China Biologic Reports Financial Results for the First Quarter of 2013

1Q13 Total Sales Increases 14.4% to $54.0 Million

1Q13 Operating Margin Increases to 48.1% from 39.9%

1Q13 Non-GAAP Net Income Increases 29.0% to $16.4 Million

May 08, 2013, 17:00 ET from China Biologic Products, Inc.

BEIJING, May 8, 2013 /PRNewswire-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, today announced its financial results for the first quarter of 2013.

First Quarter 2013 Financial Highlights

  • Total sales in the first quarter of 2013 increased by 14.4% to $54.0 million from $47.2 million in the same quarter of 2012.
  • Gross profit increased by 18.7% to $37.4 million from $31.5 million in the same quarter of 2012. Gross margin increased to 69.2% in the first quarter of 2013 from 66.7% in the first quarter of 2012.
  • Income from operations increased by 38.0% to $26.0 million from $18.8 million in the same quarter of 2012. Operating margin increased to 48.1% in the first quarter of 2013 from 39.9% in the same quarter of 2012.
  • Net income attributable to the Company increased by 15.1% to $14.9 million from $13.0 million in the same quarter of 2012. Fully diluted net income per share was $0.53 in the first quarter of 2013 as compared to $0.44 in the same quarter of 2012.
  • Non-GAAP adjusted net income attributable to the Company was $16.4 million, representing a 29.0% increase from $12.7 million in the same quarter of 2012. Non-GAAP adjusted net income per share was $0.59, compared to $0.48 in the same quarter of 2012.

Mr. David (Xiaoying) Gao, Chairman and Chief Executive Officer of China Biologic, commented, "We were pleased to experience consistently strong demand for our products as well as a favorable pricing environment during the first quarter, which allowed us to enjoy steady top-line growth. Our operating margin continued to climb due to adjustments in our product mix in recent years to include more higher-margin products, the implementation of our direct sales strategy to hospitals and inoculation centers resulting in more favorable pricing power and from the implementation of efficient cost control measures."

"During the quarter, the China Food and Drug Administration ("CFDA") conducted site inspection on Shandong Taibang production facility and we expect to obtain the renewed GMP certification in the third quarter of 2013. We also obtained the required operating permits from local authorities to commence plasma collection at the new station in Cao County, Shandong Province in April and remain on track with commencing plasma collection operations by the end of the second quarter. Additionally, we expect to commence our Guizhou Taibang facility upgrade in the beginning of June which will result in a six-to-nine month production suspension. We have already factored in this suspension to our 2013 financial forecast and have been building inventory in recent quarters to ensure we have adequate customer supply."

Mr. Gao concluded, "We are off to a solid start in 2013 and remain confident we can meet market demand during our Guizhou production facility transition. Our outlook for the remainder of the year is strong and we reiterate comfort with our full year financial guidance forecast."

First Quarter 2013 Financial Performance

Total sales in the first quarter of 2013 were $54.0 million, an increase of 14.4% from $47.2 million in the same quarter of 2012. Excluding foreign exchange influence, the increase in sales was primarily attributable to a mix of price and volume increases in plasma-based products. During the three months ended March 31, 2013, most of the Company's approved products recorded price increases. The price increase for the human albumin products was primarily attributable to the increase of the retail price ceiling announced by the NDRC in January 2013, which came into effect at the beginning of February, enabling the Company to raise ex-factory prices in certain regional markets. The general price for the immunoglobulin product group (other than human hepatitis B immunoglobulin products) remained consistent, as the average price for human immunoglobulin for intravenous injection ("IVIG") products increased 2% over the prior year period.

During the first quarter of 2013, human albumin products and IVIG products remained the largest two sales contributors.

  • As a percentage of total sales, human albumin product revenue was 37.9% in the first quarter of 2013 as compared to 54.6% in the same quarter of 2012. Sales volume of human albumin products declined 26.6% in the reporting quarter, primarily due to the planned inventory increase of these products in preparation of the production suspension in Guizhou Taibang.
  • As a percentage of total sales, IVIG revenue was 47.5% in the first quarter of 2013 as compared to 32.3% in the same quarter of 2012. Sales volume of IVIG products increased by 65.0% in the reporting quarter, mainly due to the Company's effective marketing efforts and the engagement of new distributors selling IVIG products into new territories in the first quarter of 2013.

