QINGDAO, China, Dec. 28, 2018 /PRNewswire/ – TDH Holdings, Inc.
(NASDAQ: PETZ) ("TDH" or the "Company"), a PRC-based company that
specializes in the development, manufacturing and sales of various
pet food products under multiple established brands in China, Asia
and Europe, today announced its
unaudited financial results for the six months ended June 30, 2018.
First Half 2018 Unaudited Financial Highlights:
|
|
For the Six
Months Ended June 30,
|
($ millions,
except per share data)
|
|
2018
|
|
2017
|
|
%
Change
|
Revenues
|
|
$11.55
|
|
$14.08
|
|
-18.0%
|
Gross profit
(loss)
|
|
($0.89)
|
|
$4.16
|
|
-121.4%
|
Gross profit
(loss) margin
|
|
-7.7%
|
|
29.5%
|
|
-37.2 pp*
|
Operating
income (loss)
|
|
($5.69)
|
|
$0.67
|
|
-955.3%
|
Operating
income (loss) margin
|
|
-49.3%
|
|
4.7%
|
|
-54.0 pp*
|
Net income
(loss)
|
|
($4.83)
|
|
$0.54
|
|
-989.2%
|
Earnings (loss)
per share - basic and diluted
|
|
($0.51)
|
|
$0.07
|
|
-845.4%
|
|
|
|
|
|
|
|
* pp:
percentage points
|
|
|
|
|
|
|
- Revenues decreased by 18.0% to $11.55
million for the first half of 2018, with decreases in sales
from overseas markets partially offset by increase in sales in
domestic market and E-commerce platforms.
- Gross loss was $0.89 million for
the first half of 2018, compared to gross profit of $4.16 million for the same period of the
prior year.
- Operating loss was $5.69 million
for the first half of 2018, compared to operating income of
$0.67 million for the same period of
the prior year. The operating loss was mainly due to the gross loss
combined with the increased operating expenses.
- Net loss was $4.83 million, or
loss per share of $0.51, for the
first half of 2018, compared to net income of $0.54 million, or earning per share of
$0.07, for the same period of the
prior year.
First Half 2018 Financial Results
Revenues
The Company generates its revenues from product sales, mainly
including sales for pet chews, dried pet snacks and wet canned pet
foods in oversea markets, domestic markets and by e-commerce
platform. Revenue consists of the invoiced value for the sales, net
of value-added tax ("VAT"), business tax, and applicable local
government levies. For the first half of 2018, total revenues
decreased by $2.53 million, or 18.0%,
to $11.55 million from $14.08 million as compared with the same period
of the prior year. The decrease in total revenues was mainly due to
production restriction and delayed delivery resulting from 1)
government mandated production suspension for the most part of the
second quarter of 2018 in preparation for the Shanghai Cooperation
Organization Summit that was held in Qingdao City where our facility located; 2)
equipment relocation, testing and delayed product delivery after
relocation of one of our production facilities during the first
quarter of 2018.
|
|
For the Six
Months Ended June 30,
|
|
|
2018
|
|
|
2017
|
|
|
Y/Y
Change
|
|
|
Revenues
($'000)
|
|
% of T
otal
|
|
|
Revenues
($'000)
|
|
% of
Total
|
|
|
Amount
($'000)
|
|
%
|
Overseas
|
$
|
7,576
|
|
65.6%
|
|
$
|
11,446
|
|
81.3%
|
|
$
|
(3,869)
|
|
-33.8%
|
Domestic
|
|
1,725
|
|
14.9%
|
|
|
601
|
|
4.3%
|
|
|
1,124
|
|
187.0%
|
E-commerce
|
|
2,293
|
|
19.9%
|
|
|
2,049
|
|
14.5%
|
|
|
244
|
|
11.9%
|
less: sales tax
and additional surcharge
|
|
(43)
|
|
-0.4%
|
|
|
(12)
|
|
-0.1%
|
|
|
(31)
|
|
258.6%
|
Total
|
$
|
11,552
|
|
100.0%
|
|
$
|
14,084
|
|
100.0%
|
|
$
|
(2,532)
|
|
-18.0%
|
Overseas sales decreased by $3.87 million, or 33.8%, to $7.58 million for the first half of
2018 from $11.45 million
for the same period of the prior year. Domestic sales increased by
$1.12 million, or 187%, to
$1.73 million for the first half
of 2018 from $0.60 million
for the same period of the prior year. Sales from the e-commerce
channel increased by $0.24 million, or 11.9%, to $2.29 million for the first half of
2018 from $2.05 million for
the same period of the prior year.
