RINO International Corp. Announces Record 2008 Revenue and Net Income

-- Fourth Quarter 2008 Sales Increase 136.5% to $40.8 million, *Adjusted Net Income Increases 12.0% to $7.0 million with EPS of $0.28

-- Fiscal Year 2008 Sales Increase 119.8% to $139.3 million, **Adjusted Net Income Increases 119.9% to $39.0 million with EPS of $1.56

-- Cash & Equivalents of $19.7 million on December 31, 2008

-- Reaffirms 2009 Guidance: Revenues expected to exceed $176.5 million

-- Management to Host Earnings Conference Call on April 3 at 10:00 am ET

DALIAN, China, April 2 /PRNewswire-Asia-FirstCall/ -- RINO International Corp. (OTC Bulletin Board: RINO), which through its subsidiaries and controlled affiliates in the People's Republic of China (collectively, the 'Company' or 'RINO'), designs, manufactures, installs and services proprietary and patented wastewater treatment, desulphurization equipment, and high temperature anti- oxidation systems for iron and steel manufacturers in the People's Republic of China ('PRC'), today announced the Company's financial results for the fourth quarter and fiscal year 2008.

    SUMMARY FINANCIALS

    Fourth Quarter 2008 Results (Unaudited)

                                  Q4 2008        Q4 2007              CHANGE
    Sales                   $40.8 million  $17.3 million            +136.5 %
    Gross Profit            $10.8 million   $8.1 million             +32.1 %
    GAAP Net Income (Loss)   $1.0 million  ($1.2 million)           +183.0 %
    Adjusted Net Income*     $7.0 million   $6.3 million             +12.0 %
    GAAP EPS (Diluted)              $0.04         ($0.12)           +133.3 %
    Adjusted EPS (Diluted)*         $0.28        0.26***              +7.7 %

    Fiscal Year 2008 Results
                                  FY 2008        FY 2007             CHANGE
    Sales                  $139.3 million  $63.4 million             +119.8 %
    Gross Profit            $54.3 million  $30.5 million              +78.3 %
    GAAP Net Income         $21.3 million  $10.2 million             +108.3 %
    Adjusted Net Income**   $39.0 million  $17.7 million             +119.9 %
    GAAP EPS (Fully Diluted)        $0.85          $0.52              +63.5 %
    Adjusted EPS (Diluted)**        $1.55          $0.90              +72.2 %


    * Adjusted Net Income and EPS in the Q4 2008 and 2007 are non-GAAP
      calculations and do not include non-cash, stock-based compensation
      charges of $6.0 million and $7.5 million, respectively, related mainly
      to the 'Make Good' provision of an October 2008 financing agreement.
      Note that taxes were accrued in 2007 with none in 2008.
    ** Adjusted Net Income and EPS in the Fiscal Year 2008 and 2007 are
       non-GAAP calculations and do not include non-cash, stock-based
       compensation charges of $17.7 million and $7.5 million, respectively,
       related mainly to the 'Make Good' provision of an October 2008
       financing agreement. Adjusted Net Income and EPS for fiscal year 2007
       were adjusted based on the normalized tax rate for 2007.
    *** Share count utilized for 2007 Q4 EPS Calculation was 19.7 million vs.
        the 25.1 million for Q4 2008

2008 Fourth Quarter Financial Results (unaudited)

Net revenues for the fourth quarter ended December 31, 2008 increased 136.5% to $40.8 million compared to $17.3 million for the fourth quarter in 2007. Revenue growth was driven by increased sales from all of the Company's product lines and revenues exceeded previously issued guidance by approximately 20%. Specifically during the fourth quarter, the Company recorded $30.1 million in revenue from desulphurization projects, an increase of 140.8% from $12.5 million in same period in 2007, $1.8 million in wastewater treatment system sales, an increase of 232.3% over fourth quarter of 2007, $2.8 million in sales of anti-oxidation equipment and coatings compared to $8,000 recorded in the same period of 2007, and $6.1 million in machining service revenues, an increase of 45.2% from the $4.2 million recorded in the same period of 2007.

