NEW YORK, Nov. 14 /PRNewswire-Asia/ -- Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE Amex: TBV), http://www.tiens-bio.com , today announced financial results for the third quarter and nine months ended September 30, 2009.
Revenue for the third quarter of 2009 was $9.4 million, compared to $26.2 million for the third quarter of 2008.
Net income for the third quarter of 2009 was $2.9 million, or $0.03 per share, compared to net income of $14.6 million, or $0.20 per share, for the third quarter of 2008.
Results for the third quarter of 2009 reflect a decrease in revenue in China to $4.7 million, compared to $14.6 million for the same period in 2008. The revenue decrease is attributed to a decline in domestic distributors' demand in the third quarter of 2009 after stocking up on products in the second quarter of 2009 due to the Company's increased marketing efforts in the second quarter. In addition, revenue for the third quarter of 2008 was unusually high due to a future price increase announcement by Tianshi Engineering during that quarter.
For the third quarter of 2009, international revenue was $4.8 million, compared to $11.6 million for the same period in 2008. The decrease in international revenue was mainly due to a decrease in sales in the Asia-Pacific region by $6.1 million and the Europe-Asia region by $2.5 million in the third quarter of 2009, as compared to the third quarter of 2008. International revenue results for the third quarter of 2009 reflect a decline in customer demand for the period as customers stocked up on certain products during the first two quarters of 2009. Export restrictions were reduced in late 2008 as China's Administration of Quality Supervision, Inspection and Quarantine completed its national campaign against unsafe food and substandard products. As a result of reduced export restrictions, customers were able to purchase more products in the first two quarters of 2009.
Revenue for the nine months ended September 30, 2009 was $48.2 million, compared to $58.7 million for the nine months ended September 30, 2008, reflecting the aforementioned decrease in sales in China.
Net income for the nine months ended September 30, 2009 was $22.2 million, or $0.29 per share, compared to $24.8 million, or $0.32 per share for nine months ended September 30, 2008.
For the nine months ended September 30, 2009, revenue in China was $17.1 million, compared to $29.2 million for the nine months ended September 30, 2008 reflecting the aforementioned reduction in distributors' product demand in the third quarter.
For the nine months ended September 30, 2009, international revenue was $31.2 million, compared to $29.5 million for the same period in 2008. The increase in international revenue for the nine months of 2009 reflects a strong increase in international sales in the first quarter of 2009 after China's Administration of Quality Supervision, Inspection and Quarantine ceased its export restrictions. From August 2007 to the end of 2008, it implemented an ongoing national campaign in China against unsafe food and substandard products, which resulted in a general slow-down and backlog of export clearances for Chinese food products.
Other Highlights
Cost of sales for the third quarter of 2009 was $3.1 million, compared to $6.6 million for the same period in 2008. The decrease was mainly due to the decrease in revenue for the third quarter of 2009.
Gross profit for the third quarter of 2009 was $6.3 million, compared to $19.6 million for the same period in 2008. The gross profit margin for the third quarter of 2009 was 66.7%, compared to 74.8% for the same period in 2008.
Selling, general and administrative expenses for the third quarter of 2009 were $2.9 million, compared to $4.6 million for the same period in 2008. The selling, general and administrative expenses as a percentage of sales was 30.9% for the third quarter of 2009 compared to 17.4% for the same period in 2008. This increase was primarily due to the decrease in revenue for the third quarter of 2009 compared to the same period of 2008.
Cost of sales for the nine months ended September 30, 2009, was $15.0 million, compared to $16.9 million for the same period in 2008. Cost of sales for the period decreased at a slightly lower rate than revenue, primarily due to fixed costs, which do not increase or decrease in line with revenue changes.
Gross profit for the nine months ended September 30, 2009 was $33.2 million, compared to $41.8 million the same period in 2008, and the gross profit margin was 68.9% compared to 71.3% for the same period in 2008. These decreases were mainly due to the decrease of revenue and the increase of fixed cost as a percentage of revenue.
Selling, general and administrative expenses for the nine months ended September 30, 2009 were $10.1 million, compared to $12.9 million in the same period in 2008. For the nine months ended September 30, 2009, selling, general and administrative expenses as a percentage of sales was 20.9%, compared to 22.0% for the same period in 2008. This decrease was primarily due to the decrease in selling, general and administrative expenses for the third quarter of 2009.
