FEICHENG, China, Aug. 17 /PRNewswire-Asia-FirstCall/ -- China Ruitai International Holdings Co., Ltd. ("China Ruitai", "TaiAn" or the "Company") (OTC Bulletin Board: CRUI), a manufacturer and distributor of cellulose ether additives for use in the production of pharmaceuticals, construction materials, PVC products, foods and beverages and cosmetics, today announced its financial results for its second quarter ended June 30, 2010.
Second Quarter 2010 Highlights -- Revenue was $11.2 million, up 32.0% from 2Q 2009; Company expands customer base by 330 customers in 2Q2010 -- Gross profit was $2.9 million, unchanged from 2Q 2009 due increases in raw material costs -- Net income was $1.4 million, up 19.2% from 2Q 2009 and earnings per diluted shares were $0.054 based on 26.0 million shares Second Quarter 2010 Results 2Q 2010 2Q 2009 CHANGE Net Sales $ 11.2 million $ 8.4 million + 32.0 % Gross Profit $ 2.9 million $2.9 million 0 % Net Income $ 1.4 million $ 1.2 million + 19.2 % EPS (Diluted) $0.054 $0.046 + 19.3 %
Company Overview and Second Quarter 2010 Results
China Ruitai is one of the largest manufactures of non-ionic cellulose ether products in China with approximately 28% market share. Cellulose either is an organic chemical derived from cotton that serves as a thickener, stabilizer and binding agent for a wide variety of commercial industries and products, including; pharmaceuticals, construction materials, petrochemicals, food and beverage products and cosmetics. Specifically, the Company's cellulose ether is a stabilizer and thickener in latex paint and dry mix for concrete mortar and, used as a membrane reagent in pharmaceuticals, a thickener and binding agent for foods and cosmetics, including fruit preserves, ice cream, toothpaste and lipsticks. The Company produces 220 industry- specific products under its "RuiTai" brand, which are sold through a network of domestic and international distributors to Asia, Europe, the Middle East and North America. In total China Ruitai has 8,500 tons of capacity for its product lines.
During the three-month period ended June 30, 2010, the Company posted revenues of $11.2 million, a 32.0% increase from $8.5 million in the same year ago period. At the beginning of 2010 and continuing in the second quarter of this year, the Company initiated an aggressive price promotion targeting potential customers and offering 2009 pricing for initial orders placed in 2010. All this in the context of the Company's competitors raising customers' prices due to a global increase in the price of cotton, the key raw material essential in the production of the cellulose ether additives. As a result of the price promotion, the Company secured an additional 330 customers in the quarter. Adding to the Company's revenues for the quarter were sales of cellulose ether to their domestic and international pharmaceutical and PVC sectors, which increased 28.4% and 38.6%, respectively. Primary exports from the Company include Hydroxypropyl Methyl Cellulose (known as "HPMC") used in the construction and pharmaceutical industries, and Ethyl and Hydroxyethyl (EC and HC) used in the petrochemical industry and for other products in the pharmaceutical industry.
Capacity utilization during the second quarter of 2010 was 75% vs. 65% in the year ago period. The increase in capacity utilization was a result of increased production on the Company's HPMC, MC and EC production lines and subsequent shipments of its products to China Ruitai's customer base.
During the three-month period ended June 30, 2010, the Company's cost of sales increased 49.3% to $8.2 million over the same period a year ago. This increase was driven by higher sales volumes accompanied by increased prices for cotton. Ginned cotton, in particular, is the key raw material for producing cellulose ether, comprising approximately 45% of the total cost of goods. The other main raw material is chloromethane and accounts for 30% of the costs of goods; chloromethane is the organic agent required to produce cellulose ethers. Due to unfavorable growing climates during the harvest season, costs of ginned cotton increased 100% in the second quarter while costs of chloromethane increased 225% in the same period.
Corresponding gross profits for the quarter were 26.4% compared to 34.9% for the second quarter of 2009. While cotton prices during the second quarter reached historical highs, management decided to execute a price promotion to targeted customers by which they maintained 2009 selling prices while the majority of the Company competitors increased selling prices to match costs. As a result, several small competitors exited the market as result of the Company's strategy and China Ruitai subsequently increased its customer base by 330 customers in the quarter. As cotton prices have remained elevated during through the second quarter, China Ruitai is gradually increasing selling prices to more adequately reflect production costs with the goal of achieving projected gross margins of approximately 30% through the third and fourth quarter of 2010.
