Tianli Agritech Reports First Quarter 2013 Results PR Newswire WUHAN CITY, China, May 13, 2013 WUHAN CITY, China, May 13, 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 first quarter ended March 31, 2013. Mrs. Hanying Li, Chairwoman and CEO of Tianli Agritech commented, "The hog industry continued to face headwinds as retail pork prices remained depressed during the first quarter of 2013.The recent outbreak of H7N9 bird flu in certain regions in China also negatively affected consumer confidence and caused a temporary shift in consumer preference away from pork, putting further pressure on the hog industry. As a result, the average selling prices for both breeder and market hogs remained at the low levels of the fourth quarter of 2012 and decreased 7% and 8%, respectively, from the same period of last year. Despite these challenges, our revenue grew on both a year-over-year and sequential basis in the first quarter of 2013 as we sold more breeder hogs and market hogs which more than offset the decline in hog prices." Mrs. Li continued, "Our black hog program continued to progress well. We completed the construction of 120 farms during the first quarter of 2013, which brought our total count of completed farms to 765 in Enshi Prefecture. We plan to fund and construct up to an additional 33 farms in the second quarter of 2013. Since the third quarter of 2012, we have sold 4,585 black hogs generating over $1.1 million in revenue. With our recent entry into the Beijing and Wuhan markets, we are excited about the prospects for our black hog program and expect it to contribute meaningfully to our revenue and earnings in 2013." Q1 2013 Highlights: For the Three Months Ended March 31, ($ thousands, except per share 2013 2012 % Change data) Revenue $ $ 10% 7,387 6,706 Gross margin 10.9% 19.4% -44% Operating margin -1.8% 10.0% -118% Net income for common shareholders (110) 707 -116% Diluted earnings per share (0.01) 0.07 -114% Revenue for the first quarter of 2013 increased 10% to $7.39 million from the same period of 2012. This increase was primarily the result of selling more breeder hogs and market hogs, partially offset by declines in the average selling prices for both breeder hogs and market hogs. The Company sold a total of 32,513 breeder and market hogs over the course of the first quarter of 2013, compared to 27,095 hogs for the same period of 2012. Revenue for the first quarter of 2013 from breeder hog sales increased 6% to $2.13 million with number of breeder hogs sold increasing 14% to 7,690 hogs and the average selling price of breeder hogs decreasing 7% to $277 per hog. Revenue for the first quarter of 2013 from market hog sales increased 12% to $5.26 million from $4.69 million for the same period of 2012 as number of market hogs sold grew 22% to 24,823 hogs and the average selling price of market hogs declined 8% to $212 per hog. The decline in average selling prices of both breeder and market hogs was mainly due to market fluctuations. The recent outbreak of bird flu (H7N9) in certain regions of China also affected pork demand and price. During the first quarter of 2013, the Company sold 1,825 black hogs to retailers in the Beijing market generating $0.45 million in revenue. The sales of black hogs are included in the market hogs category in the table below. For the Three Months Ended March 31, 2013 2012 No. of Average Sales($thousands) No. of Average Sales($thousands) HogsSold Price/Hog($) HogsSold Price/Hog($) Breederhogs 7,690 $ $ 2,129 6,766 $ $ 2,017 277 298 Market hogs 24,823 212 5,257 20,329 231 4,689 Total 32,513 227 7,387 27,095 248 6,706 Gross profit for the first quarter of 2013 was $0.81 million, a 38% decrease from the same period of last year. Gross margin of 10.9% compared to 19.4% for the same period of 2012. The combination of higher feed costs and lower hog selling prices contributed to the decrease in gross margin. The gross margins for breeder hogs and market hogs were 30% and 3%, respectively, for the first quarter of 2013, versus 31% and 15%, respectively, for the same period of last year. Selling, general and administrative expenses increased by $0.31 million to $0.94 million for the