Cost of sales was $16.6 million in the first quarter of 2013 compared to $15.7 million in the same quarter of 2012. Cost of sales as a percentage of total sales was 30.8%, as compared to 33.3% in the same quarter of 2012. The decrease in cost of sales as a percentage of sales was mainly due to the change of the Company's product mix to include more higher-margin products.

Gross profit increased by 18.7% to $37.4 million in the first quarter of 2013 from $31.5 million in the same quarter of 2012. Gross margin was 69.2% and 66.7% for the three months ended March 31, 2013 and 2012, respectively.

Total operating expenses in the first quarter of 2013 decreased by 9.8% to $11.4 million from $12.7 million in the same quarter of 2012. As a percentage of total sales, total operating expenses decreased to 21.2% in the first quarter of 2013 from 26.9% in the same quarter of 2012.

Selling expenses in the first quarter of 2013 decreased by 61.9% to $1.8 million from $4.8 million in the same quarter of 2012. As a percentage of total sales, selling expenses were 3.4%, down from 10.2% in the same quarter of 2012. The decrease in selling expenses as a percentage of sales was primarily due to the Company's adjusted sales policy and lower commission rate for certain products during the second half of 2012. The Company has taken additional steps to further control selling expenses during the first quarter of 2013. However, China Biologic does not expect selling expenses as a percentage of sales to stay at first quarter levels as it plans to carry out a series of promotional and conference activities for the newly-launched product Factor VIII beginning in the second quarter of 2013.

General and administrative expenses in the first quarter of 2013 increased by 21.6% to $8.7 million from $7.1 million in the same quarter of 2012. As a percentage of total sales, general and administrative expenses were 16.1% and 15.1% in the first quarter of 2013 and 2012, respectively. The increase in G&A expenses was mainly due to higher payroll expenses and employee benefits, an increase in share-based compensation and legal expenses related to the disputes among Guizhou Taibang shareholders.

Research and development expenses in the first quarter of 2013 were $0.9 million, representing an increase of 28.5% from $0.7 million in the same quarter of 2012. As a percentage of total sales, research and development expenses for the three months ended March 31, 2013 and 2012 were 1.7% and 1.5%, respectively. The increase in R&D expenses was primarily due to the expenditure paid for certain clinical trial programs during the first quarter of 2013.

Income from operations for the three months ended March 31, 2013 was $26.0 million, an increase of 38.0% from $18.8 million in the same period of 2012. Operating margin increased to 48.1% in the reporting quarter from 39.9% in the same quarter of 2012.

Income tax expense in the first quarter of 2013 was $4.6 million, as compared to $3.2 million in the same quarter of 2012, representing an increase of 45.0%. The effective income tax rates were 17.4% and 15.2% for the three months ended March 31, 2013 and 2012, respectively.

Net income attributable to the Company increased by 15.1% to $14.9 million in the first quarter of 2013, from $13.0 million in the same quarter of 2012. Net margins were 27.6% and 27.4% for the three months ended March 31, 2013 and 2012, respectively. Fully diluted net income per share was $0.53, as compared to $0.44 in the first quarter of 2012.

Non-GAAP adjusted net income attributable to the Company was $16.4 million or $0.59 per diluted share in the first quarter of 2013, compared to $12.7 million or $0.48 per diluted share in the same quarter of 2012.

Non-GAAP adjusted net income and diluted earnings per share for the three months ended March 31, 2013 excluded $1.5 million of non-cash employee share-based compensation expenses.

As of March 31, 2013, the Company had cash and cash equivalents of $138.7 million, compared to $129.6 million as of December 31, 2012.

Net cash provided by operating activities for the three months ended March 31, 2013 was $22.0 million, as compared to $8.2 million for the three months ended March 31, 2012.

Outlook

For the full year of 2013, the Company reiterates comfort with its full year financial forecast of total sales in the range of $195 million to $205 million and full year non-GAAP adjusted net income in the range of $50 million to $53 million. This guidance assumes the anticipated production suspension at the Company's Guizhou facility, only organic growth and excludes acquisitions and necessarily assumes no significant adverse product price changes during 2013.

This forecast reflects the Company's current and preliminary views, which are subject to change.

Conference Call

The Company will host a conference call at 7:30 am, Eastern Time on Thursday, May 9, 2013, which is 7:30 pm, Beijing Time on May 9, 2013, to discuss first quarter 2013 results and answer questions from investors. Listeners may access the call by dialing 1-480-629-9857.

