Attached files
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| 8-K - China Green Agriculture, Inc. | v210725_8k.htm |
China
Green Agriculture, Inc. Reports Second Quarter Fiscal Year 2011 Financial
Results and Revises Fiscal Year 2011 Guidance
-- Q2 FY
2011 Sales Increases 216.1% to $35.3 million, Net Income Increases
32.0% to $6.2 million with EPS of $0.24
-- Q2 FY
2011 Gross Margin Decreases to 34.9% from 60.6% Y-O-Y; Operating Margin
Decreases to 22.3% from 48.6% Y-O-Y
--
Company Revises Fiscal Year 2011 Guidance: Revenue, Net Income and EPS of at
least $155.0 million, $31.5 million, and $1.17,
respectively
--
Management to host Earnings Conference Call at 8:00am ET, Thursday, February 10,
2011
XI'AN,
China, Feb. 10, 2011 /PRNewswire-Asia-FirstCall/ -- China Green Agriculture,
Inc. (NYSE: CGA) ("China Green Agriculture" or the "Company"), a leading
producer and distributor of humic acid ("HA") based compound fertilizer, blended
fertilizer, organic compound fertilizer and mixed organic-inorganic compound
fertilizer through its wholly owned subsidiaries in China, Shaanxi TechTeam
Jinong Humic Acid Product Co., Ltd. ("Jinong") and Beijing Gufeng Chemical
Products Co., Ltd. ("Gufeng"), today announced the financial results for its
fiscal year 2011 second quarter ending December 31, 2010.
Financial
Summary
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(Three
months ended December 31, 2010)
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Q2
FY2011
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Q2
FY2010
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CHANGE
(%)*
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|
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Net
Sales
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$35.3
million
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$11.2
million
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+216.1%
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|
Gross
Profit
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$12.3
million
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$6.8
million
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+82.2%
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Net
Income
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$6.2million
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$4.7
million
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+32.0%
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EPS
(Basic and Fully Diluted)
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$0.24
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$0.20
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+
18.40%
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Basic
Weighted Average Shares Outstanding
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25.9
million
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23.3
million
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+11.5%
|
|
Fully
Diluted Weighted Average Shares Outstanding
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26.4
million
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23.3million
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+13.3%
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|
First
six months FY 2011 Results (USD)
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|||
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(Six
months ended December 31, 2010)
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|||
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Six
Months
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Six
Months
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CHANGE
(%)*
|
|
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FY2011
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FY2010
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||
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Net
Sales
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$74.8million
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$22.4
million
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+233.2%
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Gross
Profit
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$25.5
million
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$13.7
million
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+85.5%
|
|
Net
Income
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$14.0
million
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$10.0
million
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+40.6%
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EPS
(Basic and Fully Diluted)
|
$0.54
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$0.44
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+
21.7%
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Basic
Weighted Average Shares Outstanding
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25.9
million
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22.5
million
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+15.5%
|
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Fully
Diluted Weighted Average Shares Outstanding
|
26.4
million
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22.5
million
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+17.4%
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*The
Company’s results for the six months ended December 31, 2010 include the
operating results of Beijing Gufeng Chemical Products Co., Ltd., a company
organized under the laws of the People’s Republic of China, and its wholly-owned
subsidiary, Beijing Tianjuyuan Fertilizer Co., Ltd., which we acquired in July
2010 and whose results were not included in our results for any period prior to
the acquisition.
"We are
pleased with our strong performance in the second quarter and with the
continuing development, integration and expansion of the company as a
whole. Gufeng added $18.9 million to our net sales while Jinong
continued to turn in a solid performance with a 56.4% sales increase compared to
the second quarter of fiscal 2010, allowing us to exceed our revenue
guidance. While we fell short of our guidance on net income and EPS,
this was mostly due to litigation related expenses and stock compensation charge
triggered by our strong performance in fiscal 2010. Without these expenses, we
almost would have met our net income range provided in the guidance," stated Mr.
Tao Li, Chairman, President and Chief Executive Officer of China Green
Agriculture.
"During
this quarter we made substantial progress in many key areas of our business.
