-- Fourth Quarter 2008 Sales Increase 136.5% to $40.8 million, *Adjusted
Net Income Increases 12.0% to $7.0 million with EPS of $0.28
-- Fiscal Year 2008 Sales Increase 119.8% to $139.3 million, **Adjusted
Net Income Increases 119.9% to $39.0 million with EPS of $1.56
-- Cash & Equivalents of $19.7 million on December 31, 2008
-- Reaffirms 2009 Guidance: Revenues expected to exceed $176.5 million
-- Management to Host Earnings Conference Call on April 3 at 10:00 am ET
DALIAN, China, April 2 /PRNewswire-Asia/ -- RINO International Corp. (OTC Bulletin Board: RINO), which through its subsidiaries and controlled affiliates in the People's Republic of China (collectively, the "Company" or "RINO"), designs, manufactures, installs and services proprietary and patented wastewater treatment, desulphurization equipment, and high temperature anti- oxidation systems for iron and steel manufacturers in the People's Republic of China ("PRC"), today announced the Company's financial results for the fourth quarter and fiscal year 2008.
SUMMARY FINANCIALS
Fourth Quarter 2008 Results (Unaudited)
Q4 2008 Q4 2007 CHANGE
Sales $40.8 million $17.3 million +136.5 %
Gross Profit $10.8 million $8.1 million +32.1 %
GAAP Net Income (Loss) $1.0 million ($1.2 million) +183.0 %
Adjusted Net Income* $7.0 million $6.3 million +12.0 %
GAAP EPS (Diluted) $0.04 ($0.12) +133.3 %
Adjusted EPS (Diluted)* $0.28 0.26*** +7.7 %
Fiscal Year 2008 Results
FY 2008 FY 2007 CHANGE
Sales $139.3 million $63.4 million +119.8 %
Gross Profit $54.3 million $30.5 million +78.3 %
GAAP Net Income $21.3 million $10.2 million +108.3 %
Adjusted Net Income** $39.0 million $17.7 million +119.9 %
GAAP EPS (Fully Diluted) $0.85 $0.52 +63.5 %
Adjusted EPS (Diluted)** $1.55 $0.90 +72.2 %
* Adjusted Net Income and EPS in the Q4 2008 and 2007 are non-GAAP
calculations and do not include non-cash, stock-based compensation
charges of $6.0 million and $7.5 million, respectively, related mainly
to the "Make Good" provision of an October 2008 financing agreement.
Note that taxes were accrued in 2007 with none in 2008.
** Adjusted Net Income and EPS in the Fiscal Year 2008 and 2007 are
non-GAAP calculations and do not include non-cash, stock-based
compensation charges of $17.7 million and $7.5 million, respectively,
related mainly to the "Make Good" provision of an October 2008
financing agreement. Adjusted Net Income and EPS for fiscal year 2007
were adjusted based on the normalized tax rate for 2007.
*** Share count utilized for 2007 Q4 EPS Calculation was 19.7 million vs.
the 25.1 million for Q4 2008
2008 Fourth Quarter Financial Results (unaudited)
Net revenues for the fourth quarter ended December 31, 2008 increased 136.5% to $40.8 million compared to $17.3 million for the fourth quarter in 2007. Revenue growth was driven by increased sales from all of the Company's product lines and revenues exceeded previously issued guidance by approximately 20%. Specifically during the fourth quarter, the Company recorded $30.1 million in revenue from desulphurization projects, an increase of 140.8% from $12.5 million in same period in 2007, $1.8 million in wastewater treatment system sales, an increase of 232.3% over fourth quarter of 2007, $2.8 million in sales of anti-oxidation equipment and coatings compared to $8,000 recorded in the same period of 2007, and $6.1 million in machining service revenues, an increase of 45.2% from the $4.2 million recorded in the same period of 2007.
Cost of goods sold for the fourth quarter of 2008 was $30.0 million compared to $9.1 million in the same period of 2007, an increase of 229.8%, which was driven mainly by increased sales, in addition to costs associated with hiring outside contractors in order to meet specific installation timelines, something the Company does not expect to be a recurring cost.
Gross profit was $10.8 million in the fourth quarter 2008 compared to $8.1 million for the same period in 2007, an increase of $2.6 million or 32.1%. Corresponding gross margins for the fourth quarters of 2008 and 2007 were approximately 26.4% and 47.2%, respectively. The decrease in gross margin is attributable to the higher costs incurred during the fourth quarter of 2008 in addition to the absence of higher margin royalty revenue which was present during 2007.
Total operating expenses for the fourth quarter of 2008 were $10.7 million versus $8.6 million for the same period in 2007. Excluding the non-cash equity compensation charge of $6.0 million and $7.5 million recorded during the fourth quarters of 2008 and 2007, respectively, operating income for the fourth quarters of 2008 and 2007 would have been $6.1 million and $7.0 million with operation margins of 14.9% and 40.7% respectively.
