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Revenue for the first quarter of fiscal 2010 was approximately $13.4million, an increase of 40.2% compared to $9.6 million for the first quarterof fiscal 2009. The increase resulted from higher sales volume of portfolioproducts, increased market penetration through the Company's broaddistribution channels, which was supported by additional production capacityfrom the new facility. Revenues from the top three selling products, GinkgoMihuan Oral Liquid, Arpu Shuangxin Oral Liquid, and Azithromycin DispersibleTablets, were collectively $7.1 million and represented approximately 53.1% oftotal revenues for the quarter. During the fourth quarter of fiscal 2009 salesof the top three selling products were approximately $7.8 million, or 58.6% oftotal revenues.
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Cost of goods sold for the three months ended September 30, 2009 wasapproximately $6.3 million or 47.4% of revenue as compared to $4.7 million or49.0% of revenue for the three months ended September 30, 2008, yielding agross profit of $7.1 million and gross margins of 52.6%, compared to $4.9million in gross profit and gross margins of 51.0% during the first quarter offiscal 2009. Gross margins improved as a result of the product mix, inaddition to enhanced cost controls and manufacturing efficiencies implementedduring the production process.
Operating expenses for the three months ended September 30, 2009 wereapproximately $4.3 million, up 58.7% compared to the same period in 2008.Selling, general and administration expenses for the period increased toapproximately $4.1 million from $2.6 million in the first quarter of fiscal2009 as a result of the implementation of Tianyin's sales and marketingstrategy, including increased sales payrolls and direct marketing expenses, inaddition to a consulting expense amounted to $0.5 million paid to externalservice providers. Research and development expenses for the three monthsended September 30, 2009 increased 134.1% to $0.2 million from the firstquarter of fiscal 2009.
Operating income for the first quarter of fiscal 2010 totaledapproximately $2.7 million, a 26.9% increase from the $2.2 million reportedfor the first quarter of fiscal 2009. Operating margins were 20.5% and 22.6%for the first quarter of fiscal 2010 and fiscal 2009, respectively as theCompany continued to spend aggressively on sales and marketing initiatives togenerate incremental product sales.
Net income was approximately $2.2 million in the first quarter of fiscal2010, a 22.3% increase, compared to $1.8 million for the first quarter offiscal 2009. The company had an effective tax rate of 18.9% and 16.7%, for thefirst quarter of fiscal 2010 and 2009, respectively. Diluted earnings pershare were $0.08 compared to $0.07 for the first quarter of fiscal 2010 andfiscal 2009 respectively, based upon 27.5 million and 24.6 million shares. Thedivergence in the share account relates to accounting for the company'spreferred shares which are convertible into common, in addition to warrantswhich were exercised.
"We are pleased to report another quarter of strong revenue growth andimproved profitability. The results of our marketing strategies to support ahigh quality product portfolio are driving measured improvements in ourrevenue base. Additionally, increased production capacity is enabling us toaccommodate higher volumes of several leading drugs, including Gingko Mihuan,through our distribution channels," stated Dr. Guoqing Jiang, Tianyin's ChiefExecutive Officer."
Balance Sheet and Cash Flow
Cash and cash equivalents and restricted cash totaled $14.4 million onSeptember 30, 2009 compared to $12.4 million on June 30, 2009. The Company hada current ratio of 5.8 to 1 and total stockholders' equity of 46.2 million,which includes noncontrolling interest of $0.4 million, with total assets of$50.8 million versus total liabilities of $4.6 million on September 30, 2009.For the first three months of fiscal 2010, the Company generated $2.2 millionin cash from operations versus $0.5 million for the same period in fiscal 2009.
Business Development & Outlook
On September 28, 2009, Tianyin appointed Mr. Tao Yang to the position ofChief Operating Officer. Mr. Yang has more than 18 years experience in thesales and marketing industry. He was appointed in November 2008 as ChiefAdvisor for Sales and Marketing and Special Advisor to Dr. Jiang, the CEO ofthe Company. Since then, Mr. Yang has helped implement a strategy to boostsales of leading products and further improve the efficiency of Tianyin'ssales and marketing team.
