NEW YORK, May 15 /PRNewswire-FirstCall/ -- Tiens Biotech Group (USA), Inc. (“the Company” or “Tiens”), , www.tiens-bio.com, announced financial results for the first quarter ended March 31, 2007.
Revenue for the first quarter of 2007 was $16.2 million, compared to $16.7 million for the first quarter of 2006.
Net income for first quarter of 2007 was $6.6 million, compared to net income of $6.8 million for first quarter of 2006. Earnings per share for both first quarter 2007 and 2006 were $0.09.
Revenue by Region
For the first quarter of 2007, revenue in China was $7.2 million, a decrease of 15.8% compared to the first quarter of 2006.
In China, Tiens sells its products to Tianjin Tianshi Biological Engineering Co., Ltd. (“Tianshi Engineering”), an affiliated Chinese company. In order to qualify for a direct selling license in China, Tianshi Engineering is required to produce a part of the products that it sells in China. As a result, in 2006, Tiens began to sell semi-finished products to Tianshi Engineering, which jointly shares licenses with Tiens to produce, manufacture and sell the products. The semi-finished products, which we are now exclusively selling in China, have lower sales prices than the finished products we had previously sold to Tianshi Engineering.
In addition, management believes that sales to China were negatively impacted by other factors, including:
* continued consumer uncertainty in China regarding the impact of direct selling regulations and uncertainty regarding the timing of the direct selling license application process and approval; and * increased government and media scrutiny on the direct selling industry, particularly following last year’s publication of the new direct selling regulations.
The application of Tianshi Engineering for a direct selling license in China is still pending.
First quarter 2007 international revenue was $9.0 million, an increase of 10.7% compared to 2006. The increase in international revenue was mainly due to significant sales increases in Russia, as well as strong revenue growth in South Africa, Congo, Colombia, Hungary, Kazakhstan, Malaysia, Ecuador, Kenya and Moldova.
Other Highlights
Cost of sales for the first quarter of 2007 was $4.4 million, a decrease of 7.7%, compared to $4.8 million for the first quarter of 2006. This decrease was primarily due to economies of scale related to the increase in international sales.
Gross profit for the first quarter of 2007 was $11.8 million compared to $11.9 million for the first quarter of 2006. The gross profit margin for the first quarter of 2007 was 72.7% compared to 71.3% for the first quarter of 2006.
Selling, general and administrative expenses were $3.2 million for the first quarter of 2007 compared to $2.6 million for the first quarter of 2006. The increase was primarily due to an increase in the number of employees and in the level of salaries, which were increased during the second quarter of 2006. These increases have also been made in anticipation of Tianshi Engineering receiving a direct selling license in China and the related increase in sales and marketing efforts which management believes will follow. The selling and administrative expenses as a percentage of sales was 19.8% for the first quarter of 2007 compared to 15.3% for the first quarter of 2006.
Tiens continues to strive to expand its market share in China through the branches, chain stores, and Chinese affiliated companies of Tianshi Engineering. To enhance its position in this competitive market, Tianshi Engineering continues to increase its marketing activities in China, including opening additional branches across China, developing a nation-wide advertising campaign, encouraging media coverage and strengthening the Tiens brand.
As of March 31, 2007, Tiens USA had $101.9 million of retained earnings and total shareholders’ equity of $127.3 million.
Tiens Yihai
In March 2007, Tiens received notice that the Local Government had significantly reduced its approval of land use rights for the Tiens Yihai property. As a result of the reduction in the number of acres for which we have received land use rights and continued uncertainty relating to the Tiens Yihai project, management has suspended development of the project. Tiens is currently reviewing alternative commercial uses for the Tiens Yihai site, as well as the possibility of selling the land use rights to a third party.
Tiens is also currently considering the possible acquisition of an alternative 80 acre site located in the Wuqing economic development area of Tianjin, China. The property is located approximately seven kilometers from Tiens’ corporate headquarters and manufacturing facility.
Jinyuan Li, Chairman, President and CEO of Tiens, said, “Tiens continued to generate an increase in international revenue in the first quarter and experienced only a slight decrease in revenue despite the challenging direct selling regulatory environment in China. The decision to suspend the development of the Tiens Yihai property is due to continued delays in the approval process and downsizing of the project by the local government. We are currently reviewing the possible acquisition of a site near our existing Tiens corporate headquarters. We remain positive in our long-term outlook for the Company as we continue to invest in the future and strive to enhance shareholder value.”
About Tiens Biotech Group (USA), Inc. www.tiens-bio.com.
Tiens Biotech Group (USA), Inc. conducts its business operations from Tianjin, People’s Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary nutrition supplement products, and personal care products.
Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 63 countries. Since its establishment, Tiens has developed and produced 35 nutrition supplements, which include wellness products and dietary nutrition supplements. Tiens has also developed and produced 25 personal care products, which include skin care products and personal washing products. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.
In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens’ products in China through chain stores, domestic affiliated companies, and its 111 branches. Outside of China, Tiens sells its products to affiliated companies in 63 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company’s direct sales marketing program is subject to governmental regulation in each of these countries.
