SISHUI COUNTY, CHINA / ACCESSWIRE / June 29, 2018 / China YCT International Group, Inc. (OTCQB: CYIG) (the “Company) today announced its financial results for the fiscal year ended March 31, 2018.
Total revenues increased by 15.0% year-over-year to $64.94 million with growth in sales across all three product categories: acertruncatumbunge seed oil, health care products and Huoliyuan capsule.
Overall gross margin was 39.0% for the fiscal year ended March 31, 2018, compared to 41.1% for the prior fiscal year. The decrease in overall gross margin was mainly related to the lower gross margin for Huoliyuan capsules as a result of increased raw material and manufacturing costs.
Net income attributable to the Company was $11.39 million, or $0.38 per share, for the fiscal year ended March 31, 2018, compared to $10.8 million, or $0.34 per share, for the prior fiscal year.
Mr. Tinghe Yan, Chairman and Chief Executive Officer of the Company, commented, “With revenue growth of 30.4%, 4.3% and 11.0% for healthcare products, Huoliyuan capsules, and acertruncatumbunge seed oil, respectively, our financial results for the fiscal year ended March 31, 2018 highlighted continued strength in our businesses across the board. This also marked our fifth consecutive year of steady top-line growth – no mean feat for our dedicated team.”
“As we will start to harvest acertruncatum seeds at our own planting bases starting this fall and launch the commercial production of blended edible oil products using acertruncatum seed oil as a key ingredient, we are excited about the long-term outlook of our business and looking forward to extending our growth streak for fiscal year 2019 and beyond,” concluded Mr. Yan.
Fiscal Year Ended March 31, 2018 Financial Results
For the Twelve Months Ended March 31,
($ millions, except per share data)
2018
2017
% Change
Revenues
$64.94
$56.46
15.0%
Gross profit
$25.34
$23.18
9.3%
Gross margin
39.0%
41.1%
-2.0 pp
Operating income
$14.81
$13.20
12.2%
Operating margin
22.8%
23.4%
-0.6 pp
Net income attributable to CYIG
$11.39
$10.08
13.0%
Earnings per share
$0.38
$0.34
12.9%
Revenues
For the fiscal year ended March 31, 2018, total revenues increased by $8.48 million, or 15.0%, to $64.94 million from $56.46 million for the prior fiscal year. The increase in total revenues was across all product categories.
Revenues from health care products increased by $6.14 million, or 30.4%, to $26.30 million for the fiscal year ended March 31, 2018 from $20.16 million for the prior fiscal year. The increase in sales of health care products was primarily due to the growth of our customer base as well as the contribution from Internet direct-sales.
Revenues from Huoliyuan capsules increased by $1.07 million, or 4.3%, to $25.80 million for the fiscal year ended March 31, 2018 from $24.73 million for the prior fiscal year. The increase in sales of Huoliyuan capsules was primarily due to the easing of market competition.
Revenues from acertruncatumbunge seed oil increased by $1.28 million, or 11.0%, to $12.84 million for the fiscal year ended March 31, 2018 from $11.57 million for the prior fiscal year. The increase in sales of acertruncatumbunge seed oil was primarily due to increased marketing efforts in promoting the products. Since July 2015, the Company has produced and sold acertruncatumbunge seed oil extracted from the acertruncatum pods that were purchased from third party vendors. Our self-grown acertruncatum pods will not be ready to be used for production until approximately the fall of 2018.
The sales of health care products, Huoliyuan capsules and acertruncatumbunge seed oil accounted for 40.5%, 39.7% and 19.8%, respectively, of total revenues for the fiscal year ended March 31, 2018, compared to 35.7%, 43.8%, and 20.5%, respectively, for the prior fiscal year.
