China Biologic Reports Financial Results for the First Quarter of 2014

    China Biologic Reports Financial Results for the First Quarter of 2014

1Q14 Total Sales Increase 4.1% to $56.3Million

1Q14 Operating Margin Increases to 49.7% from 48.1%

1Q14 Non-GAAP Net Income Increases 16.3% to $ 19.1Million

PR Newswire

BEIJING, May 6, 2014

BEIJING, May 6, 2014 /PRNewswire/ -- China Biologic Products, Inc. (NASDAQ:
CBPO, "China Biologic" or the "Company"), a leading fully integrated
plasma-based biopharmaceutical company in China, today announced its unaudited
financial results for the first quarter of 2014.

First Quarter 2014 Financial Highlights

  oTotal sales in the first quarter of 2014 increased by 4.1% to $56.3
    million from $54.0 million in the same quarter of 2013.
  oGross profit increased by 3.0% to $38.6 million from $37.4 million in the
    same quarter of 2013. Gross margin decreased slightly to 68.5% in the
    first quarter of 2014 from 69.2% in the first quarter of 2013.
  oIncome from operations increased by 7.7% to $28.0 million from $26.0
    million in the same quarter of 2013. Operating margin increased to 49.7%
    in the first quarter of 2014 from 48.1% in the same quarter of 2013.
  oNet income attributable to the Company increased by 22.5% to $18.3 million
    from $14.9 million in the same quarter of 2013. Fully diluted net income
    per share was $0.69 in the first quarter of 2014 as compared to $0.53 in
    the same quarter of 2013.
  oNon-GAAP adjusted net income attributable to the Company was $19.1
    million, representing a 16.3% increase from $16.4 million in the same
    quarter of 2013. Non-GAAP adjusted net income per share was $0.73,
    compared to $0.59 in the same quarter of 2013.

Mr. David (Xiaoying) Gao, Chairman and Chief Executive Officer of China
Biologic, commented, "We are pleased to have further increased our revenue in
the first quarter, in spite of strong financial performance in the prior year
period, as well as a temporary production suspension of Guizhou Taibang's
plasma production during this period. During the reporting quarter, our
Shandong facility maintained strong sales growth momentum, and our Guizhou
facility experienced a 37% sales decrease due to the production suspension,
which was in line with our internal forecast. Our plasma collection volume
continued to grow as planned. Our operating margin and net margin of the first
quarter of 2014 reached 49.7% and 32.5%, respectively, representing a
year-on-year improvement. This solid growth was primarily attributable to
strong market demand, especially for our human albumin products, stable
product pricing, a more profitable product mix, improved plasma utilization
efficiency, as well as effective cost control measures."

"During the reporting quarter, human albumin products and IVIG products
remained our two largest sales contributors, while other products also
experienced positive developments. We experienced modest growth in both price
and sales volume of albumin products. For our higher-margin hyper-immune
products, in particular, human rabies immunoglobulin products, our overall
market share continues to grow and we experienced strong growth in sales
volume during the reporting quarter. The overall revenue contribution from
rabies immunoglobulin products increased to 12% of total sales from 2% in the
same quarter of 2013. We attribute this success to our R&D efforts in the last
year, which improved vaccination practices on specialty plasma collection and
production yields. As a result, we increased the supply of rabies vaccinated
plasma and expanded their production in our Shandong subsidiaries since the
second half of 2013. Additionally, sales of human coagulation factor VIII
continued to ramp up, which further improved the Company's plasma utilization
efficiency. For our non-plasma products, thanks to the recent remodeling of
our placenta polypeptide production line, sales volume of placenta polypeptide
increased by 21% year-over-year in the first quarter and we expect its
production volume to continue to rise in the coming quarters. "

Mr. Gao continued, "As for our operational developments, Guizhou Taibang
received GMP certification for its placenta polypeptide production facility in
January and GMP certification for its plasma production in March. Our Guizhou
Taibang facility has since resumed production with increased production
capacity. We also began commercial production of human prothrombin complex
concentrate at Guizhou Taibang. With these updates, we expect more products
available for sales in the second half of 2014. We are confident that we can
enhance our total sales and operating efficiency to meet growing market
demand. We expect the growth momentum we saw in the first quarter to
accelerate in the following quarters."

