Nutrastar Announces Strong Second Quarter 2012 Results Sales of Premium Consumer Products up 30.6%; Net Income Rises 25.6%

HARBIN, China, Aug. 13, 2012 /PRNewswire-Asia-FirstCall/ -- Nutrastar International Inc. (OTCBB: NUIN; "Nutrastar" or the "Company"), a leading producer and supplier of premium branded consumer products, including commercially cultivated Cordyceps Militaris ("Cordyceps"), functional health beverages and organic and specialty foods, today announced its results for the three months and six months ended June 30, 2012.

Financial Highlights for the Three Months Ended June 30, 2012
 

  • Net revenue was $10.04 million, an increase of 30.6% from $7.68 million in the quarter ended June 30, 2011.
  • Gross profit increased 27.2% to $7.56 million, up from $5.95 million in the comparable 2011 quarter, representing a gross margin of 75.4%.
  • Net income was $4.90 million, up 25.6% from $3.90 million in Q2 2011.
  • Basic and diluted EPS were $0.31 and $0.30, respectively, with 15.38 million basic shares and 16.52 million diluted shares outstanding.

Financial Highlights for the Six Months Ended June 30, 2012
 

  • Net revenue was $16.90 million, an increase of 25.3% from $13.48 million in the six months ended June 30, 2011.
  • Gross profit increased 21.9% to $12.65 million, up from $10.37 million in the comparable 2011 six month period, representing a gross margin of 74.8%.
  • Net income was $7.85 million, up 13.6% from $6.91 million in the first six months of 2011.
  • Basic and diluted EPS were $0.50 and $0.48, respectively, with 15.37 million basic shares and 16.51 million diluted shares outstanding.

Management Commentary

"We are quite pleased with our progress in the second quarter and first six months of 2012. While tough macroeconomic conditions remained steadfast, we continued to execute on our growth strategy and yield lucrative results," Ms. Lianyun Han, CEO of Nutrastar, commented. "By focusing on growing our sales volume through existing distribution channels, we saw revenue from product sales reach $10.04 million in second quarter, up 30.6% year-over-year and $16.9 million in the first six months, up 25.3% year over year. Demand for both our core consumer product Cordyceps and functional health drinks stayed strong with second quarter sales up 23.8% and 76.8% from the comparable 2011 period, respectively. Moreover, net income rose 25.6% in the second quarter and 13.6% in the first six months, while gross margin came in at a robust 75.4%, good indications of a strong and growing business."

Commenting on the company's cash position, Ms. Han stated, "As noted in our filings with the Securities & Exchange Commission and verified by our independent auditor, we've had and continue to have an extremely solid balance sheet, comprised of very little debt and a substantial cash position. Amidst volatile financial markets and an uncertain future, our strong balance sheet and large cash position, roughly $3.90 per diluted share, puts us in a powerful position as a company and opens the doors of opportunity that might not otherwise be present. It's important that we continue to manage this cash wisely and conservatively and use it towards growing the business organically and through acquisition if the right opportunities present themselves."

Ms. Han added, "Looking ahead, in terms of production capacity, our Cordyceps expansion project is expected to stay on track throughout the rest of 2012 to meet our goal of 100 tons production capacity by end of year 2013, an increase of 14.9% from current levels. We are eagerly awaiting and excited for the completion of this final stage which will allow us to better meet growing demand of our Cordyceps-related consumer products and further strengthen our top and bottom line."

Financial Position as of June 30, 2012

The Company had cash and cash equivalents totaling $64.47 million or $3.90 per diluted share, total assets of approximately $83.98 million or $5.08 per diluted share, working capital of $62.03 million or $3.76 per diluted share, and stockholders' equity of $79.78 million. Net cash generated from operating activities during the six months ended June 30, 2012 was $8.88 million up from $6.00 million in the comparable 2011 period. 

Outlook for the Year Ending December 31, 2012

Based on management's current expectations, it is still believed that revenue will be in the range of $40 million to $44 million, representing an approximate top line increase of 17% to 29% year over year.

Financial Results Conference Call

Nutrastar will host a conference call at 9:00 a.m. ET on Monday, August 13, 2012 to discuss the Company's second quarter 2012 results. Ms. Lianyun Han, Chief Executive Officer, and Mr. Robert Tick, Chief Financial Officer, will be hosting the call.

