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| 8-K - RENMIN TIANLI GROUP, INC. | e612275_8k-tianli.htm |
Tianli Agritech, Inc. Reports First Quarter 2014 Results
WUHAN CITY, China, May 12, 2014 /PRNewswire/ -- Tianli Agritech, Inc. (NASDAQ:OINK) ("Tianli" or the "Company"), a leading producer of breeder hogs, market hogs and black hogs headquartered in Wuhan City, China, today announced its financial results for the first quarter 2014 ended March 31, 2014.
Mr. Ping Wang, Chairman and Chief Executive Officer of Tianli commented, "We are pleased to deliver another solid quarter, achieving 32% top-line growth and $0.03 EPS for the three months ended March 31, 2014. Our black hog program and retail operations are showing strength, positioning us well for future growth. Looking ahead, despite near-term challenges facing the hog industry- slowing economic growth momentum, tightened credit environment, and the government's crackdown on corruption and extravagant spending, we are confident about the long-term growth prospects of the Chinese hog industry and Tianli's market position."
First Quarter 2014 Financial Results:
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For the Three Months Ended March 31,
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||||||||||||
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($ thousands, except per share data)
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2014
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2013
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% Change
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|||||||||
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Revenue
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$ | 9,717 | $ | 7,387 | 31.5 | % | ||||||
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Gross margin
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15.0 | % | 10.9 | % | 38.0 | % | ||||||
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Operating margin
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4.2 | % | -1.8 | % |
NM
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|||||||
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Net income (losses) for common shareholders
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428 | (110 | ) |
NM
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||||||||
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Diluted earnings per share
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0.03 | (0.01 | ) |
NM
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||||||||
Revenue for the first quarter of 2014 increased $2.33 million, or approximately 32%, to $9.72 million from $7.39 million for the same period of 2013. This increase was primarily attributable to sales of black hogs raised by farmers participating in our black hog program as well as revenue contributed from our retail sales of specialty black hog products which resumed in April 2013. The Company sold a total of 41,352 breeder hogs, regular market hogs and black hogs with a blended average selling price of $223 per hog during the first quarter of 2014, compared to 32,513 hogs sold and a blended average selling price of $227 per hog for the same period of 2013. Revenue for the first quarter of 2014 from breeder hog sales decreased by 7% to $1.99 million while the number of breeder hogs sold decreased 8% to 7,069 hogs and the average selling price of breeder hogs increased 1% to $281 per hog. The decline in breeder hogs sold was primarily due to weakness in market demand for breeder hogs as farmers are not looking to expand their herds. Revenue for the first quarter of 2014 from regular market hog sales increased 1% to $4.58 million as the number of regular market hogs sold grew 4% to 22,583 hogs and the average selling price of regular market hogs decreased 3% to $203 per hog.
For the first quarter of 2014, we generated $3.15 million in revenue through the sale of black hogs and black hog specialty pork products. We sold 11,700 black hogs as breeder and market hogs with an average selling price of $228 per hog, generating revenue of $2.67 million. We also sold 89,483 kilograms of specialty black hog products through retail that generated $0.48 million in revenue during the first quarter of 2014. Our black hog specialty pork product portfolio includes fresh pork meat sold through supermarkets and to restaurants, hotels and other retailers, and vacuumed pork meats sold in gift boxes or portable thermo coolers.
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For the Three Months Ended March 31,
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||||||||||||||||||||||||
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2014
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2013
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|||||||||||||||||||||||
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No. of Hogs
Sold
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Average
Price/Hog ($)
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Sales
($ thousands)
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No. of Hogs
Sold
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Average
Price/Hog ($)
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Sales
($ thousands)
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|||||||||||||||||||
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Breeder hogs- regular hogs
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7,069 | $ | 281 | $ | 1,989 | 7,690 | $ | 277 | $ | 2,129 | ||||||||||||||
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Market hogs- regular hogs
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22,583 | 203 | 4,580 | 21,722 | 209 | 4,547 | ||||||||||||||||||
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Market hogs- black hogs
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11,700 | 228 | 2,670 | 3,101 | 229 | 710 | ||||||||||||||||||
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Total
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41,352 | 223 | 9,239 | 32,513 | 227 | 7,387 | ||||||||||||||||||
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Kilogram
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Average
Price/kg ($)
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Sales
($ thousands)
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Kilogram
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Average
Price/kg ($)
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Sales
($ thousands)
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|||||||||||||||||||
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Market hogs- specialty black hog pork products
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89,483 | $ | 5 | $ | 478 | - | - | - | ||||||||||||||||
Cost of goods sold increased $1.67 million, or 25%, to $8.25 million for the first quarter of 2014. Cost of goods sold related to the hog farming segment was $8.01 million for the first quarter of 2014 as compared to $6.58 million for the same period of 2013. Cost of goods sold for the retail segment was $0.25 million for the first quarter of 2014. Gross profit for the first quarter of 2014 was $1.46 million, compared to $0.81 million for the same period of last year. Gross margin for the first quarter of 2014 was 15.0%, compared to 10.9% for the same period of 2013. This increase in gross margin reflected improvement in the gross margin from the sale of breeder hogs and black hogs and the impact of our higher margin specialty black hog meat products. The gross margins for breeder hogs, regular market hogs, black hogs, and retail sales were 36%, 6%, 9% and 48% respectively, for the first quarter of 2014. As a comparison, gross margins for breeder hogs, regular market hogs, and black hogs were 30%, 11%, and 4%, respectively, for the same period of last year.
