FEICHENG, China, May 19 /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 financial results for its first quarter ended March 31, 2010.
First Quarter 2010 Highlights -- Q1 revenue increased 24.4% to $10.2 million -- Q1 net income increased 35.7% to $1.9 million -- Q1 EPS of $0.07 vs. $0.05 First Quarter 2010 Results Q1 2010 Q1 2009 CHANGE Net Sales $10.2 million $8.2 million +24.4% Gross Profit $3.30 million $3.25 million +1.7% Net Income attributable to China Ruitai International Holding Co., Ltd. $1.9 million $1.4 million +38.6% Earnings Per Share $0.07 $0.05 +40.0%
Company Overview and First Quarter 2010 Results
China Ruitai is one of the largest manufactures of non-ionic cellulose ether products in China. Specifically, cellulose either is an organic chemical derived from cotton that serves as a thickener and stabilizer for a wide variety of commercial industries and products, including pharmaceuticals, construction materials, petrochemicals, food and beverage products, in addition to 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, and a thickener and binding agent for foods and cosmetics, including fruit preserves, ice cream, toothpaste and lipsticks. The Company produces twelve, 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.
During the three month period ended March 31, 2010, the Company posted revenues of $10.2 million, a 24.4% increase from $8.2 million in the same year ago period, which benefited from higher sales volumes to customers as the global economy recovered. International sales in the first quarter of 2010 contributed 30.7% of revenues versus 36.8% in the same period in 2009, while sales to Chinese customers accounted for approximately 69.3% compared to 63.2 % in each respective period. Primary export products from the Company include; Hydroxypropyl Methyl Cellulose (known as "HPMC") which is used in the construction industry, PVC used in the petrochemical industry and for various products in the pharmaceutical industry. 27.6% of overall sales for the first quarter emanated from customers, which produce premium pharmaceutical, food and cosmetic products. China Ruitai has sales agents located in thirty offices throughout the PRC, including Beijing and Shanghai, with branch offices in seven other tier two cities. Capacity utilization during the first quarter of 2010 was 83% vs. 70% in the year ago period, as the Company produced 1,700 tons compared to 1,430 tons.
During the three month period ended March 31, 2010, the Company's cost of sales increased 39.3% to $6.9 million over the same year ago period. This increase was driven by higher sales volumes accompanied by increased prices for specialty cotton, which doubled during the first quarter of 2010 to $1631 per ton compared to the year ago period. The two key raw materials required for the production of cellulose ether products are purified cotton and etherifying epoxy propane. The Company is based in Feicheng City, which is located in the Shandong Province, a region known for its cotton production, and also home to a number of large etherifying epoxy propane producers. Corresponding gross profits for the quarter were 32.3% compared to 39.5% for the first quarter of 2009. The fluctuation of the cotton price is primarily due to the severe drought in China which has led to decreased supply. While cotton prices during the first quarter reached historical highs, management decided to maintain selling prices, while the majority of our competitors increased selling prices to match costs. Several small competitors exited the market as result of the Company's strategy. As cotton prices have remained elevated during the second quarter, China Ruitai increased selling prices to more adequately reflect production costs, with the goal of achieving gross margins close to historical levels.
Selling expenses which consist of sales commissions, freight charges, and travel were $0.4 million for the three month period ended March 31, 2010 an increase of approximately 24.3% compared to the first quarter of 2009. This increase was due to increased transportation costs and increased sales commissions associated with increased sales.
General and administrative expenses totaled $0.3 million for the three month period ended March 31, 2010 compared to $0.8 million for the same year ago period, a decrease of approximately 65.1%, which was associated with lower research and development costs and the elimination of non-cash equity compensation expenses associated with consultant warrants.
For the three month period ended March 31, 2010, income from operations increased 28.1% to $2.7 million from the year ago period, as a result of decreased operating expenses and rental income of $0.3 million from a newly acquired commercial property in Beijing.
On December 30, 2009, the Company allowed its related party "Shandong Ruitai Chemicals Co., Ltd." to satisfy a total of $31.7 million in debt owed in return for Shandong Ruitai's transfer of 100% of its ownership interest in real estate property located in Beijing, China, commonly known as the "Taishan Building." As a result, starting from the first quarter of 2010, the 130,125 square foot "Taishan Building" started generating quarterly rental income of $0.3 million which will positively impact future earnings.
