SHENZHEN, China, Aug. 11 /PRNewswire-Asia/ -- Winner Medical Group Inc. (OTC Bulletin Board: WMDG) ("Winner Medical", or the "Company"), today reported unaudited financial results for the third quarter ended June 30, 2009. The Company's results are detailed in its form 10-Q, filed today with the United States Securities and Exchange Commission.
Third Quarter 2009 Highlights
-- Total net sales revenue increased by 5.56% over the third quarter of
fiscal 2008 to $24.36 million
-- Gross profit increased by 20.12% over the third quarter of fiscal 2008
to $7.18 million
-- Operating income increased by 72.93% over the third quarter of fiscal
2008 to $3.72 million
-- Net income increased by 76.40% over the third quarter of fiscal 2008 to
$3.06 million
-- Net income per share for the third quarter of 2009 was $0.07 per basic
and diluted share, compared to $0.03 per basic and diluted share for
the third quarter of fiscal 2008
Jianquan Li, Chairman and Chief Executive Officer of Winner Medical, commented, "During the third quarter, we experienced a robust growth in profits while maintaining a solid increase in revenue. The huge improvement in gross margin and net margin is the result of our implementation of cost control measures, such as lean production and equipment technical improvements which optimize production efficiency and reduce unit production cost."
Mr. Li continued, "Another factor that drives the increase in our overall gross and net profit margin is that the PurCotton products reached the break-even point and started making profit during the month of June. The recognition of top-tier clients of the premium quality of our PurCotton products led to the increased sales volume. We are confident that this new product will be the growth driver over the mid- to long-term."
Third Quarter 2009 Unaudited Financial Results
Revenue: Winner Medical reported net sales revenue of $24.36 million, a 5.56% increase over the third quarter of fiscal 2008. Healthy revenue growth was mainly due to strong demand from China as a result of the medical reform in China, and the Company's effort to develop the China market; and the increased sales of PurCotton products to China, the United States, Europe and Japan.
Gross Profit: For the third quarter of fiscal 2009, gross profit was $7.18 million, an increase of 20.12% over $5.98 million in the same period of fiscal 2008. Gross margin was 29.49%, versus 25.91% achieved in the third quarter of fiscal 2008. The increase in gross margin was mainly due to improvement of the Company's cost control, equipment technical improvement and lean production management that increased production efficiency and reduced production waste; the tax rebate rate for exports from China increased by two percent; and the PurCotton products started making profit during the month of June 2009 compared to losses from these products during the same period last year.
Operating Expenses: Selling, general and administrative expenses decreased by 1.53% to $3.60 million in the third quarter of fiscal 2009, from $3.66 million in the third quarter of fiscal 2008. During this quarter, the decrease in operating expenses was mainly due to the decreased transportation expense for export sales compared with the same period last year as a result of the decline of unit transportation fee.
Operating Income: During the period, operating income was $3.72 million, an increase of 72.93% compared with $2.15 million in the same quarter of 2008. The increase was mainly attributed to decreased export transportation fees, and improved production management to reduce manufacture cost.
Income Taxes: The income tax provision for the third quarter of fiscal 2009 was $695,000, up from -$271,000 for the same period in fiscal 2008. The increase in tax provision was mainly due to a change in tax rate for the Company's subsidiaries in China as a result of the Chinese income tax reform that came into effect on January 1, 2008, and the cancellation of tax return policy for purchasing domestic machinery.
Net income: Net income increased by 76.40% to $3.06 million, or $0.07 per basic and diluted share, compared to net income of $1.74 million, or $0.04 per basic and diluted share, for the third quarter of the last fiscal year. This increase can be attributed to improved production management to reduce manufacture unit cost and improve production efficiency, relatively stable RMB against foreign currency exchange rate, and the decrease in transportation expenses.
Nine Months Ended June 30, 2009 Unaudited Financial Results
Revenue: Winner Medical reported net sales revenue of $70.72 million, a 17.30% increase over the nine months ended June 30, 2009. Healthy revenue growth was mainly due to strong demand, particularly in North and South America and China; the net sales to North and South American customers was $13.55 million for the nine months ended June 30, 2009, an increase of 61.06% compared to the same period last year. The net sales to Chinese customers were $11.5 million for the nine months ended June 30, 2009, an increase of 32.49%, compared to the same period last year.
Gross Profit: For the nine months ended June 30, 2009, gross profit was $19.59 million, an increase of 32.96% over $14.73 million in the same period of fiscal 2008. Gross margin was 27.70%, versus 24.43% achieved in the nine months ended June 30, 2008. The increase in gross margin was mainly due to improvement of the Company's cost control, equipment technical improvement and lean production management that increased production efficiency and reduced production waste; the tax rebate rate for exports from China increased by two percent; and the PurCotton products started making profit during the month of June 2009, compared to losses from these products during the same period last year.
