Tiens Biotech Group (USA) Reports First Quarter Results
NEW YORK, May 17 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSEAMEX: TBV), http://www.tiens-bio.com , today announced financial results for the first quarter ended March 31, 2010.
Revenue for the first quarter of 2010 was $11.4 million, compared to $18.2 million for the first quarter of 2009.
Net income for the first quarter of 2010 was $3.6 million, or $0.05 per share, compared to $9.0 million, or $0.12 per share for 2009.
Revenue in China increased to $6.8 million for the first quarter of 2010, compared to $2.7 million for the same period in 2009. The Company's 2010 first quarter sales in China was, however, comparable to the 2009 average quarterly sales in China of $6.8 million. Management believes that Tianshi Engineering's announced plans to increase prices of its products during the third quarter of 2008 prompted customers to stock up on certain products in late 2008, thereby decreasing customer demand in the first quarter of 2009. Revenue in China for the first quarter of 2009 was lower than any other quarter in 2009.
Results for the first quarter of 2010 reflect a decrease in international revenue to $4.6 million, from $15.5 million for the same period in 2009 and was lower than the 2009 quarterly average revenue of $8.7 million. Management believes that uneven bulk ordering significantly contributed to the decrease as some international distributors purchase products only once or twice during each year. The decrease is also due to declined sales to Indonesia and Vietnam. In the first two quarters of 2009, customers in Indonesia and Vietnam significantly stocked up on the Company's products, which depressed subsequent sales in the latter half of 2009 and through the first quarter of 2010. Sales declines in these regions also reflect the recent adjustment by the Company's international distributors of the direct selling rules for customers in these regions, which is expected to increase long-term sales but negatively affect near-term sales.
Additionally, during 2008, China's Administration of Quality Supervision, Inspection and Quarantine ("AQSIQ") carried out a national campaign against unsafe food and substandard products, which brought on a general slow-down and backlog of export clearances for Chinese food products. Upon the lifting of the regulations, overseas affiliated companies began to purchase more products, thereby increasing sales in the first quarter of 2009.
Other Highlights
Cost of sales for the first quarter of 2010 were $3.4 million, compared to $5.7 million for the first quarter of 2009. This decrease was mainly due to the corresponding decrease in sales for the period. Cost of sales decreased at a higher rate than revenue, which is mainly attributable to the increased sales percentage of certain products, such as Cordyceps Capsules, which have a higher profit margin.
Gross profit for the first quarter of 2010 was $8.0 million, compared to $12.5 million for the first quarter of 2009. The gross profit margin for the first quarter of 2010 was 69.8%, compared to 68.6% for the first quarter of 2009.
Selling, general and administrative expenses were $3.5 million for the first quarter of 2010, compared to $3.1 million for first quarter of 2009. The increase was primarily due to increases in bad debts. Selling and administrative expenses as a percentage of sales was 30.7% for the first quarter of 2010, compared to 17.2% for the first quarter of 2009, primarily due to fixed costs which do not increase or decrease in line with sales.
As of March 31, 2010, Tiens had $129.6 million of retained earnings and total shareholders' equity of $179.3 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased to report an increase in domestic sales. We are confident that both international and domestic sales will return to, and potentially exceed, previous levels as customers and distributors begin to replenish stored up products. We remain committed to building greater market share in China, expanding our international customer base, and further implementing our strategic plans for long-term domestic and international growth."
About Tiens Biotech Group (USA), Inc. (http://www.tiens-bio.com )
Tiens Biotech Group (USA), Inc. (NYSEAMEX: TBV) conducts its business operations from Tianjin, People's Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements.
Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 54 countries. Since its establishment, Tiens has developed and produced 37 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.
In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 92 branches. Outside of China, Tiens sells its products to affiliated companies in 54 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company's direct sales marketing program is subject to governmental regulation in each of these countries.
Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward- looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) the Company's ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; (iv) whether the Company continues to experience delays in the export clearance of its products; (v) whether Tianshi Engineering, the Company's affiliate which sells its products in China, obtains a direct selling license in China; and (vi) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under "Search for Company Filings."
For further information, please contact:
Tiens Biotech Group (USA), Inc.
Investor Relations
Tel: +86-22-8213-7594
Fax: +86-22-8213-7594
Email: [email protected]
