Shengtai Pharmaceutical, Inc. Reports Second Quarter Fiscal Year 2013 Financial Results

WEIFANG, SHANDONG, China, Feb. 14, 2013 /PRNewswire/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai'' or ''the Company'' or "We" or "Us" or "Our"), a manufacturer and distributor in China of glucose and starch as pharmaceutical raw materials and other starch and glucose products, today reported financial results for the three months ended December 31, 2012.

"We are glad to see the increase of sales revenue and increase of gross profit during the three months ended December 31, 2012 compared to the same period last year," stated Qingtai Liu, CEO of Shengtai. "The Company has produced a positive cash flow from operating expense during the six months ended December 31, 2012."

Second Quarter Fiscal Year 2013 operations results

Net sales for the three months ended December 31, 2012 were $64,103,621, an increase of $21,170,196 or 49.31%, compared with $42,933,425 for the same period in 2011. The increase in net sales primarily resulted from increased cornstarch and other products sales. For the three months ended December 31, 2012, the quantities of our glucose products, cornstarch products and other products sold were 33,228 tons, 55,115 tons, and 60,085 tons , respectively, increase/decrease of approximately (8.94%), 83.38%, and 93.31%, respectively. The increased sales quantities of cornstarch is due to a substantial increase of our Slurry sales, which increased approximately 6,848 tons or 687.03% for the three months ended December 31, 2012 compared to 996.74 tons for the same period in 2011. Net sales from exports for the three months ended December 31, 2012 were $16,214,168, an increase of approximately 115.79%, compared with $7,513,799 for the same period in 2011. The increase is mainly attributable to the increased exporting sales of corn germ meal during the three months ended December 31, 2012 compared to the same period last year, when the export of corn germ meal was nil.

Cost of sales for the three months ended December 31, 2012 was $58,114,822, an increase of $19,222,428 or 49.42%, compared with $38,892,394 for the same period in 2011. The increase in cost of sales was in line with increased sales.

Gross profit for the three months ended December 31, 2012 was $5,988,799, an increase of $1,947,768 or 48.20%, compared with $4,041,031 for the same period in 2011. The increase of gross profit is in line with the increased sales. Gross profit margin for the three months ended December 31, 2012 was 9.34%, a decrease by 0.07% as compared to the gross profit margin of 9.41% for the same period in 2011. The reason for the decrease of gross profit margin is mainly because the average sales prices decreased as compared to the same period last year.

For the three months ended December 31, 2012, selling, general and administrative expenses were $3,898,845, an increase of $872,383 or 28.83%, compared to $3,026,462 for the three months ended December 31, 2011. The increase of selling, general, and administrative expenses is caused by increased selling, general and administrative expenses in PRC, offset by decreased selling, general and administrative expenses in the United States. The Company's selling, general and administrative expenses in the United States ended December 31, 2012 decreased by $49,086 compared to the same period in 2011. The decrease is mainly due to decreased salary expenses of $57,874. The selling, general and administrative expenses from our PRC operating entities increased by $123,106 for the three months ended December 31, 2012 compared to $3,702,602 for the same period in 2011. The selling expenses from our PRC operating entities increased by $1,198,829 or 73.39% in the quarter ended December 31, 2012 compared to the same period in 2011. The increase is mainly attributable to the increase in shipping and handing expenses of $1,225,986 and other expenses of $73,717 offset by decreased package expenses of $14,274, decreased commodity inspection fee of $6,619, decreased exhibition expenses of $5,930, and decreased carfares of $79,156. The general and administrative expenses incurred in PRC increased $248,639 in the quarter ended December 31, 2012 compared to $744,713 for the same period in 2011.

Net income for the three months ended December 31, 2012 was $261,216, an increase of $326,278 or 501.49%, compared with net loss $65,062 for the same period in 2011. The increase in net income was primarily attributable to the increased gross profit of $1,947,768, offset by increased selling, general and administrative expenses of $872,383 and by increased interest expenses of $518,770.

