Deyu Agriculture Corp. Reports Record Highs in Revenues, Net Income and Fully Diluted EPS for the Year 2011
BEIJING, April 2, 2012 /PRNewswire-Asia-FirstCall/ -- Deyu Agriculture Corp. (OTCBB: DEYU) (the "Company"), a Beijing, China based vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains, today announced its financial results for the year ended December 31, 2011.
Fiscal Year 2011 Highlights:
- Revenue increased 207.1% year-over-year to $261.6 million.
- Corn division sales improved 155.7% to $177.7 million.
- Grain division sales increased 253.0% to $40.5 million
- Bulk trading division sales increased 936.2% to $43.3 million
- Gross profit improved 96.8% to $43.1 million
- Net income available to common stockholders increased 50.4% to $17.3 million
Summarized Fiscal Year (FY) 2011 Results: |
||||
FY 2011 |
FY 2010 |
CHANGE |
||
Revenue |
$261.6 million |
$85.2 million |
+207.1% |
|
Gross profit |
$43.1 million |
$21.9 million |
+96.8% |
|
Net Income* |
$17.3 million |
$11.5 million |
+50.4% |
|
EPS (Diluted)** |
$1.42 |
$1.16 |
+22.4% |
|
*Represents net income available to common stockholders. |
|
**Earnings per diluted share of $1.42 on 12.5 million shares. For FY 2010, the Company reported fully diluted earnings per share of $1.16 on 10.2 million shares. |
|
"Each of our divisions delivered excellent results in 2011," said Jianming Hao, the Company's Chief Executive Officer and Chairman. "Our business, performed exceedingly well, and our advanced newly-added processing center increased our total storage capacity to over 100,000 tons and also enhanced annual turnover of corn to over 700,000 tons. We have also greatly expanded our sales network. Our wholesale network now covers 15 provinces in China, and our retail sales network grew from 10,000 supermarkets and convenience stores in 2010 to approximately 20,000 supermarkets and convenience stores across 29 of China's provinces in 2011.
Mr. Hao added, "In February of this year, we acquired the Taizihu Group, which has a well-established grain product line that includes bean-based products, fruit vinegars and juices and other grain products, as well as a strong production capacity of 45,000 tons. By enriching our product lines, integrating our broad sales network with the Taizihu Group's sales channels, and expanding our production capacity, we believe that our grain product sales will continue to improve in 2012 and help us maintain our progress."
Fiscal Year 2011 Financial Results
Revenue
In FY 2011, the Company had sales of $261.6 million compared to sales of $85.2 million in FY 2010, an increase of $176.4 million or 207.1%.
Net sales from the Company's corn division increased $108.2 million or 155.7%, from $69.5 million in FY 2010 to $177.7 million in FY 2011. This growth was attributable to the Company's expansion of its sales network, the Company's increase in storage capacity and turnover, as well as the Company obtaining sufficient working capital.
Revenue from the Company's grain division increased $29.0 million or 253.0%, from $11.5 million in FY 2010 to $40.5 million in FY 2011. This increase was primarily due to growth of the Company's market share through the expansion of its sales network and promotional activities.
The Company's revenue from its bulk trading division, which was added in fourth quarter of 2010, increased $39 million or 936.2%, from $4.2 million in FY 2010 to $43.3 million in FY 2011. This growth was primarily due to the leverage of our broad wholesale network, which covers 15 provinces in China, as well as our sufficient working capital.
Gross Profit & Gross Margin
The Company's gross profit increased by $21.2 million or 96.8%, from $21.9 million in FY 2010 to $43.1 million in FY 2011. This improvement was attributable to the Company's growth in sales volume, including an increase of $14 million in its corn division, $3.6 million in its grain division and $3.6 million in its bulk trading division.
The Company's gross margin decreased from 25.7% in FY 2010 to 16.5% in FY 2011. The Company experienced a purchase cost increase on both corn and grains caused by the inflation in the prices of raw materials in China. The Company's sales expansion strategies that it implemented by lowering the average selling price compared with the market price reduced the Company's profit margin. In FY 2011, the increasing percentage of bulk trading of total sales with a relatively low margin of 8.3% also negatively affected the Company's overall profit margin.
