AgFeed Industries, Inc. Announces First Quarter Results

News provided by

AgFeed Industries, Inc.

May 11, 2010, 06:55 ET

NEW YORK, May 11 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED, NYSE Alternext: ALHOG), one of the largest independent hog production and animal nutrient companies in China, today announced its results for the first quarter of 2010.  Revenue for the first quarter reached $52.9 million an increase of 58% compared to the first quarter of 2009.  Production volumes increased by 24% in the Company's hog division and 119% in the animal nutrition division, as compared to the same period in 2009

Dr. Songyan Li AgFeed's Chairman stated, "In spite of falling hog prices and a softness in orders for hog feed our company's divisions continued to show their resiliency and wherewithal in dealing with our large customer base. I expect hog prices will begin to appreciate over the next 90 days and will lead to hog prices being 12% -15% higher in the second half of the year.  Our 'AgFeed, Government & Farmer' strategy is taking hold as evidenced by our Dahua City and Xinyu City local government hog farm projects, featuring a true partnership to introduce western hog production technologies for the health and benefit of the Chinese consumer.  These projects, when completed, will be able to produce over 800,000 top line hogs every year.  I believe that we will benefit from our ongoing investments in our customers and businesses.  We recently listed our stock on Europe's Alternext, an affiliate of the NYSE, as part of our ongoing effort to continually expand our base of shareholders, which today stands at over 22,000 shareholders of record.  On May 18th, I will be part of AgFeed's team presenting at Rodman & Renshaw's investor conference in London."

Mr. Junhong Xiong AgFeed's President observed, "We are pleased with the results we achieved in a challenging operating environment.  During the quarter, the average hog price was 11% less than the first quarter of last year.  Many of our customers are struggling to withstand the combined challenge of low hog prices and increased feed prices due to the high cost of corn. In order to support our animal nutrition customers and cement our market position, AgFeed has chosen to exploit its relative financial strength by extending payment terms to its customers.  Facing similar pressures in our Hog Division, we were able to sell hogs at relatively advantageous prices by accepting payment terms from certain long-standing and credit worthy customers."

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 -- animal nutrients in premix, concentrates and complete feeds and hog production. AgFeed is one of China's largest commercial hog producers in terms of total annual hog production as well as one of the largest premix feed company in terms of revenues. China is the world's largest hog producing country that produced over 645 million hogs in 2009, compared to approximately 100 million hogs produced annually in the U.S. China also has the world's largest consumer base for pork consumption. Over 62% of total meat consumed in China is pork. Hog production in China enjoys income tax free status. The feed markets in which AgFeed operates represent a $20 billion segment of China's $58 billion per year animal feed market.

SAFE HARBOR DISCLOSURE NOTICE 

This press release may contain forward-looking information about the Company. 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. 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. For a list of factors that could affect the Company's results, see the Company's filings with the Securities and Exchange Commission, including "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Cautionary Statement for Forward-Looking Statements," set forth in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2010. 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. The information contained in this press release is made as of the date of the press release, even if subsequently made available by the Company on its website or otherwise.

Contact:  Investor Relations: AgFeed Industries, Inc.     Tel: (917) 804-3584     Email: [email protected]

The Company's policy is to handle all questions by email to [email protected] and they will be answered as soon as possible.

AGFEED INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME











Three Months Ended March 31,





2010

2009





(unaudited)

(unaudited)








Revenues

$

52,859,067

$

33,429,274

Cost of goods sold


46,539,785

27,625,869

Gross profit


6,319,282

5,803,405








Operating expenses






Selling expenses


1,030,623

863,867

General and administrative expenses

3,664,385

1,757,172

    Total operating expenses

4,695,008

2,621,039








Income from operations


1,624,274

3,182,366








Non-operating income (expense):






Other expense


(96,373)

192,681

Interest income


48,011

60,562

Interest and financing costs

(124,911)

(152,914)

Foreign currency transaction gain (loss)

13,803

(1,831)









    Total non-operating income (expense)

(159,470)

98,498








Income before provision for income taxes

1,464,804

3,280,864

Provision for income taxes


453,580

215,550

Net income including noncontrolling interest

1,011,224

3,065,314

Less: Net income (loss) attributed to noncontrolling interest

(56,194)

46,474

Net income attributed to AgFeed

1,067,418

3,018,840








Other comprehensive income







    Foreign currency translation gain (loss)

764

(153,854)

Comprehensive Income



$

1,068,182

$

2,864,986








Weighted average shares outstanding :





Basic


44,869,485

37,933,141

Diluted


45,213,024

37,933,141








Earnings per share attributed to AgFeed common stockholders:



Basic

$

0.02

$

0.08

Diluted

$

0.02

$

0.08
























Earnings before interest, taxes, depreciation and amortization:










Net income

$

1,067,418

$

3,018,840

Interest


124,911

152,914

Taxes



453,580

215,550

Depreciation


811,899

610,706

Amortization


23,191

12,779

EBITDA

$

2,480,999

$

4,010,789








EBITDA per share

$

0.06

$

0.11


AGFEED INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



















March 31,

December 31,




2010

2009




(unaudited)

