omniture

RINO International Announces Record Revenues for Its Third Quarter 2008

2008-11-11 17:23 713


DALIAN, China, Nov. 11 /Xinhua-PRNewswire-FirstCall/ --

-- Sales Increase 154.4% to $44.9 million, Net Income (excluding a

non-cash equity compensation charge) increases 267.7% to $15.7 million

with EPS of $0.63

-- Q3 gross margins were 45.8% and operating margins were 36.4%

(excluding non-cash compensation charge)

-- Sales for the First Nine Months of 2008 increased 113.6% to $98.5

million, Net Income (excluding a non-cash equity compensation charge)

increased 180% to $31.9 million with EPS of $1.27

-- Backlog increased to approximately $61.1 million with $29.4 million

expected to be recorded as sales during the fourth quarter

RINO International Corp. (OTC Bulletin Board: RINO), through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd. ("Innomind"), its

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 (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 its financial results for the third quarter of 2008 which ended September 30, 2008.

SUMMARY FINANCIALS

Third Quarter 2008 Results

Q3 2008 Q3 2007 CHANGE

Net Sales $44.9 million $17.6 million +154.4%

Gross Profit $20.6 million $7.3 million +180.6%

GAAP Net Income $9.9 million $4.3 million +131.0%

Net Income* $15.7 million $4.3 million +267.7%

GAAP EPS $0.39 $0.24 +62.5%

EPS (Fully Diluted) * $0.62 $0.24 +158.3%

* The asterisk denoted Net Income and EPS in the Q3 2008 column

above are non-GAAP calculations and do not include $5.8 million

in accrued non-cash, equity compensation charges related to the

founders 2008 "Make Good" provision.

Third Quarter of 2008 Results (Unaudited):

Net sales for the third quarter of 2008 increased 154.4% to $44.9 million compared to $17.6 million for the third quarter in 2007 and 29.7% sequentially. Revenue growth was driven predominantly by further demand for the Company's waste water treatment and flue gas desulphurization product lines. During the third quarter, the company recorded $37.7 million in desulphurization projects, an increase of 207.3% from $12.3 million in third quarter 2007, $4.4 million in wastewater treatment system sales, an increase of 86.9% over the $2.4 million recorded in third quarter 2007, $164,000 in anti-oxidation equipment and coatings compared to $156,000 recorded in the same period 2007, and $2.6 million in machining service revenues, a decline of 6.8% from the $2.8 million recorded in the same period 2007.

"We are extremely pleased to report another record quarter for net sales and net income. Our growth was principally driven by flue gas desulphurization project installations for clients such as Nanjing Iron & Steel, Tonghua Iron & Steel Group Co., Ltd. and Handan Iron & Steel Co. SEPA mandates to clean up China's air has proven to be a principal catalyst for adoption and since our desulphurization solution was first commercialized in late 2006, we have recorded approximately $108 million in sales for this product alone," stated Mr. Zou Dejun, President and CEO of RINO International.

Gross profit for the third quarter of 2008 was $20.6 million, compared to $7.3 million for the same period last year, yielding gross margins of 45.8% and 41.6% respectively. The 420 basis point improvement in gross margin reflects changes in product mix in addition to prudent management of key input materials, such as steel, utilized to build our products.

Operating expenses for the third quarter were $10.0 million compared to $2.2 million for the same period last year. The $7.8 million increase in operating expenses was largely led by a $5.8 million, non cash equity compensation charge related to the "make good" provision, which was not present in the 2007 third quarter results, a higher depreciation and amortization charge as the Company's asset base increased, and an increase in selling, general & administrative expense of approximately $1.2 million Dalian Innomind from $0.4 million for the three month period ended September 30, 2007 to $1.6 million for the same period in 2008 after Dalian Innomind was incorporated on July 9, 2007. Operating margins were 23.4% compared to 29.2% for the third quarter of 2007. Excluding this equity compensation charge, operating income would have been $16.4 million; representing a 218.0% increase from the year ago period and the operating margin for the second quarter of 2008 would have been 36.4%, a 720 basis improvement from the third quarter of 2007.

GAAP Net income for the third quarter of 2008 increased 131.0% to $9.9 million from $4.3 million in the same year ago period. Non GAAP Net income, excluding the $5.8 million charge in equity compensation expenses, was $15.7 million, which represented a 267.7% increase compared with same period in 2007. The company did not incur income taxes during the third quarter of 2008 due to Dalian Innomind's tax holiday, but did have a $0.75 million provision during the third quarter of 2007. Fully diluted earnings per share were $0.39 compared to $0.24 based on 25.2 million and 17.9 million diluted shares outstanding. The variance in shares relates to the capital raise and public merger which were effected in October of 2007. Excluding the non-cash charge for equity compensation, the Company would have reported third quarter 2008 fully diluted earnings of $0.62 per share.

