China Ruitai International Holdings Co., Ltd. Reports Second Quarter 2011 Financial Results

Aug 16, 2011, 21:18 ET from China Ruitai International Holdings Co., Ltd.

FEICHENG, China, Aug. 16, 2011 /PRNewswire-Asia/ -- China Ruitai International Holdings Co., Ltd. ("China Ruitai" or "the Company") (OTC Bulletin Board: CRUI), a manufacturer and distributor of cellulose ether additives for use in the production of pharmaceuticals, construction materials, Polyvinyl chloride ("PVC") products, foods, beverages and cosmetics, today reported its quarterly financial results for the second quarter ended June 30, 2011.

Second Quarter Highlights

(In $ millions, except per-share data)

Three Months Ended June 30

2011

2010

Change %

Sales

11.72

11.17

4.93%

Gross Profit

3.72

2.95

26.17%

Operating Income

2.45

2.20

11.48%

Net Income attributable to China Ruitai

1.37

1.42

-3.32%

Diluted EPS

0.05

0.05

0%

Second Quarter 2011 Results

Revenue

Total revenue for the three month period ended June 30, 2011 was $11.72 million, an increase of 4.93% from $11.17 million during the three month period ended June 30, 2010. The increase in revenue was primarily attributable to: (i) the increase in the product prices; and (ii) the change in our sales strategy.  In April 2011, we started to merge into the high-end pharmaceutical products and the PVC sector, focusing on the Hvdroxyethyl Cellulose ("HEC") market.

Cost of Sales

Cost of sales for the second quarter of 2011 decreased 2.68% to $8.00 million from $8.22 million for the same period of 2010. This decrease in cost of sales resulted in an improvement in energy savings.

Operating Expenses

  • Selling expenses, which consist of sales commissions, freight charges, travel and other selling expenses, totaled $0.60 million for the three month period ended June 30, 2011, compared to selling expenses of $0.53 million for the three month period ended June 30, 2010, an increase of 14.06%. This increase resulted primarily from an increase of freight charges.
  • General and administrative expenses totaled $0.66 million for the three month period ended June 30, 2011 compared to $0.22 million for the three month period ended June 30, 2010, an increase of 205.89%. The main reason for the increase can be attributed to (i) employees payroll increase according to China's inflation rate; and (ii) a $0.42 million increase in bad debt expense in the three month period ended June 30, 2011.

Operating income was $2.45 million and $2.20 million in the second quarter of 2011 and 2010, respectively, an increase of 11.48%. This was primarily attributable to higher sales and lower cost of sales net of increases in operating activities.

Net Income attributable to China Ruitai

The Company had net income of $1,369,869 for the three month period ended June 30, 2011 compared to $1,416,917 for the three month period ended June 30, 2010, a decrease of $47,048, or 3.32%.  This decrease is primarily attributable to an increase in operating expenses.

Dianmin Ma, Chairman of China Ruitai, commented, "We are pleased to report our second quarter financial results reflected gradual improvement in our performance against a challenging economic environment. We had 4.7% growth in our sales in this quarter compared to the same period last year, driven by improved sales strategy. The high-end pharmaceutical products and the PVC products sector we have started to focus have allowed us to gain increased sales volume and higher margins. During the quarter, we have also continued to work hard on our energy saving system to reduce our costs."

Mr. Ma continued, "Looking ahead, we expect our sales to continue to grow at a healthy pace in the second half of 2011. We are confident that our diversified product lines and sales strategy will help us sustain the solid growth to deliver our company's strong financial performance for our stockholders, as well as continuing to be one of the largest companies in the industry."

About China Ruitai International Holdings Co.

China Ruitai is one of the largest manufacturers of non-ionic cellulose ether products in China with 9,000 tons of annual capacity. The Company's organic products are used as a thickener, stabilizer and binding agent for a wide variety of products used every day in a number of industries including; pharmaceuticals, construction and building products, and consumer goods, such as cosmetics and foods, including fruit preserves, ice cream, toothpaste and lipsticks.  The Company produces nine categories of cellulose ether and 183 industry-specific products under its "RuiTai" brand, which are sold through a network of domestic and international distributors to Asia, Europe, the Middle East and North America.  

China Ruitai is engaged in the production and sales of processed chemicals, with a primary focus on non-ionic cellulose ether products. Cellulose ether is an organic chemical that dissolves in water and other organic solvents. Due to the surface-active properties of cellulose ether, it acts as a thickener and stabilizer in aqueous solutions, making it a beneficial additive in a wide variety of commercial industries and products, including, but not limited to the pharmaceutical industry, the construction industry, PVC products, food and beverage products, petroleum, and cosmetics.

Forward-Looking Statements

This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the PRC, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. 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.

For more information, please contact:

China RuiTai International Holdings Co, Ltd

Phone: 1-212-899-5131

Email: rtmg@rutocel.com

CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

June 30, 2011

December 31, 2010

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

17,994,188

$

25,286,619

Restricted cash

24,075,507

10,254,394

Accounts receivable, net

10,267,874

4,896,665

Notes receivable

5,953,862

2,736,496

Advances to suppliers, net

2,104,015

1,171,477

Inventories

11,454,083

9,468,211

Other receivables, net

913,352

1,023,337

Total current assets

72,762,881

54,837,199

Property and equipment, net

13,849,174

14,014,923

Commercial leasing assets, net

37,481,694

37,079,584

Advance payment for equipment purchase, net

418,842

-

Land use rights, net

5,104,824

5,045,883

$

129,617,415

$

110,977,589

LIABILITIES AND EQUITY

Current liabilities:

