American Oriental Bioengineering Reports Fourth Quarter and Full Year 2009 Financial Results
Fourth Quarter 2009 Financial Performance
Revenue in the fourth quarter of 2009 increased 3.9% year over year to$100.0 million from $96.3 million, reflecting continued demand for theCompany's core prescription and OTC pharmaceutical products.
Gross profit in the fourth quarter of 2009 was $52.6 million compared to$60.0 million in the fourth quarter of 2008. Gross margin was 52.6%, comparedto 62.4% 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 fourth quarter of 2009 increased 28.5% to $14.9million compared with $11.6 million in the prior year period. Selling andmarketing expenses decreased 17.4% to $14.1 million from $17.1 million in theprior year period, and advertising expense decreased 22.7% to $9.5 million inthe fourth quarter of 2009, compared to $12.3 million in the prior year period.Research and development expenses increased to $6.7 million compared with $0.6million in the prior year, reflecting the Company's efforts in R&D activitiesincluding the setup of the centralized R&D centre in Beijing, China in 2009.General and administrative expenses increased 35.5% to $6.5 million from $4.8million in the prior year period, primarily driven by increased expenses onoptimizing the management team in view of the changing market environment andon the accounting-related professional fees resulting from the increasednumber of subsidiaries being audited and additional audit fees.
Net income attributable to controlling interest for the fourth quarter of2009 was $11.7 million, compared to $7.8 million in the prior year period.Excluding $1.4 million of interest expense on convertible securities, $0.2million of amortized financing costs related to the Company's outstandingconvertible notes and $0.3 million capitalization of debt interest, theCompany's net income attributable to controlling interest was $0.14 perdiluted share, reflecting an increase of approximately 40.0% compared to $0.10per diluted share in the same period of 2008.
2009 Financial Performance
Revenue for the fiscal year 2009 increased 11.9% to $296.2 million from$264.6 million in 2008. During the same time period, gross profit decreasedby 3.9% to $166.8 million from $173.6 million in the year 2008. Prescriptionpharmaceutical products generated revenue of $115.8 million, up 32.4% from$87.4 million in the year 2008, and OTC pharmaceutical products generatedrevenue of $128.4 million, down 6.6% from $137.5 million in 2008. The CCXAand Boke businesses contributed revenue of $34.9 million and $49.0 million,respectively, during the fiscal year 2009, compared with $24.8 million and$38.2 million in 2008. Revenue from CCXA and Boke increased by 40.8% and28.2%, respectively, compared to the prior year, reflecting sustainable growthof the subsidiaries. Revenue from nutraceutical products increased 14.2% to$39.1 million from $34.3 million in the year before. Revenue from Nuo Hua'sdistribution business was $12.9 million compared to $5.5 million in 2008.
Operating income in the year 2009 was $58.8 million compared to $63.5million in the year 2008. Net income attributable to controlling interest forthe year 2009 was $41.4 million, compared to $47.1 million in the prior yearperiod. Excluding $5.8 million of interest expense on convertible securities,$0.9 million of amortized financing costs related to the Company's outstandingconvertible notes and $0.8 million capitalization of debt interest, theCompany's net income attributable to controlling interest was $0.53 perdiluted share.
As of December 31, 2009, the Company had $94.4 million in cash and cashequivalents, including restricted portions, and generated approximately $25.4million of operating cash flow during the year of 2009. Working capital was$130.9 million in 2009, reflecting an increase of 50.4% compared to $87.1million in 2008. Accounts receivable turnover days was 58 and inventoryturnover days was 32 in 2009.
Mr. Tony Liu, Chairman and Chief Executive Officer of American OrientalBioengineering, commented, "We are very pleased with our 2009 performancedespite the increasingly challenging economic environment worldwide andChina's rapidly changing regulatory environment. In 2009, we expanded ourproduct portfolio, strengthened our leading brands and diversified ouroperations. Going into 2010, we'll continue to strengthen our corecompetencies in production, sales and marketing and distribution reach, andwe'll particularly focus on R&D efforts to ensure that we are well-prepared tocapture the tremendous amount of opportunities in China's dynamic healthcaresector."
The Company will hold a conference call at 8:00 am ET on Monday, March 15,2010, to discuss its results. Listeners may access the call by dialing1-800-261-3417 or 1-617-614-3673 for international callers, access code:25821500. A webcast will also be available through AOBO's website athttp://www.bioaobo.com . A replay of the call will be available through March22, 2010. Listeners may access the replay by dialing 1-888-286-8010 or1-617-801-6888 for international callers, access code: 59269795.
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, 2009, 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 4.8% to $85.0 million from $81.2 million in the prior year's fourth quarter, driven by increased demand for the Jinji Series of products, Shuanghuanglian Injection Powder, the Cease Enuresis Soft Gel and Patch, as well as the newly-launched products such as YuYeQingHuo Capsules and Shedanchan beiye. Revenue from prescription pharmaceutical products increased 56.2% to $44.6 million from $28.5 million in the prior year, reflecting a year over year increase in sales from prescription formulated Jinji capsule, Boke and CCXA products. The overall increase in sales was also supported by continuous marketing efforts, an increase in new product offerings, as well as expansion of coverage to previously unaddressed rural markets. OTC pharmaceutical products generated $40.4 million in revenue during the fourth quarter of 2009, in comparison to $52.6 million in the prior year's period, reflecting lower sales performance of Jinji Yimucao, a drug included in China's Essential Drug list, as distributors reduced orders in anticipation of price reductions in government tenders, starting in the fourth quarter. -- Nutraceutical products generated revenue of approximately $11.4 million in the fourth quarter of 2009, up 18.7% from $9.6 million in the prior year period, reflecting increased sales of new beverage products launched in the beginning of 2009. -- The Company generated $3.6 million from its distribution business, Nuo Hua, in the fourth quarter of 2009.
SOURCE American Oriental Bioengineering, Inc.
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