* Revenue increases 52% to $8.6 million * Net income increases 86%
to $1.9 million BEIJING, China, May 18
/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 first quarter ended March 31, 2007. First
Quarter Highlights -- Revenue increased 52% year-over-year to $8.6
million -- Newly established distribution network channel
contributed 11% to first quarter revenues -- Net income increased
86% year-over-year to $1.9 million First Quarter 2007 Results
Revenue for the first quarter 2007 increased 51.5% to $8.6 million,
from $5.7 million in the first quarter 2006. The increase in
revenue for the quarter was attributed to the sales of China
Agritech's new products - Green Vitality and Lulingbao IV which
were not produced in the same period of 2006. Net income increased
to $1.9 million, up 85.8% from the first quarter of 2006. Fully
diluted earnings per share for the quarter were $0.10, compared to
fully diluted earnings per share of $0.05 in the first quarter
2006. The number of diluted weighted average shares outstanding was
19.1 million in the first quarter of 2007, compared to 18.5 million
in the first quarter of 2006. Commenting on the first quarter of
2007, Mr. Yu Chang, Chief Executive Officer of China Agritech,
said, "We are excited with both our top and bottom line growth
during the first quarter. We have dedicated the last year to
building out our capacity and establishing our distribution network
and we are pleased to finally see results from these efforts. Our
new facilities in Beijing and Anhui contributed to our revenue with
the production of Green Vitality. We have also recently finished
the test-running of the production process at our Chongqing factory
and are now in full production. Our fourth converting facility in
Xinjiang is expected to come online in the second quarter of 2007."
During the quarter, China Agritech successfully expanded its market
penetration to include the central and southern regions of China.
The company sold 152 metric tons of its Green Vitality fertilizer
produced from its Beijing and Anhui factories in these new regions
which contributed 11% to total revenue during the first quarter of
2007. Gross profit for the first quarter 2007 was $4.5 million, up
60.0% from $2.8 million in the first quarter 2006. Gross margin was
52.4%, compared to 49.6% in the same period a year earlier. Gross
margin in the first quarter 2007 was favorably impacted by reduced
material costs as a result of improved production cost control
measures as well as increased sales of higher margin products.
Selling expenses during the quarter were $0.6 million, or 7.1% of
revenue compared to $0.5 million, or 8.3% of revenue, in the
comparable quarter in 2006. The decline in selling expense as a
percent of revenue is attributable to the company's rate of revenue
increase being greater than rate of selling expenses increase.
Administrative expenses during the quarter were $0.5 million, or
6.4% of revenue, compared to $0.4 million or 7.2% of revenue in the
same period of 2006. The percentage decrease was positively
impacted by more efficient cost controls of administrative
expenses. Income from operations was $3.3 million, up 73.1% from
$1.9 million in the same period of 2006. Operating margin for the
quarter was 38.9% compared to 34.0% in the first quarter of 2006.
The increase in operating margin was due to a combination of
improved operating efficiencies and higher gross margin during the
first quarter of 2007. First quarter of 2007 net income was $1.9
million, up 85.8% from $1.0 million in the first quarter of 2006.
Fully diluted earnings per share were $0.10 for the first quarter
2007, compared to fully diluted earnings per share of $0.05 for the
same period a year earlier. Financial Condition As of March 31,
2007, China Agritech had $5.0 million in cash, restricted cash and
cash equivalents, working capital of $29.2 million and no long-term
debt. Days sales outstanding for the first quarter 2007 was 160
days. Shareholders' equity stood at $29.2 million, up from $26.9
million as of December 31, 2006. Business Outlook The peak selling
time for China Agritech's fertilizer is during the agricultural
growing season which has just begun in China. Moreover, the company
is in the early stages of expanding its market penetration from the
northern region to include the central and southern regions of
China. The increased market penetration is supported by a
multi-tier distribution system which is expected to contribute to
revenue growth for the rest of 2007. China Agritech is building its
fourth new factory located in Xinjiang, which it expects to put
into production in late May, 2007. The company has budgeted $1
million in capital expenditures for this factory. China Agritech
year-end guidance for 2007 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 have started off the beginning of our peak selling season with
strong results which we expect will continue through the rest of
the season. We have shown progress in our ability to penetrate the
