News

Aoxin Tianli Group, Inc. Reports First Quarter of 2016 Financial Results
Author:Aoxin Tianli Date:May/12/2016

Aoxin Tianli Group, Inc. Reports First Quarter of 2016 Financial Results

Company to Host Earnings Conference Call on Thursday, May 12, 2016 at 8:00 a.m. ET

 

WUHAN CITY, China, May 11, 2016 /PRNewswire/ -- Aoxin Tianli Group, Inc. (NASDAQ:ABAC) ("Aoxin Tianli" or the "Company"), a leading producer of breeder hogs, market hogs and black hogs, as well as specialty processed black hog pork products sold through retail and the internet, today announced its financial results for the first quarter ended March 31, 2016.

 

Ms. Hanying Li, Chairwoman and Chief Executive Officer of Aoxin Tianli Group, Inc., commented, "Our revenues decreased by 5.5% in the first quarter, resulting from a 19.8% reduction in the number of hogs sold which was partially offset by an 18.5% increase in the average selling price ("ASP") for hogs. The decrease in the number of hogs sold was a result of reduction in capacity of 20,000 hogs due to the sales of Farm 2 and 3 during the third quarter of 2015. The increase in ASP reflected improving market condition in the first quarter, particularly during the Chinese New Year holiday season. The number of black market hogs sold also decreased slightly by 2.8% in the first quarter as a result of decreased production by the independent farmers in our black hog program."

 

Three Months Ended March 31, 2016 Financial Results

Revenues

 

For the Three Months Ended March 31,

($ thousands, except per share data)

2016

 

2015

 

% Change

Revenues

$ 9,059

 

$ 9,588

 

-5.5%

Hog farming

8,639

 

9,092

 

-5.0%

Retail

420

 

497

 

-15.4%

Gross margin

23.2%

 

16.1%

 

7.1%

Operating margin

11.6%

 

-3.1%

 

NM

Net loss

(274)

 

(217)

 

26.6%

Net income (loss) from continuing operations

1,137

 

(359)

 

NM

Gain (loss) from operations and disposal of discontinued component

(1,411)

 

142

 

NM

Net income (loss) for common shareholders

(105)

 

(240)

 

NM

Earnings (loss) per share

(0.00)

 

(0.01)

 

NM

Continuing operations

0.03

 

(0.01)

 

NM

Discontinued components

(0.04)

 

0.00

 

NM

 

Revenues for the three months ended March 31, 2016 decreased by $0.53 million, or 5.5%, to $9.06 million from $9.59 million for the same period of last year. The reduction in revenues reflected a reduction in the number of hogs sold as a result of the sale of two hog farms during the third quarter of 2015 and was partially offset by improved prices for market hogs.

 

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $0.45 million, or 5.0%, to $8.64 million for the three months ended March 31, 2016 from $9.09 million for the same period of last year. The Company sold a total of 35,112 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $246 per hog during the three months ended March 31, 2016, compared to 43,795 hogs sold and a blended average selling price of $208 per hog for the same period of last year.

 

 

For the Three Months Ended March 31,

 

2016

 

2015

 

No. of
Hogs Sold

 

Average
Price/Hog ($)

 

Sales
($ thousands)

 

No. of
Hogs Sold

 

Average
Price/Hog ($)

 

Sales
($ thousands)

Breeder hogs- regular hogs

4,340

 

$ 252

 

$ 1,095

 

7,183

 

$ 263

 

$ 1,888

Market hogs- regular hogs

15,930

 

219

 

3,481

 

21,343

 

183

 

3,902

Market hogs- black hogs

14,842

 

274

 

4,063

 

15,269

 

216

 

3,302

Total Hog Farming

35,112

 

246

 

8,639

 

43,795

 

208

 

9,092

                       
       
 

Kilogram

 

Average
Price/kg($)

 

Sales
($ thousands)

 

Kilogram

 

Average
Price/kg ($)

 

Sales
($ thousands)

Retail- specialty black hog pork products

87,384

 

$ 5

 

$ 420

 

114,932

 

$ 4

 

$ 497

 

Revenues for the three months ended March 31, 2016 from regular breeder hog sales decreased by 42.0% to $1.09 million with the number of regular breeder hogs sold decreasing by 39.6% to 4,340 hogs and the average selling price of regular breeder hogs decreasing by 4.0% to $252 per hog. Revenues for the three months ended March 31, 2016 from regular market hog sales decreased by 10.8% to $3.48 million as the number of regular market hogs sold decreased by 25.4% to 15,930 hogs while the average selling price of regular market hogs increased by 19.5% to $219 per hog. Revenues for the three months ended March 31, 2016 from black market hogs increased by 23.0% to $4.06 million with the number of black hogs sold decreasing by 2.8% to 14,842 hogs and the average selling price of black hogs increasing by 26.9% to $274 per hog. The decrease in black hogs sold was primarily a result of decreased production by the independent farmers in our black hog program. We anticipate that as the production of these farmers reaches capacity, the number of black hogs available for sale will level off.

