-- Q2 Revenues Increased 17.6% to $40.7 million, net income increased 83%
to $9.9 million with EPS of $0.39
-- $81.9 million backlog as of August 7, 2009
-- Cash and Equivalents of $51.7 million on June 30, 2009
-- Management to Host Earnings Conference Call on Tuesday, August 11, 2009
at 12:30 p.m. ET
DALIAN, China, Aug. 11 /PRNewswire-Asia/ -- RINO International Corp. (Nasdaq: RINO), 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 second quarter 2009.
Second Quarter 2009 Summary Financial Results
Q2 2009 Q2 2008 CHANGE
Net Sales $40.7 million $34.6 million +17.6%
Gross Profit $14.2 million $15.3 million -(7.2)%
Net Income $9.9 million (*)$5.4 million +83.0%
EPS (Fully Diluted) $0.39 $0.21 +85.7%
(*) Denotes a $5.8 million non-cash equity compensation charge take during
Q2 2008 related to the Company's Make Good Provision
2009 Second Quarter Financial Results
Net sales for the second quarter ended June 30, 2009 increased 17.6% to $40.7 million from $34.6 million reported during the second quarter in 2008. Revenue growth was driven by demand for RINO's major product lines as the Company continued to execute on new and existing project installations. Specifically, the company recorded $30.1 million in flue gas desulphurization (FGD) revenues, an increase of 20.3% from $25.0 million reported in the same period of 2008, $9.2 million in wastewater treatment system sales, an increase of 53.4% over the $6.0 million recorded in the second quarter in 2008, and $1.1 million in anti-oxidation equipment and coatings compared to $1.2 recorded in the same year ago period. The company recorded $0.3 million in machining services revenue, a decrease of 89.6 % from the $2.4 million recorded in the same period in 2008 an. As a percentage of total revenues for the quarter, desulphurization represented 73.9%, wastewater treatment equipment represented 22.7% and anti-oxidation was 2.8%.
Cost of sales for the second quarter of 2009 was $26.6 million as compared to $19.3 million in same period 2008, an increase of 37.3%. Gross profit was $14.2 million in the second quarter of 2009 as compared to $15.3 million for the same period in 2008, a decrease of 7.2%. Gross margins were approximately 34.8% and 44.1%, respectively. The increase in cost of sales was directly attributable to outsourcing costs associated with meeting project installation timelines. As the Company continues to outsource a meaningful portion of projects due to capacity constraints, gross margins will fluctuate from quarter to quarter, depending on the percentage of revenue mix generated from outsourced projects.
Total operating expenses for the second quarter of 2009 decreased 57.4% to $4.2 million from $9.8 million for the same period in 2008. The decrease in operating expenses was directly related to the absence of a $5.8 million charge for stock compensation expense recorded during the second quarter of 2008. Operating income for the second quarter of 2009 increased 81.8% to $10.0 million from $5.5 million in the year ago period. Operating margins were 24.5% compared to 15.9%. Adjusting for the non cash charge, operating income would have increased $0.2 million year-over-year.
"During the second quarter we completed three FGD installations and three wastewater treatment system installations while beginning several new projects," stated Mr. Zou Dejun, President and CEO of RINO International, Inc. "Consistent with previous guidance, we expect margin fluctuations periodically due to outsourcing which is necessary to complement our in-house production capabilities and meet project implementation timelines. We expect gross margins to stabilize in the range of 37-38% for the second half of the year. We are in the final stages of securing new property and expect to commence construction for a new production and fabrication facility this fall which is expected to be operational during the middle of 2010. We believe this will significantly expand our capacity and enable us to meet our future growth objectives while also improving overall margins."
Net income for the second quarter was $9.9 million, representing an increase of 83.0% from the $5.4 million reported in the same period in the prior year. Earnings per diluted share were $0.39 for the second quarter of 2009 as compared to $0.21 for the second quarter in 2008, based on 25.1 million and 25.2 million shares outstanding, respectively. The company incurred no taxes during each period and has received special tax exempt status from the central government.
Mr. Zou Dejun further elaborated, "We are very pleased to report another quarter of strong growth and profitability as we continue to capitalize on our first mover advantage and dominant market position to expand our business. On July 31, 2009, the Chinese Ministry of Industry and Information Technology published a formal plan for the implementation of FGD systems in the sintering plants of Chinese steel companies, which is a specific roadmap to accelerate the number of desulphurization projects completed throughout the PRC. This gives us confidence that growth in our sector will further increase thus benefiting RINO and we are hopeful on winning several new project bids which are currently under review. We are also reiterating 2009 revenue guidance of $176.5 million."