first quarter of 2013. The increase was primarily related to our black hog program. Operating margin of (1.8%) for the first quarter of 2013 compared to 10.0% for the same period of last year. Net loss from continuing operations for the first quarter of 2013 was $0.18 million, compared to net income of $0.71 million for the same period of 2012. The decrease was primarily the result of the deterioration in gross margin and increase in selling, general and administrative expenses as explained above. After allocating net loss attributable to non-controlling interest, net loss attributable to common shareholders for the first quarter of 2013 was $0.11 million, or a loss of $0.01 per diluted share. This compared to net income attributable to common shareholders of $0.71 million, or $0.07 per diluted share for the same period of last year. As of March 31, 2013, the Company had cash and cash equivalents of $7.98 million, compared to $7.48 million as of December 31, 2012. Working capital as of March 31, 2013 was $9.21 million as compared to $8.98 million at December 31, 2012. Cash flow from operations was $0.93 million for the first quarter of 2013, down from the $2.04 million for the same period of last year. Recent Developments On May 6, 2013, the Company began to sell Tianli-Xiduhei^TM black hog products in Wuhan City through NEWSTAR supermarket as well as three LAO NONG MIN retail stores. On February 6, 2013, the Company received a letter from The NASDAQ Stock Market notifying the Company that it is not in compliance with Marketplace Rule 5450(a)(1) regarding the minimum closing bid price requirement. The Company has until August 5, 2013 to regain compliance. On January 28, 2013, Tianli-Xiduhei® black pork meat made its official debut at HUA LIAN and YONG HUI supermarket chains in Beijing. As of March 31, 2013, the Company had sold 1,825 black hogs in Beijing generating $0.45 million in revenue. On January 18, 2013, one of the Company's subsidiaries, Hubei Tianzhili Black Hog Breeding Inc., set up a wholly owned subsidiary with limited liabilities, Hubei Tianzhili (Hefeng) Black Hog Breeding Co., Ltd., in Hefeng City, Enshi Prefecture. 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 products. 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 March 31, 2013, the Company had provided funds totaling $12.67 million and completed the construction of 765 farms for local farmers. The Company plans to fund and construct up to an additional 33 farms in the second quarter of 2013. The Company plans to achieve a production capacity of 30,000~50,000 black hogs during 2013 with a long run target annual capacity of 1 million 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. In January 2013, the Company began to sell black hogs in Beijing. In May 2013, the Company began to sell its branded black hog meat cuts through retail outlets in Wuhan, Hubei province. Earnings Conference Call Tianli will host an earnings conference call and live webcast covering its first quarter financial results at 8:00 a.m. Eastern Time (New York) on May 14, 2013, which is also 8:00 p.m. in Beijing on May 14. 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 1Q13". Conference Call Date: Tuesday, May 14, 2013 Time: 8:00 am EDT, U.S. U.S. Dail-in: +1 877-317-6789 International Dial-in: +1 412-317-6789 Conference ID: Tianli 1Q 2013 Webcast Link: http://services.choruscall.com/links/tianli130514.html Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 24, 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:email@example.com Web:http://www.weitian-ir.com TIANLI AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the Three Months Ended March 31, 2013 2012 Sales $ 7,386,534 $ 6,706,421 Cost of goods sold 6,581,233 5,404,414 Gross profit 805,301 1,302,007 Operating expenses: General and administrative expenses 902,498 633,467 Selling expenses 36,042 - Total operating expenses 938,540 633,467 Income (loss) from operations (133,239) 668,540 Other income (expense): Interest expense (166,817) (93,666) Subsidy income 95,589 134,647 Other income (expense) 25,904 1,833 Total other income (expenses) (45,324) 42,814 Income (loss) before income taxes (178,563) 