"Third quarter gross margins were at the higher end of our previously disclosed target 40-45%. Excluding the non cash equity compensation charges, we delivered a significant increase in net income on both a comparable and sequential basis, despite incremental costs incurred to support a much higher revenue base," commented Dejun Zou, Rino International Corp.'s Chief Executive Officer. "As previously disclosed, the founders placed 3.91 million shares of common stock in escrow against a "net income make good" provision of $28 million, and EPS of $1.12 for 2008. The company estimated a non cash equity compensation charge of $17.5 million would be incurred during the 2008 year if the net income provision was surpassed, which year to date it has been. This also equates to an estimated $5.9 million charge during the fourth quarter. These expenses are non-cash, solely relate to our make good provisions, do not impact our diluted share count or capital structure and will not be present during 2009."

Nine Month Financial Results

During the nine month period which ended September 30, 2008, net sales increased to $98.5 million, up 113.6% from $46.1 million for the same period in 2007. Wastewater treatment sales nearly doubled to $12.6 million while flue gas desulphurization and ancillary equipment sales increase 263.4% to $75.2 million. Gross profit increased 95.2% to $43.6 million versus $22.3 million for the first nine month period of 2007. Gross margin was 44.2% for the nine months ended September 30, 2008 compared to 48.4% during the same period of 2007 with the majority of variance coming from the absence of revenue related to a higher margin licensing agreement which was in place during 2007. Operating income increased 32.4% to $21.6 million compared to $16.3 million in the nine month period of 2007. Excluding the $11.7 million equity compensation charge, operating income would have been $33.3 million, representing a 104.3% increase from the first nine months of 2007. The company did not have an income tax provision during the first nine months of 2008, but did incur a $4.4 million provision during the first nine month of 2007. GAAP net income for the nine months ended September 30, 2008 was $20.3 million or $0.81 per diluted share, up 77.1% from $11.4 million, or $0.64 per diluted share in the nine month period of 2007. Non GAAP net income, excluding the equity compensation charge, was $31.9 million, which equates to $1.27 per diluted share. 25.2 million and 17.9 million diluted shares were utilized for these calculations during the first nine months of 2008 and 2007, respectively.

Balance Sheet:

Cash and cash equivalents and restricted cash totalled $2.4 million on September 30, 2008 (including $1.0 million in restricted cash), compared to $8.4 million (of which $1 million was restricted cash) on December 31, 2007. The company had $60.7 million in working capital on September 30, 2008 and a current ratio of 3.6 to 1. The accounts receivable balance was $52.9 million on September 30, 2008, compared to $20.8 million on December 31, 2007 and annualized days sales outstanding for the third quarter of 2008 was 106 days. Net cash used by operations was $10.0 million, which was due to increase in accounts receivable and advances for inventory purchases, mainly consisting of steel and other raw materials utilized in building the Company's products for installation.

"RINO has continued to book a significant number of new contracts with both existing and new customers, many of which will be completed this year. Backlog on our wastewater and desulphurization system stood at $61.1 million and we expect $29.4 million to be recognized as sales during the fourth quarter," Mr. Zou concluded.

NEW BUSINESS DEVELOPMENTS

-- RINO received notification concerning availability of the publication

for two international patents covering equipment and application

methodology related to its anti-oxidation technology from the

International Bureau of World Intellectual Property Organization

(WIPO). In addition, the Company received a technology achievement

certificate for its proprietary anti-oxidation technology from an

appraisal committee consisting of industry engineers, scientists,

and member of the Chinese Academy of Science, the licensor of the

technology. To date, RINO has installed a total of 7 systems for

several steel customers and the results have proven the technology

is both successful in functionality and ready for broad based

commercialization.

-- RINO is in preliminary testing for a new product it plans to

commercialize during 2009. This Sludge treatment is a proprietary

technology which utilizes superheated steam as a dehydrating medium to

process and recycle biological and chemical sludge, in addition to oily

sludge. Treated sludge can be used as agricultural fertilizer, for

building materials and burned for cleaner energy.

