Aoxin Tianli Group, Inc. Reports Second Quarter 2015 Results

Aug 12, 2015, 16:30 ET from Aoxin Tianli Group, Inc.

WUHAN CITY, China, Aug. 12, 2015 /PRNewswire/ -- Aoxin Tianli Group, Inc. (NASDAQ: ABAC) ("Aoxin Tianli" or the "Company"), a diversified company with businesses in hog farming, manufacture and marketing of electro-hydraulic servo-valves, and the development of optical fiber hardware and software solutions, today announced its financial results for the second quarter ended June 30, 2015.

"Thanks to a strong recovery in pork prices and an increase in sales volume for our retail specialty black hog pork products, we delivered another solid quarter, with revenues growing 32% Y/Y to $10.64 million and gross margin improving both Y/Y and sequentially to 23.3%", said Mr. Ping Wang, Chairman and Chief Executive Officer of Aoxin Tianli Group, Inc. "With the uptick in pork prices continuing into the third quarter and retail sales remaining strong, we are in a good position in the near term." 

Mr. Wang continued, "As a further slowdown in China's economy during the second quarter started to take a toll on our emerging businesses, we remain confident in the long-term prospects of our servo and security & protection businesses. Additionally, the recent Chinese stock market turmoil has made it difficult for us to have any success on the acquisition front so far this year. However, we remain steadfast in our pursuit of growth and diversification through strategic acquisitions and investments under the guidance of the New Strategic Development Plan that we adopted last July and ask our investors and supporters to bear with us." 

Second Quarter 2015 Financial Results:

For the Three Months Ended June 30,

($ thousands, except per share data)

2015

2014

% Change

Revenues

$              10,636

$                8,075

31.7%

Hog farming

9,547

7,893

21.0%

Retail

305

182

67.2%

Servo

535

-

NM

Security & protection

249

-

NM

Gross margin

23.3%

7.7%

15.6%

Operating (loss) margin

8.9%

-4.1%

NM

Net income for common shareholders

919

560

64.3%

Earnings per share

0.03

0.03

-2.6%

Revenues

Revenues for the second quarter of 2015 increased by $2.56 million, or approximately 31.7%, to $10.64 million from $8.07 million for the same period of last year, thanks to the favorable hog pricing environment, increased retail sales volume, and solid contributions from the newly acquired servo and security & protection businesses that contributed $0.78 million, or 7.4% of total revenues.

For the Three Months Ended June 30,

2015

2014

No. of Hogs Sold

Average Price/Hog ($)

Sales ($ thousands)

No. of Hogs Sold

Average Price/Hog ($)

Sales ($ thousands)

Breeder hogs- regular hogs

7,191

$              271

$            1,949

6,938

$               251

$            1,742

Market hogs- regular hogs

20,656

206

4,259

20,213

168

3,401

Market hogs- black hogs

13,123

254

3,340

13,155

209

2,750

Total Hog Farming

40,970

233

9,547

40,306

196

7,893

Kilogram

Average Price/kg ($)

Sales ($ thousands)

Kilogram

Average Price/kg ($)

Sales ($ thousands)

Retail- specialty black hog pork products

67,155

$                  5

$               305

39,568

$                   5

$               182

Revenues for the second quarter of 2015 from hog farming, which include sales of regular breeder hogs, regular market hogs, and black hogs, increased by $1.65 million, or 21.0%, to $9.55 million for the second quarter of 2015 from $7.89 million for the same period of last year. The Company sold a total of 40,970 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $233 per hog during the second quarter of 2015, compared to 40,306 hogs sold and a blended average selling price of $196 per hog for the same period of last year.

Revenues for the second quarter of 2015 from regular breeder hog sales increased by 11.9% to $1.95 million with the number of regular breeder hogs sold increasing by 3.6% to 7,191 hogs and the average selling price of regular breeder hogs increasing by 8% to $271 per hog. Revenues for the second quarter of 2015 from regular market hog sales increased by 25.2% to $4.26 million as the number of regular market hogs sold increased by 2.2% to 20,656 hogs and the average selling price of regular market hogs increased by 22.6% to $206 per hog. Revenues for the second quarter of 2015 from black market hogs increased by 21.5% to $3.34 million with the number of black hogs sold decreasing slightly to 13,123 hogs and the average selling price of black hogs increasing by 21.5% to $254 per hog.