Selling, general and administrative expenses increased $0.12 million, or 13%, to $1.06 million for the first quarter of 2014. The increase was primarily the result of a loss in inventory of $0.09 million and marketing expenses of $0.25 million related to our black hog program, partially offset by a reduction of $0.22 million in administrative expenses.
Net Income for the first quarter of 2014 was $0.30 million, compared to a net loss of $0.18 million for the same period of 2013. The combination of an increase in revenue and a decrease in selling, general, and administrative expenses led to the return to profitability. The turnaround from a net loss to net profit was primarily the result of: 1) stable hog feed costs, which helped us control our cost of goods sold and 2) improved margins contributed by sales of breeder hogs, black hogs and black hog specialty pork products.
After allocating net income attributable to non-controlling interest, net income attributable to common shareholders for the first quarter of 2014 was $0.43 million, or $0.03 per diluted share. This compared to net loss attributable to common shareholders of $0.11 million, or net loss of $0.01 per diluted share for the first quarter of 2013.
Financial Position
As of March 31, 2014, the Company had cash and cash equivalents of $19.53 million, compared to $10.09 million at the end of 2013. Working capital as of March 31, 2014 was $21.03 million as compared to $14.95 million at December 31, 2013. Cash flow from operations was $3.02 million and $0.93 million for the three months ended March 31, 2014 and 2013, respectively.
Recent Developments
On April 18, 2014, the Company announced that its wholly owned VIE subsidiary, Wuhan Fengze Agricultural Science and Technology Development Co., Ltd. ("Fengze"), completed an equity interest transfer with Xiamen Ruijin Fund LLP ("XMRJ") that allowed Fengze to regain full control of Hubei Tianzhili Breeder Hog Co., Ltd. ("Tianzhili"). Total consideration for the transaction is RMB 6,666,700, or approximately $1,050,000, which equals the advances received from XMRJ as of April 18, 2014 in connection with XMRJ's acquisition of the 40% equity interest in Tianzhili in November 2012. As a result of the transaction, Tianzhili became a wholly owned subsidiary of Fengze and the Company regained full control of its Black Hog Program in Enshi Prefecture.
On April 11, 2014, the Company announced that it had entered into an agreement to sell $5.72 million shares of its common stock (the "Offering") to Mr. Ping Wang, the Company's Chairman and CEO. Pursuant to a Subscription Agreement executed on April 10, 2014, once regulatory issues are resolved, which is anticipated to happen shortly, the Company will issue 2.6 million shares of its common stock to Mr. Wang for an aggregate consideration of $5.72 million, or $2.20 per share. The offering price represents an approximately 20.9% premium over the closing price of $1.82 on April 9, 2014. As a condition of the sale, Mr. Wang agreed not to sell the Shares for 18 months and thereafter at not less than $2.20 per share.
On April 8, 2014, Mr. Ping Wang and the Company's Nominating Committee recommended, and the Board of Directors approved, the appointment of Mr. Tong Zhao as a Director of the Board. Mr. Zhao, 39, currently serves as Executive President of Aoxin Holding Co., Ltd. ("Aoxin"), where Mr. Wang also serves as Chairperson.
On March 31, 2014, the Company announced that, due to personal health-related reasons, Mrs. Hanying Li has resigned as Chairwoman and Chief Executive Officer, effective March 27, 2014. Mrs. Li will remain with Tianli as a member of the Board of Directors. On March 28, 2014, the Nominating Committee recommended, and the Board of Directors approved, the appointment of Mr. Ping Wang as a Director, the Chairman of the Board, and Chief Executive Officer of Tianli.
