DALIAN, China, April 1/PRNewswire-Asia-FirstCall/ -- Rino International Corp. (Nasdaq: RINO), which through its subsidiaries and controlled affiliates (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 the Company's financial results for the fourth quarter and fiscal year 2009.
-- Fourth Quarter 2009 Sales Increase 29.9% to $53.0 million, *Adjusted
Net Income Increases 92.9% to $13.5 million with EPS of $.53
-- 2009 Sales Increase 27.7% to $192.6 million, **Adjusted Net Income
Increases 47.3% to $57.3 million with EPS of $2.26
-- 2009 Cash flow from operations increased 414.4% to $30.9 million
-- Cash & Equivalents of $134.5 million on December 31, 2009
-- Backlog of $89.4 million on February 28, 2010
-- 2010 Guidance: Revenues Expected to Exceed $225 Million
-- Management to Host Earnings Conference Call on April 1, 2010 at 9:00am
ET
SUMMARY FINANCIALS
Fourth Quarter 2009 Results (Unaudited)
Q4 2009 Q4 2008 CHANGE
Sales $53.0 million $40.8 million +29.9%
Gross Profit $16.1 million $10.8 million +49.2%
GAAP Net Income $17.2 million $1.0 million +1600.0%
Adjusted Net Income* $13.5 million $7.0 million +92.9%
GAAP EPS (Diluted) $0.68 $0.04 +1600.0%
Adjusted EPS (Diluted)* $0.53 $0.28 +89.3%
* Net Income and EPS in the Q4 of 2009 and 2008 are non-GAAP calculations
and do not include $3.6 million in non-cash charges due to stock-based
compensation and a change in value of warrants during Q4 of 2009 and $6
million in equity compensation charges during Q4 2008.
Fiscal Year 2009 Results
FY 2009 FY 2008 CHANGE
Sales $192.6 million $139.3 million +27.7%
Gross Profit $72.3 million $54.3 million +33.1%
GAAP Net Income $56.4 million $21.3 million +164.8%
Adjusted Net Income** $57.3 million $38.9 million +47.3%
GAAP EPS (Fully Diluted) $2.22 $0.85 +161.2%
Adjusted EPS (Diluted)** $2.26 $1.55 +45.8%
* Full Year 2009 included $0.8 million in non-cash charges due to stock-
based compensation and a change in the value of the warrants.
**Fiscal Year 2008 included $17.7 million in non-cash equity compensation
expenses related to the "Make Good" provision of an October 2007
financing agreement which was present in 2009.
2009 Fourth Quarter Financial Results (unaudited)
Net revenues for the fourth quarter ended December 31, 2009 increased 29.9% to $53.0 million compared to $40.8 million for the fourth quarter in 2008. Specifically during the fourth quarter, the company recorded $27.3 million in desulphurization projects which represented 51.5% of sales and was a 9.3% decrease from the same period 2008; $14.4 million in wastewater treatment system sales, which represented 27.2% of sales and was an increase of 700% over fourth quarter 2008; $7.7 million in anti-oxidation equipment and an coatings compared, which represented 14.5% of total sales and represented an increase of 413% from the same period of 2008; and $3.6 million in machining service revenues, a decrease of 51.4% from the $7.4 million recorded in the same period 2008, and represented 6.8% of sales during the fourth quarter of 2009.
Cost of goods sold for the fourth quarter of 2009 was $36.9 million compared to $30.0 million in same period 2008, an increase of 23.0%. Gross profit was $16.1 million in the fourth quarter 2009 compared to $10.8 million for the same period in 2008, an increase of $5.3 million, and represented gross margins of approximately 30.3% and 26.4%, respectively.
Total operating expenses for the fourth quarter of 2009 were $2.9 million versus $10.0 million for the same period in 2008. Excluding the non cash equity compensation charge of $0.05 million and $6.0 million for the fourth quarter of 2009 and 2008 respectively, operating income would have been $13.2 million and $6.7 million with operation margins of 24.9% and 16.5% respectively.
GAAP net income for the fourth quarter of 2009 was $17.2 million compared to $1.0 million reported in the same period prior year. Excluding charge in equity compensation expenses of $0.05 million and change in value of warrant of $3.6 million for the fourth quarter of 2009, and non-cash charge in equity compensation expenses of $6.0 million for the fourth quarter of 2008, adjusted net income was $13.5 million compared to $7.0 million for fourth quarter of 2008. Based on 25.4 and 25.1 million shares outstanding, GAAP earnings were $0.68 and $0.04 per diluted share for the fourth quarter of 2009 and 2008, respectively. Excluding the non-cash charge for equity compensation and change value of warrant, the Company would have reported fourth quarter diluted earnings of $0.53 per share compared to $0.28 in the year ago period.
