CHENGDU, China, Feb. 8 /PRNewswire-Asia-FirstCall/ -- Tianyin
Pharmaceutical Co., Inc., (NYSE Alternext: TPI), a manufacturer and
supplier of modernized traditional Chinese medicine ("TCM") based
in Chengdu, China, today announced fiscal results for its second
quarter ended December 31, 2009. -- Q2 2010 Revenue Increased 47.9%
to $14.9 Million, Net Income Increased 24.8% to $2.6 Million with
adjusted EPS of $0.11 on a diluted basis -- Cash and Equivalents of
$19.9 Million on December 31, 2009 -- First-half 2010 Cash Flow
from Operations Increased 24.5% to $4.9 million -- Tianyin secured
SFDA approvals for four new products during the second quarter
addressing multiple indications, bringing total number of products
in the portfolio to 48 Q2 FY2010 Results Q2 FY2010 Q2 FY2009 CHANGE
(%) Net Sales $14.9 million $10.1 million +48% Gross Profit $7.8
million $5.2 million +50% GAAP Net Income $2.6 million $2.1 million
+25% Adjusted Net Income* $3.4 million $2.1 million +62% GAAP EPS
(Diluted) $0.08 $0.13 -38% Adjusted EPS (Diluted) $0.11 $0.13 -15%
Weighted Shares Outstanding 30.4 million 15.7 million +94% Six
Months FY2010 Results Six Months Six Months CHANGE FY2010 FY2009
(%) Net Sales $28.3 million $19.7 million +44% Gross Profit $14.8
million $10.0 million +48% GAAP Net Income $4.8 million $3.8
million +24% Adjusted Net Income $5.5 million $3.8 million +48%
GAAP EPS (Diluted) $0.17 $0.16 +6% Adjusted EPS (Diluted) $0.19
$0.16 +19% Weighted Shares Outstanding 28.5 million 24.7 million
+15% Second Quarter Ending December 31, 2009 Financial Results
Revenue for the second quarter of fiscal 2010 was approximately
$14.9 million, an increase of 47.9% compared to $10.1 million for
the second quarter of fiscal 2009. The increase was attributable to
higher sales of both existing and new products, channel expansion
efforts that increased market penetration, and increased
utilization of the Company's expanded production facility. Revenues
from the top three selling products, Ginkgo Mihuan Oral Liquid,
Arpu Shuangxin Oral Liquid and Azithromycin Dispersible Tablets,
were $7.6 million and represented approximately 51% of total
revenues collectively for the quarter. Cost of goods sold for the
three months ended December 31, 2009 was approximately $7.2 million
or 48.1% of revenue as compared to $4.9 million or 49.0% of revenue
for the three months ended December 31, 2008, yielding a gross
profit of $7.8 million and gross margins of 51.9%, compared to $5.2
million in gross profit and gross margins of 51.0% during the
second quarter of fiscal 2009. Gross margins improved as a result
of an increase in higher margin products in the sales mix along
with greater efficiencies in our production and manufacturing
processes. Operating expenses for the three months ended December
31, 2009 were approximately $4.6 million, up 72.0% compared to the
same period in 2008. Selling, general and administration expenses
for the period increased to approximately $4.4 million from $2.6
million in the second quarter of fiscal 2009 as a result of the
implementation of Tianyin's sales and marketing strategy, including
increased sales payrolls and direct marketing expenses, in addition
to non-cash stock compensation expense of $0.9 million. Research
and development expenses for the three months ended December 31,
2009 increased 134.4% to $0.2 million compared to the second
quarter of fiscal 2009. Operating income for the second quarter of
fiscal 2010 totaled approximately $3.2 million, a 27.2% increase
from the $2.5 million reported for the second quarter of fiscal
2009. Operating margins were 21.1% and 24.5% for the second quarter
of fiscal 2010 and fiscal 2009, respectively as the Company
continued to spend aggressively on sales and marketing initiatives
to generate incremental and future product sales. GAAP net income
was approximately $2.6 million in the second quarter of fiscal
2010, a 24.8% increase, compared to $2.1 million for the second
quarter of fiscal 2009. The company had an effective tax rate of
18.2% and 16.6%, for the second quarter of fiscal 2010 and 2009,
respectively. Diluted earnings per share were $0.08 compared to
$0.13 for the second quarter of fiscal 2010 and fiscal 2009
respectively, based upon 30.4 million and 15.7 million shares.
