Shiner International, Inc. Announces Second Quarter 2010 Financial Results
HAIKOU, China, Aug. 13 /PRNewswire-Asia/ -- Shiner International, Inc. ("Shiner"), (Nasdaq: BEST), an emerging global supplier of anti-counterfeiting and advanced packaging products, today announced financial results for the quarter ended June 30, 2010.
Financial Summary
Second Quarter Results
-- Earnings per share (basic and diluted) of $0.04 for the second quarter,
remain unchanged from the prior quarter, and were up from a loss per
share of $0.01 (basic and diluted) for the second quarter of 2009.
-- Total revenue increased 65% from $8.0 million during the second quarter
of 2009 to $13.2 million during the second quarter of 2010.
-- Net income of $0.94 million for the second quarter of 2010, compared to
a net loss of $0.28 million in the second quarter of 2009.
The following table sets forth the percentage of total film revenue
generated by each of our product lines for the six months ended June 30, 2010
and 2009, respectively:
Percent of Total Revenue
For the six months ended June 30,
2010 2009
BOPP Tobacco film 33% 44%
Coated film 39% 27%
Anti-counterfeiting film 21% 20%
Color printed packaging 7% 9%
Revenues and Earnings
Shiner's revenue for the three months ended June 30, 2010 increased 14% on a sequential basis from the quarter ended March 31, 2010, and increased 65% when compared to the same period in 2009. The year to year increase in revenue related directly to increases in sales across Shiner's main business lines, which included a 136% increase in coated film sales from $2.2 million for the second quarter of 2009 to $5.1 million for the second quarter of 2010. Anti-counterfeit film sales increased 63% to $3.0 million from $1.9 million for the comparable period in 2009. Revenue from BOPP tobacco film sales was $4.0 million for the quarter ended June 30, 2010, an increase of 25% from the same period in 2009. Revenue from color printing increased 39% to $1.0 million in the second quarter in 2010 from $0.8 million during the comparable period in 2009.
The table below shows Shiner's consolidated net sales (in millions) by product line for the three months ended June 30, 2010, the change in total net sales from the same period in 2009, and the changes in volume and price from the same period in 2009:
Net Sales ($) % Change % Change in % Change in
Product Q2 FY 2010 Q2 FY 2009 Volume Price
BOPP Tobacco Film 4.0 25 39 (10)
Coated Film 5.1 136 118 8
Anti-Counterfeit 3.0 63 53 7
Color Printing 1.0 39 -- --
The table below shows Shiner's consolidated net domestic sales (in millions) by product line for the three months ended June 30, 2010, the change in total net sales from the same period in 2009, and the changes in volume and price from the same period in 2009:
Net Sales ($) % Change % Change in % Change in
Product Q2 FY 2010 Q2 FY 2009 Volume Price
BOPP Tobacco Film 4.0 26 41 (11)
Coated Film 3.7 238 213 8
Anti-Counterfeit 1.8 433 345 9
Color Printing 1.0 34 -- --
International sales for the quarter ended June 30, 2010 totaled $2.7 million and accounted for 20.5% of Shiner's total revenues in comparison to $2.6 million, or 33% of total revenues, for the comparable period in 2009.
The table below shows Shiner's consolidated net international sales (in millions) by product line for the three months ended June 30, 2010, the change in total net sales from the same period in 2009, and the changes in volume and price from the same period in 2009:
Net Sales ($) % Change % Change in % Change in
Product Q2 FY 2010 Q2 FY 2009 Volume Price
Coated Film 1.4 33 8 23
Anti-Counterfeit 1.2 (19) (15) (5)
Color Printing 0.04 -- -- --
Cost of goods sold increased $4.1 million, or 59%, from $6.9 million for the three months ended June 30, 2009 to $11.0 million for the three months ended June 30, 2010. Cost of goods sold represented 83.0 % and 86.2% of our total revenue for the three months ended June 30, 2010 and 2009, respectively.
Our gross profit for the three months ended June 30, 2010 was $2.2 million, which represented a gross margin of 17.0% and an increase of 32 basis points from a gross margin of 13.8% for the three months ended June 30, 2009. The increase in gross margin was a direct consequence of an increase in the selling prices of our products, a decrease in overhead unit rates as a result of increased production volume, and lower raw material prices.