"We are very pleased with our financial results for the fourth quarter and full year of 2009," commented Mr. Zou Dejun, President and CEO of RINO International, "During the fourth quarter of 2009, we experienced continued momentum in installations of our anti-oxidation systems and wastewater treatment systems. In addition, we completed a total of 5 FGD desulphurization systems for a total of 5 customers during the fourth quarter. We would like to extend our gratitude to all our investors for their support in the $100 million December financing, which will provide the necessary working capital to secure more projects while expanding our production capacity. To that end, we recently acquired 50-year land use rights for approximately 57.5 acres in a large scale industrial plant located in Dalian Changxing Island Harbor Industrial Zone and will build out a new facility during 2010 to be used to expand its R&D and manufacturing capabilities for a wide range of its environmental protection equipment."
Fiscal Year 2009 Revenue Breakdown (Audited)
FY 2009 FY 2008 CHANGE
Waste Water Treatment $46.0 million $14.4 million +218.3%
% of Sales 23.9% 10.4%
Desulphurization Equipment $116.4 million $105.3 million +10.6%
% of Sales 60.4% 75.6%
Anti-oxidation equipment
& coatings $25.1million $5.7 million +336.6%
% of Sales 13.0% 4.1%
Machining services $5.2 million $13.9 million -62.7%
% of Sales 2.7% 9.9%
Total Sales $192.6 million $139.3 million +38.3%
Revenue increased 27.7% to $192.6 million for the twelve months ended Dec. 31, 2009, from the $139.3 million reported in 2008, surpassing previously issued guidance of $176.5 million. Sales of Wastewater Systems increased 218.3% to $46.0 million for 2009, compared to $14.4 million in 2008. The Company recorded anti-oxidation equipment and related coatings sales of $25.1 million from nine contracts executed for 2009, as compared to revenues of $5.7 million with 2 contracts completed for 2008. This represented a year-over-year increase of $19.3 million, or 336.6%.
Gross profits for 2009 were $72.3 million compared to $54.3 million in 2008, an increase of 33.1%. Gross margins were 37.5% compared to 39.0% in 2008, which were impacted by higher subcontractor costs in 2009. Operating income for the year totaled $55.3 million, an increase of 142.5% compared to $22.8 million in 2008 with operating margins of 28.7% compared to 16.3% in 2008. This is equivalent to an increase of 42.2% compared to adjusted operating income of $38.9 million for 2008, excluding non cash equity compensation charges of $0.05 million and $17.7 million for 2009 and 2008, respectively.
GAAP Net income was $56.4 million for the year ended December 31, 2009, an increase of $35.1 million, or approximately 165.0% compared to last year. Earnings per diluted share were $2.22 vs. $0.85, based on 25.4 and 25.1 million shares outstanding, respectively. Excluding the equity compensation charge and change value of warrant, adjust net income was $57.3 million, or $2.26 per diluted share for 2009.
"We were pleased with the momentum in our wastewater business as we were awarded projects which were approximately double the size of average contracts executed in 2008. With inadequate wastewater infrastructure and existing systems reaching their useful life, we are optimistic about further growth opportunities for this product segment. Mandates by the State Environmental Protection Agency (SEPA) calling for the iron and steel producers to significantly reduce sulphur emissions and specific goals set by China's MIIT to attain this reduction helped drive adoption and enabled us to increase our average contract size for our desulphurization projects by approximately 39% over 2008. As evidenced by our recently announced agreement with Shougang Jingtang Steel Company, we are beginning to implement the BOT model in our desulphurization business, which is aimed at meeting our customer's operating, financial and regulatory objectives, while providing long-term recurring revenue for RINO. We continue to diversify our business through increased sales of anti-oxidation application equipment and the associated coating, and commercialization of our new energy efficient sludge treatment system based on proprietary Rotary Drum Film Dryer ("DWM") technology, which addresses an estimated $28.8 billion market in China, several times larger than that for our existing products. With a strong working capital position, we are well positioned to continue our growth momentum and capitalize this long-term secular growth opportunity in China," stated Mr. Zou Dejun, Director and CEO of RINO.
