SkyPeople Fruit Juice Reports Second Quarter 2012 Financial Results

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Aug 13, 2012, 10:58 ET

XI'AN, China, Aug. 13, 2012 /PRNewswire-Asia-FirstCall/ -- SkyPeople Fruit Juice, Inc. (NASDAQ: SPU) ("SkyPeople" or "the Company"), a producer of fruit juice concentrates, fruit juice beverages and other fruit-related products, today announced its financial results for the second quarter ended June 30, 2012.

Second Quarter 2012 Highlights:

Total revenue was $12.8 million, an increase of 5.1% year-over-year
Revenue of concentrated pear juice increased 97.5% to $3.7 million year-over-year
Revenue of fruit juice beverages increased 17.2% to $6.4 million year-over-year
Cash flow from operations was $25.1 million
Cash and cash equivalents were $87.7 million as of June 30, 2012

"We are pleased to report that the Company generated sound financial results for the quarter as the diversification of our product mix has continued to help offset the volatility associated with specific product growing seasons." Mr. Yongke Xue, Chief Executive Officer of SkyPeople, commented. "We were able to generate healthy growth and margins in our pear juice segment, in particular, and continue to seek additional product categories where we can leverage our core competencies and secure growing and stable cash flow."

CEO Xue continued, "During the quarter, we implemented a variety of new marketing strategies for our fruit juice beverage segment in order to heighten the segment's profile and increase sales. This resulted in strong sales momentum which saw strong sequential gains aided by our new 6,000 bottle per hour fruit juice production line which also began its operation in the quarter. We foresee continued favorable results as this downstream integration of our business further diversifies our product mix and capitalizes on the trend toward healthy nutrition in the market place," CEO Xue stated.

Second Quarter 2012 Financial Results

Revenue for the three months ended June 30, 2012 was $12.8 million, an increase of 5.1%, as compared to $12.2 million for the same period in 2011. This increase was primarily due to an increase in the sales of concentrated pear juice and fruit juice beverages, as partially offset by a decrease in the sales of concentrated apple juice and apple aroma and concentrated kiwifruit juice and kiwifruit puree.

*Second Quarter 2012 Revenue by Segment* (in thousands)
	Three Months Ended, June 30		Change
	2012	2011	%
Concentrated apple juice and apple aroma	$751	$2,387	(68.5%)
Concentrated kiwifruit juice and kiwifruit puree	489	1,711	(71.4%)
Concentrated pear juice	3,734	1,891	97.5%
Fruit juice beverages	6,366	5,433	17.2%
Other	1,497	789	89.7%
Total	$12,837	$12,211	5.1%

Gross profit was $4.2 million, an increase of 1% from the second quarter of 2011. Gross profit margin was 33% as compared to 34% for the same period of 2011. The year-over-year decline in gross margin was attributable to a decline in gross margins in two of the Company's primary product segments - concentrated apple juice and apple aroma, and concentrated kiwifruit juice and kiwifruit puree. The gross margin of the concentrated pear juice and fruit juice beverage segments increased slightly.

*Second Quarter 2012 Gross Profit by Segment* (in thousands)
	Three Months Ended, June 30
	2012		2011
	Gross Profit	Gross Margin	Gross Profit	Gross Margin
Concentrated apple juice and apple aroma	$94	13%	$606	25%
Concentrated kiwifruit juice and kiwifruit puree	223	46%	941	55%
Concentrated pear juice	1,705	46%	805	43%
Fruit juice beverages	2,118	33%	1,668	31%
Other	81	5%	147	19%
Total	$4,221	33%	$4,167	34%

Operating expenses for the second quarter of 2012 decreased 27% to $1.3 million, or 10% of sales, compared to $1.8 million, or 14% of sales for the same period of 2011. General and administrative expenses decreased 35% to $0.7 million, mainly due to the insurance refund of our legal fees that we incurred related to our pending litigations. Selling expenses decreased 20% to $0.5 million, which was mainly due to a one-time sales rebate incurred during the same period of 2011, which was charged to selling expenses.

Income from operations for the second quarter of 2012 increased 22% to $2.9 million as compared to $2.4 million for the same period of 2011.

Net income attributable to common shareholders and diluted earnings per share for the second quarter of 2012 were $2.4 million and $0.09, respectively, compared to $1.5 million and $0.06, respectively, for the second quarter of 2011.

Six-Month 2012 Financial Results

Revenue for the six months ended June 30, 2012 decreased 12% to $27.8 million, from $31.6 million for the same period of 2011. Gross profit decreased 30% to $9.0 million from $12.8 million in the corresponding period of 2011. Operating income declined 42% to $5.5 million for the first half of 2012 from $9.6 million for the first half of 2011. Net income attributable to common shareholders and earnings per share for the first half of 2012 decreased 36% to $4.3 million, or $0.16 per diluted share compared to net income attributable to common shareholders of $6.8 million, or $0.25 per diluted share, for the first half of 2011.