Cost of goods sold for the fourth quarter of 2008 was $30.0 million compared to $9.1 million in the same period of 2007, an increase of 229.8%, which was driven mainly by increased sales, in addition to costs associated with hiring outside contractors in order to meet specific installation timelines, something the Company does not expect to be a recurring cost.

Gross profit was $10.8 million in the fourth quarter 2008 compared to $8.1 million for the same period in 2007, an increase of $2.6 million or 32.1%. Corresponding gross margins for the fourth quarters of 2008 and 2007 were approximately 26.4% and 47.2%, respectively. The decrease in gross margin is attributable to the higher costs incurred during the fourth quarter of 2008 in addition to the absence of higher margin royalty revenue which was present during 2007.

Total operating expenses for the fourth quarter of 2008 were $10.7 million versus $8.6 million for the same period in 2007. Excluding the non-cash equity compensation charge of $6.0 million and $7.5 million recorded during the fourth quarters of 2008 and 2007, respectively, operating income for the fourth quarters of 2008 and 2007 would have been $6.1 million and $7.0 million with operation margins of 14.9% and 40.7% respectively.

GAAP net income for the fourth quarter of 2008 was $1.0 million compared to a net loss of $1.2 million reported in the fourth quarter of 2007, representing diluted earnings per share of $0.04 and a negative $0.12 for the fourth quarter of 2007, based on 25.1 million and 19.7 million shares outstanding, respectively. Adjusted net income, excluding equity compensation expenses of $6.0 million and $7.5 million, respectively, was $7.0 million for the fourth quarter of 2008 compared to $6.3 million for fourth quarter of 2007, equating to earnings of $0.28 and $0.26 per diluted share, respectively. The Company accrued for taxes in 2007 and did not for 2008.

'We are pleased with our financial results for the fourth quarter and the fiscal year 2008,' stated Mr. Zou Dejun, President and CEO of RINO International, 'We have continued to deliver year-over-year growth in each of our product lines including our new anti-oxidation systems and coatings, while significantly increasing our customer base and geographic footprint in China. We are confident that the drivers in place, including increasing demand for environmental protection equipment supported by key government incentives, will enable us to deliver incremental revenue and earnings growth for our Company during 2009.'

    Full Year 2008 Results (Audited)

    Fiscal Year 2008 Revenue Breakdown
                                    FY 2008          FY 2007           CHANGE
    Waste Water Treatment    $ 14.4 million  $   7.0 million         +107.3 %
    % of Sales                        10.4%            11.0%
    Desulphurization
     Equipment              $ 105.3 million   $ 33.1 million         +217.7 %
    % of Sales                        75.6%            52.3%
    Anti-oxidation equipment
     & coatings               $ 5.7 million    $ 2.0 million         +192.3 %
    % of Sales                         4.1%             3.1%
    Machining services       $ 13.9 million   $ 11.9 million          +16.9 %
                                       9.9%            18.7%
    Other services                       --     $9.5 million         -100.0 %
                                                       14.9%
    Total Sales             $ 139.3 million   $ 63.4 million         +119.8 %

Revenue increased 119.8% to $139.3 million for the fiscal year ended December 31, 2008, as compared to $63.4 million for 2007. The Company's customer base was further diversified and revenue generation was much less concentrated as the top six customers accounted for 34.7% of the total gross revenues during 2008.

Gross profits for 2008 were $54.3 million compared to $30.5 million in 2007, an increase of 78.3%. Gross margins were 39.0% for 2008 compared to 48.1% in 2007, with the decrease related mainly to the absence of royalty based income recorded during 2007 and higher expenses for outsourcing incurred during the fourth quarter of 2008. Operating income for 2008 totaled $21.6 million, an increase of 36.8% compared to $15.8 million in 2007 with margins of 15.5% compared to 25.0% in 2007. Excluding the non-cash equity compensation charges of $17.7 million and $7.5 million incurred during 2008 and 2007, adjusted operating income for 2008 was $39.3 million, an increase of 68.7% from the $23.3 million in 2007. Adjusted operating margins were 28.2% for 2008 versus 36.8% for 2007 with 2007's margins being positively impacted by the high margin royalty revenue absent in 2008.

