Skypeople Fruit Juice (NASDAQ:SPU)

First Quarter 2012 Summary:

• Total revenue was $15.0 million, a decrease of 23% year-over-year
• Sales revenue of concentrated kiwi juice and kiwi puree increased 26% to $3.8 million
• Sales revenue of concentrated pear juice increased 19% to $4.8 million
• Cash generated from operations was $14.8 million
• Cash and cash equivalents were $76.7 million as of March 31, 2012

Yongke Xue, Chief Executive Officer of SkyPeople, commented, "We continue to be challenged by unpredictable market conditions and rising raw material costs due to the volatile pricing of fresh fruits. We understand that these factors are beyond our control, and have been working to further diversify our segment mix to offset, to the extent possible, the effect of seasonality. Nonetheless, we were able to generate healthy margins in two key product lines. We are also pleased to report solid cash flows generated from operating activities, further strengthening our cash position which enables us to execute our comprehensive growth strategy."

"During the quarter we achieved the following important developments which I would like to highlight. First of all, our cash balances had been independently verified, which substantiated our integrity and reassured investors as to our credibility. Secondly, we had commenced operation of a new fruit juice beverage production line in our Huludao Wonder subsidiary, which was expected to help us take advantage of economies of scale and focus on producing high margin fruit juice beverages. Thirdly, we appointed Mr. Xin Ma as our new Chief Financial Officer with confidence that his experience with U.S. publicly traded Chinese companies is an excellent fit to our needs. These developments reflected our management's commitment to focus on enhanced financial transparency, sound investor communications and an operational focus on high margin products. Our top priority continues to be generating solid returns on our investment so as to create long-term value for our shareholders," CEO Xue stated.

Full Year 2011 Results

• otal revenue was $84.0 million, a decrease of 10% year-over-year
• Concentrated apple juice and apple aroma segment sales revenue increased 6% to $24.8 million 
• Concentrated pear juice segment sales revenue increased 6% to $13.4 million 
• Cash inflow generated from operations was $26.0 million 
• Cash and cash equivalents of $61.2 million as of December 31, 2011 
• Added another concentrated pear juice production line in the Company's Jingyang factory in Shaanxi province
• A new beverage production line that will produce a variety of fruit juice beverages has been substantially completed and the trial operation has commenced in the fourth quarter of 2011

Yongke Xue, Chief Executive Officer of SkyPeople, commented, "Despite the unexpected weather conditions that prevailed throughout the harvest season of the year, we were able to generate year-to-year increases in two important product lines for the year as well as a reasonable level of revenue and strong cash flow from all of our business segments. We experienced an increase in our raw material costs due to the highly volatile pricing of fresh fruit. However, we are confident in our ability to manage the business during difficult times, and to develop new products with higher margins that may offset some of these operating concerns in the future."

"We continue to be optimistic about the long-term future of our Company. We are implementing a strategy to cut the prices of our fruit juice beverages in order to expand our market share. We remain confident about the sector given relatively low current domestic consumption and potentially escalating consumer adoption as rising incomes lead to healthier lifestyles. A new production line for concentrated pear juice and a new fruit juice production line were both implemented in the fourth quarter of 2011. Our strategic growth plan for additional storage, processing and production capacity is in motion that we believe augurs a promising future for the Company," CEO Xue stated.

XI'AN, China, December 28, 2011 /PRNewswire-Asia-FirstCall/ -- SkyPeople Fruit Juice, Inc. (NASDAQ: SPU -News) ("SkyPeople" or "the Company"), a processor and manufacturer of kiwifruit, apple, pear and other concentrated specialty fruit juices and manufacturer of Hedetang- and Qian Mei Duo-branded fruit beverages in the People's Republic of China ("PRC" or "China"), today announced that it added another concentrated pear juice line in the Company's Jingyang factory in Shaanxi province.

