Deyu Agriculture Corp. Announces Fiscal Year 2012 Results and Schedule Results Conference Call and Website

BEIJING, March 28, 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 fiscal year ended December 31, 2012.

Fiscal Year 2012 Results:

• Net revenue was $254.0 million compared to $261.6 million in 2011;
• Gross profit was $44.7 million, increasing $1.6 million or 3.8% from $43.1 million in 2011;     
• Gross margin increased to 17.6% for 2012 from 16.5% in 2011;
• Net income available to common stockholders was $16.0 million compared to $17.3 million in 2011;
• Earnings per diluted share was $1.30 on 12.6 million shares, compared to $1.42 on 12.5 million shares in 2011.

"In 2012, in order to move to a more sustainable growth approach, we reduced our reliance on bank loans to supplement our working capital for fast growth by decreasing our overall borrowings from banks from $14.4 million to $8.3 million," said Jianming Hao, Chief Executive Officer of the Company. "Even with a slight decrease of revenue and net income, we are still very pleased with our performance this year. We believe this strategic move significantly reduced our financial risks and can benefit the Company and our shareholders in the long term.

"We are glad to see that our recent acquisition, the Taizihu Group, which has a diversified product line of grain products and large production capacity, made a revenue contribution of $23.3 million. We are also currently working on building strategic alliances with large and well-branded companies such as Wen's Food Group Co., Ltd. ("WFG") and Beijing Suning Appliance Co., Ltd. ("Suning") to build our leading position in the industry," continued Mr. Hao.

"In October 2012 we elected a new President, Greg Chen, and increased our Board with the additions of Greg and Mr. Jan Poulsen," Mr. Hao added. "With Greg's experience in strategic development and operation management, and Jan's 20+ years of experience in both asset management and business development within the food and beverage industries, we are confident that we can continue to build on our progress."

Financial Results for the Fiscal Year Ended December 31, 2012

In fiscal year 2012, the Company's net revenue was $254.0 million, compared with $261.6 million for 2011, a decrease of $7.6 million, or 2.9%. Net revenue from the Corn Division for 2012 was $151.0 million, a decrease of $26.7 million, or approximately 15.0%, as compared to $177.7 million for 2011, which was primarily due to the reduction of working capital for inventory procurement supported by bank loans and bank notes. Net revenue from our Grain Division for 2012 was $73.8 million, an increase of $33.3 million, or 82.2%, as compared to $40.5 million for 2011. The increase was a combined result of an increase of $23.3 million of sales revenue added by the Taizihu Group and an increase of $18.2 million in sales revenue derived from newly retained institutional clients in 2012, partially offset by a decrease of $8.2 million in sales revenue in retail sales in supermarkets and conventional stores caused by the reduction of the sales of unprofitable products in some stores. Net revenue from our Bulk Trading Division for 2012 was $29.2 million, a decrease of $14.2 million, or 32.7% as compared to $43.3 million for 2011. This decrease was mainly attributable to the decrease of working capital supported by bank loans and bank notes.

The Company's gross profit increased by $1.6 million, or 3.8%, from $43.1 million for 2011 to $44.7 million for 2012. The increase was a combined result of a decrease of $6.1 million in the Corn Division, an increase of $9.6 million in the Grain Division and a decrease of $1.9 million in the Bulk Trading Division. Our gross margin increased from 16.5% for 2011 to 17.6% for 2012. Gross margin for our Corn Division was 15.4% for 2012, down from 16.5% for 2011, which was mainly attributable to the continuous increase in the purchase price of raw corn and supplemental procurement from suppliers while selling prices did not increase consistently. Gross margin for the Grain Division increased from 24.9% for 2011 to 26.7% for 2012, an, which was mainly a combined result of the increase of gross margin of retail sales caused by reducing the sales of unprofitable products in some stores and the decrease of gross margin derived from the addition of new product portfolios containing mixed gross margins that targeted a wider scope of customers. Gross margin for the Bulk Trading Division was 6.0% for 2012, down from 8.3% for 2011, which was mainly attributable to the increase of percentage of sales for certain types of grains with relatively lower gross margin.