Cost of revenues
Cost of revenues consists primarily of raw materials, labor and
factory overhead expenses necessary to manufacture finished
goods. Cost of revenues increased by $2.52 million, or 25.4%, to $12.44 million for the first half of 2018 from
$9.93 million for the same period of
the prior year. The increase in cost of revenues was mainly due to
increased raw material costs, such as chicken, beef and pork,
write-down of obsolete inventories and low productivity after the
relocation of one of our main production facilities. As a
percentage of revenues, cost of revenues was 107.7% for the first
half of 2018, compared to 70.5% for the same period of the prior
year.
Gross profit (loss) and gross profit (loss) margin
Gross loss was $0.89 million for
the first half of 2018, compared to gross profit of $4.16 million for the same period of the prior
year. Gross loss margin was 7.7% for the first half of 2018,
compared to gross profit margin of 29.5% for the same period of the
prior year.
Operating expense
Operating expense consists of selling expense, general and
administrative expense and research and development expense.
Selling expense increased by $0.27
million, or 12.8%, to $2.40
million for the first half of 2018 from $2.13 million for the same period of the prior
year. The increase in selling expense was mainly due to the
increased payroll expenses of new marketing personnel recruited
during the first half of 2018 and the increased advertising and
promotion expenditures.
General and administrative expense increased by $0.57 million, or 63.0%, to $1.48 million for the first half of 2018 from
$0.91 million for the same period of
the prior year. The increase in general and administrative expense
was mainly attributable to the increased payroll expenses for newly
engaged senior management executives and professionals, and
increased expenses on application of production certifications
during the first half of 2018.
Research and development expense increased by $0.46 million, or 102.0%, to $0.92 million for the first half of 2018 from
$0.46 million for the same period of
the prior year. The increase in research and development expense
was due to new R&D projects during the first half of
2018.
As a result, total operating expenses increased by $1.31 million, or 37.5%, to $4.80 million for the first half of 2018 from
$3.49 million for the same period of
the prior year.
Operating income (loss) and operating income (loss)
margin
Loss from operations was $5.69
million for the first half of 2018, compared to operating
income of $0.67 million for the same
period of the prior year. The decrease in income from operations
was the combined result of decrease in net revenues and increases
in cost of goods sold and operating expenses.
Net Income (loss) and earnings (loss) per share
Net loss was $4.83 million, or
loss per share of $0.51, for the
first half of 2018, compared to net income of $0.54 million, or earnings per share of
$0.07, for the same period of the
prior year.
Financial Conditions
As of June 30, 2018, the Company
had cash, cash equivalents and restricted cash of $3.02 million, compared to $3.64 million at December
31, 2017. Accounts receivable and inventories were
$1.82 million and $7.70 million, respectively, as of June 30, 2018, compared to $1.93 million and $9.14
million, respectively, at the end of 2017. Total working
capital was $1.30 million as of
June 30 2018, compared to
$6.92 million at the end of 2017.
Net cash used in operating activities was $2.04 million for the first half of 2018,
compared to $1.13 million for the
same period of the prior year. Net cash used in investing
activities was $0.28 million for the
first half of 2018, compared to $1.25
million for the same period of the prior year. Net cash
provided by financing activities was $1.74
million for the first half of 2018, compared to $1.54 million for the same period of the prior
year.
Notice
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
About TDH Holdings, Inc.
Founded in April 2002, TDH
Holdings, Inc. (the "Company") (NASDAQ: PETZ), is a developer,
manufacturer and distributer of a variety of pet food products
under multiple brands that are sold in the China, Asia
and Europe. More information about
the Company can be found at www.tiandihui.com.
Safe Harbor Statement
This news release contains forward-looking statements.
Without limiting the generality of the foregoing, words such as
"may," "will," "expect," "believe," "anticipate," "intend,"
"could," "estimate" or "continue" or the negative or other
variations thereof or comparable terminology are intended to
identify forward-looking statements. These statements are only
predictions, uncertainties and other factors may cause the
Company's actual results, levels of activity, performance or
achievements to be materially different from any future results,
levels or activity, performance or achievements expressed or
implied by these forward-looking statements. Specifically, the
Company's statements regarding its continued growth and business
outlook, are forward-looking statements. In addition, any
statements that refer to expectations, projections or other
characterizations of future events or circumstances are
forward-looking statements. These forward-looking statements are
not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict
and many of which are beyond the control of the Company.
