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Revenue for the first quarter of 2009 increased 33.4% to approximately$9.6 million compared to approximately $7.2 million for the first quarter of2008. The increase in revenues was primarily due to enhanced marketing efforts,expansion of current sales channels and broadened product portfolio.
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Cost of goods sold for the first quarter was approximately $4.7 million,yielding a gross profit of $4.9 million and gross margins of 51%, compared to$2.9 million in gross profit and a gross margin of 40.1% during the firstquarter of 2008. Thus, gross profits grew by 69.7% on a year-over-year basis.The increase in gross profit and improved margins were primarily attributableto the growth in revenue, the relatively stable price of raw materials and themanagement's focus on high margin products. The sales of Ginkgo Mihuan OralLiquid and Arpu Shuangxin, which had comparatively higher gross margin,increased 340% and 31% respectively, compared to that for the same period in2007.
Operating expenses for the three months ended September 30, 2008 were $2.7million, up 155.4% compared to the same period in 2007. Selling, general andadministration expenses for the period increased to approximately $2.6 millionfrom $1 million in the first quarter of 2008. The increase in SG&A expenseswas mainly the result of the Company's efforts to strengthen the marketing andsales activities to increase revenue, including increasing advertisement andpromotion, and hiring more sales people. For the three months ended September30, 2008, the number of employees in Tianyin's sales department increased by206 employees, compared to the same period one year ago, resulting in a totalof 720 sales people. Research and development expenses were $82,638 in thethree months ended September 30, 2008, versus $27,451.
Operating income for the first quarter of 2009 totaled approximately $2.2million, a 19.4% increase from the $1.8 million reported for the first quarterof 2008. Operating margins were 22.6% and 25.3% for the first quarter of 2009and 2008, respectively. The decrease in the operating margin was due toincreased spending on R&D and marketing to expand Tianyin's market presence.
For the first quarter of 2009, net income was $1.8 million, a 10.9%increase, compared to $1.5 million for the first quarter of 2008. Fullydiluted earnings per share were $0.07 compared to $0.12 for the first quarterof 2009 and 2008 respectively, based up on 24.6 million and 12.8 millionshares. The increase in net income was primarily due to increased sales withhigher gross margin.
"We continued to experience strong year-over-year revenue and earninggrowth from our current portfolio of products combined with enhanced grossprofit margins. We believe the results validate the plan management has beenimplementing to focus on products with high gross margins and increased salesand marketing efforts. We expect the benefits of these will continue into thefuture as well," Dr. Guoqing Jiang, Chief Executive Officer of Tianyin,commented.
Balance Sheet and Cash Flow
The Company had a current ratio of 6.4 to 1 and $12.4 million in cash andcash equivalents on September 30, 2008. The Company had Stockholders' Equityof $35.1 million, with total assets of $38.5 million versus total liabilitiesof $3.4 million. For the first three months of fiscal year 2009, the Companygenerated $0.5 million in cash from operations versus $1 million for the sameperiod in 2008.
Business Development
Tianyin has received approval from the Chinese State Food and DrugAdministration (SFDA) to produce Laonian Kechuan Tablets in the dosage form of0.25 gram/tablet (SFDA approval number Z20083360) and Fuke Zhidai Tablets inthe dosage form of 0.4 gram/tablet (SFDA approval number Z20083375). LaonianKechuan Tablets is a TCM drug that effectively treats asthma in people aged 60or above. Fuke Zhidai Tablets is a TCM drug used to treat abnormal leucorrhea,which is caused by chronic cervicitis, endometritis and endocolpitis. TheCompany plans to launch Laonian Kechuan Tablets and Fuke Zhidai Tablets in thedomestic market and begin recording revenue in November 2008 and December 2008,respectively. The Company launched the production of Azithromycin DispersibleTablets in August 2008 and is due to market the new product in October 2008.Azithromycin is highly effective in treating upper and lower respiratory tractinfections and other bacterial infections in the skin and reproductive system.Tianyin received approval from the Chinese State Food and Drug Administration(SFDA) to produce Azithromycin Dispersible Tablets in December 28, 2007.
Tianyin continues to invest in information systems and post-marketingstudies and monitoring to improve efficiency. The Company is also makingprogress constructing the plant they started building in the end of April 2008.Also, Tianyin continues to evaluate acquisition opportunities which willcomplement the existing product and manufacturing lines, as well as provideaccretive earnings growth.
