In the news release, "China Agritech, Inc. Reports Record Quarterly Net
Revenue and Gross Profit for the Second Quarter of 2010," issued earlier today
by China Agritech, Inc. over PR Newswire, we are advised by the company that
several items were issued inadvertently. In the third paragraph, the third
sentence should read, "After over 2 years' preparation of technology upgrades
and production facility constructions, we are one of the largest commercial
producers of granular organic fertilizer with a number of mature products and
well established production capacity, and we are moving full speed on market
share acquisition," instead of " After over 2 years' preparation of technology
upgrades and production facility constructions, we now the largest commercial
producer of granular organic fertilizer with a number of mature products and
well established production capacity, and we are moving full speed on market
share acquisition." In the first sentence of the fourth paragraph under
"Second Quarter 2010 Results," general and administrative expenses for the
second quarter of 2010 should have read "
China Agritech, Inc. Reports Record Quarterly Net Revenue and Gross Profit for the Second Quarter of 2010
- Net Revenue grew 63%, Diluted EPS at $1.05 - - Teleconference to begin 9:00a.m. today -
Second Quarter Financial Highlights -- Net revenue increased 63% year-over-year to a quarterly record of $34.3 million; -- Gross profit increased 33% year-over-year to $11.9 million with a 34.7% gross margin; -- Net income was $21 million, or Diluted EPS $1.05; -- Cash and cash equivalents were $51.7 million with no debt.
Mr.
Mr. Chang continued, "Compared with liquid organic fertilizer, granular organic fertilizer has only emerged in the recent few years. However, due to its efficacy in plant growth, nutrient preservation, ease for transportation and favorable pricing, granular organic fertilizer has been well received by farmers. Moreover, the growing adoption of granular fertilizer also boosts the demand of liquid organic fertilizer as their different functions for different stages of farming. After over 2 years' preparation of technology upgrades and production facility constructions, we are now one of the largest commercial producers of granular organic fertilizer with a number of mature products and well established production capacity, and we are moving full speed on market share acquisition."
Second Quarter 2010 Results
Net revenue grew 63% year-over-year to a quarterly record of
Gross profit increased 33% year-over-year to a quarterly record of
Selling expenses were
General and administrative expenses were
Income from operations was
Excluding the non-deductible charge for the change in fair value of
warrants of
GAAP net income for the second quarter of 2010 was
Excluding the non-cash gain in the fair value of warrants, gain on
extinguishment of warrants, and share-based compensation, non-GAAP net income
attributable to common stockholders for the second quarter of 2010 was
Six Month Results
Total revenue for the first six months of 2010 increased 91.2%
year-over-year to
Financial Conditions
As of
Recent Events
In May, 2010 the Company closed its previously announced public offering
of 1,243,000 shares of common stock. Total gross proceeds from the offering
and over-allotment were approximately
In May, 2010, the Company signed a renewal contract with Sinochem for the
sale of the Company's "Green Vitality" organic liquid fertilizers. Pursuant to
the agreement, China Agritech will supply Green Vitality liquid fertilizer
worth an estimated value of
In June, 2010, the Company received
Business Outlook
The Company reiterates its guidance for the year ending
"While we are encouraged by our solid performance in the first half of the
year, we expect that the second half will be stronger as the peak farming
season is unfolding and our products are gaining traction. Our balance sheet
is now strengthened and we expect that our cash flow will continue to improve.
With our product portfolio, growing R&D capability, nationwide distribution
footprint and strong financial standing, we believe that we are well
positioned to capture the wave of the organic food market growth in China," Mr.
Conference Call
The Company will host a conference call, to be simultaneously webcast on
To participate, please call the following phone numbers: United States 1-866-519-4004 or 1-718-354-1231 China, Domestic 800-819-0121-Landline or 400-620-8038 - Mobile Hong Kong 852-2475-0994 or 800-930-346 Canada 866-386-1016 International Toll Dial-In Number: +656-723-9381 Conference ID # 89992339
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
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 # 89992339
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, 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 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.