Conference Call

The Company will hold a conference call on Wednesday, August 15, 2012, at 9:00 a.m. Eastern Time to discuss its financial results for the second quarter ended June 30, 2012.

The Company's CEO, Mr. Yongke Xue, and CFO, Mr. Xin Ma, will host the call.

To attend the live conference call, please dial in at least 10 minutes before the call to ensure timely participation. Please use the dial-in information below. When prompted by the operator, mention the conference Pass Code.

Date:	Wednesday, August 15, 2012
Time:	9:00 a.m. Eastern Time, US
Conference Line Dial-In:	+1-866-394-2209
International Dial-In:	+1-706-758-1481
Conference Pass Code:	18762772

To access the replay, please dial 1-855-859-2056 within the United States or 1-404-537-3406 when dialing internationally, and enter the pass code 18762772 for the replay. The replay will be available on August 14 at 12:00 pm.

About SkyPeople Fruit Juice, Inc.

SkyPeople Fruit Juice, Inc., a Florida company, through its wholly-owned subsidiary Pacific Industry Holding Group Co., Ltd. ("Pacific"), a Vanuatu company, and SkyPeople Juice International Holding (HK) Ltd., a wholly-owned subsidiary of Pacific and a company organized under the laws of Hong Kong Special Administrative Region of the People's Republic of China, holds 99.78% ownership interest in SkyPeople Juice Group Co., Ltd. ("SkyPeople (China)"). SkyPeople (China) is engaged in the production and sale of fruit juice concentrates, fruit juice beverages, and other fruit related products in the PRC and overseas markets. Its fruit juice concentrates are sold to domestic customers and exported directly or via distributors. Fruit juice concentrates are used as a basic ingredient component in the food industry. Its brands, "Hedetang" and "SkyPeople", which are registered trademarks in the PRC, are positioned as high quality, healthy and nutritious end-use juice beverages. For more information, please visit http://www.skypeoplefruitjuice.com.

Safe Harbor Statement

Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2011 and otherwise in our SEC reports and filings, including the final prospectus for our offering. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. We have no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.

For more information, please contact:

COMPANY

Xin Ma, CFO

SkyPeople Fruit Juice, Inc.

Tel: China + 86 - 29-8837-7161

Email: [email protected]

Web: http://www.skypeoplefruitjuice.com

-Financial Tables Follow-

SKYPEOPLE FRUIT JUICE, INC.
CONSOLIDATED BALANCE SHEETS



	June 30, 2012		December 31, 2011
		(Unaudited)
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	87,712,871	$	61,154,007
Restricted cash		31,621		316,396
Accounts receivables, net of allowance of $46,352 and $46,529 as of June 30, 2012 and December 31, 2011, respectively		15,065,938		35,999,858
Other receivables		229,795		192,032
Inventories		5,951,049		6,126,376
Deferred tax assets		132,629		174,285
Advances to suppliers and other current assets		149,628		66,528
TOTAL CURRENT ASSETS		109,273,531		104,029,482

PROPERTY, PLANT AND EQUIPMENT, NET		48,435,375		44,277,228
LAND USE RIGHT, NET		7,760,565		6,673,496
OTHER ASSETS		1,026,167		5,323,162
TOTAL ASSETS	$	166,495,638	$	160,303,368


LIABILITIES

CURRENT LIABILITIES
Accounts payable	$	3,024,270	$	2,972,916
Accrued expenses		3,144,146		4,701,054
Income tax payable		880,708		1,910,779
Advances from customers		-		178,857
Short-term bank loans		11,589,116		6,425,713
Short-term notes payable		-		284,654
TOTAL CURRENT LIABILITIES		18,638,240		16,473,973

SHAREHOLDERS' EQUITY

SkyPeople Fruit Juice, Inc, Stockholders' equity
Series B Preferred stock, $0.001 par value; 10,000,000 shares authorized;1,051,647 shares and 1,456,647 shares issued and outstanding as of June 30, 2012 and December 31, 2011, respectively		1,052		1,457
Common stock, $0.001 par value; 66,666,666 shares authorized; 25,960,402 shares and 25,690,402 shares issued and outstanding as of June 30, 2012 and December 31, 2011, repectively		25,960		25,690
Additional paid-in capital		59,189,509		59,189,374
Retained earnings		68,943,262		64,623,453
Accumulated other comprehensive income		13,551,231		14,086,620
Total SkyPeople Fruit Juice, Inc. stockholders' equity		141,711,014		137,926,594
Non-controlling interests		6,146,384		5,902,801
TOTAL EQUITY		147,857,398		143,829,395
TOTAL LIABILITIES AND EQUITY	$	166,495,638	$	160,303,368

