Tianli Agritech Reports Second Quarter 2013 Results

WUHAN, China, Aug. 13, 2013 /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 second quarter ended June 30, 2013.

Mrs. Hanying Li, Chairwoman and CEO of Tianli Agritech commented, "Despite continued weakness in overall pork demand and a decline in pork prices, our revenue increased by 7% to $6.8 million in the second quarter of 2013 as the number of hogs we sold grew by 30% to a record level of 36,464 hogs which more than offset the 18% decline in average selling price per hog. We also resumed our retail operations and started to sell our Tianli-Xiduhei™ hog meat cuts through leading supermarket chains in the Wuhan market during the second quarter. Looking ahead, as we continue to focus on expanding our black hog program in Enshi prefecture and building out our retail operations, we believe Tianli is well positioned for a rebound of the hog industry in coming quarters."

Second Quarter 2013 Financial Results:

Revenue for the second quarter of 2013 increased by $0.45 million, or 7%, to $6.84 million from $6.39 million for the same period of 2012. This increase was primarily the result of selling more breeder hogs and market hogs, partially offset by declines in the average selling prices for both breeder and market hogs. The Company sold a total of 36,464 breeder hogs, market hogs, and market hogs for processed pork products during the second quarter of 2013, compared to 28,034 hogs for the same period of 2012. Revenue for the second quarter of 2013 from breeder hog sales decreased 7% to $1.96 million with the number of breeder hogs sold increasing 12% to 7,718 hogs and the average selling price of breeder hogs decreasing 18% to $253 per hog. Revenue for the second quarter of 2013 from market hog sales increased 13% to $4.84 million as the number of market hogs sold grew 35% to 28,531 hogs and the average selling price of market hogs declined 16% to $169 per hog. The decline in average selling prices of both breeder and market hogs was mainly due to market conditions. During the second quarter of 2013, the Company also generated $0.05 million in revenue from retail operations that were resumed in April 2013. The Company sold 3,988 black hogs, generating $0.81 million in sales, during the second quarter of 2013. Sales of black hogs are included in the market hogs category in the discussion above and the table below.

Gross profit (loss) for the second quarter of 2013 was ($0.28) million, compared to gross income of $0.80 million for the same period of last year. Gross margin (deficit) was (4.0%) and 12.5% for the second quarter of 2013 and 2012, respectively. The combination of increased feed costs and lower hog selling prices contributed to the decrease in gross margin. The gross margins (deficit) for breeder hogs and market hogs were 24% and (15%), respectively, for the second quarter of 2013, versus 34% and 2%, respectively, for the same period of last year.

Selling, general and administrative expenses increased by $0.28 million, or 67%, to $0.71 million for the second quarter of 2013. The increase was primarily related to our black hog program that generated an additional $0.24 million in administrative expenses. Operating margin (deficit) for the second quarter of 2013 was (14.4%), compared to 5.9% for the same period of last year.

Net loss from continuing operations for the second quarter of 2013 was $1.14 million, compared to net income of $0.27 million for the same period of 2012. The decrease was primarily the result of the deterioration in gross margin and the increase in selling, general and administrative expenses as explained above. After allocating net loss attributable to non-controlling interest, net loss attributable to common shareholders for the second quarter of 2013 was $1.00 million, or a loss of $0.09 per diluted share. This compared to net income attributable to common shareholders of $0.32 million, or $0.03 per diluted share, for the same period of last year. 

