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American Oriental Bioengineering Reports First Quarter 2009 Financial Results

May 11, 2009

NEW YORK, May 11 /PRNewswire-Asia-FirstCall/ — American Oriental
Bioengineering, Inc. (NYSE: AOB), a pharmaceutical company dedicated to
improving health through the development, manufacture and commercialization of
a broad range of prescription and over the counter (“OTC”) products in China,
today announced financial results for the first quarter ended March 31, 2009.

Financial Results

Revenue in the first quarter of 2009 increased 18.9% year over year to
$46.1 million from $38.8 million, reflecting continued demand for the
Company’s core pharmaceutical and nutraceutical products. Revenue from
pharmaceutical products increased 8.9% to $34.7 million from $31.9 million in
the prior year’s first quarter. Prescription pharmaceutical products revenue
increased 14.5% to $16.2 million during the first quarter of 2009, reflecting
prescription formulation Jinji and CCXA products, which offset declines in
Shuanghuanglian Injection Powder (“SHL”). OTC pharmaceutical products
generated $18.5 million in revenue during the first quarter of 2009, roughly
flat to the prior year period, reflecting continued demand for Boke nasal
spray and Jinji Yimucao products and a shift of Jinji Capsule products from
OTC to prescription sales. Nutraceutical products generated revenue of
approximately $8.9 million in the first quarter of 2009, up 29.0% from the
prior year period, reflecting continued demand for peptide products and an
expanded distribution network versus the prior year’s first quarter. The
Company generated $2.5 million in distribution revenue in the first quarter of
2009 from Nuo Hua’s majority owned subsidiary.

Gross profit in the first quarter of 2009 increased 8.1% to $28.4 million
from $26.3 million in the first quarter of 2008. Gross margin was 61.7%,
compared with 67.8% in the prior year period, reflecting lower margin
distribution revenue and CCXA’s generic product sales.

Operating income in the first quarter was $11.2 million compared with
$12.0 million in the prior year period, reflecting a 20.2% increase in
operating expenses to $17.2 million in the first quarter of 2009 from $14.3
million
in the prior year period. General and administration expenses as well
as selling and marketing expenses increased 9.3% to $9.8 million from $8.9
million
in the prior year period. The increase primarily reflects marketing
and promotional initiatives related to Jinji and Boke products. Advertising
expense increased 26.7% to $5.6 million in the first quarter of 2009, compared
to $4.4 million in the prior year period.

Net income for the first quarter of 2009 was $7.9 million, compared to
$9.4 million in the prior year period. Excluding the $1.7 million of interest
expense related to the Company’s outstanding convertible notes in the first
quarter of 2009, which did not occur in the first quarter of 2008, net income
performance was roughly flat on a year over year basis. Net income per
diluted share was $0.11 in the first quarter of 2009 compared to $0.12 per
diluted share in the first quarter of 2008.

As of March 31, 2009, the Company had $73.9 million in cash and generated
approximately $3.6 million of operating cashflow during the quarter.

Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental
Bioengineering, commented, “We are pleased with our first quarter performance
and have met our key near-term objective to foster a dynamic business model
that is diversified across prescription, OTC and nutraceutical products.
Notably, our distribution business began to strengthen overall performance
this quarter, contributing to net income as anticipated, and enlarging our
distribution reach, particularly for our prescription pharmaceutical products.
We are more flexible today than we were one year ago and, because of this, we
can quickly adapt to change and capitalize on new opportunities despite the
uncertain regulatory environment. Our marketing capabilities, extensive
distribution platform, compelling product portfolio and ongoing rural
expansion offset anticipated challenges in SHL sales during the first quarter
of 2009 and we remain focused on becoming a top five pharmaceutical company in
China.”

Conference Call

The Company will hold a conference call at 8:00 am ET on May 11, 2009 to
discuss first quarter 2009 results. Listeners may access the call by dialing
1-866-798-2884 or 1-617-614-6207 for international callers, access code:
34266051. A webcast will also be available through AOBO’s website at
http://www.bioaobo.com . A replay of the call will be available through May
18, 2009
. Listeners may access the replay by dialing 1-888-286-8010 or
1-617-801-6888 for international callers, access code: 57318398.

About American Oriental Bioengineering, Inc.

American Oriental Bioengineering, Inc. is a China-based pharmaceutical
company dedicated to improving health through the development, manufacture and
commercialization of a broad range of prescription and over the counter
products.

Statements made in this press release are forward-looking and are made
pursuant to the safe harbor provisions of the Securities Litigation Reform Act
of 1995. Such statements involve risks and uncertainties that may cause
actual results to differ materially from those set forth in these statements.
The economic, competitive, governmental, technological and other factors
identified in the Company’s filings with the Securities and Exchange
Commission, including the Form 10-K for the year ended December 31, 2008, may
cause actual results or events to differ materially from those described in
the forward looking statements in this press release. The Company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether because of new information, future events, or otherwise.


           AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
     CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                 (UNAUDITED)

                                                    THREE MONTHS ENDED
                                                         March 31
                                                   2009              2008
    REVENUES                                   $46,077,190       $38,768,598
    COST OF GOODS SOLD                          17,660,338        12,477,636

    GROSS PROFIT                                28,416,852        26,290,962

    Selling and marketing                        5,211,502         5,029,708
    Advertising                                  5,567,357         4,394,341
    General and administrative                   4,565,643         3,912,683
    Depreciation and amortization                1,858,915           977,210

    Total operating expenses                    17,203,417        14,313,942

    INCOME FROM OPERATIONS                      11,213,435        11,977,020

    EQUITY IN EARNINGS (LOSS) FROM
     UNCONSOLIDATED ENTITIES                       437,794                --
    INTEREST INCOME (EXPENSE), NET              (1,579,269)           16,847
    OTHER (EXPENSE), NET                           (98,609)         (101,790)

    INCOME BEFORE INCOME TAXES                   9,973,351        11,892,077
    INCOME TAXES                                 2,103,299         2,469,948

    NET INCOME                                   7,870,052         9,422,129
    NET INCOME ATTRIBUTABLE TO NON-
     CONTROLLING INTEREST                           (3,551)               --
    NET INCOME ATTRIBUTABLE TO
     CONTROLLING INTEREST                        7,866,501         9,422,129

    OTHER COMPREHENSIVE INCOME
    Foreign currency translation gain,
     net of tax                                    378,466         6,934,434
    OTHER COMPREHENSIVE INCOME, NET OF
     TAX                                           378,466         6,934,434

    COMPREHENSIVE INCOME                        $8,244,967       $16,356,563

    NET INCOME PER COMMON SHARE
      BASIC                                          $0.11             $0.12
      DILUTED                                        $0.11             $0.12
    WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES OUTSTANDING
      BASIC                                     74,538,593     78,191,242.00
      DILUTED                                   86,917,603     78,192,795.00

             AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

                                     ASSETS
                                               March 31,       DECEMBER 31,
                                                  2009             2008
                                               UNAUDITED
    CURRENT ASSETS
    Cash and cash equivalents                 $73,899,602      $70,636,510
    Accounts receivable, net of reserve
     of $130,631 and $226,330 at March 31,
     2009 and December 31, 2008,
     respectively                              31,812,778       36,982,167
    Inventories, net of provision for
     slow moving inventories                   17,954,075       13,042,123
    Advances to suppliers                       2,241,176        3,593,979
    Notes receivable                            1,039,914          708,076
    Refundable deposit                          6,397,106        6,396,996

    Tax refund claims                             823,737               --
    Deferred tax assets                           456,444          347,216
    Other current assets                          863,554          744,903
            Total Current Assets              135,488,386      132,451,970

    LONG-TERM ASSETS
    Plant and equipment, net                   97,192,300       98,154,443
    Land use rights, net                      148,319,092      148,988,870
    Deposit for long-term assets                6,355,148        6,347,174
    Construction in progress                   25,675,899       25,385,835
    Deferred tax assets                         1,322,194        1,313,832
    Other intangible assets, net               22,426,393       23,690,440
    Goodwill                                   28,543,226       28,543,226
    Investments in and advances to
     equity investments                        55,554,438       54,963,064
    Unamortized financing costs                 3,983,911        4,215,983
           Total Long-Term Assets             389,372,601      391,602,867

                TOTAL ASSETS                 $524,860,987     $524,054,837

                      LIABILITIES AND SHAREHOLDERS' EQUITY

                                              DECEMBER 31,     DECEMBER 31,
                                                  2008             2007
                                               UNAUDITED
    CURRENT LIABILITIES
    Accounts payable                          $10,355,431      $12,287,887
    Notes payables                              3,277,285        3,262,877
    Other payables and accrued expenses        13,578,351       19,766,652
    Taxes payable                                      --          420,671
    Short-term bank loans                       7,441,276        7,140,148
    Current portion of long-term bank
     loans                                         59,022           58,659
    Other liabilities                           2,738,113        2,253,440
    Deferred tax liability                        999,454          846,026
         Total Current Liabilities             38,448,932       46,036,360

    LONG-TERM LIABILITIES
    Long-term bank loans                          789,579          804,521
    Long-term notes payable                            --          269,908
    Deferred tax liabilities                   16,102,048       16,083,768
    Convertible Note                          115,000,000      115,000,000
        Total Long-Term Liabilities           131,891,627      132,158,197
             TOTAL LIABILITIES                170,340,559      178,194,557

    EQUITY
    SHAREHOLDERS' EQUITY
    Preferred stock, $0.001 par value;
     2,000,000 shares authorized;
     1,000,000 shares issued and
     outstanding at March 31, 2009 and
     December 31, 2008, respectively                1,000            1,000
    Common stock, $0.001 par value;
     150,000,000 shares authorized;
     78,291,735 and 78,249,264 shares
     issued and outstanding at March
     31, 2009 and December 31, 2008,
     respectively                                  78,292           78,249
    Common stock to be issued                     177,000          376,335
    Prepaid forward repurchase contract       (29,998,616)     (29,998,616)
    Additional paid-in capital                196,352,466      195,741,544
    Retained earnings (the restricted
     portion of retained earnings is
     $29,532,699 at March 31, 2009 and
     December 31, 2008)                       157,790,182      149,923,681
    Accumulated other comprehensive
     income                                    29,464,472       29,086,006
         Total Shareholders' Equity           353,864,796      345,208,199
    NONCONTROLLING INTEREST                       655,632          652,081
                TOTAL EQUITY                  354,520,428      345,860,280
    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                                  $524,860,987     $524,054,837

SOURCE American Oriental Bioengineering, Inc.


Source: newswire



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