Yew Bio-Pharm Reports Financial Results for 2018 Second Quarter
EL MONTE, Calif., Aug. 14, 2018 (GLOBE NEWSWIRE) -- Yew Bio-Pharm Group, Inc. (“Yew Bio” or the “Company”) (YEWB), a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine, handicraft products made from yew timber and yew candle and soap made with yew essential oil in China, today reported financial results for three- and six-months ended June 30, 2018.
2018 Second Quarter Results
| Three Months Ended June 30, | Percentage | ||||||
| 2018 | 2017 | Change | |||||
| Revenues: | |||||||
| TCM Raw Materials | $ | 13,053,333 | $ | 11,536,786 | 13.15 | % | |
| Yew Trees | 32,501 | - | 100.00 | % | |||
| Handicrafts | 206 | 1,004 | (79.48 | )% | |||
| Others | 1,734,328 | 4,066,586 | (57.35 | )% | |||
| Total Revenues | $ | 14,820,368 | $ | 15,604,376 | (5.02 | )% | |
Total revenues for the second quarter of 2018 decreased 5.02% to $14.8 million from $15.6 million a year ago. Sales of TCM raw materials amounted to 88.08% of total revenues; sales of Yew Trees amounted to 0.22% of total revenues; sales of Handicrafts amounted to 0.00% of total revenues and sales of “Others” segment consisting with the yew essential oil candles, pine needle extracts, yew essential oil soaps, complex Taxus Cuspidate and northeast yew extract amounted to 11.70% of total revenues.
For the three months ended June 30, 2018, gross profit was $3.4 million, or 22.6% of total revenues, compared with $10.6 million, or 67.9% of total revenues for the comparable 2017 quarter. The decrease in the gross profit margin was primarily attributable to the decreased gross margin yields of TCM raw materials.
Operating expenses increased 329.2% to $1,287,300 for the quarter ended June 30, 2018, from $299,915 in the year-ago quarter. The increasing was primarily attributable to the increases in the stock-based compensation.
Net income for the three months ended June 30, 2018 decreased 84.3% to $1.6 million from $10.3 million in the same quarter last year due to the increase in cost of revenues from TCM raw material. Earnings per diluted share for the three months ended June 30, 2018 was $0.03, as compared to $0.19 for the three months ended June 30, 2017.
Six Month 2018 Financial Results
| Six Months Ended June 30, | Percentage | |||||
| 2018 | 2017 | Change | ||||
| Revenues: | ||||||
| TCM Raw Materials | $ | 14,748,730 | $ | 14,071,047 | 4.82 | % |
| Yew Trees | 32,501 | - | 100.00 | % | ||
| Handicrafts | 1,308 | 2,368 | (44.76 | )% | ||
| Others | 3,068,967 | 9,406,425 | (67.37 | )% | ||
| Total Revenues | $ | 17,851,506 | $ | 23,479,840 | (23.97 | )% |
Total revenues for the first six months of 2018 decreased to $17.9 million from $23.5 million a year ago. Sales of TCM raw materials amounted to 82.62% of total revenues; sales of Yew Trees amounted to 0.18% of total revenues; sales of Handicrafts amounted to 0.01% of total revenues and sales of “Others” segment consisting with yew essential oil candles, pine needle extracts, yew essential oil soaps, complex Taxus Cuspidate and northeast yew extract amounted to 17.19% of total revenues.
For the six months ended June 30, 2018, gross profit was $3.8 million, or 21.5% of total revenues, compared with $11.1 million, or 47.3% of total revenues for the comparable first six months of 2017. The decrease in the gross profit margin was primarily attributable to the decreased gross margin yields of TCM raw materials.
Operating expenses increased 158.6% to $1,547,172 for the six months ended June 30, 2018, from $598,318 for the same period last year. The increasing was primarily attributable to the increase in stock-based compensation.