Certain statements in this press release constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward- looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company’s future operating results are dependent upon many factors, including but not limited to the Company’s ability to: (i) obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company’s control; (iv) whether Tianshi Engineering, the Company’s affiliate which sells its products in China, obtains a direct selling license in China; and (v) other risk factors discussed in the Company’s periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under “Search for Company Filings.”
CONTACT: Investor Relations Carl Hymans Tiens Biotech Group (USA), Inc. G. S. Schwartz & Co. Tel: +86-22-8213-7915 Tel: 212-725-4500 Fax: +86-22-8213-7667 Fax: 212-725-9188 Email: investor@tiens-bio.com Email: carlh@schwartz.comhttp://www.tiens-bio.com -Tables Follow- TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED) 2007 2006 REVENUE - RELATED PARTIES $ 16,236,789 $ 16,722,560 COST OF SALES 4,435,599 4,806,296 GROSS PROFIT 11,801,190 11,916,264 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 3,222,756 2,566,422 INCOME FROM OPERATIONS 8,578,434 9,349,842 OTHER INCOME (EXPENSE), net 447,613 (37,721) INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST 9,026,047 9,312,121 PROVISION FOR INCOME TAXES 711,010 733,531 INCOME BEFORE MINORITY INTEREST 8,315,037 8,578,590 MINORITY INTEREST 1,753,218 1,808,881 NET INCOME 6,561,819 6,769,709 OTHER COMPREHENSIVE INCOME: Foreign currency translation adjustment 1,275,061 717,827 COMPREHENSIVE INCOME $ 7,836,880 $ 7,487,536 EARNINGS PER SHARE, BASIC AND DILUTED $ 0.09 $ 0.09 WEIGHTED AVERAGE NUMBER OF SHARES 71,333,586 71,333,586 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2007 AND DECEMBER 31, 2006 A S S E T S March 31, December 31, 2007 2006 (Unaudited) (Audited) CURRENT ASSETS: Cash $ 50,926,651 $ 54,270,065 Accounts receivable, trade - related parties, net of allowance for doubtful accounts of $83,958 and $86,776 as of March 31, 2007 and December 31, 2006, respectively 16,707,575 12,926,670 Accounts receivable, trade - third parties 18,319 18,135 Inventories 6,258,266 6,845,108 Other receivables 304,927 349,905 Other receivables - related parties 7,855,811 8,397,227 Employee advances 103,929 111,121 Prepaid expense 2,265,153 2,135,917 Total current assets 84,440,631 85,054,148 PLANT AND EQUIPMENT, net 32,351,061 30,511,319 OTHER ASSETS: Intangible assets, net 3,021,408 510,183 Long-term prepaid expenses 4,747,661 7,031,348 Loans receivable - related party 26,256,356 25,640,000 Total other assets 34,025,425 33,181,531 Total assets $ 150,817,117 $ 148,746,998 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2007 AND DECEMBER 31, 2006 L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y March 31, December 31, 2007 2006 (Unaudited) (Audited) CURRENT LIABILITIES: Accounts payable $ 3,258,547 $ 4,123,105 Advances from customers - related parties 1,542,768 1,570,120 Wages and benefits payable 989,889 992,068 Other taxes payable 1,379,199 969,760 Other payables 352,170 500,213 Other payables - related parties 202,027 522,105 Dividend payable to minority interest 240,728 238,311 Current portion of long term debt, related party 2,130,000 2,130,000 Total current liabilities 10,095,328 11,045,682 LONG TERM DEBT, net of current portion, related party 6,397,742 6,397,742 Total liabilities 16,493,070 17,443,424 MINORITY INTEREST 7,066,916 11,883,323 SHAREHOLDERS’ EQUITY: Common stock, $0.001 par value, 260,000,000 shares authorized, 71,333,586 issued and outstanding, respectively 71,334 71,334 Paid-in-capital 8,842,009 8,842,009 Statutory reserves 9,420,783 9,420,783 Retained earnings 101,932,956 95,371,137 Accumulated other comprehensive income 6,990,049 5,714,988 Total shareholders’ equity 127,257,131 119,420,251 Total liabilities and shareholders’ equity $ 150,817,117 $ 148,746,998 TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES REVENUE BY REGION (Unaudited) Three months ended March 31, 2007 2006 Change China $ 7,210,301 $ 8,566,617 -15.8% International $ 9,026,488 $ 8,155,943 10.7% Total $ 16,236,789 $ 16,722,560 -2.9%
Tiens Biotech Group (USA), Inc.
CONTACT: Investor Relations: Tiens Biotech Group (USA), Inc.,+86-22-8213-7915, Fax: +86-22-8213-7667, investor@tiens-bio.com; or CarlHymans of G. S. Schwartz & Co., +1-212-725-4500, Fax: +1-212-725-9188,carlh@schwartz.com, for Tiens Biotech Group (USA), Inc.
Web site: http://www.tiens-bio.com/