As of September 30, 2009, Tiens had $123.5 million of retained earnings and total shareholders' equity of $170.5 million.
Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are confident that international and domestic sales will return to, and potentially exceed, previous levels as customers and distributors begin to replenish stored up products. We will continue to implement our strategic plans for long-term growth and remain committed to expanding our international customer base and gaining greater market share in China."
About Tiens Biotech Group (USA), Inc. http://www.tiens-bio.com
Tiens Biotech Group (USA), Inc. (NYSE Amex: 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 46 countries. Since its establishment, Tiens has developed and produced 37 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 98 branches. Outside of China, Tiens sells its products to affiliated companies that 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."
- Tables Follow -
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, 2009 AND 2008
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
REVENUE -
RELATED PARTIES $9,439,739 $26,195,853 $48,228,320 $58,671,121
COST OF SALES -
RELATED PARTIES 3,144,650 6,606,502 14,997,118 16,850,267
GROSS PROFIT 6,295,089 19,589,351 33,231,202 41,820,854
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES 2,916,202 4,562,946 10,061,729 12,898,742
INCOME FROM
OPERATIONS 3,378,887 15,026,405 23,169,473 28,922,112
Interest
expense (40,363) (67,207) (146,180) (199,869)
Interest
income 76,154 227,326 262,701 733,175
Other
expense (16,122) (412,620) (89,554) (1,399,484)
OTHER (EXPENSE)
INCOME, NET 19,669 (252,501) 26,967 (866,178)
INCOME BEFORE
INCOME TAXES 3,398,556 14,773,904 23,196,440 28,055,934
INCOME TAXES 544,688 152,990 1,027,404 3,297,438
NET INCOME 2,853,868 14,620,914 22,169,036 24,758,496
LESS: Net income
attributable to
the
noncontrolling
interest (617,638) (92,326) (1,163,683) (1,979,405)
NET INCOME
ATTRIBUTABLE TO
THE COMPANY 2,236,230 14,528,588 21,005,353 22,779,091
OTHER
COMPREHENSIVE
INCOME
Foreign
currency
translation
adjustment 170,638 807,035 381,630 7,906,663
COMPREHENSIVE
INCOME
ATTRIBUTABLE
TO THE
COMPANY 2,406,868 15,335,623 21,386,983 30,685,754
COMPREHENSIVE
INCOME
ATTRIBUTABLE
TO THE
NON-CONTROLLING
INTEREST 629,028 94,943 1,188,923 2,432,607
COMPREHENSIVE
INCOME $3,035,896 $15,430,566 $22,575,906 $33,118,361
EARNINGS PER
SHARE, BASIC
AND DILUTED $0.03 $0.20 $0.29 $0.32
WEIGHTED
AVERAGE SHARES
OUTSTANDING 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, 2009 AND DECEMBER 31, 2008
September 30, December 31,
2009 2008
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $9,518,495 $20,992,573
Cash related to assets held for sale 23,984,135 23,861,938
Total cash 33,502,630 44,854,511
Accounts receivable, trade -
related parties, net of allowance
for doubtful accounts of $208,535 and
$1,108,789 as of September 30, 2009
and December 31, 2008, respectively 14,215,995 23,941,431
Inventories 5,595,637 8,365,607
Other receivables 932,781 813,591
Other receivables - related parties 13,833,872 15,729,076
Employee advances 193,525 112,591
Prepaid expenses 639,435 301,898
Prepaid taxes 1,489,956 1,531,207
Other assets held for sale 10,839,419 10,904,842
Total current assets 81,243,250 106,554,754
PROPERTY, PLANT AND EQUIPMENT, net 10,445,464 10,274,643
OTHER ASSETS:
Construction in progress 108,687,141 72,300,104
Construction deposits 2,980,428 2,586,302
Intangible assets, net 12,939,643 13,137,195
Other assets 8,772,637 87,541
Total other assets 133,379,849 88,111,142
Total assets $225,068,563 $204,940,539
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2009 AND DECEMBER 31, 2008
LIABILITIES AND SHARE HOLDERS' EQUITY
September 30, December 31,
2009 2008
(Unaudited)
CURRENT LIABILITIES:
Accounts payable $4,690,894 $6,283,849
Advances from customers - related parties 4,056,804 3,239,650
Wages and benefits payable 724,125 1,449,146