We sold 67,155 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.31 million for the second quarter of 2015. This compared to 39,568 kilograms sold at approximately $5 per kilogram and revenues of $0.18 million for the same period of last year. This growth, combined with the sales of black market hogs, led to $3.64 million in revenues from our black hog program.

Revenues from our servo business was $0.54 million, including $0.38 million from selling electro-hydraulic servo devices and relevant components and $0.16 million from providing maintenance services to customers, and accounted for 5.0% of total revenues for the second quarter of 2015.

Revenues from our security & protection business was $0.25 million, including $0.19 million from selling optical fiber invasion alarm systems and $0.06 million from selling education devices and providing relevant technical support and accounted for 2.4% of total revenues for the second quarter of 2015.

Gross profit

Cost of goods sold increased by $0.70 million, or 9.4%, to $8.16 million for the second quarter of 2015 from $7.45 million for the same period of last year. Cost of goods sold related to hog farming, retail, servo and security & protection were $7.59 million, $0.23 million, $0.23 million and $0.10 million, respectively, for the second quarter of 2015, compared to $7.28 million, $0.18 million for hog farming and retail, respectively, for the same period of last year. Overall gross profit increased by $1.86 million, or 299.5%, to $2.48 million for the second quarter of 2015 from $0.62 million for the same period of last year. Gross profit for the second quarter of 2015 for hog farming, retail, servo and security & protection were $1.96 million, $0.08 million, $0.30 million, and $0.15 million, respectively.

Overall gross margin was 23.3%, with gross margins for hog farming, retail, servo and security & protection segments 21%, 25%, 56% and 58%, respectively, for the second quarter of 2015. This compared to overall gross margin of 7.7%, and gross margins for hog farming and retail of 8% and 3%, respectively, for the same period of last year.

Operating profit

Total operating expenses, including general and administrative expenses and selling and marketing expenses, increased by $0.59 million, or 61.6%, to $1.54 million for the second quarter of 2015 from $0.95 million for the same period of last year. The increase was primarily the result of our new operating segments which incurred expenses of $0.14 million for our servo business and $0.21 million for our security & protection business, as well as a non-cash stock based compensation expenses of $0.14 million.

Operating income for the second quarter of 2015 was $0.94 million, compared to operating loss of $0.33 million for the same period of last year. Operating profit margin for the second quarter of 2015 was 8.9%, compared to operating loss margin of 4.1% for the same period of last year.

Net income

As a result of the foregoing, net income for the second quarter of 2015 was $0.92 million, compared to $0.56 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the second quarter of 2015 was $0.92 million, or $0.03 per diluted share. This compared to net income attributable to common shareholders of $0.56 million, $0.03 per diluted share, for the same period of last year.

Six Months Ended June 30, 2015 Financial Results:

For the Six Months Ended June 30,

($ thousands, except per share data)

2015

2014

% Change

Revenues

$              21,986

$              17,761

23.8%

Hog farming

18,639

17,132

8.8%

Retail

801

630

27.3%

Servo

1,754

-

NM

Security & protection

792

-

NM

Gross margin

21.5%

11.6%

9.9%

Operating margin

3.9%

0.3%

3.6%

Net income for common shareholders

679

957

-29.0%

Earnings per share

0.02

0.06

-66.7%

Revenues

Revenues for the six months ended June 30, 2015 increased by $4.22 million, or approximately 23.8%, to $21.99 million from $17.76 million for the same period of last year. This increase was mainly driven by the favorable hog pricing environment during the second quarter of 2015, increased sales volume of specialty black hog pork products through retail, and solid contributions from the newly acquired servo and security & protection businesses that contributed $2.55 million, or 11.6% of total revenues.

For the Six Months Ended June 30,

2015

2014

No. of Hogs Sold

Average Price/Hog ($)

Sales ($ thousands)

No. of Hogs Sold

Average Price/Hog ($)

Sales ($ thousands)

Breeder hogs- regular hogs

14,374

$              267

$            3,836

14,007

$               266

$            3,731

Market hogs- regular hogs

41,999

194

8,160

42,796

186

7,981

Market hogs- black hogs

28,392

234

6,642

24,855

218

5,420

Total Hog Farming

84,765

220

18,639

81,658

210

17,132

Kilogram

Average Price/kg ($)

Sales ($ thousands)

Kilograms

Average Price/kg ($)

Sales ($ thousands)

Retail- specialty black hog pork products

182,087

$                  4

$               801

129,052

$                   5

$               630

Revenues for the six months ended June 30, 2015 from hog farming, which include sales of regular breeder hogs, regular market hogs, and black hogs, increased by $1.51 million, or 8.8%, to $18.64 million for the six months ended June 30, 2015 from $17.13 million for the same period of last year. The Company sold a total of 84,765 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $220 per hog for the six months ended June 30, 2015, compared to 81,658 hogs sold and a blended average selling price of $210 per hog for the same period of last year.

