WUHAN CITY, China, November 13, 2012 /PRNewswire/ -- Tianli Agritech, Inc. (NASDAQ:OINK - News), a leading producer of breeder and market hogs headquartered in Wuhan City, China, today announced its financial results for the quarter ended September 30, 2012.
Third Quarter 2012
Summarized Third quarter 2012 Results | |||
Q3 2012 | Q3 2011 | +/- | |
Sales | $6.6 million | $8.1 million | -19% |
Gross Profit | $0.6 million | $3.6 million | -83% |
Selling, General and Administrative Expenses | $1.6 million | $0.6 million | +166% |
Net Income | ($1.1 million) | $2.9 million | -138% |
EPS | ($0.10) | $0.29 | -134% |
Sales for the third quarter of 2012 fell 19% to $6.6 million primarily due to the drop in prices for market hogs and a reduction in the number of breeder hogs sold in the three months ended September 30, 2012 compared to the same period a year ago. The Company sold a combined total of 29,702 breeder and market hogs in the third quarter of 2012 compared to 25,519 hogs in the comparable period in 2011.
As a result of increased competition from exporters to China and softer demand from hog farms in China, sales of Tianli breeder hogs declined 26% in the third quarter of 2012. In terms of the number of breeders sold, Tianli sold 6,405 breeder hogs in the third quarter of 2012, down 11% from 7,169 breeder hogs sold in the same period last year. The average sales price for breeder hogs was $289, down 17% from the third quarter of 2011. Breeder hog revenues in the three months ended September 30, 2012 comprised 28% of revenues for the quarter.
Tianli sold approximately 27% more market hogs in the third quarter of 2012 than it did in the same period of 2011, though the average price per market hog decreased by 33% as a result of both lower market prices and the Company's decision to sell hogs at a younger age when they weigh less than they would at full maturity. As a result, sales revenue attributable to market hogs fell by approximately 16%. The primary reason for the reduction in the prices for market hogs in this quarter compared to 2011 was the competition from imported pork, which sell for less than domestic pork.
Sales by Products
(Dollar Figures Rounded - Percentages based on Actual Results) | |||||||||||||||||||
Q3 2012 | Q3 2011 | ||||||||||||||||||
Products | No. of Hogs | Sales | No. of Hogs | Sales | |||||||||||||||
Breeder Hogs | 6,405 |
$1.8 million | 7,169 |
$2.5 million | |||||||||||||||
Market Hogs | 23,297 |
$4.7 million | 18,350 |
$5.6 million | |||||||||||||||
Total | 29,702 |
$6.6 million | 25,519 |
$8.1 million | |||||||||||||||
Gross profit in the third quarter was $0.6 million, an 83% decrease from the same period last year. Gross margin was 9.5% in the third quarter of 2012 compared to 42% in the third quarter of 2011. The decline in gross margin is a result of lower sales prices and significantly higher feed costs. Gross margin for breeder and market hogs was 32% and 1%, respectively, for the third quarter of 2012.
Selling, general and administrative ("SG&A") expenses were $1.6 million in the third quarter of 2012, an increase of approximately $1.0 million from $0.6 million in the third quarter of 2011. The primary cause of the year-over-year increase in SG&A expenses was $1.1 million of non-cash stock-based compensation paid to the Company's sales and marketing agents and employees related to black hog sales.
Tianli generated an operating loss of $1.1 million in the three months ended September 30, 2012 compared to operating income of $2.9 million in the same period a year ago.
Net income from continuing operations for the three months ended September 30, 2012 was a loss of $1.1 million, down 139% from the same period last year. EPS per fully diluted share were ($0.10) compared to $0.29 for the comparable quarter last year. The weighted average number of shares outstanding was approximately 11.0 million and 10.1 million for the 2012 and 2011 periods, respectively.
"We are managing our business for the long term and are prepared to weather short term competitive forces," began Tianli's Chairwoman and CEO, Ms. Hanying Li. "Despite very challenging market conditions for breeder and market hogs in China currently, we are generating positive cash flows from operations. 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."
Year-to-Date 2012
Summarized Year to Date 2012 Results | |||
YTD 2012 | YTD 2011 | +/- | |
Sales | $19.7 million | $21.7 million | -9% |
Gross Profit | $ 2.7 million | $ 9.3 million | -71% |
Selling, General and Administrative Expenses | $ 2.7 million | $ 2.1 million | +31% |
Net Income* | ($0.1 million) | $ 7.2 million | -102% |
EPS* | ($0.01) | $0.71 | -101% |
*Net income and EPS from continuing operations | |||
Sales for the nine months ended September 30, 2012 were $19.7 million, down 9% from $21.7 million in the same period a year ago. Tianli sold 84,831 hogs in the first nine months of 2012 compared to 76,128 hogs sold in the corresponding period in 2011, an increase of 11%. Sales of breeder hogs and market hogs were $6 million and $13.7 million in the first nine months of 2012, down 23% and 2%, respectively, from the corresponding period a year ago.