Financial Condition

As of December 31, 2012, Shengtai had cash and restricted cash totaling $7.65 million. The Company's short-term loan totaled $77.13 million and long-term debt totaled $0 million. The Company's total shareholders' equity increased to $63.98 million.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai stated, "We see a good demand of our products from the market during the past six months ended December 31, 2012. We will continue in focusing on providing good service to fulfill these demand as well as controlling our gross profit rate at current level." 

About Shengtai Pharmaceutical, Inc.

Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary, Shengtai Holding, Inc. ("SHI"), and the Chinese operating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a manufacturer and distributor in china of glucose and starch products as pharmaceutical raw materials, other starch products and other glucose products such as corn meals, food and beverage glucose and dextrin. 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, the Company's planned capacity expansion 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. Yukie Ying Gao
Investor Relations Manager
Tel: +86-536-2188831
Email: shengtai_IR@163.com

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited



December 31,


 June 30,  


2012


2012





ASSETS

CURRENT ASSETS:






Cash & cash equivalents

$

11,147,724

$

4,903,303


Restricted cash


7,648,641


13,084,586


Accounts receivable, net of allowance for doubtful accounts of $1,124,954 and $1,603,051,respectively


12,033,935


12,099,625


Notes receivable


3,142,795


4,590,758


Other receivables 


3,972,063


8,862,789


Inventories


35,844,802


29,457,981


Prepayments and other assets


1,918,666


1,023,154



Total current assets


75,708,626


74,022,195






PLANT AND EQUIPMENT, net


83,556,022


80,185,228









CONSTRUCTION IN PROGRESS


368,759


1,213,540









EQUITY INVESTMENT


12,845,149


11,704,050









ADVANCE FOR CONSTRUCTION


1,486,961


2,188,892









INTANGIBLE ASSETS, NET


3,347,968


3,271,147












Total assets

$

177,313,485

$

172,585,052









L I A B I L I T I E S    A N D    S T O C K H O L D E R S'   E Q U I T Y









CURRENT LIABILITIES:






Accounts payable 

$

10,464,735

$

5,432,615


Accounts payable and accrued liabilities - related party


719,793


405,926


Notes payable - banks


12,463,973


17,835,706


Short term bank loans


77,132,764


73,483,997


Accrued liabilities


560,086


479,593


Other payable


2,440,584


1,672,805


Employee loans


358,244


295,076


Other payable - officer


37,460


37,027


Customer deposit


8,831,607


9,610,252


Taxes payable


322,588


997,529



Total current liabilities


113,331,834


110,250,526









COMMITMENTS AND CONTINGENCIES













STOCKHOLDERS' EQUITY:






Preferred stock, $0.001 par value, 2,500,000 shares authorized,







no shares issued and outstanding as of December 31, 2012 and June 30, 2012             


-


-


Common stock, $0.001 par value, 50,000,000 shares authorized,







9,584,912 shares issued and outstanding as of December 31, 2012 and June 30, 2012


9,585


9,585


Additional paid-in capital


21,945,101


21,945,101


Statutory reserves


4,290,884


4,226,125


Retained earnings


27,456,850


27,064,092


Accumulated other comprehensive income


10,279,230


9,089,623



Total stockholders' equity


63,981,651


62,334,526












Total liabilities and stockholders' equity

$

177,313,485

$

172,585,052












The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.









SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME 

Unaudited














THREE MONTHS ENDED DECEMBER 31,


SIX MONTHS ENDED DECEMBER 31,




2012


2011



2012


2011












NET SALES


$

64,103,621

$

42,933,425


$

112,848,264

$

82,988,873












COST OF SALES


$

58,114,822

$

38,892,394


$

101,801,487

$

75,562,795












GROSS PROFIT     



5,988,799


4,041,031



11,046,777


7,426,078












SELLING, GENERAL AND ADMINISTRATIVE EXPENSES         



3,898,845


3,026,462



7,188,542


5,179,077












INCOME FROM OPERATIONS



2,089,954


1,014,569



3,858,235


2,247,001












OTHER INCOME (EXPENSE) :











  Earnings on equity investment



291,815


32,977



530,824


306,890

  Non-operating income 



36,998


161,516



39,989


752,983

  Non-operating expense



(240,241)


(6,244)



(401,028)


(13,725)

  Interest expense and other charges



(1,910,036)


(1,391,266)



