China Biologic Reports Financial Results for the First Quarter of 2013 1Q13 Total Sales Increases 14.4% to $54.0 Million 1Q13 Operating Margin Increases to 48.1% from 39.9% 1Q13 Non-GAAP Net Income Increases 29.0% to $16.4 Million PR Newswire BEIJING, May 8, 2013 BEIJING, May 8, 2013 /PRNewswire-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), a leading fully integrated plasma-based biopharmaceutical company in China, today announced its financial results for the first quarter of 2013. First Quarter 2013 Financial Highlights oTotal sales in the first quarter of 2013 increased by 14.4% to $54.0 million from $47.2 million in the same quarter of 2012. oGross profit increased by 18.7% to $37.4 million from $31.5 million in the same quarter of 2012. Gross margin increased to 69.2% in the first quarter of 2013 from 66.7% in the first quarter of 2012. oIncome from operations increased by 38.0% to $26.0 million from $18.8 million in the same quarter of 2012. Operating margin increased to 48.1% in the first quarter of 2013 from 39.9% in the same quarter of 2012. oNet income attributable to the Company increased by 15.1% to $14.9 million from $13.0 million in the same quarter of 2012. Fully diluted net income per share was $0.53 in the first quarter of 2013 as compared to $0.44 in the same quarter of 2012. oNon-GAAP adjusted net income attributable to the Company was $16.4 million, representing a 29.0% increase from $12.7 million in the same quarter of 2012. Non-GAAP adjusted net income per share was $0.59, compared to $0.48 in the same quarter of 2012. Mr. David (Xiaoying) Gao, Chairman and Chief Executive Officer of China Biologic, commented, "We were pleased to experience consistently strong demand for our products as well as a favorable pricing environment during the first quarter, which allowed us to enjoy steady top-line growth. Our operating margin continued to climb due to adjustments in our product mix in recent years to include more higher-margin products, the implementation of our direct sales strategy to hospitals and inoculation centers resulting in more favorable pricing power and from the implementation of efficient cost control measures." "During the quarter, the China Food and Drug Administration ("CFDA") conducted site inspection on Shandong Taibang production facility and we expect to obtain the renewed GMP certification in the third quarter of 2013. We also obtained the required operating permits from local authorities to commence plasma collection at the new station in Cao County, Shandong Province in April and remain on track with commencing plasma collection operations by the end of the second quarter. Additionally, we expect to commence our Guizhou Taibang facility upgrade in the beginning of June which will result in a six-to-nine month production suspension. We have already factored in this suspension to our 2013 financial forecast and have been building inventory in recent quarters to ensure we have adequate customer supply." Mr. Gao concluded, "We are off to a solid start in 2013 and remain confident we can meet market demand during our Guizhou production facility transition. Our outlook for the remainder of the year is strong and we reiterate comfort with our full year financial guidance forecast." First Quarter 2013 Financial Performance Total sales in the first quarter of 2013 were $54.0 million, an increase of 14.4% from $47.2 million in the same quarter of 2012. Excluding foreign exchange influence, the increase in sales was primarily attributable to a mix of price and volume increases in plasma-based products. During the three months ended March 31, 2013, most of the Company's approved products recorded price increases. The price increase for the human albumin products was primarily attributable to the increase of the retail price ceiling announced by the NDRC in January 2013, which came into effect at the beginning of February, enabling the Company to raise ex-factory prices in certain regional markets. The general price for the immunoglobulin product group (other than human hepatitis B immunoglobulin products) remained consistent, as the average price for human immunoglobulin for intravenous injection ("IVIG") products increased 2% over the prior year period. During the first quarter of 2013, human albumin products and IVIG products remained the largest two sales contributors. oAs a percentage of total sales, human albumin product revenue was 37.9% in the first quarter of 2013 as compared to 54.6% in the same quarter of 2012. Sales volume of human albumin products declined 26.6% in the reporting quarter, primarily due to the planned inventory increase of these products in preparation of the production suspension in Guizhou Taibang. oAs a percentage of total sales, IVIG revenue was 47.5% in the first quarter of 2013 as compared to 32.3% in the same quarter of 2012. Sales volume of IVIG products increased