Exhibit 99.1

 

Shineco, Inc. Reports Third Quarter of 2018 Financial Results

 

BEIJING, May 17, 2018 /PRNewswire/ -- Shineco, Inc. ("Shineco" or the "Company"; NASDAQ: TYHT), a producer and distributor of Chinese herbal medicines, organic agricultural produce, specialized textiles, and other health and well-being focused plant-based products in China, announced today its financial results for the third quarter ended March 31, 2018.

 

Mr. Yuying Zhang, Chairman and Chief Executive Officer of Shineco, Inc., commented, "We are delighted that our increased capital spending in 2017 has translated into increased profitability in 2018. Our business in Xinjiang factory has turned a profit, and our sales in Shandong have remained stable. This is reflected in our financial results. Shineco's gross profit had increased by 102% to $5.26 million, our operating margin had increased by 8.4 percentage points to 29.4%, and our gross margin had increased by 6.7 percentage points to 39.4% compared to the same period of last year."

Mr. Zhang concluded, "The market's response to our Luobuma product line has been immensely positive, as reflected by an impressive sales increase of 388.6% to $5.48 million from $1.12 million from the same period of last year. We are pleased with the recognition from our clients, as we continue to innovate and expand in the future."

Third Quarter of 2018 Financial Highlights

 

   For the Three Months Ended March 31 
($ millions, except per share data)  2018   2017   % Change 
Revenue   13.34    7.94    68.0%
Luobuma products   5.48    1.12    388.6%
Chinese medicinal herbal products   3.30    3.05    8.3%
Other agricultural products   4.56    3.77    20.9%
Gross profit   5.26    2.60    102.2%
Gross margin   39.4%   32.8%   6.7%
Operating income   3.92    1.67    135.0%
Operating margin   29.4%   21.0%   8.4%
Net income attributable to Shineco   4.55    1.92    136.8%
EPS   0.21    0.09    135.2%

 

·Revenues increased by 68.0% to $13.34 million for the three months ended March 31, 2018 from $7.94 million for the same period last year.
·Gross profit increased by 102.2% to $5.26 million for the three months ended March 31, 2018 from $2.60 million for the same period last year. Gross margin increased by 6.7 percentage points to 39.4% from 32.8% for the same period of last year.
·Net income attributable to Shineco increased by 136.8% to $4.55 million, or $0.21 per basic and diluted share, for the three months ended March 31, 2018 from $1.92 million, or $0.09 per basic and diluted share, for the same period last year. The increases in net income and earnings per share were primarily due to an increase in gross profit, partially offset by an increase in general and administrative expenses.

Third Quarter of 2018 Financial Results

Revenues

Revenues for the three months ended March 31, 2018 increased by $5.40 million, or 68.0%, to $13.34 million from $7.94 million for the same period of last year, mainly due to increased sales of all products.

 

   For the Three Months Ended March 31 
   2018   2017 
($ millions)  Revenues   COGS   Gross
Margin
   Revenues   COGS   Gross
Margin
 
Luobuma products   5.48    2.36    56.9%   1.12    0.57    49.2%
Chinese medicinal herbal products   3.30    2.56    22.0%   3.05    2.28    24.7%
Other agricultural products   4.56    3.15    31.0%   3.77    2.47    34.4%
Business and sales related taxes   -    0.01    -    -    0.02    - 
Total   13.34    8.08    39.4%   7.94    5.34    32.8%

 

Revenues from Luobuma products increased by $4.36 million, or 388.6%, to $5.48 million for the three months ended March 31, 2018 from $1.12 million for the same period of last year, mainly due to establishment of new subsidiary, Xinjiang Taihe, which generated revenue of $5,210,768.

 

1 

 

 

Revenues from Chinese medicinal herbal products increased by $0.25 million, or 8.3%, to $3.30 million for the three months ended March 31, 2018 from $3.05 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers for the three months ended March 31, 2018 than the same period in 2017.

Revenues from other agricultural products increased by $0.79 million, or 20.9%, to $4.56 million for the three months ended March 31, 2018 from $3.77 million for the same period of last year. The sales of other agricultural products were mainly derived from sales of yew trees and our storage services. The increase was mainly due to the increase in sales volume of yew trees since the public realized the air purification function of the yew trees.

