Tiens Biotech revenue rose in Q1, but costs rose faster

Tiens Biotech revenue rose in Q1, but costs rose faster

Tiens Biotech Group (USA), Inc. announced financial results for the quarter ended March 31, 2011. Revenue for the first quarter of 2011 was $13.1 million, compared to $11.4 million for 2010.

Tiens Biotech Group (USA), Inc. (the "Company" or "Tiens", NYSE AMEX: TBV), www.tiens-bio.com , a company dedicated to the research, development, manufacturing, and marketing of nutrition supplement products, including wellness products and dietary supplements, announced financial results for the quarter ended March 31, 2011.

Revenue for the first quarter of 2011 was $13.1 million, compared to $11.4 million for 2010.

Net income for first quarter of 2011 was $2.9 million, or $0.04 per share, compared to $3.6 million, or $0.05 per share for 2010.

The 14.4% increase in revenue for the first quarter of 2011 mainly resulted from a 21.2% increase in domestic sales as compared to the year-ago period. There were two primary reasons for the robustness of the domestic market. First, distributors rushed to increase inventory in advance of the planned price increases for some products that were scheduled for March 2011. Additionally, Tiens began to see the effects of the long-awaited direct selling license that was awarded by the Ministry of Commerce of the People's Republic of China on March 11, 2011. On the international front, Tiens experienced a modest 4.6% increase as a result of increased sales to South Africa.

Net income, however, was negatively impacted by an increase of $1.4 million in selling, general and administrative expenses. This increase was primarily responsible for the 18.3% decrease in net income for the quarter and was mainly due to increases in depreciation related to the transfer of construction in progress to fixed assets.

Other Highlights

Cost of sales were $4.1 million in 2011 compared to $3.4 million in 2010, an increase of 20.2%. This increase was primarily due to the corresponding increase in sales. However, cost of sales rose at a higher rate than sales overall, as a result of a reduction in sales of the Company's higher margin products.

Gross profit increased by 11.9% to $8.9 million in 2011, compared to $8.0 million in 2010. The gross profit margin for 2011 was 68.3% compared to 69.8% for the same period in 2010.

Selling, general and administrative expenses increased by 39.3% to $4.9 million in 2011, compared to $3.5 million in 2010. The increase was primarily due to the aforementioned increases in depreciation.

As of March 31, 2011, Tiens had $130.7 million of retained earnings and total shareholders' equity of $190.1 million.

Jinyuan Li, Chairman, President and CEO of Tiens, said, "We are pleased by the increase in sales this quarter and expect our new domestic selling license to be a growing contributor to revenue in the months and years ahead. In the international arena, we are confident that our operations will gradually improve as worldwide economic conditions continue to recover. Likewise, operational improvements made at the distributor level should also boost results over time. Our commitment to both domestic and international growth remains steadfast as we continue to manage our business through the economic recovery and look ahead toward further execution of our strategic growth plans in both China and abroad."

About Tiens Biotech Group (USA), Inc. www.tiens-bio.com

Tiens Biotech Group (USA), Inc. TBV 0.00% conducts its business operations from Tianjin, People's Republic of China. Tiens primarily engages in the research, development, manufacturing and marketing of nutrition supplement products, including wellness products and dietary supplements.

Tiens derives its revenues principally from product sales to affiliated companies in China and internationally in 45 countries. Since its establishment, Tiens has developed and produced 37 nutrition supplements, which include wellness products and dietary supplements. Tiens develops its products at its own product research and development center, which employs highly qualified professionals in the fields of pharmacology, biology, chemistry and fine chemistry. Tiens has obtained all required certificates and approvals from government regulatory agencies to manufacture and sell its products in China.

In China, Tiens conducts the marketing and sales of its products through its affiliated company, Tianshi Engineering. Tianshi Engineering markets and sells Tiens' products in China through chain stores, domestic affiliated companies, and its 87 branches. Outside of China, Tiens sells its products to affiliated companies in 45 countries who in turn sell through an extensive direct sales force, or multi-level marketing sales force. The Company's direct sales marketing program is subject to governmental regulation in each of these countries.

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