CHINA RUITAI INTL (GREY:CRUI)

First Quarter Results:

"We are working through several short term challenges," stated Chairman Dianmin Ma of China Ruitai. "The good news is we have built a diversified customer base across four industries which we believe provide us with relatively stable revenues. Along with others in the industry, we increased prices to offset the rising input costs of cotton. While this caused some order delays as customers worked through less expensive inventory, we expect this action will result in higher sales and stable margins in the second half of this year. As our products are essential ingredients in so many end products which consumers use every day, such as toothpaste and medicines, and we are one of the largest companies serving this industry, we feel confident in a resumption of growth and improved profitability looking forward.  Our outlook for the balance of the year is positive despite some setbacks in the first quarter."

• Total revenue for the three months ended March 31, 2011 was $9.6 million, a decrease of 6% from $10.2 million in the comparable period in 2010
• The net income for the three months ended March 31, 2011 was $0.7 million compared to $1.9 million in the prior year's corresponding period. EPS was $0.04 and $0.09 in the first quarter of 2011 and 2010, respectively

GeoTeam Note: Fourth quarter 2010 vs. 2009 EPS was $0.06 vs. $0.05

The increase in revenue experienced by the Company was primarily attributable to the following four factors: i) we expanded our capacity by adding additional designed capacity of 500 tons of Ethyl Cellulose (EC) production into our production line, contributing to the increased sales revenue from the high priced pharmaceutical, food and cosmetics industries; ii) compared with our sales price per ton in 2009, we increased our average selling price by $250 per ton in 2010; iii) the demand of China RuiTai’s products remain high and we sold an additional 1,104 tons of cellulose ether and further expanded our market share in 2010 compared to 2009; iv) we were continuously shifting our product portfolio to more sales in high margin industries such as the pharmaceutical industry. Pharmaceutical sales revenue represented 46.12% of our total sales revenue in 2010 compared to 33.99% in 2009.

We have seen another year of consistent growth as we the top line and bottom line increased by 20%," began Chairman Dianmin Ma of China Ruitai. "With escalating demand for our product from pharmaceutical, food and cosmetics customers and a dedicated sales team catering to their needs, we anticipate further margin improvements as we move into 2011. We are well positioned to capture further market share by leveraging our recognized brand to win business. As the competitive landscape narrows due to smaller non-compliant facilities closing, we are optimistic about enhanced pricing power and leading position in the marketplace."

Guidance for 2010 and Outlook for 2011

Management is reaffirming 2010 guidance of $43 million in revenues, $7.0 in net income and $0.27 in earnings per share for the period ended December 31, 2010. The company expects to achieve gross margins of 30% or higher in the fourth quarter and for 2010.

China Ruitai is expanding its production facility which currently has 8,500 tons of production capacity annually. With some minor adjustments to the current production line, the Company anticipates it can increase capacity to 9,500 tons by the first quarter of 2011 with specific focus on producing more high-margin EC products for the pharmaceutical, food and cosmetic markets. This will help drive incremental growth during 2011.

Guidance for 2010

China Ruitai management anticipates cotton prices will regulate, and its promotional effort will produce re-orders of China Ruitai's products the balance of the year. Management is reaffirming its 2010 guidance of

• $43 million in revenues.
• $7.0 in net income.
• $0.27 in earnings per share.