NEW YORK, May 10, 2011 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED, NYSE Alternext: ALHOG) ("AgFeed" or the "Company"), an international agribusiness with operations in the U.S. and China announced its results for the first quarter of 2011.
AgFeed reports revenue of $93 million and an operating profit of $0.5 million. Revenues for the company's U.S. hog production unit reached $57.9 million with an operating profit of $3.6 million. In China, significant progress was made in restructuring hog production and containing operating issues in this business segment with revenue reported at $10.9 million and an operating loss of $139,000. In its Chinese based animal nutrition segment, the Company reports first quarter revenue of $24.2 million and an operating loss of $835,000. These results do not reflect the loss attributable to discontinued operations within the Company's legacy Chinese hog production unit.
John A. Stadler, AgFeed's Chairman & Interim Chief Executive Officer stated, "Our team of hog production professionals that were deployed in the past months to focus on turning around our legacy Chinese hog production system has made significant strides in closing and liquidating facilities that could not meet our standard production metrics while at the same time moving rapidly to bring appropriate operating discipline to the remaining legacy assets. This work is not yet complete. However, we expect that we can return the legacy system to profitability later this year. The performance of our animal nutrition unit was disappointing. The size of the nation-wide Chinese hog herd is down which has impacted demand for our nutrition products. More importantly we were unable to pass along the rapidly increasing cost of grains in real time."
Gerard Daignault, President & Chief Executive Officer of AgFeed's animal nutrition business pointed out, "As our business continues to evolve from its historic base of being focused on pre-mix to having a significant complete feed business, we will face ever greater exposure to swings in the price of corn and soy bean meal. Our ability to pass these price increases on to our customers on a timely basis will be vital. Faced with record high commodity prices, we will be confronted with price competition as growers seek alternative feed sources in order to lower their own operating costs. We are committed to providing our customers with quality animal feeds to promote healthy animals and a safe food supply. As part of this commitment and in order to bring a more diverse product line to our distributor base of over 1,887 outlets, we are continuing our R&D efforts to bring our customers specialized products designed for sow development and nursery pig growth."
Edward Pazdro, the Company's Chief Financial Officer observed, "During the first quarter we continued to rationalize our Chinese hog production and headquarters operations which allowed us to reduce our headcount by 203 since the end of 2010. We also retired approximately $4.5 million of local bank debt in China in May 2011."
Regarding the Company's U.S. based hog production business its leader, Glenn McClelland stated, "We continue to be extremely pleased by the commitment to operating excellence and continuous operating improvement demonstrated by our team. Our results for the quarter clearly demonstrate this commitment and the dedication of our entire organization."
In conclusion Mr. Stadler added, "During the coming weeks we plan to provide 'guidance' to the investment community regarding our annual performance." He also reiterated, "The base of hog production excellence and human capital which AgFeed can deliver from its U.S. operations at M2P2 coupled with our burgeoning Chinese presence and its showcase western-style hog production facility at Da Hua demonstrate a model of aligning resources from disparate global locations in order to delivery high quality, safe food to a global market."
ABOUT AGFEED INDUSTRIES, INC.
NASDAQ Global Market Listed AgFeed Industries (www.agfeedinc.com) is an international agribusiness with operations in the U.S. and China. AgFeed has two business lines: animal nutrition in premix, concentrates and complete feeds and hog production. In the U.S., AgFeed's hog production unit, M2P2, is a market leader in setting new standards for production efficiency and productivity. AgFeed believes the transfer of these processes, procedures and techniques will allow its new Western-style Chinese hog production units to set new standards for production in China. China is the world's largest pork market consuming 50% of global production and over 62% of total protein consumed in China is pork. Hog production in China currently enjoys income tax free status.
SAFE HARBOR DISCLOSURE NOTICE
Certain statements regarding AgFeed Industries set forth in this press release contain forward-looking information and speak only as of the date of such statement. You can identify these statements by the fact that they use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance or business plans and prospects. This forward-looking information is subject to numerous material risks, uncertainties and assumptions, certain of which are beyond the control of AgFeed Industries, including the impact of general economic conditions, industry conditions, volatility of commodity prices, currency fluctuations, environmental risks, competition from other industry participants, stock market volatility, ability to access sufficient capital from internal and external sources. Readers are cautioned that the material assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise. Actual results, performance or achievement could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that AgFeed Industries will derive therefrom. AgFeed Industries disclaim any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. For additional information and risk factors that could affect AgFeed Industries, see its filings with the Securities and Exchange Commission, including "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Cautionary Statement for Forward-Looking Statements," set forth in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2011. The information contained in this press release is made as of the date of the press release, even if subsequently made available by AgFeed Industries on its website or otherwise.
Contact: Investor Relations: AgFeed Industries, Inc. Tel: (917) 804-3584 Email: ir@agfeedinc.com
The Company's policy is to handle all questions by email to ir@agfeedinc.com and they will be answered as soon as possible.
