×

Renmin Tianli Group, Inc. Reports Third Quarter 2017 Financial Results

WUHAN CITY, China, Nov. 13, 2017 /PRNewswire/ -- Renmin Tianli Group, Inc. (NASDAQ: ABAC) ("Renmin 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 nine months ended September 30, 2017.

Mr. Luchang Zhou, Chief Executive Officer of Renmin Tianli, commented, "Our third quarter revenues decreased by 13.4% to $6.79 million primarily due to a decrease in sales from our hog farming business despite continued growth of our retail business. Revenues from hog farming decreased by 15.3% to $6.21 million, primarily due to a 26.2% decrease in the average selling price per hog despite a 14.8% increase in the number of hogs sold during the third quarter. Our retail business remained strong, with revenues increasing 13.2% to $0.58 million and volume increasing by 11.7% to 121,031 kilograms. Our margins improved significantly, with gross margin improving by 5.8 percentage points to 16.7% and operating margin improving by 6.5 percentage points to 5.4%, as the severe floods in July 2016 negatively affected our margins for the third quarter of last year. The improvement in margins was also a result of ongoing cost control efforts on employee payrolls. Looking ahead, we expect hog pricing to remain the biggest uncertainty facing our business."

Third Quarter 2017 Financial Results


For the Three Months Ended September 30,

($ thousands, except per share data)

2017


2016


% Change

Revenues

$ 6,791


$ 7,841


-13.4%

Hog farming

6,207


7,326


-15.3%

Retail

583


516


13.2%

Gross margin

16.7%


10.9%


5.8 pp

Operating margin

5.4%


-1.1%


6.5 pp

Net Income (loss)

385


(2,833)


113.6%

Net income from continuing operations

385


(1,783)


121.6%

Gain (loss) from operations of discontinued component

-


(1,050)


NM

Net income (loss) for common shareholders

385


(2,707)


114.2%

Revenues for the third quarter of 2017 decreased by $1.05 million, or 13.4%, to $6.79 million from $7.84 million for the same period of last year. The decrease in revenues reflected the impact from lower prices for regular market hogs and black hogs, and fewer black hogs available for sale.

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $1.12 million, or 15.3%, to $6.21 million for the third quarter of 2017 from $7.33 million for the same period of last year. The Company sold a total of 35,014 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $177 per hog during the third quarter of 2017, compared to 30,500 hogs sold and a blended average selling price of $240 per hog for the same period of last year.














For the Three Months Ended September 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

3,962


$ 251


$ 996


3,660


$ 248


$ 909

Market hogs- regular hogs

19,978


151


3,014


14,229


221


3,151

Market hogs- black hogs

11,074


198


2,197


12,611


259


3,266

Total Hog Farming

35,014


177


6,207


30,500


240


7,326






Kilogram


Average
Price/kg ($)


Sales
($ thousands)


Kilogram


Average
Price/kg ($)


Sales
($ thousands)

Retail- specialty black hog pork products

121,031


$ 5


583


108,390


$ 5


516

Revenues for the third quarter of 2017 from regular breeder hog sales increased by 9.5% to $1.00 million with the number of regular breeder hogs sold increasing by 8.3% to 3,962 hogs and the average selling price of regular breeder hogs increasing by 1.2% to $251 per hog. Revenues for the third quarter of 2017 from regular market hog sales decreased by 4.3% to $3.01 million as the number of regular market hogs sold increased by 40.4% to 19,978 hogs while the average selling price of regular market hogs decreased by 31.7% to $151 per hog. Revenues for the third quarter of 2017 from black market hogs decreased by 32.7% to $2.20 million with the number of black hogs sold decreasing by 12.2% to 11,074 hogs and the average selling price of black hogs decreasing by 23.6% to $198 per hog.

We sold 121,031 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.58 million for the third quarter of 2017. This compares to108,390 kilograms sold at approximately $5 per kilogram and revenues of $0.52 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $2.78 million in revenues from our black hog program for the third quarter of 2017, compared to $3.78 million for the same period of last year.

