Deyu Agriculture Corp. Announces Fiscal Year 2012 Results and Schedule Results Conference Call and Website
BEIJING, March 28, 2013 /PRNewswire/ -- Deyu Agriculture Corp. (OTCBB: DEYU) (the "Company"), a Shanxi Province, China-based vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains, today announced its financial results for the fiscal year ended December 31, 2012.
Fiscal Year 2012 Results:
- Net revenue was $254.0 million compared to $261.6 million in 2011;
- Gross profit was $44.7 million, increasing $1.6 million or 3.8% from $43.1 million in 2011;
- Gross margin increased to 17.6% for 2012 from 16.5% in 2011;
- Net income available to common stockholders was $16.0 million compared to $17.3 million in 2011;
- Earnings per diluted share was $1.30 on 12.6 million shares, compared to $1.42 on 12.5 million shares in 2011.
"In 2012, in order to move to a more sustainable growth approach, we reduced our reliance on bank loans to supplement our working capital for fast growth by decreasing our overall borrowings from banks from $14.4 million to $8.3 million," said Jianming Hao, Chief Executive Officer of the Company. "Even with a slight decrease of revenue and net income, we are still very pleased with our performance this year. We believe this strategic move significantly reduced our financial risks and can benefit the Company and our shareholders in the long term.
"We are glad to see that our recent acquisition, the Taizihu Group, which has a diversified product line of grain products and large production capacity, made a revenue contribution of $23.3 million. We are also currently working on building strategic alliances with large and well-branded companies such as Wen's Food Group Co., Ltd. ("WFG") and Beijing Suning Appliance Co., Ltd. ("Suning") to build our leading position in the industry," continued Mr. Hao.
"In October 2012 we elected a new President, Greg Chen, and increased our Board with the additions of Greg and Mr. Jan Poulsen," Mr. Hao added. "With Greg's experience in strategic development and operation management, and Jan's 20+ years of experience in both asset management and business development within the food and beverage industries, we are confident that we can continue to build on our progress."
Financial Results for the Fiscal Year Ended December 31, 2012
In fiscal year 2012, the Company's net revenue was $254.0 million, compared with $261.6 million for 2011, a decrease of $7.6 million, or 2.9%. Net revenue from the Corn Division for 2012 was $151.0 million, a decrease of $26.7 million, or approximately 15.0%, as compared to $177.7 million for 2011, which was primarily due to the reduction of working capital for inventory procurement supported by bank loans and bank notes. Net revenue from our Grain Division for 2012 was $73.8 million, an increase of $33.3 million, or 82.2%, as compared to $40.5 million for 2011. The increase was a combined result of an increase of $23.3 million of sales revenue added by the Taizihu Group and an increase of $18.2 million in sales revenue derived from newly retained institutional clients in 2012, partially offset by a decrease of $8.2 million in sales revenue in retail sales in supermarkets and conventional stores caused by the reduction of the sales of unprofitable products in some stores. Net revenue from our Bulk Trading Division for 2012 was $29.2 million, a decrease of $14.2 million, or 32.7% as compared to $43.3 million for 2011. This decrease was mainly attributable to the decrease of working capital supported by bank loans and bank notes.
The Company's gross profit increased by $1.6 million, or 3.8%, from $43.1 million for 2011 to $44.7 million for 2012. The increase was a combined result of a decrease of $6.1 million in the Corn Division, an increase of $9.6 million in the Grain Division and a decrease of $1.9 million in the Bulk Trading Division. Our gross margin increased from 16.5% for 2011 to 17.6% for 2012. Gross margin for our Corn Division was 15.4% for 2012, down from 16.5% for 2011, which was mainly attributable to the continuous increase in the purchase price of raw corn and supplemental procurement from suppliers while selling prices did not increase consistently. Gross margin for the Grain Division increased from 24.9% for 2011 to 26.7% for 2012, an, which was mainly a combined result of the increase of gross margin of retail sales caused by reducing the sales of unprofitable products in some stores and the decrease of gross margin derived from the addition of new product portfolios containing mixed gross margins that targeted a wider scope of customers. Gross margin for the Bulk Trading Division was 6.0% for 2012, down from 8.3% for 2011, which was mainly attributable to the increase of percentage of sales for certain types of grains with relatively lower gross margin.
