WUXI, China, May 15, 2014 /PRNewswire-FirstCall/ -- Cleantech
Solutions International, Inc. ("Cleantech Solutions" or "the
Company") (NASDAQ: CLNT), a manufacturer of metal components and
assemblies used in various clean technology and manufacturing
industries and textile dyeing and finishing machines, today
announced its financial results for the three months ended
March 31, 2014.
"We began the year on solid footing, generating profitable
growth and strong operating cash flow. Our dyeing machine segment
continues to see strong momentum as an increasing number of textile
manufacturers are purchasing our low-emission airflow dyeing
machines and other equipment in view of the Chinese government's
more aggressive pollution control requirements in the dyeing
industry. In our forged products business, sales to customers in
the wind power industry were relatively flat as we shifted our
focus to customers in industries with more favorable growth
dynamics," said Mr. Jianhua Wu,
Chairman and CEO of Cleantech Solutions. "We continue to increase
capacity of our dyeing equipment segment and introduce new products
to help drive future growth."
First Quarter 2014 Results
Revenue for the first quarter of 2014 increased 27.0% to
$17.6 million, compared to
$13.9 million for the same period of
2013.
Revenue growth was primarily driven by sales of dyeing and
finishing equipment due to demand for the Company's low-emission
airflow dyeing machines, which enable manufacturers to meet
China's stricter environmental
standards. In addition, the Company experienced a strong increase
in sales of forged products from customers in industries other than
wind power.
The increase in revenue is summarized as follows:
- Revenue from the dyeing and finishing equipment segment
increased 27.5% to $9.4 million,
compared to $7.4 million for the
first quarter of 2013.
- Revenue from the sale of forged rolled rings to other
industries rose 59.0% to $4.5
million, compared with $2.8
million for the comparable period of the prior year.
- Revenue from the sale of forged rolled rings for the wind power
industry rose 1.6% to $3.8 million,
compared to $3.7 million for the
comparable period last year.
Gross profit for the first quarter of 2014 increased 36.5% to
$4.3 million, compared to
$3.1 million for the same period in
2013. Gross margin increased to 24.2% during the first quarter of
2014 compared to 22.5% for the same period a year ago. The increase
in gross margin for the first quarter was primarily attributable to
(i) increased operational and cost efficiencies for both the forged
rolled rings and related products and dyeing and finishing
equipment segments, reflecting the allocation of fixed costs,
primarily consisting of depreciation, over a higher production
level and (ii) a slight decrease in raw materials costs in the
forged rolled rings and related products segment.
Operating expenses rose 18.0% to $1.0
million, compared to $0.8
million in the comparable period last year. The increase was
primarily due to a higher selling, general and administrative
expenses associated with higher payroll and related benefits,
travel and entertainment and shipping expenses associated with
expanding the business along with research and development expense
related to the Company's new dyeing equipment.
Operating income was $3.3 million,
up from $2.3 million in the same
period of 2013. Operating margin was 18.6% compared to 16.5% in the
first quarter last year.
EBITDA, a non-GAAP measurement, which adds back to net income
interest expense, income tax, depreciation and amortization, was
$5.3 million, up from $3.9 million in the first quarter last year. The
calculation of EBITDA is shown in a table following the financial
statements.
Net income for the first quarter of 2014 was $2.4 million, or $0.68 per basic and diluted share, compared to
$1.6 million, or $0.56 per basic and diluted share, in the first
quarter of 2013.
Financial Condition
As of March 31, 2014, Cleantech
Solutions held cash and cash equivalents of $2.0 million compared with $1.1 million at December
31, 2013. Accounts receivable were $13.7 million and total current assets were
$23.3 million as of March 31, 2014. The Company had $3.1 million in short-term bank loans payable at
March 31, 2014, relatively unchanged
from December 31, 2013. Stockholders'
equity was $93.1 million at
March 31, 2014.
In the first quarter of 2014, the Company generated $3.8 million in cash flow from operations. During
the quarter, the Company had approximately $2.9 million in capital expenditures to expand
production capabilities and purchase equipment for its dyeing and
finishing equipment segment.
