WUHAN CITY, China, August 10, 2012 /PRNewswire-Asia/ -- Tianli Agritech, Inc. (NASDAQ:OINK), a leading producer of breeder and market hogs headquartered in Wuhan City, China, today announced its financial results for the quarter ended June 30, 2012.
Second Quarter 2012
Summarized Second Quarter 2012 Results | |||
Q2 2012 | Q2 2011 | +/- | |
Sales | $6.4 million | $7.7 million | -17% |
Gross Profit | $0.8 million | $3.2 million | -75% |
Selling, General and Administrative Expenses | $0.4 million | $0.6 million | -33% |
Net Income* | $0.3 million | $2.5 million | -87% |
EPS* | $0.03 | $0.24 | -88% |
*Net income and EPS from continuing operations
Sales for the second quarter of 2012 decreased 17% to $6.4 million primarily due to the drop in selling prices for market hogs and fewer breeder hogs sold in the three months ended June 30, 2012 compared to the same period a year ago. The Company sold 28,034 hogs in total compared to 27,589 hogs in the comparable period in 2011.
Breeder hog sales declined 26% due to soft market demand for breeder hogs. The Company sold 6,883 breeder hogs in the second quarter of 2012, down 24% from 9,012 breeder hogs sold in the same period last year. Pricing for breeder hogs remained relatively flat year over year. The Company sold approximately 14% more market hogs in the second quarter of 2012 than it did in the same period of 2011, while the average price per market hog decreased by 22%. As a result, sales revenue attributable to market hogs fell by approximately 11%. Breeder hog revenues in the three months ended June 30, 2012 comprised 33% of revenues for the quarter.
Sales by Products
(Dollar Figures Rounded - Percentages based on Actual Results)
Q2 2012 | Q2 2011 | ||||||||||||||||||
Products | No. of Hogs | Sales | No. of Hogs | Sales | |||||||||||||||
Breeder Hogs | 6,883 |
$2.1 million | 9,012 |
$2.8 million | |||||||||||||||
Market Hogs | 21,151 |
$4.3 million | 18,577 |
$4.8 million | |||||||||||||||
Total | 28,034 |
$6.4 million | 27,589 |
$7.7 million | |||||||||||||||
Gross profit was $0.8 million, a 75% decrease from the same period last year. Gross margin was 12.5% in the second quarter of 2012 compared to 42% in the second quarter of 2011 as a result of significantly higher feed costs, the sale of fewer breeder hogs in Q2 2012 and the decrease in prices received for market hogs.
Selling, general and administrative (SG&A) expenses were $0.4 million in the second quarter of 2012, a decrease of approximately $0.2 million from $0.6 million in the second quarter of 2011. Operating income of $0.4 million in the three months ended June 30, 2012 was down 86% from the corresponding period a year ago. Operating margins were 8.5% and 27.7% in the second quarter of 2012 and 2011, respectively.
Net income from continuing operations for the three months ended June 30, 2012 was approximately $0.3 million, down 89% from the same period last year. Earnings per fully diluted share were $0.03 compared to $0.24 last year. The weighted average diluted shares outstanding were approximately 10.1 million for both periods.
"We are managing our business for the long term," began Tianli's Chairwoman and CEO, Ms. Hanying Li. "Despite very challenging market conditions for breeder and market hogs in China, we still generated positive cash flows and remained profitable. Our ability to quickly turn our hog inventory into cash, along with our investments in our Black Hog program, differentiates Tianli from other hog operators. We remain focused on maintaining a solid financial position in order to capitalize on the ongoing industry consolidation."
First Half 2012
Summarized First Half 2012 Results | |||
1H 2012 | 1H 2011 | +/- | |
Sales | $13.1 million | $13.6 million | -4% |
Gross Profit | $2.1 million | $5.7 million | -63% |
Selling, General and Administrative Expenses | $1.1 million | $1.4 million | -27% |
Net Income* | $1.0 million | $4.3 million | -76% |
EPS* | $0.10 | $0.43 | -77% |
*Net income and EPS from continuing operations
Sales for the six months ended June 30, 2012 was $13.1 million, down 4% from $13.6 million in the same period a year ago. Tianli sold 55,129 hogs in the first half of 2012 compared to 50,609 hogs sold in the first half of 2011, an increase of 9%. Sales of breeder hogs and market hogs were $4.1 million and $9.0 million in the first six months of 2012, down 21% and up 8%, respectively, from the corresponding period a year ago.