Other taxes payable -- 117,818
Contractor deposits 249,195 163,248
Contractor payables 18,214,994 11,871,456
Other payables 1,632,208 1,933,743
Other payables - related parties 216,941 6,373,900
Current portion of long-term debt,
related party 2,130,000 2,130,000
Liabilities directly associated with
assets classified as held for sale 114,910 122,047
Total current liabilities 32,030,071 33,684,857
NON-CURRENT LIABILITIES
Long-term debt, net of current portion,
related party 1,072,742 2,137,742
Deferred income 11,235,733 11,208,844
Total non current liabilities 12,308,475 13,346,586
Total liabilities 44,338,546 47,031,443
EQUITY:
Shareholders' equity of the Company:
Common stock, $0.001 par value,
250,000,000 shares authorized,
71,333,586 issued and outstanding 71,334 71,334
Paid-in-capital 9,461,369 9,234,123
Statutory reserves 13,217,217 9,420,783
Retained earnings 123,534,272 106,325,356
Accumulated other comprehensive income 24,232,692 23,851,062
Total shareholders' equity of the
Company 170,516,884 148,902,658
Noncontrolling interest 10,213,133 9,006,438
Total equity 180,730,017 157,909,096
Total liabilities and equity $225,068,563 $204,940,539
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 (UNAUDITED)
Nine months ended September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $22,169,036 $24,758,496
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Provision for doubtful accounts (902,297) 89,913
Depreciation 1,662,206 2,063,597
Amortization 291,418 226,559
Interest income (9,357) (138,328)
Gain on sale of assets (14,846) (8,644)
(Increase) decrease in assets:
Accounts receivable, trade -
related parties 10,678,476 (25,058,774)
Accounts receivable, trade - third
parties -- 109,101
Other receivables (121,058) 639,999
Other receivables - related parties (1,306,527) 452,044
Inventories 2,801,809 (1,090,429)
Employee advances (80,873) (345,666)
Prepaid expense (336,620) 347,689
Increase (decrease) in liabilities:
Accounts payable (1,687,613) 3,098,509
Advances from customers - related
parties 808,830 1,233,804
Wages and benefits payable (768,334) (381,633)
Other taxes payable (31,337) (1,834,741)
Other payables (176,274) (86,004)
Other payables - related parties (76,484) 282,945
Net cash provided by operating
activities 32,900,155 4,358,437
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection from loans to local
government 105,208 454,941
Repayment of loan from related
parties -- 2,155,702
Acquisition of intangible assets -- (6,037,069)
Construction deposits (3,465,755) (3,363,647)
Contractor deposits 85,498 (390,634)
Addition to construction in
progress (26,936,754) (18,573,180)
Equipment deposits (8,700,872) -
Proceeds from sales of
properties 17,041 61,797
Purchase of equipment and
automobiles (1,755,815) (574,822)
Net cash used in investing
activities (40,651,449) (26,266,912)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan from (repayment to) related
parties (3,946,050) 6,578,584
Payments on long term debt, related
party -- (1,065,000)
Payments to minority interest
shareholder -- (5,123,520)
Increase in paid in capital 245,030 --
Increase in deferred income -- 5,861,232
Net cash provided by (used in)
financing activities (3,701,020) 6,251,296
EFFECT OF EXCHANGE RATE CHANGES
ON CASH 100,433 3,242,494
DECREASE IN CASH (11,351,881) (12,414,685)
CASH, beginning of period 44,854,511 54,081,848
CASH, end of period $33,502,630 $41,667,163
Supplemental disclosure of cash flow
information
Cash paid during the period for:
Interest $105,817 $132,662
Income taxes $871,764 $3,857,173
TIENS BIOTECH GROUP (USA), INC. AND SUBSIDIARIES
REVENUE BY REGION
(Unaudited)
Three months
ended September 30,
2009 2008 Change
China $4,663,939 $14,576,060 -68.0%
International $4,775,800 $11,619,793 -58.9%
Total $9,439,739 $26,195,853 -64.0%
Nine months
ended September 30,
2009 2008 Change
China $17,076,162 $29,191,771 -41.5%
International $31,152,158 $29,479,350 5.7%
Total $48,228,320 $58,671,121 -17.8%