WUXI, China, Nov. 13, 2015 /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, and, since the first quarter
of 2015, the petroleum and chemical industries, today announced its
financial results for the three and nine months ended September 30, 2015.
"In the third quarter of 2015, challenging economic conditions,
falling steel prices and limited availability of credit in
China presented numerous
challenges for our business. Our forged rolled rings and
related products segment in particular experienced a significant
reduction in sales and operated at a loss during the
quarter. In our dyeing equipment segment, we experienced
softer demand for our low-emission airflow dyeing machines as many
of our customers already upgraded to newer models last year and
much of our remaining customer base does not have the ability to
make significant capital expenditures at this time. We
continue to deliver parts and equipment under our contract with a
large state-owned enterprise for a major chemical project in
Xinjiang, which helped offset the decreases in revenue from our
other two segments," said Mr. Jianhua
Wu, Chairman and CEO of Cleantech Solutions. "Despite these
difficult conditions, we remained profitable and our financial
condition is strong."
Third Quarter 2015 Results
Revenue for the third quarter of 2015 decreased by 40.6% to
$12.0 million, compared to
$20.2 million for the same period of
2014.
The Company experienced lower sales of forged rolled rings and
related components to customers in the wind power and other
industries and to dyeing and finishing equipment customers compared
to the comparable quarter last year. These decreases were partially
offset by sales of equipment to customers in the petroleum and
chemical industries.
- Revenue from the sale of forged rolled rings and related
products to the wind power and other industries fell by 83.2% to
$1.4 million, compared with
$8.4 million for the comparable
period of the prior year. Economic conditions in China, overall capital expenditures, and the
availability of credit are adversely affecting customer
demand.
- Revenue from the dyeing and finishing equipment segment
decreased by 29.2% to $8.4 million,
compared to $11.8 million for the
third quarter of 2014. In order to reduce business risk, the
Company postponed shipments of low-emission airflow dyeing machines
to certain customers who were behind in payments. In
addition, the Company experienced softer demand for its
low-emission airflow dyeing machines in 2015, as many of its
customers had upgraded to new models in 2014 and did not require
additional equipment in 2015. Finally, the Company believes
that orders for new low-emission airflow dyeing machines have
slowed down in 2015 because much of the remaining potential
customer base does not have the ability to make the significant
capital expenditures necessary to upgrade equipment.
- The Company generated $2.3
million in revenues from sales of equipment to customers in
the petroleum and chemical industries during the third quarter,
particularly from a large state-owned enterprise, which accounted
for all of the petroleum and chemical segment revenue for the third
quarter of 2015. This new business segment began shipping
orders in the first quarter of 2015.
Gross profit for the third quarter of 2015 decreased by 57.2% to
$2.0 million, compared to
$4.7 million for the same period in
2014. Gross margin was 16.6% during the third quarter of 2015
compared to 23.1% for the same period a year ago. The decline in
gross margin for the third quarter of 2015 was primarily
attributable to (i) the reduced scale of operations resulting from
lower revenues, including the allocation of fixed costs mainly
consisting of depreciation, to cost of revenues in the forged
rolled rings and related products segment combined with a slight
increase in labor costs, as a result of which cost of revenue from
this segment were greater than revenues, resulting in a negative
gross profit from the segment, and (ii) the contribution of revenue
from the sale of equipment to customers in the petroleum and
chemical industries, which currently has a low gross margin because
the Company is a new entrant to this market and is offering lower
prices to attract customers. These decreases were partially
offset by a slight increase in gross margin from the dyeing and
finishing equipment segment associated with a larger proportion of
higher margin models in the product mix.
Operating expenses decreased 28.0% to $0.7 million, compared to $1.0 million in the comparable period last year.
The decrease was primarily due to lower selling, general and
administrative expenses, partially offset by an increase in
depreciation expenses related to new office equipment, furniture
and other improvements which the Company started depreciating in
2014.
