Skystar Bio-pharmaceutical Co. (fka SKBI)

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Skystar Bio-Pharmaceutical Announces Results for Third Quarter Fiscal Year 2012
Veterinary Medication Facility Resumes Production and Distribution; Veterinary Vaccine Facility Receives Initial GMP Certification
MarketwirePress Release: Skystar – Thu, Nov 15, 2012 5:30 AM EST

XI'AN, CHINA--(Marketwire - Nov 15, 2012) - Skystar Bio-Pharmaceutical Company ( NASDAQ : SKBI ) ("Skystar" or the "Company"), a China-based manufacturer and distributor of veterinary medicines, vaccines, micro-organisms and feed additives, today reported unaudited third quarter fiscal year 2012 earnings, for the period ended September 30, 2012.

Third Quarter 2012 Highlights

Revenue decrease 57% YoY to $8.9 million
Veterinary vaccines totaled $1.0 million, up 19% YoY
Veterinary medicines totaled $1.8 million, down 86% YoY
Feed additives totaled $1.2 million, up 13% YoY
Probiotics products totaled $4.9 million, down 18% YoY
Gross margin of 59% for the third quarter of fiscal 2011 as compared to 52% in the year ago period
GAAP net income declined 65% to $2.7 million or $0.36 per fully diluted share, compared with net income of $7.7 million or $1.08 per fully diluted share in the year ago period
Fiscal 2012 top line revenue guidance range revised from $33 million to $38 million reflecting inactivity of the veterinary medications facility due to timing of its GMP re-certification process.

Nine Month 2012 Highlights

Net revenue declined 31% YoY to $25.7 million
Gross profit of $14.7 million for the nine months of fiscal 2012 as compared to $18.9 million in the year ago period
GAAP net income $6.3 million, compared with GAAP net income of $11.2 million in the year ago period

Mr. Weibing Lu, Skystar Bio-Pharmaceutical's Chairman and Chief Executive Officer, commented, "Skystar has made significant strides in moving its infrastructure forward in support of manufacturing capacity for the Company's veterinary medication and vaccine lines providing a solid outlook in the medium and long term.

"Skystar has resumed production and distribution of its primary veterinary medicine following GMP recertification by the Ministry of Agriculture. In addition, Skystar's animal and aquaculture vaccine production facility passed initial GMP certification, and, when it operates and reaches its full production levels, is expected to generate at minimum $15 million in annual sales.

"Once operational, the much anticipated vaccine facility will allow Skystar to mass produce vaccines currently produced by hand in large quality controlled batches. Both the certification of the veterinary medicine and vaccine plants are significant milestones for Skystar and are vital in supporting the Company's growth in upcoming years."

Mr. Lu concluded, "In terms of Skystar's performance for the 3rd quarter of 2012, it is noteworthy that, in spite of China's 'soft' economic performance which is partly attributable to fiscal policies designed to control inflation, Skystar has been able to maintain and, at times, marginally increase sales pricing for its products. With this in mind, Skystar's 3rd quarter revenue and bottom line largely reflect a revenue drop in its veterinary medication business in the 3rd quarter, which accounts for nearly 60% of Skystar's revenues in any given period. This is a short term effect related to the closure of Skystar's veterinary medication facility during the pendency of the GMP recertification process. Now that Skystar has resumed production at this facility, Skystar can continue its commitment to maintaining bottom line profitability in its organic business in order to fund growth and expansion initiatives internally for years to come."

Forecast
With the loss of revenue from the veterinary medication plant for all of the third quarter, Skystar's seasonally strongest quarter, the Company is recasting guidance to be in the range of $33 million to $38 million for fiscal 2012.

Financial Summary
Revenues for third quarter 2012, decreased 57% to $8.9 million as compared to $20.9 million in the year ago period.

Gross profit third quarter 2012 was roughly $5.3 million, down 52% from third quarter 2011.

Gross margin for the period was higher at 59% compared to 52% in the year ago period, due to the change in available product mix for sale.

Total operating expenses for third quarter 2012 was $1.6 million, or 18% of total revenue, compared with $1.9 million or 9% of total revenue in the year ago period.

Research and development costs totaled roughly $200,000 for the period, as compared to roughly $91,000 for the three months ended September 30, 2011, an increase of 118%.

Selling expenses totaled $690,000 for third quarter 2012 as compared to $1.2 million for the comparable year ago period this was a decrease of roughly $480,000 or 41%.

General and administrative expenses totaled $730,000 in the third quarter of 2012 as compared to $602,000 for the year ago period, an increase of $128,000 or 21%.

Operating income decreased 59% year over year and was $3.6 million in the third quarter of fiscal 2012 as compared to $9.0 million in the year ago period, operating margin remained level at 41% as compared to 43% from the year ago period.

Net income for the third quarter of 2012 was $2.7 million, or $0.36 per fully diluted share. This compares to net income of $7.7 million or $1.08 per fully diluted share in the same quarter of 2011.

As of September 30, 2012, Skystar had approximately $2.7 million in cash and current assets of $73 million and current liabilities of $20 million.

Conference Call & Webcast Information
The Company will host a conference call on Thursday, November 15, 2012 to discuss the quarter. Skystar's conference call will begin promptly at 7:45 a.m. ET to discuss third quarter financial results and operational performance. Mr. Weibing Lu, Skystar's chairman and chief executive officer, will host the call, which will be webcast live.

Webcast
The webcast will be made available on the investor relations section of the Skystar corporate website at http://www.investorcalendar.com/IC/CEPage.asp?ID=170249.

http://finance.yahoo.com/news/skystar-bio-pharmaceutical-announces-results-103000821.html