EX-99.1 2 v192873_ex99-1.htm Unassociated Document
 
Deer Consumer Products, Inc. Announces Record 2nd Quarter 2010 Financial Results - 251% Net Income Growth, 125% Revenue Growth, EPS $0.18, Anticipates Record Earnings Growth in the Second Half of 2010
 
NEW YORK, August 10, 2010 /PRNewswire-FirstCall/ — Deer Consumer Products, Inc. (Nasdaq: DEER; website: http://www.deerinc.com/), one of the world's largest vertically integrated branded and ODM/OEM manufacturers of small home and kitchen appliances marketing to both global and China domestic consumers, announced today record financial results for the second quarter ended June 30, 2010. Deer management is scheduled to host an investor conference call today at 8:30 am, US Eastern Time.
 
Financial Highlights:
 
 
·
Revenues of $34.45 million, an increase of 125% from Q2/09
 
 
·
Net income of $6.02 million, an increase of 251% from Q2/09
 
 
·
Fully diluted EPS (Earnings per Share) of $0.18, an increase of 125% from EPS $0.08 in Q2/09
 
 
·
Strong balance sheet: $74.3 million in cash (approximately $2.21 per common share in cash) without any long term debts or bank borrowing
 
 
·
Better than expected China domestic sales - high margin China domestic sales increased 579% to 33% of revenue in Q2/2010
 
 
·
Expanded gross profit margin to 28.7%, compared to 24.8% in Q2/09
 
 
·
Expanded operating margin to 20.2%, compared to 14.7% in Q2/09
 
 
·
Expanded net income margin to 17.5%, compared to 11.2% in Q2/09
 
 
·
Sees positive impact to earnings from China’s currency appreciation and positive growth momentum from the current global economic environment
 
 
·
Anticipates record earnings in the second half of 2010

 
 
 
 
Financial Summary for Q2/2010 versus Q2/2009:
 
      Q2 2010      
Q2 2009
    
YoY%
Change
  
Revenue
   $ 34,450,687     $ 15,310,503       125 %
                         
China Sales
   $ 11,376,532     $ 1,674,260       579 %
                         
China sales % of revenue
     33.0 %     10.9 %     —  
                         
International Sales
   $ 23,074,155     $ 13,636,243       69 %
                         
International sales % of revenue
     67.0 %     89.1 %     —  
                         
Gross Profit
   $ 9,881,653     $ 3,790,638       161 %
                         
Gross Margin
     28.7 %     24.8 %     —  
                         
Income from Operations
   $ 6,971,574     $ 2,256,404       209 %
                         
Operating Margin
     20.2 %     14.7 %     —  
                         
Income Tax Rate
     15.5 %     19.7 %     —  
                         
Net Income
   $ 6,020,540     $ 1,714,876       251 %
                         
Net Margin
     17.5 %     11.2 %     —  
                         
Diluted EPS
   $ 0.18     $ 0.08       125 %
 
Revenues:
 
Revenues for the second quarter of 2010 were $34.45 million, an increase of approximately 125% from $15.31 million in the second quarter 2009. Deer attributes the significant revenue increase to organic growth in the high margin China domestic market which grew 579% year over year. In addition, Deer continues to experience strong organic growth from its global markets.
 
Net Income:
 
Net income for the second quarter of 2010 was approximately $6.02 million, an increase of approximately 251% from Q2/09. Fully diluted EPS was $0.18 compared to $0.08 in 2009.
 
Anticipates Rapid Earnings Growth Momentum to Continue in 2010
 
Based on customer interest and order placements, Deer anticipates strong earnings growth momentum to continue throughout the rest of 2010. Demand from both global and China domestic customers have been particularly encouraging since the Company entered the 3rd quarter.
 
Strategically Well Positioned as a Direct Access to the Vast Chinese Consumer Markets
 
China has the world's fastest growing small household appliance market; however, not a single U.S. global brand in the industry has any meaningful sales presence in China. Deer's fully integrated model of aligning a strong cash position, product design, internal low cost manufacturing and quality control, supply chain management and rapidly expanding China domestic market footprints has positioned Deer as a strategic platform for accessing the Chinese consumers.

 
 
 
 
Management Comments on 2nd Quarter 2010 Financial Results
 
Bill He, Deer's Chairman and Chief Executive Officer, commented: "Deer is pleased to report the best 2nd quarter financial results in our corporate history. During this quarter, we did not experience any customer slow down in either export markets or China domestic markets. We executed well in the China domestic markets through higher volume sales and higher profit margins. We significantly expanded both China domestic and international sales channels. Deer has a strong cash position and has no exposure to the credit markets. Our integrated 'production to market' model has made Deer one of the most profitable and efficient companies in the small household appliance industry in the world. We see positive earnings trend to continue during the second half of 2010."
 
