Aoxin Tianli Group, Inc. Reports First Quarter of 2016 Financial Results

WUHAN CITY, China, May 12, 2016 /PRNewswire/ -- Aoxin Tianli Group, Inc. (NASDAQ:ABAC) ("Aoxin Tianli" or the "Company"), a leading producer of breeder hogs, market hogs and black hogs, as well as specialty processed black hog pork products sold through retail and the internet, today announced its financial results for the first quarter ended March 31, 2016.

Ms. Hanying Li, Chairwoman and Chief Executive Officer of Aoxin Tianli Group, Inc., commented, "Our revenues decreased by 5.5% in the first quarter, resulting from a 19.8% reduction in the number of hogs sold which was partially offset by an 18.5% increase in the average selling price ("ASP") for hogs. The decrease in the number of hogs sold was a result of reduction in capacity of 20,000 hogs due to the sales of Farm 2 and 3 during the third quarter of 2015. The increase in ASP reflected improving market condition in the first quarter, particularly during the Chinese New Year holiday season. The number of black market hogs sold also decreased slightly by 2.8% in the first quarter as a result of decreased production by the independent farmers in our black hog program."

Three Months Ended March 31, 2016 Financial Results

Revenues

Revenues for the three months ended March 31, 2016 decreased by $0.53 million, or 5.5%, to $9.06 million from $9.59 million for the same period of last year. The reduction in revenues reflected a reduction in the number of hogs sold as a result of the sale of two hog farms during the third quarter of 2015 and was partially offset by improved prices for market hogs.

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $0.45 million, or 5.0%, to $8.64 million for the three months ended March 31, 2016 from $9.09 million for the same period of last year. The Company sold a total of 35,112 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $246 per hog during the three months ended March 31, 2016, compared to 43,795 hogs sold and a blended average selling price of $208 per hog for the same period of last year.

Revenues for the three months ended March 31, 2016 from regular breeder hog sales decreased by 42.0% to $1.09 million with the number of regular breeder hogs sold decreasing by 39.6% to 4,340 hogs and the average selling price of regular breeder hogs decreasing by 4.0% to $252 per hog. Revenues for the three months ended March 31, 2016 from regular market hog sales decreased by 10.8% to $3.48 million as the number of regular market hogs sold decreased by 25.4% to 15,930 hogs while the average selling price of regular market hogs increased by 19.5% to $219 per hog. Revenues for the three months ended March 31, 2016 from black market hogs increased by 23.0% to $4.06 million with the number of black hogs sold decreasing by 2.8% to 14,842 hogs and the average selling price of black hogs increasing by 26.9% to $274 per hog. The decrease in black hogs sold was primarily a result of decreased production by the independent farmers in our black hog program. We anticipate that as the production of these farmers reaches capacity, the number of black hogs available for sale will level off.

We sold 87,384 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $0.42 million for the three months ended March 31, 2016. This compares to 114,932 kilograms sold at approximately $4 per kilogram and revenues of $0.50 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $4.48 million in revenues from our black hog program for the three months ended March 31, 2016, compared to $3.80 million for the same period of last year.

The results of operations of Hang-ao and OV Orange and their wholly owned subsidiaries, were reclassified as discontinued operations in the Company's financial statements for the three months ended March 31, 2016 and 2015 based on the Company's decision to focus on the hog industry and sell both subsidiaries and relevant businesses in the near future. OV Orange was sold on December 29, 2015. We have not found a buyer for Hang-ao as of today.

Gross profit

Cost of goods sold decreased by $1.09 million, or 13.5%, to $6.96 million for the three months ended March 31, 2016 from $8.04 million for the same period of last year. Cost of goods sold for hog farming decreased by $1.02 million, or 13.3%, to $6.65 million for the three months ended March 31, 2016 from $7.66 million for the same period of last year, benefitting from a reduction in the purchase prices for our feeds and the sale of two farms during the third quarter of 2015. Cost of goods sold for retail decreased by $0.07 million, or 17.6%, to $0.31 million for the three months ended March 31, 2016 from $0.38 million for the same period of last year.

