-- Revenue up 67%, net income up 65%, and EPS reached $ 0.81 -- --
Revised guidance to $70 million top line; $15.6 million bottom line
-- -- Teleconference to begin at 8:00 a.m. EST Thursday, November
12, 2009 -- BEIJING, Nov. 12 /PRNewswire-Asia-FirstCall/ -- China
Agritech, Inc. (NASDAQ:CAGC) ("China Agritech", or the "Company"),
a leading organic compound fertilizer manufacturer and distributor
in the People's Republic of China, today announced its unaudited
financial results for the third quarter and nine months ended
September 30, 2009. Financial Highlights -- Net revenue increased
66.6% year-over-year to a quarterly record $27 million; -- Gross
profit increased 51.3% year-over-year to $9.6 million; -- Net
income increased 64.9% year-over-year to a quarterly record $5.7
million; -- Fully diluted earnings per share were $0.81 compared
with $0.56 in the 2008 third quarter; -- Almost 34,000 metric tons
of organic granular fertilizer sold during the quarter; -- Cash and
cash equivalents were $19.0 million with a current ratio of 5.7 to
1 and no long-term liabilities; and -- Revised 2009 guidance to net
revenues $70 million and net income of $15.6 million Mr. Yu Chang,
Chief Executive Officer of China Agritech, commented, "We are
encouraged by the initial results from our strategic actions to
expand into the much larger market for organic granular fertilizers
and extend our geographic reach into new Chinese provinces. As many
Chinese farmers are more familiar with granular than liquid
fertilizers, we believe that the bundle of our granular with our
liquid fertilizers will continue to drive sales volume. We also
anticipate our major distribution relationships in the domestic and
foreign markets will add to our growth. The additional capital from
Carlyle's investment strengthened our cash position and we are
financially well equipped for further expansion. Carlyle will help
us integrate our marketing by building marketing and distribution
channels so we may more quickly penetrate targeted markets. "Our
'Green Vitality' compound organic granular fertilizer products are
a premium line. Green Vitality is an innovative and versatile
organic granular fertilizer which can improve the yields of a large
variety of crops. On the production front, we have already seen
timely contributions from two of our three new production
facilities for organic granular fertilizers, and we expect to have
the Xinjiang facility commence commercial production by the end of
2009 which will add to our presence in the western markets of
China," Mr. Chang concluded. Third Quarter 2009 Results Revenue for
the third quarter of 2009 grew by 66.6%, or by $10.8 million, to
$27 million, a growth record for any quarter, from third quarter
2008 sales of $16.2 million. Sales of the Company's new organic
granular fertilizers represented approximately $7.9 million of the
2009 third quarter sales increase, with liquid organic fertilizer
sales approximating a $2.9 million gain. The third quarter of 2009
benefited from the commercial production of organic granular
fertilizers that began production in the 2009 second quarter at the
new facilities in Anhui province, eastern China, and Harbin in the
northern Heilongjiang Province, with a combined 150,000 metric tons
of capacity. Granular unit sales in the 2009 third quarter were
almost 34,000 metric tons versus approximately 11,000 metric tons
in the third quarter of 2008. The increase in revenue from organic
liquid sales was due to an increase of almost 28% in its average
net sales price. Gross profit for the third quarter of 2009
increased 51.3%, or by $3.3 million, to approximately $9.6 million
from $6.3 million in the third quarter of 2008. Gross margin for
the quarter was 35.5% compared with 39.1% in the third quarter of
2008. The decline in the gross margin was primarily due to the
relatively higher percent of lower-margin organic granular
fertilizers sold in this year's third quarter compared with the
Company's product sales mix in the third quarter a year ago. In the
third quarter of 2009, organic liquid fertilizer sales generated a
gross margin of approximately 47.4% compared with a gross margin of
approximately 20% for organic granular fertilizers. Selling
expenses during the third quarter of 2009 were $0.73 million, or
2.7% of revenue, down on a percentage basis from $0.65 million, or
4.0% of revenue in the third quarter of 2008. The increased expense
was primarily because of higher commissions related to the
increased sales of granular fertilizers for the third quarter of
2009 compared to the corresponding quarter of 2008. Operating and
administrative expenses during the quarter were $1.7 million, or
6.3% of revenue, representing an increase of 109.7% compared with
$0.81 million, or 5.0% of revenue, for the same period in 2008. The
increase was attributable to the payment of Delaware franchise
taxes for 2008 and part of 2009, payment of NASDAQ listing fees,
payment of directors' and officers' insurance premiums, an increase
in the general provision for doubtful accounts, inclusion of
non-recurring advisory and professional fees, and higher executive
compensation for the addition of independent directors, a chief
operating officer and a chief financial officer in the quarter
ended September 30, 2009, whereas there was no such expenses and
positions in the period ended September 30, 2008. Income from
operations was approximately $7.2 million, a 46.9% increase from
almost $4.9 million in the third quarter of 2008. Operating margin
for the 2009 third quarter was 26.5% compared to 30.1% in the third
quarter last year. The increase in income from operations and
decrease in operating margin were generated by the successful
organic granular fertilizer sales and higher gross margin on
organic liquid fertilizer sales during the second quarter of 2009,
partially offset with higher operating and administrative expenses.
