Sales Performance - For the nine months ended March 31, 2019, Jinong sold approximately 53,008 metric tons of fertilizer products, an increase of 12,711 metric tons, or 31.5%, compared to 40,297 metric tons for the same period in 2018[128]. - Gufeng sold approximately 305,288 metric tons of fertilizer products for the nine months ended March 31, 2019, an increase of 80,235 metric tons, or 35.7%, compared to 225,053 metric tons for the same period in 2018[132]. - For the three months ended March 31, 2019, the company sold approximately 207,704 metric tons of fertilizer products, compared to 116,813 metric tons for the same period in 2018, representing an increase of 90,891 metric tons, or 77.8%[129]. - Jinong launched 1 new fertilizer product and added 44 new distributors during the three months ended March 31, 2019[135]. - Gufeng added 5 new distributors during the same period, although it did not launch any new fertilizer products[135]. - Sales of fertilizer products to customers in five provinces accounted for approximately 55.9% of fertilizer revenue for the three months ended March 31, 2019, with Hebei contributing 24.1%[133]. Revenue and Net Sales - The total revenue from fertilizer products for Jinong and Gufeng accounted for approximately 91.4% and 90.3% of total revenues for the nine months ended March 31, 2019 and 2018, respectively[128]. - Total net sales for the three months ended March 31, 2019 were $108,120,570, an increase of $25,569,687, or 31.0%, from $82,550,883 for the same period in 2018[147]. - Total net sales for the nine months ended March 31, 2019, were $218,329,839, an increase of $9,046,811, or 4.3%, from $209,283,028 in the same period of 2018[170]. - Jinong's net sales decreased by $18,914,144, or 23.5%, to $61,561,229 for the nine months ended March 31, 2019[171]. - Gufeng's net sales increased by $25,393,984, or 31.1%, to $106,996,368 for the nine months ended March 31, 2019[172]. Profitability - Gross profit for the three months ended March 31, 2019 decreased by $2,936 to $21,156,975, with a gross profit margin of 19.6% compared to 25.6% for the same period in 2018[156]. - Total gross profit for the nine months ended March 31, 2019 decreased by $8,734,567, or 14.9%, to $49,870,840 compared to $58,605,407 for the same period in 2018[179]. - Gross profit generated by Jinong decreased by $10,298,939, or 25.4%, to $30,271,756 for the nine months ended March 31, 2019, with a gross profit margin of approximately 49.2%[180]. - Gross profit generated by Gufeng increased by $2,110,390, or 20.4%, to $12,451,425 for the nine months ended March 31, 2019, with a gross profit margin of approximately 11.6%[181]. - Gufeng's gross profit for the three months ended March 31, 2019, was $7,692,164, an increase of $2,874,463, or 59.7%, from $4,817,701 in the same period of 2018[158]. Expenses - Total cost of goods sold for the three months ended March 31, 2019 was $86,963,595, an increase of $25,572,623, or 41.7%, from $61,390,972 for the same period in 2018[151]. - Total cost of goods sold for the nine months ended March 31, 2019, was $168,458,999, an increase of $18,785,547, or 12.6%, from $149,673,452 in 2018[174]. - Total operating expenses increased by $2,173,751, or 18.8%, to $13,707,663 for the three months ended March 31, 2019[146]. - Selling expenses increased by $3,327,688, or 93.7%, to $6,880,994, representing 6.4% of net sales for the three months ended March 31, 2019[161]. - General and administrative expenses decreased by $1,153,937, or 14.5%, to $6,826,669, representing 6.3% of net sales for the three months ended March 31, 2019[162]. - General and administrative expenses decreased by $6,761,894, or 42.8%, to $9,036,397 for the nine months ended March 31, 2019, representing 4.1% of net sales[185]. Net Income - Net income for the three months ended March 31, 2019 was $5,117,899, a decrease of $2,509,134, or 32.9%, from $7,627,033 for the same period in 2018[146]. - Net income for the nine months ended March 31, 2019 was $16,635,439, a decrease of $3,912,528, or 19.0%, compared to $20,547,967 for the same period in 2018[187]. - Net income for Gufeng increased by $2,585,024, or 46.8%, to $8,111,897 for the nine months ended March 31, 2019, driven by a significant increase in net sales[190]. Cash Flow and Financial Position - Net cash used in operating activities was $77,964,267 for the nine months ended March 31, 2019, an increase of $106,399,032, or 374.2%, compared to net cash provided of $28,434,766 for the same period in 2018[197]. - Cash and cash equivalents decreased by $81,563,602, or 54.1%, to $69,242,037 as of March 31, 2019, compared to $150,805,639 as of June 30, 2018[193]. - Accounts receivable decreased by $1,034,162, or 0.6%, to $177,715,883 as of March 31, 2019, primarily due to Jinong[200]. - Allowance for doubtful accounts in accounts receivable increased by $3,700,005 to $23,158,524, with the allowance as a percentage of accounts receivable at 13.0% as of March 31, 2019[201]. - As of March 31, 2019, total inventory was $132,579,212, an increase of $78,794,398 or 146.5% compared to $53,784,814 as of June 30, 2018, primarily driven by Gufeng's inventory increase of 93.3%[203]. - Advances to suppliers rose to $51,055,495 as of March 31, 2019, reflecting an increase of $25,861,032 or 102.6% from $25,194,463 as of June 30, 2018[204]. - Accounts payable decreased to $9,436,035 as of March 31, 2019, down by $17,692,886 or 65.2% from $27,128,921 as of June 30, 2018, mainly due to a reduction in Gufeng's accounts payable[205]. - Unearned revenue increased to $7,793,572 as of March 31, 2019, representing a rise of $541,605 or 7.5% compared to $7,251,967 as of June 30, 2018, with Gufeng's unearned revenue increasing by 70.4%[205]. Risk Factors and Management - The company reported accumulated other comprehensive income of $9.5 million as of March 31, 2019, with no hedging transactions to mitigate foreign exchange risk[219]. - Short-term debt outstanding was $4.5 million as of March 31, 2019, slightly down from $4.7 million as of June 30, 2018, with fixed interest rates on all outstanding debt instruments[220]. - The company has not experienced significant credit risk, as most customers are long-term clients with strong payment records[222]. - Inflationary factors may adversely affect operating results, although no material impact has been observed to date[223]. - The company is organized into ten main business units, with operations segmented into four main business segments for financial reporting purposes[215]. - Management's estimates and assumptions significantly affect reported amounts of assets and liabilities, with actual results potentially differing materially from these estimates[209].
CGA(CGA) - 2019 Q3 - Quarterly Report