2009 Six Month Financial Results
For the first six months of 2009 revenues increased 42.2% to $76.3 million from $53.7 million in the year ago period. Flue gas desulphurization sales increased 48.9% to $55.8 million and represented 73.1% of total sales. Wastewater treatment equipment increased 101.0% to $16.5 million and represented 21.6% of sales. Anti-oxidation equipment and coatings increased 26.8% to $3.6 million, representing 4.7% of total sales while machining services decreased 90.4% to $0.5 million. Cost of sales increased 50.5% to $46.2 million yielding gross profit of $30.1 million, an increase of 30.9% from $23.0 million reported in the year ago period. Gross margins were 39.4% compared to 42.8% during the first six months of 2009 and 2008, respectively. Operating expenses decreased 39.6% to $7.5 million during the first six months of 2009 from $12.5 million during the year ago period, which included a $5.8 million non-cash equity compensation charge. Income from operations increased 115.2% to $22.6 million from 10.5 million with operating margins of 29.6% compared to 19.4%. Net income for the first six months of 2009 increased 114% to $22.3 million from $10.4 million with corresponding diluted earnings per share of $0.89 compared to $0.41 based on 25.1 million and 25.2 million diluted shares in each respective period. The company incurred no income taxes.
Balance Sheet and Cash Flow Discussion
Cash and cash equivalents as of June 30, 2009 were $51.7 million compared to $19.7 million on December 31, 2008. Accounts receivable increased to $73 million from $51.5 million reported as of December 31, 2008. As a percentage of total annualized sales, our accounts receivable increased to 48.0% at June 30, 2009, compared to 37.0% on December 31, 2008. The Company reported $30.8 million in short term loans, which is held with Shanghai Pudong Development Bank to provide incremental working capital. The Company had a current ratio of 3.0 to 1 and stockholder's equity increased to $87.9 million from $66.9 million as of December 31, 2008. RINO International, Inc. had a backlog of $81.9 million as of August 7, 2009.
For the first six months of 2009 the Company generated $9.7 million in cash flow from operations, as compared to $7.6 million cash used in operations for the second quarter in 2008.
Conference Call
RINO International, Inc. will host a conference call on August 11, 2009, at 12:30 p.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: Tuesday, August 11, 2009
Time: 12:30 p.m. ET
Conference Line Dial-In (U.S.): 1 888-549-7880
International Dial-In: +1 480-629-9866
Conference ID: 4136887
Webcast link: http://viavid.net/dce.aspx?sid=000068C3
This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=000068C3 or at ViaVid's website at http://www.viavid.net , where the webcast can be accessed through September 11, 2009.
A playback recording will be available through August 18, 2009. To listen, please call 800-406-7325 within the United States or +1 303-590-3030 when calling internationally. Utilize the pass code 4136887 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 and the risks set forth "Risk Factors" contained in the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q.
For more information, please contact:
For the Company:
Investors:
Jenny Liu
Tel: +86-411-8766-2700
Email: jennyliu@rinogroup.com
HC International, Inc.
Matt Hayden
Tel: +1-561-245-5155
Email: matt.hayden@hcinternational.net
-Tables as Follows -
Please refer to notes that accompany all tables
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
2009 2008
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $51,744,184 $19,741,982
Restricted cash -- 1,030,317
Notes receivable 1,348,884 2,157,957
Accounts receivable, trade, net of
allowance for doubtful accounts of
$205,588 and $0 as of June 30, 2009
and December 31, 2008, respectively 73,019,821 51,503,245
Inventories 1,120,651 1,203,448
Advances for inventory purchase 15,645,759 21,981,669
Other current assets and prepaid
expenses 648,240 517,847
Total current assets 143,527,539 98,136,465
PROPERTY, PLANT AND EQUIPMENT, NET 12,729,140 13,197,119
OTHER ASSETS
Prepaid expenses (non-current) 66,323 73,350
Advances for equipment and
construction material purchase 5,543,399 5,550,966
Prepayment for land use right 457,667 458,292
Intangible assets, net 1,176,595 1,211,608
Total other assets 7,243,984 7,294,216
Total assets $163,500,663 $118,627,800
LIABILITIES AND SHARE HOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,985,670 $5,816,714
Short-term loan 30,765,000 8,802,000
Customer deposits 56,256 3,609,407
Liquidated damages payable 20,147 2,598,289
Other payables and accrued
liabilities 415,544 746,267
Notes payable 88,340 --
Due to a stockholder 439,007 596,023
