Shengtai Pharmaceutical, Inc. Reports First Quarter Fiscal Year 2012 Financial Results

Nov 14, 2011, 18:00 ET from Shengtai Pharmaceutical, Inc.

WEIFANG, Shandong, China, Nov. 14, 2011 /PRNewswire-Asia-FirstCall/ -- Shengtai Pharmaceutical, Inc. (OTC Bulletin Board: SGTI) (''Shengtai'' or ''the Company'' or "we" or "us"), 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 first quarter of fiscal 2012 ended September 30, 2011.

"We are glad that our sales increased 15% during the last quarter ended September 30, 2011, compared to the same period last year. During the quarter ended September 30, 2011, we continued our strategy of locking in lower cost raw material." Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "We put in more cash resources into advances for raw material purchases to lock in the increasing raw material cost. We put our view for the long term success of the business and we are on the right path toward improvement and success among competition."

First Quarter Fiscal 2012 Result of Operations

Net sales for the three months ended September 30, 2011 were $40,055,448, an increase of $5,410,876, or 15.62%, compared with the same period in 2010. The increase in net sales primarily resulted from increased unit selling prices of our products. For the three months ended September 30, 2011 compared to the same period last year, the quantity of our glucose products sold decreased about 2.44%, while the average unit selling price of our glucose products increased about 18.86%. For the three months ended September 30, 2011 compared to the same period last year, the quantity of our cornstarch products sold decreased about 8.14%, while the average unit selling price of our cornstarch products increased about 11.72%. For the three months ended September 30, 2011 compared to the same period last year, the quantity of our other products sold decreased about 2.66%, while the average unit selling price of our other products increased about 21.67%. The increased unit selling prices are caused by the increased raw material cost during the quarter ended September 30, 2011 compared to the same period last year. The sales quantity was affected because the Company tried to maintain a certain gross profit while the corn prices increased.

Net sales from exports for the three months ended September 30, 2011 increased approximately 26.80% compared with the same period in 2010. The increase is mainly attributable to the increased unit sales prices due to increased corn prices for the three months ended September 30, 2011 compared to the same period last year.

Cost of sales for the three months ended September 30, 2011 was $36,670,401, an increase of $8,045,186, or 28.11%, compared with the same period in 2010. The increase in cost of sales was mainly due to increase in the price of corn, our main raw material.

Gross profit for the three months ended September 30, 2011 was $3,385,047, a decrease of $2,634,310, or 43.76%, compared with the same period in 2010. The decrease of gross profit is mainly because unit selling prices of our products did not increase as fast as the corn prices. Gross profit margin for the three months ended September 30, 2011 was 8.45%, a decrease from 17.37% for the same period in 2010. The reason for the decrease of gross profit margin is mainly because the price of corn, our main raw material, increased approximately 21.62% for the three months ended September 30, 2011 compared to the same period last year where the average selling prices did not increase much. The Company believes that the market is taking its time to respond to the increased corn prices and will reach a more profitable price level in the near future. At the same time, the Company believes that the Company's actions to improve gross profit margin, such as expanding raw material storage facilities to reduce the impact of fluctuation on the price of our raw materials, will benefit us in maintaining our profitability.

For the three months ended September 30, 2011, selling, general and administrative expenses were $2,152,615, a decrease of $427,189, or 16.56%, compared to $2,579,804 for the three months ended September 30, 2010. The selling, general, and administrative expenses remain stable as selling expenses increased due to increased sales while general and administrative expenses decreased mainly due to decreased bad debt allowance as a result of better collections this quarter. The Company incurred $6,900 and $100,176 non-cash stock option expenses for the three months ended September 30, 2011 and 2010, respectively. The option expenses are included in selling, general and administrative expenses.

Net income for the three months ended September 30, 2011 was $883,557, a decrease of $759,527 compared with $1,643,084 for the same period in 2010. The decrease in net income was primarily attributable to the decreased gross profit.

Financial Condition

As of September 30, 2011, Shengtai Pharmaceutical, Inc. had cash and restricted cash totaling $12.68 million. The Company's short-term loan totaled $63.48 million and long-term debt totaled $0 million. The Company's total shareholders' equity increased to $60.99 million.

Management Comments

Looking forward, Qingtai Liu, CEO of Shengtai Pharmaceutical, Inc. stated, "Even though during the last quarter, the increased corn prices shrank the gross margin for the industry, we still view it as an opportunity for us. Compared to smaller companies, we had more cash to support us in a less profitable market for a longer time. We had stored larger raw material inventory and advanced more cash for raw material purchases. This will allow us to have a better margin than the competitors."

"Going forward we are confident to be the final winner of the industry!" concluded Mr. Liu.

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: ir-yukie@shengtaipharmaceutical.com

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

AS OF SEPTEMBER 30, 2011 AND JUNE 30, 2011

(Unaudited)

A S S E T S

September 30,

June 30,

2011

2011

CURRENT ASSETS:

Cash & cash equivalents

$

3,617,312

$

4,051,349

Restricted cash

9,059,600

8,972,600

Accounts receivable, net of allowance for doubtful accounts of $1,149,712 and $1,506,470 as of September 30, 2011 and June 30, 2011, respectively