Recent Events
In April 2014, the Company's board
of directors appointed Mr. Frank
Zhao as an independent director and chairman of the audit
committee.
In March 2014, the Company signed
an operating lease agreement related to the lease of ESR equipment,
which was used in 2010 and 2011 to produce forged products for the
high performance components market. The operating lease commenced
on April 1, 2014 and has an eight
year term. Rental payments are recorded as rental revenue over the
lease term as earned and the equipment will be depreciated over its
estimated useful life of eight years starting April 1, 2014.
Business Outlook
"Looking ahead, we hold a positive outlook for our business for
the rest of the year. We expect environmental factors in
China to continue to drive textile
manufacturers to replace old and inefficient equipment with more
environmentally friendly models. We continue to see strong order
flow for our low emission airflow dyeing machines and
after-treatment compacting machines and we are currently developing
a new garment washing machine for denim. We plan to gradually
increase production capacity in our dyeing machine segment to meet
demand."
"We intend to devote a greater marketing effort for sales of
forged products to customers in heavy equipment industries, putting
less emphasis on the wind power industry. We remain optimistic that
we will generate sales from our products for the oil and gas
industry in 2014, although we have not received any orders to date
and we cannot predict the size or timing of any sales or whether we
will receive orders," Mr. Wu concluded.
Conference Call
Cleantech Solutions will conduct a conference call at
9:00 a.m. Eastern Time on
Friday, May 16, 2014 to discuss
financial results for the first quarter ended March 31, 2014.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: (877) 679-2987. International callers should
dial (646) 502-5131 and enter pin code 792243.
If you are unable to participate in the conference call at this
time, a replay will be available starting an hour after the
conference call through 10:00 A.M. ET
June 15, 2014. To access the replay,
dial (866) 345-5132 and enter pin code 212637.
Use of Non-GAAP Financial Measures
The Company has included in this press release certain non-GAAP
financial measures. The Company believes that both management and
investors benefit from referring to these non-GAAP financial
measures in assessing the performance of the Company and when
planning and forecasting future periods. Readers are cautioned not
to view non-GAAP financial measures on a stand-alone basis or as a
substitute for GAAP measures, or as being comparable to results
reported or forecasted by other companies, and should refer to the
reconciliation of GAAP measures with non-GAAP measures also
included herein.
About Cleantech Solutions International
Cleantech Solutions is a manufacturer of metal components and
assemblies, primarily used in clean technology and other
industries. The Company supplies forging products, fabricated
products and machining services to a range of clean technology
customers and supplies dyeing and finishing equipment to the
textile industry. The Company's website is
www.cleantechsolutionsinternational.com. Any information on the
Company's website or any other website is not a part of this press
release.
Safe Harbor Statement
This release contains certain "forward-looking statements"
relating to the business of the Company and its subsidiary and
affiliated companies. These forward looking statements are often
identified by the use of forward-looking terminology such as
"believes," "expects" or similar expressions. Such forward looking
statements involve known and unknown risks and uncertainties that
may cause actual results to be materially different from those
described herein and in the conference call referred to in this
press release as anticipated, believed, estimated or expected.
Investors should not place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of a
variety of factors, including those discussed in the Company's
periodic reports that are filed with the Securities and Exchange
Commission and available on its website, including factors
described in "Risk Factors" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in our
Form 10-K for the year ended December 31,
2013 and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our Form 10-Q for the
quarter ended March 31, 2014. All
forward-looking statements attributable to the Company or to
persons acting on its behalf are expressly qualified in their
entirety by these factors other than as required under the
securities laws. The Company does not assume a duty to update these
forward-looking statements.
Company Contacts:
Cleantech Solutions International,
Inc.