The new line, which was put into production on December 26, 2011, can process 20 tons of pears per hour. With its ISO9001, HACCP and KOSHER certified quality control system, the new production line meets the standards of exporting to major fruit juice consuming countries including the U.S., Canada and European Union. The capital expenditures associated with this project was approximately $7.4 million. The new line augments SkyPeople's existing capacity of processing 20 tons of pears per hour.

"We believe that the new line production will provide us with additional capacity to meet our expectation for growth in demand for this juice product and further strengthen our leading position in the concentrated pear juice segment," commented Yongke Xue , Chief Executive Officer of SkyPeople Fruit Juice.

Third Quarter 2011 Results

Second Quarter 2011 summary:

• Total revenue decreased 9% to $12.2 million year-over-year
• Apple concentrate sales increased 110% to $2.4 million due to higher pricing
• Fresh juice beverage sales increased 12% to $5.4 million 
• Cash flows from operations increased was $27.5 million in first half of 2011; $76.1 million cash and cash equivalents at June 30, 2011

Yongke Xue, Chief Executive Officer of SkyPeople Fruit Juice explained, "Sales of our Hedetang and Qian Mei Duo beverages grew significantly in the quarter and were the single largest revenue stream for the Company. Our branded beverages are now sold in over 100 retail stores in approximately 13 cities including Xi'an, Beijing and now, Tianjin. During our seasonally slowest quarter, we improved apple juice and pear concentrate sales despite weather effects on the harvest seasons over the last six months. This was offset by a measured decrease in kiwifruit sales as the second quarter in 2010 had abnormally strong harvests. We remain committed to capitalizing on the growth potential for our branded beverages and the continued growth of our concentrate business in China and international markets."

XI'AN, China, July 21, 2011 /PRNewswire-Asia-FirstCall/ -- SkyPeople Fruit Juice, Inc. (NASDAQ:SPU - News) (together with is direct and indirect subsidiaries, "SkyPeople" or the "Company"), a processor and manufacturer of kiwifruit, apple, pear and other concentrated specialty fruit juices and manufacturer of Hedetang and Qin Mei Duo-branded fruit beverages in the People's Republic of China ("PRC" or "China"), today announced that it signed a Letter of Intent with the People's Government of Suizhong County, Liaoning Province, to establish a fruit and vegetable industry chain and further processing demonstration zone in Suizhong County, Liaoning Province (the "Suizhong project"). The Suizhong project is one of the projects promoted by Liaoning government in its efforts to further develop the agricultural product processing industry in Liaoning.

Yonkue Xue, Chief Executive Officer of SkyPeople Fruit Juice explained, "Our diversified product portfolio produced respectable growth in the first quarter despite weather effects on the harvest seasons for apple and pear over the last six months. Sales of our Hedetang and Qian Mei Duo beverages grew significantly in the quarter and were the single largest revenue stream for the Company. Our branded beverages are now sold in over 100 retail stores in approximately 13 cities including Xi'an, Beijing and now, Tianjin. We are excited about the growth potential for this market and the continued growth of our concentrate business in China and international markets."

Fourth Quarter Results:

• A record with revenue of $43.9 million, up 22.6% from 4Q 2009
• Apple concentrates and Hedetang fruit beverages increased 359% and 417%, respectively
•  Net income was $11.2 million, up 9.8% year-over-year, also a record
•  Diluted EPS showed a decrease to $0.47 for 4Q 2010 based on 23.1 million shares versus $0.56 per share in 4Q 2009 based on 18.6 million shares

"The fourth quarter is traditionally our strongest and was an appropriate ending to a successful year in which we demonstrated the significant growth in both apple concentrates and our branded Hedetang fruit beverages," started Yonkue Xue, Chief Executive Officer of SkyPeople Fruit Juice. "Due to seasonality, we normally witness kiwifruit concentrates and fresh fruits as the dominant contributor to revenues in the quarter. This year, however, we witnessed triple digit growth from our apple concentrates and production. I am especially proud of the 4 fold increase in fruit beverage sales, which was driven by a broader distribution footprint, the addition of new retail locations, and reorders from existing customers. Our Hedetang-branded beverages are currently sold through over 84 distributors and over 100 retail stores in approximately 17 cities. As the market continues to embrace these unique flavors, we are pursuing a significant growth opportunity in this segment and commercialized a new fruit juice line, Qian Mei Duo in January 2011 to target one of the fastest growing markets in China, the active, health-conscious female 18-29 years old."