Gross profit

Cost of goods sold decreased by $1.33 million, or 19.0%, to $5.66 million for the third quarter of 2017 from $6.98 million for the same period of last year. Cost of goods sold for hog farming decreased by $1.32 million, or 20.1%, to $5.27 million for the third quarter of 2017 from $6.59 million for the same period of last year. Cost of goods sold for retail decreased by $5,000, or 1.3%, to $0.39 million for the third quarter of 2017 from $0.39 million for the same period of last year.

Overall gross profit increased by $0.28 million, or 32.2%, to $1.13 million for the third quarter of 2017 from $0.86 million for the same period of last year. This increase in our gross profit was primarily related to an increase in gross profit of $0.20 million, or 27.7%, for our hog farming segment. Gross profits for hog farming and retail were $0.94 million and $0.19 million, respectively, for the third quarter of 2017, compared to $0.74 million and $0.12 million, respectively, for the same period of last year.

Overall gross margin was 16.7%, with gross margins for hog farming and retail of 15.1% and 33.2%, respectively, for the third quarter of 2017. This compared to overall gross margin of 10.9%, and gross margins for hog farming and retail of 10.0% and 23.5%, respectively, for the same period of last year. The improvement in our gross margin for hog farming was mainly from the absence in 2017 of an expense comparable to that recorded in 2016 as a result of the flood damage which was included as part of the cost of goods sold in 2016. The improvement in gross profit and gross margin 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 $0.18 million, or 19.0%, to $0.77 million for the third quarter of 2017 from $0.95 million for the same period of last year. The decrease was primarily the result of cost control over employee payrolls. Operating income for the third quarter of 2017 was $0.37 million, compared to operating loss of $0.09 million for the same period of last year. Operating margin for the third quarter of 2017 was 5.4%, compared to operating loss margin of 1.1% for the same period of last year.

Net income

Net income was $0.39 million for the third quarter of 2017, compared to net loss of $2.83 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $0.39 million for the third quarter of 2017, compared to a loss of $1.78 million for the same period of last year. Net income for the third quarter of 2016 was adversely impacted by the net loss from our discontinued operation, Hang-ao, which was $1.05 million for the third 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 third quarter of 2017 was $0.39 million, compared to net loss of $2.71 million for the same period of last year.

Nine Months Ended September 30, 2017 Financial Results


For the Nine Months Ended September 30,

($ thousands, except per share data)

2017


2016


% Change

Revenues

$ 19,694


$ 26,511


-25.7%

Hog farming

17,742


25,197


-29.6%

Retail

1,952


1,315


48.4%

Gross margin

14.8%


19.4%


-4.6 pp

Operating margin

2.3%


8.0%


-5.7 pp

Net income (Loss)

483


(2,502)


119.3%

Net income from continuing operations

483


570


-15.3%

Gain (loss) from operations and disposal of discontinued component

-


(3,073)


NM

Net income (loss) for common shareholders

483


(2,134)


122.6%

Revenues for the nine months ended September 30, 2017 decreased by $6.82 million, or 25.7%, to $19.69 million from $26.51 million for the same period of last year. The reduction in revenues is continuing to reflect the impact from the ongoing weak demand for regular breeder hogs, which also reduces prices for regular hogs and black hogs, and the reduction in the number of black hogs available for sale after the 2016 flood damage.

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $7.46 million, or 29.6%, to $17.74 million for the nine months ended September 30, 2017 from $25.20 million for the same period of last year. The Company sold a total of 97,410 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $182 per hog during the nine months ended September 30, 2017, compared to 99,446 hogs sold and a blended average selling price of $253 per hog for the same period of last year.


For the Nine Months Ended September 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

10,143


$ 248


$ 2,519


12,096


$ 251


$ 3,042

Market hogs- regular hogs

54,694


154


8,442


46,119


227


10,458

Market hogs- black hogs

32,573


208


6,781


41,231


284


11,697

Total Hog Farming

97,410


182


17,742


99,446


253


25,197






Kilogram


Average
Price/kg ($)


Sales
($ thousands)


Kilograms


Average
Price/kg ($)


Sales
($ thousands)

