Sino-Global Announces Fiscal Year 2015 First Quarter Financial Results

Sino-Global Shipping America, Ltd., a shipping agency, logistics and ship management services company, today announced its financial results for the first fiscal quarter ended September 30, 2014.

Basic and diluted EPS of $0.06 for the three months ended September 30, 2014 marked the fifth consecutive quarter of net profit for the Company.
Continued strength from the Inland Transportation Management Services generated revenues of approximately $0.95 million, or 36.3% of total revenues, for the three months ended September 30, 2014.
Gross margin of 45.9% for the three months ended September 30, 2014 improved significantly over the same period of last year as a result of strong contribution from the higher margin Inland Transportation Management Services business as well as improvement in the Shipping Agency Services.
Further expanded our service platform with the acquisition of Longhe Ship Management (Hong Kong) Co., Limited (“LSM”) on September 8, 2014. LSM generated revenues of approximately $50,000 and net profit of approximately $23,000 from completion of the acquisition on September 8, 2014 through September 30, 2014.
Strengthened balance sheet with significant increases in cash and cash equivalents and working capital.

Mr. Lei Cao, Chairman and Chief Executive Officer of Sino-Global commented: “We are pleased to report our fiscal year 2015 first quarter financial results that feature: 1) year-over-year growth in revenues from both the Shipping Agency and Inland Transportation Management Services and positive contribution from the newly acquired Ship Management Services and 2) improvement in overall gross margins. The results marked the fifth consecutive quarter of net profit for Sino-Global, reflecting the benefit of our streamlined operations and diversified services platform.”

Mr. Cao, continued: “Looking ahead, we believe that the difficult macroeconomic conditions, increasing competition in our industry and rising labor costs will continue in coming quarters. That said, we also believe that our stringent cost management and ongoing efforts to broaden revenue streams along the shipping industry value chain should position us well for growth in the long run.”

Total revenues decreased by 21.5% to $2,605,925 for the three months ended September 30, 2014 from $3,317,661 for the same period of 2013. The decline in total revenues was mainly due to receiving no revenues from the Shipping and Chartering services during the three months ended September 30, 2014, partially offset by revenues generated from Inland Transportation Management services, which the Company did not receive in 2013. Despite the continued impact of macroeconomic weakness, revenues from our Shipping Agency and Ship Management services increased by 16.0% to $1,659,291 for the three months ended September 30, 2014 from $1,430,661 for the same period of 2013. The Inland Transportation Management services, which we launched in the second quarter of fiscal year 2014, generated revenues of $946,634, or 36.3% of total revenues, for the three months ended September 30, 2014. As noted above, we had no revenues for Shipping and Chartering services for the three months ended September 30, 2014. LSM, which we acquired on September 8, 2014, generated revenues of $47,587 from its acquisition on September 8, 2014 through September 30, 2014.

Cost of revenues decreased by 41.0% to $1,409,153 for the three months ended September 30, 2014 from $2,387,803 for the same period of 2013. The decline was primarily because, in the absence of revenues for the period, the Shipping and Chartering services had no cost of revenues for the three months ended September 30, 2014, compared to $1,275,000 for the same period of 2013. This decrease was partially offset by costs associated with the Inland Transportation services in 2014, which we did not have in 2013. Gross margin of 45.9% for the three months ended September 30, 2014 increased significantly from 28.0% for the same period of 2013, mainly because our newly launched Inland Transportation Management services featured higher gross margins than the Shipping and Chartering services. Cost of revenues for Shipping Agency and Ship Management services and Inland Transportation Management services were $1,283,505 and $125,648, leading to gross margins of 22.6% and 86.7%, respectively, for the three months ended September 30, 2014.

General and administrative expenses increased by 4.9% to $939,805 for the three months ended September 30, 2014 from $896,164 for the same period of 2013. The increase was mainly due to higher business development expenses of $63,942, recognition of stock-based compensation for common stock issued to consultants of $71,698, partially offset by reduction in office expenses of $53,783.

Selling expenses increased by 10.3% to $56,339 for the three months ended September 30, 2014 from $51,088 for the same period of 2013, mainly due to higher commission rates.

Operating income of $200,628 for the three months ended September 30, 2014 compared to operating loss of $17,394 for the same period of 2013. This marks our fourth consecutive quarter of operating profit and fifth consecutive quarter of net profit, showing that our continued efforts to streamline our operations and diversify our revenue streams have borne fruit. Operating profit margin of 7.7% for the three months ended September 30, 2014 compared to operating loss margin of 0.5% for the same period of 2013.

As a result of the foregoing, we reported net income of $165,501 for the three months ended September 30, 2014, compared to $28,973 for the same period of 2013. After deduction of non-controlling interest, net income attributable to Sino-Global was $332,459, or $0.06 per diluted share, for the three months ended September 30, 2014, compared to $275,394, or $0.06 per diluted share, for the same period of 2013.

Financial Condition

As of September 30, 2014, the Company had cash and cash equivalents of $3,553,187 and working capital of $5,200,958, compared to $902,531 and $3,727,003, respectively, at the end of the fiscal year ended June 30, 2014. Net cash provided by operating activities was $524,352 for the three months ended September 30, 2014, as compared to net cash used in operating activities of $1,030,634 for the same period of last year. Net cash provided by investing activities was $1,103,902 for the three months ended September 30, 2014 mainly as a result of the collection of short-term loan to a related party, as compared to net cash used in investing activities of $3,399 for the same period of last year. Net cash provided by financing activities was $967,820 for the three months ended September 30, 2014 due to the issuance of 647,000 shares of common stock in July 2014.

Recent Developments

On July 2, 2014, the Company announced the closing of its previously announced underwritten public offering of 572,000 registered shares of its common stock, without par value per share, at a price to the public of $1.76 per share. The underwriter partially exercised the over-allotment and purchased an additional 75,000 shares. The total number of shares sold in the offering including such over-allotment shares was 647,000 shares of common stock and the net proceeds from the offering was $967,820.

On August 8, 2014, the Company entered into an agreement to acquire all of the equity of Longhe Ship Management (Hong Kong) Co., Limited (“LSM”) from Mr. Deming Wang, who owns approximately 3.6% of the Company’s total shares outstanding at the time of the acquisition agreement. The purchase price for LSM is set to be between 20,000 and 200,000 shares of our common stock, depending on the net income of LSM from July 4, 2014 through December 31, 2014. On August 22, 2014, the Company issued the first payment of 50,000 shares of our common stock to be held in escrow to Mr. Wang. The transaction was completed on September 8, 2014.
Source: Sino-Global Shipping America, Ltd.