2014

Tianli Agritech Reports Second Quarter 2011 Results Revenue Increases 41% to $7.7 million

Net Income Increases 17% to a record $2.5 million

WUHAN, China, Aug. 15, 2011 /PRNewswire-Asia/ -- Tianli Agritech, Inc. (NASDAQ: OINK), a leading producer of breeder and market hogs headquartered in Wuhan City, China, today announced its financial results for the quarter ended June 30, 2011.

Second Quarter Highlights:

  • Revenue increased 41% year-over-year to $7.7 million due to higher selling prices and volumes.
  • Breeder hog revenue increased by 24% in the quarter, representing 37% of total revenue.  
  • Net income increased 17% to a record $2.5 million.


Summarized Second Quarter 2011 Results


Q2 2011

Q2 2010

Increase (Decrease)

Sales

$7.7 million

$5.4 million

41%

Gross Profit

$3.2 million

$2.4 million

35%

Selling, General and Administrative Expenses

$0.6 million

$0.3 million

141%

Net Income

$2.5 million

$2.1 million

17%

EPS*

$0.24

$0.26

(8%)


* EPS calculations are based on the 10,125,000 shares outstanding during Q2 2011 and 8,125,000 shares outstanding during Q2 2010, reflecting the effect of the Company's July 2010 IPO.



Sales by Products

(Dollar Figures Rounded - Percentages based on Actual Results)




















Q2 2011


Q2 2010

Products


No. of Hogs
Sold




Sales
Revenues


No. of Hogs
Sold




Sales
Revenues

Breeder Hogs


9,012






$2.8 million


7,046






$2.3 million

Market Hogs


18,577






$4.8 million


18,769






$3.2 million

Total


27,589






$7.7 million


25,815






$5.4 million




Tianli's Chairwoman and CEO, Ms. Hanying Li, stated, "We benefited from steady increases in market hog pricing during the quarter as shortages continue to plague many markets, while demand for breeder hogs accelerated as customers are looking to expand their own market hog raising capacity. Our diversification allows us to service both markets simultaneously, providing us with the flexibility that few operators in our geographic areas have. Our diversified model also helps to diminish revenue and margin fluctuations, which can occur on a quarter by quarter basis. We expect further sales growth for both breeders and market hogs as our new farms come online."

Revenue for the second quarter of 2011 increased $2.3 million, or 41%, to $7.7 million from the prior year. The Company sold a total of 27,589 hogs compared to 25,815 hogs sold in the comparable 2010 period. Sales of breeder hogs increased 24% to $2.8 million, with approximately 28% more breeder hogs sold, as the average price per hog decreased slightly due to a greater mix of lower margin crossbred breeders sold during the second quarter of 2011.

Market hog sales increased 53% to $4.8 million. The number of market hogs was relatively flat at 18,577 while the average price per hog increased 55% year-over-year to $260.00 due to high market demand.

Gross profit in the second quarter of 2011 was $3.2 million, a 35% increase over the same period last year. Gross margin was approximately 42% and 44% for the second quarter of 2011 and 2010, respectively, as increased cost of feed.

Selling, general and administrative expenses were $0.6 million in the second quarter of 2011, an increase of approximately $0.3 million. Approximately $0.2 million of the increase was related to higher public company expenses not present in the year ago period. Expenses were impacted by a $0.1 million increase in bad debt allowance which reflected a more conservative procedure on the Company's accounts receivable aging report.

Net income for the three months ended June 30, 2011 was approximately $2.5 million, up 17% from $2.1 million last year. Earnings per fully diluted share were $0.24 compared to $0.26 last year due to a 25% increase in the shares outstanding associated with the Company's IPO and 2.0 million shares placed with investors in July of 2010.

First Half 2011 Results


Summarized First Half 2011 Results


1H 2011

1H 2010

Increase (Decrease)

Sales

$13.6 million

$9.9 million

37%

Gross Profit

$5.7 million

$4.2 million

34%

Selling, General and Administrative Expenses

$1.4 million

$0.4 million

225%

Net Income

$4.3 million

$3.8 million

14%

EPS*

$0.43

$0.47

(9%)


* EPS calculations are based on the 10,125,000 shares outstanding during 1H 2011 and 8,125,000 shares outstanding during 1H 2010, reflecting the effect of the Company's July 2010 IPO.



Net sales increased 37% to $13.6 million during the six months ended June 30, 2011. Tianli sold 50,609 hogs at an average sales price of $268 per hog, an increase of 7% and 27%, respectively. Breeder hog sales increased 44% to $5.2 million, accounting for 39% of total sales in the first half of 2011. Market hog sales were $8.3 million, up 33% from $6.3 million in the first half of 2010.

Gross profit increased $1.5 million to $5.7 million. Gross margin percentages were 42% and 43% for the first six months of 2011 and 2010, respectively.

Selling, general and administrative expenses were $1.4 million compared to $0.4 million in the prior year. The Company incurred $0.1 million of non-cash stock compensation expenses and $0.1 million of bad debt provisions in the first six months of 2011. Operating income was $4.3 million and $3.8 million in the first six months of 2011 and 2010, respectively.