With the integration process solidly on track, Gufeng’s sales doubled from a
year ago and they launched two new humic acid-based fertilizers as part of our
strategic shift towards higher-margin products. Our new product development
roll-out was complemented by the launch of four new humic-acid based liquid and
powder fertilizer products by Jinong. Our nationwide distribution
network continued its solid expansion into new provinces to reach a total of 755
distributors as Jinong added 10 new distributors while Gufeng added five. The
construction of Yuxing [defined below] is also progressing well. In addition to
the completion of the 100 sunlight greenhouses during the first quarter, which
are now operational, six of the 12 intelligent greenhouses had been completed as
of December 31, 2010."
Second
Quarter of FY2011 Results of Operations
Net
sales for the second quarter of fiscal year 2011 were $35.3 million, an increase
of 216.1%, from $11.2 million for the same quarter of fiscal year
2010.
Gufeng
contributed $18.9 million in net sales, representing 53.5% of our total net
sales, in the three months ended December 31, 2010. Jinong's net sales increased
56.4%, to $14.3 million from $9.1 million for the same quarter of fiscal year
2011. This increase was mainly attributable to stronger sales of Jinong’s main
stream products including both existing and new liquid fertilizers, powder
fertilizers, and particularly, the lower-margin granular fertilizers released
since our 40,000 metric-ton production line began production in August 2009. The
net sales of Xi’an Jintai Agriculture Development Technology Company, a
wholly-owned subsidiary of Jinong (“Jintai”), which include sales of
agricultural products, namely top-grade fruits, vegetables, flowers and colored
seedlings which are produced using our own fertilizers were $2.2 million for the
quarter as compared to $2.1 million for the same period in 2009. Jintai’s
products continue to show slightly growing margins with a mix of higher-margin
flower and lower-margin vegetable products, adding consistently to our overall
revenues. But we expect flat growth rates as greenhouse facility reached its
maximum capacity. Xi’an Hu County Yuxing Agriculture Technology
Development Co., Ltd., a wholly-owned subsidiary of Jinong (“Yuxing”), had no
revenues during the period ended December 31, 2010 but we expect to begin
production of agriculture products at Yuxing which will generate sales revenue
during the second half of fiscal year 2011.
Cost of
goods sold increased to $23.0 million, up $18.6 million or 422.0% from
approximately $4.4 million reported in the second quarter of fiscal year 2010.
This significant increase was mainly due to the costs attributable to the
production and sale of Gufeng’s products, which accounted for 65.3% of total
cost of goods sold. Cost of sales as a percentage of sales was
approximately 65.1% for the second quarter and 39.4% for the same period of
fiscal year 2010.
Gross
profit for the three months ended December 31, 2010 increased by $5.6 million,
or 82.2%, to $12.3 million from $6.8 million for the three months ended December
31, 2009. Gross profit margin decreased to approximately 34.9% from 60.6% for
the same period of last year. The decrease was primarily due to higher sales of
lower-margin granular fertilizer products, mostly as a result of the acquisition
of Gufeng.
Selling
expenses were $1.6 million, an increase of $1.1 million, or 205.5%, compared to
the same period of the prior year. This increase was primarily due to the
inclusion of Gufeng’s selling expenses for the period ended December 31,
2010.
General
and administrative expenses were $2.9 million, an increase of 252.5%, from the
same period of the prior year. The increase reflected $0.5 million in litigation
related legal expenses incurred in this quarter, $0.1 million in acquisition
expenses for Gufeng and the non-cash amortization expenses of $0.5 million from
Gufeng's estimated intangible assets. In addition, non-cash stock compensation
expenses increased to $0.9 million as a result of our issuance of options and
restricted shares to our directors, officers and employees under our 2009 Equity
Incentive Plan.
Total
operating expenses as a percentage of sales were 12.6% compared to 11.9% for the
same period of last year.
Operating
income was $7.9 million, up 44.8% from $5.4 million in the second quarter of
fiscal year 2010. Operating margin was 22.3%, compared to 48.6% in the same
quarter of fiscal year 2010.