Adjusted net income, which adds back the non-cash equity
compensation charge of $0.9 million, was $3.4 million, representing
62.0% year-over year growth with earnings of $0.11 per diluted
share. The divergence in the share count relates to the preferred
shares which have been and are convertible into common, in addition
to common shares issued in October 2009 private placement, and
warrants both exercised and outstanding. "Our strong performance in
the second quarter and first half of fiscal year 2010 was driven by
continued execution of our growth strategy, including the expansion
of our sales force and distribution channels, increased sales and
marketing activities to support market share gains for our
expanding portfolio of products, in addition to rapid utilization
of our newly added manufacturing capacity," stated Dr. Guoqing
Jiang, Tianyin's Chief Executive Officer. "To facilitate our future
growth strategy and to diversify our product offering, we
formalized a joint venture named Sichuan Jiangchuan Pharmaceutical
Co., Ltd. to produce macrolide antibiotics, which addresses a large
and rapidly growing market in China. We have secured the property
and commenced construction for our new production facility and
expect this to be a key contributor to growth during fiscal 2011.
In addition, we received SFDA approval for four new generic
products, which complement our portfolio and address established
billion dollar plus markets that cover multiple indications. We
currently have 40 drug candidates under SFDA review and believe the
Chinese stimulus plan, favorable health care policies, increased
consumer disposable income, and favorable demographic trends will
continue driving overall growth in demand for the pharmaceutical
market." Six Months Ending December 31, 2009 Financial Results For
the six months ended December 31, 2009, revenues increased 44.1% to
$28.3 million from $19.7 million reported for the prior year
period. Ginkgo Mihuan, one of Tianyin's flagship products,
contributed approximately $9.2 million or 33% of total revenues for
the first six months of fiscal 2010, representing 102%
year-over-year growth. Revenues generated from the Arpu Shuangxin
Oral Liquid were $2.9 million, or 16% of total revenues, a 2%
increase from fiscal 2009. Tianyin's top 5 selling products
generated revenue of $14.7 million and represented 53% of total
revenue. Cost of goods sold for the first six months of fiscal year
2010 was approximately $13.5 million, yielding a gross profit of
$14.8 million and gross margins of 52.3%, compared to $10.0 million
in gross profit and a gross margin of 51.0% for the same period in
fiscal year 2009. Operating expenses for the first six months of
fiscal year 2010 were $8.9 million, compared to $5.4 million in the
same period in fiscal 2009. Selling, general and administration
expenses for the period increased to approximately $8.5 million
from $5.2 million, which included the previously disclosed non-cash
equity compensation expense. Operating income totaled approximately
$5.9 million, a 27.1% increase from the $4.6 million reported for
the first half of fiscal 2009. Operating margins were 20.8% and
23.6% for the first half of fiscal year 2010 and 2009,
respectively, and were impacted by a non recurring $0.9 million
equity compensation expense for consulting. For the six months
ended December 31, 2009, net income was approximately $4.8 million,
a 23.6% increase from $3.8 million recorded for the same period in
fiscal 2009. Diluted earnings per share were $0.17, compared to
$0.16 in the same period 2009, based on 28.5 million and 24.7
million shares for 2010 and 2009, respectively. Adjusted net
income, which adds back the non-cash equity compensation charge of
$0.9 million, was $5.5 million, representing 44.7% year-over year
growth with earnings of $0.20 per diluted share. The provision for
income taxes was $1.1 million and $0.8 million for the first half
of fiscal 2010 and 2009 with an effective tax rate of 18.5% and
16.6%, respectively. Balance Sheet and Cash Flow Cash and cash
equivalents and restricted cash totaled $19.9 million on December
31, 2009 compared to $12.4 million on June 30, 2009, which was the
result of cash flow from operations, a $4.5 million net equity
raise completed in October, 2009, and proceeds from exercised
warrants. Net cash used in investing activities for the six months
ended December 31, 2009 was $4.3 million for the acquisition of
intangible drug, and property and equipment. The Company had a
current ratio of 6.8 to 1 and total stockholders' equity of $54.0
million, with total assets of $58.8 million versus total
liabilities of $4.8 million on December 31, 2009. For the first six
months of fiscal 2010, the Company generated $4.9 million in cash
from operations versus $3.9 million for the same period in fiscal
2009. Business Development & Outlook -- On October 29, 2009,
Tianyin announced the Sichuan Jiangchuan Pharmaceutical Co., Ltd.
