CHENGDU, China, Dec. 10, 2014 /PRNewswire/ -- Tianyin Pharmaceutical Inc. (NYSE Amex: TPI), a pharmaceutical company that specializes in the patented biopharmaceutical, modernized traditional Chinese medicine (mTCM), branded generics and active pharmaceutical ingredients (API) announced financial results for the fiscal year 2014.
Fiscal Year 2014 Ended June 30, 2014 Financial Highlights:
-- Revenue was $46.6 million versus $67.5 million in the FY2013;
-- Gross profit was $15.9 million with gross margin at 34% versus gross profit of $26.0 million with gross margin at 39% in the FY 2013;
-- Operating income was $2.7 million, compared with $9.3 million in FY 2013;
-- Net Income was $(0.8) million compared with $6.6 million in FY 2013;
-- Earnings per share of $(0.03) per basic and diluted share, compared with $0.23 per basic and diluted share in the FY 2013;
-- Cash and cash equivalents totaled $16.1 million on June 30, 2014;
Comparison of results (in $ million) for the fiscal years ended June 30, 2014 and 2013 | ||||||||
Years Ended June 30 | 2014 | 2013 | ||||||
Sales | $ | 46.6 | $ | 67.5 | ||||
Cost of Sales | $ | 30.7 | $ | 41.5 | ||||
Gross profit | $ | 15.9 | $ | 26.0 | ||||
Selling, general and administrative and R&D expenses | $ | 13.2 | $ | 16.7 | ||||
Other income (expenses) | $ | (3.3) | $ | (0.3) | ||||
Income taxes | $ | (0.2) | $ | 2.4 | ||||
Net income attributable to TPI | $ | (0.8) | $ | 6.6 | ||||
Sales for the fiscal year ended June 30, 2014 was $46.6 million, decreased by 31% from $67.5 million for the fiscal year 2013, mainly due to the Hugan incidence, along with generic pricing pressure, sales volume decrease and prolonged JCM production ramp up. We witnessed a 43% reduction of total revenue of TPI’s organic portfolio which excludes the distribution revenue, from $51.0 million for the fiscal year ended June 30, 2013 to $29.3 million for the fiscal year ended June 30, 2014. With the recovery of production capacity and sales, we are implementing various strategies to stabilize our generic sales.
Cost of Sales for the fiscal year ended June 30, 2014 was approximately $30.7 million or 66% of the revenue, compared with $41.5 million or 62% of the revenue for the fiscal year ended June 30, 2013. Our cost of sales primarily consists of the direct raw material costs, labor, depreciation and amortization of manufacturing equipment and facilities and other overhead. The slight increase of our cost of sales percentage from the previous year was mainly due to a margin decrease of our products amid the healthcare reform and intensified market competition and written off of obsolete inventory in the year ended June 30, 2014, which was further discussed in the following “Gross profit” segment.
Gross profit for fiscal year ended June 30, 2014 was approximately $15.9 million with 34% gross margin, compared with $26.0 million with 39% gross margin for fiscal year ended June 30, 2013. The sales of GMOL were $16.0 million compared with $26.1 million in fiscal year 2013, along with other core products revenue growth that totaled $23.0 million. During the fiscal year 2014, our organic product portfolio delivered approximately 46% gross margin, a decrease from 52% in fiscal year 2013 mainly due to the pricing controls and fierce competition amid the current healthcare market compounded by the interruption by GMP recertification. Provided the blend of core product sales growth along with TMT lower margin distribution revenue and lower margin generic sales as the current pricing trend continues, we anticipate our overall gross margin in the near term to stabilize above 36% for the fiscal 2015, influenced by JCM macrolide API revenue as compared to the core product portfolio performance. The factors that influence the gross margins of our major products include raw material price (85% of the cost of goods sold) and production cost (15% of the cost of goods sold).
Operating and R&D Expenses were $14.6 million in fiscal year ended June 30, 2014, compared with $16.7 million in fiscal year ended June 30, 2013. The decrease of $2.1 million operating and R&D expenses is proportional to the sales compression. As a result of the sales impact caused by the Hugan incidence, our operating margin was compressed to 6% compared with 14% a year earlier. We expect the operating expenses percentage to stabilize above 12% of the revenue for fiscal year 2015. The income from operation of $3.0 million compared with $9.3 million in the previous year was mainly the result of decrease of sales and gross margins.
Net loss attributable to TPI was $0.8 million for the fiscal year ended June 30, 2014, compared with a net income of $6.6 million in fiscal year ended June 30, 2013. The loss was mainly caused by the production interruption, sales decrease and related costs that resulted from GMP re-certification.
Income Taxes for the year ended June 30, 2014 and 2013 were $0.20 million and $2.4 million. The decrease in provision for income tax was mainly due to the decrease of pre-tax income due to decrease of income from operation and non-operational expenses.
Balance Sheet and Cash Flow
As of June 30, 2014, we had working capital totaling $24.5 million, including cash and cash equivalents of $16.1 million. Net cash generated from operating activities was $2.5 million for fiscal year ended June 30, 2014 as compared with $12.9 million for fiscal year ended June 30, 2013. The decrease was mainly due to the decrease of the net income. At the end of fiscal year 2014, the accounts receivable was $9.1 million, 19% of the total revenue, compared with $10.1 million, or 15% of the total revenue for fiscal 2013, mainly due to the decreased annual sales. We believe that TPI is adequately funded to meet all of our working capital and capital expenditure needs for fiscal year 2015.
Net cash used in investing activities for the fiscal year ended June 30, 2014 totaled $(15.4) million compared with $(16.1) million in the fiscal year ended June 30, 2013 which are mainly related to the construction and equipment purchase of the Qionglai Facility (QLF) project.
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