Average gross margins in 2010 for the Company's main product category are detailed below. Product Approximate % of Gross Profit Revenues Margin (%) Hydroxypropyl Methyl Cellulose (HPMC) ~ 83.0 % 25 - 30 Methyl Cellulose (MC) ~ 6.0 % 17 - 20 Ethyl Cellulose (EC) ~ 5.0 % 40 - 45
Selling expenses which consist of sales commissions, freight charges, and travel were $0.5 million for the three-month period ended June 30, 2010 an increase of approximately 19.3% compared to the second quarter of 2009. This increase was due to increased transportation costs and increased sales commissions associated with increased sales.
General and administrative ("G&A") expenses totaled $0.2 million for the three-month period ended June 30, 2010 compared to $0.7 million for the same year ago period, a decrease of approximately 68.5%. The decrease in G&A for the quarter was attributed by the Company collecting on advances to ginned cotton suppliers and the reduction of its bad debt reserve. Specifically, the Company revised its allowance of bad debt reserves according to payment cycles and successful collection processes.
For the three-month period ended June 30, 2010, income from operations increased 20.4% to $2.2 million from the year ago period and operating margins were 19.7% for the quarter. Operating income increased as a result of decreased operating expenses and increased sales. Operating income also accounts for rental income of $0.3 million from the Company's commercial property in Beijing. China Ruitai owns a commercial building in Beijing which is leased to a hotel management company. For the three-month period ended June 30, 2010, the Company recorded approximately $0.3 million, which, after depreciation costs, provided the Company $0.1 million in other income for the quarter.
Net income for the quarter was $1.4 million, an increase of approximately 19.2% over the year ago period. Earnings per share for the quarter ended June 30, 2010 increased 19.3% to 5.4 cents versus 4.6 cents in the same period 2009, based on 26.0 million basic and diluted shares outstanding.
Six Months Results
Total revenue for the first six months of fiscal 2010 was $21.4 million, up 28.2% from $16.7 million in the prior year's period. Revenues were driven by the increased demand from domestic and international markets in cellulose ether and the consumer and industrial products which cellulose ethers are used in their manufacturing. A second contributor to revenues for the first six months of 2010 were the Company's sales to new customers resulting from a price promotion in the first and second quarter of the year. For the first six months of 2010, the Company added 468 customers to its network resulting from these sales promotions.
Gross profit in the first half of fiscal year 2010 was $6.3 million, an amount similar with that derived in the prior year's corresponding period. The gross profit margin decreased by 8.0% for the six months ended June 30, 2010, from 37.2% to 29.2%, compared to the same period of fiscal 2009. The decrease in gross margins is a result of the increase in price for cotton and chloromethane, the Company's two main raw materials and its price promotion to secure new customers. As pricing regulates in market and China Ruitai gradually passes along price increases, the Company anticipates gross margins will remain at approximately 30% in the second half of the year.
Selling, general and administrative expenses in the first half of fiscal year 2010 were $1.4 million, compared to $2.2 million in the prior year's corresponding period, a 37.8% decrease year over year. The decrease in SG&A costs was attributed to the collection of certain supplier advances and a reduction of bad debt reserves as a percentage of the Company's accounts receivables.
Operating income in the first half of 2010 was $4.9 million, with operating margin of 22.7%, a 22.0% increase from $4.0 million in the prior year's period.
Net income for the first half of fiscal year 2010 was $3.4 million, compared to $2.6 million in the prior year's corresponding period, a 29.7% increase year over year. Earnings per weighted average diluted share increased 30% in the six-month period to $0.13 based on 26.0 million basic and diluted shares outstanding.
As of June 30, 2010, the Company had $12.2 million in cash, up from $10.2 million as of December 31, 2009; working capital was a negative $27.8 million, up from negative $31.8 million as of December 31, 2009; accounts receivable were $7.7 million, compared to $4.1 million as of December 31, 2009. The Company had notes receivable of $4.6 million, compared to $7.2 million as of December 31, 2009. Current liabilities were $100.9 million compared to $96.2 million as of December 31, 2009. The Company had $32.8 million in short-term loans, $48.8 million in notes payable and $1.5 million in loan from employees for a total of $83.1 million in short-term debt as of June 30, 2010. Shareholder's equity was $25.6 million, a 16.2% increase from $22.1 million reported on December 31, 2009.
