Qilian International Holding Group Limited Reports Fiscal Year 2021 Financial Results

JIUQUAN, China, Feb. 12, 2022 /PRNewswire/ — Qilian International Holding Group Limited (Nasdaq: QLI) (the “Company”, “Qilian International”, “we”, “our” or “us”), a China-based pharmaceutical and chemical products manufacturer, today announced its unaudited financial results for the fiscal year ended September 30, 2021.

Mr. Zhanchang Xin, Chairman and CEO of the Company, commented, “The fiscal year 2021 was an excellent year for the Company. Compared with the fiscal year 2020, our revenue grew by 14%, or $7.1 million, to $57.1 million, which was made possible due to consistent execution and solid progress of our business strategies. Despite the ongoing macro challenges in 2021 and the impact of regional resurgence of COVID-19 pandemic, our focus remained on expanding production capacity, and we also made substantial progress on the expansion of our new organic fertilizer production facility. In 2022 and beyond, we intend to complete the construction of a pig by-product processing facility for  heparin sodium production, and fully complete the construction of our new organic fertilizer production facility. We will also continue to increase our research and development efforts and provide high-quality products to our customers. We believe our business strategy will further fuel growth in 2022, driving further improvements in our operational and financial performance, and creating long-term value for all stakeholders.” 

Fiscal Year 2021 Financial Highlights

Fiscal Year 2021 Financial Results

Net Revenue

For the fiscal year ended September 30, 2021, revenue increased by $7.1 million, or 14%, to $57.1 million from $50.0 million for the fiscal year ended September 30, 2020. The increase was primarily attributable to a $6.4 million increase in sales from heparin products and sausage casings, and a $0.8 million increase in sales from oxytetracycline & licorice products and TCMD.

Sales from oxytetracycline products, licorice products and TCMD increased by $0.8 million, or 3%, to to $33.5 million for the fiscal year ended September 30, 2021 from $32.6 million for the fiscal year ended September 30, 2020. The increase was due to the appreciation of RMB against USD in 2021, which accounted for $2.5 million. Sales denominated in RMB decreased by RMB10.6 million, equivalent to $1.6 million. The decrease in sales in this segment is due to a decrease in the average selling price of oxytetracycline products by 9% compared to that of 2020 in order to stimulate the sales of oxytetracycline products. Sales quantity increased by 6% compared to that of 2020, due to the lower selling price. The ongoing COVID-19 pandemic has caused significant uncertainty in global market and demand as well as logistics and transportation. Although we do not serve customers oversea directly, COVID-19 related export restrictions has led to excessive supply of our competitors’ products in domestic markets. 

Sales from heparin products and sausage casings increased by $6.4 million, or 38%, to $23.2 million for the fiscal year ended September 30, 2021 from $16.7 million for the fiscal year ended September 30, 2020. $1.2 million of such increase was due to the appreciation of RMB against USD in 2021. In additional, the increase of our sales of heparin products was mainly driven by increased demand from pharmaceutical customers. Due to the COVID-19 pandemic, global demand for prescription medicines, vaccines and medical devices increased. The demand for heparin, a widely used medication, also increased significantly during the pandemic. In 2021, we increased investment in this segment and added new sales force. The sales quantity of heparin products increased by 41%, and their selling price increased by 10%. However, our sales of sausage casings decreased by $0.4 million. As the gross margin of sausage casings in the past two fiscal years was negative due to the combined effect of COVID-19 pandemic and African Swine fever in China, we reduced our efforts in selling sausage casings. 

Sales from fertilizer decreased by $0.3 million, or 31%, to $0.5 million for the fiscal year ended September 30, 2021 from $0.7 million for the fiscal year ended September 30, 2020. In the fiscal year ended September 30, 2021, we expanded our manufacturing capacity and the production of fertilizer was interrupted for almost ten months. We resumed normal production of fertilizer in October 2021.

Cost of Revenue and Gross Profit

Cost of revenue increased by $9.0 million, or 21%, to $51.5 million for the fiscal year ended September 30, 2021 from $42.5 million for the fiscal year ended September 30, 2020.

Gross profit decreased by $1.9 million, or 25%, to $5.6 million for the fiscal year ended September 30, 2021 from $7.5 million for the fiscal year ended September 30, 2020. As a result, gross margin decreased to 9.9% for the fiscal year ended September 30, 2021 from 15.1% for the fiscal year ended September 30, 2020.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $0.5 million, or 19%, to $3.3 million for the fiscal year ended September 30, 2021 from $2.7 million for the year ended September 30, 2020. The increase was mainly attributable to an increase of approximately $0.4 million in salary and repair and maintenance expense as we expanded our operations and sales, as well as an increase of $0.2 million in insurance expense in connection with us being a publicly traded company in the United States.

