-- First Quarter Revenue Increases 177.1% to $8.3 million -- First
Quarter Net Income Increases 41.5% to 0.4 million -- Company
Successfully Launches Its New Flat Plate Collector Production Line
-- Completes Strategic Acquisition of Shenzhen Pengsangpu --
Company Recently Appoints New Chief Financial Officer BEIJING,
China, May 16 /Xinhua-PRNewswire-FirstCall/ -- China Solar &
Clean Energy, Inc. (OTC:CSOL) (BULLETIN BOARD: CSOL) ('CSOL'), a
premier manufacturer and distributor of solar water heaters,
renewable energy solutions, and space heating devices in the
People's Republic of China (the "PRC"), today announced its results
for the first quarter of 2008 which ended March 31, 2008. Sales for
the first quarter of 2008 increased 177.1% to $8.3 million compared
to $3 million for the same quarter in 2007. The significant
increase was primarily due to the increase in higher margin
products such as energy saving projects and heat pipe related
products from the acquisition of Tianjin Huaneng which contributed
approximately $5.5 million in revenues for the first quarter versus
none in the year ago period. Solar Heater and Boiler division
contributed $2.8 million, a decrease of 5.5%, from approximately $3
million in first quarter 2007, which resulted from lower sales
volume and prices caused by increased competition and Chinese New
Year Holiday. Shenzhen Pengsangpu did not contribute as the
effective acquisition date was April 1, 2008. Gross profit for the
three months ended March 31, 2008 was $2.5 million, an increase of
approximately 228.7% from the first quarter of 2007. Gross margins
were 29.6% compared to 24.9% for the first quarter of 2008 and 2007
respectively. The improvement was a result of product and systems
sales related to the acquisition of Tianjin Huaneng. Operating
expenses for the three months ended March 31, 2008 increased 164.8%
to $1.3 million from $0.4 million in the same period in 2007, while
selling, general and administration expenses for the period
increased to approximately $1.1 million from approximately $0.44
million in the first quarter of 2007. The increase was primarily
due to expenses directly related to Tianjin Huaneng which were not
present in the first quarter of 2007, in addition to increased
expenses for overall marketing, which includes costs for
advertisement, promotion and sales force related expenses.
Operating income for the first quarter of 2008 totaled $1.2 million
compared to $0.3 million for the same period in 2007, representing
a 339.2% increase. Operating margins were 14.5% and 9.1% for the
first quarter of 2008 and 2007, respectively. Taxes paid during the
quarter were $0.34 million compared to none in the year ago period.
The company paid $0.5 million in minority interests to the 49%
owners of Tianjin Huaneng Energy Equipment Company which was not
present in the first quarter of 2007. Net income for the 2008 first
quarter increased 41.5% to $0.4 million, representing earnings of
$.03 per diluted share, from $0.3 million in net income, or $.04
per diluted share during the first quarter of 2007. Calculations
were based utilizing 15.3 million and 7.0 million diluted shares
outstanding respectively. During the quarter, the Company issued
approximately 4.7 million shares of common stock at a purchase
price of $2.40 per share, for gross proceeds of approximately $11.3
million. Additionally, the Company deposited 2 million shares of
common stock ('Make Good Shares') into escrow account for its Make
Good Targets of $4.8 million and $8 million in after-tax net income
for 2008 and 2009, respectively. 'We are pleased with our results
despite the typical seasonal softness due to the Chinese New Year
and extremely cold weather. Demand for Tianjin Huaneng energy
saving equipment continued to be robust and was the principal
driver in helping us achieve a 177.1% increase in revenues,'
commented Mr. Deli Du, President and Chief Executive Officer.
'During the quarter, we made further investments in marketing and
advertising which have enabled us to gain additional market share,
while helping to propagate our brand recognition which we believe
will facilitate future growth. While our margins continue to be
impacted by competition and pricing pressure in our core solar hot
water heater market, our emphasis on Tianjin Huaneng's high margin
proprietary energy saving boilers and environmental protection
equipment has improved the Company's overall profitability. In
addition, our new flat plate collector production line is fully
online, something which we believe will further improve our margins
and profitability through enhanced production efficiencies,'
continued Mr. Du. Balance Sheet and Cash Flow Discussion The
Company had $10.7 million and $5.5 million in cash and equivalents
as of March 31, 2008 and December 31, 2007 respectively. The
increase in cash was primarily due to the receipt of net proceeds
of approximately $10 million from the private placement in March.
Inventory increased to $4.1 million as of March 31, 2008, from $3.9
million on December 31, 2007, principally due to increased
production preparing for peak season in second quarter. Accounts
receivable decreased slightly to $7.1 million as of March 31, 2008,
from $7.5 million as of December 31, 2008 due to the improved
collection efforts. 'We expect the acquisition of Shenzhen
PengSangPu, which had an effective acquisition date of March 31,
2008, will be a significant growth driver for the balance of this
year as contributions begin during the second quarter of 2008.
PengSang's proprietary products, engineering expertise and strong
customer base, which includes larger commercial and government
buildings, will create a number of synergies while complementing
our core product portfolio and extending our footprint into the
coveted Southern China market. The acquisition was completed for an
estimated aggregate purchase price of $7.0 million in cash and
stock and make good provisions were a component.' 'I would like to
use this opportunity to welcome Mr. Jacky Yang who recently joined
China Solar as the acting CFO. He brings extensive corporate
finance experience in several industries and will be asset as we
continue to grow our business. Additionally, I want to add that the
recent earthquake which hit the Sichuan Province is not anticipated
to affect our production or sales during 2008,' Mr. Du concluded.
