Aoxin Tianli Group, Inc. Reports Second Quarter 2015 Results

WUHAN CITY, China, August 13, 2015 /PRNewswire/ -- Aoxin Tianli Group, Inc. (NASDAQ:ABAC) ("Aoxin Tianli" or the "Company"), a diversified company with businesses in hog farming, manufacture and marketing of electro-hydraulic servo-valves, and the development of optical fiber hardware and software solutions, today announced its financial results for the second quarter ended June 30, 2015.

"Thanks to a strong recovery in pork prices and an increase in sales volume for our retail specialty black hog pork products, we delivered another solid quarter, with revenues growing 32% Y/Y to $10.64 million and gross margin improving both Y/Y and sequentially to 23.3%", said Mr. Ping Wang, Chairman and Chief Executive Officer of Aoxin Tianli Group, Inc. "With the uptick in pork prices continuing into the third quarter and retail sales remaining strong, we are in a good position in the near term."

Mr. Wang continued, "As a further slowdown in China's economy during the second quarter started to take a toll on our emerging businesses, we remain confident in the long-term prospects of our servo and security & protection businesses. Additionally, the recent Chinese stock market turmoil has made it difficult for us to have any success on the acquisition front so far this year. However, we remain steadfast in our pursuit of growth and diversification through strategic acquisitions and investments under the guidance of the New Strategic Development Plan that we adopted last July and ask our investors and supporters to bear with us."

Second Quarter 2015 Financial Results:

Revenues

Revenues for the second quarter of 2015 increased by $2.56 million, or approximately 31.7%, to $10.64 million from $8.07 million for the same period of last year, thanks to the favorable hog pricing environment, increased retail sales volume, and solid contributions from the newly acquired servo and security & protection businesses that contributed $0.78 million, or 7.4% of total revenues.

Revenues for the second quarter of 2015 from hog farming, which include sales of regular breeder hogs, regular market hogs, and black hogs, increased by $1.65 million, or 21.0%, to $9.55 million for the second quarter of 2015 from $7.89 million for the same period of last year. The Company sold a total of 40,970 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $233 per hog during the second quarter of 2015, compared to 40,306 hogs sold and a blended average selling price of $196 per hog for the same period of last year.

Revenues for the second quarter of 2015 from regular breeder hog sales increased by 11.9% to $1.95 million with the number of regular breeder hogs sold increasing by 3.6% to 7,191 hogs and the average selling price of regular breeder hogs increasing by 8% to $271 per hog. Revenues for the second quarter of 2015 from regular market hog sales increased by 25.2% to $4.26 million as the number of regular market hogs sold increased by 2.2% to 20,656 hogs and the average selling price of regular market hogs increased by 22.6% to $206 per hog. Revenues for the second quarter of 2015 from black market hogs increased by 21.5% to $3.34 million with the number of black hogs sold decreasing slightly to 13,123 hogs and the average selling price of black hogs increasing by 21.5% to $254 per hog.

We sold 67,155 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.31 million for the second quarter of 2015. This compared to 39,568 kilograms sold at approximately $5 per kilogram and revenues of $0.18 million for the same period of last year. This growth, combined with the sales of black market hogs, led to $3.64 million in revenues from our black hog program.

Revenues from our servo business was $0.54 million, including $0.38 million from selling electro-hydraulic servo devices and relevant components and $0.16 million from providing maintenance services to customers, and accounted for 5.0% of total revenues for the second quarter of 2015.

Revenues from our security & protection business was $0.25 million, including $0.19 million from selling optical fiber invasion alarm systems and $0.06 million from selling education devices and providing relevant technical support and accounted for 2.4% of total revenues for the second quarter of 2015.

Gross profit

Cost of goods sold increased by $0.70 million, or 9.4%, to $8.16 million for the second quarter of 2015 from $7.45 million for the same period of last year. Cost of goods sold related to hog farming, retail, servo and security & protection were $7.59 million, $0.23 million, $0.23 million and $0.10 million, respectively, for the second quarter of 2015, compared to $7.28 million, $0.18 million for hog farming and retail, respectively, for the same period of last year. Overall gross profit increased by $1.86 million, or 299.5%, to $2.48 million for the second quarter of 2015 from $0.62 million for the same period of last year. Gross profit for the second quarter of 2015 for hog farming, retail, servo and security & protection were $1.96 million, $0.08 million, $0.30 million, and $0.15 million, respectively.

