BEIJING, Aug. 11, 2016 /PRNewswire/ --
--3Q16 Total Net Revenue Increases 12.1%
YoY--
--3Q16 Non-GAAP Operating Loss Narrows YoY--
--Achieves Positive Operating Cash Flow in 3Q16--
Origin Agritech Limited (NASDAQ: SEED, "Origin" or the
"Company"), a technology-focused supplier of crop seeds in
China today announced its
unaudited financial results for the third quarter of fiscal 2016
ended June 30, 2016 ("GAAP").
Mr. Shashank Aurora, Chief
Financial Officer of Origin, commented, "The sum of recognized
revenue and deferred revenue as of June 30,
2016 was RMB473.9 million, or
US$71.5 million, an increase of 6.0%
compared to RMB447.1 million for the
same period one year ago, driven by ongoing development and strong
interest in our corn seed products and biotechnologies. The
majority of deferred revenue will be recognized in the fourth
fiscal quarter of 2016. Excluding one-time items, we narrowed both
our loss from operations and net loss compared to last quarter as
well as to the prior year. In our Seed Production &
Distribution segment, we managed our inventory downward in the
quarter as we improved our forecasting capabilities and better
aligned seed production with demand. This helped generate healthy
cash flow from operations, freed up working capital and reduced our
debt. We continue to optimize our cost structure based on the
exciting market opportunities that lie ahead."
Dr. William S. Niebur, Chief
Executive Officer of Origin, commented, "We are making steady
progress with our efforts to become a more globally focused seed
and biotechnology company that bases its development in
China and provides solutions to
farmers around the world. We have recently added several
important executive team members, including a new Chief Financial
Officer and a new Chief Technology Officer who will drive the
evolution of our current business model to enable expansion
globally. Additionally, as a part of our strategic
partnership approach, we announced a collaboration and commercial
licensing agreement with a major multinational seed company in the
third fiscal quarter to develop new GM crops for farmers in
China. This agreement has great
potential to modernize China's
agricultural system and enhance food security, both major
priorities for the government. We have a healthy pipeline of new
seed products and traits for future release and are committed to
pursuing new domestic and international partnership opportunities
to maximize revenue and profit growth in the years ahead."
Third Quarter Fiscal 2016 Financial Results
Total net revenue for the third fiscal quarter of 2016
increased by 12.1% to RMB82.6 million
(US$12.5 million) from RMB73.7 million in the prior year period. The
increase in seed revenue was primarily driven by increased sales of
corn seed hybrid Liyu-16 and was also partially impacted by lower
discard sales from the rice business. While the total planted
corn acres in China are expected
to decline by 10% in the calendar year of 2016, which may affect
the Company's full year volume and revenue, the Company has been
able to maintain a consistent market share in the corn seed
business in China.
The following table shows the Company's year-over-year change in
net revenue for each segment:
(in thousands RMB)
|
Q3 FY2016
|
Q3 FY2015
|
% of change
|
Seed production &
distribution
|
82,329
|
73,697
|
11.7
|
%
|
Biotech & Product
Development
|
278
|
-
|
100.0
|
%
|
Segment total net
revenues
|
82,607
|
73,697
|
12.1
|
%
|
Net revenue from the Seed Production and Distribution segment
increased 11.7% to RMB82.3 million
(US$12.4 million), compared to
RMB73.7 million in the prior year
period.
Net revenue from the Biotech and Product Development segment was
RMB0.3 million in the third fiscal
quarter of 2016, while there was no such segment recognized in the
prior year period. The revenue from this segment represents
fees for services from the Company's collaborators.
Deferred revenues increased 4.8% to RMB391.3 million (US$59.0
million) as of June 30, 2016,
compared with RMB373.4 million as of
June 30, 2015. Deferred revenues
mainly reflect the value of Origin's crop seeds after: a) sales
arrangement is confirmed; b) delivery to the customer is made; and
c) pre-payment from the customer is received, but before the final
sales price is fixed and determined. The final sales price is
primarily determined by sales incentives that are offered to the
Company's customers. It is expected that the majority of these
deferred revenues will be recorded on the income statement during
the fourth fiscal quarter of 2016. Final sales will be known
when seed returns are completed in fourth fiscal quarter.
The sum of recognized revenue and deferred revenue as of
June 30, 2016 was RMB473.9 million (US$71.5
million), an increase of 6.0% compared to RMB447.1 million for the same period in fiscal
year 2015. The sum of recognized revenue for the first nine
months ended June 30, 2016 and the
deferred revenue as of June 30, 2016
was RMB485.3 million (US$73.2 million), an increase of 4.0% compared to
RMB466.5 million for the same period
in fiscal year 2015.