About China Solar & Clean Energy Solutions, Inc. China Solar
& Clean Energy Solutions, Inc. operates through its wholly
owned subsidiaries Bazhou Deli Solar Energy Heating Co. Ltd. ("Deli
Solar (Bazhou)"), Beijing Deli Solar Technology Development Co.,
Ltd. and its 51% ownership in Tianjin Huaneng Group, all located in
the PRC. The Company manufactures and distributes hot water and
space heating devices to customers in the PRC, in addition to waste
heat recovery systems. For more information, please visit
http://www.cn-sce.com/ . Safe Harbor Statement: Certain statements
in this news release may contain forward-looking information about
China Solar & Clean Energy Solutions and its subsidiaries
business and products within the meaning of Rule 175 under the
Securities Act of 1933 and Rule 3b-6 under the Securities Exchange
Act of 1934, and are subject to the safe harbor created by those
rules. The actual results may differ materially depending on a
number of risk factors including, but not limited to, the general
economic and business conditions in the PRC, market and customer
acceptance and demand for products, ability to market products,
fluctuations in foreign currency markets, the use of estimates in
the preparation of financial statements, the impact of competitive
products and pricing, the ability to develop and launch new
products on a timely basis, the regulatory environment,
fluctuations in operating results, and various other factors beyond
its control. All forward-looking statements are expressly qualified
in their entirety by this Cautionary Statement and the risks
factors detailed in the Company's reports filed with the Securities
and Exchange Commission. China Solar & Clean Energy Solutions
undertakes no duty to revise or update any forward-looking
statements to reflect events or circumstances after the date of
this release. -- FINANCIAL TABLES FOLLOW -- CHINA SOLAR & CLEAN
ENERGY SOLUTIONS, INC CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars ('US$'), except for
number of shares) As of As of March 31, December 31, 2008 2007
(Unaudited) (Note 1) ASSETS Current assets: Cash and cash
equivalents $ 10,733,793 $ 5,466,637 Accounts receivable, net
7,116,825 7,453,009 Inventories 4,065,773 3,875,658 Other
receivables and prepayments 4,959,380 1,637,948 Total current
assets 26,875,771 18,433,252 Property, plant and equipment, net
9,401,021 8,819,216 Goodwill 1,789,324 1,789,324 Intangible assets,
net 1,651,885 1,597,921 TOTAL ASSETS $ 39,718,001 $ 30,639,713
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable, trade $ 1,254,717 $ 2,111,028 Income tax payables
1,411,384 1,108,433 Other payables and accrued liabilities
6,906,468 8,552,452 Total current liabilities 9,572,569 11,771,913
Deferred tax liabilities 259,612 -- Minority interests 1,454,872
935,825 Stockholders' equity: Convertible preferred stock 1,609
1,774 Common stock 11,136 6,205 Additional paid-in capital
19,358,497 9,260,607 Accumulated other comprehensive income
1,140,936 1,134,270 Retained earnings 7,918,770 7,529,119 Total
stockholders' equity 28,430,948 17,931,975 TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 39,718,001 $ 30,639,713 CHINA SOLAR &
CLEAN ENERGY SOLUTIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME Currency expressed in United States Dollars ('US$'))
(Unaudited) For the three months ended March 31, 2008 2007 Revenue,
net $ 8,300,076 $ 2,995,863 Cost of revenue 5,845,016 2,248,915
Gross profit 2,455,060 746,948 Operating expenses: Depreciation and
amortization 149,167 35,336 Selling and distribution 502,563 44,030
General and administrative 601,653 393,957 Total operating expenses
1,253,383 473,323 Income from operations 1,201,677 273,625 Other
income (expenses): Other income 41,090 1,657 Interest expense
(33,838) -- Total other income (expenses) 7,252 1,657 Income before
income taxes and minority interest 1,208,929 275,282 Income tax
expense 346,263 -- Income before minority interest 862,666 275,282
Minority interests 473,015 -- NET INCOME $ 389,651 $ 275,282 Net
income per share - basic $ 0.05 $ 0.04 Net income per share -
diluted $ 0.03 $ 0.04 Weighted average shares outstanding - basic
8,009,713 6,205,290 Weighted average shares outstanding - diluted
15,284,770 6,957,876 CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Currency expressed
in United States Dollars ('US$')) (Unaudited) For the three months
ended March 31, 2008 2007 Cash flows from operating activities: Net
cash (used in) provided by operating activities (4,104,526) 909,192
Cash flows from investing activities: Purchase of property, plant
and equipment (730,974) (154,617) Net cash used in investing
activities (730,974) (154,617) Cash flows from financing
activities: Private placement sale of common stock 9,995,156
Warrant exercise of common stock 107,500 -- Net cash (used in)
provided by financing activities 10,102,656 -- Foreign currency
translation adjustment -- 27,551 NET CHANGE IN CASH AND CASH
EQUIVALENTS 5,267,156 782,126 CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 5,466,637 3,212,065 CASH AND CASH EQUIVALENTS, END OF
PERIOD $ 10,733,793 $ 3,994,191 SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION Cash paid for income taxes $ 31,978 $ -- Cash paid
for interest expenses $ 33,838 $ -- For more information, please
contact: Yihai Yang China Solar & Clean Energy Solutions, Inc.
Tel: +86-10-6385-0516 Email: Investor Relations Matthew Hayden HC
International, Inc. Tel: +1-858-704-5065 Email: DATASOURCE: China
Solar & Clean Energy Solutions, Inc. CONTACT: Yihai Yang of
China Solar & Clean Energy Solutions, Inc., +86-10-6385-0516,
or ; or Investor Relations, Matthew Hayden of HC International,
Inc., +1-858-704-5065, or , for CSOL Web Site:
http://www.cn-sce.com/
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