-- Full year revenues increased 28% to $54.2 million
-- Full year non-GAAP net income rose 19% to $16.9 million, or $0.99 per basic and diluted share
-- New plant expected to begin trial production in Q2 FY2010
SHANGHAI, July 15 /PRNewswire-Asia-FirstCall/ -- China-Biotics, Inc.
(Nasdaq: CHBT) ('China-Biotics', 'the Company'), a leading Chinese firm
specializing in the manufacture, research, development, marketing and
distribution of probiotics products, today announced its financial results for
the fourth quarter and fiscal year ended March 31, 2009.
Fourth Quarter 2009 Highlights
-- Net sales increased 18.9% year-over-year to $15.5 million
-- Gross profit rose 21.0% to $10.6 million, with a gross margin of 68.5%
-- Net income was $6.6 million, or $0.39 per basic and diluted share
-- Excluding a $1 million gain related to the change in fair value of
convertible notes, non-GAAP net income was $5.6 million, or $0.33 per
basic and diluted share
Fiscal Year 2009 Highlights
-- Net sales increased 28.1% to $54.2 million
-- Gross profit rose 26.6% to $38.0 million, with a gross margin of 70.1%
-- Operating income increased 16.2% to $21.8 million
-- Net income increased 13.8% to $20.0 million, or $1.17 per basic and
diluted share
-- Excluding a $3.1 million gain related to the change in fair value of
convertible notes, non-GAAP net income was $16.9 million, or $0.99 per
basic and diluted share
-- Completed construction of a 150-metric-ton-per-year bulk additives
manufacturing facility in Qingpu and expect to start trial production
in Q2 FY2010
-- Established 46 new Shining-branded retail outlets, bringing the total
number of outlets to 106 in Shanghai and 12 other major cities in China
-- Expanded number of bulk additive business customers to supply
probiotics to dairy, food, pharmaceutical, and animal feed
manufacturers
-- Listed as CHBT on Nasdaq Global Market in October 2008
Fourth Quarter 2009 Results
During the fourth quarter of the 2009 fiscal year, net sales increased
18.9% to $15.5 million from $13.1 million a year ago. The increase resulted
from significant growth in the sales of new products, most of which were sold
in the Company's Shining-branded retail outlets, and growth in the bulk
additive business. The Company's established retail outlets and well-trained
sales assistants contributed to the rapid revenue growth from new products
through its customer-oriented sales model and establishment of the Community
Network, which provides health education and probiotics-related seminars to
health-conscious consumers in the middle and high income levels.
'The final quarter of 2009 included several positive accomplishments, the
most significant of which was the progress we achieved in our new state-of-
the-art manufacturing facility,' said Mr. Jinan Song, Chairman and Chief
Executive Officer of China-Biotics. 'Despite depressed retail sales stemming
from the challenging global economy, we continued to experience growth in both
of our businesses from the prior year. In addition, we continued to focus on
the completion of our new facility, which we expect to begin making a
meaningful contribution to revenue in the third quarter of fiscal 2010.'
Gross profit for the quarter increased 21.0% to $10.6 million from $8.8
million a year ago. Gross margin was 68.5% in the fourth quarter, compared to
67.3% in the same quarter a year ago. The slight improvement in gross margin
resulted from an adjustment to the Company's product portfolio.
Operating expenses were $4.9 million, compared to $3.1 million in the
fourth quarter of fiscal 2008. The increase was primarily due to setup and
operations costs for new retail stores and increased salary expense stemming
from new hires to support the Company's expansion.
Operating income was $5.7 million, largely unchanged from fiscal 2008,
while operating margin was 36.7%.
Total other income was $1.1 million, compared to total other income of
$3.6 million in the fourth quarter of fiscal 2008. Other income is primarily
comprised of book gains related to the change in the fair value of the $25
million in convertible notes the Company issued in December 2007.
