2014

Tianli Agritech Reports Second Quarter 2012 Results -$4 million cash flows from operations in 1H 2012, up 45% YOY

-Completed construction of 405 farms for Enshi Black Hog program

WUHAN CITY, China, Aug. 9, 2012 /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, 2012.  

Second Quarter 2012

Summarized Second Quarter 2012 Results
(Dollar Figures Rounded – Percentages based on Actual Results)



Q2 2012

Q2 2011

+/-

Sales

$6.4 million

$7.7 million

-17%

Gross Profit

$0.8 million

$3.2 million

-75%

Selling, General and Administrative Expenses

$0.4 million

$0.6 million

-33%

Net Income*

$0.3 million

$2.5 million

-87%

EPS*

$0.03

$0.24

-88%

*Net income and EPS from continuing operations

Sales for the second quarter of 2012 decreased 17% to $6.4 million primarily due to the drop in selling prices for market hogs and fewer breeder hogs sold in the three months ended June 30, 2012 compared to the same period a year ago.  The Company sold 28,034 hogs in total compared to 27,589 hogs in the comparable period in 2011.

Breeder hog sales declined 26% due to soft market demand for breeder hogs. The Company sold 6,883 breeder hogs in the second quarter of 2012, down 24% from 9,012 breeder hogs sold in the same period last year. Pricing for breeder hogs remained relatively flat year over year. The Company sold approximately 14% more market hogs in the second quarter of 2012 than it did in the same period of 2011, while the average price per market hog decreased by 22%. As a result, sales revenue attributable to market hogs fell by approximately 11%.  Breeder hog revenues in the three months ended June 30, 2012 comprised 33% of revenues for the quarter.

Sales by Products

(Dollar Figures Rounded – Percentages based on Actual Results)  




















   Q2 2012


   Q2 2011

Products


No. of Hogs
Sold




Sales
Revenues


No. of Hogs
Sold




Sales
Revenues

Breeder Hogs


6,883





 

$2.1 million


9,012





 

$2.8 million

Market Hogs


21,151




 

$4.3 million


18,577





 

$4.8 million

Total


28,034





 

$6.4 million


27,589





 

$7.7 million

Gross profit was $0.8 million, a 75% decrease from the same period last year. Gross margin was 12.5% in the second quarter of 2012 compared to 42% in the second quarter of 2011 as a result of significantly higher feed costs, the sale of fewer breeder hogs in Q2 2012 and the decrease in prices received for market hogs.

Selling, general and administrative (SG&A) expenses were $0.4 million in the second quarter of 2012, a decrease of approximately $0.2 million from $0.6 million in the second quarter of 2011. Operating income of $0.4 million in the three months ended June 30, 2012 was down 86% from the corresponding period a year ago. Operating margins were 8.5% and 27.7% in the second quarter of 2012 and 2011, respectively.

Net income from continuing operations for the three months ended June 30, 2012 was approximately $0.3 million, down 89% from the same period last year. Earnings per fully diluted share were $0.03 compared to $0.24 last year. The weighted average diluted shares outstanding were approximately 10.1 million for both periods.

"We are managing our business for the long term," began Tianli's Chairwoman and CEO, Ms. Hanying Li. "Despite very challenging market conditions for breeder and market hogs in China, we still generated positive cash flows and remained profitable. Our ability to quickly turn our hog inventory into cash, along with our investments in our Black Hog program, differentiates Tianli from other hog operators. We remain focused on maintaining a solid financial position in order to capitalize on the ongoing industry consolidation." 

First Half 2012

Summarized First Half 2012 Results
(Dollar Figures Rounded – Percentages based on Actual Results)



1H 2012

1H 2011

+/-

Sales

$13.1 million

$13.6 million

-4%

Gross Profit

$2.1 million

$5.7 million

-63%

Selling, General and Administrative Expenses

$1.1 million

$1.4 million

-27%

Net Income*

$1.0 million

$4.3 million

-76%

EPS*

$0.10

$0.43

-77%

*Net income and EPS from continuing operations

Sales for the six months ended June 30, 2012 was $13.1 million, down 4% from $13.6 million in the same period a year ago. Tianli sold 55,129 hogs in the first half of 2012 compared to 50,609 hogs sold in the first half of 2011, an increase of 9%. Sales of breeder hogs and market hogs were $4.1 million and $9.0 million in the first six months of 2012, down 21% and up 8%, respectively, from the corresponding period a year ago.

Gross profit decreased 63% to $2.1 million, representing a gross margin of 16.1%.

Operating expenses were $1.0 million, down 27% from $1.4 million in the first half of 2011. Operating income fell 75% to $1.0 million from $4.2 million in the prior year period.