Gross profit decreased 71% to $2.7 million, representing a gross margin of 14%.
Operating expenses were $2.7 million, up $0.7 million from $2.0 million in the first nine months of 2011. The Company had operating income of approximately $0.04 million compared to operating income of $7.2 million in the same period a year ago.
Net income from continuing operations for the nine months was a loss of $0.1 million compared to net income of $7.2 million in the year to date period in 2011. EPS for the first nine months of 2012 was ($0.01) based on 10.4 million weighted average shares outstanding.
Financial Position
As of September 30, 2012, the Company had $7.5 million in cash, compared to $6.5 million as of December 31, 2011. Working capital was $8.9 million, down from $12.0 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 $0.2 million at September 30, 2012. Inventories were $9.6 million, unchanged from the end of 2011.
Tianli generated approximately $4.7 million of cash from operating activities and spent $5.4 million on capital expenditures and breeding stock during the first nine months of 2012, primarily to support its Enshi Black Hog program. It is envisioned that Tianli will fund construction of up to 800 program farms by the end of this year, of which over 497 program farms have been completed and put into use as of September 30, 2012.
Business Updates
The Company began selling Black Hogs raised through the first 75 farms it has partnered with in Enshi during the second quarter of 2011. Through the third quarter of the year the Company has sold approximately 1,590 Black hogs to processors in the province who in turn sold Tianli's high-quality Black Hog meat at retail locations. The Company has also begun conversations with two major food retailers in northern China where its sales agents in an effort to secure retail placements. The average sales price per Black Hog is approximately 1,600 RMB, or 10% higher than the current market price for standard market hogs in China.
In March 2012, Tianli commenced construction of a 3,210 square meter feed facility located in Laifeng County, Enshi Area. Through the end of the second quarter, it has completed construction of the office building, warehouse and barns. Construction of the facility has been completed and the Company is awaiting receipt of appropriate certifications which will allow the facility to commence operations. The new feed facility can support 100,000 hogs.
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. 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.us
Web: http://www.mzgroup.com
TIANLI AGRITECH, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED BALANCE SHEETS | ||||
(AMOUNTS EXPRESSED IN US DOLLARS) | ||||
September 30, 2012 | December 31, 2011 | |||
(Unaudited) | ||||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ | 7,541,510 | $ | 6,507,742 |
Accounts receivable | 187,316 | 126,866 | ||
Inventories | 9,584,881 | 9,578,040 | ||
Advances to suppliers | 30,305 | - | ||
Prepaid expenses | 275,926 | 164,664 | ||
Restricted cash | 39,563 | - | ||
Loan to An Puluo | - | 1,101,582 | ||
Other receivables, net | 250,780 | 154,775 | ||
Assets - discontinued operations | - | 1,402,842 | ||
Total Current Assets | 17,910,281 | 19,036,511 | ||
Long-term prepaid expenses | 1,704,648 | 1,818,399 | ||
Plant and equipment, net | 21,921,400 | 17,676,999 | ||
Construction in progress | 2,616,700 | 3,126,317 | ||
Biological assets, net | 4,652,790 | 3,886,580 | ||
Land use rights, net | 1,493,989 | 1,522,709 | ||
Total Assets | $ | 50,299,808 | $ | 47,067,515 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities: | ||||
Short-term loans | $ | 6,330,116 | $ | 4,721,064 |
Accounts payable and accrued liabilities | 148,497 | 172,541 | ||
Due to An Puluo | - | 35,951 | ||
Other payables | 2,409,151 | 781,037 | ||
Due to related party | 125,574 | 120,326 | ||
Liabilities - discontinued operations | - | 1,198,544 | ||
Total Liabilities | 9,013,338 | 7,029,463 | ||
Stockholders' Equity: | ||||
Common stock ($0.001 par value, 50,000,000 shares | ||||
authorized, 11,135,000 and 10,135,000 shares issued | 11,135 | 10,135 | ||
Additional paid in capital | 14,665,306 | 13,520,276 | ||
Statutory surplus reserves | 2,416,647 | 2,416,647 | ||
Retained earnings | 21,692,200 | 21,795,072 | ||
Accumulated other comprehensive income | 2,501,182 | 2,295,922 | ||
Total Stockholders' Equity | 41,286,470 | 40,038,052 | ||
Total Liabilities and Stockholders' Equity | $ | 50,299,808 | $ | 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 September 30, | For the Nine Months Ended September 30, | |||||||
2012 | 2011 | 2012 | 2011 | |||||
