-- Q1 2010 Revenue Increased 15.8% to $29.8 Million, Gross margins
increased 600 basis points to 31.7% SHENZHEN, China, Feb. 10
/PRNewswire-Asia/ -- Winner Medical Group Inc. (NYSE Amex: WWIN;
"Winner Medical"), a manufacturer of medical dressings, medical
disposables and non-woven PurCotton(R) materials for the medical
and consumer products industries, today reported that fiscal first
quarter 2010 revenue increased 15.8% to $29.8 million and diluted
earnings per share increased 142.9% to $0.17. First Quarter 2010
Summary Q1 FY2010 Q1 FY2009 Y/Y (In million) (In million) Sales
Revenue $29.8 $25.7 15.8% Cost of Sales $20.4 $19.1 6.4% Gross
Profit $9.4 $6.6 42.8% Operating Income $4.5 $1.7 159.4% Net Income
Attributable to Winner Medical Group Inc. $3.9 $1.5 165.8% Diluted
EPS $0.17 $0.07 142.9% "Winner Medical delivered strong
first-quarter results as our operating numbers were enhanced by
accelerating growth in the Chinese market for our Winner(R) brand
and finished medical products, which were further supported by
sequential increases by PurCotton(R) jumbo roll sales," said
Jianquan Li, chairman and Chief Executive Officer of Winner
Medical. "Our business is performing well and our domestic and
PurCotton(R) business is on track for strong profit growth this
quarter." "Looking forward, we will continue to reshape and
strengthen our portfolio, by expanding medical products sales into
the Chinese marketplace through direct sales to hospitals,
distributors and chain drugstores, and launching PurCotton(R) brand
products and opening more PurCotton(R) trial stores. We expect that
these products and sales to the Chinese marketplace will fuel our
growth in an increasingly competitive marketplace. We also expect
to drive growth this year through key strategic investments funded
by our continued strong cash flow," Mr. Li said. First Quarter 2010
Highlights Sales Revenue Winner Medical reported net revenues of
$29.8 million for the first quarter of 2010, a 15.8% increase from
$25.7 million in the first quarter of 2009. Net revenues generated
from traditional products in the first quarter of 2010 increased
approximately 9.5% to $27.3 million from $24.9 million in the first
quarter of 2009, primarily driven by increased sales to North and
South American customers and Chinese customers. As a component,
PurCotton(R) products sales in the first quarter of 2010 increased
approximately 199.2% to $2.5 million from $0.8 million in the first
quarter of 2009. The strong revenue was also driven by a large
quantity of sales from face masks and protective products as a
result of H1N1 both in the Chinese and global markets. Gross Profit
Gross profit in the first quarter of 2010 increased to $9.4
million. First quarter 2010 gross margins were 31.7%, a 600 basis
point improvement from 25.7% reported in the first quarter of 2009,
which resulted from the Company's strategy of targeting the Chinese
medical market combined with high margin sales of PurCottton(R)
products, as well as from benefits derived from our lean production
management and favorable foreign exchange rates. Operating Expenses
In the first quarter of 2010, the Company reported Selling, General
and Administrative expenses of $5.3 million, versus $4.5 million in
the first quarter of 2009. This increase was mainly due to
increases in transportation expenses for the domestic and export
markets, increases in salaries for management and administrative
staff and consulting expenses for brand building projects, as well
as an increase in the provision for bad debts. Operating Income
Operating income increased by 159.4% to $4.5 million in the first
quarter of 2010, from $1.7 million in the first quarter of 2009.
Income taxes The Company's effective tax rate for the first quarter
of 2010 was 13.1%, compared to 15.9% in the first quarter of 2009.
The lower income tax rate is mainly due to the Company's
subsidiary, Winner Industries (Shenzhen), obtaining the High and
New Technology Enterprise Certificate which reduced its income tax
rate from 18% to 15% and also due to the fact that another
subsidiary, Winner Industries (Huanggang), was entitled to a
two-year full exemption from enterprise income tax, and it
experienced high sales revenue growth in the first quarter of 2010.
Net Income Attributable to Winner Medical Group Inc. Net income
increased by 165.8% to $3.9 million in the first quarter of 2010,
as compared to approximately $1.5 million in the first quarter of
2009. Diluted earnings per share were $0.17 in the first quarter,
versus $0.07 per share in the comparable quarter last year. This
increase was primarily driven by high demand of PurCotton(R)
products, rapid sales of traditional medical products to Chinese
customers and North and South American customers, lean production
management and favorable foreign exchange rates. Other Select Data
Average accounts receivable days outstanding were 40 days in the
first quarter of 2010 compared to 45 days in the fourth quarter of
2009. As of December 31, 2009, the Company had $7.5 million in cash
and cash equivalents, compared to $9.5 million as of September 30,
2009. Net cash provided by operating activities and net cash used
in investing activities during the first quarter of 2010 were $3.2
million and $2.1 million, respectively. Working capital as of
December 31, 2009 was $26.2 million compared to $23.0 million as of
September 30, 2009. 2010 First Quarter Operational Highlights China
Medical Market Business Update Net sales to customers in China
totaled $8.1 million in the first quarter of 2010 compared to $2.6
million in the comparable quarter last year, an increase of 212.7%.
