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Aoxin Tianli Group, Inc. Reports Second Quarter 2017 Financial Results

WUHAN CITY, China, Aug. 14, 2017 /PRNewswire/ -- Aoxin Tianli Group, Inc. (ABAC) ("Aoxin Tianli" or the "Company"), a producer of breeder hogs, market hogs and black hogs, as well as specialty processed black hog pork products sold through retail outlets and the internet, with headquarters in Wuhan City, Hubei Province, China, today announced its financial results for the three and six months ended June 30, 2017.

Mr. Luchang Zhou, Chief Executive Officer of Aoxin Tianli, commented, "thanks to the continued growth in our retail business, total revenues decreased by only 35.3% to $6.22 million in the second quarter primarily driven by decreases in both the number of hogs sold and the average selling price per hog in our hog farming business. The decrease in the number of hogs sold in our hog farming business was primarily the result of a drop in the number of  regular breeder hogs and black hogs sold as a result of the damages caused by the severe floods in July 2016 that limited the number of hogs available for sale in the second quarter. Hog prices were also not in our favor and further declined sequentially during the second quarter."

Mr. Wocheng Liu, Chairman of Aoxin Tianli, added, "while we continue to face significant headwinds in the near term, we are pleased to welcome Mr. Zhou and Ms. Qinyu Liu to join our team as Chief Executive Officer and Chief Financial Officer, respectively. With their significant career accomplishments, Mr. Zhou and Ms. Liu bring tremendous value to Aoxin Tianli as we seek opportunities to take the Company to the next level."

Second Quarter 2017 Financial Results

 


For the Three Months Ended June 30,

($ thousands, except per share data)

2017


2016


% Change

Revenues

$               6,222


$              9,611


-35.3%

Hog farming

5,561


9,232


-39.8%

Retail

661


379


74.3%

Gross margin

13.4%


22.7%


-9.3 pp

Operating margin

0.9%


12.0%


-11.1 pp

Net Income (loss)

64


605


-89.4%

Net income from continuing operations

64


1,217


-94.7%

Gain (loss) from operations of discontinued component

-


(611)


NM

Net income (loss) for common shareholders

64


679


-90.5%


 

Revenues for the second quarter of 2017 decreased by $3.39 million, or 35.3%, to $6.22 million from $9.61 million for the same period of last year. The decrease in revenues reflected the impact from the ongoing weak demand for regular breeder hogs, lower prices for regular hogs and black hogs, and fewer black hogs available for sale after the July 2016 flood damage.

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $3.67 million, or 39.8%, to $5.56 million for the second quarter of 2017 from $9.23 million for the same period of last year. The Company sold a total of 32,179 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $173 per hog during the second quarter of 2017, compared to 33,834 hogs sold and a blended average selling price of $273 per hog for the same period of last year. 

 


For the Three Months Ended June 30,


2017


2016


No. of Hogs
Sold


Average
Price/Hog ($)


Sales
($ thousands)


No. of Hogs
Sold


Average
Price/Hog ($)


Sales 
($ thousands)

Breeder hogs- regular hogs

3,344


$               247


$               827


4,096


$                253


$           1,038

Market hogs- regular hogs

17,924


144


2,582


15,960


240


3,826

Market hogs- black hogs

10,911


197


2,153


13,778


317


4,368

Total Hog Farming

32,179


173


5,561


33,834


273


9,232


















Kilogram


Average
Price/kg ($)


Sales
($ thousands)


Kilogram


Average
Price/kg ($)


Sales
($ thousands)

Retail- specialty black hog pork products

138,123


$                    5


661


80,368


$                    5


379

 

Revenues for the second quarter of 2017 from regular breeder hog sales decreased by 20.3% to $0.82 million with the number of regular breeder hogs sold decreasing by 18.4% to 3,344 hogs and the average selling price of regular breeder hogs decreasing by 2.4% to $247 per hog. Revenues for the second quarter of 2017 from regular market hog sales decreased by 32.5% to $2.58 million as the number of regular market hogs sold increased by 12.3% to 17,924 hogs while the average selling price of regular market hogs decreased by 39.9% to $144 per hog. Revenues for the second quarter of 2017 from black market hogs decreased by 50.7% to $2.15 million with the number of black hogs sold decreasing by 20.8% to 10,911 hogs and the average selling price of black hogs decreasing by 37.8% to $197 per hog.

