China Botanic Pharmaceutical Reports Second-Quarter Fiscal Year 2011 Results
Sales grew 56.1% year-over-year to $18.9 million
Net Income rose 107.1% year-over-year to a record $7.1 million
Reaffirm Net Income Guidance for FY 2011
HARBIN, China, June 14, 2011 /PRNewswire-Asia/ -- China Botanic Pharmaceutical Inc. (AMEX: CBP) (formerly Renhuang Pharmaceutical, Inc.) ("China Botanic" or the "Company"), a developer, manufacturer and distributor of botanical products, bio-pharmaceuticals and traditional Chinese medicines ("TCM") in China, today announced financial results for the three months ended April 30, 2011.
Second-Quarter 2011 Highlights and Recent Events
- Net sales increased 56.1% year-over-year to $18.9 million
- Gross profit increased 79.3% to $11.1 million from $6.2 million in the second quarter of fiscal year 2010
- Gross margin increased to 59.0% from 51.4% a year ago
- Net income rose 107.1% to $7.1 million or $0.19 per diluted share
- The Company's wholly owned subsidiary, Harbin Renhuang Pharmaceutical Co., Ltd received official approval to produce water-based mixtures.
- The Company successfully completed research of the chromatographic fingerprints for its Siberian Ginseng series products, utilizing a state-of-the-art analysis method which identifies the chemical characteristics of the designated medicine.
- The Company successfully completed a feasibility study to analyze the benefits of using straw pellets, a renewable bio-fuel, for its production operations and plans to put the new fuel into use by October, 2011.
"During the second fiscal quarter of 2011, we continued to benefit from our strong market position, customer loyalty and well-accepted increases in selling prices, resulting in nearly 56% year-over-year growth in revenue and more than 100% year-over-year growth in net income. We are pleased to report strong financial performance during the quarter and remain optimistic about the future," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic. "In addition, our four new products, namely Qing Re Jie Du Oral Liquid, Compound Schizandra Tablets, Ginseng and Venison Extract, and Badger Oil have been well accepted in the market and contributed 19% of the quarter's total sales revenue up from 15% in the first fiscal quarter of 2011."
Second-Quarter Fiscal 2011 Results
During the three months ended April 30, 2011, net sales increased 56.1% to $18.9 million, from $12.1 million during the same period in 2010. The rise was mainly attributable to year-over-year increase in average selling prices of the Company's products and the growing market acceptance of the Company's new products introduced in the second half of 2010. Sales declined compared to the first quarter fiscal 2011 due to normal seasonality. April to August is typically the company's slowest period of the year.
Gross profit increased 79.3% to $11.1 million compared to $6.2 million in the second quarter of fiscal 2010. Gross margin increased to 59.0% as compared to 51.4% in the same period of 2010. The growth in gross profit was mainly driven by price increases across all of the Company's products, somewhat mitigated by modest increases in raw material prices.
Operating expenses for the second quarter of fiscal 2011 were $3.1 million, as compared to $2.8 million in the same period last year. Sales and distribution expenses rose to $1.5 million from $1.3 million a year ago. The spending increase reflected the Company's efforts to expand its distribution network, market share, and awareness of its premium quality products. General and administrative expenses decreased 12.6% to $0.9 million. Research and development expenses were $0.7 million, up from $0.6 million in the year ago period, reflecting the Company's continued commitment to build a strong pipeline of new products.
Operating income in the second quarter was $8.0 million, compared to $3.4 million in the second quarter of 2010. Operating margin increased year-over-year to 42.5% from 28.1%.
The Company incurred income tax expenses $1.0 million in the second quarter of fiscal 2011, compared to no taxes paid for the first quarter 2010, due to the 15% tax rate imposed effective January 1, 2011. For the second quarter ended April 30, 2011, net income increased 107.1% to $7.1 million, or $0.19 per diluted share, from $3.4 million, or $0.09 per diluted share for the same period a year ago.
Six Month Results
Total revenue for the six month period ended April 30, 2011 was $41.5 million, an increase of 42.0% from $29.2 million for the first six months of fiscal 2010. Gross profit in the first half of fiscal 2011 rose 59.0% to $25.0 million, representing a gross margin of 60.1% as compared to 53.7% in the first half of fiscal 2010. Operating income grew 82.6% year-over-year to $19.7 million. In the first six months of fiscal 2011, net income was $18.0 million or $0.48 per diluted share, up from $10.8 million or $0.29 per diluted share in the first six months of fiscal 2010.
