HARBIN, China, Aug. 9, 2011 /PRNewswire-Asia-FirstCall/ --
China Sky One Medical, Inc. ("China Sky One" or "the
Company") (NASDAQ: CSKI), a leading fully integrated pharmaceutical
company producing over-the-counter drugs in the People's Republic of China ("PRC"), today
announced financial results for the second quarter of 2011.
Second Quarter 2011
Financial Highlights
- Total revenues decreased 7.6% year-over-year to $37.7 million
- The Company marketed 101 products, compared with 114 products
in the quarter ended June 30,
2010
- Gross profit fell 15.7% to $24.9
million
- Operating income declined 39.6% to $8.3
million
- GAAP net income, including a non-cash gain from change in the
fair value of derivative warrant liability, decreased 50.2%
year-over-year to $6.1 million, or
$0.36 per diluted share
- Excluding the non-cash gain, non-GAAP adjusted net income
declined 42.0% to $5.9 million, or
$0.35 per diluted share
"Our second quarter revenue declined 7.6% year-over-year,
primarily reflecting the loss of two distribution relationships in
the third quarter of 2010. We continue to aggressively pursue new
customers to distribute our broad portfolio of pharmaceutical
products, while investing in China
Sky One's future, as exemplified by our winning bid on land use
rights for land in Harbin's Song
Bei District. We intend to build a research and development center,
an injection manufacturing facility, a logistics center and an
office building on the land during the first phase of development,
which we expect to complete by mid-2012," said Mr. Yan-Qing Liu, Chairman and CEO of China One
Medical, Inc. "Despite the challenges of the past year, we are
optimistic that we can reestablish robust revenue and earnings
growth at China Sky One Medical by continuing to invest in R&D,
securing new distributor relationships and identifying uses for our
strong balance sheet and cash flow."
Second Quarter 2011
Results
In the second quarter of 2011, China Sky One's total revenues
decreased 7.6% to $37.7 million from
$40.8 million in the same quarter
last year, largely reflecting the continuing impact of terminated
business relationships with a domestic distributor and an overseas
sales agent during the third quarter of 2010, which negatively
impacted the sales of the Company's Ointments, Patches, Sprays and
Diagnostic Kits categories. These two distributors accounted for 0%
and 17.4% of the Company's overall revenue in the second quarter of
2011 and second quarter of 2010, respectively.
By product category, lower sales from Ointments, Patches, Sprays
and Drops contributed to the Company's overall year-over-year
revenue decline, offset somewhat by top-line growth in Wash Fluids,
Dignostic Kits, Suppositories and the Others category.
Sales of ointments declined 28.5% year-over-year to $8.3 million in the second quarter of 2011,
primarily due to a $2.6 million
year-over-year decline in the Company's Hemorrhoids Ointment
product.
Sales of patches declined 34.2% year-over-year to $6.4 million in the second quarter of 2011. The
decrease in patch product sales was primarily due to a 63.3%
decrease in Slim Patch sales, along with sales declines of several
other Patch products, primarily due the termination of a key
distributor relationship in the third quarter of 2010.
Sales of wash fluids increased 133.5% year-over-year to
$4.3 million in the second quarter of
2011, driven by strong sales of Metronidazole and Chlorhexidine
wash fluids.
Sales of spray products decreased 22.6% year-over-year to
$4.0 million in the second quarter of
2011, primarily due to lower sales of YinKe Spray and JieYin
Spray.
Revenue from drops decreased 33.6% year-over-year to
$1.9 million in the second quarter of
2011, primarily due to lower sales of Naphazoline Hydrochloride Eye
Drops.
Diagnostic kit sales increased year-over-year by 36.4% to
$3.2 million in the second quarter of
2011, primarily due to increased sales of Cardiac Arrest Early
Examination Kits.
Sales of suppositories grew by 12.9% year-over-year to
$2.6 million in the second quarter of
2011, driven by increased sales of Policresulen Vaginal
Suppositories and Chlorhexidine Acetate Hemorrhoids
Suppositories.
