Tianli Agritech Reports Fourth Quarter and Full Year 2011 Results Revenue Increases 48% to $31.4 million and Exceeded Guidance

Net Income Reached $8.1 million with $0.80 EPS

Net Income Reached $8.1 million with $0.80 EPS

WUHAN CITY, China, March 15, 2012 /PRNewswire-Asia/ -- Tianli Agritech, Inc. (NASDAQ: OINK), a leading producer of breeder and market hogs, and retailer of hog meat headquartered in Wuhan City, China, today announced its financial results for the fourth quarter and twelve month period ended December 31, 2011.  

Fourth quarter Highlights:

  • Revenue increased 49% year-over-year to $8.7 million due to higher selling prices, increased unit sales of Tianli market hogs plus retail sales of "Tianli An  Puluo" hog meat.
  • The retail division contributed $1.7 million of revenues in its second quarter of operations for the year.

Tianli's Chairwoman and CEO, Ms. Hanying Li, began, "We completed another successful year, which included the acquisition of our 11th hog farm and the launch of our Tianli-branded retail pork products through our partnership with An Puluo Foods. While our fourth quarter results were negatively impacted by complications resulting from contaminated feed at a few of our farms, we responded quickly to contain the impact. Having implemented a series of additional safeguards, we expect the negative drag on our financials to subside in the first half of 2012."

Summarized Fourth quarter 2011 Results        

 

Q4 2011

 

Q4 2010

 

Change

 

Sales  

$8.7 million

$5.8 million

49%

Gross Profit 

$1.8 million

$2.5 million

-26%

Selling, General and Administrative Expenses

 

$0.9 million

$0.4 million

113%

Net Income

$0.8 million

$2.2 million

-61%

EPS *  

$0.08

$0.22

-64%

*EPS calculations are based on the results of the weighted average calculation method of the 10,135,000 shares outstanding during Q4 2011 and 9,733,696 shares outstanding during Q4 2010, reflecting the effect of the Company's July 2010 IPO.

Revenue for the fourth quarter of 2011 increased 49% to $8.7 million from same period a year ago. The Company sold 25,472 hogs, down 1.13% from the prior year reflecting the stronger demand for market hogs offset by the weaker demand for breeder hogs.  Sales of market hogs increased 68.25% to $5.3 million as high retail pork prices drove strong demand for market hogs. Breeder hog sales fell 38.21% to $1.6 million, representing 18.80% of total sales in the fourth quarter of 2011.

Through its cooperation with An Puluo Food, Tianli's retail division generated $1.7 million in sales in the fourth quarter after launching in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases under the Tianli AnPuluo brand in over 50 major retail outlets in great Wuhan, including Wal-Mart, Zon 100, and RT Mart.

Gross profit in the fourth quarter of 2011 was $1.8 million, a 26% decrease from the same period last year. Gross margin was approximately 21% and 43% for the fourth quarter of 2011 and 2010, respectively. The year-over-year margin decline was attributable to $1.3 million in costs related to the disposal of a shipment of contaminated hog feed and the treatment and disposal of hogs which became ill as a result of eating the contaminated feed. 

Selling, general and administrative expenses were $0.9 million in the fourth quarter of 2011, an increase of approximately $0.5 million. Approximately $0.1 million of the increase was related to higher public company expenses and $0.4 million related to the Company's retail business and marketing costs not present in the year ago period. 

Net income was approximately $0.8 million, down 61% from $2.2 million in the three months ended December 31, 2010. Earnings per fully diluted share were $0.08 compared to $0.22 the previous year.   

Twelve Months 2011 Results      

Summarized Twelve Months 2011 Results     

 

FY 2011

 

FY 2010

 

Change

 

Sales  

$31.4 million

$21.3 million

48%

Gross Profit 

$11.4 million

$9.2 million

24%

Selling, General and Administrative Expenses

 

$3.2 million

$1.2 million

164%

Net Income

$8.1 million

$8.2 million

-1%

EPS *  

$0.80

$0.90

-11%

*EPS calculations are based on the results of the weighted average calculation method of the 10,135,000 shares outstanding during Q4 2011 and 9,023,630 shares outstanding during FY 2010, reflecting the effect of the Company's July 2010 IPO.