Outlook for Record Earnings in the Second Half of 2010:
 
“The Chinese domestic marketing channels are delivering better than expected results. Consumer wealth expansion with high GDP growth and low inflation has created a favorable market environment for our products, which enhance the lifestyles of ordinary people. Revenue growth has come from multiple distribution venues, including rapidly expanding traditional retail outlets and third party independent dealer networks as well as online sales. Our China growth strategy is a simple and highly practical one: placing our products on the shelves of major retailers and creating product visibility as our initial steps in building awareness towards “DEER” branded products. Once we reach our critical mass in product presence at some of China’s key domestic retailers, Deer intends to launch regional and store-specific marketing campaigns in the 3rd and 4th quarters to further enhance individual store sales. Our strong cash position provides ample marketing opportunities. Deer anticipates continued strong China domestic market sales as well as record earnings in the second half,” concluded Bill He, Chairman & CEO of Deer.
 
Investor Conference Call Details:
 
Deer management will host an earnings conference call today to discuss the 2nd quarter financial results and outlook.
 
Date and time: 8:30 am U.S. Eastern Daylight Time, August 10, 2010
U.S. toll free number: 1-888-419-5570
International direct dial-in: +1 617-896-9871
Conference passcode: 91241846
 
About Deer Consumer Products, Inc.
 
Deer Consumer Products, Inc. (Nasdaq: DEER; website: http://www.deerinc.com/) is a NASDAQ Global Select Market listed U.S. registered public company headquartered in China. Deer has a 15-year operating business as well as a strong balance sheet. Supported by more than 103 patents, trademarks, copyrights and approximately 2,000 company-trained seasonal and full time staff, Deer is a leading designer, ODM/OEM manufacturer and global marketer of quality small home and kitchen electric appliances. Deer's product lines include blenders, juicers, soy milk makers and a large variety of other home appliances designed to make today's lifestyles simpler and healthier. With more than 100 global clients/branded products such as Black & Decker, Ariete, Disney, Toastmaster, Magic Bullet, Back to Basics and Wal-Mart, and rapidly expanding China domestic market footprint, Deer has enjoyed rapid sales and earnings growth in recent years.

 
 
 
 
Safe Harbor Statement
 
All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Deer's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Deer's filings with the Securities and Exchange Commission.

 

DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

   
June 30,
    
December 31,
  
   
2010
    
2009
  
   
(unaudited)
        
ASSETS
            
             
CURRENT ASSETS:
            
Cash and cash equivalents
   $ 74,296,844     $ 79,333,729  
Restricted cash
     1,830,091       35,701  
Accounts receivable
     22,909,025       17,070,781  
Advances to suppliers
     3,443,313       3,299,107  
Other receivables
     393,213       213,487  
Inventories
     22,600,352       18,061,282  
Other current assets
     106,459       12,500  
Total current assets
     125,579,297       118,026,587  
                 
PROPERTY AND EQUIPMENT, net
     11,350,720       11,325,999  
CONSTRUCTION IN PROGRESS
     5,757,356       3,724,337  
INTANGIBLE ASSETS, net
     768,227       394,684  
OTHER ASSETS
     10,307       20,073  
TOTAL ASSETS
   $ 143,465,907     $ 133,491,680  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
CURRENT LIABILITIES:
                
Accounts payable
   $ 13,140,234     $ 13,055,110  
Other payables
     1,267,500       1,061,460  
Unearned revenue
     1,036,644       1,719,761  
Accrued payroll
     614,593       1,148,663  
Notes payable
     7,099,328       6,212,911  
Tax and welfare payable
     567,894       862,332  
Total current liabilities
     23,726,193       24,060,237  
                 
STOCKHOLDERS' EQUITY:
                
Common Stock, $0.001 par value; 75,000,000 shares authorized; 33,585,058 and 32,631,748 shares issued and outstanding at June 30, 2010 and December 31, 2009
     33,585       32,632  
Additional paid-in capital
     90,962,980       91,111,661  
Development funds
     1,711,765       1,185,859  
Statutory reserve
     3,423,531       2,371,718  
Other comprehensive income
     2,733,652       2,335,216  
Retained earnings
     20,874,201       12,394,357  
Total stockholders' equity
     119,739,714       109,431,443  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 143,465,907     $ 133,491,680  

 
 
 


DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2010
    
2009
    
2010
    
2009
  
   
(unaudited)
    
(unaudited)
    
(unaudited)
    
(unaudited)
  