GAAP net income for the fourth quarter of 2008 was $1.0 million compared to a net loss of $1.2 million reported in the fourth quarter of 2007, representing diluted earnings per share of $0.04 and a negative $0.12 for the fourth quarter of 2007, based on 25.1 million and 19.7 million shares outstanding, respectively. Adjusted net income, excluding equity compensation expenses of $6.0 million and $7.5 million, respectively, was $7.0 million for the fourth quarter of 2008 compared to $6.3 million for fourth quarter of 2007, equating to earnings of $0.28 and $0.26 per diluted share, respectively. The Company accrued for taxes in 2007 and did not for 2008.
"We are pleased with our financial results for the fourth quarter and the fiscal year 2008," stated Mr. Zou Dejun, President and CEO of RINO International, "We have continued to deliver year-over-year growth in each of our product lines including our new anti-oxidation systems and coatings, while significantly increasing our customer base and geographic footprint in China. We are confident that the drivers in place, including increasing demand for environmental protection equipment supported by key government incentives, will enable us to deliver incremental revenue and earnings growth for our Company during 2009."
Full Year 2008 Results (Audited)
Fiscal Year 2008 Revenue Breakdown
FY 2008 FY 2007 CHANGE
Waste Water Treatment $ 14.4 million $ 7.0 million +107.3 %
% of Sales 10.4% 11.0%
Desulphurization
Equipment $ 105.3 million $ 33.1 million +217.7 %
% of Sales 75.6% 52.3%
Anti-oxidation equipment
& coatings $ 5.7 million $ 2.0 million +192.3 %
% of Sales 4.1% 3.1%
Machining services $ 13.9 million $ 11.9 million +16.9 %
9.9% 18.7%
Other services -- $9.5 million -100.0 %
14.9%
Total Sales $ 139.3 million $ 63.4 million +119.8 %
Revenue increased 119.8% to $139.3 million for the fiscal year ended December 31, 2008, as compared to $63.4 million for 2007. The Company's customer base was further diversified and revenue generation was much less concentrated as the top six customers accounted for 34.7% of the total gross revenues during 2008.
Gross profits for 2008 were $54.3 million compared to $30.5 million in 2007, an increase of 78.3%. Gross margins were 39.0% for 2008 compared to 48.1% in 2007, with the decrease related mainly to the absence of royalty based income recorded during 2007 and higher expenses for outsourcing incurred during the fourth quarter of 2008. Operating income for 2008 totaled $21.6 million, an increase of 36.8% compared to $15.8 million in 2007 with margins of 15.5% compared to 25.0% in 2007. Excluding the non-cash equity compensation charges of $17.7 million and $7.5 million incurred during 2008 and 2007, adjusted operating income for 2008 was $39.3 million, an increase of 68.7% from the $23.3 million in 2007. Adjusted operating margins were 28.2% for 2008 versus 36.8% for 2007 with 2007's margins being positively impacted by the high margin royalty revenue absent in 2008.
GAAP Net income was $21.3 million for the year ended December 31, 2008, an increase of $11.1 million, or approximately 108.3% compared to 2007. Earnings per diluted share in 2008 were $0.85, based on 25.1 million shares outstanding, compared to $0.52, based on 19.7 million shares outstanding, for 2007. Adjusted net income (Non GAAP), excluding the equity compensation charge and taking 2007 taxes into consideration, was $38.9 million, or $1.55 per diluted share for 2008 compared to $17.7 million, or $0.90 per diluted share for 2007. The Company surpassed its "Make Good" target of $28.0 million in after tax net income.
"We have aggressively capitalized on the opportunity created by State Environmental Protection Agency (SEPA) mandates aimed at significantly reducing sulphur emitted by iron and steel producers by completing 25 desulphurization projects in 2008, making us the dominant industry player in China. Tax credits and subsidies for steel producers, in addition to fines related to strict emission enforcement, has driven rapid adoption and we currently estimate that there are still approximately 200 coal-fired sinters which still need to be equipped, creating over a billion dollar opportunity in this product segment alone. While large desulphurization systems will comprise the majority of our revenues for 2009, we are intently focused on further diversifying our business through increased sales of anti-oxidation equipment and the coatings which accompany it. In addition, we are enthusiastic about the opportunity for our new sludge treatment product which addresses a market significantly larger than our current product portfolio and will be formally introduced to the market during the next several months," concluded Mr. Zou.