Net income for the fourth quarter of the 2009 fiscal year was $6.6 million,
or $0.39 per basic and diluted share, compared with $8.0 million, or $0.47 per
basic and diluted share, in the fourth quarter of fiscal 2008. The calculation
of diluted earnings per share for the fourth quarters of fiscal 2009 and 2008
exclude the potential common stock of 2,083,000 shares related to the
Company's convertible notes at the conversion price of $12 per share, as the
conversion price was higher than the average market price during those periods.
Excluding the book gains associated with the fair value of the convertible
notes, non-GAAP net income for the fourth quarter of fiscal 2009 was $5.6
million, or $0.33 per basic and diluted share, compared to non-GAAP net income
of $4.6 million, or $0.27 per basic and diluted share, in the fourth quarter
of fiscal 2008.
Fiscal Year 2009 Results
For the 2009 fiscal year, net sales were $54.2 million, up 28.1% from
$42.3 million in fiscal 2008. Shining Essence, the Company's best-selling
product, accounted for 39.9% of sales during the year, compared with 48.6%
during the prior year. Shining Probiotics Protein Powder accounted for 5.6% of
total sales in fiscal 2009, as sales from that product increased 92% from the
prior year. Gross profit during the year was $38.0 million, an increase of
26.6% from $30.0 million the prior year. Gross margin was 70.1% in fiscal 2009,
compared to 70.9% in fiscal 2008. Operating expenses were $16.2 million in
fiscal 2009, compared to $11.3 million a year ago. Full-year operating income
increased 16.2% to $21.8 million from $18.7 million in fiscal 2008. Operating
margin was 40.2% in fiscal 2009, compared to 44.3% the prior year. Net income
for the 2009 fiscal year was $20.0 million, or $1.17 per basic and diluted
share, up 13.8% from $17.5 million, or $1.03 per basic and diluted share, in
fiscal 2008. The calculation of diluted earnings per share for the 2009 and
2008 fiscal years exclude the potential common stock of 2,083,000 shares
related to the Company's convertible notes at the conversion price of $12 per
share, as the conversion price was higher than the average market price during
those periods. Excluding book gains associated with the change in the fair
value of the convertible notes, non-GAAP net income was $16.9 million, or
$0.99 per basic and diluted share, an increase of 19.0% from non-GAAP net
income of $14.2 million, or $0.83 per basic and diluted share, a year ago.
Financial Condition
As of March 31, 2009, the Company had cash and cash equivalents of $70.8
million and working capital of $55.0 million. In fiscal 2009, China-Biotics
generated $23.1 million in cash flow from operations and recorded $17.5
million in capital expenditures, primarily for the construction of the new
manufacturing facility. Accounts receivable were $14.4 million, and days'
sales outstanding improved to 93 for the year from 119 in 2008. At March 31,
2009, the Company had stockholders' equity of $65.4 million, compared to $44.4
million the prior year.
Business Outlook
The Company's new bulk additives production facility is scheduled to
commence trial production during the second quarter of fiscal 2010. As of June
30, 2009, China-Biotics had signed contracts with 16 commercial customers
located in Beijing and Shanghai cities and Jiangsu, Jiangxi, Qinghai, Shaanxi,
Shandong and Zhejiang provinces. These growing companies are among the leaders
in the baked foods, dairy, poultry feed and pharmaceutical industries.
'With the ramp-up of our new facility this year, we will be able to accept
larger purchase orders from major dairy producers and animal feed
manufacturers, which remain the most prominent sources of demand for bulk
additives,' Mr. Song said. 'Same-store sales for Shining retail stores that
have been in operation at least one year are expected to grow significantly
year-over-year, and we hope to continue to expand the number of Shining retail
outlets during the year. Although global economic growth remains suppressed,
we believe there is pent-up demand for our bulk additive products, which
should generate substantial growth in revenues and net income during the 2010
fiscal year.'