As of December 31, 2010, we have completed the infrastructure construction work for the fruit juice beverage production line and have ordered the machinery for this new beverage production line. We expect to install and test the new beverage production line in the second quarter and start operating the production line in the third quarter of 2011. The environmental project mainly consists of a wastewater processing facility that is required in our production of fruit juice concentrates. Our increasing need for an additional wastewater processing facility is a result of our expansion in the production of concentrated apple juice. We expect to complete this project in the third quarter of 2011.

In the first quarter of 2011, we halted all construction work because of the cold weather in Huludao, which had regularly suffered sub-zero daytime temperatures. We expect to recommence the infrastructure construction work in April 2011 when the weather becomes more suitable for construction. We currently expect to complete all such infrastructure construction work by the end of the second quarter of 2011 and thereafter start installation and testing of the machinery. We expect to complete the installation of the concentrated apple production line in the fourth quarter of 2011 or early 2012. We plan to start the construction of the refrigeration storage unit for the storage of concentrated fruit juices and fresh fruits and vegetables and a concentrated fruit juice-mixing center in the second quarter of 2011. We expect to complete this project in the fourth quarter of 2011 or early 2012. As of December 31, 2010, we have spent $1.0 million of the net proceeds from the offering on the construction work of Huludao Wonder. We have not signed any contracts for the purchase of the machinery or the equipment for the refrigeration storage unit and concentrated apple juice production line yet. We are in the process of negotiating with different suppliers and we expect to order this machinery and equipment in the third and fourth quarters of 2011.

"The strong financial performance we delivered in the third quarter reflects the underlying demand for our concentrates globally and domestic demand for our juices and beverages in China," began Yongke Xue, CEO of SkyPeople Fruit Juice. "With plans underway to expand our capacity by 100% in concentrated apple juice in 2010, we are optimistic in our ability to meet the growing demand, which continues to expand in China. In fruit beverages, we will continue to increase distribution at a measured pace. The new, branded beverages we are introducing in the fourth quarter are the first step of our multi-year plan to make our Hedetang juice beverages a category leader. Based on the strong momentum through the first nine months of 2010, we remain confident in meeting our full year revenue, adjusted net income and adjusted EPS guidance as we enter our strongest quarters during the harvest seasons. We are also pleased that our fructose line is now up and running and we anticipate fructose revenues contributing to revenues for the year." Xue concluded.

GeoTeam® Note:  SPU has finally joined the growing number of ChinaHybrid compnies that are willing to issue guidance, helping to subdue fears of near-term dilutive equity raises.  although comments in the 2010 third quarter filing does not rule out a potential raise. 

We believe that projected cash flows from operations, anticipated cash receipts, cash on hand, and trade credit will provide the necessary capital to meet our projected operating cash requirements for at least the next 12 months, which does not take into account any potential expenditures related to the potential expansion of our current production capacity.

2010 Guidance:

   Second Quarter 2010 Results:

                             2Q 2010           2Q 2009           CHANGE

    Net Sales            $ 13.4 million  $ 6.2 million      + 116.1%
    Gross Profit         $ 6.4 million    $1.9 million       + 236.8%
    Net Income         $ 4.8 million    $ 1.7 million      + 182.4%
    EPS (Diluted)       $0.22             $0.09                + 144.4%

"In the second quarter of 2010, sales of our concentrates and Hedetang juices experienced double digit growth exceeding management's expectations for the quarter," began Yongke Xue, CEO of SkyPeople Fruit Juice. "Continued growth in our domestic sales is a testament to our strategy to increase market share for our core concentrates of kiwifruit and pear in China while expanding our geographic footprint for our proprietary brand of juices. In the second quarter, we were also pleased to see continued orders from our international customer base, which we believe will support overall growth for the balance of the year. Our new product turnjujube concentrate, also contributed to the second quarter and we expect incremental growth going forward. " Xue concluded.

