American Oriental Bioengineering Reports Fourth Quarter and Full Year 2009 Financial Results
NEW YORK, March 15 /PRNewswire-Asia-FirstCall/ -- American Oriental Bioengineering, Inc. (NYSE: AOB), ("the Company" or "AOBO"), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter ("OTC") products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2009.
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 the Company's core prescription and OTC pharmaceutical products.
-- 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.
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%, compared to 62.4% in the prior year period, reflecting continued revenue mix shift to CCXA's generic product sales as well as increasing raw material prices.
Operating income in the fourth quarter of 2009 increased 28.5% to $14.9 million compared with $11.6 million in the prior year period. Selling and marketing expenses decreased 17.4% to $14.1 million from $17.1 million in the prior year period, and advertising expense decreased 22.7% to $9.5 million in the 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 $0.6 million in the prior year, reflecting the Company's efforts in R&D activities including 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 $4.8 million in the prior year period, primarily driven by increased expenses on optimizing the management team in view of the changing market environment and on the accounting-related professional fees resulting from the increased number of subsidiaries being audited and additional audit fees.
Net income attributable to controlling interest for the fourth quarter of 2009 was $11.7 million, compared to $7.8 million in the prior year period. Excluding $1.4 million of interest expense on convertible securities, $0.2 million of amortized financing costs related to the Company's outstanding convertible notes and $0.3 million capitalization of debt interest, the Company's net income attributable to controlling interest was $0.14 per diluted share, reflecting an increase of approximately 40.0% compared to $0.10 per 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 decreased by 3.9% to $166.8 million from $173.6 million in the year 2008. Prescription pharmaceutical products generated revenue of $115.8 million, up 32.4% from $87.4 million in the year 2008, and OTC pharmaceutical products generated revenue of $128.4 million, down 6.6% from $137.5 million in 2008. The CCXA and 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% and 28.2%, respectively, compared to the prior year, reflecting sustainable growth of 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's distribution business was $12.9 million compared to $5.5 million in 2008.
Operating income in the year 2009 was $58.8 million compared to $63.5 million in the year 2008. Net income attributable to controlling interest for the year 2009 was $41.4 million, compared to $47.1 million in the prior year period. Excluding $5.8 million of interest expense on convertible securities, $0.9 million of amortized financing costs related to the Company's outstanding convertible notes and $0.8 million capitalization of debt interest, the Company's net income attributable to controlling interest was $0.53 per diluted share.
Balance Sheet
As of December 31, 2009, the Company had $94.4 million in cash and cash equivalents, including restricted portions, and generated approximately $25.4 million 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 $87.1 million in 2008. Accounts receivable turnover days was 58 and inventory turnover days was 32 in 2009.
Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, "We are very pleased with our 2009 performance despite the increasingly challenging economic environment worldwide and China's rapidly changing regulatory environment. In 2009, we expanded our product portfolio, strengthened our leading brands and diversified our operations. Going into 2010, we'll continue to strengthen our core competencies in production, sales and marketing and distribution reach, and we'll particularly focus on R&D efforts to ensure that we are well-prepared to capture the tremendous amount of opportunities in China's dynamic healthcare sector."
Conference Call
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 dialing 1-800-261-3417 or 1-617-614-3673 for international callers, access code: 25821500. A webcast will also be available through AOBO's website at http://www.bioaobo.com . A replay of the call will be available through March 22, 2010. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 59269795.
About American Oriental Bioengineering, Inc.
American Oriental Bioengineering, Inc. is a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products.
Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2009, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
For more information, please contact:
Integrated Corporate Relations, Inc.