7,947,177

8,580,973

Notes receivable

6,920,284

2,815,726

Other receivables

13,509,236

8,359,103

Inventories

13,669,955

13,016,399

Prepayments and other assets

683,352

2,296,982

Total current assets

55,406,918

48,093,131

PLANT AND EQUIPMENT, net

75,998,870

77,029,157

CONSTRUCTION IN PROGRESS

5,470,017

4,693,018

EQUITY INVESTMENT

10,744,826

9,132,725

ADVANCE FOR CONSTRUCTION

2,073,442

2,039,929

INTANGIBLE ASSETS, NET

3,270,524

3,251,214

Total assets

$

152,964,598

$

144,239,174

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

$

4,483,824

$

9,508,512

Accounts payable and accrued liabilities - related party

366,245

943,779

Notes payable - banks

11,558,800

11,447,800

Short term loans

63,478,176

48,094,740

Accrued liabilities

810,426

917,464

Other payable

1,749,450

2,642,598

Employee loans

295,717

261,938

Other payable - officer

36,588

36,285

Customer deposit

7,758,145

8,954,841

Taxes payable

1,440,771

1,809,093

Total current liabilities

91,978,142

84,617,050

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

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

no shares issued and outstanding

-

-

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

9,584,912 shares issued and outstanding

9,585

9,585

Additional paid-in capital

21,560,399

21,553,499

Statutory reserves

4,179,339

4,068,822

Retained earnings

26,921,841

26,148,801

Accumulated other comprehensive income

8,315,292

7,841,417

Total stockholders' equity

60,986,456

59,622,124

Total liabilities and stockholders' equity

$

152,964,598

$

144,239,174

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

SHENGTAI PHARMACEUTICAL INC. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

FOR THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(Unaudited)

2011

2010

NET SALES

$

40,055,448

$

34,644,572

COST OF SALES

36,670,401

28,625,215

GROSS PROFIT    

3,385,047

6,019,357

SELLING, GENERAL AND  ADMINISTRATIVE EXPENSES        

2,152,615

2,579,804

INCOME FROM OPERATIONS

1,232,432

3,439,553

OTHER INCOME (EXPENSE) :

 Earnings on equity investment

273,914

86,889

 Non-operating income

591,467

22,997

 Non-operating expense

(7,481)

(107,049)

 Interest expense and other charges

(843,111)

(1,123,116)

 Interest income

4,726

1,266

   Other income (expense) , net

19,514

(1,119,012)

INCOME BEFORE PROVISION FOR INCOME TAXES

1,251,946

2,320,541

PROVISION FOR INCOME TAXES

368,389

677,457

NET INCOME

883,557

1,643,084

OTHER COMPREHENSIVE ITEMS:

   Foreign currency translation adjustments

473,875

828,546

COMPREHENSIVE INCOME

$

1,357,432

$

2,471,630

EARNINGS PER SHARE

Basic and diluted

$

0.09

$

0.17

WEIGHTED AVERAGE NUMBER OF SHARES

Basic and diluted

9,584,912

9,584,912

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

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

FOR THREE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010

(Unaudited)

2011

2010

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

883,557

$

1,643,084

Adjustments to reconcile net income to cash

provided by operating activities:

Depreciation

1,896,910

1,895,046

Amortization

14,689

13,856

Bad debt (reduction) provision

(371,317)

844,536

Share based compensation to employees

6,900

100,176

Earnings on equity investment

(273,914)

(200,846)

Change in operating assets and liabilities:

Accounts receivable

1,088,222

1,156,815

Notes receivable

(4,076,734)

(1,151,924)

Other receivables

(5,395,534)

(3,143,542)

Inventories

(587,134)

(5,063,226)

Prepayments and other assets

1,635,692

(280,797)

Accounts payable and accrued liabilities

(5,993,088)

(523,481)

Accounts payable and accrued liabilities - related party

(586,610)

851,146

Other payable

(719,296)

4,381,514

Customer deposit

(1,283,359)

4,832,831

Taxes payable

(385,814)

(885,179)

Net cash (used in) provided by operating activities

(14,146,831)

4,470,009

CASH FLOWS FROM INVESTING ACTIVITIES:

Increase in equity investment

(1,249,440)

-

Purchase plant and equipment

(1,076)

(2,087,021)

Additions to construction in progress

(6,054)

-

Advances for construction

(13,732)

1,002,821

Increase in land use right

(2,476)

(37,568)

Net cash used in investing activities

(1,272,779)

(1,121,768)

CASH FLOWS FROM FINANCING ACTIVITIES:

Decrease in restricted cash

-

15,958,104

Borrowings on notes payable - banks

-

14,790,000

Principal payments on notes payable - banks

-

(32,613,300)

Borrowings on short term loans

18,116,880

7,927,440

Principal payments on short term loans

(3,201,690)

(8,470,800)

Borrowings on employee loans

31,236

(8,661)

Borrowings on long term loans

-

(1,820,419)

Net cash provided by (used in) financing activities

14,946,426

(4,237,636)

EFFECTS OF EXCHANGE RATE CHANGE IN CASH

39,147

568,748

DECREASE IN CASH & CASH EQUIVALENTS

(434,036)

(320,647)

CASH & CASH EQUIVALENTS, beginning of year

4,051,349

4,121,541

CASH & CASH EQUIVALENTS, end of year

$

3,617,312

$

3,800,894

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the year for:

Interest Paid

$

783,614

$

807,673

Income taxes

$

404,936

$

853,195

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Decrease of other receivable for acquisition of plant and equipment

$

20,569

$

-

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

$

61,400

$

-

Acquisition of plant and equipment on credit (accounts payable)

$

779,368

$

-

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

$

73,204

$

-

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

SOURCE Shengtai Pharmaceutical, Inc.



RELATED LINKS

http://www.shengtaipharmaceutical.com