The Company's operating expenses increased $4.3 million, or 20.1%, to $25.8 million for 2012 as compared to $21.5 million for 2011. This increase was primarily a combined result of the increase of freight charges caused by the rising costs of railway freight, advertisement expenses spent on brand promotion and distribution expenses, expenses added by the Taizihu Group, increased depreciation and amortization caused by newly-acquired buildings as well as increased payroll and other expenses.

The Company had net income available to common stockholders of $16.0 million for 2012, as compared to a net income of $17.3 million for 2011, a decrease of $1.3 million, or 7.7%. Earnings per diluted share was $1.30 on 12.6 million shares for 2012, compared to $1.42 on 12.5 million shares for 2011.

Recent Updates about the Company

In February 2012, the Company acquired the Taizihu Group, which has a well-established grain product line of grain products under well recognized brand names "Huichun" and "Taizihu". In June 2012, the Company formed a supply relationship with WFG, one of the largest modern multi-industry and trans-regional livestock enterprises, to which we will provide raw corn on a non-exclusive basis. In August 2012, the Company reached an agreement with Suning, one of the largest electrical and electronic appliance retailers in China, to supply it with refined packaged grain goods valued at 18.4 million USD for its commercial use.

In October 2012, the Company registered a subsidiary named Jilin Jinglong Agriculture Development Limited in Jilin Province, one of the main corn and grain producing areas in Chinatoexplore business in Northeast China, Also in October 2012, the China National Cereals and Oils Committee selected the Company's wholly-owned subsidiary, Detian Yu, as one of China's Top 100 Grain and Oil Enterprises. And in December 2012, the Company received approximately $209,000 (RMB 1.3 million) in subsidies from the Jinzhong city government, which will be used to support Deyu's business operations as well as the construction of its grains processing projects.

Business Outlook

"With the industrial and market resources we have established in the past few years, we are growing to be a more integrated agriculture company with a nationwide sales network covering manufacturers, grain traders, wholesalers, distributors, institutional clients and retail stores in China," said Jianming Hao. "In view of this goal we are now working on a digital platform to integrate the resources in the whole supply chain, and to deliver value-added services to farmers and our clients.

"In the future, our digital platform will not only provide our current clients and farmers with enhanced services, but also facilitate the extension of Deyu's value-added services to potential clients and farmers in different regions. In addition, we believe the platform can serve as Deyu's vital branding platform in the industry and marketplace. We believe we can compete more effectively by utilizing the platform to turn some key barriers imposed by the conventional approaches into strategic advantages," added Mr. Hao.

Conference Call

The Company will host a conference call on April 2, 2013 at 8:30 AM EDT to discuss the Company's results for the fiscal year ended December 31, 2012.

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:	4/2/2013
Time:	8:30 AM EDT
Conference Line Dial-In (US):	877-407-9205
International Dial-In:	201-689-8054
Conference ID#:	411546
Webcast Link:	http://www.investorcalendar.com/IC/CEPage.asp?ID=170716

Dial in at least 10 minutes before the call to ensure timely participation. A Teleconference Replay will be available until 11:59 PM April 16, 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: 411546

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 of 20 years 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, President
Deyu Agriculture Corp.
Tel: [phone]
Email: [e-mail]

Ms. Amy He, Chief Financial Officer
Deyu Agriculture Corp.
Tel: [phone] x8522
Email: [e-mail]

 

Financial Tables

 

