QINGYUAN, Guangdong, China, Nov. 17 /Xinhua-PRNewswire-FirstCall/ -- China Bottles Inc. ("China Bottles" or "The Company") (OTC Bulletin Board: CBTT), a leading plastic packaging solutions company and plastic bottle production equipment company in the People's Republic of China, today announced its financial results for the third quarter ended September 30, 2008.
Third Quarter 2008 Highlights
-- Revenue reached $ 11.0 million, an increase of 158.6% year-over-year
-- Gross profit increased 162.9% year-over-year to $3.3 million with a
gross margin of 29.6%
-- Operating income increased 205.2% year-over-year to $2.2 million
-- Net income increased 157.2% year-over-year to $1.5 million, or $0.02
per fully diluted share
-- Expanded bottle blowing machinery market reach to Cambodia and Algeria
"We are pleased to report strong results in the third quarter with triple-digit top and bottom line growth," stated Mr. Chonghui Zhao, CEO of China Bottles. "Our strong performance can largely be attributed to our growth strategy of enlarging our geographic footprint while deepening penetration in our current markets. During this quarter, we participated in three different trade shows, increasing product orders and strengthening our brand awareness. We also set up a sales center and hired 15 additional sales representatives which contributed to our strong revenue growth."
Third Quarter 2008 Results
In the third quarter of fiscal 2008, sales revenue increased 158.6% to $11.0 million from $4.2 million in the same period one year ago. Sales of blowing machines, molding and bottles production grew from $2.3 million $1.4 million and $0.6 million for the third quarter of 2007 to $6.3 million, $3.7 million and $1.0 million for the same period of 2008, respectively. The increase in revenue was mainly due to the increase in market acceptance of the Company's products, particularly high end products, due to growing demand from the drink and beverage industry in China.
Gross profit for the third quarter of 2008 increased 162.9%, to $3.3 million from $1.2 million during the same period in 2007. Gross margin was 29.6% for the third quarter of 2008 compared to 29.2% during the same period in 2007. During the most recent quarter, the Company successfully sold more higher gross margin blowing machines to compensate for increases in the price of raw materials and higher direct labor costs, leading to a slightly higher gross margin.
General and administrative expenses for the third quarter of 2008 totaled $0.8 million, up from $0.3 million in the same period prior year. The increase in general and administrative expenses was primarily due to expanded operations and an increase in staff, travel and entertainment expenses, and higher costs associated with operating as a public company.
Selling and marketing expenses, including distribution expenses for the third quarter of 2008 were $0.2 million, an increase of 17.6% from roughly $0.2 million in the same quarter last year. The increase is primary due to increases in sales activities in the third quarter of 2008.
Operating income for the third quarter of 2008 was $2.2 million, up 205.2% from $0.7 million in the same quarter of 2007. Operation margin was 20.2% compared to 17.1% in the same time last year.
Net income for the third quarter of 2008 was $1.5 million, or $0.02 per fully diluted share, up 157.2% from $0.6 million, or $0.01 per fully diluted share, in the same period in 2007. Net margin for the third quarter of 2008 was 13.8%, unchanged from the same period in 2007.
Nine Months 2008 Results
Net revenue was $50.2 million in the nine months ended September 30, 2008, up 130.4% from $21.8 million in the nine months ended September 30, 2007. Gross profit was $16.2 million with a gross margin of 32.3%, up 100.7% from $8.1 million and a gross margin of 37.0% in the same period last year. Operating income was $12.3 million with an operating margin of 24.6%, up 91.2% from $6.4 million and an operating margin of 29.6% in the same period last year. Net income was $9.2 million, or $0.12 per fully diluted share, up 71.8% from $5.4 million, or $0.09 per fully diluted share, in the nine months ended September 30, 2007.
Financial Condition
As of September 30, 2008, the Company had cash and cash equivalents of $0.9 million, accounts receivable of $15.4 million and working capital of $ 13.9 million. The Company had $18.7 million in shareholders' equity compared to $8.5 million at the end of 2007. The company generated $1.4 million in cash flow from operating activities during the nine months ended September 30, 2008. The Company believes its existing cash on hand and cash flow from operations will meet its liquidity requirements for the next 12 months. China Bottles' capital expenditures were approximately $1.5 million in the first nine months of 2008 due to the purchase of equipment and land use rights acquired for the expansion of the Company's production capacity.
Recent Events
-- October 2008, China Bottles participated in the 2008 Autumn Canton
Chinese Export Commodities Fair to showcase its Guozhu brand bottle
blowing machines.
-- October 2008, China Bottles participated in the 2008 China Brew &
Beverage Trade Show to showcase its Guozhu brand bottle blowing
machines and Guozhu brand injection mold machines.
-- October 2008, China Bottles participated in the 2008 Autumn
Pharmaceutical Machinery Exposition & Nanchang International
Pharmaceutical Machinery Exposition to showcase its Guozhu brand
molding and blowing machines to further tap the pharmaceutical market.
Business Outlook
Despite the global economic slowdown which has recently begun to affect China, China Bottles remains confident in its growth outlook. In particular, the Company believes the Chinese government's plan to spur economic growth by encouraging domestic consumption will be beneficial as a majority of the Company's customer base is in China. For the full year of 2008, the Company is forecasting revenues of $61.0 million.
Currently, pharmaceutical products comprise about 20% of China Bottles' total revenue. For 2009, this percentage is expected to increase to 30%.