711,354 Income taxes - - Net income (loss) from continuing (178,563) 711,354 operations Discontinued operations: Loss from operations of - (4,656) discontinued component, net of taxes Net income (loss) (178,563) 706,698 Add: Net loss attributable to the 68,495 - noncontrolling interests Net income (loss) attributable to $ (110,068) $ 706,698 Tianli Agritech Inc. and Subsidiaries Earnings per share - basic and diluted: Continuing operations - Basic & $ (0.02) $ 0.07 diluted Discontinued operations -Basic & $ - $ - diluted Weighted-average shares 11,194,000 10,135,000 outstanding, basic and diluted Comprehensive income: Net income (loss) attributable to $ (110,068) $ 706,698 Tianli Agritech Inc. and Subsidiaries Unrealized foreign currency translation adjustment attributable to Tianli 252,565 247,805 Agritech Inc. and Subsidiaries Comprehensive income $ 142,497 $ 954,503 TIANLI AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, December 31, 2013 2012 ASSETS (Unaudited) Current Assets: Cash and cash equivalents $ 7,976,673 $ 7,477,205 Accounts receivable 187,646 158,047 Inventories 10,767,087 10,232,893 Advances to suppliers 11,968 189,094 Prepaid expenses 137,414 237,247 Restricted cash 797,881 793,512 Other receivables 202,457 208,325 Total Current Assets 20,081,126 19,296,323 Plant and equipment, net 25,722,163 24,400,573 Construction in progress 480,244 1,655,901 Biological assets, net 4,089,522 4,357,846 Long-term prepaid expenses 1,662,590 1,681,488 Intangible assets, net 1,481,424 1,485,773 Total Assets $ 53,517,069 $ 52,877,904 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Short-term loans $ 7,141,033 $ 7,101,935 Accounts payable and accrued 187,658 190,811 liabilities Other payables 3,417,093 2,893,332 Due to related party 126,363 125,842 Total Current Liabilities 10,872,147 10,311,920 Stockholders' Equity: Common stock ($0.001 par value, 50,000,000 shares authorized, 11,194,000 shares issued and outstanding as of March 31, 11,194 11,194 2013 and December 31, 2012, respectively) Additional paid in capital 14,888,470 14,888,470 Statutory surplus reserves 2,416,647 2,416,647 Retained earnings 21,472,209 21,582,277 Accumulated other comprehensive 2,857,367 2,604,802 income Stockholders' Equity - Tianli 41,645,887 41,503,390 Agritech Inc. and Subsidiaries Noncontrolling interest 999,035 1,062,594 Total Stockholders' Equity 42,644,922 42,565,984 Total Liabilities and $ 53,517,069 $ 52,877,904 Stockholders' Equity TIANLI AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months Ended March 31, 2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (178,563) $ 706,698 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 800,471 674,203 Amortization of prepaid expenses 100,446 74,705 Bad debt expense - 16 Stock-based compensation - 5,343 Changes in operating assets and liabilities: Accounts receivable (28,681) 3,040 Inventories (317,839) (121,318) Advances to suppliers 79 (138,263) Prepaid expenses - 69,016 Other receivables 7,003 75 Accounts payable and accrued (4,196) (50,934) payables Other payables 546,572 815,144 Total adjustments 1,103,855 1,331,027 Net cash provided by operating 925,292 2,037,725 activities from continuing operations Net cash provided by operating activities from discontinued - (1,146) operations Net cash provided by operating 925,292 2,036,579 activities CASH FLOWS FROM INVESTING ACTIVITIES Investment in construction in - (1,331,897) progress Purchase of biological assets (58,570) (351,879) Purchase of plant and (432,941) (46,631) equipment Net cash used in (491,511) (1,730,407) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Due to An Puluo - (7,996) Net cash provided by - (7,996) financing activities EFFECT OF EXCHANGE RATE CHANGES ON 65,687 (28,049) CASH NET INCREASE IN CASH 499,468 270,127 CASH, BEGINNING OF YEAR 7,477,205 6,518,533 CASH, END OF YEAR $ 7,976,673 $ 6,788,660 SUPPLEMENTAL DISCLOSURES: Cash paid during the period for: Interest paid $ 173,021 $ 100,082 Income tax paid $ - $ - SOURCE Tianli Agritech, Inc. 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Tianli Agritech Reports First Quarter 2013 Results
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