SHENZHEN, China, Dec. 8, 2010 /PRNewswire-Asia-FirstCall/ --
Fourth- Quarter 2010 Highlights
- Revenue increased by 2.1% over Q4 FY09 to $28.2 million
- Gross profit increased by 5.8% over Q4 FY09 to $8.8 million
- Net income increased by 5.9% over Q4 FY09 to $3.1 million with EPS of $0.13
Full Fiscal Year 2010 Highlights
- Revenue increased by 16.9% YOY to $115.0 million
- Gross Profit increased 23.7% YOY to $34.6 million
- Net income increased 43.4% YOY to $13.1 million
- Net income per basic share increased 39.0% to $0.57
- Adjusted basic EPS increased 42.9% to $0.60 for the fiscal year 2010 versus $0.42for the fiscal year 2009
Winner Medical Group Inc. (Nasdaq: WWIN), a leading manufacturer of medical dressings, medical disposables and non-woven fabric made from 100% natural PurCotton® products in China, today reported consolidated financial results for the fourth quarter and full fiscal year ended September 30, 2010.
Fiscal Fourth Quarter 2010 Results (Amounts in USD millions) | ||||
Q4 FY2010 | Q4 FY2009 | % Change | ||
Net Sales | $28.2 | $27.7 | 2.1% | |
Cost of Sales | $19.4 | $19.3 | 0.5% | |
Gross Profit | $8.8 | $8.4 | 5.8% | |
Gross Margin | 31.3% | 30.2% | 3.6% | |
Net Income Attributable to Winner Medical Group Inc. | $3.1 | $2.9 | 5.9% | |
Basic EPS | $0.13 | $0.13 | - | |
Fiscal Year 2010 Results (Amounts in USD millions) | ||||
FY2010 | FY2009 | % Change | ||
Net Sales | $115.0 | $98.4 | 16.9% | |
Cost of Sales | $80.4 | $70.4 | 14.2% | |
Gross Profit | $34.6 | $27.9 | 23.7% | |
Gross Margin | 30.0% | 28.4% | 5.6% | |
Net Income Attributable to Winner Medical Group Inc. | $13.1 | $9.1 | 43.4% | |
Basic EPS | $0.57 | $0.41 | 39.0% | |
Mr. Jianquan Li, Chairman and Chief Executive Officer of Winner Medical, commented, “During the past year we made significant progress on several of our growth initiatives, which are evidenced in our full year results and stable gross margins. We are pleased with our full year results despite a challenging fourth quarter, a period where we experienced market effects from European debt crisis and rising raw material prices. Faced with these pressures, the Company increased its selling prices, to pass along raw material cost increases to customers, signed long term contracts with its raw material suppliers and entered into several cotton forward contracts to hedge future price fluctuations. During fiscal year 2010, we enhanced our production efficiencies and implemented more stringent cost controls, which enabled us to improve our margins and increase profitability.
“We are confident that the actions we have taken will yield further operating benefits during 2011. Our brand and competitive position continues to improve as rising commodity costs drive smaller competitors to reduce output. As we adjusted prices and gained additional market share by expanding distribution in China and abroad, we are confident in achieving our target of 20% to 30% revenue growth per annum,” Mr. Li concluded.
Fourth Quarter 2010 Unaudited Financial Results
Net Sales
For the fourth quarter of fiscal 2010, Winner Medical reported net sales revenue of $28.2 million, an increase of 2.1% compared to the same period last year. The slight increase was mainly due to the fact that sales to North and South America remained robust, which was driven by increased orders from American and Brazilian clients. However, this sales was offset by the high price of cotton at certain points during the fourth quarter 2010. In response, the Company increased its selling price to clients, who postponed orders as they relied on inventory for certain periods. Also, orders to Europe slowed as the debt crisis hit, and clients located in Greece and Spain in particular postponed or cancelled orders. As of December 8, 2010, most of the Company’s clients have accepted adjusted selling prices.
Gross Profit
For the fourth quarter of fiscal 2010, gross profit was $8.8 million, an increase of 5.8% over $8.4 million in the same period of fiscal 2009. Gross margin was 31.3%, versus 30.2% in the fourth quarter of fiscal 2009. Winner Medical’s gross margin remained unchanged due to progressively increasing its selling price. At the same time, the Company signed long term contracts with its raw material suppliers and purchased cotton futures contracts in the China futures exchange market, as a way to hedge against some of the volatility in the cost of cotton.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by 13.7% to $5.6 million in the fourth quarter of fiscal 2010, from $5.0 million in the fourth quarter of fiscal 2009. This increase was mainly due to the increase in transportation fees, growth in its sales force and expenses related to the opening of PurCotton retail stores.