About China Bottles Inc.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
-- FINANCIAL TABLES FOLLOW --
CHINA BOTTLES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (UNAUDITED)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
REVENUE $10,978,444 $4,245,224 $50,193,533 $21,784,085
COST OF SALES 7,723,918 3,007,264 34,002,465 13,714,933
GROSS PROFIT 3,254,526 1,237,960 16,191,068 8,069,152
EXPENSES
General and
administrative 795,408 303,655 2,452,927 860,462
Selling and
distributions 246,330 209,381 1,406,103 760,356
TOTAL OPERATING
EXPENSES 1,041,738 513,036 3,859,030 1,620,818
INCOME FROM
CONTINUING
OPERATIONS 2,212,788 724,924 12,332,038 6,448,334
OTHER INCOME
Sales of scraps -- 31,579 107,089 242,410
Sales of parts -- 28,099 -- 67,241
Sales of materials -- -- 118,963 --
Settlement of debts -- -- 90,867 --
Subsidized income -- -- 78,576 --
Other income (38,725) 10,083 51,411 69,429
Interest income 3,804 3,885 3,804 12,244
INTEREST EXPENSES (27,156) (9,807) (237,005) (28,801)
INCOME BEFORE INCOME
TAXES 2,150,711 788,763 12,545,743 6,810,857
PROVISION FOR INCOME
TAXES 638,715 200,880 3,328,920 1,445,063
NET INCOME $1,511,996 $587,883 $9,216,823 $5,365,794
OTHER COMPREHENSIVE
INCOME
Gain on Foreign
Exchange Translation 38,478 53,745 1,044,277 120,047
COMPREHENSIVE INCOME $1,550,474 $641,628 $10,261,100 $5,485,841
NET INCOME PER SHARE
BASIC $0.02 $0.02 $0.14 $0.18
WEIGHTED AVERAGE
SHARES BASIC 75,000,000 29,750,000 65,784,672 29,750,000
NET INCOME PER SHARE
DILUTED $0.02 $0.01 $0.12 $0.09
WEIGHTED AVERAGE
SHARES DILUTED 75,000,000 54,750,000 75,000,000 54,750,000
CHINA BOTTLES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2008 2007
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalent $856,463 $1,375,786
Accounts receivable, net 15,397,240 1,494,539
Inventories 7,477,424 6,737,712
Notes receivable 8,662 --
Prepaid expenses and other
receivables 5,144,365 2,112,535
Total current assets 28,884,154 11,720,572
PROPERTY, PLANT & EQUIPMENT, NET 4,593,839 3,636,505
LAND USE RIGHT, NET OF AMORTIZATION 241,685 229,689
TOTAL ASSETS $33,719,678 $15,586,766
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Bank loans $1,168,556 $1,777,389
Accounts payable 2,867,617 1,244,801
Accrued expenses and other payables 7,306,115 904,791
Amount due to a related party 705,539 1,556,986
Customers deposits 2,343,927 650,652
Income tax payable 615,934 1,001,257
Total current liabilities 15,007,688 7,135,876
TOTAL LIABILITIES $15,007,688 $7,135,876
STOCKHOLDERS' EQUITY
Preferred stock, Par value $0.001;
25,000,000 and 10,000,000 shares
authorized; Nil and 5,000,000 shares
issued and outstanding -- 5,000
Common stock, Par value $0.001;
175,000,000 shares and 50,000,000
shares authorized; 75,000,000 shares
and 50,000,000 shares issued and
outstanding 75,000 50,000
Additional paid in capital 2,665,900 2,685,900
Retained earnings 14,394,020 5,177,197
Other comprehensive income 1,577,070 532,793
TOTAL STOCKHOLDERS' EQUITY $18,711,990 $8,450,890
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $33,719,678 $15,586,766
CHINA BOTTLES INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended
September 30,
2008 2007
Cash Flows From Operating Activities:
Net income $9,216,823 $5,365,794
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 484,287 264,371
Amortization of land use rights 6,786 2,998
Changes in operating assets and
liabilities:
Increase in accounts receivable (13,902,701) (1,614,411)
Increase in notes receivable (8,662) --
Increase in inventories (739,712) (2,018,732)
Increase in prepaid expenses and
other receivable (3,031,830) (3,276,438)
Increase in accounts payable 1,622,816 1,134,462
Increase/(decrease) in accrued
expenses and other payables 6,401,324 (3,585,517)
Increase in customers deposits 1,693,275 1,811,258
Decrease in notes payable -- (73,334)
(Decrease)/increase in taxes
payable (385,323) 3,370,298
Net cash provided by operating
activities 1,357,083 1,380,749
Cash Flows From Investing
Activities:
Purchase of property, plant and
equipment (1,441,621) (1,079,713)
Purchase of land use right (11,412) (112,870)
Increase in amount due from a
director -- (644,764)
Net cash used in investing
activities (1,453,033) (1,837,347)
Cash Flows From Financing
Activities:
Decrease in amount due to a related
party (851,447) (14,969)
Proceeds from bank loans 1,168,556 1,348,449
Repayment of bank loans (1,777,389)
Net cash (used in) / provided by
financing activities (1,460,280) 1,333,480
Net (decrease) / increase in cash (1,556,230) 876,882
Effect of foreign exchange rate
changes 1,036,907 (538,384)
Cash and Cash Equivalents at
Beginning of Period 1,375,786 497,078
Cash and Cash Equivalents at the
End of Period $856,463 $835,576
For more information, please contact:
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Graham Reed, Financial Writer
Email: graham.reed@ccgir.com
Web: http://www.ccgirasia.com