The following table summarizes the breakdown of revenues and gross profit by products for the fiscal year ended March 31, 2018 and 2017, respectively:
For the Twelve Months Ended March 31,
2018
2017
Revenues ($M)
Gross Profit ($M)
Gross Margin (%)
Revenues ($M)
Gross Profit ($M)
Gross Margin (%)
Health care supplements
26.30
11.70
44.5%
20.16
8.98
44.5%
Drug (Huoliyuan capsule)
25.80
7.46
28.9%
24.73
8.74
35.4%
Acer truncatum oil
12.84
6.18
48.1%
11.57
5.46
47.2%
Total
64.94
25.34
39.0%
56.46
23.18
41.1%
Cost of Goods Sold
Our cost of goods sold was comprised primarily of the cost of finished goods we purchased from Shandong Yongchuntang, the raw materials we purchased from third party vendors, and the manufacturing cost of acertruncatum bunge seed oil and Huoliyuan capsules. For the fiscal year ended March 31, 2018, total cost of goods sold increased by $6.32 million, or 19.0%, to $39.60 million from $33.28 million for the prior fiscal year. As a percentage of revenues, total cost of goods sold was 61.0% for the fiscal year ended March 31, 2018, compared to 58.9% for the prior fiscal year. The increase was primarily related to the slight increase in raw material costs and manufacturing costs for Huoliyuan capsules.
Cost of goods sold for health care products, Huoliyuan capsules and acer truncatum bunge seed oil were $14.60 million, $18.34 million and $6.66 million, respectively, for the fiscal year ended March 31, 2018, compared to $11.18 million, $15.99 million and $6.11 million, respectively, for the prior fiscal year.
Gross Profit
Gross profit increased by $2.16 million, or 9.3%, to $25.34 million for the fiscal year ended March 31, 2018 from $23.18 million for the prior fiscal year. Gross profit for health care products, Huoliyuan capsules and acer truncatum bunge seed oil were $11.70 million, $7.46 million and $6.18 million, respectively, for the fiscal year ended March 31, 2018, compared to $8.98 million, $8.74 million and $5.46 million, respectively, for the prior fiscal year.
Overall gross margin was 39.0%, with gross margins for health care products, Huoliyuan capsules and acer truncatum bunge seed oil being 44.5%, 28.9% and 48.1%, respectively, for the fiscal year ended March 31, 2018. Overall gross margin was 41.1%, and gross margins for health care products, Huoliyuan capsules and acer truncatum bunge seed oil were 44.5%, 35.4% and 47.2%, respectively, for the prior fiscal year. The decrease in overall gross margin was mainly related to Huoliyuan capsules. The decrease in gross margin for Huoliyuan capsules was a result of increased raw material and manufacturing costs.
Operating Expenses
Our selling expenses consist primarily of sales commissions, advertising and promotion expenses, freight charges and related compensation. For the fiscal year ended March 31, 2018, selling expenses increased by $1.05 million, or 26.7%, to $4.98 million from $3.93 million for the prior fiscal year. The increase in selling expenses was primarily due to the increase in shipping cost and sales commission as a result of increased sales volume andadvertising costs.
General and administrative expenses increased by $0.47 million, or 11.1%, to $4.72 million for the fiscal year ended March 31, 2018 from $4.25 million for the prior fiscal year. The increase in general and administrative expenses was primarily due to the increase in depreciation and amortization expenses, as well as legal and consulting fees offset by the decrease in stock options amortization.
Research and development expenses were $0.49 million for the fiscal year ended March 31, 2018, compared to $0.81 million for the prior fiscal year. The decrease in research and development expenses was mainly due to the decreased purchase of the materials used for R&D. As of March 31, 2018, the Company had 27 staff in the R&D department.
Impairment of $0.33 million and $0.99 million were recorded from reduction in the capitalized costs of acer truncatum bunge planting for the fiscal years ended March 31, 2018 and 2017, respectively.
As a result, total operating expenses increased by $0.55 million, or 5.5%, to $10.53 million for the fiscal year ended March 31, 2018 from $9.98 million for the prior fiscal year.
Operating Income
Total operating income increased by $1.61 million, or 12.2%, to $14.81 million for the fiscal year ended March 31, 2018 from $13.20 million for the prior fiscal year. The increase in total operating income was mainly a result of increased gross profit and partially offset by increased operating expenses. Operating margin was 22.8% for the fiscal year ended March 31, 2018, compared to 23.4% for the prior fiscal year.