"Finally, at the non-operational level, we repurchased 2.5 million shares of
common stock from Ms. Siu Ling Chan, an individual shareholder of our Company,
at a total consideration of $70 million in February 2014. Through this
transaction, we continue to enhance our shareholding structure and increase
shareholder value," concluded Mr. Gao.

First Quarter 2014 Financial Performance

Total sales in the first quarter of 2014 were $56.3 million, an increase of
4.1% from $54.0 million in the same quarter of 2013. Excluding foreign
exchange translation effect, the increase in sales was primarily due to the
increased sales at Shandong Taibang, partially offset by the reduced sales as
a result of the planned production suspension at Guizhou Taibang during such
period.

During the first quarter of 2014, human albumin products and IVIG products
remained the largest two sales contributors.

  oAs a percentage of total sales, human albumin product revenue was 42.3% in
    the first quarter of 2014 as compared to 37.9% in the same quarter of
    2013. The sales volume of human albumin products increased by 10.3% in the
    reporting quarter, primarily due to increased sales volumes at Shandong
    Taibang, partially offset by reduced sales volume at Guizhou Taibang. The
    increase in sales volume was response to the increase in market demand for
    domestic human albumin. The reduced sales volume at Guizhou Taibang was
    primarily due to the planned production suspension at Guizhou Taibang
    during such period.
  oAs a percentage of total sales, IVIG revenue was 36.5% in the first
    quarter of 2014 as compared to 47.5% in the same quarter of 2013. The
    sales volume of IVIG products decreased by 20.7% in the reporting quarter,
    mainly due to reduced production volume as a result of the planned
    production suspension of Guizhou Taibang during this period. In addition,
    Shandong Taibang allocated a portion of its regular IVIG production
    capacity to human rabies immunoglobulin products, which have higher
    margins, and thus reduced the production of IVIG products for the first
    quarter of 2014.

Cost of sales was $17.7 million in the first quarter of 2014 compared to $16.6
million in the same quarter of 2013. As a percentage of total sales, cost of
sales was 31.5%, as compared to 30.8% in the same quarter of 2013. The
increase in cost of sales was mainly due to increased sales activities and
increased plasma collection costs, partially offset by increased sales of
higher-margin products.

Gross profit increased by 3.0% to $38.6 million in the first quarter of 2014
from $37.4 million in the same quarter of 2013. Gross margin was 68.5% and
69.2% for the three months ended March 31, 2014 and 2013, respectively.

Total operating expenses in the first quarter of 2014 decreased by 7.6% to
$10.6 million from $11.4 million in the same quarter of 2013. As a percentage
of total sales, total operating expenses decreased to 18.8% in the first
quarter of 2014 from 21.2% in the same quarter of 2013.

Selling expenses in the first quarter of 2014 increased by 24.3% to $2.3
million from $1.8 million in the same quarter of 2013. As a percentage of
total sales, selling expenses were 4.1%, up from 3.4% in the same quarter of
2013.The increasein selling expenses was primarily due to increased sales of
placenta polypeptide products, which have higher selling expenses.

General and administrative expenses in the first quarter of 2014 decreased by
16.9% to $7.2 million from $8.7 million in the same quarter of 2013. As a
percentage of total sales, general and administrative expenses were 12.8% and
16.1% in the first quarter of 2014 and 2013, respectively. The decrease in
general and administrative expenses was mainly due to a decrease in expenses
associated with share-based compensation for the three months ended March 31,
2014 as compared to the same period of 2013. In addition, in the first quarter
of 2013, the Company incurred amortization expenses in relation to the GMP
certificates with respect to the acquisition of Guizhou Taibang in 2008. Given
that such intangible asset had been fully amortized by the end of 2013, the
Company did not incur a corresponding expense in the first quarter of 2014.