Revenues for the six months ended June 30, 2015 from regular breeder hog sales increased by 2.8% to $3.84 million with the number of regular breeder hogs sold increasing by 2.6% to 14,374 hogs and the average selling price of regular breeder hogs increasing by 0.4% to $267 per hog. Revenues for the six months ended June 30, 2015 from regular market hog sales increased by 2.2% to $8.16 million as the number of regular market hogs sold decreased by 1.9% to 41,999 hogs while the average selling price of regular market hogs increased by 4.3% to $194 per hog. Revenues for the six months ended June 30, 2015 from black market hogs increased by 22.6% to $6.64 million with the number of black hogs sold increasing 14.2% to 28,392 hogs and the average selling price of black hogs increasing by 7.3% to $234 per hog.

We sold 182,087 kilograms of specialty black hog pork products through retail at approximately $4 per kilogram, generating revenues of $0.80 million for the six months ended June 30, 2015. This compared to 129,052 kilograms sold at approximately $5 per kilogram and revenues of $0.63 million for the same period of last year. This growth, combined with the sales of black market hogs, led to $7.44 million in revenues from our black hog program.

Revenues from our servo business was $1.75 million, including $1.39 million from selling electro-hydraulic servo devices and relevant components and $0.37 million from providing maintenance services to customers, and accounted for 8.0% of total revenues for the six months ended June 30, 2015.

Revenues from our security & protection business was $0.79 million, including $0.37 million from selling optical fiber invasion alarm systems and $0.42 million from selling education devices and providing relevant technical support, and accounted for 3.6% of total revenues for the six months ended June 30, 2015.

Gross profit

Cost of goods sold increased by $1.55 million, or 9.9%, to $17.25 million for the six months ended June 30, 2015 from $15.71 million for the same period of last year. Cost of goods sold related to hog farming, retail, servo and security & protection were $15.25 million, $0.61 million, $1.02 million and $0.37 million, respectively, for the six months ended June 30, 2015, compared to $15.29 million, $0.42 million for hog farming and retail, respectively, for the same period of last year. Overall gross profit increased by $2.68 million, or 130.5%, to $4.73 million for the six months ended June 30, 2015 from $2.05 million for the same period of last year. Gross profit for the six months ended June 30, 2015 for hog farming, retail, servo and security & protection were $3.39 million, $0.19 million, $0.73 million, and $0.42 million, respectively.

Overall gross margin was 21.5%, with gross margins for hog farming, retail, servo and security & protection segments 18%, 24%, 42% and 53%, respectively, for the six months ended June 30, 2015. This compared to overall gross margin of 11.6%, and gross margins for hog farming and retail of 11% and 33%, respectively, for the same period of last year.

Operating profit

Total operating expenses, including general and administrative expenses and selling and marketing expenses, increased by $1.86 million, or 92.8%, to $3.87 million for the six months ended June 30, 2015 from $2.01 million for the same period of last year. The increase was primarily the result of our new operating segments which incurred expenses of $0.3 million for our servo business and $0.7 million for our security & protection business, as well as non-cash stock based compensation expenses of $0.74 million.

Operating income for the six months ended June 30, 2015 was $0.86 million, compared to $0.04 million for the same period of last year. Operating margin for the six months ended June 30, 2015 was 3.9%, compared to 0.3% for the same period of last year.

Net income

As a result of the foregoing, net income for the six months ended June 30, 2015 was $0.71 million, compared to $0.83 million for the same period of last year. After the deduction of non-controlling interests, net income attributable to common shareholders for the six months ended June 30, 2015 was $0.68 million, or $0.02 per diluted share. This compared to net income attributable to common shareholders of $0.96 million, $0.06 per diluted share, for the same period of last year.

