NEW YORK, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", (NYSE Alternext US: TBV), http://www.tiens-bio.com , announced financial results for the third quarter and nine months ended September 30, 2008.
For the third quarter ended September 30, 2008, revenue was $26.2 million, an increase of 137.6% compared to $11.0 million for the third quarter ended September 30, 2007.
Net income for the third quarter of 2008 was $14.5 million, an increase of 377.0% compared to $3.0 million for the same period in 2007.
The increase in revenue for the third quarter of 2008 reflects an increase in revenue for both China and internationally.
For the third quarter of 2008, revenue in China was $14.6 million, an increase of 330.1% compared to $3.4 million for the same period in 2007. During the third quarter, Tianshi Engineering, the affiliated company which markets and sells Tiens' products in China, announced plans to increase the prices of its products in October 2008. Tiens believes that the increase in revenue in the third quarter was due in part to customers stocking up on certain products as a result of the price increase announcement by Tianshi Engineering. Therefore, the increase in sales may not continue through the fourth quarter of 2008. At the present time, however, the price increase of Tianshi Engineering products will not affect the price at which Biological sells to Tianshi Engineering.
For the third quarter of 2008, international revenue was $11.6 million, an increase of 52.1% compared to $7.6 million for the same period in 2007. The increase in international sales reflects further reductions in export restrictions by China for countries in Africa and Asia through the third quarter of 2008.
In August 2007, China's Administration of Quality Supervision, Inspection and Quarantine ("AQSIQ") announced an ongoing national campaign in China against unsafe food and substandard products. The special campaign against poor product quality was launched in response to a series of safety scares involving Chinese products worldwide. The campaign set 20 detailed goals, including twelve "100 percents". For example, 100 percent of food producers should be licensed; 100 percent of agricultural wholesale markets in cities must be monitored; 100 percent of suppliers of raw materials for exported products should be inspected; and 100 percent of agricultural products must be free of five types of strong pesticides. The campaign, which was originally scheduled to finish at the end of 2007, is currently scheduled to continue throughout 2008.
As a result of this campaign by the AQSIQ, there has been a general slow-down and backlog of export clearances for Chinese food products, and, from August 2007 through the first quarter of 2008, Tiens experienced significant delays in obtaining export clearance for all of the products which we sell to our international affiliates. Beginning in the second quarter of 2008, these export restrictions were reduced for exports to countries in Africa and Asia, but remained in place for exports to countries in Europe and the Americas. During the third quarter of 2008, these export restrictions were further reduced.
For the nine months ended September 30, 2008, revenue was $58.7 million, an increase of 41.1% compared to $41.6 million for the nine months ended September 30, 2007.
For the nine months ended September 30, 2008, net income was $22.8 million, an increase of 56.5% compared to $14.6 million for the same period in 2007.
For the nine months ended September 30, 2008, revenue in China was $29.2 million, an 85.5% increase compared to $15.7 million for the same period in 2007. The growth in revenue during the third quarter was offset by a 15% decrease in revenue in China during the first quarter of 2008. During the first quarter of 2008, Tiens believes that sales in China were negatively impacted by continued uncertainty in China regarding the impact of recently enacted direct selling regulations and uncertainty regarding the timing of the direct selling license application process and approval.
For the nine months ended September 30, 2008, international revenue was $29.5 million, an increase of 14.0% compared to $25.8 million for the same period in 2007. This increase in international revenue was mainly due to an increase in sales in Russia and Indonesia.
Other Highlights
Cost of sales for the third quarter of 2008 increased $113.8% to $6.6 million, compared to $3.1 million for the same period in 2007. This increase was mainly due to the increase in revenue for the period. Cost of sales for the period increased at a lower rate than revenue primarily due to the increase in sales of products sold to Tianshi Engineering which have a lower cost compared to products sold to overseas companies.
For the nine months ended September 30, 2008, cost of sales increased 40.7% to $16.9 million, compared to $12.0 million for the same period in 2007. This increase was in line with the increase in revenue for the period and was due to both the increase in sales and the increase in the value of the renminbi against the dollar.
