Attached files
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| 8-K - TIANYIN PHARMACEUTICAL CO., INC. - TIANYIN PHARMACEUTICAL CO., INC. | tpi8k52011.htm |
| EX-99.2 - SCRIPT OF CONFERENCE CALL ON MAY 17, 2011 - TIANYIN PHARMACEUTICAL CO., INC. | ex99two.htm |
Exhibit 99.1
TPI Reports Record Third Quarter Fiscal Year 2011 Financial Results
May 16, 2011
CHENGDU, China, May 16, 2011 /PRNewswire-Asia-FirstCall/ -- Tianyin Pharmaceutical Co., Inc. (NYSE Amex: TPI), a pharmaceutical company that specializes in the patented biopharmaceutical, modernized traditional Chinese medicine, branded generics and other pharmaceuticals, announced the financial results for the third quarter of Fiscal Year 2011.
Third quarter fiscal year 2011 ending March 31, 2011 financial highlights
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Revenue increased 56.3% year over year to $24.9 million from $15.9 million in third quarter fiscal year 2010;
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Operating income increased 39.9% year over year to $5.0 million from $3.6 million in third quarter fiscal year 2010;
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Net Income increased to $3.7 million, up 27.7% year over year from $2.9 million in third quarter fiscal year 2010;
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Earnings per share of $0.13 per basic share, or $0.12 per diluted share, up from $0.11 per basic share, or $0.09 per diluted share a year earlier, a gain of 19.3% and 35.5%, respectively;
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Cash and cash equivalents totaled $31.1 million on March 31, 2011 or $1.10 per basic share in cash;
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Targeting 900 hospitals coverage by the end of fiscal year 2011 up from the current 880 hospitals network;
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Forecasting $30 million JCM macrolide API revenue for the first year of operation.
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Third quarter fiscal year 2011 ending March 31, 2011 Results
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3Q FY2011
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3Q FY2010
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YoY
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Sales
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$24.9 million
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$15.9 million
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+56.3%
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Gross Profit
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$10.8 million
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$8.4 million
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+28.6%
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Operating Income
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$5.0 million
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$3.6 million
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+39.9%
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Net Income
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$3.7 million
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$2.9 million
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+27.7%
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EPS (Diluted)
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$0.12
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$0.09
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+35.5%
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Diluted Shares
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29.8 million
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31.6 million
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Sales for the quarter ended March 31, 2011 was $24.9 million, up 56.3% as compared to $15.9 million for the quarter ended March 31, 2010. Although our generic pharmaceutical sales have been under pricing pressure since the beginning of the third quarter, the channel expansion, optimized production facility usage, and the continuous stream of Tianyin Medicine Trading (TMT) distribution revenue supported the quarterly sales growth.
With the current hospital coverage at 880 hospitals, increased from 850 hospitals from the beginning of fiscal year 2011, we are targeting to reach 900 hospitals by the end of fiscal year 2011 ending June 30, 2011.
Revenues from the top selling products are listed as follows,
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Gingko Mihuan Oral Liquid (GMOL): $5.6 million, revenue driving prescription patented proprietary medicine for stroke treatment, nationally reimbursed;
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Apu Shuangxin Benorylate Granules (APU): $1.8 million, flagship OTC product with proprietary granular formulation for inflammation and rheumatism;
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Azithromycin Tablets (AZI): $0.98 million, branded Essential Drug Listed (EDL) highly effective broad spectrum antibiotics;
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Xuellian Chongcao Oral Liquid (XLCC): $1.1 million, formulated proprietary TCM oral liquid for immunity and sexual function enhancement;
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Qing Re Jie Du Oral Liquid (QR): $0.77 million, modernized TCM legacy product for viral infections such as H1N1 influenza.
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These products totaled $10.2 million in sales, representing 41.2% of the quarterly revenue.
Cost of Sales for the quarter ended March 31, 2011 was $14.0 million or 56.2% of sales as compared to $7.5 million or 47.2% of the sales of the quarter ended March 31, 2010. Our cost of sales consists of the raw material cost, labor, depreciation and amortization of manufacturing equipment and facilities, and other overhead.
