AgFeed Industries, Inc. Announces Third Quarter 2009 Financial Results
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NEW YORK, Nov. 10 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED), one of the largest commercial hog producers and the largest animal nutrients company in China, today announced financial results for the third quarter and first nine months of 2009:
Highlights
-- Revenue of $45.12 million and $117.07 million, compared to $49.43
million and $97.21 million for the quarter and nine month periods of
2008, respectively.
-- Income from continuing operations of $3.71 million and $9.16 million,
compared to $9.31 million and $19.81 million for the quarter and nine
month periods of 2008, respectively.
-- Net income of $2.9 million and $7.1 million for the quarter and first
nine months of 2009, compared to $8.2 million and $13.1 million for the
comparable 2008 periods.
-- Earnings per share on income from continuing operations of $0.09 and
$0.23 for the quarter and nine months of 2009 periods, compared to $0.28
and $0.64 for the comparable 2008 periods. Earnings per share of $0.07
and $0.18 for the quarter and nine months of 2009 periods, compared to
$0.25 and $0.42 for the comparable 2008 periods;
-- Gross profit of $7.6 million and $18.6 million for the third quarter and
first nine months of 2009, as compared to $12.3 million and $26.8
million for the third quarter and first nine months of 2008,
respectively.
-- Balance sheet was strong; cash and cash equivalents on hand at September
30, 2009 was $36.5 million, an increase of $5.6 million in the third
quarter of 2009; the current ratio was 5.47:1 at September 30, 2009;
total assets were $157.9 million and book value was $142.8 million at
September 30, 2009.
-- Gross margins for the third quarter and first nine months of 2009 were
16.8% and 15.1%, respectively, compared to 24.9% and 27.5% for the
corresponding 2008 periods.
Management Comments
Dr. Songyan Li, AgFeed's Chairman, commented that, "I am pleased to report that nine months into our transition year we are accomplishing much of what we set out to do. I am happy with the operating results in both of our business segments in spite of a number of market challenges that we faced in the hog industry and in our regional economy. Our operating income for the third quarter was a commendable $3.71 million. We finished the quarter with a strong balance sheet and $36.5 million in cash to fund our operations and growth. Our animal nutrients business performed exceptionally well in the third quarter, aided by the recent implementation of the Food Safety Laws and the Green-Certified label on our products.
Dr. Li continued, "Earlier this year we announced our intention to adopt the Western model of hog production. We are well on our way to a full transition in 2009 to that model with our new alliance with Hypor, the formation of AgFeed International Protein Technology, our joint venture with M2P2 LLC, and our ongoing investment in upgrading our existing farms. As we continue to invest in our genetics programs, improve our bio-security and upgrade our environmental protection systems over the next 25 months we believe that AgFeed will become the standard for top quality, green-certified pork in China."
In discussing AgFeed's animal nutrients business, Junhong Xiong, AgFeed's Chief Executive Officer, asserted, "Our revenues of $17.1 million in the third quarter of 2009 were significantly higher, reaching approximately 80% of the revenues we posted for the first half of 2009. We expect that our animal nutrients business segment will remain strong through the end of 2009, meeting and exceeding our projections of 100,000 metric tons sold in 2009." Mr. Xiong added, "AgFeed is responding to the market demand for "complete" feed with plans to upgrade and expand our production capabilities in this key market segment. We believe this will provide an opportunity for us to triple our animal nutrient business revenues by the end of 2011."
Gerard Daignault, AgFeed's Chief Operating Officer, commenting on the Company's hog business, said "AgFeed is focused on bio-security and expanding its breeding hog inventory. The recent pure lines stocking of the Lushan Breeder Farm has produced record birth-rate results. AgFeed's second breeder farm, Ganda (Guangxi Province) will begin its pure lines stocking in December. The building of the Wunnin nucleus farm located in Jiangxi Province was completed on November 3 and will also be stocked with world class Hypor genetic breeding stock." Mr. Daignault added, "AgFeed's first Western-model farm located in Da Hua (Guangxi Province) opened this morning China time, with a groundbreaking ceremony sponsored by the PRC regional government. We currently anticipate that these facilities will house 10,000 sows producing 250,000 hogs by 2011 helping to meet the goal of selling 2.5 million hogs from 2009 to 2011."