-- On September 5, 2008, Bruce Richardson resigned from his positions as

the Chief Financial Officer and Secretary of the Company to pursue

other interests. The Company accepted Mr. Richardson's resignation and

while his duties in the interim have been assumed by Chairman Ms. Qiu

Jianping and several managers, the Company is currently evaluating

several prospective CFO candidates.

About RINO International Corporation

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.

Cautionary Statement Regarding Forward-Looking Information

This upcoming conference call 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 and the risks set forth "Risk Factors" contained in the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and the Registration Statement on Form S-1 as amended filed with the SEC.

-- Tables to Follow --

RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES

(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)

CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007

ASSETS

September 30, December 31,

2008 2007

(Unaudited)

CURRENT ASSETS

Cash and cash equivalents $ 1,366,511 $ 7,390,631

Restricted cash 1,024,951 1,000,000

Accounts receivable 50,549,827 19,222,133

Notes receivable 5,119,245 202,670

Costs and estimated earnings in excess

of billings on uncompleted contracts 118,150 2,818,122

Inventories 690,460 178,480

Advances for inventory purchase 23,998,295 12,092,202

Other current assets and prepaid expenses 1,215,893 1,174,464

Total current assets 84,083,332 44,078,702

PROPERTY, PLANT AND EQUIPMENT, NET 12,075,935 11,000,581

OTHER ASSETS

Accounts receivable (non-current) 2,342,263 1,618,203

Prepaid expenses (non-current) 76,808 95,706

Advances for equipment and construction

material purchase 7,300,869 3,751,343

Prepayment for land use right 457,042 428,301

Intangible assets, net 1,224,962 1,190,289

Total other assets 11,401,944 7,083,842

Total assets $ 107,561,211 $ 62,163,125

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable $ 1,843,492 $ 2,534,858

Billings in excess of costs and

estimated earnings on uncompleted

contracts 112,503 --

Customer deposits 4,018,785 116,214

Liquidated damages payable 2,116,708 1,000,000

Other payables and accrued liabilities 1,924,419 686,031

Due to shareholder 674,883 106,963

Other taxes payable 25,845 581,444

Income tax payable 894,904 5,970,794

Value added tax payable 4,453,106 2,989,365

Short-term loan 7,315,000 --

Total current liabilities 23,379,645 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,

25,000,000 shares issued and

outstanding as of September 30, 2008

and December 31, 2007) 2,500 2,500

Additional paid-in capital 19,909,557 8,221,663

Retained earnings 27,762,359 11,376,163

Statutory reserves 5,988,170 2,109,539

Accumulated other comprehensive income 6,038,661 1,987,272

Total shareholders' equity 59,701,247 23,697,137

Total liabilities and shareholders'

equity $ 107,561,211 $ 62,163,125

RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES

(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(UNAUDITED)

Three months ended Nine months ended

SEPTEMBER 30, SEPTEMBER 30,

2008 2007 2008 2007

REVENUES:

Contracts $43,575,844 $14,789,076 $92,060,717 $29,065,605

Services 1,305,292 2,849,885 6,482,958 17,066,298

44,881,136 17,638,961 98,543,675 46,131,903

COST OF SALES

Cost of contracts 23,298,573 8,838,709 51,144,465 18,147,939

Cost of services 848,959 1,328,688 3,341,128 5,265,797

Depreciation 165,889 140,867 486,145 399,681

24,313,421 10,308,264 54,971,738 23,813,417

GROSS PROFIT 20,567,715 7,330,697 43,571,937 22,318,486

OPERATING EXPENSES

Selling, general and

administrative

expenses 4,211,794 2,186,565 10,065,666 5,339,323

Research and

development -- -- 267,817 681,136

Stock compensation

expense-shares placed

in escrow 5,832,960 -- 11,665,920 --

TOTAL OPERATING

EXPENSES 10,044,754 2,186,565 21,999,403 6,020,459

INCOME FROM OPERATIONS 10,522,961 5,144,132 21,572,534 16,298,027

OTHER INCOME (EXPENSE),

NET

Other income 15,431 87 90,187 5,240

Government grant 15,863 47,036 -- --

Interest income 76,285 628 132,853 3,055

Interest expense (149,095) (178,278) (374,503) (489,233)

Liquidated damage

expense (616,708) -- (1,116,708) --

Other expenses (7,623) (336) (39,536) (3,532)

TOTAL OTHER INCOME

(EXPENSES), NET (665,847) (130,863) (1,307,707) (484,470)