Operating income was $1.3 million,
compared to operating income of $3.7
million in the same period of 2014. Operating margin was
10.6% compared to 18.1% in the same period of 2014.
EBITDA, a non-GAAP measurement, which adds interest expense,
income tax, depreciation and amortization to net income, was
$3.3 million, compared to
$5.9 million in the third quarter of
2014. The calculation of EBITDA is shown in a table following
the financial statements.
Net income for the third quarter of 2015 was $0.9 million, or $0.23 per basic and diluted share, compared to
net income of $2.7 million, or
$0.70 per basic and diluted share, in
the third quarter of 2014.
Nine Month Results
For the nine months ended September 30,
2015, revenue was $42.9
million compared to $55.4
million in the first nine months of 2014. Gross profit was
$7.8 million, down from $13.0 million in the first nine months of 2014.
Gross margin was 18.1%, compared to 23.5% in the first nine months
of 2014. Operating income was $4.8
million compared to $10.0
million in the first nine months of 2014. EBITDA, a non-GAAP
measurement, was $11.1 million,
compared to $16.4 million in the
first nine months of 2014. Net income was $3.4 million, compared to $7.3 million in the first nine months of
2014. Net income per basic and diluted share was $0.86 compared to $1.99 in the first nine months of 2014.
Financial Condition
As of September 30, 2015,
Cleantech Solutions held cash and cash equivalents of $18.7 million compared to $7.8 million at December
31, 2014. Accounts receivable were $17.2 million compared to $20.3 million at December
31, 2014. Inventories were $3.9
million compared to $4.2
million at December 31,
2014. Total current assets were $41.7
million as of September 30,
2015. The Company had $3.1
million in short-term bank loans payable at September 30, 2015, relatively unchanged from
December 31,
2014. Stockholders' equity was $97.6 million at September
30, 2015. In the first nine months of 2015, the Company
generated $11.3 million in cash flow
from operations.
Business Outlook
"With China's industrial sector facing lower fixed asset
investment and slower production, we expect the next few quarters
to remain challenging. In the coming months, our primary focus
will be on our core dyeing and equipment operations and executing
the orders we have on hand in the petroleum and chemical segment.
We remain confident in the long-term growth opportunities in
China, particularly in the area of
clean energy, and we are exploring opportunities to expand into new
lines of business," Mr. Wu
concluded.
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
forged rolled rings and related products, and a supplier of
fabricated products and machining services to a range of clean
technology customers, and a supplier of products for the petroleum
and chemical industries. 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,
2014 and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our Form 10-Q for the
quarter ended September 30, 2015. 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
- tables to follow -
CLEANTECH
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
(LOSS)/INCOME
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For the Nine Months
Ended
|
|
|
September
30,
|
|
Spetember
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$ 12,025,433
|
|
$ 20,246,555
|
|
$ 42,862,498
|
|
$ 55,409,844
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
10,023,347
|
|
15,570,370
|
|
35,094,790
|
|
42,375,936
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
2,002,086
|
|
4,676,185
|
|
7,767,708
|
|
13,033,908
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
160,564
|
|
148,371
|
|
672,656
|
|
376,640
|