Gross Margin for the quarter ended March 31, 2011 was 43.6% as compared to 52.8% for the quarter ended March 31, 2010. The decrease in gross margins was attributable to the addition of TMT revenues, the distribution arm of TPI, whose gross margins average approximately 15%. In addition, the pricing pressure on our generic products also contributes to the gross margin reduction. During this quarter, our 56 product organic portfolio delivered approximately 51.4% gross margins, about 1.4% lower than the gross margin of 52.8% from a year earlier. Given the blend of the TMT lower margin distribution revenue and recent decline of the gross margins associated with our proprietary portfolio under the current pricing trend, we anticipate that our overall gross margin in the near term, on a quarter to quarter comparison basis, may trend lower, but on a sequential basis should stabilize and improve depending upon the revenue mix percentages of TMT revenue, upcoming JCM macrolide API revenue as compared to the proprietary portfolio's revenue performance.
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Operating Expenses for the quarter ended March 31, 2011 were $5.8 million, compared with $4.8 million for the quarter ended March 31, 2010. Continuing sales payroll and marketing expenses are the main components of the operating expenses.
Net Income was $3.7 million for the quarter ended March 31, 2011, as compared to net income of $2.9 million for the quarter ended March 31, 2010, a net increase of $0.8 million or 27.6% year over year. Net profit margins for the quarter ended March 31, 2011 decreases to 14.9% from 18.3% for the quarter ended March 31, 2010 mainly attributable to 1) recent pricing pressure on the generic pharmaceutical business, 2) lower margin TMT distribution revenue, and 3) increase of income tax provision to 25% starting January 2011 from the previous 15% for Chengdu Tianyin at the expiration of the three year tax benefit for high tech enterprise. We expect the stabilization of the net profit margin at approximately 15% going forward under the current pharmaceutical sales market condition.
Diluted earnings per share for the three months ended March 31, 2011 were $0.12, up 35.5% from the earnings of $0.09 per diluted share for the three months ended March 31, 2010, based on 29.8 million and 31.6 million shares, respectively.
Balance Sheet and Cash Flow
As of March 31, 2011, we had working capital totaling $37.2 million, including cash and cash equivalents of $31.1 million or $1.10 per share in cash. Net cash generated from operating activities for the nine months ended March 31, 2011 was $12.3 million, compared with $11.5 million for the nine months ended March 31, 2010. We believe that TPI is adequately funded to meet all of the working capital and capital expenditure needs for fiscal year 2011.
Business Outlook
Jiangchuan Macrolide Project - JCM
Since the construction completion of JCM, we have entered into the equipment installation and GMP certification preparation phase of the JCM project. We forecast the first year JCM macrolide API revenue contribution to reach $30 million.
Tianyin Medicine Trading Distribution Business - TMT
Since the signing of one-year distribution rights in last November with Jiangsu Lianshui Pharmaceutical (“Lianshui”) to distribute 15 Lianshui-branded generic injection products including cough suppressant, antibiotics, and anti-inflammatory medicines, our TMT business continues to revenue contribution for TPI. The annual distribution revenue is estimated to be approximately $15 million.
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Fiscal Year 2011 Financial Guidance
Due to the recent healthcare reform and the resulting pricing pressure on generic pharmaceutical sales nationwide, since January 2011, our generic division which makes up approximately 40% of our total revenue is expected to experience sales reduction for the next few quarters. In addition, the longer than expected equipment installation and GMP certification preparation process following the newly issued SFDA GMP standards by the PRC government at the beginning of March 2011, are expected to reduce the previously forecast revenue of JCM macrolide facility. We therefore revise our fiscal year 2011 revenue guidance to $90.0 million representing 40.8% year over year growth, from the previously guided $113.0 million in total revenue.
Based on the revised revenue forecast of $90.0 million along with the new 25% income tax rate starting in January 2011 from the previous 15% for Chengdu Tianyin, we revise our net income forecast to $16 million, representing 32.9% year over year growth from previous $18 million. The forecasted net income excludes any non-cash expenses associated with stock compensation plans or stock option expenses.