Balance Sheet and Cash Flow Discussion
Cash and cash equivalents as of December 31, 2009 were $134.5 million, as compared to $19.7 million on December 31, 2008, mainly resulting from the $100 million registered direct offering closed on December 7, 2009. Accounts receivable stood at $57.8 million as of December 31, 2009, compared to $51.5 million reported on December 31, 2008. Days sales outstanding were 110 and 135 for 2009 and 2008, respectively. Inventories and advances for inventory totaled $39.4 million on December 31, 2009, while advances for equipment and construction material purchase were $9.1 million. The Company generated $30.9 million in cash flow from operations, compared with $6.0 million cash generated in operation in 2008. Stockholder's equity increased 205.2% to $204.2 million vs. $66.9 million in 2008, with the associated book value on December 31, 2009 of approximately $8.04 per share.
2010 Guidance
Management expects to report revenues of at least $225 million for the fiscal year 2010, representing approximately 17% growth over fiscal 2009 results, and gross margins of between 35% and 40% for 2010. On March 31, 2009 the Company had 28,603,321 common shares outstanding. The Company expects to generate revenue growth in all of its business lines, including contribution from its new sludge dehydration project. In addition, management believes its working capital and cash flow from operations will enable it to meet these projections.
Conference Call
The Company will host a conference call on April 1 2010, at 9:00 a.m. ET. To attend the call, please use the dial information below. When prompted, ask for the "RINO International Call" and/or be prepared to provide the conference ID.
Date: April 1, 2010
Time: 9:00am ET
Conference Line Dial-In (U.S.): 1-877-941-8601
International Dial-In: +1-480-629-9810
Conference ID: 4275058
Webcast link: http://viavid.net/dce.aspx?sid=000072AF
Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through April 8th, 2010. To listen, please call 1-800-406-7325 within the United States or +1-303-590-3030 when calling internationally. Utilize the pass code 4275058 for the replay.
About RINO International Corporation
RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited, Rino Investment (Dalian) Co., Ltd. ("Rino Investment") and Rino Investment's wholly owned subsidiary, Dalian Rino Heavy Industries Co., Ltd., together with Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ("Dalian Rino") and Dalian Rino's wholly-owned subsidiaries, Dalian Rino Environmental Engineering Project Design Co., Ltd., Dalian Rino Environmental Construction & Installation Project Co., Ltd. and RINO Technology Corporation, 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. Additional information about the Company is available at the Company's website: http://www.rinogroup.com .
About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: adjusted operating income, adjusted net income and adjusted EPS (basic and diluted). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our "recurring core business operating results." We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between the two.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this press release and conference presentation may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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, the risks set forth "Risk Factors" contained in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
For more information, please contact:
For the Company:
Jenny Liu
Tel: +86-411-8766-2700
Email: jennyliu@rinogroup.com
For Investors:
Matt Hayden, HC International, Inc.
Tel: +1-561-245-5155
Email: matt.hayden@hcinternational.net
--FINANCIAL TABLES FOLLOW--
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND 2008
2009 2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents $134,487,611 $19,741,982
Restricted cash -- 1,030,317
Notes receivable 440,100 2,157,957
Due from shareholders 3,005,386 --
Accounts receivable, trade, net of
allowance for doubtful accounts of
$273,446 and $0 as of December
31, 2009 and 2008, respectively 57,811,171 51,503,245
Costs and estimated earnings in excess
of billings on
uncompleted contracts 3,258,806 --
Inventories 5,405,866 1,203,448
Advances for inventory purchases 34,056,231 21,981,669
Other current assets and prepaid
expenses 629,506 517,847
Total current assets 239,094,677 98,136,465
PROPERTY, PLANT AND EQUIPMENT, NET 12,265,389 13,197,119
OTHER ASSETS
Advances for non current assets 6,570,378 6,082,608