ASSETS








CURRENT ASSETS:




Cash and cash equivalents

$

28,620,027

$

37,580,154

Accounts receivable, net of allowance for doubtful accounts  



     of $498,612 and $415,765


22,999,966

14,397,793

Advances to suppliers


813,242

1,173,941

Other receivables


4,658,159

2,186,643

Inventory


25,649,502

23,835,412

Prepaid expenses


974,950

1,325,150

Debt issue costs


27,287

34,706









Total current assets


83,743,133

80,533,799







PROPERTY AND EQUIPMENT, net


27,508,016

26,991,851

CONSTRUCTION-IN-PROCESS


10,570,727

7,615,132

INTANGIBLE ASSETS, net


43,910,857

43,808,499

OTHER ASSETS


4,072,546

3,998,739








TOTAL ASSETS

$

169,805,279

$

162,948,020







LIABILITIES AND EQUITY  








CURRENT LIABILITIES:






Short-term loan

$

4,401,000

$

4,401,000

Accounts payable


10,070,537

6,162,385

Other payables


4,039,693

1,892,858

Unearned revenue


415,373

582,266

Accrued expenses


73,207

83,649

Accrued payroll


649,280

975,485

Tax and welfare payable


610,336

396,370

Interest payable


137,919

120,419









Total current liabilities


20,397,345

14,614,432







CONVERTIBLE NOTES, net of debt discount of $64,215 and $81,675

935,785

918,325







TOTAL LIABILITIES


21,333,130

15,532,757







COMMITMENTS AND CONTINGENCIES


-

-







EQUITY:





   AgFeed stockholders' equity:






Common stock, $0.001 per share; 75,000,000 shares authorized;  




  45,270,558 issued and 44,903,263 outstanding at March 31, 2010




  44,510,558 issued and 44,143,263 outstanding at December 31, 2009

45,271

44,511

Additional paid-in capital


112,828,305

109,281,086

Deferred compensation


(3,462,280)

-

Other comprehensive income


4,177,214

4,176,450

Statutory reserve


4,984,833

4,685,115

Treasury stock (367,295 shares)


(1,811,746)

(1,811,746)

Retained earnings


31,978,263

31,210,563


Total AgFeed stockholders' equity  

148,739,860

147,585,979

   Noncontrolling interest (deficit)


(267,711)

(170,716)


Total equity  

148,472,149

147,415,263








TOTAL LIABILITIES AND EQUITY

$

169,805,279

$

162,948,020









AGFEED INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS












Three Months Ended March 31,





2010

2009





(unaudited)

(unaudited)








CASH FLOWS FROM OPERATING ACTIVITIES:




Net income including noncontrolling interest

$

1,011,224

$

3,065,314

Adjustments to reconcile net income including noncontrolling interest




 to net cash used in operating activities:





Depreciation

811,899

610,706


Amortization

23,191

12,779


Stock based compensation

75,281

138,531


Issuance of common stock for services

375,720

-


Amortization of debt issuance costs

7,419

28,193


Amortization of discount on convertible debt

17,460

66,349


(Increase) / decrease in assets:






Accounts receivable

(8,599,242)

(2,523,056)



Other receivables

(2,466,242)

(623,691)



Inventory

(1,813,472)

985



Advances to suppliers

360,605

30,505



Prepaid expenses

350,014

301,104



Other assets

(73,782)

208,976


Increase / (decrease) in current liabilities:






Accounts payable

3,906,822

1,202,475



Other payables

2,142,963

(3,866,938)



Unearned revenue

(166,837)

(204,837)



Accrued expenses

(12,304)

(306)



Accrued payroll

(326,087)

(173,358)



Tax and welfare payable

213,894

(229,655)



Interest payable

17,500

(74,628)









Net cash used in operating activities

(4,143,974)

(2,030,552)








CASH FLOWS FROM INVESTING ACTIVITIES:





Purchase of property and equipment

(4,282,474)

(2,211,649)


Purchase of intangible assets

(125,514)

(35,294)









Net cash used in investing activities

(4,407,988)

(2,246,943)








CASH FLOWS FROM FINANCING ACTIVITIES:





Offering costs paid

-

(276,885)


Capital contributed by noncontrolling interest holders

-

118,664


Purchase of noncontrolling interest in majority owed hog farms

(406,103)

-









Net cash used in financing activities

(406,103)

(158,221)








Effect of exchange rate changes on cash and cash equivalents

(2,062)

(20,991)








NET DECREASE IN CASH & CASH EQUIVALENTS

(8,960,127)

(4,456,707)








CASH & CASH EQUIVALENTS, BEGINNING BALANCE

37,580,154

24,839,378








CASH & CASH EQUIVALENTS, ENDING BALANCE

$

28,620,027

$

20,382,671








SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:




Interest paid

$

64,969

$

133,000

Income taxes paid

$

210,860

$

176,640

SOURCE AgFeed Industries, Inc.

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