WUXI, China, Nov. 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 nine months ended September 30, 2014.
"In the third quarter, we saw a solid increase in revenue from
the third quarter of 2013, driven by our dyeing and finishing
equipment segment. We believe our reputation for producing high
quality, energy efficient machines that allow textile manufacturers
to meet the Chinese government's more aggressive pollution control
requirements drove higher sales volumes of our patented low
emission airflow dyeing machines and new garment washing machines
for denim. This was offset by slight declines in sales of
forged products and components to customers in the wind power and
other industries. Despite a slight decline in gross margin,
our bottom line increased year-over-year and we generated strong
cash flow to support our future growth," said Mr. Jianhua Wu, Chairman and CEO of Cleantech
Solutions.
Third Quarter 2014 Results
Revenue for the third quarter of 2014 increased by 11.2% to
$20.2 million, compared to
$18.2 million for the same period of
2013.
The Company experienced strong revenue growth from sales of
dyeing and finishing equipment, partially offset by lower sales of
forged products:
- Revenue from the dyeing and finishing equipment segment
increased by 24.3% to $11.8 million,
compared to $9.5 million for the
third quarter of 2013. Demand for this equipment continues to be
driven by China's increasingly
strict environmental standards. We believe that textile
manufacturers are attracted to Cleantech Solutions' machines
because of their compact design, high degree of both automation and
mechanical-electrical integration and ability to meet the new
environmental standards.
- Revenue from the sale of forged rolled rings to industries
other than wind power fell by 2.7% to $4.9
million, compared with $5.0
million for the comparable period of the prior year.
- Revenue from the sale of forged rolled rings for the wind power
industry fell by 3.8% to $3.6
million, compared to $3.7
million for the comparable period last year.
Gross profit for the third quarter of 2014 increased by 0.9% to
$4.7 million, compared to
$4.6 million for the same period in
2013. Gross margin was 23.1% during the third quarter of 2014
compared to 25.5% for the same period a year ago. The decline in
gross margin for the 2014 third quarter was primarily attributable
to (i) lower selling prices in our forged products and components
segment, which was necessary to meet competition and (ii) the
effects of the introduction of new models of dyeing and finishing
equipment with an initial low production run resulting is fixed
costs being allocated over a smaller number of units.
Operating expenses fell by 29.7% to $1.0
million, compared to $1.4
million in the comparable period last year, resulting
primarily from a reduction in bad debt expense. During the third
quarter of 2013, we sustained a bad debt expense of $0.4 million. In the third quarter of 2014, we
did not incur any bad debt expense.
Operating income was $3.7 million,
compared to $3.2 million in the same
period of 2013. Operating margin was 18.1% compared to 17.6% in the
same period of 2013.
EBITDA, a non-GAAP measurement, which adds back to net income
interest expense, income tax, depreciation and amortization, was
$5.9 million, up from $4.9 million in the third quarter last year. The
calculation of EBITDA is shown in a table following the financial
statements.
Net income for the third quarter of 2014 was $2.7 million, or $0.70 per basic and diluted share, compared to
$2.1 million, or $0.61 per basic and diluted share, in the third
quarter of 2013.
Nine Month Results
For the nine months ended September 30,
2014, revenue increased by 12.4% to $55.4 million from $49.3
million in the first nine months of 2013. Gross profit
increased by 11.0% to $13.0 million,
compared to $11.7 million last year.
Gross margin for first nine months of 2014 was 23.5%, compared to
23.8% in the first nine months of 2013. Operating income
increased 16.0% to $10.0 million from
$8.6 million in the first nine months
of 2013. EBITDA, a non-GAAP measurement, was $16.4 million, compared to $13.6 million in the first nine months of
2013. Net income was $7.3
million, up from $6.1 million
in the first nine months of 2013. Net income per basic and diluted
share was $1.99 compared to
$1.95 in the first nine months of
2013.