Edward Pazdro, Chief Financial Officer of AgFeed International Protein Technology, reported, "Dr. Songyan Li is working with regional Chinese governments in targeted areas to introduce our joint venture concept. He is pursuing the identification and selection of additional farm sites and negotiation of agreements with local government officials, banks and farmers that will provide us with the opportunity to bring the success of our experience in Da Hua to other locations, affording AgFeed and AgFeed International Protein Technology the opportunity to expand their Western-model hog production model to new sites."
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 produces over 600 million hogs per year, compared to approximately 100 million hogs 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 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 November 10, 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 Chinese 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
September 30, December 31,
2009 2008
---- ----
(unaudited)
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $36,480,253 $24,839,378
Accounts receivable, net of allowance
for doubtful accounts of $246,847
and $520,413 16,222,992 9,462,380
Advances to suppliers 1,211,852 518,829
Other receivables 408,620 2,066,030
Inventory 22,019,710 20,616,560
Prepaid expenses 1,506,462 1,166,646
Debt issue costs 42,291 246,223
---------- ----------
Total current assets 77,892,180 58,916,046
PROPERTY AND EQUIPMENT, net 23,060,443 20,810,094
CONSTRUCTION-IN-PROCESS 10,276,793 10,853,389
INTANGIBLE ASSETS 43,819,722 43,833,705
OTHER ASSETS 2,887,066 2,641,902
------------ ------------
TOTAL ASSETS $157,936,204 $137,055,136
============ ============
LIABILITIES AND EQUITY
-------------------------
CURRENT LIABILITIES:
Short-term loans $4,401,000 $-
Accounts payable 6,738,882 5,214,596
Other payables 1,104,883 5,766,741
Unearned revenue 365,163 321,664
Accrued expenses 452,612 164,558
Accrued payroll 685,234 818,052
Tax and welfare payable 385,503 465,875
Interest payable 102,531 121,139
---------- ----------
Total current liabilities 14,235,808 12,872,625
CONVERTIBLE NOTES, net of debt discount
of $99,524 and $579,444 900,476 3,220,556
---------- ----------
TOTAL LIABILITIES 15,136,284 16,093,181
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 11) - -
--- ---
EQUITY:
AgFeed stockholders' equity:
Common stock, $0.001 per share;
75,000,000 shares authorized;
43,917,558 issued and 43,550,263
outstanding at September 30, 2009
38,300,436 issued and 37,933,141
outstanding at December 31, 2008 43,918 38,300
Additional paid-in capital 107,654,125 90,903,261
Other comprehensive income 4,187,956 4,167,217
Statutory reserve 4,230,516 3,236,054
Treasury stock (367,295 shares) (1,811,746) (1,811,746)
Retained earnings 28,458,229 22,311,258
---------- ----------
Total AgFeed stockholders' equity 142,762,998 118,844,344
Noncontrolling interest 36,922 2,117,611
------ ---------
Total equity 142,799,920 120,961,955
------------ ------------
TOTAL LIABILITIES AND EQUITY $157,936,204 $137,055,136
============ ============
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues $45,115,442 $49,426,274 $117,072,486 $97,208,685
Cost of goods sold 37,554,278 37,124,058 98,486,258 70,438,683
---------- ---------- ---------- ----------
Gross profit 7,561,164 12,302,216 18,586,228 26,770,002
Operating expenses
Selling expenses 960,574 970,268 2,823,783 2,597,470
General and
administrative
expenses 2,888,845 2,021,549 6,606,537 4,364,858
--------- --------- --------- ---------
Total operating
expenses 3,849,419 2,991,817 9,430,320 6,962,328
--------- --------- --------- ----------
Income from operations 3,711,745 9,310,399 9,155,908 19,807,674
Non-operating income
(expense):
Other expense (387,979) (257,493) (384,503) (283,063)
Interest income 75,344 44,860 188,460 171,095
Interest and
financing costs (192,963) (605,391) (970,391) (5,244,592)