Net income from continuing operations was $1.0 million compared to $4.3 million in the first half of 2011. EPS for the first six months of 2012 was $0.10 based on 10.1 million weighted average diluted shares outstanding.

Financial Position

As of June 30, 2012, the Company had $5.7 million in cash, compared to $6.5 million as of December 31, 2011. Working capital was $11.1 million, down from $12 million as of December 31, 2011. Because the Company conducts its hog sales on cash on delivery basis, it has low levels of accounts receivable outstanding, which totaled $0.13 million at June 30, 2012. Inventories were $9.2 million compared to $9.6 million at the end of 2011. 

Tianli generated approximately $4 million in cash from operating activities and spent $4.1 million on capital expenditures and breeding stock during the first six months of 2012, primarily to support its Enshi Black Hog program.  It is envisioned that we will fund construction of up to 1,000 program farms by the end of this year, of which over 405 program farms have been completed and put into use as of June 30, 2012. Additionally, it has spent $1.27 million on another 92 farms that will become operational during the third quarter of 2012. Spending on construction of farms for the Black Hog Program continues and as of today, in addition to the 92 farms under construction as of the end of the second quarter, there are additional farms in process.  The goal is to construct and provide sows for farms having a production capacity of 40,000 hogs during 2012 with a long run target of an annual capacity of 1 million hogs.

Business Updates

Tianli's 11th farm, designed to raise Black Hogs, has approximately 900 breeder hogs and over 2,000 market Hogs in stock. The Company expects to expand the breeder hog base to approximately 3,500 by the end of 2012.

The Company began selling Black Hogs raised through the 405 farms it has partnered within Enshi during the last week of July. The average sales price per Black Hog is approximately 1,600 RMB, or 10% higher than the current market price for normal market hogs in China. The Company expects to sell approximately 1,000 Black Hogs by the end of August 2012.

In March 2012, Tianli commenced construction of a 3,210 square meter feed facility located in Laifeng County, Enshi Area. Through the end of July, it has completed construction of the office building, warehouse and barns. Once complete, the new feed facility will be capable of producing up to 30,000 tons of feed to support 100,000 hogs.  By adding shifts, the facilities can double production to 60,000 tons of feed a year in support of 200,000 hogs.  Management anticipates completing construction by the end of September 2012 and to commence formal operations in November 2012.

Second Quarter 2012 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 Conference Call".

Conference Call


Date:

Friday, August 10, 2012

Time:

8:00 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 First Quarter Conference Call  or

Webcast link:

http://webcast.mzvaluemonitor.com/Home/Login/813a0eae-4dc5-41db-a6f6-8c769f6d5eeb

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through August 17,2012. To listen, please call +1-877-344-7529 within the United States or +1-412-317-0088 if calling internationally.  Conference call code for replay is 10017419.

This call is being webcast by MZ Technologies and can be accessed by clicking on the following link: http://webcast.mzvaluemonitor.com/Home/Login/813a0eae-4dc5-41db-a6f6-8c769f6d5eeb


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. Specifically, there can be no guaranty that the offering mentioned herein will close. 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


Company – CHINA

Tianli Agritech, Inc.
Ms. Joyce Shen
Administrative Secretary
Phone: 86-27-82740726  x 895
Email: ir@tianli-china.com
Web: http://www.tianli-china.com

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

 

TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)



June 30, 2012


December 31, 2011



(Unaudited)



ASSETS





Current Assets:





Cash and cash equivalents

$

5,697,854

$

6,507,742

Accounts receivable


127,265


126,866

Inventories


9,207,605


9,578,040

Advances to suppliers


226,648


-

Prepaid expenses


199,550


164,664

Loan to An Puluo


-


1,101,582

Other receivables


251,182


154,775

Assets - discontinued operations


-


1,402,842

Total Current Assets


15,710,104


19,036,511

Long-term prepaid expenses


1,735,345


1,818,399

Plant and equipment, net


21,031,864


17,676,999

Construction in progress


1,358,505


3,126,317

Biological assets, net


4,645,060


3,886,580

Land use rights, net


1,508,825


1,522,709

Total Assets

$

45,989,703

$

47,067,515






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Short-term loans

$

2,345,892

$

4,721,064

Accounts payable and accrued liabilities


136,231


172,541

Due to An Puluo


-


35,951

Other payables


2,041,411


781,037

Due to related party


125,725


120,326

Liabilities - discontinued operations


-


1,198,544

Total Liabilities


4,649,259


7,029,463






Stockholders' Equity:





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





authorized, 10,135,000 shares issued and outstanding on            June 30, 2012 and December 31, 2011)