Our analysis of the market condition suggests that although the pricing pressure on the generic division is likely to continue for the remainder of 2012 calendar year, the JCM along with TMT distribution business are expected to support the growth of TPI for the coming fiscal year.
Management will continue to evaluate the Company's business outlook and communicate any changes on a quarterly basis or as when appropriate.
Conference Call
Senior management will host the earnings conference call for the third quarter of fiscal year 2011 ending March 31, 2011 to be held at 9:00 a.m. ET on Tuesday, May 17, 2011.
Interested parties may access the call by dialing +1-877-941-1427 (U.S.), 1-480-629-9664 (International)
The conference ID is 4441371. It is advisable to dial in approximately 5 minutes prior to the start of the call.
A replay will be available by calling +1-877-870-5176 (U.S.), 1-858-384-5517 (International), from 05/17/2011 at 12:00 Noon ET till 05/31/2011 at 11:59 pm ET.
Replay Pin Number: 4441371
This call is being web cast by ViaVid Broadcasting and can be accessed at ViaVid's website at the following link: http://viavid.net/dce.aspx?sid=0000869E
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About Tianyin Pharmaceutical
Tianyin Pharmaceutical Co., Inc. (TPI), headquartered at Chengdu, China, specializes in the development, manufacturing, marketing and sale of patented biopharmaceutical, modernized traditional Chinese medicines, branded generics and other pharmaceuticals. TPI currently manufactures and markets a comprehensive portfolio of 56 products, 23 of which are listed in the highly selective National Reimbursement List, 7 are included in the Essential Drug List of China. TPI's pipeline targets cardiovascular diseases, women's health, immune system and respiratory disorders. TPI has an extensive nationwide distribution network with 730 sales representatives out of totaled 1,365 employees. For more information about Tianyin, please visit http://www.tianyinpharma.com.
Safe Harbor Statement
The Statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission.
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For more information, please contact:
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Investors Contact:
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James Jiayuan Tong M.D. Ph.D.
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Chief Financial Officer, Chief Business & Development Officer
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Director
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Tianyin Pharmaceutical Co., Inc.
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Web: http://www.tianyinpharma.com
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Email: Dr.Tong@tianyinpharma.com
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Tel: +86-28-8551-6696 (Chengdu, China)
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+1-949-350-6999 (U.S.)
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+86-134 36 550011 (China)
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Address:
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23rd Floor Unionsun Yangkuo Plaza
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No. 2, Block 3, South Renmin Road
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Chengdu, 610041
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China
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TIANYIN PHARMACEUTICAL CO., INC.
Consolidated Balance Sheets
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March 31,
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June 30,
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2011
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2010
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Assets
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(Unaudited)
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Current assets:
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Cash and cash equivalents
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$ | 31,066,927 | $ | 27,009,066 | ||||
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Accounts receivable, net of allowance for doubtful
accounts of $436,515 and $421,079 as of March 31, 2011 and
June 30, 2010, respectively
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9,742,186 | 8,185,240 | ||||||
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Inventory
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5,431,746 | 3,588,824 | ||||||
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Advance payments
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397,020 | 382,980 | ||||||
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Loans receivable
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- | 294,600 | ||||||
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Other current assets
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31,831 | 77,283 | ||||||
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Total current assets
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46,669,710 | 39,537,993 | ||||||
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Property and equipment, net
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25,596,835 | 14,968,822 | ||||||
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Intangibles, net
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15,295,417 | 15,232,286 | ||||||
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Total assets
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$ | 87,561,962 | $ | 69,739,101 | ||||
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Liabilities
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Current liabilities:
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Accounts payable and accrued expenses
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$ | 1,556,489 | $ | 1,715,781 | ||||
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Accounts payable – construction related
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2,389,461 | 2,248,849 | ||||||
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Short-term bank loans
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2,748,600 | 1,473,000 | ||||||
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VAT taxes payable
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746,997 | 658,312 | ||||||
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Income taxes payable
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1,333,674 | 861,614 | ||||||
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Other taxes payable
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159,356 | 19,564 | ||||||
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Dividends payable
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34,661 | 72,995 | ||||||
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Other current liabilities
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537,834 | 429,135 | ||||||
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Total current liabilities
