Deyu Agriculture Corp. Announces Fiscal Year 2012 Results and Schedule Results Conference Call and Website PR Newswire BEIJING, March 28, 2013 BEIJING, March 28, 2013 /PRNewswire/ -- Deyu Agriculture Corp. (OTCBB: DEYU) (the "Company"), a Shanxi Province, China-based vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains, today announced its financial results for the fiscal year ended December 31, 2012. Fiscal Year 2012 Results: oNet revenue was $254.0 million compared to $261.6 million in 2011; oGross profit was $44.7 million, increasing $1.6 million or 3.8% from $43.1 million in 2011; oGross margin increased to 17.6% for 2012 from 16.5% in 2011; oNet income available to common stockholders was $16.0 million compared to $17.3 million in 2011; oEarnings per diluted share was $1.30 on 12.6 million shares, compared to $1.42 on 12.5 million shares in 2011. "In 2012, in order to move to a more sustainable growth approach, we reduced our reliance on bank loans to supplement our working capital for fast growth by decreasing our overall borrowings from banks from $14.4 million to $8.3 million," said Jianming Hao, Chief Executive Officer of the Company. "Even with a slight decrease of revenue and net income, we are still very pleased with our performance this year. We believe this strategic move significantly reduced our financial risks and can benefit the Company and our shareholders in the long term. "We are glad to see that our recent acquisition, the Taizihu Group, which has a diversified product line of grain products and large production capacity, made a revenue contribution of $23.3 million. We are also currently working on building strategic alliances with large and well-branded companies such as Wen's Food Group Co., Ltd. ("WFG") and Beijing Suning Appliance Co., Ltd. ("Suning") to build our leading position in the industry," continued Mr. Hao. "In October 2012 we elected a new President, Greg Chen, and increased our Board with the additions of Greg and Mr. Jan Poulsen," Mr. Hao added. "With Greg's experience in strategic development and operation management, and Jan's 20+ years of experience in both asset management and business development within the food and beverage industries, we are confident that we can continue to build on our progress." Financial Results for the Fiscal Year Ended December 31, 2012 In fiscal year 2012, the Company's net revenue was $254.0 million, compared with $261.6 million for 2011, a decrease of $7.6 million, or 2.9%. Net revenue from the Corn Division for 2012 was $151.0 million, a decrease of $26.7 million, or approximately 15.0%, as compared to $177.7 million for 2011, which was primarily due to the reduction of working capital for inventory procurement supported by bank loans and bank notes. Net revenue from our Grain Division for 2012 was $73.8 million, an increase of $33.3 million, or 82.2%, as compared to $40.5 million for 2011. The increase was a combined result of an increase of $23.3 million of sales revenue added by the Taizihu Group and an increase of $18.2 million in sales revenue derived from newly retained institutional clients in 2012, partially offset by a decrease of $8.2 million in sales revenue in retail sales in supermarkets and conventional stores caused by the reduction of the sales of unprofitable products in some stores. Net revenue from our Bulk Trading Division for 2012 was $29.2 million, a decrease of $14.2 million, or 32.7% as compared to $43.3 million for 2011. This decrease was mainly attributable to the decrease of working capital supported by bank loans and bank notes. The Company's gross profit increased by $1.6 million, or 3.8%, from $43.1 million for 2011 to $44.7 million for 2012. The increase was a combined result of a decrease of $6.1 million in the Corn Division, an increase of $9.6 million in the Grain Division and a decrease of $1.9 million in the Bulk Trading Division. Our gross margin increased from 16.5% for 2011 to 17.6% for 2012. Gross margin for our Corn Division was 15.4% for 2012, down from 16.5% for 2011, which was mainly attributable to the continuous increase in the purchase price of raw corn and supplemental procurement from suppliers while selling prices did not increase consistently. Gross margin for the Grain Division increased from 24.9% for 2011 to 26.7% for 2012, an, which was mainly a combined result of the increase of gross margin of retail sales caused by reducing the sales of unprofitable products in some stores and the decrease of gross margin derived from the addition of new product portfolios containing mixed gross margins that targeted a wider scope of customers. Gross margin for the Bulk Trading Division was 6.0% for 2012, down from 