-- Revenue Increased 74.0% to $59.0 Million in 2Q08 --
-- 2Q08 Net Income Increased 43.4% to $13.9 Million --
-- 2Q08 Diluted EPS $0.18 versus 2Q07 Diluted EPS $0.15 --
NEW YORK, Aug. 12 /Xinhua-PRNewswire/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter (“OTC”) products in China, today announced financial results for the quarter ended June 30, 2008.
Revenue in the second quarter of 2008 increased 74.0% year over year to $59.0 million from $33.9 million, reflecting a continued increase in demand for the Company’s OTC and prescription pharmaceutical products. Revenue from pharmaceutical products increased 91.5% to $49.8 million from $26.0 million in the second quarter of 2007. Revenue from OTC pharmaceutical products increased 102.9% to $29.4 million from $14.5 million in the prior year’s second quarter, reflecting continued recognition of the Company’s new products supported by effective marketing campaigns. Sales generated by CCXA and Boke, which were not subsidiaries in the second quarter of 2007, were major contributors to the increase in OTC sales and generated a combined $13.4 million of revenue during the second quarter of 2008. Strong sales of the Jinji series and Jinji Yimucao products also contributed to the increase in OTC revenue during the second quarter of 2008. Prescription pharmaceutical products generated $20.4 million in revenue during the second quarter of 2008, a 77.2% year over year increase, driven by sales of Shuanghuanglian Injection Powder and Cease Enuresis Soft Gel. We believe that our continous marketing efforts, increased brand recognition and effective pricing strategy, as well as expanding rural market coverage drove prescription pharmaceutical revenue performance during the second quarter of 2008. Nutraceutical product revenue increased approximately 17% to $9.2 million in the second quarter of 2008 from $7.9 million in the prior year’s period, and decreased as a percentage of total revenue to approximately 15.6% versus 23.3% in the comparable period. The increase in Nutraceutical revenue was mainly attributed to the increase in sales of peptide tablets and peptide powder. The Company continues to focus on selling and marketing higher growth pharmaceutical products.
Gross profit in the second quarter of 2008 increased 69.1% to $40.1 million from $23.7 million in the second quarter of 2007. Gross margin was approximately 67.9%, compared to 69.9% in the prior year’s period, reflecting a shift in product mix.
For the second quarter of 2008, operating expenses increased 75.5% to $21.4 million from $12.2 million in the comparable period of 2007. The increase in operating expenses was primarily due to increases of $3.8 million in sales and marketing expenses, $2.7 million in general and administrative expenses as well as additional depreciation and amortization costs due to the Boke and CCXA acquisitions. Income from operating in the second quarter of 2008 increased 62.4% to $18.7 million from $11.5 million in the second quarter of 2007, while operating margin was 31.7%, compared to 33.9% in the second quarter of the prior year.
Net income for the second quarter of 2008 increased 43.4% to $13.9 million, or $0.18 per diluted share, compared to $9.7 million, or $0.15 per diluted share, in the prior year’s period. Net income for the second quarter of 2008 includes the impact of $0.6 million in loss from unconsolidated entities, related to the Company’s minority ownership in China Aoxing. Diluted share count in the second quarter of 2008 was 78.2 million, compared to 66.6 million in the second quarter of 2007.
Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented “We are very pleased with our financial performance in the second quarter of 2008. All of our product categories exhibited strong sales and we believe that our performance is the result of promoting effective marketing and branding of our products and the expansion into rural markets. We believe that our six month performance speaks to the effectiveness of our acquisition strategy. For the six month period in 2008, OTC revenue was up 117% versus the year before, with $23.4 million of incremental revenue from CCXA and Boke integrations. We also generated $28.4 million of operating cash flow, an increase of 77.3% from the same period of last year.”
Mr. Liu concluded, “We continue to anticipate revenue growth in 2008 of at least 50 percent, and expect to reach total revenue of at least $245.0 million in the full year 2008. This anticipated year over year top line growth reflects continued demand for our leading products, and particularly our success with CCXA and Boke integrations. We also anticipate net income performance of at least $62.0 million, which reflects anticipated year over year net income growth of more than 44%. This full year financial guidance excludes interest expense related to the July 2008 convertible financing and excludes the financial impact of any pending acquisitions or LOIs. On that note, we remain dedicated to our goal of building a leading pharmaceutical business in China. Today we have signed an LOI and we are in the process of negotiating a large acquisition of a pharmaceutical distribution company located in China, which we believe will bolster the reach of our distribution network. We intend to move quickly and efficiently on the acquisition front and we’ll strive to work responsibly and aggressively on behalf of our shareholders.”
The Company will hold a conference call at 5:00 pm ET on August 11, 2008 to discuss its fiscal second quarter 2008 results. Listeners may access the call by dialing 1-800-599-9816 or 1-617-847-8705 for international callers, access code: 41757592. A webcast will also be available through AOB’s website at http://www.bioaobo.com . A replay of the call will be available through August 18, 2008. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 95123746.
About American Oriental Bioengineering Inc.
American Oriental Bioengineering Inc. is a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products in China.
Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company’s filings with the Securities and Exchange Commission, including the Form 10-Q for the quarter ended June 30, 2008, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
JUNE 30, DECEMBER 31,
2008 2007
(UNAUDITED)
CURRENT ASSETS
Cash and cash equivalents $ 144,473,275 $ 166,410,075
Accounts receivable, net of
reserve of $176,962 and $302,270
at June 30, 2008 and December 31,
2007, respectively 17,332,076 16,494,619
Inventories, net 18,968,955 12,264,536
Advances to suppliers 2,984,896 4,309,352
Notes receivable 691,872 2,259,616
Refundable deposit 6,368,222 --
Other current assets 534,169 5,134,118
Total Current Assets 191,353,465 206,872,316
LONG-TERM ASSETS
Plant and equipment, net 50,561,819 48,496,760
Land use rights, net 48,732,647 46,310,240
Deposit for long-term assets 34,852,986 --
Construction-in-progress 776,947 755,614
Deferred tax assets 1,866,111 1,498,481
Other intangible assets, net 26,232,600 26,972,166
Goodwill 22,566,768 22,566,768
Investment and advances in
unconsolidated entities 19,318,730 242,551
Other long-term assets 290,000 --
Total Long-Term Assets 205,198,608 146,842,580
TOTAL ASSETS $ 396,552,073 $ 353,714,896
LIABILITIES AND SHAREHOLDERS’ EQUITY
JUNE 30, DECEMBER 31,
2008 2007
(UNAUDITED)
CURRENT LIABILITIES
Accounts payable $ 4,671,462 $ 3,436,352
Other payables and accrued expenses 8,281,952 7,786,157
Taxes payable 3,766,436 2,843,719
Short-term bank loans 6,694,025 6,289,222
Current portion of long-term bank
loans 2,958,324 2,374,565
Other liabilities 2,711,988 3,621,030
Deferred tax liabilities 358,529 109,733
Total Current Liabilities 29,442,716 26,460,778
LONG-TERM LIABILITIES
Long-term bank loans, net of current
portion 828,879 1,263,483
Long-term notes payable 296,668 286,365
Deferred tax liabilities 16,713,352 12,621,180
Total Long-Term
Liabilities 17,838,899 14,171,028
TOTAL LIABILITIES 47,281,615 40,631,806
COMMITMENTS
SHAREHOLDERS’ EQUITY
Preferred stock, $0.001 par value;
2,000,000 shares authorized;
1,000,000 shares issued and
outstanding at June 30, 2008 and
December 31, 2007, respectively 1,000 1,000
Common stock, $0.001 par value;
150,000,000 shares authorized;
78,249,264 and 77,991,935 shares
issued and outstanding at June 30,
2008 and December 31, 2007,
respectively. 78,249 77,992
Common stock to be issued 182,332 1,611,333
Additional paid-in capital 195,253,082 193,007,987
Retained earnings (the restricted
portion of retained earnings is
$15,910,685 at June 30, 2008 and
December 31, 2007, respectively 125,399,613 102,117,792
Accumulated other comprehensive
income 28,356,182 16,266,986
Total Shareholders’ Equity 349,270,458 313,083,090
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY $ 396,552,073 $ 353,714,896
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
2008 2007 2008 2007
REVENUES $ 59,010,005 $ 33,913,234 $ 97,778,603 $ 59,662,608
COST OF GOODS
SOLD 18,928,447 10,210,485 31,406,083 18,240,539
GROSS PROFIT 40,081,558 23,702,749 66,372,520 41,422,069
Selling and
marketing 7,687,892 3,886,564 12,717,600 6,590,035
Advertising 7,452,231 5,412,510 11,846,572 9,237,855
General and
administrative 5,253,274 2,557,805 9,165,957 5,495,949
Depreciation
and
amortization 1,010,461 341,562 1,987,671 675,836
Total
operating
expenses 21,403,858 12,198,441 35,717,800 21,999,675
INCOME FROM
OPERATIONS 18,677,700 11,504,308 30,654,720 19,422,394
EQUITY IN
EARNINGS
(LOSS) FROM
UNCONSOLIDATED
ENTITIES (640,008) 3,888 (641,067) 11,000
INTEREST
INCOME
(EXPENSE), NET (30,616) 43,048 (13,769) 17,238
OTHER INCOME
(EXPENSE), NET (255,770) 56,952 (356,502) 131,958
INCOME BEFORE
INCOME TAXES 17,751,306 11,608,196 29,643,382 19,582,590
INCOME TAXES 3,891,614 1,939,825 6,361,562 3,464,773
NET INCOME 13,859,692 9,668,371 23,281,820 16,117,817
OTHER
COMPREHENSIVE
INCOME
Foreign
currency
translation
gain, net
of tax 5,154,761 1,468,243 12,089,196 2,279,042
TOTAL OTHER
COMPREHENSIVE
INCOME, NET
OF TAX 5,154,761 1,468,243 12,089,196 2,279,042
COMPREHENSIVE
INCOME $ 19,014,453 $ 11,136,614 $ 35,371,016 $ 18,396,859
NET INCOME
PER SHARE
BASIC $ 0.18 $ 0.15 $ 0.30 $ 0.25
DILUTED $ 0.18 $ 0.15 $ 0.30 $ 0.24
WEIGHTED
AVERAGE
NUMBER OF
SHARES
OUTSTANDING
BASIC 78,223,659 65,144,311 78,207,405 64,877,916
DILUTED 78,223,659 66,600,080 78,208,181 66,483,294