Adam Wasserman, CFO
E-mail: adamw@cleantechsolutionsinternational.com
Web: www.cleantechsolutionsinternational.com
Compass Investor Relations
Elaine Ketchmere, CFA
Email: eketchmere@compass-ir.com
+1-310-528-3031
Web: www.compassinvestorrelations.com
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
March 31,
|
|
|
2014
|
|
2013
|
|
|
|
|
|
REVENUES
|
|
$
17,635,271
|
|
$
13,884,699
|
COST OF
REVENUES
|
|
13,361,985
|
|
10,754,609
|
GROSS
PROFIT
|
|
4,273,286
|
|
3,130,090
|
OPERATING
EXPENSES:
|
|
|
|
|
Depreciation
|
|
109,859
|
|
107,214
|
Selling,
general and administrative
|
|
887,470
|
|
738,000
|
Total Operating
Expenses
|
|
997,329
|
|
845,214
|
INCOME FROM
OPERATIONS
|
|
3,275,957
|
|
2,284,876
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
Interest
income
|
|
5,240
|
|
481
|
Interest
expense
|
|
(57,727)
|
|
(105,127)
|
Grant
income
|
|
31,887
|
|
-
|
Other
income
|
|
-
|
|
28,930
|
Total Other Income
(Expense), net
|
|
(20,600)
|
|
(75,716)
|
INCOME BEFORE INCOME
TAXES
|
|
3,255,357
|
|
2,209,160
|
|
|
|
|
|
INCOME
TAXES
|
|
858,999
|
|
586,560
|
|
|
|
|
|
NET INCOME
|
|
$
2,396,358
|
|
$
1,622,600
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
NET
INCOME
|
|
$
2,396,358
|
|
$
1,622,600
|
OTHER
COMPREHENSIVE (LOSS) INCOME:
|
|
|
|
|
Unrealized foreign
currency translation (loss) gain
|
|
(781,788)
|
|
428,440
|
COMPREHENSIVE
INCOME
|
|
$
1,614,570
|
|
$
2,051,040
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE:
|
|
|
|
|
Basic
|
|
$ 0.68
|
|
$ 0.56
|
Diluted
|
|
$ 0.68
|
|
$ 0.56
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES
OUTSTANDING:
|
|
|
|
|
Basic
|
|
3,503,502
|
|
2,894,586
|
Diluted
|
|
3,503,502
|
|
2,894,586
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
March 31,
2014
|
|
December 31,
2013
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$
2,001,106
|
|
$
1,114,873
|
Restricted
cash
|
405,719
|
|
687,353
|
Notes
receivable
|
76,275
|
|
703,718
|
Accounts
receivable, net of allowance for doubtful accounts
|
13,679,677
|
|
15,234,863
|
Inventories,
net of reserve for obsolete inventories
|
6,106,615
|
|
4,733,558
|
Advances to
suppliers
|
611,547
|
|
695,254
|
Prepaid VAT on
purchases
|
118,415
|
|
489,302
|
Deferred tax
assets - current portion
|
251,057
|
|
253,173
|
Prepaid
expenses and other
|
86,958
|
|
74,030
|
Total Current
Assets
|
23,337,369
|
|
23,986,124
|
PROPERTY AND
EQUIPMENT - net
|
71,166,982
|
|
70,595,138
|
OTHER
ASSETS:
|
|
|
|
Deferred tax
assets - net of current portion
|
1,212,001
|
|
1,222,216
|
Equipment held
for operating lease
|
4,711,496
|
|
4,751,206
|
Land use
rights, net
|
3,730,424
|
|
3,786,051
|
Total
Assets
|
$
104,158,272
|
|
$
104,340,735
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term
bank loans
|
$
3,083,465
|
|
$
3,109,453
|
Bank
acceptance notes payable
|
405,719
|
|
687,353
|
Accounts
payable
|
4,591,665
|
|
4,961,555
|
Accrued
expenses
|
469,834
|
|
899,816
|
Advances from
customers
|
1,124,627
|
|
1,455,740
|
VAT and
service taxes payable
|
73,457
|
|
126,349
|
Income taxes
payable
|
1,318,069
|
|
1,623,603
|
Total Current
Liabilities
|
11,066,836
|
|
12,863,869
|
Total
Liabilities
|
11,066,836
|
|
12,863,869
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred stock
($0.001 par value; 10,000,000 shares authorized;
0 share issued
and outstanding at March 31, 2014 and December 31,
2013,
respectively)
|
-
