Attached files
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| 8-K - WEIKANG BIO-TECHNOLOGY GROUP CO., INC. | v215721_8-k.htm |
Exhibit 99.1
Weikang Bio-Technology Announces Fiscal 2010 Financial Results
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Revenue Rises 57.0% to $74.6 Million
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Adjusted Operating Income Climbs to $37.6 Million
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Adjusted* Net Income Hits $28.3 Million or $0.95 Per Share
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GAAP Net Income Up 56.5% to $24.4 Million or $0.87 Per Share
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HARBIN, China, March 22, 2011 /PRNewswire-Asia-FirstCall/ -- Weikang Bio-Technology Group Co., Inc. (OTC QB: WKBT) ("Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced its financial results for the fiscal year ended December 31, 2010.
Fiscal 2010 Financial Highlights
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Revenues generated in fiscal 2010 increased 57.0% to $74.6 million, up from $47.5 million in 2009.
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Gross profit was $45.0 million, an increase of 74.2% compared to $25.8 million in fiscal 2009. Gross margin was 60.4% and 54.4% in fiscal 2010 and 2009, respectively.
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Operating income in fiscal 2010 was $33.7 million, an increase of 68.5% compared to $20.0 million in 2009. Operating margin was 45.2% and 42.1% in fiscal 2010 and 2009, respectively.
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Adjusted* net income for fiscal 2010 was $28.3 million, an increase of 81.3% from GAAP net income of $15.6 million in 2009.
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GAAP net income for fiscal 2010 increased 56.5% to $24.4 million, compared to $15.6 million in 2009.
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Adjusted* fully diluted earnings per share (“EPS”) for fiscal 2010 was $0.95, an increase of 53.2% from fully diluted EPS of $0.62 in 2009.
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GAAP diluted EPS was $0.87 for fiscal 2010, up 40.3% from diluted EPS of $0.62 in 2009.
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Fiscal 2010 Financial Summary
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Fiscal 2010 Results
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FY 2010
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FY 2009
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Change
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Net Sales
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$74.6 million
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$47.5 million
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57.0%
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Gross Profit
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$45.0 million
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$25.8 million
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74.2%
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Adjusted* Net Income
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$28.3 million
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N/A
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81.3%**
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GAAP Net Income
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$24.4 million
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$15.6 million
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56.5%
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Adjusted* Diluted EPS
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$0.95
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N/A
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53.2%**
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GAAP Diluted EPS
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$0.87
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$0.62
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40.3%
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* 2010 net income adjusted for $3.88 million non-cash stock-based compensation expenses.
**Annual percentage changes calculated using 2010 non-GAAP net income and 2009 GAAP net income. No adjustment to net income was necessary in fiscal 2009.
“Our business strategy was very successful this year, as evidenced by strong double-digit annual growth in both our top and bottom lines and an especially strong fourth quarter," commented Mr. Yin Wang, Chairman and CEO of Weikang. "Our market share continues to improve with our successful new product launches and expanded sales channels. The five new products we launched during 2010 contributed roughly $11 million to our total sales, and we plan to launch four new products during 2011, three of which we expect to roll out during the first quarter.”
Mr. Wang continued, “We are committed to implementing improved marketing and promotional strategies as well as aggressive R&D, both of which contributed to our strong performance this year. Furthermore, we have streamlined our cost structure in order to provide the highest quality product at the best value, and we look forward to continued growth of this nature as we continue to pursue additional US investor support and interaction in 2011.”
Fiscal Year 2010 Results of Operations
Revenues
During the year ended December 31, 2010, the Company recorded record revenues of $74.6 million, compared to $47.5 million in 2009, an increase of 57.0%, or $27.1 million. The increase in sales was primarily attributable to sales of the Company’s five new products launched in the second half of 2010, which accounted for approximately 15% of total revenues. An additional 8% of sales were attributable to new sales channels in Hunan and Guangxi provinces, with further growth due to increased client demand and market share. General price increases throughout China also contributed to higher product prices for the Company.
Gross Profit
Cost of sales increased to $29.5 million in 2010 from $21.6 million in 2009. The increase of $7.9 million, or 36.5%, was mainly due to a decrease in cost of goods sold as a percentage of sales from 45.6% in 2009 to 39.6% in 2010. Gross profit was $45.0 million for the year ended December 31, 2010, compared to $25.8 million for 2009, representing gross margins of 60.4% and 54.4%, respectively. The increase in gross margin was attributable to strict cost control procedures and improved economies of scale.
