Yuhe International, Inc. Announces Unaudited Fourth Quarter and
Fiscal Year 2010 Results and Provides 2011 Guidance
- 2010 net revenue increased 43% year over year to $67.5 million
- 2010 gross profit increased 44.5% year over year to $24.2 million
- Adjusted net income (non-GAAP) increased 52% year over year to $19.5 million, or $1.15 per fully diluted share
- 2011 guidance for net income between $33 million and $36 million
Weifang, Shandong Province, the P.R.C. March 31, 2011 - Yuhe International, Inc. (NASDAQ: YUII) (“Yuhe” or the “Company”), a leading supplier of day-old chickens raised for meat production, or broilers, in the People's Republic of China (“PRC”), today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2010 and its fiscal year 2011 guidance.
Fiscal Year 2010 Highlights
- Net revenue was $67.5 million, a 43% year over year increase
- Gross profit was $24.2 million, a 44.5% year over year increase
- Adjusted net income (non-GAAP) was $19.5 million, a 52% year over year increase
- In December 2010, acquired ten new breeder farms, for a capacity expansion of 950,000 sets of parent breeders
- In July 2010, completed acquisition of five breeder farms, for a capacity expansion of 430,000 sets of parent breeders
“We are very pleased to report a strong fiscal year 2010 with solid financial and operational results.” commented Mr. Zhentao Gao, Chairman and chief executive officer of Yuhe International, Inc. “Our 2010 non-GAAP net income of $19.5 million has surpassed our previously raised guidance of $18.5 million in net income. The growth was driven by an increase in both sales volume and average selling prices of our day-old broilers. In fiscal year 2010, we sold approximately 146 million day-old broilers, or an increase of 33% from 110 million in 2009. The full year 2010 average selling price for day-old broilers increased 9% year-over-year to RMB 2.97 per bird from RMB 2.74 per bird in 2009. We are particularly pleased with our gross margin performance in fiscal year 2010, which rose to 35.9% from 35.4% in 2009, due to our successful margin management in locking in favorable fixed-price supply contracts during the market downturn and capitalizing on the market rebounds during the third and fourth quarter of 2010.”
“On the operational side, we have also achieved exceptional progress in fiscal year 2010. The first acquisition conducted by the Company in December 2009 of 13 breeder farms in Shandong Province started contributing to our production in fiscal year 2010, and currently nine out of the 13 farms are fully operational. The Company also completed two accretive acquisitions in Liaoning and Henan provinces of a total of 15 breeder farms in July and December 2010, to increase its production capacity to 3.15 million sets of parent breeders, or 8% of China’s broiler market in capacity, and to further strengthen its position as China’s largest supplier of day-old broilers. In addition, we completed construction of our third hatchery facility and the added 60 sets of hatchers commenced full operation at the year-end 2010, bringing our total sets of hatchers to 160 to absorb the increased breeding capacity” continued Mr. Gao.
Fourth Quarter 2010 Results
Net revenue increased 64.06% to $21.8 million, as compared to $13.3 million for the fourth quarter of 2009. The revenue increase was mainly driven by the 46% gain in sales volume of day-old broilers and a 16% increase in average selling prices. For the three months ended December 31, 2010, the sales volume of day-old broilers amounted to 45 million birds with an average selling price of RMB 3.18 per bird, as compared to the sales volume of 31 million birds with an average selling price of RMB 2.73 per bird in the fourth quarter of 2009. Gross profit increased 59.4% year over year to $7.5 million, with gross margin of 34.5%, as compared to $4.7 million, or 35.5% gross margin for the same period in 2009. The decrease in gross margin was mainly due to a 19% increase in average unit cost to RMB 2.11 per bird from RMB 1.77 per bird in the fourth quarter of the prior year. Net income(loss) for the three months ended December 31, 2010 was a net loss of $47.6 million, a decrease of $51.2 million from net income of $3.6 million for the same period in 2009, due mainly to incurrence of the non-recurring stock-based compensation expense of $53.81 million deriving from the share transfer between Mr. Kunio Yamamoto and Mr. Gao Zhentao. The purpose of the arrangement between Mr. Yamamoto and Mr. Gao Zhentao was to transfer Mr. Yamamoto’s shares to Mr. Gao Zhentao in exchange for the services that Mr. Gao Zhentao has rendered, which resulted in the strong performance of the Company in the years 2008 and 2009. Adjusted net income (non-GAAP) for the three months ended December 31, 2010 was $6.20 million, or $0.32 per fully diluted share, up 71.13% compared with net income of $3.6 million, or $0.23 per fully diluted share for the same period in 2009. For the fourth quarter of 2010 there were 19.3 million fully diluted weighted shares outstanding versus 15.9 million fully diluted weighted shares outstanding in the prior year period.