Revenues surged 86.5% year-over-year to a record $19.1 million
Net income climbed 32.8% year-over-year to $2.7 million
HARBIN, China, Aug. 17 /PRNewswire-Asia/ -- Rodobo International, Inc. (the "Company" or "Rodobo") (OTC Bulletin Board: RDBO), one of the leading independent dairy companies in China, reported financial results for the third quarter ended June 30, 2010.
Third Quarter 2010 Highlights:
-- Revenue was $19.1 million, up 86.5% from $10.3 million in 3Q09
-- Gross profit was $7.3 million, up 25.6% from $5.8 million in 3Q09
-- Net income was $2.7 million, up 32.8% from $2 million in 3Q09
-- Earnings per diluted share was down to $0.10 from $0.13 in 3Q09
-- Closed with certain accredited institutional investors the private
placement for net proceeds totaling approximately $2.64 million
Fourth Quarter 2010 Guidance:
Management feels confident to give its guidance for the fourth quarter of 2010 for revenue to be in the range of $20 - $24 million and net income to be in the range of $3.0 - $3.2 million.
"We are pleased to report very strong financial results, exceptional revenue growth and strong profitability for the third quarter of 2010. Rodobo has a strong operating history, achieving a very strong and consistent revenue and net income growth over the last four years," stated Mr. Yanbin Wang, the Chairman and Chief Executive Officer of Rodobo. "In addition to these results, we are very pleased with the acquisition and early results of the Beixue Group. Our formula milk products sales expanded to two new provinces, Jiangsu and Anhui and continue to penetrate into other seven provinces."
Third Quarter 2010 Financial Results
Net sales for the third quarter of 2010 were $19.1 million, an increase of approximately $8.8 million or 86.5%, compared to net sales for the third quarter of 2009. This increase was primarily driven by volume growth, with the average selling price remaining relatively flat over both periods. We continued our efforts to develop distribution networks and expand the geographic market areas in the 9 provinces in which we were selling products in 7 of them. The increase was also attributed to the launch of a new product series called "Peer", under our baby/infant formula product line, in July 2009. Sales generated from our "Peer" product series were approximately $6.1 million or 31.9% of total sales revenue for the third quarter of 2010. Hulunbeier Hailaer Beixue, one of our new subsidiaries acquired on February 5, 2010, contributed $6.6 million in sales, or 34.5% of total sales revenue for the third quarter of 2010.
Gross profit increased approximately $1.5 million for the third quarter of 2010, an increase of 25.6% compared to the gross profit for the same period of 2009. The overall gross profit margin had declined from 56.8% in the third quarter of 2009 to 38.3% in the third quarter of 2010.
Overall gross profit margin was diluted due to the recent acquisition of the lower-margin business of Hulunbeier Hailaer Beixue. Hulunbeier Hailaer Beixue has a gross margin of 4.2% for the third quarter of 2010. Excluding the margin dilution impact of this acquisition, gross profit margin actually remained flat at 56.2% for the third quarter of 2010 compared to 56.8% for the third quarter of 2009.
Operating expenses for the third quarter ended June 30, 2010 were $4.6 million, an increase of $0.8 million or 21.9% compared to the third quarter of 2009. Operating expenses as a percentage of net sales decreased from 36.9% for the third quarter of 2009 to 24.1% for the third quarter. The decline in operating expenses as a percentage of net sales was primarily due to Hulunbeier Hailaer Beixue, which has lower operating expenses as a percentage of its net sales. Distribution expenses for the third quarter decreased by 2.2% to $3.4 million, or 18.0% of net sales, compared to $3.5 million, or 34.2% of net sales for the third quarter of 2009. General and administrative ("G&A") expenses increased by 328.3% to $1.2 million, or 6.2% of net sales for the third quarter of 2010, compared to $0.3 million, or 2.7% of net sales for the third quarter of 2009. The increase was primarily due to $0.3 million of stock-based compensation expenses in the third quarter of 2010, which was not incurred in the same period of 2009. The increase is also attributed to an additional $0.2 million of depreciation and amortization expenses related to the newly acquired subsidiaries.