Total operating expenses in the third quarter of fiscal
year 2016 were RMB28.9 million
(US$4.4 million), up 54.5% from
RMB18.7 million in the same quarter
of fiscal year 2015. The increase was primarily due to the
timing difference associated with the recognition of marketing
expenses and a one-time stock compensation expense. Excluding
certain one-time expenses, total operating expenses for the nine
months in fiscal year 2016 were RMB74.8million, which is similar to the
RMB73.8 million amount for the first
nine months in fiscal year 2015.
Loss from operations for the third quarter of fiscal year
2016 was RMB15.1 million
(US$2.3 million) compare to
RMB8.4 million in the same quarter of
fiscal year 2015. Excluding the impact of one-time items, including
stock-based compensation expense and Other Income, the operating
loss decreased to RMB10.2 million
from RMB13.4 million in the same
quarter of fiscal year 2015.
Net loss attributable to the Company was RMB18.2 million (US$2.7
million), or net loss per diluted share of RMB0.8 (US$0.12) in
the third quarter of fiscal year 2016, compared to a net loss of
RMB11.9 million, or net loss per
diluted share of RMB0.52 in the same
quarter of fiscal year 2015. Excluding the impact of the
aforementioned one-time items, the net loss attributable to the
Company decreased to RMB13.3 million,
or net loss per diluted share of RMB0.58, from RMB16.9
million, or net loss per diluted share of RMB0.74 in the same quarter of fiscal year 2015,
respectively.
Balance Sheet
As of June 30, 2016, the Company
had cash and cash equivalents of RMB25.9
million (US$3.9 million).
Shareholders' equity attributable to the Company was RMB168.7 million (US$25.4
million).
Total borrowing was RMB256.9
million (US$38.7 million),
including short-term borrowings of RMB210.0
million (US$31.7 million) and
long-term borrowing of RMB46.9
million (US$7million),
representing a decrease of RMB17.5
million compared to the same period last year. Short-term
borrowing was mainly for working capital, while long-term borrowing
was mainly used in relation to the corn seed production facilities
in Xinjiang Origin and the Company's working capital. The decrease
in debt was mostly due to the positive cash flow generated for
fiscal year 2015, primarily in the fourth fiscal quarter as well as
for the full 2015 fiscal year. The Company also generated positive
operating cash flow in its third fiscal quarter in 2016.
Advances from customers were RMB47.3
million (US$7.1 million) as of
June 30, 2016. These advances
represent cash receipts for orders in the upcoming selling
season.
Inventory decreased by RMB90.6
million as of June 30, 2016
compared to the same period in the previous fiscal year, mainly due
to improved forecast demand efforts by management and from lower
production.
Conference Call
The Company will host a teleconference on August 11, 2016, at 8:30
a.m. ET / 8:30 p.m.
Beijing time to discuss the
results. To participate in the call, please dial the following
numbers approximately 5 minutes prior to the scheduled start
time.
US Toll
Free:
1-888-346-8982
International
Toll:
1-412-902-4272
Mainland China Toll
Free:
4001-201203
Hong Kong Toll
Free:
800-905945
A replay of the call will be available shortly after the
conference call through August 18,
2015. The dial-in numbers for the replay are:
US Toll
Free: 1-877-344-7529
International
Toll:
1-412-317-0088
Replay Access
Code: 10091059
About Origin
Origin Agritech Limited, founded in 1997 and headquartered in
Zhong-Guan-Cun (ZGC) Life Science Park in Beijing, is China's leading agricultural biotechnology
company, specializing in crop seed breeding and genetic
improvement, seed production, processing, distribution, and related
technical services. Leading the development of crop seed
biotechnologies, Origin Agritech's phytase corn was the first
transgenic corn to receive the Bio-Safety Certificate from
China's Ministry of Agriculture.
Over the years, Origin has established a robust biotechnology seed
pipeline including products with glyphosate tolerance and pest
resistance (Bt) traits. Origin operates production centers,
processing centers and breeding stations nationwide with sales
centers located in key crop-planting regions. Product lines are
vertically integrated for corn, rice and canola seeds. For further
information, please visit the Company's website at:
http://www.originseed.com.cn or
http://www.originseed.com.cn/en/.
