BEIJING, May 22 /PRNewswire-FirstCall/ -- China Agritech, Inc. (BULLETIN BOARD: CAGC) , a leading agricultural products company engaged in the development, manufacturing and distribution of liquid organic compound fertilizers, today reported results for the first quarter ended March 31, 2006.
Sales revenue for the quarter grew by 14% to $5.7 million, compared to revenues of $5.0 million for the first quarter of 2005. The increase in revenues is predominantly due to the continued expansion of China Agritech's customer base into the central and southern regions of China. Approximately $1.1 million, or 19% of revenue in the quarter was attributable to new business. Operating income reached $1.9 million for the first quarter of 2006 compared to $1.1 million for the same period last year, an increase of approximately 77%. Net income exceeded $1.0 million in the first quarter of 2006, as compared to net income of $221,770 in the first quarter of 2005. Diluted earnings per common share were $0.05 and $0.02 for Q1 2006 and Q1 2005, respectively.
"We are pleased to report another profitable performance for the first quarter of 2006. Our first quarter results reflect the success of our expansion strategy into the underserved and underpenetrated regions in the central and southern provinces of China," commented Mr. Yu Chang, Chief Executive Officer of China Agritech. "We are excited about the future prospects and potential revenue contribution for China Agritech going forward."
Gross profit and gross margin in the quarter were $2.8 million and 49.6%, respectively, as compared to $2.6 million and 52.5% in the first quarter of fiscal 2005. The decline in gross margin was attributable to increased lease expense at the Harbin facility, increased shipping charges on raw materials and general equipment maintenance. Operating margins were robust at 34.0% in the current quarter versus 21.9% in the year ago period. The increase was mainly attributable to continued strong demand for the company's products as well as reduced general and administrative expenses due to transaction costs related to the reverse merger.
Financial Condition Remains Strong in 2006
The Company's financial condition remained strong during the first quarter of 2006. CAGC has approximately $9.46 million in cash on hand. Working capital increased from $10.2 million at December 31, 2005 to $22.3 million at March 31, 2006. The company has no long-term debt.
Business Outlook
"We are particularly excited about the progress we are making in terms of the expansion of our overall manufacturing capacity," said Mr. Chang. "The Company has commenced construction on manufacturing sites, hired key personnel and successfully targeted TV, radio and print outlets. Based on the demand for organic compound fertilizers, which is one of the fastest growing segments of the overall fertilizer industry, we believe that we have made solid investments in the future of China Agritech."
About China Agritech
China Agritech is a leading agricultural products company that is engaged in the development, manufacturing and distribution of organic liquid compound fertilizers and related products in the People's Republic of China. The principal markets for the company's products are to farmers located in twelve provinces of China including: Heilongjiang, Hebei, Liaonong, Jilin, Shandong, Inner Mongolia, Henan, Sichuan, Guangdong, Xinjiang, Yunnan and Guizhou. In 2005, the company had an annual production capacity of 5,000 metric tons.
The statements contained in this Release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements regarding the Company's expectations, hopes, beliefs, intentions or strategies regarding the future. These forward- looking statements are based on the Company's current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those anticipated by the Company. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond the control of the Company) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward- looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
China Agritech, Inc. (OTC BB)
Summary of Consolidated Earnings
(Unaudited)
(In Thousands of Dollars)
1Q 2006 1Q 2005
Sales $5,685,397 $4,985,120
Cost of Goods Sold 2,865,315 2,367,602
Gross Profit 2,820,082 2,617,518
Gross profit margin 49.60% 52.50%
Selling Expenses 473,508 366,814
Operating and Administrative Expenses 411,465 1,158,337
Total Operating Expenses 884,973 1,525,151
Income from Operations 1,935,109 1,092,367
Operating margin 34.00% 21.90%
Other Income (expense) (6, 110) 9
Finance Costs 119 (3)
Total Other Income (Expense) (5, 991) 6
Income before Income Taxes 1,929,118 1,092,373
Provision for Income Taxes 768,041 723,675
Income before Minority Interests 1,161,077 368,698
Minority Interests (146,749) (146,928)
Net Income 1,014,328 221,770
Other Comprehensive Income
Foreign Currency Translation Gain 74,292 0
Comprehensive Income 1,088,620 221,770
Basic and Diluted Net Earnings per
Share $0.05 $0.02
Basic and Diluted Weighted Average
Shares Outstanding 18,503,615 12,158,466
Selected Balance Sheet Data
(Unaudited)
(In Thousands of Dollars)
March 31, 2006 December 31, 2005
Cash and cash equivalents $9,460,307 $255,831
Total assets $26,108,827 $12,646,305
Working capital $22,391,005 $10,230,715
Stockholders' equity $22,220,059 $10,057,951