Retail- specialty black hog pork products

395,835


$ 5


$ 1,952


276,142


$ 5


$ 1,315

Revenues for the nine months ended September 30, 2017 from regular breeder hog sales decreased by 17.2% to $2.52 million with the number of regular breeder hogs sold decreasing by 16.1% to 10,143 hogs and the average selling price of regular breeder hogs decreasing by 1.2% to $248 per hog. Revenues for the nine months ended September 30, 2017 from regular market hog sales decreased by 19.3% to $8.44 million as the number of regular market hogs sold increased by 18.6% to 54,694 hogs while the average selling price of regular market hogs decreased by 32.2% to $154 per hog. Revenues for the nine months ended September 30, 2017 from black market hogs decreased by 42.0% to $6.78 million with the number of black hogs sold decreasing by 21.0% to 32,573 hogs and the average selling price of black hogs decreasing by 26.8% to $208 per hog.

We sold 395,835 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $1.95 million for the nine months ended September 30, 2017. This compares to 276,142 kilograms sold at approximately $5 per kilogram and revenues of $1.32 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $8.73 million in revenues from our black hog program for the nine months ended September 30, 2017, compared to $13.01 million for the same period of last year.

Gross profit

Cost of goods sold decreased by $4.59 million, or 21.5%, to $16.79 million for the nine months ended September 30, 2017 from $21.37 million for the same period of last year. Cost of goods sold for hog farming decreased by $4.90 million, or 24.0%, to $15.48 million for the nine months ended September 30, 2017 from $20.38 million for the same period of last year. The decrease in cost of goods sold for hog farming was primarily due to lower sales volume, which was partly offset by increased feed costs. In addition, large hogs normally require more feed to maintain their daily diet and are sold to pork dealers directly. To efficiently control our production costs during the downtrend cycle, we sold our regular market hogs at younger ages which can improve our inventory turnover rate and reduce relevant inventory maintenance cost. Cost of goods sold for retail increased by $0.47 million, or 56.5%, to $1.30 million for the nine months ended September 30, 2017 from $0.83 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 $2.23 million, or 43.4%, to $2.91 million for the nine months ended September 30, 2017 from $5.14 million for the same period of last year. This decrease in our gross profit reflected a decrease in gross profit of $2.56 million for our hog farming segment partially offset by improvement in our retail sales. Gross profits for hog farming and retail were $2.26 million and $0.65 million, respectively, for the nine months ended September 30, 2017, compared to $4.82 million and $0.32 million, respectively, for the same period of last year.

Overall gross margin was 14.8%, with gross margins for hog farming and retail of 12.7% and 33.2%, respectively, for the nine months ended September 30, 2017. This compared to overall gross margin of 19.4%, and gross margins for hog farming and retail of 19.1% and 24.4%, respectively, for the same period of last year. The reduction in our gross margin from our Hog Farming segment was due to the reduced selling prices for regular market hogs and black market hogs during the period. During the nine months ended September 30, 2017, we sold more large regular market hogs to pork dealers than the same period in 2016. However, the reduced sales 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 and gross margin 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 $0.57 million, or 18.7%, to $2.46 million for the nine months ended September 30, 2017 from $3.02 million for the same period of last year. The decrease was primarily the result of cost control over employee payrolls. Operating income for the nine months ended September 30, 2017 was $0.45 million, compared to $2.11 million for the same period of last year. Operating margin for the nine months ended September 30, 2017 was 2.3%, compared to 8.0% for the same period of last year.

Net income (loss)

Net income was $0.48 million for the nine months ended September 30, 2017, compared to net loss of $2.50 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $0.48 million for the nine months ended September 30, 2017, compared to $0.57 million for the same period of last year. Net income for the nine months ended September 30, 2016 was adversely impacted by the net loss from our discontinued operation, Hang-ao, which was $3.07 million for the nine months ended September 30, 2016. Hang-ao was sold on December 23, 2016.

After the deduction for non-controlling interests, net income attributable to common shareholders for the nine months ended September 30, 2017 was $0.48 million, compared to net loss of $2.13 million for the same period of last year.