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9,507,072 | 7,479,250 | ||||||
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Total liabilities
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9,507,072 | 7,479,250 | ||||||
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Equity
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Stockholders' equity:
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Common stock, $0.001 par value, 50,000,000 shares
authorized, 29,396,276 and 27,371,526 shares issued and
outstanding at March 31, 2011 and June 30, 2010, respectively
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29,396 | 27,326 | ||||||
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Series A convertible preferred stock, $0.001 par value -0-
and 1,360,250 shares issued and outstanding at March 31, 2011
and June 30, 2010, Respectively
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- | 1,360 | ||||||
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Additional paid-in capital
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31,536,139 | 29,623,396 | ||||||
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Statutory reserve
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3,732,883 | 3,732,883 | ||||||
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Treasury stock
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(111,587 | ) | (111,587 | ) | ||||
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Retained earnings
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37,339,441 | 25,687,770 | ||||||
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Accumulated other comprehensive income
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5,096,149 | 2,845,076 | ||||||
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Total stockholders' equity
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77,622,421 | 61,806,224 | ||||||
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Noncontrolling interest
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432,469 | 453,627 | ||||||
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Total equity
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78,054,890 | 62,259,851 | ||||||
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Total liabilities and equity
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$ | 87,561,962 | $ | 69,739,101 | ||||
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TIANYIN PHARMACEUTICAL CO., INC.
Consolidated Statements of Operations
(Unaudited)
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For the Three Months Ended March 31,
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For the Nine Months Ended March 31,
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2011
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2010
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2011
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2010
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Sales
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$ | 24,880,980 | $ | 15,917,771 | $ | 72,165,647 | $ | 44,259,352 | ||||||||
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Cost of sales
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14,044,670 | 7,493,230 | 39,183,982 | 21,019,960 | ||||||||||||
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Gross profit
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10,836,310 | 8,424,541 | 32,981,665 | 23,239,392 | ||||||||||||
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Operating expenses:
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Selling, general and administrative
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5,517,647 | 4,607,897 | 17,252,309 | 13,135,398 | ||||||||||||
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Research and development
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286,020 | 218,515 | 802,696 | 608,385 | ||||||||||||
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Total operating expenses
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5,803,667 | 4,826,412 | 18,055,005 | 13,743,783 | ||||||||||||
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Income from operations
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5,032,643 | 3,598,129 | 14,926,660 | 9,495,609 | ||||||||||||
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Other income (expenses):
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Interest income
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33,083 | 15,068 | 90,681 | 34,436 | ||||||||||||
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Interest expense
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(29,791 | ) | (18,913 | ) | (72,599 | ) | (58,276 | ) | ||||||||
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Other income (expenses)
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- | - | - | (39,510 | ) | |||||||||||
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Total other Income (Expenses)
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3,292 | (3,845 | ) | 18,082 | (63,350 | ) | ||||||||||
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Income before provision for income tax
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5,035,935 | 3,594,284 | 14,944,742 | 9,432,259 | ||||||||||||
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Provision for income tax
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1,323,665 | 686,161 | 3,171,172 | 1,767,852 | ||||||||||||
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Net income
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3,712,270 | 2,908,123 | 11,773,570 | 7,664,407 | ||||||||||||
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Less: Net income (loss) attributable to noncontrolling interest
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(4,492 | ) | (1,357 | ) | (21,121 | ) | (2,397 | ) | ||||||||
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Net income attributable to Tianyin Pharmaceutical Co., Inc.
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3,716,762 | 2,909,480 | 11,794,691 | 7,666,804 | ||||||||||||
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Basic earnings per share
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$ | 0.13 | $ | 0.11 | $ | 0.42 | $ | 0.31 | ||||||||
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Diluted earnings per share
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$ | 0.12 | $ | 0.09 | $ | 0.39 | $ | 0.26 | ||||||||
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Weighted average number of common shares outstanding
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Basic
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28,218,732 | 26,363,749 | 28,031,064 | 23,650,332 | ||||||||||||
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Diluted
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29,822,596 | 31,631,330 | 30,062,270 | 29,931,923 | ||||||||||||
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TIANYIN PHARMACEUTICAL CO., INC.
