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Yongye International, Inc.(YONG)

Q4 2012 Earnings Call

April 2, 2013 8:30 am ET


John Capodanno – Investor Relations Advisor-FTI Consulting

Sam Yu – Chief Financial Officer

Kelly Wang – Finance Director, Capital Market


Adam Waldo – Lismore Partners, LLC

Jared Cohen – J.M. Cohen & Company



Good day, ladies and gentlemen. Welcome to the Yongye International Fourth Quarter and Full Year 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As I reminder this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today’s call, Mr. John Capodanno. Mr. Capodanno, please proceed.

John Capodanno

Thank you, operator. Good morning, ladies and gentlemen, and welcome to Yongye International’s fourth quarter and full year 2012 earnings conference call. I am John Capodanno of FTI Consulting, Yongye’s Investor Relations Advisor. With us today are Mr. Sam Yu, Yongye’s Chief Financial Officer and Ms. Kelly Wang, Yongye’s Finance Director.

Before we start, I would like to remind our listeners that management’s prepared remarks in this call contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the Company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today due to such risks as, but not limited to, fluctuations in customer demand, management of rapid growth, intensity of competition from other providers of plant and animal nutrient products and services, general economic conditions, geopolitical events, and regulatory changes and other information detailed from time to time in the Company’s filings and future filings with the United States Securities and Exchange Commission. Although the Company believes that the expectations in such forward-looking statements are reasonable, there is no assurance that such expectations will prove to be correct.

On the call today, we will also mention adjusted financial measures during the discussion of our performance. Reconciliation of those measures to comparable GAAP information can be found in the fourth quarter and full year 2012 earnings release that was distributed yesterday. Any projections as of the Company’s future performance represent management’s estimates as of today, April 2, 2013. Yongye assumes no obligation to update these projections in the future as market conditions change.

Having now stated those formalities, I will now turn the call over to Mr. Sam Yu for a review of the Company’s developments in the fourth quarter and full year 2012.

Sam Yu

Thank you, John. Thank you everyone for joining us on the call today. I have a number of things, I would like to discuss but first, I would like to begin with the brief explanation of the delay in our filing of Form 10-K and the subsequent trading halt implemented by NASDAQ. It was necessary for the Company to delay filing its 10-K as we couldn’t complete company’s information relating to accounts receivable, and the related allowance for doubtful accounts for the year end December 31, 2012. We needed to see more accounts receivable connection from certain distributors, to determine those accounting matters before filing our 10-K.

We initially expect to collect the entire overdue balance by March 18, 2013, which was the original form taken from 10-K filing deadline with the SEC. However, on March 14, 2013, there was still a substantial portion of the overdue amount that was not received. As a result, we didn’t have sufficient subsequent collection information to analyze the realization of the account receivable and established proper amount for the allowance of doubtful accounts and/or bad debt expenses.

On March 15, 2013, we’ve filed a notification of late filing on Form 12b-25 with the SEC, the result of which automatically extended the deadline of filing the Annual Report by 15 days or through April 2, 2013. NASDAQ subsequently a halt in trading on the Yongye’s stock. At that time we had no information as to why NASDAQ elected to implement a trading halt. NASDAQ later provide the Yongye with a written request for additional information relating to the Company’s delay in filing the Form 10-K in connection of the account receivable as of the year end 2012. The current state of the Company’s audit of the financial statements to be included in the Company’s Form 10-K for the year ended December 31, 2012 and the status of the proposed going private transaction returning to the Company.

We have worked diligently to provide NASDAQ with all the necessary information they requested, and on Tuesday, March 26, we provided a full, detailed response to NASDAQ. We have not yet received a response from NASDAQ. We will maintain an open line of communications with NASDAQ, so as to address all of their concerns and ensure compliance with their regulations.

I’d like to thank everyone for their patience through this process.

Now I’d like to provide an overview of our performance during the fourth quarter and full-year 2012. Yongye had achieved an another successful year with the strong top and bottom line growth, which highlights the continued strength of our brand and the success we’re having in traditional and new markets with our sales and distribution strategy. We will remain focus on expanding our distribution networks and deepening our penetration in existing markets.

The fourth quarter is traditionally a slow one for us, and they are the strong demand to our business with 70% to 80% of full-year sales occurring during the second and third quarters annually.

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