Investors are invited to participate on the live call by dialing +1 (877) 407- 0784 for domestic and +1 (201) 689-8560 for international.  Please reference event ID: 398605.

For investors that would like to listen to the call via webcast, please log on to http://public.viavid.com/index.php?id=101375 approximately 5 minutes before the start of the call.

A replay of the call will be available for two (2) weeks following the call starting at 12:00 p.m. Noon ET on August 13, 2012 and ending at 11:59 p.m. ET on August 27, 2012. To list to the replay, investors can dial +1 (877) 870-5176 for domestic and +1 (858) 384-5517 for international.  The pass code for the replay is: 398605.

For more information regarding Nutrastar's financial performance during the quarter ended June 30, 2012, please refer to the Quarterly Report on Form 10-Q to be filed with the Securities and Exchange Commission on or about August 13, 2012.

About Nutrastar International Inc.

Nutrastar is a China based leading producer and supplier of premium branded consumer products including commercially cultivated Cordyceps Militaris, functional health beverages as well as specialty and organic foods. Cordyceps Militaris is one of the most highly regarded herbal nutrients in Traditional Chinese Medicine. The Company is headquartered in Harbin, capital of Heilongjiang Province, with 332 employees, including 21 in R&D, and 149 in sales and marketing. The products of Nutrastar are sold throughout China via a sales and distribution network that covers more than 10 provinces. More information may be found at http://www.nutrastarintl.com/ or e-mail: ir@nutrastarintl.com.

Make sure you are first to receive timely up-to-date information on Nutrastar. Sign up for Nutrastar's email news alert system today at: http://www.nutrastarintl.com/alerts

Safe Harbor Statement

This news release contains "forward-looking statements" relating to the business of Nutrastar International Inc., its subsidiaries and other affiliate companies.  All statements, other than statements of historical fact included herein are "forward-looking statements" including statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts.  These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions.  These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the Company with the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors.  You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required under the securities laws, the Company does not assume a duty to update any forward-looking statements to reflect events or circumstances after the date hereof.

For more information, please contact:
 

Howard Gostfrand
American Capital Ventures
Tel:  +1-305-918-7000
Email: info@amcapventures.com


NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


(Unaudited)


(AMOUNTS EXPRESSED IN US DOLLARS)






For the Three Months



For the Six Months




Ended June 30,



Ended June 30,




2012



2011



2012



2011















NET REVENUE

$

10,035,428


$

7,683,291


$

16,896,446


$

13,479,533















Cost of goods sold


(2,472,094)



(1,736,616)



(4,250,662)



(3,106,416)















GROSS PROFIT


7,563,334



5,946,675



12,645,784



10,373,117















Selling expenses


(465,650)



(463,938)



(848,008)



(873,811)


General and administrative expenses


(664,538)



(814,091)



(1,329,243)



(1,335,417)















Income from operations


6,433,146



4,668,646



10,468,533



8,163,889















Other income (expenses):













   Interest income


66,664



66,766



133,882



106,595


   Foreign exchange differences


(13,571)



28,864



(11,167)



51,785


   Change in fair value of warrants


144,788



436,934



140,759



829,125


   Total other income


197,881



532,564



263,474



987,505















Income before income taxes


6,631,027



5,201,210



10,732,007



9,151,394















Provision for income taxes


(1,729,994)



(1,299,593)



(2,881,396)



(2,242,006)















NET INCOME


4,901,033



3,901,617



7,850,611



6,909,388















OTHER COMPREHENSIVE INCOME:













   Foreign currency translation adjustments


(366,862)



714,722



(287,109)



1,226,731















COMPREHENSIVE INCOME

$

4,534,171


$

4,616,339


$

7,563,502


$

8,136,119















Earnings per share:













   Basic

$

0.31


$

0.26


$

0.50


$

0.46


   Diluted

$

0.30


$

0.24


$

0.48


$

0.42















Weighted average number of shares outstanding:













   Basic


15,384,180



14,793,775



15,370,851



14,639,464


   Diluted


16,517,699



16,394,902



16,513,952



16,309,911



 

NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)






June 30,


December 31,





2012


2011





(Unaudited)