Gross profit decreased 63% to $2.1 million, representing a gross margin of 16.1%.
Operating expenses were $1.0 million, down 27% from $1.4 million in the first half of 2011. Operating income fell 75% to $1.0 million from $4.2 million in the prior year period.
Net income from continuing operations was $1.0 million compared to $4.3 million in the first half of 2011. EPS for the first six months of 2012 was $0.10 based on 10.1 million weighted average diluted shares outstanding.
Financial Position
As of June 30, 2012, the Company had $5.7 million in cash, compared to $6.5 million as of December 31, 2011. Working capital was $11.1 million, down from $12 million as of December 31, 2011. Because the Company conducts its hog sales on cash on delivery basis, it has low levels of accounts receivable outstanding, which totaled $0.13 million at June 30, 2012. Inventories were $9.2 million compared to $9.6 million at the end of 2011.
Tianli generated approximately $4 million in cash from operating activities and spent $4.1 million on capital expenditures and breeding stock during the first six months of 2012, primarily to support its Enshi Black Hog program. It is envisioned that we will fund construction of up to 1,000 program farms by the end of this year, of which over 405 program farms have been completed and put into use as of June 30, 2012. Additionally, it has spent $1.27 million on another 92 farms that will become operational during the third quarter of 2012. Spending on construction of farms for the Black Hog Program continues and as of today, in addition to the 92 farms under construction as of the end of the second quarter, there are additional farms in process. The goal is to construct and provide sows for farms having a production capacity of 40,000 hogs during 2012 with a long run target of an annual capacity of 1 million hogs.
Business Updates
Tianli's 11th farm, designed to raise Black Hogs, has approximately 900 breeder hogs and over 2,000 market Hogs in stock. The Company expects to expand the breeder hog base to approximately 3,500 by the end of 2012.
The Company began selling Black Hogs raised through the 405 farms it has partnered within Enshi during the last week of July. The average sales price per Black Hog is approximately 1,600 RMB, or 10% higher than the current market price for normal market hogs in China. The Company expects to sell approximately 1,000 Black Hogs by the end of August 2012.
In March 2012, Tianli commenced construction of a 3,210 square meter feed facility located in Laifeng County, Enshi Area. Through the end of July, it has completed construction of the office building, warehouse and barns. Once complete, the new feed facility will be capable of producing up to 30,000 tons of feed to support 100,000 hogs. By adding shifts, the facilities can double production to 60,000 tons of feed a year in support of 200,000 hogs. Management anticipates completing construction by the end of September 2012 and to commence formal operations in November 2012.
Second Quarter 2012 Conference Call
To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "Tianli Agritech Second Quarter Conference Call".
Conference Call | |
Date: | Friday, August 10, 2012 |
Time: | 8:00 am Eastern Time, US |
Conference Line Dial-In (U.S.): | +1-877-317-6776 |
International Dial-In: | +1-412-317-6776 |
Conference ID: | Tianli Agritech First Quarter Conference Call or |
Webcast link: | http://webcast.mzvaluemonitor.com/Home/Login/813a0eae-4dc5-41db-a6f6-8c769f6d5eeb |
Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through August 17,2012. To listen, please call +1-877-344-7529 within the United States or +1-412-317-0088 if calling internationally. Conference call code for replay is 10017419.
This call is being webcast by MZ Technologies and can be accessed by clicking on the following link: http://webcast.mzvaluemonitor.com/Home/Login/813a0eae-4dc5-41db-a6f6-8c769f6d5eeb
About Tianli Agritech, Inc.
Tianli Agritech, Inc. is in the business of breeding, raising and selling hogs in the People's Republic of China. The company is focused on growing high quality hogs for sale for breeding and meat purposes. The company conducts genetic, breeding and nutrition research to steadily improve its production capabilities.
