- Revenues - increased 125% to $12.5 million from $5.6 million in
2Q08 - Net income - increased 257% to $2.6 million from $0.73
million in 2Q08 - Earnings Per Share of $0.11, an increase of 267%
from EPS $0.03 in 2Q08 - Raises 3rd quarter 2009 financial guidance
to approximately $35 million in revenues and approximately $6.8
million in net income - Raises 2009 earnings guidance to
approximately $15.5 million in net income on revenues of
approximately $80 million - Successfully completed recent asset
acquisition of one of China's largest industry players - Positive
signs of economic growth in China, anticipates earnings growth
momentum to continue into 2010 NEW YORK, Aug. 11 /PRNewswire-Asia/
-- SmartHeat Inc. (NASDAQ:HEAT) (website:
http://www.smartheatinc.com/), a market leader in China's clean
technology, energy savings industry today announced record
financial results for the 2nd quarter ended June 30, 2009.
SmartHeat's products significantly reduce heat energy costs,
increase energy efficiency and reduce air pollution. SmartHeat is a
U.S. company with its primary operations in China. James Jun Wang,
Chairman & CEO of SmartHeat, commented: "Our strong 2nd quarter
financial results reflected management's excellent execution of our
growth strategies in a favorable market environment for our
industry. Due to China's effective implementation of its economic
stimulus plan in which the energy savings industry was particularly
supported by the Chinese government as a sector that receives
significant funding allocations, China's heat energy savings
industry has not been negatively impacted by the current global
economic slowdown. As a market leader in this space, we believe
SmartHeat will continue to deliver consistent and rapid earnings
growth in the foreseeable future." Mr. Wang continued: "SmartHeat
noticed positive signs of economic recovery and gradual expansion
in China's energy savings industry. The current economic slowdown
has significantly increased customer awareness towards utilization
of energy savings equipment from which we are a primary
beneficiary. SmartHeat is well positioned to potentially reap
significant benefits from the world's economic recovery." Record
2nd Quarter Revenues -- Revenues of $12.5 million, up 125%,
compared to $5.6 million in Q2 2008. -- Significant revenue
increase was due to continued market expansion in a favorable
market environment. -- SmartHeat experienced significant sales and
earnings growth across all product lines. Record 2nd Quarter Net
Income -- Net income of $2.6 million, up 257%, compared to $0.73
million in Q2 2008. -- Fully diluted EPS of $0.11, up 267%,
compared to EPS of $0.03 in Q2 2008. -- Total shares issued and
outstanding as of June 30, 2009 were 24,179,900 shares. -- The
significant increase in net income was primarily due to greater
economies of scale in production costs combined with rapid growth
in revenues and improved operating efficiency. Raises 3rd Quarter
2009 Earnings Guidance Based on our anticipated greater pace of
economic recovery in the 2nd half and increased customer demand for
our products as we have entered our seasonally strongest quarter in
a year, SmartHeat raises 3rd quarter earnings guidance to
approximately $35 million in revenues and approximately $6.8
million in net income. In the 3rd quarter of 2008, SmartHeat
reported revenues of $20.7 million and net income of $4.3 million.
Raises Full Year 2009 Earnings Guidance SmartHeat raises full year
2009 earnings guidance to approximately $15.5 million in net income
on approximately $80 million in revenues. In 2008, SmartHeat
reported revenues of $32.7 million and net income of $6.34 million.
