SkyPeople Fruit Juice Reports Second Quarter 2015 Financial Results

Aug 14, 2015, 12:30 ET from SkyPeople Fruit Juice, Inc.

XI'AN, China, Aug. 14, 2015 /PRNewswire/ -- 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, 2015.

Second Quarter 2015 Summary:

  • Total revenue was $12.2 million, an increase of 2% year-over-year
  • Gross profit was $5.1 million, an increase of 11% year-over-year
  • Gross profit margin was 42% as compared to 38% in the year-ago quarter
  • Income from operations was $3.6 million, an increase of 64% year-over-year
  • Net income attributable to SkyPeople Fruit Juice, Inc. was $2.1 million, as compared to $0.05 million in the year-ago quarter
  • Cash, cash equivalents and restricted cash were $63.6 million as of June 30, 2015

"We are pleased to report a robust increase in profitability in the second quarter of 2015 from the year-ago quarter attributable to lower raw material costs, better operating efficiencies and prudent financial management," said Mr. Yongke Xue, Chief Executive Officer of SkyPeople. "Our fruit juice beverage segment continues to the major segment contributor to both revenue and profitability which offset the constrained contributions from other product segments due to the scarcity of raw materials required for processing attributable to extended seasonality issues."

"In our view, China's rising incomes and the challenges of urban living are speeding the transition in consumer tastes towards healthier living. Our strategic plan is to widen our fruit juice beverage distribution efforts so as to further penetrate China's urban markets. Our fruit juice beverages products are sold via over 100 distributors in more than 20,000 retail stores in China. We also look forward to a new growing season to provide ample raw materials for processing so as to better balance the components of our revenue.

"We are making steady progress with our new projects that will better integrate our operations and ensure a more secure supply of fresh fruit raw materials. In particular, the project in Mei County to manufacture and trade kiwi products will undergo trial production later this year which is an important milestone for us. Our goal is to strengthen our product mix and reduce volatility that can occur with our current supply chain."

"We continue to view China's urbanization, changing demographics and the trend towards healthier lifestyles as key drivers of continued long-term growth. We are confident about the sustained marketability of our products even during times of an economic slowdown as nutrition and healthy living are gaining more traction as an emerging phenomenon across all of China," Chief Executive Officer Yongke Xue concluded.

Second Quarter 2015 Financial Results

Revenue for the three months ended June 30, 2015 was $12.2 million, an increase of 2% as compared to $12.0 million for the same period of 2014. This increase was primarily due to an increase in the sales of the concentrated pear juice, fruit juice beverages and concentrated kiwi segments, partially offset by a decrease in sales from the apple-related products segment.

The fruit juice beverages segment comprised 91% of total revenue for the three months ended June 30, 2015 as compared to 92% of total revenue for same period of 2014.  The segment now represents a substantial proportion of the Company's revenue.

Second Quarter 2015 Revenue by Product Segment (in thousands)

(In $000's, except %'s)

Three Months ended June 30,

2015

2014

% of change

Concentrated apple juice and apple aroma

50

773

(94%)

Concentrated kiwifruit juice and kiwi puree

42

5

740%

Concentrated pear juice

988

190

420%

Fruit juice beverages

11,085

10,991

1%

Other

-

20

-

Total

12,165

11,979

2%

Revenue by Segment. Sales from apple related products were approximately $50,000 for the three months ended June 30, 2015, a 94% decrease from sales of $0.77 million for the same period of 2014. Although volume declined substantially, the unit selling price of concentrated apple juice increased compared to the same period a year ago. For the second quarter of 2015, the Company sold approximately 11 tons of concentrated apple juice, a 98% decrease from the 480 tons of concentrated apple juice sold in the same period of 2014.

Sales from concentrated kiwifruit juice and kiwifruit puree were $42,000 for the three months ended June 30, 2015, a 740% increase from sales of $5,000 for the same period of 2014. This was attributable to an increase in the amount of products sold as well as an increase in unit selling price. For the second quarter of 2015, the Company sold approximately 9 tons of kiwi-related products, a 233% increase from the 2.7 tons of kiwi-related products sold in the same period of 2014.

Sales of concentrated pear juice were $988,000 for the three months ended June 30, 2015, a 420% increase from sales of $190,000 for the same period of 2014. This was primarily a result of an increase the amount of products sold, offset by a decrease in unit selling price. For the second quarter of 2015, the Company sold approximately 578 tons of concentrated pear juice, a 478% increase from the 100 tons of concentrated pear juice sold in the same period of 2014.

Sales from our fruit juice beverages segment were $11.1 million for the three months ended June 30, 2015, a 1% increase from sales of $11.0 million for the same period of 2014. The increase in revenue was primarily due to gains in market share attributable to our continuous efforts of expanding this sales channel.