|
|
-
|
Common stock
($0.001 par value; 50,000,000 shares authorized;
3,503,502 and
3,503,502 shares issued and outstanding at March 31,
2014 and
December 31, 2013, respectively)
|
3,503
|
|
3,503
|
Additional
paid-in capital
|
31,532,308
|
|
31,532,308
|
Retained
earnings
|
48,601,672
|
|
46,322,329
|
Statutory
reserve
|
2,861,735
|
|
2,744,720
|
Accumulated
other comprehensive gain - foreign currency translation
adjustment
|
10,092,218
|
|
10,874,006
|
Total Stockholders'
Equity
|
93,091,436
|
|
91,476,866
|
Total Liabilities and
Stockholders' Equity
|
$
104,158,272
|
|
$
104,340,735
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
|
|
March 31,
|
|
|
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
2,396,358
|
|
$
1,622,600
|
|
Adjustments to
reconcile net income from operations to net
cash
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
1,965,274
|
|
1,569,551
|
|
|
Amortization of land
use rights
|
|
24,165
|
|
23,511
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Notes
receivable
|
|
626,267
|
|
(133,241)
|
|
|
Accounts
receivable
|
|
1,438,666
|
|
663,513
|
|
|
Inventories
|
|
(1,423,313)
|
|
(723,549)
|
|
|
Prepaid value-added
taxes on purchases
|
|
369,574
|
|
(101,245)
|
|
|
Prepaid and other
current assets
|
|
(13,343)
|
|
11,776
|
|
|
Advances to
suppliers
|
|
78,486
|
|
(744,915)
|
|
|
Accounts
payable
|
|
(598,233)
|
|
(204,399)
|
|
|
Accrued
expenses
|
|
(427,424)
|
|
(532,717)
|
|
|
VAT and service taxes
payable
|
|
(52,228)
|
|
(111,027)
|
|
|
Income taxes
payable
|
|
(294,175)
|
|
(192,720)
|
|
|
Advances from
customers
|
|
(321,360)
|
|
549,929
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
|
3,768,714
|
|
1,697,067
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(2,868,611)
|
|
(2,708,871)
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(2,868,611)
|
|
(2,708,871)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Principal payments on
capital lease
|
|
-
|
|
(85,364)
|
|
|
Proceeds from bank
loans
|
|
981,098
|
|
1,749,971
|
|
|
Repayments of bank
loans
|
|
(981,098)
|
|
(954,529)
|
|
|
Decrease (increase)
in restricted cash
|
|
277,978
|
|
(954,529)
|
|
|
(Decrease) increase
in bank acceptance notes payable
|
|
(277,978)
|
|
954,529
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
-
|
|
710,078
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH
EQUIVALENTS
|
|
(13,870)
|
|
7,416
|
|
|
|
|
|
|
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH
EQUIVALENTS
|
|
886,233
|
|
(294,310)
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
1,114,873
|
|
1,445,728
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
|
$
2,001,106
|
|
$
1,151,418
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
Interest
|
|
|
$ 57,727
|
|
$ 105,127
|
|
|
Income
taxes
|
|
|
$
1,153,173
|
|
$ 779,280
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
Property and
equipment acquired on credit as payable
|
|
$ 267,324
|
|
$ 20,681
|
|
Reconciliation of Net
Income to EBITDA
|
(Amounts expressed in
US$)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
March 31,
|
|
|
|
|
|
2014
|
|
2013
|
Net income
|
|
$
2,396,358
|
|
$
1,622,600
|
Add: income
tax
|
|
858,999
|
|
586,560
|
Add: interest
expense
|
|
57,727
|
|
105,127
|
Add: depreciation and
amortization
|
|
1,989,439
|
|
1,593,062
|
EBITDA
|
|
$
5,302,523
|
|
$
3,907,349
|
SOURCE Cleantech Solutions International, Inc.