Business Outlook Mr. Wang commented: "Since the beginning of the
2nd half, we have experienced greater customer order flow and
willingness among our existing and new customers to increase demand
for our energy savings equipment. Our recently completed asset
acquisition of one of China's largest PHE manufacturers has not
only expanded our production capabilities but also extended our
product offerings to new customer segments. We believe SmartHeat's
rapid earnings growth momentum will continue well into 2010 as we
anticipate broader global economic recovery next year. We are
optimistic that SmartHeat is on track to achieve solid 3rd quarter
earnings growth and another year of record success in 2009 for our
growing list of individual and institutional shareholders." About
SmartHeat Inc. Founded by James Jun Wang, a former executive at
Honeywell China, SmartHeat Inc. (http://www.smartheatinc.com/) is a
NASDAQ Global Market listed (NASDAQ:HEAT) US company with its
primary operations in China. SmartHeat is a market leader in
China's clean technology energy savings industry. SmartHeat
manufactures standard plate heat exchangers (PHEs), custom plate
heat exchanger units (PHE Units) and heat meters. SmartHeat's
products directly address air pollution problems in China where
massive coal burning for cooking and heating purposes is the only
source of economical heat energy in China. With broad product
applications, SmartHeat's products significantly reduce heating
costs, increase energy use and reduce air pollution. SmartHeat's
customers include global Fortune 500 companies as well as
municipalities and industrial/residential users. China's heat
transfer market is currently estimated at approximately $2.4
billion with double-digit annual growth according to China Heating
Association. Safe Harbor Statement All statements in this press
release that are not historical are forward-looking statements made
pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. There can be no assurance that
actual results will not differ from the company's expectations.
SmartHeat's actual results may differ from its projections.
Further, preliminary results are subject to normal year-end
adjustments. You are cautioned not to place undue reliance on any
forward-looking statements in this press release as they reflect
SmartHeat's current expectations with respect to future events and
are subject to risks and uncertainties that may cause actual
results to differ materially from those contemplated. Potential
risks and uncertainties include, but are not limited to, the risks
described in SmartHeat's filings with the Securities and Exchange
Commission. Contact Corporate Communications: Ms. Jane Ai,
Corporate Secretary SmartHeat Inc. Tel: 011-86-24-25363366 Email:
SMARTHEAT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF
AS OF JUNE 30, DECEMBER 31, 2009 2008 (UNAUDITED) ASSETS CURRENT
ASSETS Cash & cash equivalents $2,408,714 $1,435,212 Restricted
cash 933,312 462,048 Accounts receivable, net 8,997,822 11,390,169
Retentions receivable 357,683 290,852 Advances to suppliers
2,909,069 412,524 Other receivables, prepayments and deposits
1,366,965 698,834 Inventories 8,220,181 6,107,583 Note receivable -
bank acceptance 14,637 14,631 ------ ------ Total current assets
25,208,383 20,811,853 NON-CURRENT ASSETS Restricted cash 23,345
219,472 Accounts receivable, net 740,116 310,810 Retentions
receivable 1,420,830 166,912 Intangible assets, net 4,179,143
1,155,131 Property and equipment, net 7,363,041 2,436,553 ---------
--------- Total noncurrent assets 13,726,475 4,288,878 -----------
----------- TOTAL ASSETS $38,934,858 $25,100,731 ===========
=========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES Accounts payable $1,620,935 $1,210,906 Unearned revenue
1,691,800 850,408 Notes payable - bank acceptance 762,710 - Taxes
payable 559,085 1,327,775 Accrued liabilities and other payables
5,968,709 1,330,812 Due to minority shareholder - 5,303 Loans
payable 5,562,142 2,443,450 --------- --------- Total current
liabilities 16,165,381 7,168,654 OTHER PAYABLES - NONCURRENT
1,200,586 - DEFERRED TAX LIABILITY 23,488 38,854 COMMITMENTS AND
CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, $0.001 par value;
75,000,000 shares authorized, 24,179,900 shares issued and
outstanding at June 30, 2009 and December 31, 2008, respectively
24,180 24,180 Paid in capital 8,223,671 8,223,453 Statutory reserve
1,530,781 1,150,542 Accumulated other comprehensive income 997,772
984,629 Retained earnings 10,768,999 7,510,419 ---------- ---------
Total stockholders' equity 21,545,403 17,893,223 -----------