Balance Sheet and Cash Flow Discussion
Cash and cash equivalents as of December 31, 2008 were $19.7 million, representing an increase of 167.1% as compared to $7.4 million as of December 31, 2007, while short term debt stood at $8.8 million compared to none at the end of 2007. Accounts receivable stood at $51.5 million on December 31, 2008 with days sales outstanding of 115 compared to $19.2 million on December 31, 2007 and corresponding days sales outstanding of 102. Inventories and advances for inventory totaled $23.2 million on December 31, 2008. The Company generated $6.0 million in cash flow from operations for 2008, compared with $5.0 million cash used in operations in 2007. Stockholder's equity increased 182.4% to $66.9 million versus $23.7 million in 2007, with the associated book value on December 31, 2008 of approximately $2.67 per share compared to $0.95 in the year ago period.
2009 Guidance
Management is reiterating its revenue guidance for calendar 2009 of $176.5 million, representing at least 26.7% year-over-year growth. Revenue growth is projected in all of its business lines, including at least 10% for wastewater treatment, 50% for desulphurization, and 300% for anti-oxidation. Management believes gross margins for 2009 will range from 35% to 40%, with fluctuations possible on a quarterly basis due to outsourcing work necessary to meet installation requirements and deadlines across a large number of projects. As anti-oxidation coating revenue increases on an absolute basis it will have a modest positive impact on associated gross margins. Guidance does not include contributions from the Company's planned launch of its new sludge dehydration product. In addition, the Company believes that cash on hand, its $15 million bank line with Pudong Development Bank of Shanghai, and cash flow from operations will enable it to meet these projections.
Conference Call
The Company will host a conference call on April 3, 2009, at 10:00 am ET. To attend the call, please use the dial information below. When prompted, ask for the "RINO International Call" and/or be prepared to provide the conference ID.
Date: April 3, 2009
Time: 10:00 am ET
Conference Line Dial-In (U.S.): +1 800-762-8779
International Dial-In: +1 480-248-5085
Conference ID: 4048548
Webcast link: http://viavid.net/dce.aspx?sid=00006153
Please dial in at least 10-minutes before the call to ensure timely participation. A playback will be available through April 9th, 2009. To listen, please call 800-406-7325 within the United States or +1 303-590-3030 when calling internationally. Utilize the pass code 4048548 for the replay.
About RINO International Corporation
RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ("Dalian Rino") and Dalian Rino Environment Project Design Co., Ltd., a wholly-owned subsidiary of Dalian Rino, is a leading provider of environmental protection equipment for the iron and steel industry in China. Specifically, RINO designs, manufactures, installs and services proprietary and patented wastewater treatment, flue gas desulphurization equipment, and high temperature anti-oxidation systems, which are all designed to reduce either industrial pollution and/or improve energy utilization. RINO's manufacturing facility maintains the ISO 9001 Quality Management System and ISO 14001 Environment Management System certifications, in addition to receiving numerous government and industry awards.
Additional information about the Company is available at the Company's website: http://www.rinogroup.com .
Cautionary Statement Regarding Forward-Looking Information
Certain statement in this press release may contain forward-looking information about the Company. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and statements which may include discussions of strategy, and statements about industry trends future performance, operations and products of each of the entities referred to above. Actual performance results may vary significantly from expectations and projections as a result of various factors, including, without limitation, the risks set forth "Risk Factors" contained in the Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and the Company's Registration Statement on Form SB-2, as amended, filed with the SEC on November 19, 2007.
For more information, please contact:
For the Company:
Amy Qiu
Tel: +86-411-8766-1233
Email: aqiu@rinogroup.com
Investors:
Matt Hayden
HC International, Inc.
Tel: +1-561-245-5155
Email: matt.hayden@hcinternational.net
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2008 AND 2007
2008 2007
ASSETS
CURRENT ASSETS
Cash and cash equivalents $19,741,982 $7,390,631
Restricted cash 1,030,317 1,000,000
Notes receivable 2,157,957 202,670
Accounts receivable 51,503,245 19,222,133
Costs and estimated earnings in
excess of billings on uncompleted
contracts -- 2,818,122
Inventories 1,203,448 178,480
Advances for inventory purchase 21,981,669 12,092,202
Other current assets and prepaid
expenses 517,847 1,174,464
