EX-99.1 2 v201498_ex99-1.htm Unassociated Document
 
Deer Consumer Products, Inc. Announces Record 3rd Quarter Financial Results, Raises 2010 Earnings Guidance, Provides Growth Outlook for 2011
 
NEW YORK, November 10, 2010 /PRNewswire via COMTEX/ -- 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 3rd quarter ended September 30, 2010. Deer management is scheduled to host an investor conference call today at 8:30 am, US Eastern Standard Time.
 
3rd Quarter Financial Highlights:
 
l
Revenues of $55.26 million, an increase of 108% from Q3/09
 
l
Net income of $9.27 million, an increase of 125% from Q3/09, fully diluted EPS (Earnings per Share) of $0.28, an increase of 56% from EPS of $0.18 in Q3/09
 
l
Strong balance sheet: $54.4 million in cash without any long term debts
 
l
Record China domestic sales – high margin China domestic sales increased 708% to 42% of revenues compared to Q3/09
 
l
Expanded gross profit margin to 28.7%, compared to 22.1% in Q3/09
 
l
Expanded operating margin to 21.0%, compared to 16.9% in Q3/09
 
l
Expanded net income margin to 16.8%, compared to 15.5% in Q3/09
 
l
Initiated planning for Deer’s 2nd production facility, which is located in China’s eastern AnHui Province – positioned for significant China domestic customer demand in 2011
 
l
Sees positive impact to earnings from China's currency appreciation and positive growth momentum from the current global economic environment
 
3rd Quarter Revenues and Net Income:
 
Q3/2010 revenues were $55.26 million, an increase of approximately 108% from $26.54 million in Q3/2009. Deer attributes the significant increase in organic revenues to 708% year over year quarterly growth in the high margin China domestic markets. In addition, Deer continues to experience strong organic growth from its global markets. Net income for Q3/2010 was approximately $9.27 million, an increase of approximately 125% from Q3/09. Fully diluted EPS was $0.28, compared to $0.18 in Q3/2009.
 
Management Comments on 3rd Quarter 2010 Financial Results:
 
Bill He, Deer's Chairman and CEO, commented: "Deer is pleased to report the best 3rd quarter financial results in our corporate history. During this quarter, we executed our China domestic market expansion strategies successfully, which resulted in higher revenue growth as well as higher profit margins. Deer believes that our integrated 'production to market' model and our in-depth local cultural and market knowledge have made Deer one of the most profitable and efficiently operated companies in the small household appliance industry in the world. We capture both manufacturing margins and end user distribution margins. We see positive earnings growth trend to continue well into 2011.”
 
1
 
Raises 2010 Earnings Guidance to $29 Million in Net Income, EPS of $0.87:
 
Based on the current order fulfillment and product shipments to China domestic and global customers, Deer raises its 2010 earnings guidance to approximately $172 million in revenues, approximately $29 million in net income and Earnings per Share (EPS) of $0.87-$0.88. Deer’s previous 2010 guidance was $160 million in revenues, $26 million in net income and EPS of $0.76.
 
Business Outlook for 2011: Targets Minimum 30% Revenues and Earnings Growth in 2011 from the Raised 2010 levels:
 
Deer anticipates no less than 30% growth in both revenues and net income in 2011 from the raised 2010 levels, mainly due to anticipated continued revenue growth in China’s domestic markets. In 2010, Deer significantly expanded its China domestic market distribution footprints, which positions the Company for further market expansion in 2011. In addition, Deer sees better global market conditions in 2011 as the global economy continues to improve, which would benefit Deer’s global market sales.
 
“Deer’s strong financial performance in 2010 has set a positive tone for Deer’s continued expansion in 2011. Chinese consumer wealth expansion in a favorable environment of high GDP growth and low inflation has created healthy market demand for Deer’s small household appliances products, which directly enhance the lifestyles of China’s rising middle class. Deer’s strong balance sheet and significant cash position also provide ample strategic M&A opportunities in 2011. In addition, Deer plans to significantly increase our production capacity in 2011 through the opening of our second production facility, in order to stay closer to our China domestic customers as well as expanding distribution outlets. Our second factory should be completed in 2011 and it is strategically located in a region that can service more than 300 million people in one of China’s most economically developed areas. Deer looks forward to continuing delivering high earnings growth for our shareholders for years to come,” commented Mr. He.
 
Deer is a Direct and Strategic Access to the Vast Chinese Consumer Markets:
 
China has the world's fastest growing markets for small household appliances. Deer's fully integrated model of aligning rapidly growing branded products, 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. From time to time, Deer is engaged in strategic discussions with global brands on both product collaboration and other strategic initiatives.
 