Our selling, general and administrative expenses decreased by about 4.8%, or $0.06 million, to $1.2 million for the three months ended June 30, 2010 from $1.3 million for the comparable period in 2009.
Income from operations was $1.0 million for the 2010 second quarter compared to a $0.21 million loss in the same period of the prior year.
For the second quarter of fiscal 2010, Shiner reported net income of $0.9 million compared to a net loss of $0.3 million in the same period of the prior year. Earnings per share were $0.04 for the second quarter of fiscal 2010 compared to a net loss of $0.01 per share for the second quarter of fiscal 2009. The improvement reflects significantly higher sales volume, increased manufacturing capacity utilization, higher selling prices, and lower raw material costs. Shiner's productivity and cost-cutting actions are essentially tracking according to its business plan.
At June 30, 2010, we had $3.3 million in cash and cash equivalents on hand. On June 30, 2010, we had five short-term loans outstanding for a total of $4.7 million and we had working capital of $10.8 million, a decrease of $0.8 million from March 31, 2010.
Operations Outlook
Mr. Xing stated: "We are glad to see the continued positive results throughout the first and second quarter. The strong growth in all business product lines validates our business progress and our effort to improve shareholder value. Our coated film sales increased 136% this quarter compared to the second quarter of 2009, along with a 63% increase in the anti counterfeit film, which contributed to the $1.22 million net income growth for the quarter.
"The primary industries we serve appear to be recovering, led by increased demand for consumer media products, tobacco and cigarettes, and food spending by consumers. We believe the growth for our core business will be driven by the growth in the standard of living and higher wages across Asia, the new food laws that have been passed in China, and the growing need for media companies to protect their products from counterfeiting in China and Southeast Asia.
While there is still uncertainty about the sustainability of the global economic recovery, given our current cost structure and the prospect of improvement in the markets we serve, we believe that we will be well positioned to continue to generate improved earnings performance as sales increase. "Looking ahead to the third quarter," Mr. Xing said. "We expect earnings to be in line with our previous forecasts and currently estimate our third quarter earnings at about $0.04 per share."
Business Highlights
Mr. Xing stated: "Our goal is to continue to increase sales both in China and internationally and we have begun to make investments in our infrastructure as well as our distribution network, as follows:
"Our new Hainan manufacturing facility has been completed and operations have begun. The new plant allows us to consolidate operations and processes from three separate locations into one central location, providing Shiner with immediate operational efficiencies, improved quality control and cost savings. We believe this new facility provides us with the opportunity to better serve international customers and puts Shiner in a better competitive position to win new business.
"We obtained a credit facility from the Bank of China to finance a state-of-the-art BOPP line from Bruckner Group. This line is custom ordered to our specifications to produce special base film for high quality anti counterfeit film and coated film. The equipment is expected to be delivered early in the first quarter of 2011, and we expect it to be operational in the second quarter of 2011.
"We plan on establishing two sales offices in the third quarter. The first is in Shanghai, which will focus on the domestic food safety packaging market and target China's leading food processors. The second sales office will be located in Hong Kong as a joint venture with an established distributor and will focus on developed markets such as Europe and North America.
"We believe that these investments and initiatives will put us in a better position to strengthen our leading position in the growing domestic food safety packaging market and capture additional international business. We will continue to focus on maintaining profitability and believe that we are on target to achieve our 2010 business plan goals."
Conference Call Information
Management will host an earnings conference call on August 23, 2010 at 8:30 a.m., U.S. Eastern Time. To participate in this live conference call, please dial 1 866-318-8614 approximately fifteen minutes before the scheduled call and reference passcode 45827451. International participants should call 1 617-399-5133 replay of the call will be available for two weeks starting from Monday, August 23, 2010 at 10:30 a.m. To listen to the replay, please dial 1 888-286-8010 or 1 617-801-6888 for international participants, and enter replay passcode 97036442. The conference call will also be archived on Shiner's website at http://www.shinerinc.com .
About Shiner International, Inc.
Shiner International is engaged in the research and development, manufacture and sale of flexible packaging material. Products include coated packaging film, shrink-wrap film, common packaging film, anti-counterfeit laser holographic film and color-printed packaging materials. Shiner's flexible packaging products are used by manufacturers in the food and consumer products industry to preserve texture, flavor, hygiene, and convenience and safety of their products. Shiner was founded in 1990 and is headquartered in Haikou China.