Sales from the Others product category increased by 43.0%
year-over-year to $7.2 million in the
second quarter of 2011. Higher revenues from Other Products were
mainly driven by the sale of the thirteen additional products
launched after the first quarter of 2010.
Gross profit declined 15.7% to $24.9
million in the second quarter of 2011. Gross margin in the
quarter was 66.1%, as compared to 72.5% in the second quarter of
2010, mainly due to increases in the price of certain raw materials
used to produce the Company's products, and lower sales prices of
certain products due to the competitive sales market.
Operating expenses increased 5.1% year-over-year to $16.6 million in the second quarter of 2011. The
increase was principally due to $0.6
million higher depreciation and amortization expenses and
$0.5 million higher selling expenses,
somewhat offset by $0.3 million lower
general and administrative expenses. Second quarter 2011 operating
income was $8.3 million, or 22.0% or
revenue, as compared to an operating income of $13.7 million, or 33.6% of revenue, in the same
period a year ago.
Total other income was $0.3
million in the second quarter of 2011, as compared to
$2.1 million in the prior year
quarter. The decrease reflected non-cash gain related to the change
in the fair value of our derivative warrant liability related to
the private placement in January
2008, which was $0.2 million
in the second quarter of 2011 and $2.1
million in the same period a year ago.
Provision for income taxes was $2.4
million in the second quarter of 2011, as compared to
$3.6 million in the same period last
year.
GAAP net income for the second quarter of 2011 was $6.1 million, as compared to $12.2 million in the second quarter of 2010.
Excluding the non-cash gain related to the change in fair value of
derivative warrant liability, the Company's non-GAAP adjusted net
income declined 42.0% to $5.9
million, or $0.35 per diluted
share, as compared to $10.2 million,
or $0.60 per diluted share, in the
prior year period.
Financial Condition
As of June 30, 2011, China Sky One
had $44.3 million in cash and
equivalents, with a current ratio of 6.2. Working capital was
approximately $61.2 million, up from
$57.4 million at December 31, 2010. Stockholders' equity at
June 30, 2011, was $179.9 million, 9.7% higher than the $164.0 million recorded at December 31, 2010.
Accounts receivable turnover days decreased to 51.6 for the six
months ended June 30, 2011, as
compared to 53.4 days in the same period of 2010. Inventory
turnover days increased to 46.0 for the first six months of 2011
from 30.4 days in the year ago period.
The Company generated $13.0
million in net cash flow from operating activities in the
first six months of 2011, compared to $19.3
million in the year ago comparable period. Management
believes current working capital and borrowing capabilities are
sufficient to cover their operating and capital requirements in the
near future.
Conference Call
China Sky One will conduct a conference call at 9:30 a.m. Eastern Time (ET) on Wednesday, August 10, 2011, to discuss second
quarter 2011 financial results. A full version of the Company's
quarterly report will be filed with the SEC on Form 10-Q prior to
the call. To participate in the live conference call, please dial
the following number five to ten minutes prior to the scheduled
conference call time: (866) 395-5819. International callers should
dial (706) 643-6986. The Conference ID for this call is 89304197.
If you are unable to participate in the call at this time, a replay
will be available for two weeks starting on Wednesday, August 10, 2011 at 11:30 a.m. ET. To access the replay, dial (855)
859-2056, international callers dial (404) 537-3406. The Conference
Replay Passcode is 89304197.
Use of Non GAAP Financial Measures
GAAP results for the three and six month periods ended
June 30, 2011 and June 30, 2010 include gains or losses related to
the change in the fair market value of the derivative warrant
liability. To supplement its consolidated financial statements
presented on a GAAP basis, the Company has provided non-GAAP
adjusted financial information, which are adjusted net income and
adjusted diluted earnings per share, excluding the impact of these
items. The Company's management believes that this adjusted measure
provides investors with a better understanding of how the results
relate to the Company's historical performance. A reconciliation of
adjustment to GAAP results appears in the tables accompanying this
press release. This additional adjusted information is not meant to
be considered in isolation or as a substitute for GAAP financials.