This significant quarterly sales gain resulted from the Company's
strategy of launching its own brand name Winner(R) products and
selling products through hospitals, distributors, and chain
drugstores. The Company has established sales distribution channels
in major cities such as Beijing, Shanghai, Guangzhou, Shenzhen,
Wuhan, and Fuzhou and has cooperated with 7 out of the top 10 chain
drugstores in China which have a combined network of approximately
20,000 locations in almost all major cities. Winner(R), as a
well-known trademark, was recognized by the Trademark Office of the
Chinese State Administration for Industry and is well accepted by
the Company's clients and end customers. The increase of sales
within China is also due to orders related to H1N1 protective
products. The Company expects to strengthen its sales continuously
to the Chinese marketplace, and expects domestic demand to be
driven by Chinese medical reforms and increasing demand for high
quality medical disposable products. PurCotton(R) Business Update
PurCotton(R) product sales of $2.5 million in the first quarter of
2010 represented a 199.2% increase versus the $0.8 million of sales
in the first quarter of the 2009. Sales in the first quarter of
2010 benefited from an increase in PurCotton(R) raw materials sales
(jumbo rolls) to customers in China and Japan who produce consumer
products, including sanitary and incontinence products, as well as
from the processing of orders for PurCotton(R) finished medical
products, such as operating room towels and sponges for customers
in China, Europe, and the United States. As of December 31, 2009,
the first two PurCotton(R) manufacturing lines were producing at
full capacity, with a total production capacity of 200 tons per
month. The third and fourth production lines are expected to start
production in March and May 2010, respectively. In order to build
and market the PurCotton(R) brand name in China, the Company has
set up a wholly-owned subsidiary, Shenzhen PurCotton Technology
Co., Ltd., which focuses on selling its PurCotton(R) branded
products through Company owned chain stores. On December 31, 2009,
the Company opened its first three PurCotton(R) pilot chain stores
and another two stores were opened on February 8, 2010 in Shenzhen,
Guangdong province. Each store sells four lines of PurCotton(R)
branded personal products and healthcare supplies, including
PurCotton(R) baby personal products, feminine personal products,
daily home care products and medical care products. The total
projected average cost to open each pilot store is approximately
$60,000 to $80,000, which includes the lease take-out, a cash
deposit, build-out, instruments, inventory stocking and one month
salary for sales persons. This is a trial step as the Company
enters the retail consumer personal products and healthcare
suppliers markets in China. The Company will open more stores
depending on the growth of market demand for PurCotton(R) products.
The Company believes that this flagship product will be a
significant growth driver and complement to its product portfolio.
Conference Call Winner Medical's senior management will host a
conference call to discuss its first quarter 2010 results and
recent business developments. Date of the conference call:
Wednesday, February 10, 2010 (EST) Time: 1:30pm (Pacific Standard
Time) / 4:30pm (Eastern Standard Time) / February 11, 2010 at
5:30am (Shenzhen/Hong Kong Time) Dial-in Number: 866-700-6293 (US)
10-800-130-0399 (South China) 10-800-152-1490 (North China)
800-96-3844 (HK) +1-617-213-8835 (International) Passcode:
33425805. A telephone replay will be available shortly after the
conclusion of the call and will be accessible through February 17,
2010 by calling 888-286-8010 (US) or +1-617-801-6888
(International); Passcode: 30554778. About Winner Medical: Winner
Medical is a leading manufacturer and the largest exporter by
volume in the medical dressing industry in China. Headquartered in
Shenzhen, the Company has eight wholly-owned operating subsidiaries
and four joint ventures with over 5,000 employees. The Company
engages in the manufacturing, sale, research, and development of
medical care products, wound care products, home care products and
PurCotton(R) products, a nonwoven fabric made from 100% natural
cotton. The products are sold worldwide, with Europe, the United
States and Japan serving as the top three markets. The Company
currently holds more than sixty patents and patent applications for
various products and manufacturing processes and is one of the few
Chinese companies licensed by the U.S. Food and Drug Administration
(FDA) to ship finished, sterilized products directly to the United
States market. To learn more about Winner Medical, please visit
Winner Medical's web site at: http://ir.winnermedical.com/ .
