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China Biologic Reports Financial Results for the First Quarter of 2013
Date:5/8/2013

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

  • 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.
  • 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.
  • 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.
  • 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.
  • 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 PerformanceTotal 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.

  • 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.
  • 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.

    OutlookFor 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 CallThe 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 DisclosureThis 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 StatementThis 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 SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFor the three months ended March 31, March 31, 20132012Sales

    $

    54,031,732$

    47,227,461Cost of sales16,616,75815,715,727Gross profit 37,414,97431,511,734Operating expenses Selling expenses1,836,3934,826,107General and administrative expenses 8,687,0977,145,794Research and development expenses 913,092710,588Income from operations 25,978,39218,829,245Other income (expenses)Equity in income of an equity method investee 128,9481,022,412Change in fair value of derivative liabilities -1,209,382Interest expense (236,174)(608,563)Interest income648,062543,395Other income (expenses), net -(100,989)Total other income (expenses), net 540,8362,065,637Earnings before income tax expense 26,519,22820,894,882Income tax expense 4,606,9023,176,715Net income 21,912,32617,718,167Less: Net income attributable to noncontrolling interest 6,996,4664,760,861Net income attributable to China Biologic Products, Inc.

    $

    14,915,860$

    12,957,306Net income per share of common stock: Basic

    $

    0.55$

    0.51Diluted

    $

    0.53$

    0.44Weighted average shares used in computation: Basic 26,785,54125,601,125Diluted 27,915,50626,547,885Net income

    $

    21,912,326$

    17,718,167Other comprehensive income :Foreign currency translation adjustment, net of nil income taxes 1,396,5411,176,957Comprehensive income 23,308,86718,895,124Less: Comprehensive income attributable to noncontrolling interest 7,159,1575,015,835Comprehensive income attributable to China Biologic Products, Inc.

    $

    16,149,710$

    13,879,289CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSMarch 31, December 31, 20132012ASSETS Current Assets Cash and cash equivalents

    $

    138,709,901$

    129,609,317Accounts receivable, net of allowance for doubtful accounts 14,569,72511,206,244Inventories 76,756,80475,679,173Prepayments and other current assets5,948,1505,664,919Total Current Assets 235,984,580222,159,653Property, plant and equipment, net 55,165,40551,325,177Intangible assets, net 3,340,6753,541,582Land use rights, net 5,836,6005,818,709Deposits related to land use rights15,634,23714,752,574Restricted cash 2,928,6602,912,145Equity method investment 10,726,24210,537,310Total Assets

    $

    329,616,399$

    311,047,150LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term bank loans

    $

    4,788,000$

    7,935,000Accounts payable 2,757,7352,908,624Due to related parties 4,214,5924,081,624Other payables and accrued expenses 23,744,93225,423,349Advance from customers 4,327,3552,857,420Income tax payable 5,808,7234,513,075Total Current Liabilities 45,641,33747,719,092Deferred income2,928,6602,912,145Other liabilities 3,228,9232,996,749Total Liabilities

    $

    51,798,920$

    53,627,986Stockholders' Equity Common stock: par value $0.0001; 100,000,000 shares authorized;

    26,845,101 and 26,629,615 shares issued and outstanding at March 31, 2013

    and December 31, 2012, respectively

    $

    2,685$

    2,663Additional paid-in capital 65,037,64062,251,731Retained earnings 134,058,860119,143,000Accumulated other comprehensive income 15,306,17214,072,322Total equity attributable to China Biologic Products, Inc. 214,405,357195,469,716Noncontrolling interest 63,412,12261,949,448Total Stockholders' Equity 277,817,479257,419,164Commitments and contingencies --Total Liabilities and Stockholders' Equity

    $

    329,616,399$

    311,047,150CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFor the three months ended March 31, March 31, 20132012CASH FLOWS FROM OPERATING ACTIVITIES: Net income

    $

    21,912,326$

    17,718,167Adjustments to reconcile net income to net cash provided by operating

    activities: Depreciation1,534,5071,096,725Amortization 282,605755,797Loss on sale of property, plant and equipment 1,23815,092Allowance for doubtful accounts, net -58,497Reversal of doubtful accounts - other receivables and prepayments (169)-Write-down of obsolete inventories -63,982Deferred tax expense534,67898,278Share-based compensation 1,634,735962,419Change 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)1,146,821Accounts payable 25,644(881,402)Other payables and accrued expenses (2,068,529)(3,584,253)Advance from customers 1,451,180668,207Due to related parties94,3462,482,577Income tax payable 1,267,826(1,569,925)Net cash provided by operating activities

    $

    22,030,185$

    8,208,202CASH FLOWS FROM INVESTING ACTIVITIES:Payment for property, plant and equipment (4,977,306)(2,325,870)Payment for intangible assets and land use rights (802,136)(318,622)Proceeds from sale of property, plant and equipment2,416-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 interest shareholders (4,397,232)(4,382,880)Net cash used in financing activities

    $

    (7,731,687)$

    (10,734,880)EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH 579,112733,956NET INCREASE (DECREASE) IN CASH

    $

    9,100,584$

    (4,437,214)Cash and cash equivalents at beginning of period129,609,31789,411,835Cash and cash equivalents at end of period

    $

    138,709,901$

    84,974,621Supplemental cash flow information Cash paid for income taxes

    $

    2,804,399$

    4,648,363Cash paid for interest expense

    $

    119,490$

    159,217Noncash investing and financing activities: Acquisition of property, plant and equipment included in payables

    $

    100,086$

    6,900 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FOR THE THREE MONTHS ENDED March 31, 2013 and 2012For the three months ended March 31, March 31, 20132012Adjusted Net Income Attributable to the Company - Non GAAP

    $

    16,394,620$

    12,710,343Diluted EPS - Non GAAP

    $

    0.59$

    0.48Non-cash employee stock compensation

    $

    (1,478,760)$

    (962,419)Gain from change in fair value of warrants

    $

    -$

    1,209,382Net Income Attributable to the Company

    $

    14,915,860$

    12,957,306Weighted average number of shares used in computation of Non GAAP diluted EPS27,915,50626,547,885 


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    SOURCE China Biologic Products, Inc.
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