Net Income Increases 26% to Record $2.6 million BEIJING, Aug. 15
/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 second quarter ended June 30, 2007.
Second Quarter Highlights -- Gross profit increased 7%
year-over-year to record $5.8 million -- Gross margin increased 570
basis points to record 58.3% -- Net income increased 26%
year-over-year to $2.6 million -- Fully diluted earnings per share
increased to record $0.14 Second Quarter 2007 Results Revenue for
the second quarter 2007 declined 3.6% to $9.9 million, from $10.2
million in the second quarter 2006. The decline in revenue during
the quarter was due to flooding in the south of China and a drought
in the northeast of China which affected large amounts of farm
land. For the second quarter, the Beijing, Anhui and Chongqing
factories contributed almost $600,000, or 6%, to total revenue.
Gross profit was $5.8 million, up 6.8% from $5.4 million in the
second quarter of 2007. Gross margin increased to 58.3% compared to
52.6% in the second quarter of 2006. Net income for the quarter
increased to $2.6 million, up 26.2% from the second quarter of
2006. Fully diluted earnings per share were $0.14 for the quarter,
compared to fully diluted earnings per share of $0.11 in the second
quarter 2006. "We are pleased to see both record gross profit and
net income during the second quarter despite the extremely unusual
weather conditions in both the south and northeast regions of China
in the past quarter," commented Mr. Yu Chang, Chief Executive
Officer of China Agritech. "During the quarter, we completed the
construction of our fourth converting facility in Xinjiang which is
currently in the test-running phase of the production process."
Gross profit for the second quarter 2007 was $5.8 million, up 6.8%
from $5.4 million in the second quarter 2006. Gross margin was
58.3%, compared to 52.6% in the same period a year earlier. Gross
margin in the second quarter 2007 was favorably impacted by reduced
packing material cost. Selling expenses during the quarter were
$0.8 million, or 8.0% of revenue compared to $0.7 million, or 6.7%
of revenue, in the comparable quarter in 2006. The increase in
selling expenses is attributed to the additional selling and
marketing expenses incurred for the new plants in Anhui and
Beijing. Administrative expenses during the quarter were $0.5
million, or 4.7% of revenue, compared to $0.8 million, or 7.8% of
revenue, in the same period of 2006. The decrease in administrative
expenses is attributed to the partial reversal of a provision for
doubtful debts recorded in 2006 in the current quarter and to
improved administrative cost control measures. Income from
operations was $4.5 million, up 15.4% from $3.9 million in the same
period of 2006. Operating margin for the quarter was 45.6% compared
to 38.1% in the second quarter of 2006. The increase in operating
margin was due to a combination of improved operating efficiencies
and higher gross margin during the second quarter of 2007. Second
quarter of 2007 net income was $2.6 million, up 26.2% from $2.1
million in the second quarter of 2006. Fully diluted earnings per
share were $0.14 for the second quarter 2007 compared to fully
diluted earnings per share of $0.11 for the same period a year
earlier. Six Month Financial Results For the first six months of
2007, revenue increased to $18.5 million, up 16.1% from $15.9
million in the first six months of 2006. Gross profit increased
25.1% in the first six months of 2007 to $10.3 million from $8.2
million in the comparable period a year ago. Gross margin was 55.5%
in the first six months of 2007 compared to 51.5% in the first six
months of 2006. Income from operations increased 34.5% to $7.8
million compared to $5.8 million in the same period a year ago. Net
income for the first half of 2007 was $4.5 million, or $0.24 per
fully diluted share, up 45.7% from $3.1 million, or $0.17 per fully
diluted share, in the first half of 2006. Financial Condition As of
June 30, 2007, China Agritech had $4.8 million in cash, restricted
cash and cash equivalents, working capital of $31.5 million and no
long-term debt. Days sales outstanding for the second quarter 2007
was 176 days, compared to 160 days in the first quarter 2007.
