-- Sales Increase 85% to $34.6 million, Net Income (excluding a non-cash
equity compensation charge) increases 195% to $11.2 million with EPS of
$0.44
-- Backlog for projects in progress increased to approximately $35.0 and
the company’s pipeline of contracts signed from mid-June to mid-July,
2008 stands at approximately $26.0 million.
-- Management Hosts Earnings Conference Call Monday, August 18th at 4:30
p.m. ET
DALIAN, China, Aug. 15 /Xinhua-PRNewswire-FirstCall/ -- 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”) and Dalian RINO Environmental Engineering Science and Technology Co., Ltd., a PRC company that 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 second quarter of 2008 which ended June 30.
SUMMARY FINANCIALS
Second Quarter 2008 Results
Q2 2008 Q2 2007 CHANGE
Net Sales $34.6 million $18.7 million +85%
Gross Profit $15.3 million $10.1 million +51.5%
GAAP Net Income $5.4 million $3.8 million + 42%
Net Income* $11.2 million $3.8 million +195%
GAAP EPS $0.21 $0.21 - 0 -
EPS (Fully Diluted) * $0.44 $0.21 +109.5%
* The asterisk denoted Net Income and EPS in the Q2 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.
Second Quarter of 2008 Results (Unaudited):
Net sales for the second quarter of 2008 increased 85.1% to $34.6 million compared to $18.7 million for the second quarter in 2007. Revenue growth was driven mainly by implementation for desulphurization systems and wastewater treatment systems, while sales of anti-oxidation equipment and coatings, machining services, and technical services declined in second quarter 2007 During the second quarter, the company recorded $25.0 million in desulphurization projects, an increase of 373% from $5.2 million in second quarter 2007, $6.0 million in wastewater treatment system sales, an increase of 62% over the $2.2 million recorded in second quarter 2007, $1.2 million in anti-oxidation equipment and coatings compared to $1.3 million recorded in the same period 2007, and $2.4 million in machining service revenues, a decline of 24% from the $3.2 million recorded in the same period 2007.
“We are very pleased with our progress during the second quarter. Our growth was driven by core product project installations, including several desulphurization projects and a dust catcher system for Nanchang Changli Steel, in addition to two sets of anti-oxidation equipment for Sichan Chuanwei Steel,” stated Mr. Zou Dejun, President and CEO of RINO International.
Gross profit for the second quarter of 2008 was $15.3 million, compared to $10.1 million for the same period last year, yielding gross margins of 44.1% and 53.9% respectively. Gross margins for the second quarter of 2007 were favorably impacted by a licensing agreement for production of desulphurization systems, which concluded in 2007.
Operating expenses for the second quarter were $10.1 million compared to $2.6 million for the same period last year. The increase was due to higher costs associated with the significant increase in revenue, in addition to a $5.8 million, non cash equity compensation charge related to the “make good” provision, which was not present in the 2007 second quarter results. Operating margins were 15% compared to 40.0% for the second quarter of 2008 and 2007, respectively. Excluding this equity compensation charge, operating income would have been $11 million, representing a 47.6% increase from the year ago period and the operating margin for the second quarter of 2008 would have been 31.9%, a 300 basis improvement from the second quarter of 2007.
GAAP Net income for the second quarter of 2008 increased 42.1% to $5.4 million from $3.8 million in the same year ago period. Net income (Non GAAP), excluding the $5.8 million charge in equity compensation expenses, was $11.2 million. The company did not incur income taxes during the second quarter of 2008 due to Dalian Innomind’s tax holiday, but did provide for income taxes of $3.6 million during the second quarter of 2007. Fully diluted earnings per share were $0.21 compared to $0.21 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 second quarter 2008 fully diluted earnings of $0.44 per share.
“This quarter’s gross margins were consistent with our previously disclosed target of between 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 Bruce Richardson, Rino International Corp.’s Chief Financial Officer. “As previously discussed, a non cash equity compensation charge was anticipated for the 2008 year as a result of the “make good” provisions. We currently anticipate total
full-year 2008 non-cash equity compensation expense of $17.5 million which will impact the GAAP net income during both the third and fourth quarters. These charges are solely related to our make good provisions and will end after 2008.”
Six Month Financial Results
For the first half of 2008, revenues increased to $53.7 million, up 88.3% from $28.5 million in first half of 2007. Gross profit increased 53.3% to $23.0 million in the first six months of 2008, versus $15.0 million in the first six month of 2007. Gross margin was 42.9% in the first half of 2008 compared to 52.7% during the first half of 2007 with the majority of variance coming from the absence of revenue related to higher margin licensing agreement which was in place during 2007. Operating income in the first half of 2008 decreased 2.9 % to $10.7 million compared to $11.0 million in the first half 2007. Excluding the $5.8 million equity compensation charge, operating income would have been $16.5 million and represented a 50% increase from the first half of 2007. The company did not provide for taxes during the first six months of 2008, but did incur a $3.6 million provision during the first half of 2007. GAAP net income for the first six months of 2008 was $10.4 million or $0.41 per diluted share, up 44.5% from $7.2 million, or $0.40 per diluted share in the first half of 2007. Net income (Non GAAP), excluding the equity compensation charge, was $16.2 million, which equates to $0.64 per diluted share. 25.2 million and 17.9 million diluted shares were utilized for these calculations during the first six months of 2008 and 2007, respectively.
