Message #7 From:
NewsBot Date: March 31, 2008 08:41:31 AM
China Yingxia International, Inc. Announces Record Fourth Quarter and Year 2007 Results
- FY 2007 Revenues Increased 89.39% to $15.91 million.
- FY 2007 EBIT Increased 161.57% to $6.08 million.
- FY 2007 Net Income was $6.12 million or $0.15 per fully diluted share.
- Teleconference to Be Held at 9:00 a.m. EST Today -
NEW YORK, March 31 /Xinhua-PRNewswire-FirstCall/ -- China Yingxia
International, Inc. (OTC Bulletin Board: CYXI - News), (the 'Company') a
leading provider in the nutraceutical industry engaged in the development,
manufacture and distribution of organic nutritional food products,
supplements, and personal care products in China, today announced its audited
results for the fourth quarter and for the year ended December 31, 2007.
Fourth-Quarter Highlights
-- Total Revenues increased 78.31% to a record $5.52 million compared to $3.09 million for Q4 2006. -- Gross profit increased 89.74% to a $2.76 million compared to $1.45 million for Q4 2006. -- Net income increased 29.6% to a record $1.39 million compared to $1.08 million(1) for the same period in 2006.
Fiscal Year 2007 Highlights
-- Total Revenues increased 89.4% to a record $15.91 million. -- Gross profit increased 100.17% to a record $9.14 million. -- Earnings before Interest and Taxes increased 161.57% to a record $6.08 million. -- Net Income increased 14.59% to a record $6.12 million or $0.15 per fully diluted share.
(1) The figure excludes the one-time going public expense and one-time provision for achieving WFOE status.
'This was a record year for our company in terms of financial growth and
also a success in terms of the execution of our business model. Our very
strong revenue growth was driven by an expanded number of nutritional foods,
health supplements, and personal care products provided by our suppliers, as
well as our ability to increase our number of active franchisees' said Ms.
Yingxia Jiao, the company's Chairwoman and CEO.
Ms. Jiao further added, 'In the past year, we dramatically expanded our
franchisee distribution network beyond the northeast and currently have over
1000 active franchisees throughout the country. We are extremely pleased to
have increased to 391 active franchisees in the south central and east regions
of the country at the end of 2007.'
'We substantially diversified our product mix. Sales of nutritional foods,
supplements, cosmetics, and personal care products grew 280% to $9.8 million
from $2.6 million. They accounted for 61.7% of sales, up from 30.8% of sales
in the previous year. The strong diversification of our product mix will offer
us strong opportunities for balanced growth.'
Fourth Quarter of 2007 Financial Results
For the fourth quarter ended December 31, 2007, sales grew 78.31% to $5.53
million, from $3.09 million recorded in same period of 2006.
Gross profit rose 89.74% to $2.76 million from $1.45 million in same
period of 2006. The increase was a result of the expansion of our franchisee
distribution network. Fourth-quarter 2007 gross margin was stable at 49.9%
compared with 46.9% in 2006 same period.
Operating expenses decreased 23.6% to $1.39 million in the fourth quarter
of 2007, from $1.82 million in same period 2006, primarily due to research and
development costs, which accounted for approximately 26.8% of selling expenses
in the fourth quarter of 2006.
General and administrative expenses increased to $1.54 million, from $1.33
million. In the fourth quarter of 2007, one-time expenses for issuance of
stock to consultant and an allowance for doubtful accounts related to related
party loans totaled $0.56 million. In the fourth quarter of 2006, a one time
expense of $0.85 million was incurred for going public. Normalizing these
items, general and administrative expenses increased 102.08% to $0.97 million
from $0.48 million. This was primarily due to expenses related to marketing
our products and attracting new franchisees.
Net income for the fourth quarter of 2007 increased to $1.39 million from
$1.24 million in the same period in 2006. The Company received a $1.01 million
income tax provision in the fourth quarter of 2006. Normalizing for this non-
cash cash and the one-time going public expense of $0.85 million mentioned
above, net income for the fourth quarter of 2006 totaled $1.08 million. Using
this figure, net income for the fourth quarter of 2007 increased by 29.6%
compared to the same period in 2006.