Shareholders' equity stood at $32.2 million as of June 30, 2007, up
from $26.9 million as of December 31, 2006. Subsequent Event On
July 5, 2007, China Agritech completed a private placement of
approximately 5.6 million shares of the Company's common stock at a
price of $2.70 per share. The placement generated approximately
$15.0 million in net proceeds which will be used to add the
production of organic granular fertilizer at each of the Company's
four factories. Business Outlook China Agritech is expanding its
product line to include the production of organic granular
fertilizer at each of its four new factories. Total capacity is
expected to be 80,000 metric tons in 2008. The Company expects
capital expenditures will be approximately $6.0 million for the
rest of 2007. China Agritech reaffirms its year-end guidance for
2007 to be in the range of $46.0 and $48.0 million in revenues and
net income in the range of $8.4 and $8.6 million. "We look forward
to bringing our granular fertilizer online in 2008. We believe it
will be a strong complement with our liquid organic fertilizer and
assist us in increasing our market penetration," concluded Mr.
Chang. "We are also continuing our sales and marketing efforts in
both the domestic and international markets." Conference Call
Information Management will conduct a conference call to discuss
China Agritech's second quarter financial results and provide a
corporate overview. The conference call will take place at 10:00 am
EST on Friday, August 17, 2007, to discuss results for the second
quarter 2007 Hosting the call will be Mr. Kelviz Lim Kok Siak, Vice
President of Finance, joined by Mr. Yu Chang, Chief Executive
Officer of China Agritech. To participate in the conference call,
please dial the following number five to ten minutes prior to the
scheduled conference call time: (888) 339-2688. International
callers should dial 617- 847-3007. The pass code for the call is
38968727. If you are unable to participate in the call at this
time, a replay will be available on Friday, August 17, 2007 at
11:00 a.m. ET, through Friday, August 24, 2007. To access the
replay from the United States dial 888-286-8010, or 617-801-6888 if
calling internationally. Enter the conference ID number 22097404.
This conference call will be broadcast live over the Internet and
can be accessed by all interested parties on the China Agritech
website at http://www.chinaagritechinc.com/ . To listen to the live
webcast, please go to the China Agritech 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 SHEETS June 30, 2007 December 31,
2006 (UNAUDITED) ASSETS Current Assets Cash and cash equivalents $
4,768,011 $ 6,430,009 Restricted cash 18,061 100,028 Accounts
receivable, net 21,093,412 12,239,073 Inventories 6,604,427
1,322,244 Advances to suppliers 2,341,498 8,038,974 Prepayments and
other receivables 614,106 382,463 Total Current Assets 35,439,514
28,512,791 Construction In Process 1,070,974 -- Property, Plant,
And Equipment, Net 2,429,630 2,514,123 Total Assets $ 38,940,118 $
31,026,914 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities
Accounts payable $ 479,783 $ 108,886 Accrued liabilities and other
payables 1,564,617 871,495 Amount due to related parties 1,173 954
Taxes payable 1,907,892 1,028,885 Total Current Liabilities
3,953,465 2,010,220 Minority Interests 2,778,565 2,160,575
Commitments -- -- Stockholders' Equity Common stocks; $0.001 par
value, 100,000,000 shares authorized, 19,143,615 shares issued and
outstanding 19,144 19,144 Additional paid in capital 12,621,447
12,619,049 Statutory reserve 3,535,137 2,790,916 Accumulated other
comprehensive income 1,433,061 601,288 Retained earnings 14,599,299
10,825,722 Total Stockholders' Equity 32,208,088 26,856,119 Total