Financial Condition
As of September 30, 2014,
Cleantech Solutions held cash and cash equivalents of $1.7 million compared with $1.1 million at December
31, 2013. Accounts receivable were $14.4 million compared to $15.2 million at December
31, 2013. Inventories increased to $7.7 million from $4.7
million at December 31, 2013,
in order to satisfy expected purchase orders from the Company's
customers. Total current assets were $25.7 million as of September 30, 2014. The Company had $3.1 million in short-term bank loans payable at
September 30, 2014, relatively
unchanged from December 31,
2013. Stockholders' equity was $100.1
million at September 30,
2014.
In the first nine months of 2014, the Company generated
$9.8 million in cash flow from
operations and spent approximately $10.8
million in capital expenditures to expand production
capabilities and upgrade equipment.
Recent Events
In September 2014, the Company's
affiliate, Wuxi Huayang Dyeing Machinery Co., Ltd. ("Dyeing"),
received two patents from the State Intellectual Property Office of
the People's Republic of China,
covering components of the hot air circulation system of its low
emission air flow dyeing machines. The Company believes that the
hot air circulation system helps to enhance the machines' ability
to produce higher quality textiles with a better look and feel. The
patents provide Dyeing with the exclusive use of the system
components in dyeing equipment for a period of 20 years.
On November 5, 2014, the Company
announced an upcoming investor day on December 5, 2014. The one-day event will be
held at the Company's two manufacturing facilities in Wuxi City.
During the event, Mr. Jianhua Wu,
along with CFO, Mr. Adam Wasserman,
and VP of Operations, Mr. Ryan Hua,
will make presentations and answer questions about the Company's
production processes and product development initiatives and
provide updates on the latest developments in its markets and
business generally.
Business Outlook
"As we approach year end, we expect growth in our dyeing
equipment business to continue, driven by the Chinese government's
enforcement of anti-pollution policies for textile manufacturers.
Order flow for the most updated models of our low emission airflow
dyeing machines and our new garment washing machines for denim are
strong. We are also optimistic about opportunities to use our
upgraded facilities to enable us to offer products to potential
customers in the power equipment and oil and gas industries, for
whom we developed prototypes during 2014," said Mr. Wu.
Conference Call
Cleantech Solutions will conduct a conference call at
9:00 a.m. Eastern Time on
Friday, November 14, 2014 to discuss
financial results for the third quarter ended September 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: (888) 346-8982. International callers should
dial (412) 902-4272 and ask to join the Cleantech Solutions
International call.
If you are unable to participate in the conference call at this
time, a replay will be available through November 21, 2014 at 9:00 am ET. To access the replay, dial (877)
344-7529 or (412) 317-0088 for international callers and enter pin
code: 10056067.
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
and dyeing and finishing equipment for the textile industry and
forging products, and a supplier of fabricated products and
machining services to a range of clean technology customers. 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 September 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
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
|
|
For the Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$ 20,246,555
|
|
$ 18,213,508
|
|
$ 55,409,844
|
|
$ 49,312,341
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
15,570,370
|
|
13,576,808
|
|
42,375,936
