WEIFANG, Shandong, China, Sept. 28 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI - News; "Shengtai Pharmaceutical" or "the Company"), a leading manufacturer and distributor of high-quality, pharmaceutical grade glucose products in China, today reported financial results for the fourth quarter and the fiscal year ended June 30, 2009.
"Fiscal year 2009 had been challenging. The world economic crisis had impacted our operation. Our cornstarch and its by products had generated lower sales volume and lower average selling prices ("ASP")," Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO, said. "However, we are glad to see that our key business glucose had generated higher sales volume and higher sales revenue. We are also seeing market recovery for the cornstarch and its by products."
Mr. Liu continued, "As the economic environment is improving, we have initiated a series of measures to embrace coming opportunities. We will focus on gaining higher glucose market share, controlling cost, and putting more focus in developing higher value added corn starch based products."
Fiscal Fourth Quarter 2009 Financial Results
For the fiscal 2009 fourth quarter, sales revenue was $24.10 million, a 7% decrease as compared with $25.84 million for the same period in 2008.
Gross profit for the fourth quarter of fiscal 2009 was $1.32 million, a decrease of 75% as compared with $5.31 million in the same period in 2008. Gross margin was 5.5% for the 2009 fourth quarter as compared with 20.6% for the same period in 2008.
Operating loss for the fiscal 2009 fourth quarter was $1.58 million, a decrease of 152% as compared with $3.04 million operating income for the same quarter a year ago. The operating margin reached 6.56% in the fourth quarter of 2009 as compared to 11.8% for the same period in 2008.
Net loss was $2.16 million, a decrease of 169% as compared with net income of $3.14 million in the fourth quarter last year. The fully diluted loss per share were $ 0.11, a 171% decrease as compared to earnings per share $ 0.16 for the same quarter a year ago.
Fiscal Year 2009 Results
For the fiscal year 2009 ended June 30th, net revenues decreased 19% to $73.32 million from $90.87 million in fiscal year 2008. The decrease in sales was largely due to lower sales units and lower averaging selling prices of cornstarch and other products including fibers, dextrin, corn embryo, protein powders, and phytin. Glucose sales revenue increased slightly in FY09. Glucose products accounted for 50.31% of the total net revenues in FY09. Revenue from exports accounted for approximately 14% of total revenue in FY09.
Gross profit in fiscal year 2009 was $7.52 million, a decrease of 63% from $20.26 million a year ago. Gross profit margin was 10.3%, a decline from 22.3% for fiscal year 2008. The gross margin decline was mainly due to lower averaging selling prices ("ASP") and higher unit costs due to idle capacity.
Selling, general and administrative (SG&A) expenses for the fiscal year ended June 30, 2009 were $8.61 million, an increase of $1.22 million, or 16% compared with fiscal year 2008. The increase in our selling, general and administrative expenses was the result of the higher worker insurance requirements related expenditures. The increased expenses of expanding our sales network also contributed to the higher general and administrative expenses. In addition, the Company also recorded a non-cash stock option expense totaling $635,272 during FY2009.
Research and development expenses for the fiscal year ended June 30, 2009 were $0.37 million. We did not have such expenses in the year ended June 30, 2008. The expenses relate to our effort to develop high valued added products. Currently we have not successfully completed our development but we will focus on developing high value added products to increase our gross margin.
Operating income decreased 111% to $1.45 million from $12.87 million in the prior year.
The tax rate for Shengtai's China operations in FY09 was 12%, same as in the FY08. As a Sino-foreign joint venture, Shengtai Pharmaceutical enjoyed the 2 year tax holiday and 3 year 50% tax reduction. For FY09, Shengtai was in the fifth year of tax benefit program granted by the government. The prevailing corporate income tax rate in China is now 25%.
Net income decreased 126% to a loss of $2.66 million and fully diluted losses per share were $0.14, compared with net income of $10.41 million, or fully diluted earnings per share of $0.52 in fiscal year 2008. The weighted average number of shares on a fully diluted basis decreased by 4% to 19,139,394 shares in fiscal year 2009 versus 19,874,486 shares in fiscal year 2008.
Financial Condition
As of June 30, 2009, Shengtai Pharmaceutical had cash and restricted cash totaled $33.51 million. In fiscal year 2009, the Company used $1.29 million in cash flow for operations as compared to $5.50 million generated by the operations in the same period in FY08. DSO as of FY09 was 36 days as compared to 30 days for FY08. At June 30, 2009, the Company had short-term bank debt totaling $25.64 million and $5.65 million of long-term debt outstanding. The Company's total shareholders' equity decreased to $44.95 million from $46.76 million at June 30, 2008.
Business Outlook
Ms. Yiru Shi, Chief Financial Officer of Shengtai Pharmaceutical, commented, "In FY 2009, we have completed the vertical integration of our business and expanded our glucose production capacity. Our new glucose factory started operations. Our glucose business remained stable in the world economic crisis. We are not planning any in house projects in fiscal year 2010 that will require additional large capital expenditures. As a result, our day-to-day operating cash flows and liquidity positions should improve considerably."
