.4%, to $4.93 million for the six months ended December 31, 2017 from $1.65 million for the same period of last year, mainly due to revenue generated by a new subsidiary, Xinjiang Taihe, of $2.93 million and increased sales volume of our health awareness related products. The Company also enhanced online sales promotions during the six months ended December 31, 2017, which contributed to more sales.
Revenues from Chinese medicinal herbal products increased by $0.25 million, or 3.8%, to $6.93 million for the six months ended December 31, 2017 from $6.68 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers.
Revenues from other agricultural products increased by $0.81 million, or 8.8%, to $10.08 million for the six months ended December 31, 2017 from $9.27 million for the same period of last year. The increase was mainly due to the increase in sales volume of yew trees since the public realized the air purification function of the yew trees.
Gross profit and Gross Margin
Total cost of goods sold increased by $3.31 million, or 28.3%, to $15.04 million for the six months ended December 31, 2017 from $11.72 million for the same period of last year. Gross profit increased by $1.04 million, or 17.7%, to $6.91 million for the six months ended December 31, 2017 from $5.87 million for the same period of last year. Overall gross margin decreased by 1.9 percentage points to 31.5% for the six months ended December 31, 2017, compared to 33.4% for the same period of last year.
Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 50.1%, 23.1%, and 28.4%, respectively, for the six months ended December 31, 2017. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 50.4%, 26.0%, and 35.6%, respectively, for the same period of last year.
Operating income
Selling expenses decreased by $0.04 million, or 4.2%, to $0.85 million for the six months ended December 31, 2017 from $0.88 million for the same period of last year, primarily due to decreased rent expense of warehouses, salary expenses, and service fees of e-commerce websites, partially offset by increased promotion expenses. General and administrative expenses increased by $0.47 million, or 33.3%, to $1.86 million for the six months ended December 31, 2017 from $1.40 million for the same period of last year. The increase in general and administrative expenses was primarily due to the incorporation of new subsidiaries, Tiankunrunze, Xinjiang Taihe and Tajite in 2017, as well as increased professional service fees, such as attorney's fees, consulting fees and auditing fees.
Operating income increased by $0.61 million, or 17.0%, to $4.20 million for the six months ended December 31, 2017 from $3.59 million for the same period of last year. Operating margin was 19.1% for the six months ended December 31, 2017, compared to 20.4% for the same period of last year.
Net income
Net income increased by $0.56 million, or 13.2%, to $4.84 million for the six months ended December 31, 2017 from $4.28 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the six months ended December 31, 2017 was $4.85 million, or $0.23 per basic and diluted share. This compared to net income attributable to common shareholders of $4.20 million, $0.21 per basic and diluted share, for the same period of last year.
Financial Condition
As of December 31, 2017, the Company had cash of $29.35 million, compared to $23.15 million as of June 30, 2017. Working capital as of December 31, 2017 was $44.27 million as compared to $39.69 million at June 30, 2017. Net cash provided by operating activities was $7.78 million for the six months ended December 31, 2017, compared to net cash used in operating activities of $0.15 million for the same period of last year. Net cash used in investing activities was $0.49 million for the six months ended December 31, 2017, compared to $2.78 million for the same period of last year. Net cash used in financing activities was $1.47 million for the six months ended December 31, 2017, compared to net cash provided by financing activities of $5.79 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 www.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]