Liabilities and Stockholders' Equity $ 38,940,118 $ 31,026,914
CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED INCOME
STATEMENTS FOR THE THREE MONTH AND SIX MONTH PERIODS ENDED JUNE 30,
2007 AND 2006 (UNAUDITED) THREE MONTH PERIODS ENDED SIX MONTH
PERIODS ENDED JUNE 30, JUNE 30, 2007 2006 2007 2006 Net sales
$9,866,891 $10,235,393 $18,478,632 $15,920,790 Cost of sales
(4,115,279) (4,852,452) (8,216,104) (7,717,767) Gross profit
5,751,612 5,382,941 10,262,528 8,203,023 Operating expenses Selling
expenses (790,784) (688,021) (1,404,786) (1,161,529) General and
administrative expenses (464,090) (797,978) (1,012,157) (1,209,443)
Total operating expenses (1,254,874) (1,485,999) (2,416,943)
(2,370,972) Income from operations 4,496,738 3,896,942 7,845,585
5,832,051 Other income (expense) Other (expense) income 3,985
(26,179) 31,881 (32,289) Finance income (expense) (1,718) 9,722
(1,927) 9,841 Total other income (expense) 2,267 (16,457) 29,954
(22,448) Income before income taxes and minority interest 4,499,006
3,880,485 7,875,540 5,809,603 Provision for income taxes
(1,544,137) (1,482,294) (2,804,192) (2,250,335) Income before
minority interests 2,954,869 2,398,191 5,071,348 3,559,268 Minority
interests (320,726) (310,389) (552,077) (457,138) Net income
2,634,143 2,087,802 4,519,271 3,102,130 Other comprehensive income
Foreign currency translation adjustment 327,124 70,635 831,773
140,427 Comprehensive income $2,961,267 $2,158,437 $5,351,044
$3,242,557 Basic and diluted weighted average shares outstanding
19,143,615 19,143,615 19,143,615 18,343,615 Basic and diluted net
earnings per share $0.14 $0.11 $0.24 $0.17 CHINA AGRITECH, INC. AND
ITS SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX
MONTHS ENDED JUNE 30, 2007 AND 2006 (UNAUDITED) 2007 2006 Cash
flows from operating activities: Net income $ 4,519,271 $ 3,102,130
Adjustments to reconcile net income to net cash used in operating
activities: Stock based compensation 2,398 1,817 Minority Interest
552,077 457,138 Depreciation 166,992 54,776 Decrease (increase) in
current assets: Accounts receivable (8,415,620) (5,349,097) Other
receivable (121,396) (1,243,333) Inventory (5,137,954) (711,048)
Advances to suppliers 5,827,971 195,504 Prepaid expenses (96,012)
-- Advance to related parties -- (57,956) Due from shareholders
1,246 (130,616) Increase (decrease) in current liabilities:
Accounts payable 370,903 368,752 Other payable 514,578 (2,687) Tax
payable 840,414 955,269 Accrued expenses 148,459 -- Net cash used
in operating activities (826,672) (2,359,351) Cash flows from
investing activities: Acquisition of property & equipment
(82,499) (657,138) Construction in progress (1,070,974) --
Restricted cash 81,546 -- Net cash used in investing activities
(1,071,927) (657,138) Cash flows from financing activities:
Issuance of shares for cash -- 11,079,705 Effect of exchange rate
change on cash and cash equivalents 236,601 36,116 Net increase
(decrease) in cash and cash equivalents (1,661,998) 8,099,332 Cash
and cash equivalents, beginning of year 6,430,009 530,831 Cash and
cash equivalents, end of year $ 4,768,011 $ 8,630,163 Supplement
disclosure of cash flow information: Interest expense paid $ -- $
-- Income taxes paid $ 3,760,570 $ 1,333,678 For more information,
please contact: CCG Elite Investor Relations Crocker Coulson,
President Leslie Richardson, Financial Writer Tel: +1-646-213-1915
Email: China Agritech, Inc. Yvonne Zhang Tel: +86-10-5870-2280
DATASOURCE: China Agritech, Inc. CONTACT: CCG Elite Investor
Relations - Crocker Coulson, President, or Leslie Richardson,
Financial Writer, +1-646-213-1915, or , both for China Agritech,
Inc.; or China Agritech, Inc. - Yvonne Zhang, +86-10-5870-2280 Web
Site: http://www.chinaagritechinc.com/
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