TPI Reports Fiscal Year 2011 Financial Results

Sep 27, 2011, 02:33 ET from Tianyin Pharmaceutical Co., Inc.

CHENGDU, China, Sept. 27, 2011 /PRNewswire-Asia-FirstCall/ -- Tianyin Pharmaceutical Co., Inc. (NYSE Amex: TPI), a pharmaceutical company that specializes in patented biopharmaceutical, modernized traditional Chinese medicine, branded generics and other pharmaceuticals, announced the financial results for the Fiscal Year 2011.

Fiscal year 2011 ending June 30, 2011 financial highlights

  • Revenue delivered $95.2 million, exceeding the guided $90.0 million revenue forecast for fiscal year 2011, a gain of 48.9% year over year from $63.9 million in fiscal year 2010;
  • Income from operation increased 23.1% year over year to $18.1 million from $14.7 million in fiscal year 2010;
  • Net Income (excluding non-cash equity compensation of $1.9 million) increased to $17.5 million, up 35.4% year over year from $13.0 million in fiscal year 2010; Net income exceeded previously guided $16.0 million net income forecast excluding non-cash equity compensation.
  • Earnings per share increased to $0.55 per basic share, or $0.53 per diluted share, up from $0.47 per basic share, or $0.40 per diluted share in fiscal year 2010, a gain of 17.0% and 32.5%, respectively;
  • Cash and cash equivalents totaled $31.7 million on June 30, 2011 or $1.12 per basic share in cash;
  • Targeting Jiangchuan macrolide facility (JCM) GMP certification in October 2011; Reaffirming $30 million JCM macrolide API revenue for the first year of operation.

Fiscal year 2011 ending June 30, 2011 Results

FY2011

FY2010

YoY

Sales

$95.2 million

$63.9 million

+48.9%

Gross Profit

$42.5 million        

$33.3 million        

+27.6%

Operating Income

$18.1 million

$14.7 million

+23.1%

Net Income

$15.6 million

$11.9 million

+31.1%

Net Income (pro forma)        

$17.5 million

$13.0 million

+34.6%

EPS (Diluted)

$0.53

$0.40

+32.5%

Diluted Shares

29.7 million

30.1 million

Sales for the fiscal year ended June 30, 2011 delivered $95.2 million for the fiscal year 2011 up 48.9% from $63.9 million for the fiscal year 2010, supported by our continuous sales channel expansion and market penetration for our current product portfolio especially the lead products. The results exceeded our targeted $90.0 million fiscal year 2010 guidance which validated our growth strategies. Among the revenue mix, the revenue contribution from TPI's organic portfolio delivered $78.1 million a gain of 22.2% over $63.9 million in fiscal year 2010. We are exploring various growth strategies to sustain the current momentum. In addition to introducing distribution revenue from TMT and macrolide API revenue from JCM, for our core product portfolio, we are focusing on AAA and AA hospitals in major cities of China as an in-depth approach to develop high end hospital pharmaceutical market. The lead product sales are: Ginkgo Mihuan Oral Liquid (GMOL): $20.5 million, Apu Shuangxin Oral Liquid (APU) $6.6 million, Xuelian Chongcao (XLCC): $4.1 million, Azithromycin Dispersible Tablets (AZI): $3.9 million, Qingre Jiedu Oral Liquid (QRE): $2.9 million, which totaled $38.0 million or 48.7% of the organic portfolio revenue.

Cost of Sales for the fiscal year ended June 30, 2011 was $52.7 million or 55.4% of the revenue, compared with $30.6 million or 47.9% of the revenue for the fiscal year ended June 30, 2010. Our cost of sales primarily consists of the costs of direct raw materials, labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead. The increase of our cost of sales from the previous year was due to 1) the additional distribution business through TMT amounting to $17.1 million at 11% gross margin, 2) pricing pressure on generic pharmaceutical sales, and 3) increase of raw material costs.