Net
income was $6.2 million, up 32.0% from $4.7 million during the same period in
fiscal year 2010. For the three month period ended December 31, 2010 diluted net
income per share was $0.24 as compared to $0.20 for the same period in 2009,
based on diluted weighted average shares outstanding of 26.4 million and 23.3
million, respectively. Net income margin approximated 17.6% and 42.3% for the
three months ended December 31, 2010 and 2009, respectively. Net income was
negatively impacted by litigation related expenses and a stock compensation
non-cash charge triggered by the Company’s strong performance in fiscal 2010.
Without these expenses, the Company almost would have met its net income
target.
Six
Months FY2011 Results
For the
six months ending December 31, 2010, net sales increased 233.2% to $74.8
million, up from $22.4 million for the six months ended December 31, 2009.
Newly acquired Gufeng contributed $ 40.7 million in net sales, representing
54.4% of our total net sales for the six months ended December 31, 2010. For the
first six months in fiscal year 2011, Jinong's net sales, which accounted for
41.2% of total net sales, increased $11.5 million, or 59.8%, to $30.8 million
from $19.3 million for the six months ended December 31, 2009. Jintai's net
sales were $3.3 million as compared to $3.2 million for the same period in
2009.
Gross
profit increased 85.5% to $25.5 million, versus $13.7 million in the same period
a year ago. Gross margin was 34.1% and 61.2% for the six months ended December
31, 2010 and 2009, respectively. Operating income for the first six months rose
50.3% to $17.5 million compared to $11.6 million for the first six months of
fiscal year 2010. Net income in the first six months of fiscal year 2011 was
$14.0 million, or $0.53 per fully diluted share, based on 26.4 million
weighted average shares outstanding. Net income in the first six months of
fiscal year 2010 was $10.0 million, or $0.44 per basic and fully diluted share,
based on 22.5 million weighted average shares outstanding.
Financial
Condition
As of
December 31, 2010, cash and cash equivalents were $56.7 million, a decrease of
$5.6 million, or 9.1%, from $62.3 million as of June 30, 2010.
Our
principal sources of liquidity include cash from operations, borrowings from
local commercial banks and net proceeds of offerings of our securities
consummated in July 2009 and November/December 2009.
Fiscal
Year 2011 and the Third Quarter Guidance
China
Green Agriculture's second quarter fiscal year 2011 revenue of $35.3 million met
the high end of its revenue guidance. However, due to the unexpected
professional expenses related to the pending litigations and the non-cash stock
compensation expense, net income of $6.2 million missed the low end of the
Company’s net income guidance for the second quarter of $7.76 million to $7.86
million. Diluted net income of $0.24 per share was lower than the second quarter
fiscal year 2011 EPS guidance of $0.29 per share based on 26.9 million weighted
average shares. Without taking into account the litigation related expenses and
one-time non-cash stock compensation expenses, the diluted net income per share
would have been $0.29.
For the
fiscal year ending June 30, 2011, management has raised revenue guidance to
a range of $155.0 million to $165.0 million due to the large export
contract signed by Gufeng in this fiscal year, lowered the net income
guidance to a range of $31.5 million to $33.2 million due to additional
legal and investor relations fees related to certain pending litigations, and
reduced EPS guidance to a range of $1.17 to $1.24 based on 26.9 million
weighted average shares. For the third quarter ending March 31, 2011, management
expects revenues from in a range of $41.8 million to $43.6 million, net income
in a range of $8.2 million to $8.6 million, and EPS in a range of $0.31 to $0.32
based on 26.9 million weighted average shares. This guidance reflects the
anticipated strong sales resulting from the Company's incoming peak sales season
as well as the larger sales force and better marketing efforts on the high-end
fertilizer products.
Outlook
Chairman
Li commented: "We continue to see great benefits ahead from the acquisition and
integration of Gufeng, capacity expansion and product mix rebalancing. We expect
further gains in efficiency, continued expansion of our sales network and
additional roll-outs of more potent products both at Jinong and at Gufeng.
