-- Full year revenues increased 33.0% to a record $39.3 million --
Full year net income increased 59.4% to $8.5 million BEIJING, March
28 /Xinhua-PRNewswire-FirstCall/ -- China Agritech, Inc. (OTC:CAGC)
(BULLETIN BOARD: CAGC) ("China Agritech" or "the Company"), a
leading manufacturer of liquid organic fertilizer and other
fertilizer products in China, today announced its financial results
for the fourth quarter and full year ended December 31, 2007.
Fourth Quarter Highlights -- Revenues increased 53.2%
year-over-year to $9.2 million -- Gross profit increased 23.5%
year-over-year to $3.9 million -- Net income increased 27.5%
year-over-year to $1.5 million, or $0.06 per diluted share Full
Year 2007 Highlights -- Revenues grew 33.0% to a record $39.3
million in line with guidance -- Gross profit increased 32.3% to a
record $20.3 million -- Net income grew 59.4% to a record $8.5
million, or $0.39 per diluted share, in line with guidance --
Completed private placement financing, raising $15 million in gross
proceeds to build new granular production facilities "We made
significant progress in our expansion strategy throughout 2007 as
we penetrated new markets in central and southern China and signed
a $7.8 million contract with Sinochem Fertilizer, the largest
fertilizer distributor in China," commented Mr. Yu Chang, Chief
Executive Officer of China Agritech. "We will begin test production
of our new granular fertilizer factory in Beijing in April; we
expect the factory will begin production in May." "During the
fourth quarter, we experienced higher packaging costs associated
with rising crude oil prices, which negatively impacted gross
margin. We are in the process of evaluating alternative options for
packaging materials in an effort to lower these costs in the
future." Net revenue for the fourth quarter of 2007 climbed 53.2%
to $9.2 million from $6 million in the fourth quarter of 2006.
Revenue growth was the result of strong demand for LvlingBao III
and Tailong I fertilizers, which represented 36% and 26%,
respectively, of net revenue in the fourth quarter of 2007. Green
Vitality doubled as a percent of net revenue from the third quarter
of 2007 to 16% as the Company increased its penetration in the
southern and central regions of China. Lvling BaoIV represented the
balance of 22% of net revenue. Gross profit for the fourth quarter
of 2007 was $3.9 million, up 23.5% from gross profit of $3.1
million in the fourth quarter of 2006. Gross margin for the quarter
was 42.3% compared to 52.5%. The decline in gross margin was
primarily due to higher packaging costs, as well as higher raw
materials costs for nitrogen, phosphorus, and potassium. Selling
expenses during the quarter were $0.8 million, or 8.2% of revenue,
down from $1.1 million, or 19.0% of revenue, in the fourth quarter
of 2006. The decline in selling expense is due to the higher than
usual selling expenses in the fourth quarter of 2006 as the Company
established its new distribution network throughout China.
Operating and administrative expenses during the quarter were $0.7
million, or 7.3% of revenue, compared to a credit of $0.3 million,
in the same period of 2006. China Agritech recorded $227,981 in
allowance for doubtful accounts during the quarter compared to
$170,236 in the fourth quarter of 2006. The credits in the fourth
quarter of 2006 represented the reversal of certain bad-debt
expenses recorded in the previous three quarters of 2006 and were
accounted for in the fourth quarter of 2006, which were more than
the allowance for doubtful accounts incurred in the same quarter.
Income from operations was $2.5 million, up 8.1% from $2.3 million
in the same period of 2006. Operating margin for the quarter was
26.8% compared to 37.9% in the fourth quarter of 2006. Net income
for the fourth quarter of 2007 was $1.5 million, up 27.5% from $1.1
million in the fourth quarter of 2006. Fully diluted earnings per
share were $0.06 for the fourth quarter of 2007 compared to fully
diluted earnings per share of $0.06 for the same period a year
earlier. Weighted average fully-diluted shares for the fourth
quarter of 2007 increased to 24,811,761 compared to weighted
average fully-diluted shares of 19,143,615 in the fourth quarter of
2006, as the result of an additional 5,556,000 shares of common
stock issued in a private placement in July 2007. Full Year
Financial Results Revenues for the full year 2007 increased 33.0%
to $39.3 million, from $29.5 million in 2006. Gross profit
increased to $20.3 million, up 32.3% from $15.3 million. Gross
profit margin was 51.8% in 2007 compared to 52.0% in 2006. Income
from operations increased 44.0% to $15.0 million from $10.4 million
in the same period a year ago. Net income in 2007 was $8.5 million,
or $0.39 per fully diluted share up 59.4% from $5.3 million, or
$0.29 per fully diluted share. Financial Condition As of December
31, 2007, China Agritech had $13.9 million in cash and restricted
cash, no long-term debt and $50.6 million in working capital. Days'
sales outstanding for the year was 161 compared to 127 in 2006.
