BEIJING, May 10 /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 first
quarter ended March 31, 2010.
Financial Highlights
-- Net revenue increased 109% year-over-year to $15.3 million;
-- Gross profit increased 90% year-over-year to $6.4 million on a 41.6%
gross margin;
-- Excluding non-cash charges reflecting the change in fair value of
warrants issued and stock compensation of $9.6 million, non-GAAP net
income increased 210% year-over-year to $3.3 million;
-- Non-GAAP fully diluted EPS $0.18, up 100% from $0.09 in 2009, on a
higher weighted average number of shares outstanding;
-- GAAP net loss was $6.4 million, or $0.37 loss per diluted share;
-- Cash and cash equivalents were $28.7 million;
-- Net cash flow from operation was $8.3 million for the first quarter.
Mr. Yu Chang, Chief Executive
Officer of China Agritech, commented, "We are excited to report
another strong quarter. First quarter is typically the slow season.
However, our liquid and granular fertilizer sales remained strong.
As severe climate changes and natural disasters continue to unfold
in many parts of the agricultural provinces in China, agricultural
product supplies becomes increasingly important in balancing demand
for an already undersupplied population. With the increasing
acceptance of organic fertilizers among Chinese farmers, we are
confident that our liquid and granular organic fertilizer bundle
will continue to help farmers increase their yields."
First Quarter 2010 Results
Summary of Financial Results
(Thousand US dollars, except earnings per share)
For the Three Months
Ended March 31,
2010 2009
Total revenue $15,354 $7,347
GAAP Net income (Loss) (6,365) 1,053
Stock-based compensation 155 --
Loss on change in fair value of warrants 9,477 --
Adjustments to the Net Income 9,632 --
Non-GAAP Net Income 3,267 1,053
GAAP Diluted (loss)earning per share (0.37) 0.09
Adjustment to diluted EPS 0.55 0.00
Non-GAAP diluted EPS 0.18 0.09
Net revenue for the first quarter of 2010 grew by 109% to
$15.3 million from sales in the first
quarter of 2009 of $7.3 million.
Revenues in the first quarter of 2010 were approximately derived
equally from organic liquid and organic granular sales. Liquid
sales of $8.1 million were 11% higher
than the same quarter last year primarily due to new markets
established in the southern and central parts of the country. Sales
of our new granular products were $7.2
million in 2010 whereas there were no granular sales in the
first quarter of 2009.
Gross profit increased 90% year-over-year to approximately
$6.4 million. Gross margin for the
quarter was 42%, down from 46 in the first quarter of 2009. The
lower gross margin was primarily due to the change in the product
mix as the Company introduced granular organic compound fertilizer
in the second half of 2009. Granular organic fertilizer carries a
lower margin than liquid organic fertilizer, but presents a
substantially larger market. Organic granular fertilizer and
organic liquid fertilizer products recorded 29% and 53% gross
profit margin, respectively, in the first quarter of 2010.
Selling expenses were $0.6
million, or 4% of revenue compared with $0.4 million and 6% of revenue in the first
quarter of 2009.
Operating and administrative expenses during the quarter were
$1.6 million, compared with
$0.98 million in the first quarter of
fiscal year 2009. The increase in operating and administrative
expenses was mostly due to more legal, professional and listing
fees for the Company listing its shares on the Global Market of
Nasdaq, higher personnel expenses, and non-cash compensation
charges for the issuance of stock options. The percentage of
operating and administrative expenses decreased to 10% in the first
quarter of 2010 from 13% in the first quarter of 2009. The
percentage decrease was mainly attributable to effective cost
control measures and greater operational leverage as the top line
continues to rise.
Income from operations was approximately $4.3 million in the first quarter, up 115% from
$2.0 million in the same quarter of
last year. Operating margin for the 2010 first quarter was 28%,
compared with the 27% in the first quarter last year. Higher sales
combined with effective cost controls, resulted in the rise in
operating income.
GAAP net loss was $6.4 million,
with diluted loss per share of $0.37,
compared with net income of $1.3
million and diluted earnings per share of $0.09 in the first quarter of 2009. Excluding
non-cash charges for the change in fair value of warrants issued
and stock compensation, non-GAAP net income attributable to common
stockholders for the first quarter of 2010 was $3.3 million, up 210% from the same period last
year. Non-GAAP diluted earnings per share were $0.18 versus $0.09
for the same quarter in 2009. Diluted weighted average number of
shares (GAAP basis) outstanding for the first quarter of 2010 were
17.0 million compared with diluted weighted average number of
shares outstanding of 12.3 million in the first quarter of
2009.
As of March 31, 2010, the Company
had cash and cash equivalents of $28.7
million as compared to $20.3
million on December 31 2009.
Net cash flow from operating activities was $8.3 million.
Recent Events
Subsequent to the first quarter of 2010, on May 4th, China Agritech completed an offering of
1,420,459 shares of common stocks, including the over allotment, at
a price of $16.10 per share. The
Company received gross proceeds of approximately $23.0 million. Net proceeds from this offering
are expected to establish branded large-scale distribution centers,
and the remaining net proceeds, if any, will be used for working
capital and general corporate purposes.