Balance Sheet:
Cash and cash equivalents and restricted cash totalled $7.6 million on June 30, 2008 (including $5.1 million in restricted cash), compared to $8.4 million (of which $1 million was restricted cash) on December 31, 2007. The company had $47.2 million in working capital on June 30, 2008 and a current ratio of 3.2 to 1. The accounts receivable balance was $37.4 million on June 30, 2008, compared to $20.8 million on December 31, 2007 and annualized days sales outstanding for the second quarter of 2008 was 97 days. Net cash used by operations was $7.7 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 existing and new customers, many which will be completed this year. Backlog for projects in process is $35.0 million, the majority of which we expect will translate into revenue during 2008. “In addition, we signed approximately $26 million in new business between the middle of June and the middle of July,” Mr. Zou concluded.
2008 Make Good Provision
As part of the private placement dated October 5, 2007, management entered into a “make good agreement” and placed a total of 3.91 million shares into an escrow to secure its obligations to meet a net income target of $28 million in after tax net income (“ATNI”) and $1.12 on a fully diluted basis in earnings per share for 2008. If the objective is not met, the shares will be transferred on an all or none basis to the investors in the private placement on a pro-rata basis. If the objective is met, the shares will be returned to the founders and a non cash, equity compensation charge, estimated at $17.5 million, will be incurred in 2008 to account for this. This charge will not impact the reported ATNI number for purposes of determining whether the founders have achieved the make good.
Conference Call Information:
The conference call will take place at 4:30 p.m. ET on Monday, August 18, 2008. Interested participants should call 800-762-8779 when calling within the United States or 480-629-9031 when calling internationally. A playback will be available through August 25, 2008. To listen, please call 800-406-7325 within the United States or 303-590-3030 when calling internationally. Utilize the pass code 3910637 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link, http://viavid.net/dce.aspx?sid=000054AA, or at ViaVid’s website at http://www.viavid.net , where the webcast can be accessed through September 18, 2008.
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, Innomind and RINO. 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 Registration Statement on Form S-1 and the amendments thereto filed with the SEC.
- Tables Follow -
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2008 AND DECEMBER 31, 2007
June 30, December 31,
2008 2007
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $2,521,248 $7,390,631
Restricted cash 5,078,061 1,000,000
Accounts receivable 37,376,216 20,840,336
Notes receivable 1,714,822 202,670
Costs and estimated earnings in
excess of billings on
uncompleted contracts -- 2,818,122
Inventories 1,518,797 178,480
Advances for inventory purchase 19,377,225 12,092,202
Other current assets and prepaid
expenses 1,095,390 1,174,464
Total current assets 68,681,759 45,696,905
PROPERTY, PLANT AND EQUIPMENT,
NET 11,966,517 11,000,581
OTHER ASSETS
Prepaid expenses (non-current) 80,245 95,706
Advances for equipment and
construction material purchase 7,188,956 3,751,343
Prepayment for land use right 455,793 428,301
Intangible assets, net 1,238,225 1,190,289
Total other assets 8,963,219 5,465,639
Total assets $89,611,495 $62,163,125
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $2,129,787 $2,534,858
Billings in excess of costs and
estimated earnings on
uncompleted contracts 126,004 --
Customer deposits 1,035,230 116,214
Liquidated damages payable 1,500,000 1,000,000
Other payables and accrued
liabilities 729,060 686,031
Notes payable 2,443,981 --
Sales commission payable 803,636 --
Due to a stockholder 803,634 106,963
Other taxes payable 26,067 581,444
Income tax payable 1,065,001 5,970,794
Value added tax payable 3,471,713 2,989,365
Short-term loan 7,295,000 --
Total current liabilities 21,429,113 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 June 30, 2008
and December 31, 2007) 2,500 2,500
Additional paid-in capital 14,103,283 8,221,663
Retained earnings 19,531,275 11,376,163
Statutory reserves 4,362,140 2,109,539
Accumulated other comprehensive
income 5,702,865 1,987,272
Total shareholders’ equity 43,702,063 23,697,137
Total liabilities and
shareholders’ equity $89,611,495 $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 SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(UNAUDITED)
Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
Contracts $32,187,128 $8,739,662 $48,484,873 $14,276,529
Services 2,429,986 9,962,959 5,177,666 14,216,413
34,617,114 18,702,621 53,662,539 28,492,942
COST OF SALES
Cost of contracts 17,583,203 5,935,444 27,845,892 9,309,230
Cost of services 1,589,775 2,540,189 2,492,169 3,937,109