|
|
37,572,531
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
4,676,185
|
|
4,636,700
|
|
13,033,908
|
|
11,739,810
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
148,371
|
|
109,652
|
|
376,640
|
|
461,539
|
Selling, general and administrative
|
|
854,707
|
|
1,316,925
|
|
2,677,892
|
|
2,675,076
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
1,003,078
|
|
1,426,577
|
|
3,054,532
|
|
3,136,615
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
3,673,107
|
|
3,210,123
|
|
9,979,376
|
|
8,603,195
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
4,141
|
|
14,840
|
|
13,286
|
|
16,009
|
Interest
expense
|
|
(60,487)
|
|
(74,638)
|
|
(178,313)
|
|
(244,291)
|
Grant
income
|
|
2,735
|
|
-
|
|
34,821
|
|
-
|
Foreign
currency transaction gain (loss)
|
|
(2)
|
|
(9,821)
|
|
1,268
|
|
(15,800)
|
Other
income
|
|
33,799
|
|
5,933
|
|
67,665
|
|
43,015
|
|
|
|
|
|
|
|
|
|
Total Other
Income (Expense), net
|
|
(19,814)
|
|
(63,686)
|
|
(61,273)
|
|
(201,067)
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
3,653,293
|
|
3,146,437
|
|
9,918,103
|
|
8,402,128
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
953,552
|
|
1,015,701
|
|
2,604,100
|
|
2,326,239
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$ 2,699,741
|
|
$ 2,130,736
|
|
$ 7,314,003
|
|
$ 6,075,889
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$ 2,699,741
|
|
$ 2,130,736
|
|
$ 7,314,003
|
|
$ 6,075,889
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME (LOSS):
|
|
|
|
|
|
|
Unrealized foreign currency translation gain (loss)
|
29,648
|
|
516,244
|
|
(645,827)
|
|
2,161,711
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$ 2,729,389
|
|
$ 2,646,980
|
|
$ 6,668,176
|
|
$ 8,237,600
|
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 0.70
|
|
$ 0.61
|
|
$ 1.99
|
|
$ 1.95
|
Diluted
|
|
$ 0.70
|
|
$ 0.61
|
|
$ 1.99
|
|
$ 1.95
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
Basic
|
|
3,859,986
|
|
3,479,646
|
|
3,666,543
|
|
3,112,148
|
Diluted
|
|
3,859,986
|
|
3,479,646
|
|
3,666,543
|
|
3,112,148
|
|
|
|
|
|
|
|
|
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash
equivalents
|
$ 1,707,306
|
|
$ 1,114,873
|
Restricted
cash
|
438,782
|
|
687,353
|
Notes
receivable
|
237,917
|
|
703,718
|
Accounts
receivable, net of allowance for doubtful accounts
|
14,399,885
|
|
15,234,863
|
Inventories,
net of reserve for obsolete inventories
|
7,655,946
|
|
4,733,558
|
Advances to
suppliers
|
577,318
|
|
695,254
|
Prepaid VAT on
purchases
|
229,513
|
|
489,302
|
Deferred tax
assets - current portion
|
244,568
|
|
253,173
|
Prepaid
expenses and other
|
161,767
|
|
74,030
|
|
|
|
|
Total Current
Assets
|
25,653,002
|
|
23,986,124
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
75,329,154
|
|
70,595,138
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Deferred tax
assets - net of current portion
|
1,213,675
|
|
1,222,216
|
Equipment held
for operating lease, net
|
4,382,777
|
|
4,751,206
|
Land use
rights, net
|
3,687,544
|
|
3,786,051
|
|
|
|
|
Total
Assets
|
$ 110,266,152
|
|
$ 104,340,735
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term
bank loans
|
$ 3,087,724
|
|
$ 3,109,453
|
Bank
acceptance notes payable
|
438,782
|
|
687,353
|
Accounts
payable
|
4,933,495
|
|
4,961,555
|
Accrued
expenses
|
679,609
|
|
899,816
|
Advances from
customers
|
230,334
|
|
1,455,740
|
VAT and
service taxes payable
|
125,854
|
|
126,349
|
Income taxes
payable
|
639,406
|
|
1,623,603
|
|
|
|
|
Total Current
Liabilities
|
10,135,204
|
|
12,863,869
|
|
|
|
|
Total
Liabilities
|
10,135,204
|
|
12,863,869
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred
stock ($0.001 par value; 10,000,000 shares authorized; 0 share
issued and
|
|
|
|
outstanding at
September 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 September 30, 2014 and December 31, 2013, respectively)