Selling, general and
administrative
|
|
537,601
|
|
825,379
|
|
2,206,587
|
|
2,590,445
|
Research and
development
|
|
23,935
|
|
29,328
|
|
81,195
|
|
87,447
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
722,100
|
|
1,003,078
|
|
2,960,438
|
|
3,054,532
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
1,279,986
|
|
3,673,107
|
|
4,807,270
|
|
9,979,376
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
|
Interest income
|
|
11,633
|
|
4,141
|
|
30,150
|
|
13,286
|
Interest expense
|
|
(61,131)
|
|
(60,487)
|
|
(175,102)
|
|
(178,313)
|
Grant income
|
|
-
|
|
2,735
|
|
-
|
|
34,821
|
Foreign currency transaction
(loss)/gain
|
|
-
|
|
(2)
|
|
(11)
|
|
1,268
|
Other income
|
|
-
|
|
33,799
|
|
-
|
|
67,665
|
|
|
|
|
|
|
|
|
|
Total
Other Income (Expense), net
|
|
(49,498)
|
|
(19,814)
|
|
(144,963)
|
|
(61,273)
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
1,230,488
|
|
3,653,293
|
|
4,662,307
|
|
9,918,103
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
326,357
|
|
953,552
|
|
1,289,172
|
|
2,604,100
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
904,131
|
|
$ 2,699,741
|
|
$ 3,373,135
|
|
$ 7,314,003
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
904,131
|
|
$ 2,699,741
|
|
$ 3,373,135
|
|
$ 7,314,003
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
(LOSS) INCOME:
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation (loss)/gain
|
|
(4,217,933)
|
|
29,648
|
|
(3,415,632)
|
|
(645,827)
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS)
INCOME
|
|
$ (3,313,802)
|
|
$ 2,729,389
|
|
$
(42,497)
|
|
$ 6,668,176
|
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.23
|
|
$
0.70
|
|
$
0.86
|
|
$
1.99
|
Diluted
|
|
$
0.23
|
|
$
0.70
|
|
$
0.86
|
|
$
1.99
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
|
3,943,725
|
|
3,859,986
|
|
3,939,486
|
|
3,666,543
|
Diluted
|
|
3,943,725
|
|
3,859,986
|
|
3,939,486
|
|
3,666,543
|
CLEANTECH
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
September 30,
2015
|
|
December 31,
2014
|
ASSETS
|
(Unaudited)
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
18,672,230
|
|
$
7,835,791
|
Restricted cash
|
582,329
|
|
488,719
|
Notes receivable
|
248,670
|
|
114,034
|
Accounts receivable, net of allowance for doubtful
accounts
|
17,158,938
|
|
20,316,037
|
Inventories, net of reserve for obsolete inventories
|
3,854,729
|
|
4,241,022
|
Advances to suppliers
|
629,605
|
|
565,581
|
Deferred tax assets
|
363,012
|
|
375,744
|
Prepaid expenses and other
|
172,104
|
|
153,260
|
|
|
|
|
Total
Current Assets
|
41,681,617
|
|
34,090,188
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
61,302,025
|
|
69,628,597
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Equipment held for sale
|
408,222
|
|
422,540
|
Land use
rights, net
|
3,478,202
|
|
3,672,420
|
|
|
|
|
Total
Assets
|
$ 106,870,066
|
|
$ 107,813,745
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term bank loans
|
$
3,147,723
|
|
$
3,095,219
|
Bank acceptance notes payable
|
582,329
|
|
488,719
|
Accounts payable
|
4,012,473
|
|
4,322,275
|
Accrued expenses
|
556,354
|
|
1,059,579
|
Advances from customers
|
837,408
|
|
495,461
|
VAT and service taxes payable
|
169,913
|
|
500,569
|
Income taxes payable
|
-
|
|
531,120
|
|
|
|
|
Total
Current Liabilities
|
9,306,200
|
|
10,492,942
|
|
|
|
|
Total
Liabilities
|
9,306,200
|
|
10,492,942
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred stock ($0.001 par value; 10,000,000 shares authorized; 0
share issued and
|
|
|
|
outstanding at September 30, 2015 and December 31, 2014)
|
-
|
|
-
|
Common stock ($0.001 par value; 50,000,000 shares authorized;
3,943,986 and 3,859,986
|
|
|
|
shares
issued and outstanding at September 30, 2015 and December 31, 2014,