Short-term bank loans

$

40,219,712

$

42,339,454

Accounts payable

7,237,536

7,691,017

Notes payable

11,759,245

15,124,474

Notes payable- related party

24,292,124

3,024,895

Advances from customers

1,120,457

687,408

Due to related party

567,327

2,526,474

Income tax payable

5,274,379

4,336,457

Other payables

4,707,541

3,872,549

Loan from employees

1,698,447

1,470,138

Total current liabilities

96,876,768

81,072,866

Total Liabilities

96,876,768

81,072,866

Commitments and contingencies

Equity

Shareholders' equity:

Common stock ($.001 par value; 50,000,000 shares authorized authorized

shares issued and outstanding 26,000,000 as of June 30,

2011 and December 31, 2010)

26,000

26,000

Additional paid-in capital

2,908,171

2,908,171

Statutory reserve

1,369,652

1,369,652

Retained earnings

25,149,149

23,043,387

Accumulated other comprehensive income

2,965,604

2,264,049

Total China Ruitai Shareholders' Equity

32,418,576

29,611,259

Non-controlling interest

322,071

293,464

Total Equity

32,740,647

29,904,723

TOTAL LIABILIIES AND EQUITY

$

129,617,415

$

110,977,589

CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Income and Comprehensive Income

(Unaudited)

Three months ended June 30,

Six months ended June 30,

2011

2010

2011

2010

Sales

$

11,722,184

$

11,171,175

$

21,309,001

$

21,409,431

Cost of sales (See note below)

8,001,818

8,222,567

14,785,951

15,152,439

Gross margin

3,720,366

2,948,608

6,523,050

6,256,992

Operating expenses:

General and administrative expenses

660,283

215,858

1,381,778

500,110

Selling expenses

604,849

530,310

1,133,378

889,385

Total operating expense

1,265,132

746,168

2,515,156

1,389,495

Income from operations

2,455,234

2,202,440

4,007,894

4,867,497

Other income/(expense)

Interest income

90,940

175,432

178,381

566,612

Interest expense

(796,829)

(550,610)

(1,536,782)

(1,129,097)

Commercial leasing income

373,832

311,774

742,615

614,957

Cost of commercial leasing

(224,771)

(214,123)

(446,233)

(428,130)

Other income/(expense)

17,159

(16,608)

10,993

21,687

Total other income/(expense), net

(539,669)

(294,135)

(1,051,026)

(353,971)

Income before income tax expense

1,915,565

1,908,305

2,956,868

4,513,526

Income tax expense

531,859

477,076

829,835

1,123,378

Net income before allocation to noncontrolling interests

1,383,706

1,431,229

2,127,033

3,390,148

Less: Net income attributable to noncontrolling interests

13,837

14,312

21,271

33,701

Net income attributable to China Ruitai

1,369,869

1,416,917

2,105,762

3,356,447

Comprehensive income

Net Income before allocation to non-controlling interest

1,383,706

1,431,229

2,127,033

3,390,148

Foreign Currency Translation Adjustment

517,029

103,929

708,891

170,956

Comprehensive Income

$

1,900,735

$

1,535,158

$

2,835,924

$

3,561,104

Less: Comprehensive income attributable to noncontrolling interests

19,141

16,042

28,607

35,431

Comprehensive Income Attributable to China Ruitai

$

1,881,594

$

1,519,116

$

2,807,317

$

3,525,673

Earnings per share - Basic and diluted

$

0.05

$

0.05

$

0.08

$

0.13

Weighted average number of common shares outstanding-Basic and diluted

26,000,000

26,000,000

26,000,000

26,000,000

CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

Six months ended June 30,

2011

2010

Cash flows from operating activities:

Net income before allocation to non-controlling interests

$

2,127,033

$

3,390,148

Adjustments to reconcile net income before non-controlling interests to net cash used in operation activities

Depreciation

1,238,777

1,170,810

Amortization of land use rights

56,631

54,244

Bad debt provision

226,802

(382,323)

Loss on disposal of equipment

3,505

-

Changes in operating assets and liabilities:

Restricted cash

(13,442,342)

(2,346,400)

Accounts receivable

(5,284,903)

(3,632,516)

Notes receivable

(3,121,232)

2,615,532

Advances to suppliers

(1,164,805)

(29,570)

Inventories

(1,749,315)

732,041

Other receivables

104,117

(3,208,529)

Accounts payable

(623,931)

1,492,701

Notes payable

(3,674,444)

(1,613,150)

Other payables

737,999

269,815

Advances from customers

412,840

727,868

Income taxes payable

829,280

227,259

Net cash used in operating activities

(23,323,988)

(532,070)

Cash flows from investing activities:

Advanced payment to purchase equipment

(262,808)

-

Purchase of property and equipment

(312,147)

(1,369,347)

Net cash used in investing activities

(574,955)

(1,369,347)

Cash flows from financing activities:

Proceeds from bank loans

15,760,304

22,428,651

Repayment of bank loans

(18,822,341)

(17,002,601)

Proceeds from loan from a related party

20,974,953

-

Repayment of loan from a related party

(1,996,128)

(1,630,614)

Repayment of loan from employee

192,418

20,517

Net cash provided by financing activities

16,109,206

3,815,953

Effect of foreign exchange rate fluctuation on cash and cash equivalents

497,306

80,053

Net (decrease) increase in cash and cash equivalents

(7,292,431)

1,994,589

Cash and cash equivalents- beginning of period

25,286,619

10,174,528

Cash and cash equivalents-end of period

$

17,994,188

$

12,169,117

Supplementary disclosure of cash flow information:

Cash paid for interest expense

$

1,536,782

$

1,129,181

Cash paid for income tax

$

-

$

896,164

SOURCE China Ruitai International Holdings Co., Ltd.