Shareholders' equity stood at $50.8 million up from $26.9 million
in 2006. Business Outlook China Agritech completed its first
granular fertilizer factory with 50,000 metric tons capacity in
Beijing in March 2008. The factory will begin test production in
April; it is expected to begin production in May 2008. The Company
plans to add two new granular factories with 50,000 metric tons
capacity each in Harbin and Xinjiang once the Beijing factory is
operating smoothly. China Agritech estimates that it will sell
approximately 40,000 to 50,000 metric tons of granular fertilizer
in 2008. The Company continues to develop new markets in the
central and southern regions of China for its organic liquid
compound fertilizer. China Agritech reaffirms its 2008 guidance for
revenue to be in the range of $60 - $62 million, and net income to
$9.5 - $10 million. Fully diluted earnings per share are expected
to be $0.38 to $0.40 based on 24.8 million fully diluted shares.
Capital expenditures for 2008 are estimated at $6 million. "We are
actively ramping up production ahead of the peak agriculture season
and have signed contracts with about 280 distributors. Our
contracts are for a full year although the majority of our
fertilizer is delivered during the second and third quarters,"
concluded Mr. Chang. "We have ramped up our marketing efforts
throughout local villages and are providing more demonstrations of
the benefits of using our fertilizer. We are also in the initial
stages of working with the Ministry of Agriculture to launch a
national campaign for sustainable agriculture." Conference Call
Information Management will conduct a conference call to discuss
China Agritech's fourth quarter and full year financial results and
provide a corporate overview. The conference call will take place
at 9:00 am ET on Friday, March 28, 2008. Hosting the call will be
Mr. Kelviz Lim Kok Siak, Vice President of Finance 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) 419-5570. International callers should
dial 617-896-9871. The pass code for the call is 129 657 34. If you
are unable to participate in the call at this time, a replay will
be available on Friday, March 28, 2008 at 11:00 a.m. ET, through
Friday, April 11, 2008. To access the replay from the United States
dial 888-286-8010, or 617-801-6888 if calling internationally.
Enter the conference ID number 37675636. 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 Inc. China Agritech is engaged in the development,
manufacture and distribution of organic liquid and granular
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 it products to
farmers located in twenty provinces of China including: Hainan,
Anhui, Hubei, Jiangsu, Jiangxi, Guangxi, Liaoning, Shanxi
Heilongjiang, Hebei, Jilin, Shandong, Inner Mongolia, Henan,
Sichuan, Guangdong, Xinjiang, Yunnan, Chongqing and Guizhou. For
more information visit http://www.chinaagritechinc.com/ . Safe
Harbor Statement Under the Private Securities Litigation Reform Act
of 1995: Certain statements in this press release and oral
statements made by China Agritech on its conference call in
relation to this release constitute forward-looking statements for
purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. These statements include, without
limitation, statements regarding our ability to prepare the Company
for growth, the Company's planned manufacturing capacity expansion
in 2008 and predictions and guidance relating to the Company's
future financial performance. We have based these forward-looking
statements largely on our current expectations and projections
about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy
and financial needs, but these projections also involve risks and
uncertainties that could cause actual results to differ materially
from those in the forward-looking statements, which may include,
but are not limited to, such factors as 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. You are urged to
consider these factors carefully in evaluating the forward-looking
statements herein and are cautioned not to place undue reliance on
such forward-looking statements, which are qualified in their
entirety by this cautionary statement. The forward-looking
statements made herein speak only as of the date of this press
release and the Company undertakes no duty to update any
forward-looking statement to conform the statement to actual
results or changes in the company's expectations. -- financial
tables below -- CHINA AGRITECH, INC. AND SUBSIDIARIES AUDITED
CONSOLIDATED INCOME STATEMENTS FOR THE YEARS ENDED DECEMBER 31,
2007, AND 2006 2007 2006 Net revenue $39,270,292 $29,525,577 Cost
of revenue 18,939,725 14,161,358 Gross profit 20,330,567 15,364,219
Operating expenses Selling expenses 2,985,581 2,983,756 Operating
and administrative expenses 2,418,895 2,015,252 Total operating
expenses 5,404,476 4,999,008 Income from operations 14,926,091
10,365,211 Other income (expense) Other income 111,852 98,617