8.3% for 2011, which was mainly attributable to the increase of percentage of sales for certain types of grains with relatively lower gross margin. The Company's operating expenses increased $4.3 million, or 20.1%, to $25.8 million for 2012 as compared to $21.5 million for 2011. This increase was primarily a combined result of the increase of freight charges caused by the rising costs of railway freight, advertisement expenses spent on brand promotion and distribution expenses, expenses added by the Taizihu Group, increased depreciation and amortization caused by newly-acquired buildings as well as increased payroll and other expenses. The Company had net income available to common stockholders of $16.0 million for 2012, as compared to a net income of $17.3 million for 2011, a decrease of $1.3 million, or 7.7%. Earnings per diluted share was $1.30 on 12.6 million shares for 2012, compared to $1.42 on 12.5 million shares for 2011. Recent Updates about the Company In February 2012, the Company acquired the Taizihu Group, which has a well-established grain product line of grain products under well recognized brand names "Huichun" and "Taizihu". In June 2012, the Company formed a supply relationship with WFG, one of the largest modern multi-industry and trans-regional livestock enterprises, to which we will provide raw corn on a non-exclusive basis. In August 2012, the Company reached an agreement with Suning, one of the largest electrical and electronic appliance retailers in China, to supply it with refined packaged grain goods valued at 18.4 million USD for its commercial use. In October 2012, the Company registered a subsidiary named Jilin Jinglong Agriculture Development Limited in Jilin Province, one of the main corn and grain producing areas in Chinatoexplore business in Northeast China, Also in October 2012, the China National Cereals and Oils Committee selected the Company's wholly-owned subsidiary, Detian Yu, as one of China's Top 100 Grain and Oil Enterprises. And in December 2012, the Company received approximately $209,000 (RMB 1.3 million) in subsidies from the Jinzhong city government, which will be used to support Deyu's business operations as well as the construction of its grains processing projects. Business Outlook "With the industrial and market resources we have established in the past few years, we are growing to be a more integrated agriculture company with a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China," said Jianming Hao. "In view of this goal we are now working on a digital platform to integrate the resources in the whole supply chain, and to deliver value-added services to farmers and our clients. "In the future, our digital platform will not only provide our current clients and farmers with enhanced services, but also facilitate the extension of Deyu's value-added services to potential clients and farmers in different regions. In addition, we believe the platform can serve as Deyu's vital branding platform in the industry and marketplace. We believe we can compete more effectively by utilizing the platform to turn some key barriers imposed by the conventional approaches into strategic advantages," added Mr. Hao. Conference Call The Company will host a conference call on April 2, 2013 at 8:30 AM EDT to discuss the Company's results for the fiscal year ended December 31, 2012. To join the conference call, use the dial-in information below. When prompted, ask for the "Deyu Agriculture Call" and/or be prepared to provide the conference ID. Date: 4/2/2013 Time: 8:30 AM EDT Conference Line 877-407-9205 Dial-In (US): International Dial-In: 201-689-8054 Conference ID#: 411546 Webcast Link: http://www.investorcalendar.com/IC/CEPage.asp?ID=170716 Dial in at least 10 minutes before the call to ensure timely participation. A Teleconference Replay will be available until 11:59 PM April 16, 2013. To listen, please call 877-660-6853 within the United States or 201-612-7415 if calling internationally. Utilize the conference ID # for replay: 411546 About Deyu Agriculture Corp. Deyu Agriculture Corp. is a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains operating in Shanxi Province in the People's Republic of China. The Company has access of 20 years to over 109,000 acres of farmland in Shanxi Province for breeding, cultivating, processing, warehousing and distributing grain and corn products. We have a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China. Deyu Agriculture Corp.'s facilities include sophisticated production lines and modern warehouses with a total production capacity of over 105,000 tons for grain products, storage capacity of over 100,000 tons and annual turnover of 700,000 tons for