BEIJING, Nov. 15 /Xinhua-PRNewswire-FirstCall/ -- China Agritech,
Inc. (OTC:CAGC) (BULLETIN BOARD: CAGC) ('China Agritech') one of
the largest manufacturers of liquid organic fertilizer in China,
today announced its financial results for the third quarter of
2006. Q3 Highlights -- Revenues increased 32% year over year to
$7.6 million -- Gross margin increased to 52.8% from 44.5% in the
third quarter 2005 -- Net income increase 110.6% year over year to
$1.1 million -- New Beijing factory opened with 2,000 metric tons
converting capacity and 5,000 metric tons of concentrate -- New
Anhui factory opened with 2,000 metric tons converting capacity
Revenue for the third quarter 2006 increased 32.0% to $7.6 million,
from $5.8 million in the third quarter 2005. Net income increased
to $1.1 million, up 110.6% from $0.5 million. Fully diluted EPS for
the quarter was $0.06 as compared to fully diluted EPS of $0.04 in
the third quarter 2005. Commenting on the quarter, 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 third quarter. Revenues and margins were favorably impacted by
increased shipments of our higher priced Tailong I fertilizer,
which reach 330 tons, up from 37 tons in the third quarter 2005.
During the third quarter, we opened our new factory in Beijing
which will serve as our primary syrup production center for our new
markets, with a capacity 5,000 metric tons per year. It also
contains a converting factory with 2,000 metric tons capacity and
will serve as our research and development center. We expect to
complete construction of two additional converting facilities in
Xinjiang and Chongquing by year end, which will bring our total
capacity to 13,000 metric tons, an increase of 160% from the 5,000
metric tons we had at the beginning of 2006.' Gross profit for the
third quarter 2006 was $4.0 million for an increase of 56.5% from
$2.6 million in the third quarter 2005. Gross margins increased to
52.8% of sales, up from 44.5% in the third quarter of 2005. The
gross profit for the quarter was favorably impacted by reduced
material cost as a result of improved production cost control
measure and increased sales of higher margin products. Selling
expenses during the quarter were $0.7 million, or 8.9% of revenue,
down from $0.8 million or 13.4% of revenue. The decrease in selling
expenses is the result of reduced advertising expense for the
Harbin factory which more than offset the increased advertising
expense for the new Anhui and Beijing factories. Operating and
administrative expenses for the third quarter 2006 were $1.1
million, or 14.2% of sales, compared to $0.7 million, or 25.5% of
sales in the third quarter 2005. The increase in operating and
administrative expenses for the quarter is attributed to the start
up cost associated with the new factories and headquarters and
accrued certain bad debt allowance. Income from operations
increased 98.0% to $2.2 million, or 29.7% of sales, from $1.1
million, or 19.8% of sales, in the prior year period. Operating
margins increase increased due to favorable product mix and
improved cost controls. Third quarter 2006 net income was $1.1
million, up 110.6% from the third quarter 2005 of $0.5 million.
Fully diluted earnings per share were $0.06 for the third quarter
2006, compared to fully diluted earning per share of $0.04 for the
same period a year earlier. In January 2006, the Company completed
a private placement which increased fully diluted shares to 19.1
million shares in the third quarter of 2006 from 14.2 million in
the third quarter of 2005. Nine Months Results Revenues for the
first nine months of 2006 were $23.5 million, up 12.4% from $20.9
million in the first nine months of 2005. Gross profit for the
period was $12.2 million, up 24.3% from $9.8 million in the prior
year period. Operating income was $8.0 million, an increase of
49.7% from $5.4 million in the third quarter of 2005. Net income
increased 62.2% for the first nine months of 2006 to $4.2 million,
from $2.6 million in the prior year period. Fully diluted EPS for
the period was $0.23, compared to $0.18 for the first nine months
of 2005. Financial Condition As of September 30, 2006, China
Agritech had $8.1 million in cash and cash equivalents, working
capital of $25.3 million and no long-term debt. Shareholders'
equity stood at $25.7 million, up from $10.0 million as of December
31, 2005. Business Outlook During the fourth quarter, China
Agritech intends to complete construction on its two new factories,
in Xinjiang and Chongqing, and has budgeted about $1.5 million in
capital expenditures. As the fourth quarter is the end of the
harvesting season in China Agritech's current served markets in the
north and northeast of China, the Company does not anticipate
significant revenue contributions from its three newest factories
this year. 'We believe that the significant expansion in our
production capacity in 2006, will position us very well as we enter
the key selling season in the spring and summer of 2007,' said Mr.
