-- Full year record revenue increases 17% to $29.5 million -- Full
year record net income increases 46% to $5.3 million BEIJING, April
3 /Xinhua-PRNewswire-FirstCall/ -- China Agritech, Inc. (OTC:CAGC)
(BULLETIN BOARD: CAGC) ("China Agritech"), a leading manufacturer
of liquid organic fertilizer in China, today announced its
financial results for the fourth quarter and year ended December
31, 2006. Fourth Quarter Highlights -- Revenue increased 36.3%
year-over-year to $6.0 million -- Net income increased 5.5%
year-over-year to $1.1 million -- Established distribution network
in Central and Southern China. Full Year 2006 Highlights -- Record
revenue increased 17% to $29.5 million -- Gross margin increased
270 basis points to 52% -- Record net income increased 46% to $5.3
million Revenue for the fourth quarter 2006 increased 36.3% to $6.0
million, from $4.4 million in the fourth quarter 2005. The increase
in revenue for the quarter was primarily driven by a combination of
changes in the company's product mix and higher sales volume. Net
income increased to $1.1 million, up 5.5% from the fourth quarter
of 2005. Fully diluted earnings per share for the quarter were
$0.06, compared to fully diluted earnings per share of $0.08 in the
fourth quarter 2005. The number of diluted weighted average shares
outstanding was 19.1 million in the fourth quarter of 2006,
compared to 14.2 million in the fourth quarter of 2005. Commenting
on the fourth quarter of 2006, Mr. Yu Chang, Chief Executive
Officer of China Agritech, said, "We are very pleased with the top
and bottom line growth we experienced during the fourth quarter.
Revenues were favorably impacted by the introduction of our
Lulingbao IV earlier in the year which added 444 metric tons of
sales volume for the quarter. We recently completed the
construction of our third converting facility in Chongqing at the
end of March, and are currently test-running the production
process. We expect production to be fully operational in the first
half of April. Our fourth converting facility in Xinjiang is
expected to come online in May." Revenue for the fourth quarter
2006 increased 36.3% to $6.0 million from $4.4 million in the
fourth quarter 2005. The year-over-year increase in revenue was due
to the introduction of Lulingbao IV in the second quarter of 2006
which added 444 metric tons of sales volume offsetting a decline in
sales volume of Tailong I. For the fourth quarter 2006, Lulingbao
III and Lulingbao IV comprised 36.7% and 38.6% of revenue,
respectively, while Tailong I represented 24.6% of revenue. In the
fourth quarter 2005, Tailong I represented 61.8% of revenue and
Lulingbao III represented the other 38.2%. Gross profit for the
fourth quarter 2006 was $3.1 million, up 18.3% from $2.7 million in
the fourth quarter 2005. Gross margin was 52.5%, compared to 60.4%
in the same period a year earlier. Gross margin in the fourth
quarter 2005 was positively impacted by a one-time sale of a custom
formula at a favorable price. Selling expenses during the quarter
were $1.1 million, or 19.0% of revenue, up from $0.2 million or
5.0% of revenue in the comparable quarter in 2005. The increase in
selling expenses for the quarter was due to costs associated with
the build out of China Agritech's new distribution network. The
company opened 30 sales offices which oversees 600 independent
sales agencies that support its Beijing, Anhui, and Chongqing
factories. China Agritech recorded credits to operating and
administrative expenses in the fourth quarters 2006 and 2005 of
$271,120 and $278,520, respectively. These credits represent the
reversal of certain bad-debt expenses recorded in the previous
three quarters and are normally accounted for in the fourth
quarter. Income from operations was $2.3 million, or 37.9% of
sales, compared to $2.7 million, or 61.7% of sales, in the same
period of 2005. The year-over- year decline in operating margin was
due to higher selling expenses in the fourth quarter 2006 and the
positive impact of the one-time sale of a custom formula which
contributed to above average margins in the fourth quarter of 2005.
Fourth quarter 2006 net income was $1.1 million, up 5.5% from the
fourth quarter of 2005. Fully diluted earnings per share was $0.06
for the fourth quarter 2006, compared to fully diluted earnings per
share of $0.08 for the same period a year earlier. In January 2006,
the company completed a private placement, which increased the
number of weighted average diluted shares to 19.1 million shares in
the fourth quarter of 2006, up from 14.2 million in the fourth
quarter of 2005. 2006 Year End Results Revenue for the full year
2006 was $29.5 million, up 17% from $25.3 million in 2005. Gross
profit was $15.4 million, up 23% from $12.5 million in the prior
year period. Gross margin for the year was 52% compared to 49.3% in
2005. Operating income was $10.4 million, up 27.6% from $8.1
million for the full year 2005. Net income increased 46% in 2006 to
$5.3 million, up from $3.7 million in 2005. Fully diluted EPS for
the period was $0.29, compared to $0.26 for the same period 2005.