On March 27, 2014, the Company announced that it had completed a $6 million private placement of its common stock to Mr. Ping Wang, a citizen of the PRC. Pursuant to a Subscription Agreement executed on March 24, 2014, the Company issued and sold 3 million shares of its common stock (the "Shares") to Mr. Wang for an aggregate consideration of $6 million, or $2.00 per share. The offering price represents an approximately 13% premium over the closing price of $1.77 on March 21, 2014. As a condition of the sale, Mr. Wang agreed not to sell the Shares for 18 months and thereafter at not less than $2.00 per share.
Earnings Conference Call
Tianli will host an earnings conference call and live webcast covering its first quarter 2014 financial results at 8:00 a.m. EDT on May 13, 2014, which is also 8:00 p.m. in Beijing on May 13, 2014. 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".
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Conference Call
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Date:
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Tuesday, May 13, 2014
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Time:
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8:00 am EDT, U.S.
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U.S. Dial-in:
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+1 877-317-6789
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International Dial-in:
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+1 412-317-6789
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Conference ID:
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Tianli/OINK
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Webcast Link:
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http://services.choruscall.com/links/tianli140513.html
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For those unable to participate, an audio replay of the call will be available beginning approximately one hour after the end of the live call through May 29, 2014. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access ID No. 10046300.
About Tianli Agritech, Inc.
Tianli Agritech, Inc. is in the business of breeding, raising and selling breeder and market hogs in China and is developing 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 this cautionary statement 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:
Tina Xiao
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com
Web: http://www.weitian-ir.com
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TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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||||||||
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March 31,
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December 31,
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2014
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2013
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(Unaudited)
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ASSETS
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||||||||
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Current Assets:
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Cash and cash equivalents
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$ | 19,531,022.00 | $ | 10,087,694.00 | ||||
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Accounts receivable, net
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181,849.00 | 256,607.00 | ||||||
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Inventories
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9,985,633.00 | 11,484,786.00 | ||||||
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Advances to suppliers
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2,129,898.00 | 1,612,492.00 | ||||||
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Prepaid expenses
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153,436.00 | 204,106.00 | ||||||
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Restricted cash
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- | - | ||||||
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Other receivables, net
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281,889.00 | 1,181,078.00 | ||||||
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Total Current Assets
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32,263,727.00 | 24,826,763.00 | ||||||
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Long-term prepaid expenses
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1,571,432.00 | 1,606,188.00 | ||||||
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Plant and equipment, net of accumulated depreciation of $7,464,495 and
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||||||||
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$6,960,163 at March 31, 2014 and December 31, 2013, respectively
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22,434,283.00 | 23,185,732.00 | ||||||
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Construction in progress
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50,471.00 | 50,897.00 | ||||||
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Biological assets, net of accumulated amortization of $4,191,169 and
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||||||||
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$3,843,502 at March 31, 2014 and December 31, 2013, respectively
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2,851,542.00 | 3,276,840.00 | ||||||
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Intangible assets, net
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1,455,399.00 | 1,480,631.00 | ||||||
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Total Assets
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$ | 60,626,854.00 | $ | 54,427,051.00 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
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Current Liabilities:
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||||||||
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Short-term loans
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$ | 7,952,093.00 | $ | 6,382,561.00 | ||||
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Accounts payable and accrued payables
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7,497.00 | 48,896.00 | ||||||
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Other payables
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3,146,825.00 | 3,309,246.00 | ||||||
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Due to related party
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127,978.00 | 139,430.00 | ||||||
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Total Current Liabilities
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11,234,393.00 | 9,880,133.00 | ||||||
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Stockholders' Equity:
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||||||||
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Common stock ($0.001 par value, 50,000,000 shares authorized,
|
||||||||
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16,964,000 and 13,964,000 shares issued and outstanding as of
|
||||||||
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March 31, 2014 and December 31, 2013, respectively)
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16,964.00 | 13,964.00 | ||||||
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Additional paid in capital
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23,291,398.00 | 18,094,200.00 | ||||||
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Statutory surplus reserves
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2,416,647.00 | 2,416,647.00 | ||||||
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Retained earnings
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19,966,549.00 | 19,538,507.00 | ||||||
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Accumulated other comprehensive income
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3,700,903.00 | 4,046,055.00 | ||||||
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Stockholders' Equity - Tianli Agritech Inc. and Subsidiaries
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49,392,461.00 | 44,109,373.00 | ||||||
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Noncontrolling interest
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- | 437,545.00 | ||||||
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Total Stockholders' Equity
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49,392,461.00 | 44,546,918.00 | ||||||
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Total Liabilities and Stockholders' Equity
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$ | 60,626,854.00 | $ | 54,427,051.00 | ||||
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TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
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||||||||
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For the 3 Months Ended March 31,
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2014
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2013
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|||||||
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Sales
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9,716,629 | $ | 7,386,534 | |||||
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Cost of goods sold
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8,254,511 | 6,581,233 | ||||||
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Gross profit
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1,462,118 | 805,301 | ||||||