We sold 138,123 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.66 million for the second quarter of 2017. This compares to 80,368 kilograms sold at approximately $5 per kilogram and revenues of $0.38 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $2.81 million in revenues from our black hog program for the second quarter of 2017, compared to $4.75 million for the same period of last year.

Gross profit

Cost of goods sold decreased by $2.04 million, or 27.5%, to $5.39 million for the second quarter of 2017 from $7.43 million for the same period of last year. Cost of goods sold for hog farming decreased by $2.20 million, or 30.7%, to $4.95 million for the second quarter of 2017 from $7.15 million for the same period of last year. The decrease in cost of goods sold for hog farming was primarily due to lower sale volume, which was partly offset by increased feed costs. Cost of goods sold for retail increased by $0.15 million, or 52.4%, to $0.44 million for the second quarter of 2017 from $0.29 million for the same period of last year. The increase in cost of goods sold for retail was primarily due to increased sales volume.

Overall gross profit decreased by $1.34 million, or 61.7%, to $0.84 million for the second quarter of 2017 from $2.18 million for the same period of last year. This decrease in our gross profit reflected a decrease in gross profit of $1.48 million for our hog farming segment, especially in the sale of our regular market hogs. Gross profits for hog farming and retail were $0.61 million and $0.23 million, respectively, for the second quarter of 2017, compared to $2.09 million and $0.09 million, respectively, for the same period of last year.

Overall gross margin was 13.4%, with gross margins for hog farming and retail of 11.0% and 34.1%, respectively, for the second quarter of 2017. This compared to overall gross margin of 22.7%, and gross margins for hog farming and retail of 22.6% and 24.5%, respectively, for the same period of last year. The reduction in gross margin from hog farming was due to the increase in the number of large regular market hogs, over 100 kilograms per hog, sold during the period coupled with a decrease in the number of breeder hogs sold. Large hogs normally require more feed to maintain their daily diet and are sold to pork dealers directly. Since the beginning of 2017, we sold more large regular market hogs to pork dealers than the same period in 2016. However, the reduced sale prices of regular market hogs and increased feed costs for maintaining large market hogs caused our gross margin to decrease. The improvement in gross profit from the retail segment was primarily the result of higher sale prices charged to our new customer and an increase in sales volume.

Operating income

Total operating expenses, including general and administrative expenses and selling and marketing expenses, decreased by $0.25 million, or 24.3%, to $0.78 million for the second quarter of 2017 from $1.03 million for the same period of last year. The decrease was primarily the result of cost control over employee payrolls. Operating income for the second quarter of 2017 was $0.06 million, compared to $1.15 million for the same period of last year. Operating margin for the second quarter of 2017 was 0.9%, compared to 12.0% for the same period of last year.

Net income

Net income was $0.06 million for the second quarter of 2017, compared to $0.61 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $0.06 million for the second quarter of 2017, compared to $1.22 million for the same period of last year. Net income for the second quarter of 2016 was adversely impacted by the net loss from our discontinued operation, Hang-ao, which was $0.61 million for the second quarter of 2016. Hang-ao was sold on December 23, 2016.

After the deduction for non-controlling interests, net income attributable to common shareholders for the second quarter of 2017 was $0.06 million, compared to $0.68 million for the same period of last year.

First Half 2017 Financial Results

 








For the Six Months Ended June 30,

($ thousands, except per share data)

2017


2016


% Change

Revenues

$            12,903


$           18,670


-30.9%

Hog farming

11,535


17,871


-35.5%

Retail

1,368


799


71.2%

Gross margin

13.7%


22.9%


-9.2 pp

Operating margin

0.6%


11.8%


-11.2 pp

Net income (Loss)

98


331


-70.5%

Net income from continuing operations

98


2,353


-95.9%

Gain (loss) from operations and disposal of discontinued component

-


(2,022)


NM

Net income (loss) for common shareholders

98


574


-83.0%

 

Revenues for the first half of 2017 decreased by $5.77 million, or 30.9%, to $12.90 million from $18.67 million for the same period of last year. The decrease in revenues reflected the impact from the ongoing weak demand for regular breeder hogs, lower prices for regular hogs and black hogs, and fewer black hogs available for sale after the July 2016 flood damage.