Operating Income
Total operating expenses were $11.3 million in 2010, compared to $5.9 million in 2009. The increase of 93.6%, or $5.5 million, was mainly attributable to increased promotional, marketing, and advertising expenses for new products; non-cash stock-based compensation expenses of $3.88 million; and R&D expenses of $2.54 million related to licorice flavonoid extraction technology. Income from operations totaled $33.7 million in 2010, an increase of 68.5% or $13.7 million, as compared to $20.0 million in 2009.
Net Income
Net income for fiscal 2010 was $24.4 million, compared to $15.6 million for 2009, an increase of 56.5% or $8.8 million. The increase was mainly attributable to the increase in revenues, improvement in gross margin due to cost control measures, and other reasons set forth above. The Company generated basic and diluted EPS of $0.87, an increase of 40.3% from basic and diluted EPS of $0.62 in 2009.
About Weikang Bio-Technology Group Co., Inc.
Weikang Bio-Technology Group Co., Inc. is principally engaged in developing, manufacturing and distributing Traditional Chinese Medicine (TCM), and health and nutritional supplements in China, in compliance with requisite Chinese licenses and approvals. The Company is also expanding its business scope to develop, manufacture and distribute Chinese herbal extract products and GMP-certified western prescription and OTC pharmaceuticals through its acquisition of Tianfang Pharmaceutical Co., Ltd. For more information, please visit http://www.weikangbio.com.
Use of Non-GAAP Financial Measures
To supplement Weikang’s condensed consolidated financial statements presented on a GAAP basis, Weikang is providing certain income statement information that is not calculated according to GAAP. Weikang believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the fiscal year ended December 31, 2010 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.
Non-GAAP financial results for the fiscal year ended December 31, 2010 discussed in this release reflect operating results excluding the impact of the non-cash, stock-based compensation recognized under general and administrative expenses for investor relations and consulting services rendered to the Company in fiscal 2010.
Safe Harbor Statement
Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press 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 those 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.
Investor Relations Contact:
Paul Kuntz, Senior Specialist
RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 0
Email: info@redchip.com
WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
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YEARS ENDED DECEMBER 31,
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2010
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2009
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Net sales
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$ | 74,554,214 | $ | 47,484,188 | ||||
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Cost of goods sold
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29,538,359 | 21,640,326 | ||||||
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Gross profit
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45,015,855 | 25,843,862 | ||||||
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Operating expenses:
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Selling
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3,347,947 | 2,583,202 | ||||||
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General and administrative
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5,452,014 | 1,321,838 | ||||||
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Research and development
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2,537,854 | 1,951,000 | ||||||
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Total operating expenses
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11,337,815 | 5,856,040 | ||||||
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Income from operations
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33,678,040 | 19,987,822 | ||||||
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Non-operating income (expenses)
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Interest income
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82,838 | 13,206 | ||||||
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Other income
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481,490 | 973,196 | ||||||
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Other expenses
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(2,666 | ) | (1,664 | ) | ||||
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Total non-operating income, net
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561,662 | 984,738 | ||||||
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Income before income tax
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34,239,702 | 20,972,560 | ||||||
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Income tax
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9,802,018 | 5,355,758 | ||||||
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Net income
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24,437,684 | 15,616,802 | ||||||
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Other comprehensive income
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Foreign currency translation gain
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1,680,040 | 21,375 | ||||||
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Comprehensive Income
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$ | 26,117,724 | $ | 15,638,177 | ||||
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Basic weighted average shares outstanding
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28,091,282 | 25,375,581 | ||||||
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Diluted weighted average shares outstanding
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28,092,743 | - | ||||||
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Basic earnings per share
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$ | 0.87 | $ | 0.62 | ||||
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Diluted earnings per share
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$ | 0.87 | $ | - | ||||
WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 2010 AND 2009
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2010
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2009
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ASSETS:
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CURRENT ASSETS:
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Cash & equivalents
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$ | 50,363,812 | $ | 11,380,019 | ||||
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Account receivable
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652,167 | - | ||||||
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Advances to suppliers and other receivables
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241,342 | 26,079 | ||||||
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Inventory
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388,535 | 285,395 | ||||||
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Deferred compensation
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902,226 | - | ||||||
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Total current assets
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52,548,082 | 11,691,493 | ||||||
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NONCURRENT ASSETS
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Deferred compensation-noncurrent
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16,077 | - | ||||||
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Property and equipment, net
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9,606,269 | 10,162,946 | ||||||
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Construction in progress
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683,830 | - | ||||||
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Intangible assets
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15,754,666 | 15,558,731 | ||||||
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Total noncurrent assets
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26,060,842 | 25,721,677 | ||||||
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TOTAL ASSETS
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$ | 78,608,924 | $ | 37,413,170 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
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Accounts payable
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$ | 14,204 | $ | 12,668 | ||||
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Unearned revenue
