BEIJING, May 14, 2013 /PRNewswire/- Deyu Agriculture Corp.
(OTCBB: DEYU) (the "Company"), a Shanxi
Province, China-based
vertically integrated producer, processor, marketer and distributor
of organic and other agricultural products made from corn and
grains, today announced its financial results for the first quarter
ended March 31, 2013.
First Quarter 2013 Results:
- Net revenue was $77.2 million,
compared to $62.7 million in Q1 of
2012;
- Gross profit was $8.8 million,
compared to $12.4 million in Q1 of
2012;
- Gross margin was 11.4%, compared to 19.8% in Q1 of 2012;
- Net income available to common stockholders was $3.1 million, compared to $6.2 million in Q1 of 2012;
- Earnings per diluted share was $0.25 on 12.7 million shares, compared to
$0.50 on 12.6 million shares in Q1 of
2012.
"The results of the first quarter of 2013 certainly is
disappointing, in comparison with the same period of the previous
year," said Greg Chen, Chief
Executive Officer of the Company. "The decrease of pork prices and
the spread of avian flu H7N9 in the recent months have greatly
reduced the demand for animal feeds, which is the major market of
our corn products. At the same time, with a good corn harvest last
year, market sales prices decreased yet purchase prices did not
decline consistently due to the government's protective farming
policies in favor of farmers."
"For the grain division, the deteriorating efficiency of current
retail distribution channels curtailed much of our retail grain
package sales, This highlights the urgent need to focus more on
strategic business development for a sustainable growth," added Mr.
Chen. "The fast advancing economy and evolving market conditions in
China present both opportunities
and challenges. The Company is exploring new venues to achieve
competitiveness by streamlining its operation structure and by
focusing more on strategic planning, resource integration,
strategic partnership building and more brand-driven approaches to
present our products and services."
"On the bulk trading end, we are considering a new operation
structure to integrate business resources into a single trading
platform to serve more farmers in the co-ops and clients across
several regions. We plan to reorient our retail business toward a
better targeted market segment with revamped product lines in a
more brand-driven approach with media and service support to assist
the retailers, the distributors and institutional buyers in order
to efficiently promote packaged grain retail sales to consumers,"
continued Mr. Chen.
Financial Results for the First Quarter Ended March 31, 2013
The Company's net revenue for Q1 2013 was $77.2 million compared with $62.7 million for Q1 2012, an increase of
$14.4 million, or 23.0%, which was
mainly due to the increase of our bulk trading business with low
margin. Net revenue from our Corn Division for Q1 2013 was
approximately $35.4 million, a
decrease of $7.8 million, or
approximately 18.0%, as compared to $43.2
million for Q1 2012, which was mainly due to the weakening
demand from livestock feeds companies. Net revenue from our Grain
Division for Q1 2013 was $12.4
million, a decrease of $2.3
million, or 15.6%, as compared to $14.7 million for Q1 2012, which was mainly
attributable to the decline of retail sales in supermarket and
convenience stores. Net revenue from our Bulk Trading Division for
Q1 2013 was $29.4 million, an
increase of $24.5 million, or 501.8%,
as compared to $4.9 million for Q1
2012, which was mainly attributable to our strategic shift from
grain retail sales to wholesale or bulk trading.
The Company's gross profit decreased by $3.6 million, or 29.1%, from $12.4 million for Q1 2012 to $8.8 million for Q1 2013, which was mainly
attributable to the decrease of sales revenue from the Corn and
Grain Division and the decrease of gross margin. Our gross margin
decreased from 19.8% for Q1 2012 to 11.4% for Q1 2013. The decrease
in gross margin was mainly the combined result of the simultaneous
decline of gross margin in each division and the increased sales
percentage of the bulk trading business, which had a relatively
lower gross margin.
