On Monday May 11, 2009, 6:55 am EDT
NEW YORK, May 11 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED - News), one of the largest commercial hog producer and the largest animal nutrients company in China, today announced financial results for the first quarter of 2009:
- Earnings per share of $0.08 compared to $0.03 for the first quarter of 2008.
- Net Income of $3.02 million compared to $0.91 million for the comparable 2008 period.
- Revenue of $33.43 million, up from $12.15 million in the first quarter of 2008.
- Gross Profit of $5.80 million.
Management Comments
Dr. Songyan Li, AgFeed's Chairman, commented that, "We are pleased with the results of operations for the first quarter of 2009 in spite of tough market conditions. Our year to year margins suffered due to external inventory hangover, a mild macro decline in the economy and the higher cost of corn and soy which forced our production costs to rise. The recent H1N1 flu had some effect on our businesses but the Chinese government has taken aggressive measures to curtail this problem in China. Hog prices will continue at low levels until late summer and I believe prices will begin to climb by September as the Chinese economy accelerates."
Junhong Xiong, CEO commented, "China's adoption of the Food Safety Law which goes into effect on June 1,2009 will enhance our animal nutrient business by removing competing substandard products from our market. As a feed operating company we have received 'Green Certification' for our 'BEST' label pre-mix products from the Minister of Agriculture. This combination of the new law and green certification should propel our sales in 2009 and beyond."
Gerry Daignault COO added, "We have made great headway in the last few months investing in AgFeed's science-based genetics programs and standardizing production practices. These plans will result in increasing the sow birth rates over the next two years (2010-11) to be in position to sell 2,000,000 hogs in that period while also improving other key production metrics. AgFeed is in the final stages of completing the construction of the nucleus farm near Wuning China and will stock the farm with pure lines in the third quarter. This farm will be at the top of our genetics pyramid and will support our future genetics programs. Hypor, our genetics partner, has provided us with a great deal of support in planning this farm, including design, stocking plans as well as maximizing the benefits across our production system."
2009 Strategic Plan
AgFeed senior management has developed a three year strategic plan through 2011. The Chinese $586 billion stimulus plan will have positive effects on the economy and the consumer as urbanization and the swift growth of the Chinese middle class, strongly position AgFeed for the expanding Chinese consumer pork market. The plan provides for the implementation of a series of measures that are designed to:
- Strengthen the Company's financial foundation;
- Improve the Company's existing hog farms using advanced management and process systems;
- Continue to invest in a broad, science-based genetics programs designed to increase throughput and profit margins; and
- Expand AgFeed's product branding, and distribution strategies in both of its lines of business - capitalizing on the recognizability of the brand labels "AgFeed" and "BEST."
About AgFeed Industries, Inc.
NASDAQ Global Market listed AgFeed Industries (www.agfeedinc.com) is a U.S. company with its primary operations in China. AgFeed has two profitable business lines -- premix and blended animal feed and hog production. AgFeed is China's largest commercial hog producer in terms of total annual hog production as well as the largest premix feed company in terms of revenues. China is the world's largest hog producing country that produced 625 million hogs in 2008, compared to approximately 100 million hogs in the U.S. China also has the world's largest consumer base for pork consumption. Over 65% of total meat consumed in China is pork. Hog production in China enjoys income tax free status. The pre-mix feed market in which AgFeed operates is an approximately $1.6 billion segment of China's $40 billion per year animal feed market, according to the China Feed Industry Association.
Safe Harbor Disclosure Notice
The information contained in this earnings release and the attachments is as of March 16, 2009. The Company assumes no obligation to update any forward-looking statements contained in this earnings release or the attachments as a result of new information or future events or developments.
This earnings release and the attachments contain forward-looking information about the Company's financial results and estimates, business plans and prospects that involve substantial risks and uncertainties. You can identify these statements by the fact that they use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects. Among the factors that could cause actual results to differ materially are the following: the availability and prices of live hogs, raw materials, fuel and supplies; food safety; livestock disease; live hog production costs; product pricing; the competitive environment and related market conditions; operating efficiencies; interest rate and foreign currency exchange rate fluctuations; access to capital; the cost of compliance with environmental and health standards; actions of the PRC government; governmental laws and regulations affecting our operations, including tax obligations; the ability to make effective acquisitions at the prices we expect and successfully integrate newly acquired businesses into existing operations; the success of our research and development activities, changes in generally accepted accounting principles; uncertainties related to general economic, political, business, industry, regulatory and market conditions; any changes in business, political and economic conditions due to the threat of terrorist activity; and other risks and uncertainties described in the Company's Annual Report on Form 10-K for the year ended December 31, 2008 and in its subsequent Quarterly Reports on Form 10-Q. Readers are cautioned not to place undue reliance on forward-looking statements because actual results may differ materially from those expressed in, or implied by, the statements. Any forward-looking statement that the Company makes speaks only as of the date of such statement, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
Contact:
Investor Relations:
AgFeed Industries, Inc.
Tel: (917) 804-3584
Email: ir@agfeedinc.com
The Company's policy is to handle all questions by email to ir@agfeedinc.com and they will be answered as soon as possible.