Chang. 'We are placing significant management focus on building the
regional distribution network to support our new geographic
footprint, which will cover 17 provinces in China, up from just 12
provinces at the beginning of 2006. We look forward to a strong
2007 with increased penetration in both domestic and international
markets.' Conference Call Information Management will conduct a
conference call to discuss China Agritech's third quarter financial
results and provide a corporate overview. The conference call will
take place at 6:00 pm Eastern Time, on Wednesday November 15, 2006.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: (866) 800-8648. International callers should
dial (617) 614-2702. When prompted by the operator, mention
Conference ID 57355225. For those unable to participate during the
live conference call, an audio replay of the call will be available
at (888) 286-8010 if calling within the United States, or (617)
801-6888 if calling internationally. Please use Conference ID
94240086. The playback will be available for 7 days after the call.
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 SHEET AS OF SEPTEMBER 30, 2006
(UNAUDITED) ASSETS September December 30, 31, 2006 2005 Current
Assets Cash and cash equivalents $ 8,134,284 $ 255,831 Restricted
cash 178,345 275,000 Accounts receivable, net 17,259,379 8,525,185
Inventories 907,581 72,827 Advances to suppliers 1,466,190
2,076,252 Prepayments and other receivables 238,379 376,064 Total
Current Assets 28,184,158 11,581,159 Property, plant and equipment,
net 2,271,006 1,065,146 Total Assets $ 30,455,164 $ 12,646,305
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts
payable $ 1,030,396 $ 115,024 Accrued liabilities and other
payables 669,672 616,363 Amount due to a director 20,588 56,702
Income taxes payable 1,114,539 562,355 Total Current Liabilities
2,835,195 1,350,444 Minority Interests 1,918,852 1,237,910
Commitments Stockholders' Equity Common stocks; $0.001 par value,
100,000,000 shares authorized, 19,143,615 shares issued and
outstanding 19,144 14,344 Additional paid-in capital 12,618,531
1,547,741 Statutory reserves 2,500,627 1,731,067 Accumulated other
comprehensive income 595,890 228,566 Retained earnings 9,966,925
6,536,233 Total Stockholders' Equity 25,701,117 10,057,951 Total
Liabilities and Stockholders' Equity $ 30,455,164 $ 12,646,305
CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30,
2006 AND 2005 (UNAUDITED) Three month periods ended Nine month
periods ended September 30, September 30, 2006 2005 2006 2005 Net
revenue $7,601,819 $5,760,407 $23,522,609 $20,930,453 Cost of
revenue (3,589,872) (3,197,088) (11,307,639) (11,106,705) Gross
profit 4,011,947 2,563,319 12,214,970 9,823,748 Operating expenses
Selling expenses (679,211) (771,690) (1,840,740) (2,150,488)
Operating and administrative expenses (1,076,929) (652,407)
(2,286,372) (2,272,042) Total operating expenses (1,756,140)
(1,424,097) (4,127,112) (4,422,530) Income from operations
2,255,807 1,139,222 8,087,858 5,401,218 Other income (expense)
Other (expense) income (6,854) 51 (39,143) 65 Finance costs
(11,654) (410) (1,813) (412) Total other expenses (18,508) (359)
(40,956) (347) Income before income taxes 2,237,299 1,138,863
8,046,902 5,400,871 Provision for income taxes (938,523) (493,846)
(3,188,858) (2,331,309) Income before minority interests 1,298,776
645,017 4,858,044 3,069,562 Minority interests (190,550) (119,542)
(647,688) (473,326) Net income 1,108,226 525,475 4,210,356
2,596,236 Other comprehensive income Foreign currency translation
adjustment 455,463 -- 367,329 -- Comprehensive income $1,563,689
$525,475 $4,577,685 $2,596,236 Basic weighted average shares
outstanding 19,143,615 14,238,657 18,614,203 14,093,114 Basic aet
earnings per share $0.06 $0.04 $0.23 $0.18 Diluted weighted average
shares outstanding 19,143,615 14,238,657 18,614,203 14,093,114
Diluted net earnings per share $0.06 $0.04 $0.23 $0.18 CHINA
AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH
FLOW FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 2006 AND 2005
(UNAUDITED) 2006 2005 Cash flows from operating activities Net
income $ 4,210,356 $ 2,596,236 Adjustment to reconcile net income
to net cash used in operating activities: Minority interests
647,688 473,326 Stock compensation expenses 2,398 -- Depreciation
90,471 49,767 Changes in operating assets and liabilities:
(Increase) decrease in current assets Due from shareholders
(439,351) (23,234) Advance/repayment from related parties (162,996)
(33,662) Accounts receivable, net (8,454,017) (5,950,513)
Restricted cash 95,598 -- Prepayment and other receivable 139,423
(22,328) Inventories (822,746) 64,355 Advances to suppliers 643,490
-- (Decrease) increase in: Accounts payable 1,450,674 2,226,871
Accrued liabilities and other payables 130,554 394,276 Income tax
payable 458,853 152,607 Due to shareholders -- (499,031) Due to
related parties -- (575,994) Net cash used in operating activities
(2,009,605) (1,147,324) Cash flows from investing activities Cash
acquired from reverse acquisition of Tailong -- 185,635 Purchase of
property, plant and equipment (1,267,032) (528) Net cash provided
by (used in) investing activities (1,267,032) 185,107 Cash flows
from financing activities Capital contributed 11,081,575 1,350,000
For more information, please contact: CCG Elite Investor Relations
Crocker Coulson, President Leslie Richardson, Financial Writer Tel:
+1-310-477-9800 Email: China Agritech, Inc. Zhao Yan, VP Finance
Tel: +86-10-5870-2280 DATASOURCE: China Agritech, Inc. CONTACT:
Crocker Coulson, President/Leslie Richardson, Financial Writer of
CCG Elite Investor Relations, +1-310-477-9800, or ; or Zhao Yan, VP
Finance of China Agritech, Inc., +86-10-5870-2280 Web Site:
http://www.chinaagritechinc.com/
Copyright