Overall gross margin was 23.3%, with gross margins for hog farming, retail, servo and security & protection segments 21%, 25%, 56% and 58%, respectively, for the second quarter of 2015. This compared to overall gross margin of 7.7%, and gross margins for hog farming and retail of 8% and 3%, respectively, for the same period of last year.

Operating profit

Total operating expenses, including general and administrative expenses and selling and marketing expenses, increased by $0.59 million, or 61.6%, to $1.54 million for the second quarter of 2015 from $0.95 million for the same period of last year. The increase was primarily the result of our new operating segments which incurred expenses of $0.14 million for our servo business and $0.21 million for our security & protection business, as well as a non-cash stock based compensation expenses of $0.14 million.

Operating income for the second quarter of 2015 was $0.94 million, compared to operating loss of $0.33 million for the same period of last year. Operating profit margin for the second quarter of 2015 was 8.9%, compared to operating loss margin of 4.1% for the same period of last year.

Net income

As a result of the foregoing, net income for the second quarter of 2015 was $0.92 million, compared to $0.56 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the second quarter of 2015 was $0.92 million, or $0.03 per diluted share. This compared to net income attributable to common shareholders of $0.56 million, $0.03 per diluted share, for the same period of last year.

Six Months Ended June 30, 2015 Financial Results:

Revenues

Revenues for the six months ended June 30, 2015 increased by $4.22 million, or approximately 23.8%, to $21.99 million from $17.76 million for the same period of last year. This increase was mainly driven by the favorable hog pricing environment during the second quarter of 2015, increased sales volume of specialty black hog pork products through retail, and solid contributions from the newly acquired servo and security & protection businesses that contributed $2.55 million, or 11.6% of total revenues.

Revenues for the six months ended June 30, 2015 from hog farming, which include sales of regular breeder hogs, regular market hogs, and black hogs, increased by $1.51 million, or 8.8%, to $18.64 million for the six months ended June 30, 2015 from $17.13 million for the same period of last year. The Company sold a total of 84,765 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $220 per hog for the six months ended June 30, 2015, compared to 81,658 hogs sold and a blended average selling price of $210 per hog for the same period of last year.

Revenues for the six months ended June 30, 2015 from regular breeder hog sales increased by 2.8% to $3.84 million with the number of regular breeder hogs sold increasing by 2.6% to 14,374 hogs and the average selling price of regular breeder hogs increasing by 0.4% to $267 per hog. Revenues for the six months ended June 30, 2015 from regular market hog sales increased by 2.2% to $8.16 million as the number of regular market hogs sold decreased by 1.9% to 41,999 hogs while the average selling price of regular market hogs increased by 4.3% to $194 per hog. Revenues for the six months ended June 30, 2015 from black market hogs increased by 22.6% to $6.64 million with the number of black hogs sold increasing 14.2% to 28,392 hogs and the average selling price of black hogs increasing by 7.3% to $234 per hog.

We sold 182,087 kilograms of specialty black hog pork products through retail at approximately $4 per kilogram, generating revenues of $0.80 million for the six months ended June 30, 2015. This compared to 129,052 kilograms sold at approximately $5 per kilogram and revenues of $0.63 million for the same period of last year. This growth, combined with the sales of black market hogs, led to $7.44 million in revenues from our black hog program.

Revenues from our servo business was $1.75 million, including $1.39 million from selling electro-hydraulic servo devices and relevant components and $0.37 million from providing maintenance services to customers, and accounted for 8.0% of total revenues for the six months ended June 30, 2015.

Revenues from our security & protection business was $0.79 million, including $0.37 million from selling optical fiber invasion alarm systems and $0.42 million from selling education devices and providing relevant technical support, and accounted for 3.6% of total revenues for the six months ended June 30, 2015.

