Good day, and welcome to the Feihe International, Inc. third quarter 2012 earnings conference call. Today's call is being recorded. At this time, I would like to turn the conference over to Ms. Judy Tu, Vice President of Feihe International, Inc. Please go ahead.
Thank you Operator. Before we begin, please bear with me as I read through the forward-looking statements disclaimer.
This call may contain forward-looking statements within the meaning of the federal securities laws. Statements that are not purely historical are forward-looking statements within the meaning of section 21E of the Securities and Exchange Act of 1934 as amended in section 27A of the Securities Act of 1933 as amended. These statements include but are not limited to statements about the company's plans, objectives, expectations, strategies, intentions, or other characterizations, events, or circumstances. And are generally identified by the words may, expect, anticipate, intend, plan, believe, seeks, estimates, could, would, and similar expressions. Because these forward-looking statements are subject to a number of risks and uncertainties, the company's actual results could differ materially from those expressed or implied by these forward-looking statements.
Factors that could cause or contribute to such differences include but are not limited to those discussed under the heading risk factors in the company's annual report on form 10-K as well as other reports filed with the SEC. The company assumes no obligation to update any such forward-looking statements.
On our call today is Mr. Roger Liu, Vice Chairman and CFO, Ms. Dora [Inaudible], IR associate, Ms. Renee Ren, IR associate, and myself.
I will begin with a translation of Vice Chairman Liu's opening remarks. Then we will move onto our third quarter financial review.
On behalf of Vice Chairman Liu, thank you for joining our third quarter 2012 conference call. I want to take this opportunity to express our sincere appreciation to all of our shareholders for their continued support and for their confidence in our company and management team.
We are very pleased with our third quarter results. Our revenue of $66.1 million and improved gross profit margin are excellent indications of the effectiveness of our decision to concentrate on the sales of our infant formula products. Our sales of infant formula powder increased 15% compared to the third quarter of 2011. And this continues to be an area of strategic focus for us.
Furthermore, net income improved $17.1 million in the third quarter of 2012 compared with the third quarter of 2011. We remain focused on expanding sales of higher margin products and strengthening our premium quality brand awareness.
In addition, the sales of premium [inaudible] series and super premium [inaudible] baby series branded milk powder have been consistently increasing. We plan to expand our sales and build value to our shareholders by continuing to build customer brand awareness of our premiere milk sources, high quality, and advanced production techniques, scientific R&D, premium products, and good customer service.
Finally, we will continue to make improvements on our operations across all functions and strengthen our footprint as a leading infant formula company in China in the coming years.
With that, I will turn the call over to Ms. Renee Ren for our third quarter, 2012 financial highlights.
Thank you to Feihi key financial highlights.
The company's revenue was $56.1 million for the three months [inaudible] ended September 30th, 2012, up $2.7 million or 4.3% from $63.4 million in the second quarter of 2012. Our [inaudible] decrease of $9.3 million or 12.4% compared to $75.4 million revenue for the third quarter of 2011. This year-over-year decrease was primarily attributable to a decrease in sales of raw milk powder, a high cost, and a low gross profit product of approximately [inaudible] $16.9 million offset by our increase in sales of branded new powder of approximately $7.2 million.
The increase in sales compared to the last quarter end, 2012, was primarily attributable to our increase in sales of branded infant mix powders. Sales of infant powder are our highest margin products increased to $62.7 million from $55.5 million in the third quarter of 2011. Revenue from branding mix powder products was $62.7 million in the third quarter of 2012, up $2 million from $60.7 million in second quarter 2012. And up $7.2 million from $55.5 million of third quarter 2011.
Raw milk from ground [inaudible] powder was $15,000 in the third quarter of 2012 versus $33,000 in second quarter of 2012. And $16.9 million in the third quarter of 2011.
The company's gross profit was $36.3 million in the third quarter of 2012, an increase of approximately $8.8 million or 32% compared to $27.5 million in the third quarter of 2011. Our gross profit margin was 54.9% compared with 36.5% in the third quarter of 2011.
The substantial growth was primarily attributed to a general increase in the sales of high-end milk powder. And the decrease in the [inaudible] raw milk powder.
The [inaudible] income from operations was $5.4 million in the third quarter of 2012, an increase of approximately $2.2 million or 69.4% compared to $3.2 million in the third quarter of 2011.
Our total operating expenses increased by approximately $6.4 million or 25.8% from approximately $24.8 million in the three months period ending September 30th, 2011 to approximately $31.2 million in the three months period ending September 30th, 2012. This increase was primarily attributable to an increase of $8.9 million or 48.9% in the sales of marketing expenses from approximately $18.2 million for the three months period ending September 30th, 2011to $27.1 million in the three months period ending September 30th, 2012. And primarily related to an increase in advertisement fees, marketing promotions, and transportation expenses.
Net income attributable to common shareholders of the company for the third quarter of 2012 was $7.5 million. Or diluted EPF of 0.38, a significant increase from $473,000 [inaudible] to EPF of 0.11 in the third quarter of 2011. And an increase from $5.8 million [inaudible] to EPF of 0.29 in the second quarter of 2012.
As of September 30th, 2012, the company had cash and cash equivalents of $2.3 million and total current assets of $201.1 million compared to cash and cash equivalents of $15.4 million and total current assets of $200.5 million as of December 31st, 2011.
The company had a working capital of approximately $31.1 million as of September 30th, 2012 compared to a working capital deficiency of approximately $8.0 million as of December 31st, 2011.
We are pleased to report our third quarter, 2012 financial results today. We are confident that we are taking effective measures to continue to improve our operations across all functions to drive greater profitability and increase revenue for our shareholders. We look forward to continually updating our progress and improvements in the coming quarters.
And again on behalf of our Chairman Liu, we thank you for your continued confidence in Feihe International.
We are done with our prepared comments for our conference call today. Operator.
(Operator instructions). [No questions presented].
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