The Company's gross margin for our Corn Division was 13.5% for
Q1 2013, down by 300 basis points from 16.5% Q1 2012, which was
mainly attributable to the weakening demand in addition to
over supply as a result of a good harvest last year. Gross margin
for the Grain Division was 21.0% for Q1 2013, a decrease of 1130
basis points from 32.3% for Q1 2012, which was primarily due to our
strategic shift from grain retail sales to wholesales with
relatively lower gross margins but with fewer distribution
expenses. Gross margin for the Bulk Trading Division was 4.9% for
Q1 2013, which was relatively lower compared to our other Divisions
as a result of its high turnover rate and relatively lower cost
maintenance. Gross margin for the Bulk Trading Division decreased
by 680 basis points for the three months ended March 31, 2013 from 11.7% for Q1 2012, which was
mainly attributable to the variation in the composition of grain
varieties with diversified gross margin.
The Company's operating expenses decreased $0.9 million, or 15.6%, to $5.1 million for Q1 2013 as compared to
$6.0 million for Q1 2012. This
decrease was primarily due to the reduction of advertisement
expenses and distribution expenses spent on retail sales. Interest
expense for Q1 2013 was $0.2 million
compared to $0.5 million for Q1 2012,
a decrease of $0.3 million, or 63.7%,
which was mainly due to the decrease in the balances on loans.
Non-operating income for Q1 2013 decreased $0.6 million, which mainly due to the reduction
of $0.5 million gain on bargain
purchase in connection with the business acquisition for Q1
2012.
The Company had net income available to common stockholders of
$3.1 million for Q1 2013, as compared
to a net income of $6.2 million for
Q1 2012, a decrease of $3.1 million,
or 50.0%. Earnings per diluted share was $0.25 on 12.7 million shares for Q1 2013,
compared to $0.50 on 12.6 million
shares for Q1 2012.
Subsequent Event after March 31,
2013
Due to a rather unexpected heavy snow storm which hit Taiyuan,
Shanxi Province in late
April 2013, the warehouses leased by
the Company suffered severe structural damage and caused extensive
damage to our grain goods stored in those warehouses. The full
details of the event including the scale of the damage are still
being investigated jointly by the warehouse owner and the Company.
We have estimated potential loss due to such damages can reach
$1 million or higher.
Business Outlook
"2013 is a very important transition period. We are working on
new initiatives to continue to cultivate the whole value chain
concept, by offering agricultural services to secure strategic
production resources, to offer efficient commercial orders and
other value-added services, to continue to engage the retail market
by introducing new product lines utilizing a brand-driven approach
to go beyond the traditional distribution channels," said Mr.
Chen.
"To achieve the goals set by our new initiatives, we believe our
new IT infrastructure, which is currently under development, will
become a crucial operation platform to provide high level resource
integration, information access, risk management, et cetera. We
expect that the platform will offer extended services to farmers in
the co-ops and clients alike, will build strategic partnerships and
serve Deyu's brand building strive. We believe the Company can
compete more effectively with our new operation approach to turn
some key barriers imposed by the conventional approaches into
strategic advantages," added Mr. Chen.
Conference Call
The Company will host a conference call on May 16, 2013 at 8:30 AM
EDT to discuss the Company's results for the first quarter
ended March 31, 2013.
To join the conference call, use the dial-in information below.
When prompted, ask for the "Deyu Agriculture Call" and/or be
prepared to provide the conference ID.
Date:
|
5/16/2013
|
Time:
|
8:30 AM
EDT
|
Conference
Line Dial-In (US):
|
877-407-9205
|
International Dial-In:
|
201-689-8054
|
Conference
ID#:
|
00414504
|
Webcast
Link:
|
http://www.investorcalendar.com/IC/CEPage.asp?ID=170988
|
Dial in at least 10 minutes before the call to ensure timely
participation. A Teleconference Replay will be available until
11:59 PM May
23, 2013. To listen, please call 877-660-6853 within
the United States or 201-612-7415
if calling internationally. Utilize the conference ID # for replay:
00414504.
About Deyu Agriculture Corp.
Deyu Agriculture Corp. is a vertically integrated producer,
processor, marketer and distributor of organic and other
agricultural products made from corn and grains operating in
Shanxi Province in the People's Republic of China. The Company
has access to over 109,000 acres of farmland in Shanxi Province for breeding, cultivating,
processing, warehousing and distributing grain and corn products.