The adjusted financial information that the Company provides also
may differ from the adjusted information provided by other
companies.
About China Sky One Medical, Inc.
China Sky One Medical, Inc., a Nevada corporation, is a holding company. The
Company engages in the manufacturing, marketing and distribution of
pharmaceutical, medicinal and diagnostic products. Through its
wholly-owned subsidiaries, Harbin Tian Di Ren Medical Science and
Technology Company ("TDR"), Harbin First Bio-Engineering Company
Limited ("First"), Tianlong and Peng Lai Jin Chuang Pharmaceutical
Company ("Jin Chuang") the Company
manufactures and distributes over-the-counter pharmaceutical
products, which make up its major revenue source. For more
information, visit http://www.cski.com.cn.
Safe Harbor Statement
Certain of the statements made in the press release
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
can be identified by the use of forward- looking terminology such
as "believe,"
"expect," "intend,"
"anticipate," "estimate,"
"should",
"would",
"could",
"may",
"plan",
"possible",
"project" or similar expressions.
Such statements typically involve risks and uncertainties and may
include financial projections or business
development. Actual results could differ materially from the
expectations reflected in such forward-looking statements as a
result of a variety of factors, including the risks associated with
the effect of changing economic conditions in
PRC, the ability to achieve guidance, the
announcement or execution of any acquisitions or other strategic
deals, the success of any pipeline projects,
variations in cash flow, reliance on collaborative retail
partners and on new product development, variations in new product
development, risks associated with rapid technological change, and
the potential of introduced or undetected flaws and defects in
products, and other risk factors detailed in reports filed with the
Securities and Exchange Commission from time to time.
Company
Contact:
|
Investor
Relations Contact:
|
|
China Sky One Medical,
Inc.
|
CCG Investor
Relations
|
|
Mr. Yan-Qing Liu,
CEO
|
Mr. Crocker Coulson,
President
|
|
Email: ir@cski.com.cn
|
Tel:
+1-646-213-1915
|
|
|
Email: crocker.coulson@ccgir.com
|
|
|
Website:
www.ccgirasia.com
|
|
|
|
|
|
Ms.
Mabel Zhang,
Vice President
|
|
|
Tel:
+1-310-954-1353
|
|
|
Email: mabel.zhang@ccgir.com
|
|
|
|
-- Financial Tables Follow --
China Sky
One Medical, Inc. and Subsidiaries
Reconciliation of Non-GAAP Net
Income and Diluted EPS
(Unaudited,
$ in thousands except share and per share data)
|
|
|
For the Three Months
Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
2010
|
|
2011
|
|
2010
|
|
|
Net
Income
|
Diluted EPS
|
|
Net
Income
|
Diluted
EPS
|
|
Net
Income
|
Diluted
EPS
|
|
Net
Income
|
Diluted
EPS
|
|
Net
Income
|
$6,102
|
$0.36
|
|
$12,242
|
$0.73
|
|
$12,225
|
$0.72
|
|
$24,830
|
$1.47
|
|
Loss (gain)
related to change in fair value of derivative warrant
liabilities
|
($214)
|
($0.01)
|
|
($2,087)
|
($0. 13)
|
|
($1,591)
|
($0.09)
|
|
($7,013)
|
($0.42)
|
|
|
$5,888
|
$0.35
|
|
$10,155
|
$0.60
|
|
$10,634
|
$0.63
|
|
$17,817
|
$1.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Weighted Average Shares Outstanding