Net income for the first six months of 2018 decreased 83.1% to $1.8 million from $10.4 million for the same period last year. Earnings per diluted share was $0.03, as compared to $0.19 for the six months ended June 30, 2017.
"Our total revenues decreased for the six months ended June 30, 2018 compared with the same period of 2017 was mainly due to the sales decreasing of Others segment.” said Mr. Zhiguo Wang, Chairman and Chief Executive Officer of Yew Bio-Pharm Group, Inc. “As a newly added category of the company, we developed a series of yew tree derivate products such as yew essential oil soap and candle. These products have contributed a great portion of total revenues to the company since 2016. In order to explore the market demand, we attended the Las Vegas ASD trade show on July 29th, 2018, and we directly communicated to the retailers/wholesalers in the show as to our products, designs and functions. We also received highly positive responses from the customers, and we are following some potential customers after the show.”
“As we mentioned in previous reports, we are reserving the yew tree resource in order to manufacture our TCM raw materials. However, we still have to cut down certain whole grown yew trees to produce TCM raw materials to fulfill the increased demands. This will increase our TCM raw materials unit cost extremely since we picked the leaves from our grown yew trees to manufacture TCM raw materials normally. In order to resolve the issue, on June 14, 2018, we entered into a Joint Venture Planting Agreement with Qing’An National Forestry Administration, pursuant to which the Qing’An Forestry has given HDS access to 10,729.5 mu of forest land located in Qing’An County to develop yew tree forests and produce yew seedlings. In addition, the Company is required to plant yew trees on this land from June 14, 2018 to June 13, 2038. Any gross revenues from the planting of yew tree shall be distributed 80% to the Company and 20% to the Qing’An Forestry. We believe this will be a great benefit for the company, which could provide more yew trees and increase our potential revenues.”
ABOUT YEW BIO-PHARM GROUP, INC
Yew Bio-Pharm Group, Inc., through its operating entity, Harbin Yew Science and Technology Development Co., Ltd. (HDS), is a major grower and seller of yew trees, yew raw materials used in the manufacture of traditional Chinese medicine (TCM) and products made from yew timber in China. Raw material from the species of yew tree that the Company grows contains taxol, and TCM containing yew raw materials has been approved as a traditional Chinese medicine in China for secondary treatment of certain cancers. The Company uses a patented, accelerated growth technology to speed the growth and maturity and commercialization of yew trees and believes that it is one of the few companies possessing a permit to sell them. Yew Bio-Pharm also recently established a division to focus on organic foods and dietary supplements with the aim of developing new business opportunities in related industries. To learn more, please visit
SAFE HARBOR
This press release forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements involve a number of risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our ability to collect from our largest customers; our dependence on a small number of customers for raw materials, including a related party; our ability to continue to purchase raw materials at relatively stable prices; our dependence on a small number of customers for our yew trees for reforestation; our ability to market successfully raw materials used in the manufacture of traditional Chinese medicines; and our ability to receive continued preferential tax treatment for the sale of yew trees and potted yew trees. From time to time, these risks, uncertainties and other factors are discussed in the Company’s filings with the U.S. Securities and Exchange Commission, including its most recent annual report on Form 10-K. Yew Bio does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.
