Rino Intl (RINO) was a high flyer last year as revenues and earnings soared, but the stock began to sell off in January and continued to slide even as growth remained very impressive.  Now we know why.  As I’ve mentioned before, technicals always lead fundamentals.  That is, the stock will sell off long before the fundamentals turn sour.  Conversely, a stock will run well before the growth begins to appear.

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The price action in RINO was forecasting a bad quarter or two and with the company missing EPS estimates by .14/share by posting .30/share, you could call it a bad quarter.  While revenues were quite good (about 35% growth over year ago quarter), matching Wall St estimates, EPS dropped 40% over the year ago quarter.  The company was hit with higher steel costs and outsourcing costs (needed to meet project implementation timelines).

RINO’s desulphurization business provides the bulk of the revenues and experienced 32% growth (70% of biz).  Its wastewater treatment business represents about 20% of the company and experienced 50% growth while its anti-oxidation business represents about 10% of revenues and experienced 20% growth.

CEO Zou Dejun commented: “During the first quarter of 2010, we delivered measured revenue growth through the execution of several major projects, including both desulphurization and wastewater treatment systems.  We are pleased with the momentum in our business as evidenced by our backlog and expect a robust second half of the year as the State Environmental Protection Agency (SEPA) maintains a supportive policy to reduce the sulphur emissions for iron and steel producers, while aging wastewater infrastructure systems force prospective customers to accelerate purchase decisions. We are confident in meeting our projects for $225 million in revenue for 2010, representing 17% growth over 2009.”

Other highlights:

– construction began on new production facility in order to expand manufacturing capacity up to 300% (expected to by fully completed in about a year)
– began installation of first BOT desulphurization project with Shougang Steel
– current backlog of $110.5 million with 50% of that expected to be recognized as revenue in 2nd quarter

Shares of RINO are getting hit hard this morning, down about 10% in early trading.