Approximately 69% percent of Shiner's current customers are located in China with the remainder spanning Southeast Asia, Europe, the Middle East and North America. Shiner holds 15 patents on products and production equipment, and has an additional eight patent applications pending. The Company's flexible packaging meets the approval of U.S. FDA requirements, as well as those required for food packaging sold in the EU. Shiner's product manufacturing process is certified under ISO 9001:2000. Additional information on Shiner International is available at http://www.shinerinc.com .
Caution Concerning Forward-Looking Statements
This press release, and oral statements made regarding the subjects of this release, contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, or the Reform Act, which may include, but are not limited to, statements regarding Shiner's earnings estimates, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, including statements identified by words such as "believe," "plan," "seek," "expect," "intend," "estimate," "anticipate," "will," and similar expressions. All statements addressing operating performance, events, or developments that Shiner expects or anticipates will occur in the future, including statements relating to sales growth, earnings or earnings per share growth, and market share, as well as statements expressing optimism or pessimism about future operating results, are forward-looking statements within the meaning of the Reform Act. The forward-looking statements are based on management's current views and assumptions regarding future events and operating performance, and are inherently subject to significant business, economic, and competitive uncertainties and contingencies and changes in circumstances, many of which are beyond Shiner's control. The statements in this press release are made as of the date of this press release, even if subsequently made available by Shiner on its website or otherwise. Shiner does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release. Although Shiner does not make forward-looking statements unless it believes it has a reasonable basis for doing so, Shiner cannot guarantee their accuracy. The foregoing factors, among others, could cause actual results to differ materially from those described in these forward-looking statements. For a list of other factors which could affect Shiner' results, including earnings estimates, see Shiner's filings with the Securities and Exchange Commission. No undue reliance should be placed on any forward-looking statements.
For more information, please contact:
Corporate Contact:
Investor Relations:
Shiner International, Inc.
Tel: +86-898-6858-1713
Email: [email protected] or [email protected]
SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2010 2009
(unaudited)
ASSETS
CURRENT ASSETS:
Cash & cash equivalents $3,248,732 $3,059,796
Restricted cash -- 733,455
Accounts receivable, net of
allowance for doubtful
accounts of $288,076 and
$252,008 7,778,717 6,405,741
Advances to suppliers 2,791,646 3,192,211
Notes receivable 317,761 88,311
Inventory, net 10,357,777 8,320,624
Prepaid expenses & other current
assets 467,729 299,694
Total current assets 24,962,362 22,099,832
Property and equipment, net 11,555,250 12,163,693
Construction in progress 9,706,253 6,582,805
Intangible assets, net 347,428 349,491
TOTAL ASSETS $46,571,293 $41,195,821
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,624,548 $2,667,835
Other payables 4,427,229 4,487,587
Unearned revenue 235,970 234,543
Accrued payroll 144,030 138,826
Short term loan 4,713,600 3,227,400
Total current liabilities 14,145,377 10,756,191
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Common stock, par value $0.001;
75,000,000 shares authorized,
24,650,000 shares issued and
24,588,155 shares outstanding
at June 30, 2010 and December
31, 2009 24,650 24,650
Additional paid-in capital 11,402,392 11,389,756
Treasury stock (61,845 shares) (58,036) (58,036)
Other comprehensive income 3,092,475 2,980,077
Statutory reserve 2,908,032 2,872,856
Retained earnings 15,056,403 13,230,327
Total stockholders' equity 32,425,916 30,439,630
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $46,571,293 $41,195,821
SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE (LOSS)