Financial Condition
As of April 30, 2011, the Company had cash and cash equivalents of approximately $27.6 million and total current assets of approximately $54.6 million. As of April 30, 2011, China Botanic had working capital of approximately $42.4 million as compared to $47.1 million for the fiscal year ended October 31, 2010. The Company had no long-term debt on its balance sheet as of April 30, 2011. Shareholders' equity stood at $90.0 million, compared with $69.8 million as of October 31, 2010. Net cash flow from operating activities for the six months ended April 30, 2011 was $16.1 million compared to $19.3 million for the same period of 2010.
Business Outlook
"We anticipate continued growth in revenue and net income in the coming years driven by our established market presence, strong customer loyalty, ability to introduce new market-oriented products and aggressive sales and marketing efforts. We are confident that we will achieve our goals for fiscal 2011 and meet our financial guidance for revenue in the range of $70.6 million to $71.7 million and our raised after-tax net income guidance of approximately $25.5 million," said Mr. Li. "The recent government levied price controls in the TCM industry do not result in a margin squeeze for China Botanic as our product prices are significantly lower than the government price ceilings and the prices of our competitors. We enjoy a strong pricing advantage even after our recent price increases and our customers are satisfied with the high-quality of our products. In addition, our research team continues to work on several other promising products and we hope to announce new product introductions in the coming quarters, which will strengthen our market position and enhance our longer term growth."
Conference Call
China Botanic will host a conference call at 9:00 a.m. Eastern Time on Wednesday, June 15, 2011, to discuss financial results for the second quarter of fiscal year 2011, ended April 30, 2011. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-394-2209. International callers should dial +1 706-758-1481. The conference ID number for the call is 74659602.
If you are unable to participate in the call at this time, a replay will be available on Wednesday, June 15, 2011 at 12:00 noon Eastern Time, through Wednesday, June 29, 2011. To access the replay, dial 800-642-1687. International callers should dial +1 706-645-9291. The conference ID number for the replay is 74659602.
ABOUT CHINA BOTANIC PHARMACEUTICAL INC.
China Botanic Pharmaceutical Inc. is engaged in the research, development, manufacturing, and distribution of botanical products, bio-pharmaceutical products, and traditional Chinese medicines ("TCM"), in the People's Republic of China. All of the Company's products are produced at its three GMP-certified production facilities in Ah City, Dongfanghong and Qingyang. The Company distributes its botanical anti-depression and nerve-regulation products, biopharmaceutical products, and botanical antibiotic and OTC TCMs through its network of over 3,000 distributors and over 70 sales centers across 24 provinces in China. For more information, please visit www.renhuang.com.
Safe Harbor Statement
This press release contains certain statements that may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's beliefs, assumptions and expectations of the Company's future operations and financial performance, taking into account the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known that may cause actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition expressed or implied in any forward-looking statements. These forward-looking statements are based on current plans and expectations and are subject to a number of uncertainties including, but not limited to, the Company's ability to manage expansion of its operations effectively, and other factors detailed in the Company's annual report on Form 10-K and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented herein.
