- Anhui Organic Granular Fertilizer Facility in Commercial
Production; Harbin Plant in Trial Production - - Teleconference to
Begin at 9:00 a.m. EDT on Friday, May 15 - BEIJING, May 14
/PRNewswire-Asia-FirstCall/ -- China Agritech, Inc. (OTC Bulletin
Board: CAGC) ("China Agritech" or the "Company"), a leading
national liquid and granular organic compound fertilizer
manufacturer and distributor in China, today announced its
financial results for the first quarter of 2009 ended March 31,
2009. Financial Highlights -- 2009 first quarter net revenue was
$7.3 million compared with $7.1 million in the same quarter in
2008; -- 2009 first quarter net income was $1.3 million, or diluted
EPS of $0.04, compared with $1.4 million, or diluted EPS of $0.05
in the 2008 first quarter; -- Cash was $5.5 million with a current
ratio of 12.5 to 1; -- Total liabilities were $5.5 million with no
long-term debt; -- Net working capital was $62.8 million; --
Stockholders' equity was $63.7 million, or $2.58 per share; --
Sales of 20,000 tons of organic granular fertilizers expected in
2009 second quarter; -- 2009 guidance of $60 million in net
revenues and $9.5 million in net income. "In the first quarter of
2009, we continued to position ourselves for future growth as we
completed testing of organic granular fertilizers in the first
quarter and started commercial production of such fertilizers in
May of 2009 at our 100,000 ton-per-year plant in Anhui. We are
currently also in trial production of organic granular fertilizers
in our new Harbin 50,000 ton-per-year facility. Inventories for the
first quarter were higher as we invested in raw materials to
manufacture our new granular organic fertilizer products," said Mr.
Yu Chang, Chairman, President and CEO of China Agritech. For the
first quarter of 2009, the Company reported net revenue of $7.3
million compared with $7.1 million in the first quarter of 2008.
The first and fourth quarters are seasonally the weakest sales
periods of traditional liquid fertilizers because the farmers apply
our products during the growing period of the crops which is
normally the second and third quarters. Net revenue in the 2008
first quarter reflected an accounting reclassification that changed
marketing rebates from selling expenses into sales discounts to net
off the Company's sales. All of the sales in the first quarter of
2009 were from China Agritech's organic liquid fertilizers. Gross
profit for the first quarter of 2009 and 2008 remained stable at
$3.4 million compared with $2.7 million in gross profit for the
fourth quarter of 2008. The gross margin was 45.8% compared with
47.9% in the first quarter last year, and up from 37.7% reported in
the 2008 fourth quarter. The gross margin decrease between the
first quarters of 2009 and 2008 primarily reflected higher raw
materials costs in the most recent period. Selling expenses were
$405,000 in the 2009 first quarter versus $458,000 in the first
quarter last year. The selling expenses in the first quarter of
2008 were adjusted to reflect the change in the accounting
treatment for marketing rebates mentioned above. Selling expenses
as a percent of sales declined to 5.5% from 6.5% in the first
quarter last year. The lower selling expenses were generated by
more efficient management of sales activities and tighter cost
controls, especially for travel expenses. Operating and
administrative expenses were $984,000 in the 2009 first quarter
compared with $873,000 in last year's same quarter. The $111,000
difference is principally a result of the inclusion of
non-recurring legal and professional consulting fees, associated
with the Sarbanes-Oxley Act Section 404 advice, introduction of the
2008 Incentive Equity Plan and acquisition for 10% interest in
Pacific Dragon, as well as for continuous SEC reporting
requirements and general legal advice for long-term company
planning. Income from operations was $2.0 million compared with
$2.1 million in the first quarter of 2008, and a gain over the $1.8
million of the 2008 fourth quarter. Income before taxes of $2.0
million declined by approximately $141,000 in the 2009 first
quarter due to lower operating income, and a significant reduction
in other income in this year's first quarter as interest income was
reduced by over $59,000. The effective tax rate in the first
quarter of 2009 was 36.0% compared with 33.8% in the same quarter
last year because of the increase in professional fees and other
operating expenses resulting in a widening of net operating loss in
other tax jurisdictions where no future tax benefit is expected to
be realized. Net income was $1.3 million compared with $1.4 million
in the 2008 first quarter. Diluted EPS was $0.04 compared with
$0.05 in the first quarter of 2008. The decrease of approximately
$139,000 is mainly due to higher general and administrative
expenses incurred in this year's quarter. As of March 31, 2009, the
Company had cash and cash equivalents of $5.5 million with a
current ratio of 12.5 to 1. Total liabilities were $5.5 million
with no long-term debt. Accounts receivable were $36 million
compared with almost $35 million at the end of 2008. Accounts
receivable increased slightly during the first quarter primarily
from sales to the new geographic areas. Net working capital
improved to $62.8 million from $61.5 million at the end of 2008.