GAAP Net income was $21.3 million for the year ended December 31, 2008, an increase of $11.1 million, or approximately 108.3% compared to 2007. Earnings per diluted share in 2008 were $0.85, based on 25.1 million shares outstanding, compared to $0.52, based on 19.7 million shares outstanding, for 2007. Adjusted net income (Non GAAP), excluding the equity compensation charge and taking 2007 taxes into consideration, was $38.9 million, or $1.55 per diluted share for 2008 compared to $17.7 million, or $0.90 per diluted share for 2007. The Company surpassed its 'Make Good' target of $28.0 million in after tax net income.

'We have aggressively capitalized on the opportunity created by State Environmental Protection Agency (SEPA) mandates aimed at significantly reducing sulphur emitted by iron and steel producers by completing 25 desulphurization projects in 2008, making us the dominant industry player in China. Tax credits and subsidies for steel producers, in addition to fines related to strict emission enforcement, has driven rapid adoption and we currently estimate that there are still approximately 200 coal-fired sinters which still need to be equipped, creating over a billion dollar opportunity in this product segment alone. While large desulphurization systems will comprise the majority of our revenues for 2009, we are intently focused on further diversifying our business through increased sales of anti-oxidation equipment and the coatings which accompany it. In addition, we are enthusiastic about the opportunity for our new sludge treatment product which addresses a market significantly larger than our current product portfolio and will be formally introduced to the market during the next several months,' concluded Mr. Zou.

Balance Sheet and Cash Flow Discussion

Cash and cash equivalents as of December 31, 2008 were $19.7 million, representing an increase of 167.1% as compared to $7.4 million as of December 31, 2007, while short term debt stood at $8.8 million compared to none at the end of 2007. Accounts receivable stood at $51.5 million on December 31, 2008 with days sales outstanding of 115 compared to $19.2 million on December 31, 2007 and corresponding days sales outstanding of 102. Inventories and advances for inventory totaled $23.2 million on December 31, 2008. The Company generated $6.0 million in cash flow from operations for 2008, compared with $5.0 million cash used in operations in 2007. Stockholder's equity increased 182.4% to $66.9 million versus $23.7 million in 2007, with the associated book value on December 31, 2008 of approximately $2.67 per share compared to $0.95 in the year ago period.

2009 Guidance

Management is reiterating its revenue guidance for calendar 2009 of $176.5 million, representing at least 26.7% year-over-year growth. Revenue growth is projected in all of its business lines, including at least 10% for wastewater treatment, 50% for desulphurization, and 300% for anti-oxidation. Management believes gross and operating margins for 2009 will be similar to 2008, adjusted for non cash equity compensation expenses which will not be present during 2009, and may experience a slight improvement as a greater amount of anti-oxidation coating is produced and sold. Guidance does not include contributions from the Company's planned launch of its new sludge dehydration product. In addition, the Company believes that cash on hand, its $15 million bank line with Pudong Development Bank of Shanghai, and cash flow from operations will enable it to meet these projections.

Conference Call

The Company will host a conference call on April 3, 2009, at 10:00 am ET. To attend the call, please use the dial information below. When prompted, ask for the 'RINO International Call' and/or be prepared to provide the conference ID.

    Date:                           April 3, 2009
    Time:                           10:00 am ET
    Conference Line Dial-In (U.S.): +1 800-762-8779
    International Dial-In:          +1 480-248-5085
    Conference ID:                  4048548
    Webcast link:                   http://viavid.net/dce.aspx?sid=00006153

Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through April 9th, 2009. To listen, please call 800-406-7325 within the United States or +1 303-590-3030 when calling internationally. Utilize the pass code 4048548 for the replay.

About RINO International Corporation

RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ('Dalian Rino') and Dalian Rino Environment Project Design Co., Ltd., a wholly-owned subsidiary of Dalian Rino, is a leading provider of environmental protection equipment for the iron and steel industry in China. Specifically, RINO designs, manufactures, installs and services proprietary and patented wastewater treatment, flue gas desulphurization equipment, and high temperature anti-oxidation systems, which are all designed to reduce either industrial pollution and/or improve energy utilization. RINO's manufacturing facility maintains the ISO 9001 Quality Management System and ISO 14001 Environment Management System certifications, in addition to receiving numerous government and industry awards.