Intangible assets, net 1,144,796 1,211,608
Total other assets 7,715,174 7,294,216
Total assets $259,075,240 $118,627,800
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,281,353 $5,816,714
Short-term bank loans 1,467,000 8,802,000
Customer deposits 4,984,801 3,609,407
Liquidated damages payable 20,147 2,598,289
Other payables and accrued liabilities 496,411 746,267
Due to shareholder -- 596,023
Taxes Payable 4,003,709 5,062,901
Total current liabilities 15,253,421 27,231,601
Warrant Liabilities 15,172,712 --
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,
28,603,321 shares and 25,040,000
shares issued and outstanding as
of December 31, 2009 and 2008) 2,860 2,504
Additional paid-in capital 107,135,593 25,924,007
Retained earnings 78,983,794 28,570,948
Statutory reserves 11,755,312 6,196,478
Accumulated other comprehensive income 6,291,229 6,221,943
Total shareholders' equity 204,168,788 66,915,880
Total liabilities and shareholders'
equity $259,075,240 $118,627,800
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
REVENUES
Contracts $187,473,072 $119,920,874
Services 5,169,434 19,422,523
192,642,506 139,343,397
COST OF SALES
Contracts 116,716,424 74,247,181
Services 2,858,119 10,099,616
Depreciation 754,688 662,436
120,329,231 85,009,233
GROSS PROFIT 72,313,275 54,334,164
OPERATING EXPENSES
Selling, general and
administrative expenses 16,939,558 13,883,023
Stock compensation expense and
shares placed in escrow 47,385 17,678,080
TOTAL OPERATING EXPENSES 16,986,943 31,561,103
INCOME FROM OPERATIONS 55,326,332 22,773,061
OTHER INCOME (EXPENSES), NET
Other income, net 241,313 490,601
Change in fair value of warrants (831,185) --
Interest expense, net (90,830) (383,649)
Gain (expenses) on liquidated
damage 1,746,120 (1,598,289)
TOTAL OTHER INCOME (EXPENSES),
NET 1,065,418 (1,491,337)
INCOME BEFORE PROVISION FOR
INCOME TAXES 56,391,750 21,281,724
PROVISION FOR INCOME TAXES -- --
NET INCOME 56,391,750 21,281,724
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustment 69,286 4,234,671
COMPREHENSIVE INCOME $56,461,036 $25,516,395
WEIGHTED AVERAGE NUMBER OF
SHARES:
Basic 25,379,587 25,040,000
Diluted 25,379,587 25,148,178
EARNINGS PER SHARE:
Basic $2.22 $0.85
Diluted $2.22 $0.85
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $56,391,750 $21,281,724
Adjusted to reconcile net income to
cash used in operating activities:
Depreciation 970,451 806,625
Amortization 66,771 65,651
Allowance for bad debt 273,278 --
Imputed interest on due to shareholders 13,560 24,268
Amortization of long term prepaid
expenses 46,468 28,830
Share issued for service 8,960 179,200
Stock compensation expense and
shares placed in escrow 38,425 17,498,880
(Gain) expense on liquidated damage (1,746,120) 1,598,289
Change in fair value of warrants 831,185 --
Changes in operating assets and
liabilities
Notes receivable 1,716,803 (1,906,766)
Accounts receivable (6,577,334) (28,635,455)
Costs and estimated earnings in
excess of billings on uncompleted
contracts (3,256,807) 2,971,223
Inventories (4,199,840) (994,352)
Advances for inventory purchases (12,067,154) (8,850,435)
Other current assets and prepaid
expenses (111,590) 512,905
Accounts payable (1,534,419) 3,043,036
Customer deposits 1,374,550 3,424,139
Other payables and accrued
liabilities (249,703) 12,662
Taxes Payable (1,058,542) (5,085,079)
Net cash provided by operating
activities 30,930,692 5,975,345
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (39,295) (2,176,132)
Advances for non current assets (533,939) (1,283,107)
Net cash used in investing
activities (573,234) (3,459,239)
CASH FLOWS FROM FINANCING ACTIVITIES
Change in restricted cash 1,030,317 (30,317)
Proceeds from short-term bank loans 30,788,100 15,712,000
Payment of short-term bank loans (38,118,600) (7,310,000)
Payment on liquidated damage
settlement (615,018) --
Payment to shareholder (5,093,486) --
Proceeds from shareholder 1,532,372 472,979
Proceeds from issuance of stock 94,855,453 --
Net cash provided by financing
activities 84,379,138 8,844,662
EFFECT OF EXCHANGE RATE ON CASH 9,033 990,583
INCREASE IN CASH AND CASH
EQUIVALENTS 114,745,629 12,351,351
CASH AND CASH EQUIVALENTS,
beginning 19,741,982 7,390,631
CASH AND CASH EQUIVALENTS,
ending $134,487,611 $19,741,982
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid for Interest expense $680,925 $480,902
Cash paid for income taxes $229,911 $5,434,122
Shares issued for liquidated
damage penalty settlement $217,004 $--
Shares issued for service received $8,960 $179,200