We have a nationwide sales network covering manufacturers, grain
traders, wholesalers, distributors, institutional clients and
retail stores in China. Deyu
Agriculture Corp.'s facilities include sophisticated production
lines and modern warehouses with a total production capacity of
over 105,000 tons for grain products, storage capacity of over
100,000 tons and annual turnover of 700,000 tons for corn products.
The Company's website is located at www.deyuagri.com.
Safe Harbor Statements
This press release contains forward-looking statements made
under the "safe harbor" provisions of the U.S. Private Securities
Litigation Reform Act of 1995. Forward-looking statements are based
upon the current plans, estimates and projections of Deyu
Agriculture Corp.'s management and are subject to risks and
uncertainties, which could cause actual results to differ from the
forward looking statements. Such statements include, among others,
those concerning market and industry segment growth and demand and
acceptance of new and existing products; any projections of sales,
earnings, revenue, margins or other financial items; any statements
of the plans, strategies and objectives of management for future
operations; any statements regarding future economic conditions or
performance; uncertainties related to conducting business in
China, as well as all assumptions,
expectations, predictions, intentions or beliefs about future
events. Therefore, you should not place undue reliance on these
forward-looking statements. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: business conditions in China, general economic conditions;
geopolitical events and regulatory changes, availability of
capital, changes in the agricultural industry, the Company's
ability to maintain its competitive position. Additional
Information regarding risks can be found in the Company's quarterly
and annual reports filed with the U.S. Securities and Exchange
Commission at www.sec.gov.
Company Contact:
Mr. Greg Chen, Chief Executive
Officer
Deyu Agriculture Corp.
Tel: +1-646-499-5475
Email: gregchen@china-deyu.com
Ms. Amy He, Chief Financial
Officer
Deyu Agriculture Corp.
Tel: +86-10-8273-2870 x8522
Email: amy@china-deyu.com
Financial Tables
DEYU
AGRICULTURE CORP AND SUBSIDIARIES
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
March
31,
2013
|
|
|
December 31,
2012
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
8,996,461
|
|
|
$
|
4,937,279
|
|
Restricted cash
|
|
|
499,131
|
|
|
|
815,348
|
|
Accounts receivable, net
|
|
|
26,570,650
|
|
|
|
33,991,288
|
|
Due from related parties
|
|
|
162,604
|
|
|
|
397,214
|
|
Inventory
|
|
|
24,871,764
|
|
|
|
30,322,191
|
|
Advance to supplier
|
|
|
16,400,579
|
|
|
|
6,145,840
|
|
Prepaid expenses
|
|
|
413,962
|
|
|
|
1,453,184
|
|
Other
current assets
|
|
|
308,477
|
|
|
|
340,456
|
|
Total Current Assets
|
|
|
78,223,628
|
|
|
|
78,402,800
|
|
|
|
|
|
|
|
|
|
|
Property,
plant, and equipment, net
|
|
|
19,777,755
|
|
|
|
19,442,599
|
|
Construction-in-progress
|
|
|
1,905,392
|
|
|
|
2,614,491
|
|
Long-term
Investment
|
|
|
58,608
|
|
|
|
58,426
|
|
Intangible
assets, net
|
|
|
13,327,286
|
|
|
|
13,389,075