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $6.34 million, or 35.5%, to $11.54 million for the first half of 2017 from $17.87 million for the same period of last year. The Company sold a total of 62,396 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $185 per hog during the first half of 2017, compared to 68,946 hogs sold and a blended average selling price of $259 per hog for the same period of last year.

 


For the Six Months Ended June 30,


2017


2016


No. of Hogs
Sold


Average
Price/Hog ($)


Sales
($ thousands)


No. of Hogs
Sold


Average
Price/Hog ($)


Sales
($ thousands)

Breeder hogs- regular hogs

6,181


$               246


$            1,523


8,436


$                253


$           2,133

Market hogs- regular hogs

34,716


156


5,427


31,890


229


7,307

Market hogs- black hogs

21,499


213


4,585


28,620


295


8,431

Total Hog Farming

62,396


185


11,535


68,946


259


17,871


















Kilogram


Average
Price/kg ($)


Sales
($ thousands)


Kilograms


Average
Price/kg ($)


Sales 
($ thousands)

Retail- specialty black hog pork products

274,804


$                    5


$            1,368


167,752


$                    5


$               799

 

Revenues for the first half of 2017 from regular breeder hog sales decreased by 28.6% to $1.52 million with the number of regular breeder hogs sold decreasing by 26.7% to 6,181 hogs and the average selling price of regular breeder hogs decreasing by 2.5% to $246 per hog. Revenues for the first half of 2017 from regular market hog sales decreased by 25.7% to $5.43 million as the number of regular market hogs sold increased by 8.9% to 34,716 hogs while the average selling price of regular market hogs decreased by 31.8% to $156 per hog. Revenues for the first half of 2017 from black market hogs decreased by 45.6% to $4.59 million with the number of black hogs sold decreasing by 24.9% to 21,499 hogs and the average selling price of black hogs decreasing by 27.6% to $213 per hog.

We sold 274,804 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $1.37 million for the first half of 2017. This compares to 167,752 kilograms sold at approximately $5 per kilogram and revenues of $0.80 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $5.95 million in revenues from our black hog program for the first half of 2017, compared to $9.23 million for the same period of last year.

Gross profit

Cost of goods sold decreased by $3.26 million, or 22.7%, to $11.13 million for the first half of 2017 from $14.39 million for the same period of last year. Cost of goods sold for hog farming decreased by $3.58 million, or 25.9%, to $10.22 million for the first half of 2017 from $13.79 million for the same period of last year. The decrease in cost of goods sold for hog farming was primarily due to lower sale volume, which was partly offset by increased feed costs. Cost of goods sold for retail increased by $0.32 million, or 52.5%, to $0.92 million for the first half of 2017 from $0.60 million for the same period of last year. The increase in cost of goods sold for retail was primarily due to increased sales volume.

Overall gross profit decreased by $2.51 million, or 58.6%, to $1.77 million for the first half of 2017 from $4.28 million for the same period of last year. This decrease in our gross profit reflected a decrease in gross profit of $2.76 million for our hog farming segment, especially in the sale of our regular market hogs, partially offset by improvement in our retail sales. Gross profits for hog farming and retail were $1.32 million and $0.45 million, respectively, for the first half of 2017, compared to $4.08 million and $0.20 million, respectively, for the same period of last year.