 

We sold 87,384 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.42 million for the three months ended March 31, 2016. This compares to 114,932 kilograms sold at approximately $4 per kilogram and revenues of $0.50 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $4.48 million in revenues from our black hog program for the three months ended March 31, 2016, compared to $3.80 million for the same period of last year.

 

The results of operations of Hang-ao and OV Orange and their wholly owned subsidiaries, were reclassified as discontinued operations in the Company's financial statements for the three months ended March 31, 2016 and 2015 based on the Company's decision to focus on the hog industry and sell both subsidiaries and relevant businesses in the near future. OV Orange was sold on December 29, 2015. We have not found a buyer for Hang-ao as of today.

 

Gross profit

Cost of goods sold decreased by $1.09 million, or 13.5%, to $6.96 million for the three months ended March 31, 2016 from $8.04 million for the same period of last year. Cost of goods sold for hog farming decreased by $1.02 million, or 13.3%, to $6.65 million for the three months ended March 31, 2016 from $7.66 million for the same period of last year, benefitting from a reduction in the purchase prices for our feeds and the sale of two farms during the third quarter of 2015. Cost of goods sold for retail decreased by $0.07 million, or 17.6%, to $0.31 million for the three months ended March 31, 2016 from $0.38 million for the same period of last year.

 

Overall gross profit increased by $0.56 million, or 36.0%, to $2.10 million for the three months ended March 31, 2016 from $1.54 million for the same period of last year, mainly due to a decrease in cost of goods sold for hog farming as aforementioned.

 

Gross profits for hog farming and retail were $1.99 million and $0.11 million, respectively, for the three months ended March 31, 2016, compared to $1.43 million and $0.12 million, respectively, for the same period of last year.

 

Overall gross margin was 23.2%, with gross margins for hog farming and retail of 23.1% and 25.2%, respectively, for the three months ended March 31, 2016. This compared to overall gross margin of 16.1%, and gross margins for hog farming and retail of 15.7% and 23.4%, respectively, for the same period of last year.

 

Operating income (loss)

Total operating expenses, including general and administrative expenses and selling and marketing expenses, decreased by $0.79 million, or 43.1%, to $1.05 million for the three months ended March 31, 2016 from $1.84 million for the same period of last year. The decrease was primarily the result of a cancelation of a stock grant to key employees which generated non-cash compensation expense of $0.36 million, a decrease of $0.25 million in our depreciation and amortization expenses as a result of the disposal of two hog farms during the third quarter of 2015, and a decrease of $0.12 million in bad debt expense.

 

Operating income for the three months ended March 31, 2016 was $1.05 million, compared to an operating loss of $0.30 million for the same period of last year. Operating margin for the three months ended March 31, 2016 was 11.6%, compared to operating loss of 3.1% for the same period of last year.

 

Net income (loss)

Net loss increased by $0.06 million, or 26.6%, to $0.27 million for the three months ended March 31, 2016 from $0.22 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $1.14 million for the three months ended March 31, 2016, compared to a net loss of $0.36 million for the same period of last year. The operating results of our discontinued operations, Hang-ao and OV Orange, decreased significantly from net income of $0.14 million for the first quarter of 2015 to net loss of $1.41 million for the same period of 2016. After the deduction of non-controlling interests, net loss attributable to common shareholders for the three months ended March 31, 2016 was $0.10 million, or $0.003 loss per diluted share. This compared to net loss attributable to common shareholders of $0.24 million, $0.007 loss per diluted share, for the same period of last year.

 

Financial Condition

As of March 31, 2016, the Company had cash and cash equivalents of $51.72 million, compared to $49.66 million at the end of 2015. Working capital as of March 31, 2016 was $62.70 million as compared to $63.98 million at December 31, 2015. Net cash provided by operating activities was $3.24 million for the three months ended March 31, 2016, compared to $3.37 million for the same period of last year. Net cash used in investing activities was $1.61 million for the three months ended March 31, 2016, primarily for purchases of new equipment for our hog farms. This compared to net cash provided by investing activities of $1.62 million for the same period of last year, mostly generated by our discontinued operations. Net cash used in financing activities was $nil for the three months ended March 31, 2016, compared to $3.66 million used in financing activities for the same period of last year.

