AgFeed Industries, Inc. Announces First Quarter Results

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May 11, 2010, 06:55 ET

NEW YORK, May 11 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED, NYSE Alternext: ALHOG), one of the largest independent hog production and animal nutrient companies in China, today announced its results for the first quarter of 2010. Revenue for the first quarter reached $52.9 million an increase of 58% compared to the first quarter of 2009. Production volumes increased by 24% in the Company's hog division and 119% in the animal nutrition division, as compared to the same period in 2009

Dr. Songyan Li AgFeed's Chairman stated, "In spite of falling hog prices and a softness in orders for hog feed our company's divisions continued to show their resiliency and wherewithal in dealing with our large customer base. I expect hog prices will begin to appreciate over the next 90 days and will lead to hog prices being 12% -15% higher in the second half of the year. Our 'AgFeed, Government & Farmer' strategy is taking hold as evidenced by our Dahua City and Xinyu City local government hog farm projects, featuring a true partnership to introduce western hog production technologies for the health and benefit of the Chinese consumer. These projects, when completed, will be able to produce over 800,000 top line hogs every year. I believe that we will benefit from our ongoing investments in our customers and businesses. We recently listed our stock on Europe's Alternext, an affiliate of the NYSE, as part of our ongoing effort to continually expand our base of shareholders, which today stands at over 22,000 shareholders of record. On May 18th, I will be part of AgFeed's team presenting at Rodman & Renshaw's investor conference in London."

Mr. Junhong Xiong AgFeed's President observed, "We are pleased with the results we achieved in a challenging operating environment. During the quarter, the average hog price was 11% less than the first quarter of last year. Many of our customers are struggling to withstand the combined challenge of low hog prices and increased feed prices due to the high cost of corn. In order to support our animal nutrition customers and cement our market position, AgFeed has chosen to exploit its relative financial strength by extending payment terms to its customers. Facing similar pressures in our Hog Division, we were able to sell hogs at relatively advantageous prices by accepting payment terms from certain long-standing and credit worthy customers."

ABOUT AGFEED INDUSTRIES, INC.

NASDAQ Global Market Listed. AgFeed Industries (www.agfeedinc.com) is a U.S. company with its primary operations in China. AgFeed has two profitable business lines -- animal nutrients in premix, concentrates and complete feeds and hog production. AgFeed is one of China's largest commercial hog producers in terms of total annual hog production as well as one of the largest premix feed company in terms of revenues. China is the world's largest hog producing country that produced over 645 million hogs in 2009, compared to approximately 100 million hogs produced annually in the U.S. China also has the world's largest consumer base for pork consumption. Over 62% of total meat consumed in China is pork. Hog production in China enjoys income tax free status. The feed markets in which AgFeed operates represent a $20 billion segment of China's $58 billion per year animal feed market.

SAFE HARBOR DISCLOSURE NOTICE

This press release may contain forward-looking information about the Company. You can identify these statements by the fact that they use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects. Readers are cautioned not to place undue reliance on forward-looking statements because actual results may differ materially from those expressed in, or implied by, the statements. For a list of factors that could affect the Company's results, see the Company's filings with the Securities and Exchange Commission, including "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Cautionary Statement for Forward-Looking Statements," set forth in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2010. Any forward-looking statement that the Company makes speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. The information contained in this press release is made as of the date of the press release, even if subsequently made available by the Company on its website or otherwise.

Contact: Investor Relations: AgFeed Industries, Inc. Tel: (917) 804-3584 Email: [email protected]

The Company's policy is to handle all questions by email to [email protected] and they will be answered as soon as possible.


AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME


			Three Months Ended March 31,
			2010		2009
			(unaudited)		(unaudited)

Revenues		$	52,859,067	$	33,429,274
Cost of goods sold			46,539,785		27,625,869
Gross profit			6,319,282		5,803,405

Operating expenses
	Selling expenses		1,030,623		863,867
	General and administrative expenses		3,664,385		1,757,172
	Total operating expenses		4,695,008		2,621,039

Income from operations			1,624,274		3,182,366

Non-operating income (expense):
	Other expense		(96,373)		192,681
	Interest income		48,011		60,562
	Interest and financing costs		(124,911)		(152,914)
	Foreign currency transaction gain (loss)		13,803		(1,831)

	Total non-operating income (expense)		(159,470)		98,498

Income before provision for income taxes			1,464,804		3,280,864
Provision for income taxes			453,580		215,550
Net income including noncontrolling interest			1,011,224		3,065,314
Less: Net income (loss) attributed to noncontrolling interest			(56,194)		46,474
Net income attributed to AgFeed			1,067,418		3,018,840

Other comprehensive income
Foreign currency translation gain (loss)			764		(153,854)
Comprehensive Income		$	1,068,182	$	2,864,986

Weighted average shares outstanding :
	Basic		44,869,485		37,933,141
	Diluted		45,213,024		37,933,141

Earnings per share attributed to AgFeed common stockholders:
	Basic	$	0.02	$	0.08
	Diluted	$	0.02	$	0.08



Earnings before interest, taxes, depreciation and amortization:

Net income		$	1,067,418	$	3,018,840
Interest			124,911		152,914
Taxes			453,580		215,550
Depreciation			811,899		610,706
Amortization			23,191		12,779
EBITDA		$	2,480,999	$	4,010,789

EBITDA per share		$	0.06	$	0.11


AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS



				March 31,		December 31,
				2010		2009
				(unaudited)
ASSETS

CURRENT ASSETS:
	Cash and cash equivalents		$	28,620,027	$	37,580,154
	Accounts receivable, net of allowance for doubtful accounts
	of $498,612 and $415,765			22,999,966		14,397,793
	Advances to suppliers			813,242		1,173,941
	Other receivables			4,658,159		2,186,643
	Inventory			25,649,502		23,835,412
	Prepaid expenses			974,950		1,325,150
	Debt issue costs			27,287		34,706

		Total current assets		83,743,133		80,533,799

PROPERTY AND EQUIPMENT, net				27,508,016		26,991,851
CONSTRUCTION-IN-PROCESS				10,570,727		7,615,132
INTANGIBLE ASSETS, net				43,910,857		43,808,499
OTHER ASSETS				4,072,546		3,998,739

	TOTAL ASSETS		$	169,805,279	$	162,948,020

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
	Short-term loan		$	4,401,000	$	4,401,000
	Accounts payable			10,070,537		6,162,385
	Other payables			4,039,693		1,892,858
	Unearned revenue			415,373		582,266
	Accrued expenses			73,207		83,649
	Accrued payroll			649,280		975,485
	Tax and welfare payable			610,336		396,370
	Interest payable			137,919		120,419

		Total current liabilities		20,397,345		14,614,432

CONVERTIBLE NOTES, net of debt discount of $64,215 and $81,675				935,785		918,325

TOTAL LIABILITIES				21,333,130		15,532,757

COMMITMENTS AND CONTINGENCIES				-		-

EQUITY:
AgFeed stockholders' equity:
	Common stock, $0.001 per share; 75,000,000 shares authorized;
	45,270,558 issued and 44,903,263 outstanding at March 31, 2010
	44,510,558 issued and 44,143,263 outstanding at December 31, 2009			45,271		44,511
	Additional paid-in capital			112,828,305		109,281,086
	Deferred compensation			(3,462,280)		-
	Other comprehensive income			4,177,214		4,176,450
	Statutory reserve			4,984,833		4,685,115
	Treasury stock (367,295 shares)			(1,811,746)		(1,811,746)
	Retained earnings			31,978,263		31,210,563
		Total AgFeed stockholders' equity		148,739,860		147,585,979
Noncontrolling interest (deficit)				(267,711)		(170,716)
		Total equity		148,472,149		147,415,263

	TOTAL LIABILITIES AND EQUITY		$	169,805,279	$	162,948,020


AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


					Three Months Ended March 31,
					2010		2009
					(unaudited)		(unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net income including noncontrolling interest			$	1,011,224	$	3,065,314
	Adjustments to reconcile net income including noncontrolling interest
	to net cash used in operating activities:
		Depreciation			811,899		610,706
		Amortization			23,191		12,779
		Stock based compensation			75,281		138,531
		Issuance of common stock for services			375,720		-
		Amortization of debt issuance costs			7,419		28,193
		Amortization of discount on convertible debt			17,460		66,349
		(Increase) / decrease in assets:
			Accounts receivable		(8,599,242)		(2,523,056)
			Other receivables		(2,466,242)		(623,691)
			Inventory		(1,813,472)		985
			Advances to suppliers		360,605		30,505
			Prepaid expenses		350,014		301,104
			Other assets		(73,782)		208,976
		Increase / (decrease) in current liabilities:
			Accounts payable		3,906,822		1,202,475
			Other payables		2,142,963		(3,866,938)
			Unearned revenue		(166,837)		(204,837)
			Accrued expenses		(12,304)		(306)
			Accrued payroll		(326,087)		(173,358)
			Tax and welfare payable		213,894		(229,655)
			Interest payable		17,500		(74,628)

	Net cash used in operating activities				(4,143,974)		(2,030,552)

CASH FLOWS FROM INVESTING ACTIVITIES:
		Purchase of property and equipment			(4,282,474)		(2,211,649)
		Purchase of intangible assets			(125,514)		(35,294)

	Net cash used in investing activities				(4,407,988)		(2,246,943)

CASH FLOWS FROM FINANCING ACTIVITIES:
		Offering costs paid			-		(276,885)
		Capital contributed by noncontrolling interest holders			-		118,664
		Purchase of noncontrolling interest in majority owed hog farms			(406,103)		-

	Net cash used in financing activities				(406,103)		(158,221)

Effect of exchange rate changes on cash and cash equivalents					(2,062)		(20,991)

NET DECREASE IN CASH & CASH EQUIVALENTS					(8,960,127)		(4,456,707)

CASH & CASH EQUIVALENTS, BEGINNING BALANCE					37,580,154		24,839,378

CASH & CASH EQUIVALENTS, ENDING BALANCE				$	28,620,027	$	20,382,671

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	Interest paid			$	64,969	$	133,000
	Income taxes paid			$	210,860	$	176,640