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Sino Global announced financial results

Highlighted by Progress in New Business Initiatives and Reinvestment

Sino-Global Shipping America, Ltd., a logistics integrated solutions provider engaged in non-asset based global shipping, freight logistics, and inland transportation management and related services, announced its financial and operating results for the fourth quarter of the fiscal year 2018 and year ended June 30, 2018. The Company has also provided extensive information on its annual report on Form 10-K filed this morning with the U.S. Securities and Exchange Commission. Management encourages investors to review this filing for more details of the Company’s financial results for the fiscal year 2018, background on Sino-Global’s business and history, as well as Company strategy for the coming fiscal year.

Management Comments – Highlights in Fiscal 2018

Mr. Lei Cao, Chairman and Chief Executive Officer of Sino-Global commented, “We made tremendous progress this year in our freight logistics, bulk cargo container and container trucking services while spending much of this year investing in our business. These highlights include:

  • Reinvesting in our Business: Since our change in business focus to a asset-light online logistics platform we have made great strides towards integrating our business relationships in China with opportunities in the United States, with revenues increasing substantially since this change in model. Going forward, we know that in order to maintain an advantage we needed to expand our technical capabilities. We invested in an upgraded IT facility in Shanghai that will help facilitate a larger base of revenues.
  • Broadening our Global Base of Customers and Shipments: In fiscal 2018, we coordinated the shipment of a vast array of materials from China to ports in Australia and the United States by utilizing our long-term relationships to connect shippers to our online platform. This included an increase in sales to major customers shipping minerals and coals between Australia and China.
  • New Joint Venture Agreement: In September 2018, we entered into a co-operation agreement with Ningbo Far-East Universal Shipping Agency Co., Ltd (“Ningbo Far-East”) to set up a joint venture in Hong Kong to engage in worldwide shipping agency and management business. The Company shall have 51% ownership in the joint venture. Ningbo Far-East is one of the top ranking shipping agencies for private enterprises in the Ningbo and Zhoushan ports. We are very pleased with the potential of this joint venture, as it provides further diversification in our customer base without any significant overlap. We are one of the few shipping agents specialized in providing a full range of general shipping agency services in China and the only shipping agency company listed on a major stock exchange in the U.S. compared to the other, much smaller, shipping agencies in China. The setup of Sino Ningbo allows us to use our resources such as our customer base, our IT infrastructure currently under development and our business insight to build a global network of shipping agencies.
  • Development of Online Platform: In fiscal 2018, we continued to further the development of our online platform, which helps to bridge the gap between global shippers from China and other countries such as Australia and the United States. With the signing of a strategic cooperation agreement with COSCO Beijing, we are able to take advantage of the low container rate to jointly promote bulk cargo container transportation.
  • Seeking “Reverse” Logistics Opportunities from the U.S. to China: We also are continuing to take advantage of export opportunities, as we shipped 140 containers totaling 18 tons per container of sulfur from Long Beach, CA in the U.S. to our customers in China. With these shipments we coordinated with the customers to sign the purchase contract with sulfur suppliers in the United States; organized the container shipping, obtained customs clearance, and arranged for the product to be shipped to the customer’s designated port.

Overall, we feel that the Company has properly positioned itself to take advantage of a growing revenue opportunity. As we move forward into fiscal 2019, we are focused on leveraging our growing infrastructure to improve operating margins and the bottom line. We expect to provide an updated shareholder letter at the end of November to outline our growth strategy in calendar 2019.”

Fiscal Year 2018 Fourth Quarter Financial Review

  • Total revenues increased by 57.1% to approximately $7.3 million for the three month period ending June 30, 2018, which compared to $4.6 million in the year ending June 30, 2017. This increase was due to the Company’s business development efforts in freight logistics, container trucking and inland transportation management segments.
  • The Company’s gross profit for the period was $2.1 million, compared to $1.4 million in the prior year period. Gross profit margin during the period was 29.2% which remain consistent compared to 31.0% for the same period last year.
  • The operating loss for the three months ended June 30, 2018 was $0.7 million, compared to an operating income of $0.47 million for the year ended June 30, 2017. The decrease in operating income was mainly due to increases in selling, general and administrative expenses (SG&A), largely due to stock compensation being awarded in the fourth quarter of 2018.
  • For the three months ended June 30, 2018, the Company reported a net loss of $0.8 million, or $(0.06) per diluted share based on weighted average shares outstanding of 12,864,913, compared to a net income of $0.8 million, or $0.07 per diluted share based on weighted average shares outstanding of 10,152,685, for the same period in prior year. The decrease was largely due to a $1.1 million income tax expense during the period compared to a $0.3 million income tax benefit in the prior year period.

