WEIFANG, China, Nov. 16 ShengtaiPharmaceutical, Inc. (OTC Bulletin Board: SGTI) ("Shengtai" or "the Company"),a leading manufacturer and distributor of high-quality, pharmaceutical gradeglucose products in China, today reported financial results for the firstquarter of fiscal 2010 ended September 30, 2009.
"The first quarter fiscal year 2010 brings our company back to profitableand creates a very good opening for fiscal year 2010. Our glucose revenueincreased approximately 65% compared to the same period last year. The totalglucose revenue accounted for 58.41% of total revenue for the three monthsended September 30, 2009, compared to 45.29% the same period last year.Selling, general and administrative (SG&A) expenses for the three months endedSeptember 30, 2009 were $2.08 million, a decrease of $345,101 compared withthe same period last year. Our financial results demonstrate that our strategyof controlling cost, improving product structure to create a higher grossprofit products mix, and expanding market share in pharmaceutical glucosemarkets has been successful," said Mr. Qingtai Liu, Shengtai Pharmaceutical'sCEO. "The competition in the last year was tough but we are proud that wesurvived the economic crisis and are on the right track to our goal ofbecoming the largest pharmaceutical glucose provider."
First Quarter Fiscal 2010 Financial Results
First quarter 2010 revenues were $23.13 million, a 27.61% increaseyear-over-year compared to the $18.12 million reported in the first quarter offiscal 2009. Sales of glucose products totaled $13.51 million during the firstquarter as it accounted for 58.4% of sales. Cornstarch sales for the quartertotaled $4.65 million or 20.1% of revenues. Sales of other products totaled$4.97 million or 21.5% of revenues. With the government stimulus plan takingeffect, and the recovery of the economy, and our increased competitivestrength, the demand of our glucose products was increased compared to thesame period last year.
Gross profit for the three months ended September 30, 2009 was $3.32million compared with $3.19 million the same period last year. Gross marginwas 14.36%, a decline from 17.62% in the first quarter of fiscal 2009. Thedecline in gross margin in the first quarter was primarily driven by increasedraw material cost and higher production cost per unit due to the idle capacityfrom expanded new facilities.
Selling, general and administrative (SG&A) expenses for the three monthsended September 30, 2009 were $2.08 million, a decrease of $345,101 comparedwith the same period last year. The decrease in selling, general andadministrative expenses was mainly the result of our efforts in controllingour costs. We incurred $158,818 in non-cash stock option expenses for thethree months ended September 30, 2009. First quarter 2010 net income was$783,833 or 4 cents per diluted share, compared to first quarter 2009 netincome of $629,796 or 3 cents per diluted share.
As of September 30, 2009, Shengtai Pharmaceutical had cash and restrictedcash totaling $12.78 million. The Company generated $0.83 million in positivecash flow from operations during the first quarter. The Company's short-termloan totaled $29.63 million and long-term debt totaled $4.96 million. TheCompany's total shareholders' equity increased to $45.96 million.
Based on its current outlook, and existing and anticipated businessconditions, Shengtai expects net income for fiscal year ending June 30, 2010to be between $3-$5 million.
"Looking forward we see several factors that will create a continuousdemand for the Company's pharmaceutical graded glucose products. First of all,this winter is abnormally cold in northern China with Swine flu a strongthreat to health. More people will get flu shots and other IV treatments. InChina, IV drips are the most commonly used in hospitals and clinics to treatthe symptoms of cold and flu," said Mr. Qingtai Liu, Shengtai Pharmaceutical'sCEO. "Second, we would also see the health care stimulus package starting toshow its effects in the next twelve months and we expect increased demand forbasic pharmaceutical products from newly built clinics. Third, we believe weare in a much better position than some of our key competitors in thepharmaceutical glucose field. We have expanded production capacity and haveenough operating cash flow. Some of our key competitors went bankrupt, havetemporarily stopped production, or are on the verge of going out of business.This is a good opportunity for us to obtain an even higher market share in thepharmaceutical glucose market. With these good external opportunities, we planto stick to our strategy of controlling costs, improving product structure tocreate a higher gross profit products mix, and expanding market share in thepharmaceutical glucose market. We are very confident that our key competitivestrength remains and will welcome a profitable year in fiscal year 2010."
The Company will host a conference call on Tuesday November 17, 2009 at8:00 A.M. Eastern Standard Time / 9:00 P.M. Beijing Time. A question andanswer session will follow management's presentation. Ms. Yiru Melody Shi(Chief Financial Officer), and Ms. Shenglian Iris Wang (Investor RelationsAssistant Manager) will be the primary speakers on the call.
To participate, please call the following numbers ten minutes before thecall start time:
Phone Number: +1 (877) 407-8035 (North America)
Phone Number: +1 (201) 689-8035 (International)
A replay of the call will be available through Tuesday, November 24, 2009,at 11:59 P.M. Eastern Standard Time. For the replay, please call:
About Shengtai Pharmaceutical, Inc.
Shengtai Pharmaceutical, Inc. through its wholly owned subsidiary,Shengtai Holding, Inc. (SHI), a New Jersey corporation, and the Chineseoperating company of Weifang Shengtai Pharmaceutical Co., Ltd., is a leadingmanufacturer and supplier of pharmaceutical grade glucose used for medicalpurposes. It also manufactures and supplies glucose and cornstarch products tothe food, beverage and industrial production industries in China. For moreinformation about Shengtai Pharmaceutical, Inc., please visithttp://www.shengtaipharmaceutical.com .
Certain statements made in this news release, may contain forward-lookingstatements concerning the Company's business and products. These statementsinclude, without limitation, statements regarding our ability to prepare theCompany for growth, and predictions and guidance relating to the Company'sfuture financial performance. We have based these forward-looking statementslargely on our current expectations and projections about future events andfinancial trends that we believe may affect our financial condition, resultsof operations, business strategy and financial needs, but they involve risksand uncertainties that could cause actual results to differ materially fromthose in the forward-looking statements, which may include, but are notlimited to, such factors as unanticipated changes in product demand especiallyin the pharmaceutical industry, pricing and demand trends for the Company'sproducts, changes to government regulations, risk associated with operation ofthe Company's new facilities, risk associated with large-scale implementationof the Company's business plan, the ability to attract new customers, abilityto increase its product's applications, cost of raw materials, downturns inthe Chinese economy, and other information detailed from time to time in theCompany's filings and future filings with the United States Securities andExchange Commission. Investors are urged to consider these factors carefullyin evaluating the forward-looking statements herein and are cautioned not toplace undue reliance on such forward-looking statements, which are qualifiedin their entirety by this cautionary statement. The forward-looking statementsmade herein speak only as of the date of this press release and the Companyundertakes no duty to update any forward-looking statement to conform thestatement to actual results or changes in the Company's expectations.First Quarter 2010 Financial Summary -- First quarter 2010 revenues totaled $23.13 million -- First quarter had positive operating cash flow of $0.83 million -- Cash and restricted cash of $12.78 million
SOURCE Shengtai Pharmaceutical, Inc.