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528,485 | 11,716 | ||||||
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Taxes payable
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6,269,422 | 2,247,410 | ||||||
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Accrued expenses
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1,376,154 | - | ||||||
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Due to related party
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25,669 | - | ||||||
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Total current liabilities
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8,213,934 | 2,271,794 | ||||||
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ADVANCE FROM OFFICER
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- | 650,000 | ||||||
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OTHER LIABILITY
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- | 7,620,321 | ||||||
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CONTINGENCIES
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DEFERRED TAX LIABILITY
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3,464,815 | 3,450,005 | ||||||
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STOCKHOLDERS' EQUITY
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Common stock, $.00001 par value; authorized shares
100,000,000; issued and outstanding shares 29,963,551 and 25,486,800 at
December 31, 2010 and 2009, respectively
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300 | 255 | ||||||
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Additional paid in capital
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17,530,601 | 139,245 | ||||||
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Statutory reserve
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2,431,927 | 1,069,507 | ||||||
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Accumulated other comprehensive income
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2,524,566 | 844,526 | ||||||
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Retained earnings
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44,442,781 | 21,367,517 | ||||||
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Total stockholders' equity
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66,930,175 | 23,421,050 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 78,608,924 | $ | 37,413,170 | ||||
WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
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YEARS ENDED DECEMBER 31,
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2010
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2009
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income
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$ | 24,437,684 | $ | 15,616,802 | ||||
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Adjustments to reconcile net income to net cash
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provided by operating activities:
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Depreciation and amortization
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1,193,045 | 1,176,909 | ||||||
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Stock compensation
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3,843,732 | 139,500 | ||||||
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Stock option
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35,132 | - | ||||||
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Changes in deferred tax
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(90,241 | ) | (104,306 | ) | ||||
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(Increase) decrease in current assets:
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Accounts receivable
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(638,024 | ) | - | |||||
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Advances to suppliers and other receivables
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(214,767 | ) | (1,903 | ) | ||||
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Inventory
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(92,239 | ) | (133,257 | ) | ||||
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Increase (decrease) in current liabilities:
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Accounts payable
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1,118 | (340 | ) | |||||
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Unearned revenue
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505,207 | (212,677 | ) | |||||
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Accrued expenses
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1,346,510 | 8,559 | ||||||
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Taxes payable
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3,866,569 | 979,150 | ||||||
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Net cash provided by operating activities
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34,193,726 | 17,468,437 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Construction in progress
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(669,001 | ) | - | |||||
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Acquisition of property & equipment
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(59,301 | ) | (3,563,305 | ) | ||||
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Net cash used in investing activities
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(728,302 | ) | (3,563,305 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Changes in due from management
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- | 1,261,882 | ||||||
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Net proceeds from shares issued
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4,323,913 | - | ||||||
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Payment for purchase of Tianfang
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- | (3,812,596 | ) | |||||
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Changes in due from related party
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25,113 | - | ||||||
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Net cash provided by (used in) financing activities
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4,349,026 | (2,550,714 | ) | |||||
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EFFECT OF EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS
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1,169,343 | 8,674 | ||||||
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INCREASE IN CASH & EQUIVALENTS
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38,983,793 | 11,363,092 | ||||||
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CASH & EQUIVALENTS, BEGINNING OF YEAR
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11,380,019 | 16,927 | ||||||
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CASH & EQUIVALENTS, END OF YEAR
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$ | 50,363,812 | $ | 11,380,019 | ||||
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Supplemental Cash flow data:
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Income tax paid
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$ | 10,163,057 | $ | 4,163,362 | ||||
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Interest paid
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$ | - | $ | - | ||||
WEIKANG BIO-TECHNOLOGY GROUP CO., INC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010
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Adjusted Net Income
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Fiscal Year Ended
December 31, 2010
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Net Income (Loss) and Diluted EPS
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Net Income
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Diluted EPS
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Adjusted amount (non-GAAP)
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$28,316,548
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$0.95
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Stock-based compensation adjustment (1)
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3,878,864
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0.08
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GAAP amount per consolidated statement of operations
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24,437,684
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0.87
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(1) Stock-based compensation expense for shares issued to financial and investor relations consultants.
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Source: Weikang Bio-Technology Group Co., Inc.