The Company's operating expenses increased $4.3 million, or 20.1%, to $25.8 million for 2012 as compared to $21.5 million for 2011. This increase was primarily a combined result of the increase of freight charges caused by the rising costs of railway freight, advertisement expenses spent on brand promotion and distribution expenses, expenses added by the Taizihu Group, increased depreciation and amortization caused by newly-acquired buildings as well as increased payroll and other expenses.
The Company had net income available to common stockholders of $16.0 million for 2012, as compared to a net income of $17.3 million for 2011, a decrease of $1.3 million, or 7.7%. Earnings per diluted share was $1.30 on 12.6 million shares for 2012, compared to $1.42 on 12.5 million shares for 2011.
Recent Updates about the Company
In February 2012, the Company acquired the Taizihu Group, which has a well-established grain product line of grain products under well recognized brand names "Huichun" and "Taizihu". In June 2012, the Company formed a supply relationship with WFG, one of the largest modern multi-industry and trans-regional livestock enterprises, to which we will provide raw corn on a non-exclusive basis. In August 2012, the Company reached an agreement with Suning, one of the largest electrical and electronic appliance retailers in China, to supply it with refined packaged grain goods valued at 18.4 million USD for its commercial use.
In October 2012, the Company registered a subsidiary named Jilin Jinglong Agriculture Development Limited in Jilin Province, one of the main corn and grain producing areas in Chinatoexplore business in Northeast China, Also in October 2012, the China National Cereals and Oils Committee selected the Company's wholly-owned subsidiary, Detian Yu, as one of China's Top 100 Grain and Oil Enterprises. And in December 2012, the Company received approximately $209,000 (RMB 1.3 million) in subsidies from the Jinzhong city government, which will be used to support Deyu's business operations as well as the construction of its grains processing projects.
Business Outlook
"With the industrial and market resources we have established in the past few years, we are growing to be a more integrated agriculture company with a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China," said Jianming Hao. "In view of this goal we are now working on a digital platform to integrate the resources in the whole supply chain, and to deliver value-added services to farmers and our clients.
"In the future, our digital platform will not only provide our current clients and farmers with enhanced services, but also facilitate the extension of Deyu's value-added services to potential clients and farmers in different regions. In addition, we believe the platform can serve as Deyu's vital branding platform in the industry and marketplace. We believe we can compete more effectively by utilizing the platform to turn some key barriers imposed by the conventional approaches into strategic advantages," added Mr. Hao.
Conference Call
The Company will host a conference call on April 2, 2013 at 8:30 AM EDT to discuss the Company's results for the fiscal year ended December 31, 2012.
To join the conference call, use the dial-in information below. When prompted, ask for the "Deyu Agriculture Call" and/or be prepared to provide the conference ID.
| Date: |
4/2/2013 |
| Time: |
8:30 AM EDT |
| Conference Line Dial-In (US): |
877-407-9205 |
| International Dial-In: |
201-689-8054 |
| Conference ID#: |
411546 |
| Webcast Link: |
Dial in at least 10 minutes before the call to ensure timely participation. A Teleconference Replay will be available until 11:59 PM April 16, 2013. To listen, please call 877-660-6853 within the United States or 201-612-7415 if calling internationally.
Utilize the conference ID # for replay: 411546
About Deyu Agriculture Corp.
Deyu Agriculture Corp. is a vertically integrated producer, processor, marketer and distributor of organic and other agricultural products made from corn and grains operating in Shanxi Province in the People's Republic of China. The Company has access of 20 years to over 109,000 acres of farmland in Shanxi Province for breeding, cultivating, processing, warehousing and distributing grain and corn products. We have a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China. Deyu Agriculture Corp.'s facilities include sophisticated production lines and modern warehouses with a total production capacity of over 105,000 tons for grain products, storage capacity of over 100,000 tons and annual turnover of 700,000 tons for corn products. The Company's website is located at www.deyuagri.com.
Safe Harbor Statements
This press release contains forward-looking statements made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon the current plans, estimates and projections of Deyu Agriculture Corp.'s management and are subject to risks and uncertainties, which could cause actual results to differ from the forward looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; uncertainties related to conducting business in China, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. Therefore, you should not place undue reliance on these forward-looking statements. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: business conditions in China, general economic conditions; geopolitical events and regulatory changes, availability of capital, changes in the agricultural industry, the Company's ability to maintain its competitive position. Additional Information regarding risks can be found in the Company's quarterly and annual reports filed with the U.S. Securities and Exchange Commission at www.sec.gov.