Year 2007 Financial Results
For the year 2007, sales soared 89.39% to a record $15.91 million, from
$8.40 million in 2006.
While raw cactus plants which accounts for 38.31% of total revenue still
remains the top selling product line, the Company has significantly
diversified the concentration of its product mix to other product lines
including dietary supplements, personal care and other products, and
nutritional food products which account for 21.56%, 21.75% and 13.53% of total
revenue respectively.
The nutritional food product line contributed approximately $2.15 million
to total revenues and represents 22.57% of total growth. The personal care and
others product line contributed approximately $3.46 million to total revenues
and represents 41.58% of total growth. The dietary supplements product line
contributed approximately $3.43 million to total revenues and represents
22.78% of total growth.
The Company achieved a gross profit of $9.14 million in 2007 compared to
$4.57 million in 2006, representing a 100.17% increase year-over-year and a
direct result of the 89.4% increase in sales and improved product mix margins.
The Company incurred total operating expenses of $3.06 million in 2007,
compared to $2.23 in 2006. This represents an increase of 37.25%, year-over-
year. This increase is primarily due to the higher selling, general and
administrative expenses ('SG&A').
SG&A amounted to $2.92 million or 18.35% of total sales in 2007 compared
to $1.74 million or 20.7% of total sales in 2006. Normalizing for the one time
$0.85 million fee of going public, our SG&A expense for 2006 becomes $0.88
million or 10.48% of total sales. The year-over-year increase is primarily due
to higher costs related to marketing our brand and products as a result of
increased sales. Additionally, higher consulting, legal, directors' and
officers' insurance and auditing expenses totaling approximately $0.43 million
contributed to the increase in SG&A expenses.
We recorded an allowance for doubtful accounts in the amount of $0.34
million. 'Although we have already collected these loans,' Ms. Jiao stated,
'we decided to take a write-down, because they were not collected at year end.
It is very important to us that investors have confidence in the conservatism
of our accounting.'
Net Income for 2007 was $6.12 million compared to $5.34 million for 2006.
Net income for 2006 includes a one time income tax benefit we received as
a result of achieving WFOE status. The tax benefit represented $3.00 million
or 56.19% of our total net income for 2006.
Excluding the income tax provision and normalizing for the going public
expense, net income in 2006 was $3.18 million. Using this net income figure
for 2006 and net income of $6.12 million in 2007, we achieved a 92.45% year-
over-year growth. This increase in net income was mainly due to sales to new
franchisees and new products.
Diluted income per share for 2007 was $0.15.
Outlook
Based on Company's projections, expected 2008 revenue growth is in the
range of approximately 30-35%, gross margins growth in the range of 27-32%,
and approximately 45-50% growth in net income for the full year of 2008.
'In 2008, we expect strong growth in sales and net income,' said Ms. Jiao.
'We are excited by the initial market feedback received for two products we
introduced last summer: the soybean milk product line and the functional rice
for sufferers of diabetes. If the organic rice sales continue to be successful
and if we are able to complete our acquisition of the new soy milk production
lines, we believe these two products will be our flagship products for next
few years.'
'We will also continue to seek our acquisition targets to expand our
distribution network domestically and abroad. While 100% of our sales were
within China in 2007, we expect to capitalize on the growing need for health
foods and personal care products in our neighboring Asian countries,'
concluded Ms. Jiao.
2007 Operating Highlights and Year End Balance Sheet Update
-- In August 2007, the Company made a short tem loan of $2,194,774 to the agriculture production base in Hulan county, Helongjiang Province to help finance the well sinker and irrigation project due to an unexpected severe drought in the northern part of China during the summer of 2007. The purpose of the loan was to support the farmers in order to prevent any further damage to their harvest and to secure the raw materials for the Company's own production. The loan was intended to be interest free and for a short-term period from August 2007 to March 2008. The management expects the entire loan to be repaid by the end of March 2008.
As of March 31, 2008, this full amount has been collected.
'We are please to have collected these loans,' stated Ms. Jiao. 'We
understand many of our investors did not fully appreciate the importance of
building strong relationships with the farmers who grow our products. We know
that supporting them during a serious drought enabled us to obtain the highest
quality products and will insure their strong support in coming years.'