10,135


10,135

Additional paid in capital


13,530,963


13,520,276

Statutory surplus reserves


2,416,647


2,416,647

Retained earnings


22,817,406


21,795,072

Accumulated other comprehensive income


2,565,293


2,295,922

Total Stockholders' Equity


41,340,444


40,038,052

 Total Liabilities and Stockholders' Equity

$

45,989,703

$

47,067,515

 


 

TIANLI AGRITECH, INC. AND SUBSIDIARIES

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,



2012


2011


2012


2011

Revenue

$

6,391,343

$

7,670,429

$

13,097,764

$

13,577,395

Cost of goods sold


5,589,803


4,452,623


10,994,216


7,896,443

    Gross profit


801,540


3,217,806


2,103,548


5,680,952










General and administrative expenses


425,207


610,983


1,058,674


1,380,957

Selling expenses


1,253


25,128


1,253


62,310

Income from operations


375,080


2,581,695


1,043,621


4,237,685










Other income (expense):









Interest expenses and bank charges


(85,692)


(98,700)


(179,358)


(108,973)

Subsidy income


27,339


22,970


161,986


213,267

Other income (expense)


(44,927)


(26,814)


(43,094)


(25,359)

Total other income (expense)


(103,280)


(102,544)


(60,466)


78,935










Income before income taxes


271,800


2,479,151


983,155


4,316,620

Income taxes


-


-


-


-

Net income from continuing operations


271,800


2,479,151


983,155


4,316,620










Discontinued operations:









Gain from operations of discontinued component, net of taxes


43,836


-


39,179


-

Net income

$

315,636

$

2,479,151

$

1,022,334

$

4,316,620










Earnings per share:









Basic and diluted weighted average shares


10,135,000


10,125,000


10,135,000


10,125,000

Basic and diluted earnings per share from continuing operations

$

0.03

$

0.24

$

0.10

$

0.43

Basic and diluted earnings per share from discontinued operations

$

-

$

-

$

-

$

-










Comprehensive income:









Net income

$

315,636

$

2,479,151

$

1,022,334

$

4,316,620

Unrealized foreign currency translation adjustment


21,566


273,638


269,371


461,419

Comprehensive income

$

337,202

$

2,752,789

$

1,291,705

$

4,778,039

 

 

 

TIANLI AGRITECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)

(UNAUDITED)




For the Six Months Ended June 30,



2012


2011

CASH FLOWS FROM OPERATING ACTIVITIES





Net income

$

1,022,334

$

4,316,620

Adjustments to reconcile net income to net cash





 provided by operating activities:





Depreciation and amortization


1,487,841


979,443

Amortization of prepaid rental expenses


96,293


-

Bad debt expense


-


104,245

Stock-based compensation


10,687


173,581

Gain on disposal of biological assets


-


(168,710)

Loss from disposal of construction in progress


49,344


-

Changes in operating assets and liabilities:





Accounts receivable


519


(67,791)

Inventories


440,097


(2,324,369)

Advances to suppliers


(226,871)


707,637

Prepaid expenses


(149,952)


79,307

Other receivables


(40,618)


(1,088,237)

Accounts payable and accrued liabilities


(37,595)


42,602

Other payables


1,257,271


-

Net cash provided by operating activities from continuing operations


3,909,350


2,754,328

Net cash used in operating activities from discontinued operations


114,969


-

Net cash provided by operating activities


4,024,319


2,754,328






CASH FLOWS FROM INVESTING ACTIVITIES





Cash collected from loan to An Puluo


1,110,635


-

Payment for long-term prepaid expenses


-


(85,701)

Purchase of plant and equipment


(161,998)


(1,693,392)

Purchase of farms


-


(2,152,543)

Addition to construction in progress


(2,628,812)


(2,198,927)

Proceeds from disposal of construction in progress


571,025


-

Purchase of biological assets


(1,346,696)


(1,515,063)

Proceeds from disposal of biological assets


-


267,732

Net cash used in investing activities


(2,455,846)


(7,377,894)






CASH FLOWS FROM FINANCING ACTIVITIES





Increase in restricted cash


-


(305,759)

Repayment of short-term loans


(3,173,243)


-

Proceeds from short-term loans


761,578


3,057,590

Net cash provided by (used in) financing activities


(2,411,655)


2,751,831






EFFECT OF EXCHANGE RATE CHANGES ON CASH


33,304


137,456

NET DECREASE IN CASH


(809,888)


(1,734,279)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


6,507,742


7,983,793

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

5,697,854

$

6,249,514






SUPPLEMENTAL DISCLOSURES:





Cash paid during the period for:





Interest expense paid

$

191,357

$

36,075

Income tax paid

$

-

$

-

 

SOURCE Tianli Agritech, Inc.



RELATED LINKS
http://webcast.mzvaluemonitor.com/Home/Login/813a0eae-4dc5-41db-a6f6-8c769f6d5eeb
http://www.tianli-china.com

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