Net income attributable to China Ruitai International Holding Co., Ltd. was $1.9 million for the three month period ended March 31, 2010, an increase of approximately 38.6% over the year ago period. Earnings per share for the quarter ended March 31, 2010 increased 40.0% to $0.07 versus $0.05 in the same period 2009, based on 26 million fully diluted shares outstanding.
"Our strategy to focus Company resources, production and sales efforts on higher margin, higher growth industries in China, including pharmaceuticals, food and cosmetics, yielded strong growth in our first quarter earnings," said Mr. Ma, Chairman and CEO of China Ruitai. "We have continued to properly position and increase awareness of our "Ruitai" brand throughout the industry, while developing relationships with distributors and end customers who are some of the fastest growing of the industries that we service."
On March 31, 2010, current assets were $65.3 million while total assets were $120.4 million. On March 31, 2010, cash and cash equivalents were $7.9 million compared to $10.2 million as of December 31, 2009.
Accounts receivable were $7.7 million, an increase of approximately 87.0% compared to accounts receivable of $4.1 million as of December 31, 2009 with day sales outstanding of 69 compared to 50, respectively. As of March 31, 2010, accounts payable were $7.0 million, an increase of approximately 12.8% compared to accounts payable of $6.2 million as of December 31, 2009.
On March 31, 2010, current liabilities were $94.3 million, notes payable were $48.6 million, and short-term bank loans were $25.4 million.
Cash flow from operations for the first quarter was $0.7 million compared to $2.7 million in the year ago period. Total stockholder's equity was $24.1 million in the first quarter of 2010, up 9.2% from $22.0 million as of December 31, 2009.
2010 Business Outlook
"Our domestic industry consists of a number of fragmented suppliers. With consolidation underway and given the fact that a number of smaller firms failed during the recent economic downturn, we have experienced increased sales opportunities for our higher-margin products. Our facility can produce 10,000 metric tons per year, exceeding our closest competitor and making us the largest in China," began Chairman Ma.
"We are well positioned to benefit from the overall economic recovery in multiple industries, and plan to emphasize sales of our higher growth, higher margin products," concluded Mr. Ma.
About China Ruitai International Holdings Co.
China Ruitai, through its wholly-owned subsidiary, Pacific Capital Group and its majority-owned subsidiary, TaiAn, is engaged in the production, sales, and exportation of deeply 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. TaiAn is one of the largest non-ionic cellulose ether producers in China.
Certain statements in this release and other written or oral statements made by or on behalf of the Company are "forward-looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and our future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future are forward-looking statements within the meaning of these laws. The forward-looking statements are subject to a number of risks and uncertainties including market acceptance of the Company's services and projects and the Company's continued access to capital and other risks and uncertainties. The actual results the Company achieves may differ materially from any forward- looking statements due to such risks and uncertainties. These statements are based on our current expectations and speak only as of the date of such statements.