("Jiangchuan") joint venture, which will focus on production of
macrolide antibiotics, such as Azithromycin, one of the world's
best-selling antibiotics. Jiangchuan holds a license from Chinese
State Food and Drug Administration (SFDA) to produce macrolide
antibiotics and a related business license from the Industry and
Commerce Bureau and Tax department. Tianyin owns 77% of Jiangchuan
and will utilize this as the foundation for a broader, longer term
strategy to build a significant presence in the rapidly growing
Chinese macrolide antibiotics market, while diversifying its
revenue base of western pharmaceuticals. Construction on a new
production facility in Xinjin Industry Development Area commenced
January 8, 2010, with Phase I expected to operational by July, 2010
and Phase II to be operational by the second half of 2010, with
total anticipated capital expenditures of $20 million. The Company
anticipates significant revenue and earnings contributions from
this initiative during fiscal 2011. -- On December 1, 2009, Tianyin
received SFDA approvals to produce two generic products, including
a Pediatric Fever and Cough Oral Liquid and an
Antibacterial/Anti-inflammatory Capsule. The Pediatric Fever and
Cough Oral Liquid is a generic prescription TCM that is used for
respiratory tract infections and influenza in children to
effectively reduce symptoms such as fever, shakes, cough, shortness
of breath, and sore throat. According to Tianyin's market research
and estimation, annual sales of this type of products are
approximately $1.1 billion in China. The
Antibacterial/Anti-inflammatory Capsules are a generic OTC TCM used
as natural antibiotics to treat bacterial infection and
inflammation with minimal side effects as compared to western
antibiotics. Tianyin estimates that total annual sales of
associated with products in this category are approximately $1.5
billion in China. -- Tianyin announced that 23 of its medicine
compounds were included in the 2009 Edition of the National Basic
Medical Insurance, Industrial Injury Insurance and Maternity
Insurance Medicine Directory, which lists a total of 2,151
medicines and became effective on December 1, 2009. The 23
medicines treat a variety of common indications and diseases and
make up approximately 70% of Tianyin's total revenues for the
fiscal year 2009. -- On January 11, 2010, Tianyin declared a
quarterly cash dividend of 2.5 cents to be paid to its common stock
shareholders for the fiscal second quarter of 2010 on March 10,
2010. -- On January 13, 2010, Tianyin received approvals from the
Chinese State Food and Drug Administration (SFDA) to produce two
generic antibiotics, Ofloxacin Tablets and Fleroxacin Tablets,
which target new indications for the Company. Ofloxacin addresses
several indications including staph, strep throat (Streptococcus),
pneumonia, E. Coli, and several sexually transmitted bacterial
diseases. Fleroxacin addresses several indications including
chronic and acute bronchitis and pneumonia, salmonella, multiple
gastrointestinal and abdominal infections, and skin/soft tissue
infections. Both drugs are included in China's Essential Drug List
(EDL), which is increasing demand for these products throughout the
PRC. Fiscal 2010 and 2011 Guidance On October 29, 2009 management
increased fiscal 2010 guidance for the year which ends June 30,
2010 and expects to report revenues of more than $63.6 million and
net income of at least $11.3 million, representing 48.3% and 43.0%
year-over-year growth respectively. On December 3, 2009 management
announced financial guidance for fiscal year ending June 30 2011.
The Company forecasted revenues of $113.3 million for fiscal 2011,
representing a 78.1% increase over projected fiscal year 2010
revenues of $63.6 million, with net income of $19.6 million,
representing 73.5% over projected net income of $11.3 million for
fiscal 2010. Conference Call The Company will host a conference
call to discuss the 2010 second quarter financial results on
Monday, February 8, 2010 at 4:30 p.m. ET. Interested participants
should call +1-877-941-8418 within the United States, or US
+1-480-629-9809 if calling internationally. The conference ID is
4207607. It is advisable to dial in approximately 5-10 minutes
prior to 4:30 p.m. EDT. If you are unable to participate in the
call at the scheduled time, a playback will be available through
February 22, 2010. To listen to the playback, please call
+1-800-406-7325 from within the United States, or US
+1-303-590-3030 internationally. Please use passcode 4207607 for
the replay. This call is being web cast by ViaVid Broadcasting and
can be accessed at ViaVid's website at the following link
http://viavid.net/dce.aspx?sid=00007061 To access the web cast, you
will need to have the Windows Media Player on your desktop. For the