Net Income
As a result of the above, the Company's net income available to common stockholders and earnings per diluted share were $17.3 million and $1.42, respectively, compared to $11.5 million and $1.16, respectively, in FY 2010.
Business Outlook
"Our priority is further improving our market share in corn and grains," remarked Mr. Hao. "In view of this goal, we are working very hard to add more sales outlets and to enhance our promotional activities in an effort to increase brand awareness and purchases among consumers. For our emerging bulk trading business, we plan to continue to leverage our existing resources, such as our ample reserves and storage capacity, broad sales and supply networks, and modern logistic centers, to help this division achieve substantial growth again in 2012. Also, we plan to diversify the grain varieties we offer through our bulk trading business to include certain rare grain varieties in China like kidney beans, green beans and sunflower seeds. We plan to look to demand trends in the market to determine which of these varieties would be most beneficial for us to incorporate into our product offerings."
"Due to our expanding economies of scale and the rising demand for our products, it is important that we improve our supply base of raw materials," Mr. Hao added. "Right now, we are strongly considering broadening our operating model to include other main producing areas of corn and grain through establishing new subsidiaries for our corn and grain businesses. In light of the increasing demand we are experiencing for our products, we are looking towards developing or introducing new products through the establishment of partnerships with other grain producers or through business acquisitions."
"As we aim to enrich our product line and provide goods that better meet consumer diet trends, we also anticipate expanding our overseas channels and our export product portfolio," Mr. Hao continued. "Our subsidiary Huichun has established export channels that we want to build on in 2012, with our focus being on the sales of bean-based products, refined packaged grains and large packaged grains. While 2011 was an excellent year for us in terms of financial gains and our development as a company, we are confident that we have sound strategies that can help us build upon our progress in 2012 and increase global awareness of our brand."
Conference Call
The Company will host a conference call on Friday, April 6, 2012 at 8:30 AM EDT to review and discuss the Company's results for the year ended December 31, 2011.
To join the conference call, use the dial-in information below. When prompted, ask for the "Deyu Agriculture Call" and/or be prepared to provide the conference ID.
Date: 04/06/2012
Time: 8:30 AM Eastern
Conference Line Dial-In (US): 877-407-9205
International Dial-In: 201-689-8054
Conference ID#: 391617
Webcast Link: http://www.investorcalendar.com/IC/CEPage.asp?ID=166702
Dial in at least 10 minutes before the call to ensure timely participation. A playback will be available until 11:59 PM April 20, 2012. To listen, please call 877-660-6853 within the United States or 201-612-7415 if calling internationally.
Utilize the pass code below for replay (both required)
Account#: 286
Conference ID#: 391617
About Deyu Agriculture Corp.
Deyu Agriculture Corp. is a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains operating in Shanxi Province of the People's Republic of China. The Company has access to over 109,000 acres of farmland in Shanxi Province for breeding, cultivating, processing, warehousing and distributing grain and corn products. Deyu has an extensive wholesale network in over 15 provinces and a retail distribution network of approximately 20,000 supermarkets and convenience stores in 29 provinces across China. Deyu's facilities include advanced production lines and modern warehouses with a total production capacity of over 105,000 tons for grain products, storage capacity of over 100,000 tons and annual turnover of 700,000 tons for corn products. The Company's website is located at www.deyuagri.com.
Safe Harbor Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon the current plans, estimates and projections of Deyu's management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, changes in the agricultural industry, the Company's ability to maintain its competitive position. Additional Information regarding risks can be found in the Company's quarterly and annual reports filed with the U.S. Securities and Exchange Commission at www.sec.gov.
Investor Contact:
Mr. Kevin Fickle, President
NUWA Group LLC.
Tel: +1-925-330-8315
Email: [email protected]
Company Contact:
Ms. Amy He, Acting Chief Financial Officer
Deyu Agriculture Corp.