ASSETS


CURRENT ASSETS






Cash and cash equivalents

$

64,470,406

$

54,556,329


Restricted cash


-


4,170


Accounts receivable


88,929


82,516


Inventories


1,386,321


898,871


Prepayments and other receivables


279,548


1,194,466



Total current assets


66,225,204


56,736,352

OTHER ASSETS






Intangible assets, net


1,779,632


2,024,593


Property, plant and equipment, net


11,969,041


12,395,567


Construction in process


4,002,646


5,271,609










Total assets

$

83,976,523

$

76,428,121


LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES






Accounts payable

$

-

$

6,339


Other payables and accruals


1,215,143


1,064,045


Taxes payable


2,358,944


2,585,738


Due to a related party


149,592


80,648


Preferred stock dividend payable


467,020


529,851


Warrants liabilities


3,652


144,411



Total current liabilities


4,194,351


4,411,032








Total liabilities


4,194,351


4,411,032








COMMITMENTS AND CONTINGENCIES (Note 19)












STOCKHOLDERS' EQUITY











Preferred Stock, $0.001 par value, (1,000,000 shares authorized,






113,010 shares and 147,820 shares issued and outstanding, respectively;






aggregate liquidation preference amount: $3,164,280 and $4,138,960,






plus accrued but unpaid dividend of $482,934 and $529,851,


2,577,324


3,371,206


at June 30, 2012 and December 31, 2011, respectively)






Common stock, $0.001 par value, 190,000,000 shares authorized






15,432,381 shares issued and 15,388,826 shares outstanding at


15,433


14,963


     June 30, 2012; 14,962,631 shares issued and 14,957,970 shares

     outstanding at December 31, 2011






Additional paid-in capital


18,383,361


17,180,280


Treasury stock, at cost, 43,555 shares and 4,661 shares of common stock






 as of June 30, 2012 and December 31, 2011


(78,767)


(9,553)


Statutory reserves


3,921,102


3,076,552


Retained earnings


50,034,261


43,167,074


Accumulated other comprehensive income


4,929,458


5,216,567



Total stockholders' equity


79,782,172


72,017,089










Total liabilities and stockholders' equity

$

83,976,523

$

76,428,121


 

NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


(AMOUNTS EXPRESSED IN US DOLLARS)






For the Six Months Ended

June 30,




2012



2011


CASH FLOWS FROM OPERATING ACTIVITIES:







Net income

$

7,850,611


$

6,909,388


Adjustments to reconcile net income to cash provided by operating activities:







   Change in fair value of warrants


(140,759)



(829,125)


   Warrants and consultant restricted stock expense


-



41,526


   Depreciation and amortization


618,482



546,552


   Share-based compensation expense


207,964



181,571


 (Increase) decrease in assets:







       Accounts receivable


(6,744)



25,099


       Inventories


(492,222)



(1,150,108)


       Prepayments and other receivables


912,912



(828,948)


 Increase (decrease) in liabilities:







       Accounts payable


(6,332)



(112,813)


       Other payables and accruals


155,434



44,378


       Taxes payable


(217,584)



1,173,734


     Net cash provided by operating activities


8,881,762



6,001,254









CASH FLOWS FROM INVESTING ACTIVITIES:







Refund of prepayments for cold studios


1,268,351



-


Purchase of property, plant and equipment and construction in progress


(15,926)



(1,950,448)


     Net cash used in  investing activities


1,252,425



(1,950,448)









CASH FLOWS FROM FINANCING ACTIVITIES:







Purchase of common stocks


(69,214)



-


Advance from related party


77,143



-


Decrease in restricted cash


4,170



92,815


     Net cash provided by financing activities


12,099



92,815









Foreign currency translation adjustment


(232,209)



914,415









INCREASE IN CASH AND CASH EQUIVALENTS


9,914,077



5,058,036


CASH AND CASH EQUIVALENTS, at the beginning of the period


54,556,329



40,758,848









CASH AND CASH EQUIVALENTS, at the end of the period

$

64,470,406


$

45,816,884









NON-CASH TRANSACTIONS







Preferred stock and dividend converted into common stock

$

995,587


$

1,123,305


Share-based payment – IR warrants


-



41,526


Preferred stock dividend payable


138,874



322,595


Share-based payment to officers and directors under equity incentive plan


207,964



181,571


SUPPLEMENTAL DISCLOSURE INFORMATION







Income taxes paid

$

3,050,703


$

1,167,463


 

SOURCE Nutrastar International Inc.



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