Six Months Ended June 30, 2013 Financial Results:

Revenue for the six months ended June 30, 2013 increased $1.13 million, or 9%, to $14.23 million from the same period of 2012. This increase was primarily the result of selling more breeder hogs and market hogs, partially offset by declines in the average selling prices for both breeder and market hogs. The Company sold a total of 68,977 breeder hogs, market hogs, and market hogs for processed pork products during the first half of 2013, compared to 55,129 hogs for the same period of 2012. Revenue for the six months ended June 30, 2013 from breeder hog sales decreased 1% to $4.09 million with the number of breeder hogs sold increasing 13% to 15,408 hogs and the average selling price of breeder hogs decreasing 12% to $265 per hog. Revenue for the six months ended June 30, 2013 from market hog sales increased 13% to $10.09 million as the number of market hogs sold grew 29% to 53,354 hogs and the average selling price of market hogs declined 13% to $189 per hog. The decline in average selling prices of both breeder and market hogs was mainly due to market conditions. During the first half of 2013, the Company also generated $0.05 million in revenue from retail. The Company sold 5,813 black hogs, generating $1.26 million in sales, in the first half of 2013. The sales of black hogs are included in the market hogs category in the discussion above and the table below.

Gross profit for the six months ended June 30, 2013 was $0.53 million, compared to $2.10 million for the same period of last year. Gross margin was 4% and 16% for the six months ended June 30, 2013 and 2012, respectively. The impact of increased feed cost and reduced hog prices caused the significant decrease in gross margin.

Selling, general and administrative expenses increased by $0.59 million, or 56%, to $1.65 million for the six months ended June 30, 2013 from $1.06 million for the same period of last year. The increase was primarily related to our black hog program which generated an additional $0.51 million in administrative expenses. Operating margin (deficit) for the six months ended June 30, 2013 was (7.9%), compared to 8.0% for the same period of last year.

Net loss from continuing operations for the six months ended June 30, 2013 was $1.32 million, compared to net income of $0.98 million for the same period of 2012. The decrease was primarily the result of the deterioration in gross margin and increase in selling, general and administrative expenses as explained above. After allocating net loss attributable to non-controlling interest, net loss attributable to common shareholders for the six months ended June 30, 2013 was $1.11 million, or a loss of $0.10 per diluted share. This compared to net income attributable to common shareholders of $1.02 million, or $0.10 per diluted share, for the same period of last year. 

Financial Position  

As of June 30, 2013, the Company had cash and cash equivalents of $6.24 million, compared to $7.48 million as of December 31, 2012. Working capital as of June 30, 2013 was $8.62 million as compared to $8.98 million at December 31, 2012. Cash flow from operations was ($0.21) million and $4.02 million for the six months ended June 30, 2013 and 2012, respectively.

Recent Developments     

On August 5, 2013, the Company announced that it received Nasdaq's approval to transfer its listing from the Nasdaq Global Market to Nasdaq Capital Market. The Company was also granted an additional 180-Day extension, or until February 3, 2014, by Nasdaq to regain compliance with the Minimum Bid Price Rule.

On July 1, 2013, the Company announced that its subsidiary, Wuhan Fengze Agricultural Science and Technology Development Co. Ltd., signed a cooperation agreement (the "Agreement") with Shenzhen Investment Banking International Marketing Group to jointly develop a direct sales program for Tianli's branded black hog meat in Shenzhen and other cities in Guangdong Province.

On May 29, 2013, the company announced that it had signed an agreement with Zhongbai Warehouse Supermarket Co., Ltd. ("ZHONGBAI")to sell cuts of Tianli-Xiduhei™ black hog meat through five of ZHONGBAI's warehouse outlets in Wuhan, Hubei province.

On May 6, 2013, the Company announced that it resumed its retail operations and began to sell Tianli-Xiduhei™ black hog products in Wuhan City through a NEWSTAR supermarket as well as three LAO NONG MIN retail stores.

Earnings Conference Call

Tianli will host an earnings conference call and live webcast covering its second quarter financial results at 8:00 a.m. EDT on August 14, 2013, which is also 8:00 p.m. in Beijing on August 14, 2013. 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".

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 August 26, 2013. 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. 10032808.

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 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.

For more information, please contact:

Tina Xiao
Weitian Group LLC
Phone: +1-917-609-0333
Email: [email protected]
Web: http://www.weitian-ir.com

SOURCE Tianli Agritech, Inc.

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