Guidance for 2010
China Ruitai management anticipates cotton prices will regulate, and its promotional effort will produce re-orders of China Ruitai's products the balance of the year. Management is reaffirming its 2010 guidance of $43 million in revenues, $7.0 in net income and $0.27 in earnings per share for the period ended December 31, 2010.
About China Ruitai International Holdings Co.
China Ruitai is engaged in the production and sales of processed chemicals, with a primary focus on non-ionic cellulose ether products. Cellulose ether is an organic chemical that dissolves in water and other organic solvents. Due to the surface-active properties of cellulose ether, it acts as a thickener and stabilizer in aqueous solutions, making it a beneficial additive in a wide variety of commercial industries and products, including, but not limited to the pharmaceutical industry, the construction industry, PVC products, food and beverage products, petroleum, and cosmetics. Specific examples of applications in which cellulose ether products are used include: as a stabilizer and thickener in latex paint; in mortar dry mix for building materials; to improve the performance of resin in PVC production; as a membrane reagent, stabilizer, and thickener in pharmaceuticals; and to improve jam, ice cream, toothpaste and lipsticks in the food and cosmetic industries. China Ruitai is one of the largest non-ionic cellulose ether producers in China.
This press release contains certain "forward-looking statements" that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to, the Company's ability to obtain the necessary financing to continue and expand operations, to market its products in new markets and to offer products at competitive pricing, to attract and retain management, and to integrate and maintain technical information and management information systems, political and economic factors in the PRC, compliance requirement of laws and regulations of the PRC, the effects of currency policies and fluctuations, general economic conditions and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission and other regulatory authorities. The Company undertakes no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise.
- Financial Statements Follow - CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES Consolidated Balance Sheets June 30, December 31, 2010 2009 (unaudited) ASSETS Current Assets: Cash and cash equivalents $12,169,117 $10,174,528 Restricted cash 35,646,600 33,054,466 Accounts receivable, net 7,708,993 4,098,729 Notes receivable 4,577,235 7,153,450 Advance to suppliers 2,024,448 1,649,685 Inventories 7,455,295 8,132,681 Other receivables 3,468,551 126,657 Total current assets 73,050,239 64,390,196 Property and equipment, net 13,928,075 13,204,825 Commercial leasing assets, net 36,542,390 36,710,934 Land use rights, net 4,969,850 4,988,817 Long term investment -- 888,960 $128,490,554 $120,183,732 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term bank loans $32,839,062 $27,195,342 Accounts payable 7,718,548 6,175,266 Notes payable 48,756,300 50,020,476 Advance from customers 859,420 127,419 Due to related party- current portion 467,251 2,979,171 Income tax payable 5,543,077 5,277,239 Other payables 3,192,663 2,900,942 Loan from employees 1,507,404 1,476,292 Total current liabilities 100,883,725 96,152,147 Due to related party- long-term portion 2,000,254 1,986,114 Total Liabilities 102,883,979 98,138,261 COMMITMENTS AND CONTINGENCIES Stockholders' equity: Common stock ($.001 par value; 50,000,000 shares authorized, 26,000,000 shares issued and outstanding as of March 31, 2010 and December 31, 2009) 26,000 26,000 Additional paid-in capital 2,908,171 2,908,171 Statutory reserve 1,369,652 1,369,652 Retained earnings 19,535,677 16,179,230 Accumulated other comprehensive income 1,516,597 1,347,371 Total Equity of China Ruitai Shareholders 25,356,097 21,830,424 Equity attributable to noncontrolling interests 250,478 215,047 Total Stockholders' Equity 25,606,575 22,045,471 $128,490,554 $120,183,732 CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES Consolidated Statements of Income and Comprehensive Income Three months ended Six months ended June 30, June 30, 2010 2009 2010 2009 (unaudited) (unaudited) (unaudited) (unaudited) Sales $11,171,175 $8,463,783 $21,409,431 $16,694,963 Cost of sales 8,222,567 5,506,063 