                         
Revenue
   $ 34,450,687     $ 15,310,503     $ 58,353,144     $ 22,182,719  
                                 
Cost of Revenue
     24,569,034       11,519,865       41,593,643       16,732,569  
                                 
Gross profit
     9,881,653       3,790,638       16,759,501       5,450,150  
                                 
Operating expenses
                                
Selling expenses
     1,820,456       727,911       3,248,420       911,253  
General and administrative expenses
     1,089,623       806,323       1,764,689       1,177,904  
Total operating expenses
     2,910,079       1,534,234       5,013,109       2,089,157  
                                 
Income from operations
     6,971,574       2,256,404       11,746,392       3,360,993  
                                 
Non-operating income (expense):
                                
Interest expense and financing costs
     (19,755 )     (110,522 )     (49,461 )     (225,353 )
Interest income
     239,139       1,037       331,060       2,656  
Other expense
     22,824       (2,015 )     8,223       (3,896 )
Foreign exchange loss
     (92,676 )     (9,997 )     (125,810 )     (80,503 )
                                 
Total non-operating income (expense)
     149,532       (121,497 )     164,012       (307,096 )
                                 
Income before income tax
     7,121,106       2,134,907       11,910,404       3,053,897  
                                 
Income tax
     1,100,566       420,031       1,852,841       682,147  
                                 
Net income
     6,020,540       1,714,876       10,057,563       2,371,750  
                                 
Other comprehensive income
                                
Foreign currency translation gain (loss)
     363,071       (42,108 )     398,436       (62,440 )
                                 
Comprehensive Income
   $ 6,383,611     $ 1,672,768     $ 10,455,999     $ 2,309,310  
                                 
Weighted average shares outstanding :
                                
Basic
     33,019,662       21,626,413       32,826,777       20,817,208  
Diluted
     33,703,876       21,706,167       33,729,852       20,876,960  
                                 
Earnings per share:
                                
Basic
   $ 0.18     $ 0.08     $ 0.31     $ 0.11  
Diluted
   $ 0.18     $ 0.08     $ 0.30     $ 0.11  

 
 
 

DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

   
Six Months Ended June 30,
  
   
2010
    
2009
  
   
(unaudited)
    
(unaudited)
  
             
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
   $ 10,057,563     $ 2,371,750  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
                
Depreciation
     707,571       707,567  
Amortization
     9,005       4,716  
Stock based compensation
     166,695       -  
(Increase) / decrease in assets:
                
Accounts receivable
     (5,742,579 )     (3,177,512 )
Other receivables
     (178,052 )     68,397  
Inventories
     (4,445,193 )     (678,170 )
Due from related party
     -       330,974  
Advances to suppliers
     (130,127 )     1,980,585  
Other assets
     (84,155 )     20,792  
Increase / (decrease) in current liabilities:
                
Accounts payable
     888,735       211,143  
Unearned revenue
     (687,059 )     (847,621 )
Other payables
     264,989       462,873  
Due to related party
     -       (194,491 )
Accrued payroll
     (536,355 )     441,700  
Tax and welfare payable
     (296,630 )     665,060  
                 
Net cash provided by (used in) operating activities
     (5,592 )     2,367,763  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Acquisition of property and equipment
     (686,066 )     (532 )
Acquisition of intangible assets
     (379,267 )     -  
Construction in process
     (2,008,746 )     (907,615 )
Changes in restricted cash
     (1,786,204 )     109,304  
Sale of short-term investments
     -       29,302  
                 
Net cash used in investing activities
     (4,860,283 )     (769,541 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from issuance of notes payable
     -       1,678,439  
Proceeds from sale of common stock
     -       2,678,000  
Offering costs paid
     (320,000 )     (338,892 )
Proceeds from the exercise of warrants
     6,951,527       -  
Payment on short term loans
     -       (3,549,693 )
Purchase of treasury shares
     (6,945,950 )     -  
                 
Net cash provided by (used in) financing activities
     (314,423 )     467,854  
                 
Effect of exchange rate changes on cash and cash equivalents
     143,413       (44,292 )
                 
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
     (5,036,885 )     2,021,784  
                 
CASH & CASH EQUIVALENTS, BEGINNING BALANCE
     79,333,729       2,782,026  
                 
CASH & CASH EQUIVALENTS, ENDING BALANCE
   $ 74,296,844     $ 4,803,810  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                
Interest paid
   $ -     $ 102,024  
Income taxes paid
   $ 1,251,617     $ 440,315  

 
 
 
 
Contact Information:
  
   
   
Corporate Contact:
  
Ms. Helen Wang
  
Deer Consumer Products, Inc.
  
Tel: 011-86-755-86028285
  
Email: investors@deerinc.com
  
   
Source: Deer Consumer Products, Inc