Deer Consumer Products, Inc. Announces Record 3rd Quarter Financial Results, Raises 2010 Earnings Guidance, Provides Growth Outlook for 2011

NEW YORK, Nov. 10, 2010 /PRNewswire-FirstCall/ -- Deer Consumer Products, Inc. (Nasdaq: DEER ; website: http://www.deerinc.com/), one of the world's largest vertically integrated branded and ODM/OEM manufacturers of small home and kitchen appliances marketing to both global and China domestic consumers, announced today record financial results for the 3rd quarter ended September 30, 2010. Deer management is scheduled to host an investor conference call today at 8:30 am, US Eastern Standard Time.

3rd Quarter Financial Highlights:

• Revenues of $55.26 million, an increase of 108% from Q3/09
• Net income of $9.27 million, an increase of 125% from Q3/09, fully diluted EPS (Earnings per Share) of $0.28, an increase of 56% from EPS of $0.18 in Q3/09
• Strong balance sheet: $54.4 million in cash without any long term debts
• Record China domestic sales – high margin China domestic sales increased 708% to 42% of revenues compared to Q3/09
• Expanded gross profit margin to 28.7%, compared to 22.1% in Q3/09
• Expanded operating margin to 21.0%, compared to 16.9% in Q3/09
• Expanded net income margin to 16.8%, compared to 15.5% in Q3/09
• Initiated planning for Deer's 2nd production facility, which is located in China's eastern AnHui Province – positioned for significant China domestic customer demand in 2011
• Sees positive impact to earnings from China's currency appreciation and positive growth momentum from the current global economic environment

3rd Quarter Revenues and Net Income:

Q3/2010 revenues were $55.26 million, an increase of approximately 108% from $26.54 million in Q3/2009. Deer attributes the significant increase in organic revenues to 708% year over year quarterly growth in the high margin China domestic markets. In addition, Deer continues to experience strong organic growth from its global markets. Net income for Q3/2010 was approximately $9.27 million, an increase of approximately 125% from Q3/09. Fully diluted EPS was $0.28, compared to $0.18 in Q3/2009.

Management Comments on 3rd Quarter 2010 Financial Results:

Bill He, Deer's Chairman and CEO, commented: "Deer is pleased to report the best 3rd quarter financial results in our corporate history. During this quarter, we executed our China domestic market expansion strategies successfully, which resulted in higher revenue growth as well as higher profit margins. Deer believes that our integrated 'production to market' model and our in-depth local cultural and market knowledge have made Deer one of the most profitable and efficiently operated companies in the small household appliance industry in the world. We capture both manufacturing margins and end user distribution margins. We see positive earnings growth trend to continue well into 2011."

Raises 2010 Earnings Guidance to $29 Million in Net Income, EPS of $0.87:

Based on the current order fulfillment and product shipments to China domestic and global customers, Deer raises its 2010 earnings guidance to approximately $172 million in revenues, approximately $29 million in net income and Earnings per Share (EPS) of $0.87-$0.88. Deer's previous 2010 guidance was $160 million in revenues, $26 million in net income and EPS of $0.76.

Business Outlook for 2011: Targets Minimum 30% Revenues and Earnings Growth in 2011 from the Raised 2010 levels:

Deer anticipates no less than 30% growth in both revenues and net income in 2011 from the raised 2010 levels, mainly due to anticipated continued revenue growth in China's domestic markets. In 2010, Deer significantly expanded its China domestic market distribution footprints, which positions the Company for further market expansion in 2011. In addition, Deer sees better global market conditions in 2011 as the global economy continues to improve, which would benefit Deer's global market sales.

"Deer's strong financial performance in 2010 has set a positive tone for Deer's continued expansion in 2011. Chinese consumer wealth expansion in a favorable environment of high GDP growth and low inflation has created healthy market demand for Deer's small household appliances products, which directly enhance the lifestyles of China's rising middle class. Deer's strong balance sheet and significant cash position also provide ample strategic M&A opportunities in 2011. In addition, Deer plans to significantly increase our production capacity in 2011 through the opening of our second production facility, in order to stay closer to our China domestic customers as well as expanding distribution outlets. Our second factory should be completed in 2011 and it is strategically located in a region that can service more than 300 million people in one of China's most economically developed areas. Deer looks forward to continuing delivering high earnings growth for our shareholders for years to come," commented Mr. He.  

Deer is a Direct and Strategic Access to the Vast Chinese Consumer Markets:

China has the world's fastest growing markets for small household appliances. Deer's fully integrated model of aligning rapidly growing branded products, strong cash position, product design, internal low cost manufacturing and quality control, supply chain management and rapidly expanding China domestic market footprints has positioned Deer as a strategic platform for accessing the Chinese consumers. From time to time, Deer is engaged in strategic discussions with global brands on both product collaboration and other strategic initiatives.

About Deer Consumer Products, Inc.

Deer Consumer Products, Inc. (Nasdaq: DEER - News) is a NASDAQ Global Select Market listed U.S. company with its primary operations in China. Deer has a 15-year operating business as well as a strong balance sheet. Operated by Deer's founders and supported by more than 103 patents, trademarks, copyrights and approximately 2,000 employees, Deer is a leading designer, ODM/OEM manufacturer and global marketer of quality small home and kitchen electric appliances. Deer's product lines include blenders, juicers, soy milk makers and a large variety of other home appliances designed to make today's lifestyles simpler and healthier. With more than 100 global clients/branded products such as Black & Decker, Ariete, Disney, Toastmaster, Magic Bullet, Back to Basics, Wal-Mart, and a rapidly expanding China domestic market footprint, Deer has enjoyed triple-digit growth in revenues and earnings in recent years.

Safe Harbor Statement

All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Deer's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Deer's filings with the Securities and Exchange Commission.

SOURCE Deer Consumer Products, Inc.