SkyPeople Fruit Juice, a producer of fruit juice concentrates, fruit juice beverages and other fruit-related products, has announced financial results for the third quarter ended September 30, 2014.
Third Quarter 2014 Summary:
* Revenue was $34.8 million, an increase of 79% year-over-year
* Gross profit was $10.2 million, an increase of 41% year-over-year
* Income from operations was $7.2 million, an increase of 57% year-over-year
* Net income was $4.7 million, an increase of 45% year-over-year
* Cash and cash equivalents were $52.7 million as of September 30, 2014
"We are very pleased to report these strong financial results, highlighted by a balanced contribution to revenue among our core products due to the general availability of fresh fruit raw materials during the quarter," said Mr. Hongke Xue, chief executive officer of SkyPeople. "These quarterly results confirm our strategy for procuring sufficient quantities of fresh fruit by locating our production facilities near fruit growing centers in large fruit producing provinces.
"In terms of our major project initiatives, our project to develop a manufacturing base for kiwi products in Mei County has shown progress with the construction of a kiwi fruit and fruit-related materials trading zone now mostly completed. Our orange development project in Hubei Province is also making progress with the goal of these two projects to meaningfully expand our processing capabilities.
"SkyPeople now sells its fruit juice beverages to more than 20,000 retail stores in some 20 provinces in China," said Mr. Xue, and he expects these figures to continue to improve in the quarters ahead.
"China's rising incomes, we believe, are speeding the transition in consumer tastes towards healthy living, including the increased consumption of high-quality fruit juice beverages. We are therefore well positioned to capitalize on this trend and to continue to capture additional market share," said Mr. Xue.
Third Quarter 2014 Financial Results
Revenue. Revenue for the three months ended September 30, 2014 was $34.8 million, an increase of 79% compared to $19.5 million for the same period of 2013. This increase was due to an increase in sales in almost all of our product lines, offset by the decrease of revenue from the other products segment.
Third Quarter 2014 Gross Profit by Product Segment
The company's gross profit was $10.2 million in Q3 2014, an increase of 41% from $7.2 million for the same period in 2013. The increase was primarily due to the increase in gross profit generated from apple-related products, concentrated pear juice, fruit juice beverages, fresh fruits and vegetables and other products segments, which was partially offset by a lesser amount of gross profit generated from kiwi-related products.
Operating Expenses. Operating expenses for the third quarter of 2014 were $3.0 million, or 9% of sales, as compared to $2.6 million, or 13% of sales for Q3 2013. General and administrative expenses decreased 19% to $1.3 million for Q3 2014 as compared to $1.6 million for the same period of 2013, but selling expenses increased 63% in Q3 2014 to $1.6 million as compared to $1.0 million for the same period of 2013, mainly due to an increase in payroll and related expenses necessary to handle the company's increased sales.
Income from Operations. Income from operations was $7.2 million for the third quarter of 2014, an increase of 57% as compared to $4.6 million for the same period of 2013.
Net Income and Earnings Per Share. Net income for the third quarter of 2014 was $4.7 million, an increase of 45% as compared to $3.3 million for the same period of 2013, primarily due to the 41% increase in gross profit. Earnings per share attributable to SkyPeople Fruit Juice for the third quarter of 2014 was $0.17 as compared to $0.11 for the same period of 2013.
Nine Months 2014 Financial Results
Revenue for the nine months ended September 30, 2014 was $58.6 million, an increase of 21% compared to $48.4 million for the same period of 2013. Gross profit was $18.4 million, an increase of 1% compared to $18.2 million for the same period of 2013. Gross margin for the nine months ended September 30, 2014 was 31% compared to 38% in the same period of 2013. Operating expenses for the first nine months of 2014 were $7.4 million, or 13% of sales, as compared to $7.2 million, or 15% of sales for the same period of 2013. General and administrative expenses were $3.5 million, a decrease of 17% as compared to $4.2 million for the same period of 2013. Selling expenses were $3.9 million, an increase of 31% as compared to $3.0 million for the same period of 2013. Income from operations for the nine months ended September 30, 2014 was $10.99 million, a decrease of less than 1% as compared to $11.03 million for the same period of 2013. Net income attributable to SkyPeople Fruit Juice for the first nine months ended September 30, 2014 was $5.1 million, or $0.19 per share, compared to $7.5 million, or $0.28 per share, for the same period of 2013.
Third Quarter 2014 Financial Condition
As of September 30, 2014, the company had $52.7 million in cash, cash equivalents and restricted cash, compared to $74.1 million as of fiscal year end 2013. The Company's restricted cash of $18.8 million consisted of cash equivalents used as collateral to secure short-term notes payable. SkyPeople's working capital as of September 30, 2014 was $31.3 million, a decrease in working capital of $71.9 million as of December 31, 2013. As of September 30, 2014, the Company had total liabilities of $99.5 million including $44.9 million in short-term bank loans and bank notes payable, an $8.0 million long-term loan to a related party and $20.2 million in capital lease obligations. As of September 30, 2014, shareholders' equity attributable to SkyPeople was $177.1 million as compared to $173.5 million as of fiscal year-end 2013.