Company Contact:
Mr. Greg Chen, President
Deyu Agriculture Corp.
Tel: +1-646-499-5475
Email: [email protected]
Ms. Amy He, Chief Financial Officer
Deyu Agriculture Corp.
Tel: +86-10-8273-2870 x8522
Email: [email protected]
Financial Tables
| DEYU AGRICULTURE CORP AND SUBSIDIARIES |
||||||
| CONSOLIDATED BALANCE SHEETS |
||||||
| December 31, |
December 31, |
|||||
| Assets |
||||||
| Current Assets |
||||||
| Cash and cash equivalents |
$ |
4,937,279 |
$ |
8,741,703 |
||
| Restricted cash |
815,348 |
1,850,999 |
||||
| Accounts receivable, net |
33,991,288 |
36,167,136 |
||||
| Due from related parties |
397,214 |
587,108 |
||||
| Inventory |
30,322,191 |
20,314,090 |
||||
| Advance to supplier |
6,145,840 |
7,233,371 |
||||
| Prepaid expenses |
1,453,184 |
391,537 |
||||
| Assets held for sale |
- |
1,634,274 |
||||
| Other current assets |
340,456 |
2,204,934 |
||||
| Total Current Assets |
78,402,800 |
79,125,152 |
||||
| Property, plant, and equipment, net |
19,442,599 |
12,355,946 |
||||
| Construction-in-progress |
2,614,491 |
- |
||||
| Long-term Investment |
58,426 |
- |
||||
| Other assets |
- |
727,535 |
||||
| Intangible assets, net |
13,389,075 |
10,651,844 |
||||
| Total Assets |
$ |
113,907,391 |
$ |
102,860,477 |
||
| Liabilities and Equity |
||||||
| Current Liabilities |
||||||
| Short-term loan |
$ |
8,323,623 |
$ |
14,413,480 |
||
| Accounts payable |
5,179,729 |
1,833,190 |
||||
| Note payables |
- |
1,588,840 |
||||
| Advance from customers |
2,249,282 |
8,488,272 |
||||
| Accrued expenses |
1,506,776 |
1,149,205 |
||||
| Tax payable |
305,712 |
- |
||||
| Preferred stock dividends payable |
229,171 |
219,721 |
||||
| Due to related parties |
8,933,843 |
5,445,115 |
||||
| Other current liabilities |
720,862 |
583,196 |
||||
| Total Current Liabilities |
27,448,998 |
33,721,019 |
||||
| Equity |
||||||
| Series A convertible preferred stock, $.001 par value, |
2,040 |
1,997 |
||||
| Common stock, $.001 par value; 75,000,000 shares |
10,658 |
10,565 |
||||
| Additional paid-in capital |
20,781,439 |
20,367,138 |
||||
| Other comprehensive income |
5,737,793 |
4,831,353 |
||||
| Retained earnings |
59,500,134 |
43,491,465 |
||||
| Total Stockholders' Equity |
86,032,064 |
68,702,518 |
||||
| Noncontrolling Interests |
426,329 |
436,940 |
||||
| Total Equity |
86,458,393 |
69,139,458 |
||||
| Total Liabilities and Equity |
$ |
113,907,391 |
$ |
102,860,477 |
||
| DEYU AGRICULTURE CORP AND SUBSIDIARIES |
||||||||
| CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME |
||||||||
| For The Years Ended |
||||||||
| December 31, |
||||||||
| 2012 |
2011 |
|||||||
| Net revenue |
$ |
254,046,098 |
$ |
261,576,666 |
||||
| Cost of goods sold |
(209,325,445) |
(218,480,009) |
||||||
| Gross Profit |
44,720,653 |
43,096,657 |
||||||
| Selling expenses |
(16,153,096) |
(13,231,094) |
||||||
| General and administrative expenses |
(9,619,036) |
(8,222,182) |
||||||
| Total Operating Expenses |
(25,772,132) |
(21,453,276) |
||||||
| Operating income |
18,948,521 |
21,643,381 |
||||||
| Interest income |
37,846 |
42,159 |
||||||
| Interest expense |
(1,477,304) |
(805,601) |
||||||
| Non-operating income |
665,270 |
(180,294) |
||||||
| Total Other Expenses |
(774,188) |
(943,736) |
||||||
| Income from continuing operations before income taxes |
18,174,333 |
20,699,645 |
||||||
| Income taxes |
(1,765,514) |
(184,384) |
||||||
| Income from continuing operations |
16,408,819 |
20,515,261 |
||||||
| Loss from discontinued operations, net of income taxes |