Tel: +86-10-5224-1802 X389
Email: [email protected]
Ms. Cynthia Yang, Assistant to Acting CFO
Tel: +1-646-820-8060
Email: [email protected]
DEYU AGRICULTURE CORP AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS |
|||||||||
Assets |
December 31, |
December 31, |
|||||||
Current Assets |
|||||||||
Cash and cash equivalents |
$ |
8,741,703 |
$ |
5,665,858 |
|||||
Restricted cash |
1,850,999 |
125,560 |
|||||||
Accounts receivable, net |
36,167,136 |
11,160,959 |
|||||||
Due from related parties |
587,108 |
- |
|||||||
Inventory |
20,314,090 |
16,541,999 |
|||||||
Advance to supplier |
7,233,371 |
1,178,532 |
|||||||
Prepaid expenses |
391,537 |
1,324,251 |
|||||||
Assets held for sale |
1,634,274 |
- |
|||||||
Other current assets |
2,204,934 |
669,134 |
|||||||
Current assets of discontinued operations |
- |
5,806,884 |
|||||||
Total Current Assets |
79,125,152 |
42,473,177 |
|||||||
Property, plant, and equipment, net |
12,355,946 |
4,287,372 |
|||||||
Construction-in-progress |
- |
6,732,189 |
|||||||
Other assets |
727,535 |
10,394,246 |
|||||||
Intangible assets, net |
10,651,844 |
- |
|||||||
Non-current assets of discontinued operations |
- |
2,042,168 |
|||||||
Total Assets |
$ |
102,860,477 |
$ |
65,929,152 |
|||||
Liabilities and Equity |
|||||||||
Current Liabilities |
|||||||||
Short-term loan |
$ |
14,413,480 |
$ |
2,631,364 |
|||||
Accounts payable |
1,833,190 |
197,012 |
|||||||
Note payables |
1,588,840 |
- |
|||||||
Advance from customers |
8,488,272 |
6,451,782 |
|||||||
Accrued expenses |
1,149,205 |
1,291,227 |
|||||||
Preferred stock dividends payable |
219,721 |
238,620 |
|||||||
Due to related parties |
5,445,115 |
- |
|||||||
Other current liabilities |
583,196 |
23,779 |
|||||||
Current liabilities of discontinued operations |
- |
11,654,915 |
|||||||
Total Current Liabilities |
33,721,019 |
22,488,699 |
|||||||
Equity |
|||||||||
Series A convertible preferred stock, $.001 par value, 10,000,000 shares authorized, 1,997,467 and 2,106,088 shares outstanding, respectively |
1,997 |
2,106 |
|||||||
Common stock, $.001 par value; 75,000,000 shares authorized, 10,564,774 and 10,349,774 shares issued and outstanding, respectively |
10,565 |
10,350 |
|||||||
Additional paid-in capital |
20,367,138 |
18,770,230 |
|||||||
Other comprehensive income |
4,831,353 |
2,272,633 |
|||||||
Retained earnings |
43,491,465 |
22,385,134 |
|||||||
Total Stockholders' Equity |
68,702,518 |
43,440,453 |
|||||||
Noncontrolling Interests |
436,940 |
- |
|||||||
Total Equity |
69,139,458 |
43,440,453 |
|||||||
Total Liabilities and Equity |
$ |
102,860,477 |
$ |
65,929,152 |
|||||
DEYU AGRICULTURE CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||
For The Years Ended |
|||||||||
December 31, |
|||||||||
2011 |
2010 |
||||||||
Net revenue |
$ |
261,576,666 |
$ |
85,174,884 |
|||||
Cost of goods sold |
(218,480,009) |
(63,250,363) |
|||||||
Gross Profit |
43,096,657 |
21,924,521 |
|||||||
Selling expenses |
(13,231,094) |
(6,281,768) |
|||||||
General and administrative expenses |
(8,222,182) |
(3,627,860) |
|||||||
Total Operating Expense |
(21,453,276) |
(9,909,628) |
|||||||
Operating income |
21,643,381 |
12,014,893 |
|||||||
Interest income |
42,159 |
17,505 |
|||||||
Interest expense |
(805,601) |
(341,555) |
|||||||
Non-operating income |
(180,294) |
(18,174) |
|||||||
Total Other Expense |
(943,736) |
(342,224) |
|||||||
Income from continuing operations before income taxes |
20,699,645 |
11,672,669 |
|||||||
Income taxes |
(184,384) |
913,785 |
|||||||
Income from continuing operations |
20,515,261 |