Revenue | $ | 6,574,673 | $ | 8,090,596 | $ | 19,672,437 | $ | 21,667,991 |
Cost of goods sold | 5,953,024 | 4,495,248 | 16,947,240 | 12,391,691 | ||||
Gross profit | 621,649 | 3,595,348 | 2,725,197 | 9,276,300 | ||||
General and administrative expenses | 490,723 | 581,163 | 1,549,397 | 1,962,120 | ||||
Selling expenses | 1,131,133 | 29,379 | 1,132,386 | 91,689 | ||||
Income (loss) from operations | (1,000,207) | 2,984,806 | 43,414 | 7,222,491 | ||||
Other income (expense): | ||||||||
Interest expenses and bank charges | (115,429) | (77,334) | (294,787) | (186,307) | ||||
Subsidy income | - | 9,142 | 161,838 | 222,409 | ||||
Other income (expense) | (9,570) | 1,323 | (52,516) | (24,036) | ||||
Total other income (expense) | (124,999) | (66,869) | (185,465) | 12,066 | ||||
Income (loss) before income taxes | (1,125,206) | 2,917,937 | (142,051) | 7,234,557 | ||||
Income taxes | - | - | - | - | ||||
Net income (loss) from continuing operations | (1,125,206) | 2,917,937 | (142,051) | 7,234,557 | ||||
Discontinued operations: | ||||||||
Gain from operations of discontinued component, net of taxes | - | 26,436 | 39,179 | 26,436 | ||||
Net income (loss) | $ | (1,125,206) | $ | 2,944,373 | $ | (102,872) | $ | 7,260,993 |
Earnings (losses) per share: | ||||||||
Basic and diluted weighted average shares | 10,968,333 | 10,125,000 | 10,412,778 | 10,128,382 | ||||
Basic and diluted earnings (losses) per share from continuing operations | $ | (0.10) | $ | 0.29 | $ | (0.01) | $ | 0.72 |
Basic and diluted earnings per share from discontinued operations | $ | - | $ | - | $ | - | $ | - |
Comprehensive income (loss): | ||||||||
Net income (loss) | $ | (1,125,206) | $ | 2,944,373 | $ | (102,872) | $ | 7,260,993 |
Unrealized foreign currency translation adjustment | (64,111) | 675,322 | 205,260 | 1,136,741 | ||||
Comprehensive income (loss) | $ | (1,189,317) | $ | 3,619,695 | $ | 102,388 | $ | 8,397,734 |
TIANLI AGRITECH, INC. AND SUBSIDIARIES | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(AMOUNTS EXPRESSED IN US DOLLARS) | ||||
(UNAUDITED) | ||||
For the Nine Months Ended | ||||
2012 | 2011 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income (loss) from continuing operations | $ | (142,051) | $ | 7,234,557 |
Adjustments to reconcile net income to net cash | ||||
provided by operating activities: | ||||
Depreciation and amortization | 2,138,097 | 1,641,170 | ||
Amortization of prepaid rental expenses | 84,200 | - | ||
Bad debt expense | - | 112,640 | ||
Stock-based compensation | 1,146,030 | 237,926 | ||
Gain on disposal of biological assets | - | (209,502) | ||
Loss from disposal of construction in progress | 49,299 | - | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (59,837) | (122,318) | ||
Inventories | 47,047 | (3,607,070) | ||
Advances to suppliers | (30,356) | (30,332) | ||
Prepaid expenses | (161,227) | (126,547) | ||
Other receivables | (95,293) | 140,362 | ||
Accounts payable and accrued liabilities | (25,055) | (30,223) | ||
Other payables | 1,627,446 | 385,840 | ||
Net cash provided by operating activities from continuing operations | 4,578,300 | 5,626,503 | ||
Net cash provided by operating activities from discontinued operations | 154,042 | 1,521 | ||
Net cash provided by operating activities | 4,732,342 | 5,628,024 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Cash collected from loan to An Puluo | 1,109,614 | - | ||
Advance to An Puluo | - | (1,077,337) | ||
Purchase of intangible assets | - | (780,135) | ||
Payment for long-term prepaid expenses | - | (87,398) | ||
Purchase of plant and equipment | (143,875) | (4,828,899) | ||
Deposits for purchase of equipment | - | (153,905) | ||
Addition to construction in progress | (5,212,022) | (1,206,203) | ||
Proceeds from disposal of construction in progress | 509,430 | - | ||
Purchase of biological assets | (1,677,504) | (1,678,342) | ||
Proceeds from disposal of biological assets | - | 134,156 | ||
Net cash used in investing activities | (5,414,357) | (9,678,063) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Increase in restricted cash | (39,629) | - | ||
Repayment of short-term loans | (3,170,326) | - | ||
Proceeds from short-term loans | 4,755,489 | 3,078,107 | ||
Net cash provided by financing activities | 1,545,534 | 3,078,107 | ||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 170,249 | 522,654 | ||
NET INCREASE (DECREASE) IN CASH | 1,033,768 | (449,278) | ||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 6,507,742 | 7,983,793 | ||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 7,541,510 | $ | 7,534,515 |
SUPPLEMENTAL DISCLOSURES: | ||||
Cash paid during the period for: | ||||
Interest expense paid | $ | 312,157 | $ | 117,332 |
Income tax paid | $ | - | $ | - |