(financial tables follow)
YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| June 30, 2018 | December 31, 2017 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash | $ | 772,769 | $ | 859,830 | ||||
| Accounts receivable | 60,127 | 9,881,914 | ||||||
| Accounts receivable - related parties | 12,296,807 | 21,847,733 | ||||||
| Inventories, net | 8,385,394 | 2,579,190 | ||||||
| Prepaid expenses - related parties | 43,202 | 57,202 | ||||||
| Prepaid expenses and other assets | 58,176 | 37,519 | ||||||
| VAT recoverables | 990,403 | 170,564 | ||||||
| Total Current Assets | 22,606,878 | 35,433,952 | ||||||
| LONG-TERM ASSETS: | ||||||||
| Long-term prepaid expenses - related party | 357,904 | - | ||||||
| Long-term inventories, net | 1,396,072 | 10,546,648 | ||||||
| Property and equipment, net | 540,854 | 579,557 | ||||||
| Land use rights and yew forest assets, net | 28,455,098 | 6,369,938 | ||||||
| Total Long-term Assets | 30,749,928 | 17,496,143 | ||||||
| Total Assets | $ | 53,356,806 | $ | 52,930,095 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable | $ | 167,928 | $ | 152,812 | ||||
| Accounts payable - related parties | - | 357,708 | ||||||
| Accrued expenses and other payables | 421,710 | 162,619 | ||||||
| Taxes payable | 5,522 | 5,574 | ||||||
| Due to related parties | 586,295 | 619,999 | ||||||
| Short-term borrowings | 4,666,779 | 6,099,876 | ||||||
| Total Current Liabilities | 5,848,234 | 7,398,588 | ||||||
| NONCURRENT LIABILITIES: | ||||||||
| Deferred income | 353,522 | 359,646 | ||||||
| Total Noncurrent Liabilities | 353,522 | 359,646 | ||||||
| Total Liabilities | 6,201,756 | 7,758,234 | ||||||
| SHAREHOLDERS’ EQUITY: | ||||||||
| Common Stock ($0.001 par value; 140,000,000 shares authorized; 51,875,000 shares issued and outstanding at June 30, 2018 and December 31, 2017) | 51,875 | 51,875 | ||||||
| Additional paid-in capital | 11,428,412 | 10,363,412 | ||||||
| Retained earnings | 32,049,852 | 30,287,658 | ||||||
| Statutory reserves | 3,762,288 | 3,762,288 | ||||||
| Accumulated other comprehensive income (loss) - foreign currency translation adjustment | (137,377 | ) | 706,628 | |||||
| Total Shareholders’ Equity | 47,155,050 | 45,171,861 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 53,356,806 | $ | 52,930,095 | ||||
YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
| For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| REVENUES: | ||||||||||||||||
| Revenues | $ | 142,412 | $ | 4,067,590 | $ | 174,670 | $ | 9,408,793 | ||||||||
| Revenues - related parties | 14,677,956 | 11,536,786 | 17,676,836 | 14,071,047 | ||||||||||||
| Total Revenues | 14,820,368 | 15,604,376 | 17,851,506 | 23,479,840 | ||||||||||||
| COST OF REVENUES: | ||||||||||||||||
| Cost of revenues | 89,337 | 4,058,847 | 102,243 | 9,360,063 | ||||||||||||
| Cost of revenues - related parties | 11,377,474 | 955,866 | 13,916,411 | 3,010,134 | ||||||||||||
| Total Cost of Revenues | 11,466,811 | 5,014,713 | 14,018,654 | 12,370,197 | ||||||||||||
| GROSS PROFIT | 3,353,557 | 10,589,663 | 3,832,852 | 11,109,643 | ||||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Selling | 6,989 | 66 | 7,829 | 331 | ||||||||||||
| General and administrative | 1,280,311 | 299,849 | 1,539,343 | 597,987 | ||||||||||||
| Total Operating Expenses | 1,287,300 | 299,915 | 1,547,172 | 598,318 | ||||||||||||
| INCOME FROM OPERATIONS | 2,066,257 | 10,289,748 | 2,285,680 | 10,511,325 | ||||||||||||
| OTHER INCOME (EXPENSES): | ||||||||||||||||
| Interest expense | (69,077 | ) | (35,382 | ) | (137,110 | ) | (87,345 | ) | ||||||||
| Other income | 3,022 | 1,147 | 90,325 | 1,437 | ||||||||||||