Tax Payable 11,091,981 5,062,901
Total current liabilities 47,861,945 27,231,601
Warrant Liabilities 3,288,906 --
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,
25,090,438, shares and 25,040,000
shares issued and outstanding as of
June 30, 2009 and December 31, 2008,
respectively 2,509 2,504
Additional paid-in capital 25,105,124 25,924,007
Retained earnings 48,003,651 28,570,948
Statutory reserves 8,673,905 6,196,478
Accumulated other comprehensive
income 6,084,304 6,221,943
Total shareholders' equity 87,869,493 66,915,880
Total liabilities and shareholders'
equity $163,500,663 $118,627,800
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
REVENUES:
Contracts $40,469,182 $32,187,128 $75,835,318 $48,484,873
Services 253,068 2,429,986 495,051 5,177,666
40,722,250 34,617,114 76,330,369 53,662,539
COST OF SALES
Contracts 26,123,509 17,583,203 45,249,005 27,845,892
Services 268,912 1,589,775 592,830 2,492,169
Depreciation 162,260 162,481 370,327 320,256
26,554,681 19,335,459 46,212,162 30,658,317
GROSS PROFIT 14,167,569 15,281,655 30,118,207 23,004,222
OPERATING EXPENSES
Selling, general and
administrative expenses 4,116,479 3,638,586 7,487,203 6,332,596
Research and development 29,815 294,473 29,815 304,956
Stock compensation expense 9,263 5,832,960 9,263 5,832,960
TOTAL OPERATING EXPENSES 4,155,557 9,766,019 7,526,281 12,470,512
INCOME FROM OPERATIONS 10,012,012 5,515,636 22,591,926 10,533,710
OTHER INCOME (EXPENSE),
NET
Other (expense) income,
net 3,871 (16,207) (5,779) 42,843
Change value of warrant (1,833,745) -- (1,810,134) --
Interest income (expense),
net (72,974) (112,062) (191,933) (168,840)
Gain on liquidated damage
settlement 1,746,120 -- 1,746,120 --
TOTAL OTHER INCOME
(EXPENSES), NET (156,728) (128,269) (261,726) (125,997)
INCOME BEFORE PROVISION
FOR INCOME TAXES 9,855,284 5,387,367 22,330,200 10,407,713
PROVISION FOR INCOME TAXES -- -- -- --
NET INCOME 9,855,284 5,387,367 22,330,200 10,407,713
OTHER COMPREHENSIVE
INCOME:
Foreign currency
translation adjustment (10,019) 1,452,688 (137,639) 3,715,593
COMPREHENSIVE INCOME $9,845,265 $6,840,055 $22,192,561 $14,123,306
WEIGHTED AVERAGE NUMBER OF
SHARES:
Basic 25,070,356 25,000,000 25,055,668 25,000,000
Diluted 25,076,940 25,183,285 25,055,668 25,175,890
EARNINGS PER SHARE:
Basic $0.39 $0.22 $0.89 $0.42
Diluted $0.39 $0.21 $0.89 $0.41
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 AND 2008
(Unaudited)
Six Months Ended June 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $22,330,200 $10,407,713
Adjusted to reconcile net income to
cash used in operating activities:
Depreciation 478,251 389,553
Amortization 33,377 32,300
Allowance for bad debt 205,687 --
Imputed interest 13,556 10,456
Amortization of long term prepaid
expense 7,329 21,276
Stock compensation expense 9,263 5,871,164
(Gain) expense on liquidated damage
penalty settlement (1,746,120) 500,000
Change in fair value of warrants 1,810,134 --
Changes in operating assets and
liabilities
Notes receivable 806,516 (1,456,847)
Accounts receivable (21,802,792) (14,715,707)
Costs and estimated earnings in
excess of billings on uncompleted
contracts -- 2,923,610
Inventories 81,194 (1,291,373)
Advances for inventory purchase 6,308,955 (6,282,450)
Other current assets and prepaid
expenses (131,544) 153,165
Accounts payable (823,508) (559,222)
Billings in excess of costs and
estimated earnings on uncompleted
contracts -- 122,498
Customer deposits (3,549,925) 885,859
Other payables and accrued
liabilities (329,915) (510)
Sales commission payable -- 781,273
Tax payable 6,038,867 (5,462,952)
Net cash used in operating activities 9,739,525 (7,670,194)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (28,051) (610,720)
Advances for construction material
and equipment purchase -- (3,107,868)
Net cash used in investing activities (28,051) (3,718,588)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment on due to shareholder (824,808) --
Proceeds from shareholder advances 668,449 670,386
Decrease (increase) of restricted
cash 1,030,317 (3,964,579)
Proceeds from notes payable 88,382 2,375,971
Proceeds from short-term loan 21,985,500 7,092,000
Payment on liquidated damage penalty (615,018) --
Net cash provided by financing
activities 22,332,822 6,173,778
EFFECT OF EXCHANGE RATE ON CASH (42,094) 345,621
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 32,002,202 (4,869,383)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 19,741,982 7,390,631
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $51,744,184 $2,521,248
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $369,146 $213,381
Income taxes $229,848 $5,158,928
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Shares issuance for liquidated damage
penalty settlement $217,004 $--