Gross profit for fiscal year 2011 was approximately $42.5 million with 44.6% gross margins compared with $33.3 million with 52.1% gross margin for fiscal year 2010. The decrease in gross margins was attributable to the addition of TMT revenues, the distribution arm of TPI, whose gross margins average approximately 11%. The pricing pressure on our generic products also contributed to the reduction of the gross margins. During the fiscal year 2011, our organic product portfolio delivered approximately 52.0% gross margins, about 0.8% lower than 52.8% in fiscal year 2010. Given the blend of the TMT lower margin distribution revenue and recent gross margin reduction associated with our proprietary portfolio under the current pricing trend, we anticipate that our overall gross margin in the near term, on a quarter to quarter comparison basis, may trend lower, but on a sequential basis should stabilize and improve depending upon the revenue mix percentages of TMT revenue, upcoming JCM macrolide API revenue as compared to the proprietary portfolio's revenue performance. The factors that influence the gross margins of our major products include 1) raw material price (85% of the cost of goods sold) and 2) production cost (15% of the cost of goods sold).

Operating and R&D Expenses were $24.4 million in fiscal year 2011 compared with $18.6 million in fiscal year 2010. Continuing sales payroll and marketing expense increases are the main components of the operating expenses. We anticipate these costs may continue to increase but will be in line with our revenue growth. Operating expenses also included $1.9 million of share-based compensation payment for TPI employees.

Net income was $15.6 million in fiscal year 2011 compared with $11.9 million in fiscal year 2010. The increase in our net income was mainly driven by the revenue growth. The Pro forma net income excludes the non-cash share-based compensation payment: $17.5 million for fiscal year 2011 compared with $13.0 million for fiscal year 2010.

We have reached our target of 900 hospitals by the end of fiscal year 2011 ending June 30, 2011 from the 850 hospitals coverage at the beginning of fiscal year 2011.

Diluted earnings per share for the fiscal year ending June 30, 2011 were $0.53, up 32.5% from the earnings of $0.40 per diluted share for the fiscal year 2010, based on 29.7 million and 30.1 million shares, respectively.

Balance Sheet and Cash Flow

As of June 30, 2011, we had working capital totaling $38.5 million, including cash and cash equivalents of $31.7 million. Net cash generated from operating activities was $14.2 million for fiscal year 2011 as compared with $15.4 million for fiscal year 2010 which was mainly due to the change in fair value of warrant liability of $(1.6) million compared with $0.16 million in the previous year. In fiscal year 2011, the accounts receivable also improved: $9.0 million, or 9.5% of the total revenue as compared with $8.2 million, or 12.8% of the fiscal 2010 revenue. We believe that TPI is adequately funded to meet all of our working capital and capital expenditure needs for fiscal year 2012.

Net cash used in investing activities for the fiscal year ended June 30, 2011 totaled $(11.7) million compared with $(8.8) million in 2010 which were mainly related to JCM construction and pipeline development.

Net cash used in financing activities for fiscal year 2011 totaled $1.1 million which is related short term bank loan of $1.2 million, as compared with $8.0 million in fiscal year 2010 mainly due to the $(1.4) million paid dividends and $8.9 million additional paid in capital related to the 2009 financing.

Business Outlook

Jiangchuan Macrolide Project JCM

JCM facility is currently under inspection for environmental and safety standards which will be immediately followed by the API production and GMP certification for the JCM project. We reaffirm our first year JCM macrolide API revenue forecast of $30 million.

Tianyin Medicine Trading Distribution Business TMT

Since the signing of one-year distribution rights in last November with Jiangsu Lianshui Pharmaceutical to distribute 15 Lianshui-branded generic injection products including cough suppressant, antibiotics, and anti-inflammatory medicines, the TMT distribution business delivered $17.1 million in revenue.

Future Forecast

We have met and exceeded the $90.0 million revenue guidance and the $16.0 million net income forecast excluding any non-cash expenses due to stock compensation plans or stock option expenses. As a result of the price reduction on generic pharmaceutical products nationwide as a result of the ongoing healthcare reform, our generic sales, which makes up approximately 40% of our total revenue, has been under pressure. Our analysis of the market condition suggests that although the pricing pressure is likely to continue, the JCM revenue along with the TMT distribution revenue are expected to support the growth of TPI for the coming fiscal year. We reaffirmed our forecast of $30 million for JCM revenue for its first year of operation. Management will continue to evaluate the Company's business outlook and communicate any changes on a quarterly basis or as when appropriate.