On October 29, 2009, Tianyin announced it has formed a joint venture withSichuan Mingxin Pharmaceutical Co., Ltd ("Mingxin") named Sichuan JiangchuanPharmaceutical Co., Ltd. ("Jiangchuan"). Tianyin owns 77% of Jiangchuan andwill utilize this as the foundation for a broader, longer-term strategy tobuild a significant presence in the rapidly growing Chinese macrolideantibiotics market, while diversifying its revenue base of westernpharmaceuticals.
On October 29, 2009 management increased fiscal 2010 guidance for the yearwhich ends June 30, 2010 and expects to report revenues of more than $63.6million and net income of at least $11.3 million, representing 48.3% and 43.0%year-over-year growth respectively.
"The Chinese stimulus plan and favorable policies for the health careindustry are now starting to manifest themselves throughout the pharmaceuticalindustry by driving sales of many popular pharmaceutical products and creatingthe catalyst for long-term secular growth. We are extremely excited about ourrecently announced Joint Venture, which is named Sichuan JiangchuanPharmaceutical Co. Ltd. This will enable us to capitalize on the large andrapidly growing macrolide antibiotics market. Supported by our existingmarketing expertise and extensive distribution channels, we are confident thatthis new initiative will create a meaningful growth driver in fiscal 2011 andbeyond, while complementing the organic growth of our current productportfolio with widely used western style medications. With a solid businessfoundation and favorable policies from the Chinese government, we willcontinue to execute on our long-term growth plan while creating both near andlong-term value for our shareholders," concluded Dr. Jiang.
Conference Call
The Company will host a conference call to discuss the 2010 first quarterfinancial results on Friday, November 13, 2009 at 10:30 a.m. ET. Interestedparticipants should call +1-877-941-2321 within the United States, or US+1-480-629-9714 if calling internationally. The conference ID is 4182573. Itis advisable to dial in approximately 5-10 minutes prior to 10:30 a.m. ET. Ifyou are unable to participate in the call at the scheduled time, a playbackwill be available through November 21, 2009. To listen to the playback, pleasecall +1-800-406-7325 from within the United States, or US+1-303-590-3030 internationally. Please use passcode 4182573 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 39 products, 22 of which are listed in the highly selectiveNational Medicine Catalog of the National Medical Insurance program. Tianyinowns and operates two GMP manufacturing facilities and an R&D platformsupported by leading Chinese academic institutions. The Company has a pipelineof 17 pharmaceutical products pending approval. Tianyin has an extensivenationwide distribution network throughout China with a sales force of 720salespeople. Tianyin is headquartered in Chengdu, Sichuan Province with twomanufacturing facilities and a total of 1,365 employees. For more informationabout Tianyin, please visit http://www.tianyinpharma.com .
Safe Harbor Statement
The Statements which are not historical facts contained in this pressrelease are forward-looking statements that involve certain risks anduncertainties including but not limited to risks associated with theuncertainty of future financial results, additional financing requirements,development of new products, government approval processes, the impact ofcompetitive products or pricing, technological changes, the effect of economicconditions and other uncertainties detailed in the Company's filings with theSecurities and Exchange Commission.For more information, please contact: For the Company: Allen Tang, Ph.D., MBA, Assistant to the CEO Tel: +86-158-2122-5642 Email: [email protected] Investors: Mr. Matthew Hayden, HC International Tel: +1-561-245-5155 Email: [email protected] Web: http://www.hcinternational.net Consolidated Balance Sheets (Unaudited) September 30, June 30, 2009 2009 (Unaudited) Assets Current assets: Cash and cash equivalents $14,352,876 $12,352,223 Accounts receivable, net of allowance for doubtful accounts of $172,182 and $171,947 at September 30, 2009 and June 30, 2009, respectively 7,121,470 5,620,519 Inventory 3,686,431 3,808,289 Advance