free download of the Media Player please visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp
About Tianyin Pharmaceuticals Tianyin is a manufacturer and
supplier of modernized Traditional Chinese Medicine ("TCM") in
China. It was established in 1994 and acquired by the current
management team in August 2003. It has a comprehensive product
portfolio of 39 products, 22 of which are listed in the highly
selective National Medicine Catalog of the National Medical
Insurance program. Tianyin owns and operates two GMP manufacturing
facilities and an R&D platform supported by leading Chinese
academic institutions. The Company has a pipeline of 17
pharmaceutical products pending approval. Tianyin has an extensive
nationwide distribution network throughout China with a sales force
of 720 salespeople. Tianyin is headquartered in Chengdu, Sichuan
Province with two manufacturing facilities and a total of 1,365
employees. For more information about Tianyin, please visit
http://www.tianyinpharma.com/ . Safe Harbor Statement The
Statements which are not historical facts contained in this press
release are forward-looking statements that involve certain risks
and uncertainties including but not limited to risks associated
with the uncertainty of future financial results, additional
financing requirements, development of new products, government
approval processes, the impact of competitive products or pricing,
technological changes, the effect of economic conditions and other
uncertainties detailed in the Company's filings with the Securities
and Exchange Commission. This press release utilizes Non GAAP
financial measures, such as adjusted net income and earnings per
share. Management believes that adjustments reflecting certain non
cash charges are more representative of the Company's operating
results. Investors should not rely on such measures in making
decisions For more information, please contact: For the Company:
Allen Tang, Ph.D., MBA, Assistant to the CEO Tel: +86-158-2122-5642
Email: Investors: Mr. Matthew Hayden, HC International Tel:
+1-561-245-5155 Email: Web: http://www.hcinternational.net/
Consolidated Balance Sheets (Unaudited) December 31, June 30, 2009
2009 (Unaudited) Assets Current assets: Cash and cash equivalents
$19,866,573 $12,352,223 Accounts receivable, net of allowance for
doubtful accounts of $172,182 and $171,947 at December 31, 2009 and
June 30, 2009, respectively 8,642,875 5,620,519 Inventory 3,220,937
3,808,289 Advance payments 381,420 1,188,115 Loan receivable
293,400 -- Other receivables 201,321 601,912 Other current assets
43,811 81,277 Total current assets 32,650,337 23,652,335 Property
and equipment, net 10,646,495 9,642,526 Intangibles, net 15,470,215
12,037,483 Total assets $58,767,047 $45,332,344 Liabilities Current
liabilities: Accounts payable and accrued expenses $1,650,451
$1,392,639 Short-term bank loans 1,400,985 1,399,075 VAT taxes
payable 542,629 458,930 Income taxes payable 571,885 490,514 Other
taxes payable 15,696 11,890 Dividends payable 98,538 325,417 Other
current liabilities 501,851 307,934 Total current liabilities
4,782,035 4,386,399 Total liabilities 4,782,035 4,386,399 Equity
Stockholders' equity: Common stock, $0.001 par value, 50,000,000
shares authorized, 25,795,902 and 17,908,912 shares issued and
outstanding at December 31, 2009 and June 30, 2009, respectively
25,796 17,909 Series A convertible preferred stock, $0.001 par
value, 10,000,000 shares authorized, 2,322,750 and 7,146,500 shares
issued and outstanding at December 31, 2009 and June 30, 2009,
respectively 2,323 7,147 Additional paid-in capital 28,337,810
19,694,514 Statutory reserve 2,299,807 2,299,807 Treasury stock
(111,587) (111,587) Retained earnings 20,393,640 16,486,775
Accumulated other comprehensive income 2,598,164 2,551,380 Total
stockholders' equity 53,545,953 40,945,945 Noncontrolling interest
439,059 -- Total equity 53,985,012 40,945,945 Total liabilities and
equity $58,767,047 $45,332,344 Consolidated Statements of
Operations and Comprehensive Income (Unaudited) For the Three
Months Ended For the Six Months Ended December 31, December 31,
2009 2008 2009 2008 Sales $14,936,378 $10,101,869 $28,341,581
$19,663,809 Cost of sales 7,177,503 4,944,980 13,526,730 9,627,603
Gross profit 7,758,875 5,156,889 14,814,851 10,036,206 Operating
expenses: Selling, general and administrative 4,409,735 2,595,311
8,527,501 5,228,672 Research and development 197,380 84,220 389,870
166,858 Total operating expenses 4,607,115 2,679,531 8,917,371
5,395,530 Income from operations 3,151,760 2,477,358 5,897,480
4,640,676 Other income (expenses): Interest income (expense), net
(10,443) 15,564 (19,995) 29,808 Other expenses -- (26,975) (39,510)
(54,695) Total other expenses (10,443) (11,411) (59,505) (24,887)
Income before provision for income tax 3,141,317 2,465,947
5,837,975 4,615,789 Provision for income tax 571,756 408,827