Total current assets 98,136,465 44,078,702
PROPERTY, PLANT AND EQUIPMENT, NET 13,197,119 11,000,581
OTHER ASSETS
Accounts receivable (non-current) -- 1,618,203
Prepaid expenses (non-current) 73,350 95,706
Advances for equipment and
construction material purchase 5,550,966 3,751,343
Prepayment for land use right 458,292 428,301
Intangible assets, net 1,211,608 1,190,289
Total other assets 7,294,216 7,083,842
Total assets $118,627,800 $62,163,125
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $5,816,714 $2,534,858
Short-term loan 8,802,000 --
Customer deposits 3,609,407 116,214
Liquidated damages payable 2,598,289 1,000,000
Other payables and accrued
liabilities 746,267 686,031
Due to a stockholder 596,023 106,963
Taxes payable 5,062,901 9,541,603
Total current liabilities 27,231,601 13,985,669
REDEEMABLE COMMON STOCK ($0.0001 par
value, 5,464,357 shares issued with
conditions for redemption outside
the control of the company) 24,480,319 24,480,319
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Preferred Stock ($0.0001 par value,
50,000,000 shares authorized, none
issued and outstanding) -- --
Common Stock ($0.0001 par value,
10,000,000,000 shares authorized,
25,040,000 and 25,000,000 shares
issued and outstanding as of
December 31, 2008 and 2007,
respectively) 2,504 2,500
Additional paid-in capital 25,924,007 8,221,663
Retained earnings 28,570,948 11,376,163
Statutory reserves 6,196,478 2,109,539
Accumulated other comprehensive
income 6,221,943 1,987,272
Total shareholders' equity 66,915,880 23,697,137
Total liabilities and shareholders'
equity $118,627,800 $62,163,125
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
2008 2007
REVENUES:
Contracts $119,920,874 $42,073,308
Services 19,422,523 21,313,500
139,343,397 63,386,808
COST OF SALES
Cost of contracts 74,247,181 24,170,825
Cost of services 10,099,616 8,178,852
Depreciation 662,436 571,267
85,009,233 32,920,944
GROSS PROFIT 54,334,164 30,465,864
OPERATING EXPENSES
Selling, general and administrative
expenses 14,760,562 6,565,640
Research and development 245,920 581,846
Stock compensation expense 17,678,080 7,499,520
TOTAL OPERATING EXPENSES 32,684,562 14,647,006
INCOME FROM OPERATIONS 21,649,602 15,818,858
OTHER INCOME -EXPENSE), NET
Other income 75,914 12,926
Interest income 130,181 32,065
Interest expense (513,830) (564,353)
Other expenses (60,143) (55,917)
TOTAL OTHER EXPENSES, NET (367,878) (575,279)
INCOME BEFORE PROVISION FOR INCOME
TAXES 21,281,724 15,243,579
PROVISION FOR INCOME TAXES -- 5,024,774
NET INCOME 21,281,724 10,218,805
OTHER COMPREHENSIVE INCOME:
Foreign currency translation
adjustment 4,234,671 1,789,994
COMPREHENSIVE INCOME $25,516,395 $12,008,799
WEIGHTED AVERAGE NUMBER OF SHARES:
Basic 25,040,000 19,611,510
Diluted 25,148,178 19,694,481
EARNINGS PER SHARE:
Basic $0.85 $0.52
Diluted $0.85 $0.52
RINO INTERNATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $21,281,724 $10,218,805
Adjusted to reconcile net income to
cash provided by -used in)
operating activities:
Depreciation 806,625 658,937
Amortization 65,651 11,654
Imputed interest 24,268 33,019
Amortization of long term prepaid
expense 28,830 42,667
Stock compensation expense 17,678,080 7,586,724
Liquidated damage expense 1,598,289 --
Changes in operating assets and
liabilities
Notes receivable (1,906,766) --
Accounts receivable (28,635,455) (14,435,613)
Costs and estimated earnings in
excess of billings on uncompleted
contracts 2,971,223 (2,705,985)
Inventories (994,352) (57,130)
Advances for inventory purchase (8,850,435) (11,337,385)
Other current assets and prepaid
expenses 512,905 (1,043,339)
Accounts payable 3,043,036 (1,525,537)
Customer deposits 3,424,139 --
Other payables and accrued
liabilities 12,662 (138,641)
Taxes payable (5,085,079) 8,393,777
Deferred tax liabilities -- (672,947)
Net cash provided by -used in)
operating activities 5,975,345 (4,970,994)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,176,132) (831,886)
Advances for construction material
and equipment purchase (1,283,107) (3,053,405)
Prepayment for land use right -- (410,125)
Purchase of intangible assets -- (380,717)
Net cash used in investing
activities (3,459,239) (4,676,133)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution by stockholders -- 1,780
Net proceeds from redeemable
preferred stock issuance in private
placement -- 22,253,722
Payment on due to shareholder -- (361,098)
Proceeds from shareholder advances 472,979 --
Increase of restricted cash (30,317) (1,000,000)
Proceeds from short-term bank loan 15,712,000 --
Repayment of short-term bank loan (7,310,000) (7,876,910)
Net cash provided by financing
activities 8,844,662 13,017,494
EFFECT OF EXCHANGE RATE ON CASH 990,583 415,914
INCREASE IN CASH AND CASH
EQUIVALENTS 12,351,351 3,786,281
CASH AND CASH EQUIVALENTS, beginning 7,390,631 3,604,350
CASH AND CASH EQUIVALENTS, ending $19,741,982 $7,390,631
Cash paid during the period for:
Interest $480,902 $531,334
Income taxes $5,434,122 $519,258
