WUXI, China, Aug. 14, 2014 /PRNewswire/ -- 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 and six months ended June 30, 2014.
"In the second quarter, we saw a modest increase in revenue from
the second quarter of 2013, were profitable and generated strong
operating cash flow. Sales of our low emission airflow dyeing
machines, which enable textile manufacturers to meet the Chinese
government's more aggressive pollution control requirements, grew
at a more tempered pace this quarter as we operated near full
utilization and are in the process of bringing additional capacity
online. In our forged products business, we saw an uptick in sales
to customers in the wind power industry, which was offset by a
decline in sales to customers in other industries," said Mr.
Jianhua Wu, Chairman and CEO of
Cleantech Solutions.
Second Quarter 2014 Results
Revenue for the second quarter of 2014 increased by 1.8% to
$17.5 million, compared to
$17.2 million for the same period of
2013.
The Company experienced continued revenue growth from sales of
dyeing and finishing equipment, somewhat offset by lower sales of
forged products, resulting in a modest decline from revenues in the
first quarter of 2014:
- Revenue from the dyeing and finishing equipment segment
increased by 7.3% to $9.7 million,
compared to $9.0 million for the
second quarter of 2013. The Company continues to experience strong
demand for its low emission airflow dyeing machines that enable
manufacturers to meet China's
increasingly strict environmental standards.
- Revenue from the sale of forged rolled rings to other
industries fell by 9.6% to $4.6
million, compared with $5.1
million for the comparable period of the prior year.
- Revenue from the sale of forged rolled rings for the wind power
industry rose by 4.5% to $3.2
million, compared to $3.1
million for the comparable period last year.
Gross profit for the second quarter of 2014 increased by 2.8% to
$4.1 million, compared to
$4.0 million for the same period in
2013. Gross margin increased to 23.3% during the second quarter of
2014 compared to 23.1% for the same period a year ago. The increase
in gross margin for the second quarter was primarily attributable
to (i) increased operational and cost efficiencies in the forged
rolled rings and related products segment and (ii) a small decline
in gross margin in the dyeing and finishing equipment segment,
reflecting the introduction of a new model of machine and its
initial production at relatively low volumes.
Operating expenses rose by 21.9% to $1.1
million, compared to $0.9
million in the comparable period last year. The increase was
primarily due to higher selling, general and administrative
expenses. Selling, general and administrative expenses in the year
ago period benefited from a $0.3
million recovery of an account previously written off.
Operating income was $3.0 million,
down from $3.1 million in the same
period of 2013. Operating margin was 17.3% compared to 18.1% in the
second quarter last year.
EBITDA, a non-GAAP measurement, which adds back to net income
interest expense, income tax, depreciation and amortization, was
$5.2 million, up from $4.8 million in the second quarter last year. The
calculation of EBITDA is shown in a table following the financial
statements.
Net income for the second quarter of 2014 was $2.2 million, or $0.61 per basic and diluted share, compared to
$2.3 million, or $0.79 per basic and diluted share, in the second
quarter of 2013.
Six Month Results
For the six months ended June 30,
2014, revenue increased by 13.1% to $35.2 million from $31.1
million in the first half of 2013. Gross profit increased by
17.7% to $8.4 million, compared to
$7.1 million last year. Gross margin
for first half of 2014 was 23.8%, compared to 22.8% in the first
half of 2013. Operating income increased 16.9% to $6.3 million from $5.4
million in the first half of 2013. EBITDA, a non-GAAP
measurement, was $10.5 million,
compared to $8.7 million in the first
half of 2013. Net income was $4.6
million, up from $3.9 million
in the first half of 2013. Net income per basic and diluted share
was $1.29 compared to $1.35 in the first half of 2013.
Financial Condition
As of June 30, 2014, Cleantech
Solutions held cash and cash equivalents of $1.8 million compared with $1.1 million at December
31, 2013. Accounts receivable were $13.7 million and total current assets were
$25.1 million as of June 30, 2014. The Company had $3.1 million in short-term bank loans payable at
June 30, 2014, relatively unchanged
from December 31, 2013. Stockholders'
equity was $97.4 million at
June 30, 2014.
In the first half of 2014, the Company generated $5.3 million in cash flow from operations. During
the first half of 2014, the Company spent approximately
$6.3 million in capital expenditures
to expand production capabilities and purchase equipment for its
dyeing and finishing equipment segment.
Recent Events
On June 2, 2014, the Company's
Chairman and CEO, Mr. Jianhua Wu,
and his wife, Ms. Lihua Tang,
purchased a total of 290,984 shares of common stock at a purchase
price of $5.58 pursuant to a stock
purchase agreement dated June 2, 2014
for the purchase price of RMB10,000,000 (approximately $1,624,000). The proceeds were used to fund the
expansion of the Company's dyeing machine business in anticipation
of increased business from that business line.