- |
(3,891,830) |
||||||
| Net income |
16,408,819 |
16,623,431 |
||||||
| Net loss attributable to noncontrolling interests: |
||||||||
| Net loss from continuing operations |
46,599 |
38,673 |
||||||
| Net loss from discontinued operations |
- |
1,101,255 |
||||||
| Total net loss attributable to noncontrolling interests |
46,599 |
1,139,928 |
||||||
| Net income attributable to Deyu Agriculture Corp. |
16,455,418 |
17,763,359 |
||||||
| Preferred stock dividends |
(446,748) |
(427,917) |
||||||
| Net income available to common stockholders |
16,008,670 |
17,335,442 |
||||||
| Foreign currency translation (loss) gain |
910,907 |
2,751,687 |
||||||
| Comprehensive income |
16,919,577 |
20,087,129 |
||||||
| Other comprehensive income attributable to noncontrolling interests |
(4,467) |
(130,653) |
||||||
| Comprehensive income attributable to Deyu Agriculture Corp. |
$ |
16,915,110 |
$ |
19,956,476 |
||||
| Amounts attributable to common stockholders: |
||||||||
| Net income from continuing operations, net of income taxes |
$ |
16,008,670 |
$ |
20,126,017 |
||||
| Discontinued operations, net of income taxes |
- |
(2,790,575) |
||||||
| Net income attributable to common stockholders |
$ |
16,008,670 |
$ |
17,335,442 |
||||
| Net income attributable to common stockholders per share - basic: |
||||||||
| Income from continuing operations |
$ |
1.51 |
$ |
1.91 |
||||
| Loss from discontinuing operations |
- |
(0.27) |
||||||
| Net income attributable to common stockholders |
$ |
1.51 |
$ |
1.64 |
||||
| Net income attributable to common stockholders per share - diluted: |
||||||||
| Income from continuing operations |
$ |
1.30 |
$ |
1.64 |
||||
| Loss from discontinuing operations |
- |
(0.22) |
||||||
| Net income attributable to common stockholders |
$ |
1.30 |
$ |
1.42 |
||||
| Weighted average number of common shares outstanding - basic |
10,598,603 |
10,522,432 |
||||||
| Weighted average number of common shares outstanding - diluted |
12,614,108 |
12,497,164 |
||||||
| DEYU AGRICULTURE CORP AND SUBSIDIARIES |
|||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
| For The Years Ended |
|||||||
| December 31, |
|||||||
| 2012 |
2011 |
||||||
| CASH FLOWS FROM OPERATING ACTIVITIES |
|||||||
| Net income available to common stockholders |
$ |
16,008,670 |
$ |
17,335,442 |
|||
| Loss from discontinued operations attributable to |
- |
2,790,575 |
|||||
| Adjustments to reconcile net income to net cash provided |
|||||||
| Depreciation &amortization |
2,297,082 |
979,297 |
|||||
| Allowance for doubtful accounts |
- |
- |
|||||
| Reserve for inventory valuation |
- |
- |
|||||
| Loss on disposal of fixed assets |
577 |
- |
|||||
| Share-based compensation |
120,853 |
428,702 |
|||||
| Preferred stock dividends accrued |
446,748 |
219,721 |
|||||
| Dividends paid with Series A preferred stock |
- |
212,420 |
|||||
| Common stocks issued for services |
114,400 |
78,000 |
|||||
| Grain on bargain purchase |
(499,079) |
- |
|||||
| Deferred income tax expense (benefit) |
878,746 |
184,384 |
|||||
| Noncontrolling interests |
(46,599) |
(38,673) |
|||||
| Decrease (increase) in current assets: |
|||||||
| Accounts receivable |
2,649,036 |
(23,824,017) |
|||||
| Related-parties trade receivable |
226,755 |
(494,752) |
|||||
| Inventories |
(8,383,187) |
(2,873,705) |
|||||
| Advance to suppliers |
1,987,857 |
(5,840,601) |
|||||
| Prepaid expense and other current assets |
(40,331) |
(539,339) |
|||||
| Increase (decrease) in liabilities: |
|||||||