Gross profit and Gross Margin

Total cost of goods sold increased by $2.74 million, or 51.3%, to $8.08 million for the three months ended March 31, 2018 from $5.34 million for the same period of last year. Gross profit increased by $2.66 million, or 102.2%, to $5.26 million for the three months ended March 31, 2018 from $2.60 million for the same period of last year. Overall gross margin increased by 6.7 percentage points to 39.4% for the three months ended March 31, 2018, compared to 32.8% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 56.9%, 22.0%, and 31.0%, respectively, for the three months ended March 31, 2018. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 49.2%, 24.7%, and 34.4%, respectively, for the same period of last year.

Operating income

Selling expenses increased by $0.08 million, or 27.4%, to $0.39 million for the three months ended March 31, 2018 from $0.30 million for the same period of last year, primarily due to the acquisition of a new subsidiary, Tianjin Tajite, in October 2017. The increase in selling and distribution expenses was also a result of increased promotion expenses as the Company enhanced its online sales promotions, partially offset by decreased rent expense of warehouse and salary expenses due to more effective cost control during the three months ended March 31, 2018 compared to the same period of 2017. General and administrative expenses increased by $0.33 million, or 51.5%, to $0.96 million for the three months ended March 31, 2018 from $0.63 million for the same period of last year. The increase in general and administrative expenses was primarily due to the incorporation and acquisition of new subsidiaries, Tiankunrunze in last quarter of fiscal year 2017, and Xinjiang Taihe and Tianjin Tajite in fiscal year 2018. As a result, total operating expenses increased by $0.41 million, or 43.6%, to $1.34 million for the three months ended March 31, 2018 from $0.94 million for the same period of last year.

Operating income increased by $2.25 million, or 135.0%, to $3.92 million for the three months ended March 31, 2018 from $1.67 million for the same period of last year. Operating margin was 29.4% for the three months ended March 31, 2018, compared to 21.0% for the same period of last year.

Net income

Net income increased by $2.55 million, or 130.4%, to $4.51 million for the three months ended March 31, 2018 from $1.96 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the three months ended March 31, 2018 was $4.55 million, or $0.21 per basic and diluted share. This compared to net income attributable to common shareholders of $1.92 million, $0.09 per basic and diluted share, for the same period of last year.

Nine Months Ended March 31, 2018 Financial Results

   For the Nine Months Ended March 31 
($ millions, except per share data)  2018   2017   % Change 
Revenue   35.28    25.53    38.2%
Luobuma products   10.41    2.77    276.0%
Chinese medicinal herbal products   10.23    9.73    5.2%
Other agricultural products   14.64    13.04    12.3%
Gross profit   12.17    8.47    43.6%
Gross margin   34.5%   33.2%   1.3%
Operating income   8.11    5.25    54.4%
Operating margin   23.0%   20.6%   2.4%
Net income attributable to Shineco   9.41    6.12    53.7%
EPS   0.45    0.30    49.3%

2 

 

Revenues

Revenues for the nine months ended March 31, 2018 increased by $9.75 million, or 38.2%, to $35.28 million from $25.53 million for the same period of last year, mainly due to increased sales of all products. 

   For the Nine Months Ended March 31 
   2018   2017 
($ millions)  Revenues   COGS   Gross
Margin
   Revenues   COGS   Gross
Margin
 
Luobuma products   10.41    4.81    53.7%   2.77    1.37    50.0%
Chinese medicinal herbal products   10.23    7.89    22.5%   9.73    7.20    25.6%
Other agricultural products   14.64    10.36    29.2%   13.04    8.44    35.3%
Business and sales related taxes   -    0.06    -    -    0.05    - 
Total   35.28    23.11    34.5%   25.53    17.06    33.2%

 

Revenues from Luobuma products increased by $7.64 million, or 276.0%, to $10.41 million for the nine months ended March 31, 2018 from $2.77 million for the same period of last year, mainly due to revenue generated by a new subsidiary, Xinjiang Taihe, of US$ 8,145,196. Moreover, the increase of revenue from this segment was due to increased sales volume of our health awareness related products. The Company also enhanced online sales promotions during the nine months ended March 31, 2018, which contributed to more sales revenue overall.