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
113,292,669
|
|
|
$
|
113,907,391
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Short-term loan
|
|
$
|
8,768,114
|
|
|
$
|
8,323,623
|
|
Accounts payable
|
|
|
3,564,063
|
|
|
|
5,179,729
|
|
Advance from customers
|
|
|
5,501,706
|
|
|
|
2,249,282
|
|
Accrued expenses
|
|
|
1,426,295
|
|
|
|
1,506,776
|
|
Tax payable
|
|
|
432,171
|
|
|
|
305,712
|
|
Preferred stock dividends
payable
|
|
|
116,279
|
|
|
|
229,171
|
|
Due to related parties
|
|
|
3,271,720
|
|
|
|
8,668,552
|
|
Other
current liabilities
|
|
|
536,739
|
|
|
|
986,153
|
|
Total Current Liabilities
|
|
|
23,617,087
|
|
|
|
27,448,998
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Series A
convertible preferred stock, $.001 par
value, 10,000,000 shares
authorized, 2,110,094
and 2,039,970 shares outstanding,
respectively
|
|
|
2,110
|
|
|
|
2,040
|
|
Common
stock, $.001 par value; 75,000,000 shares
authorized, 10,618,266 and 10,658,266 shares
outstanding, respectively
|
|
|
10,618
|
|
|
|
10,658
|
|
Additional paid-in capital
|
|
|
20,990,814
|
|
|
|
20,781,439
|
|
Other comprehensive income
|
|
|
6,036,644
|
|
|
|
5,737,793
|
|
Retained
earnings
|
|
|
62,603,185
|
|
|
|
59,500,134
|
|
Total
Stockholders' Equity
|
|
|
89,643,371
|
|
|
|
86,032,064
|
|
Noncontrolling Interests
|
|
|
32,211
|
|
|
|
426,329
|
|
Total
Equity
|
|
|
89,675,582
|
|
|
|
86,458,393
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Equity
|
|
$
|
113,292,669
|
|
|
$
|
113,907,391
|
|
DEYU
AGRICULTURE CORP AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME
|
(UNAUDITED)
|
|
|
|
|
|
|
For The
Three Months Ended
|
|
|
|
March
31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Net
revenue
|
|
$
|
77,167,714
|
|
|
$
|
62,739,469
|
|
Cost of
goods sold
|
|
|
(68,363,540)
|
|
|
|
(50,319,668)
|
|
Gross
Profit
|
|
|
8,804,174
|
|
|
|
12,419,801
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(3,198,595)
|
|
|
|
(4,158,372)
|
|
General
and administrative expenses
|
|
|
(1,882,867)
|
|
|
|
(1,858,774)
|
|
Total
Operating Expenses
|
|
|
(5,081,462)
|
|
|
|
(6,017,146)
|
|
Operating
income
|
|
|
3,722,712
|
|
|
|
6,402,655
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
8,100
|
|
|
|
11,538
|
|
Interest
expense
|
|
|
(175,704)
|
|
|
|
(484,544)
|
|
Non-operating income
|
|
|
813
|
|
|
|
568,346
|
|
Total
Other Expenses
|
|
|
(166,791)
|
|
|
|
95,340
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
|
3,555,921
|
|
|
|
6,497,995
|
|
Income
taxes
|
|
|
(340,433)
|
|
|
|
(201,294)
|
|
Net
income
|
|
|
3,215,488
|
|
|
|
6,296,701
|
|
Net loss
attributable to noncontrolling interests:
|
|
|
3,619
|
|
|
|
21,434
|
|
Net income
attributable to Deyu Agriculture Corp.
|
|
|
3,219,107
|
|
|
|
6,318,135
|
|
Preferred
stock dividends
|
|
|
(116,055)
|
|
|
|
(110,075)
|
|
Net income
available to common stockholders
|
|
|
3,103,052
|
|
|
|
6,208,060
|
|
Foreign
currency translation (loss) gain
|
|
|
288,602
|
|
|
|
37,273
|
|
Comprehensive income
|
|
|
3,391,654
|
|
|
|
6,245,333
|
|
Other
comprehensive income attributable to noncontrolling
interests
|
|
|
10,249
|
|
|
|
292
|
|
Comprehensive income attributable to Deyu Agriculture
Corp.