Web: http://www.tiens-bio.com
G. S. Schwartz & Co.
Carl Hymans
Tel: +1-212-725-4500
Fax: +1-212-725-9188
Email: [email protected]
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2010 and 2009 (UNAUDITED)
Three months ended March 31,
2010 2009
REVENUE - RELATED PARTIES $11,403,363 $18,237,545
COST OF SALES - RELATED PARTIES 3,440,881 5,735,059
GROSS PROFIT 7,962,482 12,502,486
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 3,497,547 3,130,936
INCOME FROM OPERATIONS 4,464,935 9,371,550
Interest expense -- (52,616)
Interest income 1,872 85,768
Other expense (253,710) (45,288)
OTHER (EXPENSE) INCOME, NET (251,838) (12,136)
INCOME BEFORE INCOME TAXES 4,213,097 9,359,414
INCOME TAXES 609,502 359,615
NET INCOME 3,603,595 8,999,799
LESS: Net income attributable to the
noncontrolling interest (342,057) (406,974)
NET INCOME ATTRIBUTABLE TO THE COMPANY 3,261,538 8,592,825
OTHER COMPREHENSIVE INCOME:
Foreign currency translation adjustment 14,970 200,003
COMPREHENSIVE INCOME ATTRIBUTABLE
TO THE COMPANY 3,276,508 8,792,828
COMPREHENSIVE INCOME ATTRIBUTABLE
TO THE NONCONTROLLING INTEREST 343,398 419,595
COMPREHENSIVE INCOME $3,619,906 $9,212,423
EARNINGS PER SHARE,
BASIC AND DILUTED $0.05 $0.12
WEIGHTED AVERAGE NUMBER OF SHARES,
BASIC AND DILUTED 71,333,586 71,333,586
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER 31, 2009
March 31, December 31,
2010 2009
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $9,873,298 $1,848,328
Accounts receivable, trade - related
parties, net of allowance for
doubtful accounts of $1,621,619 and
$1,419,178 as of March 31, 2010 and
December 31, 2009, respectively 10,245,625 15,379,312
Inventories 5,024,331 5,328,052
Other receivables 902,216 995,657
Other receivables - related parties 39,458,619 44,561,626
Employee advances 101,755 115,673
Prepaid expenses 594,263 658,193
Prepaid taxes 171,715 407,534
Total current assets 66,371,822 69,294,375
PROPERTY, PLANT AND EQUIPMENT, net 9,811,115 10,124,483
OTHER ASSETS:
Construction in progress 133,225,733 125,572,621
Construction deposits 3,763,996 1,405,997
Intangible assets, net 12,789,812 12,864,295
Other assets 13,400,435 11,847,937
Total other assets 163,179,976 151,690,850
Total assets $239,362,913 $231,109,708
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $4,211,661 $5,012,157
Advances from customers - related
parties 8,461,804 4,426,751
Wages and benefits payable 1,068,256 1,484,852
Income taxes payable 314,266 --
Contractor deposits 183,420 183,395
Contractor payables 18,834,263 18,513,216
Other payables 1,168,820 1,151,551
Other payables - related parties 4,405,557 3,326,110
Total current liabilities 38,648,047 34,098,032
NON-CURRENT LIABILITIES
Deferred income 11,238,037 11,236,501
Total non current liabilities 11,238,037 11,236,501
Total liabilities 49,886,084 45,334,533
EQUITY:
Shareholders' equity of the Company:
Common stock, $0.001 par value,
250,000,000 shares authorized,
71,333,586 issued and outstanding,
respectively 71,334 71,334
Paid-in-capital 18,118,007 18,042,189
Statutory reserves 13,217,217 13,217,217
Retained earnings 129,631,801 126,370,263
Accumulated other comprehensive
income 18,277,093 18,262,123
Total shareholders' equity of the
Company 179,315,452 175,963,126
Noncontrolling interest 10,161,377 9,812,049
Total equity 189,476,829 185,775,175
Total liabilities and equity $239,362,913 $231,109,708
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)
Three months ended March 31,
2010 2009
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $3,603,595 $8,999,799
Adjustments to reconcile net
income to cash
provided by (used in) operating
activities:
Provision for doubtful accounts 202,247 (184,568)
Depreciation 417,469 544,811
Amortization 83,557 97,143
Interest expense -- 1,372
Gain on sale of assets (15,082) (11,652)
Rental expense borne by a related party 81,749 81,626
(Increase) decrease in assets:
Accounts receivable, trade - related
parties 4,933,543 (1,493,130)
Other receivables 93,577 (17,415)
Other receivables - related parties (1,200,159) (2,567,169)
Inventories 304,560 1,398,175
Employee advances 13,935 (76,407)
Prepaid expense 64,017 (589,907)
Increase (decrease) in liabilities:
Accounts payable (819,926) (567,056)
Advances from customers - related
parties 4,034,448 1,364,661
Wages and benefits payable (416,798) (393,303)
Other taxes payable 550,140 (270,424)
Other payables 19,487 (565,726)
Other payables - related parties 1,079,414 106,916
Net cash provided by
operating activities 13,029,773 5,857,746
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Life Resources 3,000,000 --
Proceeds from disposal of a subsidiary 700,000 --
Construction deposits (562,642) (1,163,628)
Contractor deposits -- 48,930
Addition to construction in progress (9,112,590) (4,483,010)
Equipment deposits (1,558,192) --
Proceeds from sales of properties 2,621,021 17,031
Purchase of equipment and automobiles (88,505) (1,035,910)
Net cash used in investing activities (5,000,908) (6,616,587)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash provided by (used in)
financing activities -- --
EFFECT OF EXCHANGE RATE CHANGES ON CASH (3,895) 55,752
NET INCREASE (DECREASE) IN CASH 8,024,970 (703,089)
CASH, beginning of period 1,848,328 44,854,511
CASH, end of period $9,873,298 $44,151,422
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ -- $ 266,273
Income taxes $ 213,625 $ 3,877,420
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
REVENUE BY REGION
Three months ended
March 31,
2010 2009 Change
China $6,783,273 $2,742,620 147.3%
International $4,620,090 $15,494,925 -70.2%
Total $11,403,363 $18,237,545 -37.5%
SOURCE Tiens Biotech Group (USA), Inc.
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