Tianyin's common stock began trading on the NYSE Alternext U.S. (formerlyknown as the American Stock Exchange) under the ticker "TPI" at market open onWednesday, October 1, 2008. In addition, the Company's board of directorsapproved a $3 million stock repurchase program on October 28, 2008.
"In the first quarter of fiscal year 2009, our organic growth fromexisting core products and new products launched in fiscal year 2008demonstrates the success of our growth strategy. We received two approvalsfrom the Chinese SFDA to produce Laonian Kechuan Tablets and Fuke ZhidaiTablets. We plan to launch these two drugs before the end of 2008 and we areoptimistic that these new drugs will further improve our profitability and beadditional growth contributors to our top-line and bottom-line numbers. Wewill continue to focus on broadening our product portfolio, increasing oursales and marketing activities, and further expanding our distribution network.Our extensive market research provides evidence that we are well positioned inthe Chinese pharmaceutical industry, the benefit of which will continue tosupport our revenue and net income growth throughout fiscal 2009 and beyond,"concluded Dr. Jiang.
Conference Call
The Company will host a conference call to discuss the 2009 first quarterfinancial results on Tuesday, November 11, 2008 at 8:30 a.m. EST. Interestedparticipants should call 800-762-8795 within the United States, or US +1-480-629-9031 if calling internationally. The conference ID is 3940851. It isadvisable to dial in approximately 5-10 minutes prior to 8:30 a.m. EST. If youare unable to participate in the call at the scheduled time, a playback willbe available on Tuesday, November 11, 2008 at 11:30 a.m. ET through Thursday,November 27, 2008 at 11:59 p.m. ET. To listen to the playback, please call800-406-7325 from within the United States, or US +1 303-590-3030internationally. Please use pass code 3940851 for the replay.
About Tianyin Pharmaceuticals
Tianyin is a manufacturer and supplier of modernized Traditional ChineseMedicine ("TCM") in China. It was established in 1994 and acquired by thecurrent management team in August 2003. It has a comprehensive productportfolio of 33 modernized TCMs and 5 generic western medicines in the market,22 of which are listed in the highly selective National Medicine Catalog ofthe National Medical Insurance Program. Tianyin owns and operates two GMPmanufacturing facilities and an R&D platform supported by leading Chineseacademic institutions. The Company has a pipeline of 47 pharmaceuticalproducts pending approval. Tianyin has an extensive nationwide distributionnetwork throughout China with a sales force of 720 salespeople. Tianyin isheadquartered in Chengdu, Sichuan Province with two manufacturing facilitiesand a total of 1,365 employees. Tianyin achieved revenue of approximately$33.5 million and net income of approximately $6 million in FY2008 ending June30, 2008. For more information about Tianyin Pharmaceuticals, please visithttp://www.tianyinpharma.com .
Safe Harbor Statement
This Press Release contains or may contain forward looking statements andinformation that are based upon beliefs of and information currently availableto the Company's management as well as estimates and assumptions made by theCompany's management. When used herein the words "anticipate", "believe","estimate", "expect", "future", "intend", "plan" and similar expressions asthey relate to the Company or the Company's management identify forwardlooking statements. These statements involve certain risks and uncertaintiesincluding but not limited to risks associated with the uncertainty of futurefinancial results, additional financing requirements, development of newproducts, government approval processes, the impact of competitive products orpricing, technological changes, the effect of economic conditions and otheruncertainties detailed in the Company's filings with the Securities andExchange Commission. Should one or more of these risks or uncertaintiesmaterialize, or should the underlying assumptions prove incorrect, actualresults may differ significantly from those anticipated, believed, estimated,intended or planned.