Financial Condition

As of September 30, 2017, the Company had cash and cash equivalents of $60.39 million, compared to $54.46 million at the end of 2016. Working capital as of September 30, 2017 was $62.64 million as compared to $57.50 million at December 31, 2016. Net cash provided by operating activities was $3.92 million for the nine months ended September 30, 2017, compared to $9.99 million for the same period of last year. Net cash used in investing activities was $nil for the nine months ended September 30, 2017, compared to $3.10 million for the same period of last year. Net cash used in financing activities was $0.59 million for the nine months ended September 30, 2017, compared to $0.30 million for the same period of last year.

About Renmin Tianli Group, Inc.

Renmin Tianli Group, Inc. (the "Company"), previously known as Aoxin Tianli Group, 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
Weitian Group LLC
Phone: +1-732-910-9692
Email: tony.tian@weitian-ir.com

RENMIN TIANLI GROUP, INC. AND SUBSIDIARIES

(FORMERLY KNOWN AS "AOXIN TIANLI GROUP, INC.)

CONSOLIDATED BALANCE SHEETS








September 30,


December 31,



2017


2016



(Unaudited)



ASSETS





Current Assets:





Cash

$

60,390,668

$

54,458,026

Accounts receivable


87,278


60,283

Inventories


5,334,098


5,506,085

Advances to suppliers


-


1,129,477

Prepaid expenses


9,102


112,676

Other receivables


303,681


293,377

Total Current Assets


66,124,827


61,559,924






Long-term prepaid expenses, net


1,254,019


1,196,989

Plant and equipment, net


20,312,898


21,113,840

Biological assets, net


1,947,494


1,901,744

Intangible assets, net


2,360,303


2,403,637






Total Assets

$

91,999,541

$

88,176,134






LIABILITIES AND STOCKHOLDERS' EQUITY










Current Liabilities:





Short-term loans

$

2,109,419

$

2,591,793

Accounts payable and accrued payables


16,265


5,327

Other payables


1,363,980


1,465,164

Total Current Liabilities


3,489,664


4,062,284






Stockholders' Equity:





Common stock ($0.004 par value, 25,000,000
shares authorized, 7,983,745 shares issued
and outstanding as of September 30, 2017 and
7,988,245 shares issued and outstanding as of
December 31, 2016)


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


27,318,307


26,835,585

Accumulated other comprehensive income


(2,652,590)


(6,565,895)

Total Stockholders' Equity


88,509,877


84,113,850

Total Liabilities and Stockholders' Equity

$

91,999,541

$

88,176,134






See accompanying notes to unaudited consolidated financial statements

RENMIN TIANLI GROUP, INC. AND SUBSIDIARIES

(FORMERLY KNOWN AS "AOXIN TIANLI GROUP, INC.)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(UNAUDITED)












For the Three Months Ended September 30,


For the Nine Months Ended September 30,



2017


2016


2017


2016



















Revenues

$

6,790,580

$

7,841,371

$

19,693,731

$

26,511,428

Cost of goods sold


5,656,305


6,983,613


16,786,328


21,374,328

Gross profit


1,134,275


857,758


2,907,403


5,137,100










Operating expenses:









General and administrative expenses


686,415


843,205


2,219,404


2,701,269

Selling expenses


81,845


104,702


238,173


322,893

Total operating expenses


768,260


947,907


2,457,577


3,024,162










Income (loss) from operations


366,015


(90,149)


449,826


2,112,938










Other income (expense):









Interest income


17,991


1,422


29,660


142,871

Flood damange


-


(1,695,338)


-


(1,695,338)

Other income


1,200


1,005


3,236


9,670

Total other income (expense)


19,191


(1,692,911)


32,896


(1,542,797)










Income (loss) before income taxes


385,206


(1,783,060)


482,722


570,141










Income taxes


-


-


-


-

Net income (loss) from continuing operations


385,206


(1,783,060)


482,722


570,141










Discontinued operations:









Loss from operations of discontinued component, net of
taxes


-


(1,050,327)


-


(3,072,531)










Net income (loss)


385,206


(2,833,387)


482,722


(2,502,390)

Net loss attributable to noncontrolling interest


-


126,040


-


368,704

Net income (loss) attributable to Renmin Tianli Group Inc.
common stockholders


385,206


(2,707,347)


482,722


(2,133,686)










