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First Quarter 2010 Financial Performance
Revenue in the first quarter of 2010 increased 16.7% year over year to$53.7 million from $46.1 million, reflecting continued demand for theCompany's core prescription and OTC pharmaceutical products.
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Gross profit in the first quarter of 2010 was $28.2 million, compared to$28.4 million in the first quarter of 2009. Gross margin was 52.5%, comparedto 61.7% in the prior year period, reflecting continued revenue mix shift toCCXA's generic product sales as well as increasing raw material prices.
Operating income in the first quarter of 2010 was $6.4 million, comparedto $10.9 million in the prior year period. Selling and marketing expensesincreased 14.7% to $6.0 million from $5.2 million in the prior year period,and advertising expense increased 21.2% to $6.7 million in the first quarterof 2010 from $5.6 million in the prior year period. General andadministrative expenses increased 8.6% to $4.8 million from $4.4 million inthe prior year period. Research and development expenses increased to $2.8million from $0.7 million in the prior year period. This reflects theCompany's continuing efforts to invest in the centralized R&D centre inBeijing.
Net income attributable to controlling interest for the first quarter of2010 was $3.1 million, compared to $7.2 million in the prior year period. TheCompany's net income attributable to controlling interest was $0.04 perdiluted share, compared to $0.10 per diluted share in the same period of 2009.
Balance Sheet
As of March 31, 2010, the Company had $99.0 million in cash and cashequivalents, including restricted portions, and generated approximately $5.8million of operating cash flow during the first quarter of 2010. Workingcapital was $136.9 million as of March 31, 2010, reflecting an increase of4.6% from $130.9 million as of December 31, 2009.
Mr. Tony Liu, Chairman and Chief Executive Officer of American OrientalBioengineering, commented, "We are very satisfied with our performance in thefirst quarter, despite the challenging global economic environment and thechanging Chinese regulatory environment. During the past quarter, we continuedto invest heavily in R&D, which consumed 5% of total revenue, in order toupgrade our existing products and develop new proprietary products to lay asolid foundation for AOBO's near term and long term growth. Meanwhile, wecontinued to fortify our market position, strengthen our presence in ruralareas, and diversify our business operations through cost control, advertisingcampaigns, and sales network expansion. We are confident that we will achieveinitial success from the above combined efforts in the latter part of thisyear."
Conference Call
The Company will hold a conference call at 8:00 am ET on Monday, May 10,to discuss its results. Listeners may access the call by dialing1-866-804-6927 or 1-857-350-1673 for international callers, access code:92995812. A webcast will also be available through AOB's website athttp://www.bioaobo.com . A replay of the call will be available through May17, 2010. Listeners may access the replay by dialing 1-888-286-8010 or1-617-801-6888 for international callers, access code: 50942560.
About American Oriental Bioengineering, Inc.
American Oriental Bioengineering, Inc. is a pharmaceutical companydedicated to improving health through the development, manufacture andcommercialization of a broad range of prescription and over the counterproducts.
Statements made in this press release are forward-looking and are madepursuant to the safe harbor provisions of the Securities Litigation Reform Actof 1995. Such statements involve risks and uncertainties that may causeactual results to differ materially from those set forth in these statements.The economic, competitive, governmental, technological and other factorsidentified in the Company's filings with the Securities and ExchangeCommission, including the Form 10-K for the year ended December 31, 2010, maycause actual results or events to differ materially from those described inthe forward looking statements in this press release. The Company undertakesno obligation to publicly update or revise any forward-looking statements,whether because of new information, future events, or otherwise.-- Revenue from pharmaceutical products increased 17.8% to $40.9 million from $34.7 million in the first quarter of 2009, driven by increased demand for the Shuanghuanglian ("SHL") Injection Powder, BOKE and CCXA pharmaceutical products, as well as the newly-launched products such as YuYeQingHuo Capsules. Revenue from prescription pharmaceutical products increased 29.3% to $20.9 million from $16.2 million in the prior year period, reflecting a year over year increase in sales from the prescription Jinji capsule, SHL powder, Boke and CCXA prescription products. The overall increase in sales was also supported by continuous marketing efforts, an increase in new product offerings, and expansion of coverage to previously unaddressed rural markets. OTC pharmaceutical products generated $19.9 million in revenue during the first quarter of 2010, in comparison to $18.5 million in the prior year period, reflecting increased sales of our Boke and CCXA products as a result of improved recognition of those products. -- Nutraceutical products generated revenue of approximately $9.7 million in the first quarter of 2010, up 8.5% from $8.9 million in the prior year period, reflecting increased sales of new beverage products launched in the second quarter of 2009. -- The Company generated $3.2 million from its distribution business, Nuo Hua, in the first quarter of 2010. An increase of 29.5% was mainly attributed to the Nuo Hua's expanding market coverage.
SOURCE American Oriental Bioengineering, Inc.