Company Contact: |
CCG Investor Relations: |
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China Botanic Pharmaceutical Inc. |
Mr. Mark Collinson, Partner |
|
Ms. Portia Tan, IR Contact |
Phone: +1-310-954-1343 (Los Angeles) |
|
Tel: 86-451-8260-2162 |
Email: [email protected] |
|
Email: [email protected] |
Website: www.ccgirasia.com |
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Mr. Crocker Coulson, President |
||
Phone: +1-646-213-1915 (New York) |
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Email: [email protected] |
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- Financial Tables Follow-
CHINA BOTANIC PHARMACEUTICAL INC. |
|||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||||||
April 30, 2011 |
October 31, 2010 |
||||||||||
(Unaudited) |
(Audited) |
||||||||||
ASSETS |
|
|
|
|
|
|
|
||||
Current assets: |
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
|
|
$ |
27,627,143 |
|
|
$ |
27,826,142 |
||
Trade receivables, net |
20,547,326 |
19,814,438 |
|||||||||
Due from related parties |
|
|
|
|
68,707 |
|
|
|
28,877 |
||
Inventory, net |
6,088,032 |
2,645,616 |
|||||||||
Other receivables, net |
|
|
|
|
268,307 |
|
|
|
200,994 |
||
Total current assets |
$ |
54,599,515 |
$ |
50,516,067 |
|||||||
|
|
|
|
|
|
|
|
|
|||
Property and equipment, net |
$ |
1,938,890 |
$ |
2,069,460 |
|||||||
Intangible Assets |
|
|
|
|
17,197,278 |
|
|
|
1,953,617 |
||
Construction in progress |
1,901,258 |
||||||||||
Deposits |
|
|
|
26,423,769 |
|
|
|
18,605,935 |
|||
Deferred tax assets |
136,650 |
- |
|||||||||
|
|
|
|
|
|
|
|
||||
Total assets |
$ |
102,197,360 |
$ |
73,145,079 |
|||||||
|
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||||||
Liabilities |
|||||||||||
Accounts payable |
|
|
$ |
7,861,148 |
|
|
$ |
333,555 |
|||
Tax payable |
2,268,240 |
1,064,066 |
|||||||||
Accrued employee benefits |
|
|
|
|
1,977,605 |
|
|
|
1,645,192 |
||
Warrant Liabilities |
|
64,848 |
|
342,770 |
|||||||
Total liabilities |
|
|
|
|
$ |
12,171,841 |
|
|
$ |
3,385,583 |
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
Preferred stock (no par value, 1,000,000 shares authorized; none issued and outstanding as of April 30,2011 and October 31, 2010,respectively) |
|||||||||||
Common stock ($0.001 par value, 100,000,000 shares, authorized; 37,239,536 issued and outstanding as of April 30,2011 and October 31, 2010, respectively) |
|
|
|
$ |
37,240 |
|
|
$ |
37,240 |
||
Additional paid-in capital |
7,688,785 |
7,627,987 |
|||||||||
Common stock warrants |
|
|
|
|
496,732 |
|
|
|
496,732 |
||
Reserves |
3,372,697 |
3,372,697 |
|||||||||
Accumulated other comprehensive income |
|
|
|
|
|
6,944,667 |
|
|
|
4,768,793 |
|
Retained earnings |
|
71,485,398 |
|
53,456,047 |
|||||||
Total shareholders' equity |
|
|
|
|
|
90,025,519 |
|
|
|
69,759,496 |
|
|
|
|
|
||||||||
Total liabilities and shareholders' equity |
|
|
|
|
$ |
102,197,360 |
|
|
$ |
73,145,079 |
|
CHINA BOTANIC PHARMACEUTICAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
|||||||||||||||||
For the three months |
For the six months |
||||||||||||||||
ended April 30, |
ended April 30, |
||||||||||||||||
2011 |
2010 |
2011 |
2010 |
||||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||||||||||||
Sales, net |
|
|
|
$ |
18,873,689 |
|
$ |
|
12,092,506 |
|
$ |
41,498,749 |
|
$ |
29,225,120 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Cost of goods sold |
|
|
|
|
7,733,630 |
|
|
|
5,877,856 |
|
|
16,541,417 |
|
|
13,530,494 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
11,140,059 |
|
|
|
6,214,650 |
|
|
24,957,332 |
|
|
15,694,626 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Operating and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and distribution |
|
|
|
|
1,541,011 |
|
|
|
1,265,319 |
|
|
2,870,190 |
|
|
2,404,300 |
|
|
General and administrative |
|
|
|
|
851,762 |
|
|
|
974,825 |
|
|
1,511,644 |
|
|
1,791,794 |
|
|
Research and development |
|
|
|
|
718,512 |
|
|
|
570,557 |
|
|
899,186 |
|
|
722,921 |
|
|
Total operating expenses |
|
|
|
|
3,111,285 |
|
|
|
2,810,701 |