Depreciation 162,481 138,330 320,256 258,814
19,335,459 8,613,963 30,658,317 13,505,153
GROSS PROFIT 15,281,655 10,088,658 23,004,222 14,987,789
OPERATING
EXPENSES
Selling, general
and administrative
expenses 3,585,508 1,743,268 5,730,999 3,040,616
Depreciation 36,692 27,714 69,297 54,240
Amortization 16,386 12,669 32,300 24,133
Research and
development 578,153 831,984 588,636 831,984
Stock compensation
expense-shares
placed in escrow 5,832,960 -- 5,832,960 --
TOTAL OPERATING
EXPENSES 10,049,699 2,615,635 12,254,192 3,950,973
INCOME FROM
OPERATIONS 5,231,956 7,473,023 10,750,030 11,036,816
OTHER INCOME
(EXPENSE), NET
Other income 1,379 5,153 74,756 5,153
Government grant 283,680 70,043 283,680 70,043
Interest income 34,642 784 56,568 2,427
Interest expense (146,704) (157,098) (225,408) (310,955)
Liquidated damage
expense -- -- (500,000) --
Other expenses (17,586) (573) (31,913) (3,196)
TOTAL OTHER
INCOME (EXPENSE) 155,411 (81,691) (342,317) (236,528)
INCOME BEFORE
PROVISION FOR
INCOME TAXES 5,387,367 7,391,332 10,407,713 10,800,288
PROVISION FOR
INCOME TAXES -- 3,623,618 -- 3,623,618
NET INCOME 5,387,367 3,767,714 10,407,713 7,176,670
OTHER COMPREHENSIVE
INCOME:
Foreign currency
translation
adjustment 1,452,688 667,258 3,715,593 302,994
COMPREHENSIVE
INCOME $6,840,055 $4,434,972 $14,123,306 $7,479,664
WEIGHTED AVERAGE
NUMBER OF SHARES:
Basic 25,000,000 17,899,643 25,000,000 17,899,643
Diluted 25,183,285 17,899,643 25,175,890 17,899,643
EARNINGS PER SHARE:
Basic $0.22 $0.21 $0.42 $0.40
Diluted $0.21 $0.21 $0.41 $0.40
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
(UNAUDITED)
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $10,407,713 $7,176,670
Adjusted to reconcile net income to
cash used in operating activities:
Depreciation 389,553 313,054
Amortization 32,300 24,133
Imputed interest 10,456 24,082
Amortization of long term prepaid
expense 21,276 --
Stock compensation expense - options
issued 38,204 --
Stock compensation expense - shares
placed in escrow 5,832,960 --
Changes in operating assets and
liabilities
Accounts receivable (14,715,707) (1,125,821)
Costs and estimated earnings in
excess of billings on uncompleted
contracts 2,923,610 --
Inventories (1,291,373) (4,088,657)
Other current assets and prepaid
expenses 153,165 (763,004)
Advances for inventory purchase (6,282,450) (8,191,617)
Accounts payable (559,222) (94,546)
Billings in excess of costs and
estimated earnings on uncompleted
contracts 122,498 180,371
Customer deposits 885,859 --
Liquidated damages payable 500,000 --
Other payables and accrued
liabilities (510) 90,660
Notes receivable (1,456,847) 12,971
Sales commission payable 781,273 --
Other taxes payable (577,866) 355,362
Value added tax payable 273,842 548,055
Income tax payable (5,158,928) 3,788,534
Deferred tax liabilities -- (664,890)
Net cash used in operating activities (7,670,194) (2,414,643)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (610,720) (61,907)
Purchase of intangible assets -- (376,159)
Advances for construction material
and equipment purchase (3,107,868) --
Prepayment for land use right -- (328,475)
Net cash used in investing
activities (3,718,588) (766,541)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in due to related
parties 670,386 (135,187)
Increase of restricted cash (3,964,579) --
Increase of notes payable 2,375,971 --
Proceeds from short-term loan 7,092,000 --
Net cash provided by (used in)
financing activities 6,173,778 (135,187)
EFFECT OF EXCHANGE RATE ON CASH 345,621 55,127
DECREASE IN CASH AND CASH EQUIVALENTS (4,869,383) (3,261,244)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 7,390,631 3,604,350
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $2,521,248 $343,106
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $213,381 $274,141
Income taxes $5,158,928 $499,975
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
(FORMERLY KNOWN AS JADE MOUNTAIN CORPORATION)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED JUNE 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-options
issued 38,204
Stock compensation
expense-shares
placed in escrow 5,832,960
Imputed interest
on advances from
a shareholder 10,456
Net income
Allocation to
Statutory reserve
Foreign currency
Translation gain
BALANCE, June 30,
2008 (Unaudited) $25,000,000 $2,500 $14,103,283
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-options
issued 38,204
Stock compensation
expense-shares
placed in escrow 5,832,960
Imputed interest
on advances from
a shareholder 10,456
Net income 10,407,713 10,407,713
Allocation to
statutory
reserve 2,252,601 (2,252,601) --
Foreign currency
translation
gain 3,715,593 3,715,593
BALANCE, June 30,
2008 (Unaudited) $4,362,140 $19,531,275 $5,702,865 $43,702,063
For more information, please contact:
For the Company:
Bruce Richardson
Tel: +86-411-8766-1233
Email: bruce.richardson@rinogroup.com
Investors:
Matt Hayden
HC International, Inc.
Tel: +1-561-245-5155
Email: matt.hayden@hcinternational.net