Non-GAAP Disclosure
We also present "non-GAAP financial measures" as defined by
applicable U.S. securities regulations, which are more thoroughly
explained and reconciled below to the most comparable measures
reported under GAAP. You are reminded that the presentation of
these non-GAAP financial measures should not be viewed in isolation
or as a substitute for our financial results prepared in accordance
with GAAP. We believe that both management and investors may
benefit from referring to these non-GAAP financial measures in
assessing our performance and when planning and forecasting future
periods. These non-GAAP financial measures also facilitate
management's internal comparisons to the Company's historical
performance and liquidity. We believe these non-GAAP financial
measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision making. These
non-GAAP financial measures have limitations, however, because they
do not include all items of income and expenses that impact the
Company's operations. You are also reminded that these non-GAAP
financial measures are not uniformly defined by all companies,
including those in the agricultural biotech and seed production
industry, and may not be comparable to similarly titled measures
presented by other companies.
(in thousands RMB, except per share
data)
|
Q3FY2015
|
|
Q3FY2016
|
|
% of change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
18,731
|
|
|
28,950
|
|
|
54.5%
|
Non-GAAP operating
expenses
|
|
23,505
|
|
|
23,807
|
|
|
1.3%
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
8,418
|
|
|
15,137
|
|
|
79.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP operating
loss
|
|
13,192
|
|
|
9,994
|
|
|
-24.2%
|
Net loss attributable to the
Company
|
|
11,897
|
|
|
18,213
|
|
|
53.1%
|
Non-GAAP net loss attributable to the
Company
|
|
16,671
|
|
|
13,070
|
|
|
-21.6%
|
EPS attributable to the Company -
basic
|
|
(0.52)
|
|
|
(0.80)
|
|
|
53.8%
|
EPS attributable to the Company -
diluted
|
|
(0.52)
|
|
|
(0.80)
|
|
|
53.8%
|
EPS attributable to the Company excluding one-time
items
- basic
|
|
(0.74)
|
|
|
(0.58)
|
|
|
-21.6%
|
EPS attributable to the Company excluding one-time
items
-
diluted
|
|
(0.74)
|
|
|
(0.58)
|
|
|
-21.6%
|
We have presented the non-GAAP operating expenses, non-GAAP
operating loss, non-GAAP net loss attributable to the Company and
related EPS calculations to exclude a one-time expense for stock
based compensation and the reversal of a tax liability that has
expired. We believe that these non-GAAP financial presentations
provide meaningful supplementary information about our performance
by excluding certain expenses that may not be indicative of our
operating performance. Management uses selected non-GAAP measures
to gain better understanding of the Company's comparative operating
performance from period to period. Management believes that the
non-GAAP information, when read in conjunction with the Company's
GAAP information provides useful information to investors by
offering them the ability to make more meaningful period to period
comparison of the Company's operating results and allows them to
better identify trends in the Company's underlying business and
performance.
Forward Looking Statement
This release contains forward-looking statements. All
forward-looking statements included in this release are based on
information available to us on the date hereof. These statements
involve known and unknown risks, uncertainties and other factors,
which may cause our actual results to differ materially from those
implied by the forward-looking statements. In some cases, you can
identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential," "targets,"
"goals," "projects," "continue," or variations of such words,
similar expressions, or the negative of these terms or other
comparable terminology. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Therefore, actual results may differ materially and
adversely from those expressed in any forward-looking statements.