Net sales increased 48% to $31.4 million during the year ended December 31, 2011. Tianli sold 101,600 hogs at an average sales price of $282 per hog, an increase of 3% and 31%, respectively. Market hog sales were $19.3 million in 2011 compared to $12.4 million in 2010, a 55% increase. Breeder hog sales were $9.4 million, up 6% from $8.8 million for the year ended December 31, 2010 as higher prices offset a decline in the number of breeder hogs sold. Total sales of processed pork products sold through retail channels were $2.8 million in 2011.

Sales by Products 

 (Dollar Figures Rounded)  

 

FY 2011 

FY 2010

Products

No of Hogs Sold

Sales Revenues

No. of Hogs Sold

Sales Revenues

Breeder Hogs

29,654

$9.4 million

33,003

$8.8 million

Market Hogs

71,946

$19.3 million

65,295

$12.4 million

Retail  

 

$2.8 million

 

-

TOTAL

 

$31.4 million

 

$21.3 million

Gross profit increased 24% to $11.4 million, resulting in a gross profit margin of approximately 36.2%. Gross margins for breeder hogs, market hogs, and processed pork products were 47%, 32% and 28%, respectively.

Selling, general and administrative expenses were $3.2 million compared to $1.2 million in the prior year. The Company incurred $0.3 million of non-cash stock compensation expenses, $0.8 million public company expenses and $0.6 million of operating expenses related to its retail segment in the first twelve months of 2011. Operating income was essentially flat year-over-year at $8.2 million.

Net income and earnings per share were $8.1 million and $0.80 respectively in the twelve months ended December 31, 2011, compared to $8.2 million and $0.90 in the previous twelve month periods.

Financial Position  

As of December 31, 2011, the Company had $6.5 million in cash and cash equivalents compared to $8.0 million as of December 31, 2010. The Company generated approximately $6.7 million of cash from operations in the twelve months of 2011. Working capital as of December 31, 2011 was $11.9 million, including $9.9 million of inventories and a $1.1 million loan to An Puluo Food which should be collected within 12 months. Inventories increased to support the launch of the Company's retail business in the third quarter of 2011 and reflect our operations at farm #9 and #10.

Tianli invested approximately $14.4 million in capital expenditures and breeding stock during the twelve months of 2011, primarily for plant and equipment, enhancing breeder stock with imported purebreds from Europe and for investments related to its retail products expansion.

 "Our company is executing on the vision I had when we launched Tianli eight years ago," Ms. Li concluded. "The strong demand for pork in China is providing us with a tailwind to grow organically as our more recent farm acquisitions reach capacity. The retail expansion provides us with further opportunities to increase revenues and cash flows while establishing the Tianli brand through AnPuluo Foods. Our single most exciting strategy for 2012, Enshi Black Hog breeding and sales, is expected to be a major contributor in revenues and earnings for years to come"

Business Update on Black Hogs Project  

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 35% 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 2011, the Company had funded and completed the construction of 125 farms for local farmers and it envisions that it will fund and construct up to an additional 183 farms by the end of the year 2012. The goal is to achieve a production capacity of 100,000 black hogs during 2012 with a long run target of an annual capacity of 1 million 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 supplies.  To date and at the time of this report, the Company has not started to sell Black Hogs yet. However, we will start to sell black hogs in either the first or second quarter of 2012. The hogs will be bought from the first 78 hog farmers who are the first participants of our Black Hog Program.

Earnings Conference Call

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 Agritech Fourth quarter 2011 Conference Call".

Conference Call

 

Date:

Thursday, March 15, 2012

Time:

9:00 am Eastern Time, US

Conference Line Dial-In (U.S.):

+1-877-317-6776

International Dial-In:

+1-412-317-6776

Conference ID:

Tianli Agritech Fourth quarter 2011 Conference Call

Webcast link:

http://webcast.mz-ir.com/publico.aspx?codplataforma=3650

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through March 23, 2012. To listen, please call +1-877-344-7529 within the United States or +1-412-317-0088 if calling internationally.