Financial Condition

As of June 30, 2015, the Company had cash and cash equivalents of $46.81 million. Working capital as of June 30, 2015 was $53.90 million as compared to $47.52 million at December 31, 2014. Net cash provided by operating activities in the six months ended June 30, 2015 was $9.11 million, compared to $5.79 million for the same period of last year. Net cash provided by investing activities was $1.62 million for the six months ended June 30, 2015, compared to net cash used in investing activities of $1.09 million for the same period of last year. Net cash used in financing activities was $3.47 million for the six months ended June 30, 2015, compared to net cash provided by financing activities of $16.33 million for the same period of last year.

Company Update

On August 11, 2015, the Company entered into a hog farm sales agreement to sell two of its hog farms, including Farm 2 located in Nanyan Village, Hubei Province, with annual capacity of 10,000 hogs and Farm 3 located in Qunyi Village, Hubei Province, with annual capacity of 10,000 hogs, to Wuhan City Tianjian Agricultural Development Co., Ltd. for a total consideration of RMB 7.5 million (approximately $1.23 million).

Earnings Conference Call

Aoxin Tianli will host an earnings conference call and live webcast covering its second quarter 2015 financial results at 8:00 a.m. EDT on August 13, 2015, which is 8:00 p.m. in Beijing on August 13, 2015. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "AoxinTianli / ABAC".

Conference Call

Date:

Thursday, August 13, 2015

Time:

8:00 am EDT, U.S.

U.S. Dial-in:

+1 877-317-6789

International Dial-in:

+1 412-317-6789

Conference ID:

Aoxin Tianli / ABAC

Webcast Link:

http://services.choruscall.com/links/abac150813

For those unable to participate, an audio replay of the presentation will be available beginning approximately one hour after the end of the live call through August 28, 2015. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access ID No. 10070892.

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as Tianli Agritech, Inc., is a diversified company with businesses in hog farming, manufacturing and marketing of electro-hydraulic servo-valves, and the development of optical fiber hardware and software solutions. Under a New Strategic Development Plan adopted in July 2014, the Company plans to continue to diversify through targeted investments and acquisitions in selected high-growth industries such as equipment manufacturing, optoelectronics, new materials and new energy products, electromechanics and healthcare devices. The Company is headquartered in Wuhan City, Hubei Province.

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 regulations, 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 this cautionary statement 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  

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

2015

2014

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

46,806,712

$

39,123,869

Notes receivable

4,927

16,291

Accounts receivable, net

1,334,076

2,237,794

Accounts receivable - related party

-

19,875

Inventories

9,103,209

11,015,763

Advances to suppliers

4,459,508

1,051,259

Prepaid expenses

72,057

238,875

Other receivables, net

586,194

241,666

Loan receivable - related party

-

1,629,062

Due from related party

80,194

78,195

Restricted cash

3,284,719

-

Assets held for sale

2,054,517

-

Total Current Assets

67,786,113

55,652,649

Long-term prepaid expenses, net

3,523,509

2,832,996

Plant and equipment, net

33,235,790

36,525,169

Construction in progress

715,924

710,128

Biological assets, net

1,591,889

2,036,823

Intangible assets, net

5,537,600

5,795,759

Total Assets

$

112,390,825

$

103,553,524

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Short-term loans

$

2,430,693

$

2,411,012

Bank acceptance notes payable

6,569,439

-

Accounts payable and accrued payables

1,058,203

1,506,703

Advances from customers

143,937

83,304

Advances from customers - related party

60,597

58,451

Deferred income

344,298

260,058

Special payables

183,978

182,488

Other payables

2,740,503

2,991,109

Other payable - related party

129,868

180,457

Due to related party

228,279

455,232

Total Current Liabilities

13,889,795

8,128,814

Stockholders' Equity:

Common stock ($0.001 par value, 100,000,000 shares authorized,

33,203,000 shares issued and 33,183,000 shares outstanding as of June 30, 2015 and 32,373,000 shares issued and outstanding as of

December 31, 2014)

33,183

32,373

Additional paid in capital

64,455,074

63,022,184

Statutory surplus reserves

2,565,542

2,532,813

Retained earnings

24,752,194

24,105,472

Accumulated other comprehensive income

5,030,420

4,079,896

Stockholders' Equity - Aoxin Tianli Group Inc. and Subsidiaries

96,836,413

93,772,738

Noncontrolling interest

1,664,617

1,651,972

Total Stockholders' Equity

98,501,030

95,424,710

Total Liabilities and Stockholders' Equity

$

112,390,825

$

103,553,524

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

For the Three Months Ended June 30,

For the Six Months Ended June 30,

2015

2014

2015

2014

Revenues

$

10,635,970

$

8,074,894

$

21,959,893

$

17,761,223

Revenues - related party

-

-

25,913

-

10,635,970

8,074,894

21,985,806

17,761,223

Cost of goods sold

8,155,470

7,453,933

17,254,965

15,708,444

Gross profit

2,480,500

620,961

4,730,841

2,052,779

Operating expenses:

