Tianli Agritech Reports Fourth Quarter and Full Year 2012 Results

      Tianli Agritech Reports Fourth Quarter and Full Year 2012 Results

Company generated $5.6 million in cash flow from operations in 2012

PR Newswire

WUHAN CITY, China, March 14, 2013

WUHAN CITY, China, March 14, 2013 /PRNewswire/ -- Tianli Agritech, Inc.
(NASDAQ:OINK) ("Tianli" or the "Company"), a leading producer of breeder hogs,
market hogs and black hogs headquartered in Wuhan City, China, today announced
its financial results for the fourth quarter and twelve month period ended
December 31, 2012.

"2012 proved to be a very challenging year for Tianli due to unstable market
conditions. As a result, we saw revenue decline for the first time in our
company's history," began Tianli's Chairwoman and CEO, Mrs. Hanying Li.
"Looking ahead, we expect gradual recovery of pork prices in coming quarters.
We remain confident in our long term growth prospects, strong financial
position and ongoing ability to generate cash. With our black hog program in
Enshi Prefecture continuing to make significant progress, we believe Tianli is
well positioned to take full advantage of the ongoing industry consolidation
and regain its growth momentum in coming years." 

Q4 2012 Highlights:

                                    For the Three Months Ended December 31,
($ thousands, except per share      2012             2011             % Change
data)
Revenue                             $         $         -2%
                                    6,857           6,970
Gross margin                        10.6%            19.0%            -44%
Operating margin                    -0.1%            11.9%            -101%
Net income from continuing          (110)            660              -117%
operations
Diluted earnings per share          (0.01)           0.08             -112%

Revenue for the fourth quarter of 2012 fell 2% to $6.9 million primarily due
to decline in market hog prices. The Company sold a total of 30,865 breeder
and market hogs in Q4 2012 compared to 25,472 hogs in Q4 2011. Revenue from
breeder hog sales increased 13% to $1.8 million in Q4 2012 with number of
breeder hogs sold increasing 19% to 6,636 hogs and average selling price of
breeder hogs decreasing 5% to $278 per hog. Revenue from market hog sales
decreased 6% from $5.3 million in Q4 2011 to $5.0 million in Q4 2012 as number
of market hogs sold grew 22% to 24,229 hogs and average selling price of
market hogs declined 23% to $207 per hog. The decline in average selling price
of market hogs was mainly due to competition from imported pork, which sells
for less than domestic pork.

        For the Three Months Ended December 31,
        2012                                 2011
        No. of     Average    Sales          No. of     Average    Sales
        HogsSold  Price/Hog  ($thousands)  HogsSold  Price/Hog  ($thousands)
                   ($)                                  ($)
Breeder            $      $                    $      $     
hogs    6,636              1,846         5,589         292  1,634
                   278
Market  24,229     207        5,011          19,883     268        5,336
hogs
Total   30,865     222        6,857          25,472     274        6,970

Gross profit in Q4 2012 was $0.7 million, a 45% decrease from the same period
of last year. Gross margin of 10.6% compared to 19.0% for the fourth quarter
of 2011. Higher feed costs and lower pork prices contributed to the
deterioration of gross margin.

Selling, general and administrative expenses increased $0.2 million to $0.7
million in Q4 2012. The increase was primarily due to our promotional
marketing effort to sell our black hogs. Operating margin in Q4 2012 was
(0.1%), compared to 11.9% for the same period of last year.

Net income (loss) from continuing operations in Q4 2012 was ($0.1) million,
compared to $0.7 million in Q4 2011. The material decrease in net income was
primarily the result of the deterioration in gross margin and increase in
operating expenses. Earnings (loss) per diluted share were ($0.01), compared
to $0.08 in Q4 2011.