Forward-Looking Statements: This press release contains certain
statements that may include "forward- looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical fact
included herein are "forward-looking statements" including
statements regarding Winner Medical and its subsidiary companies'
business strategy, plans and objective and statements of
non-historical information. These forward-looking statements are
often identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions, involve known and
unknown risks and uncertainties. Although Winner Medical 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.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
Winner Medical'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 Winner Medical's
periodic reports that are filed with and available from the
Securities and Exchange Commission. All forward-looking statements
attributable to Winner Medical or persons acting on its behalf are
expressly qualified in their entirety by these factors. Other than
as required under the securities laws, Winner Medical does not
assume a duty to update these forward-looking statements. For more
information, please contact: Company: Peng Zhai Investor Relations
Manager Winner Medical Group Inc. Tel: +86-755-2806-6858
+86-755-2813-8888 x691 Email: Web: http://ir.winnermedical.com/
Investors: Scott Powell HC International, Inc. Tel: +1-917-721-9480
Email: Web: http://www.hcinternational.net/ Winner Medical Group
Inc. Consolidated Statements of Income and Comprehensive Income
Three months ended December 31, 2009 2008 (Unaudited) (Unaudited)
US$ US$ Net sales 29,786,805 25,730,274 Cost of sales (20,354,958)
(19,126,878) Gross profit 9,431,847 6,603,396 Other operating
income, net 440,463 484,964 Exchange difference, net (24,380)
(885,012) Selling, general and administrative expenses (5,323,719)
(4,458,526) Income from operations 4,524,211 1,744,822 Interest
income 17,872 12,516 Interest expense (53,846) (208,409) Equity in
earnings of 50 percent or less owned persons (30,322) 89,876 Income
before income taxes 4,457,915 1,638,805 Income taxes (581,887)
(260,128) Net income 3,876,028 1,378,677 Net loss attributable to
non-controlling interests 44,684 96,207 Net income attributable to
Winner Medical Group Inc. 3,920,712 1,474,884 Comprehensive income:
Net income 3,876,028 1,378,677 Foreign currency translation
difference (172,924) (167,682) Comprehensive income attributable to
non-controlling interests 44,735 96,207 Comprehensive income
attributable to Winner Medical Group Inc. 3,747,839 1,307,202 Net
income attributable to Winner Medical Group Inc. per share - basic
0.18 0.07 - diluted 0.17 0.07 Weighted average common stock
outstanding - basic 22,363,675 22,363,675 - diluted 22,473,167
22,417,239 Winner Medical Group Inc. Consolidated Balance Sheets
December 31, September 30, 2009 2009 (Unaudited) (Unaudited) US$
US$ ASSETS Current assets: Cash and cash equivalents 7,476,616
9,493,026 Restricted bank deposits 133,929 123,868 Accounts
receivable, less allowances for doubtful accounts of US$578,831 and
US$244,401 at December 31, 2009 and September 30, 2009,
respectively 13,401,545 13,148,462 Amount due from an affiliated
company 26,491 -- Inventories 14,974,014 14,932,740 Prepaid
expenses and other receivables 5,976,808 3,614,567 Income taxes
recoverable 31,638 30,910 Deferred tax assets 462,878 359,151 Total
current assets 42,483,919 41,702,724 Property, plant and equipment,
net 56,036,622 55,770,870 Investment in equity investees 1,893,677
1,923,956 Intangible assets, net 140,565 147,008 Non-current
restricted bank deposits 34,904 34,917 Prepaid expenses and other
receivables 1,780,298 1,104,344 Deferred tax assets 104,075 252,190
Total assets 102,474,060 100,936,009 LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Short-term bank loans 3,661,287
6,589,545 Accounts payable 5,412,730 4,843,404 Accrued payroll and
employee benefits 2,300,876 2,072,892 Customer deposits 493,168
603,824 Other accrued liabilities 3,085,505 2,574,736 Amounts due
to affiliated companies 21,137 56,349 Income taxes payable
1,237,027 1,938,941 Total current liabilities 16,211,730 18,679,691
Deferred tax liabilities 41,904 41,899 Total liabilities 16,253,634
18,721,590 Commitments and contingencies Stockholders' equity:
Common stock, par value $0.001 per share; authorized 247,500,000,
issued and outstanding December 31, 2009 - 22,363,675 shares;
September 30, 2009 - 22,363,675 shares 22,364 22,364 Additional
paid-in capital 31,469,026 31,166,123 Retained earnings 40,802,138
36,797,172 Statutory reserves 3,343,841 3,428,095 Accumulated other
comprehensive income 10,544,977 10,717,850 Total Winner Medical
Group Inc stockholders' equity 86,182,346 82,131,604
Non-controlling interests 38,080 82,815 Total equity 86,220,426
82,214,419 Total liabilities and equity 102,474,060 100,936,009
DATASOURCE: Winner Medical Group Inc. CONTACT: Company: Peng Zhai,
Investor Relations Manager, +86-755-2806-6858 or +86-755-2813-8888
x691, , of Winner Medical Group Inc.; Investors: Scott Powell,
+1-917-721-9480, , of HC International, Inc. Web site:
http://ir.winnermedical.com/ http://www.hcinternational.net/
Copyright