Attached files
| file | filename |
|---|---|
| 8-K - China Botanic Pharmaceutical | v187843_8k.htm |
| EX-99.2 - China Botanic Pharmaceutical | v187843_ex99-2.htm |
|
FINAL
|
|
Company
Contact:
|
CCG
Investor Relations:
|
|
Renhuang
Pharmaceuticals, Inc.
|
Ms.
Lei Huang, Account Manager
|
|
Ms.
Portia Tan, IR Contact
|
Phone:
+1-646-833-3417 (New York)
|
|
Tel:
86-451-5392-5461
|
Email:
lei.huang@ccgir.com
|
|
Email:
ir@renhuang.com
|
Website:
www.ccgirasia.com
|
|
Mr.
Crocker Coulson, President
|
|
|
Phone:
+1-646-213-1915 (New York)
|
|
|
Email:
crocker.coulson@ccgir.com
|
For
Immediate Release
|
Renhuang Reports Second Quarter 2010 Results
|
|
· Sales grew 39% while net income rose 63% year-over-year
|
|
· Management reiterates fiscal
2010
guidance
|
Harbin, China – June 7, 2010 –
Renhuang Pharmaceuticals, Inc. (Pink Sheets: RHGP) (“Renhuang” or the
“Company”), a developer, manufacturer and distributor of botanical products,
bio-pharmaceuticals and traditional Chinese medicines (“TCM”), today announced
its financial results for the second quarter ended April 30, 2010 and affirmed
financial guidance for fiscal year 2010.
Second
Quarter Fiscal 2010 Highlights and Recent Events
|
·
|
Net
sales grew 39.0% year-over-year to $12.1
million.
|
|
·
|
Gross
profit increased 44.5% to $6.2 million from $4.3 million in 2009 while
gross margin increased to 51.4% from 49.4% a year
ago
|
|
·
|
Net
income rose 63.0% to $3.4 million or $0.09 per diluted share, as compared
to $2.1 million or $0.06 per diluted share in
2009
|
|
·
|
New
products, Banlangen Granules and Compound Honeysuckle Granules, accounted
for nearly $3.7 million in sales in the
quarter
|
|
·
|
Appointed
three new independent directors, strengthening corporate governance
practices
|
“Renhuang
continued to deliver robust growth in the second quarter of fiscal 2010 with
strong increases in revenue and earnings,” said Mr. Shaoming Li, the Chairman
and CEO of Renhuang. “We are pleased with the rapid market acceptance of our
recently introduced products, Banlangen Granules and Compound Honeysuckle
Granules, which were key drivers behind the sales growth and margin expansion
to-date. Our operating leverage remained robust in the second quarter with a
nearly 400 basis point operating margin increase year-over-year despite higher
operating expenses.”
Second
Quarter Fiscal 2010 Results
For the
second quarter ended April 30, 2010, net sales were $12.1 million, up 39.0% from
$8.7 million in the same quarter last year. The sales increase was
largely driven by strong growth in sales of the Company’s recently introduced
products, Banlangen Granules and Compound Honeysuckle Granules, and an increase
in the net average selling price (ASP) of other products. Banlangen Granules and
Compound Honeysuckle Granules accounted for 27.2% of gross sales in the quarter,
as compared to 20.2% in the first quarter of fiscal 2010. Excluding
Banlangen Granules and Compound Honeysuckle Granules, net ASP rose 5.1%
year-over-year in the second quarter of fiscal 2010, which included lower
average sales rebate.
Gross
profit in the quarter increased 44.5% to $6.2 million, as compared to $4.3
million for the same period of 2009. Gross margin for the quarter ended April
30, 2010 increased to 51.4% from 49.4% in the comparable fiscal 2009 quarter.
The year-over-year margin expansion was mainly due to lower sales rebates and
higher average selling prices of several of the Company’s products.
Operating
expenses for the second quarter of fiscal 2010 were $2.8 million, as compared to
$2.2 million in the same period last year. Sales and marketing expenses rose to
$1.3 million from $1.1 million. The spending increase reflected Renhuang’s
ongoing distribution network expansion, including penetration into new rural
markets, and direct-to-consumer TV advertising to promote product brand
awareness. General and administrative expenses increased 63.0% to $1.0 million,
primarily as a result of an increase in warrant expenses related to professional
service contracts
Operating
income in the fiscal 2010 quarter was $3.4 million, up 63.0% from $2.1 million
in the 2009 quarter. Operating margin increased significantly year-over-year to
28.3% from 24.1%, with sales growth and gross margin expansion more than
offsetting higher operating spend. The Company did not incur income tax expenses
as its subsidiary registered in the PRC has been granted a tax holiday for
fiscal 2010. For the second quarter ended April 30, 2010, net income grew 63.0%
to $3.4 million, or $0.09 per diluted share, from $2.1 million, or $0.06 per
diluted share, in the prior year period.