Actual results may differ from those projected in the
forward-looking statements due to risks and uncertainties that are
described more fully in the Company's public reports filed with the
U.S. Securities and Exchange Commission. Although the Company
believes that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, there can be no assurance that the
results contemplated in forward-looking statements will be
realized. In light of the significant uncertainties inherent
in the forward-looking information included herein, the inclusion
of such information should not be regarded as a representation by
TDH or any other person that their objectives or plans will be
achieved. The Company does not undertake any obligation to revise
the forward-looking statements contained herein to reflect events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
For more information, please contact:
Tony Tian,
CFA
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1-732-910-9692
TDH HOLDINGS, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
2018
|
|
|
2017
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,486,464
|
|
|
$
|
2,346,109
|
Restricted cash,
current
|
|
|
1,037,824
|
|
|
|
797,668
|
Accounts
receivable
|
|
|
1,726,107
|
|
|
|
1,932,924
|
Accounts receivable -
related party
|
|
|
97,787
|
|
|
|
-
|
Advances to
suppliers
|
|
|
384,610
|
|
|
|
633,554
|
Inventories
|
|
|
7,696,593
|
|
|
|
9,135,332
|
Due from related
parties
|
|
|
283,334
|
|
|
|
361,961
|
Prepayments and other
current assets
|
|
|
957,391
|
|
|
|
371,796
|
Total current
assets
|
|
|
13,670,110
|
|
|
|
15,579,344
|
NON-CURRENT
ASSETS:
|
|
|
|
|
|
|
|
Restricted cash,
non-current
|
|
|
500,000
|
|
|
|
500,000
|
Property, plant and
equipment, net
|
|
|
3,358,909
|
|
|
|
3,520,373
|
Land use rights,
net
|
|
|
204,899
|
|
|
|
211,023
|
Equity
Investments
|
|
|
226,617
|
|
|
|
-
|
Deferred tax
assets
|
|
|
872,510
|
|
|
|
-
|
Total non-current
assets
|
|
|
5,162,935
|
|
|
|
4,231,396
|
Total
assets
|
|
$
|
18,833,045
|
|
|
$
|
19,810,740
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
6,260,891
|
|
|
$
|
4,734,110
|
Accounts payable -
related parties
|
|
|
134,175
|
|
|
|
152,298
|
Notes
payable
|
|
|
1,807,950
|
|
|
|
1,377,106
|
Advances from
customers
|
|
|
490,096
|
|
|
|
231,230
|
Advances from
customers - related party
|
|
|
-
|
|
|
|
7,520
|
Short term
loans
|
|
|
3,127,313
|
|
|
|
1,402,514
|
Taxes
payable
|
|
|
13,331
|
|
|
|
13,562
|
Due to related
parties
|
|
|
204,786
|
|
|
|
345,873
|
Other current
liabilities
|
|
|
335,524
|
|
|
|
392,435
|
Total
current liabilities
|
|
|
12,374,066
|
|
|
|
8,656,648
|
NON-CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Deferred tax
liabilities
|
|
|
-
|
|
|
|
5,810
|
Total
liabilities
|
|
|
12,374,066
|
|
|
|
8,662,458
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Common stock ($0.001
par value; 200,000,000 shares authorized; 9,423,750 shares
issued and outstanding at June 30, 2018 and December 31,
2017)
|
|
|
9,424
|
|
|
|
9,424
|
Additional paid-in
capital
|
|
|
9,947,084
|
|
|
|
9,947,084
|
Stock subscription
receivable
|
|
|
-
|
|
|
|
(100,000)
|
Statutory
reserves
|
|
|
160,014
|
|
|
|
160,014
|
Retained earnings
(deficit)(1)
|
|
|
(3,957,057)
|
|
|
|
823,474
|
Accumulated other
comprehensive income
|
|
|
299,723
|
|
|
|
308,286
|
Total TDH Holdings, Inc. stockholders' equity
|
|
|
6,459,188
|
|
|
|
11,148,282
|
Noncontrolling
interest
|
|
|
(209)
|
|
|
|
-
|
Total equity
|
|
|
6,458,979
|
|
|
|
11,148,282
|
Total liabilities
and equity
|
|
$
|
18,833,045
|
|
|
$
|
19,810,740
|
(1)
|
On January 1, 2018,
the Company adopted ASC 606 Revenue from Contracts with Customers
using the modified retrospective method, which means that prior
periods amount will be reported on a historical basis and amounts
for 2018 are reported on the new basis. Under the new accounting
standard, the main impact to the Company is that revenue generated
from products sold to certain E-commerce platforms is recognized at
the time products are delivered rather than when the price is
determined and mutually agreed upon between the Company and the
E-commerce platforms, usually at a later time after products
delivery. The cumulative impact arising from the adoption was an
increase to retained earnings as of January 1, 2018 of
approximately $0.05 million.