southern and central regions of China which significantly expands
our customer base. Our distribution network is fully established at
the village level which is a key component in supporting our
expansion as we build a national brand in liquid organic compound
fertilizer. We also expect to see results in penetrating
international markets during the second half of this year,"
concluded Mr. Chang. Conference Call Information Management will
conduct a conference call to discuss China Agritech's first quarter
financial results and provide a corporate overview. The conference
call will take place at 9:00 a.m. Eastern Time, on Friday, May 18,
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 30478473. If you
are unable to participate in the call at this time, a replay will
be available on Friday, May 18, 2007 at 11:00 a.m. ET, through
Friday, May 25, 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 20941076. 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 MARCH 31, DECEMBER 31,
2007 2006 (UNAUDITED) ASSETS Current Assets Cash and cash
equivalents $ 4,910,594 $ 6,430,009 Restricted cash 56,149 100,028
Accounts receivable, net 18,338,613 12,239,073 Inventories
2,852,716 1,322,244 Advances to suppliers 5,300,016 8,038,974
Prepayments and other receivables 386,673 382,463 Total Current
Assets 31,844,760 28,512,791 Property, plant and equipment, net
2,467,794 2,514,123 Total Assets $ 34,312,554 $ 31,026,914
LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts
payable $ 93,016 $ 108,886 Accrued liabilities and other payables
997,865 871,495 Amount due to related parties 1,191 954 Income tax
payable 1,557,786 1,028,885 Total Current Liabilities 2,649,858
2,010,220 Minority Interests 2,415,601 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 12,620,248 12,619,049 Statutory
reserve 3,103,240 2,790,916 Accumulated other comprehensive income
1,105,936 601,288 Retained earnings 12,398,526 10,825,722 Total
Stockholders' Equity 29,247,095 26,856,119 Total Liabilities and
Stockholders' Equity $ 34,312,554 $ 31,026,914 CHINA AGRITECH, INC.
AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE
MONTHS ENDED MARCH 31, 2007 AND 2006 MARCH 31, 2007 2006
(UNAUDITED) (UNAUDITED) Net revenue $ 8,611,741 $ 5,685,397 Cost of
revenue (4,100,825) (2,865,315) Gross profit 4,510,916 2,820,082
Operating expenses Selling expenses (614,002) (473,508) Operating
and administrative expenses (548,067) (411,465) Total operating
expenses (1,162,069) (884,973) Income from operations 3,348,847
1,935,109 Other income (expense) Other (expense) income 27,896
(6,110) Finance income (expense) (209) 119 Total other income
(expense) 27,687 (5,991) Income before income taxes and minority
interest 3,376,534 1,929,118 Provision for income taxes (1,260,055)
(768,041) Income before minority interests 2,116,479 1,161,077
Minority interests (231,351) (146,749) Net income 1,885,128
1,014,328 Other comprehensive income Foreign currency translation
adjustment 504,648 74,292 Comprehensive income $ 2,389,776 $
1,088,620 Basic and diluted weighted average shares outstanding
19,143,615 18,503,615 Basic and diluted net earnings per share $
0.10 $ 0.05 CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED MARCH 31, 2007
AND 2006 March 31, 2007 2006 (UNAUDITED) (UNAUDITED) Cash flows
from operating activities: Net income $ 1,885,128 $ 1,014,328
Adjustments to reconcile net income to net cash used in operating
activities: Stock based compensation 1,199 -- Minority Interest
231,351 146,749 Depreciation 81,140 25,420 (Increase) Decrease in
current assets: Accounts receivable (5,944,426) (2,524,073)
Prepayment and other receivable 6,016 (1,385,464) Inventory
(1,340,544) (540,650) Advances to suppliers 2,810,417 417,611
Increase (Decrease) in current liabilities: Accounts payable
(272,030) 909,967 Other payable 245,294 -- Tax payable 515,789
290,525 Accrued expenses (38,641) (9,303) Net cash used in
operating activities (1,819,308) (1,654,890) Cash flows from
investing activities: Acquisition of property & equipment
(34,811) (175,668) Restricted cash 43,883 -- Net cash provided by
(used in) investing activities 9,072 (175,668) Cash flows from
financing activities: Advance/repayment from/to related parties --
(51,251) Advance from shareholders 1,246 -- Capital contributed --
11,019,849 Net cash provided by financing activities 1,246
10,968,598 Net increase (decrease) in cash and cash equivalents
(1,808,989) 9,138,040 Effect of exchange rate change on cash and
cash equivalents 289,574 66,436 Cash and cash equivalents,
beginning of year 6,430,009 255,831 Cash and cash equivalents, end
of year $ 4,910,594 $ 9,460,307 Supplement disclosure of cash flow
information: Interest expense paid $ -- $ 12 Income taxes paid $
3,760,570 $ 565,712 For more information, please contact: CCG Elite
Investor Relations Crocker Coulson, President, or 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 ; or Yvonne Zhang of China Agritech, Inc.,
+86-10- 5870-2280 Web Site: http://www.chinaagritechinc.com/
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