DALIAN, China, Nov. 13 /PRNewswire-Asia-FirstCall/ --
- Q3 2009 net sales increased 41.0% to $63.3 million vs. Q3 2008; net
income increased 73.3% to $17.1 million; EPS of $0.68 vs. $0.39
- First nine months of 2009 net contract sales increased 41.7% to $139.6
million YOY; net income increased 94.5% to $39.4 million; EPS was $1.57
vs. $0.81
- Cash flow from operations was $9.5 million for the first nine months
of 2009
- Backlog on September 30, 2009 was approximately $52.7 Million
- Management to host earnings conference call November 13th at
8:30 a.m. ET
RINO International Corp. (OTC Bulletin Board: RINO), which through its subsidiaries and controlled affiliates in the People's Republic of China (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 third quarter of 2009.
SUMMARY FINANCIALS
First Quarter 2009 Results
Q3 2009* Q3 2008** CHANGE
Sales $63.3 million $44.9 million +41.0%
Gross Profit $26.1 million $20.6 million +27.1%
Adjusted Net Income $19.7 million $15.7 million +25.5%
GAAP Net Income $17.1 million $9.9 million +73.3%
Adjusted EPS (Diluted) $0.78 $0.62 +25.8%
GAAP EPS (Diluted) $0.68 $0.39 +74.4%
*Q3 2009 included a $2.6 million non-cash charge related to the changes in the value of warrants.
**Q3 2008 included $5.8 million in non-cash equity compensation charges not present in 2009.
Adjusted Net Income and EPS are non-GAAP and utilized to illustrate operating numbers.
First Nine Months of 2009 Results
2009 2008* CHANGE
Sales $139.6 million $98.5 million +41.7%
Gross Profit $56.3 million $43.6 million +29.1%
Adjusted Net Income $43.8 million $31.9 million +37.2%
GAAP Net Income $39.4 million $20.3 million +94.5%
Adjusted EPS (Diluted) $1.74 $1.27 +37.0%
GAAP EPS (Diluted) $1.57 $0.81 +93.8%
* The first nine months of 2009 included a $4.4 million non-cash charge related to changes in values of warrants.
**The first nine months of 2008 included $11.7 million in non-cash equity compensation expenses not present in 2009.
Adjusted Net Income and EPS are non-GAAP and utilized to show operating numbers.
2009 Third Quarter Financial Results
Net revenues for the third quarter ended September 30, 2009 increased 41.0% to $63.3 million as compared to $44.9 million for the third quarter in 2008. Revenue growth was driven by demand across its product lines, including a significant increase in both wastewater treatment and anti-oxidation systems and coatings sales. Specifically, the Company recorded $33.3 million in desulphurization revenues, a decrease of 11.8% from the third quarter of 2008, $15.1 million in wastewater treatment system sales, an increase of 241.9% from the third quarter of 2008, and $13.8 million in anti-oxidation equipment and coatings, an over 8-fold increase compared to the same year ago period. The Company recorded $1.1 million in machining service revenues.
Cost of sales for the third quarter of 2009 was $37.2 million as compared to $24.3 million in the same period of 2008, an increase of 52.9%. Gross profit was $26.1 million in the third quarter of 2009, a 27.1% increase from $20.6 million for the same period in 2008, representing gross margins of approximately 41.3% and 45.8%, respectively. The 4.5% variance in gross margins was mainly attributable to outsourcing, which has enabled the Company to continue growing its revenue base without significantly expanding its facility.
Total operating expenses for the third quarter of 2009 were $6.6 million, a 38.7% decrease from $10.7 million reported during the same period in 2008. The third quarter of 2008 included a non-cash stock compensation expense of $5.8 million related to a "Make Good Provision" relating to a private placement of the Company's Common Stock in 2007. Eliminating this expense, operating expenses would have increased by 35.1%, which was primarily the result of $2.4 million in commission expenses for new contracts. Operating income for the third quarter of 2009 and 2008 was $19.6 million and $9.9 million, respectively, representing operating margins of 30.9% for the third quarter of 2009 compared to the third quarter 2008 operating margin of 22.0%, or 35.0% when adjusted to eliminate the non-cash expense.