|
TDH HOLDINGS, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
(LOSS)
|
(Unaudited)
|
|
|
|
For The
Six Months
Ended
June 30,
2018
|
|
|
For The
Six Months
Ended
June 30,
2017
|
|
|
|
|
|
|
Net
revenues
|
|
$
|
11,034,840
|
|
|
$
|
14,074,615
|
Net revenues -
related parties
|
|
|
517,038
|
|
|
|
9,087
|
Total
revenues
|
|
|
11,551,878
|
|
|
|
14,083,702
|
Cost of
revenues
|
|
|
12,007,697
|
|
|
|
9,918,642
|
Cost of revenues -
related parties
|
|
|
435,449
|
|
|
|
7,161
|
Gross
profit
|
|
|
(891,268)
|
|
|
|
4,157,899
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling
expense
|
|
|
2,404,158
|
|
|
|
2,130,758
|
General and
administrative expense
|
|
|
1,476,634
|
|
|
|
905,693
|
Research and
development expense
|
|
|
920,745
|
|
|
|
455,878
|
Total operating
expenses
|
|
|
4,801,537
|
|
|
|
3,492,329
|
Income (loss) from
operations
|
|
|
(5,692,805)
|
|
|
|
665,570
|
Interest
expense
|
|
|
(46,142)
|
|
|
|
(46,814)
|
Government
subsidies
|
|
|
21,676
|
|
|
|
407
|
Other
income
|
|
|
9,944
|
|
|
|
40,985
|
Other
expenses
|
|
|
(34,629)
|
|
|
|
(61,591)
|
Total other
expenses
|
|
|
(49,151)
|
|
|
|
(67,013)
|
Income (loss)
before income taxes provision (benefit)
|
|
|
(5,741,956)
|
|
|
|
598,557
|
Income tax provision
(benefit)
|
|
|
(913,052)
|
|
|
|
55,489
|
Net income
(loss)
|
|
|
(4,828,904)
|
|
|
|
543,068
|
Less: Net loss
attributable to noncontrolling interest
|
|
|
(42)
|
|
|
|
-
|
Net income (loss)
attributable to TDH Holdings, Inc.
|
|
$
|
(4,828,862)
|
|
|
$
|
543,068
|
|
|
|
|
|
|
|
|
Comprehensive
income (loss)
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(4,828,904)
|
|
|
$
|
543,068
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
(8,730)
|
|
|
|
122,832
|
Total
comprehensive income (loss)
|
|
|
(4,837,634)
|
|
|
|
665,900
|
Less: Comprehensive
loss attributable to noncontrolling interest
|
|
|
(209)
|
|
|
|
-
|
Comprehensive
income (loss) attributable to TDH Holdings, Inc.
|
|
$
|
(4,837,425)
|
|
|
$
|
665,900
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share attributable to TDH Holdings, Inc.
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.51)
|
|
|
$
|
0.07
|
Diluted
|
|
$
|
(0.51)
|
|
|
$
|
0.07
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
9,423,750
|
|
|
|
7,900,000
|
Diluted
|
|
|
9,423,750
|
|
|
|
7,900,000
|
TDH HOLDINGS, INC.
AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
For the
six months
ended
|
|
For the
six months
ended
|
|
|
June 30,
2018
|
|
June 30,
2017
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(4,828,904)
|
|
$
|
543,068
|
Adjustments to
reconcile net income to net cash used in operating
activities
|
|
|
|
|
|
|
Depreciation
and amortization expense
|
|
|
189,571
|
|
|
174,663
|
Deferred
income tax asset
|
|
|
(913,052)
|
|
|
-
|
Deferred
income tax liability
|
|
|
-
|
|
|
(1,174)
|
Changes in
operating assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
436,165
|
|
|
(629,097)
|
Accounts receivable -
related party
|
|
|
(101,665)
|
|
|
-
|
Inventories
|
|
|
1,152,362
|
|
|
(3,109,155)
|
Due to related
party
|
|
|
9,424
|
|
|
-
|
Advances to
suppliers
|
|
|
247,602
|
|
|
127,546
|
Prepayments and other
current assets
|
|
|
(640,101)
|
|
|
(201,707)
|
Accounts
payable
|
|
|
1,740,043
|
|
|
2,929,702
|
Accounts payable -
related parties
|
|
|
(16,146)
|
|
|
-
|
Notes
payable
|
|
|
472,309
|
|
|
(568,785)
|
Taxes
payable
|
|
|
(782)
|
|
|
39,846
|
Advances from
customers
|
|
|
273,226
|
|
|
(469,522)
|
Advances from
customer - related party
|
|
|
(7,685)
|
|
|
-
|
Other current
liabilities
|
|
|
(52,402)
|
|
|
37,928
|
|
|
|
|
|
|
|
NET CASH USED IN
OPERATING ACTIVITIES
|
|
$
|
(2,040,035)
|
|
$
|
(1,126,687)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Payments to
acquire property, plant and equipment
|
|
|
(59,603)
|
|
|
(28,730)
|
Loans to
related parties
|
|
|
(236,388)
|
|
|
(1,225,765)
|
Repayment from
related parties
|
|
|
254,902
|
|
|
-
|
Payments for
equity investments
|
|
|
(235,605)
|
|
|
-
|
|
|
|
|
|
|
|
NET CASH USD IN
INVESTING ACTIVITIES(2)
|
|
$
|
(276,694)
|
|
$
|
(1,254,495)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Collection of
stock subscription receivable
|
|
|
100,000
|
|
|
644,970
|
Proceeds from
related parties
|
|
|
4,665
|
|
|
1,736,158
|
Repayments to
related parties
|
|
|
(188,484)
|
|
|
(676,957)
|
Proceeds from
short term loans
|
|
|
2,133,269
|
|
|
1,008,076
|
Repayments of
short term loans
|
|
|
(314,139)
|
|
|
(1,169,430)
|
|
|
|
|
|
|
|
NET CASH PROVIDED
BY FINANCING ACTIVITIES
|
|
$
|
1,735,311
|
|
$
|
1,542,817
|
|
|
|
|
|
|
|
Effects on changes in
foreign exchange rate
|
|
|
(38,071)
|
|
|
34,820
|
Net change in cash,
cash equivalents, and restricted cash
|
|
|
(619,489)
|
|
|
(803,545)
|
Cash, cash
equivalents, and restricted cash - beginning of the
period
|
|
|
3,643,777
|
|
|
1,852,223
|
Cash, cash
equivalents, and restricted cash - end of the period
|
|
$
|
3,024,288
|
|
$
|
1,048,678
|
|
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
46,142
|
|
$
|
46,814
|
Income taxes
paid
|
|
$
|
-
|
|
$
|
7,390
|
|
|
|
|
|
|
|
Non-cash Investing
and Financing Transactions
|
|
|
|
|
|
|
Operating expenses
paid by related parties
|
|
$
|
58,650
|
|
$
|
43,059
|
Liabilities assumed
in connection with purchase of property, plant and
equipment
|
|
$
|
21,785
|
|
$
|
2,639
|
Accounts payable
settled with loans to related parties
|
|
$
|
-
|
|
$
|
10,632
|
Receivables from
related parties settled with payables to related parties
|
|
$
|
56,875
|
|
$
|
1,060,574
|
|
|
|
|
|
|
|
Reconciliation of
cash, cash equivalents, and restricted cash to the consolidated
balance sheets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,486,464
|
|
$
|
528,118
|
Restricted
cash
|
|
$
|
1,537,824
|
|
$
|
520,560
|
Total cash, cash
equivalents, and restricted cash
|
|
$
|
3,024,288
|
|
$
|
1,048,678
|
(2)
|
The Company adopted
ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted
Cash", beginning in the first quarter of fiscal year 2018. As a
result of adopting this new accounting update, the consolidated
statements of cash flows were retrospectively adjusted to include
restricted cash in cash and cash equivalents when reconciling the
beginning-of-period and end-of-period total amounts shown on the
consolidated statements of cash flows. The impact of the
retrospective reclassification on cash flows used in investing
activities and effect of exchange rate changes for the six months
ended June 30, 2017 was an increase of $201,075 and an increase of
$14,515, respectively.
|
View original
content:http://www.prnewswire.com/news-releases/tdh-holdings-inc-reports-first-half-2018-financial-results-300771277.html
SOURCE TDH Holdings, Inc.