Operating Expenses: Selling, general and administrative expenses increased by 12.69% to $11.92 million during the nine months ended June 30, 2009, from $10.58 million during the nine months ended June 30, 2008. The increase in operating expenses was mainly due to the increase in research and development expenses, increase in salary and welfare for the management and administrative staff, and increase in related administrative expenses, such as depreciation and amortization for Winner Medical (Huanggang) Co., Ltd.
Operating Income: During the period, operating income was $7.57 million, an increase of 95% compared with $3.88 million of the same period of 2008. The increase was mainly attributed to decreased export transportation fees, and improved production management to reduce manufacture cost.
Income Taxes: The income tax provision for the nine months ended June 30, 2009 was $1,414,000, up from $113,000 for the same period in fiscal 2008. The increase in tax provision was mainly due to a change in tax rate for the Company's subsidiaries in China as a result of the Chinese Income Tax reform that came into effect on January 1, 2008, and the cancellation of tax return policy for purchasing domestic machinery.
Net income: Net income increased by 78.24% to $6.18 million, or $0.14 per basic and diluted share, compared to net income of $3.47 million, or $0.08 per basic and diluted share, for the same period of the last fiscal year. This increase can be attributed to improved production management to reduce manufacture unit cost and improve production efficiency, relatively stable RMB against foreign currency exchange rate, and the decrease in transportation expenses.
Balance Sheet
Cash and cash equivalents as of June 30, 2009 was approximately $7.84 million, compared with $6.46 million as of September 30, 2008. The Company's working capital as of June 30, 2009 was $20.78 million compared with $12.37 million as of September 30, 2008. Net operating cash flow during the nine months ended June 30, 2008 was $9.94 million, an increase of $6.07 million compared with the same period in fiscal 2008.
Third Quarter 2009 Operational Highlights
Medical care, Wound care and Home care products in China
Winner Medical develops China market through distributors, drugstore chains, and hospitals. As a result, sales revenue from China was $5.02 million for the three months ended June 30, 2009, against $3.34 million in the same period last year, an increase of 50.57%. As a percentage of net revenues, the sales revenue from China increased 20.62% for the three months ended June 30, 2009 from 14.46% for the three months ended June 30, 2008.
PurCotton:
In the third quarter of fiscal 2009, the Company's PurCotton sales grew steadily. The Company has $1,207,000 in raw material sales in the third quarter of fiscal 2009, compared with $1,108,000 sales during the last quarter. Net loss from PurCotton products during three month ended June 30, 2009 was approximately $5,000, as compared with a net loss of $487,000 in the same period last year. The PurCotton sales were mainly to customers in China, Japan, and the United States. At the same time, the Company is in the stage of processing trial orders of PurCotton finished medical products, such as operation room towels and sponges, with customers in North America and Europe.
Winner Medical believes that revenue from PurCotton will grow rapidly in the future. In July 2009, Winner Medical signed an agreement with a leading consumer products company in China to provide PurCotton rolls, which will be processed into feminine products and then distributed throughout China by the consumer products company. Including this deal, Winner Medical's PurCotton sales to customers in China, Japan, the United States, and other countries are expected to reach approximately $700,000 per month or approximately 150 tonnes per month. As a result of the continuous sales expansion, the sale of PurCotton products reached the break-even point, and started to make a profit during the month of June 2009.
2009 Guidance
The Company maintains its estimate that revenue in fiscal year 2009 will range from $98.33 million to $100.90 million, an increase of 15% to 18% compared to fiscal year of 2008.
Conference Call
Winner Medical's senior management will host a conference call at 5am (Pacific)/ 8am (Eastern)/ 8pm (Shenzhen/ Hong Kong) on Wednesday, August 12, 2009 to discuss its 2008/09 third quarter results and recent business developments. The conference call can be accessed by calling 866-510-0705 (US), 10-800-130-0399 (South China), 10-800-152-1490 (North China), or 800-96-3844 (HK); Passcode: 24788174. A telephone replay will be available shortly after the conclusion of the call and will be accessible through August 19, 2009 by calling 888-286-8010 (US) or +1-617-801-6888 (International); Passcode: 19154413.
About Winner Medical
Winner Medical is a leading manufacturer in the medical dressing industry (medical and wound care products) in China. Headquartered in Shenzhen, the Company has seven wholly owned manufacturing and distribution facilities, four joint-venture factories and over 5,000 employees. The Company engages in the manufacture, sale, research, and development of medical care products, wound care products, home care products and PurCotton products, a nonwoven fabric made from 100% natural cotton. The products are sold worldwide, with Europe, the United States and Japan serving as the top three markets. The Company currently holds 50 patents and patent applications for various products and manufacturing processes and is one of the few Chinese companies licensed by the U.S. Food and Drug Administration (FDA) to ship finished, sterilized products directly to the United States market. To learn more about Winner Medical, visit Winner Medical's web site http://www.winnermedical.com .