Neither we nor any other person can assume responsibility for the
accuracy and completeness of forward-looking statements. Important
factors that may cause actual results to differ from expectations
include, but are not limited to, those risk factors discussed in
Origin's filings with the SEC including its annual report on Form
20-F to be filed. We undertake no obligation to revise or update
publicly any forward-looking statements for any reasons.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
(In thousands, except share
data)
|
|
|
Three Months ended June
30,
|
|
|
|
|
2015
|
|
|
|
|
2016
|
|
|
|
|
|
RMB
|
|
|
|
RMB
|
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
73,697
|
|
|
|
82,607
|
|
|
|
12,455
|
|
Cost of revenues
|
|
|
(63,384)
|
|
|
|
(68,794)
|
|
|
|
(10,372)
|
|
Gross profit
|
|
|
10,313
|
|
|
|
13,813
|
|
|
|
2,083
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and marketing
|
|
|
(6,771)
|
|
|
|
(8,330)
|
|
|
|
(1,256)
|
|
General and
administrative
|
|
|
(9,748)
|
|
|
|
(14,087)
|
|
|
|
(2,124)
|
|
Research and
development
|
|
|
(8,804)
|
|
|
|
(8,588)
|
|
|
|
(1,295)
|
|
Other operating income,
net
|
|
|
6,592
|
|
|
|
2,055
|
|
|
|
310
|
|
Total operating
expenses
|
|
|
(18,731)
|
|
|
|
(28,950)
|
|
|
|
(4,365)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(8,418)
|
|
|
|
(15,137)
|
|
|
|
(2,282)
|
|
Interest expense
|
|
|
(4,695)
|
|
|
|
(3,460)
|
|
|
|
(522)
|
|
Interest income
|
|
|
93
|
|
|
|
83
|
|
|
|
13
|
|
Loss before income tax
expense
|
|
|
(13,020)
|
|
|
|
(18,514)
|
|
|
|
(2,791)
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
(24)
|
|
|
|
(13)
|
|
|
|
(2)
|
|
Deferred
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Income tax expense
|
|
|
(24)
|
|
|
|
(13)
|
|
|
|
(2)
|
|
Net loss
|
|
|
(13,044)
|
|
|
|
(18,527)
|
|
|
|
(2,793)
|
|
Less: Net loss attributable to the non-controlling
interests
|
|
|
(1,147)
|
|
|
|
(314)
|
|
|
|
(47)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Origin Agritech
Limited
|
|
|
(11,897)
|
|
|
|
(18,213)
|
|
|
|
(2,746)
|
|
Other comprehensive loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(13,044)
|
|
|
|
(18,527)
|
|
|
|
(2,793)
|
|
Foreign currency translation
difference
|
|
|
329
|
|
|
|
(2,257)
|
|
|
|
(340)
|
|
Comprehensive
loss
|
|
|
(12,715)
|
|
|
|
(20,784)
|
|
|
|
(3,133)
|
|
Less: Comprehensive loss attributable to
non-controlling interests
|
|
|
(1,147)
|
|
|
|
(314)
|
|
|
|
(47)
|
|
Comprehensive loss attributable to Origin Agritech
Limited
|
|
|
(11,568)
|
|
|
|
(20,470)
|
|
|
|
(3,086)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to Origin Agritech Limited per
share - basic
|
|
|
(0.52)
|
|
|
|
(0.80)
|
|
|
|
(0.12)
|
|
Net loss attributable to Origin Agritech Limited per
share - diluted
|
|
|
(0.52)
|
|
|
|
(0.80)
|
|
|
|
(0.12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in calculating basic and diluted net loss
per share
|
|
|
22,738,541
|
|
|
|
22,853,541
|
|
|
|
22,853,541
|
|
UNAUDITED CONSOLIDATED BALANCE
SHEETS
|
|
(In thousands, except share
data)
|
|
|
|
6/30/2015
|
|
9/30/2015
|
|
6/30/2016
|
|
6/30/2016
|
|
|
RMB
|
|
RMB
|
|
RMB
|
|
US$
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
22,414
|
|
66,025
|
|
25,912
|
|
3,907
|
Restricted cash
|
|
-
|
|
-
|
|
20,280
|
|
3,058
|
Accounts receivable
|
|
6,590
|
|
2,051
|
|
2,124
|
|
320
|
Due from related
parties
|
|
4,750
|
|
-
|
|
1,000
|
|
151
|
Advances to suppliers
|
|
14,865
|
|
10,484
|
|
8,612
|
|
1,298
|
Advances to growers
|
|
18,727
|
|
20,796
|
|
24,271
|
|
3,659
|
Inventories
|
|
595,577
|
|
439,562
|
|
504,877
|
|
76,123
|
Income tax
recoverable
|
|
48
|
|
48
|
|
48
|
|
7
|
Other current assets
|
|
6,377
|
|
4,793
|
|
5,199
|
|
784
|
Total current
assets
|
|
669,348
|
|
543,759
|
|
592,323
|
|
89,307
|
Restricted cash
|
|
20,000
|
|
20,280
|
|
-
|
|
-
|
Land use rights, net
|
|
30,061
|
|
31,722
|
|
30,600
|
|
4,614
|
Plant and equipment,
net
|
|
325,353
|
|
324,905
|
|
312,982
|
|
47,190
|
Equity investments
|
|
18,721
|
|
18,721
|
|
18,721
|
|