respectively)
|
3,944
|
|
3,860
|
Additional paid-in capital
|
33,803,333
|
|
33,517,857
|
Retained earnings
|
53,120,069
|
|
50,039,267
|
Statutory reserve
|
3,586,532
|
|
3,294,199
|
Accumulated other comprehensive income - foreign currency
translation adjustment
|
7,049,988
|
|
10,465,620
|
|
|
|
|
Total
Stockholders' Equity
|
97,563,866
|
|
97,320,803
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$ 106,870,066
|
|
$ 107,813,745
|
CLEANTECH
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
For the Nine Months
Ended
|
|
|
Spetmber
30,
|
|
|
2015
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net income
|
|
$ 3,373,135
|
|
$ 7,314,003
|
Adjustments to reconcile net income from operations to net
cash
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
Depreciation
|
|
6,166,899
|
|
6,245,723
|
Amortization of land use rights
|
|
71,966
|
|
72,141
|
Amortization of prepaid expense
|
|
-
|
|
13,774
|
Stock-based compensation
|
|
285,560
|
|
271,661
|
Changes in operating assets and liabilities:
|
|
|
|
|
Notes receivable
|
|
(142,843)
|
|
461,461
|
Accounts receivable
|
|
2,546,105
|
|
729,430
|
Inventories
|
|
250,193
|
|
(2,959,168)
|
Prepaid value-added taxes on purchases
|
|
-
|
|
256,691
|
Prepaid and other current assets
|
|
21,114
|
|
(11,280)
|
Advances to suppliers
|
|
(85,798)
|
|
113,219
|
Accounts payable
|
|
(168,462)
|
|
(314,445)
|
Accrued expenses
|
|
(487,275)
|
|
(215,395)
|
VAT
and service taxes payable
|
|
(323,532)
|
|
388
|
Income taxes payable
|
|
(574,783)
|
|
(967,226)
|
Advances from customers
|
|
369,986
|
|
(1,216,756)
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
|
11,302,265
|
|
9,794,221
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of property and equipment
|
|
(12,573)
|
|
(10,822,897)
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(12,573)
|
|
(10,822,897)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from bank loans
|
|
4,545,012
|
|
3,091,592
|
Repayments of bank loans
|
|
(4,382,690)
|
|
(3,091,592)
|
(Increase) Decrease in restricted cash
|
|
(113,625)
|
|
244,073
|
Increase (decrease) in bank acceptance notes payable
|
|
113,625
|
|
(244,073)
|
Net
proceeds from sale of common stock
|
|
-
|
|
1,623,691
|
|
|
|
|
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
162,322
|
|
1,623,691
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH EQUIVALENTS
|
|
(615,575)
|
|
(2,582)
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
|
10,836,439
|
|
592,433
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
7,835,791
|
|
1,114,873
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
|
$ 18,672,230
|
|
$ 1,707,306
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
Cash paid for:
|
|
|
|
|
Interest
|
|
$
175,102
|
|
$ 178,313
|
Income taxes
|
|
$ 1,863,955
|
|
$ 3,571,325
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
Property and equipment acquired on credit as payable
|
|
$
-
|
|
$ 321,064
|
Common stock issued for future service
|
|
$
-
|
|
$ 90,554
|
Reconciliation of
Net Income to EBITDA
|
(Amounts expressed
in US$)
|
|
For the Three Months
Ended
|
|
For the Nine Months
Ended
September 30,
|
September
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income
|
$ 904,131
|
|
$ 2,699,741
|
|
$ 3,373,135
|
|
$ 7,314,003
|
Add: income
tax
|
326,357
|
|
953,552
|
|
1,289,172
|
|
2,604,100
|
Add: interest
expense
|
61,131
|
|
60,487
|
|
175,102
|
|
178,313
|
Add: depreciation and
amortization
|
2,045,999
|
|
2,184,933
|
|
6,238,865
|
|
6,317,864
|
Adjusted
EBITDA
|
$ 3,337,618
|
|
$ 5,898,713
|
|
$ 11,076,274
|
|
$ 16,414,280
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-third-quarter-2015-results-300178331.html
SOURCE Cleantech Solutions International, Inc.