Tianli Agritech Reports Third Quarter 2011 Results

Revenue Increases 65% to $9.2 million

Net Income Increases 33% to a record $2.9 million

Nov 14, 2011, 17:57 ET from TIANLI AGRITECH, INC./PRN ASIA

WUHAN CITY, China, Nov. 14, 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 and nine month period ended September 30, 2011.

Third Quarter Highlights:

  • Revenue increased 65% year-over-year to $9.2 million due to higher selling prices and unit sales of breeder hogs and market hogs
  • Market hog sales increased 88%, driven by a 58% increase in average price per hog
  • Retail sales contributed $1.1 million of revenues in initial quarter of operations
  • Cash flows from operations were $5.6 million for the first nine months of 2011

Summarized Third Quarter 2011 Results

Q3 2011

Q3 2010

Increase

Sales

$9.2 million

$5.5 million

65%

Gross Profit

$3.9 million

$2.4 million

58%

Selling, General and Administrative Expenses

$0.9 million

$0.4 million

145%

Net Income

$2.9 million

$2.2 million

33%

EPS*

$0.29

$0.23

26%

* EPS calculations are based on the results of the weighted average calculation method of the 10,135,000 shares outstanding during Q3 2011 and 9,733,696 shares outstanding during Q3 2010, reflecting the effect of the Company's July 2010 IPO.

Tianli's Chairwoman and CEO, Ms. Hanying Li, stated, "Our strong third quarter results were driven by robust underlying demand for pork in China. Despite a shift toward market hogs this quarter, our sales and margins benefited from higher pricing. As we ramp capacity at our 10th farm, we expect continued growth in units and pricing for the remainder of 2011 and added revenue contributions from our AnPuluo Foods retail program."

Sales by Products

(Dollar Figures Rounded – Percentages based on Actual Results)

Q3 2011

Q3 2010

Products

No. of Hogs Sold

Sales Revenues

No. of Hogs Sold

Sales Revenues

Breeder Hogs

7,169

$

$2.5 million

9,977

$

$2.6 million

Market Hogs

18,350

$

$5.6 million

15,443

$

$3.0 million

Total

25,519

$

$8.1 million

25,420

$

$5.5 million

Revenue for the third quarter of 2011 increased $3.7 million, or 65%, to $9.2 million from the prior year. The Company sold a total of 25,519 hogs, up slightly from 25,420 hogs sold in the comparable period in 2010. Sales of breeder hogs fell 2% to $2.5 million as hog farmers delayed breeder hog purchases to capitalize on the increasing price of pork in China which, according to the National Bureau of Statistics, had increased 43.5% in September 2011 while the average price per breeder hog increased only 35% to $348 per hog. As a result, market hog sales surged 88% to $5.6 million. The number of market hogs sold increased by 2,907 head to 18,350 head while the average price per hog increased a record 58% year-over-year to $305 due to high market demand.

Through their cooperation with An Puluo Food, Tianli's retail segment generated $1.1 million in sales after its initial launch in the third quarter of 2011. Tianli provides and co-brands hog meat cuts, packaged and sold in refrigerated food cases in over 30 major retailers in greater Wuhan.

Gross profit in the third quarter of 2011 was $3.9 million, up 58% over the same period last year. Gross margin was approximately 42% and 44% for the third quarter of 2011 and 2010, respectively. The slight decrease in margin was due to higher feed costs and the revenue and gross profit contribution from its lower margin retail business, which commenced operations in the third quarter of 2011.

Selling, general and administrative expenses were $0.9 million in the third quarter of 2011, an increase of approximately $0.5 million. Approximately $0.2 million of the increase was related to higher public company expenses and $0.3 million related to the Company's retail business and marketing costs not present in the year ago period.

Net income for the three months ended September 30, 2011 was approximately $2.9 million, up 33% from $2.2 million last year. Earnings per fully diluted share were $0.29 compared to $0.23 the previous year. Share counts were 10.1 million and 9.7 million in the third quarter of 2011 and 2011, respectively.