by 65.0% in the reporting quarter, mainly due to the Company's effective marketing efforts and the engagement of new distributors selling IVIG products into new territories in the first quarter of 2013. Cost of sales was $16.6 million in the first quarter of 2013 compared to $15.7 million in the same quarter of 2012. Cost of sales as a percentage of total sales was 30.8%, as compared to 33.3% in the same quarter of 2012. The decrease in cost of sales as a percentage of sales was mainly due to the change of the Company's product mix to include more higher-margin products. Gross profit increased by 18.7% to $37.4 million in the first quarter of 2013 from $31.5 million in the same quarter of 2012. Gross margin was 69.2% and 66.7% for the three months ended March 31, 2013 and 2012, respectively. Total operating expenses in the first quarter of 2013 decreased by 9.8% to $11.4 million from $12.7 million in the same quarter of 2012. As a percentage of total sales, total operating expenses decreased to 21.2% in the first quarter of 2013 from 26.9% in the same quarter of 2012. Selling expenses in the first quarter of 2013 decreased by 61.9% to $1.8 million from $4.8 million in the same quarter of 2012. As a percentage of total sales, selling expenses were 3.4%, down from 10.2% in the same quarter of 2012. The decrease in selling expenses as a percentage of sales was primarily due to the Company's adjusted sales policy and lower commission rate for certain products during the second half of 2012. The Company has taken additional steps to further control selling expenses during the first quarter of 2013. However, China Biologic does not expect selling expenses as a percentage of sales to stay at first quarter levels as it plans to carry out a series of promotional and conference activities for the newly-launched product Factor VIII beginning in the second quarter of 2013. General and administrative expenses in the first quarter of 2013 increased by 21.6% to $8.7 million from $7.1 million in the same quarter of 2012. As a percentage of total sales, general and administrative expenses were 16.1% and 15.1% in the first quarter of 2013 and 2012, respectively. The increase in G&A expenses was mainly due to higher payroll expenses and employee benefits, an increase in share-based compensation and legal expenses related to the disputes among Guizhou Taibang shareholders. Research and development expenses in the first quarter of 2013 were $0.9 million, representing an increase of 28.5% from $0.7 million in the same quarter of 2012. As a percentage of total sales, research and development expenses for the three months ended March 31, 2013 and 2012 were 1.7% and 1.5%, respectively. The increase in R&D expenses was primarily due to the expenditure paid for certain clinical trial programs during the first quarter of 2013. Income from operations for the three months ended March 31, 2013 was $26.0 million, an increase of 38.0% from $18.8 million in the same period of 2012. Operating margin increased to 48.1% in the reporting quarter from 39.9% in the same quarter of 2012. Income tax expense in the first quarter of 2013 was $4.6 million, as compared to $3.2 million in the same quarter of 2012, representing an increase of 45.0%. The effective income tax rates were 17.4% and 15.2% for the three months ended March 31, 2013 and 2012, respectively. Net income attributable to the Company increased by 15.1% to $14.9 million in the first quarter of 2013, from $13.0 million in the same quarter of 2012. Net margins were 27.6% and 27.4% for the three months ended March 31, 2013 and 2012, respectively. Fully diluted net income per share was $0.53, as compared to $0.44 in the first quarter of 2012. Non-GAAP adjusted net income attributable to the Company was $16.4 million or $0.59 per diluted share in the first quarter of 2013, compared to $12.7 million or $0.48 per diluted share in the same quarter of 2012. Non-GAAP adjusted net income and diluted earnings per share for the three months ended March 31, 2013 excluded $1.5 million of non-cash employee share-based compensation expenses. As of March 31, 2013, the Company had cash and cash equivalents of $138.7 million, compared to $129.6 million as of December 31, 2012. Net cash provided by operating activities for the three months ended March 31, 2013 was $22.0 million, as compared to $8.2 million for the three months ended March 31, 2012. Outlook For the full year of 2013, the Company reiterates comfort with its full year financial forecast of total sales in the range of $195 million to $205 million and full year non-GAAP adjusted net income in the range of $50 million to $53 million. This guidance assumes the anticipated production suspension at the Company's Guizhou facility, only organic growth and excludes acquisitions and necessarily assumes no significant adverse product price changes during 2013. This forecast