General and administrative expenses

1,280,470

844,398

3,344,268

1,617,809

Selling expenses

258,562

107,731

527,036

390,498

Total operating expenses

1,539,032

952,129

3,871,304

2,008,307

Income (loss) from operations

941,468

(331,168)

859,537

44,472

Other income (expense):

Interest expense

(16,869)

(139,139)

(7,566)

(228,815)

Subsidy income

-

19,545

-

19,545

Relocation compensation from Farm 8 shutdown

-

988,021

-

988,021

Other income, net

1,158

22,388

(55,607)

7,149

Total other income (expense)

(15,711)

890,815

(63,173)

785,900

Income before income taxes

925,757

559,647

796,364

830,372

Income taxes

1,700

-

88,819

-

Net income

924,057

559,647

707,545

830,372

Net loss (income) attributable to noncontrolling interest

(4,655)

-

(28,094)

127,017

Net income attributable to Aoxin Tianli Group Inc. common stockholders

919,402

559,647

679,451

957,389

Other comprehensive income:

Unrealized foreign currency translation adjustment

386,460

127,876

950,524

(237,492)

Comprehensive income

$

1,305,862

$

687,523

$

1,629,975

$

719,897

Earnings per share attributable to Aoxin Tianli Group Inc. common stockholders - basic and diluted:

Weighted-average shares outstanding, basic and diluted

33,183,000

19,664,000

32,643,000

16,814,000

Continuing operations - Basic & diluted

$

0.03

$

0.03

$

0.02

$

0.06

Discontinued operations - Basic & diluted

$

-

$

-

$

-

$

-

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

For the Six Months Ended June 30,

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

707,545

$

830,372

Adjustments to reconcile net income to net cash

  provided by operating activities:

Depreciation and amortization

1,985,497

1,746,285

Amortization of prepaid expenses

145,314

171,990

Amortization of long-term prepaid expenses

843,164

45,261

Provision for doubtful accounts

121,072

28,955

Loss from farm shutdown

12,063

-

Loss from disposal of biological assets

157,516

-

Changes in operating assets and liabilities:

Notes receivable

11,451

-

Accounts receivable

923,233

77,884

Accounts receivable - related party

19,958

-

Inventories

4,199,062

1,835,497

Advances to suppliers

830,513

274,677

Prepaid expenses

(54,829)

(50,702)

Other receivables

(344,793)

808,897

Long-term prepaid expenses

-

(87,952)

Accounts payable and accrued payables

(458,990)

56,093

Advances from customers

59,718

-

Advances from customers - related party

1,663

-

Deferred income

81,796

-

Other payables

(83,445)

57,617

Other payables - related party

(51,858)

-

Total adjustments

8,398,105

4,964,502

Net cash provided by operating activities   

9,105,650

5,794,874

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid for purchase of noncontrolling interest

-

(1,083,100)

Proceeds from collection of loan receivable from related party

1,635,912

-

Purchase of biological assets

(589)

-

Purchase of plant and equipment

(11,150)

(6,271)

Net cash used in investing activities

1,624,173

(1,089,371)

CASH FLOWS FROM FINANCING ACTIVITIES

Increase at restricted cash

(3,271,823)

-

Proceeds from capital contribution

-

15,560,000

Due to (from) related party

(199,700)

(79,128)

Repayment of short-term loans

(1,635,912)

(781,797)

Proceeds from short-term loans

1,635,912

1,628,744

Net cash provided by financing activities     

(3,471,523)

16,327,819

EFFECT OF EXCHANGE RATE CHANGES ON CASH

424,543

(1,504)

NET INCREASE IN CASH

7,682,843

21,031,818

CASH, BEGINNING OF PERIOD

39,123,869

10,087,694

CASH, END OF PERIOD

$

46,806,712

$

31,119,512

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

Interest paid

$

82,520

$

307,690

Income tax paid

$

88,819

$

-

NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES

Prepayments for raw material purchases made with bank acceptance notes

$

6,543,646

$

-

Shares issued to employees

$

1,433,700

$

-

 

SOURCE Aoxin Tianli Group, Inc.