Net income for the third quarter of 2010 was $2.7 million, an increase of $0.7 million (approximately 32.8%) compared with $2.0 million for the third quarter of 2009. This increase in net income was mainly attributable to the increase in net sales, partially offset by an increase in cost of goods sold and operating expenses.
Nine Month Results
For the nine months ended June 30, 2010, net sales increased to $44.5 million, up 75.2% from $25.4 million in the nine months ended June 30, 2009. Gross profit increased 47.7% in the nine months ended June 30, 2010 to $18.6 million from $12.6 million in the comparable period in 2009. Gross margin was 41.8% in the nine months ended June 30, 2010 compared to 49.6% in the comparable period in 2009. Net income for the nine months ended June 30, 2010 was $8.8 million or $0.39 per fully diluted share, up 72.6% from $5.1 million, or $0.34 per fully diluted share, in the comparable period in 2009.
Financial Condition
As of June 30, 2010, Rodobo had $12.8 million in cash and cash equivalents, $6.2 million in current liability and no long-term debt. Shareholders' equity was $56.2 million as of June 30, 2010, up from $21.3 million as of September 30, 2009. Net cash from operating activities during the nine months ended June 30, 2010 was $8.6 million.
Business Outlook
Over the next twelve months, Rodobo intends to pursue its primary objective of increasing its market share in China's diary industry. The Company is also evaluating acquisition and consolidation opportunities in China's fragmented dairy industry. Rodobo's management believes it has sufficient working capital to operate its existing business for the next twelve months by using its cash generated from its operating activities as well as part of the net proceeds from the private placement which closed on June 23, 2010.
"Our markets remain robust as the Chinese government continues to support the modernization of the dairy industry as well as support improved hygiene and food safety standards. We have established a successful vertically integrated business model and remain dedicated to continue building a nationally-recognized leading brand for our premium dairy products and create value for our shareholders," concluded Mr. Wang.
Conference Call Information
Management will conduct a conference call at 9:00 A.M. Eastern Time, on Tuesday, August 17, 2010. Yanbin Wang, Chairman and CEO of Rodobo, will present opening remarks and Stephen Tong, VP of Finance, will conduct the call and answer questions from participants. Domestic participants may dial (888) 567-1602 and international participants may dial (201) 604-5049 or toll free (800) 4747-4646 to listen to the live broadcast. Additionally, a live webcast will be available at http://www.visualwebcaster.com/event.asp?id=71688 . Persons unable to participate in the live session may listen to a recording of the conference call, which will be available approximately two hours after the live session ends, by dialing (888) 632-8973 domestically and (201) 499-0429 internationally, and entering (88201729) followed by the # sign. The conference call in its entirety will also be available via recorded webcast on the Company's website at http://www.Rodobo.com .
About Rodobo International, Inc.
Rodobo International, Inc. is one of the leading non-state-owned dairy companies in China. Through its wholly-owned operating subsidiaries and variable interest entity, Rodobo International, Inc. is a producer and distributor of high-quality formula milk powder products for infants, children, the middle-aged and the elderly in China. The Company's products are sold under the brand names "Rodobo", "Healif" and "Peer" and are produced in cutting edge facilities under best quality control systems and in compliance with high industry standards.
Safe Harbor Statement
This press release and the statements of representatives of Rodobo International, Inc., and its consolidated subsidiaries (collectively, the "Company") related thereto contain, or may contain, among other things, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the impact of the recent acquisitions on the business and operations of the Company; the ability of the Company to achieve its commercial objectives including increased growth, revenues, earnings, and production capacity; the business strategy, plans and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are subject to significant known and unknown risks and uncertainties and are often identified by the use of forward-looking terminology such as "projects," "may," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans" or similar expressions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. The Company undertakes no duty to update these forward-looking statements except as required by law.
For additional information, please contact:
Xiuzhen Qiao
Rodobo International Inc.
Tel: +86-10-6216-6032
Email: qiaozhen1973@163.com
Stephen Tong
Rodobo International, Inc.