GAAP net income for the third quarter was $17.1 million, representing an increase of 73.3% as compared to $9.9 million reported in the same period in the prior year. Earnings per diluted share were $0.68 for the third quarter in 2009 as compared to $0.39 for the third quarter in 2008, which was based on 25.2 million shares outstanding. The Company did not incur any taxes during either period.
During the third quarter of 2009 the Company incurred a non-cash charge of $2.6 million for the change in the value of warrants. Adjusting for non-cash charges in each respective period, net income for the third quarter of 2009 and 2008 was $19.7 million and $15.7 million, with $0.78 and $0.62 in earnings per diluted share.
"The third quarter continued our momentum as we executed on our growth plan while making further improvements in all of our key financial metrics," stated Mr. Zou Dejun, President and CEO of RINO International. "This was the first quarter we saw meaningful uptake by customers for our anti-oxidation systems. During the quarter we performed work on a total of 12 FGD desulphurization systems, 5 wastewater treatment systems and installed 7
anti-oxidation systems for a total of 23 customers. We are excited about our DXT desulphurization system which we believe will enable us to cement our position as the leader in this particular FGD application, while providing a strong conduit for growth during the next few years as adoption accelerates. In addition, our backlog as of September 30, 2009 was approximately $52.7 million, which represents 6 desulphurization, 4 wastewater treatment and 6 anti-oxidation projects. We believe our collective growth initiatives will continue to provide incremental and robust top-line and bottom line growth and we currently expect to surpass our previous revenue estimate of $176.5 million for 2009".
2009 Nine Month Financial Results
For the first nine months of 2009 revenues increased 41.7% to $139.6 million from $98.5 million in the year ago period. FGD sales increased 18.5% to $89.1 million and represented 63.8% of total sales. Wastewater treatment equipment increased 150.1% to $31.6 million and represented 22.6% of sales. Anti-oxidation equipment and coatings increased 308.9% to $17.4 million, representing 12.5% of total sales while machining services were $1.6 million.
Cost of sales increased 51.7% to $83.4 million yielding gross profit of $56.3 million, an increase of 29.1% from $43.6 million reported in 2008. Gross margins were 40.3% compared to 44.2% during the first nine months of 2009 and 2008, respectively.
Operating expenses decreased 39.1% to $14.1 million during the first nine months of 2009 from $23.1 million in 2008, which included an $11.7 million non-cash equity compensation charge. Income from operations increased 106.2% to $42.2 million from $20.5 million with operating margins of 30.2% compared to 20.8%, or 32.6% excluding the charge.
GAAP Net income for the first nine months of 2009 increased 94.5% to $39.4 million from $20.3 million with corresponding diluted earnings per share of $1.57 compared to $0.81 in 2008 based on 25.1 million and 25.2 million diluted shares in each respective period. The Company incurred no income taxes in either period. During the first nine months of 2009 the Company incurred a non-cash charge of $4.4 million for the change in the value of warrants, with no associated charge in 2008. Adjusting for non-cash charges during each respective period, net income was $43.8 million and $31.9 million, yielding $1.74 and $1.27 in earnings per diluted share.
"Our business continues to be driven by a number of factors centered around government mandates stipulating that iron and steel manufacturers be equipped with desulphurization systems. The Chinese Ministry of Industry and Information Technology showed its commitment to support this initiative by publishing a formal plan on July 31, 2009 which prioritizes steel FGD installations, sets specific desulphurization guidelines and targets, while offering priority funding by both the central and local governments and further support for domestic based technology. This is the single most important regulatory event since our Company was formed and clears a path toward doubling the number of sinters to be equipped with FGD systems annually through 2011. We expect that growth from our FGD system installations, in addition to the large Sludge Treatment System for the Dalian Government, will drive further growth during 2010."
Balance Sheet and Cash Flow Discussion
Cash and cash equivalents as of September 30, 2009 were $29.0 million, representing an increase of 47.0% as compared to $19.7 million as of December 31, 2008. Working capital on September 30, 2009 was $115.4 million for the third quarter of 2009, an increase of 62.8% from $70.9 million on December 31, 2008. Accounts receivable stood at $44.6 million, a 13.5% decrease from $51.5 million reported as of December 31, 2008. The Company reported $8.8 million in short term loans payable, maintained a current ratio of 4.7 to 1 and saw stockholder's equity increase 65.2% to $110.5 million as of September 30, 2009 as compared to $66.9 million as of December 31, 2008.