15,152,439 10,482,604 Gross margin 2,948,608 2,957,720 6,256,992 6,212,359 Operating expenses: General and administrative expenses 215,858 683,737 500,110 1,498,970 Selling expenses 530,310 444,994 889,385 733,971 Total operating expense 746,168 1,128,731 1,389,495 2,232,941 Income from operations 2,202,440 1,828,989 4,867,497 3,979,418 Other income/(expense) Interest income 175,432 382,513 566,612 924,916 Interest expense (550,610) (483,531) (1,129,097) (1,249,082) Commercial leasing income 311,774 -- 614,957 -- Cost of commercial leasing (214,123) -- (428,130) -- Other income/(expense) (16,608) (127,065) 21,687 (169,048) Income before income tax expense 1,908,305 1,600,906 4,513,526 3,486,204 Income tax expense 477,076 400,225 1,123,378 871,551 Net income before allocation to noncontrolling interests 1,431,229 1,200,681 3,390,148 2,614,653 Less: Net income attributable to noncontrolling interests 14,312 12,007 33,701 26,147 Net income attributable to China Ruitai 1,416,917 1,188,674 3,356,447 2,588,506 Other comprehensive income Net Income 1,431,229 1,200,681 3,390,148 2,614,653 Foreign Currency Translation Adjustment 103,929 1,339 170,956 21,553 Comprehensive Income $1,535,158 $1,202,020 $3,561,104 $2,636,206 Less: Comprehensive income attributable to noncontrolling interests 16,042 12,028 35,431 26,363 Comprehensive Income Attributable to China Ruitai $1,519,116 $1,189,992 $3,525,673 $2,609,843 Earnings per share - Basic and diluted $0.05 $0.05 $0.13 $0.10 Weighted average number of common shares outstanding - Basic and diluted 26,000,000 26,000,000 26,000,000 26,000,000 CHINA RUITAI INTERNATIONAL HOLDINGS CO., LTD. AND SUBSIDIARIES Consolidated Statements of Cash Flows Six months ended June 30, 2010 2009 (unaudited) (unaudited) Cash flows from operating activities: Net income before allocation to noncontrolling interests $3,390,148 $2,614,653 Adjustments to reconcile net income before noncontrolling interests to net cash provided by/(used in) operation activities Depreciation 1,170,810 633,970 Amortization of land use rights 54,244 53,500 Stock based compensation -- 165,978 Changes in operating assets and liabilities: Restricted cash (2,346,400) (10,082,958) Accounts receivable (3,565,273) (1,793,548) Notes receivable 2,615,532 (778,556) Advance to suppliers (361,417) -- Inventories 732,041 1,084,961 Other receivables (3,326,248) (513,093) Accounts payable 1,492,701 437,914 Notes payable (1,613,150) 10,229,087 Advance from customers 727,868 188,658 Income tax payable 227,259 358,439 Other payables 269,815 (9,203) Net cash (used in)/provided by operating activities (532,070) 2,589,802 Cash flows from investing activities: Purchase of property and equipment (1,369,347) (1,146,764) Net cash used in investing activities (1,369,347) (1,146,764) Cash flows from financing activities: Proceeds from bank loans 22,428,651 730,648 Repayment of bank loans (17,002,601) -- Repayment in amount due to a related party (1,630,614) (5,597,857) Loan from employees 20,517 (38,566) Net cash provided by financing activities 3,815,953 (4,905,775) Effect of exchange rate fluctuation on cash and cash equivalent 80,053 8,420 Net increase/(decrease) in cash and cash equivalent 1,994,589 (3,454,317) Cash and cash equivalent- beginning of period 10,174,528 5,319,456 Cash and cash equivalent-end of period 12,169,117 1,865,139 Supplemental disclosure of cash flow information: Cash paid for interest expense $1,129,181 $1,249,083 Cash paid for income tax $896,164 $515,713 Supplemental disclosure of non-cash investing and financing activities $888,960 $-- Repayment in amount due to related party by transferring out long-term investment at cost Collection in amount due from related party by receiving the ownership in real estate property at fair value $-- $36,710,934 For more information, please contact: COMPANY: Ms. Crystal Tang, VP of Finance China Ruitai International Holdings Co, Ltd 1221 Avenue of Americas Suite 4200 New York, NY 10020 Web: http://www.rutocel.com Phone: +1-212-899-5131 Email: email@example.com firstname.lastname@example.org INVESTOR RELATIONS: Mr. John Mattio, Senior Vice President HC International, Inc. New York and Connecticut Web: http://www.hcinternational.net Phone: +1-203-616-5144 Email: email@example.com
|SOURCE China Ruitai International Holdings Co., Ltd.|
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