Recent Events
In April 2009, China-Biotics signed an agreement with Dabeinong Group
('Dabeinong') to supply probiotics as bulk additives for poultry feed products.
These bulk additives will be used in several of Dabeinong's products and will
help enhance the avian immune system and increase poultry survival and egg
production rates in commercially raised poultry.
In June 2009, China-Biotics attended Digestive Disease Week 2009 in
Chicago. DDW is the largest and most prestigious meeting in the world for
gastrointestinal professionals in the fields of gastroenterology, hepatology,
endoscopy and gastrointestinal surgery, attracting approximately 16,000
physicians, researchers and academics from around the world.
Also in June 2009, the Company joined the Russell 3000(R) Index and
Russell Global(R) Index, as Russell Investments reconstituted its
comprehensive set of U.S. and global equity indices.
Conference Call
The company will host a conference call at 10:00 a.m. EDT on, Wednesday,
July 15, 2009, to discuss its financial results for the fourth quarter and
fiscal year ended March 31, 2009. To participate in the event by telephone,
please dial 888-241-0558 five to 10 minutes prior to the start time (to allow
time for registration) and reference passcode 16647783. International callers
should dial 647-427-3417. The conference call will be broadcast live over the
Internet and can be accessed by all interested parties at the Company's Web
site, http://www.chn-biotics.com . To listen to the call, please visit the
site at least 15 minutes prior to the start of the call to register, download,
and install any necessary audio software. For those unable to participate
during the live webcast, it will be archived using the same link for 90 days.
A digital replay of the call will also be available on Wednesday, July 15, at
approximately 11:00 a.m. EDT through Wednesday, July 29, at midnight EDT. Dial
800-695-3685 and enter the conference ID number 16647783. International
callers should dial 402-220-1757 and enter the same conference ID number.
Use of Non-GAAP Financial Information
GAAP results for the fourth quarters and fiscal years ended March 31, 2009
and 2008, include non-cash gains related to change in fair value of the
Company's convertible notes. To supplement the Company's condensed
consolidated financial statements presented on a GAAP basis, the Company has
provided non-GAAP financial information excluding the impact of these items in
this release, which are non-GAAP net income and non-GAAP diluted earnings per
share. The Company's management believes that these non-GAAP measures provide
investors with a better understanding of how the results relate to the
Company's historical performance. A reconciliation of adjustments to GAAP
results appears in the tables accompanying this press release. This additional
non-GAAP information is not meant to be considered in isolation or as a
substitute for GAAP financials. The non-GAAP financial information that the
Company provides also may differ from the non-GAAP information provided by
other companies.
About China-Biotics, Inc.
China-Biotics, Inc. ('China-Biotics,' 'the Company'), a leading
manufacturer of biotechnology products and supplements, engages in the
research, development, marketing and distribution of probiotics dietary
supplements. Through its wholly owned subsidiary, Shanghai Shining
Biotechnology Co., Ltd., the Company has operations in Shanghai. Its
proprietary product portfolio contains live microbial nutritional supplements
under the 'Shining' brand. Currently, the products are sold OTC through large
distributors to pharmacies and supermarkets in Shanghai, Jiangsu, and Zhejiang.
China-Biotics plans to launch 300 Shining brand stores in major cities in
China. Currently, China-Biotics is strategically expanding its production
capacity of probiotics to meet growing demand in the bulk additive market.
For more information, please visit http://www.chn-biotics.com.
Safe Harbor Statement Under the Private Securities Litigation Reform Act
of 1995: The information in this release contains forward-looking statements
which involve risks and uncertainties, including statements regarding the
Company's capital needs, business strategy and expectations. Any statements
contained herein that are not statements of historical fact may be deemed to
be forward-looking statements, which may be identified by terminology such as
'may,' 'should,' 'will,' 'expect,' 'plan,' 'intend,' 'anticipate,' 'believe,'
'estimate,' 'predict,' 'potential,' 'forecast,' 'project,' or 'continue,' the
negative of such terms or other comparable terminology. Readers should not
rely on forward-looking statements as predictions of future events or results.