----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $38,934,858
$25,100,731 =========== =========== The accompanying notes are an
integral part of these consolidated financial statements SMARTHEAT,
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER
COMPREHENSIVE INCOME (UNAUDITED) FOR THE SIX MONTHS FOR THE THREE
MONTHS ENDED JUNE 30, ENDED JUNE 30, ------------------
-------------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net
sales $18,705,898 $8,637,283 $12,498,395 $5,558,232 Cost of goods
sold 11,874,903 6,228,156 7,973,956 4,115,200 ---------- ---------
--------- --------- Gross profit 6,830,995 2,409,127 4,524,439
1,443,032 Operating expenses Selling expenses 1,159,532 608,028
698,619 410,607 General and administrative expenses 1,340,132
446,470 770,610 162,325 --------- ------- ------- ------- Total
operating expenses 2,499,664 1,054,498 1,469,229 572,932 ---------
--------- --------- ------- Income from operations 4,331,331
1,354,629 3,055,210 870,100 Non-operating income (expenses)
Interest income 80,421 260,683 63,740 113,545 Interest expense
(117,612) (163,040) (64,760) (96,412) Subsidy income 35,340 9,141
35,340 9,141 Other expense (11,199) - (10,119) (2,891) Other income
969 8,290 969 - --- ----- --- - Total non-operating income
(expenses) (12,081) 115,074 25,170 23,383 Income before income tax
4,319,250 1,469,703 3,080,380 893,483 Income tax expense 680,432
266,028 462,831 161,071 ------- ------- ------- ------- Net income
3,638,818 1,203,675 2,617,549 732,412 Other comprehensive item
Foreign currency translation 13,143 410,896 11,433 168,802 ------
------- ------ ------- Comprehensive Income $3,651,961 1,614,571
$2,628,982 $901,214 ========== ========= ========== ======== Basic
weighted average shares outstanding 24,179,900 20,213,419
24,179,900 21,926,838 ---------- ---------- ---------- ----------
Diluted weighted average shares outstanding 24,191,063 20,213,419
24,206,099 21,926,838 ---------- ---------- ---------- ----------
Basic earnings per share $0.15 $0.06 $0.11 $0.03 ===== ===== =====
===== Diluted earnings per share $0.15 $0.06 $0.11 $0.03 =====
===== ===== ===== The accompanying notes are an integral part of
these consolidated financial statements SMARTHEAT, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR
THE SIX MONTHS ENDED JUNE 30, 2009 2008 ---- ---- CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $3,638,818 $1,203,675 Adjustments
to reconcile net income to net cash (used in) provided by operating
activities: Depreciation and amortization 194,027 104,038 Unearned
interest on accounts receivable 68,292 (22,366) Stock option
compensation expense 218 - Decrease in deferred tax liability
(15,380) - (Increase) decrease in current assets: Accounts
receivable 1,349,607 (1,803,120) Retentions receivable (1,320,413)
346,914 Advances to suppliers (2,487,309) (1,888,198) Other
receivables, prepayments and deposits (1,468,178) (277,990)
Inventories (2,109,938) 2,874,481 Increase (decrease) in current
liabilities: Accounts payable 1,721,658 1,358,223 Unearned revenue
840,957 (1,709,100) Taxes payable (769,124) (167,960) Accrued
liabilities and other payables 226,202 423,418 ------- ------- Net
cash (used in) provided by operating activities (130,563) 442,015
-------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Restricted
cash (274,835) (229,833) Construction in progress - (39,549)
Acquisition of property & equipment (239,005) (119,299)
-------- -------- Net cash used in investing activities (513,840)
(388,681) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of assets acquisition liability (1,500,139) - Repayment to
shareholder - (44,862) Proceeds from (Repayment to) short term
loans 3,117,362 (213,152) --------- -------- Net cash provided by
(used in) financing activities 1,617,223 (258,014) ---------
-------- EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH
EQUIVALENTS 682 19,028 NET INCREASE (DECREASE) IN CASH & CASH
EQUIVALENTS 973,502 (185,652) CASH & CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,435,212 393,147 --------- ------- CASH &
CASH EQUIVALENTS, END OF PERIOD $2,408,714 $207,495 ==========
======== Supplemental Cash flow data: Income tax paid $995,787
$197,756 ======== ======== Interest paid $121,259 $87,887 ========
======= The accompanying notes are an integral part of these
consolidated financial statements DATASOURCE: SmartHeat Inc.
CONTACT: Ms. Jane Ai, Corporate Secretary, SmartHeat Inc.,
011-86-24-25363366, Web Site: http://www.smartheatinc.com/
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