Total shareholders' equity of the Company was $63.7 million at
March 31, 2009 compared with $62.8 million at the end of 2008.
Recent Developments In April 2009, Beijing Agritech received final
approval from the government for exemption of value added tax. On
April 7, 2009, China Agritech announced a new cost control plan. On
April 13, 2009, the Company announced a breakthrough for new
high-tech organic fertilizers and received a certificate of
registration from the Chinese Ministry of Agriculture for these new
humic acid-based, organic liquid and powder compound fertilizers.
The new fertilizers will incorporate honeycomb embedding technology
and microelement deep complexing. These new technologies make the
fertilizers more environmentally friendly and effective with a
higher nutrient content. The new products are expected to be
launched in the third quarter of 2009 and will be distributed
nationally using the Company's extensive domestic sales network in
order to improve our sales and profits in the next few quarters. On
May 5, 2009, the Company announced that it had appointed Ms. Ling
Xiao Dai as VP of Finance, effective May 1, 2009. Business Outlook
The Company affirms its expectations for its 2009 year outlook for
net revenue to be approximately $60 million and net income to be
approximately $9.5 million. These targets are based on the
Company's current views on the operating and market conditions,
which are estimates and subject to change. Mr. Chang said, "In
2009, we expect to reap the initial rewards of our strategic moves.
We are now entering into a sharp growth period for the domestic
organic fertilizer market. Last year, we began to set up our own
manufacturing center and we have already completed the overall
structure for production and sales all over the country. We are
absolutely ready for rapid growth and expansion into the bigger
organic granular fertilizer market." Conference Call The Company
will host a conference call, to be simultaneously Webcast, on
Friday, May 15, 2009 at 9:00 a.m. Eastern Daylight 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 800-933-053 Canada 1-800-407-1908
International Toll Dial-In Number: 656-735-7955 Conference ID #
10026006 A live Webcast 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 Webcast and download any necessary audio software. A Webcast
replay will be available on the Company's website, and the call
replay will be available through Friday, May 22, 2009 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 # 10026006
About China Agritech, Inc. China Agritech, Inc. is engaged in the
development, manufacturing 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 26 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. UNAUDITED CONSOLIDATED INCOME
STATEMENTS FOR THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (All
amounts in thousands of U.S. dollars) Three Months Three Months
Ended 3/31/09 Ended 3/31/08 Net Revenue 7,347 7,068 * Cost of
Revenue (3,979) (3,681) Gross Profit 3,368 3,387 Selling Expenses
(405) (458)* Operating and Administrative Expenses (984) (873)
Income From Operations 1,979 2,056 Other Income (Expenses) 2 67
Income Tax (714) (717) Net income 1,267 1,406 Net income
attributable to non- controlling interest in a subsidiary (214)
(215) Net income attributable to common stockholders 1,053 1,190 *
Re-classification of marketing rebate of approximately $249,000
from selling expenses to net revenue. UNAUDITED CONSOLIDATED