Any or all of the Company's forward-looking statements may turn out to be
wrong. They can be affected by inaccurate assumptions, risks and uncertainties
and other factors which could cause actual events or results to be materially
different from those expressed or implied in the forward-looking statements.
In evaluating these statements, readers should consider various factors,
including the risks described in 'Item 1A. Risk Factors' beginning on page 15
and elsewhere in the Company's 2009 Annual Report on Form 10-K. These factors
may cause the Company's actual results to differ materially from any
forward-looking statement. In addition, new factors emerge from time to time
and it is not possible for the Company to predict all factors that may cause
actual results to differ materially from those contained in any
forward-looking statements. The Company disclaims any obligation to publicly
update any forward-looking statements to reflect events or circumstances after
the date of this document, except as required by applicable law.
- FINANCIAL TABLES FOLLOW -
CHINA-BIOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in US Dollars)
Three months ended March 31, Years ended March 31,
2009 2008 2009 2008
(unaudited) (unaudited) (audited) (audited)
Net sales $15,521,065 $13,054,310 $54,197,082 $42,321,111
Cost of sales (4,892,374) (4,270,441) (16,197,267) (12,310,092)
Gross profit $10,628,691 $8,783,869 $37,999,815 $30,011,019
Operating expenses:
Selling expenses $(3,048,922) $(2,238,193)$(11,563,012) $(6,869,109)
General and
administrative
expenses (2,027,988) (1,670,929) (6,246,482) (4,826,473)
Other income (expenses) 143,132 789,221 1,592,773 431,844
Total operating
expenses $(4,933,778) $(3,119,901)$(16,216,721)$(11,263,738)
Income from operations $5,694,913 5,663,968 21,783,094 18,747,281
Other income and
expenses:
Changes in the fair
value of embedded
derivatives $1,019,000 $3,366,000 $3,092,000 $3,366,000
Interest income 40,692 222,358 254,183 365,594
Total other income
(expenses) $1,059,692 $3,588,358 $3,346,183 $3,731,594
Income before taxes $6,754,605 $9,252,326 $25,129,277 $22,478,875
Provision for income
taxes (165,472) (1,264,197) (5,162,388) (4,936,631)
Net income $6,589,132 $7,988,129 $19,966,889 $17,542,244
Earnings per share:
Basic and diluted $0.39 $0.47 $1.17 $1.03
Weighted average shares
outstanding
Basic and diluted 17,080,000 17,080,000 17,080,000 17,080,000
CHINA-BIOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Audited, amounts expressed in US Dollars)
AS OF MARCH 31, 2009 AND 2008
Years Ended March 31,
2009 2008
ASSETS
Current assets
Cash and cash equivalents $70,824,041 $64,310,448
Accounts receivable 14,428,382 13,214,531
Other receivables 6,493 238,835
Inventories 563,853 408,358
Prepayment 1,547,582 1,806,605
Total current assets $87,370,351 $79,978,777
Property, plant and equipment and
land use right $33,079,839 $13,812,749
Deferred tax assets 354,157 --
Total assets $120,804,347 $93,791,526
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,909,898 $2,786,180
Tax payables 25,691,681 22,317,982
Other payables and accruals 3,734,526 1,792,156
Total current liabilities $32,336,105 $26,896,318
Non-current liabilities
Convertible note, net of discount of
$8,554,365 and $6,000,054 as of March
31, 2008 and 2009, respectively $18,999,946 $16,445,635
Embedded derivatives 2,660,000 5,752,000
Interest payable 1,411,942 302,306
Total non-current liabilities $23,071,888 $22,499,941
Commitments and contingencies
Stockholders' equity:
