China Kangtai Cactus Biotech Q3 Revenue Up 39% To $13.3M; Q3 Operating Income Up 72% To $5.38M; EPS $0.18; Net Income Up 42% To $4M. YTD Revenue Up 23% To $29.2M; Operating Income Up 71% To $11.26M

China Kangtai Cactus Biotech Inc. (OTCBB: CKGT), a vertically integrated grower, developer, manufacturer and marketer of a variety of cactus-based products in China, announced today that revenue for the third quarter of 2011 increased 39% to $13.3 million, compared to $9.5 million in the same period of 2010. Income from operations rose 72% to $5.4 million, compared to $3.1 million in the same period of 2010. Net income for the third quarter of 2011 increased 42% to $3.99 million or $0.18 per diluted share compared to $2.8 million for the same period of 2010, or $0.13 per diluted share.

Third Quarter Highlights

• Revenue for the third quarter of 2011 increased 39% to $13.3 million, up from $9.5 million recorded in the same period of 2010.
• Income from operations increased 72% to $5.38 million, compared to $3.12 million in the third quarter of 2010.
• Net income increased 42% to $3.99 million or $0.18 per diluted share versus $2.8 million in the third quarter of 2010, or $0.13 per diluted share.
• Gross profit margin decreased to 37% compared with 38% in Q3 of 2010 as a result of changes in product mix.

Q3 Product Categories Performance

• Sales of cactus cigarettes were up 266% to $2.4 million, from $0.66 million in Q3 2010.
• Nutraceuticals revenue increased 37% to $4.9 million, up from $3.6 million recorded in Q3 2010.
• Cactus feed increased 56% to $2.1 million, up from $1.4 million recorded in the third quarter of 2010.
• Beverage sales decreased 19% to $3.2 million from $3.9 million recorded in the third quarter of 2010 as the company discontinued certain product lines that were not profitable and no longer competitive.
• Raw & intermediate material increased 2729% to $655,996 from $23,186 recorded in the third quarter of 2010.

Nine Months Financial Highlights

• Revenue for the first nine months of 2011 increased 23% to $29.2 million, up from $23.8 million recorded in the same period of 2010.
• Income from operations increased 71% to $11.3 million, compared to $6.6 million in the first nine months of 2010.
• Net income increased 6% to $8.7 million or $0.39 per diluted share versus $8.2 million or $0.38 per diluted share in the first nine months of 2010.
• Gross profit margin increased to 36% compared with 35% in the first nine months of 2010.

Nine Months Product Categories Performance

• Sales of cactus cigarettes increased 231% to $5.67 million from $1.7 million recorded in the first nine months of 2010.
• Nutraceutical sales revenue increased 30% to $11.36 million, up from $8.7 million in the same period of 2010.
• Raw & intermediate material sales decreased 20% to $1.4 million from $1.7 million recorded in the first nine months of 2010.
• Cactus feed increased 52% to $4.8 million, up from $3.2 million recorded in the first nine months of 2010.
• Beverage sales decreased 29% to $6.0 million from $8.5 million recorded in the same period of 2010 reflecting the company’s discontinuance of certain product lines that were not profitable and no longer competitive.

Liquidity and Capital Resources

As of September 30, 2011, cash and cash equivalents were $5.2 million. Accounts receivable net of allowance was $12.16 million. Net cash provided by operating activities was $1.9 million in the nine months ended September 30, 2011, a decrease from $6.9 million for the same period in 2010. Net cash provided by investing activities was $112,657 in the nine months ended September 30, 2011. As of November 10, 2011, the number of shares of the company’s common stock issued and outstanding was 22,355,527.