|
16,940,539
|
|
|
16,812,810
|
|
|
16,940,539
|
|
|
16,894,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Sky
One Medical, Inc. and Subsidiaries
Condensed
Consolidated Statements of Operations and Comprehensive
Income
(Unaudited,
$ in thousands except share and per share data)
|
|
|
|
Three Months
Ended June 30,
|
|
|
Six Months
Ended
June
30,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
2010
|
|
|
Revenues
|
|
$
|
37,671
|
|
|
$
|
40,760
|
|
|
$
|
66,036
|
|
|
$
|
69,663
|
|
|
Cost of
Goods Sold
|
|
|
12,753
|
|
|
|
11,216
|
|
|
|
21,817
|
|
|
|
18,491
|
|
|
Gross
Profit
|
|
|
24,918
|
|
|
|
29,544
|
|
|
|
44,219
|
|
|
|
51,172
|
|
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
1,396
|
|
|
|
827
|
|
|
|
2,730
|
|
|
|
1,668
|
|
|
Research and
development
|
|
|
5,923
|
|
|
|
5,910
|
|
|
|
10,035
|
|
|
|
9,674
|
|
|
Selling
|
|
|
8,530
|
|
|
|
7,983
|
|
|
|
14,830
|
|
|
|
13,894
|
|
|
General and
administrative
|
|
|
800
|
|
|
|
1,123
|
|
|
|
1,720
|
|
|
|
2,113
|
|
|
Total operating
expenses
|
|
|
16,649
|
|
|
|
15,843
|
|
|
|
29,315
|
|
|
|
27,349
|
|
|
Income from
Operations
|
|
|
8,269
|
|
|
|
13,701
|
|
|
|
14,904
|
|
|
|
23,823
|
|
|
Other
Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
55
|
|
|
|
30
|
|
|
|
87
|
|
|
|
59
|
|
|
Change in fair value of
derivative warrant liability
|
|
|
214
|
|
|
|
2,087
|
|
|
|
1,591
|
|
|
|
7,013
|
|
|
Total other
income
|
|
|
269
|
|
|
|
2,117
|
|
|
|
1,678
|
|
|
|
7,072
|
|
|
Net Income
Before Provision for Income Tax
|
|
|
8,538
|
|
|
|
15,818
|
|
|
|
16,582
|
|
|
|
30,895
|
|
|
Provision
for Income Taxes
|
|
|
2,436
|
|
|
|
3,576
|
|
|
|
4,357
|
|
|
|
6,065
|
|
|
Net
Income
|
|
$
|
6,102
|
|
|
$
|
12,242
|
|
|
$
|
12,225
|
|
|
$
|
24,830
|
|
|
Basic
Earnings Per Share
|
|
$
|
0.36
|
|
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
$
|
1.48
|
|
|
Basic
Weighted Average Shares Outstanding
|
|
|
16,940,539
|
|
|
|
16,790,851
|
|
|
|
16,940,539
|
|
|
|
16,783,896
|
|
|
Diluted
Earnings Per Share
|
|
$
|
0.36
|
|
|
$
|
0.73
|
|
|
$
|
0.72
|
|
|
$
|
1.47
|
|
|
Diluted
Weighted Average Shares Outstanding
|
|
|
16,940,539
|
|
|
|
16,812,810
|
|
|
|
16,940,539
|
|
|
|
16,894,775
|
|
|
Other
Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustment
|
|
$
|
2,275
|
|
|
$
|
535
|
|
|
$
|
3,690
|
|
|
$
|
556
|
|
|
Net Income
|
|
|
6,102
|
|
|
|
12,242
|
|
|
|
12,225
|
|
|
|
24,830
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Income
|
|
$
|
8,377
|
|
|
$
|
12,777
|
|
|
$
|
15,915
|
|
|
$
|
25,386
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Sky
One Medical, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
($ in
thousands, except share data)
|
|
|
|
June 30,
|
|
|
December
31,
|
|
|
|
|
2011
(Unaudited)
|
|
|
2010
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
44,295
|
|
|
$
|
43,124
|
|
|
Accounts receivable,
net
|
|
|
21,864
|
|
|
|
20,080
|
|
|
Inventories
|
|
|
6,701
|
|
|
|
2,409
|
|
|
Prepaid and other current
assets
|
|
|
22
|
|
|
|
21
|
|
|
Total current
assets
|
|
|
72,882
|
|
|
|
65,634
|
|
|
Property and equipment,
net
|
|
|
28,890
|
|
|
|
28,960
|
|
|
Intangible assets,
net
|
|
|
26,520
|
|
|
|
23,155
