Nutrastar Announces Record 2010 Performance and Revenue Guidance for 2011

Mar 28, 2011, 08:00 ET from Nutrastar International Inc.

HARBIN, China, March 28, 2011 /PRNewswire-Asia-FirstCall/ --

Financial Highlights for the Year Ended December 31, 2010:

  • Revenues increased 58.1% to $24.2 million
  • Gross profit increased 82% to $19.6 million, a gross margin of 80.9%
  • Net income rose 73.6% to $13.4 million, representing a net margin of 55.5%
  • Basic earnings per share ("EPS") increased to $0.80; Diluted EPS increased to $0.79

Nutrastar International Inc. (OTC Bulletin Board: NUIN; "Nutrastar" or the "Company"), a leading producer and supplier of premium branded Traditional Chinese Medicine ("TCM") consumer products, today announced record financial results for the year ended December 31, 2010 and revenue guidance for the year ending December 31, 2011. For year 2010, revenues and net income both posted an increase of over 50% from year 2009.

Ms. Lianyun Han, CEO of Nutrastar, commented, "Despite global economic challenges and inflationary pressures, Nutrastar continues to sell at full production capacity and post improved financial results quarter after quarter. Our performance in 2010 has resulted in double digit growth on both the top and bottom line. We hope to see a continuation of this upward trend looking into the remainder of 2011 and in years to come."

Total revenue generated from sales of Nutrastar's consumer products was $24.24 million, an increase of $8.91 million or 58.1% from approximately $15.33 million for the same period in 2009. The increase was primarily as a result of an increase in demand for the Company's core product, commercially cultivated Cordyceps Militaris ("Chinese Golden Grass"), combined with an increase in the average selling price of approximately 20%.

The Company's revenue is categorized into three segments based on our consumer product portfolio. In 2010, revenue from our commercially cultivated Cordyceps Militaris was $22.04 million, revenue from our organic and specialty food products was approximately $1.78 million and revenue from our newly introduced functional health beverage product line was approximately $0.43 million. The functional health beverage product line was introduced and rolled out initially in select cities in the province of Jiangsu in mid-November 2010.

Overall gross profit was $19.6 million, an increase of $8.84 million or 82% from approximately $10.77 million during the same period in 2009. Gross margin was 80.9% for the year ended December 31, 2010, an increase of 15.2% from 70.2% in 2009. Cost of goods sold, comprised of costs related to raw materials, labor and overhead, was $4.64 million for 2010, an increase of $0.08 million, or 1.6% from approximately $4.56 million in 2009. As a percentage of revenues, the cost of goods sold decreased to 19.1% in 2010 from 29.8% in 2009. This improved performance was a result of continued product mix shift towards smaller packages of Cordyceps with higher gross margins combined with decreased cost of goods due to improved production processes and economies of scale.

Income before income taxes was approximately $15.66 million, up $6.69 million or 74.5% from $8.98 million in the same period of 2009. As a percentage of revenues, income before income taxes increased to 64.6% in 2010 from 58.6% in 2009.

Net income was $13.44 million, an increase of $5.7 million or 73.7% from $7.74 million in the full year 2009.

Basic and diluted EPS for the year ended December 31, 2010 was $0.80 and $0.79, based on 14.33 million and 14.48 million shares outstanding, respectively, an increase of $0.21 per basic and diluted share from the same period in 2009 when there were approximately 13.13 million basic and 13.34 million diluted shares outstanding.

Financial Position as of December 31, 2010

At December 31, 2010, the Company had cash and cash equivalents totaling $40.76 million, total assets of approximately $55.0 million, working capital of $39.37 million and stockholders' equity of $52.0 million. The Company generated $15.35 million in net cash from operating activities for the year ended December 31, 2010.

Commenting on the annual results, Ms. Han stated, "2010 was a year of great strides and accomplishments for our Company. Having successfully completed a significant portion of our capacity expansion plan, we've now brought our annual capacity to 72 tons going into 2011. Capacity expansion will continue through 2011 and 2012 and upon completion of the current plan, we expect capacity to reach over 100 tons going into year 2013. Nutrastar saw the highest recorded sales of our core Cordyceps products, hitting $22.04 million for the year. Cordyceps products, especially our high-margin, small packaged products, have continued to see strong sales growth and steady order flow. Earnings per share have continued to rise significantly, resulting in increased value to our shareholders."