Research and development expenses in the first quarter of 2014 were $1.1
million, representing an increase of 17.6% from $0.9 million in the same
quarter of 2013. As a percentage of total sales, research and development
expenses for the three months ended March 31, 2014 and 2013 were 1.9% and
1.7%, respectively. The increase in research and development expenses was
primarily due to the expenditure paid for certain clinical trial programs and
the engagement of external experts for certain pipeline products.

Income from operations for the three months ended March 31, 2014 was $28.0
million, an increase of 7.7% from $26.0 million in the same period of 2013.
Operating margin increased to 49.7% in the reporting quarter from 48.1% in the
same quarter of 2013.

Income tax expense in the first quarter of 2014 was $5.3 million, as compared
to $4.6 million in the same quarter of 2013, representing an increase of
15.9%. The effective income tax rates were 18.2% and 17.4% for the three
months ended March 31, 2014 and 2013, respectively.

Net income attributable to the Company increased by 22.5% to $18.3 million in
the first quarter of 2014, from $14.9 million in the same quarter of 2013. Net
margins were 32.5% and 27.6% for the three months ended March 31, 2014 and
2013, respectively. Fully diluted net income per share was $0.69 in the first
quarter of 2014, as compared to $0.53 in the first quarter of 2013.

Non-GAAP adjusted net income attributable to the Company was $19.1 million or
$0.73 per diluted share in the first quarter of 2014, compared to $16.4
million or $0.59 per diluted share in the same quarter of 2013.

Non-GAAP adjusted net income and diluted earnings per share for the three
months ended March 31, 2014 excluded $0.8 million of non-cash employee
share-based compensation expenses.

As of March 31, 2014, the Company had cash and cash equivalents of $77.5
million, compared to $144.1 million as of December 31, 2013, which was
primarily due to the $70 million used for share repurchase that occurred in
February 2014. Net cash provided by operating activities for the three months
ended March 31, 2014 was $11.5 million, as compared to $22.0 million for the
three months ended March 31, 2013. The decrease was mainly due to the increase
of accounts receivable and inventories and the decrease of advances from
customers for the first quarter of 2014. The increase in accounts receivable
was $6.4 million, as compared to $3.3 million in the same period of 2013. This
increases was primarily due to the delay in our shipment of, and hence
customers' payments for, certain batches of products during the first quarter
of 2014. This delay was the result of delayed inspection and approval by
National Institutes for Food and Drug Control on such products. Additionally,
we incurred an approximately $2.9 million increase in inventories for the
reporting quarter, as compared to $0.6 million in the same period of 2013,
mainly attributable to an increase of raw materials. The decrease of advances
from customers was $1.4 million for the three months ended March 31, 2014, as
compared to the increase of $1.5 million in the same period of 2013. This
decrease was primarily due to a lump sum prepayment made by certain
distributors in the fourth quarter of 2013 for certain immunoglobulin
products. A portion of these products were delivered during the three months
ended March 31, 2014, upon which the corresponding prepayment was recognized
as sales.

Outlook

For the full year of 2014, the Company reiterates its full year financial
forecast of total sales in the range of $230 million to $240 million and full
year non-GAAP adjusted net income in the range of $67 million to $69 million.
This guidance assumes only organic growth and excludes acquisitions and
necessarily assumes no significant adverse product price changes during 2014.

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 8:00 am, Eastern Time on Wednesday,
May 7, 2014, which is 8:00 pm, Beijing Time on May 7, 2014, to discuss first
quarter 2014 results and answer questions from investors. Listeners may access
the call by dialing:

US:             +1 877 870 4263
International:  +1 412 317 0790
Hong Kong:      800 905 945
Mainland China: 400 120 1203
Passcode:       10045496

A telephone replay will be available one hour after the conclusion of the
conference all through 9:00 am, Eastern Time on May 14, 2014. The dial-in
details are:

US:            +1 877 344 7529
International: +1 412 317 0088
Passcode:      10045496

A live and archived webcast of the conference call will be available through
the Company's investor relations website at
http://chinabiologic.investorroom.com.