 

Company Update

On March 23, 2016, the Company announced it received a letter from NASDAQ, granting the Company an additional 180-day period, or until September 19, 2016, to regain compliance with NASDAQ's minimum $1.00 bid price per share rule (the "Bid Price Rule") for continued listing on the NASDAQ Capital Market.

 

Earnings Conference Call

Aoxin Tianli will host an earnings conference call and live webcast covering its first quarter of 2016 financial results at 8:00 a.m. ET on May 12, 2016, which is 8:00 p.m. in Beijing on May 12, 2016. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "AoxinTianli / ABAC".

Conference Call

 

Date:

Thursday, May 12, 2016

Time:

8:00 am ET, U.S.

U.S. Dial-in:

+1 877-317-6789

International Dial-in:

+1 412-317-6789

Conference ID:

Aoxin Tianli / ABAC

Webcast Link:

http://mms.prnasia.com/ABAC/20160512/default.aspx

 

For those unable to participate, an audio replay of the call will be available beginning approximately one hour after the end of the live call through May 19, 2016. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access ID No. 10086002.

 

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as Tianli Agritech, Inc., is in the business of breeding, raising and selling breeder and market hogs in China. The Company also sells specialty processed black hog pork products through supermarkets and other retail outlets, as well as the internet. The Company also owns an 88% equity interest in Hubei Hang-ao Servo-valve Manufacturing Technology Co., Ltd. ("Hang-ao"), which the Company acquired in July 2014 and currently is seeking to sell.

 

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

 

For more information, please contact:

Tina Xiao
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com

 

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

         
   

March 31,

 

December 31,

   

2016

 

2015

         

ASSETS

       

Current Assets:

       

Cash and cash equivalents

$

51,719,456

$

49,656,897

Accounts receivable, net

 

167,275

 

292,684

Inventories

 

6,092,519

 

5,656,165

Advances to suppliers, net

 

5,847,964

 

7,823,138

Prepaid expenses

 

334,734

 

816,646

Other receivables, net

 

313,597

 

312,161

Restricted cash

 

3,101,088

 

9,242,571

Assets from discontinued operations

 

6,610,381

 

7,926,437

Total Current Assets

 

74,187,014

 

81,726,699

         

Long-term prepaid expenses, net

 

1,370,907

 

1,389,144

Plant and equipment, net

 

24,629,880

 

23,410,803

Biological assets, net

 

1,682,450

 

1,580,847

Intangible assets, net

 

2,763,106

 

2,802,948

         

Total Assets

$

104,633,357

$

110,910,441

         

LIABILITIES AND STOCKHOLDERS' EQUITY

       
         

Current Liabilities:

       

Bank acceptance notes payable

$

6,202,175

$

12,323,428

Accounts payable and accrued payables

 

23,934

 

19,655

Other payables

 

2,926,237

 

3,041,085

Liabilities from discontinued operations

 

2,333,206

 

2,359,696

Total Current Liabilities

 

11,485,552

 

17,743,864

         

Stockholders' Equity:

       

Common stock ($0.001 par value, 100,000,000 shares authorized, 32,999,000 shares issued and 31,952,000 shares outstanding as of March 31, 2016 and 33,203,000 shares issued and 33,183,000 shares outstanding as of December 31, 2015)

 

31,952

 

33,183

Additional paid in capital

 

61,395,561

 

61,743,410

Statutory surplus reserves

 

2,457,180

 

2,457,180

Retained earnings

 

28,490,408

 

28,595,306

Accumulated other comprehensive income

 

(410,598)

 

(1,018,861)

Stockholders' Equity - Aoxin Tianli Group Inc. and Subsidiaries

 

91,964,503

 

91,810,218

Noncontrolling interest

 

1,183,302

 

1,356,359

Total Stockholders' Equity

 

93,147,805

 

93,166,577

Total Liabilities and Stockholders' Equity

$

104,633,357

$

110,910,441

 

 

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)

         
   

For the Three Months Ended March 31,

   

2016

 

2015

         
         

Revenues

$

9,059,268

$

9,588,415

Cost of goods sold

 

6,958,752

 

8,043,856

Gross profit

 

2,100,516

 

1,544,559

         

Operating expenses:

       

General and administrative expenses

 

943,935

 

1,646,982

Selling expenses

 

102,288

 

192,839

Total operating expenses

 

1,046,223

 

1,839,821

         

Income (loss) from operations

 

1,054,293

 

(295,262)

         

Other income (expense):

       

