First glance at earnings look pretty good.
WUHAN CITY, CHINA--(Marketwire - 11/11/10) - Tianli Agritech, Inc. (NASDAQ:OINK - News), a leading producer of breeder and meat hogs headquartered in Wuhan City, China, today announced its financial results for the three and nine month periods ended September 30, 2010. The Company anticipates filing its Form 10-Q for the period ended September 30, 2010 before 7:00 am ET on Friday, November 12, in advance of its conference call with investors which will occur at 10:00 am ET the same day.
Third Quarter 2010 Financial Highlights
-- Revenue was $5.5 million, representing an increase of 76% as compared
to the third quarter of 2009
-- Breeder hog revenue increased 83% and meat hog revenues increased 70%
over the comparable 2009 period. The higher margin breeder revenue
comprised 46% of the Company's revenue in the third quarter
-- Gross profit more than doubled to $2.4 million with a gross margin of
44.2%, up more than six percentage points from last year's level
-- Net income was $2.2 million, up 106% from 2009's third quarter,
resulting in earnings per share of $0.23
Summarized Third Quarter 2010 Results
(Dollar Figures Rounded - Percentages based on Actual Results)
3rd Q 2010 3rd Q 2009 Increase
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Sales $5.5 million $3.2 million 76%
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Gross Profit $2.4 million $1.2 million 104%
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Net Income $2.2 million $1.1 million 106%
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EPS* $0.23 $0.13 77%
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* EPS calculations are based on the weighted average 9.7 million shares outstanding during the 3rd Quarter of 2010 and 8.1 million shares outstanding during the 3rd Quarter of 2009, reflecting the effect of the Company's July 2010 IPO.
Operating expenses in the quarter ended September 30, 2010 were approximately $352,000 as compared to approximately $107,000 in 2009. This increase is largely attributed to the growth of the capacity of the Company's farms and the additional costs pertaining to the Company's now being a public company. Separately, the Company also benefited from a provincial subsidy of $132,000 received in the third quarter.
As an agricultural company, Tianli is exempt from corporate income taxes (EIT) and valued added tax (VAT). Net income for the period ended September 30, 2010 was $2.2 million and diluted earnings per share was $0.23.
Tianli's Chairwoman and CEO, Ms. Hanying Li, stated, "We continue to witness the strong performance of our business as evidenced by the third quarter results. This strengthens our belief that focusing on the genetic quality of our stock has enabled us to become a preferred source of breeder hogs, resulting in higher margins while reinforcing the quality positioning of the Tianli brand. With the capital provided by our IPO proceeds, we are now preparing to significantly expand the Company's capacity while further enhancing the quality of our products. Tianli is currently in active discussions regarding the potential acquisition of various hog farms, and this expansion would better position the Company to benefit from China's continued growth in its demand for pork."
Operational Overview
Tianli sells breeder hogs, which are purchased by other hog farms to increase their production, and meat hogs, which are sent to pork processing facilities for packaging of fresh, refrigerated or frozen pork products for sale to consumers. Tianli has concentrated on the breeder hog market and continually improving the genetics, nutrition and raising of healthy hogs. The gross margin for breeder hogs is higher than that of meat hogs due to the higher price that quality breeder hogs can generate, as well as the lower feed and other costs as breeder hogs are generally sold at a younger age than meat hogs. One of the methods that Tianli utilizes to improve the health of its hogs is its proprietary probiotic enhanced premix feed. The Company believes that this has enabled it to decrease mortality, incur less veterinary care and medicine costs, and thus increase operating profits.
Sales by Products
(Dollar Figures Rounded - Percentages based on Actual Results)
Quarter Ended 9/30/2010 Quarter Ended 9/30/2009
-------------------------- --------------------------
No. of Hogs Sales No. of Hogs Sales
Products Sold Revenues Sold Revenues
-------- ----------- ------------- ----------- -------------
Breeder Hogs 9,977 $ 2.6 million 5,859 $ 1.4 million
Meat Hogs 15,443 $ 3.0 million 9,806 $ 1.8 million
----------- ------------- ----------- -------------
Total 25,420 $ 5.5 million 15,665 $ 3.2 million
Breeder hog revenues in the third quarter of 2010 increased by 83% over the comparable 2009 period, and comprised 46% of revenues in the quarter. The Company's sales of 9,977 breeder hogs in the quarter represented a 70% increase year-over-year, while the unit sales of meat hogs increased by approximately 57%, and the increased volume of hogs sold was the major factor in the revenue increase. The gross margin on the sales of breeders increased to 56% from the prior year level of 50% while the meat hog margin increased to 34% from 29%, reflecting the benefit of 7% higher prices.
Nine Month 2010 Financial Highlights
-- Revenue was $15.5 million, an increase of 69% as compared to the first
nine months of 2009
-- Breeder hog revenue increased over 150% while meat hog revenue
increased 38% over the comparable 2009 period. As a result, breeder
revenue comprised 40% of the Company's total revenue during the first
nine months
-- Gross profit more than doubled to $6.7 million with a gross margin of
43.3%, up more than seven percentage points from last year's level
-- Net income was $6.0 million, up 91% from 2009's first nine months
Summarized Nine Months 2010 Results
(Dollar Figures Rounded - Percentages based on Actual Results)
Nine Months Nine Months
2010 2009 Increase
--------------- --------------- --------------
Sales $15.5 million $9.2 million 69%
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Gross Profit $6.7 million $3.3 million 103%
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Net Income $6.0 million $3.1 million 91%
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EPS* $0.69 $0.39 77%
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* EPS calculations are based on the weighted average 8.7 million shares outstanding during the first nine months of 2010 and 8.1 million outstanding during the first nine months of 2009.
Revenues from breeder hogs for the nine months ended September 30, 2010 increased by approximately 153% while the revenues for the sale of meat hogs increased by 38%. The revenue increase was largely the result of the hogs sold increasing from 47,202 in the 2009 period to 72,536 in 2010, a 54% gain. The higher proportion of the more profitable breeder hog sales significantly benefited the Company's gross profit margins for the nine month period, which increased by over seven percentage points to 43.3%.
2010 Guidance
The Company expects to report full year 2010 revenues of approximately $21 million, net income of $8.1 million to $8.3 million, and EPS of $0.90 to $0.92.
Financial Position
As of September 30, 2010, the Company had $10.9 million in cash, which included net proceeds from its IPO financing secured in July 2010, compared to $2.0 million as of December 31, 2009. Working capital was $13.7 million, up from $2.1 million as of December 31, 2009. The Company conducts its sales on cash on delivery basis and thus has no accounts receivable. Inventories were $3.7 million, compared to $3.3 million as of December 31, 2009, and the Company had a $400,000 refundable deposit for a potential acquisition being held in escrow. Stockholders' equity increased 125% to $28.5 million during the nine month period ended September 30, 2010. Cash flow from operations during the first nine months of 2010 was $6.4 million. Stockholders' equity increased 125% to $28.5 million during the nine month period ended September 30.
AI