|
3,860
|
|
3,503
|
Additional
paid-in capital
|
33,517,857
|
|
31,532,308
|
Retained
earnings
|
52,874,014
|
|
46,322,329
|
Statutory
reserve
|
3,507,038
|
|
2,744,720
|
Accumulated
other comprehensive income - foreign currency translation
adjustment
|
10,228,179
|
|
10,874,006
|
|
|
|
|
Total
Stockholders' Equity
|
100,130,948
|
|
91,476,866
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$ 110,266,152
|
|
$ 104,340,735
|
|
|
|
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
For the Nine Months
Ended
|
|
|
|
|
|
September
30,
|
|
|
|
|
|
2014
|
|
2013
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$ 7,314,003
|
|
$ 6,075,889
|
|
Adjustments to
reconcile net income from operations to net cash
|
|
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
6,245,723
|
|
4,882,899
|
|
|
Amortization of land
use rights
|
|
72,141
|
|
71,261
|
|
|
Increase in allowance
for doubtful accounts
|
|
-
|
|
76,784
|
|
|
Amortization of
prepaid expense
|
|
13,774
|
|
-
|
|
|
Common stock issued
for service
|
|
271,661
|
|
278,034
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Notes
receivable
|
|
461,461
|
|
(390,950)
|
|
|
Accounts
receivable
|
|
729,430
|
|
(1,260,651)
|
|
|
Inventories
|
|
(2,959,168)
|
|
(158,944)
|
|
|
Prepaid value-added
taxes on purchases
|
|
256,691
|
|
(270,730)
|
|
|
Prepaid and other
current assets
|
|
(11,280)
|
|
82,378
|
|
|
Advances to
suppliers
|
|
113,219
|
|
(687,094)
|
|
|
Accounts
payable
|
|
(314,445)
|
|
(672,461)
|
|
|
Accrued
expenses
|
|
(215,395)
|
|
(451,672)
|
|
|
VAT and service taxes
payable
|
|
388
|
|
(209,667)
|
|
|
Income taxes
payable
|
|
(967,226)
|
|
222,801
|
|
|
Advances from
customers
|
|
(1,216,756)
|
|
305,052
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
|
9,794,221
|
|
7,892,929
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(10,822,897)
|
|
(9,943,309)
|
|
|
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(10,822,897)
|
|
(9,943,309)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
Principal payments on
capital lease
|
|
-
|
|
(390,009)
|
|
|
Proceeds from bank
loans
|
|
3,091,592
|
|
4,821,973
|
|
|
Repayments of bank
loans
|
|
(3,091,592)
|
|
(4,018,311)
|
|
|
Decrease (increase)
in restricted cash
|
|
244,073
|
|
(787,589)
|
|
|
(Decrease) increase
in bank acceptance notes payable
|
|
(244,073)
|
|
787,589
|
|
|
Net proceeds from
sale of common stock
|
|
1,623,691
|
|
2,388,589
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
1,623,691
|
|
2,802,242
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH EQUIVALENTS
|
|
(2,582)
|
|
25,427
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
|
592,433
|
|
777,289
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
1,114,873
|
|
1,445,728
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
|
$ 1,707,306
|
|
$ 2,223,017
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
|
Interest
|
|
$ 178,313
|
|
$ 244,291
|
|
|
|
Income
taxes
|
|
$ 3,571,325
|
|
$ 2,103,438
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
Property and
equipment acquired on credit as payable
|
|
$ 321,064
|
|
$ 547,294
|
|
Common stock issued
for future service
|
|
$ 90,554
|
|
$ 78,600
|
Reconciliation of Net
Income to EBITDA
|
(Amounts expressed in
US$)
|
|
|
For the Three Months
ended September 30,
|
|
For the Nine Months
ended September 30,
|
|
2014
|
2013
|
|
2014
|
2013
|
Net income
|
$2,699,741
|
$2,130,736
|
|
$7,314,003
|
$6,075,889
|
Add: income
tax
|
953,552
|
1,015,701
|
|
2,604,100
|
2,326,239
|
Add: interest
expense
|
60,487
|
74,638
|
|
178,313
|
244,291
|
Add: depreciation and
amortization
|
2,184,933
|
1,685,694
|
|
6,317,864
|
4,954,160
|
EBITDA
|
$5,898,713
|
$4,906,769
|
|
$16,414,280
|
$13,600,579
|
SOURCE Cleantech Solutions International, Inc.