Business Outlook
The Company reiterates its guidance for the year ending
December 31, 2010 with revenues
expected to reach approximately $114
million and non-GAAP net income, which excludes the change
in the fair value of warrants issued and stock-based compensation,
of approximately $23.5 million,
representing a year-over-year growth of 50% and 45% on revenues and
non-GAAP net income respectively. These targets are based upon the
Company's current views on operating and market conditions, which
are subject to change. This guidance follows 68.3% revenue growth
in 2009. The Company will periodically update this guidance.
"We remain confident that 2010 will be another strong year for
us, as our production capacity is expanding and market acceptance
for our granular organic fertilizer is growing. We will continue to
strengthen our channels and services to attract more farmers to
test and adopt our products. As the Chinese government continues to
increase agricultural investment, agricultural material subsidies
directly for farmers to purchase fertilizers are expected to
increase year-by-year. After seven consecutive years of grain
harvest, the overall fertilizer consumption is likely to remain at
a high level in 2010. We continue to position ourselves as a
greener and more sustainable alternative to chemical fertilizers.
We look forward to chipping away market shares from our chemical
counterparts in 2010," Mr. Yu Chang,
Chairman and Chief Executive Officer of China Agritech
concluded.
Conference Call
The Company will host a conference call, to be simultaneously
web cast, on Monday, May 10, 2010 at
8:00 a.m. Eastern Daylight Time, or
8:00 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 866-386-1016
International Toll Dial-In Number: +656-723-9381
Conference ID # 73237864
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 Monday, May 17, 2010 at 11:59 p.m. EDT. 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 # 73237864
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 press release contains certain statements that may be
deemed to be "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and the
Private Securities Litigation Reform Act of 1995. All statements,
other than statements of historical facts, that address activities,
events or developments that the Company expects, projects, believes
or anticipates will or may occur in the future, including, without
limitation, statements about its business or growth strategy,
general industry conditions, future operating results of the
Company, capital expenditures, expansion and growth opportunities,
financing activities and other such matters, are forward-looking
statements. Although the Company believes that its expectations
stated in this press release are based on reasonable assumptions,
actual results may differ from those projected in the
forward-looking statements. 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.
Use of Non-GAAP Financial Measures
The Company makes reference to non-GAAP financial measures.
Management believes that investors may find it useful to review our
financial results that exclude the non-cash expenses of stock based
compensation and change in fair value of warrants issued to The
Carlyle Group as a result of the adoption of a Financial Accounting
Standards Board's ("FASB") ASC 815 (EITF 07-05) accounting standard
effective from January 1 2009.
Management believes that these non-GAAP financial measures are
useful to investors in that they provide supplemental information
to possibly better understand the underlying business trends and
operating performance of the Company. The Company uses these
non-GAAP financial measures to evaluate operating performance.
However, non-GAAP financial measures should not be considered as an
alternative to net income or any other performance measures derived
in accordance with GAAP.
For more information, please contact:
In China:
Mr. Gareth Tang
Chief Financial Officer
China Agritech, Inc.
Email: gareth@chinaagritech.com
In the U.S.:
Mr. Kevin Theiss
Investor Relations
Grayling
Tel: +1-646-284-9409
Email: kevin.theiss@grayling.com
- Tables to follow -
CHINA AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2010 2009
ASSETS (Unaudited) (Audited)
Current Assets
Cash and cash equivalents $28,670,837 $20,313,089
Accounts receivable, net 43,341,716 39,256,098
Inventories 13,607,662 6,606,095
Advances to suppliers 12,889,971 25,348,687
Prepayments and other receivables 2,864,593 2,287,220
Total Current Assets 101,374,779 93,811,189
Property, plant and equipment, net 5,836,267 5,980,696
Construction in progress 424,128 424,006
Intangible assets, net 381,926 397,507
Total Assets $108,017,100 $100,613,398
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $4,014,855 $62,616
Accrued expenses and other payables 1,603,498 1,394,357
Warrant liabilities 29,635,346 20,157,869
Taxes payable 1,616,406 1,695,665
Total Current Liabilities 36,870,105 23,310,507
Stockholders' Equity
Preferred stock: $0.001 par value, 10,000,000
shares authorized, none issued -- --
Common stock: $0.001 par value; 100,000,000
shares authorized, 17,002,542 shares
issued and outstanding as of March 31,
2010 and December 31, 2009 17,003 17,003
Additional paid in capital 34,853,025 34,698,079
Statutory reserves 2,195,818 2,195,818
Accumulated other comprehensive income 5,777,832 5,723,265
Retained earnings 28,303,317 34,668,726
Total Equity 71,146,995 77,302,891
Total Liabilities and Stockholders' Equity $108,017,100 $100,613,398
CHINA AGRITECH, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
MARCH 31, MARCH 31,
FOR THREE MONTHS ENDED 2010 2009
Net revenue $15,353,857 $7,347,376
Cost of revenue (8,970,221) (3,978,685)
Gross profit 6,383,636 3,368,691
Operating expenses:
Selling expenses (559,769) (405,719)
Operating and administrative expenses (1,562,001) (983,675)
Total operating expenses (2,121,770) (1,389,934)
Income from operations 4,261,866 1,979,297
Other income/(expenses):
Interest income 11,346 2,573
Exchange (loss)/gain, net (165) (447)
Changes in fair value of warrants classified
as derivatives (9,477,477) --
Total other income/(expense), net (9,466,296) 2,126
(Loss)/Income before income taxes (5,204,430) 1,981,423
Income tax expenses (1,160,979) (714,278)
Net (loss)/ income (6,365,409) 1,267,145
Net income attributable to non-controlling
interest -- (214,283)
Net (loss)/income attributable to China
Agritech stockholders $(6,365,409) $1,052,862
(Loss)/Earnings per share attributable to
China Agritech common stockholders:
- Basic $(0.37) $0.09
- Diluted $(0.37) $0.09
Weighted average shares outstanding:
- Basic 17,002,542 12,349,808
- Diluted 17,002,542 12,349,808
as retroactively adjusted for the 1-for-4 reverse stock split on
September 8, 2009 and the 2-for-1 forward stock split on February 1, 2010.