This call is being webcast by MZ Technologies and can be accessed by clicking on the following link: http://webcast.mz-ir.com/publico.aspx?codplataforma=3650.

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:

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

Investor Relations

Mr. John Mattio
MZ North America, SVP
Phone: (212) 730-7130
Email: john.mattio@mzgroup.us
Web: http://www.mz-ir.com

 

TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

December 31,

 

 

2011

 

2010

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

$

6,518,533

$

7,983,793

Accounts receivable

 

994,329

 

-

Inventories

 

9,924,594

 

4,819,805

Advances to suppliers

 

7,868

 

1,036,765

Acquisition deposit

 

-

 

530,303

Prepaid expenses

 

174,893

 

83,832

Loan to An Puluo

 

1,101,582

 

-

Other receivables

 

172,668

 

330,744

 Total Current Assets

 

18,894,467

 

14,785,242

 

 

 

 

 

Long-term prepaid expenses

 

1,883,445

 

-

Plant and equipment, net of accumulated depreciation of $3,353,352 and 

 

 

 

 

$2,113,578 at December 31, 2011 and 2010, respectively

 

17,677,831

 

13,354,379

Construction in progress

 

3,202,483

 

272,727

Biological assets, net of accumulated amortization of $1,090,459 and 

 

 

 

 

$431,356 at December 31, 2011 and 2010, respectively

 

3,886,580

 

3,440,253

Intangible assets, net

 

1,522,709

 

742,954

 

 

 

 

 

Total Assets

$

47,067,515

$

32,595,555

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

Short-term loans

$

4,721,064

$

728,266

Accounts payable and accrued payables

 

316,473

 

136,536

Due to An Puluo

 

1,090,563

 

-

Acquisition payables

 

-

 

921,212

Other payables

 

781,037

 

-

Due to related party

 

120,326

 

-

Total Current Liabilities

 

7,029,463

 

1,786,014

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

Common stock ($0.001 par value, 50,000,000 shares authorized,

 

 

 

 

10,135,000 and 10,125,000 shares issued and outstanding as of 

 

 

 

 

December 31, 2011 and 2010, respectively)

 

10,135

 

10,125

Additional paid in capital

 

13,520,276

 

13,445,712

Statutory surplus reserves

 

2,416,647

 

1,510,423

Retained earnings

 

21,795,072

 

14,605,162

Accumulated other comprehensive income

 

2,295,922

 

1,238,119

Total Stockholders' Equity

 

40,038,052

 

30,809,541

Total Liabilities and Stockholders' Equity

$

47,067,515

$

32,595,555

 

 

 

 

 

 

TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 

 

 

 

 

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

Sales

$

31,437,795

$

21,279,164

Cost of goods sold

 

20,048,000

 

12,097,076

Gross profit

 

11,389,795

 

9,182,088

 

 

36.2%

 

 

Operating expenses:

 

 

 

 

General and administrative expenses

 

2,532,382

 

1,131,421

Selling expenses

 

625,123

 

63,578

Total operating expenses

 

3,157,505

 

1,194,999

 

 

 

 

 

Income from operations

 

8,232,290

 

7,987,089

 

 

 

 

 

Other income (expense):

 

 

 

 

Interest expense

 

(181,221)

 

(31,388)

Subsidy income

 

233,928

 

221,897

Other expense

 

(188,863)

 

(18,926)

Total other income (expenses)

 

(136,156)

 

171,583

 

 

 

 

 

Income before income taxes

 

8,096,134

 

8,158,672

 

 

 

 

 

Income taxes

 

-

 

-

 

 

 

 

 

Net income

 

8,096,134

 

8,158,672

Other comprehensive income:

 

 

 

 

Unrealized foreign currency translation adjustment

 

1,057,803

 

808,769

 