Overall gross margin was 13.7%, with gross margins for hog farming and retail of 11.4% and 33.1%, respectively, for the first half of 2017. This compared to overall gross margin of 22.9%, and gross margins for hog farming and retail of 22.8% and 24.9%, respectively, for the same period of last year. The reduction in gross margin from hog farming was due to the increase in the number of large regular market hogs, over 100 kilograms per hog, sold during the period coupled with a decrease in the number of breeder hogs sold. Large hogs normally require more feed to maintain their daily diet and are sold to pork dealers directly. During the first half of 2017, we sold more large regular market hogs to pork dealers than the same period in 2016. However, the reduced sale prices of regular market hogs and increased feed costs for maintaining large market hogs caused our gross margin to decrease. The improvement in gross profit from the retail segment was primarily the result of higher sale prices charged to our new customer and an increase in sales volume.

Operating income

Total operating expenses, including general and administrative expenses and selling and marketing expenses, decreased by $0.39 million, or 18.6%, to $1.69 million for the first half of 2017 from $2.08 million for the same period of last year. The decrease was primarily the result of cost control over employee payrolls. Operating income for the first half of 2017 was $0.08 million, compared to $2.20 million for the same period of last year. Operating margin for the first half of 2017 was 0.6%, compared to 11.8% for the same period of last year.

Net income

Net income was $0.10 million for the first half of 2017, compared to $0.33 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $0.10 million for the first half of 2017, compared to $2.35 million for the same period of last year. Net income for the first half of 2016 was adversely impacted by the net loss from our discontinued operation, Hang-ao, which was $2.02 million for the first half of 2016. Hang-ao was sold on December 23, 2016.

After the deduction for non-controlling interests, net income attributable to common shareholders for the first half of 2017 was $0.10 million, compared to $0.57 million for the same period of last year.

Financial Condition

As of June 30, 2017, the Company had cash and cash equivalents of $57.89 million, compared to $54.46 million at the end of 2016. Working capital as of June 30, 2017 was $60.20 million as compared to $57.50 million at December 31, 2016. Net cash provided by operating activities was $2.64 million for the first half of 2017, compared to $7.25 million for the same period of last year. Net cash used in investing activities was $nil for the first half of 2017, compared to $3.00 million for the same period of last year. Net cash used in financing activities was $0.58 million for the first half of 2017, compared to $0.31 million for the same period of last year.

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as TianliAgritech, 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.

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:

Tony Tian, CFA
WeitianGroup LLC
Phone: +1-732-910-9692
Email:
tony.tian@weitian-ir.com

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(AMOUNTS EXPRESSED IN US DOLLARS)

(UNAUDITED)








For the Three Months Ended June 30,


For the Six Months Ended June 30,



2017


2016


2017


2016

Revenue

$

6,222,160

$

9,610,789

$

12,903,151

$

18,670,057

Cost of goods sold


5,387,139


7,431,963


11,130,023


14,390,715

Gross profit


835,021


2,178,826


1,773,128


4,279,342










General and administrative expenses


701,029


914,129


1,532,989


1,858,064

Selling expenses


78,580


115,903


156,328


218,191

Operating expenses


779,609


1,030,032


1,689,317


2,076,255










Income from operations


55,412


1,148,794


83,811


2,203,087










Other income (expense):









Interest income


7,845


59,606


11,669


141,449

Other income, net


1,165


8,206


2,036


8,665

Total other income


9,010


67,812


13,705


150,114










Income  before income taxes


64,422


1,216,606


97,516


2,353,201

Income taxes


-


-


-


-

Net income from continuing operations


64,422


1,216,606


97,516


2,353,201










Discontinued operations:









Loss from operations of discontinued component, net of taxes


-


(611,417)


-


(2,022,204)

Net income


64,422


605,189


97,516


330,997



















Net loss attributable to the noncontrolling interest


-


73,370


-


242,664

Net income (Loss) attributable to Aoxin Tianli Group, Inc. and Subsidiaries

$

64,422

$

678,559

$

97,516

$

573,661










Earnings per share, continuing operations– Basic and Diluted

$

0.01

$

0.15

$

0.01

$

0.29

Loss per share, discontinued operations– Basic and Diluted

$

-

$

(0.08)

$

-

$

(0.25)

Weighted average shares outstanding – Basic and Diluted


7,983,745


7,988,000


7,987,870


8,134,208










Comprehensive income (loss):