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
different dosages of plasma-based products through its indirect majority-owned
subsidiaries, Shandong Taibang Biological Products Co., Ltd. and Guizhou
Taibang Biological Products 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. 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 2014, 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,
                                                      2014          2013
                                                      USD           USD
Sales                                                 56,266,577    54,031,732
Cost of sales                                         17,715,166    16,616,758
Gross profit                                          38,551,411    37,414,974
Operating expenses
 Selling expenses                               2,282,486     1,836,393
 General and administrative expenses            7,216,626     8,687,097
 Research and development expenses              1,073,566     913,092
Income from operations                                27,978,733    25,978,392
Other income (expenses)
 Equity in income of an equity method           337,363       128,948
investee
 Interest expense                               (621,207)     (236,174)
 Interest income                                1,595,878     648,062
Total other income, net                               1,312,034     540,836
Earnings before income tax expense                    29,290,767    26,519,228
Income tax expense                                    5,338,218     4,606,902
Net income                                            23,952,549    21,912,326
Less: Net income attributable to noncontrolling       5,678,878     6,996,466
interest
Net income attributable to China Biologic             18,273,671    14,915,860
Products, Inc.
Net income per share of common stock:
 Basic                                          0.72          0.55
 Diluted                                        0.69          0.53
Weighted average shares used in computation:
 Basic                                          24,950,549    26,785,541
 Diluted                                        26,132,929    27,915,506
Net income                                            23,952,549    21,912,326
Other comprehensive income :
Foreign currency translation adjustment, net of       (3,116,643)   1,396,541
nil income taxes
Comprehensive income                                  20,835,906    23,308,867
Less: Comprehensive income attributable to            5,105,401     7,159,157
noncontrolling interest
Comprehensive income attributable to China            15,730,505    16,149,710
Biologic Products, Inc.



CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                    March 31,    March 31,
                                                                    2014          2013
                                                                    USD           USD
ASSETS
Current Assets
 Cash and cash equivalents                                        77,548,247    144,138,487
 Time deposit                                                     -             6,608,612
 Restricted deposit                                               30,187,800    -
 Accounts receivable, net of allowance for doubtful accounts     23,484,720    17,270,132
 Inventories                                                     90,711,805    88,634,855
 Prepayments and other current assets                             8,595,815     7,641,061
    Total Current Assets                                      230,528,387   264,293,147
Property, plant and equipment, net                                 75,319,270    73,149,072
Land use rights, net                                               9,131,483     8,213,145
Deposits related to land use rights                                 11,927,245    13,667,130
Restricted cash and deposit, excluding current portion              71,665,430    30,523,674
Equity method investment                                           11,587,587    11,349,807
Other non-current assets                                            3,792,776     2,585,232
    Total Assets                                              413,952,178   403,781,207
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
 Short-term bank loans, including current portion of long-term    34,869,000    9,822,000
bank loans
 Accounts payable                                                3,032,118     4,445,732
 Due to related parties                                          7,152,356     7,206,970
 Other payables and accrued expenses                             29,414,313    34,852,740
 Advance from customers                                          1,534,479     2,908,853
 Income tax payable                                              5,261,761     4,202,405
    Total Current Liabilities                                 81,264,027    63,438,700
Long-term bank loans, excluding current portion                     70,000,000    30,000,000
Deferred income                                                     2,978,205     3,003,895
Other liabilities                                                  3,717,754     3,369,003
    Total Liabilities                                         157,959,986   99,811,598
Stockholders' Equity
Common stock:
par value $0.0001;
100,000,000 shares authorized;
27,398,797 and 27,341,744 shares issued at March 31, 2014 and
December 31, 2013, respectively;
23,419,093and25,862,040sharesoutstandingatMarch31,2014and
December 31, 2013,                                                  2,740         2,734
respectively
 Additional paid-in capital                                      73,218,535    72,031,864
Treasury stock: 3,979,704 and 1,479,704 shares at March 31, 2014    (99,594,080)  (29,594,080)
and December 31, 2013, respectively, at cost
 Retained earnings                                               192,018,222   173,744,551
 Accumulated other comprehensive income                          18,963,328    21,506,494
 Total equity attributable to China Biologic Products, Inc.      184,608,745   237,691,563
 Noncontrolling interest                                         71,383,447    66,278,046
    Total Stockholders' Equity                                255,992,192   303,969,609
 Commitments and contingencies                                   -             -
    Total Liabilities and Stockholders' Equity                413,952,178   403,781,207



CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                   For the three months ended
                                                    March 31,      March 31,
                                                    2014           2013
                                                    USD            USD
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                          23,952,549     21,912,326
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation                                        1,472,397      1,534,507
Amortization                                        177,001        282,605
Loss on sale of property, plant and equipment       35,795         1,238
Reversal of allowance for doubtful accounts, net    (18,286)       -
Reversal of doubtful accounts - other receivables   -              (169)
and prepayments
Write-down of obsolete inventories                  9,092          -
Deferred tax expense                                920,004        534,678
Share-based compensation                            980,965        1,634,735
Equity in income of an equity method investee       (337,363)      (128,948)
Change in operating assets and liabilities:
Accounts receivable                                 (6,391,825)    (3,294,140)
Prepayment and other current assets                 (1,566,829)    (569,804)
Inventories                                         (2,865,378)    (647,310)
Accounts payable                                    (1,385,934)    25,644
Other payables and accrued expenses                 (3,217,798)    (2,068,529)
Advance from customers                              (1,359,641)    1,451,180
Due to related parties                              7,075          94,346
Income tax payable                                  1,103,529      1,267,826
Net cash provided by operating activities           11,515,353     22,030,185
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment for property, plant and equipment           (6,385,851)    (4,977,306)
Payment for intangible assets and land use right    (1,083,278)    (802,136)
Refund of deposits related to land use right        1,635,200      -
Proceeds upon maturity of time deposit              6,608,612      -
Proceeds from sale of property, plant and           174,896        2,416
equipment
Net cash provided by (used in) investing            949,579        (5,777,026)
activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock option exercised                205,712        1,815,858
Repayment of short-term bank loans                  (4,905,600)    (3,186,400)
Proceeds from long-term bank loans                  70,000,000     -
Payment for deposit as security for long-term       (72,128,672)   -
bank loans
Payment for share repurchase                        (70,000,000)   -
Acquisition of noncontrolling interest              -              (1,963,913)
Dividend paid by subsidiaries to noncontrolling     (1,409,542)    (4,397,232)
interest shareholders
Net cash used in financing activities               (78,238,102)   (7,731,687)
EFFECT OF FOREIGN EXCHANGE RATE CHANGE ON CASH      (817,070)      579,112
NET (DECREASE) INCREASE IN CASH AND CASH            (66,590,240)   9,100,584
EQUIVALENTS
Cash and cash equivalents at beginning of period    144,138,487    129,609,317
Cash and cash equivalents at end of period          77,548,247     138,709,901
Supplemental cash flow information
Cash paid for income taxes                          3,276,548      2,804,399
Cash paid for interest expense                      331,605        119,490
Noncash investing and financing activities:
Acquisition of property, plant and equipment        2,574,119      100,086
included in payables
Transfer from prepayments and deposits to           184,279        447,963
property, plant and equipment



CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                                                               For the three months
                                                                               ended
                                                                               March 31,   March 31,
                                                                               2014        2013
                                                                               USD         USD
Adjusted Net Income Attributable to the Company - Non GAAP                     19,071,546  16,394,620
Diluted EPS - Non GAAP                                                         0.73        0.59
Non-cash employee stock compensation                                           (797,875)   (1,478,760)
Net Income Attributable to the Company                                         18,273,671  14,915,860
WeightedaveragenumberofsharesusedincomputationofNonGAAPdilutedEPS  26,132,929  27,915,506

SOURCE China Biologic Products, Inc.

Website: http://www.chinabiologic.com
Website: http://chinabiologic.investorroom.com
 
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