A live and archived webcast of the conference call will be available at http://public.viavid.com, with event ID: 104670.

A replay of the call will be available through May 23, 2013 by dialing 1-858-384-5517, access code: 4618459.

About China Biologic Products, Inc.

China Biologic Products, Inc. (Nasdaq: CBPO), is a leading fully integrated plasma-based biopharmaceutical company in China. The Company's products are used as critical therapies during medical emergencies and for the prevention and treatment of life-threatening diseases and immune-deficiency related diseases. China Biologic is headquartered in Beijing and manufactures over 20 plasma-based products through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co., Ltd. and Guiyang Dalin Biologic Technologies Co., Ltd. The Company also has an equity investment in Xi'an Huitian Blood Products Co., Ltd. The Company sells its products to hospitals and other healthcare facilities in China. For additional information, please see the Company's website www.chinabiologic.com.

Non-GAAP Disclosure

This news release contains non-GAAP financial measures that exclude non-cash compensation expenses related to options granted to employees and directors under the Company's 2008 Equity Incentive Plan and changes in the fair value of warrants. To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of these items in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this news release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

Safe Harbor Statement

This news release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiaries. All statements, other than statements of historical fact included herein, are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect.

Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including its potential inability to achieve the expected operating and financial performance in 2013, potential inability to find alternative sources of plasma, potential inability to increase production at permitted sites, potential inability to mitigate the financial consequences of a temporarily reduced raw plasma supply through cost cutting or other efficiencies, and potential additional regulatory restrictions on its operations and those additional risks and uncertainties discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Contact:

China Biologic Products, Inc. Mr. Ming Yin Vice President Phone: +86-10-6598-3099 Email: ir@chinabiologic.com

ICR Inc. Mr. Bill Zima Phone: +86-10-6583-7511 or +1-646-405-5191 E-mail: bill.zima@icrinc.com

Financial statements follow.

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the three months ended

March 31,

March 31,

2013

2012

Sales

$

54,031,732

$

47,227,461

Cost of sales

16,616,758

15,715,727

Gross profit

37,414,974

31,511,734

Operating expenses

       Selling expenses

1,836,393

4,826,107

       General and administrative expenses

8,687,097

7,145,794

       Research and development expenses

913,092

710,588

Income from operations

25,978,392

18,829,245

Other income (expenses)

       Equity in income of an equity method investee

128,948

1,022,412

       Change in fair value of derivative liabilities

-

1,209,382

       Interest expense

(236,174)

(608,563)

       Interest income

648,062

543,395

       Other income (expenses), net

-

(100,989)

Total other income (expenses), net

540,836

2,065,637

Earnings before income tax expense

26,519,228

20,894,882

Income tax expense

4,606,902

3,176,715

Net income

21,912,326

17,718,167

Less: Net income attributable to noncontrolling interest

6,996,466

4,760,861

Net income attributable to China Biologic Products, Inc.

$

14,915,860

$

12,957,306

Net income per share of common stock:

       Basic

$

0.55

$

0.51

       Diluted

$

0.53

$

0.44

Weighted average shares used in computation:

       Basic

26,785,541

25,601,125

       Diluted

27,915,506

26,547,885

Net income

$

21,912,326

$

17,718,167

Other comprehensive income :

Foreign currency translation adjustment, net of nil income taxes

1,396,541

1,176,957

Comprehensive income

23,308,867

18,895,124

Less: Comprehensive income attributable to noncontrolling interest

7,159,157

5,015,835

Comprehensive income attributable to China Biologic Products, Inc.

$

16,149,710

$

13,879,289

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

March 31,

December 31,

2013

2012

ASSETS

Current Assets

   Cash and cash equivalents

$

138,709,901

$

129,609,317

   Accounts receivable, net of allowance for doubtful accounts

14,569,725

11,206,244

   Inventories

76,756,804

75,679,173

   Prepayments and other current assets

5,948,150

5,664,919

       Total Current Assets

235,984,580

222,159,653

Property, plant and equipment, net

55,165,405

51,325,177

Intangible assets, net

3,340,675

3,541,582

Land use rights, net

5,836,600

5,818,709

Deposits related to land use rights

15,634,237

14,752,574

Restricted cash

2,928,660

2,912,145

Equity method investment

10,726,242

10,537,310

       Total Assets

$

329,616,399

$

311,047,150

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

   Short-term bank loans

$

4,788,000

$

7,935,000

   Accounts payable

2,757,735

2,908,624

   Due to related parties

4,214,592

4,081,624

   Other payables and accrued expenses

23,744,932

25,423,349

   Advance from customers

4,327,355

2,857,420

   Income tax payable

5,808,723

4,513,075

       Total Current Liabilities

45,641,337

47,719,092

Deferred income

2,928,660

2,912,145

Other liabilities

3,228,923

2,996,749

       Total Liabilities

$

51,798,920

$

53,627,986

Stockholders' Equity

   Common stock: par value $0.0001; 100,000,000 shares authorized;