corn products. The Company's website is located at www.deyuagri.com. Safe Harbor Statements This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the current plans, estimates and projections of Deyu Agriculture Corp.'s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, changes in the agricultural industry, the Company's ability to maintain its competitive position. Additional Information regarding risks can be found in the Company's quarterly and annual reports filed with the U.S. Securities and Exchange Commission at www.sec.gov. Company Contact: Mr. Greg Chen, President Deyu Agriculture Corp. Tel: +1-646-499-5475 Email: email@example.com Ms. Amy He, Chief Financial Officer Deyu Agriculture Corp. Tel: +86-10-8273-2870 x8522 Email: firstname.lastname@example.org Financial Tables DEYU AGRICULTURE CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, December 31, 2012 2011 Assets Current Assets Cash and cash equivalents $ 4,937,279 $ 8,741,703 Restricted cash 815,348 1,850,999 Accounts receivable, net 33,991,288 36,167,136 Due from related parties 397,214 587,108 Inventory 30,322,191 20,314,090 Advance to supplier 6,145,840 7,233,371 Prepaid expenses 1,453,184 391,537 Assets held for sale - 1,634,274 Other current assets 340,456 2,204,934 Total Current Assets 78,402,800 79,125,152 Property, plant, and equipment, net 19,442,599 12,355,946 Construction-in-progress 2,614,491 - Long-term Investment 58,426 - Other assets - 727,535 Intangible assets, net 13,389,075 10,651,844 Total Assets $ 113,907,391 $ 102,860,477 Liabilities and Equity Current Liabilities Short-term loan $ 8,323,623 $ 14,413,480 Accounts payable 5,179,729 1,833,190 Note payables - 1,588,840 Advance from customers 2,249,282 8,488,272 Accrued expenses 1,506,776 1,149,205 Tax payable 305,712 - Preferred stock dividends payable 229,171 219,721 Due to related parties 8,933,843 5,445,115 Other current liabilities 720,862 583,196 TotalCurrentLiabilities 27,448,998 33,721,019 Equity Series A convertible preferred stock, $.001 par value, 10,000,000 shares authorized,2,039,970 and 2,040 1,997 1,997,467 shares outstanding, respectively Common stock, $.001 par value; 75,000,000 shares authorized, 10,658,266 and 10,564,774 shares outstanding, 10,658 10,565 respectively Additional paid-in capital 20,781,439 20,367,138 Other comprehensive income 5,737,793 4,831,353 Retained earnings 59,500,134 43,491,465 Total Stockholders' Equity 86,032,064 68,702,518 Noncontrolling Interests 426,329 436,940 Total Equity 86,458,393 69,139,458 Total Liabilities and Equity $ 113,907,391 $ 102,860,477 DEYU AGRICULTURE CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME For The Years Ended December 31, 2012 2011 Net revenue $ 254,046,098 $ 261,576,666 Cost of goods sold (209,325,445) (218,480,009) Gross Profit 44,720,653 43,096,657 Selling expenses (16,153,096) (13,231,094) General and administrative expenses (9,619,036) (8,222,182) Total Operating Expenses (25,772,132) (21,453,276) Operating income 18,948,521 21,643,381 Interest income 37,846 42,159 Interest expense (1,477,304) (805,601) Non-operating income 665,270 (180,294) Total Other Expenses (774,188) (943,736) Income from continuing operations before 18,174,333 20,699,645 income taxes Income taxes (1,765,514) (184,384) Income from continuing operations 16,408,819 20,515,261 Loss from discontinued operations, net of - (3,891,830) income taxes Net income 16,408,819 16,623,431 Net loss attributable to noncontrolling interests: Net loss from continuing operations 46,599 38,673 Net loss from discontinued operations - 1,101,255 Total net loss attributable to 46,599 1,139,928 noncontrolling interests Net income attributable to Deyu 16,455,418 17,763,359 Agriculture Corp. Preferred stock dividends (446,748) (427,917) Net income available to common 16,008,670 17,335,442 stockholders Foreign currency translation (loss) gain 910,907 2,751,687 Comprehensive income 16,919,577 20,087,129 Other comprehensive income attributable to (4,467) (130,653) noncontrolling interests Comprehensive income attributable to Deyu $ 16,915,110 $ 19,956,476 Agriculture Corp. Amounts attributable to common stockholders: Net income from continuing operations, $ 16,008,670 $ 20,126,017 net of income taxes Discontinued operations, net of income - (2,790,575) taxes Net income attributable to common $ 16,008,670 $ 17,335,442 stockholders Net income attributable to common stockholders per share - basic: Income from continuing operations $ 1.51 $ 1.91 Loss from discontinuing operations - (0.27) Net income attributable to common $ 1.51 $ 1.64 stockholders Net income attributable to common stockholders per share - diluted: Income from continuing operations $ 1.30 $ 1.64 Loss from