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

$

64,422

$

678,559

$

97,516

$

573,661

Unrealized foreign currency translation adjustment


1,423,687


(2,743,550)


2,080,452


(2,135,287)

Comprehensive income (loss)

$

1,488,109

$

(2,064,991)

$

2,177,968

$

(1,561,626)

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(AMOUNTS EXPRESSED IN US DOLLARS)








June 30, 2017


December 31, 2016



(Unaudited)



ASSETS





Current Assets:





Cash and cash equivalents

$

57,891,099

$

54,458,026

Accounts receivable, net


71,099


60,283

Inventories, net


5,071,017


5,506,085

Advances to suppliers, net


395,506


1,129,477

Prepaid expenses


34,868


112,676

Other receivables, net


297,384


293,377

Total Current Assets


63,760,973


61,559,924






Long-term prepaid expenses, net


1,254,052


1,196,989

Plant and equipment, net


20,470,230


21,113,840

Biological assets, net


1,996,914


1,901,744

Intangible assets, net


2,366,792


2,403,637






Total Assets

$

89,848,961

$

88,176,134






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Short-term bank loans

$

2,065,682

$

2,591,793

Accounts payable and accrued liabilities


17,744


5,327

Other payables


1,473,717


1,465,164






Total  Current Liabilities


3,557,143


4,062,284






Stockholders' Equity:





Common stock ($0.004 par value, 25,000,000 shares





authorized, 7,983,745 shares and 7,988,245 shares issued and outstanding on June 30, 2017 and December 31, 2016, respectively)


31,934


31,952

Additional paid in capital


61,395,579


61,395,561

Statutory surplus reserves


2,416,647


2,416,647

Retained earnings


26,933,101


26,835,585

Accumulated other comprehensive loss


(4,485,443)


(6,565,895)

Total Stockholders' Equity


86,291,818


84,113,850

 Total Liabilities and Stockholders' Equity

$

89,848,961

$

88,176,134

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(AMOUNTS EXPRESSED IN US DOLLARS)

(UNAUDITED)






For the Six Months Ended June 30,



2017


2016

CASH FLOWS FROM OPERATING ACTIVITIES





Net income from continuing operations

$

97,516

$

2,353,201

Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization


1,418,330


1,194,716

Amortization of prepaid expenses


94,422


249,698

Amortization of long-term prepaid expenses


51,606


53,997

Loss from disposal of biological assets


67,945


427,071

Stock-based compensation


4,015


12,046

Changes in operating assets and liabilities:





Accounts receivable


(9,194)


182,316

Inventories


892,224


2,764,344

Prepaid expenses


(19,756)


(11,879)

Other receivables


3,200


605

Long-term prepaid expenses


(78,683)


-

Accounts payable and accrued liabilities


14,212


67,973

Other payables


105,441


-

        Total adjustments


2,543,762


4,940,887

Net cash provided by operating activities from continuing operations


2,641,278


7,294,088

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


-


(41,000)

Net cash provided by operating activities


2,641,278


7,253,088











CASH FLOWS FROM INVESTING ACTIVITIES





Purchase of plant and equipment


-


(3,002,759)

Net cash used in investing activities from continuing operations


-


(3,002,759)

Net cash provided by investing activities from discontinued operations


-


-

Net cash provided by (used in)investing activities


-


(3,002,759)






CASH FLOWS FROM FINANCING ACTIVITIES





Restricted cash received from banks


-


9,180,826

Proceeds of short-term loans


2,036,317


2,754,248

Repayments of short-term loans


(2,618,122)


(12,241,101)

Net cash used in financing activities from continuing operations


(581,805)


(306,027)

Net cash provided by financing activities from discontinued operations


-


-

Net cash used in financing activities


(581,805)


(306,027)






EFFECT OF EXCHANGE RATE CHANGES ON CASH


1,373,600


(1,159,599)

NET INCREASE IN CASH


3,433,073


2,784,703

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


54,458,026


49,656,897

CASH AND CASH EQUIVALENTS, END OF PERIOD

$

57,891,099

$

52,441,600

















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