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Operating expenses:
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||||||||
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General and administrative expenses
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773,411 | 902,498 | ||||||
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Selling expenses
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282,767 | 36,042 | ||||||
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Total operating expenses
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1,056,178 | 938,540 | ||||||
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Income (loss) from operations
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405,940 | (133,239 | ) | |||||
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Other income (expense):
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Interest expense
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(89,676 | ) | (166,817 | ) | ||||
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Subsidy income
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- | 95,589 | ||||||
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Impairment loss from Farm 8 shutdown
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- | - | ||||||
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Impairment loss from construction in progress
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- | - | ||||||
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Other income (expense)
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(15,239 | ) | 25,904 | |||||
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Total other expenses
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(104,915 | ) | (45,324 | ) | ||||
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Income (loss) before income taxes
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301,025 | (178,563 | ) | |||||
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Income taxes
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- | - | ||||||
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Net income (loss) from continuing operations
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301,025 | (178,563 | ) | |||||
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Discontinued operations:
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||||||||
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Gain from operations of discontinued component, net of taxes
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- | - | ||||||
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Net income (loss)
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301,025 | (178,563 | ) | |||||
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Net loss attributable to noncontrolling interest
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127,017 | 68,495 | ||||||
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Net income (loss) attributable to Tianli Agritech Inc. common stockholders
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428,042 | (110,068 | ) | |||||
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Other comprehensive income:
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||||||||
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Unrealized foreign currency translation adjustment
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(365,368 | ) | 252,565 | |||||
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Comprehensive income
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62,674 | $ | 142,497 | |||||
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Earnings (losses) per share attributable to Tianli Agritech Inc. common stockholders - basic and diluted:
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||||||||
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Weighted-average shares outstanding, basic and diluted
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13,964,000 | 11,194,000 | ||||||
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Continuing operations - Basic & diluted
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0.03 | $ | (0.01 | ) | ||||
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Discontinued operations -Basic & diluted
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- | $ | - | |||||
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TIANLI AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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||||||||
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For the Three Months Ended March 31,
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2014
|
2013
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|||||||
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CASH FLOWS FROM OPERATING ACTIVITIES
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||||||||
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Net income (loss)
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301,025 | $ | (178,563 | ) | ||||
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Adjustments to reconcile net income (loss) to net cash
|
||||||||
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provided by operating activities:
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||||||||
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Depreciation and amortization
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884,027 | 800,471 | ||||||
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Amortization of prepaid expenses
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110,316 | 100,446 | ||||||
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Bad debt expense
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8,486 | - | ||||||
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Loss from inventory LCM
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86,917 | - | ||||||
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Changes in operating assets and liabilities:
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||||||||
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Accounts receivable
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64,678 | (28,681 | ) | |||||
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Inventories
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1,326,872 | (317,839 | ) | |||||
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Advances to suppliers
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(534,902 | ) | 79 | |||||
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Prepaid expenses
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(39,488 | ) | - | |||||
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Other receivables
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896,107 | 7,003 | ||||||
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Accounts payable and accrued payables
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(41,301 | ) | (4,196 | ) | ||||
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Other payables
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(40,578 | ) | 546,572 | |||||
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Total adjustments
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2,721,134 | 1,103,855 | ||||||
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Net cash provided by (used in) operating activities
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3,022,159 | 925,292 | ||||||
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CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
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Cash paid for purchae of noncontrolling interest
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(1,090,114 | ) | - | |||||
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Purchase of biological assets
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- | (58,570 | ) | |||||
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Purchase of plant and equipment
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(3,467 | ) | (432,941 | ) | ||||
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Net cash used in investing activities
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(1,093,581 | ) | (491,511 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
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Due to related party
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(10,990 | ) | - | |||||
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Proceeds from capital contribution
|
6,000,000 | - | ||||||
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Proceeds from short-term loans
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1,635,163 | - | ||||||
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Net cash provided by financing activities
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7,624,173 | - | ||||||
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
(109,423 | ) | 65,687 | |||||
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NET INCREASE IN CASH
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9,443,328 | 499,468 | ||||||
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CASH, BEGINNING OF PERIOD
|
10,087,694 | 7,477,205 | ||||||
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CASH, END OF PERIOD
|
19,531,022 | $ | 7,976,673 | |||||
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SUPPLEMENTAL DISCLOSURES:
|
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Cash paid during the period for:
|
||||||||
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Interest paid
|
146,661 | $ | 173,021 | |||||
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Income tax paid
|
- | $ | - | |||||