SKYPEOPLE FRUIT JUICE, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
		2012	2011			2012		2011
Revenue	$	12,837,273	$	12,210,706	$	27,830,773	$	31,625,621
Cost of goods sold		8,615,882		8,043,560		18,823,383		18,852,917
Gross profit		4,221,391		4,167,146		9,007,390		12,772,704

Operating Expenses
General and administrative expenses		653,771		1,008,734		2,131,375		1,824,894
Selling expenses		521,782		648,929		1,047,116		1,103,603
Research and development expenses		142,685		138,241		285,370		274,708
Total operating expenses		1,318,238		1,795,904		3,463,861		3,203,205

Income from operations		2,903,153		2,371,242		5,543,529		9,569,499

Other income (expenses)
Interest income		87,016		65,774		156,705		142,086
Subsidy income		649,607		88,697		1,083,111		571,764
Interest expenses		(248,332)		(176,393)		(403,144)		(340,188)
Others income (expenses)		(32)		42,605		(1,000)		39,572
Total other income (expenses)		488,259		20,683		835,672		413,234

Income before income tax		3,391,412		2,391,925		6,379,201		9,982,733
Income tax provision		864,293		763,578		1,792,673		2,693,386
Net income		2,527,119		1,628,347		4,586,528		7,289,347

Less: Net income attributable to non-controlling interests		126,468		140,398		266,719		509,222

NET INCOME ATTRIBUTABLE TO SKYPEOPLE FRUIT JUICE, INC.	$	2,400,651	$	1,487,949	$	4,319,809	$	6,780,125

Earnings per share:
Basic earnings per share	$	0.09	$	0.06	$	0.16	$	0.25
Diluted earnings per share	$	0.09	$	0.06	$	0.16	$	0.25

Weighted average number of shares outstanding
Basic		25,820,951		25,690,402		25,755,677		25,690,402
Diluted		26,661,500		26,661,500		26,661,500		26,661,500

Comprehensive Income
Net income	$	2,527,119	$	1,628,347	$	4,586,528	$	7,289,347
Foreign currency translation adjustment		(715,096)		1,810,214		(558,525)		2,951,792
Total Comprehensive income		1,812,023		3,438,561		4,028,003		10,241,139
Comprehensive income attributable to non-controlling interests		96,851		203,924		243,583		617,726
Comprehensive income attributable to SkyPeople Fruit Juice, Inc.	$	1,715,172	$	3,234,637	$	3,784,420	$	9,623,413

SKYPEOPLE FRUIT JUICE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

	For the Six Months Ended June 30,
	2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	4,586,528	$	7,289,347
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		1,434,420		1,748,456
Deferred income tax assets		41,656		-
Changes in operating assets and liabilities
Accounts receivable		20,855,020		24,269,825
Other receivable		(38,559)		(302,428)
Advances to suppliers and other current assets		(83,436)		(38,099)
Inventories		945,181		38,114
Accounts payable		62,809		704,376
Accrued expenses		(1,545,105)		(1,994,692)
Income tax payable		(1,025,682)		(3,666,772)
Advances from customers		(178,673)		(508,717)
Net cash provided by operating activities		25,054,159		27,539,410

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment		(1,249,417)		(134,415)
Additions to land use right		(1,206,012)		-
Prepayment for other assets		(936,644)		(4,714,425)
Net cash used in investing activities		(3,392,073)		(4,848,840)

CASH FLOWS FROM FINANCING ACTIVITIES
Decrease (increase) in restricted cash		284,361		(273,047)
Short-term notes payable		(284,361)		273,047
Proceeds from short-term bank loans		6,341,757		7,585,239
Repayment of short-term bank loans		(1,139,578)		(5,082,262)
Net cash provided by (used in) financing activities		5,202,179		2,502,977

Effect of change in exchange rate		(305,401)		1,602,342

NET INCREASE IN CASH AND CASH EQUIVALENTS		26,558,864		26,795,889
Cash and cash equivalents, beginning of period		61,154,007		49,350,385
Cash and cash equivalents, end of period	$	87,712,871	$	76,146,274

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$	403,145	$	340,188
Cash paid for income taxes	$	2,776,698	$	6,360,158

SUPPLEMENTARY DISCLOSURE OF SIGNIFICANT NON-CASH TRANSACTION
Transferred from other assets to property, plant and equipment and construction in process	$	5,225,307	$	445,384