2,823
|
Goodwill
|
|
11,973
|
|
11,973
|
|
11,973
|
|
1,805
|
Acquired intangible assets,
net
|
|
36,266
|
|
31,390
|
|
27,923
|
|
4,210
|
Other assets
|
|
2,579
|
|
3,079
|
|
2,278
|
|
343
|
Total assets
|
|
1,114,301
|
|
985,829
|
|
996,800
|
|
150,292
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
210,000
|
|
220,000
|
|
210,000
|
|
31,663
|
Current portion of long-term
borrowings
|
|
16,750
|
|
24,000
|
|
26,420
|
|
3,983
|
Accounts payable
|
|
10,817
|
|
4,389
|
|
6,985
|
|
1,053
|
Due to growers
|
|
8,829
|
|
17,337
|
|
6,623
|
|
999
|
Due to related
parties
|
|
11,468
|
|
42,284
|
|
19,667
|
|
2,965
|
Advances from
customers
|
|
128,083
|
|
264,547
|
|
47,280
|
|
7,129
|
Deferred revenues
|
|
373,383
|
|
11,248
|
|
391,311
|
|
59,000
|
Income tax payable
|
|
-
|
|
37
|
|
-
|
|
-
|
Other payables and accrued
expenses
|
|
45,624
|
|
50,298
|
|
38,303
|
|
5,775
|
Total current
liabilities
|
|
804,954
|
|
634,140
|
|
746,589
|
|
112,567
|
Long-term borrowings
|
|
47,679
|
|
40,972
|
|
20,500
|
|
3,091
|
Other long-term
liability
|
|
18,201
|
|
19,939
|
|
16,953
|
|
2,556
|
Total
liabilities
|
|
870,834
|
|
695,051
|
|
784,042
|
|
118,214
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
|
|
Preferred stock (no par value; 1,000,000 shares
authorized, none issued)
|
|
-
|
|
|
|
|
|
|
Common stock (no par value; 60,000,000 shares
authorized,
|
|
|
|
|
|
|
|
|
24,016,163, 24,091,163 and 24,151,163 shares issued
as of June 30, 2015, September 30, 2015 and June 30, 2016,
respectively;
|
|
|
|
|
|
22,738,541, 22,813,541 and 22,873,541 shares
outstanding as of
|
|
|
|
|
|
June 30, 2015, September 30, 2015 and June 30, 2016,
respectively)
|
|
-
|
|
-
|
|
|
|
|
Additional paid-in
capital
|
|
402,272
|
|
402,500
|
|
408,572
|
|
61,602
|
Accumulated deficit
|
|
(170,316)
|
|
(116,808)
|
|
(191,903)
|
|
(28,934)
|
Treasury stock at cost (1,277,622, 1,277,622 and
1,277,622 shares
|
|
(37,445)
|
|
(37,445)
|
|
(37,445)
|
|
(5,646)
|
as of June 30, 2015, September 30, 2015 and June 30,
2016, respectively)
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive
loss
|
|
(4,199)
|
|
(7,053)
|
|
(10,552)
|
|
(1,590)
|
Total Origin Agritech Limited shareholders'
equity
|
|
190,312
|
|
241,194
|
|
168,672
|
|
25,432
|
|
|
|
|
|
|
|
|
|
Non-controlling
interests
|
|
53,155
|
|
49,584
|
|
44,086
|
|
6,646
|
Total equity
|
|
243,467
|
|
290,778
|
|
212,758
|
|
32,078
|
|
|
|
|
|
|
|
|
|
Total liabilities and
equity
|
|
1,114,301
|
|
985,829
|
|
996,800
|
|
150,292
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED SEGMENT INFORMATION
Contributions of the major activities and profitability
information of the Company's reportable segments for the three
months ended June 30, 2015and 2016
are as follows:
(In
thousands)
|
|
Three Months ended June
30,
|
|
|
|
|
2015
|
|
|
|
2016
|
|
|
|
|
RMB
|
|
|
|
RMB
|
|
|
|
US$
|
|
Segment net
revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Seed Production
&Distribution
|
|
|
73,697
|
|
|
|
82,329
|
|
|
|
12,413
|
|
Biotech &Product
Development
|
|
|
-
|
|
|
|
278
|
|
|
|
42
|
|
Segment total net
revenues
|
|
|
73,697
|
|
|
|
82,607
|
|
|
|
12,455
|
|
Inter-segment sales
eliminations
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Reconciliation to consolidated
revenues
|
|
|
73,697
|
|
|
|
82,607
|
|
|
|
12,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating (income)
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
Seed Production
&Distribution
|
|
|
(1,194)
|
|
|
|
2,726
|
|
|
|
411
|
|
Biotech &Product
Development
|
|
|
5,814
|
|
|
|
6,346
|
|
|
|
957
|
|
Total segment operating
loss
|
|
|
4,620
|
|
|
|
9,072
|
|
|
|
1,368
|
|
Unallocated corporate operating expenses,
net
|
|
|
3,798
|
|
|
|
6,065
|
|
|
|
914
|
|
Reconciliation to consolidated loss from
operations
|
|
|
8,418
|
|
|
|
15,137
|
|
|
|
2,282
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/origin-agritech-limited-reports-unaudited-financial-results-for-the-third-quarter-fiscal-2016-300312337.html
SOURCE Origin Agritech Limited