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Investor Conference Call Details:
 
Deer Consumer Products, Inc. 2010 Third Quarter Earnings Call
 
Date and time:  Nov 10, 2010, 8:30 AM US Eastern Standard Time
 
International direct:  +1 617 614.2702
 
US Toll free:  1 866 800.8648
 
Passcode:  774 291 73
 
 
About Deer Consumer Products, Inc.
 
Deer Consumer Products, Inc. (Nasdaq:DEER - News) is a NASDAQ Global Select Market listed U.S. company with its primary operations in China. Deer has a 15-year operating business as well as a strong balance sheet. Operated by Deer's founders and supported by more than 103 patents, trademarks, copyrights and approximately 2,000 employees, 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, Wal-Mart, and a rapidly expanding China domestic market footprint, Deer has enjoyed triple-digit growth in revenues and earnings in recent years.
 
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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.
 
 
Contact Information:
____________________________________
 
Corporate Contact and Investor Relations:
Deer Consumer Products, Inc.
Tel: 011-86-755-86028285
Email: investors@deerinc.com
____________________________________
 
 
Source: Deer Consumer Products, Inc.
 
4
DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
   
September 30,
    
December 31,
  
   
2010
    
2009
  
   
(unaudited)
        
ASSETS
             
CURRENT ASSETS:
            
 Cash and cash equivalents
   $ 54,377,822     $ 79,333,729  
 Restricted cash
     1,128,314       35,701  
 Accounts receivable
     42,119,937       17,070,781  
 Advances to suppliers
     8,576,188       3,299,107  
 Other receivables
     170,526       213,487  
 Inventories
     21,811,223       18,061,282  
 Other current assets
     159,583       12,500  
 Total current assets
     128,343,593       118,026,587  
                 
 PROPERTY AND EQUIPMENT, net
     12,020,769       11,325,999  
 CONSTRUCTION IN PROGRESS
     6,035,101       3,724,337  
 INTANGIBLE ASSETS, net
     22,997,999       394,684  
 OTHER ASSETS
     448,129       20,073  
 TOTAL ASSETS
   $ 169,845,591     $ 133,491,680  
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY
                 
 CURRENT LIABILITIES:
                
 Accounts payable
   $ 22,168,819     $ 13,055,110  
 Other payables
     1,441,269       1,061,460  
 Unearned revenue
     2,092,634       1,719,761  
 Accrued payroll
     1,459,646       1,148,663  
 Notes payable
     9,393,419       6,212,911  
 Tax and welfare payable
     2,065,358       862,332  
 Total current liabilities
     38,621,145       24,060,237  
                 
 STOCKHOLDERS' EQUITY:
                
 Common Stock, $0.001 par value; 75,000,000 shares authorized;
                
   33,590,116 and 32,631,748 shares issued and outstanding
                
      at September 30, 2010 and December 31, 2009
     33,590       32,632  
 Additional paid-in capital
     91,055,073       91,111,661  
 Development funds
     2,205,163       1,185,859  
 Statutory reserve
     4,410,327       2,371,718  
 Other comprehensive income
     4,860,662       2,335,216  
 Retained earnings
     28,659,631       12,394,357  
 Total stockholders' equity
     131,224,446       109,431,443  
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 169,845,591     $ 133,491,680  
 
5
 
DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
 
   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
   
2010
    
2009
    
2010
    
2009
  
   
(unaudited)
    
(unaudited)
    
(unaudited)
    
(unaudited)
  
                         
Revenue
  
$
55,263,309
    
$
26,541,039
    
$
113,616,453
    
$
48,723,758
  
                                 
Cost of Revenue
    
39,417,477
      
20,670,731
      
81,011,120
      
37,403,300
  
                                 
Gross profit
    
15,845,832
      
5,870,308
      
32,605,333
      
11,320,458
  
                                 
Operating expenses
                                
Selling expenses
    
2,756,357
      
960,013
      
6,004,777
      
1,871,266
  
General and administrative expenses
    
1,480,948
      
429,656
      
3,245,637
      
1,607,560
  
Total operating expenses
    
4,237,305
      
1,389,669
      
9,250,414
      
3,478,826
  
                                 
Income from operations
    
11,608,527
      
4,480,639
      
23,354,919
      
7,841,632
  
                                 
Non-operating income (expense):
                                
Interest expense and financing costs
    
(35,977
)
    
(50,174
)
    
(85,438
)
    