For more information, please contact: In China: Gareth Tang Chief Financial Officer China Agritech, Inc. Email: gareth@chinaagritech.com In the U.S.: Shiwei Yin/Kevin Theiss Investor Relations Grayling Phone: +1-646-284-9474 Email: shiwei.yin@grayling.com - Tables to follow - CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, US$) June 30, December 31, 2010 2009 ASSETS (Unaudited) Current Assets Cash and cash equivalents $51,738,535 $20,313,089 Accounts receivable, net 51,203,710 39,256,098 Inventories 18,424,145 6,606,095 Advances to suppliers 13,800,659 25,348,687 Prepayments and other receivables 5,175,062 2,287,220 Total Current Assets 140,342,111 93,811,189 Property, plant and equipment, net 6,117,778 5,980,696 Construction in progress 493,433 424,006 Intangible assets, net 368,421 397,507 Total Assets $147,321,743 $100,613,398 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $1,532,487 $62,616 Accrued expenses and other payables 2,554,517 1,394,357 Warrant liabilities -- 20,157,869 Taxes payable 2,293,808 1,695,665 Total Current Liabilities 6,380,812 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, 20,766,243 and 17,002,542* shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively 20,766 17,003 Additional paid in capital 83,784,969 34,698,079 Statutory reserves 2,195,818 2,195,818 Accumulated other comprehensive income 6,402,728 5,723,265 Retained earnings 48,536,650 34,668,726 Total Equity 140,940,931 77,302,891 Total Liabilities and Stockholders' Equity $147,321,743 $100,613,398 *as retroactively adjusted for the 1-for-4 reverse stock split on September 8, 2009 and the 2-for-1 forward stock split on February 1, 2010. CHINA AGRITECH, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDING JUNE 30, (Unaudited, US$) For the Three Months Ended For the Six Months ended June 30, June 30, 2010 2009 2010 2009 Net revenue $34,268,842 $20,988,611 $54,182,722 $28,335,987 Cost of revenue (22,384,633) (12,033,792) (35,799,677) (16,012,477) Gross profit 11,884,209 8,954,819 18,383,045 12,323,510 Operating expenses: Selling expenses (1,286,505) (624,993) (1,846,274) (1,030,712) General and administrative expenses (3,057,466) (871,838) (5,474,192) (1,855,513) Total operating expenses (4,343,971) (1,496,831) (7,320,466) (2,886,225) Income from operations 7,540,238 7,457,988 11,062,579 9,437,285 Other income (expense) Interest income 17,095 3,451 28,441 6,024 Exchange gain (loss) 1,231 (2,609) 1,066 (3,056) Gain on extinguishment of warrant liability 1,629,465 -- 1,629,465 -- Changes in fair value of warrants classified as derivatives 13,307,462 -- 3,829,985 -- Other income (18,024) -- (18,024) -- Total other income (expense) 14,937,229 842 5,470,933 2,968 Income before income taxes 22,477,467 7,458,830 16,533,512 9,440,253 Provision for income taxes (1,689,490) (1,601,958) (2,665,588) (2,316,236) Net income 20,787,977 5,856,872 13,867,924 7,124,017 Net income attributable to non-controlling interest in a subsidiary -- (267,169) -- (481,452) Net income attributable to China Agritech's common stockholders 20,787,977 5,589,703 13,867,924 6,642,565 Other comprehensive income: Foreign currency translation adjustment 624,896 (22,528) 679,463 (124,341) Comprehensive income 21,412,873 5,567,175 14,547,387 6,518,224 Comprehensive income attributable to non-controlling interest in a subsidiary -- (8,814) -- 8,403 Comprehensive income attributable to China Agritech's common stockholders $21,412,873 $5,558,361 $14,547,386 $6,526,627 Net income per share: - Basic $1.12 $0.44* $0.77 $0.53* - Diluted $1.05 $0.44* $0.72 $0.53* Weighted average number of shares outstanding: - Basic 18,594,916 12,656,621* 17,952,950 12,504,062* - Diluted 19,749,122 12,656,621* 19,306,827 12,504,062* *as retroactively adjusted for the 1-for-4 reverse stock split on September 8, 2009 and the 2-for-1 forward stock split on February 1, 2010. CHINA AGRITECH, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (Unaudited, US$) For the Six Months Ended June 30, 2010 2009 Cash flows from operating activities: Net income $13,867,924 $7,124,017 Adjustments to reconcile net income to cash provided by operating activities: Share-based compensation 2,146,754 2,703 Changes in fair value of warrants classified as derivatives (3,829,985) -- Gain on extinguishment of warrant liability (1,629,465) -- Depreciation and amortization of property, plant and equipment 348,240 320,109 Amortization of intangible assets 31,393 -- Reversal of allowance for doubtful debts (659) -- Decrease / (Increase) in current assets: Accounts receivable (11,647,188) (8,937,538) Inventories (11,712,387) (4,967,706) Advances to suppliers 13,088,615 3,601,066 Prepayments and other receivable (1,675,598) 276,024 Increase in current liabilities: Accounts payable 1,462,049 7,467,145 Tax payables 581,076 1,038,862 Accrued expenses and other payables 17,390 2,114,634 Net cash provided by operating activities 1,048,159 8,039,316 Cash flows from investing activities: Acquisition of 10% interest of Pacific Dragon -- (1,000,000) Acquisition of property, plant and equipment (449,954) (2,200,669) Construction in progress (66,601) 163,161 Net cash used in investing activities (516,555) (3,037,508) Cash flows from financing activities: Issuance of shares for cash in public offering 20,828,197 -- Proceeds from exercise of warrants 10,000,074 -- Net cash provided by financing activities 30,828,271 -- Net increase in cash and cash equivalents 31,359,875 5,001,808 Effect of exchange rate change on cash and cash equivalents 65,571 (438,639) Cash and cash equivalents, beginning of period 20,313,089 11,952,235 Cash and cash equivalents, end of period $51,738,535 $16,515,404 Supplement disclosure of cash flow information: Cash paid for interest -- -- Cash paid for income tax $$2,271,296 $2,316,236
------
China Agritech, Inc. Reports Record Quarterly Net Revenue and Gross Profit for the Second Quarter of 2010
- Net Revenue grew 63%, Diluted EPS at $1.05 -
- Teleconference to begin 9:00a.m. today -
Second Quarter Financial Highlights -- Net revenue increased 63% year-over-year to a quarterly record of $34.3 million; -- Gross profit increased 33% year-over-year to $11.9 million with a 34.7% gross margin; -- Net income was $21 million, or Diluted EPS $1.05; -- Cash and cash equivalents were $51.7 million with no debt.