12,586,454 |
|||||||
Loss from discontinued operations, net of income taxes |
(3,891,830) |
(756,480) |
|||||||
Net income |
16,623,431 |
11,829,974 |
|||||||
Net loss attributable to noncontrolling interests: |
|||||||||
Net loss from continuing operations |
38,673 |
- |
|||||||
Net loss from discontinued operations |
1,101,255 |
- |
|||||||
Total net loss attributable to noncontrolling interests |
1,139,928 |
- |
|||||||
Net income attributable to Deyu Agriculture Corp. |
17,763,359 |
11,829,974 |
|||||||
Preferred stock dividends |
(427,917) |
(327,721) |
|||||||
Net income available to common stockholders |
17,335,442 |
11,502,253 |
|||||||
Foreign currency translation gain |
2,751,687 |
1,363,322 |
|||||||
Comprehensive income |
20,087,129 |
12,865,575 |
|||||||
Less: Other comprehensive income attributable to noncontrolling interests |
(130,653) |
- |
|||||||
Comprehensive income attributable to Deyu Agriculture Corp. |
$ |
19,956,475 |
$ |
12,865,575 |
|||||
Amounts attributable to common stockholders: |
|||||||||
Net income from continuing operations, net of income taxes |
$ |
20,126,017 |
$ |
12,258,733 |
|||||
Discontinued operations, net of income taxes |
(2,790,575) |
(756,480) |
|||||||
Net income attributable to common stockholders |
$ |
17,335,442 |
$ |
11,502,253 |
|||||
Net income attributable to common stockholders per share - basic: |
|||||||||
Income from continuing operations |
$ |
1.91 |
$ |
1.45 |
|||||
Loss from discontinuing operations |
(0.27) |
(0.09) |
|||||||
Net income attributable to common stockholders |
$ |
1.64 |
$ |
1.36 |
|||||
Net income attributable to common stockholders per share - diluted: |
|||||||||
Income from continuing operations |
$ |
1.64 |
$ |
1.23 |
|||||
Loss from discontinuing operations |
(0.22) |
(0.07) |
|||||||
Net income attributable to common stockholders |
$ |
1.42 |
$ |
1.16 |
|||||
Weighted average number of common shares outstanding - basic |
10,522,432 |
8,445,880 |
|||||||
Weighted average number of common shares outstanding - diluted |
12,497,164 |
10,249,041 |
|||||||
DEYU AGRICULTURE CORP AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||
For The Years Ended |
|||||||||
December 31, |
|||||||||
2011 |
2010 |
||||||||
CASH FLOWS FROM OPERATING ACTIVITIES |
|||||||||
Net income available to common stockholders |
$ |
17,335,442 |
$ |
11,502,253 |
|||||
Loss from discontinued operations attributable to Deyu Agriculture Corp. |
2,790,575 |
756,480 |
|||||||
Adjustments to reconcile net income to net cash |
|||||||||
provided by operating activities: |
|||||||||
Depreciation & amortization |
979,297 |
489,379 |
|||||||
Share-based compensation |
428,702 |
549,106 |
|||||||
Preferred stock dividends accrued |
219,721 |
232,642 |
|||||||
Dividends paid with Series A preferred stock |
212,420 |
- |
|||||||
Common stocks issued for services |
78,000 |
- |
|||||||
Deferred income tax expense (benefit) |
184,384 |
(913,785) |
|||||||
Noncontrolling interests |
(38,673) |
- |
|||||||
Loss on disposal of fixed assets |
- |
7,573 |
|||||||
Decrease (increase) in current assets: |
|||||||||
Accounts receivable |
(23,824,017) |
(6,645,744) |
|||||||
Related-parties trade receivable |
(494,752) |
- |
|||||||
Inventories |
(2,873,705) |
(7,816,702) |
|||||||
Advance to suppliers |
(5,840,601) |
(947,913) |
|||||||
Prepaid expense and other current assets |
(539,339) |
(853,455) |
|||||||
Increase (decrease) in liabilities: |
|||||||||
Accounts payable |
1,584,038 |
192,077 |
|||||||
Advance from customers |
1,677,638 |
6,284,419 |
|||||||
