Tianli Agritech Reports First Quarter 2012 Results
Tianli Agritech Reports First Quarter 2012 Results
-Revenue increased 32% to $7.8 million
-Retail operations generated $1.1 million in revenues
-Generated $2.4 million in cash from operations
WUHAN, China, May 14, 2012
WUHAN, China, May 14, 2012 /PRNewswire-Asia/ -- Tianli Agritech, Inc. (NASDAQ:OINK), a leading producer of breeder and market hogs, and retailer of pork products, headquartered in Wuhan City, China, today announced its financial results for the first quarter of 2012.
First quarter 2012
Summarized First Quarter 2012 Results (Dollar Figures Rounded – Percentages based on Actual Results)
Selling, General and Administrative Expenses
*EPS calculations are based on 10,135,000 shares and 10,125,000 shares, the weighted average number of shares outstanding during Q1 2012 and Q1 2011, respectively.
Sales for the first quarter of 2012 increased 32%, with breeder hog sales declining 17% and market hog sales increasing by 34%. The Company sold 27,095 hogs in total compared to 23,020 hogs in the comparable period in 2011. Market pricing for both retail and breeder hogs year over year was relatively flat. In addition to the increase in our sales as a result of the overall growth in hog sales, our sales also increased as a result of the inclusion of our retail sales which began in the third quarter of 2011 and constituted 14% of our revenue in the first quarter of 2012.
Sales by Products
(Dollar Figures Rounded – Percentages based on Actual Results)
No. of Hogs Sold
No. of Hogs Sold
Breeder hog revenues in the three months ended March 31, 2012 fell 17% over the comparable 2011 period and comprised 26% of our revenues for the quarter. The decline in breeder hog sales is attributed to higher feed costs which caused farmers to forego purchases of breeders. The Company sold 6,766 breeder hogs in the first quarter of 2012, down 14% from the same period last year. Conversely, sales of market hogs were up approximately 34% over the prior year due to higher volume and increased demand for retail pork products. Tianli also recorded $1.1 million of revenues from its retail business which began in the third quarter of 2011. The cooperative arrangement with An Puluo is currently distributing pork products under the Tianli-An Puluo brand in over 50 major retail outlets in Great Wuhan, including Wal-mart, Zon 100and RT Mart.
Gross profit was $1.7 million in the first quarter of 2012, a 29% decrease from the same period last year. Gross margin was 22.3% in the first quarter of 2012 compared to 41.7% in the first quarter of 2011 as a result of significantly higher feed costs and lower pork prices. The decrease in the gross margin of our hog segment was partially offset by the margins obtained by our retail business, which was approximately 40% in the first quarter of 2012.
Selling, general and administrative (SG&A) expenses were $1.1 million in the first quarter of 2012, an increase of approximately $0.3 million from $0.8 million in the first quarter of 2011. The biggest contributor to the year-over-year increase in SG&A expenses was our retail business. Operating margins were 8.5% and 28.0% in the first quarter of 2012 and 2011, respectively.
Net income for the three months ended March 31, 2012 was approximately $0.7 million, down 62% from the same period last year. Earnings per fully diluted share were $0.07 compared to $0.18 last year.
Tianli's Chairwoman and CEO, Ms. Hanying Li, stated, "We continue to see strong demand across each of our businesses. In the first quarter of 2012 we sold 34% more market hogs while our breeder hog sales were negatively impacted by a weak market and the contamination that occurred in December 2011, which resulted in a loss of approximately 500 breeder hogs. I am extremely pleased with the progress of our black hog program, which will become a big contributor to our sales later this year. We anticipate further growth by expanding the number of farms that participate in our program with local cooperatives to raise Enshi black hogs."
As of March 31, 2012, the Company had $6.8 million in cash, compared to $6.5 million as of December 31, 2011. Working capital was $11.6 million, down from $11.9 million as of December 31, 2011. Because the Company conducts its hog sales on cash on delivery basis, it has low levels of accounts receivable outstanding, which totaled $0.6 million at March 31, 2012. Inventories were $10 million compared to $9.9 million at the end of 2011.
Tianli generated approximately $2.4 million in cash from operating activities and spent $1.7 million on capital expenditures and breeding stock during the first three months of 2012, primarily to support its black hog program expansion.
Earnings Conference Call
Ms. Hanying Li, Chairwoman and CEO, Mr. Guofu Zhang, CFO and Mr. Simon Guo, Tianli's VP and US Representative, will host the 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 the "Tianli Agritech, Inc. call" and/or be prepared to provide the conference ID.
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 First Quarter 2012 Conference Call".
Tuesday, May 15, 2012
9:00 am Eastern Time, US
Conference Line Dial-In (U.S.):
Tianli Agritech First Quarter 2012 Conference Call
Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through May 23, 2012. To listen, please call +1-877-344-7529 within the United States or +1-412-317-0088 if calling internationally.
Tianli Agritech, Inc. is in the business of breeding, raising and selling hogs in the People's Republic of China and is developing a retail channel for 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.
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.