| Exchange loss | (387,014 | ) | - | (476,701 | ) | - | ||||||||||
| Total Other Expenses | (453,069 | ) | (34,235 | ) | (523,486 | ) | (85,908 | ) | ||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 1,613,188 | 10,255,513 | 1,762,194 | 10,425,417 | ||||||||||||
| PROVISION FOR INCOME TAXES | - | (604 | ) | - | (604 | ) | ||||||||||
| NET INCOME | $ | 1,613,188 | $ | 10,254,909 | $ | 1,762,194 | $ | 10,424,813 | ||||||||
| COMPREHENSIVE INCOME: | ||||||||||||||||
| NET INCOME | $ | 1,613,188 | $ | 10,254,909 | $ | 1,762,194 | $ | 10,424,813 | ||||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||
| Foreign currency translation adjustment | (2,400,809 | ) | 775,601 | (844,005 | ) | 1,079,481 | ||||||||||
| COMPREHENSIVE INCOME (LOSS) | $ | (787,621 | ) | $ | 11,030,510 | $ | 918,189 | $ | 11,504,294 | |||||||
| NET INCOME PER COMMON SHARE: | ||||||||||||||||
| Basic | $ | 0.03 | $ | 0.20 | $ | 0.03 | $ | 0.20 | ||||||||
| Diluted | $ | 0.03 | $ | 0.19 | $ | 0.03 | $ | 0.19 | ||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 51,875,000 | 51,875,000 | 51,875,000 | 51,875,000 | ||||||||||||
| Diluted | 55,866,258 | 53,041,145 | 55,502,609 | 55,034,527 | ||||||||||||
YEW BIO-PHARM GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 1,762,194 | $ | 10,424,813 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 30,050 | 46,498 | ||||||
| Stock-based compensation | 1,065,000 | 67,348 | ||||||
| Amortization of land use rights and yew forest assets | 598,366 | 70,717 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 10,037,898 | 2,693,028 | ||||||
| Accounts receivable - related parties | 9,542,974 | (4,421,530 | ) | |||||
| Prepaid expenses and other current assets | (21,862 | ) | (5,367 | ) | ||||
| Prepaid expenses - related parties | 13,543 | 11,816 | ||||||
| Inventories, net | 3,297,088 | (7,625,415 | ) | |||||
| VAT recoverables | (855,373 | ) | 292,731 | |||||
| Accounts payable | 15,301 | (26,246 | ) | |||||
| Accounts payable - related parties | (365,562 | ) | (1,978,078 | ) | ||||
| Accrued expenses and other payables | 272,245 | 302,587 | ||||||
| Due to related parties | (32,370 | ) | (51,602 | ) | ||||
| Deferred income | - | 218,204 | ||||||
| Taxes payable | (52 | ) | (11,869 | ) | ||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 25,359,440 | 7,635 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Prepayments made to related party for purchase of yew forest assets | (372,098 | ) | - | |||||
| Purchase of land use rights and yew forest assets | (23,681,125 | ) | (679,387 | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (24,053,223 | ) | (679,387 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from short-term borrowings | 3,156,000 | 6,501,105 | ||||||
| Repayment of short-term borrowings | (4,432,593 | ) | (3,617,764 | ) | ||||
| Repayments to related party | - | (75,875 | ) | |||||
| NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES | (1,276,593 | ) | 2,807,466 | |||||
| EFFECT OF EXCHANGE RATE ON CASH | (116,685 | ) | 22,849 | |||||
| NET INCREASE (DECREASE) IN CASH | (87,061 | ) | 2,158,563 | |||||
| CASH - Beginning of period | 859,830 | 278,991 | ||||||
| CASH - End of period | $ | 772,769 | $ | 2,437,554 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid for: | ||||||||
| Interest | $ | 104,208 | $ | 86,076 | ||||
| Income taxes | $ | - | $ | 18,015 | ||||
| NON-CASH INVESTING AND FINANCIANG ACTIVITIES | ||||||||
| Operating expenses paid by related party | $ | 4,555 | $ | 27,015 | ||||
| Reclassification of inventories to land use rights and yew forest assets | $ | - | $ | 4,257,122 | ||||
Company Contacts: Henry Pang Yew Bio-Pharm Group, Inc. Tel: (626) 401-9588