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2009 AND DECEMBER 31, 2008
March 31, December 31,
2009 2008
---- ----
(unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $20,382,671 $24,839,378
Accounts receivable, net of
allowance for doubtful accounts
of $282,958 and $520,413 11,972,363 9,462,380
Advances to suppliers 487,620 518,829
Other receivable 2,687,318 2,066,030
Inventory 20,587,466 20,616,560
Prepaid expense 864,025 1,166,646
Debt issue costs 218,030 246,223
---------- ----------
Total current assets 57,199,493 58,916,046
PROPERTY AND EQUIPMENT, net 22,754,806 20,810,094
CONSTRUCTION-IN-PROCESS 10,466,343 10,853,389
INTANGIBLE ASSETS 43,796,461 43,833,705
OTHER ASSETS 2,429,339 2,641,902
------------ ------------
TOTAL ASSETS $136,646,442 $137,055,136
============ ============
LIABILITIES AND EQUITY
-------------------------
CURRENT LIABILITIES:
Accounts payable $6,409,881 $5,214,596
Other payables 1,892,659 5,766,741
Unearned revenue 116,401 321,664
Accrued expenses 164,064 164,558
Accrued payroll 643,587 818,052
Tax and welfare payable 235,600 465,875
Interest payable 46,511 121,139
--------- ----------
Total current liabilities 9,508,703 12,872,625
CONVERTIBLE NOTES, net of debt
discount of $513,095 and $579,444 3,286,905 3,220,556
---------- ----------
TOTAL LIABILITIES 12,795,608 16,093,181
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 10) - -
- -
EQUITY:
AgFeed stockholders' equity:
Common stock, $0.001 per share;
75,000,000 shares authorized;
38,300,436 issued and 37,933,141
outstanding at March 31, 2009
38,300,436 issued and 37,933,141
outstanding at December 31, 2008 38,300 38,300
Additional paid-in capital 90,764,907 90,903,261
Other comprehensive income 4,013,363 4,167,217
Statutory reserve 3,580,436 3,236,054
Treasury stock (367,295 shares held in
treasury) (1,811,746) (1,811,746)
Retained earnings 24,985,716 22,311,258
---------- ----------
Total AgFeed stockholders' equity 121,570,976 118,844,344
Noncontrolling interest 2,279,858 2,117,611
--------- ---------
Total equity 123,850,834 120,961,955
------------ ------------
TOTAL LIABILITIES AND EQUITY $136,646,442 $137,055,136
============ ============
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
2009 2008
---- ----
(unaudited) (unaudited)
Revenues $33,429,274 $12,147,084
Cost of goods sold 27,625,869 8,714,123
---------- ---------
Gross profit 5,803,405 3,432,961
Operating expenses
Selling expenses 863,867 753,622
General and administrative expenses 1,757,172 954,221
--------- -------
Total operating expenses 2,621,039 1,707,843
--------- ---------
Income from operations 3,182,366 1,725,118
Non-operating income (expense):
Other income (expense) 192,681 (14,571)
Interest income 60,562 50,175
Interest and financing costs (152,914) (326,642)
Foreign currency transaction loss (1,831) (224,473)
------ --------
Total non-operating income (expense) 98,498 (515,511)
Income before provision for income taxes 3,280,864 1,209,607
Provision for income taxes 215,550 96,263
---------- ----------
Net income including noncontrolling
interest $3,065,314 $1,113,344
Less: Net income attributed to
noncontrolling interest 46,474 194,047
---------- --------
Net income attributed to AgFeed $3,018,840 $919,297
Other comprehensive income
Foreign currency translation gain (loss) $153,854 1,011,701
-------- ---------
Comprehensive Income $2,864,986 $1,930,998
========== ==========
Weighted average shares outstanding :
Basic 37,933,141 27,802,640
========== ==========
Diluted 37,933,141 28,046,455
========== ==========
Earnings per share attributed to
AgFeed common stockholders:
Basic $0.08 $0.03
===== =====
Diluted $0.08 $0.03
===== =====
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
2009 2008
---- ----
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including
noncontrolling interest $3,065,314 $1,113,344
Adjustments to reconcile net
income including noncontrolling
interest to net cash used
in operating activities:
Depreciation 610,706 185,753
Amortization 12,779 12,598
Loss on disposal of assets - 16,774
Stock based compensation 138,531 16,108
Amortization of debt
issuance costs 28,193 54,821
Amortization of discount on
convertible debt 66,349 129,011
(Increase) / decrease in assets:
Accounts receivable (2,523,056) (2,082,250)
Other receivable (623,691) (641,521)
Inventory 985 (3,077,865)
Advances to suppliers 30,505 304,242
Prepaid expense 301,104 490,590
Other assets 208,976 -
Increase / (decrease) in current
liabilities:
Accounts payable 1,202,475 1,482,467
Other payables (3,866,938) 539,211
Due to related party - 287,055
Unearned revenue (204,837) (54,019)
Accrued expenses (306) 177,017
Accrued payroll (173,358) (40,086)
Tax and welfare payable (229,655) 92,948
Interest payable (74,628) 125,409
---------- --------
Net cash used in operating
activities (2,030,552) (868,393)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and
equipment (2,211,649) (635,952)
Acquisition of intangible
assets (35,294) (70,654)
Cash paid for purchase of
subsidiary - (5,290,747)
---------- ----------
Net cash used in investing
activities (2,246,943) (5,997,353)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of
common stock - 22,000,032
Offering costs paid (276,885) (3,432,670)
Proceeds from the issuance of
convertible notes - 19,000,000
Issuance costs for convertible
notes - (1,716,666)
Capital contributed by
noncontrolling
interest holders 118,664 -
-------- ----------
Net cash provided by (used in)
financing activities (158,221) 35,850,696
-------- ----------
Effect of exchange rate changes on
cash and cash equivalents (20,991) 242,976
------- -------
NET INCREASE (DECREASE) IN CASH &
CASH EQUIVALENTS (4,456,707) 29,227,926
CASH & CASH EQUIVALENTS, BEGINNING
BALANCE 24,839,378 7,696,209
---------- ---------
CASH & CASH EQUIVALENTS, ENDING
BALANCE $20,382,671 $36,924,135
=========== ===========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Interest paid $133,000 $51,223
======== =======
Income taxes paid $176,640 $-
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