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. Specifically, there can be no guaranty that the offering mentioned herein will close. 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 regulation, 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 the cautionary statements 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:
Company - US
Tianli Agritech, Inc.
Mr. Simon Guo
Vice President and US Representative
Phone:+1-347-343-0580
Email: simon@tianli-china.com
Web: http://www.tianli-china.com
Company - CHINA
Tianli Agritech, Inc.
Ms. Joyce Shen
Administrative Secretary
Phone: 86-27-82740726 x 895
Email: ir@tianli-china.com
Web: http://www.tianli-china.com
Investor Relations
Mr. John Mattio
MZ Group, SVP
Phone: (212) 730-7130
Email: john.mattio@mzgroup.com
Web: http://www.mz-ir.com
TIANLI AGRITECH, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(AMOUNTS EXPRESSED IN US DOLLARS) | ||||
June 30, 2012 | December 31, 2011 | |||
(Unaudited) | ||||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ | 5,697,854 | $ | 6,507,742 |
Accounts receivable | 127,265 | 126,866 | ||
Inventories | 9,207,605 | 9,578,040 | ||
Advances to suppliers | 226,648 | - | ||
Prepaid expenses | 199,550 | 164,664 | ||
Loan to An Puluo | - | 1,101,582 | ||
Other receivables | 251,182 | 154,775 | ||
Assets - discontinued operations | - | 1,402,842 | ||
Total Current Assets | 15,710,104 | 19,036,511 | ||
Long-term prepaid expenses | 1,735,345 | 1,818,399 | ||
Plant and equipment, net | 21,031,864 | 17,676,999 | ||
Construction in progress | 1,358,505 | 3,126,317 | ||
Biological assets, net | 4,645,060 | 3,886,580 | ||
Land use rights, net | 1,508,825 | 1,522,709 | ||
Total Assets | $ | 45,989,703 | $ | 47,067,515 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities: | ||||
Short-term loans | $ | 2,345,892 | $ | 4,721,064 |
Accounts payable and accrued liabilities | 136,231 | 172,541 | ||
Due to An Puluo | - | 35,951 | ||
Other payables | 2,041,411 | 781,037 | ||
Due to related party | 125,725 | 120,326 | ||
Liabilities - discontinued operations | - | 1,198,544 | ||
Total Liabilities | 4,649,259 | 7,029,463 | ||
Stockholders' Equity: | ||||
Common stock ($0.001 par value, 50,000,000 shares | ||||
authorized, 10,135,000 shares issued and outstanding on June 30, 2012 and December 31, 2011) | 10,135 | 10,135 | ||
Additional paid in capital | 13,530,963 | 13,520,276 | ||
Statutory surplus reserves | 2,416,647 | 2,416,647 | ||
Retained earnings | 22,817,406 | 21,795,072 | ||
Accumulated other comprehensive income | 2,565,293 | 2,295,922 | ||
Total Stockholders' Equity | 41,340,444 | 40,038,052 | ||
Total Liabilities and Stockholders' Equity | $ | 45,989,703 | $ | 47,067,515 |
TIANLI AGRITECH, INC. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||||||
(AMOUNTS EXPRESSED IN US DOLLARS) | ||||||||
(UNAUDITED) | ||||||||
For the Three Months Ended | For the Six Months Ended | |||||||
2012 | 2011 | 2012 | 2011 | |||||
Revenue | $ | 6,391,343 | $ | 7,670,429 | $ | 13,097,764 | $ | 13,577,395 |
Cost of goods sold | 5,589,803 | 4,452,623 | 10,994,216 | 7,896,443 | ||||
Gross profit | 801,540 | 3,217,806 | 2,103,548 | 5,680,952 | ||||
General and administrative expenses | 425,207 | 610,983 | 1,058,674 | 1,380,957 | ||||
Selling expenses | 1,253 | 25,128 | 1,253 | 62,310 | ||||
Income from operations | 375,080 | 2,581,695 | 1,043,621 | 4,237,685 | ||||
Other income (expense): | ||||||||
Interest expenses and bank charges | (85,692) | (98,700) | (179,358) | (108,973) | ||||
Subsidy income | 27,339 | 22,970 | 161,986 | 213,267 | ||||
Other income (expense) | (44,927) | (26,814) | (43,094) | (25,359) | ||||
Total other income (expense) | (103,280) | (102,544) | (60,466) | 78,935 | ||||