Financial Condition As of December 31, 2006, China Agritech had
$6.5 million in cash, restricted cash and cash equivalents, working
capital of $26.5 million and no long-term debt. Shareholders'
equity stood at $26.9 million, up from $10.0 million as of December
31, 2005. Days sales outstanding for the full year 2006 was 128.
Business Outlook During the first quarter 2007, China Agritech
completed construction of its third new factory located in
Chongqing, which the company expects to put into production in
early April, 2007. The company has budgeted $1.7 million in capital
expenditures for construction of its fourth factory located in
Xinjiang, currently scheduled for completion in May, 2007. China
Agritech expects to see increased revenue growth as a result of the
added capacity starting at the beginning of the peak agriculture
growing season which is during the second quarter of 2007. "We
anticipate a strong 2007 with increased penetration expected to
occur in both domestic and international markets. We believe that
the significant expansion in our production capacity positions us
to expand our target market to Central and Southern China in time
for the peak selling season of spring and summer," said Mr. Chang.
"We have established a substantial regional distribution network to
support our geographic expansion which includes 30 sales offices
and 600 independent sales agencies. Each agency manages 10 sales
executives which equates to 6,000 points of sales at the village
level. We are also pursuing opportunities in international market
and are hopeful to see favorable progress in the second half of
this year." Conference Call Information Management will conduct a
conference call to discuss China Agritech's fourth quarter
financial results and provide a corporate overview. The conference
call will take place at 9:00 a.m. Eastern Time, on Tuesday April 3,
2007. To participate in the conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: (888) 482- 0024. International callers should
dial 617-801-9702. The pass code for the call is 541 933 05. If you
are unable to participate in the call at this time, a replay will
be available on Tuesday, April 3 at 11:00 a.m. ET, through Tuesday,
April 10. To access the replay from the United States dial
888-286-8010, or 617-801-6888 if calling internationally. Enter the
conference ID number 35903644. This conference call will be
broadcast live over the Internet and can be accessed by all
interested parties on China Agritech's website at
http://www.chinaagritechinc.com/ . To listen to the live webcast,
please go to China Agritech's website at least fifteen minutes
prior to the start of the call to register, download, and install
any necessary audio software. For those unable to participate
during the live broadcast, a replay will be available shortly after
the call on China Agritech's website for 90 days. About China
Agritech China Agritech is engaged in the development,
manufacturing and distribution of organic liquid compound
fertilizers and related products in the People's Republic of China.
The company has developed proprietary formulas that provide a
continuous supply of high-quality agricultural products while
maintaining soil fertility. The company sells its products to
farmers located in twelve provinces of China including:
Heilongjiang, Hebei, Liaonong, Jilin, Shandong, Inner Mongolia,
Henan, Sichuan, Guangdong, Xinjiang, Yunnan and Guizhou. For more
information visit http://www.chinaagritechinc.com/ . 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
such as the inability to protect the proprietary formula, the price
of raw materials, any liabilities from unknown harmful effects of
the product, and adverse weather conditions. 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. --financial tables below--- CHINA AGRITECH, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2006 AND
2005 2006 2005 ASSETS Current Assets Cash and cash equivalents $
6,430,009 $ 255,831 Restricted cash 100,028 275,000 Accounts
receivable, net 12,239,073 8,525,185 Inventories 1,322,244 72,827
Advances to suppliers 8,038,974 2,076,252 Prepayments and other
receivables 382,463 376,064 Total Current Assets 28,512,791
11,581,159 Property, Plant and Equipment, net 2,514,123 1,065,146
Total Assets $ 31,026,914 $ 12,646,305 LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 108,886
$ 115,024 Accrued expenses and other payables 871,495 616,363