CHINA AGRITECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
MARCH 31, MARCH 31,
FOR THREE MONTHS ENDED 2010 2009
Cash flows from operating activities:
Net (loss)/ income $(6,365,409) $1,267,145
Adjustments to reconcile net income to net cash
used in operating activities:
Share-based compensation 154,947 --
Depreciation and amortization of property,
plant and equipment 190,116 152,442
Amortization of intangible assets 15,708 --
Allowance for doubtful debts (437) --
Changes in fair value of warrants
classified as derivatives 9,477,477 --
Decrease / (Increase) in current assets:
Accounts receivable (4,085,181) (1,287,193)
Inventories (7,001,568) (6,460,298)
Advances to suppliers 12,458,716 215,676
Prepayments and other receivable (577,372) 170,089
(Decrease) / Increase in current liabilities:
Accounts payable 3,952,239 369,294
Tax payables (79,259) 13,053
Accrued expenses and other payables 209,142 154,357
Net cash used in operating activities 8,349,119 (5,405,435)
Cash flows from investing activities:
Acquisition of property, plant and equipment (45,687) (598)
Deposit paid for acquisition of non controlling
interest -- (1,000,000)
Net cash used in investing activities (45,687) (1,000,598)
Effect of exchange rate change on cash and cash
equivalents 54,316 (62,947)
Net increase/ (decrease) in cash and cash
equivalents 8,357,748 (6,468,980)
Cash and cash equivalents, beginning of period 20,313,089 11,952,235
Cash and cash equivalents, end of period $28,670,837 $5,483,255
Supplement disclosure of cash flow information:
Cash paid for income tax $1,282,063 $714,278
Non cash Investment and Financing Activity
Acquisition of non-controlling interest funded by
issuance of stock -- $(1,000,000)
The following table shows statement of income data on a GAAP and
non-GAAP basis reconciling the GAAP financial measures that are
most directly comparable to non-GAAP financial measures. The
non-GAAP adjusted net income and earnings per share information
should not be considered an alternative to, or more meaningful
than, net income and earnings per share as determined in accordance
with GAAP, since it omits the impact of the change in fair value of
warrants. Management believes that the presentation of this
non-GAAP financial measure is warranted and useful to its
stockholders because it provides an additional analytical tool for
understanding the Company's financial performance by excluding
certain items that may obscure trends in the core operating
performance of the Company's business.
Three Months Ended
March 31
2010 2009
Adjusted Net Income available to
Common shareholders -non-GAAP $ 3,267,015 $ 1,052,862
Subtract:
Change in fair value of warrants $ (9,477,477) $ 0
Stock based compensation $ (154,947) $ 0
Net Income (Loss) -GAAP $ (6,365,409) $ 1,052,862
Adjusted basic earning per share non-
GAAP $ 0.19 $ 0.09
Subtract:
Change in fair value of warrant $ (0.56) $ 0.00
Stock based compensation $ (0.00) $ 0.00
Basic earning per share - GAAP $ (0.37) $ 0.09
Adjusted diluted earning per share non-
GAAP $ 0.18 $ 0.09
Subtract:
Change in fair value of warrant $ (0.55) $ 0.00
Stock based compensation $ (0.00) $ 0.00
No dilution effect because of loss $ 0.01 $ 0.00
Diluted earning per share-GAAP $ (0.37) 0.09
Weighted average number of shares -
GAAP*
Basic 17,002,542 12,349,808
Diluted 17,002,542 12,349,808
Weighted average number of shares - non
GAAP*
Basic 17,002,542 12,349,808
Diluted 17,992,535 12,349,808
*as retroactively adjusted for the 1-for-4 reverse stock split on
September 8, 2009 and the 2-for-1 forward stock split on February 1, 2010.
SOURCE China Agritech, Inc.