 

Revenues from Chinese medicinal herbal products increased by $0.51 million, or 5.2%, to $10.23 million for the nine months ended March 31, 2018 from $9.73 million for the same period of last year. The increase was primarily due to more fulfilled sales orders from customers for the nine months ended March 31, 2018 than the same period in 2017.

Revenues from other agricultural products increased by $1.60 million, or 12.3%, to $14.64 million for the nine months ended March 31, 2018 from $13.04 million for the same period of last year. The increase was mainly attributable to the increase in sales volume of yew trees since the public realized the air purification function of the yew trees.

Gross profit and Gross Margin

Total cost of goods sold increased by $6.06 million, or 35.5%, to $23.11 million for the nine months ended March 31, 2018 from $17.06 million for the same period of last year. Gross profit increased by $3.70 million, or 43.6%, to $12.17 million for the nine months ended March 31, 2018 from $8.47 million for the same period of last year. Overall gross margin increased by 1.3 percentage points to 34.5% for the nine months ended March 31, 2018, compared to 33.2% for the same period of last year.

Gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products were 53.7%, 22.5%, and 29.2%, respectively, for the nine months ended March 31, 2018. This compared to gross margins for Luobuma products, Chinese medicinal herbal products, and other agricultural products of 50.0%, 25.6%, and 35.3%, respectively, for the same period of last year.

Operating income

Selling expenses increased by $0.05 million, or 3.9%, to $1.23 million for the nine months ended March 31, 2018 from $1.19 million for the same period of last year, primarily due to the acquisition of a new subsidiary, Tianjin Tajite, in October 2017. The increase in selling and distribution expenses was also a result of increased promotion expenses as the Company enhanced its online sales promotions, partially offset by decreased rent expense of warehouse and salary expenses due to more effective cost control during the nine months ended March 31, 2018 compared to the same period of 2017. General and administrative expenses increased by $0.79 million, or 39.0%, to $2.82 million for the nine months ended March 31, 2018 from $2.03 million for the same period of last year. The increase in general and administrative expenses was primarily attributable to the incorporation and acquisition of new subsidiaries, Tiankunrunze in second quarter of fiscal year 2017, and Xinjiang Taihe and Tianjin Tajite in fiscal year 2018.  The increase in general and administrative expenses was also a result of increased professional service fees, such as attorney's fees, consulting fees and auditing fees. As a result, total operating expenses increased by $0.84 million, or 26.0%, to $4.05 million for the nine months ended March 31, 2018 from $3.22 million for the same period of last year.

Operating income increased by $2.86 million, or 54.4%, to $8.11 million for the nine months ended March 31, 2018 from $5.25 million for the same period of last year. Operating margin was 23.0% for the nine months ended March 31, 2018, compared to 20.6% for the same period of last year.

3 

 

Net income

Net income increased by $3.12 million, or 50.0%, to $9.35 million for the nine months ended March 31, 2018 from $6.23 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the nine months ended March 31, 2018 was $9.41 million, or $0.45 per basic and diluted share. This compared to net income attributable to common shareholders of $6.12 million, $0.30 per basic and diluted share, for the same period of last year.

Financial Condition

As of March 31, 2018, the Company had cash and cash equivalents of $28.43 million, compared to $23.15 million as of June 30, 2017. Net cash used in operating activities was $5.34 million for the nine months ended March 31, 2018, compared to net cash used in operating activities of $1.38 million for the same period of last year. Net cash used in investing activities was $0.90 million for the nine months ended March 31, 2018, compared to $1.69 million for the same period of last year. Net cash used in financing activities was $0.45 million for the nine months ended March 31, 2018, compared to net cash provided by financing activities of $5.60 million for the same period of last year.

About Shineco, Inc.

Incorporated in August 1997 and headquartered in Beijing, China, Shineco, Inc. ("Shineco" or the "Company") is a Delaware holding company that uses its subsidiaries' and variable interest entities' vertically- and horizontally-integrated production, distribution and sales channels to provide health and well-being focused plant-based products in China. Utilizing modern engineering technologies and biotechnologies, Shineco produces, among other products, Chinese herbal medicines, organic agricultural produce and specialized textiles. For more information about the Company, please visit www.shinecobiotech.com.

