Tianli Agritech Reports Third Quarter 2012 Results

              Tianli Agritech Reports Third Quarter 2012 Results

Company generated $4.7 million in cash from operations YTD2012

PR Newswire

WUHAN CITY, China, Nov. 12, 2012

WUHAN CITY, China, Nov. 12, 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
(Dollar Figures Rounded – Percentages based on Actual 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.ofHogs     Sales         No.ofHogs     Sales
              Sold            Revenues      Sold            Revenues
                                                           
Breeder Hogs  6,405                         7,169
                              $1.8 million                  $2.5 million
                                                           
Market Hogs   23,297                        18,350
                              $4.7 million                  $5.6 million
                                                           
Total         29,702                        25,519
                              $6.6 million                  $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
(Dollar Figures Rounded – Percentages based on Actual 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        $ 2.7 million $ 2.1 million +31%
Expenses
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            148,497              172,541
liabilities
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
 and outstanding on September   11,135               10,135
30, 2012 and December
 31, 2011)
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         2,501,182            2,295,922
income
Total Stockholders' Equity              41,286,470           40,038,052
Total Liabilities and Stockholders'  $ 50,299,808         $ 47,067,515
Equity



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 Nine Months Ended
                        September 30,                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          490,723         581,163      1,549,397      1,962,120
expenses
Selling expenses        1,131,133       29,379       1,132,386      91,689
Income (loss) from      (1,000,207)     2,984,806    43,414         7,222,491
operations
Other income
(expense):
Interest expenses and   (115,429)       (77,334)     (294,787)      (186,307)
bank charges
Subsidy income          -               9,142        161,838        222,409
Other income            (9,570)         1,323        (52,516)       (24,036)
(expense)
Total other income      (124,999)       (66,869)     (185,465)      12,066
(expense)
Income (loss) before    (1,125,206)     2,917,937    (142,051)      7,234,557
income taxes
Income taxes            -               -            -              -
Net income (loss)
from continuing         (1,125,206)     2,917,937    (142,051)      7,234,557
operations
Discontinued
operations:
Gain from operations
of discontinued         -               26,436       39,179         26,436
component, net of
taxes
Net income (loss)     $ (1,125,206)  $  2,944,373  $ (102,872)   $  7,260,993
Earnings (losses) per
share:
Basic and diluted
weighted average        10,968,333      10,125,000   10,412,778     10,128,382
shares
Basic and diluted
earnings (losses) per $ (0.10)       $  0.29       $ (0.01)      $  0.72
share from continuing
operations
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    (64,111)        675,322      205,260        1,136,741
adjustment
Comprehensive income  $ (1,189,317)  $  3,619,695  $ 102,388     $  8,397,734
(loss)



TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS EXPRESSED IN US DOLLARS)
(UNAUDITED)
                                                     FortheNineMonthsEnded
                                                     September30,
                                                     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       4,578,300     5,626,503
continuing operations
Net cash provided by operating activities from       154,042       1,521
discontinued operations
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                                    $ -           $ -

SOURCE Tianli Agritech, Inc.

Website: http://www.tianli-china.com
Website: http://www.mzgroup.com
 
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