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China Botanic Reports First Quarter Fiscal 2012 Results

HARBIN, China, March 19, 2012 /PRNewswire-Asia/ -- China Botanic Pharmaceutical Inc. (NYSE AMEX: CBP) ("China Botanic" or the "Company"), a developer, manufacturer and distributor of botanical products, bio-pharmaceuticals and Traditional Chinese Medicines ("TCM") in China, today announced financial results for the three months ended January 31, 2012.

First Quarter 2012 Highlights

  • Net sales increased 24.4% year over year to $28.1 million
  • Gross profit increased 25.4% to $17.3 million from $13.8 million in the first quarter of fiscal 2011
  • Gross margin increased to 61.6% from 61.1% in the year ago period
  • Net income rose 12.4% to $12.3 million, or $0.33 per diluted share, from $10.9 million, or $0.29 per diluted share, in the first quarter of fiscal 2011

  • First Quarter Fiscal Year 2012 ResultsDuring the three months ended January 31, 2012, net revenue increased by 24.4% to $28.1 million from $22.6 million in the same period of 2011. The significant revenue growth was mainly due to price increases across all of the Company's products during the quarter and the increasing market recognition of the Company's Siberian Ginseng Series products and other new products, such as Ginseng and Venison Extract (launched in the fourth quarter of fiscal year 2010) and Badger Oil (launched in the first quarter of fiscal year 2011) as a result of China Botanic's marketing efforts. China Botanic is expecting to gain greater market acceptance in 2012 and beyond and anticipates that market demand for its products will continue to grow.

    Gross profit increased 25.4% to $17.3 million compared to $13.8 million in the first quarter of fiscal 2011. Gross margin increased to 61.6% as compared to 61.1% in the same period last year. The slight increase in gross margin in the three months ended January 31, 2012 was primarily attributable to increased product pricing and decreased sales rebate from average 13.3% to 8.5% of gross sales, which was partly offset by increasing raw material costs. China Botanic anticipates the cost of raw materials will continue to increase in 2012 at a slow to moderate speed.

    Operating expenses for the first three months of fiscal 2012 were $2.9 million, as compared to $2.2 million in the same period last year.

    Sales and marketing expenses rose 19.7% to $1.6 million from $1.3 million a year ago, reflecting the Company's investment in advertising activities during the quarter to expand market recognition of the Company's botanic anti-depression series products. General and administrative expenses increased 58.6% to $1.0 million from $0.7 million in the year ago period. This increase was primarily attributable to increased spending on other service fees, amortization expenses, and consulting expenses. Research and development expenses were approximately $236 thousand, up 30.9% from approximately $181 thousand in the year ago period.

    Operating income in the first quarter fiscal 2012 increased 24.1% to $14.5 million, compared to $11.7 million in the first quarter of fiscal 2011. Operating margin decreased slightly year-over-year to 51.4% from 51.5%.

    The Company incurred income tax expenses of $2.2 million in the first quarter of fiscal 2012, compared to $0.7 million for the comparable period in 2011.  A 15% tax rate was imposed effective January 1, 2011.

    Net income increased 12.4% year over year to $12.3 million, or $0.33 per diluted share, from $10.9 million, or $0.29 per diluted share for the same period a year ago.

    Financial ConditionAs of January 31, 2012, China Botanic had cash of approximately $21.4 million and total current assets of approximately $70.6 million. The Company had working capital of approximately $56.9 million on January 31, 2012, as compared to $40.8 million at the fiscal year end of October 31, 2011. The Company had no long-term debt on its balance sheet at the end of January 31, 2012. Shareholders' equity stood at $113.5 million, compared to $99.7 million as of October 31, 2011. Net cash flow from operating activities for the three months ended January 31, 2012 was $3.4 million compared to $1.3 million for the same period of 2011.

    Business OutlookFor fiscal year 2012, China Botanic reaffirms its guidance of revenues of between $91.6 million and $93.1 million, representing an increase of 26% to 28% over fiscal year 2011 revenue of $72.7 million. Revenue growth is expected to be driven largely by sales volume increases from the existing product portfolio. The Company expects net income to be in the range of $32.7 million to $33.2 million, representing an increase of between 26% and 28% over fiscal year 2011 net income of $25.9 million.

    "We are pleased to report double digit revenue and net income growth in the first quarter of fiscal year 2012. Our strong growth in sales, profitability, and operating cash flow during the quarter was largely driven by increase in our average selling prices, Siberian Ginseng Series products, Ginseng and Venison Extract product and Badger Oil product," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic.  "Our Siberian Ginseng products exhibited strong year-over-year sales growth and accounted for 58% of our total revenue in the first quarter of fiscal year 2012 compared with 52% in the same period of last year.  This reflected our continued commitment to create awareness and promote our premier product, the Siberian Ginseng Series, and it will continue to remain our top priority in the future. In addition, our new product, Ginseng and Venison Extract, launched in the fourth quarter of fiscal year 2010 has established a strong foothold in the market and contributed 12.5% of our total sales in the first quarter of fiscal year 2012 compared with 9.4% of total sales in the same period of last year."

    Conference CallChina Botanic will host a conference call at 9:00 a.m. Eastern Time on Monday, March 19, 2012, to discuss financial results for the first quarter of fiscal 2012 ended January 31, 2012.