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Consolidated Statements of Comprehensive Income
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(Unaudited)
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For the Three Months Ended March 31,
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For the Nine Months Ended March 31,
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2011
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2010
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2011
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2010
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Net income
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$ | 3,712,270 | $ | 2,908,123 | $ | 11,773,570 | $ | 7,664,407 | ||||||||
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Other comprehensive income
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Foreign currency translation adjustment
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484,258 | (155 | ) | 2,251,109 | 46,808 | |||||||||||
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Total other comprehensive income
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484,258 | (155 | ) | 2,251,109 | 46,808 | |||||||||||
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Comprehensive income
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4,196,528 | 2,907,968 | 14,024,679 | 7,711,215 | ||||||||||||
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Comprehensive income attributable to the noncontrolling interest
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(103 | ) | - | (37 | ) | (179 | ) | |||||||||
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Comprehensive income attributable to Tianyin Pharmaceutical Co., Inc.
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$ | 4,196,425 | $ | 2,907,968 | $ | 14,024,642 | $ | 7,711,036 | ||||||||
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TIANYIN PHARMACEUTICAL CO., INC.
Consolidated Statements of Cash Flows
(Unaudited)
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For the Nine Months Ended
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March 31,
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2011
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2010
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Cash flows from operating activities:
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Net Income
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$ | 11,773,570 | $ | 7,664,407 | ||||
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Adjustments to reconcile net income to net cash
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provided by (used in) operating activities:
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Depreciation and amortization
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893,896 | 678,372 | ||||||
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Bad debt expense
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- | 96,734 | ||||||
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Share-based payments
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1,913,453 | 1,274,516 | ||||||
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Loss on disposal of fixed assets
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- | 39,510 | ||||||
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Changes in assets and liabilities:
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Accounts receivable
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(1,235,887 | ) | (2,725,110 | ) | ||||
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Inventory
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(1,682,777 | ) | 190,744 | |||||
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Other current assets
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46,400 | 457,487 | ||||||
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Accounts payable and accrued expenses
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(267,848 | ) | 437,483 | |||||
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Accounts payable – construction related
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280,295 | 2,887,122 | ||||||
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VAT taxes payable
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36,038 | 87,300 | ||||||
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Income taxes payable
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433,118 | 195,177 | ||||||
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Other taxes payable
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164,187 | 5,175 | ||||||
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Dividends payable
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(18,138 | ) | - | |||||
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Other current liabilities
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(131,682 | ) | 195,931 | |||||
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Total adjustments
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431,055 | 3,820,441 | ||||||
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Net cash provided by operating activities
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12,204,625 | 11,484,848 | ||||||
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Cash flows from investing activities:
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Additions to property and equipment
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(10,317,824 | ) | (5,338,740 | ) | ||||
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Additions to intangible assets – approved drugs
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- | (2,742,168 | ) | |||||
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Loans receivable
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300,300 | (293,280 | ) | |||||
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Net cash used in investing activities
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(10,017,524 | ) | (8,374,188 | ) | ||||
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Cash flows from financing activities:
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Proceeds from bank loans
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1,201,200 | 65,988 | ||||||
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Additional paid-in capital
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- | 8,864,825 | ||||||
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Contribution from minority shareholders
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- | 439,920 | ||||||
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Dividends paid
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(54,857 | ) | (1,577,068 | ) | ||||
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Net cash provided by financing activities
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1,146,343 | 7,793,665 | ||||||
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Effect of foreign currency translation on cash
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724,417 | 2,852 | ||||||
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Net increase in cash and cash equivalents
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4,057,861 | 10,907,177 | ||||||
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Cash and cash equivalents – beginning
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27,009,066 | 12,352,223 | ||||||
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Cash and cash equivalents – ending
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$ | 31,066,927 | $ | 23,259,400 | ||||
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Supplemental schedule of non cash activities
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Advance payments exchanged for intangible assets – drug
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$ | - | $ | 807,986 | ||||
SOURCE Tianyin Pharmaceutical Co., Inc.
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