First nine months 2011 Results

Summarized First nine months 2011 Results

YTD 2011

YTD 2010

Increase (Decrease)

Sales

$22.7 million

$15.5 million

47%

Gross Profit

$9.5 million

$6.7 million

43%

Selling, General and Administrative Expenses

$2.3 million

$0.8 million

190%

Net Income

$7.3 million

$6.0 million

21%

EPS*

$0.72

$0.69

4%

* EPS calculations are based on results from the weighted average method of the 10,128,382 shares outstanding during YTD 2011 and 8,667,125 shares outstanding during YTD 2010, reflecting the effect of the Company's July 2010 IPO.

Net sales increased 47% to $22.7 million during the nine months ended September 30, 2011. Tianli sold 76,128 hogs at an average sales price of $285 per hog, an increase of 5% and 34%, respectively. Breeder hog sales increased 24% to $7.7 million, accounting for 34% of total sales in the first nine months of 2011. Market hog sales were $13.9 million, up 50% from $9.3 million in the first nine months of 2010.

Gross profit increased $2.8 million to $9.5 million. Gross margin percentages were 42% and 43% for the first nine months of 2011 and 2010, respectively.

Selling, general and administrative expenses were $2.3 million compared to $0.8 million in the prior year. The Company incurred $0.2 million of non-cash stock compensation expenses, $0.6 million public company expenses and $0.1 million of bad debt provisions in the first nine months of 2011. Operating income was $7.2 million, up 23% from the first nine months of 2010.

Net income and earnings per share was $7.3 million and $0.72 in the nine months ended September 30, 2011 and 2010, respectively, compared to $6.0 million and $0.69 in the previous nine month periods.

Financial Position

As of September 30, 2011, the Company had $7.5 million in cash, compared to $8.0 million as of December 31, 2010. The Company generated $5.6 million of cash from operations in the first nine months of 2011. Working capital as of September 30, 2011 was $13.0 million, including $8.8 million of inventories and $1.1 million of loan to An Puluo Food which should be collected within 12 months. Inventories increased to support the launch of its retail business in the third quarter of 2011.

Tianli invested approximately $9.7 million in capital expenditures and breeding stock during the first nine months of 2011 to facilitate its continued growth.

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 Third Quarter 2011 Conference Call".

Conference Call

Date:

Tuesday, November 15, 2011

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 Third Quarter 2011 Conference Call

Webcast link:

http://webcast.mz-ir.com/publico.aspx?codplataforma=3351

Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through November 23, 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 10006692 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=3351.

About Tianli Agritech, Inc.

Tianli Agritech, Inc. is in the business of breeding, raising and selling breeder and market hogs in China and the development of 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

Company - CHINA 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 Mr. John Mattio MZ Group, SVP Phone: (212) 730-7130 Email: john.mattio@hcinternational.net Web: http://www.mz-ir.com

TIANLI AGRITECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (AMOUNTS EXPRESSED IN US DOLLARS)

September 30, 2011

December 31, 2010

(Unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$

7,534,515

$

7,983,793

Accounts receivable

802,736

-

Inventories

8,797,547

4,819,805

Advances

95,736

1,036,765

Acquisition deposits

-

530,303

Prepaid expenses

214,925

83,832

Loan to An Puluo

1,101,512

-

Other receivables

213,246

330,744

Total Current Assets

18,760,217

14,785,242

Plant and equipment, net

16,992,145

13,354,379

Deposits for purchase of equipment

157,359

-

Construction advance

-

272,727

Construction in progress

1,233,269

-

Biological assets, net

4,498,193

3,440,253

Long-term prepaid expenses

1,815,619

-

Land use rights, net

1,534,968

742,954

Total Assets

$

44,991,770

$

32,595,555

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

Short-term loans

$

3,902,500

$

728,266

Accounts payable and accrued liabilities

535,744

136,536

Due to An Puluo

759,034

-

Deposits received

395,018

-

Acquisition payables

-

921,212

Due to related party

122,968

-

Total Liabilities

5,715,264

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 on September 30, 2011 and December 31, 2010)