Amount due to related parties 954 56,702 Tax payables 1,028,885
562,355 Total Current Liabilities 2,010,220 1,350,444 Minority
Interests 2,160,575 1,237,910 Commitments -- -- Stockholders'
Equity Common stocks; $0.001 par value, 100,000,000 shares
authorized, shares issued and outstanding 19,143,615 and 14,343,615
19,144 14,344 Additional paid-in capital 12,619,049 1,547,741
Statutory reserves 2,790,916 1,731,067 Accumulated other
comprehensive income 601,288 228,566 Retained earnings 10,825,722
6,536,233 Total Stockholders' Equity 26,856,119 10,057,951 Total
Liabilities and Stockholders' Equity $ 31,026,914 $ 12,646,305
CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE AND YEAR ENDED DECEMBER 31, 2006 AND 2005
For the three months ended For years ended December 31, December
31, 2006 2005 2006 2005 (unaudited) (unaudited) Revenue $6,002,948
$4,404,863 $29,525,577 $25,335,316 Cost of Revenue 2,853,719
1,742,253 14,161,358 12,848,958 Gross Profit 3,149,249 2,662,610
15,364,219 12,486,358 Operating expenses: Selling expenses
1,143,016 221,663 2,983,756 2,372,151 General and administrative
(271,120) (278,520) 2,015,252 1,993,522 Total Operating Expenses
871,896 (56,857) 4,999,008 4,365,673 Income from Operations
2,277,353 2,719,467 10,365,211 8,120,685 Other income (expenses)
Merger cost (640,000) (640,000) Other (expense) income 137,760 317
98,617 252 Finance costs -1,777 (824) (3,590) (412) Total other
income (expense) 135,983 (640,507) 95,027 (640,160) Income Before
Taxes 2,413,336 2,079,654 10,460,238 7,480,525 Provision for income
taxes (1,059,286) (842,224) (4,248,144) (3,173,533) Minority
interests (215,068) (157,787) (862,756) (631,113) Net Income $
1,138,982 $ 1,079,643 $5,349,338 $3,675,879 Comprehensive income -
foreign currency translation adjustments 5,393 228,566 372,722
228,566 Comprehensive Income $ 1,144,375 $ 1,308,209 $5,722,060
$3,904,445 Basic and Diluted Earnings per Common Share $ 0.06 $
0.08 $ 0.29 $ 0.26 Weighted-average Common Shares Outstanding
19,143,615 14,238,657 18,735,944 13,945,937 CHINA AGRITECH, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE YEAR
ENDED DECEMBER 31, 2006 AND 2005 2006 2005 Cash flows from
operating activities: Net income $ 5,349,338 $ 3,675,879
Adjustments to reconcile net income to net cash provided by (used
in) operating activities: Stock based compensation (3,597) --
Minortiy Interest 862,756 631,113 Depreciation 155,292 102,901 Loss
on disposal of fixed assets -- -- Delivery charges -- -- Decrease /
(Increase) in current assets: Restricted cash 174,972 (275,000)
Accounts receivable (3,357,026) (2,759,236) Prepayments and other
receivables (5,839) (191,603) Inventory (1,502,205) 487,630
Advances to suppliers (5,769,071) (1,914,346) (Decrease) / Increase
in current liabilities: Accounts payable 262,020 (281,234) Tax
payables 365,731 131,998 Accrued expenses and other payables
305,739 280,280 Net cash provided by (used in) operating activities
(3,161,889) (111,618) Cash flows from investing activities:
Acquisition of property & equipment (1,541,812) (8,238)
Proceeds from disposal of fixed assets -- -- Net cash used in
investing activities (1,541,812) (8,238) Cash flows from financing
activities: Repayment of installment loan -- -- Payments to
shareholders / related parties (51,312) (1,026,846) Capital
contributed 11,079,705 1,350,000 Dividend paid -- -- Net cash
provided by (used in) financing activities 11,028,393 323,154
Effect of exchange rate change on cash and cash equivalents
(150,513) 14,468 Net increase in cash and cash equivalents
6,174,178 217,766 Cash and cash equivalents, beginning of year
255,831 38,065 Cash and cash equivalents, end of year $ 6,430,009 $
255,831 Supplement disclosure of cash flow information: Income
taxes paid $ 3,760,570 $ 3,043,223 Cash from issue of common stock
placed in escrow account $ 11,079,705 $ 1,350,000 For more
information, please contact: CCG Elite Investor Relations Crocker
Coulson, President Leslie J. Richardson Tel: +1-646-213-1915 Email:
China Agritech, Inc. Yvonne Zhang Tel: +86-10-5870-2280 DATASOURCE:
China Agritech, Inc. CONTACT: Crocker Coulson or Leslie J.
Richardson, both of CCG Elite Investor Relations for China
Agritech, Inc., +1-646-213-1915, or ; or Yvonne Zhang of China
Agritech, Inc., +86-10-5870-2280 Web site:
http://www.chinaagritechinc.com/
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