SHINECO, INC. |
|||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||
ASSETS |
|||||
December 31, |
June 30, |
||||
2017 |
2017 |
||||
(Unaudited) |
|||||
CURRENT ASSETS: |
|||||
Cash |
$ |
29,351,613 |
$ |
23,154,551 |
|
Accounts receivable, net |
15,068,392 |
14,480,004 |
|||
Due from related parties |
529,816 |
448,833 |
|||
Inventories |
2,502,196 |
2,346,273 |
|||
Advances to suppliers, net |
3,230,843 |
2,396,123 |
|||
Loans to third parties, net |
- |
830,090 |
|||
Other receivables, net |
981,808 |
535,700 |
|||
Short-term deposit |
230,201 |
158,894 |
|||
Prepaid expenses |
138,967 |
375,459 |
|||
TOTAL CURRENT ASSETS |
52,033,836 |
44,725,927 |
|||
Property and equipment at cost, net of accumulated depreciation and amortization |
11,670,890 |
10,320,396 |
|||
Land use right, net of accumulated amortization |
1,385,421 |
1,346,631 |
|||
Investments |
6,280,999 |
5,695,080 |
|||
Deposit for business acquisition |
124,474 |
2,065,686 |
|||
Distribution right |
1,134,099 |
- |
|||
Long-term deposit and other noncurrent assets |
116,633 |
112,883 |
|||
Prepaid leases |
3,698,929 |
3,784,533 |
|||
Deferred tax assets |
285,917 |
233,834 |
|||
Goodwill |
2,152,975 |
- |
|||
TOTAL ASSETS |
$ |
78,884,173 |
$ |
68,284,970 |
|
LIABILITIES AND EQUITY |
|||||
CURRENT LIABILITIES: |
|||||
Short-term loans |
$ |
1,203,764 |
$ |
2,663,628 |
|
Accounts payable |
1,740,791 |
158,068 |
|||
Advances from customers |
105,785 |
5,439 |
|||
Due to related parties |
343,655 |
257,880 |
|||
Other payables and accrued expenses |
2,057,436 |
337,107 |
|||
Taxes payable |
2,024,768 |
1,608,926 |
|||
Deferred tax liability |
283,525 |
- |
|||
TOTAL LIABILITIES |
7,759,724 |
5,031,048 |
|||
Commitments and contingencies |
- |
- |
|||
EQUITY: |
|||||
Common stock; par value $0.001, 100,000,000 shares authorized; 21,034,072 and 21,034,072 shares issued and outstanding at December 31, 2017 and June 30, 2017 |
21,034 |
21,034 |
|||
Additional paid-in capital |
22,737,302 |
22,737,302 |
|||
Statutory reserve |
3,727,672 |
3,484,449 |
|||
Retained earnings |
43,675,155 |
39,064,743 |
|||
Accumulated other comprehensive loss |
(155,024) |
(3,140,982) |
|||
Total Stockholders' equity of Shineco, Inc. |
70,006,139 |
62,166,546 |
|||
Non-controlling interest |
1,118,310 |
1,087,376 |
|||
TOTAL EQUITY |
71,124,449 |
63,253,922 |
|||
TOTAL LIABILITIES AND EQUITY |
$ |
78,884,173 |
$ |
68,284,970 |
|
SHINECO, INC. |
|||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
|||||||||||
(UNAUDITED) |
|||||||||||
For the Six Months Ended |
For the Three Months Ended |
||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||
REVENUE |
$ |
21,941,696 |
$ |
17,589,730 |
$ |
14,132,202 |
$ |
11,223,066 |
|||
COST OF REVENUE |
|||||||||||
Cost of product and services |
14,994,212 |
11,687,306 |
9,288,701 |
7,251,134 |
|||||||
Business and sales related tax |
41,337 |
33,964 |
25,724 |
18,419 |
|||||||
Total cost of revenue |
15,035,549 |
11,721,270 |
9,314,425 |
7,269,553 |
|||||||
GROSS PROFIT |
6,906,147 |
5,868,460 |
4,817,777 |
3,953,513 |
|||||||
OPERATING EXPENSES |
|||||||||||
General and administrative expenses |
1,863,924 |
1,398,341 |
1,028,373 |
924,577 |
|||||||
Selling expenses |
845,219 |
882,354 |
550,283 |
502,036 |
|||||||
Total operating expenses |
2,709,143 |
2,280,695 |
1,578,656 |
1,426,613 |
|||||||
INCOME FROM OPERATIONS |
4,197,004 |
3,587,765 |
3,239,121 |
2,526,900 |
|||||||
OTHER INCOME |
|||||||||||
Income from equity method investments |
350,652 |
401,768 |
202,194 |
240,586 |
|||||||
Purchase rebate income |
779,935 |
592,628 |
411,132 |
352,638 |
|||||||
Other income |
139,975 |
159,308 |
54,356 |
73,407 |
|||||||
Interest income (expense), net |
(31,324) |
40,538 |
(12,139) |
7,785 |
|||||||
Total other income |
1,239,238 |
1,194,242 |
655,543 |
674,416 |
|||||||
INCOME BEFORE PROVISION FOR INCOME TAXES |
5,436,242 |
4,782,007 |
3,894,664 |
3,201,316 |
|||||||
PROVISION FOR INCOME TAXES |