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2011 AND DECEMBER 31, 2010
2011 2010 ---- ---- (unaudited) ASSETS ------ CURRENT ASSETS: Cash and cash equivalents $9,199,596 $12,399,916 Accounts receivable, net of allowance for doubtful accounts of $1,930,100 and $707,968 28,672,187 21,841,442 Advances to suppliers 517,064 1,676,593 Inventory 85,741,183 81,379,649 Prepaid expenses and other current assets 2,454,312 2,242,807 Deferred tax asset 83,685 83,685 Assets of discontinued operations 3,870,799 6,293,524 Total current assets 130,538,826 125,917,616 PROPERTY AND EQUIPMENT, net 67,101,166 63,631,224 INTANGIBLE ASSETS, net 5,678,896 5,783,102 GOODWILL 22,510,697 22,365,414 DEFERRED TAX ASSET 1,925,663 2,329,548 OTHER ASSETS 2,738,813 3,467,758 TOTAL ASSETS $230,494,061 $223,494,662 LIABILITIES AND EQUITY ---------------------- CURRENT LIABILITIES: Short-term loan $4,581,000 $4,551,000 Accounts payable 8,737,927 8,783,569 Other payables 2,554,637 3,736,931 Unearned revenue 92,111 489,241 Accrued expenses 8,154,401 6,142,747 Accrued payroll 941,958 1,163,504 Tax and welfare payable 892,298 1,893,727 Interest payable 192,429 121,392 Current portion of long-term debt 1,710,350 1,703,658 Convertible notes, net of discount of $10,864 - 989,136 Liabilities of discontinued operations 1,402,237 1,595,805 Total current liabilities 29,259,348 31,170,710 ACQUISITION NOTE PAYABLE 9,621,434 9,621,434 LINE OF CREDIT 44,775,792 42,231,176 LONG-TERM DEBT 14,286,195 15,024,666 TOTAL LIABILITIES 97,942,769 98,047,986 ---------- ---------- COMMITMENTS AND CONTINGENCIES - - --- --- EQUITY: AgFeed stockholders' equity: Common stock, $0.001 per share; 75,000,000 shares authorized; 56,189,050 issued and 55,802,355 outstanding at March 31, 2011 51,756,907 issued and 51,370,212 outstanding at December 31, 2010 56,190 51,758 Additional paid-in capital 133,724,749 125,788,151 Accumulated other comprehensive income 8,897,086 8,120,628 Statutory reserve 5,667,043 5,621,937 Treasury stock (386,695 shares) (1,858,942) (1,858,942) Accumulated deficit (14,026,159) (12,430,229) Total AgFeed stockholders' equity 132,459,967 125,293,303 Noncontrolling interest 91,325 153,373 ------ ------- Total equity 132,551,292 125,446,676 TOTAL LIABILITIES AND EQUITY $230,494,061 $223,494,662
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
2011 2010 ---- ---- (unaudited) (unaudited) Revenues $92,987,199 $46,489,856 Cost of goods sold 85,107,097 40,617,819 ---------- ---------- Gross profit 7,880,102 5,872,037 Operating expenses Selling expenses 986,663 1,018,164 General and administrative expenses 6,375,431 3,443,171 Total operating expenses 7,362,094 4,461,335 Income from operations 518,008 1,410,702 Non-operating income (expense): Other income (expense) (2,716) 75,158 Interest income 14,722 47,333 Interest and financing costs (914,959) (124,911) Foreign currency transaction loss (10,128) 13,803 Total non-operating income (expense) (913,081) 11,383 Income (loss) from operations before income taxes (395,073) 1,422,085 Income tax expense 538,739 453,580 Loss from continuing operations (933,812) 968,505 Discontinued operations: Income (loss) from discontinued operations (including loss on disposal of $295,280 in 2011) (681,045) 42,719 Net loss (1,614,857) 1,011,224 Less: Net income (loss) attributed to noncontrolling interest (64,033) (56,194) Net income attributed to AgFeed $(1,550,824) $1,067,418 =========== ==========
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010
2011 2010 ---- ---- (unaudited) (unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $(1,614,857) $1,011,224 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation 1,498,562 811,899 Amortization of intangible assets 111,629 23,191 Loss on sale of assets 543,552 - Stock based compensation 7,235 75,281 Issuance of common stock for services 433,795 375,720 Amortization of debt issuance costs 4,617 7,419 Amortization of discount on convertible debt 10,864 17,460 Change in working capital components Accounts receivable (6,647,112) (8,599,242) Other receivables - (2,466,242) Inventory (1,987,357) (1,813,472) Advances to suppliers 1,194,764 360,605 Prepaid expenses 511,397 350,014 Deferred taxes 403,885 - Other assets 1,118,963 (73,782) Accounts payable (246,537) 3,906,822 Other payables (1,431,148) 2,142,963 Unearned revenue (461,805) (166,837) Accrued expenses 2,010,388 (12,304) Accrued payroll (225,979) (326,087) Tax and welfare payable (1,001,190) 213,894 Interest payable 71,037 17,500 Net cash provided by (used in) operating activities (5,695,297) (4,143,974) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (6,208,508) (4,282,474) Purchase of intangible assets - (125,514) Proceeds from the sale of assets 315,114 - Net cash used in investing activities (5,893,394) (4,407,988) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from the sale of common stock 7,500,000 - Borrowings under line of credit facility, net 2,544,616 - Payment on convertible notes (1,000,000) - Payment on note payable (731,779) - Purchase of noncontrolling interest in majority owed hog farms - (406,103) Net cash provided by (used in) financing activities 8,312,837 (406,103) --------- -------- Effect of exchange rate changes on cash and cash equivalents 75,534 (2,062) ------ ------ NET DECREASE IN CASH & CASH EQUIVALENTS (3,200,320) (8,960,127) CASH & CASH EQUIVALENTS, BEGINNING BALANCE 12,399,916 37,580,154 ---------- ---------- CASH & CASH EQUIVALENTS, ENDING BALANCE $9,199,596 $28,620,027 ========== ===========
SOURCE AgFeed Industries, Inc.