payments 764,307 1,188,115 Loan receivable 293,400 -- Other receivables 201,321 601,912 Other current assets 62,560 81,277 Total current assets 26,482,365 23,652,335 Property and equipment, net 10,014,096 9,642,526 Intangibles, net 14,302,974 12,037,483 Total assets $50,799,435 $45,332,344 Liabilities Current liabilities: Accounts payable and accrued expenses $1,577,677 $1,392,639 Short-term bank loans 1,400,985 1,399,075 VAT taxes payable 475,592 458,930 Income taxes payable 510,250 490,514 Other taxes payable 11,473 11,890 Dividends payable 233,683 325,417 Other current liabilities 341,957 307,934 Total current liabilities 4,551,617 4,386,399 Total liabilities 4,551,617 4,386,399 Equity Stockholders' equity: Common stock, $0.001 par value, 50,000,000 shares authorized, 23,520,057 and 17,908,912 shares issued and outstanding at September 30, 2009 and June 30, 2009, respectively 23,520 17,909 Series A convertible preferred stock, $0.001 par value, 2,655,250 and 7,146,500 shares issued and outstanding at September 30, 2009 and June 30, 2009, respectively 2,655 7,147 Additional paid-in capital 22,740,187 19,694,514 Statutory reserve 2,299,807 2,299,807 Treasury stock (111,587) (111,587) Retained earnings 18,268,426 16,486,775 Accumulated other comprehensive income 2,587,237 2,551,380 Total stockholders' equity 45,810,245 40,945,945 Noncontrolling interest 437,573 -- Total equity 46,247,818 40,945,945 Total liabilities and equity $50,799,435 $45,332,344 Consolidated Statements of Operations and Comprehensive Income (Unaudited) For the Three Months Ended September 30, 2009 2008 Sales $13,405,203 $9,561,940 Cost of sales 6,349,227 4,682,624 Gross profit 7,055,976 4,879,316 Operating expenses: Selling, general and administrative 4,117,766 2,633,361 Research and development 192,490 82,638 Total operating expenses 4,310,256 2,715,999 Income from operations 2,745,720 2,163,317 Other income (expenses): Interest income 10,415 -- Interest expense (19,975) (27,720) Other income (expenses) 39,502) 4,245 Total other expenses (49,062) (13,475) Income before provision for income tax 2,696,658 2,149,842 Provision for income tax 509,936 358,849 Net income before noncontrolling interest 2,186,722 1,790,993 Noncontrolling interest (2,526) -- Net income 2,189,248 1,790,993 Other comprehensive income Foreign currency translation adjustment 35,857 89,434 Comprehensive income $2,225,105 $1,880,427 Basic earnings per share $0.10 $0.09 Diluted earnings per share $0.08 $0.07 Weighted average number of common shares outstanding Basic 19,735,790 15,357,818 Diluted 27,516,458 24,558,625 Consolidated Statements of Cash Flows (Unaudited) For the Three Months Ended September 30, 2009 2008 Cash flows from operating activities: Net Income $2,189,248 $1,790,993 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 197,037 119,399 Noncontrolling interest (2,526) -- Share-based payments 512,209 -- Loss on disposal of fixed assets 39,502 -- Changes in current assets and current liabilities: Accounts receivable (1,492,362) (88,138) Inventory 126,979 (1,019,969) Other receivables 401,155 (339,566) Other current assets 18,750 152,822 Accounts payable and accrued expenses 183,242 (60,470) VAT taxes payable 16,025 (15,780) Income tax payable 19,054 16,489 Other taxes payable (433) (22,708) Other current liabilities 33,582 (29,277) Total adjustments 52,214 (1,287,198) Net cash provided by operating activities 2,241,462 503,795 Cash flows from investing activities: Additions to property and equipment (525,965) -- Additions to intangible assets - drug (1,891,269) (175,668) Loan receivable (293,220) -- Net cash used in investing activities (2,710,454) (175,668) Cash flows from financing activities: Additional paid-in capital 2,534,581 -- Noncontrolling interest 439,830 -- Payment of dividends (499,331) -- Net cash provided by financing activities 2,475,080 -- Effect of foreign currency translation on cash (5,435) 32,648 Net increase in cash and cash equivalents 2,000,653 360,775 Cash and cash equivalents - beginning 12,352,223 12,057,150 Cash and cash equivalents - ending $14,352,876 $12,417,925 Supplemental schedule of non cash activities Advance payments exchanged for intangible assets - drug $425,169 $--
SOURCE Tianyin Pharmaceutical Co., Inc.