BALANCE SHEETS AS OF MARCH 31, 2009 AND DECEMBER 31, 2008 March 31,
2009 December 31, 2008 ASSETS (Audited) Current Assets Cash and
cash equivalents $5,483,255 $11,952,235 Accounts receivable, net
36,017,638 34,773,115 Inventories 12,904,898 6,452,618 Advances to
suppliers 10,567,608 10,795,357 Deposit paid 1,000,000 --
Prepayments and other receivables 2,299,241 2,484,346 Total Current
Assets 68,272,640 66,457,671 Property and equipment, net 4,338,877
4,496,045 Deposit for equipment 747,706 749,799 Construction in
progress 980,056 961,551 Total Assets $74,339,279 $72,665,066
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts
payable $3,692,492 $3,327,281 Accrued expenses and other payables
360,389 221,954 Taxes payable 1,400,246 1,388,897 Total Current
Liabilities 5,453,127 4,938,132 Commitments -- -- Stockholders'
Equity Company's stockholders' equity Common stocks; $0.001 par
value, 100,000,000 shares authorized 24,699,615 shares issued and
outstanding as of March 31,2009 and December 31,2008 24,700 24,700
Additional paid in capital 26,148,879 26,148,879 Statutory reserve
5,617,891 5,425,407 Accumulated other comprehensive income
5,736,104 5,837,917 Retained earnings 26,221,974 25,361,597 Total
company's stockholders' equity 63,749,548 62,798,500
Non-controlling interest in subsidiary 5,136,604 4,928,434 Total
stockholders' equity 68,886,152 67,726,934 Total Liabilities and
Stockholders' Equity $74,339,279 $72,665,066 UNAUDITED CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THREE MONTHS ENDED MARCH 31, 2009 AND
2008 March 31, March 31, 2009 2008 Cash flows from operating
activities: Net income $1,267,145 $1,405,554 Adjustments to
reconcile net income to net cash used in operating activities:
Depreciation 152,320 169,073 (Increase) decrease in current assets:
Accounts receivable (1,287,193) (5,998,352) Prepayments and other
receivables 190,126 474,295 Inventories (6,460,298) (508,266)
Advances to suppliers 215,676 1,465,485 Increase (decrease) in
current liabilities: Accounts payable 369,294 204,374 Other payable
32,867 (260,826) Tax payable 13,053 (398,266) Accrued liabilities
and other payables 121,490 246,022 Net cash used in operating
activities (5,385,520) (3,200,907) Cash flows from investing
activities: Acquisition of property & equipment -- (385,342)
Deposit paid for acquisition of 10% interest in Pacific Dragon
(1,000,000) -- Net cash used in investing activities (1,000,000)
(385,342) Cash flows from financing activities: Net cash provided
by financing activities -- -- Net decrease in cash and cash
equivalents (6,386,118) (3,586,249) Foreign currency translation
adjustment (83,460) 1,477,718 Cash and cash equivalents, beginning
of period 11,952,235 11,852,636 Cash and cash equivalents, end of
period $5,483,255 $9,744,105 Supplement disclosure of cash flow
information: Income taxes paid $714,278 $1,093,804 Non-cash
Investment and Financing Activity Offset of amounts due to/from
stockholders $-- $330,985 For more information, please contact: In
China: Mr. Gareth Tang Chief Financial Officer China Agritech, Inc.
Tel: +86-10-5962-1220 Email: In the U.S.: Mr. Kevin Theiss / Mr.
Valentine Ding Investor Relations Grayling Tel: +1-646-284-9409
Email: DATASOURCE: China Agritech, Inc. CONTACT: In China: Mr.
Gareth Tang, Chief Financial Officer of China Agritech, Inc.,
+86-10-5962-1220, or ; In the U.S.: Mr. Kevin Theiss or Mr.
Valentine Ding, Investor Relations of Grayling, +1-646-284-9409, or
, Web Site: http://www.chinaagritechinc.com/
Copyright