WUXI, China, May 16, 2017 /PRNewswire/ -- Cleantech Solutions
International, Inc. ("Cleantech Solutions" or "the Company")
(NASDAQ: CLNT) today announced its financial results for three
months ended March 31, 2017.
"In the first quarter of 2017, we saw a slight uptick in revenue
as some of our customers who had temporarily ceased operations to
comply with stricter environmental requirements last year resumed
normal operations. Although higher raw material costs impacted
margin and contributed to the slight loss for the quarter, we
generated positive cash flow from operations and improved our cash
position from the end of 2016," said Mr. Jianhua Wu, Chairman and CEO of Cleantech
Solutions. "We expect our revenues to remain relatively stable in
the near future and are focused on improving the long-term outlook
for our business. We continue to develop our next generation dyeing
and finishing equipment based on the patented ozone-ultrasonic
technology. We remain excited about our investment in
Shengxin, a newly formed company that plans to build solar farms in
Guizhou and Yunnan provinces, and are exploring
opportunities to produce precision components for other high growth
industries."
First Quarter 2017 Results
Revenue for the first quarter of 2017 increased by 2.9% to
$4,658,000, compared to $4,527,000 for the same period in 2016. The
Company's only source of revenue is from the dyeing and finishing
business, since the forged rolled rings and related products and
petroleum and chemical equipment businesses are discontinued.
In the first quarter of 2016, some of the Company's customers
temporarily ceased operations to comply with stricter environmental
requirements, resulting in fewer orders for dyeing machines from
these customers. In first quarter of 2017, these customers
restored normal operations, resulting in a slight increase in
revenues in the quarter.
Gross profit for the first quarter of 2017 was $586,000, compared to gross profit of
$821,000 for the same period in 2016.
Gross margin was 12.6% during the first quarter of 2017 compared to
18.1% for the same period in 2016. The decline in gross margin was
primarily attributable to higher raw material costs.
Operating expenses decreased by 12.3% to $682,000, compared to $778,000 for the same period in 2016. The
decrease was primarily due to a reduction of stock-based consulting
fees, which was partially offset by an increase in research and
development expenses for the development of new dyeing and
finishing products.
Loss from operations was $96,000,
compared to income from operations of $43,000 for the same period in 2016.
Loss from continuing operations was $146,000, or $(0.10) per basic and diluted share, compared to
loss from continuing operations of $103,000, or $(0.10) per basic and diluted share for the same
period in 2016.
Loss from discontinued operations (Refer to "Discontinued
Operations" discussion below) was nil for the first quarter of
2017. This compares to loss from discontinued operations of
$741,000, or $(0.72) per basic and diluted share for the first
quarter of 2016.
Net loss for the first quarter of 2017 was $146,000, or $(0.10) per basic and diluted share, compared to
net loss of $844,000, or $(0.82) per basic and diluted share, for the same
period in 2016.
Basic and diluted earnings per share were based on 1,415,441 and
1,025,172 weighted average shares outstanding, respectively, for
the three months ended March 31, 2017
and 2016. All share and per share information has been
adjusted to reflect a 1-for-4 reverse stock split effective
March 20, 2017.
Financial Condition
As of March 31, 2017, Cleantech
Solutions held cash and cash equivalents of $2,829,000 compared to $1,481,000 at December
31, 2016. Accounts receivable were $15,397,000 compared to $13,922,000 at December
31, 2016. Inventories were $2,795,000 compared to $2,394,000 at December 31,
2016. The Company had $2,176,000 and $638,000 in short-term bank loans and bank
acceptance notes payable, respectively, at March 31, 2017, up from $2,160,000 and $547,000, respectively, at December 31, 2016. Working capital was
$22,621,000 at March 31, 2017 compared to $21,539,000 at December
31, 2016. Stockholders' equity was $65,662,000 at March 31,
2017 compared to $65,312,000
at December 31, 2016.
In the first quarter of 2017, the Company generated $1,338,000 in operating cash flow, primarily due
to increases in accounts payable and advances from customers which
were offset by increases in accounts receivable, advances to
suppliers and inventory and the net loss for the period.
Discontinued Operations
On December 30, 2016, the Company
sold 100% of the stock of Wuxi Fulland Wind Energy Equipment Co.,
Ltd. ("Fulland Wind") to an unrelated party and discontinued the
Company's forged rolled rings and related components business.
Additionally, the Company's management decided to discontinue its
petroleum and chemical equipment segment due to significant
declines in revenues and the loss of its major customer. As such,
the assets and liabilities of these two segments were classified on
the unaudited condensed consolidated balance sheets as assets and
liabilities of discontinued operations as of March 31, 2017 and December 31, 2016 and the operating results were
classified as discontinued operations in the unaudited condensed
consolidated statements of operations for the three months ended
March 31, 2016.
About Cleantech Solutions International
Cleantech Solutions, through its affiliated companies, designs,
manufactures and distributes a line of proprietary high and low
temperature dyeing and finishing machinery to the textile
industry.
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 as anticipated, believed, estimated or expected.