Fiscal Year 2018 Financial Review

  • Total revenues increased by approximately 101.5% to $23.1 million during the year, compared to $11.4 million in the prior fiscal year. This increase was due to the Company’s efforts to diversify its business resulting in a significant increase in revenues from the freight logistic services.
  • The Company’s gross profit for the 2018 fiscal year was $7.5 million, compared to $6.5 million in the prior fiscal year. Gross profit margin during the year decreased to 32.4% from 56.5%, which was largely attributed to a greater portion of revenues coming from the rapidly growing freight logistic services segment. For the fiscal year ended June 30, 2018, the Company performed logistics services for one customer on a fragmented scope, as compared to the full range of services (with a corresponding higher margin) that it expects in the future.

The following tables present summary information by segment for the years ended June 30, 2018 and 2017:

For the year ended June 30, 2018

Inland
Transportation
Management
Services

Freight
Logistics
Services

Container
Trucking
Services

Bulk Cargo
Container
Services

Total

Revenues

– Related party

$

2,059,406

$

$

$

$

2,059,406

– Third parties

$

3,441,001

$

15,829,444

$

1,096,485

$

638,227

$

21,005,157

Total

$

5,500,407

$

15,829,444

$

1,096,485

$

638,227

$

23,064,563

Cost of revenues

$

874,760

$

13,519,486

$

696,998

$

494,449

$

15,585,693

Gross profit

$

4,625,647

$

2,309,958

$

399,487

$

143,778

$

7,478,870

Depreciation and amortization

$

72,954

$

1,902

$

20,063

$

$

94,919

Total capital expenditures

$

$

778,182

$

44,595

$

$

822,777

Gross profit margin

84.1%

14.6%

36.4%

22.5%

32.4%

 

For the year ended June 30, 2017

Inland
Transportation
Management
Services

Freight
Logistics
Services

Container
Trucking
Services

Bulk Cargo
Container
Services

Total

Revenues

– Related party

$

2,746,423

$

$

$

$

2,746,423

– Third parties

$

3,012,177

$

4,815,450

$

871,563

$

$

8,699,190

Total revenues

$

5,758,600

$

4,815,450

$

871,563

$

$

11,445,613

Cost of revenues

$

620,259

$

3,710,364

$

649,968

$

$

4,980,591

Gross profit

$

5,138,341

$

1,105,086

$

221,595

$

$

6,465,022

Depreciation and amortization

$

27,857

$

21,510

$

$

$

49,367

Total capital expenditures

$

61,359

$

1,053

$

$

$

62,412

Gross profit margin

89.2%

22.9%

25.4%

56.5%

 

  • Operating income for the year ended June 30, 2018 was approximately $0.8 million, compared to an operating income of $3.1 million in the prior year. As discussed above, the decrease was mainly due to increased costs of revenue and selling, general and administrative expenses. General and administrative expenses as a percentage of revenue remained consistent at 26.9% and 27.5% for the years ended June 30, 2018 and 2017, respectively.
  • For the fiscal year ended June 30, 2018, the Company reported a net income of $0.5 million, or $0.04 per diluted share based on 12.0 million weighted average shares outstanding, compared to net income of $3.6 million, or $0.41 per diluted share based on 8.9 million weighted average shares outstanding, for the prior year.

  Balance Sheet Information

  • As of June 30, 2018, the Company had $7.1 million in cash and cash equivalents, working capital of $17.2 million and shareholder equity of $24.3 million; compared to $8.7 million, $13.7 million, and $19.5 million, respectively, as of June 30, 2017.
  • The Company’s allowance for doubtful accounts was $1.7 million in 2018 compared with an allowance of doubtful accounts of $185,821 in 2017. As we continue to maintain long-standing relationships with our customers, we are continuing to monitor their payments closely and do not believe there are any significant collection issues with respect to our trade accounts receivable.
  • The Company holds no long-term debt.
Source: Sino Global Shipping America
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