Additional information about the Company is available at the Company's website: http://www.rinogroup.com .

Cautionary Statement Regarding Forward-Looking Information

Certain statement in this press release may contain forward-looking information about the Company. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as 'believe,' 'expect,' 'may,' 'will,' 'should,' 'project,' 'plan,' 'seek,' 'intend,' or 'anticipate' or the negative thereof or comparable terminology, and statements which may include discussions of strategy, and statements about industry trends future performance, operations and products of each of the entities referred to above. Actual performance results may vary significantly from expectations and projections as a result of various factors, including, without limitation, the risks set forth 'Risk Factors' contained in the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and the Company's Registration Statement on Form SB-2, as amended, filed with the SEC on November 19, 2007.

    For more information, please contact:

    For the Company:
     Amy Qiu
     Tel:   +86-411-8766-1233
     Email: aqiu@rinogroup.com

    Investors:
     Matt Hayden
     HC International, Inc.
     Tel:   +1-561-245-5155
     Email: matt.hayden@hcinternational.net



                 RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                         AS OF DECEMBER 31, 2008 AND 2007

                                                     2008             2007
    ASSETS

    CURRENT ASSETS
    Cash and cash equivalents                     $19,741,982      $7,390,631
    Restricted cash                                 1,030,317       1,000,000
    Notes receivable                                2,157,957         202,670
    Accounts receivable                            51,503,245      19,222,133
    Costs and estimated earnings in
     excess of billings on uncompleted
     contracts                                             --       2,818,122
    Inventories                                     1,203,448         178,480
    Advances for inventory purchase                21,981,669      12,092,202
    Other current assets and prepaid
     expenses                                         517,847       1,174,464
    Total current assets                           98,136,465      44,078,702

    PROPERTY, PLANT AND EQUIPMENT, NET             13,197,119      11,000,581

    OTHER ASSETS
    Accounts receivable (non-current)                      --       1,618,203
    Prepaid expenses (non-current)                     73,350          95,706
    Advances for equipment and
     construction material purchase                 5,550,966       3,751,343
    Prepayment for land use right                     458,292         428,301
    Intangible assets, net                          1,211,608       1,190,289
    Total other assets                              7,294,216       7,083,842

    Total assets                                 $118,627,800     $62,163,125

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES
    Accounts payable                               $5,816,714      $2,534,858
    Short-term loan                                 8,802,000              --
    Customer deposits                               3,609,407         116,214
    Liquidated damages payable                      2,598,289       1,000,000
    Other payables and accrued
     liabilities                                      746,267         686,031
    Due to a stockholder                              596,023         106,963
    Taxes payable                                   5,062,901       9,541,603
    Total current liabilities                      27,231,601      13,985,669

    REDEEMABLE COMMON STOCK ($0.0001 par
     value, 5,464,357 shares issued with
     conditions for redemption outside
     the control of the company)                   24,480,319      24,480,319

    COMMITMENTS AND CONTINGENCIES                          --              --

    SHAREHOLDERS' EQUITY
    Preferred Stock ($0.0001 par value,
     50,000,000 shares authorized,  none
     issued and outstanding)                               --              --
    Common Stock ($0.0001 par value,
     10,000,000,000 shares authorized,
     25,040,000 and 25,000,000 shares
     issued and outstanding as of
     December 31, 2008 and 2007,
     respectively)                                      2,504           2,500
    Additional paid-in capital                     25,924,007       8,221,663
    Retained earnings                              28,570,948      11,376,163
    Statutory reserves                              6,196,478       2,109,539
    Accumulated other comprehensive
     income                                         6,221,943       1,987,272
    Total shareholders' equity                     66,915,880      23,697,137
    Total liabilities and shareholders'
     equity                                      $118,627,800     $62,163,125



                 RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

                                                       2008             2007
    REVENUES:
    Contracts                                  $119,920,874      $42,073,308
    Services                                     19,422,523       21,313,500
                                                139,343,397       63,386,808

    COST OF SALES
    Cost of contracts                            74,247,181       24,170,825
    Cost of services                             10,099,616        8,178,852
    Depreciation                                    662,436          571,267
                                                 85,009,233       32,920,944