The tax rate in the third quarter of 2009 was 20.5% and was lower
than the 24.4% tax rate in the third quarter of 2008. The reduced
tax rate is due mainly to a subsidiary that generated net income
this quarter, but was exempt from Chinese income taxes. Net income
attributable to China Agritech's common shareholders for the third
quarter of 2009 was $5.7 million, up 64.9%, and was the highest net
income for any quarter. Net income in the third quarter of 2008 was
$3.5 million. Diluted net earnings per share were $0.81 versus
$0.56 for the same quarter in 2008. Diluted weighted average shares
outstanding for the third quarter of 2009 were 7.0 million compared
with diluted weighted average shares outstanding of 6.2 million in
the third quarter of 2008. Nine Month Results For the first nine
months ended September 30, 2009, net revenue increased by 50% to
$55.4 million from $36.9 million in the corresponding period of
2008. Gross profit increased 32.8% in the first nine months of 2009
to $21.9 million from approximately $16.5 million in the comparable
period one year ago. Gross margin was 39.6% in the first three
quarters of 2009 compared with 44.7% in the same period of 2008.
The decline in gross margin is mainly due to the greater sales of
lower-margin organic granular fertilizers in the 2009 period
compared with the sales in the year ago corresponding period.
Organic liquid fertilizers generated a gross margin of
approximately 49.8% and organic granular fertilizers' gross margin
was 20.6% for the first nine months of 2009. Income from operations
grew by $4.7 million, or 39.5%, to $16.6 million from $11.9 million
in the same period one year ago. Net income attributable to common
shareholders for the first nine months of 2009, rose by 63.0% or
$4.8 million to $12.4 million, with diluted net earnings per share
of $1.87, from $7.6 million, or diluted net earnings per share of
$1.23 in the first nine months of 2008. Financial Condition As of
September 30, 2009, China Agritech had $19.0 million in cash and
cash equivalents, no long-term liabilities, $72.3 million in net
working capital and a 5.6 to 1 current ratio. Accounts receivable
were $46.4 million as net revenue increased by 50.0% in the nine
months ended September 30, 2009, due primarily to the introduction
of the Company's organic granular fertilizers. Days sales
outstanding at September 30, 2009 were 198 days, compared to 245
days in the first three quarters of 2008. Shareholders' equity was
$79.6 million at September 30, 2009. Recent Developments On
September 8, 2009, the Company announced that it expanded a sales
and distribution partnership with China's largest fertilizer
producer and distributor, Sinochem Fertilizer Co., Ltd.
("Sinochem") for the Company's "Green Vitality" granular fertilizer
products. This contract is for the supply of 15,000 tons of Green
Vitality granular fertilizer and is worth an estimated value of RMB
44 million (approximately US$6.4 million value of sales). This
contract runs through December 2010. The Company will continue to
supply Sinochem with "Green Vitality" liquid fertilizer under an
existing contract. On September 15, 2009, the Company announced the
completion of construction and equipment installation at its new
organic granular fertilizer facility in Xinjiang. This facility
adds another 50,000 metric tons of capacity for the production of
organic granular fertilizer to the Company's existing 150,000
metric tons of capacity which recently began production in Anhui
and Harbin. The Xinjiang facility will provide organic granular
fertilizers primarily under the "Green Vitality" brand name to the
vast agricultural areas in northwestern China. The Company also
produces organic liquid fertilizers at Xinjiang with a capacity of
up to 2,000 metric tons. Once commercial production of our products
commences in Xinjiang by end 2009, we anticipate that China
Agritech's total annual organic fertilizer capacity will consist of
200,000 metric tons of organic granular and 13,000 metric tons of
organic liquid fertilizers, with application to a large variety of
crops. On October 20, 2009, the Company announced the signing and
closing of a $15 million private placement with Carlyle Asia Growth
Partners, the growth capital arm of The Carlyle Group. As a result
of the transaction, The Carlyle Group, through its affiliates now
holds approximately 16.5% of the issued and outstanding China
Agritech common stock. Other Events On September 7, 2009, the
Company announced a 1 for 4 reverse split of its common stock
effective on September 8, 2009. The effect of the reverse split
reduced the number of shares of common stock outstanding to
approximately 7.0 million from 28.2 million shares. China Agritech
began trading on the NASDAQ Global Market starting on September 21,
2009 under the symbol "CAGC". Company management re-emphasized