Business Outlook
"We believe our dyeing equipment business will continue to
perform well as textile manufacturers upgrade to lower emission
machinery in response to new environmental directives from the
Chinese government, although we may see some near-term fluctuation
in demand as the industry consolidates and the growth rate has
declined in second quarter of 2014. Order flow for our low emission
airflow dyeing machines remains strong and we are optimistic about
our new garment washing machine for denim. We are looking to
diversify into new areas for our forged rolled rings and related
products. We are currently developing components for industrial
blowers for the power equipment industry which we believe can hold
strong growth potential, although we have not generated any revenue
from these products to date," said Mr. Wu.
Conference Call
Cleantech Solutions will conduct a conference call at
9:00 a.m. Eastern Time on
Thursday, August 14, 2014 to discuss
financial results for the second quarter ended June 30, 2014.
To participate in the live conference call, please dial the
following number five to ten minutes prior to the scheduled
conference call time: (866) 250-8117. International callers should
dial (412) 317-6011 and enter pin code 86765634.
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
August 22, 2014. To access the
replay, dial (855) 452-5696 and enter pin code 85394589.
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 June 30, 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
- Financial Tables Follow-
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE
INCOME
|
|
For the Three
Months Ended
|
|
For the Six Months
Ended
|
|
June
30,
|
|
June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
REVENUES
|
$17,528,018
|
|
$17,214,134
|
|
$35,163,289
|
|
$31,098,833
|
COST OF
REVENUES
|
13,443,581
|
|
13,241,114
|
|
26,805,566
|
|
23,995,723
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
4,084,437
|
|
3,973,020
|
|
8,357,723
|
|
7,103,110
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Depreciation
|
118,410
|
|
244,673
|
|
228,269
|
|
351,887
|
Selling, general and
administrative
|
935,715
|
|
620,151
|
|
1,823,185
|
|
1,358,151
|
Total
Operating Expenses
|
1,054,125
|
|
864,824
|
|
2,051,454
|
|
1,710,038
|
INCOME FROM
OPERATIONS
|
3,030,312
|
|
3,108,196
|
|
6,306,269
|
|
5,393,072
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
Interest income
|
3,905
|
|
688
|
|
9,145
|
|
1,169
|
Interest expense
|
(60,099)
|
|
(64,526)
|
|
(117,826)
|
|
(169,653)
|
Grant income
|
199
|
|
-
|
|
32,086
|
|
-
|
Foreign currency gain
(loss)
|
1,270
|
|
(5,979)
|
|
1,270
|
|
(5,979)
|
Other income
|
33,866
|
|
8,152
|
|
33,866
|
|
37,082
|
|
|
|
|
|
|
|
|
Total
Other Income (Expense), net
|
(20,859)
|
|
(61,665)
|
|
(41,459)
|
|
(137,381)
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
3,009,453
|
|
3,046,531
|
|
6,264,810
|
|
5,255,691
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
791,549
|
|
723,978
|
|
1,650,548
|
|
1,310,538
|
|
|
|
|
|
|
|
|
NET INCOME
|
$2,217,904
|
|
$2,322,553
|
|
$4,614,262
|
|
$3,945,153
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
NET INCOME
|
$2,217,904
|
|
$2,322,553
|
|
$4,614,262
|
|
$3,945,153
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS):
|
|
|
|
|
|
Unrealized foreign currency
translation gain (loss)
|
106,313
|
|
1,217,027
|
|
(675,475)
|
|
1,645,467
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
$2,324,217
|
|
$3,539,580
|
|
$3,938,787
|
|
$5,590,620
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE:
|
|
|
|
|
|
|
Basic
|
$0.61
|
|
$0.79
|
|
$1.29
|
|
$1.35
|
Diluted
|
$0.61
|
|
$0.79
|
|
$1.29
|
|
$1.35
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
Basic
|
3,632,222
|
|
2,955,786
|
|
3,568,219
|
|
2,925,355
|
Diluted
|
3,632,222
|
|
2,955,786
|
|
3,568,219
|
|
2,925,355
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
June 30,
2014
|
December 31,
2013
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$1,766,655
|
|
$1,114,873
|
Restricted cash
|
357,421
|
|
687,353
|
Notes receivable
|
100,711
|
|
703,718
|
Accounts receivable, net of allowance for doubtful
accounts
|
13,663,007
|
|
15,234,863
|
Inventories, net of reserve for obsolete inventories
|
7,915,013
|
|
4,733,558
|
Advances to suppliers
|
675,372
|
|
695,254
|
Prepaid VAT on purchases
|
112,231
|
|
489,302
|
Deferred tax assets - current portion
|
251,331
|
|
253,173
|
Prepaid expenses and other
|
260,347
|
|
74,030
|
|
|
|
|
Total
Current Assets
|
25,102,088
|
|
23,986,124
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
72,827,658
|
|
70,595,138
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Deferred