Forward-Looking Statements

This press release contains information about Shineco's view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of products and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Shineco encourages you to review other factors that may affect its future results in Shineco's registration statement and in its other filings with the Securities and Exchange Commission.

For more information, please contact:

Tina Xiao
Ascent Investor Relations LLC
Phone: +1-917-609-0333
Email: tina.xiao@ascent-ir.com 

4 

 

SHINECO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 
    March 31,    June 30, 
    2018    2017 
    (Unaudited)      
ASSETS          
CURRENT ASSETS:          
Cash  $28,432,209   $23,154,551 
Accounts receivable, net   24,864,469    14,480,004 
Due from related parties   409,193    448,833 
Inventories   2,765,143    2,346,273 
Advances to suppliers, net   3,582,001    2,396,123 
Deferred issuance cost   434,000    - 
Other current assets   818,934    1,900,143 
TOTAL CURRENT ASSETS   61,305,949    44,725,927 
           
Property and equipment, net   12,463,088    10,320,396 
Land use right, net of accumulated amortization   1,426,571    1,346,631 
Investments   6,703,975    5,695,080 
Deposit for business acquisition   128,967    2,065,686 
Distribution rights   1,175,033    - 
Long-term deposit and other noncurrent assets   121,494    112,883 
Prepaid leases   3,706,730    3,784,533 
Deferred tax assets   -    233,834 
Goodwill   2,230,683    - 
TOTAL  ASSETS  $89,262,490   $68,284,970 
           
LIABILITIES AND EQUITY          
           
CURRENT LIABILITIES:          
Short-term loans  $2,481,156   $2,663,628 
Accounts payable   3,242,373    158,068 
Advances from customers   6,811    5,439 
Due to related parties   206,885    257,880 
Other payables and accrued expenses   2,181,904    337,107 
Taxes payable   2,385,329    1,608,926 
TOTAL CURRENT LIABILITIES   10,504,458    5,031,048 
           
Deferred tax liability   4,229    - 
TOTAL LIABILITIES   10,508,687    5,031,048 
           
Commitments and contingencies   -    - 
           
EQUITY:          
Common stock; par value $0.001, 100,000,000 shares authorized; 21,234,072 and 21,034,072 shares issued and outstanding at March 31, 2018 and  June 30, 2017   21,234    21,034 
Additional paid-in capital   23,171,102    22,737,302 
Statutory reserve   4,074,570    3,484,449 
Retained earnings   47,880,159    39,064,743 
Accumulated other comprehensive loss   2,489,677    (3,140,982)
Total Stockholders' equity of Shineco, Inc.   77,202,742    62,166,546 
Non-controlling interest   1,117,061    1,087,376 
TOTAL EQUITY   78,319,803    63,253,922 
           
TOTAL LIABILITIES AND EQUITY  $89,262,490   $68,284,970 

5 

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

 

   For the Nine Months
Ended March 31,
   For the Three Months
Ended March 31,
 
   2018   2017   2018   2017 
                 
REVENUE  $35,282,977   $25,531,313   $13,341,281   $7,941,583 
                     
COST OF REVENUE                    
Cost of product and services   23,059,329    17,007,048    8,065,117    5,319,742 
Business and sales related tax   55,624    53,228    14,287    19,264 
Total cost of revenue   23,114,953    17,060,276    8,079,404    5,339,006 
                     
GROSS PROFIT   12,168,024    8,471,037    5,261,877    2,602,577 
                     
OPERATING EXPENSES                    
General and administrative expenses   2,820,689    2,029,981    956,765    631,640 
Selling expenses   1,232,713    1,186,536    387,494    304,182 
Total operating expenses   4,053,402    3,216,517    1,344,259    935,822 
                     
INCOME FROM OPERATIONS   8,114,622    5,254,520    3,917,618    1,666,755 
                     
OTHER INCOME                    
Income from equity method investments   703,453    699,380    352,801    297,612 
Purchase rebate income   1,191,011    846,297    411,076    253,669 
Other income   220,270    253,196    80,295    93,888 
Interest income (expense), net   (41,684)   15,124    (10,360)   (25,414)
Total other income   2,073,050    1,813,997    833,812    619,755 
                     