Accrued expense and other liabilities |
346,492 |
1,097,413 |
|||||||
Net cash (used in) provided by operating activities of continuing operations |
(7,774,378) |
3,933,743 |
|||||||
Net cash used in operating activities of discontinued operations |
(3,858,325) |
(3,727,140) |
|||||||
Net cash (used in) provided by operating activities |
(11,632,703) |
206,603 |
|||||||
CASH FLOWS FROM INVESTING ACTIVITIES |
|||||||||
Purchase of machinery and equipment |
(3,759,859) |
(1,987,716) |
|||||||
Construction and remodeling of factory and warehouses |
(109,856) |
(3,281,762) |
|||||||
Purchase of software and other assets |
(8,902) |
(960,175) |
|||||||
Advances to related parties |
(76,995) |
- |
|||||||
Prepayments for acquisition of land use rights |
(76,715) |
(6,889,032) |
|||||||
Proceeds from disposal of fixed assets |
- |
274,727 |
|||||||
Net cash used in investing activities of continuing operations |
(4,032,327) |
(12,843,958) |
|||||||
Net cash used in investing activities of discontinued operations |
(2,476,523) |
(117,583) |
|||||||
Net cash used in investing activities |
(6,508,850) |
(12,961,541) |
|||||||
CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||||
Proceeds from capital contributions |
464,180 |
1,831,718 |
|||||||
Net proceeds from short-term loans from related parties |
3,101,839 |
3,101,989 |
|||||||
Cash restricted for credit line of bank acceptance notes |
(1,802,568) |
- |
|||||||
Release of cash restricted held at a trust account |
125,560 |
- |
|||||||
Payment of preferred dividends |
(243,678) |
- |
|||||||
Net proceeds from short-term loans from bank |
11,349,219 |
- |
|||||||
Net proceeds from short-term bank acceptance notes |
1,547,269 |
- |
|||||||
Net proceeds from short-term loan from others |
952 |
(1,079,701) |
|||||||
Net repayments of short-term loans from related parties |
- |
(1,113,632) |
|||||||
Proceeds from private placement, net of restricted cash held in escrow |
- |
8,827,123 |
|||||||
Release of restricted cash related to private placement |
- |
298,848 |
|||||||
Net cash provided by financing activities of continuing operations |
14,542,773 |
11,866,345 |
|||||||
Net cash used in financing activities of discontinued operations |
5,918,988 |
4,277,243 |
|||||||
Net cash used in financing activities |
20,461,761 |
16,143,588 |
|||||||
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS |
352,429 |
204,593 |
|||||||
NET INCREASE IN CASH & CASH EQUIVALENTS |
2,672,637 |
3,593,243 |
|||||||
NET INCREASE IN CASH & CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS |
(403,208) |
489,886 |
|||||||
NET INCREASE IN CASH & CASH EQUIVALENTS FROM CONTINUING OPERATIONS |
3,075,845 |
3,103,357 |
|||||||
CASH & CASH EQUIVALENTS, BEGINNING BALANCE |
5,665,858 |
2,562,501 |
|||||||
CASH & CASH EQUIVALENTS, ENDING BALANCE |
$ |
8,741,703 |
$ |
5,665,858 |
|||||
SUPPLEMENTAL DISCLOSURES: |
|||||||||
Income tax paid |
$ |
62 |
$ |
- |
|||||
Interest paid |
$ |
809,448 |
$ |
323,829 |
|||||
NONCASH INVESTING AND FINANCING ACTIVITIES: |
|||||||||
Construction completed and transferred to property, plant, and equipment |
$ |
5,914,602 |
$ |
- |
|||||
Construction completed and transferred to land use rights |
$ |
2,320,904 |
$ |
- |
|||||
Obtained certificates of farmland use rights |
$ |
8,221,569 |
$ |
- |
|||||
Note: Please refer to the Company's annual report on Form 10-K for the year ended December 31, 2011 for additional notes, which are an integral part of these consolidated financial statements
SOURCE Deyu Agriculture Corp.
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