Ms. Han continued, "In the fourth quarter of 2010, we launched our new Cordyceps based functional health beverage product line into the affluent Jiangsu province and in January 2011, we opened our first specialty store in Daqing City. Nutrastar's "Ban Ke Chong Cao" functional health drink is a reasonably priced "on-the-go" option for many Chinese consumers. These drinks are currently sold in over 80 supermarkets, convenience stores, hotels and restaurants. Our mass commercialization plans for the year include further expansion into Jiangsu as well as other select regions in China where market studies suggest that demand for our products is strong and widespread. Just last week, we announced the introduction of our entry-level 310 ml "Yang Yang Ba," which will be available through some of our current distribution channels and our specialty store beginning in April 2011. Through our distribution channels, we've posted initial sales for our new functional health beverages in the amount of $0.43 million for 2010. We expect considerable growth in this part of our business moving forward.

On the new product front, we are currently working on our initial rollout of our commercially cultivated Cordyceps-based alcohol products. We completed the trial production in the first quarter of this year and anticipate getting the Cordyceps-based alcohol to market by the second half of 2011 through our specialty store and other distribution channels."

"We believe that through our popular core product, commercially cultivated Cordyceps, coupled with our new beverage line, we'll continue to grow our market share in the consumer products space and further our position as a leading nutraceutical consumer products player in China. We are pleased that the Company turned a strong performance in 2010 and look forward to what 2011 will bring. We appreciate the support of our shareholders and will continue to keep the investment community apprised of our accomplishments in the China consumer marketplace," concluded Ms. Han.

Guidance for the Year Ending December 31, 2011

For the year ending December 31, 2011, based on management's current expectations, revenue will be in the range of $32.0 million to $36.0 million.  The company intends to utilize its existing cash position for capacity expansion, marketing and distribution of its new beverage products and general corporate purposes.

Recent Events

For more information regarding Nutrastar's financial performance during the year ended December 31, 2010, please refer to the Annual Report on Form 10-K to be filed with the Securities and Exchange Commission on March 29, 2011.

Conference Call

Nutrastar will host a conference call at 8:30 a.m. EDT on Tuesday, March 29, 2011, to discuss the Company's fiscal year 2010 financial results. Ms. Lianyun Han, Chief Executive Officer, and Mr. Robert Tick, Chief Financial Officer, will be hosting the call.

To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (877) 407-0784 for U.S. based callers or +1 (201) 689-8560 for international callers. The conference call pass code is 369253.

If you are unable to participate in the live call, a replay will be available for 14 days starting on Tuesday, March 29, 2011 at 11:30 a.m. ET. To access the replay, U.S. based callers should dial +1 (877) 870-5176, international callers should dial +1 (858) 384-5517. The conference pass code will remain 369253.

NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(AMOUNTS EXPRESSED IN US DOLLARS)

Year Ended December 31,

2010

2009

NET REVENUE

$

24,241,688

$

15,332,445

Cost of goods sold

(4,637,951)

(4,563,965)

GROSS PROFIT

19,603,737

10,768,480

Selling expenses

(1,092,598)

(507,587)

General and administrative expenses

(2,722,939)

(1,356,499)

Income from operations

15,788,200

8,904,394

Other income (expenses):

  Interest income

124,036

81,542

  Foreign exchange differences

(130,779)

(15,398)

  Loss on disposal of fixed assets

(102,675)

-

  Change in fair value of warrants

(15,413)

-

  Others, net

-

6,388

  Total other income (expenses)

(124,831)

72,532

Income before income taxes

15,663,369

8,976,926

Provision for income taxes

(2,219,190)

(1,235,210)

NET INCOME

13,444,179

7,741,716

OTHER COMPREHENSIVE INCOME:

Foreign currency translation adjustments

1,286,698

24,150

COMPREHENSIVE INCOME

$

14,730,877

$

7,765,866

Earnings per share

  Basic

$

0.80

$

0.59

  Diluted

$

0.79

$

0.58

Weighted average number of shares outstanding

  Basic

14,327,799

13,131,521

  Diluted

14,476,349

13,341,521

NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)