Foreign currency
transaction loss (18,121) (10,007) (14,819) (553,753)
------- -------- ------- ----------
Total
non-operating
income
(expense) (523,719) (828,031) (1,181,253) (5,910,313)
Income before provision
for income taxes 3,188,026 8,482,368 7,974,655 13,897,361
Provision for income
taxes 292,647 201,904 794,155 414,993
------- ------- ------- -------
Net income including
noncontrolling
interest 2,895,379 8,280,464 7,180,500 13,482,368
Less: Net income (loss)
attributed to
noncontrolling interest (962) 64,309 39,067 425,403
---- ------ ------ -------
Net income attributed
to AgFeed 2,896,341 8,216,155 7,141,433 13,056,965
Other comprehensive
income
Foreign
currency
translation
gain 168,640 315,925 20,739 3,104,053
------- ------- ------ ---------
Comprehensive Income $3,064,981 $8,532,080 $7,162,172 $16,161,018
========== ========== ========== ===========
Weighted average
shares outstanding :
Basic 42,420,914 33,267,815 39,984,438 31,049,732
========== ========== ========== ==========
Diluted 43,329,228 33,557,457 40,641,679 31,377,267
========== ========== ========== ==========
Earnings per share
attributed to AgFeed
common stockholders:
Basic $0.07 $0.25 $0.18 $0.42
===== ===== ===== =====
Diluted $0.07 $0.24 $0.18 $0.42
===== ===== ===== =====
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
2009 2008
---- ----
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interest $7,180,500 $13,482,368
Adjustments to reconcile net income
including noncontrolling interest to
net cash provided by operating activities:
Depreciation 1,952,213 973,164
Amortization 49,286 35,240
Loss on disposal of assets 882,854 16,774
Stock based compensation 427,551 55,962
Amortization of debt issuance costs 203,932 1,441,624
Amortization of discount on convertible debt 479,920 3,392,619
(Increase) / decrease in assets:
Accounts receivable (6,759,546) (3,439,556)
Other receivables 1,201,329 (1,837,551)
Inventory (1,777,302) (8,312,612)
Advances to suppliers (716,870) (478,535)
Prepaid expenses (340,333) (261,938)
Other assets (244,980) (1,552,469)
Increase / (decrease) in current liabilities:
Accounts payable 1,624,279 3,454,401
Other payables (2,347,476) 2,849,755
Unearned revenue 43,465 118,530
Accrued expenses 287,838 571,447
Accrued payroll (132,716) 374,101
Tax and welfare payable (80,312) 213,163
Interest payable (18,608) 251,319
--------- ----------
Net cash provided by operating activities 1,915,024 11,347,806
--------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (7,486,470) (9,052,476)
Acquisition of intangible assets (35,314) (72,262)
Cash paid for purchase of subsidiaries (2,518,089) (65,134,359)
Cash from the sale of subsidiary 835,770 -
---------- -----------
Net cash used in investing activities (9,204,103) (74,259,097)
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common stock 10,000,000 57,200,058
Offering costs paid (1,740,072) (6,079,530)
Proceeds from short-term loans 4,541,500 -
Proceeds from exercise of warrants 6,580,010 2,138,848
Proceeds from issuance of convertible notes - 19,000,000
Issuance costs for convertible notes - (1,716,666)
Payment on note payable - (1,161,297)
Capital contributed by noncontrolling
interest holders 118,664 936,320
Repayment of contribution of
noncontrolling interest holder (586,800) -
---------- ----------
Net cash provided by financing activities 18,913,302 70,317,733
---------- ----------
Effect of exchange rate changes on cash and
cash equivalents 16,652 462,472
------ -------
NET INCREASE IN CASH & CASH EQUIVALENTS 11,640,875 7,868,914
CASH & CASH EQUIVALENTS, BEGINNING BALANCE 24,839,378 7,696,209
---------- ---------
CASH & CASH EQUIVALENTS, ENDING BALANCE $36,480,253 $15,565,123
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $212,414 $164,810
======== ========
Income taxes paid $616,693 $209,582
======== ========
SOURCE AgFeed Industries, Inc.
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