Interest income

 

81,843

 

5,133

Other income (expense), net

 

459

 

(68,754)

Total other income (expense)

 

82,302

 

(63,621)

         

Income (loss) before income taxes

 

1,136,595

 

(358,883)

Income taxes

 

-

 

-

Net income (loss) from continuing operations

 

1,136,595

 

(358,883)

         

Discontinued operations:

       

Gain (loss) from operations of discontinued component, net of taxes

 

(1,410,787)

 

142,371

Net loss

 

(274,192)

 

(216,512)

         

Net loss(income) attributable to noncontrolling interest

 

169,294

 

(23,439)

Net loss attributable to Aoxin Tianli Group Inc.and subsidiaries

 

(104,898)

 

(239,951)

         

Earnings(loss) per share, continuing operations-Basic & Diluted

$

0.03

$

(0.01)

Loss per share, discontinued operations-Basic & Diluted

$

(0.04)

$

-

Weighted-average shares outstanding, basic and diluted

 

33,121,667

 

32,913,000

         

Comprehensive income (loss):

       

Net loss attributable to Aoxin Tianli Group, Inc. and Subsidiaries

 

(104,898)

 

(239,951)

Unrealized foreign currency translation adjustment

 

608,263

 

13,625

Comprehensive income (loss)

$

503,365

$

(226,326)

 

 

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
         
   

For the Three Months Ended March 31,

   

2016

 

2015

         
         

CASH FLOWS FROM OPERATING ACTIVITIES

       

Net income from continuing operations

$

1,136,595

$

(216,512)

Adjustments to reconcile net income to net cash

       

 provided by operating activities:

       

Depreciation and amortization

 

550,631

 

797,626

Amortization of prepaid expenses

 

130,844

 

684,115

Amortization of long-term prepaid expenses

 

26,977

 

28,755

Bad debt expense (Recovery gain from bad debt expense)

 

-

 

117,932

Loss from inventory valuation

 

-

 

12,017

Loss from disposal of biological assets

 

185,099

 

68,594

         

Changes in operating assets and liabilities:

       

Accounts receivable

 

125,558

 

51,170

Inventories

 

1,195,471

 

853,717

Advances to suppliers

 

-

 

1,073,475

Prepaid expenses

 

(9,828)

 

(37,346)

Other receivables

 

605

 

39,081

Accounts payable and accrued payables

 

16,092

 

(3,259)

Advances from customers

 

-

 

(45,177)

Other payables

 

-

 

(82,114)

Total adjustments

 

2,221,449

 

3,558,586

Net cash provided by operating activities from continuing operations

 

3,358,044

 

3,342,074

Net cash provided by (used in) operating activities from discontinued operations

 

(121,221)

 

29,094

Net cash provided by operating activities

 

3,236,823

 

3,371,168

         

CASH FLOWS FROM INVESTING ACTIVITIES

       

Purchase of plant and equipment

 

(1,610,201)

 

(274)

Net cash used in investing activities from continuing operations

 

(1,610,201)

 

(274)

Net cash provided by investing activities from discontinued operations

 

-

 

1,618,458

Net cash provided by (used in) investing activities

 

(1,610,201)

 

1,618,184

         

CASH FLOWS FROM FINANCING ACTIVITIES

       

Restricted cash received from (deposited to) banks

 

6,115,787

 

(3,585,339)

Due to (from) related party

 

-

 

117,507

Repayment of short-term loans

 

(6,115,787)

 

(1,629,700)

Net cash used in financing activities from continuing operations

 

-

 

(5,097,532)

Net cash provided by financing activities from discontinued operations

 

-

 

1,436,374

Net cash used in financing activities

 

-

 

(3,661,158)

         

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

435,937

 

302,270

         

NET INCREASE IN CASH

 

2,062,559

 

1,630,464

         

CASH, BEGINNING OF PERIOD

 

49,656,897

 

39,123,869

         

CASH, END OF PERIOD

$

51,719,456

$

40,754,333

         

SUPPLEMENTAL DISCLOSURES:

       

Cash paid during the period for:

       

Interest paid

$

-

$

28,216

Income tax paid

$

-

$

87,119

         

NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES

   

Prepayments for raw material purchases made with bank acceptance notes

$

-

$

6,518,799

Shares issued to employees

$

-

$

1,433,700

Inventories received from prior year prepayments

$

1,998,318

$

-

Inventories transferred to biological assets

$

409,197

$

-

Cancelation of shares related to Hang-ao acquisition

$

1,047

$

-

Cancelation of shares related to employees' compensation

$

361,080

$

-