Income Taxes
The income tax provision for the three months ended September 30, 2010 was $0.1 million, compared to $0.9 million for the same period in 2009. This decrease was mainly due to an accrued tax provision of $0.6 million in the fourth quarter of 2009 and a tax loss of $0.2 million in the fourth quarter of 2010 for Shenzhen PurCotton Technology Co., Ltd., a wholly-owned subsidiary which was established on December 7, 2009.
Net Income Attributable to Winner Medical Group Inc.
Net income attributable to Winner Medical Group Inc. increased by 5.9% to $3.1 million, or $0.13 per basic and diluted share, compared to net income of $2.9 million, or $0.13 per basic and diluted share, for the fourth quarter of last fiscal year. The slightly increase was mainly attributable to increases in selling prices in conjunction with rising cotton prices. At the same time, the Company adopted lean production management to reduce manufacturing unit cost and improve production efficiency.
Full Year Ended September 30, 2010 Audited Financial Results
Net Sales
Winner Medical reported a net sales revenue increase of 16.9% to $115.0 million for fiscal year 2010, versus $98.4 million in fiscal 2009. This increase was mainly attributable to increased sales orders from existing North and South American customers, and an increase in PurCotton® product sales to customers in China. The Company maintained solid growth in the first three quarters, in the Chinese and North and South American market in particular. However, in the fourth quarter, cotton prices parabolic hiked, which resulted in the Company having to adjust its selling prices. As such, clients postponed orders while ‘destocking’ their inventory. In addition, orders in Europe slowed as the economic impact from the sovereign debt crisis hit, and some clients postponed or cancelled orders, particularly those located in Greece and Spain.
Gross Profit
Gross profit increased by 23.7% to $34.6 million for the fiscal year ended September 30, 2010, from $27.9 million in fiscal 2009. Gross margins were 30.0%, an increase of 160 basis points from 28.4% in the same period of fiscal 2009, which was driven by the Company raising its selling prices. Meanwhile, the Company signed long-term contracts with raw material suppliers, and purchased cotton forward contracts, so that it maintained a higher gross margin than in fiscal year 2010.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by 20.7% to $20.4 million in the fiscal year 2010, from $16.9 million in fiscal 2009. Adjusted selling, general and administrative expenses (non- GAAP), which exclude share-based compensation expenses, for the fiscal year 2010 were $19.7 million, versus $16.6 million for the same period of 2009. The increase in selling expenses was primarily due to increases in transportation expenses, salaries and social insurance and leasing fees.
Income Taxes
The income tax provision for the fiscal year 2010 was $1.7 million, compared to $2.4 million in the same period of 2009, with the decrease mainly due to an accrued tax provision of $0.6 million in the fourth quarter of 2009 and a tax loss of $0.2 million in the fourth quarter of 2010 for Shenzhen PurCotton Technology Co., Ltd., a wholly-owned subsidiary, which was established on December 7, 2009.
Net Income Attributable to Winner Medical Group Inc.
For the fiscal year ended September 30, 2010, net income attributable to Winner Medical Group increased by 43.4% to $13.1 million, or $0.57 and $0.56 per basic and diluted share, respectively, compared to net income of $9.1 million, or $0.41 per basic and diluted share, for the fiscal year 2009. Adjusted net income attributable to Winner Medical Group Inc. (non-GAAP), which excludes share-based compensation expenses, was $13.8 million for fiscal year 2010, an increase of 25.1% from the same period of 2009. Excluding share-based compensation expenses, adjusted basic earnings per share (non-GAAP) was $0.60 for fiscal year 2010, versus $0.42 per share for the comparable period last year, an increase of 42.9%. The increase was driven by adopting effective methods to reduce the risk of cotton price fluctuation. In addition, the Company adopted lean production management to reduce manufacturing unit cost and improve production efficiency.
Balance Sheet
Cash and cash equivalents as of September 30, 2010 were approximately $14.8 million, compared with $9.5 million as of September 30, 2009. The Company’s working capital as of September 30, 2010 was $42.6 million, compared with $23.0 million last year. The Company’s total assets as of September 30, 2010 were approximately $119.0 million, compared with $100.9 million as of September 30, 2009 and total shareholder’s equity as of September 30, 2010 was approximately $105.8 million, compared with $82.1 million as of September 30, 2009. Net operating cash flow for the fiscal year ended September 30, 2010 was