Conference Call

Senior management will host the earnings conference call for the fiscal year 2011 ending June 30, 2011 at 9:00 a.m. Eastern Time on Tuesday, September 27, 2011.

Interested parties may access the call by dialing 1-877-941-2068 (U.S.) or 1-480-629-9712 (International).

The conference ID is 4474328. It is advisable to dial in approximately 5 minutes prior to the start of the call.

A replay will be available by calling 1-877-870-5176 or 1-858-384-5517 (International) from 09/27/2011 at 12:00 noon Eastern Time to 10/11/2011 at 11:59 pm Eastern Time.

Replay Pin Number:  4474328

About TPI

Headquartered at Chengdu, China, TPI is a pharmaceutical company that specializes in the development, manufacturing, marketing and sales of patented biopharmaceutical, modernized traditional Chinese medicines, branded generics and other pharmaceuticals. TPI currently manufactures a comprehensive portfolio of 58 products, 24 of which are listed in the highly selective national medicine reimbursement list, 7 are included in the essential drug list of China. TPI's pipeline targets various high incidence healthcare indications. TPI has an extensive nationwide distribution network with a sales force of 730 sales representatives out of totaled 1,365 employees. For more information about TPI, please visit:  http://www.tianyinpharma.com.

Safe Harbor Statement

The Statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission.

For more information, please contact:

For more information, please contact:

Investors Contact: ir@tianyinpharma.com

Web: http://www.tianyinpharma.com

Tel: +86-28-8551-6696 (Chengdu, China)

+86 134-36-550011 (China)

Address:

23rd Floor Unionsun Yangkuo Plaza

No. 2, Block 3, South Renmin Road

Chengdu, 610041

China

Consolidated Balance Sheets

June 30,

June 30,

2011

2010

Assets

Current assets:

   Cash and cash equivalents

$31,724,906

$27,009,066

   Accounts receivable, net of allowance for doubtful accounts of $510,903

     and $421,079 at June 30, 2011 and 2010, respectively

9,036,030

8,185,240

   Inventory

4,932,353

3,588,824

   Advance payments

1,639,820

382,980

   Loans receivable

-

294,600

   Other current assets

62,951

77,283

       Total current assets

47,396,060

39,537,993

Property and equipment, net

27,465,915

14,968,822

Intangibles, net

15,339,194

15,232,286

       Total assets

$90,201,169

$69,739,101

Liabilities and stockholders' equity

Current liabilities:

   Accounts payable and accrued expenses

$  2,063,792

$  1,715,781

   Accounts payable – construction related

1,824,067

2,248,849

   Short-term bank loans

2,784,600

1,473,000

   VAT taxes payable

674,974

658,312

   Income taxes payable

930,418

861,614

   Other taxes payable

124,154

19,564

   Dividends payable

-

72,995

   Other current liabilities

519,602

429,135

       Total current liabilities

8,921,607

7,479,250

Warrants liability

            -

4,733,872

       Total liabilities

8,921,607

12,213,122

Stockholders' equity:

   Common stock, $0.001 par value, 50,000,000 shares authorized,

29,396

27,326

     29,396,276 and 27,326,527 shares issued and outstanding at

     June 30, 2011 and 2010, respectively

   Series A convertible preferred stock, $0.001 par value, -0- and

-

1,360

     1,360,250 shares issued and outstanding at June 30, 2011 and 2010,

     Respectively

   Additional paid-in capital

30,065,452

25,046,388

   Statutory reserve

5,409,764

3,732,883

   Treasury stock

(111,587)

(111,587)

   Retained earnings

39,374,018

25,530,906

   Accumulated other comprehensive income

6,077,299

2,845,076

       Total stockholders' equity

80,844,342

57,072,352

Noncontrolling interest

435,220

453,627

       Total equity

81,279,562

57,525,979

       Total liabilities and equity

$90,201,169

$69,739,101

Consolidated Statements of Operations

For the Years Ended June 30,

2011

2010

Sales

$95,200,928

$63,939,684

Cost of sales

52,698,030

30,594,639

Gross profit

42,502,898

33,345,045

Operating expenses

   Selling expenses

17,711,034

12,796,881

   General and administrative expenses

5,645,481

4,949,179

   Research and development

1,072,519

852,848

       Total operating expenses

24,429,034

18,598,908

Income from operations

18,073,864

14,746,137

Other income (expenses):