|
|
5,281,020 |
|
|
4,919,015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Income from operations |
|
|
|
|
8,028,774 |
|
|
|
3,403,949 |
|
|
19,676,312 |
|
|
10,775,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Other income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
|
22,953 |
|
|
|
15,699 |
|
|
47,142 |
|
|
27,166 |
|
|
Other income net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expenses |
|
|
|
|
8,051,727 |
|
|
|
3,419,648 |
|
|
19,723,454 |
|
|
10,802,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Income tax expenses |
|
|
|
|
970,671 |
|
|
|
|
|
|
1,694,103 |
|
|
|
|
|
Net income |
|
|
|
$ |
7,081,056 |
|
|
$ |
3,419,648 |
|
$ |
18,029,351 |
|
$ |
10,802,777 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative currency translation adjustments |
|
|
|
|
1,511,453 |
|
|
|
(162,404) |
|
|
2,175,874 |
|
|
(159,889) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total comprehensive income |
|
|
|
|
8,592,509 |
|
|
|
3,257,244 |
|
|
20,205,225 |
|
|
10,642,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Earnings per common stock- Basic |
|
|
|
$ |
0.19 |
|
|
$ |
0.09 |
|
$ |
0.48 |
|
$ |
0.29 |
|
|
Earnings per common stock - Diluted |
|
|
|
$ |
0.19 |
|
|
$ |
0.09 |
|
$ |
0.48 |
|
$ |
0.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Weighted average common stock outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
37,239,536 |
|
|
|
37,239,536 |
|
|
37,239,536 |
|
|
37,239,536 |
|
|
Diluted |
|
|
|
|
37,759,494 |
|
|
|
37,917,140 |
|
|
37,827,717 |
|
|
37,724,214 |
|
|
CHINA BOTANIC PHARMACEUTICAL INC. |
|||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
For the six months ended April 30, |
|||||||||
2011 |
2010 |
||||||||
US$ |
US$ |
||||||||
(Unaudited) |
(Unaudited) |
||||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|||
Net income |
$ 18,029,351 |
$ 10,802,777 |
|||||||
Adjustments to reconcile net income to operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation |
189,667 |
181,076 |
|||||||
Amortization |
|
|
201,006 |
|
|
|
|
|
|
Warrants issued for service |
(277,922) |
342,770 |
|||||||
Share Compensation |
|
|
60,799 |
|
|
|
16,594 |
|
|
Noncash rental expenses |
379,029 |
||||||||
Deferred tax assets |
|
|
(134,576) |
|
|
|
|
|
|
Changes in assets and liabilities: |
|||||||||
(Increase)Decrease in trade receivables |
|
|
(192,743) |
|
|
|
8,238,225 |
|
|
(Increase)Decrease in due from related parties |
(38,455) |
129,841 |
|||||||
(Increase)Decrease in inventory, net |
|
|
(3,319,538) |
|
|
|
80,613 |
|
|
Decrease in prepayments |
89,036 |
||||||||
(Decrease) in other receivables, net |
|
|
(60,925) |
|
|
|
(62,244) |
|
|
(Decrease) in accounts payable |
(176,136) |
(89,235) |
|||||||
Increase(Decrease) in tax payable |
|
|
1,157,489 |
|
|
|
(685,259) |
|
|
Increase in accrued employee benefits |
|
283,444 |
|
206,296 |
|||||
Net cash provided by operating activities |
|
|
$16,100,490 |
|
|
|
$19,250,490 |
|
|
|
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Deposits for land use right and properties |
|
|
$(15,161,164) |
|
|
|
$(3,928,614) |
|
|
Increase in construction in progress |
|
|
(1,872,404) |
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(5,826) |
|
|
|
|
|
|
Net cash used in investing activities |
|
|
$(17,039,394) |
|
|
|
$(3,928,614) |
|
|
|
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash |
|
|
739,905 |
|
|
|
(41,781) |
|
|
|
|
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
(198,999) |
|
|
|
15,280,095 |
|
|
Cash and cash equivalents, beginning of year |
|
|
27,826,142 |
|
|
|
8,111,514 |
|
|
Cash and cash equivalents, end of year |
|
|
27,627,143 |
|
|
|
23,391,609 |
|
|
|
|
|
|
|
|
|
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
|
Cash paid during the year for income taxes |
|
|
|
|
|
|
|
|
|
Interest paid during the year |
|
|
|
|
|
|
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|
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SOURCE China Botanic Pharmaceutical Inc.
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