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China Botanic Reports Third Quarter Fiscal Year 2012 Results



9/20/2012 10:39:58 AM

HARBIN, China, Sept. 19, 2012 /PRNewswire/ -- China Botanic Pharmaceutical Inc. (NYSE AMEX: CBP) ("China Botanic" or the "Company"), a developer, manufacturer and distributor of botanical products, bio-pharmaceuticals and Traditional Chinese Medicines ("TCM") in China, today announced financial results for the three months ended July 31, 2012.

Third Quarter Fiscal 2012 Highlights

  • Net sales increased 21.8% year over year to $15.1 million
  • Gross profit increased 19.0% year over year to $8.9 million with gross margin of 58.9%
  • Operating income increased 26.8% year over year to $3.8 million with operating margin of 25.1%
  • Net income rose 29.2% to $3.3 million, or $0.09 per diluted share, from $2.5 million, or $0.07 per diluted share, in the third quarter of fiscal 2011
  • In July 2012, China Botanic was granted a new patent on its advanced proprietary Schisandra Lignin extraction method

Nine Months Fiscal 2012 Highlights

  • Net sales increased 22.9% year over year to $66.2 million
  • Gross profit increased 19.8% year over year to $38.8 million with gross margin of 58.6%
  • Operating income increased 21.1% year over year to $27.4 million with operating margin of 41.4%
  • Net income rose 13.9% to $23.4 million, or $0.63 per diluted share

Third Quarter Fiscal Year 2012 Results

During the three months ended July 31, 2012, net revenue increased by 21.8% to $15.1 million from $12.4 million in the same period of 2011. Sales volume and revenue increased in all product categories during the quarter largely due to growing market acceptance of the Company's Siberian Ginseng Series products, Compound Yangjiao Tablets, Tianma Series and Compound Honeysuckle Granules as a result of sales promotions and other marketing efforts.

Gross profit increased 19.0% to $8.9 million compared to $7.5 million in the second quarter of fiscal 2011. Gross margin declined to 58.9% as compared to 60.3% in the same period last year. The year-over-year decline in gross margin for the quarter was primarily due to increases in average raw material prices as a result of inflation and sales tax and additions.

Operating expenses for the three months ended July 31, 2012 increased 13.8% to $5.1 million, compared to $4.5 million in the year ago period. As a percentage of revenue, operating expenses decreased to 33.8% of total revenue from 36.2% in the year ago period. Sales and marketing expenses rose 17.5% to $1.8 million from $1.6 million a year ago, as the Company strengthened its TV advertising efforts in Heilongjiang province during the quarter to enhance market recognition of its botanic anti-depression series. General and administrative expenses increased 10.7% to $1.4 million from $1.2 million in the year-ago period. The increase was largely due to increases in depreciation expense and medical insurance premiums. Research and development expenses were approximately $1.9 million, up 12.7% from approximately $1.7 million in the year ago period.

Operating income increased 26.8% to $3.8 million, compared to $3.0 million in the third quarter of fiscal 2011. Operating margin increased year-over-year to 25.1% from 24.1%.

The Company incurred income tax expenses of $0.6 million in the third quarter of fiscal 2012, compared to $0.5 million for the comparable period in 2011.

Net income increased 29.2% year over year to $3.3 million, or $0.09 per diluted share, from $2.5 million, or $0.07 per diluted share for the same period a year ago.

Nine Months Fiscal 2012Results

For the nine months ended July 31, 2012, total net revenue was $66.2 million, an increase of 22.9% from $53.9 million from the same period of fiscal year 2011. Gross profit for the nine months ended July 31, 2012 rose 19.8% year over year to $38.8 million, representing a gross margin of 58.6% as compared to 60.2% in the year-ago period. Operating income grew 21.1% year-over-year to $27.4 million. In the nine months ended July 31, 2012, net income was $23.4 million or $0.63 per diluted share, up from $20.5 million or $0.54 per diluted share in the nine months ended July 31, 2011.

Financial Condition

As of July 31, 2012, China Botanic had cash of approximately $41.3 million and total current assets of approximately $73.9 million. The Company had working capital of approximately $67.1 million on July 31, 2012, as compared to $40.8 million at the fiscal year ended October 31, 2011. The Company had no long-term debt on its balance sheet at the end of July 31, 2012. Shareholders' equity stood at $124.0 million, compared to $99.7 million as of October 31, 2011. Net cash flow from operating activities for the nine months ended July 31, 2012 was $25.2 million compared to $26.4 million for the same period of 2011.

The Company has total capital commitments of $32.9 million to be paid by end of 2013 for the purchase of Ah City Nature and Pharmaceutical Plant, undergrowth resources rights, product patents, an advertising contract and Ah City Phase Two construction-in-progress.

Business Outlook

For fiscal year 2012, China Botanic reaffirms its guidance of revenues of between $91.6 million and $93.1 million, representing an increase of 26% to 28% over fiscal year 2011 revenue of $72.7 million. The Company expects net income to be in the range of $32.7 million to $33.2 million, representing an increase of between 26% and 28% over fiscal year 2011 net income of $25.9 million.

"With our intensive sales and marketing efforts, we are expanding our distribution network throughout the PRC, improving our market share and raising awareness of our products. During the quarter, we experienced increased demand in all product categories and going forward we anticipate particularly strong demand for our leading Siberian Ginseng series products. We anticipate that we will be successful in becoming one of the PRC's essential medicine suppliers as the PRC government moves forward with its Health Reforms in 2012," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic.

"Our research efforts, Ah City expansion project and recently acquired new patents pave the way for our longer term growth and success. We continue to invest in development of Siberian Ginseng cultivation and extraction of effective components of this plant to develop new products and enhance our existing product portfolio. We expect Ah City Phase Two project to be completed at the end of 2013 to support our growing market demand, new product introductions and market expansion."

Conference Call

The Company will host a conference call at 9:00 a.m. Eastern Time on Thursday, September 20, 2012 to discuss financial results for the third quarter of fiscal year 2012 ended July 31, 2012.

To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-394-2209. International callers should dial 706-758-1481. The conference ID number for the call is 28057322.

If you are unable to participate in the call at this time, a replay will be available on Thursday, September 20, 2012 at 12:00 noon Eastern Time, through Monday, October 1, 2012. To access the replay, dial 855-859-2056. International callers should dial 404-537-3406. The conference ID number for the replay is 28057322.

About China Botanic Pharmaceutical Inc.

China Botanic Pharmaceutical Inc. is engaged in the research, development, manufacturing, and distribution of botanical products, bio-pharmaceutical products, and traditional Chinese medicines ("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. For more information, please visit www.renhuang.com.


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