Tel: +86-10-6216-6396
Email: tongzijian@gmail.com
Investor Relations:
Stan Wunderlich
Consulting for Strategic Growth 1, Ltd.
Tel: +1-800-625-2236 x7770
Email: swunderlich@cfsg1.com
Web: http://www.cfsg1.com
Tables follow
RODOBO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,2010 September 30,
(Unaudited) 2009
ASSETS
Current assets:
Cash and cash equivalents $12,771,163 $1,640,259
Accounts receivable, net 8,167,082 2,015,044
Other receivable 245,754 5,602
Inventories 1,232,600 1,576,723
Prepaid expenses 42,805 19,040
Advances to suppliers 1,465,441 --
Total current assets 23,924,845 5,256,668
Property, plant and equipment, net 19,763,229 738,537
Biological assets, net 3,297,472 2,499,625
Other assets:
Restricted cash 39,815 --
Deposits on biological assets -- 988,818
Deposits on land and equipment 11,369,266 9,961,429
Intangible assets, net 9,918,451 4,526,117
Total other assets 21,327,532 15,476,364
Total Assets $68,313,078 $23,971,194
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term loans $1,555,717 $--
Accounts payable 2,451,318 1,246,818
Other payable 502,036 50,293
Accrued expenses 275,936 175,456
Advance from customers 205,857 --
Due to related parties 1,185,062 1,185,062
Total current liabilities 6,175,926 2,657,629
Warrant liability 1,817,352 --
Temporary equity - series A preferred
stock, $0.0001 par value, 30,000,000
shares authorized, 2,000,000 shares
issued and outstanding as of June
30, 2010 4,100,000 --
Stockholders' equity
Common stock, $0.0001 par value,
200,000,000 shares authorized,
28,003,726 and 16,216,717 shares
issued and outstanding
as of June 30, 2010 and September 30,
2009, respectively 2,800 1,622
Additional paid in capital 30,058,002 4,355,085
Additional paid in capital - warrants 971,788 971,788
Subscription receivable (50,000) (50,000)
Retained earnings 24,019,379 15,189,860
Accumulated other comprehensive
income 1,217,831 845,210
Total stockholders' equity 56,219,800 21,313,565
Total Liabilities and Stockholders'
Equity $68,313,078 $23,971,194
RODOBO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(UNAUDITED)
For The Three Months Ended For The Nine Months Ended
June 30, June 30,
2010 2009 2010 2009
Net sales $19,135,845 $10,261,572 $44,541,870 $25,425,414
Cost of goods sold 11,808,989 4,428,925 25,913,565 12,812,311
Gross profit 7,326,856 5,832,647 18,628,306 12,613,103
Operating expenses:
Distribution expenses 3,435,678 3,511,614 8,868,794 6,736,617
General and
administrative
expenses 1,180,040 275,549 2,883,025 1,134,159
Total operating
expenses 4,615,717 3,787,163 11,751,819 7,870,775
Operating income 2,711,139 2,045,484 6,876,487 4,742,328
Subsidy income -- -- 273,897 438,730
Gain on bargain
purchase -- -- 1,677,020 --
Interest expenses (45,876) -- (71,439) --
Change in fair value
of warrants 24,759 -- 24,759 --
Other income
(expenses) 25,906 (237) 48,796 (66,256)
Income before income
taxes 2,715,928 2,045,247 8,829,519 5,114,801
Provision for income
taxes -- -- -- --
Net income $2,715,928 $2,045,247 $8,829,519 $5,114,801
Other comprehensive
income:
Foreign currency
translation
adjustment 365,575 8,310 372,621 (57,243)
Comprehensive income $3,081,503 $2,053,557 $9,202,140 $5,057,558
Earnings per share
Basic $0.10 $1.42 $0.43 $3.56
Diluted $0.10 $0.13 $0.39 $0.34
Weighted average
shares outstanding
Basic 26,031,344 1,435,568 20,741,227 1,435,568
Diluted 27,758,307 15,196,717 22,468,190 15,196,717
Source: Rodobo International, Inc.