-- On December 5, 2007, the Company ('Buyer') signed an agreement ('Agreement') with Shanghai Jin Ao Food Co., Ltd. ('Seller') to purchase its six (6) Soybean Milk production lines for a total amount of RMB 30,000,000 (approximately US$4.1 million), including production equipments, technique know-how and marketing resources. The Agreement calls for the Company ('Buyer') to make three installment payments of the full purchase price before January 31, 2008. Once the payments are made in full, the Seller will transfer the ownership of the equipments and all related resources to the Buyer. As of December 31, 2007, the Company made all three-installment payments and recorded the entire amount as investment advance since the transaction has not been completed yet. Upon closing of this transaction, the Company will reclassify the amount to fixed assets and other related accounts.
'We are very excited about the opportunities for organic soy milk,' Ms.
Jiao stated. 'If all goes as expected, we will have these production lines
fully operational by mid-year. We believe these production lines could enable
us to grow our sales faster than planned and develop new channels of
distribution.'
-- Other receivables typically represent cash advances to employees and sales representatives for normal business purposes. Included in the other receivables was also an advanced payment in the amount of RMB13,800,000 (approximately US$1.9 million) made to a organic rice growing project in Donghai, Jiangsu Province, in anticipation of a good harvest year. The advance was not utilized because the actual output of the rice was less than expected. The Company collected the full amount in the first quarter of 2008.
As of March 31, 2008, the Donghai receivable has been fully collected.
-- As of December 31, 2007, the Company has loans receivable from related parties in the amount of $2,037,551. All related party loans are provided to the affiliated retail stores or companies to facilitate the initial establishment of their businesses for selling the Company's products. These loans are interest free and unsecured and are due upon demand. The Company expects to collect most of the outstanding loans in the next few months. An allowance for doubtful accounts in the amount of $347,702 was recorded for the year ended December 31, 2007.
As of March 31, 2008, the $347,702 write down was collected and approximately $1,980,189 of the $2,037,551 (or 97.18%) loans receivable has been fully collected.
Conference Call
The conference call will take place at 9:00 a.m. Eastern Standard Time, on
Monday, March 31, 2008. Anyone interested in participating should call 1-800-
762-8779 if calling within the United States, or 1-480-248-5081 if calling
internationally, approximately 5 to 10 minutes prior to 9:00 a.m. There will
be a playback available until April 8, 2008. To listen to the playback, please
call 1-800-406-7325 if calling within the United States, or 1-303-590-3030 if
calling internationally. Please use pass code 3861152 for the replay.
This call is being webcast by ViaVid Broadcasting. The webcast may be
accessed at ViaVid's Web site at http://www.viavid.net .
The Company filed its annual report on Form 10K-SB on March 28, 2008.
China Yingxia International, Inc., through its 100%-owned subsidiary,
Harbin Yingxia Industrial Group Co., Ltd. ('Yingxia'), is primarily engaged in
the development, production and sales of health food products in China.
Yingxia is located in the Province of Heilongjiang in mainland China.
Yingxia's products include soybean-based foods and drinks, longgu golden
millet enriched products, cactus-based herbal supplements, personal care
products, Nestle products, and organic rice products.
Safe Harbor Statement
The statements contained herein that are not historical facts are
'forward-looking statements' within the meaning of Section 21E of the
Securities and Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be
identified by, among other things, the use of forward-looking terminology such
as 'believes,' 'expects,' 'may,' 'will,' 'should,' or 'anticipates' or the
negative thereof or other variations thereon or comparable terminology, or by
discussions of strategy that involve risks and uncertainties. In particular,
our statements regarding the potential growth of the markets are examples of
such forward-looking statements. The forward-looking statements include risks
and uncertainties, including but not limited to, general economic conditions
and regulatory developments, not within our control. The factors discussed
herein and expressed from time to time in our filings with the Securities and
Exchange Commission could cause actual results and developments to be
materially different from those expressed or implied by such statements. The
forward-looking statements are made only as of the date of this filing, and we
undertake no obligation to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