   Interest income

132,766

53,537

   Interest expense

(119,507)

(79,186)

   Change in fair value of warrant liability

1,627,551

(156,864)

   Other expenses

              -

(39,518)

       Total other income (expenses)

1,640,810

(222,031)

Income before provision for income taxes

19,714,674

14,524,106

Provision for income taxes

4,091,905

2,626,143

Net income

15,622,769

11,897,963

Less: Net income attributable to noncontrolling interest

(40,243)

11,677

Net income attributable to Tianyin Pharmaceutical Co., Inc.

15,663,012

11,886,286

Basic earnings per share

$         0.55

$        0.47

Diluted earnings per share

$         0.53

$        0.40

Weighted average number of common shares outstanding:

   Basic

28,403,761

24,427,329

   Diluted

29,743,174

30,081,685

Consolidated Statements of Comprehensive Income

For the Years Ended June 30,

2011

2010

Net income

$15,622,769

$ 11,897,963

Other comprehensive income

   Foreign currency translation adjustment

3,254,059

735,646

       Total other comprehensive income

3,254,059

12,633,609

Total Comprehensive income

18,876,828

12,790,473

   Less: Comprehensive income attributable to the noncontrolling interest

(18,407)

453,627

Comprehensive income attributable to

Tianyin Pharmaceutical Co., Inc.

$18,895,235

$12,179,982

Consolidated Statements of Cash Flows

For the Years Ended June 30,

2011

2010

Cash flows from operating activities:

   Net Income

$15,622,769

$11,897,963

   Adjustments to reconcile net income to net cash

     provided by (used in) operating activities:

   Depreciation and amortization

1,187,770

953,767

   Change in fair value of warrant liability

(1,627,551)

156,864

   Provision for bad debts

67,081

247,131

   Loss on disposal of fixed assets

-

39,518

   Share-based payments

1,913,453

1,037,686

   Changes in current assets and current liabilities:

       Accounts receivable

(496,491)

(2,770,322)

       Inventory

(1,136,316)

239,233

       Advance payments

(1,208,960)

-

       Other current assets

15,616

606,785

       Accounts payable and accrued expenses

269,732

315,202

       Accounts payable – construction related

(525,314)

2,239,231

       VAT taxes payable

(43,643)

222,833

       Income tax payable

24,928

366,845

       Other taxes payable

128,822

(19,223)

       Dividends payable

(72,995)

(252,422)

       Other current liabilities

67,315

119,007

           Total adjustments

(1,436,553)

3,502,135

           Net cash provided by operating activities

14,186,216

15,400,098

Cash flows from investing activities:

   Loans receivable

302,240

(293,340)

   Additions to property and equipment

(124)

(59,946)

   Additions to construction in progress

(12,017,851)

(5,749,230)

   Additions to intangible assets-drug

                -

(2,742,729)

           Net cash used in investing activities

(11,715,735)

(8,845,245)

Cash flows from financing activities:

   Proceeds from short-term bank loans

1,208,960

66,002

   Additional paid-in capital

-

8,894,828

   Dividends declared and paid

(143,019)

(1,409,079)

   Capital contribution from minority shareholder of JCM

               -

440,010

           Net cash provided by financing activities

1,065,941

7,991,761

Effect of foreign currency translation

1,179,418

110,229

Net increase in cash and cash equivalents

4,715,840

14,656,843

Cash and cash equivalents at beginning of year

27,009,066

12,352,223

Cash and cash equivalents at end of year

$31,724,906

$27,009,066

Supplemental schedule of non-cash activities

   Advance payments for intangible assets-drug

$                 -

$     808,152

   Warrants liability effected on additional paid-in capital

$   3,106,321

$(4,577,008)

SOURCE Tianyin Pharmaceutical Co., Inc.



RELATED LINKS

http://www.tianyinpharma.com