tax assets - net of current portion
|
1,213,320
|
|
1,222,216
|
Equipment held for operating lease, net
|
4,549,061
|
|
4,751,206
|
Land use
rights, net
|
3,710,476
|
|
3,786,051
|
|
|
|
|
Total
Assets
|
$107,402,603
|
|
$104,340,735
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term bank loans
|
$3,086,821
|
|
$3,109,453
|
Bank acceptance notes payable
|
357,421
|
|
687,353
|
Accounts payable
|
5,031,492
|
|
4,961,555
|
Accrued expenses
|
513,698
|
|
899,816
|
Advances from customers
|
386,990
|
|
1,455,740
|
VAT and service taxes payable
|
164,155
|
|
126,349
|
Income taxes payable
|
460,467
|
|
1,623,603
|
|
|
|
|
Total
Current Liabilities
|
10,001,044
|
|
12,863,869
|
|
|
|
|
Total
Liabilities
|
10,001,044
|
|
12,863,869
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred stock ($0.001 par value; 10,000,000 shares
authorized;
|
0 share
issued and outstanding at June 30, 2014 and
December
31, 2013)
|
-
|
|
-
|
Common stock ($0.001 par value; 50,000,000 shares authorized;
|
3,859,986 and
3,503,502 shares issued and outstanding at
June 30, 2014
and December 31, 2013, respectively)
|
3,860
|
|
3,503
|
Additional paid-in capital
|
33,517,857
|
|
31,532,308
|
Retained earnings
|
50,454,995
|
|
46,322,329
|
Statutory reserve
|
3,226,316
|
|
2,744,720
|
Accumulated other comprehensive gain - foreign currency
translation adjustment
|
10,198,531
|
|
10,874,006
|
|
|
|
|
Total
Stockholders' Equity
|
97,401,559
|
|
91,476,866
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$107,402,603
|
|
$104,340,735
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
Net income
|
|
$4,614,262
|
|
$3,945,153
|
|
Adjustments to
reconcile net income from operations to net cash
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
4,084,790
|
|
3,221,159
|
|
|
Amortization of land
use rights
|
|
48,141
|
|
47,307
|
|
|
Decrease in allowance
for doubtful accounts
|
|
-
|
|
(312,411)
|
|
|
Stock-based
compensation expense
|
|
181,108
|
|
132,956
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Notes
receivable
|
|
599,395
|
|
(264,582)
|
|
|
Accounts
receivable
|
|
1,464,659
|
|
555,644
|
|
|
Inventories
|
|
(3,224,025)
|
|
518,191
|
|
|
Prepaid value-added
taxes on purchases
|
|
374,452
|
|
(192,840)
|
|
|
Prepaid and other
current assets
|
|
(5,553)
|
|
(60,237)
|
|
|
Advances to
suppliers
|
|
14,859
|
|
(473,782)
|
|
|
Accounts
payable
|
|
(283,743)
|
|
(1,740,644)
|
|
|
Accrued
expenses
|
|
(381,669)
|
|
(409,484)
|
|
|
VAT and service taxes
payable
|
|
38,824
|
|
(34,233)
|
|
|
Income taxes
payable
|
|
(1,154,225)
|
|
(63,582)
|
|
|
Advances from
customers
|
|
(1,060,826)
|
|
300,212
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
5,310,449
|
|
5,168,827
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of property
and equipment
|
|
(6,280,015)
|
|
(5,824,104)
|
|
|
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(6,280,015)
|
|
(5,824,104)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Principal payments on
capital lease
|
|
-
|
|
(130,633)
|
|
|
Proceeds from bank
loans
|
|
2,280,242
|
|
3,041,002
|
|
|
Repayments of bank
loans
|
|
(2,280,242)
|
|
(2,240,739)
|
|
|
Decrease (increase)
in restricted cash
|
|
325,749
|
|
(1,312,433)
|
|
|
(Decrease) increase
in bank acceptance notes payable
|
(325,749)
|
|
1,312,433
|
|
|
Net proceeds from
sale of common stock
|
|
1,623,691
|
|
1,767,546
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
1,623,691
|
|
2,437,176
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE ON CASH AND CASH EQUIVALENTS
|
(2,343)
|
|
27,354
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
651,782
|
|
1,809,253
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
1,114,873
|
|
1,445,728
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
$1,766,655
|
|
$3,254,981
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
Cash paid
for:
|
|
|
|
|
|
|
Interest
|
|
$117,826
|
|
$169,653
|
|
|
Income
taxes
|
|
$2,804,773
|
|
$1,374,120
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
Property and
equipment acquired on credit as payable
|
$390,060
|
|
$840,277
|
|
Common stock issued
for future service
|
|
$181,107
|
|
$
-
|
Reconciliation of Net
Income to EBITDA
(Amounts expressed in
US$)
|
|
For the Three Months
ended
June 30,
|
|
For the Six Months
ended
June 30,
|
|
2014
|
2013
|
|
2014
|
2013
|
Net income
|
$2,217,904
|
$2,322,553
|
|
$4,614,262
|
$3,945,153
|
Add: income
tax
|
791,549
|
723,978
|
|
1,650,548
|
1,310,538
|
Add: interest
expense
|
60,099
|
64,526
|
|
117,826
|
169,653
|
Add: depreciation and
amortization
|
2,143,492
|
1,675,404
|
|
4,132,931
|
3,268,466
|
EBITDA
|
$5,213,044
|
$4,786,461
|
|
$10,515,567
|
$8,693,810
|
SOURCE Cleantech Solutions International, Inc.