| Accounts payable |
2,967,217 |
1,584,038 |
|||||
| Advance from customers |
(6,471,286) |
1,677,638 |
|||||
| Accrued expense and other liabilities |
297,336 |
346,492 |
|||||
| Net cash provided by (used in) operating activities of |
12,554,795 |
(7,774,378) |
|||||
| Net cash used in operating activities of discontinued operations |
- |
(3,858,325) |
|||||
| Net cash provided by (used in) operating activities |
12,554,795 |
(11,632,703) |
|||||
| CASH FLOWS FROM INVESTING ACTIVITIES |
|||||||
| Consideration paid for acquisition |
(5,501,046) |
- |
|||||
| Construction and remodeling of factory and warehouses |
(900,487) |
(109,856) |
|||||
| Purchase of machinery and equipment |
(128,383) |
(3,759,859) |
|||||
| Advances to related parties |
(33,294) |
- |
|||||
| Cash held by the Taizihu Group at acquisition date |
20,272 |
- |
|||||
| Repayment from (loan to) related parties |
- |
(76,995) |
|||||
| Prepayments for acquisition of farmland use rights |
- |
(76,715) |
|||||
| Purchase of software and other assets |
- |
(8,902) |
|||||
| Net cash used in investing activities of continuing operations |
(6,542,938) |
(4,032,327) |
|||||
| Net cash used in investing activities of discontinued operations |
- |
(2,476,523) |
|||||
| Net cash used in investing activities |
(6,542,938) |
(6,508,850) |
|||||
| CASH FLOWS FROM FINANCING ACTIVITIES |
|||||||
| Net (repayments of) proceeds from short-term loans from |
(12,658,509) |
11,349,219 |
|||||
| Net (repayments of) proceeds from short-term bank |
(1,585,087) |
1,547,269 |
|||||
| Cash released from restriction (restricted) for credit line of |
1,281,894 |
(1,802,568) |
|||||
| Net proceeds from short-term loans from related parties |
3,312,931 |
3,101,839 |
|||||
| Payment of preferred dividends |
(267,721) |
(243,678) |
|||||
| Proceeds from capital contributions |
31,702 |
464,180 |
|||||
| Release of cash restricted held at a trust account |
- |
125,560 |
|||||
| Net proceeds from short-term loan from others |
- |
952 |
|||||
| Net cash (used in) provided by financing activities of |
(9,884,790) |
14,542,773 |
|||||
| Net cash provided by financing activities of discontinued operations |
- |
5,918,988 |
|||||
| Net cash (used in) provided by financing activities |
(9,884,790) |
20,461,761 |
|||||
| EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH |
68,509 |
352,429 |
|||||
| NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS |
(3,804,424) |
2,672,637 |
|||||
| NET DECREASE IN CASH & CASH EQUIVALENTS FROM |
- |
(403,208) |
|||||
| NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS |
(3,804,424) |
3,075,845 |
|||||
| CASH & CASH EQUIVALENTS, BEGINNING BALANCE |
8,741,703 |
5,665,858 |
|||||
| CASH & CASH EQUIVALENTS, ENDING BALANCE |
$ |
4,937,279 |
$ |
8,741,703 |
|||
| SUPPLEMENTAL DISCLOSURES: |
|||||||
| Income tax paid |
$ |
678,420 |
$ |
62 |
|||
| Interest paid |
$ |
1,815,269 |
$ |
809,448 |
|||
| NONCASH INVESTING AND FINANCING ACTIVITIES: |
|||||||
| Construction completed and transferred to property, plant, |
$ |
- |
$ |
5,914,602 |
|||
| Construction completed and transferred to land use rights |
$ |
- |
$ |
2,320,904 |
|||
| Obtained certificates of farmland use rights |
$ |
- |
$ |
8,221,569 |
|||
Note: Please refer to the Company's annual report on Form 10-K for the year ended December 31, 2012 for additional notes, which are an integral part of these consolidated financial statements.
SOURCE Deyu Agriculture Corp.
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