Gross profit for the third quarter of 2008 increased 146.8% to $19.6 million, compared to $7.9 million for the same period in 2007. For the nine months ended September 30, 2008, gross profit increased 41.3% to $41.8 million, compared to $29.4 million for the same period in 2007. The gross profit margin for the third quarter of 2008 was 74.8%, compared to 72.0% for the same period in 2007. This increase reflects the increase in proportion of sales with higher gross profit margins. For the nine months ended September 30, 2008, the gross profit margin was 71.3% compared to 71.2% for the same period in 2007. The increase in gross profit margin during the third quarter was offset by a 4.2% decrease during the first quarter of 2008.
Selling, general and administrative expenses were $4.6 million for the third quarter of 2008, an increase of 18.5% compared to $3.9 million for the same period in 2007. The increase was primarily due to increases in salary expense and research and development. Selling, general and administrative expenses as a percentage of sales was 17.4% for the third quarter of 2008 compared to 34.9% for the same period in 2007. For the nine months ended September 30, 2008, selling, general and administrative expenses were $12.9 million, an increase of 22.8% compared to $10.5 million in the same period in 2007. For the nine months ended September 30, 2008, selling, general and administrative expenses as a percentage of sales was 22.0%, compared to 25.3% for the same period in 2007. This decrease reflects the increase in sales.
In China, Tiens sells its products to Tianshi Engineering, an affiliated Chinese company. In order to qualify for a direct selling license in China, Tianshi Engineering is required to produce a part of the products that it sells in China. As a result, in 2006, Tiens began to sell semi-finished products to Tianshi Engineering, which jointly shares licenses with Tiens to produce, manufacture and sell the products. The semi-finished products, which Tiens is now exclusively selling in China, have lower sales prices than the finished products Tiens had previously sold to Tianshi Engineering. The application of Tianshi Engineering for a direct selling license in China is still pending.
Tiens continues to strive to expand its market share in China through the branches, chain stores, and Chinese affiliated companies of Tianshi Engineering. To enhance its position in this competitive market, Tianshi Engineering continues to increase its marketing activities in China, including opening additional branches across China, developing a nation-wide advertising campaign, encouraging media coverage and strengthening the Tiens brand.
As of September 30, 2008, Tiens had $101.5 million of retained earnings and total shareholders' equity of $143.6 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are extremely pleased with the significant increase in both our domestic and international revenue and continued sequential growth since the first quarter of 2008. We continue to benefit from reduced international export restrictions and are optimistic that our international sales will further increase as additional export restrictions are lifted. We are well positioned to capitalize on our growing international customer base and remain committed to gaining greater market share in China for our high quality products as well."
About Tiens Biotech Group (USA), Inc. http://www.tiens-bio.com .
Tiens Biotech Group (USA), Inc. (NYSE Alternext US: TBV) conducts its business operations from Tianjin, People's Republic of China. Tiens primarily engages in the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements.
Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 52 countries. Since its establishment, Tiens has developed and produced 33 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.
In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 100 branches. Outside of China, Tiens sells its products to affiliated companies in 52 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company's direct sales marketing program is subject to governmental regulation in each of these countries.
Certain statements in this press release constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. Such forward-looking statements are not necessarily indicative of future financial results, and may involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. The Company's future operating results are dependent upon many factors, including but not limited to: (i) the Company's ability to obtain sufficient capital or a strategic business arrangement to fund its expansion plans; (ii) the Company's ability to build the management and human resources and infrastructure necessary to support the growth of its business; (iii) competitive factors and developments beyond the Company's control; (iv) whether the Company continues to experience delays in the export clearance of its products; (v) whether Tianshi Engineering, the Company's affiliate which sells its products in China, obtains a direct selling license in China; and (vi) other risk factors discussed in the Company's periodic filings with the Securities and Exchange Commission which are available for review at http://www.sec.gov under "Search for Company Filings."