Overall gross profit increased by $0.56 million, or 36.0%, to $2.10 million for the three months ended March 31, 2016 from $1.54 million for the same period of last year, mainly due to a decrease in cost of goods sold for hog farming as aforementioned.

Gross profits for hog farming and retail were $1.99 million and $0.11 million, respectively, for the three months ended March 31, 2016, compared to $1.43 million and $0.12 million, respectively, for the same period of last year.

Overall gross margin was 23.2%, with gross margins for hog farming and retail of 23.1% and 25.2%, respectively, for the three months ended March 31, 2016. This compared to overall gross margin of 16.1%, and gross margins for hog farming and retail of 15.7% and 23.4%, respectively, for the same period of last year.

Operating income (loss)

Total operating expenses, including general and administrative expenses and selling and marketing expenses, decreased by $0.79 million, or 43.1%, to $1.05 million for the three months ended March 31, 2016 from $1.84 million for the same period of last year. The decrease was primarily the result of a cancelation of a stock grant to key employees which generated non-cash compensation expense of $0.36 million, a decrease of $0.25 million in our depreciation and amortization expenses as a result of the disposal of two hog farms during the third quarter of 2015, and a decrease of $0.12 million in bad debt expense.

Operating income for the three months ended March 31, 2016 was $1.05 million, compared to an operating loss of $0.30 million for the same period of last year. Operating margin for the three months ended March 31, 2016 was 11.6%, compared to operating loss of 3.1% for the same period of last year.

Net income (loss)

Net loss increased by $0.06 million, or 26.6%, to $0.27 million for the three months ended March 31, 2016 from $0.22 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail, was $1.14 million for the three months ended March 31, 2016, compared to a net loss of $0.36 million for the same period of last year. The operating results of our discontinued operations, Hang-ao and OV Orange, decreased significantly from net income of $0.14 million for the first quarter of 2015 to net loss of $1.41 million for the same period of 2016. After the deduction of non-controlling interests, net loss attributable to common shareholders for the three months ended March 31, 2016 was $0.10 million, or $0.003 loss per diluted share. This compared to net loss attributable to common shareholders of $0.24 million, $0.007 loss per diluted share, for the same period of last year.

Financial Condition

As of March 31, 2016, the Company had cash and cash equivalents of $51.72 million, compared to $49.66 million at the end of 2015. Working capital as of March 31, 2016 was $62.70 million as compared to $63.98 million at December 31, 2015. Net cash provided by operating activities was $3.24 million for the three months ended March 31, 2016, compared to $3.37 million for the same period of last year. Net cash used in investing activities was $1.61 million for the three months ended March 31, 2016, primarily for purchases of new equipment for our hog farms. This compared to net cash provided by investing activities of $1.62 million for the same period of last year, mostly generated by our discontinued operations. Net cash used in financing activities was $nil for the three months ended March 31, 2016, compared to $3.66 million used in financing activities for the same period of last year.

Company Update

On March 23, 2016, the Company announced it received a letter from NASDAQ, granting the Company an additional 180-day period, or until September 19, 2016, to regain compliance with NASDAQ's minimum $1.00 bid price per share rule (the "Bid Price Rule") for continued listing on the NASDAQ Capital Market.

Earnings Conference Call

Aoxin Tianli will host an earnings conference call and live webcast covering its first quarter of 2016 financial results at 8:00 a.m. ET on May 12, 2016, which is 8:00 p.m. in Beijing on May 12, 2016. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "AoxinTianli / ABAC".

For those unable to participate, an audio replay of the call will be available beginning approximately one hour after the end of the live call through May 19, 2016. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access ID No. 10086002.

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as Tianli Agritech, 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. The Company also owns an 88% equity interest in Hubei Hang-ao Servo-valve Manufacturing Technology Co., Ltd. ("Hang-ao"), which the Company acquired in July 2014 and currently is seeking to sell.

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:

Tina Xiao
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com

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