For additional information contact: China Ruitai International Holdings Co., Ltd. Ms. Crystal Tang, VP of Finance Add: 1221 Avenue of Americas Suite 4200 New York, NY 10020 Web: http://www.rutocel.com Tel: +1-212-899-5131 Fax: +1-212-899-3189 Email: email@example.com firstname.lastname@example.org HC International, Inc. John Mattio, Senior Vice President Add: 420 Lexington Avenue New York, New York Web: http://www.hcinternational.net Tel: +1-203-616-5144 Email: email@example.com CHINA RUITAI INTERNATIONAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Balance Sheets March 31, 2010 December 31, 2009 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $7,953,190 $10,174,528 Restricted cash 32,274,000 33,054,466 Accounts receivable, net 7,665,940 4,098,729 Notes receivable 7,731,215 7,153,450 Advance to suppliers 1,570,685 1,649,685 Inventories 7,581,269 8,132,681 Other receivables 499,085 126,657 Total current assets 65,275,384 64,390,196 Property and equipment, net 13,503,313 13,204,825 Commercial leasing assets, net 36,607,620 36,710,934 Land use rights, net 4,976,737 4,988,817 Long term investment -- 888,960 $120,363,054 $120,183,732 LIABILITIES AND EQUITY Current liabilities: Short-term bank loans $25,370,298 $27,195,342 Accounts payable 6,964,910 6,175,266 Notes payable 48,557,700 50,020,476 Advance from customers 619,812 127,419 Due to related party- current portion 1,748,793 2,979,171 Income tax payable 5,574,445 5,277,239 Other payables 4,101,386 2,900,942 Loan from employees 1,362,186 1,476,292 Total current liabilities 94,299,530 96,152,147 Due to related party- long-term portion 1,992,107 1,986,114 Total Liabilities 96,291,637 98,138,261 Equity: Common stock ($.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 18,118,760 16,179,230 Accumulated other comprehensive income 1,414,398 1,347,371 Total Equity of the Company's Shareholders 23,836,981 21,830,424 Noncontrolling interest 234,436 215,047 Total Equity 24,071,417 22,045,471 $120,363,054 $120,183,732 CHINA RUITAI INTERNATIONAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Statements of Income and Comprehensive Income Three months ended March 31, 2010 2009 (unaudited) (unaudited) Sales $10,238,256 $8,231,180 Cost of sales 6,929,872 4,976,541 Gross profit 3,308,384 3,254,639 Operating expenses: General and administrative expenses 284,252 815,233 Selling expenses 359,075 288,977 Total operating expense 643,327 1,104,210 Commercial leasing income 303,183 -- Cost of commercial leasing (214,007) -- Income from operations 2,754,233 2,150,429 Other income/(expense) Interest income 391,180 542,403 Interest expense (578,487) (765,551) Other income/(expense) 38,295 (41,983) Income before income tax expense 2,605,221 1,885,298 Income tax expense 646,302 471,326 Net income 1,958,919 1,413,972 Less: Net income attributable to the noncontrolling interest 19,389 14,140 Net income attributable to China Ruitai International Holding Co., Ltd. 1,939,530 1,399,832 Other comprehensive income Foreign Currency Translation Adjustment 67,027 20,012 Comprehensive income $2,006,557 $1,419,844 Earnings per share Basic and diluted $0.07 $0.05 Weighted average number of common shares outstanding Basic and diluted 26,000,000 26,000,000 CHINA RUITAI INTERNATIONAL HOLDING CO., LTD. AND SUBSIDIARIES Consolidated Statements of Cash Flows Three months ended March 31, 2010 2009 (unaudited) (unaudited) Cash flows from operating activities: Net income $1,958,919 $1,413,972 Adjustments to reconcile net income to net cash provided by operation activities Depreciation 564,625 311,395 Amortization of land use rights 27,122 26,746 Stock based compensation -- 121,000 Changes in operating assets and liabilities: Restricted cash 879,900 (9,931,952) Accounts receivable (3,553,625) (1,163,972) Notes receivable (556,011) 2,607,913 Advance to suppliers 83,947 -- Inventories 575,753 52,815 Other receivables (371,918) (949,364) Accounts payable 770,749 900,750 Notes payable (1,613,150) 9,055,602 Advance from customers 491,841 170 Income tax payable 281,188 215,819 Other payables 1,191,228 6,572 Net cash provided by operating activities 730,568 2,667,466 Cash flows from investing activities: Purchase of property and equipment (609,265) (287,450) Due from a related party -- (5,084,785) Net cash used in investing activities (609,265) (5,372,235) Cash flows from financing activities: Proceeds from bank loans 6,003,851 -- Repayment of bank loans (7,910,301) (730,293) Due to a related party (347,609) -- Loan from employees (118,513) 238,785 Net cash used in financing activities (2,372,572) (491,508) Effect of foreign exchange rate changes 29,931 6,142 Net decrease in cash and cash equivalent (2,251,269) (3,196,277) Cash and cash equivalent- beginning of period 10,174,528 5,319,456 Cash and cash equivalent-end of period $7,953,190 $2,129,321 Supplementary cash flow information: Cash paid for interest expense $578,487 $637,819 Cash paid for income tax $365,239 $220,524
|SOURCE China Ruitai International Holdings Co., Ltd.|
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