China Agritech's growth plan through building geographically
diversified production facilities, expanding its sales network and
introducing innovative product technology. Business Outlook The
Company is now expecting net revenue for the year 2009 to be
approximately $70 million versus the previous guidance of over $60
million. The revised guidance for net income is increased to
approximately $15.6 million. The new guidance reflected business
seasonality in the fourth quarter and some of the year-end
expenses. Diluted earnings per share are now expected to
approximate $2.25, based on the current average number of diluted
shares outstanding. The new guidance represents almost a 55%
increase for net revenues and around a 62% rise for net income over
the year 2008 results. These targets are based on the Company's
current views on the operating and market conditions, which are
estimates and subject to change. "In the first nine months of 2009,
we have generated over $10 million in positive operating cash flow,
as compared with a negative figure in the corresponding period in
2008. With our strong sales growth, our accounts receivable
increased also. However, we believe our strengthened accounts
receivable risk management has begun to show improvement which will
be more evident by the end of the 2009 fourth quarter. Going
forward, the increase of granular product sales will help reduce
the accounts receivable cycle as granular sales run on shorter
payment terms," Mr. Yu Chang concluded. Conference Call The Company
will host a conference call, to be simultaneously web cast, on
Thursday, November 12 at 8:00 a.m. Eastern Standard Time, or 9:00
p.m. Beijing Time. To participate, please call the following phone
numbers: United States 1-866-519-4004 China, Domestic
800-819-0121-Landline Hong Kong 852-2475-0994 Canada 1-800-407-1908
International Toll Dial-In Number: 656-735-7955 Conference ID #
41129467 A live web cast of the conference call will be available
on China Agritech's website at http://www.chinaagritechinc.com/ .
Please visit the website at least 15 minutes early to register for
the web cast and download any necessary audio software. A web cast
replay will be available on the Company's website, and the call
replay will be available through Thursday, November 19, 2009 at
11:59 p.m. EST. To access the replay, please call the following
phone numbers: United States Dial-In #: 1-866-214-5335 Canada
Dial-In #: 1-800-301-5423 China North Dial-In #: 10-800-714-0386
China South Dial-In #: 10-800-140-0386 Hong Kong Dial-In #:
800-901-596 International Dial-In #: +61 2 8235 5000 Conference ID
# 41129467 About China Agritech, Inc. China Agritech, Inc. is
engaged in the development, manufacture and distribution of liquid
and granular organic compound fertilizers and related products in
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 28 provinces of China. For more information
about the Company, please visit http://www.chinaagritechinc.com/ .
Safe Harbor Statement This release may contain certain
"forward-looking statements" relating to the business of China
Agritech and its subsidiary companies, which can be identified by
the use of forward-looking terminology such as "believes,"
"expects," "anticipates," "estimates" or similar expressions ,
including, but not limited to, statements regarding the continued
demand for China Agritech's products, China Agritech's ability to
sustain growth for the balance of the year and China Agritech's
ability to generally meet all of its objectives. Such
forward-looking statements involve known and unknown risks and
uncertainties, including all business uncertainties relating to
product development, marketing, concentration in a single customer,
raw material costs, market acceptance, future capital requirements,
and competition in general and other factors that may cause actual
results to be materially different from those described herein as
anticipated, believed, estimated or expected. Certain of these
risks and uncertainties are or will be described in greater detail
in our filings with the SEC. Except as required by law, China
Agritech is under no obligation to update or alter its
forward-looking statements whether as a result of new information,
future events or otherwise. For more information, please contact:
In China: Mr. Gareth Tang Chief Financial Officer China Agritech,
Inc. Email: In the U.S.: Mr. Kevin Theiss Investor Relations
Grayling Tel: +1-646-284-9409 Email: UNAUDITED CONSOLIDATED INCOME
STATEMENTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 and 2008
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008 THREE
MONTHS ENDED NINE MONTHS ENDED SEPT. 30, SEPT. 30, 2009 2008 2009
2008 Net revenue $27,043,952 $16,236,573 $55,379,939 $36,929,747
Cost of revenue (17,447,653) (9,896,393)(33,460,130) (20,429,067)