Income before Income Taxes
For the fiscal year ended March 31, 2018, the Company recorded gain of $0.64 million from disposal of acertruncatumbunge plants. Other income was $0.12 million for the fiscal year ended March 31, 2018, compared to $0.05 million for the prior fiscal year.
As a result, income before income tax provisions increased by $2.32 million, or 17.5%, to $15.58 million for the fiscal year ended March 31, 2018 from $13.26 million for the prior fiscal year.
Net Income
Income tax expense increased by $0.64 million, or 19.9%, to $3.84 million for the fiscal year ended March 31, 2018 from $3.20 million for the prior fiscal year.
Net income increased by $1.68 million, or 16.7%, to $11.74 million for the fiscal year ended March 31, 2018 from $10.05 million for the prior fiscal year. After the deduction of non-controlling interest, net income attributable to the Company was $11.39 million or $0.38 per basic and diluted share, for the fiscal year ended March 31, 2018, compared to $10.08 million, or $0.34 per basic and diluted share, for the prior fiscal year.
Liquidity and Capital Resources
As of March 31, 2018, the Company had cash and cash equivalents of $25.35 million, and inventories of $2.38 million, compared to $10.31 million and $5.48 million, respectively, as of March 31, 2017. Total working capital was $28.08 million as of March 31, 2018, compared to $15.49 million as of March 31, 2017.
Net cash provided by operating activities was $17.87 million for the fiscal year ended March 31, 2018, compared to $9.74 million for the prior fiscal year. Net cash used in investing activities was $4.54 million for the fiscal year ended March 31, 2018, compared to $6.50 million for the prior fiscal year. Net cash provided by financing activities was $nil for the fiscal year ended March 31, 2018 and 2017, respectively.
Recent Developments
On February 1, 2018, the Company announced that Shandong Spring Pharmaceutical Co., Ltd., a 97% owned subsidiary of the Company, has been ratified and issued a Food Production License for production of edible vegetable oil, which includes acertruncatumbunge seed oil, and related blended edible oil products (the “License”). The License was granted by the Food and Drug Administration of Sishui County and is valid for five years.
About China YCT International Group, Inc.
Based in Sishui County, Shandong Province and established in January 1989, China YCT International Group, Inc., through its subsidiaries, engages in the business of (i) distributing health care supplement products manufactured by Shandong Yongchuntang Group Co., Ltd. in the PRC, (ii) developing, manufacturing, and selling Huoliyuan capsules, a prescription medicine, (iii) developing acer truncatum bunge planting bases, and manufacturing and selling acer truncatum bunge seed oil in the PRC. Acer truncatum bunge plants are a species of maple tree. For more information about the Company, please visit www.yctgroup.com.
Forward-Looking Statements
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
For more information, please contact:
At the Company:
Zecheng Shao, Vice President
Phone: +86-156-5377-2006
Email: zc_shao@126.com
Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Phone: +1-732-910-9692
Email: ttian@weitianco.com
CHINA YCT INTERNATIONAL GROUP, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2018
MARCH 31, 2017
Assets
Current assets:
Cash and cash equivalents
$
25,353,360
$
10,308,622
Accounts receivable
174,558
1,134,967
Inventories
2,383,382
5,483,040
Purchase deposit to vendors
–
650,790
Purchase deposit to related party
1,412,864
–
Prepaid leases – current portion
741,583
900,547
Total current assets
30,065,747
18,477,966
Prepaid leases
641,349
1,265,252
Development cost of acer truncatum bunge planting
48,984,881
42,055,972
Plant, property, and equipment, net
16,793,413
14,487,135
Intangible assets, net
11,862,017
12,042,758
Deferred tax assets
200,387
508,521
Security deposit – related party
1,590,305
1,449,422
Total assets
$
110,138,099
$
90,287,026
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable to related party
$
–
$
706,048
Accounts payable and other accrued expenses
372,782
251,307
Advance from customers
445,829
–
Taxes payable