Sales from our other fruit products segment were nil for the three months ended June 30, 2015, as compared to sales of $20,000 for the same period of 2014. The amount of sales from the other fruit products segment is expected to be unstable.

Gross Profit. Gross profit was $5.1 million for the three months ended June 30, 2015, an 11% increase from gross profit of $4.6 million for the same period of 2014. The increase was primarily due to the 260% increase in gross profit generated from the concentrated pear juice segment and the 12% increase in gross profit generated from fruit juice beverages. These increases were partially offset by decreases in gross profit generated by the concentrated kiwifruit juice and kiwifruit puree segment and the apple-related products segment. The consolidated gross profit margin was 42% for the three months ended June 30, 2015 as compared to 38% for the same period of 2014 primarily due to the higher period-over-period gross margin of the fruit juice beverage segments.

Second Quarter 2015 Gross Profit by Product Segment (in thousands)

Three months ended June 30,

(In $000's, except %'s)

2015

2014

Gross profit

Gross margin

Gross profit

Gross margin

Concentrated apple juice and apple aroma

-

-

153

20%

Concentrated kiwifruit juice and kiwi puree

(10)

(27%)

1

20%

Concentrated pear juice

324

33%

90

47%

Fruit juice beverages

4,797

43%

4,302

39%

Other

-

-

8

40%

Total

5,111

42%

4,554

38%

Operating expenses for the second quarter of 2015 decreased by 38% to $1.5 million, or 13% of sales, compared to $2.4 million, or 20% of sales for the same period of 2014. During the second quarter of 2015, the Company executed stronger control over its accounts receivables. Since the outstanding balance of account receivables decreased in the second quarter of 2015 as compared with that of fiscal year end 2014, and based upon Management's estimate of the collectability of account receivables, the Company reduced bad debt provisions from $0.8 million as of fiscal year end 2014 to $0.03 million as of the second quarter of 2015. As a result, general and administrative expenses for the second quarter of 2015 was significantly lower than that of the first quarter of 2015 when the Company accrued $1.5 million of bad debt provisions. General and administrative expenses decreased 70% to $0.3 million for the second quarter of 2015 from $1.0 million for the same period of 2014. Selling expenses decreased 7% to $1.3 million for the second quarter of 2015 from $1.4 million for the same period of 2014.

Income from operations for the second quarter of 2015 was $3.6 million, an increase of 64% from $2.2 million for the same period of 2014.

Net income attributable to SkyPeople Fruit Juice for the second quarter of 2015 was $2.1 million as compared to $0.05 million for the same period of 2014, while earnings per share was $0.08 in the current quarter as compared to nil for the same period of 2014.

Financial Condition

As of June 30, 2015, the Company had $63.6 million in cash, cash equivalents and restricted cash, an increase from $31.6 million as of fiscal year end 2014. The Company's restricted cash of $3.3 million consists of cash equivalents used as collateral to secure short-term notes payable. The Company's working capital was $40.1 million as of the second quarter of 2015 as compared to working capital of $34.8 million as of fiscal year end 2014. As of June 30, 2015, the Company had total debt of $59.2 million, which included $32.1 million in short-term bank loans, $8.0 million in long-term loans from a related party and $19.1 million in total capital lease obligations. Stockholders' equity attributable to SkyPeople Fruit Juice was $185.0 million as of the end of the second quarter of 2015 as compared to $181.4 million as of fiscal year end 2014.

For the first half of 2015, the Company's operating activities generated a net cash inflow of $36.7 million as compared to a net cash inflow of $22.4 million from operating activities for the same period of 2014. Net cash used in investing activities were $1.9 million for the first half of 2015, including $2.0 million in additions to property, plant and equipment as compared to net cash used in investing activities of $2.5 million, including additions to property, plant and equipment of $10.0 million. Cash flow provided by financing activities totaled $0.4 million for the first half of 2015 as compared to $6.4 million of net cash used in financing activities for the same period of 2014.

We believe that projected cash flows from operations, anticipated cash receipts, cash on hand, and trade credit will provide the necessary capital to meet the Company's projected operating cash requirements for at least the next twelve months, which does not take into account any potential expenditures related to the potential expansion of our current production capacity.

Project Updates

The Company is developing a fruit and vegetable industry chain and processing zone in Suizhong County, Liaoning Province, China, pursuant to its Letter of Intent with the People's Government of Suizhong County. The Suizhong project may include the construction and operation of fruit juice production lines, a vegetable and fruit flash freeze facility, a refrigeration storage facility and warehouse, a world-class food safety testing center and a fruit and vegetable finished products processing center, among other facilities. The estimated capital expenditure for the project is expected to be $4.6 million. The Company has made partial payment to acquire the land use right from the local government, purchase equipment and build facilities. As of the date of this report, the Company has finished building an office building, a dormitory, a refrigeration storage facility and a warehouse.