First
Half Fiscal 2010 Results
Total
revenue for the six month period ended April 30, 2010 was $29.2 million, an
increase of 30.0% from $22.5 million for the first six months in fiscal 2009.
Year-over-year growth was mainly due to the introduction of Banlangen Granules
and Compound Honeysuckle Granules in late 2009, and an increase in ASP across
the rest of the product portfolio.
Gross
profit in the first half of fiscal 2010 rose 35.4% to $15.7 million,
representing a gross margin of 53.7% as compared to 51.6% in the first half of
fiscal 2009. Operating income grew 29.1% year-over-year to $10.8 million. In the
first six months of fiscal 2010, net income was $10.8 million or $0.29 per
diluted share, up from $8.4 million or $0.24 per diluted share in the first six
months of fiscal 2009.
Financial
Condition
As of
April 30, 2010, Renhuang had $23.4 million in cash and cash equivalents. Working
capital was $40.4 million with a current ratio of 17.4x, as compared to $32.0
million and 12.9x as of October 31, 2009. The Company had no debt on its balance
sheet. At the end of the second quarter of 2010, shareholders’ equity was $61.1
million, as compared to $50.5 million at the end of fiscal 2009.
Cash flow
from operating activities was $19.3 million for the six months ended April 30,
2010, as compared to $4.2 million during the same period in the prior year. The
cash flow increase was primarily attributable to an increase in net income and a
decrease in trade receivables that reflected a change in credit terms and more
aggressive receive collection efforts year-over-year. Average days sales
outstanding fell to 118 days in first half of fiscal 2010 from 186 in the first
half of fiscal 2009.
Recent
Events
In April
2010, Renhuang announced several major initiatives that further strengthened the
Company’s corporate governance practices, including the appointment of three new
independent directors to its board of directors. With the addition of
the independent board members, the Company also established a nominating and
compensation committee. This represented a major step in the Company’s active
efforts to meet the requirements to move to a senior exchange during the fiscal
year.
Additionally
in May 2010, Renhuang engaged the global leader in Sarbanes-Oxley Section 404
(“SOX 404”) compliance consulting, PricewaterhouseCoopers (“PWC”), to assist the
Company in establishing and maintaining its SOX 404 compliance program.
Renhuang’s management team remains committed to work with PWC to further
strengthen the Company’s internal controls, corporate governance and risk
management procedures.
During
the second quarter of fiscal 2010, Renhuang entered into a purchase agreement to
acquire two office floors for approximately $5.6 million cash. The new office
space, intended to become the Company’s new headquarters, is already housing
some of Renhuang’s offices for administrative and human resources functions. Of
the total purchase price, $3.9 million was paid in April 2010 as a deposit with
the remaining $1.7 million due by December 20, 2012.
Outlook
– Affirming Fiscal 2010 Guidance
Renhuang
is affirming its fiscal 2010 guidance for net sales in the range of $54.7-$55.6
million, which represents a 26% to 28% increase over reported revenues of $43.4
million in fiscal year 2009. The Company continues to expect fiscal 2010 net
income, excluding any non-cash, non-operating gains and expenses (such as the
change in fair market value of warrant liability), to be in the range of
$18.6-$18.9 million, up 26% to 28% from net income of $14.8 million in fiscal
year 2009.
Third
quarter sales and net income are historically modestly lower as compared to
those in the first two quarters due to seasonality of Renhuang’s product
portfolio. Demand for the Company’s products often peak in the fourth quarter,
which represents the start of the flu season.
In the
second half of fiscal 2010, Renhuang continues to expect the commercial launch
of its Qing Re Jie Du Oral Liquid, a TCM for the treatment of influenza and
upper respiratory infections, and Badger Oil, a natural medicine for the
treatment of burns. The new product introductions and continued market
penetration of Renhuang’s current product portfolio are expected to drive
revenue growth for the remainder of fiscal 2010. The Company anticipates gross
margin to remain above 50% during second half of fiscal 2010. Operating expenses
are expected to increase in the second half of the fiscal year, with higher
sales and marketing expenses to support new product roll out and increased
R&D expenses as the development pipeline advances and
grows.
”Renhuang
completed a very strong first half performance with significant momentum for the
remainder of fiscal 2010,” added Mr. Li. “Increased market acceptance of our
portfolio of natural products and introduction of new products are expected to
continue the Company’s strong pace of growth in the coming quarters. In addition
to focusing on organic growth, Renhuang continues to actively evaluate external
growth opportunities, including the potential acquisition of complementary
operations and overseas expansion.”