For the nine months ended September 30, 2009, the Company generated $9.5 million in cash flow from operations, as compared to $10.0 million cash used in operation for the first nine months in 2008. The variance between cash flow and net income was mainly related to $34.7 million in advances for inventory purchases as the company prepares for several large project installations and $13.2 million in costs and estimated earnings surpassing billings for projects still underway.
Conference Call
The Company will host a conference call on November 13, 2009, at 8:30 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: November 13, 2009
Time: 8:30am ET
Conference Line Dial-In (U.S.): +1-877-941-8416
International Dial-In: +1-480-629-9808
Conference ID: 4182665
Webcast link: http://viavid.net/dce.aspx?sid=00006CFF
Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through November 20, 2009. To listen, please call +1-800-406-7325 within the United States or
+1-303-590-3030 when calling internationally. Utilize the pass code 4182665 for the replay.
About RINO International Corporation
RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and 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. and Dalian Rino Environmental Construction & Installation Project Co., Ltd., 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 .
Cautionary Statement Regarding Forward-Looking Information
Certain statement in this press release 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, the risks set forth "Risk Factors" contained in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. In addition, this press release contains certain Non-GAAP financial results. Management believes, given the nature of certain non-cash charges, the adjusted net income and EPS enables investors to understand the correct operating metrics of its business. Management does not intend, nor suggest that investors utilize, non-GAAP financial results to make investment decisions.
For more information, please contact:
For the Company:
Jenny Liu
Tel: +86-411-8766-2700
Email: jennyliu@rinogroup.com
Investors:
Matt Hayden
HC International, Inc.
Tel: +1-561-245-5155
Email: matt.hayden@hcinternational.net
FINANCIAL STATEMENTS FOLLOW
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
ASSETS
September 30, December 31,
2009 2008
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $29,020,242 $19,741,982
Restricted cash -- 1,030,317
Notes receivable 717,363 2,157,957
Accounts receivable, trade, net of
allowance for doubtful accounts of
$342,749 and $0 as of September 30,
2009 and December 31, 2008,
respectively 44,559,387 51,503,245
Costs and estimated earnings in
excess of billings on uncompleted
contracts 13,202,094 --
Inventories 1,793,396 1,203,448
Advances for inventory purchases 56,754,792 21,981,669
Other current assets and prepaid
expenses 678,271 517,847
Total current assets 146,725,545 98,136,465
PROPERTY, PLANT AND EQUIPMENT, NET 12,516,348 13,197,119
OTHER ASSETS
Prepaid expenses (non-current) 64,576 73,350
Advances for equipment and
construction material purchases 5,550,966 5,550,966
Prepayment for land use right 799,965 458,292
Intangible assets, net 1,161,499 1,211,608
Total other assets 7,577,006 7,294,216
Total assets $166,818,899 $118,627,800
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $5,471,857 $5,816,714
Short-term loan 8,802,000 8,802,000
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,484,554 --
Customer deposits 3,712,082 3,609,407
Liquidated damages payable 20,147 2,598,289
Other payables and accrued
liabilities 427,043 746,267
Notes payable 73,790 --
Due to a stockholder 308,182 596,023
Tax Payable 11,013,805 5,062,901
Total current liabilities 31,313,460 27,231,601
Warrant Liabilities 512,498 --
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,
25,330,769 shares and 25,040,000
shares issued and outstanding as of
September 30, 2009 and December
31, 2008) 2,533 2,504
Additional paid-in capital 30,492,770 25,924,007
Retained earnings 63,271,930 28,570,948
Statutory reserves 10,491,526 6,196,478
Accumulated other comprehensive
income 6,253,863 6,221,943
Total shareholders' equity 110,512,622 66,915,880