2010 Guidance

For the calendar year ended December 31, 2010, SkyPeople has provided $92.0-$100.0 million in revenue guidance and $19.0 to $21.0 in net income. The Company expects revenue and earnings growth to continue through the second half of the year, as it enters its most profitable selling period during the third and fourth quarter harvest and squeezing seasons.

GeoTeam note: We subtracted subsidy income from the financial results to attain a more accurate EPS picture. Doing this yields:

2010 second quarter EPS: $0.14
2009 second quarter EPS: $0.04

"In the first quarter of 2010, we built upon the growth we reported during 2009 and significantly increased all key financial metrics compared to the year ago period," began Yongke Xue, CEO of SkyPeople Fruit Juice. "Sales of our concentrates represented a majority of our revenues as we witnessed a number of our export markets rebound this year. Domestic sales of concentrates and our Hedetang(TM) branded juice also showed strong growth during the first quarter. Each of our core segments produced revenue and profit growth which is evidence of execution on both our product and customer strategies in 2010," Xue concluded.

On January 19th, SkyPeople supported is sales and marketing strategies for the Hedetang(R) fruit juice and cider product lines by providing 2010 revenue guidance of $92.0 to $102.0 million, and net income guidance of $19.0 to $21.0 million. Growth is expected to be driven by enhanced distribution of its high- margin Hedetang(R) juices, leveraging its capacity expansion during is 2010 harvest seasons and increased orders from domestic and international customers of concentrates in China and from international markets as they continue to rebound.

Source: PR Newswire (March 31, 2010)

'Our sales in the second quarter were largely impacted by a drop in consumer spending in the international market based on the current global economic climate,' Mr. Yongke Xue, CEO of SkyPeople. 'Despite the decline in total revenue, we saw a 72% year-over-year increase in sales for our fruit juice beverages to $3.0 million, as well as achieved a $690,000 sequential-quarter increase for sales of our fruit vinegar beverages, which we introduced to the Chinese market in the 2009 first quarter. We plan to continue to grow our business and focus on introducing new and higher margin products to capture additional fruit juice market share.

Source: PR Newswire (August 14, 2009)

Mr. Yongke Xue, Chief Executive Officer of SkyPeople, stated, 'Our strong gains in gross profit margin, operating income and net income for the first quarter demonstrate our ability to successfully develop and bring to market high quality, healthy and nutritious fruit juice products that satisfy accelerating consumer demand and preference for healthier fruit-based juice drinks. Interest in small breed fruit products such as our specialty kiwifruit and mulberry products continues to escalate worldwide due to the nutritional advantages and unique taste of these specialty fruits, which are not as widely available as more traditional juice flavors. We also began sales of high margin kiwifruit and mulberry vinegar products during the first quarter. Sales in each of these product categories offset part of our planned decrease in apple and pear juice product sales as we seek to build a larger volume of higher margin product sales into our mix.

Mr. Xue continued, 'One of our goals is to increase our production capacity of kiwifruit juice and kiwifruit puree from 10,000 tons to 22,500 tons by the third quarter of 2009. We will also continue to invest in upgrading our existing facilities to improve our operational efficiency and productivity. As the fruit juice market continues to evolve, we are confident in our ability to meet growing consumer demand both domestically and internationally for unique and high quality juice products.'

Source: See Release

Mr. Xue stated, "We enter 2009 with a growing product line, increasing market share, and strong momentum overall. We will continue to upgrade our existing facilities to improve our operational efficiency and productivity, as well as look for targeted acquisition candidates to expand our position in the domestic and international fruit juice market."

Source: PR Newswire (March 31, 2009)