Three Months Ended June 30, Six Months Ended June 30,
2010 2009 2010 2009
(unaudited) (unaudited) (unaudited) (unaudited)
Net Revenue $13,213,898 $8,006,378 $24,800,617 $15,076,786
Cost of Revenue 10,971,574 6,900,881 20,671,040 13,499,804
Gross profit 2,242,324 1,105,497 4,129,577 1,576,982
Operating expenses
Selling expenses 463,895 496,853 867,665 774,704
General and
administrative
expenses 786,217 816,751 1,227,589 1,340,669
Total operating
expenses 1,250,112 1,313,604 2,095,254 2,115,373
Income (loss) from
operations 992,212 (208,107) 2,034,323 (538,391)
Non-operating income
(expense):
Other income, net 68,391 15,394 113,520 26,267
Subsidy income 110,029 -- 151,091 --
Interest income 3,630 6,931 5,916 14,037
Interest expense (54,515) (42,240) (97,344) (88,289)
Exchange loss (22,259) (4,214) (29,720) (2,756)
Total non-
operating
income
(expense) 105,276 (24,129) 143,463 (50,741)
Income before income
tax 1,097,488 (232,236) 2,177,786 (589,132)
Income tax (benefit)
expense 158,329 44,180 316,534 (37,703)
Net income (loss) 939,159 (276,416) 1,861,252 (551,429)
Other comprehensive
income (loss)
Foreign currency
translation
gain (loss) 121,735 (2,975) 112,398 (44,624)
Comprehensive Income
(loss) $1,060,894 $(279,391) $1,973,650 $(596,053)
Weighted average
shares outstanding:
Basic 24,588,155 24,635,812 24,588,155 24,642,867
Diluted 24,588,155 24,635,812 24,590,946 24,642,867
Earnings (loss) per
share:
Basic $0.04 $(0.01) $0.08 $(0.02)
Diluted $0.04 $(0.01) $0.08 $(0.02)
SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2010
Additional
Common Stock Paid in Treasury
Shares Amount Capital Stock
Balance, December 31, 2009 24,650,000 $24,650 $11,389,756 $(58,036)
Stock compensation expense for
options issued to directors -- -- 12,636 --
Foreign currency translation
gain -- -- -- --
Net income -- -- -- --
Transfer to statutory reserve -- -- -- --
Balance, June 30, 2010
(unaudited) 24,650,000 $24,650 $11,402,392 $(58,036)
Other Total
Comprehensive Statutory Retained Stockholders'
Income Reserve Earnings Equity
Balance, December 31,
2009 $2,980,077 $2,872,856 $13,230,327 $30,439,630
Stock compensation
expense for options
issued to directors -- -- -- 12,636
Foreign currency
translation gain 112,398 -- -- 112,398
Net income -- -- 1,861,252 1,861,252
Transfer to statutory
reserve -- 35,176 (35,176) --
Balance, June 30, 2010
(unaudited) $3,092,475 $2,908,032 $15,056,403 $32,425,916
SHINER INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
2010 2009
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $1,861,252 $(551,429)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 801,496 889,454
Amortization 37,752 3,475
Stock compensation expense for
options issued to directors 12,636 129,416
(Increase) / decrease in assets:
Accounts receivable (1,370,769) 1,776,161
Inventory (1,987,357) 139,686
Advances to suppliers 411,907 (1,253,871)
Notes receivable (228,141) --
Other assets (166,932) (477,746)
Increase / (decrease) in current
liabilities:
Accounts payable 1,937,742 969,035
Unearned revenue 467 201,914
Other payables (78,763) 191,017
Accrued payroll 4,617 11,884
Net cash provided by operating
activities 1,235,907 2,028,996
CASH FLOWS FROM INVESTING ACTIVITIES
Issuance of notes receivable -- (917,014)
Acquisition of property and
equipment (176,571) (183,705)
Payments for construction in
progress (3,083,701) (2,134,667)
(Increase)/Decrease in
restricted cash 733,405 (561,206)
Net cash used in investing
activities (2,526,867) (3,796,592)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term loans -- (656,215)
Proceeds from short-term loans 1,466,900 --
Proceeds from notes payable -- 1,111,845
Purchase of treasury stock -- (40,299)
Net cash provided by financing
activities 1,466,900 415,331
Effect of exchange rate changes on
cash and cash equivalents 12,996 (4,518)
NET INCREASE (DECREASE) IN CASH &
CASH EQUIVALENTS 188,936 (1,356,783)
CASH & CASH EQUIVALENTS, BEGINNING
BALANCE 3,059,796 3,816,454
CASH & CASH EQUIVALENTS, ENDING
BALANCE $3,248,732 $2,459,671
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid $-- $86,233
Income taxes paid $-- $14,813
Transfer from construction-in-
process to property and equipment $-- $52,848
SOURCE Shiner International, Inc.
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