(3,592,031)


(2,234,377)

  Interest income



112,265


139,465



237,392


144,191

    Other income (expense) , net



(1,709,199)


(1,063,552)



(3,184,853)


(1,044,038)












INCOME BEFORE PROVISION FOR INCOME TAXES



380,755


(48,983)



673,382


1,202,963












PROVISION FOR INCOME TAXES



119,539


16,079



215,865


384,468












NET INCOME 



261,216


(65,062)



457,517


818,495












OTHER COMPREHENSIVE ITEMS:











    Foreign currency translation adjustments



1,310,479


405,636



1,189,607


879,511












COMPREHENSIVE INCOME



1,571,695

$

340,574



1,647,124

$

1,698,006












EARNINGS PER SHARE











Basic and diluted


$

0.03

$

(0.01)


$

0.05

$

0.09












WEIGHTED AVERAGE NUMBER OF SHARES











Basic and diluted



9,584,912


9,584,912



9,584,912


9,584,912












The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.












SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited







SIX MONTHS ENDED DECEMBER 31,







2012


2011










CASH FLOWS FROM OPERATING ACTIVITIES:






Net income 

$

457,517

$

818,495


Adjustments to reconcile net income to cash (used in)







provided by operating activities:








Depreciation


4,826,303


3,866,186




Amortization


37,718


29,541




Bad debt reduction


(494,367)


(290,232)




Share based compensation to employees


-


-




Earnings on equity investment


(530,824)


(306,890)




Loss on equipment disposal


-


-



Change in operating assets and liabilities:








Accounts receivable


721,109


58,328




Notes receivable


1,493,704


(688,958)




Other receivables


4,954,330


1,273,594




Inventories


(5,998,907)


(4,294,968)




Prepayments and other assets


(2,343,071)


1,884,620




Accounts payable and accrued liabilities


(1,189,862)


(4,089,919)




Accounts payable and accrued liabilities - related party


193,812


(617,404)




Other payable


737,260


(1,069,555)




Customer deposit


(898,719)


(5,731,010)




Taxes payable


(680,990)


(381,549)





Net cash provided by (used in) operating activities


1,285,014


(9,539,722)










CASH FLOWS FROM INVESTING ACTIVITIES:






Increase in equity investment


(317,556)


(1,254,400)


Purchase of plant and equipment


(4,259)


(1,221)


Additions to construction in progress


0


(78,432)


Increase in land use right


(69,977)


(2,486)


Advances for construction 


2,194,522


1,342,590


Loan to related party - non-current


-


-





Net cash provided by (used in) investing activities


1,802,731


6,051










CASH FLOWS FROM FINANCING ACTIVITIES:






Decrease in restricted cash


5,435,944


7,121,261


Borrowings on notes payable - banks


12,329,401


1,844,282


Principal payments on notes payable - banks


(17,881,583)


(13,171,200)


Borrowings on short term loans 


49,625,257


36,443,550


Principal payments on short term loans 


(46,998,301)


(22,483,610)


Borrowings on employee loans


60,336


31,360


Principal payments on employee loans


(1,794)


(3,136)














Net cash (used in) provided byfinancing activities


2,569,259


9,782,506










EFFECTS OF EXCHANGE RATE CHANGE IN CASH


587,417


30,995










INCREASE (DECREASE) IN CASH & CASH EQUIVELENTS


6,244,420


279,831










CASH & CASH EQUIVALENTS, beginning of year


4,903,303


4,051,349










CASH & CASH EQUIVALENTS, end of year

$

11,147,723

$

4,331,179










SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:





Cash paid during the year for: 





Interest Paid



$

2,474,288

$

1,899,711

Income taxes



$

1,799

$

705,945










SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:



Decrease of other receivable for acquisition of plant and equipment

$

2,078

$

20,651

Transfers of construction in progress-related inventory to plant and equipment

$

202,334

$

79,217

Acquisition of plant and equipment and construction in progress on credit                      

$

6,081,083

$

3,557,333

Completion of construction-in-progress (transferred to plant and equipment)

$

7,044,153

$

7,415,903










The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.










SOURCE Shengtai Pharmaceutical, Inc.



RELATED LINKS
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