reflects the Company's current and preliminary views, which are subject to change. Conference Call The Company will host a conference call at 7:30 am, Eastern Time on Thursday, May 9, 2013, which is 7:30 pm, Beijing Time on May 9, 2013, to discuss first quarter 2013 results and answer questions from investors. Listeners may access the call by dialing 1-480-629-9857. A live and archived webcast of the conference call will be available at http://public.viavid.com, with event ID: 104670. A replay of the call will be available through May 23, 2013 by dialing 1-858-384-5517, access code: 4618459. About China Biologic Products, Inc. China Biologic Products, Inc. (Nasdaq: CBPO), is a leading fully integrated plasma-based biopharmaceutical company in China. The Company's products are used as critical therapies during medical emergencies and for the prevention and treatment of life-threatening diseases and immune-deficiency related diseases. China Biologic is headquartered in Beijing and manufactures over 20 plasma-based products through its indirect majority-owned subsidiaries, Shandong Taibang Biological Products Co., Ltd. and Guiyang Dalin Biologic Technologies Co., Ltd. The Company also has an equity investment in Xi'an Huitian Blood Products Co., Ltd. The Company sells its products to hospitals and other healthcare facilities in China. For additional information, please see the Company's website www.chinabiologic.com. Non-GAAP Disclosure This news release contains non-GAAP financial measures that exclude non-cash compensation expenses related to options granted to employees and directors under the Company's 2008 Equity Incentive Plan and changes in the fair value of warrants. To supplement the Company's unaudited condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information excluding the impact of these items in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this news release. This additional non-GAAP information is not meant to be considered in isolation or as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies. Safe Harbor Statement This news release may contain certain "forward-looking statements" relating to the business of China Biologic Products, Inc. and its subsidiaries. All statements, other than statements of historical fact included herein, are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects," or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they involve assumptions, risks, and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this news release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including its potential inability to achieve the expected operating and financial performance in 2013, potential inability to find alternative sources of plasma, potential inability to increase production at permitted sites, potential inability to mitigate the financial consequences of a temporarily reduced raw plasma supply through cost cutting or other efficiencies, and potential additional regulatory restrictions on its operations and those additional risks and uncertainties discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements. Contact: China Biologic Products, Inc. Mr. Ming Yin Vice President Phone: +86-10-6598-3099 Email: firstname.lastname@example.org ICR Inc. Mr. Bill Zima Phone: +86-10-6583-7511 or +1-646-405-5191 E-mail: email@example.com Financial statements follow. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended March 31, March 31, 2013 2012 Sales $ 54,031,732 $ 47,227,461 Cost of sales 16,616,758 15,715,727 Gross profit 37,414,974 31,511,734 Operating expenses Selling expenses 1,836,393 4,826,107 General and administrative expenses 8,687,097 7,145,794 Research and development expenses 913,092 710,588 Income from operations 25,978,392 18,829,245 Other income (expenses) Equity in income of an equity method 128,948 1,022,412 investee Change in fair value of derivative - 1,209,382 liabilities Interest expense (236,174) (608,563) Interest income 648,062 543,395 Other income (expenses), net - (100,989) Total other income (expenses), net 540,836 2,065,637 Earnings before income tax expense 26,519,228 20,894,882 Income tax expense 4,606,902 3,176,715 Net income 21,912,326 17,718,167 Less: Net income attributable to noncontrolling 6,996,466 4,760,861 interest Net income attributable to China Biologic $ 14,915,860 $ 12,957,306 Products, Inc. Net income per share of common stock: Basic $ 0.55 $ 0.51 Diluted $ 0.53 $ 0.44 Weighted average shares used in computation: Basic 26,785,541 25,601,125 Diluted 27,915,506 26,547,885 Net income $ 21,912,326 $ 17,718,167 Other comprehensive income : Foreign currency translation adjustment, net of 1,396,541 1,176,957 nil income taxes Comprehensive income 23,308,867 18,895,124 Less: Comprehensive income attributable to 7,159,157 5,015,835 noncontrolling interest Comprehensive income attributable to China $ 16,149,710 $ 13,879,289 Biologic