China Agritech Announces Q1 2006 Results
May 22 2006 - 6:43PM
PR Newswire (US)
* Revenues increased 14% to $5.7 million BEIJING, May 22
/PRNewswire-FirstCall/ -- China Agritech, Inc. (OTC:CAGC) (BULLETIN
BOARD: CAGC) , a leading agricultural products company engaged in
the development, manufacturing and distribution of liquid organic
compound fertilizers, today reported results for the first quarter
ended March 31, 2006. Sales revenue for the quarter grew by 14% to
$5.7 million, compared to revenues of $5.0 million for the first
quarter of 2005. The increase in revenues is predominantly due to
the continued expansion of China Agritech's customer base into the
central and southern regions of China. Approximately $1.1 million,
or 19% of revenue in the quarter was attributable to new business.
Operating income reached $1.9 million for the first quarter of 2006
compared to $1.1 million for the same period last year, an increase
of approximately 77%. Net income exceeded $1.0 million in the first
quarter of 2006, as compared to net income of $221,770 in the first
quarter of 2005. Diluted earnings per common share were $0.05 and
$0.02 for Q1 2006 and Q1 2005, respectively. "We are pleased to
report another profitable performance for the first quarter of
2006. Our first quarter results reflect the success of our
expansion strategy into the underserved and underpenetrated regions
in the central and southern provinces of China," commented Mr. Yu
Chang, Chief Executive Officer of China Agritech. "We are excited
about the future prospects and potential revenue contribution for
China Agritech going forward." Gross profit and gross margin in the
quarter were $2.8 million and 49.6%, respectively, as compared to
$2.6 million and 52.5% in the first quarter of fiscal 2005. The
decline in gross margin was attributable to increased lease expense
at the Harbin facility, increased shipping charges on raw materials
and general equipment maintenance. Operating margins were robust at
34.0% in the current quarter versus 21.9% in the year ago period.
The increase was mainly attributable to continued strong demand for
the company's products as well as reduced general and
administrative expenses due to transaction costs related to the
reverse merger. Financial Condition Remains Strong in 2006 The
Company's financial condition remained strong during the first
quarter of 2006. CAGC has approximately $9.46 million in cash on
hand. Working capital increased from $10.2 million at December 31,
2005 to $22.3 million at March 31, 2006. The company has no
long-term debt. Business Outlook "We are particularly excited about
the progress we are making in terms of the expansion of our overall
manufacturing capacity," said Mr. Chang. "The Company has commenced
construction on manufacturing sites, hired key personnel and
successfully targeted TV, radio and print outlets. Based on the
demand for organic compound fertilizers, which is one of the
fastest growing segments of the overall fertilizer industry, we
believe that we have made solid investments in the future of China
Agritech." About China Agritech China Agritech is a leading
agricultural products company that is engaged in the development,
manufacturing and distribution of organic liquid compound
fertilizers and related products in the People's Republic of China.
The principal markets for the company's products are to farmers
located in twelve provinces of China including: Heilongjiang,
Hebei, Liaonong, Jilin, Shandong, Inner Mongolia, Henan, Sichuan,
Guangdong, Xinjiang, Yunnan and Guizhou. In 2005, the company had
an annual production capacity of 5,000 metric tons. The statements
contained in this Release that are not purely historical are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, including without limitation, statements regarding the
Company's expectations, hopes, beliefs, intentions or strategies
regarding the future. These forward- looking statements are based
on the Company's current expectations and beliefs concerning future
developments and their potential effects on the Company. There can
be no assurance that future developments affecting the Company will
be those anticipated by the Company. These forward-looking
statements involve a number of risks, uncertainties (some of which
are beyond the control of the Company) or other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by such forward- looking
statements. The Company undertakes no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise, except as may be
required under applicable securities laws. China Agritech, Inc.
(OTC BB) Summary of Consolidated Earnings (Unaudited) (In Thousands
of Dollars) 1Q 2006 1Q 2005 Sales $5,685,397 $4,985,120 Cost of
Goods Sold 2,865,315 2,367,602 Gross Profit 2,820,082 2,617,518
Gross profit margin 49.60% 52.50% Selling Expenses 473,508 366,814
Operating and Administrative Expenses 411,465 1,158,337 Total
Operating Expenses 884,973 1,525,151 Income from Operations
1,935,109 1,092,367 Operating margin 34.00% 21.90% Other Income
(expense) (6, 110) 9 Finance Costs 119 (3) Total Other Income
(Expense) (5, 991) 6 Income before Income Taxes 1,929,118 1,092,373
Provision for Income Taxes 768,041 723,675 Income before Minority
Interests 1,161,077 368,698 Minority Interests (146,749) (146,928)
Net Income 1,014,328 221,770 Other Comprehensive Income Foreign
Currency Translation Gain 74,292 0 Comprehensive Income 1,088,620
221,770 Basic and Diluted Net Earnings per Share $0.05 $0.02 Basic
and Diluted Weighted Average Shares Outstanding 18,503,615
12,158,466 Selected Balance Sheet Data (Unaudited) (In Thousands of
Dollars) March 31, 2006 December 31, 2005 Cash and cash equivalents
$9,460,307 $255,831 Total assets $26,108,827 $12,646,305 Working
capital $22,391,005 $10,230,715 Stockholders' equity $22,220,059
$10,057,951 DATASOURCE: China Agritech, Inc. CONTACT: Jennifer
Barteld, Account Executive of CCG Investor Relations,
+1-212-332-7198, ; or Richard Dean, U.S. Representative of China
Agritech, Inc., +1-716-626-3535,
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