1,164,198
2,028,190
Total current liabilities
1,982,809
2,985,545
Stockholders’ Equity
Preferred stock, par value $500 per share; 45 shares authorized, issued and outstanding
22,500
22,500
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 29,789,168 shares issued and outstanding
29,789
29,789
Additional paid-in capital
4,322,838
4,322,838
Statutory reserve
1,828,504
1,828,504
Retained earnings
94,447,937
83,061,604
Accumulated other comprehensive income (loss)
4,455,017
(4,386,845)
Total stockholders’ equity attributable to the Company
105,106,585
84,878,390
Noncontrolling interest
3,048,705
2,423,091
Total stockholders’ equity
108,155,290
87,301,481
Total liabilities and stockholders’ equity
$
110,138,099
$
90,287,026
CHINA YCT INTERNATIONAL GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEARS ENDED
MARCH 31,
2018
2017
Sales
$
64,942,737
$
56,463,164
Cost of goods sold (including $14,404,967 and $11,015,268
from a related party for the years ended March 31, 2018 and 2017,
respectively)
39,603,995
33,284,237
Gross profit
25,338,742
23,178,927
Operating expenses
Selling expenses
4,984,794
3,934,334
General and administrative expenses
4,719,402
4,248,095
Research and development expenses
492,078
809,485
Impairment of assets
332,090
986,406
Total operating expenses
10,528,364
9,978,320
Income from operations
14,810,378
13,200,607
Gain on disposal of acer truncatum bunge plants
642,532
–
Interest income
124,410
54,672
Income before income tax provision
15,577,320
13,255,279
Income tax provision
3,838,832
3,200,625
Net income
11,738,488
10,054,654
Less: Net income (loss) attributable to noncontrolling interest
352,155
(23,649)
Net income attributable to the Company
11,386,333
10,078,303
Other comprehensive income (loss):
Foreign currency translation adjustment
9,115,321
(5,228,368)
Comprehensive income
20,853,809
4,826,286
Less: Comprehensive income (loss) attributable to noncontrolling interest
625,614
(28,108)
Comprehensive income attributable to the Company
$
20,228,195
$
4,854,394
Earnings per common share
Basic and Diluted
$
0.38
$
0.34
Weighted average number of common shares outstanding
Basic and Diluted
29,789,168
29,763,531
CHINA YCT INTERNATIONAL GROUP, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED
MARCH 31,
2018
2017
Cash flows from operating activities:
Net income
$
11,738,488
$
10,054,654
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of plant, property and equipment
1,300,651
746,931
Amortization of intangible assets
1,282,495
1,098,757
Amortization of prepaid leases
884,950
923,380
Stock-based compensation
–
123,135
Deferred taxes
339,358
(319,501)
Loss on disposal of property, plant and equipment
–
184,262
Gain on abandonment of acer truncatum bunge plants
(642,532)
–
Impairment of assets
332,090
986,406
Changes in operating assets and liabilities:
Purchase deposit to vendors
677,695
(667,291)
Inventory
3,447,670
(3,425,678)
Accounts receivable
1,016,216
(651,680)
Cash received from cancellation of lease
57,858
–
Taxes payable
(1,007,109)
1,369,927
Security deposit to related party
–
(1,486,171)
Purchase deposit and accounts payable to related party, net
(2,076,172
)
663,222
Advance from customers
423,132
–
Accounts payable and other accrued expenses
92,108
135,721
Net cash provided by operating activities
17,866,898
9,736,074
Cash flows from investing activities:
Acquisition of property, plant and equipment
(2,153,063)
(2,880,051)
Proceeds from disposal of acer truncatum bunge plants
2,156,510
–
Development cost of acer truncatum bunge planting
(4,542,518)
(3,618,469)
Net cash used in investing activities
(4,539,071)
(6,498,520)
Effect of exchange rate changes on cash and cash equivalents
1,716,911
(568,016)
Net increase in cash and cash equivalents
15,044,738
2,669,538
Cash and cash equivalents at beginning of year
10,308,622
7,639,084
Cash and cash equivalents at end of year
$
25,353,360
$
10,308,622
Supplemental disclosures of cash flow information:
Cash paid during the years for:
Interest
$
–
$
–
Income taxes
$
4,445,597
$
2,521,061
Noncash Investing Activities:
Transfer 3% equity of Shandong Spring in exchange for equipment and intangible assets
$
–
$
2,134,537
SOURCE: China YCT International Group, Inc.
ReleaseID: 504117