INCOME BEFORE PROVISION

FOR INCOME TAXES 9,857,114 5,013,269 20,264,827 15,813,557

PROVISION FOR INCOME

TAXES -- 746,581 -- 4,370,199

NET INCOME 9,857,114 4,266,688 20,264,827 11,443,358

OTHER COMPREHENSIVE INCOME:

Foreign currency

translation adjustment 335,796 482,329 4,051,389 785,323

COMPREHENSIVE INCOME $10,192,910 $4,749,017 $24,316,216 $12,228,681

WEIGHTED AVERAGE NUMBER

OF SHARES:

Basic 25,000,000 17,899,643 25,000,000 17,899,643

Diluted 25,153,941 17,899,643 25,152,127 17,899,643

EARNINGS PER SHARE:

Basic $0.39 $0.24 $0.81 $0.64

Diluted $0.39 $0.24 $0.81 $0.64

RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES

(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008

(UNAUDITED)

Common Stock

Par Value $0.0001 Additional

Number Common Paid-in

of shares stock capital

BALANCE, December 31, 2007 25,000,000 $2,500 $8,221,663

Stock compensation expense-shares

placed in escrow 11,665,920

Imputed interest on advances

from a shareholder 21,974

Net income

Allocation to statutory reserve

Foreign currency translation gain

BALANCE, September 30, 2008

(Unaudited) 25,000,000 $2,500 $19,909,557

(Cont.)

Accumulated

Retained Earnings other

Statutory Unrestricted comprehensive

reserve earnings income Totals

BALANCE, December 31,

2007 $2,109,539 $11,376,163 $1,987,272 $23,697,137

Stock compensation

expense-shares

placed in escrow 11,665,920

Imputed interest on

advances from a

shareholder 21,974

Net income 20,264,827 20,264,827

Allocation to

statutory reserve 3,878,631 (3,878,631) --

Foreign currency

translation gain 4,051,389 4,051,389

BALANCE, September

30, 2008 (Unaudited) $5,988,170 $27,762,359 $6,038,661 $59,701,247

RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES

(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

(UNAUDITED)

2008 2007

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $20,264,827 $11,443,358

Adjusted to reconcile net income to cash

used in operating activities:

Depreciation 603,965 483,778

Amortization 48,972 39,180

Imputed interest 21,974 31,090

Amortization of long term prepaid expense 25,090 16,330

Stock compensation expense - shares placed

in escrow 11,665,920 --

Accounts receivable (29,979,156) (7,820,427)

Costs and estimated earnings in excess of

billings on uncompleted contracts 2,413,818 (3,173,430)

Inventories (63,928) (33,498)

Other current assets and prepaid expenses 39,658 (492,896)

Advances for inventory purchase (10,826,678) (8,017,662)

Accounts payable (851,537) (74,090)

Billings in excess of costs and estimated

earnings on uncompleted contracts 110,250 189,046

Customer deposits 3,816,435 10,007

Liquidated damages payable 1,116,708 --

Other payables and accrued liabilities 1,169,036 344,385

Notes receivable (4,804,195) (2,123,148)

Other taxes payable (584,387) 357,910

Value added tax payable 1,229,207 1,581,692

Income tax payable (5,384,128) (503,559)

Deferred tax liabilities -- 4,370,199

(9,968,149) (3,371,735)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (902,594) (81,453)

Purchase of intangible assets -- (378,856)

(Increase) decrease in advances for

construction material and equipment

purchase (3,231,748) 560,785

Prepayment for land use right

-- (330,830)

Net cash used in investing activities (4,134,342) (230,354)

CASH FLOWS FROM FINANCING ACTIVITIES

Payment on due to shareholder (1,785,305) (3,076)

Proceeds from shareholder advances 2,334,594 --

Increase in restricted cash (24,951) --

Proceeds from short-term loan 7,168,500 --

Net cash provided by (used in) financing

activities 7,692,838 (3,076)

EFFECT OF EXCHANGE RATE ON CASH 385,533 78,036

DECREASE IN CASH AND CASH EQUIVALENTS (6,024,120) (3,527,129)

CASH AND CASH EQUIVALENTS AT BEGINNING OF

PERIOD 7,390,631 3,604,350

CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,366,511 77,221

SUPPLEMENTAL DISCLOSURE OF CASH FLOW

INFORMATION

$1,366,511 $77,221

Cash paid during the period for:

Interest $352,529 $428,465

Income taxes $5,384,128 $503,559

For more information, please contact:

For the Company:

Amy Qiu, Chairman of the Board

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

Source: RINO International Corp.
Related Stocks:
OTC:RINO
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