INCOME BEFORE PROVISION FOR INCOME TAXES   10,187,672    7,068,517    4,751,430    2,286,510 
                     
PROVISION FOR INCOME TAXES   834,647    833,661    239,612    328,274 
                     
NET INCOME   9,353,025    6,234,856    4,511,818    1,958,236 
                     
Less: net income (loss) attributable to non-controlling interest   (52,512)   116,006    (40,084)   35,829 
                     
NET INCOME ATTRIBUTABLE TO SHINECO, INC.  $9,405,537   $6,118,850   $4,551,902   $1,922,407 
                     
COMPREHENSIVE INCOME                    
Net income  $9,353,025   $6,234,856   $4,511,818   $1,958,236 
Other comprehensive income (loss): foreign currency translation gain (loss)   5,714,317    (1,985,492)   2,683,536    528,683 
Total comprehensive income   15,067,342    4,249,364    7,195,354    2,486,919 
Less: comprehensive income attributable to non-controlling interest   31,146    80,161    (1,249)   43,720 
                     
COMPREHENSIVE INCOME ATTRIBUTABLE TO SHINECO, INC.  $15,036,196   $4,169,203   $7,196,603   $2,443,199 
                     
Weighted average number of shares basic and diluted   21,080,787    20,477,598    21,176,294    21,034,072 
                     
Basic and diluted earnings per common share  $0.45   $0.30   $0.21   $0.09 

6 

 

SHINECO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   For the Nine Months Ended
March 31,
 
   2018   2017 
         
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income  $9,353,025   $6,234,856 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation and amortization   489,835    445,037 
Loss from disposal of property and equipment   5,520    - 
Bad debt expense   47,497    147,770 
Increase in inventory reserve   153,029    45,419 
Deferred tax (benefit) provision   (35,677)   9,790 
Income from equity method investments   (703,452)   (699,380)
Interest income from loans to related parties   -    (86,585)
           
Changes in operating assets and liabilities:          
Accounts receivable   (8,876,896)   (7,744,632)
Advances to suppliers   (939,882)   (929,907)
Inventories   (315,834)   2,613,094 
Other receivables   259,946    (864,944)
Prepaid expense and other assets   233,107    (192,464)
Due from related parties   125,501    361,287 
Prepaid leases   361,665    351,480 
Accounts payable   2,945,920    185,693 
Advances from customers   (81,157)   26,247 
Other payables   1,716,955    (1,519,339)
Taxes payable   604,558    232,390 
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES   5,343,660    (1,384,188)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Acquisitions of property and equipment   (1,721,647)   (41,016)
Proceeds from disposal of property and equipment   603    - 
Payment for construction in progress   (5,843)   - 
Repayments (advances to) of loans from third parties   831,453    (506,452)
Loan advances to related party   (53,443)   - 
Repayments of loans from related parties   -    567,246 
Income received from investments in unconsolidated entities   152,694    551,933 
Deposit for business acquisition   (123,682)   (2,060,548)
Deposit for potential investment   -    (200,000)
Cash of subsidiary acquired   23,153    - 
NET CASH (USED IN) INVESTING ACTIVITIES   (896,712)   (1,688,837)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from short-term loans   2,443,100    2,680,184 
Repayment of short-term loans   (2,820,126)   (2,406,426)
Stock issuance cost payable   -    843,844 
Proceeds from initial public offering, net of offering costs   -    4,550,705 
Repayments of advances from related parties   (68,465)   (68,984)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES   (445,491)   5,599,323 
           
EFFECT OF EXCHANGE RATE CHANGE ON CASH   1,276,201    (861,050)
           
NET INCREASE IN CASH   5,277,658    1,665,248 
           
CASH - Beginning of the Period   23,154,551    22,009,374 
           
CASH - End of the Period  $28,432,209   $23,674,622 
           
SUPPLEMENTAL CASH FLOW DISCLOSURES:          
Cash paid for income taxes  $702,064   $579,566 
Cash paid for interest  $98,017   $109,208 
           
SUPPLEMENTAL NON-CASH INVESTING ACTIVITY:          
Issued 200,000 shares of deferred issuance cost  $434,000   $- 

7


The following information was filed by Shineco, Inc. (TYHT) on Friday, May 18, 2018 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

View differences made from one year to another to evaluate Shineco, Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 10-K Annual Report to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Shineco, Inc..

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Log in with your credentials

or    

Forgot your details?

Create Account