Ashley M. Ammon
Tel: +1-646-277-1200
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2009 2008 2009 2008
Revenues $100,032,887 $96,270,506 $296,150,780 $264,643,058
Cost of sales 47,425,009 36,222,784 129,367,775 91,031,274
GROSS PROFIT 52,607,878 60,047,722 166,783,005 173,611,784
Selling and
marketing expenses 14,142,993 17,117,853 40,996,370 39,774,330
Advertising costs 9,536,612 12,342,238 31,896,992 34,102,538
Research and
development costs 6,652,704 602,868 7,922,357 1,528,991
General and
administrative
expenses 6,457,024 4,765,273 21,168,566 18,074,956
Depreciation and
amortization
expenses 920,037 1,371,108 6,038,625 4,383,215
Purchased in-
process research
and development
expenses -- 12,255,248 -- 12,255,248
Total operating
expenses 37,709,370 48,454,588 108,022,910 110,119,278
INCOME FROM
OPERATIONS 14,898,508 11,593,134 58,760,095 63,492,506
Equity in earnings
(loss) from
unconsolidated
entities 2,374,211 (542,395) 2,075,139 (1,132,986)
Interest income
(expense), net (1,440,239) (1,414,233) (5,746,382) (2,571,015)
Other expenses (405,558) 199,731 (569,661) (65,843)
INCOME BEFORE
INCOME TAXES 15,426,922 9,836,237 54,519,191 59,722,662
Income tax 3,753,893 1,980,173 13,216,986 12,635,472
NET INCOME 11,673,029 7,856,064 41,302,205 47,087,190
Net income (loss)
attribute to non-
controlling
interest (79) 27,575 118,945 (27,575)
NET INCOME
ATTRIBUTE TO
CONTROLLING
INTEREST 11,673,108 7,828,489 41,421,150 47,059,615
OTHER COMPREHENSIVE
INCOME 706,638 24,474 1,362,038 15,767,870
COMPREHENSIVE
INCOME $12,379,746 $7,852,963 $42,783,188 $62,827,485
EARNINGS PER COMMON
SHARE
Basic $0.16 $0.10 $0.56 $0.62
Diluted $0.14 $0.10 $0.53 $0.61
WEIGHTED AVERAGE
SHARES OUTSTANDING
Basic 74,673,067 74,566,818 74,612,602 76,504,035
Diluted 89,494,201 86,915,928 89,286,621 82,254,185
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31,
2009 2008
CURRENT ASSETS
Cash and cash equivalents $91,126,486 $68,060,769
Restricted Cash 3,298,379 2,575,741
Accounts receivable, net 57,215,978 36,982,167
Inventories, net 10,015,711 13,042,123
Advances to suppliers and prepaid
expenses 13,901,180 3,593,979
Notes receivable 288,476 708,076
Refundable deposit -- 6,396,996
Deferred tax assets 824,451 347,216
Other current assets 1,246,647 744,903
Total Current Assets 177,917,308 132,451,970
LONG-TERM ASSETS
Property, plant and equipment, net 95,468,265 98,154,443
Land use rights, net 153,604,196 148,988,870
Other long term assets 7,909,086 6,347,174
Construction in progress 28,975,386 25,385,835
Deferred tax assets 134,268 1,313,832
Other intangible assets, net 18,695,554 23,690,440
Goodwill 33,164,121 33,164,121
Investments in and advances to equity
investments 57,325,887 54,963,064
Unamortized financing costs 3,287,694 4,215,983
Total Long-Term Assets 398,564,457 396,223,762
TOTAL ASSETS $576,481,765 $528,675,732
LIABILITIES AND SHAREHOLDERS' EQUITY
DECEMBER 31, DECEMBER 31,
2009 2008
CURRENT LIABILITIES
Accounts payable $7,497,143 $12,287,887
Notes payables 3,392,575 3,262,877
Other payables and accrued expenses 22,320,757 19,766,652
Taxes payable 947,338 420,671
Short-term bank loans 10,384,368 7,140,148
Current portion of long-term bank
loans 60,108 58,659
Other liabilities 2,199,280 2,253,440
Deferred tax liabilities 172,473 178,931
Total Current Liabilities 46,974,042 45,369,265
LONG-TERM LIABILITIES
Long-term bank loans, net of current
portion 743,957 804,521
Long-term notes payable -- 269,908
Deferred tax liabilities 15,961,465 17,635,511
Unrecognized tax benefits 2,746,561 --
Convertible Notes 115,000,000 115,000,000
Total Long-Term Liabilities 134,451,983 133,709,940
TOTAL LIABILITIES 181,426,025 179,079,205
EQUITY
SHAREHOLDERS' EQUITY
Preferred stock, $0.001 par value;
2,000,000 shares authorized;
1,000,000 shares issued and
outstanding at December 31,
2009 and December 31, 2008,
respectively 1,000 1,000
Common stock, $0.001 par value;
150,000,000 shares authorized;
78,321,439 and 78,249,264 shares
issued and outstanding at December
31, 2009 and December 31, 2008,
respectively 78,321 78,249
Common stock to be issued 388,000 376,335
Prepaid forward repurchase contract (29,998,616) (29,998,616)
Additional paid-in capital 199,829,921 197,046,688
Retained earnings (the restricted
portion of retained earnings is
$23,757,901 at December 31, 2009
and $19,924,918 at December 31,
2008, respectively) 191,173,754 149,752,604
Accumulated other comprehensive
income 33,050,224 31,688,186
Total Shareholders' Equity 394,522,604 348,944,446
Non-controlling Interest 533,136 652,081
TOTAL EQUITY 395,055,740 349,596,527
TOTAL LIABILITIES AND EQUITY $576,481,765 $528,675,732
Working capital 130,943,266 87,082,705
SOURCE American Oriental Bioengineering, Inc.
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