Interest Expenses, net

Interest expenses are primarily generated from bank borrowings, including bank loans and banknotes payable, offset by interest income. Interest expenses for the fiscal year ended September 30, 2021 decreased by $185,000, to $58,000 for the fiscal year ended September 30, 2021 from $243,000 for the fiscal year ended September 30, 2020. The decrease is due to payoff of the bank loans in April 2021 and no bank loan has been borrowed afterwards.

Other Income

Other income was $1.0 million for the fiscal year ended September 30, 2021, as compared to $1.2 million for the fiscal year ended September 30, 2020, which primarily consisted of government grants and investment income.

Income Taxes Provision 

Provision for income taxes decreased by $0.6 million, or 71%, to $0.3 million for the fiscal year ended September 30, 2021 from $0.9 million for the fiscal year ended September 30, 2020, as a result of the decreased income before income tax provision, as well as increased tax holiday for some of the variable interest entity’s subsidiaries enacted by the Chinese government.

Net income and Net income attributable to Qilian International

Net income was $3.1 million for the fiscal year ended September 30, 2021, compared to net income of $4.9 million for the fiscal year ended September 30, 2020. After deducting non-controlling interests, net income attributable to Qilian International was $3.2 million for the year ended September 30, 2021, compared to net income attributable to Qilian International of $5.1 million for the fiscal year ended September 30, 2020.

Earnings per share-basic and diluted

After deducting non-controlling interests, earnings per share attributable to the Company was $0.09 per basic and diluted share for the fiscal year ended September 30, 2021, compared to earnings per share of $0.17 per basic and diluted share for the fiscal year ended September 30, 2020.

EBITDA

EBITDA decreased by $2.5 million, or 35%, to $4.6 million for the fiscal year ended September 30, 2021, from $7.2 million for the fiscal year ended September 30, 2020.

Financial Condition

As of September 30, 2021, the Company had cash of $10.5 million, compared to $11.9 million as of September 30, 2020.

Net cash provided by operating activities was $0.3 million for the fiscal year ended September 30, 2021, compared to $5.1 million for the fiscal year ended September 30, 2020.

Net cash used in investing activities was $24.2 million for the fiscal year ended September 30, 2021, compared to $0.4 million for the fiscal year ended September 30, 2020.

Net cash provided by financing activities was $24.0 million for the fiscal year ended September 30, 2021, compared to $2.1 million for the fiscal year ended September 30, 2020.

Non-GAAP Financial Measures

The Company’s management uses certain financial measures to evaluate its operating performance which is calculated and presented on the basis of methodologies other than in accordance with GAAP (“Non-GAAP”). These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP, and the Company’s calculations thereof may not be comparable to similarly entitled measures reported by other companies. The Company believes that EBITDA is a useful performance measure and can be used to facilitate a comparison of its operating performance on a consistent basis from period to period and to provide for a more complete understanding of factors and trends affecting its business than GAAP measures alone can provide. The Company’s management believes that EBITDA is less susceptible to variances in actual performance resulting from depreciation, amortization and other non-cash charges and more reflective of other factors that affect its operating performance. The Company’s management believes that the use of these Non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with the companies in the same industry, many of which present similar Non-GAAP financial measures to investors. The Company presents EBITDA in order to provide supplemental information that Management considers relevant for the readers of its consolidated financial statements included elsewhere in this annual report, and such information is not meant to replace or supersede U.S. GAAP measures.

The Company’s management defines EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization. EBITDA is not defined under U.S. GAAP and is subject to important limitations as analytical tools, you should not consider them in isolation or as substitutes for analysis of our Company results as reported under U.S. GAAP.

About Qilian International Holding Group Limited

Qilian International Holding Group Limited, headquartered in Gansu, China, is a pharmaceutical and chemical products manufacturer in China. It focuses on the development, manufacturing, marketing and sale of licorice products, oxytetracycline products, traditional Chinese medicine derivative products, heparin products, sausage casings, and fertilizers. The Company’s products are sold in more than 20 Provinces in China. For more information, visit the Company’s website at  http://ir.qlsyy.net/index.html or http://qilianinternational.com/.

Forward-Looking Statements

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations and projections about future events and financial trends that the Company believes may affect its financial condition, results of operations, business strategy, financial needs and fully complete the construction of our new organic fertilizer production facility. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and in its other filings with the U.S. Securities and Exchange Commission.

For more information, please contact:

Qilian International Holding Group Limited
Email: ir@qlsyy.net

Ascent Investors Relations LLC
Tina Xiao
President
Phone: 917-609-0333
Email: tina.xiao@ascent-ir.com

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