Rodobo International, Inc. Reports Fourth Quarter and Full Year 2010 Results

HARBIN, China, Dec. 21, 2010 /PRNewswire-Asia-FirstCall/ -- Rodobo International, Inc. (the "Company" or "Rodobo") (OTC Bulletin Board: RDBO), a fast growing dairy company in China, reported financial results for the fourth quarter and full year ended September 30, 2010.

Fourth Quarter 2010 Highlights:

• Revenue was $25.3 million, up 172.6% from $9.3 million in 4Q09, outperformed 4Q10 guidance range of $20 - $24 million
• Gross profit was $9.4 million, up 87.5% from $5.0 million in 4Q09
• Net income was $3.6 million, up 112.4% from $1.7 million in 4Q09, outperformed 4Q10 guidance range of $3.0 - $3.2 million
• Earnings per diluted share was $0.13, up from $0.10 in 4Q09

Full Year 2010 Highlights:

• Revenue was $69.8 million, up 101.2% from $34.7 million in 2009
• Gross profit was $28.0 million, up 59.0% from $ 17.6 million in 2009
• Net income was $12.4 million, up 82.5% from $6.8 million in 2009  
• Earnings per diluted share was up to $0.53 from $0.42 in 2009

First Quarter 2011 Guidance:

Management feels confident to give its guidance for the first quarter of 2011 for revenue to be in the range of $24 - $26 million and net income to be in the range of $3.2 - $3.5 million.

"Rodobo closed its fiscal year 2010 with strong fourth quarter results and it is our fourth consecutive top line growth quarter. Our strong revenue and net income growths demonstrated the strong market demand for Rodobo's high quality, fresh and nutritious milk powder products, the effectiveness of our strategy of expanding our production capacity, and our ability in marketing execution" stated Mr. Yanbin Wang, the Chairman and Chief Executive Officer of Rodobo. "Overall, 2010 was an extraordinary and successful year for Rodobo. The acquisition of the Beixue Group is a key groundwork of our growth strategy. As we move into 2011, we will continue to consolidate our acquisition, realign our product lines and improve our capacity utilization as we continue to expand our distribution network and further penetrate into our existing market in both formulated dairy and raw milk powder products."

Fourth Quarter 2010 Financial Results

Net sales for the fourth quarter of 2010 were $25.3 million, an increase of approximately $16.0 million or 172.6%, compared to net sales for fourth quarter of 2009. This increase was primarily derived from the contribution from the acquisition of Hulunbeier Hailaer Beixue, one of the three companies comprising the Beixue Group that were acquired by the Company on February 5, 2010. We also increased the selling price of whole milk powder products produced by Hulunbeier Hailaer Beixue after the acquisition. The revenue growth was also attributed to the sales of our "Peer" infant formula product series launched in July 2009. The "Peer" series is a high-end product line with higher selling price. During the fourth quarter, we continued our efforts to develop distribution networks and expand the market areas in the 9 provinces in which we currently sell products.

During the fourth quarter of 2010, sales generated from baby/infant formula accounted for 40.7% of total sales, sales generated from middle-aged and elderly formula accounted for 13.5% of our total sales, and sales generated from whole milk powder formula accounted for 45.8% of total sales.

Our gross profit for the fourth quarter of 2010 was $9.4 million, an increase of approximately $4.4 million or 87.5%, compared to the gross profit for the fourth quarter of 2009. The overall gross profit margin for the fourth quarter of 2010 decreased to 37.0% from 53.8% for the fourth quarter of 2009.  

Our overall gross profit margin was diluted due to the acquisition of lower-margin business. The newly acquired, Hulunbeier Hailaer Beixue, has a gross margin of 7.4% for the fourth quarter of 2010. Excluding the margin dilution impact of the acquisition, gross profit margin actually improved to 64.0% for the fourth quarter 2010 from 53.8% for the fourth quarter of 2009, which was primarily driven by the high-margin new baby/infant formula "Peer", which has a gross margin of 70.8% and accounted for approximately 52.6% of total formulated milk powder product sales (excluding sales from Hulunbeier Hailaer Beixue) in the fourth quarter of 2010.