Mr.
Mr. Chang continued, "Compared with liquid organic fertilizer, granular organic fertilizer has only emerged in the recent few years. However, due to its efficacy in plant growth, nutrient preservation, ease for transportation and favorable pricing, granular organic fertilizer has been well received by farmers. Moreover, the growing adoption of granular fertilizer also boosts the demand of liquid organic fertilizer as their different functions for different stages of farming. After over 2 years' preparation of technology upgrades and production facility constructions, we now the largest commercial producer of granular organic fertilizer with a number of mature products and well established production capacity, and we are moving full speed on market share acquisition."
Second Quarter 2010 Results
Net revenue grew 63% year-over-year to a quarterly record of
Gross profit increased 33% year-over-year to a quarterly record of
Selling expenses were
General and administrative expenses were
Income from operations was
Excluding the non-deductible charge for the change in fair value of
warrants of
GAAP net income for the second quarter of 2010 was
Excluding the non-cash gain in the fair value of warrants, gain on
extinguishment of warrants, and share-based compensation, non-GAAP net income
attributable to common stockholders for the second quarter of 2010 was
Six Month Results
Total revenue for the first six months of 2010 increased 91.2% year-over-
year to
Financial Conditions
As of
Recent Events
In May, 2010 the Company closed its previously announced public offering
of 1,243,000 shares of common stock. Total gross proceeds from the offering
and over-allotment were approximately
In May, 2010, the Company signed a renewal contract with Sinochem for the
sale of the Company's "Green Vitality" organic liquid fertilizers. Pursuant to
the agreement, China Agritech will supply Green Vitality liquid fertilizer
worth an estimated value of
In June, 2010, the Company received
Business Outlook
The Company reiterates its guidance for the year ending
"While we are encouraged by our solid performance in the first half of the
year, we expect that the second half will be stronger as the peak farming
season is unfolding and our products are gaining traction. Our balance sheet
is now strengthened and we expect that our cash flow will continue to improve.
With our product portfolio, growing R&D capability, nationwide distribution
footprint and strong financial standing, we believe that we are well
positioned to capture the wave of the organic food market growth in China," Mr.
Conference Call
The Company will host a conference call, to be simultaneously webcast on
To participate, please call the following phone numbers: United States 1-866-519-4004 or 1-718-354-1231 China, Domestic 800-819-0121-Landline or 400-620-8038 - Mobile Hong Kong 852-2475-0994 or 800-930-346 Canada 866-386-1016 International Toll Dial-In Number: +656-723-9381 Conference ID # 89992339
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
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 # 89992339
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, 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 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.