The business of Shengxin involves a high degree of risk, the
Company does not have any control over the operations of Shengxin,
and the Company can give no assurance as to whether Shengxin will
ever generate revenue or positive cash flow or whether the Company
can or will supply components to Shengxin. 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, 2016 and in our Form
10-Q for the quarter ended March 31,
2017. 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.
May Liu, Investor Relations
E-mail: ir@cleantechsolutionsinternational.com
+852-31060372
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
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE GAIN
(LOSS)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
REVENUES
|
$
|
4,657,454
|
$
|
4,526,700
|
COST OF
REVENUES
|
|
4,071,600
|
|
3,705,479
|
GROSS
PROFIT
|
|
585,854
|
|
821,221
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
Depreciation
|
|
268,365
|
|
137,909
|
|
Selling, general and
administrative
|
|
307,659
|
|
621,522
|
|
Research and
development
|
|
106,077
|
|
18,401
|
|
|
Total operating
expenses
|
|
682,101
|
|
777,832
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
OPERATIONS
|
|
(96,247)
|
|
43,389
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
Interest
income
|
|
1,878
|
|
8,416
|
|
Interest
expense
|
|
(39,690)
|
|
(32,610)
|
|
Loss on equity method
investment
|
|
(18,355)
|
|
-
|
|
Foreign currency
transaction gain
|
|
-
|
|
108
|
|
Other
income
|
|
16,992
|
|
-
|
|
|
Total other expense,
net
|
|
(39,175)
|
|
(24,086)
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
CONTINUING OPERATIONS BEFORE PROVISION
FOR INCOME TAXES
|
(135,422)
|
|
19,303
|
|
Income taxes
provision
|
|
11,062
|
|
122,818
|
|
|
|
|
|
|
|
LOSS FROM CONTINUING
OPERATIONS
|
|
(146,484)
|
|
(103,515)
|
|
|
|
|
|
|
|
LOSS FROM
DISCONTINUED OPERATIONS, NET OF INCOME TAXES
|
-
|
|
(740,578)
|
|
|
|
|
|
|
|
NET LOSS
|
$
|
(146,484)
|
$
|
(844,093)
|
|
|
|
|
|
|
|
COMPREHENSIVE GAIN
(LOSS):
|
|
|
|
|
|
Net loss
|
$
|
(146,484)
|
$
|
(844,093)
|
|
Other comprehensive
gain:
|
|
|
|
|
|
|
Unrealized foreign
currency translation gain
|
|
496,124
|
|
525,948
|
|
Comprehensive gain
(loss)
|
$
|
349,640
|
$
|
(318,145)
|
|
|
|
|
|
|
|
NET LOSS PER COMMON
SHARE:
|
|
|
|
|
|
Continuing operations
- Basic and diluted
|
$
|
(0.10)
|
$
|
(0.10)
|
|
Discontinued
operations - basic and diluted
|
|
-
|
|
(0.72)
|
|
Net loss per common
share - basic and diluted
|
$
|
(0.10)
|
$
|
(0.82)
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
Basic and
diluted
|
|
1,415,441
|
|
1,025,172
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2017
|
December 31,
2016
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,828,692
|
$
|
1,481,498
|
|
Restricted
cash
|
|
642,263
|
|
551,047
|
|
Notes
receivable
|
|
82,697
|
|
133,913
|
|
Accounts receivable,
net of allowance for doubtful accounts
|
15,397,185
|
|
13,922,371
|
|
Inventories, net of
reserve for obsolete inventories
|
2,795,003
|
|
2,394,179
|
|
Advances to
suppliers
|
|
1,503,012
|
|
1,116,525
|
|
Deferred tax
assets
|
|
389,308
|
|
386,381
|
|
Receivable from sale
of subsidiary
|
|
4,874,793
|
|
4,838,152
|
|
Prepaid expenses and
other
|
|
1,313,122
|
|
9,074
|
|
Assets of
discontinued operations
|
|
498,330
|
|
1,758,986
|
|
|
|
|
|
|
|
|
|
Total current
assets
|
|
30,324,405
|
|
26,592,126
|
|
|
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
|
|
Equity method
investment
|
|
8,657,630
|
|
8,610,759
|
|
Property and
equipment, net
|
|
29,138,898
|
|
29,878,675
|
|
Intangible assets,
net
|
|
5,244,236
|
|
5,283,695
|
|
|
|
|
|
|
|
|
|
Total other
assets
|
|
43,040,764
|
|
43,773,129
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
|
73,365,169
|
$
|
70,365,255
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
Short-term bank
loans
|
$
|
2,176,247
|
$
|
2,159,889
|
|
Bank acceptance notes
payable
|
|
638,366
|
|
547,172
|
|
Accounts
payable
|
|
2,453,499
|
|
864,870
|
|
Accrued
expenses
|
|
273,802
|
|
368,395
|
|
Advances from
customers
|
|
1,506,630
|
|
427,446
|
|
VAT and service taxes
payable
|
|
26,827
|
|
47,319
|
|
Income taxes
payable
|
|
78,325
|
|
79,467
|
|
Liabilities of
