2009 First Quarter Financial Results:
Revenue growth was driven by continued growth in demand across its three major product lines including waste water treatment, flue gas desulphurization, and anti-oxidation systems. Specifically, the company recorded $25.7 million in desulphurization revenues, an increase of 106.1% from $12.5 million in same period 2008, $7.2 million in wastewater treatment system sales, an increase of 232.3% over the $2.2 million recorded in the first quarter in 2008, and $2.4 million in anti-oxidation equipment and coatings as compared to $1.6 recorded in the same period in 2008. $0.3 million in machining service revenues was a decrease of 91.2% from the $2.7 million recorded in the same period in 2008 as the company allocated more capacity towards its iron and steel customers.
Cost of sales for the first quarter of 2009 was $19.7 million as compared to $11.3 million in same period 2008, an increase of 73.6%. Gross profit was $16.0 million in the first quarter of 2009 as compared to $7.7 million for the same period in 2008, an increase of $8.2 million or 106.6%, representing gross margins of about 44.8% and 40.5%, respectively. The improvement of gross margins was attributed to enhanced cost control of service contracts by allocating a greater percentage of work to the company’s in house team in addition to a decline in raw material prices.
Total operating expenses for the first quarter of 2009 were $3.4 million as compared to $2.7 million for the same period in 2008. The increase in operating expenses was primarily due to the increase of commission expense for new contracts, while operating expenses as a percentage of revenues decreased to 9.5% from 14.2% for the same period in, 2008. Operating margins were 35.3% compared to 26.3%.
‘The first quarter represents a very strong start in 2009 as we made significant improvements in all of our key financial metrics,’ said Zou Dejun, president and chief executive officer of RINO International, ‘Our business continues to be driven by a number of fundamental factors all centered around China’s desire to ensure that iron and steel manufacturers properly protect the environment, specifically the water and air. By collecting a significant portion of our receivables we ended the quarter with $47.9 million cash and cash equivalents on our balance sheet. This generated significant cash flow from operations, and puts us in an excellent position to capitalize on our growth opportunities for the balance of 2009. We ended the quarter with a backlog of about $61.8 million, which represents 8 desulphurization, 5 wastewater treatment and 1 anti-oxidation projects which will be implemented during the next two quarters. We are very confident that we will continue to provide incremental and robust top-line and bottom line growth for our company’.
Balance Sheet and Cash Flow Discussion:
Cash and cash equivalents as of March 31, 2009 were $47.9 million, representing an increase of 142.7% as compared to $19.7 million as of March 31, 2008. Accounts receivable stood at $39.1 million, a 24.1% decreased from $51.5 million reported as of December 31, 2008. Day’s sales outstanding stood at 99 compared to 115 at the end of last year. The company reported $8.8 million in short term loan. The company had a current ratio of 3.5 to 1 and stockholder’s equity increased 16.3% to $77.8 million as of March 31, 2009 as compared to $66.9 million as of December 31, 2008.
For the first quarter in 2009, the company generated $27.6 million in cash flow from operations, as compared to $3.6 million cash used in operation for the first quarter in 2008. This increase was mainly due to 148.5% increase in net income, a $12.4 million decrease in account receivable, and a $6.3 million increase in customer deposits and tax payable.