December 31,

2010

2009

ASSETS

CURRENT ASSETS

  Cash and cash equivalents

$

40,758,848

$

20,115,677

  Restricted cash

193,075

-

  Accounts receivable

261,223

215,486

  Inventories

867,761

616,073

  Prepayments and other receivables

289,502

251,235

     Total current assets

42,370,409

21,198,471

OTHER ASSETS

  Intangible assets, net

2,379,435

2,747,402

  Property, plant and equipment, net

10,248,989

10,396,507

Total assets

$

54,998,833

$

34,342,380

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

  Accounts payable

$

125,843

$

863

  Other payables and accruals

746,643

453,504

  Payable for intangible asset

-

878,709

  Taxes payable

696,519

319,873

  Due to related parties

51,339

49,794

  Preferred stock dividend payable

181,181

-

  Warrants liabilities

1,198,273

-

  Acquisition payable

-

8,736,833

    Total current liabilities

2,999,798

10,439,576

    Total liabilities

2,999,798

10,439,576

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY

  Preferred Stock, $0.001 par value, (1,000,000 shares authorized,     197,706 shares and none shares issued and outstanding,     respectively; aggregate liquidation preference amount: $5,535,768     and $nil, plus accrued but unpaid dividend of $181,181 and $nil, at     December 31, 2010 and 2009, respectively

4,508,914

-

  Common stock, $0.001 par value, 190,000,000 shares authorized,     14,332,731 and 14,297,731 shares issued and outstanding at     December 31, 2010 and 2009, respectively

14,333

14,298

  Additional paid-in capital

15,541,207

4,715,891

  Statutory reserves

1,348,071

1,341,687

  Retained earnings

28,326,896

16,858,012

  Accumulated other comprehensive income

2,259,614

972,916

    Total stockholders' equity

51,999,035

23,902,804

Total liabilities and stockholders' equity

$

54,998,833

$

34,342,380

NUTRASTAR INTERNATIONAL INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)

Year Ended December 31,

2010

2009

CASH FLOWS FROM OPERATING ACTIVITIES:

  Net income

$

13,444,179

$

7,741,716

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

    Change in fair value of warrants

15,413

-

    IR warrant expense

52,170

-

    Depreciation and amortization

1,019,188

1,004,386

    Share-based compensation expense

219,891

25,000

    Loss from disposal of fixed assets

102,675

-

  (Increase) decrease in assets:

    Accounts receivable

(38,204)

68,574

    Inventories

(227,528)

552,874

    Prepayments and other receivables

1,406

(237,020)

    Increase (decrease) in liabilities:

    Accounts payable

122,243

(2,345)

    Other payables and accruals

275,183

(19,890)

    Taxes payable

358,768

200,193

    Due to related parties

-

(8,998)

   Net cash provided by operating activities

15,345,384

9,324,490

CASH FLOWS FROM INVESTING ACTIVITIES:

  Purchase of property, plant and equipment

(421,638)

(49,155)

  Proceeds from disposal of fixed assets

203,086

-

    Net cash used in investing activities

(218,552)

(49,155)

CASH FLOWS FROM FINANCING ACTIVITIES:

  Net proceeds from Private Placement

5,483,919

2,500,000

  Increase in restricted cash

(193,075)

-

  Advances from related parties

-

49,773

  Repayment of acquisition payable

-

(50,269)

  Repayment of payables for intangible asset

(886,328)

(878,349)

    Net cash provided by financing activities

4,404,516

1,621,155

 Foreign currency translation adjustment

1,111,823

20,944

INCREASE IN CASH AND CASH EQUIVALENTS

20,643,171

10,917,434

CASH AND CASH EQUIVALENTS, at the beginning of the year

20,115,677

9,198,243

CASH AND CASH EQUIVALENTS, at the end of the year

$

40,758,848

$

20,115,677

NON-CASH TRANSACTIONS

  Share-based payment to employees under equity incentive plan

$

219,891

$

25,000

  Share-based payment – IR warrants

$

52,170

$

-

   Release of VIE acquisition payable

$

8,936,150

$

-

SUPPLEMENTAL DISCLOSURE INFORMATION

  Income taxes paid

$

2,214,334

$

907,835

About Nutrastar International Inc.

Nutrastar is a China based leading producer and supplier of premium branded TCM consumer products including commercially cultivated Cordyceps Militaris and functional health beverages. Cordyceps Militaris is one of the most highly regarded herbal nutrients in TCM. The Company believes it is the largest manufacturer of bioengineered Chinese Golden Grass in China, ranked by volume, according to China Market Monitoring Center (CMMC), accounting for approximately 19% market share in China. The Company is headquartered in Harbin, capital of Heilongjiang province, with a total of 321 employees of which 21 are engaged in R&D, and 140 in sales and marketing. The products of Nutrastar are sold throughout China via a direct 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. and its subsidiary 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:

Robert Tick, CFO

Nutrastar International Inc.

Email: roberttick@nutrastarintl.com

Howard Gostfrand

American Capital Ventures

Tel:  +1-305-918-7000

Email: info@amcapventures.com

SOURCE Nutrastar International Inc.



RELATED LINKS

http://www.nutrastarintl.com