(275,527
)
Interest income
    
188,754
      
63,698
      
519,814
      
66,354
  
Other income
    
9,227
      
8,894
      
17,450
      
4,998
  
Foreign exchange gain (loss)
    
(758,621
)
    
288,461
      
(884,431
)
    
207,958
  
 
                               
Total non-operating income (expense)
    
(596,617
)
    
310,879
      
(432,605
)
    
3,783
  
                                 
Income before income tax
    
11,011,910
      
4,791,518
      
22,922,314
      
7,845,415
  
                                 
Income tax
    
1,746,286
      
668,745
      
3,599,127
      
1,350,892
  
                                 
Net income
    
9,265,624
      
4,122,773
      
19,323,187
      
6,494,523
  
                                 
Other comprehensive income
                                
Foreign currency translation gain (loss)
    
2,127,010
      
57,012
      
2,525,446
      
(5,428
)
                                 
Comprehensive Income
  
$
11,392,634
    
$
4,179,785
    
$
21,848,633
    
$
6,489,095
  
                                 
Weighted average shares outstanding :
                                
Basic
    
33,585,553
      
22,730,722
      
33,082,481
      
21,462,056
  
Diluted
    
33,591,108
      
23,266,256
      
33,654,774
      
21,908,490
  
                                 
Earnings per share:
                                
Basic
  
$
0.28
    
$
0.18
    
$
0.58
    
$
0.30
  
Diluted
  
$
0.28
    
$
0.18
    
$
0.57
    
$
0.30
  
 
6
 
DEER CONSUMER PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
   
Nine Months Ended September 30,
  
   
2010
    
2009
  
   
(unaudited)
    
(unaudited)
  
             
CASH FLOWS FROM OPERATING ACTIVITIES:
            
Net income
  
$
19,323,187
    
$
6,494,523
  
Adjustments to reconcile net income to net cash
                
provided by operating activities:
                
Depreciation
    
1,084,183
      
1,072,586
  
Amortization
    
102,243
      
7,076
  
Stock based compensation
    
250,042
      
-
  
(Increase) / decrease in assets:
                
Accounts receivable
    
(24,271,068
)
    
(3,194,307
)
Other receivables
    
46,505
      
294,584
  
Inventories
    
(3,321,876
)
    
(4,650,620
)
Due from related party
    
-
      
331,019
  
Advances to suppliers
    
(5,119,133
)
    
1,247,216
  
Other assets
    
(567,302
)
    
25,695
  
Increase / (decrease) in current liabilities:
                
Accounts payable
    
11,693,505
      
719,113
  
Unearned revenue
    
331,838
      
(47,897
)
Other payables
    
344,756
      
901,444
  
Due to related party
    
-
      
(194,529
)
Accrued payroll
    
282,499
      
859,787
  
Tax and welfare payable
    
1,164,803
      
101,915
  
 
               
Net cash provided by operating activities
    
1,344,182
      
3,967,605
  
 
               
CASH FLOWS FROM INVESTING ACTIVITIES
                
Acquisition of property and equipment
    
(1,539,295
)
    
(1,486,891
)
Acquisition of intangible assets
    
(22,305,052
)
    
-
  
Construction in process
    
(2,195,791
)
    
(1,319,539
)
Changes in restricted cash
    
(1,072,919
)
    
199,948
  
Sale of short-term investments
    
-
      
29,318
  
 
               
Net cash used in investing activities
    
(27,113,057
)
    
(2,577,164
)
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Proceeds from issuance of notes payable
    
-
      
1,724,933
  
Proceeds from sale of common stock
    
-
      
17,678,000
  
Offering costs paid
    
(320,000
)
    
(2,213,892
)
Proceeds from the exercise of warrants
    
6,960,278
      
22,387
  
Payment on short term loans
    
-
      
(3,550,177
)
Purchase of treasury shares
    
(6,945,950
)
    
-
  
 
               
Net cash provided by (used in) financing activities
    
(305,672
)
    
13,661,251
  
 
               
Effect of exchange rate changes on cash and cash equivalents
    
1,118,640
      
(535
)
 
               
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
    
(24,955,907
)
    
15,051,157
  
 
               
CASH & CASH EQUIVALENTS, BEGINNING BALANCE
    
79,333,729
      
2,782,026
  
 
               
CASH & CASH EQUIVALENTS, ENDING BALANCE
  
$
54,377,822
    
$
17,833,183
  
                 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                
Interest paid
  
$
-
    
$
116,315
  
Income taxes paid
  
$
2,170,198
    
$
565,418
  
 
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