-- FINANCIAL TABLES FOLLOW -- Consolidated Balance Sheets (Unaudited) September 30, June 30, 2008 2008 (Unaudited) Assets: Current assets: Cash and cash equivalents $12,417,925 $12,057,150 Accounts receivable, net of allowance for doubtful accounts of $90,311 and $90,064 at September 30, 2008 and June 30, 2008, respectively 4,560,718 4,460,406 Inventory 4,584,781 3,555,691 Other receivables 712,120 371,815 Other current assets 94,317 247,139 Total current assets: 22,369,861 20,692,201 Property and equipment, net: 5,695,589 5,758,966 Intangibles, net: 10,471,414 10,307,754 Total assets: $38,536,864 $36,758,921 Liabilities and stockholders' equity: Current liabilities: Accounts payable and accrued expenses $1,280,592 $1,337,682 Short-term bank loans 1,397,165 1,393,345 VAT taxes payable 262,079 277,090 Income tax payable 358,629 341,214 Payroll taxes payable 17,354 39,939 Dividend payable -- 378,545 Other current liabilities 113,866 142,733 Total current liabilities: 3,429,685 3,910,548 Total liabilities: 3,429,685 3,910,548 Stockholders' equity: Common stock, $0.001 par value, 50,000,000 shares authorized, 15,465,563 and 14,738,450 shares issued and outstanding at September 30, 2008 and June 30, 2008 15,466 14,739 Common stock dividend distributable 226 -- Series A convertible preferred stock, $0.001 par value,8,893,750 9,384,375 shares issued and outstanding at September 30, 2008 and June 30, 2008 8,894 9,384 Additional paid-in capital 18,741,688 18,002,439 Statutory reserve 1,584,154 1,380,806 Retained earnings 12,189,443 10,963,131 Accumulated other comprehensive income 2,567,308 2,477,874 Total stockholders' equity: 35,107,179 32,848,373 Total liabilities and stockholders' equity: $38,536,864 $36,758,921 Consolidated Statements of Operations and Comprehensive Income (Unaudited) For the Three Months Ended September 30, 2008 2007 Sales: $9,561,940 $7,169,493 Cost of goods sold: 4,682,624 4,293,829 Gross profit: 4,879,316 2,875,664 Operating expenses: Selling, general and administrative 2,633,361 1,036,480 Research and development 82,638 27,451 Total operating expenses: 2,715,999 1,063,931 Income from operations: 2,163,317 1,811,733 Other income (expenses): Other income 14,245 -- Interest expense (27,720) (34,703) Total other income (expenses): (13,475) (34,703) Income before provision for income tax: 2,149,842 1,777,030 Provision for income tax: 358,849 265,074 Net income: 1,790,993 1,511,956 Other comprehensive income: Foreign currency translation adjustment 89,434 183,851 Comprehensive income: $1,880,427 $1,695,807 Basic earnings per share: $0.09 $0.12 Diluted earnings per share: $0.07 $0.12 Weighted average number of common shares outstanding: Basic 15,357,818 12,790,800 Diluted 24,558,625 12,790,800 Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended September 30, 2008 2007 Cash flows from operating activities: Net Income $1,790,993 $1,511,956 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 119,399 81,486 Changes in current assets and current liabilities: Accounts receivable (88,138) 7,982 Inventory (1,019,969) 285,546 Other receivables (339,566) (159,635) Advances to suppliers -- (397,200) Other current assets 152,822 -- Accounts payable and accrued expenses (60,470) (277,424) VAT taxes payable (15,780) (40,499) Income tax payable 16,489 (42,565) Payroll taxes payable (22,708) -- Other current liabilities (29,277) 77,928 Total adjustments: (1,287,198) (464,381) Net cash provided by operating activities: 503,795 1,047,575 Cash flows from investing activities: Additions to property and equipment -- (713) Additions to intangibles (175,668) -- Net cash used in investing activities: (175,668) (713) Cash flows from financing activities: Additional paid-in capital -- 8,000 Issuance of preferred stock -- 140,207 Repayment of short-term bank loans -- (794,760) Repayment of long-term bank loans -- (120,541) Net cash provided by (used in) financing activities: -- (767,094) Effect of foreign currency translation on cash: 32,648 11,007 Net increase in cash and cash equivalents: 360,775 290,775 Cash and cash equivalents - beginning: 12,057,150 624,390 Cash and cash equivalents - ending: $12,417,925 $915,165 For more information, please contact: For the Company: Allen Tang, Ph.D., MBA Assistant to the CEO Tel: +86-158-212-25642 (China) Email: [email protected] Investors: HC International, Inc. Alan Sheinwald Tel: +1-914-669-0222 (U.S.) Email: [email protected]
SOURCE Tianyin Pharmaceutical Co., Inc.