Business Updates

Tianli sells breeder hogs, which are used by other hog farms for their hog production, and market hogs, which are sent to pork processing facilities for preparation of fresh, refrigerated or frozen pork products for sale to consumers. Tianli has concentrated on the breeder hog market and is focused on continually improving the genetics and nutrition associated with raising its hogs. The gross margin for breeder hogs is higher than that of market hogs due to generally higher prices, as well as the lower feed and other costs as breeder hogs are generally sold at a younger age than market hogs.  Tianli utilizes its proprietary bio feed premix, which the Company believes enables increased feed absorption, decreases mortality rates and provides savings on veterinary and medicine costs.

Over the past year, Tianli has used capital raised in its IPO in addition to internal cash flow to fund the acquisition of two new farms, expanding its production capabilities. Farm #10 and #11 were acquired in December 2010 and May 2011 respectively. Farm's #10 will contribute to sales of hogs at the end of 2011, and Farm #11 is expected to more significantly contribute to sales of hogs in 2012.

In addition to the sales of breeder and market hogs, Tianli entered into an agreement, subject to negotiation of certain terms, with An Puluo Foods which allows Tianli to manage fresh pork retail counters in Greater Wuhan in supermarkets such as Wal-Mart, Zon100 and RT-Mart. Through the cooperation with An Puluo, Tianli can bring current products and future products including black hog meat, to the retail market more quickly through An Puluo's current retail channel.

On June 22, 2011, the company established a wholly-owned subsidiary Hubei Tianzhili Breeder Hog Co., Ltd. ("Tianzhili") in Enshi Region, where Tianli launched its black hog project. Since inception, the Company has signed agreements with three local cooperatives in the Enshi Autonomous Prefecture in Hubei Province whereby the Company, the relevant governmental agencies, and the cooperatives will assist farmers to breed and raise Enshi black hogs. Thus Tianli will provide highly desired, premium black hogs to the market which should not only result in higher revenues and profits, but also contribute to Tianli's brand recognition.

"We are excited about the growth outlook for our industry and our company," continued Ms. Hanying Li, Chairwoman and CEO of Tianli Agritech.  "Our expanding network of farms will continue to support our core business operations of selling breeders and market hogs. More importantly, our cooperation with AnPuluo Farms and their retail sales points will provide us an established platform from which we can greatly increase our profits through sales of premium black hog meat.  We envision our black hog project being a key growth driver of our business in the coming years and a means to provide additional returns to our global shareholder base."

Financial Position

As of June 30, 2011, the Company had $6.2 million in cash, compared to $8.0 million as of December 31, 2010. The Company generated $4.1 million of cash from operations in the first six months of 2011. Working capital as of June 30, 2011 was $10.7 million, including $7.3 million of inventories and $1.4 million of other receivables.

Tianli invested approximately $8.7 million in capital expenditures and breeding stock during the first six months of 2011 to facilitate its continued growth.

Earnings Conference Call

To attend the Tianli second quarter 2011 conference call, please use either the dial-in or webcast information below.

Ms. Hanying Li, Chairwoman and CEO, Mr. Bihong Zhang, CFO and Mr. Simon Guo, Tianli's VP, will host the 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 Second Quarter 2011 Conference Call".


Conference Call


Date:

Tuesday, August 16, 2011

Time:

8:00 am Eastern Time, US

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

+1-877-317-6776

International Dial-In:

+1-412-317-6776

Asia Dial-In:

Northern China: 10-800-712-2304
Southern China: 10-800-120-2304
Hong Kong: 800-962475

Conference ID:

Tianli Agritech Second Quarter 2011 Conference Call

Webcast link:

http://webcast.mz-ir.com/publico.aspx?codplataforma=3093




Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through August 24, 2011. To listen, please call +1-877-344-7529 within the United States or +1-412-317-0088 if calling internationally. Utilize the pass code 10003233 for the replay.

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=3093.

About Tianli Agritech, Inc.

Tianli Agritech, Inc. is in the business of breeding, raising and selling hogs in the People's Republic of China. 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:


Tianli Agritech, Inc.

Mr. Kuni Qiao

Executive Assistant

Phone: 86-151-0113-7061

Email: executiveassistant01@tianli-china.com

Web: http://www.tianli-china.com


Investor Relations

John Mattio, SVP

HC International, Inc.

Phone: (212) 301-7130

Email: john.mattio@hcinternational.net

Web: http://www.hcinternational.net



TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)



June 30, 2011


December 31, 2010



(Unaudited)



ASSETS





Current Assets:





Cash and cash equivalents

$

6,249,514

$

7,983,793

Restricted cash


309,043


-

Accounts receivable


68,519


-

Inventories


7,258,060


4,819,805

Advances


147,525


1,036,765

Acquisition deposits


-


530,303

Prepaid expenses


4,814


83,832

Other receivables


1,382,582


330,744

Total Current Assets


15,420,057


14,785,242

Plant and equipment, net


15,147,037


13,354,379

Construction advance


-


272,727

Construction in progress


2,222,542


-

Biological assets, net


4,511,895


3,440,253

Long-term prepaid expenses


1,806,271


-

Intangible assets, net


1,252,089


742,954

Total Assets

$

40,359,891

$

32,595,555






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Short-term loans

$

3,832,128

$

728,266

Accounts payable and accrued liabilities


390,998


136,536

Acquisition payables


417,207


921,212

Due to related party


121,291


-

Total Liabilities


4,761,624


1,786,014






Stockholders' Equity:





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





   authorized, 10,125,000 issued and outstanding on





   June 30, 2011 and December 31, 2010)


10,125


10,125

Additional paid in capital


13,456,399


13,445,712

Statutory surplus reserves


2,002,849


1,510,423

Retained earnings


18,429,356


14,605,162

Accumulated other comprehensive income


1,699,538


1,238,119

   Total Stockholders' Equity


35,598,267


30,809,541

       Total Liabilities and Stockholders' Equity

$

40,359,891

$

32,595,555




TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(AMOUNTS EXPRESSED IN US DOLLARS)

(Unaudited)



For the Three Months Ended June 30,


For the Six Months Ended

June 30,



2011


2010


2011


2010

Revenue

$

7,670,429

$

5,448,315

$

13,577,395

$

9,918,259

Cost of goods sold


4,452,623


3,064,619


7,896,443


5,668,572

   Gross profit


3,217,806


2,383,696


5,680,952


4,249,687










General and administrative expenses


610,983


250,921


1,380,957


419,267

Selling expenses


25,128


13,026


62,310


24,765

Income from operations


2,581,695


2,119,749


4,237,685


3,805,655










Other income (expense):









Interest and bank charges


(98,700)


(11,642)


(108,973)


(29,223)

Subsidy income


22,970


-


213,267


-

Other income (expense)


(26,814)


3,748


(25,359)


9,101

Total other income (expense)


(102,544)


(7,894)


78,935


(20,122)










Income before income taxes


2,479,151


2,111,855


4,316,620


3,785,533

Income taxes


-


-


-


-

Net income

$

2,479,151

$

2,111,855

$

4,316,620

$

3,785,533










Basic and diluted weighted average shares


10,125,000


8,125,000


10,125,000


8,125,000

Basic and diluted earnings per share

$

0.24

$

0.26

$

0.43

$

0.47










Comprehensive income:









Net income

$

2,479,151

$

2,111,855

$

4,316,620

$

3,785,533

Unrealized foreign currency









 translation adjustment


273,638


65,219


461,419


67,221

Comprehensive income

$

2,752,789

$

2,177,074

$

4,778,039

$

3,852,754




TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)

(Unaudited)



For the Six Months Ended June 30,



2011


2010

CASH FLOWS FROM OPERATING ACTIVITIES





Net income

$

4,316,620

$

3,785,533

Adjustments to reconcile net income to net cash





provided by operating activities:





Depreciation and amortization


979,443


487,301

Gain on disposal of biological assets


(168,710)


-

Impairment on other receivables


104,245


-

Impairment on inventories


-


59,303

Stock-based compensation


173,581


-

Changes in operating assets and liabilities:





Accounts receivable


(67,791)


-

Inventories


(2,324,369)


117,578

Advances


707,637


1,849

Prepaid expenses


79,307


(169,522)

Other receivables


(1,088,237)


9,459

Accounts payable and accrued liabilities


42,602


(13,039)

Net cash provided by operating activities


2,754,328


4,278,462






CASH FLOWS FROM INVESTING ACTIVITIES





Purchase of plant and equipment


(1,693,392)


-

Addition to construction in progress


(2,198,927)


(1,517,980)

Purchase of biological assets


(1,515,063)


(1,485,366)

Proceeds from disposal of biological assets


267,732


-

Payments for long-term prepaid expenses


(85,171)


-

Purchase of farms


(2,152,543)


(1,218,024)

Net cash used in investing activities


(7,377,894)


(4,221,370)






CASH FLOWS FROM FINANCING ACTIVITIES





Increase in restricted cash


(305,759)


-

Proceeds from short-term loans


3,057,590


-

Net cash provided by financing activities


2,751,831


-






NET (DECREASE) INCREASE IN CASH


(1,871,735)


57,092

EFFECT OF EXCHANGE RATE CHANGES ON CASH


137,456


15,494

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


7,983,793


2,022,295

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

6,249,514

$

2,094,881






SUPPLEMENTAL DISCLOSURES:





Cash paid during the period for:





Interest expense paid

$

36,075

$

18,261

Income tax paid

$

-

$

-






NON-CASH INVESTING AND FINANCING TRANSACTIONS





The Company purchased from assets in 2010 and 2011 and with these acquisitions, the Company is obligated to make payments to sellers for these assets as follows:

Fair value of assets acquired

$

3,660,678

$

-

Cash paid in 2010


(1,080,303)


-

Cash paid in 2011


(2,152,543)


-

Exchange realignment


10,625


-

Acquisition payable as of period end

$

417,207

$

-




SOURCE Tianli Agritech, Inc.



RELATED LINKS
http://www.hcinternational.net
http://www.tianli-china.com
http://webcast.mz-ir.com/publico.aspx?codplataforma=3093

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