595,035 |
505,387 |
312,178 |
303,751 |
|||||||
NET INCOME |
4,841,207 |
4,276,620 |
3,582,486 |
2,897,565 |
|||||||
Less: net income (loss) attributable to non-controlling interest |
(12,428) |
80,177 |
(15,259) |
49,829 |
|||||||
NET INCOME ATTRIBUTABLE TO SHINECO, INC. |
$ |
4,853,635 |
$ |
4,196,443 |
$ |
3,597,745 |
$ |
2,847,736 |
|||
COMPREHENSIVE INCOME |
|||||||||||
Net income |
$ |
4,841,207 |
$ |
4,276,620 |
$ |
3,582,486 |
$ |
2,897,565 |
|||
Other comprehensive income (loss): foreign currency translation gain (loss) |
3,030,781 |
(2,514,175) |
1,561,371 |
(2,317,494) |
|||||||
Total comprehensive income |
7,871,988 |
1,762,445 |
5,143,857 |
580,071 |
|||||||
Less: comprehensive income attributable to non-controlling interest |
32,395 |
36,441 |
9,542 |
9,815 |
|||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC. |
$ |
7,839,593 |
$ |
1,726,004 |
$ |
5,134,315 |
$ |
570,256 |
|||
Weighted average number of shares basic and diluted |
21,034,072 |
20,205,409 |
21,034,072 |
21,034,072 |
|||||||
Basic and diluted earnings per common share |
$ |
0.23 |
$ |
0.21 |
$ |
0.17 |
$ |
0.14 |
|||
SHINECO, INC. |
|||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(UNAUDITED) |
|||||
For the Six Months Ended December 31, |
|||||
2017 |
2016 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||
Net income |
$ |
4,841,207 |
$ |
4,276,620 |
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|||||
Depreciation and amortization |
295,832 |
299,553 |
|||
(Recovery of) provision for doubtful accounts |
(18,931) |
298,297 |
|||
Increase in inventory reserve |
148,043 |
35,930 |
|||
Deferred tax benefit |
(41,523) |
(43,424) |
|||
Income from equity method investments |
(350,652) |
(401,768) |
|||
Interest income from loans to related parties |
- |
(87,220) |
|||
Changes in operating assets and liabilities: |
|||||
Accounts receivable |
35,996 |
(6,148,928) |
|||
Advances to suppliers |
(733,215) |
(282,288) |
|||
Inventories |
(145,327) |
2,530,386 |
|||
Other receivables |
(195,516) |
(399,914) |
|||
Prepaid expense and other assets |
189,270 |
(152,508) |
|||
Due from related parties |
(8,399) |
240,601 |
|||
Prepaid leases |
237,751 |
235,872 |
|||
Accounts payable |
1,544,313 |
5,444 |
|||
Advances from customers |
17,181 |
79,921 |
|||
Other payables |
1,640,458 |
(785,057) |
|||
Taxes payable |
323,744 |
151,820 |
|||
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
7,780,232 |
(146,663) |
|||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||
Acquisitions of property and equipment |
(564,937) |
(31,952) |
|||
Payment for construction in progress |
(602,267) |
- |
|||
Loan advances to third parties |
- |
(979,465) |
|||
Repayments of loans from third parties |
830,889 |
- |
|||
Loan advances to related party |
(52,698) |
- |
|||
Repayments of loans from related parties |
- |
501,119 |
|||
Deposit for business acquisition |
(121,959) |
(2,074,198) |
|||
Deposit for potential investment |
- |
(200,000) |
|||
Cash of subsidiary acquired |
22,830 |
- |
|||
NET CASH (USED IN) INVESTING ACTIVITIES |
(488,142) |
(2,784,496) |
|||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||
Proceeds from short-term loans |
1,204,533 |
2,697,939 |
|||
Repayment of short-term loans |
(2,743,199) |
(2,414,589) |
|||
Stock issuance cost payable |
- |
843,844 |
|||
Proceeds from initial public offering, net of offering costs |
- |
4,550,705 |
|||
Proceeds from advances from related parties |
73,556 |
109,882 |
|||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES |
(1,465,110) |
5,787,781 |
|||
EFFECT OF EXCHANGE RATE CHANGE ON CASH |
370,082 |
(1,122,302) |
|||
NET INCREASE IN CASH |
6,197,062 |
1,734,320 |
|||
CASH - Beginning of the Period |
23,154,551 |
22,009,374 |
|||
CASH - End of the Period |
$ |
29,351,613 |
$ |
23,743,694 |
|
SUPPLEMENTAL CASH FLOW DISCLOSURES: |
|||||
Cash paid for income tax |
$ |
492,206 |
$ |
219,682 |
|
Cash paid for interest |
$ |
69,498 |
$ |
71,586 |
|
SOURCE Shineco, Inc
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