Conference
Call
The
Company will host a conference call at 9:00 a.m. ET on Tuesday, June 8, 2010 to
discuss the second quarter 2010 results. To participate in the conference call,
please dial the following number five to ten minutes prior to the scheduled
conference call time: 877-812-1464. International callers should dial +1 706-
902-4248. The conference ID number for the call is 79282265.
If you are unable to participate in the
call at this time, a replay will be available from Tuesday, June 8, 2010 at
10:00 a.m. Eastern Time, through Tuesday, June 22, 2010. To access the replay,
dial 800-642-1687. International callers should dial +1 706-645-9291. The
conference ID number for the replay is 79282265.
ABOUT
RENHUANG PHARMACEUTICALS, INC.
Renhuang
Pharmaceuticals, Inc. is engaged in the research, development, manufacturing,
and distribution of botanical products, bio-pharmaceutical products, and TCM, in
the People's Republic of China. All of the Company's products are produced at
its three GMP-certified production facilities in Ah City, Dongfanghong and
Qingyang. The Company distributes its botanical anti-depression and
nerve-regulation products, biopharmaceutical products, and botanical antibiotic
and OTC TCMs through its network of over 3,000 distributors and over 70 sales
centers across 24 provinces in China. Company Website: http://www.renhuang.com
.
Safe
Harbor Statement
This
press release contains certain statements that may include forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Such statements are based upon management’s beliefs, assumptions and
expectations of the Company’s future operations and economic performance, taking
into account the information currently available to management. These statements
are not statements of historical fact. Forward-looking statements involve risks
and uncertainties, some of which are not currently known that may cause actual
results, performance or financial condition to be materially different from the
expectations of future results, performance or financial condition expressed or
implied in any forward-looking statements. These forward-looking statements are
based on current plans and expectations and are subject to a number of
uncertainties including, but not limited to, the Company’s ability to
achieve its financial guidance, ability to list its shares on a senior stock
exchange, ability to manage expansion of its operations effectively, competition
in the marketing and sales of its products, and other factors detailed in the
Company’s annual report on Form 10-K and other filings with the Securities and
Exchange Commission. 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. You are cautioned not to unduly rely on
such forward-looking statements when evaluating the information presented
herein.
-
Financial Tables Follow -
RENHUANG
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
|
Three months ended April
30,
|
Six months ended
April 30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
US$
|
US$
|
US$
|
US$
|
|||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
|
Sales,
net
|
12,092,506 | 8,702,878 | 29,225,120 | 22,472,875 | ||||||||||||
|
Cost
of goods sold
|
(5,877,856 | ) | (4,402,550 | ) | (13,530,494 | ) | (10,883,043 | ) | ||||||||
|
Gross
profit
|
6,214,650 | 4,300,328 | 15,694,626 | 11,589,832 | ||||||||||||
|
Operating
and administrative expenses:
|
||||||||||||||||
|
Sales
and marketing
|
1,265,319 | 1,119,855 | 2,404,300 | 1,417,945 | ||||||||||||
|
General
and administrative
|
974,825 | 597,740 | 1,791,794 | 1,219,773 | ||||||||||||
|
Research
and development
|
570,557 | 494,202 | 722,921 | 605,980 | ||||||||||||
|
Total
operating expenses
|
2,810,701 | 2,211,797 | 4,919,015 | 3,243,698 | ||||||||||||
|
Income
from operations
|
3,403,949 | 2,088,531 | 10,775,611 | 8,346,134 | ||||||||||||
|
Other
income:
|
||||||||||||||||
|
Interest
income
|
15,699 | 10,022 | 27,166 | 19,150 | ||||||||||||
|
Income
from operations before income tax expenses
|
3,419,648 | 2,098,553 | 10,802,777 | 8,365,284 | ||||||||||||
|
Income
tax expenses
|
- | - | - | - | ||||||||||||
|
Net
income
|
3,419,648 | 2,098,553 | 10,802,777 | 8,365,284 | ||||||||||||
|