DEYU AGRICULTURE CORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
		December 31, 2012			December 31, 2011
Assets
Current Assets
Cash and cash equivalents		$	4,937,279		$	8,741,703
Restricted cash			815,348			1,850,999
Accounts receivable, net			33,991,288			36,167,136
Due from related parties			397,214			587,108
Inventory			30,322,191			20,314,090
Advance to supplier			6,145,840			7,233,371
Prepaid expenses			1,453,184			391,537
Assets held for sale			-			1,634,274
Other current assets			340,456			2,204,934
Total Current Assets			78,402,800			79,125,152
Property, plant, and equipment, net			19,442,599			12,355,946
Construction-in-progress			2,614,491			-
Long-term Investment			58,426			-
Other assets			-			727,535
Intangible assets, net			13,389,075			10,651,844
Total Assets		$	113,907,391		$	102,860,477
Liabilities and Equity
Current Liabilities
Short-term loan		$	8,323,623		$	14,413,480
Accounts payable			5,179,729			1,833,190
Note payables			-			1,588,840
Advance from customers			2,249,282			8,488,272
Accrued expenses			1,506,776			1,149,205
Tax payable			305,712			-
Preferred stock dividends payable			229,171			219,721
Due to related parties			8,933,843			5,445,115
Other current liabilities			720,862			583,196
Total Current Liabilities			27,448,998			33,721,019
Equity
Series A convertible preferred stock, $.001 par value,     10,000,000 shares authorized,  2,039,970 and    1,997,467 shares outstanding, respectively			2,040			1,997
Common stock, $.001 par value; 75,000,000 shares    authorized, 10,658,266 and 10,564,774 shares outstanding,    respectively			10,658			10,565
Additional paid-in capital			20,781,439			20,367,138
Other comprehensive income			5,737,793			4,831,353
Retained earnings			59,500,134			43,491,465
Total Stockholders' Equity			86,032,064			68,702,518
Noncontrolling Interests			426,329			436,940
Total Equity			86,458,393			69,139,458
Total Liabilities and Equity		$	113,907,391		$	102,860,477

 

DEYU AGRICULTURE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
		For The Years Ended
		December 31,
		2012			2011
Net revenue		$	254,046,098		$	261,576,666
Cost of goods sold			(209,325,445)			(218,480,009)
Gross Profit			44,720,653			43,096,657
Selling expenses			(16,153,096)			(13,231,094)
General and administrative expenses			(9,619,036)			(8,222,182)
Total Operating Expenses			(25,772,132)			(21,453,276)
Operating income			18,948,521			21,643,381
Interest income			37,846			42,159
Interest expense			(1,477,304)			(805,601)
Non-operating income			665,270			(180,294)
Total Other Expenses			(774,188)			(943,736)
Income from continuing operations before income taxes			18,174,333			20,699,645
Income taxes			(1,765,514)			(184,384)
Income from continuing operations			16,408,819			20,515,261
Loss from discontinued operations, net of income taxes			-			(3,891,830)
Net income			16,408,819			16,623,431
Net loss attributable to noncontrolling interests:
Net loss from continuing operations			46,599			38,673
Net loss from discontinued operations			-			1,101,255
Total net loss attributable to noncontrolling interests			46,599			1,139,928
Net income attributable to Deyu Agriculture Corp.			16,455,418			17,763,359
Preferred stock dividends			(446,748)			(427,917)
Net income available to common stockholders			16,008,670			17,335,442
Foreign currency translation (loss) gain			910,907			2,751,687
Comprehensive income			16,919,577			20,087,129
Other comprehensive income attributable to noncontrolling interests			(4,467)			(130,653)
Comprehensive income attributable to Deyu Agriculture Corp.		$	16,915,110		$	19,956,476
Amounts attributable to common stockholders:
Net income from continuing operations, net of income taxes		$	16,008,670		$	20,126,017
Discontinued operations, net of income taxes			-			(2,790,575)
Net income attributable to common stockholders		$	16,008,670		$	17,335,442
Net income attributable to common stockholders per share - basic:
Income from continuing operations		$	1.51		$	1.91
Loss from discontinuing operations			-			(0.27)
Net income attributable to common stockholders		$	1.51		$	1.64
Net income attributable to common stockholders per share - diluted:
Income from continuing operations		$	1.30		$	1.64
Loss from discontinuing operations			-			(0.22)
Net income attributable to common stockholders		$	1.30		$	1.42
Weighted average number of common shares outstanding - basic			10,598,603			10,522,432
Weighted average number of common shares outstanding - diluted			12,614,108			12,497,164

 