10,135

10,125

Additional paid in capital

13,514,933

13,445,712

Statutory surplus reserves

2,320,091

1,510,423

Retained earnings

21,056,487

14,605,162

Accumulated other comprehensive income

2,374,860

1,238,119

Total Stockholders' Equity

39,276,506

30,809,541

Total Liabilities and Stockholders' Equity

$

44,991,770

$

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 September 30,

For the Nine Months Ended September 30,

2011

2010

2011

2010

Revenue

$

9,169,325

$

5,544,643

$

22,746,720

$

15,462,902

Cost of goods sold

5,302,383

3,095,571

13,198,826

8,764,143

   Gross profit

3,866,942

2,449,072

9,547,894

6,698,759

General and administrative expenses

612,006

336,455

1,992,963

755,722

Selling expenses

251,580

15,419

313,890

40,184

Income from operations

3,003,356

2,097,198

7,241,041

5,902,853

Other income (expense):

Interest expenses and bank charges

(77,334)

(15,488)

(186,307)

(44,711)

Subsidy income

9,142

132,035

222,409

132,035

Other income (expense)

9,209

(757)

(16,150)

8,344

Total other income (expense)

(58,983)

115,790

19,952

95,668

Income before income taxes

2,944,373

2,212,988

7,260,993

5,998,521

Income taxes

-

-

-

-

Net income

$

2,944,373

$

2,212,988

$

7,260,993

$

5,998,521

Basic and diluted weighted average shares

10,135,000

9,733,696

10,128,382

8,667,125

Basic and diluted earnings per share

$

0.29

$

0.23

$

0.72

$

0.69

Comprehensive income:

Net income

$

2,944,373

$

2,212,988

$

7,260,993

$

5,998,521

Unrealized foreign currency translation adjustment

675,322

350,735

1,136,741

417,956

Comprehensive income

$

3,619,695

$

2,563,723

$

8,397,734

$

6,416,477

TIANLI AGRITECH, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (AMOUNTS EXPRESSED IN US DOLLARS) (Unaudited)

For the Nine Months Ended September 30,

2011

2010

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

7,260,993

$

5,998,521

Adjustments to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

1,641,170

758,181

Gain on disposal of biological assets

(209,502)

-

Provision for doubtful accounts

112,640

-

Impairment on inventories

-

101,010

Stock-based compensation

237,926

-

Changes in operating assets and liabilities:

Accounts receivable

(800,332)

-

Inventories

(3,717,789)

(190,178)

Advances

(30,332)

(21,667)

Prepaid expenses

(130,548)

-

Other receivables

71,187

(53,652)

Due to An Puluo

742,376

-

Accounts payable and accrued liabilities

63,886

(192,243)

Deposits received

386,349

-

Net cash provided by operating activities

5,628,024

6,399,972

CASH FLOWS FROM INVESTING ACTIVITIES

Advance to An Puluo

(1,077,337)

(400,000)

Purchase of plant and equipment

(4,828,899)

(4,369,845)

Deposits for purchase of equipment

(153,905)

-

Addition to construction in progress

(1,206,203)

-

Purchase of biological assets

(1,678,342)

(2,246,493)

Proceeds from disposal of biological assets

134,156

-

Payments for long-term prepaid expenses

(87,398)

-

Purchase of intangible assets

(780,135)

-

Net cash used in investing activities

(9,678,063)

(7,016,338)

CASH FLOWS FROM FINANCING ACTIVITIES

Net proceeds from initial public offering

-

10,592,344

Offering expense of initial public offering

-

(1,180,784)

Due to related party

-

26,715

Proceeds from short-term loans

3,078,107

-

Net cash provided by financing activities

3,078,107

9,438,275

NET (DECREASE) INCREASE IN CASH

(971,932)

8,821,909

EFFECT OF EXCHANGE RATE CHANGES ON CASH

522,654

75,319

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

7,983,793

2,022,295

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

7,534,515

$

10,919,523

SUPPLEMENTAL DISCLOSURES:

Cash paid during the period for:

Interest expense paid

$

117,332

$

18,310

Income tax paid

$

-

$

-

SOURCE TIANLI AGRITECH, INC./PRN ASIA



RELATED LINKS

http://webcast.mz-ir.com/publico.aspx?codplataforma=3351


http://www.tianli-china.com


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