Income before income taxes | 271,800 | 2,479,151 | 983,155 | 4,316,620 | ||||
Income taxes | - | - | - | - | ||||
Net income from continuing operations | 271,800 | 2,479,151 | 983,155 | 4,316,620 | ||||
Discontinued operations: | ||||||||
Gain from operations of discontinued component, net of taxes | 43,836 | - | 39,179 | - | ||||
Net income | $ | 315,636 | $ | 2,479,151 | $ | 1,022,334 | $ | 4,316,620 |
Earnings per share: | ||||||||
Basic and diluted weighted average shares | 10,135,000 | 10,125,000 | 10,135,000 | 10,125,000 | ||||
Basic and diluted earnings per share from continuing operations | $ | 0.03 | $ | 0.24 | $ | 0.10 | $ | 0.43 |
Basic and diluted earnings per share from discontinued operations | $ | - | $ | - | $ | - | $ | - |
Comprehensive income: | ||||||||
Net income | $ | 315,636 | $ | 2,479,151 | $ | 1,022,334 | $ | 4,316,620 |
Unrealized foreign currency translation adjustment | 21,566 | 273,638 | 269,371 | 461,419 | ||||
Comprehensive income | $ | 337,202 | $ | 2,752,789 | $ | 1,291,705 | $ | 4,778,039 |
TIANLI AGRITECH, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(AMOUNTS EXPRESSED IN US DOLLARS) | ||||
(UNAUDITED) | ||||
For the Six Months Ended June 30, | ||||
2012 | 2011 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ | 1,022,334 | $ | 4,316,620 |
Adjustments to reconcile net income to net cash | ||||
provided by operating activities: | ||||
Depreciation and amortization | 1,487,841 | 979,443 | ||
Amortization of prepaid rental expenses | 96,293 | - | ||
Bad debt expense | - | 104,245 | ||
Stock-based compensation | 10,687 | 173,581 | ||
Gain on disposal of biological assets | - | (168,710) | ||
Loss from disposal of construction in progress | 49,344 | - | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 519 | (67,791) | ||
Inventories | 440,097 | (2,324,369) | ||
Advances to suppliers | (226,871) | 707,637 | ||
Prepaid expenses | (149,952) | 79,307 | ||
Other receivables | (40,618) | (1,088,237) | ||
Accounts payable and accrued liabilities | (37,595) | 42,602 | ||
Other payables | 1,257,271 | - | ||
Net cash provided by operating activities from continuing operations | 3,909,350 | 2,754,328 | ||
Net cash used in operating activities from discontinued operations | 114,969 | - | ||
Net cash provided by operating activities | 4,024,319 | 2,754,328 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Cash collected from loan to An Puluo | 1,110,635 | - | ||
Payment for long-term prepaid expenses | - | (85,701) | ||
Purchase of plant and equipment | (161,998) | (1,693,392) | ||
Purchase of farms | - | (2,152,543) | ||
Addition to construction in progress | (2,628,812) | (2,198,927) | ||
Proceeds from disposal of construction in progress | 571,025 | - | ||
Purchase of biological assets | (1,346,696) | (1,515,063) | ||
Proceeds from disposal of biological assets | - | 267,732 | ||
Net cash used in investing activities | (2,455,846) | (7,377,894) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Increase in restricted cash | - | (305,759) | ||
Repayment of short-term loans | (3,173,243) | - | ||
Proceeds from short-term loans | 761,578 | 3,057,590 | ||
Net cash provided by (used in) financing activities | (2,411,655) | 2,751,831 | ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 33,304 | 137,456 | ||
NET DECREASE IN CASH | (809,888) | (1,734,279) | ||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 6,507,742 | 7,983,793 | ||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 5,697,854 | $ | 6,249,514 |
SUPPLEMENTAL DISCLOSURES: | ||||
Cash paid during the period for: | ||||
Interest expense paid | $ | 191,357 | $ | 36,075 |
Income tax paid | $ | - | $ | - |