discontinued operations
|
549,796
|
|
558,661
|
|
|
|
|
|
|
|
|
|
Total current
liabilities
|
|
7,703,492
|
|
5,053,219
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
7,703,492
|
|
5,053,219
|
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
Preferred stock
($0.001 par value; 10,000,000 shares authorized;
|
|
|
No shares issued and
outstanding at March 31, 2017 and December 31,
2016)
|
-
|
|
-
|
|
Common stock ($0.001
par value; 12,500,000 shares authorized;
|
|
|
1,415,441 shares
issued and outstanding at March 31, 2017 and
December 31, 2016)
|
1,415
|
|
1,415
|
|
Additional paid-in
capital
|
|
35,549,542
|
|
35,549,542
|
|
Retained
earnings
|
|
26,385,014
|
|
26,531,498
|
|
Statutory
reserve
|
|
2,352,592
|
|
2,352,592
|
|
Accumulated other
comprehensive income - foreign currency translation
adjustment
|
1,373,114
|
|
876,989
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
65,661,677
|
|
65,312,036
|
|
|
|
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
$
|
73,365,169
|
$
|
70,365,255
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
|
March 31,
|
|
|
|
|
2017
|
|
2016
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net loss
|
$
|
(146,484)
|
$
|
(844,093)
|
|
Adjustments to
reconcile net loss from operations to net cash
|
|
|
|
provided by operating
activities:
|
|
|
|
|
|
|
Depreciation
|
|
968,190
|
|
955,279
|
|
|
Depreciation -
discontinued operations
|
|
-
|
|
719,449
|
|
|
Amortization of
intangible assets
|
|
79,531
|
|
22,599
|
|
|
Loss on equity method
investment
|
|
18,355
|
|
-
|
|
|
Stock-based
compensation and fees
|
|
9,074
|
|
428,250
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Notes
receivable
|
|
52,267
|
|
14,145
|
|
|
Accounts
receivable
|
|
(1,370,349)
|
|
(73,789)
|
|
|
Inventories
|
|
(382,965)
|
|
(202,137)
|
|
|
Prepaid and other
current assets
|
|
(7,374)
|
|
(25,938)
|
|
|
Advances to
suppliers
|
|
(378,300)
|
|
(27,153)
|
|
|
Assets of
discontinued operations
|
|
(31,792)
|
|
(218,205)
|
|
|
Accounts
payable
|
|
1,583,204
|
|
6,033
|
|
|
Accrued
expenses
|
|
(95,971)
|
|
(361,554)
|
|
|
VAT and service taxes
payable
|
|
(20,865)
|
|
(93,838)
|
|
|
Income taxes
payable
|
|
(1,746)
|
|
(54,883)
|
|
|
Advances from
customers
|
|
1,076,712
|
|
287,252
|
|
|
Liabilities of
discontinued operations
|
|
(13,106)
|
|
(401,772)
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
1,338,381
|
|
129,645
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Purchase of property
and equipment
|
|
(1,444)
|
|
(9,332)
|
|
|
|
|
|
|
|
Net cash used in
investing activities
|
|
(1,444)
|
|
(9,332)
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from bank
loans
|
|
-
|
|
1,529,176
|
|
Repayments of bank
loans
|
|
-
|
|
(1,605,635)
|
|
(Increase) decrease
in restricted cash
|
|
(87,112)
|
|
458,753
|
|
Increase in
restricted cash - discontinued operations
|
-
|
|
(68,813)
|
|
Increase (decrease)
in bank acceptance notes payable
|
87,112
|
|
(458,753)
|
|
Increase in bank
acceptance notes payable - discontinued operations
|
-
|
|
58,109
|
|
|
|
|
|
|
|
Net cash used in
financing activities
|
|
-
|
|
(87,163)
|
|
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
10,257
|
|
125,461
|
|
|
|
|
|
|
|
Net increase in cash
and cash equivalents
|
|
1,347,194
|
|
158,611
|
|
|
|
|
|
|
|
Cash and cash
equivalents - beginning of period
|
|
1,481,498
|
|
18,790,370
|
|
|
|
|
|
|
|
Cash and cash
equivalents - end of period
|
$
|
2,828,692
|
$
|
18,948,981
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
Cash paid in
continuing operations for:
|
|
|
|
|
|
|
Interest
|
$
|
39,690
|
$
|
32,610
|
|
|
Income
taxes
|
$
|
12,808
|
$
|
177,701
|
|
|
|
|
|
|
|
|
Cash paid in
discontinued operations for:
|
|
|
|
|
|
|
Interest
|
$
|
-
|
$
|
23,104
|
|
|
Income
taxes
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
Stock issued for
future services
|
$
|
-
|
$
|
110,350
|
|
Stock issued for
accrued liabilities
|
$
|
-
|
$
|
64,000
|
|
Increase in prepaid
expenses and other from sale of equipment
|
$
|
1,306,677
|
$
|
-
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-first-quarter-2017-results-300458200.html
SOURCE Cleantech Solutions International, Inc.