Skystar Bio-Pharmaceutical Company a China-based manufacturer and distributor of veterinary medicines, vaccines, micro-organisms and feed additives, today reported unaudited first quarter fiscal year 2010 earnings, for the period ended March 31, 2010.
First Quarter 2009 Highlights
* Revenue increases 27% YoY to $4.9 million
o Veterinary vaccines totalled $0.2 million, up 58% YoY
o Veterinary medicines totalled $3.2 million, up 23% YoY
o Feed additives totalled $0.2 million, up 29% YoY
o Micro-organism products totalled $1.2 million, up 35% YoY
* Gross margin of 53% for the first three months of fiscal 2010 and compared to 49% for the three months ended March 31, 2009
* GAAP net income $1.1 million or $0.15 per fully diluted, compared with $1.1 million or $0.29 per fully diluted share in the year ago period
* Fiscal 2010 top line revenue guidance range increased to $45.5 million to $47.5 million from $44.0 million to $46.0 million
Mr. Weibing Lu, Skystar Bio-Pharmaceutical\'s chairman and chief executive officer, commented, \"We are pleased to have delivered such a strong start to the fiscal 2010 year with a 27% increase in revenue as compared to the year ago period. Additionally, the Company continues to improve top line growth while generating 53% gross margins in line with the Company\'s historical gross margins. We hope to continue with management\'s growth strategy in expanding our footprint in China\'s animal husbandry space.
\"Across Skystar\'s product lines we are seeing material revenue growth as a result of increased sales efforts, demand for our products and increased utilisation of the Company\'s veterinary medicine facility. Additionally, we are pleased to have Michael H. Lan join Skystar as our full time chief financial officer. We expect that Michael\'s internal financial control and operational experience will further aid in strengthening Skystar\'s financial accountability to the public.
\"On the R&D front, we are proceeding with research & development efforts to expand the Company\'s product lines as evidenced by the recently announced product testing of two additional product dosage forms: oral solution and injectable soluble powder specifically formulated for Skystar\'s veterinary line of medicines. It is Skystar\'s goal to launch a comparable number of products in fiscal 2010 as compared to the year prior.
\"With regard to Skystar\'s construction projects, we expect to complete the construction phase of the new vaccine manufacturing plant in the second fiscal quarter of 2010, whereby GMP testing and certification will commence. Since completing the micro-organism facility in December 2009, we have moved forward in the period with tooling the facility and quality assurance. The Company expects to begin micro-organism production in the new facility at the end of June 2010.
\"On the acquisition front, as of March 31, 2010, refundable long term prepayments of $12,308,130 represent refundable deposits made to potential acquisition targets, the completion of which are contingent upon the Company successfully negotiating with the target companies,\" concluded Mr. Lu.
Gross profit for first quarter 2010 was $2.6 million, up 37% from first quarter 2009. Gross margin for the period was 53%, in line with historical year over year comparables.
Operating expenses for first quarter 2009 were $0.8 million, or 17% of total revenue, compared with $0.6 million or 17% of total revenue in the year ago period.
Research and development (R&D) costs were $0.04 million, or less than 1% of revenue in first quarter 2010, down from $0.1 million, or 3% of revenue during first quarter 2009. Most of the current research projects are in the later phases of development focusing on applications and documentation without the significant outlays related to the earlier phases of the projects when large scale testing was required.
Selling expenses totaled $0.2 million, or 3% of revenue, for first quarter 2010, compared with $0.2 million, or 6% of revenue, in first quarter 2009. General and administrative expenses were $0.6 million, or 13% of revenue, in first quarter 2010, compared with $0.3 million, or 8% of revenue, in first quarter 2009.
Operating income increased by 41% year over year to $1.7 million in the first quarter of fiscal year 2010, compared with $1.2 million in the same quarter a year ago, and operating margin increased to 36% from 32% in the same period a year ago.
Net income for the first quarter of 2010 was $1.1 million, or $0.15 per fully diluted share. This compares to a net income of $1.1 million, or $0.29 per fully diluted share in the same quarter of 2009. Skystar\'s adjusted net income for the first quarter of 2010 was $1.4 million, or $0.20 per fully diluted share, compared with $1.0 million, or $0.27 per fully diluted share, in the first quarter of 2009 (See \"About Non-GAAP Financial Measures\" toward the end of this release).
As of March 31, 2010, Skystar had approximately $5.9 million in cash and restricted cash, current assets of $27.1 million and current liabilities of $4.3 million.
Fiscal Year 2010 Guidance Revised
Fiscal year 2010 revenue ranges have been revised to $45.5 million to $47.5 million for the full year reflecting partial revenue contribution from two new product dosage forms coming to market. We anticipate the estimated $5 million in total additional revenue to be fully recognized in fiscal 2011.