discontinuing operations - (0.22) Net income attributable to common $ 1.30 $ 1.42 stockholders Weighted average number of common shares 10,598,603 10,522,432 outstanding - basic Weighted average number of common shares 12,614,108 12,497,164 outstanding - diluted DEYU AGRICULTURE CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Years Ended December 31, 2012 2011 CASH FLOWS FROM OPERATING ACTIVITIES Net income available to common $ 16,008,670 $ 17,335,442 stockholders Loss from discontinued operations attributable to - 2,790,575 Deyu Agriculture Corp. Adjustments to reconcile net income to net cash provided by operating activities: Depreciation &amortization 2,297,082 979,297 Allowance for doubtful accounts - - Reserve for inventory valuation - - Loss on disposal of fixed assets 577 - Share-based compensation 120,853 428,702 Preferred stock dividends accrued 446,748 219,721 Dividends paid with Series A preferred stock - 212,420 Common stocks issued for services 114,400 78,000 Grain on bargain purchase (499,079) - Deferred income tax expense (benefit) 878,746 184,384 Noncontrolling interests (46,599) (38,673) Decrease (increase) in current assets: Accounts receivable 2,649,036 (23,824,017) Related-parties trade receivable 226,755 (494,752) Inventories (8,383,187) (2,873,705) Advance to suppliers 1,987,857 (5,840,601) Prepaid expense and other current assets (40,331) (539,339) Increase (decrease) in liabilities: Accounts payable 2,967,217 1,584,038 Advance from customers (6,471,286) 1,677,638 Accrued expense and other liabilities 297,336 346,492 Net cash provided by (used in) operating activities of 12,554,795 (7,774,378) continuing operations Net cash used in operating activities of - (3,858,325) discontinued operations Net cash provided by (used in) operating 12,554,795 (11,632,703) activities CASH FLOWS FROM INVESTING ACTIVITIES Consideration paid for acquisition (5,501,046) - Construction and remodeling of factory and (900,487) (109,856) warehouses Purchase of machinery and equipment (128,383) (3,759,859) Advances to related parties (33,294) - Cash held by the Taizihu Group at 20,272 - acquisition date Repayment from (loan to) related parties - (76,995) Prepayments for acquisition of farmland - (76,715) use rights Purchase of software and other assets - (8,902) Net cash used in investing activities of (6,542,938) (4,032,327) continuing operations Net cash used in investing activities of - (2,476,523) discontinued operations Net cash used in investing activities (6,542,938) (6,508,850) CASH FLOWS FROM FINANCING ACTIVITIES Net (repayments of) proceeds from short-term loans from (12,658,509) 11,349,219 bank and others Net (repayments of) proceeds from short-term bank (1,585,087) 1,547,269 acceptance notes Cash released from restriction (restricted) for credit line of 1,281,894 (1,802,568) bank acceptance notes Net proceeds from short-term loans from 3,312,931 3,101,839 related parties Payment of preferred dividends (267,721) (243,678) Proceeds from capital contributions 31,702 464,180 Release of cash restricted held at a trust - 125,560 account Net proceeds from short-term loan from others - 952 Net cash (used in) provided by financing activities of (9,884,790) 14,542,773 continuing operations Net cash provided by financing activities of - 5,918,988 discontinued operations Net cash (used in) provided by financing (9,884,790) 20,461,761 activities EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH 68,509 352,429 EQUIVALENTS NET (DECREASE) INCREASE IN CASH & CASH (3,804,424) 2,672,637 EQUIVALENTS NET DECREASE IN CASH & CASH EQUIVALENTS FROM - (403,208) DISCONTINUED OPERATIONS NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS (3,804,424) 3,075,845 FROM CONTINUING OPERATIONS CASH & CASH EQUIVALENTS, BEGINNING BALANCE 8,741,703 5,665,858 CASH & CASH EQUIVALENTS, ENDING BALANCE $ 4,937,279 $ 8,741,703 SUPPLEMENTAL DISCLOSURES: Income tax paid $ 678,420 $ 62 Interest paid $ 1,815,269 $ 809,448 NONCASH INVESTING AND FINANCING ACTIVITIES: Construction completed and transferred to property, plant, $ - $ 5,914,602 and equipment Construction completed and transferred to $ - $ 2,320,904 land use rights Obtained certificates of farmland use rights $ - $ 8,221,569 Note: Please refer to the Company's annual report on Form 10-K for the year ended December 31, 2012 for additional notes, which are an integral part of these consolidated financial statements. SOURCE Deyu Agriculture Corp. Website: http://www.deyuagri.com Website: http://www.investorcalendar.com/IC/CEPage.asp?ID=170716
Deyu Agriculture Corp. Announces Fiscal Year 2012 Results and Schedule Results Conference Call and Website
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