26,845,101 and 26,629,615 shares issued and outstanding at March 31, 2013

and December 31, 2012, respectively

$

2,685

$

2,663

   Additional paid-in capital

65,037,640

62,251,731

Retained earnings

134,058,860

119,143,000

Accumulated other comprehensive income

15,306,172

14,072,322

Total equity attributable to China Biologic Products, Inc.

214,405,357

195,469,716

Noncontrolling interest

63,412,122

61,949,448

       Total Stockholders' Equity

277,817,479

257,419,164

Commitments and contingencies

-

-

       Total Liabilities and Stockholders' Equity

$

329,616,399

$

311,047,150

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended

March 31,

March 31,

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

21,912,326

$

17,718,167

Adjustments to reconcile net income to net cash provided by operating

activities:

Depreciation

1,534,507

1,096,725

Amortization

282,605

755,797

Loss on sale of property, plant and equipment

1,238

15,092

Allowance for doubtful accounts, net

-

58,497

Reversal of doubtful accounts - other receivables and prepayments

(169)

-

Write-down of obsolete inventories

-

63,982

Deferred tax expense

534,678

98,278

Share-based compensation

1,634,735

962,419

Change in fair value of derivative liabilities

-

(1,209,382)

Equity in income of an equity method investee

(128,948)

(1,022,412)

Change in operating assets and liabilities:

Accounts receivable

(3,294,140)

(7,933,930)

Prepayment and other current assets

(569,804)

(657,056)

Inventories

(647,310)

1,146,821

Accounts payable

25,644

(881,402)

Other payables and accrued expenses

(2,068,529)

(3,584,253)

Advance from customers

1,451,180

668,207

Due to related parties

94,346

2,482,577

Income tax payable

1,267,826

(1,569,925)

Net cash provided by operating activities

$

22,030,185

$

8,208,202

CASH FLOWS FROM INVESTING ACTIVITIES:

Payment for property, plant and equipment

(4,977,306)

(2,325,870)

Payment for intangible assets and land use rights

(802,136)

(318,622)

Proceeds from sale of property, plant and equipment

2,416

-

Net cash used in investing activities

$

(5,777,026)

$

(2,644,492)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from stock option exercised

$

1,815,858

$

-

Repayment of short term bank loans

(3,186,400)

(6,352,000)

Acquisition of noncontrolling interest

(1,963,913)

-

Dividend paid by subsidiaries to noncontrolling interest shareholders

(4,397,232)

(4,382,880)

Net cash used in financing activities

$

(7,731,687)

$

(10,734,880)

EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH

579,112

733,956

NET INCREASE (DECREASE) IN CASH

$

9,100,584

$

(4,437,214)

Cash and cash equivalents at beginning of period

129,609,317

89,411,835

Cash and cash equivalents at end of period

$

138,709,901

$

84,974,621

Supplemental cash flow information

Cash paid for income taxes

$

2,804,399

$

4,648,363

Cash paid for interest expense

$

119,490

$

159,217

Noncash investing and financing activities:

Acquisition of property, plant and equipment included in payables

$

100,086

$

6,900

 

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

FOR THE THREE MONTHS ENDED March 31, 2013 and 2012

For the three months ended

March 31,

March 31,

2013

2012

Adjusted Net Income Attributable to the Company - Non GAAP

$

16,394,620

$

12,710,343

Diluted EPS - Non GAAP

$

0.59

$

0.48

Non-cash employee stock compensation

$

(1,478,760)

$

(962,419)

Gain from change in fair value of warrants

$

-

$

1,209,382

Net Income Attributable to the Company

$

14,915,860

$

12,957,306

Weighted average number of shares used in computation of Non GAAP diluted EPS

27,915,506

26,547,885

 

SOURCE China Biologic Products, Inc.



RELATED LINKS

http://www.chinabiologic.com