|
|
$
|
3,401,903
|
|
|
$
|
6,245,625
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to common stockholders per share - basic:
|
|
$
|
0.29
|
|
|
$
|
0.59
|
|
Net income
attributable to common stockholders per share - diluted:
|
|
|
0.25
|
|
|
|
0.50
|
|
Weighted
average number of common shares outstanding - basic
|
|
|
10,646,266
|
|
|
|
10,564,774
|
|
Weighted
average number of common shares outstanding - diluted
|
|
|
12,738,439
|
|
|
|
12,580,609
|
|
DEYU
AGRICULTURE CORP AND SUBSIDIARIES
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(UNAUDITED)
|
|
|
|
|
|
|
For The
Three Months Ended
|
|
|
|
March
31,
|
|
|
|
2013
|
|
|
2012
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
available to common stockholders
|
|
$
|
3,103,052
|
|
|
$
|
6,208,060
|
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
599,415
|
|
|
|
595,270
|
|
Allowance
for doubtful accounts
|
|
|
-
|
|
|
|
31,967
|
|
Share-based compensation
|
|
|
42,208
|
|
|
|
128,359
|
|
Preferred
stock dividends accrued
|
|
|
116,055
|
|
|
|
110,075
|
|
Common
stocks issued for services
|
|
|
(57,200)
|
|
|
|
-
|
|
Gain on
bargain purchase
|
|
|
-
|
|
|
|
(499,079)
|
|
Deferred
income tax expense (benefit)
|
|
|
-
|
|
|
|
30,327
|
|
Noncontrolling interests
|
|
|
(3,619)
|
|
|
|
(21,434)
|
|
Decrease
(increase) in current assets:
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
7,511,752
|
|
|
|
8,368,802
|
|
Related-parties trade receivable
|
|
|
235,390
|
|
|
|
539,894
|
|
Inventories
|
|
|
5,576,393
|
|
|
|
(9,326,178)
|
|
Advance to
suppliers
|
|
|
(10,215,902)
|
|
|
|
3,522,357
|
|
Prepaid
expense and other current assets
|
|
|
1,074,083
|
|
|
|
(557,328)
|
|
Increase
(decrease) in liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
(1,639,659)
|
|
|
|
602,144
|
|
Advance
from customers
|
|
|
3,239,176
|
|
|
|
(6,298,935)
|
|
Accrued
expense and other liabilities
|
|
|
(476,135)
|
|
|
|
511,846
|
|
Net cash
provided by operating activities
|
|
|
9,105,009
|
|
|
|
3,946,147
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Construction and remodeling of factory and
warehouses
|
|
|
(50,172)
|
|
|
|
-
|
|
Purchase
of machinery and equipment
|
|
|
(4,414)
|
|
|
|
(24,524)
|
|
Consideration paid for acquisition
|
|
|
-
|
|
|
|
(5,183,125)
|
|
Advances
to related parties
|
|
|
-
|
|
|
|
(78,863)
|
|
Cash held
by the Taizihu Group at acquisition date
|
|
|
-
|
|
|
|
20,272
|
|
Net cash
used in investing activities
|
|
|
(54,586)
|
|
|
|
(5,266,240)
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net
repayment of short-term loans from related parties
|
|
|
(5,735,157)
|
|
|
|
(251,834)
|
|
Net
proceeds from short-term loans from bank and others
|
|
|
417,818
|
|
|
|
261,494
|
|
Cash
released from restriction (restricted) for credit line of bank
loans
|
|
|
318,137
|
|
|
|
1,584,728
|
|
Net
repayments of short-term bank acceptance notes
|
|
|
-
|
|
|
|
(1,584,811)
|
|
Payment of
preferred dividends
|
|
|
-
|
|
|
|
(219,290)
|
|
Net cash
used in financing activities
|
|
|
(4,999,202)
|
|
|
|
(209,713)
|
|
|
|
|
|
|
|
|
|
|
EFFECT
OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS
|
|
|
7,961
|
|
|
|
23,348
|
|
|
|
|
|
|
|
|
|
|
NET
(DECREASE) INCREASE IN CASH & CASH EQUIVALENTS
|
|
|
4,059,182
|
|
|
|
(1,506,458)
|
|
CASH
& CASH EQUIVALENTS, BEGINNING BALANCE
|
|
|
4,937,279
|
|
|
|
8,741,703
|
|
CASH
& CASH EQUIVALENTS, ENDING BALANCE
|
|
$
|
8,996,461
|
|
|
$
|
7,235,245
|
|
Note: Please refer to the Company's quarterly report on Form
10-Q for the three months ended March 31,
2013 for additional notes, which are an integral part of
these consolidated financial statements.
SOURCE Deyu Agriculture Corp.