    To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-394-2209. International callers should dial 706-758-1481. The conference ID number for the call is 63338488.

    If you are unable to participate in the call at this time, a replay will be available on Monday, March 19, 2012 at 12:00 noon Eastern Time, through Monday, April 2, 2012. To access the replay, dial 855-859-2056. International callers should dial 404-537-3406. The conference ID number for the replay is 46104402.

    ABOUT CHINA BOTANIC PHARMACEUTICAL INC.China Botanic Pharmaceutical Inc. is engaged in the research, development, manufacturing, and distribution of botanical products, bio-pharmaceutical products, and traditional Chinese medicines ("TCM"), in the People's Republic of China. All of the Company's products are produced at its three GMP-certified production facilities in Ah City, Dongfanghong and Qingyang. The Company distributes its botanical anti-depression and nerve-regulation products, biopharmaceutical products, and botanical antibiotic and OTC TCMs through its network of over 3,000 distributors and over 70 sales centers across 24 provinces in China. For more information, please visit

    Safe Harbor StatementThis press release contains certain statements that may include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's beliefs, assumptions and expectations of the Company's future operations and financial performance, including but not limited to statements concerning future revenue and net income, taking into account the information currently available to management. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known that may cause actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial condition expressed or implied in any forward-looking statements. These forward-looking statements are based on current plans and expectations and are subject to a number of uncertainties including, but not limited to, the Company's ability to manage expansion of its operations effectively, and other factors detailed in the Company's annual report on Form 10-K and other filings with the Securities and Exchange Commission. 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. You are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented herein.

    – Financial Tables Follow –CHINA BOTANIC PHARMACEUTICAL INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSJanuary 31,201231-Oct-11(Unaudited)(Audited)ASSETSCurrent assetsCash




    15,283,583Trade receivables, net32,590,78721,548,325Inventory, net16,417,4077,416,720Other receivables, net




    6,823,410Total current assets70,587,47051,072,038Property and equipment, net1,704,3321,778,984Intangible assets, net17,205,41017,146,700Construction-in-progress1,964,2771,937,103Deposits for properties35,541,53637,822,113Deferred tax assets




    139,226Total assets$



    109,896,164LIABILITIES AND SHAREHOLDERS' EQUITYCurrent LiabilitiesAccounts payable




    2,098,256Tax payable9,010,5965,976,417Accrued employee benefits2,269,3912,131,565Warrant Liabilities




    23,443Total liabilities 



    10,229,681Shareholders' equityPreferred stock (no par value, 1,000,000 shares authorized; none issued and outstanding as of January 31,2012 and October 31, 2011, respectively)--Common stock ($0.001 par value, 100,000,000 shares authorized; 37,239,536  issued and outstanding as of January 31,2012 and October 31, 2011, respectively)37,24037,240Additional paid-in capital7,789,7267,763,987Common stock warrants496,732496,732Reserves3,372,6973,372,697Accumulated other comprehensive income10,106,6948,620,695Retained earnings




    79,375,132Total shareholders' equity 



    99,666,483Total liabilities and shareholders' equity$







    22,625,060Cost of goods sold




    8,807,787Gross profit




    13,817,27361.6%61.1%Operating and administrative expenses:Sales and marketing1,590,8901,329,179General and administrative1,046,633659,882Research and development




    180,674Total operating expenses




    2,169,735Income from operations




    11,647,53851.4%51.5%Other income:Interest income32,10724,189Income before income tax expenses




    11,671,727Income tax expenses




    723,432Net income$



    10,948,295Other comprehensive income:Cumulative currency translation adjustments




    664,421Total comprehensive income 



    11,612,716Earnings per common stock- Basic




    0.29Earnings per common stock - Diluted




    0.29Weighted average number of common stock outstandingBasic37,239,53637,239,536Diluted




    37,895,878CHINA BOTANIC PHARMACEUTICAL INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFor the three months ended January 31,20122011(Unaudited)(Unaudited)Cash flows from operating activities:Net income




    10,948,295Adjustments to reconcile net income to operating activities:Depreciation98,91094,091Amortization180,55435,253Share compensation25,73925,796Noncash rental expenses264,935188,202Warrants liability reevaluation-4,998-187,342Changes in assets and liabilities:(Increase) in trade receivables-10,664,863-6,077,469(Increase) in due from related parties--27,177(Increase) in inventory, net-8,834,257-4,736,029Decrease (Increase) in other receivables, net6,717,399-256,099Increase in accounts payable230,997149,153Increase in tax payable2,929,651996,035Increase in accrued employee benefits




    148,081Net cash provided by operating activities




    1,300,790Cash flows from investing activities:Deposits for land use right, property and patents2,526,967-15,056,160Increase in construction-in-progress- -1,859,436Purchase of property and equipment




    -5,171Net cash provided by (used in) investing activities




    -16,920,767Effect of exchange rate changes on cash255,965178,456Net increase (decrease) in cash6,141,397-15,441,521Cash, beginning of year




    27,826,142Cash, end of year$



    12,384,621Supplemental disclosure of cash flow information:Cash paid during the year for income taxes--Interest paid during the year--Company Contact:China Botanic Pharmaceutical Inc.Ms. Portia Tan, IR Contact

    Mr. David DongEmail:

    Email: Tel: 86-451-8260-2162

    SOURCE China Botanic Pharmaceutical Inc.
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