Common stock (par value of $0.0001,
100,000,000 shares authorized,
41,461,004 shares issued and
outstanding as of March 31, 2008 and
2009) $4,146 $4,146
Additional paid-in capital 7,863,031 7,863,031
Retained earnings 49,794,033 29,827,144
Treasury stock at cost (24,381,004
shares) (2,438) (2,438)
Accumulated other comprehensive
income 4,711,788 3,677,590
Capital and statutory reserves 3,025,794 3,025,794
Total stockholders' equity $65,396,354 $44,395,267
Total liabilities and stockholders'
equity $120,804,347 $93,791,526
CHINA-BIOTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Audited, amounts expressed in US Dollars)
FOR THE YEARS ENDED MARCH 31, 2009 AND 2008
Years Ended March 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $19,966,889 $17,542,244
Adjustments for:
Loss (Gain) on disposal of plant and
equipment 30,022 --
Depreciation 1,768,127 999,148
Change in fair value of convertible notes (3,092,000) (3,366,000)
Change in deferred tax (354,197) --
(Increase)/Decrease in restricted cash -- --
(Increase)/Decrease in accounts receivable (920,958) 2,261,918
(Increase)/Decrease in inventories (141,055) (154,189)
(Increase)/Decrease in prepayment 540,677 (1,418,658)
(Increase)/Decrease in other receivables -- --
Increase/(Decrease) in accounts payable 43,042 1,036,521
Increase in income tax and
surcharge payables 2,978,145 2,038,378
Increase/(Decrease) in other payables and
accruals, and value added tax payable 2,248,135 422,113
NET CASH PROVIDED BY OPERATING
ACTIVITIES $23,066,827 $19,361,475
CASH FLOWS FROM INVESTING ACTIVITIES
Sales proceeds from disposal of plant
and equipment $-- $--
Payment of capital expenditures (808,219) --
Purchase of plant and equipment (16,671,454) (10,302,291)
NET CASH USED IN INVESTING
ACTIVITIES $(17,479,673) $(10,302,291)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of convertible note $-- $25,000,000
Repayment on loan from shareholders -- --
NET CASH PROVIDED BY/(USED IN)
FINANCING ACTIVITIES $-- $25,000,000
Effect of exchange rate changes on cash $926,439 $3,259,239
NET INCREASE IN CASH AND CASH
EQUIVALENTS BALANCES $6,513,593 $37,318,423
CASH AND CASH EQUIVALENTS BALANCES AT
BEGINNING OF PERIOD 64,310,448 26,992,025
CASH AND CASH EQUIVALENTS BALANCES AT
END OF PERIOD $70,824,041 $64,310,448
Supplemental of cash flow information:
Interest paid $808,219 $--
Income tax paid $3,119,911 $3,034,435
CHINA-BIOTICS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL DATA
Q4 2009 Q4 2008
Diluted Diluted
Non-GAAP Net income Net Income EPS(1) Net Income EPS(1)
Adjusted Amount $5,570,132 $0.33 $4,622,129 $0.27
Adjustments
Non-cash gains from change in
fair value of convertible bonds 1,019,000 $0.06 $3,366,000 $0.20
Amount per consolidated statement of
operations $6,589,132 $0.39 $7,988,129 $0.47
(1) Diluted earnings per share based
on 17,080,000 weighted average
shares
FY 2009 FY 2008
Diluted Diluted
Non-GAAP Net income and diluted EPS Net Income EPS(1) Net Income EPS(1)
Adjusted Amount 16,874,889 $0.99 14,176,244 $0.83
Adjustments
Non-cash gains from change in
fair value of convertible bonds 3,092,000 $0.18 3,366,000 $0.20
Amount per consolidated statement of
operations 19,966,889 $1.17 17,542,244 $1.03
(1) Diluted earnings per share based
on 17,080,000 weighted average
shares
For more information, please contact:
CCG Investor Relations
Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
SOURCE China-Biotics, Inc.
Risk Analysis
Tracking 1027 U.S. listed China Stocks and Counting...
Tracking 1320 U.S. Stocks and Counting...