The Company is developing an orange processing and distribution center pursuant to its investment/service agreement with the Yidu Municipal People's Government in Hubei Province, China. Pursuant to the agreement, the Company will be responsible for an investment amount of approximately $48 million. The Yidu Municipal People's Government is in the process of demolition of buildings on the project land. The Company is actively working with various bodies of the local government to make preparations for the start of the project.

The Company is developing a kiwi processing and trading center pursuant to its investment agreement with the Managing Committee of Mei County National Kiwi Fruit Wholesale Trading Center, which has been authorized by the People's Government of Mei County, China. Pursuant to the agreement, the Company will be responsible for construction and financing with an investment amount of approximately $72 million.  As of the date of this report, the Company is in the process of building facilities and purchasing equipment. It is expected that trial production will begin in the second half of 2015.

Conference Call

The Company will hold a conference call on Monday, August 17, 2015 at 9:00 a.m. Eastern Time to discuss its financial results for the second quarter ended June 30, 2015.

The Company's CEO, Mr. Yongke Xue, and its 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.  

Date:

Monday, August 17, 2015

Time:

9:00 a.m. Eastern Time, US

Conference Line Dial-In:                          

+1-877-407-8031

International Dial-In:

+1-201-689-8031

To access the replay, please dial 1-877-660-6853 within the United States or 1-201-612-7415 when dialing internationally. The passcode for the replay is 13617530 and it will be available on August 17, 2015 at 12:00 pm through August 24, 2015.

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 company organized under the laws of Hong Kong Special Administrative Region of the People's Republic of China and a wholly owned subsidiary of Pacific, holds 99.78% ownership interest in SkyPeople Juice Group Co., Ltd. ("SkyPeople (China)"). SkyPeople (China), together with its operating subsidiaries in China, is engaged in the production and sales of fruit juice concentrates, fruit 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, 2014 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.

-Financial Tables Follow-

 

SKYPEOPLE FRUIT JUICE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

June 30, 2015

December 31, 2014

ASSETS

(Unaudited)

CURRENT ASSETS

Cash and cash equivalents

$

60,370,972

$

25,130,302

Restricted cash

3,271,395

6,537,016

Accounts receivable, net of allowance of $34,002 and $837,200 as of June 30, 2015 and December 31, 2014, respectively

26,659,988

66,570,314

Other receivables

67,458

371,995

Inventories

4,484,889

4,118,630

Deferred tax assets

1,671,563

1,410,690

Advances to suppliers and other current assets

250,116

472,578

TOTAL CURRENT ASSETS

96,776,381

104,611,525

Property, plant and equipment, net

101,376,282

96,279,068

Land use right, net

6,125,025

6,502,420

Long term assets

3,165,075

3,162,281

Deposits

62,137,972

68,878,798

TOTAL ASSETS

$

269,580,735

$

279,434,092

LIABILITIES

CURRENT LIABILITIES

Accounts payable

$

10,885,535

$

18,381,263

Accrued expenses

8,867,898

10,085,152

Income tax payable

238,922

1,457,258

Advances from customers

390,767

469,007

Notes payable -bank

-

8,171,270

Short-term bank loans

32,144,782

28,243,373

Obligations under capital leases

3,940,172

2,954,401

TOTAL CURRENT LIABILITIES

56,468,076

69,761,724

NON-CURRENT LIABILITIES

Long-term loan - related party

7,959,107

7,959,143

Obligations under capital leases

15,172,791

15,625,435

TOTAL NON-CURRENT LIABILITIES

23,131,898

23,584,578

TOTAL LIABILITIES

79,599,974

93,346,302

EQUITY

SkyPeople Fruit Juice, Inc, Stockholders' equity

Series B Preferred stock, $0.001 par value; 10,000,000 shares authorized; None issued and outstanding as of June 30, 2015 and December 31, 2014, respectively

-

-

Common stock, $0.001 par value; 66,666,666 shares authorized; 26,661,499 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively

26,661

26,661

Additional paid-in capital

59,189,860

59,189,860

Retained earnings

106,422,605

102,833,747

Accumulated other comprehensive income

19,379,532

19,351,703

Total SkyPeople Fruit Juice, Inc. Stockholders' equity

185,018,658

181,401,971

Non-controlling interests

4,962,103

4,685,819

TOTAL EQUITY

189,980,761

186,087,790

TOTAL LIABILITIES AND EQUITY

$

269,580,735

$

279,434,092

The notes in the Company's 10-Q are an integral part of these condensed consolidated financial statements.