DEYU AGRICULTURE CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
		For The Years Ended
		December 31,
		2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income available to common stockholders		$	16,008,670		$	17,335,442
Loss from discontinued operations attributable to    Deyu Agriculture Corp.			-			2,790,575
Adjustments to reconcile net income to net cash provided    by operating activities:
Depreciation &amortization			2,297,082			979,297
Allowance for doubtful accounts			-			-
Reserve for inventory valuation			-			-
Loss on disposal of fixed assets			577			-
Share-based compensation			120,853			428,702
Preferred stock dividends accrued			446,748			219,721
Dividends paid with Series A preferred stock			-			212,420
Common stocks issued for services			114,400			78,000
Grain on bargain purchase			(499,079)			-
Deferred income tax expense (benefit)			878,746			184,384
Noncontrolling interests			(46,599)			(38,673)
Decrease (increase) in current assets:
Accounts receivable			2,649,036			(23,824,017)
Related-parties trade receivable			226,755			(494,752)
Inventories			(8,383,187)			(2,873,705)
Advance to suppliers			1,987,857			(5,840,601)
Prepaid expense and other current assets			(40,331)			(539,339)
Increase (decrease) in liabilities:
Accounts payable			2,967,217			1,584,038
Advance from customers			(6,471,286)			1,677,638
Accrued expense and other liabilities			297,336			346,492
Net cash provided by (used in) operating activities of continuing operations			12,554,795			(7,774,378)
Net cash used in operating activities of discontinued operations			-			(3,858,325)
Net cash provided by (used in) operating activities			12,554,795			(11,632,703)
CASH FLOWS FROM INVESTING ACTIVITIES
Consideration paid for acquisition			(5,501,046)			-
Construction and remodeling of factory and warehouses			(900,487)			(109,856)
Purchase of machinery and equipment			(128,383)			(3,759,859)
Advances to related parties			(33,294)			-
Cash held by the Taizihu Group at acquisition date			20,272			-
Repayment from (loan to) related parties			-			(76,995)
Prepayments for acquisition of farmland use rights			-			(76,715)
Purchase of software and other assets			-			(8,902)
Net cash used in investing activities of continuing operations			(6,542,938)			(4,032,327)
Net cash used in investing activities of discontinued operations			-			(2,476,523)
Net cash used in investing activities			(6,542,938)			(6,508,850)
CASH FLOWS FROM FINANCING ACTIVITIES
Net (repayments of) proceeds from short-term loans from    bank and others			(12,658,509)			11,349,219
Net (repayments of) proceeds from short-term bank    acceptance notes			(1,585,087)			1,547,269
Cash released from restriction (restricted) for credit line of    bank acceptance notes			1,281,894			(1,802,568)
Net proceeds from short-term loans from related parties			3,312,931			3,101,839
Payment of preferred dividends			(267,721)			(243,678)
Proceeds from capital contributions			31,702			464,180
Release of cash restricted held at a trust account			-			125,560
Net proceeds from short-term loan from others			-			952
Net cash (used in) provided by financing activities of   continuing operations			(9,884,790)			14,542,773
Net cash provided by financing activities of discontinued operations			-			5,918,988
Net cash (used in) provided by financing activities			(9,884,790)			20,461,761
EFFECT OF EXCHANGE RATE CHANGE ON CASH AND CASH EQUIVALENTS			68,509			352,429
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS			(3,804,424)			2,672,637
NET DECREASE IN CASH & CASH EQUIVALENTS FROM DISCONTINUED OPERATIONS			-			(403,208)
NET (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS FROM CONTINUING OPERATIONS			(3,804,424)			3,075,845
CASH & CASH EQUIVALENTS, BEGINNING BALANCE			8,741,703			5,665,858
CASH & CASH EQUIVALENTS, ENDING BALANCE		$	4,937,279		$	8,741,703
SUPPLEMENTAL DISCLOSURES:
Income tax paid		$	678,420		$	62
Interest paid		$	1,815,269		$	809,448
NONCASH INVESTING AND FINANCING ACTIVITIES:
Construction completed and transferred to property, plant, and equipment		$	-		$	5,914,602
Construction completed and transferred to land use rights		$	-		$	2,320,904
Obtained certificates of farmland use rights		$	-		$	8,221,569

Note: Please refer to the Company's annual report on Form 10-K for the year ended December 31, 2012 for additional notes, which are an integral part of these consolidated financial statements.

SOURCE Deyu Agriculture Corp.

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