Other comprehensive income(loss):









Unrealized foreign currency translation adjustment


1,832,853


(327,849)


3,913,305


(2,463,136)










Comprehensive income (loss)

$

2,218,059

$

(3,035,196)

$

4,396,027

$

(4,596,822)










Earnings (loss) per share attributable to Renmin Tianli
Group Inc. common stockholders - basic and diluted:









Weighted-average shares outstanding, basic and diluted


7,983,745


7,988,000


7,984,995


8,134,208










Continuing operations - Basic & diluted

$

0.05

$

(0.22)

$

0.06

$

0.07

Discontinued operations - Basic & diluted

$

-

$

(0.13)

$

-

$

(0.38)










See accompanying notes to unaudited consolidated financial statements

RENMIN TIANLI GROUP, INC. AND SUBSIDIARIES

(FORMERLY KNOWN AS "AOXIN TIANLI GROUP, INC.")

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








For the Nine Months Ended September 30,



2017


2016











CASH FLOWS FROM OPERATING ACTIVITIES





Net income from continuing operations

$

482,722

$

570,141

Adjustments to reconcile net incometo net cash





provided by operating activities:





Depreciation and amortization


2,183,253


2,038,110

Amortization of prepaid expenses


126,250


379,683

Amortization of long-term prepaid expenses


78,283


80,878

Stock-based compensation


6,023


18,069

Fire damage


-


22,319

Flood damage


-


1,695,338

Destructured inventories from floods


-


504,278

Destrictured biological assets from floods


-


164,837

Loss from disposal of biological assets


75,954


530,366

Changes in operating assets and liabilities:





Accounts receivable


(23,623)


100,259

Inventories


1,042,803


3,959,585

Prepaid expenses


(27,247)


(188,329)

Other receivables


3,236


(1,679)

Long-term prepaid expenses


(79,712)


(725)

Accounts payable and accrued payables


10,436


37,544

Other payables


36,784


70,671

Total adjustments


3,432,440


9,411,204

Net cash provided by operating activitiesfrom continuing
operations


3,915,162


9,981,345

Net cash provided by operating activitiesfrom discontinued
operations


-


6,401

Net cash provided by operating activities


3,915,162


9,987,746






CASH FLOWS FROM INVESTING ACTIVITIES





Purchase of biological assets


-


(106,379)

Purchase of plant and equipment


-


(2,988,644)

Net cash used in investing activities from continuing
operations


-


(3,095,023)

Net cash provided by investing activities from discontinued
operations


-


-

Net cash used in investing activities


-


(3,095,023)






CASH FLOWS FROM FINANCING ACTIVITIES





Restricted cash received from banks


-


9,118,236

Proceeds from short-term loans


2,059,338


2,735,471

Repayment of short-term loans


(2,647,721)


(12,157,648)

Net cash used infinancing activitiesfrom continuing
operations


(588,383)


(303,941)

Net cash provided byfinancing activities from discontinued
operations


-


-

Net cash used infinancing activities


(588,383)


(303,941)






EFFECT OF EXCHANGE RATE CHANGES ON CASH


2,605,863


(1,524,182)






NET INCREASE IN CASH


5,932,642


5,064,600






CASH, BEGINNING OF PERIOD


54,458,026


49,656,897






CASH, END OF PERIOD

$

60,390,668

$

54,721,497






SUPPLEMENTAL DISCLOSURES:





Cash paid during the period for:





Interest paid

$

100,166

$

38,626

Income tax paid

$

-

$

-






NON-CASH TRANSACTIONS OF INVESTING AND
FINANCING ACTIVITIES





Inventories received from prior year prepayments

$

1,153,850

$

6,101,038

Inventories transferred to biological assets

$

528,487

$

1,230,592

Cancelation of shares related to Hang-ao acquisition

$

-

$

1,047

Cancelation of shares related to employees' compensation

$

18

$

361,080






See accompanying notes to unaudited consolidated financial statements

View original content:http://www.prnewswire.com/news-releases/renmin-tianli-group-inc-reports-third-quarter-2017-financial-results-300554529.html

SOURCE Renmin Tianli Group, Inc.