Gross profit

Cost of goods sold increased by $1.55 million, or 9.9%, to $17.25 million for the six months ended June 30, 2015 from $15.71 million for the same period of last year. Cost of goods sold related to hog farming, retail, servo and security & protection were $15.25 million, $0.61 million, $1.02 million and $0.37 million, respectively, for the six months ended June 30, 2015, compared to $15.29 million, $0.42 million for hog farming and retail, respectively, for the same period of last year. Overall gross profit increased by $2.68 million, or 130.5%, to $4.73 million for the six months ended June 30, 2015 from $2.05 million for the same period of last year. Gross profit for the six months ended June 30, 2015 for hog farming, retail, servo and security & protection were $3.39 million, $0.19 million, $0.73 million, and $0.42 million, respectively.

Overall gross margin was 21.5%, with gross margins for hog farming, retail, servo and security & protection segments 18%, 24%, 42% and 53%, respectively, for the six months ended June 30, 2015. This compared to overall gross margin of 11.6%, and gross margins for hog farming and retail of 11% and 33%, respectively, for the same period of last year.

Operating profit

Total operating expenses, including general and administrative expenses and selling and marketing expenses, increased by $1.86 million, or 92.8%, to $3.87 million for the six months ended June 30, 2015 from $2.01 million for the same period of last year. The increase was primarily the result of our new operating segments which incurred expenses of $0.3 million for our servo business and $0.7 million for our security & protection business, as well as non-cash stock based compensation expenses of $0.74 million.

Operating income for the six months ended June 30, 2015 was $0.86 million, compared to $0.04 million for the same period of last year. Operating margin for the six months ended June 30, 2015 was 3.9%, compared to 0.3% for the same period of last year.

Net income

As a result of the foregoing, net income for the six months ended June 30, 2015 was $0.71 million, compared to $0.83 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the six months ended June 30, 2015 was $0.68 million, or $0.02 per diluted share. This compared to net income attributable to common shareholders of $0.96 million, $0.06 per diluted share, for the same period of last year.

Financial Condition

As of June 30, 2015, the Company had cash and cash equivalents of $46.81 million. Working capital as of June 30, 2015 was $53.90 million as compared to $47.52 million at December 31, 2014. Net cash provided by operating activities in the six months ended June 30, 2015 was $9.11 million, compared to $5.79 million for the same period of last year. Net cash provided by investing activities was $1.62 million for the six months ended June 30, 2015, compared to net cash used in investing activities of $1.09 million for the same period of last year. Net cash used in financing activities was $3.47 million for the six months ended June 30, 2015, compared to net cash provided by financing activities of $16.33 million for the same period of last year.

Company Update

On August 11, 2015, the Company entered into a hog farm sales agreement to sell two of its hog farms, including Farm 2 located in Nanyan Village, Hubei Province, with annual capacity of 10,000 hogs and Farm 3 located in Qunyi Village, Hubei Province, with annual capacity of 10,000 hogs, to Wuhan City Tianjian Agricultural Development Co., Ltd. for a total consideration of RMB 7.5 million (approximately $1.23 million).

Earnings Conference Call

Aoxin Tianli will host an earnings conference call and live webcast covering its second quarter 2015 financial results at 8:00 a.m. EDT on August 13, 2015, which is 8:00 p.m. in Beijing on August 13, 2015. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "AoxinTianli / ABAC".

For those unable to participate, an audio replay of the presentation will be available beginning approximately one hour after the end of the live call through August 28, 2015. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access ID No. 10070892.

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as Tianli Agritech, Inc., is a diversified company with businesses in hog farming, manufacturing and marketing of electro-hydraulic servo-valves, and the development of optical fiber hardware and software solutions. Under a New Strategic Development Plan adopted in July 2014, the Company plans to continue to diversify through targeted investments and acquisitions in selected high-growth industries such as equipment manufacturing, optoelectronics, new materials and new energy products, electromechanics and healthcare devices. The Company is headquartered in Wuhan City, Hubei Province.

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

For more information, please contact:

Tina Xiao
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com

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