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
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
As Adjusted As Adjusted
(Note 1) (Note 1)
REVENUE - RELATED
PARTIES $26,195,853 $11,027,478 $58,671,121 $41,584,749
COST OF SALES
- RELATED PARTIES 6,606,502 3,089,791 16,850,267 11,979,984
GROSS PROFIT 19,589,351 7,937,687 41,820,854 29,604,765
SELLING,
GENERAL AND
ADMINISTRATIVE
EXPENSES 4,562,946 3,851,249 12,898,742 10,504,831
INCOME FROM
OPERATIONS 15,026,405 4,086,438 28,922,112 19,099,934
OTHER (EXPENSE)
INCOME, NET (252,501) 152,014 (866,178) 1,040,161
INCOME BEFORE
PROVISION
FOR INCOME TAXES
AND MINORITY
INTEREST 14,773,904 4,238,451 28,055,934 20,140,095
PROVISION FOR
INCOME TAXES 152,990 344,248 3,297,438 1,610,653
INCOME BEFORE
MINORITY INTEREST 14,620,914 3,894,203 24,758,496 18,529,442
MINORITY INTEREST 92,326 848,212 1,979,405 3,970,791
NET INCOME 14,528,588 3,045,991 22,779,091 14,558,651
OTHER
COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment 807,035 1,927,502 7,906,663 5,700,759
COMPREHENSIVE
INCOME $15,335,623 $4,973,493 $30,685,754 $20,259,410
EARNINGS PER
SHARE, BASIC
AND DILUTED $0.20 $0.04 $0.32 $0.20
WEIGHTED
AVERAGE NUMBER
OF SHARES, BASIC
AND DILUTED 71,333,586 71,333,586 71,333,586 71,333,586
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2008 AND DECEMBER 31, 2007
A S S E T S
September 30, December 31,
2008 2007
As Adjusted
(Unaudited) (Note 1)
CURRENT ASSETS:
Cash $41,667,163 $54,081,848
Accounts receivable, trade -
related parties, net of allowance
for doubtful accounts of $168,305
and $71,700, as of September 30,
2008 and December 31, 2007,
respectively 33,492,698 14,268,229
Accounts receivable, trade
- third parties -- 104,398
Inventories 7,565,126 5,949,963
Other receivables 465,221 1,068,343
Other receivables - related parties 10,852,795 13,887,138
Employee advances 423,239 65,901
Prepaid expense 308,614 623,638
Prepaid income taxes 728,993 --
Total current assets 95,503,849 90,049,458
PLANT AND EQUIPMENT, net 15,617,886 16,071,900
OTHER ASSETS:
Construction in progress 61,421,955 39,792,774
Construction deposits 3,950,031 1,089,216
Intangible assets, net 15,820,797 9,246,879
Other assets 5,332,266 5,301,847
Total other assets 86,525,049 55,430,716
Total assets $197,646,784 $161,552,074
L I A B I L I T I E S A N D S H A R E H O L D E R S’ E Q U I T Y
September 30, December 31,
2008 2007
As Adjusted
(Unaudited) (Note 1)
CURRENT LIABILITIES:
Accounts payable $7,507,216 $4,070,906
Advances from customers - related
parties 3,074,501 1,700,838
Wages and benefits payable 938,879 1,250,685
Other taxes payable -- 536,819
Income taxes payable 138,841 665,726
Contractor deposits 236,165 595,128
Contactor payables 7,606,111 7,820,285
Other payables 1,223,681 1,133,539
Other payables - related parties 7,582,403 7,938,205
Dividend payable to minority interest -- 4,902,629
Current portion of long term
debt, related party 2,130,000 2,130,000
Total current liabilities 30,437,797 32,744,760
NON-CURRENT LIABILITIES
Long term debt, net of current
portion, related party 3,202,742 4,267,742
Other payables-non current 574,184 538,130
Deferred income 11,207,307 4,895,049
Total non current liabilities 14,984,233 9,700,921
Total liabilities 45,422,030 42,445,681
MINORITY INTEREST 8,576,670 6,144,063
SHAREHOLDERS’ EQUITY:
Common stock, $0.001 par value,
250,000,000 shares authorized,
71,333,586 issued and
outstanding, respectively 71,334 71,334
Paid-in-capital 8,842,009 8,842,009
Statutory reserves 9,420,783 9,420,783
Retained earnings 101,447,251 78,668,160
Accumulated other comprehensive
income 23,866,707 15,960,044
Total shareholders’ equity 143,648,084 112,962,330
Total liabilities and
shareholders’ equity $197,646,784 $161,552,074
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007 (UNAUDITED)
Nine months ended September 30,
2008 2007
As Adjusted
(Note 1)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $22,779,091 $14,558,651