Forward-Looking Statements
This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included herein are "forward-looking statements" including statements regarding Winner Medical and its subsidiary companies' business strategy, plans and objective and statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although Winner Medical believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Winner Medical's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in Winner Medical's periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to Winner Medical or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, Winner Medical does not assume a duty to update these forward-looking statements.
For more information, please contact:
Investor Relations Contacts:
Peng Zhai
Assistant Manager, Investor Relations
Winner Medical Group Inc.
Tel: +86-755-2806-6858
Email: peng.zhai@winnermedical.com
Winner Medical Group Inc.
Consolidated Statements of Income and Comprehensive Income
Three months ended Nine months ended
June 30 June 30
2009 2008 2009 2008
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$ US$ US$ US$
Net sales 24,357,878 23,073,575 70,715,298 60,287,476
Cost of sales (17,176,129) (17,094,433) (51,128,269) (45,556,952)
Gross profit 7,181,749 5,979,142 19,587,029 14,730,524
Other operating (loss)
income, net 96,183 (77,968) 987,432 359,587
Exchange difference, net 47,432 (90,993) (1,082,265) (627,877)
Selling, general and
administrative expenses (3,600,442) (3,655,928) (11,923,716) (10,581,098)
Income from operations 3,724,922 2,154,253 7,568,480 3,881,136
Interest income 19,069 13,591 42,888 32,328
Interest expense (70,884) (196,275) (397,940) (435,140)
Equity in earnings of
50 percent or less 86,446 15,766 309,584 39,731
owned persons
Income before income
taxes and minority
interests 3,759,553 1,987,335 7,523,012 3,518,055
Income taxes (694,718) (271,384) (1,414,383) (112,801)
Income before minority
interests 3,064,835 1,715,951 6,108,629 3,405,254
Minority interests (1,183) 20,902 74,196 63,903
Net income 3,063,652 1,736,853 6,182,825 3,469,157
Other comprehensive
income
Foreign currency
translation 37,243 1,433,644 (87,899) 5,773,517
difference
Comprehensive income 3,100,895 3,170,497 6,094,926 9,242,674
Net income per share
- basic 0.07 0.04 0.14 0.08
- diluted 0.07 0.04 0.14 0.08
Weighted average common
stock
outstanding
- basic 44,727,171 44,727,171 44,727,171 44,727,171
- diluted 44,908,262 44,849,292 44,962,549 44,849,292
Winner Medical Group Inc.
Consolidated Balance Sheets
June 30 September 30
2009 2008
(Unaudited) (Unaudited)
US$ US$
ASSETS
Current assets:
Cash and cash equivalents 7,837,701 6,462,505
Restricted bank deposits 99,694 126,749
Accounts receivable, less allowances for
doubtful accounts of US$114,596 and
US$100,964 at June 30, 2009 and
September 30, 2008, respectively 11,502,982 13,516,688
Amounts due from affiliated companies 365,781 349,359
Inventories 14,785,842 15,839,587
Prepaid expenses and other receivable 5,279,048 4,734,503
Income taxes recoverable 30,897 99,126
Deferred tax assets 223,726 207,798
Total current assets 40,125,671 41,336,315
Property, plant and equipment, net 55,943,053 57,937,881
Held-for-sale asset -- 607,423
Investment in equity investees 1,845,291 1,518,848
Intangible assets, net 153,404 126,141
Non-current restricted bank deposits 158,193 --
Prepaid expenses and other receivable 117,170 233,203
Deferred tax assets 281,222 158,280
Total assets 98,624,004 101,918,091
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans 7,757,725 15,033,073
Accounts payable 6,090,115 8,271,926
Accrued payroll and employee benefits 1,790,164 1,891,410
Customer deposits 476,064 458,303
Other accrued liabilities 2,057,541 2,518,326
Amounts due to affiliated companies 56,384 136,481
Income taxes payable 1,118,719 656,550
Total current liabilities 19,346,712 28,966,069
Deferred tax liabilities 41,881 41,965
Total liabilities 19,388,593 29,008,034
Commitments and contingencies
Minority interests 74,111 148,306
Stockholders' equity:
Common stock, par value $0.001 per share;
authorized 495,000,000, issued and
outstanding June 30, 2009 - 44,727,171
shares; September 30, 2008 - 44,727,171
shares 44,727 44,727
Additional paid-in capital 31,147,950 30,843,327
Retained earnings 33,851,423 28,791,259
Statutory reserves 3,428,095 2,305,434
Accumulated other comprehensive income 10,689,105 10,777,004
Total stockholders' equity 79,161,300 72,761,751
Total liabilities and
stockholders' equity 98,624,004 101,918,091