1,081,691 767,677 Net income 2,569,561 2,057,120 4,756,284
3,848,112 Less: Net income attributable to noncontrolling interest
1,485 -- (1,040) -- Net income attributable to Tianyin 2,568,076
2,057,120 4,757,324 3,848,112 Other comprehensive income Foreign
currency translation adjustment 10,927 256,933 46,784 346,367
Comprehensive income $2,579,003 $2,314,053 $4,804,108 $4,194,479
Basic earnings per share $0.10 $0.11 $0.20 $0.20 Diluted earnings
per share $0.08 $0.13 $0.17 $0.16 Weighted average number of common
shares outstanding Basic 24,906,965 15,691,495 22,323,116
15,637,623 Diluted 30,439,912 15,691,495 28,521,127 24,697,018
Consolidated Statements of Cash Flows (Unaudited) For the Six
Months Ended December 31, 2009 2008 Cash flows from operating
activities: Net Income $4,757,324 $3,848,112 Adjustments to
reconcile net income to net cash provided by (used in) operating
activities: Depreciation and amortization 393,575 237,619
Noncontrolling interest (1,040) -- Share-based payments 1,055,395
-- Loss on disposal of fixed assets 39,510 -- Changes in current
assets and current liabilities: Accounts receivable (3,013,450)
132,660 Inventory 592,309 (1,117,856) Other receivables 401,237
608,042 Other current assets 37,500 227,140 Accounts payable and
accrued expenses 256,055 (119,588) VAT taxes payable 83,038 71,402
Income tax payable 80,668 66,275 Other taxes payable 3,788 (35,705)
Other current liabilities 193,483 732 Total adjustments 122,068
70,721 Net cash provided by operating activities 4,879,392
3,918,833 Cash flows from investing activities: Additions to
property and equipment (1,288,234) (570,491) Additions to
intangible assets - drug (2,742,168) (130,323) Advance payments for
research and development -- (2,155,450) Loan receivable (293,280)
-- Net cash used in investing activities (4,323,682) (2,856,264)
Cash flows from financing activities: Repayment of bank loans --
(512,505) Additional paid-in capital 7,590,962 -- Proceeds from
minority shareholders 439,920 -- Payment of dividends (1,077,335)
-- Net cash provided by (used in) financing activities 6,953,547
(512,505) Effect of foreign currency translation on cash 5,093
66,124 Net increase in cash and cash equivalents 7,514,350 616,188
Cash and cash equivalents - beginning 12,352,223 12,057,150 Cash
and cash equivalents - ending $19,866,573 $12,673,338 Supplemental
schedule of non cash activities Advance payments exchanged for
intangible assets - drug $807,986 $-- Non-GAAP Financial Measures
and Reconciliations As used herein, "GAAP" refers to generally
accepted accounting principals in the United States. We use various
numerical measures in conference calls, investor meetings and other
forums, which are or may be considered "Non-GAAP financial
measures" under the SEC's Regulation G. We have provided below for
your reference supplemental financial disclosure for these
measures, including the most directly comparable GAAP measure and
an associated reconciliation. Preliminary and Non-audited Second
Quarter and Year to Date Fiscal 2010 Earnings Reconciliation Three
Months Ended Six Months Ended December 31, 2009 December 31, 2009
Net Income (GAAP) $2,568,076 $4,756,324 Stock Compensation Charges
(a) $900,000 $900,000 Less: Tax Adjustment $163,800 $166,500
Adjusted Net Income $3,304,276 $5,489,824 Three Months Ended Six
Months Ended December 31, 2009 December 31, 2009 Earnings Per Share
- Diluted (GAAP) $0.08 $0.17 Stock Compensation Charges (a) $0.03
$0.03 Adjusted Earnings Per Share - Diluted $0.11 $0.20 (a) Net
Income and diluted earnings per share for the second quarter and
first six months of fiscal year 2010 includes a non-cash Stock
Compensation Charge of $900,000 or approximately $0.03 in Earnings
Per Share for the Three Months Ended December 31, 2009 in
connection with consulting services. The company has not previously
incurred on a regular basis a charge of this nature. Note: To
supplement our consolidated financial statements presented in
accordance with GAAP, Tianyin Pharmaceutical Corp. uses non-GAAP
measures, such as Adjusted Net Income and Adjusted Diluted Earnings
per share, which exclude certain non cash expenses. This non-GAAP
adjustment is provided to enhance the user's overall understanding
of our historical and current financial performance and our
prospects for the future. We believe the non- GAAP results provide
useful information to both management and investors by excluding
certain expenses we believe are not indicative of our core
operating results. DATASOURCE: Tianyin Pharmaceutical Co., Inc.
CONTACT: Allen Tang, Ph.D., MBA, Assistant to the CEO China of
Tianyin Pharmaceutical Co., Inc., +86-158-2122-5642, ; or
Investors, Matthew Hayden of HC International, +1-561-245-5155, Web
site: http://www.tianyinpharma.com/
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