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Provision for doubtful accounts 89,913 (11,320)
Minority interest 1,979,405 3,970,791
Depreciation 2,063,597 2,218,230
Amortization 226,559 218,677
Interest expense (income) (138,328) 62,182
(Gain) on sale of assets (8,644) (3,341)
(Increase) decrease in assets:
Accounts receivable, trade -
related parties (25,058,774) (1,558,640)
Accounts receivable, trade -
third parties 109,101 --
Other receivables 639,999 2,050,878
Other receivables - related parties 452,044 (10,924,763)
Inventories (1,090,429) 1,436,897
Employee advances (345,666) 51,326
Prepaid expense 347,689 909,621
Increase (decrease) in liabilities:
Accounts payable 3,098,509 (1,278,408)
Advances from customers - related
parties 1,233,804 (62,960)
Wages and benefits payable (381,633) (233,645)
Other taxes payable (1,834,741) (346,126)
Other payables (86,004) 109,016
Other payables - related parties 282,945 (278,926)
Net cash provided by operating
activities 4,358,437 10,888,140
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayment from (loans to) related
parties 2,155,702 (2,865,778)
Collections from (loans to) local
government 454,941 (9,778)
Acquisition of intangible assets (6,037,069) (317,238)
Construction deposits (3,363,647) --
Contractor deposits (390,634) 64,189
Addition to construction in progress (18,573,180) (17,431,705)
Proceeds from sale of equipment 61,797 196
Purchase of equipment and automobiles (574,822) (4,742,096)
Net cash used in investing activities (26,266,912) (25,302,210)
CASH FLOW FROM FINANCING ACTIVITIES:
Loan from (repayment to) related parties 6,578,584 (846,820)
Payments on long term debt, related party (1,065,000) --
Increase in legal capital -- 20,999,900
Increase in deferred income 5,861,232 --
Payment to minority interest shareholder (5,123,520) (6,676,102)
Net cash provided by (used in)
financing activities 6,251,296 13,476,978
EFFECT OF EXCHANGE RATE CHANGES ON CASH 3,242,494 1,822,813
INCREASE (DECREASE) IN CASH (12,414,685) 885,721
CASH, beginning of period 54,081,848 55,214,540
CASH, end of period $41,667,163 $56,100,261
Supplemental disclosures of cash flow
information
Cash paid during the year for:
Interest (net of amount capitalized) $132,662 $211,441
Income taxes $3,857,173 $1,885,052
Note 1. On December 20, 2007, the Company's subsidiary, Tianshi
International Holdings Group Ltd. ("Tianshi Holdings"), entered a
Sale and Purchase Agreement with Tianshi International Investment
Group Co., Ltd. ("Tianshi Investment"). Pursuant to the Sale and
Purchase Agreement, Tianshi Holdings agreed to buy all of the
registered share capital of Tianjin Tiens Life Resources Co., Ltd.
("Life Resources") for $64.2 million. The transaction closed on
March 13, 2008. As Tianshi Holdings and Life Resources were under
common control by Jinyuan Li before the combination, the
combination was treated for accounting purposes as a pooling of
interests. The balance sheet of the Company at December 31, 2007
and comparative interim financial statements for the corresponding
periods of the preceding fiscal year were adjusted as if Life
Resources had been combined before January 1, 2007.
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
REVENUE BY REGION
(Unaudited)
Three months
ended September 30,
2008 2007 Change
China $14,576,060 $3,388,880 330.1%
International $11,619,793 $7,638,598 52.1%
Total $26,195,853 $11,027,478 137.6%
Nine months
ended September 30,
2008 2007 Change
China $29,191,771 $15,736,494 85.5%
International $29,479,350 $25,848,255 14.0%
Total $58,671,121 $41,584,749 41.1%
For more information, please contact:
Investor Relations
Tiens Biotech Group (USA), Inc.
Tel: +86-22-8213-7915
Fax: +86-22-8213-7667
Email: investor@tiens-bio.com
Web: http://www.tiens-bio.com
Carl Hymans
G. S. Schwartz & Co.
Tel: +1-212-725-4500
Fax: +1-212-725-9188
Email: carlh@schwartz.com