    GROSS PROFIT                                 54,334,164       30,465,864

    OPERATING EXPENSES
    Selling, general and administrative
     expenses                                    14,760,562        6,565,640
    Research and development                        245,920          581,846
    Stock compensation expense                   17,678,080        7,499,520
    TOTAL OPERATING EXPENSES                     32,684,562       14,647,006

    INCOME FROM OPERATIONS                       21,649,602       15,818,858

    OTHER INCOME -EXPENSE), NET
    Other income                                     75,914           12,926
    Interest income                                 130,181           32,065
    Interest expense                               (513,830)        (564,353)
    Other expenses                                  (60,143)         (55,917)
    TOTAL OTHER EXPENSES, NET                      (367,878)        (575,279)

    INCOME BEFORE PROVISION FOR INCOME
     TAXES                                       21,281,724       15,243,579

    PROVISION FOR INCOME TAXES                           --        5,024,774

    NET INCOME                                   21,281,724       10,218,805

    OTHER COMPREHENSIVE INCOME:
    Foreign currency translation
     adjustment                                   4,234,671        1,789,994

    COMPREHENSIVE INCOME                        $25,516,395      $12,008,799

    WEIGHTED AVERAGE NUMBER OF SHARES:
    Basic                                        25,040,000       19,611,510
    Diluted                                      25,148,178       19,694,481

    EARNINGS PER SHARE:
    Basic                                             $0.85            $0.52
    Diluted                                           $0.85            $0.52



                 RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007

                                                   2008               2007
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                 $21,281,724        $10,218,805
    Adjusted to reconcile net income to
     cash provided by -used in)
     operating activities:
    Depreciation                                   806,625            658,937
    Amortization                                    65,651             11,654
    Imputed interest                                24,268             33,019
    Amortization of  long term prepaid
     expense                                        28,830             42,667
    Stock compensation expense                  17,678,080          7,586,724
    Liquidated damage expense                    1,598,289                 --
    Changes in operating assets and
     liabilities
    Notes receivable                            (1,906,766)                --
    Accounts receivable                        (28,635,455)       (14,435,613)
    Costs and estimated earnings in
     excess of billings on uncompleted
     contracts                                   2,971,223         (2,705,985)
    Inventories                                   (994,352)           (57,130)
    Advances for inventory purchase             (8,850,435)       (11,337,385)
    Other current assets and prepaid
     expenses                                      512,905         (1,043,339)
    Accounts payable                             3,043,036         (1,525,537)
    Customer deposits                            3,424,139                 --
    Other payables and accrued
     liabilities                                    12,662           (138,641)
    Taxes payable                               (5,085,079)         8,393,777
    Deferred tax liabilities                            --           (672,947)
    Net cash provided by -used in)
     operating activities                        5,975,345         (4,970,994)

    CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property and equipment          (2,176,132)          (831,886)
    Advances for construction material
     and equipment purchase                     (1,283,107)        (3,053,405)
    Prepayment for land use right                       --           (410,125)
    Purchase of intangible assets                       --           (380,717)
    Net cash used in investing
     activities                                 (3,459,239)        (4,676,133)

    CASH FLOWS FROM FINANCING ACTIVITIES
    Contribution by stockholders                        --              1,780
    Net proceeds from redeemable
     preferred stock issuance in private
     placement                                          --         22,253,722
    Payment on due to shareholder                       --           (361,098)
    Proceeds from shareholder advances             472,979                 --
    Increase of restricted cash                    (30,317)        (1,000,000)
    Proceeds from short-term bank loan          15,712,000                 --
    Repayment of short-term bank loan           (7,310,000)        (7,876,910)
    Net cash provided by financing
     activities                                  8,844,662         13,017,494

    EFFECT OF EXCHANGE RATE ON CASH                990,583            415,914

    INCREASE IN CASH AND CASH
     EQUIVALENTS                                12,351,351          3,786,281

    CASH AND CASH EQUIVALENTS, beginning         7,390,631          3,604,350

    CASH AND CASH EQUIVALENTS, ending          $19,741,982         $7,390,631

    Cash paid during the period for:
    Interest                                      $480,902           $531,334
    Income taxes                                $5,434,122           $519,258

SOURCE RINO International Corp.