Although unexpected litigation caused additional expenses for the Company in
this past quarter, we will strive hard to earn better financial results to
offset these litigation costs with additional revenues. We believe
our enlarged portfolio of diversified and branded products combined with
continued solid financial performance will position us well to capitalize on the
inevitable consolidation in the highly fragmented Chinese fertilizer industry
and to create value for our shareholders."
Conference
Call
The
Company will host a conference call to discuss the second quarter 2011 financial
results at 8:00 a.m. ET on Thursday, February 10, 2011.
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To
participate in the conference call, please dial any of the following
numbers:
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USA:
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1-877
407-8033
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International:
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1-201-689-8033
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The
conference ID for the call is
365933.
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A replay
of the call will remain available through 11:59 PM ET on February 23,
2010.
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To
access the replay, please dial any of the following
numbers:
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USA:
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1-877-660-6853
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International:
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1-201-612-7415
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Replay Pass codes
(both required for playback):
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Account:
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286
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Conference
ID:
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365933
|
This
conference call will be broadcast live over the Internet. To listen to the live
webcast, go to http://www.ir-site.com/cgagri/events.asp. Investors can also
access the webcast at http://www.InvestorCalendar.com.
About
China Green Agriculture, Inc.
The
Company mainly produces and distributes humic acid-based compound fertilizers
and other varieties of compound fertilizers through its wholly-owned
subsidiaries, Jinog and Gufeng. Jinong produces and sells 146 different kinds of
fertilizer products, all of which are certified by the PRC government as Green
Food Production Materials, as stated by the
China Green Food Research Center. Jinong currently markets
its fertilizer products to private wholesalers and retailers of agricultural
farm products in 21 provinces, four autonomous regions and three
central-government-controlled municipalities in the PRC. For the three months
ended December 31, 2010, the top five provinces (or municipalities) of
fertilizer sales accounted for 29.2% of total revenues. The five provinces (or
municipalities) and their respective percentage contribution to total fertilizer
revenues were Hebei (7.0%), Jilin (6.8%), Liaoning (6.4%), Shaanxi (4.8%) and
Beijing (4.1%). Jinong had 598 distributors in China. Gufeng had 157
distributors including some large state-owned enterprises. The recently acquired
company, Gufeng and its wholly-owned subsidiary, Beijing Tianjuyuan Fertilizer
Co., Ltd., are Beijing-based producers of compound fertilizer, blended
fertilizer, organic compound fertilizer and mixed organic-inorganic compound
fertilizer. Gufeng produces and sells over 300 different kinds of fertilizer
products, and has over 150 distributors nationwide. For more information, visit
http://www.cgagri.com.
The Company routinely posts important information on its website.
Safe Harbor
Statement
This
press release contains forward-looking statements concerning the Company's
business, products and financial results. The Company's actual results may
differ materially from those anticipated in the forward-looking statements
depending on a number of risk factors including, but not limited to, the
following: general economic and business conditions, development, shipment,
market acceptance, additional competition from existing and new competitors,
changes in technology, and various other factors beyond the Company's control.
All forward-looking statements are expressly qualified in their entirety by this
Safe Harbor Statement and the risk factors detailed in the Company's reports
filed with the SEC. China Green Agriculture undertakes no duty to revise or
update any forward-looking statements to reflect events or circumstances after
the date of this release, except as required by applicable law or
regulation.
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For
investor and media inquiries, please contact:
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China
Green Agriculture, Inc.
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Mr.
Ken Ren, Chief Financial Officer
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Tel: +1-530-220-3026
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Email:
kenren@cgagri.com
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Christensen
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Rene
Vanguestaine
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Tel: +1-646-209-2574
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+852-6686-1376
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Email:
rvanguestaine@christensenir.com
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or
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Kathy
Li
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Tel:
+1-480-614-3036
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Email:
kli@christensenir.com
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CONTACT:
Mr. Ken Ren, Chief Financial Officer, China Green Agriculture, Inc. at
+1-530-220-3026 or kenren@cgagri.com; Christensen: Rene Vanguestaine at
+1-646-209-2574, +852-6686-1376 or rvanguestaine@christensenir.com; Kathy Li at
+1-480-614-3036 or kli@christensenir.com