Finance costs (271) (3,590) Total other income (expense) 111,581
95,027 Income before income taxes and minority interests 15,037,672
10,460,238 Provision for income taxes 5,391,464 4,248,144 Income
before minority interests 9,646,208 6,212,094 Minority interests
(1,117,583 ) (862,756) Net income $8,528,625 $5,349,338 Other
comprehensive income Foreign currency translation adjustment
1,976,819 372,722 Other comprehensive income $10,505,444 $5,722,060
Basic weighted average shares outstanding 21,868,338 18,735,944
Basic net earning per share $0.39 $0.29 Diluted weighted average
shares outstanding 21,929,031 18,735,944 Diluted net earnings per
share $0.39 $0.29 CHINA AGRITECH, INC. AND SUBSIDIARIES UNAUDITED
CONSOLIDATED INCOME STATEMENTS FOR THE THREE MONTHS ENDED DECEMBER
31, 2007, AND 2006 2007 2006 Net revenue $9,195,862 $6,002,968 Cost
of revenue 5,307,860 2,853,719 Gross profit 3,888,002 3,149,249
Operating expenses Selling expenses 756,100 1,143,016 Operating and
administrative expenses 670,314 (271,120) Total operating expenses
1,426,415 871,896 Income from operations 2,461,587 2,277,353 Other
income (expense) Other income 158,269 137,760 Finance costs 2,866
(1,777) Total other income (expense) 161,136 135,983 Income before
income taxes and minority interests 2,622,722 2,413,336 Provision
for income taxes 938,932 1,059,286 Income before minority interests
1,683,790 1,354,050 Minority interests 232,114 215,068 Net income
$1,451,676 $1,138,982 Basic weighted average shares outstanding
24,699,615 19,143,615 Basic net earning per share $0.06 $0.06
Diluted weighted average shares outstanding 24,811,761 19,143,615
Diluted net earnings per share $0.06 $0.06 CHINA AGRITECH, INC. AND
SUBSIDIARIES AUDITED CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31,
2007 AND 2006 2007 2006 ASSETS Current Assets Cash and cash
equivalents $11,841,221 $6,430,009 Restricted cash 2,011,415
100,028 Accounts receivable, net 22,695,039 12,239,073 Inventories
3,508,741 1,322,244 Advances to suppliers 12,343,255 8,038,974
Prepayments and other receivables 1,242,694 382,463 Total Current
Assets 53,642,365 28,512,791 Property, Plant and Equipment, net
3,798,958 2,514,123 Total Assets $57,441,323 $31,026,914
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts
payable $41,146 $108,886 Accrued expenses and other payables
1,047,721 871,495 Amount due to related parties 352,505 954 Tax
payables 1,650,243 1,028,885 Total Current Liabilities 3,091,615
2,010,220 Minority Interests 3,465,724 2,160,575 Commitments -- --
Stockholders' Equity Common stocks; $0.001 par value, 100,000,000
shares authorized, shares issued and outstanding 24,699,615 and
19,143,615 24,700 19,144 Additional paid-in capital 26,135,914
12,619,049 Statutory reserves 4,299,653 2,790,916 Accumulated other
comprehensive income 2,578,107 601,288 Retained earnings 17,845,610
10,825,722 Total Stockholders' Equity 50,883,984 26,856,119 Total
Liabilities and Stockholders' Equity $57,441,323 $31,026,914 CHINA
AGRITECH, INC. AND SUBSIDIARIES AUDITED CONSOLIDATED STATEMENT OF
CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 2007 2006
Cash flows from operating activities: Net income $8,528,625
$5,349,338 Adjustments to reconcile net income to net cash Provided
by (used in) operating activities: Stock based compensation 37,942
(3,597) Minority Interest 1,117,583 862,756 Depreciation 390,736
155,292 Decrease / (Increase) in current assets: Accounts
receivable (9,275,894) (3,357,026) Other receivables (111,276)
55,024 Inventory (2,186,497) (1,502,205) Advances to suppliers
(3,626,775) (5,769,071) Prepayments (344,423) (62,887) Other assets
22,532 2,024 (Decrease) / Increase in current liabilities: Accounts
payable (357,627) 262,020 Tax payables 532,043 365,731 Accrued
expenses and other payables 625,851 305,739 Net cash provide by
(used in) operating activities (4,647,180) (3,336,852) Cash flows
from investing activities: Restricted Cash (1,911,179) 174,972
Acquisition of property & equipment (1,429,517) (1,541,812) Net
cash used in investing activities (3,340,697) (1,366,840) Cash
flows from financing activities: Payments to shareholders / related
parties -- (51,312) Capital contributed 13,484,478 11,079,705 Net
cash provided by (used in) financing activities 13,484,478
11,028,393 Net increase in cash and cash equivalents 5,496,602
6,324,691 Effect of exchange rate change on cash and cash
equivalents (85,390) (150,513) Cash and cash equivalents, beginning
of year 6,430,009 255,831 Cash and cash equivalents, end of year
$11,841,221 $6,430,009 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. Kelviz Lim Tel: +86-10-5962-1220 DATASOURCE: China
Agritech, Inc. CONTACT: China Agritech, Inc. - Kelviz Lim,
+86-10-5962-1220; or CCG Elite Investor Relations - Crocker
Coulson, President, or Leslie Richardson, Financial Writer,
+1-646-213-1915, or , for China Agritech, Inc. Web Site:
http://www.chinaagritechinc.com/
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