Rino Intl (PINK:RINO)

Third Quarter Highlights

• Total revenues in the third quarter of 2010 were $52.7 million, a 16.7% decrease from the corresponding period in 2009.
  
• Operating profit in the third quarter of 2010 was $9.9 million, a 49.3% decrease from the corresponding period in 2009.
  
• Net income in the third quarter of 2010 was $8.8 million, a 48.3% decrease from the corresponding period in 2009. Net income excluding change in fair value of warrants (non-GAAP) was $8.7 million, a 55.6% decrease from the corresponding period in 2009.
  
• Diluted earnings per share (“EPS”) for the third quarter of 2010 was $0.31. Diluted EPS excluding change in fair value of warrants (non-GAAP) was $0.31, a 60.8% decrease from $0.78 for the corresponding period in 2009.

“Revenues in the third quarter were down due to recent reform in the steel industry which has caused a ‘wait and see’ approach toward capex including investment in clean technologies,” said Mr. Dejun Zou, director and chief executive officer of RINO. “We are also seeing our clients experiencing a tightening of cash flow which has led to an increase in accounts receivable. However we still have a full order book with several new contracts successfully negotiated as well as backlog from the third quarter which will generate revenues in the fourth quarter.”

“We believe that despite the temporary market downturn, the long-term industry environment remains very encouraging with increasing government pressure coming to bear on polluting industries and demand getting even stronger,” Mr. Zou continued. “We are racing to meet that demand by expanding capacity and investing in advanced technology to help us solidify our leading position. At the same time we are continuing to look for opportunities to expand outside our traditional de-sox and wastewater treatment segments to capture market share in new high growth areas.”

“After a weaker than expected third quarter we are revising our full year guidance to reflect the disruption caused by industry consolidation. However we remain confident in our long-run prospects and are moving ahead with several projects to drive revenues in the future. We are continuing to work to improve internal controls and we remain focused on fulfilling Sarbanes-Oxley requirements according to schedule,” Mr. Zou concluded.

Outlook for Fiscal Year 2010

Affected by reform and contracting cash flows in the iron & steel industry in China, the company is expecting softer demand for its services in the immediate future. Based on analysis of current market demand, the company estimates its total revenue for fiscal year 2010 to range from $203.0 million to $211.0 million, down from the previously estimated range of $221.0 to $229.0 million, representing a year over year increase of 5.4% to 9.6%.

"Our business continues to be driven by a number of factors centered around government mandates stipulating that iron and steel manufacturers be equipped with desulphurization systems. The Chinese Ministry of Industry and Information Technology showed its commitment to support this initiative by publishing a formal plan on July 31, 2009 which prioritizes steel FGD installations, sets specific desulphurization guidelines and targets, while offering priority funding by both the central and local governments and further support for domestic based technology. This is the single most important regulatory event since our Company was formed and clears a path toward doubling the number of sinters to be equipped with FGD systems annually through 2011. We expect that growth from our FGD system installations, in addition to the large Sludge Treatment System for the Dalian Government, will drive further growth during 2010."

Source: PR Newswire (November 13, 2009)

Guidance Report:

Full Year Fiscal 2009 Guidance Ending December

Source: PR Newswire (February 19, 2009)