"The China healthcare reform is designed to expand basic healthcare coverage to many people currently without healthcare. Increased government investment in building new hospitals and clinics should bring additional sales opportunities for our high-quality glucose products. In FY 2010, we will focus on capturing larger market share in the growing market for pharmaceutical grade glucose products in China. With the starting of our new glucose factory, we are very well positioned for our goal," stated Mr. Qingtai Liu, Shengtai Pharmaceutical's CEO. "At the same time, we will focus on improving our products structure by developing higher value added cornstarch based products to improve our competitive position and gross margin. We will also focus heavily on cost control to ensure our profitability. We believe these strategic steps will help us improve our business as we enter fiscal year 2010."
Conference Call
The Company will host a conference call and webcast on Tuesday September 29, 2009 at 9:00 A.M. Eastern Daylight Time / 9:00 P.M. Beijing Time. A question and answer session will follow management's presentation. Ms. Yiru Melody Shi (Chief Financial Officer), and Ms. Haining Michelle Wang (Investor Relations Manager) will be the primary speakers on the call.
To participate, please call the following numbers ten minutes before the call start time:
Phone Number + 1 (877) 407-8035 (North America)
Phone Number + 1 (201) 689-8035 (International)
A replay of the call will be available through Tuesday, October 6, 2009, at 11:59 P.M. Eastern Daylight Time/ Wednesday, October 7, 2009, 11:59 A.M. Beijing Time. For the replay, please call:
Phone Number +1 (877) 660-6853 (North America)
Phone Number +1 (201) 612-7415 (International)
Account Number: 286
Conference ID Number: 333940
About Shengtai Pharmaceutical, Inc.
Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. (SHI), a New Jersey corporation, and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leading manufacturer and supplier of pharmaceutical grade glucose used for medical purposes. It also manufactures and supplies glucose and cornstarch products to the food, beverage and industrial production industries in China. For more information about Shengtai Pharmaceutical, Inc., please visit http://www.shengtaipharmaceutical.com .
Forward Looking Statements
Certain statements in this press release and oral statements made by the Company constitute forward-looking statements concerning the Company's business and products. These statements include, without limitation, statements regarding our ability to prepare the Company for growth and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs, but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the pharmaceutical industry, pricing and demand trends for the Company's products, changes to government regulations, risk associated with operation of the Company's new facilities, risk associated with large-scale implementation of the Company's business plan, the ability to attract new customers, ability to increase its product's applications, cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. Investors are urged to consider these factors carefully in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
For more information, please contact:
Shengtai Pharmaceutical, Inc.
Ms. Yiru Shi
Chief Financial Officer
Tel: +1-949-468-7078
Email: shengtaicfo@hotmail.com
Shengtai Pharmaceutical, Inc.
Haining Michelle Wang
Investor Relations Manger
Tel: +86-536-629-5802
Email: shengtaiir@hotmail.com
Shengtai Pharmaceutical, Inc. And Subsidiaries
Consolidated Statements of Income and Other Comprehensive Income
For years ended June 30, 2009 and 2008
2009 2008
SALES REVENUE, net $ 73,321,862 $ 90,871,223
COST OF SALES 65,799,486 70,613,757
GROSS PROFIT 7,522,376 20,257,466
RESEARCH AND DEVELOPMENT EXPENSE 365,689 --
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 8,607,560 7,390,623
INCOME (LOSS) FROM OPERATIONS (1,450,873) 12,866,843
OTHER (EXPENSE) INCOME:
Equity in income of unconsolidated
affiliate 251,539 272,239
Other income 695,728 584,749
Other expense (357,407) (391,858)
Interest expense and other charges (1,945,778) (2,447,608)
Interest income 142,903 171,948
Other expense, net (1,213,015) (1,810,530)
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES (2,663,888) 11,056,313
PROVISION FOR INCOME TAXES -- 645,988
NET INCOME (LOSS) (2,663,888) 10,410,325
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustments 225,362 3,890,123
COMPREHENSIVE INCOME (LOSS) $ (2,438,526) $ 14,300,448
EARNINGS (LOSS) PER SHARE
Basic $ (0.14) $ 0.55
Diluted $ (0.14) $ 0.52
WEIGHTED AVERAGE NUMBER OF SHARES
Basic 19,139,394 18,993,789
Diluted 19,139,394 19,874,486
Shengtai Pharmaceutical, Inc. And Subsidiaries
Consolidated Balance Sheets
As of June 30, 2009 and June 30, 2008
ASSETS
2009 2008
CURRENT ASSETS:
Cash and cash equivalents $ 1,779,476 $ 3,405,606
Restricted cash 31,730,382 6,763,500
Accounts receivable, net of allowance
for doubtful accounts of $946,207
and $440,701 as of June 30, 2009 and
2008, respectively 6,922,982 7,614,236