 

SKYPEOPLE FRUIT JUICE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

Three Months Ended June 30,  

Six Months Ended June 30,  

2015

2014

2015

2014

Revenue

$

12,165,269

$

11,978,652

$

28,736,308

$

23,761,819

Cost of goods sold

7,054,539

7,424,302

16,466,217

15,536,234

Gross profit

5,110,730

4,554,350

12,270,091

8,225,585

Operating Expenses

General and administrative expenses

273,646

995,830

3,258,128

2,188,951

Selling expenses

1,271,227

1,384,991

2,323,881

2,249,489

Total operating expenses

1,544,873

2,380,821

5,582,009

4,438,440

Income from operations

3,565,857

2,173,529

6,688,082

3,787,145

Other income (expense)

Interest income

230,473

238,212

264,026

311,873

Subsidy income

49,426

37,374

238,187

470,971

Interest expenses

(598,090)

(1,749,783)

(1,697,160)

(2,562,204)

Consulting fee related to capital lease

-

(439,908)

-

(882,700)

Total other expenses

(318,191)

(1,914,105)

(1,194,947)

(2,662,060)

Income before income tax

3,247,666

259,424

5,493,135

1,125,085

Income tax provision

1,070,171

102,608

1,632,740

331,210

Net income

2,177,495

156,816

3,860,395

793,875

Less: Net income attributable to non-controlling interests

(88,247)

(107,948)

(271,537)

(241,335)

NET INCOME ATTRIBUTABLE TO SKYPEOPLE FRUIT JUICE, INC.

2,089,248

48,868

3,588,858

552,540

Other comprehensive income

Foreign currency translation adjustment

1,334,006

(11,592)

575,650

(1,717,080)

Comprehensive income (loss)

3,511,501

145,224

4,436,045

(923,205)

Comprehensive income (loss) attributable to non-controlling interests

(109,877)

(156,907)

(276,284)

(135,938)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO SKYPEOPLE FRUIT JUICE, INC.

$

3,401,624

$

(11,683)

$

4,159,761

$

(1,059,143)

Earnings per share:

Basic and diluted net income per share

$

0.08

$

-

$

0.13

$

0.02

Weighted average number of shares outstanding

Basic and diluted

26,661,499

26,661,499

26,661,499

26,661,499

The notes in the Company's 10-Q are an integral part of these condensed consolidated financial statements.

 

 

SKYPEOPLE FRUIT JUICE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Six Months Ended June 30,

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

3,860,395

$

793,875

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

3,180,201

1,572,175

Deferred income tax assets

(260,873)

(944,977)

Reverse of provision for bad debt

(803,200)

-

Changes in operating assets and liabilities

Accounts receivable

40,671,942

16,111,019

Other receivable

304,109

(352,389)

Advances to suppliers and other current assets

222,326

640,892

Inventories

(361,721)

(438,715)

Accounts payable

(7,602,038)

1,801,177

Accrued expenses

(1,258,368)

4,461,534

Income tax payable

(1,216,599)

(1,178,899)

Advances from customers

(78,459)

(113,301)

Net cash provided by operating activities

36,657,715

22,352,391

CASH FLOWS FROM INVESTING ACTIVITIES

Refund of purchase deposit

-

7,506,207

Additions to property, plant and equipment

(2,036,888)

(9,966,212)

Prepayment for other assets

296,959

(18,652)

Prepayments for deposit on equipment

(143,822)

-

Net cash used in investing activities

(1,883,751)

(2,478,657)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid to non-controlling interest

-

(4,414,820)

Decrease (Increased) in restricted cash

3,263,282

(12,950,836)

(Repayment) Proceeds from short-term notes

(8,158,204)

14,254,064

Proceeds from short-term bank loans

18,752,908

19,489,005

Repayment of short-term bank loans

(13,492,076)

(19,595,955)

Payment for capital lease

-

(3,152,185)

Repayment of related party loans

-

(24,970)

Net cash provided (used in) by financing activities

365,910

(6,395,697)

Effect of change in exchange rate

100,796

(643,036)

NET CHANGE IN CASH AND CASH EQUIVALENTS

35,240,670

12,835,001

Cash and cash equivalents, beginning of period

25,130,302

66,888,954

Cash and cash equivalents, end of period

$

60,370,972

$

79,723,955

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Cash paid for interest

$

1,697,160

$

2,159,600

Cash paid for income taxes

$

1,648,425

$

2,455,086

SUPPLEMENTARY DISCLOSURE OF SIGNIFICANT NON-CASH TRANSACTION

Transferred from other assets to property, plant and equipment and construction in process

$

6,928,619

$

1,325,819

Equipment acquired by capital lease

$

-

$

21,014,564

The notes in the Company's 10-Q are an integral part of these condensed consolidated financial statements.

For more information, please contact:

COMPANY Xin Ma, Chief Financial Officer SkyPeople Fruit Juice, Inc. Tel:   China + 86 - 29-8837-7161 Email: oliver.x.ma@skypeoplefruitjuice.com Web: http://www.skypeoplefruitjuice.com  

SOURCE SkyPeople Fruit Juice, Inc.



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