FY 2012 Highlights

                             For the Year Ended December 31,
($ thousands, except per     2012                 2011                % Change
share data)
Revenue                      $              $             -7.4%
                             26,529              28,638
Gross margin                 13.0%                37.0%               -64.8%
Operating margin             0.1%                 28.1%               -99.5%
Net income from continuing   (252)                7,895               NM
operations
Diluted earnings per share   (0.02)               0.80                NM

Revenue decreased 7.4% to $26.5 million for the year ended December 31, 2012
with total hogs sold increasing 14% to 115,696 hogs and average selling price
decreasing 19% to $229 per hog. Revenue from breeder hog sales was $7.8
million in 2012, down 17% from $9.4 million in 2011 with number of breeder
hogs sold and average selling price declining 10% and 7%, respectively. The
decline in breeder hog sales was mainly due to increase in feed cost
throughout the year which caused hog farmers to reduce their purchase of
breeder hogs. Revenue from market hog sales decreased 3% from $19.3 million in
2011 to $18.7 million in 2012 as number of market hogs sold grew 24% and
average selling price declined 22% year-over-year. Our revenue from market hog
sales was adversely impacted by decreased pork prices caused by an oversupply
of pork and China's efforts to control pork prices. Since retail pork price
reached its peak level in 2011, both domestic hog production and pork imports
had continued to expand, leading to an oversupply of hogs and continued slide
of pork prices.

        For the Year Ended December 31,
        2012                                 2011
        No. of     Average    Sales          No. of     Average    Sales
        HogsSold  Price/Hog  ($thousands)  HogsSold  Price/Hog  ($thousands)
                   ($)                                  ($)
Breeder            $      $                    $      $     
hogs    26,690             7,821         29,654        316  9,374
                   293
Market  89,006     210        18,708         71,946     268        19,264
hogs
Total   115,696    229        26,529         101,600    282        28,638

Gross profit margin decreased to 13% in 2012 from 37% in 2011. Gross margins
for breeder hogs were 31% and 47% in the years 2012 and 2011, respectively.
Gross margins for market hogs were 5% and 32% in the years of 2012 and 2011,
respectively. Higher feed costs and lower pork prices contributed to the
deterioration of gross margin for both breeder hogs and market hogs.

Selling, general and administrative expenses increased $0.9 million to $3.4
million in 2012. The increase was primarily due to non-cash expense of $1.1
million resulting from the issuance of 1,000,000 common shares to our
marketing consultants and employees related to the promotion of black hog
sales.

Net loss from continuing operations in 2012 was $0.3 million, compared to net
income from continuing operations of $7.9 million in 2011. The material
decrease in net income was primarily the result of the $2.1 million decrease
in revenue, $5.0 million increase in cost of goods sold, and a $1.1 million
non-cash expense resulting from the issuance of 1,000,000 common shares.
Diluted earnings (loss) per share for 2012 and 2011 were ($0.02) and $0.80,
respectively.

Financial Position

As of December 31, 2012, the Company had $7.5 million in cash and cash
equivalents, compared to $6.5 million as of December 31, 2011. The Company
generated approximately $5.6 million of cash flow from operations during the
year of 2012. Working capital as of December 31, 2012 was $9.0 million as
compared to $12.0 million at December 31, 2011, reflecting $7.0 million
investment in rearing facilities at our black hog program, the collection of
$1.1 million previously loaned to An Puluo and the proceeds of $1.1 million
related to the investment from Xiamen Reijin Equity Investment Fund ( "XMRJ").

Recent Developments

On January 28, 2013, Tianli-Xiduhei® black pork meat made its official debut
at Hua Lian and Yong Hui supermarket chains in Beijing. Beijing is the largest
pork consuming market in China with an estimated 10 million hogs consumed
annually.

On December 10, 2012, Tianli completed the construction of a new black hog
feed facility in Enshi Prefecture. The new facility has an annual production
capacity of 30,000 tons, sufficient to supply 100,000 Black Hogs. Tianli
expects the feed facility to commence full production in Q2 2013.

On November 5, 2012, XMRJ agreed to invest RMB10 million or approximately
US$1.6 million in exchange for 40% equity interest in Hubei Tianzhili Breeder
Hog Co., Ltd. ("Tianzhili").Tianzhili is the wholly-owned subsidiary of
Wuhan Fengze Agricultural Science & Technology Development Co., Ltd., our
variable interest entity in China. XMRJ also agreed to provide interest-free
loan of RMB5 million, or approximately US$0.8 million, to Tianzhili. As of
December 31, 2012, Tianzhili received $1.1 million cash proceeds from XMRJ
with the remaining $0.5 million due in the first half of 2013.

On October19, 2012, Tianli held its annual meeting of shareholders. Jianguo
Hu and Zihui Mo were elected Class II Directors for a term of three years and
Yang Chen was elected Class I Director for a term of two years. RBSM LLP,
previously known as Sherb & Co. LLP, was also ratified as our independent
registered public accountant for the fiscal year ended December 31, 2012.