Notes receivable 1,074,011 458,630
Other receivables 79,598 691,215
Loan to related party 439,500 --
Inventories 6,215,707 5,039,278
Prepayments 211,793 310,381
Total current assets 48,453,449 24,282,846
PLANT AND EQUIPMENT, net 69,380,016 69,943,021
OTHER ASSETS:
Investment in unconsolidated affiliate 3,952,310 3,607,912
Loan to related party - non-current -- 437,700
Intangible assets, net 3,145,590 3,042,183
Total other assets 7,097,900 7,087,795
Total assets $ 124,931,365 $ 101,313,662
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,737,156 $ 7,669,728
Accounts payable - related party 437,112 714,776
Short term bank loans 25,637,500 22,658,270
Notes payable - banks 35,218,600 10,942,500
Accrued liabilities 233,110 261,187
Other payable 424,341 317,058
Employee loans 730,502 1,382,287
Employee loan - officer 248,415 53,605
Third party loan 248,336 640,228
Customer deposits 1,906,177 1,229,322
Taxes payable 2,066,878 4,631,252
Long term loan - current maturities 2,447,783 1,404,051
Total current liabilities 74,335,910 51,904,264
Other payable - noncurrent 5,642,556 2,653,995
Total liabilities 79,978,466 54,558,259
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $0.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock, $0.001 par value,
100,000,000 shares authorized,
19,169,805 and 19,094,805 shares
issued and outstanding as of June
30, 2009 and 2008, respectively 19,170 19,095
Paid-in capital 20,623,655 19,987,708
Statutory reserves 2,894,902 2,894,902
Retained earnings 16,472,689 19,136,577
Accumulated other comprehensive income 4,942,483 4,717,121
Total shareholders' equity 44,952,899 46,755,403
Total liabilities and shareholders'
equity $ 124,931,365 $ 101,313,662
Shengtai Pharmaceutical, Inc. And Subsidiaries
Consolidated Statements of Cash Flows
For the years ended June 30, 2009 and 2008
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,663,888) $ 10,410,325
Adjustments to reconcile net income
(loss) to cash provided by (used in)
operating activities:
Depreciation 5,588,306 2,964,678
Amortization 53,963 57,254
Bad debt expense 824,796 93,557
Stock option expense 635,272 317,636
(Gain) loss on building and equipment
disposal 160,233 (169,726)
Gain on disposal of land use right (530,509) --
Equity in income of unconsolidated
investment (329,562) (603,261)
Amortization of discount on Installment
payment for purchase of equipment 638,245 822,102
Amortization of discount on capital
lease obligation 530,864 --
Changes in operating assets and
liabilities:
Accounts receivable (102,229) (1,127,048)
Notes receivable (613,496) (2,274,840)
Other receivables 614,460 1,994,157
Inventories (1,155,705) (304,476)
Prepayments 99,428 (165,981)
Accounts payable (2,964,113) (7,730,549)
Accounts payable - related party (280,603) (320,156)
Accrued liabilities (28,923) (781,690)
Other payable 148,284 185,488
Customer deposit 671,213 (74,646)
Taxes payable (2,583,421) 2,201,518
Net cash (used in) provided by
operating activities (1,287,385) 5,494,342
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from building and equipment
disposal 5,173,910 139,163
Acquisition of plant and equipment (4,944,308) (14,517,157)
Proceeds from disposal of land use right 879,000 --
Acquisition of intangible assets (493,350) (296,893)
Repayments on loan to related party -- 4,590,136
Installment payment on equipment
purchase (2,048,070) (1,913,875)
Net cash used in investing activities (1,432,818) (11,998,626)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in restricted cash (24,939,882) (524,140)
Borrowings on notes payable - banks 43,276,100 11,703,650
Principal payments on notes payable -
banks (19,045,000) (10,739,820)
Borrowings on short term loans 27,102,500 21,383,257
Principal payments on short term loans (24,216,450) (19,758,515)
Borrowings on employee loans 35,772 1,458,353
Principal payments on employee loans (693,242) (778,444)
Borrowings on employee loan - officer 194,611 53,605
Borrowings on third party loan 38,179 3,139,855
Principal payments on third party loan (432,704) (2,868,909)
Principal payments on long term loan -- (399,301)
Proceeds from issuance of common stock -- 506,743
Cash proceeds from warrants exercised 750 --
Payment on capital lease obligation (232,935) --
Net cash provided by financing
activities 1,087,699 3,176,334
EFFECTS OF EXCHANGE RATE CHANGE IN CASH 6,374 313,117
DECREASE IN CASH (1,626,130) (3,014,833)
CASH, beginning of year 3,405,606 6,420,439
CASH, end of year $ 1,779,476 $ 3,405,606
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for Interest, net of
capitalized interest $ 1,674,768 $ 1,901,531
Cash paid for Income taxes $ 1,134,656 $ 14,809
Non-cash investing and financing
Activities:
Acquisition of land use right in
exchange for other receivable $ -- $ 692,304
Acquisition of plant and equipment
through assets other than plant
and equipments $ -- $ 3,366,350
Reclassification of advances on
equipment purchase to plant and
equipment upon receipt of purchase $ -- $ 7,793,173
Acquisition of plant and equipment
through liabilities $ -- $ 12,141,833
Acquisition of equipment through
capital lease $ 5,127,500 $ --