Operating expenses for the fourth quarter of 2010 were $6.3 million, an increase of approximately $2.9 million, or 85.6%, compared to the fourth quarter of 2009. Operating expenses as a percentage of net sales decreased to 24.8% in the fourth quarter of 2010 from 36.4% in the fourth quarter of 2009. The decrease of the operating expenses as a percentage of net sales was primarily due to a decrease in operating expenses, especially fewer distribution expenses expended by Hulunbei Hailaer Beixue as its whole milk powder products are sold directly to end users' processing plants.

Distribution expenses for the fourth quarter of 2010 were $5.8 million, an increase of approximately $2.7 million or 90.9%, compared to $3.1 million for the fourth quarter of 2009. The increase was mainly due to sales growth and market expansion. The increase was also attributed by $0.4 million amortization of customer list that we acquired in connection with the acquisitions of the Beixue Group made on February 5, 2010.

General and administrative expenses for the fourth quarter of 2010 were $0.4 million, an increase of $0.1 million from $0.3 million for the fourth quarter of 2009.

Net income for the fourth quarter of 2010 was $3.6 million, an increase of $1.9 million or 112.4%, compared to $1.7 million for the fourth quarter of 2009. Earnings per diluted share were $0.13 for the fourth quarter of 2010, compared with $0.10 per diluted share for the fourth quarter of 2009.

Full Year 2010 Financial Results

Net sales for the full year 2010 were $69.8 million, an increase of approximately $35.1 million or 101.2%, from $34.7 million in 2009. Gross profit increased was $28.0 million, an increase of 59.0% from $17.6 million in the comparable period in 2009. Gross margin was 40.1% in 2010 compared to 50.7% in the comparable period in 2009. Income from operation was $10.0 million, an increase of 56.8% from $6.4 million in the same period a year ago. Net income for 2010 was $12.4 million or $0.53 per fully diluted share, up 82.5% from $6.8 million, or $0.42 per fully diluted share, in the comparable period in 2009.

Financial Condition

As of September 30, 2010, Rodobo had $5.2 million in cash and cash equivalents, $5.5 million in current liabilities and no long-term debt. Shareholders' equity was $61.0 million as of September 30, 2010, up from $21.3 million as of September 30, 2009. Net cash from operating activities during 2010 was $12.8 million, compared with $3.6 million in 2009.

Conference Call Information

Management will conduct a conference call at 8:00 A.M. Eastern Time, on Tuesday, December 21, 2010. To participate in the live conference call, please dial the following number five or ten minutes prior to the scheduled conference call time: (866) 393-8606. International callers should dial +1-(706) 643-9902. When prompted by the operator, mention Conference ID number 33141799. If you are unable to participate in the call at this time, a replay will be available on Tuesday, December 21, 2010 at 11:00 a.m. Eastern Time, through Tuesday, January 4, 2011. To access the replay dial (800) 642-1687 or (706) 645-9291, and enter the passcode 33141799. Additionally, a live webcast will be available at http://intercallus.stream57.com/Rodobo_122110

About Rodobo International, Inc.

Rodobo International, Inc. is a producer and distributor of powdered milk formula products in the People's Republic of China ("PRC" or "China"). The Company's target consumers include infants, children, the middle-aged and the elderly in China. The Company's products for infants and children are currently sold under the brand names of "Rodobo" and "Peer", and its products for middle-aged and elderly consumers are currently sold under the brand name of "Healif".

Safe Harbor Statement

This press release and the statements of representatives of Rodobo International, Inc., and its consolidated subsidiaries (collectively, the "Company") related thereto contain, or may contain, among other things, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the impact of the recent acquisitions on the business and operations of the Company; the ability of the Company to achieve its commercial objectives including increased growth, revenues, earnings, and production capacity; the business strategy, plans and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are subject to significant known and unknown risks and uncertainties and are often identified by the use of forward-looking terminology such as "projects," "may," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans" or similar expressions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do 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 press 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 those discussed in the 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. The Company undertakes no duty to update these forward-looking statements except as required by law.

SOURCE Rodobo International, Inc.