For more information, please contact: In China: Gareth Tang Chief Financial Officer China Agritech, Inc. Email: gareth@chinaagritech.com In the U.S.: Shiwei Yin/Kevin Theiss Investor Relations Grayling Phone: +1-646-284-9474 Email: shiwei.yin@grayling.com - Tables to follow - CHINA AGRITECH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited, US$) June 30, December 31, 2010 2009 ASSETS (Unaudited) Current Assets Cash and cash equivalents $51,738,535 $20,313,089 Accounts receivable, net 51,203,710 39,256,098 Inventories 18,424,145 6,606,095 Advances to suppliers 13,800,659 25,348,687 Prepayments and other receivables 5,175,062 2,287,220 Total Current Assets 140,342,111 93,811,189 Property, plant and equipment, net 6,117,778 5,980,696 Construction in progress 493,433 424,006 Intangible assets, net 368,421 397,507 Total Assets $147,321,743 $100,613,398 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $1,532,487 $62,616 Accrued expenses and other payables 2,554,517 1,394,357 Warrant liabilities -- 20,157,869 Taxes payable 2,293,808 1,695,665 Total Current Liabilities 6,380,812 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, 20,766,243 and 17,002,542* shares issued and outstanding as of June 30, 2010 and December 31, 2009, respectively 20,766 17,003 Additional paid in capital 83,784,969 34,698,079 Statutory reserves 2,195,818 2,195,818 Accumulated other comprehensive income 6,402,728 5,723,265 Retained earnings 48,536,650 34,668,726 Total Equity 140,940,931 77,302,891 Total Liabilities and Stockholders' Equity $147,321,743 $100,613,398 *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 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDING JUNE 30, (Unaudited, US$) For the Three Months Ended For the Six Months ended June 30, June 30, 2010 2009 2010 2009 Net revenue $34,268,842 $20,988,611 $54,182,722 $28,335,987 Cost of revenue (22,384,633) (12,033,792) (35,799,677) (16,012,477) Gross profit 11,884,209 8,954,819 18,383,045 12,323,510 Operating expenses: Selling expenses (1,286,505) (624,993) (1,846,274) (1,030,712) General and administrative expenses (3,057,466) (871,838) (5,474,192) (1,855,513) Total operating expenses (4,343,971) (1,496,831) (7,320,466) (2,886,225) Income from operations 7,540,238 7,457,988 11,062,579 9,437,285 Other income (expense) Interest income 17,095 3,451 28,441 6,024 Exchange gain (loss) 1,231 (2,609) 1,066 (3,056) Gain on extinguishment of warrant liability 1,629,465 -- 1,629,465 -- Changes in fair value of warrants classified as derivatives 13,307,462 -- 3,829,985 -- Other income (18,024) -- (18,024) -- Total other income (expense) 14,937,229 842 5,470,933 2,968 Income before income taxes 22,477,467 7,458,830 16,533,512 9,440,253 Provision for income taxes (1,689,490) (1,601,958) (2,665,588) (2,316,236) Net income 20,787,977 5,856,872 13,867,924 7,124,017 Net income attributable to non-controlling interest in a subsidiary -- (267,169) -- (481,452) Net income attributable to China Agritech's common stockholders 20,787,977 5,589,703 13,867,924 6,642,565 Other comprehensive income: Foreign currency translation adjustment 624,896 (22,528) 679,463 (124,341) Comprehensive income 21,412,873 5,567,175 14,547,387 6,518,224 Comprehensive income attributable to non-controlling interest in a subsidiary -- (8,814) -- 8,403 Comprehensive income attributable to China Agritech's common stockholders $21,412,873 $5,558,361 $14,547,386 $6,526,627 Net income per share: - Basic $1.12 $0.44* $0.77 $0.53* - Diluted $1.05 $0.44* $0.72 $0.53* Weighted average number of shares outstanding: - Basic 18,594,916 12,656,621* 17,952,950 12,504,062* - Diluted 19,749,122 12,656,621* 19,306,827 12,504,062* *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 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED JUNE 30, 2010 AND 2009 (Unaudited, US$) For the Six Months Ended June 30, 2010 2009 Cash flows from operating activities: Net income $13,867,924 $7,124,017 Adjustments to reconcile net income to cash provided by operating activities: Share-based compensation 2,146,754 2,703 Changes in fair value of warrants classified as derivatives (3,829,985) -- Gain on extinguishment of warrant liability (1,629,465) -- Depreciation and amortization of property, plant and equipment 348,240 320,109 Amortization of intangible assets 31,393 -- Reversal of allowance for doubtful debts (659) -- Decrease / (Increase) in current assets: Accounts receivable (11,647,188) (8,937,538) Inventories (11,712,387) (4,967,706) Advances to suppliers 13,088,615 3,601,066 Prepayments and other receivable (1,675,598) 276,024 Increase in current liabilities: Accounts payable 1,462,049 7,467,145 Tax payables 581,076 1,038,862 Accrued expenses and other payables 17,390 2,114,634 Net cash provided by operating activities 1,048,159 8,039,316 Cash flows from investing activities: Acquisition of 10% interest of Pacific Dragon -- (1,000,000) Acquisition of property, plant and equipment (449,954) (2,200,669) Construction in progress (66,601) 163,161 Net cash used in investing activities (516,555) (3,037,508) Cash flows from financing activities: Issuance of shares for cash in public offering 20,828,197 -- Proceeds from exercise of warrants 10,000,074 -- Net cash provided by financing activities 30,828,271 -- Net increase in cash and cash equivalents 31,359,875 5,001,808 Effect of exchange rate change on cash and cash equivalents 65,571 (438,639) Cash and cash equivalents, beginning of period 20,313,089 11,952,235 Cash and cash equivalents, end of period $51,738,535 $16,515,404 Supplement disclosure of cash flow information: Cash paid for interest -- -- Cash paid for income tax $$2,271,296 $2,316,236
SOURCE China Agritech, Inc.