Products, Inc. CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2013 2012 ASSETS Current Assets Cash and cash equivalents $ 138,709,901 $ 129,609,317 Accounts receivable, net of allowance for 14,569,725 11,206,244 doubtful accounts Inventories 76,756,804 75,679,173 Prepayments and other current assets 5,948,150 5,664,919 Total Current Assets 235,984,580 222,159,653 Property, plant and equipment, net 55,165,405 51,325,177 Intangible assets, net 3,340,675 3,541,582 Land use rights, net 5,836,600 5,818,709 Deposits related to land use rights 15,634,237 14,752,574 Restricted cash 2,928,660 2,912,145 Equity method investment 10,726,242 10,537,310 Total Assets $ 329,616,399 $ 311,047,150 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term bank loans $ 4,788,000 $ 7,935,000 Accounts payable 2,757,735 2,908,624 Due to related parties 4,214,592 4,081,624 Other payables and accrued expenses 23,744,932 25,423,349 Advance from customers 4,327,355 2,857,420 Income tax payable 5,808,723 4,513,075 Total Current Liabilities 45,641,337 47,719,092 Deferred income 2,928,660 2,912,145 Other liabilities 3,228,923 2,996,749 Total Liabilities $ 51,798,920 $ 53,627,986 Stockholders' Equity Common stock: par value $0.0001; 100,000,000 shares authorized; 26,845,101 and 26,629,615 shares issued and $ 2,685 $ 2,663 outstanding at March 31, 2013 and December 31, 2012, respectively Additional paid-in capital 65,037,640 62,251,731 Retained earnings 134,058,860 119,143,000 Accumulated other comprehensive income 15,306,172 14,072,322 Total equity attributable to China Biologic 214,405,357 195,469,716 Products, Inc. Noncontrolling interest 63,412,122 61,949,448 Total Stockholders' Equity 277,817,479 257,419,164 Commitments and contingencies - - Total Liabilities and Stockholders' $ 329,616,399 $ 311,047,150 Equity CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended March 31, March 31, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 21,912,326 $ 17,718,167 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,534,507 1,096,725 Amortization 282,605 755,797 Loss on sale of property, plant and equipment 1,238 15,092 Allowance for doubtful accounts, net - 58,497 Reversal of doubtful accounts - other (169) - receivables and prepayments Write-down of obsolete inventories - 63,982 Deferred tax expense 534,678 98,278 Share-based compensation 1,634,735 962,419 Change in fair value of derivative liabilities - (1,209,382) Equity in income of an equity method investee (128,948) (1,022,412) Change in operating assets and liabilities: Accounts receivable (3,294,140) (7,933,930) Prepayment and other current assets (569,804) (657,056) Inventories (647,310) 1,146,821 Accounts payable 25,644 (881,402) Other payables and accrued expenses (2,068,529) (3,584,253) Advance from customers 1,451,180 668,207 Due to related parties 94,346 2,482,577 Income tax payable 1,267,826 (1,569,925) Net cash provided by operating activities $ 22,030,185 $ 8,208,202 CASH FLOWS FROM INVESTING ACTIVITIES: Payment for property, plant and equipment (4,977,306) (2,325,870) Payment for intangible assets and land use (802,136) (318,622) rights Proceeds from sale of property, plant and 2,416 - equipment Net cash used in investing activities $ (5,777,026) $ (2,644,492) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from stock option exercised $ 1,815,858 $ - Repayment of short term bank loans (3,186,400) (6,352,000) Acquisition of noncontrolling interest (1,963,913) - Dividend paid by subsidiaries to noncontrolling (4,397,232) (4,382,880) interest shareholders Net cash used in financing activities $ (7,731,687) $ (10,734,880) EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 579,112 733,956 NET INCREASE (DECREASE) IN CASH $ 9,100,584 $ (4,437,214) Cash and cash equivalents at beginning of 129,609,317 89,411,835 period Cash and cash equivalents at end of period $ 138,709,901 $ 84,974,621 Supplemental cash flow information Cash paid for income taxes $ 2,804,399 $ 4,648,363 Cash paid for interest expense $ 119,490 $ 159,217 Noncash investing and financing activities: Acquisition of property, plant and equipment $ 100,086 $ 6,900 included in payables RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE MONTHS ENDED March 31, 2013 and 2012 For the three months ended March 31, March 31, 2013 2012 Adjusted Net Income Attributable to the Company - $ 16,394,620 $ 12,710,343 Non GAAP Diluted EPS - Non GAAP $ 0.59 $ 0.48 Non-cash employee stock compensation $ (1,478,760) $ (962,419) Gain from change in fair value of warrants $ - $ 1,209,382 Net Income Attributable to the Company $ 14,915,860 $ 12,957,306 Weighted average number of shares used in 27,915,506 26,547,885 computation of Non GAAP diluted EPS SOURCE China Biologic Products, Inc. Website: http://www.chinabiologic.com
China Biologic Reports Financial Results for the First Quarter of 2013
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