 

 

 

 

Comprehensive income

$

9,153,937

$

8,967,441

 

 

 

 

 

Earnings per share - basic and diluted: 

 

 

 

 

Weighted-average shares outstanding, basic and diluted

 

10,135,000

 

9,023,630

 

 

 

 

 

Basic & diluted earnings per share

$

0.80

$

0.90

 

 

 

 

 

  

TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

For the Year Ended December 31,

 

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 CASH FLOWS FROM OPERATING ACTIVITIES 

 

 

 

 

 Net income       

$

8,096,134

$

8,158,672

 Adjustments to reconcile net income to net cash 

 

 

 

 

   provided by operating activities: 

 

 

 

 

 Depreciation and amortization 

 

2,248,593

 

1,124,874

 Amortization of prepaid rental expenses 

 

201,339

 

152,276

 Bad debt expense to other receivables 

 

54,218

 

(80,622)

 Stock-based compensation 

 

255,454

 

26,918

 Written off advances to suppliers 

 

26,584

 

-

 Non-controlling interest 

 

-

 

-

 Changes in operating assets and liabilities: 

 

 

 

 

 Accounts receivable 

 

(978,788)

 

-

 Inventories 

 

(4,848,421)

 

(1,345,473)

 Advances to suppliers 

 

1,001,973

 

(360,169)

 Prepaid expenses 

 

(241,153)

 

(83,832)

 Other receivables 

 

113,551

 

(217,333)

 Accounts payable and accrued payables 

 

172,554

 

(222,172)

 Other payables 

 

590,777

 

-

 Total adjustments 

 

(1,403,319)

 

(1,005,533)

 Net cash provided by operating activities     

 

6,692,815

 

7,153,139

 

 

 

 

 

 CASH FLOWS FROM INVESTING ACTIVITIES 

 

 

 

 

 Acquisition deposit 

 

-

 

(530,303)

 Acquisition payables 

 

(940,994)

 

-

 Advance to An Puluo 

 

(1,084,363)

 

-

 Prepaid long-term rental expenses 

 

(1,906,343)

 

-

 Purchase of intangible assets 

 

(785,223)

 

-

 Construction in progress 

 

(3,152,428)

 

(818,182)

 Purchase of biological assets 

 

(1,923,470)

 

(3,195,574)

 Purchase of plant and equipment 

 

(4,606,733)

 

(5,399,050)

 Net cash used in investing activities 

 

(14,399,554)

 

(9,943,109)

 

 

 

 

 

 CASH FLOWS FROM FINANCING ACTIVITIES 

 

 

 

 

 Repayment of short-term loans 

 

(743,564)

 

(665,690)

 Proceeds from short-term loans 

 

4,647,272

 

710,070

 Issuance of common stock 

 

-

 

12,000,000

 Offering expense for issuance of common stocks 

 

-

 

(2,841,740)

 Due to An Puluo 

 

1,073,517

 

-

 Due to related parties 

 

161,793

 

(662,460)

 Net cash provided by financing activities       

 

5,139,018

 

8,540,180

 

 

 

 

 

 NET (DECREASE) INCREASE IN CASH 

 

(2,567,721)

 

5,750,210

 

 

 

 

 

 EFFECT OF EXCHANGE RATE CHANGES ON CASH 

 

1,102,461

 

211,288

 

 

 

 

 

 CASH, BEGINNING OF YEAR 

 

7,983,793

 

2,022,295

 

 

 

 

 

 CASH, END OF YEAR 

$

6,518,533

$

7,983,793

 

 

 

 

 

 SUPPLEMENTAL DISCLOSURES: 

 

 

 

 

 Cash paid during the period for: 

 

 

 

 

 Interest paid 

$

201,589

$

62,567

 Income tax paid 

$

-

$

-

 

 

 

 

 

SOURCE Tianli Agritech, Inc.



RELATED LINKS
http://www.tianli-china.com
http://www.mz-ir.com
http://webcast.mz-ir.com/publico.aspx?codplataforma=3650

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