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China Biologic Reports Financial Results for the First Quarter of 2013



    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

  o Total 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.
  o Gross 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.
  o Income 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.
  o Net 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.
  o Non-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.

  o As 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.
  o As 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: ir@chinabiologic.com

ICR Inc.
Mr. Bill Zima
Phone: +86-10-6583-7511 or +1-646-405-5191
E-mail: bill.zima@icrinc.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
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