Black Hog Program Update 

In May of 2011, Tianli announced the development of its Black Hog program
through which Tianli will breed and sell high-value Black Hog meat. Black Hog
meat is known for its increased nutritional value and better taste and thus
commands a premium to white hog meat sold at retail. The Company will work
with all of its farmers and farming co-ops in the Enshi Prefecture in Hubei
Province to ensure that the quality of the breed is maintained and to develop
standardized programs for the feed and care of the hogs. As part of this
effort, Tianli will develop an appropriate feed mix, which the farmers will
purchase from the Company. To be eligible to participate in the program
farmers will need to be able to maintain no less than 6 sows or produce at
least 100 black hogs per year. By the end of 2012, the Company had funded and
completed the construction of 645 farms for local farmers. The Company also
expects to complete the construction of additional 120 farms by the end of
March 2013. The long term target is to fund and construct 10,000 farms with an
annual capacity of 1,000,000 black hogs.

The Company expects to benefit from the program in a number of ways,
principally by reselling the black hogs purchased from the participating
farmers and by providing the farmers with necessary feeds.

Earnings Conference Call

Tianli will host an earnings conference call and live webcast covering its
fourth quarter and year 2012 financial results at 8:00 a.m. Eastern Time (New
York) on March 15, 2013, which is also 8:00 p.m. in Beijing on March 15. 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 4Q12".

Conference Call
Date:                  Friday, March, 15, 2013
Time:                  8:00 am EDT, U.S.
U.S. Dial-in:          +1 877-317-6789
International Dial-in: +1 412-317-6789
Conference ID:         Tianli 4Q12
Webcast Link:          http://services.choruscall.com/links/tianli130315.html

Please dial in at least 10 minutes before the call to ensure timely
participation. A playback will be available through March 25, 2013. To listen,
please call +1-877-344-7529 within the United States or +1-412-317-0088 if
calling internationally.

About Tianli Agritech, Inc.

Tianli Agritech, Inc. is in the business of breeding, raising and selling
breeder and market hogs in China and is developing a retail channel for its
pork products including high-value, black hog meat. 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:

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

TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                       December 31,
                                                       2012         2011
ASSETS
Current Assets:
Cash and cash equivalents                            $ 7,477,205  $ 6,507,742
Accounts receivable                                    158,047      126,866
Inventories                                            10,232,893   9,578,040
Advances to suppliers                                  189,094      -
Prepaid expenses                                       237,247      164,664
Loan to An Puluo                                       -            1,101,582
Restricted cash                                        793,512      -
Other receivables                                      208,325      154,775
Assets - discontinued operations                       -            1,402,842
Total Current Assets                                  19,296,323   19,036,511
Long-term prepaid expenses                             1,681,488    1,818,399
Plant and equipment, net of accumulated depreciation
of $4,979,716 and
$3,353,303 at December 31, 2012 and 2011,              24,400,573   17,676,999
respectively
Construction in progress                               1,655,901    3,126,317
Biological assets, net of accumulated amortization
of $2,422,048 and
$1,090,459 at December 31, 2012 and 2011,              4,357,846    3,886,580
respectively
Intangible assets, net                                 1,485,773    1,522,709
Total Assets                                         $ 52,877,904 $ 47,067,515
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term loans                                     $ 7,101,935  $ 4,721,064
Accounts payable and accrued payables                  190,811      172,541
Due to An Puluo                                        -            35,951
Other payables                                         2,893,332    781,037
Due to related party                                   125,842      120,326
Liabilities - discontinued operations                  -            1,198,544
Total Current Liabilities                              10,311,920   7,029,463
Stockholders' Equity:
Common stock ($0.001 par value, 50,000,000 shares
authorized,
11,194,000 and 10,135,000 shares issued and
outstanding as of
December 31, 2012 and 2011, respectively)              11,194       10,135
Additional paid in capital                             14,888,470   13,520,276
Statutory surplus reserves                             2,416,647    2,416,647
Retained earnings                                      21,582,277   21,795,072
Accumulated other comprehensive income                 2,609,374    2,295,922
Stockholders' Equity - Tianli Agritech Inc. and        41,507,962   40,038,052
Subsidiaries
Noncontrolling interest                                1,058,022    -
Total Stockholders' Equity                             42,565,984   40,038,052
Total Liabilities and Stockholders' Equity           $ 52,877,904 $ 47,067,515



TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                               For the Year Ended December 31,
                                               2012               2011
Sales                                        $ 26,529,423    $    28,638,431
Cost of goods sold                             23,073,991         18,034,434
Gross profit                                   3,455,432          10,603,997
Operating expenses:
General and administrative expenses            2,239,737          2,450,399
Selling expenses                               1,181,441          101,216
Total operating expenses                       3,421,178          2,551,615
Income from operations                         34,254             8,052,382
Other income (expense):
Interest expense                               (461,299)          (181,218)
Subsidy income                                 218,605            233,928
Other income (expense)                         (43,534)           (210,064)
Total other expenses                           (286,228)          (157,354)
Income (loss) before income taxes              (251,974)          7,895,028
Income taxes                                   -                  -
Net income (loss) from continuing operations   (251,974)          7,895,028
Discontinued operations:
Gain from operations of discontinued
component, net of                              39,179             201,106
 taxes
Net income                                     (212,795)          8,096,134
Other comprehensive income:
Unrealized foreign currency translation        313,452            1,057,803
adjustment
Comprehensive income                         $ 100,657       $    9,153,937
Earnings per share - basic and diluted:
Weighted-average shares outstanding, basic
and                                           10,605,625         10,135,000
diluted
Continuing operations - Basic & diluted      $ (0.02)        $    0.78
Discontinued operations - Basic & diluted    $ -             $    0.02



TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               For the Year Ended December 31,
                                               2012              2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) from continuing           $ (251,974)     $   7,895,028
operations
Adjustments to reconcile net income to net
cash
 provided by operating activities:
Depreciation and amortization                 2,969,098         2,248,545
Amortization of prepaid expenses              406,357           188,998
Bad debt expense                              -                 54,218
Stock-based compensation                      1,188,373         255,454
Written of advances to suppliers              -                 26,584
Loss on disposal of construction in           49,338            -
progress
Changes in operating assets and
liabilities:
Accounts receivable                           (30,095)          (124,883)
Inventories                                   (573,473)         (4,507,283)
Advances to suppliers                         (189,025)         1,009,718
Prepaid expenses                              (366,450)         (229,070)
Other receivables                             (52,219)          131,164
Accounts payable and accrued payables         16,802            30,871
Other payables                                2,287,254         590,777
Total adjustments                             5,705,960         (324,907)
Net cash provided by operating activities
from                                           5,453,986         7,570,121
 continuing operations
Net cash provided by operating activities
from                                          154,135           10,791
discontinued operations
Net cash provided by operating                5,608,121         7,580,912
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Cash collected from loan to An Puluo          1,110,512         -
Acquisition payables                          -                 (940,994)
Advance to An Puluo                           -                 (1,084,363)
Payment for long-term prepaid expenses        -                 (1,831,987)
Purchase of intangible assets                 -                 (785,223)
Investment in construction in progress        (6,977,751)       (3,077,452)
Proceeds from disposal of construction in     509,842           -
progress
Proceeds from disposal of biological assets   -                 -
Deposits for purchase of equipment            -                 -
Purchase of biological assets                 (1,760,034)       (1,923,470)
Purchase of plant and equipment               (213,872)         (4,605,866)
Net cash used in investing activities         (7,331,303)       (14,249,355)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in restricted cash                   (793,223)         -
Due to An Puluo                               -                 35,389
Due to related party                          -                 161,793
Proceeds from the noncontrolling
shareholder's capital                         1,057,636         -
 investment
Repayment of short-term loans                 (4,759,336)       (743,564)
Proceeds from short-term loans                7,099,343         4,647,272
Net cash provided by financing                2,604,420         4,100,890
activities
EFFECT OF EXCHANGE RATE CHANGES ON CASH       88,225            1,091,502
NET INCREASE IN CASH                          969,463           (1,476,051)
CASH, BEGINNING OF YEAR                       6,507,742         7,983,793
CASH, END OF YEAR                           $ 7,477,205     $   6,507,742
SUPPLEMENTAL DISCLOSURES:
Cash paid during the period for:
Interest paid                               $ 484,260       $   201,589
Income tax paid                             $ -             $   -



SOURCE Tianli Agritech, Inc.

Website: http://services.choruscall.com/links/tianli130315.html