Earnings
per common stock- Basic
|
0.09 | 0.06 | 0.29 | 0.24 | ||||||||||||
|
Earnings
per common stock - Diluted
|
0.09 | 0.06 | 0.29 | 0.24 | ||||||||||||
|
Weighted
average common stock outstanding
|
||||||||||||||||
|
Basic
|
37,239,536 | 35,096,680 | 37,239,536 | 35,096,680 | ||||||||||||
|
Diluted
|
37,917,140 | 35,096,680 | 37,724,214 | 35,096,680 | ||||||||||||
RENHUANG
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
April 30,
2010
|
October 31,
2009
|
|||||||
|
(Unaudited)
|
(Audited)
|
|||||||
|
ASSETS
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
23,391,609
|
8,111,514
|
||||||
|
Trade
receivables, net
|
14,900,545
|
23,203,410
|
||||||
|
Due
from related parties
|
-
|
130,199
|
||||||
|
Inventory,
net
|
2,934,928
|
3,024,016
|
||||||
|
Deposits
|
1,462,887
|
-
|
||||||
|
Prepayments
|
-
|
89,281
|
||||||
|
Other
receivables, net
|
164,566
|
102,613
|
||||||
|
Total
current assets
|
42,854,535
|
34,661,033
|
||||||
|
Property
and equipment, net
|
2,164,720
|
2,352,163
|
||||||
|
Deposits
|
18,557,480
|
16,137,000
|
||||||
|
Total
assets
|
63,576,735
|
53,150,196
|
||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||
|
Liabilities
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
279,063
|
369,329
|
||||||
|
Value
added tax payable
|
498,090
|
1,186,642
|
||||||
|
Accrued
employee benefits
|
1,339,371
|
1,136,267
|
||||||
|
Warranty
liability
|
342,770
|
-
|
||||||
|
Total
current liabilities
|
2,459,294
|
2,692,238
|
||||||
|
Shareholders’
equity
|
||||||||
|
Preferred
stock (no par value, 1,000,000 shares authorized; none issued and
outstanding as of April 30, 2010 and October 31, 2009)
|
-
|
-
|
||||||
|
Common
stock ($0.001 par value, 100,000,000 shares authorized; 37,239,536 issued
and outstanding as of April 30, 2010 and October 31, 2009)
|
37,240
|
37,240
|
||||||
|
Additional
paid-in capital
|
7,613,119
|
7,596,525
|
||||||
|
Common
stock warrants
|
496,732
|
496,732
|
||||||
|
Reserves
|
3,372,697
|
3,372,697
|
||||||
|
Accumulated
other comprehensive income
|
3,207,770
|
3,367,659
|
||||||
|
Retained
earnings
|
46,389,883
|
35,587,105
|
||||||
|
Total
shareholders’ equity
|
61,117,441
|
50,457,958
|
||||||
|
Total
liabilities and shareholders’ equity
|
63,576,735
|
53,150,196
|
||||||
RENHUANG
PHARMACEUTICALS, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
For the six months ended April 30,
|
||||||||
|
2010
|
2009
|
|||||||
|
US$
|
US$
|
|||||||
|
(Unaudited)
|
(Unaudited)
|
|||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
10,802,777
|
8,365,284
|
||||||
|
Adjustments
to reconcile net income to operating activities:
|
||||||||
|
Depreciation
of property and equipment
|
181,076
|
177,224
|
||||||
|
Warrants
issued for services
|
342,770
|
-
|
||||||
|
Share
compensation
|
16,594
|
-
|
||||||
|
Changes
in assets and liabilities:
|
||||||||
|
Decrease
(increase) in trade receivables
|
8,238,225
|
(4,458,764
|
)
|
|||||
|
Decrease
(increase) in due from related parties
|
129,841
|
(448,118
|
)
|
|||||
|
Decrease
in inventory, net
|
80,613
|
569,231
|
||||||
|
Decrease
in prepayments
|
89,036
|
33,659
|
||||||
|
(Increase)
decrease in other receivables, net
|
(62,244)
|
80,803
|
||||||
|
Decrease
in accounts payable
|
(89,235)
|
(77,331)
|
||||||
|
Decrease
in value added tax payable
|
(685,259)
|
(270,979
|
)
|
|||||
|
Increase
in accrued employee benefits
|
206,296
|
216,565
|
||||||
|
Net
cash provided by operating activities
|
19,250,490
|
4,187,574
|
||||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchase
of property and equipment
|
-
|
(16,212
|
)
|
|||||
|
Deposits
for office properties
|
(3,928,614)
|
-
|
||||||
|
Net
cash used in investing activities
|
(3,928,614)
|
(16,212
|
)
|
|||||
|
Effect
of exchange rate changes on cash
|
(41,781)
|
6,215
|
||||||
|
Net
increase in cash and cash equivalents
|
15,280,095
|
4,177,577
|
||||||
|
Cash
and cash equivalents, beginning of year
|
8,111,514
|
9,747,693
|
||||||
|
Cash
and cash equivalents, end of year
|
23,391,609
|
13,925,270
|
||||||
|
Supplemental
disclosure of cash flow information:
|
||||||||
|
Cash
paid during the year for income taxes
|
-
|
-
|
||||||
|
Interest
paid during the year
|
-
|
-
|
||||||