|
|
|
Construction in
progress
|
|
|
41
|
|
|
|
19
|
|
|
Land use rights, net
|
|
|
43,042
|
|
|
|
40,844
|
|
|
Land and construction
deposits
|
|
|
20,255
|
|
|
|
13,612
|
|
|
Total Assets
|
|
$
|
191,630
|
|
|
$
|
172,224
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
$
|
7,430
|
|
|
$
|
3,309
|
|
|
Taxes payable
|
|
|
4,186
|
|
|
|
3,225
|
|
|
Derivative warrant
liability
|
|
|
83
|
|
|
|
1,674
|
|
|
Total current
liabilities
|
|
|
11,699
|
|
|
|
8,208
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Preferred stock ($0.001 par
value, 5,000,000 shares authorized, none issued and
outstanding)
|
|
|
-
|
|
|
|
-
|
|
|
Common stock ($0.001 par value,
50,000,000 shares authorized, 16,940,539 issued and
outstanding)
|
|
|
17
|
|
|
|
17
|
|
|
Additional paid-in
capital
|
|
|
39,252
|
|
|
|
39,252
|
|
|
Retained earnings
|
|
|
125,967
|
|
|
|
113,742
|
|
|
Accumulated other comprehensive
income
|
|
|
14,695
|
|
|
|
11,005
|
|
|
Total
stockholders' equity
|
|
|
179,931
|
|
|
|
164,016
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders'
Equity
|
|
$
|
191,630
|
|
|
$
|
172,224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
China Sky
One Medical, Inc. and Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(Unaudited,
$ in thousands)
|
|
|
|
Six Months
Ended June 30,
|
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from operating activities
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
12,225
|
|
|
$
|
24,830
|
|
|
Adjustments to reconcile net
cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
3,021
|
|
|
|
1,919
|
|
|
Change in fair value of
derivative liability
|
|
|
(1,591)
|
|
|
|
(7,013)
|
|
|
Net change in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(1,335)
|
|
|
|
(2,719)
|
|
|
Inventories
|
|
|
(4,196)
|
|
|
|
(3,124)
|
|
|
Prepaid expenses and other
current assets
|
|
|
1
|
|
|
|
50
|
|
|
Accounts payable and accrued
expenses
|
|
|
4,007
|
|
|
|
3,487
|
|
|
Taxes payable
|
|
|
882
|
|
|
|
1,838
|
|
|
Net cash
provided by operating activities
|
|
|
13,014
|
|
|
|
19,268
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
|
|
|
|
|
Land and
construction deposits
|
|
|
(6,281)
|
|
|
|
(7,316)
|
|
|
Purchase of property and
equipment
|
|
|
(96)
|
|
|
|
(407)
|
|
|
Purchase of land use
rights
|
|
|
(1,986)
|
|
|
|
-
|
|
|
Purchase of intangible
assets
|
|
|
(4,389)
|
|
|
|
-
|
|
|
Purchase of construction in
process
|
|
|
(20)
|
|
|
|
-
|
|
|
Net cash
used in investing activities
|
|
|
(12,772)
|
|
|
|
(7,723)
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from warrants
conversion
|
|
|
-
|
|
|
|
94
|
|
|
Net cash
provided by financing activities
|
|
|
-
|
|
|
|
94
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
|
|
929
|
|
|
|
261
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase
in cash and cash equivalents
|
|
|
1,171
|
|
|
|
11,900
|
|
|
Cash and
cash equivalents at beginning of period
|
|
|
43,124
|
|
|
|
52,756
|
|
|
Cash and
cash equivalents at end of period
|
|
$
|
44,295
|
|
|
$
|
64,656
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income taxes
paid
|
|
$
|
3,840
|
|
|
$
|
4,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE China Sky One Medical, Inc.