Total liabilities and
shareholders' equity $166,818,899 $118,627,800
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
REVENUES:
Contracts $62,194,946 $43,575,844 $138,030,264 $92,060,717
Services 1,107,257 1,305,292 1,602,308 6,482,958
63,302,203 44,881,136 139,632,572 98,543,675
COST OF SALES
Contracts 36,452,495 23,298,573 81,701,500 51,144,465
Services 531,440 848,959 1,124,270 3,341,128
Depreciation 185,201 165,889 555,528 486,145
37,169,136 24,313,421 83,381,298 54,971,738
GROSS PROFIT 26,133,067 20,567,715 56,251,274 43,571,937
OPERATING EXPENSES
Selling, general and
administrative
expenses 6,615,171 4,849,778 14,111,637 11,182,374
Research and
development (61,564) -- (31,749) 267,817
Stock compensation
expense-shares
placed in escrow -- 5,832,960 -- 11,665,920
TOTAL OPERATING
EXPENSES 6,553,607 10,682,738 14,079,888 23,116,111
INCOME FROM
OPERATIONS 19,579,460 9,884,977 42,171,386 20,455,826
OTHER INCOME
(EXPENSE), NET
Other (expense)
income, net (3,144) 44,947 (8,923) 50,651
Change in fair
value of
warrants (2,592,201) -- (4,402,335) --
Interest income
(expense), net 101,785 (72,810) (90,148) (241,650)
Gain on liquidated
damage
settlement -- -- 1,746,120 --
TOTAL OTHER
EXPENSES, NET (2,493,560) (27,863) (2,755,286) (190,999)
INCOME BEFORE
PROVISION FOR
INCOME TAXES 17,085,900 9,857,114 39,416,100 20,264,827
PROVISION FOR
INCOME TAXES -- -- -- --
NET INCOME 17,085,900 9,857,114 39,416,100 20,264,827
OTHER COMPREHENSIVE
INCOME:
Foreign currency
translation
adjustment 169,559 335,796 31,920 4,051,389
COMPREHENSIVE
INCOME $17,255,459 $10,192,910 $39,448,020 $24,316,216
WEIGHTED AVERAGE
NUMBER
OF SHARES:
Basic 25,204,199 25,000,000 25,104,972 25,000,000
Diluted 25,220,159 25,153,941 25,112,087 25,152,127
EARNINGS PER SHARE:
Basic $0.68 $0.39 $1.57 $0.81
Diluted $0.68 $0.39 $1.57 $0.81
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(UNAUDITED)
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $39,416,100 $20,264,827
Adjusted to reconcile net income to
cash used in operating activities:
Depreciation 717,490 603,965
Amortization 50,072 48,972
Allowance for bad debt 342,495 --
Imputed interest 13,558 21,974
Amortization of long term prepaid
expense 10,994 25,090
Stock compensation expense 28,324 11,665,920
Gain (expense) on liquidated damage
settlement (1,746,120) 1,116,708
Change in fair value of warrants 4,402,335 --
Changes in operating assets and
liabilities
Notes receivable 1,439,514 (4,804,195)
Accounts receivable 6,596,159 (29,979,156)
Costs and estimated earnings in excess
of billings on uncompleted contracts (13,192,194) 2,413,818
Inventories (589,505) (63,928)
Advances for inventory purchase (34,747,048) (10,826,678)
Other current assets and prepaid
expenses (160,940) 39,658
Accounts payable (344,598) (851,537)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 1,483,440 110,250
Customer deposits 102,598 3,816,435
Other payables and accrued liabilities (318,983) 1,169,036
Tax payable 5,946,440 (4,739,308)
Net cash provided by (used in)
operating activities 9,450,131 (9,968,149)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (37,232) (902,594)
Advances for construction material and
equipment purchases -- (3,231,748)
Prepayment for land use right (341,417) --
Net cash used in investing activities (378,649) (4,134,342)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on due to shareholder (1,058,480) (1,785,305)
Proceeds from shareholder advances 770,889 2,334,594
Decrease (increase) of restricted cash 1,030,317 (24,951)
Increase in notes payable 73,735 --
Proceeds from short-term loan 29,360,000 7,168,500
Bank loan repaid (29,315,000) --
Payment to liquidated damage penalty (615,018) --
Net cash provided by financing
activities 246,443 7,692,838
EFFECT OF EXCHANGE RATE ON CASH (39,665) 385,533
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 9,278,260 (6,024,120)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 19,741,982 7,390,631
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $29,020,242 $1,366,511
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $632,816 $352,529
Income taxes $229,880 $5,384,128
Shares issuance for liquidated damage
penalty settlement $217,004 $--