Gross profit 9,596,299 6,340,180 21,919,809 16,500,680 Operating
expenses Selling expenses (727,593) (646,861) (1,758,305)
(1,862,586) General and administrative expenses (1,694,715)
(808,710) (3,550,228) (2,732,601) Total operating expenses
(2,422,308) (1,455,571) (5,308,533) (4,595,187) Income from
operations 7,173,991 4,884,609 16,611,276 11,905,493 Other income
(expense) Interest income 9,065 22,006 15,089 85,902 Exchange gain
(loss) 299 127,277 (2,757) (47,562) Total other income (expense)
9,364 149,283 12,332 38,340 Income before income taxes 7,183,355
5,033,892 16,623,608 11,943,833 Provision for income taxes
(1,473,260) (1,225,991) (3,789,496) (3,375,985) Net income
5,710,095 3,807,901 12,834,112 8,567,848 Net income attributable to
non-controlling interest in a subsidiary -- (345,579) (481,452)
(990,577) Net income attributable to common stockholders 5,710,095
3,462,322 12,352,660 7,577,271 Other comprehensive income Foreign
currency translation adjustment 110,815 158,711 (13,526) 3,273,889
Comprehensive income 5,820,910 3,621,033 12,339,134 10,851,160
Comprehensive income attributable to non-controlling interest in a
subsidiary -- (43,610) 8,403 (378,513) Comprehensive income
$5,820,910 $3,577,423 $12,347,537 $10,472,647 Basic and diluted
weighted average shares outstanding 7,048,063 6,174,904 6,619,803
6,174,904 Basic and diluted net earnings per share $0.81 $0.56
$1.87 $1.23 CHINA AGRITECH, INC. AND SUBSIDIARIES UNAUDITED
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2009 AND DECEMBER
31, 2008 SEPTEMBER DECEMBER 30, 2009 31, 2008 (Unaudited) (Audited)
ASSETS Current Assets Cash and cash equivalents $ 19,013,822 $
11,952,235 Accounts receivable, net 46,411,842 34,773,115
Inventories 15,191,194 6,452,618 Advances to suppliers 5,667,032
10,795,357 Prepayments and other receivables 1,908,293 2,484,346
Total Current Assets 88,192,183 66,457,671 Property and equipment,
net 6,629,315 4,496,045 Deposit for equipment -- 749,799
Construction in progress 387,262 961,551 Total Assets $ 95,208,760
$ 72,665,066 LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Accounts payable $ 11,284,462 $ 3,327,281 Accrued
expenses and other payables 2,308,092 221,954 Taxes payable
2,265,549 1,388,897 Total Current Liabilities 15,858,103 4,938,132
Stockholders' Equity Common stock; $0.001 par value, 100,000,000
shares authorized, 7,048,063shares issued and outstanding 7,048
24,700 Additional paid-in capital 30,579,555 26,148,879 Statutory
reserves 6,629,315 5,425, 407 Accumulated other comprehensive
income 5,824,391 5, 837,917 Retained earnings 36,510,349 25,361,597
Total China Agritech's stockholders' equity 79,550,658 62,798,500
Non-controlling interest in a subsidiary -- 4,928,434 Total
stockholders' equity 79,550,658 67,726,9 34 Total Liabilities and
Stockholders' Equity $ 95,208,760 $ 72,665,066 CHINA AGRITECH, INC.
AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008 SEPTEMBER 30,
2009 2008 Cash flows from operating activities: Net income $
12,834,112 $ 8,567,850 Adjustments to reconcile net income to net
cash provided (used) in operating activities: Stock based
compensation 2,703 -- Depreciation 508,312 470,198 Provision for
doubtful debts 452,958 -- (Increase) decrease in current assets:
Accounts receivable (12,080,214) (22,235,689) Inventories
(8,731,639) (6,146,191) Advances to suppliers 5,874,503 7,994,813
Prepayments and other receivables 579,412 (740,955) Increase
(decrease) in current liabilities: Accounts payable 7,950,480
3,256,144 Taxes payable 875,900 714,935 Accrued expenses and other
payable 1,880,903 171,714 Net cash provided (used) in operating
activities 10,147,430 (7,947,183) Cash flows from investing
activities: Acquisition of 10% interest in Pacific Dragon
(1,000,000) -- Restricted cash -- 11,415 Acquisition of property
& equipment (2,201,642) (1,299,156) Construction in progress
155,780 (877,800) Net cash used in investing activities (3,045,862)
(2,165,541) Cash flows from financing activities: Net cash provided
by financing activities -- -- Net increase (decrease) in cash and
cash equivalents 7,101,568 (10,112,724) Effect of exchange rate
change on cash and cash equivalents (39,981) 3,536,977 Cash and
cash equivalents, beginning of period 11,952,235 11,841,221 Cash
and cash equivalents, end of period $ 19,013,822 $ 5,265,474
Supplemental disclosure of cash flow information: Income taxes paid
$ 3,013,389 $ 3,362,504 Non-cash Investment and Financing Activity:
Offset of amounts due to/from stockholders $ -- $ 330,032
DATASOURCE: China Agritech, Inc. CONTACT: In China, Mr. Gareth
Tang, Chief Financial Officer of China Agritech, Inc., ; or in the
U.S., Mr. Kevin Theiss, Investor Relations of Grayling,
+1-646-284-9409, or , for CAGC Web Site:
http://www.chinaagritechinc.com/
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