WUXI, China, May 15, 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 months ended March 31, 2015.
"In the first quarter of 2015, credit conditions in China adversely impacted the ability of some
of our dyeing equipment customers to make timely payments. In order
to reduce our business risk, we postponed shipments of low-emission
airflow dyeing machines to certain customers who were behind in
payments. In addition, we experienced softer demand for our
low-emission airflow dyeing machines, as many of our customers
upgraded to new models in 2014, and our forged rolled rings and
related components. Despite the challenging economic conditions, we
were profitable, generated positive cash flow and closed the
quarter with $12.9 million in cash
and equivalents," said Mr. Jianhua
Wu, Chairman and CEO of Cleantech Solutions. "This quarter
also marked our entry into the petroleum and chemical equipment
market, a business we hope will make a meaningful contribution to
our revenue in 2015 as we work to fulfill the purchase orders
received late last year and early this year."
First Quarter 2015 Results
Revenue for the first quarter of 2015 decreased by 11.3% to
$15.6 million, compared to
$17.6 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 to the wind power
and other industries fell by 11.9% to $7.3
million, compared with $8.3
million for the comparable period of the prior year. The
Company previously broke down the information from this segment
between wind power and other industries. Because the Company no
longer believes that this distinction is material, it is providing
information as to all forged rolled rings and related components
without separating the two types of customers.
- Revenue from the dyeing and finishing equipment segment
decreased by 30.4% to $6.5 million,
compared to $9.4 million for the
first quarter of 2014.
- The Company generated $1.8
million in revenues from sales of equipment to customers in
the petroleum and chemical industries starting in the first quarter
of 2015, and has classified sales of equipment to customers in
these industries as one of its reportable business segments for
2015.
Gross profit for the first quarter of 2015 decreased by 28.1% to
$3.1 million, compared to
$4.3 million for the same period in
2014. Gross margin was 19.6% during the first quarter of 2015
compared to 24.2% for the same period a year ago. The decline in
gross margin for the first 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
products and components and dyeing and finishing equipment segments
combined with a slight increase in labor costs, and (ii) the
production of new styles of dyeing and finishing machines and (iii)
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. The Company
hopes to improve gross margin from each of its business segments to
the extent it is able to generate sufficient revenue to enable it
to scale operations.
Operating expenses increased by 25.1% to $1.2 million, compared to $1.0 million in the comparable period last year.
The increase was primarily due to higher depreciation expenses
related to new office equipment, furniture and other improvements,
and the inclusion of depreciation for certain manufacturing
machinery that was temporarily idle in the first quarter of 2015,
for which the related depreciation was categorized as an operating
expense in the current quarter as contrasted with cost of revenues
in the comparable period last year.
Selling, general and administrative expenses increased by 1.6%
to $0.9 million, primarily due to
higher stock-based compensation expenses, which were offset by
reductions in shipping, travel and entertainment expenses,
professional fees and other expenses.
Operating income was $1.8 million,
compared to operating income of $3.3
million in the same period of 2014. Operating margin was
11.7% compared to 18.6% in the same period of 2014.
EBITDA, a non-GAAP measurement, which adds to net income
interest expense, income tax, depreciation and amortization, was
$3.9 million, compared to
$5.3 million in the first quarter
last year. The calculation of EBITDA is shown in a table following
the financial statements.
Net income for the first quarter of 2015 was $1.2 million, or $0.32 per basic and diluted share, compared to
net income of $2.4 million, or
$0.68 per basic and diluted share, in
the first quarter of 2014.
Financial Condition
As of March 31, 2015, Cleantech
Solutions held cash and cash equivalents of $12.9 million compared to $7.8 million at December
31, 2014. Accounts receivable were $18.1 million compared to $20.3 million at December
31, 2014. Inventories were $5.2
million compared to $4.2
million at December 31, 2014.
Total current assets were $37.8
million as of March 31, 2015.
The Company had $3.0 million in
short-term bank loans payable at March 31,
2015, relatively unchanged from December 31, 2014. Stockholders' equity was
$99.3 million at March 31, 2015. In the first quarter of 2015, the
Company generated $5.0 million in
cash flow from operations.
Business Outlook
"Despite the slow start to the year, we expect to generate
revenue growth in 2015. We are excited by the opportunities in the
petroleum and chemical industries, and are making good progress
fulfilling the orders we have on hand," said Mr. Wu. "We believe
the Chinese government's recent actions to loosen monetary policy,
if it continues, will have a positive impact on credit conditions
in the near term, and we expect to receive payment and ship the
temporarily delayed low-emission airflow dyeing machines in the
second and third quarters of 2015. We will showcase our new
air-fluid, dual-use dyeing machine at the 17th
International Exhibition on Textile Industry in Shanghai, where we hope to generate strong
interest from textile manufacturers seeking to comply with
China's more aggressive pollution
control requirements."
Conference Call
Cleantech Solutions will conduct a conference call at
9:00 a.m. Eastern Daylight Time on
Monday, May 18, 2015 to discuss
financial results for the first quarter ended March 31, 2015.
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 May
25, 2015 at 9:00 am EDT. To
access the replay, dial (877) 344-7529 or (412) 317-0088 for
international callers and enter pin code: 10065993.
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 March 31, 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
- Financial Tables Follow-
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
|
For the Three Months
Ended
|
|
|
March 31,
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
REVENUES
|
|
$
|
15,646,465
|
|
|
$
|
17,635,271
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
|
12,574,433
|
|
|
|
13,361,985
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
|
3,072,032
|
|
|
|
4,273,286
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
344,696
|
|
|
|
109,859
|
Selling, general and
administrative
|
|
|
874,545
|
|
|
|
860,599
|
Research and
development
|
|
|
28,698
|
|
|
|
26,871
|
|
|
|
|
|
|
|
|
Total Operating
Expenses
|
|
|
1,247,939
|
|
|
|
997,329
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
|
1,824,093
|
|
|
|
3,275,957
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
Interest
income
|
|
|
5,833
|
|
|
|
5,240
|
Interest
expense
|
|
|
(57,343)
|
|
|
|
(57,727)
|
Grant
income
|
|
|
-
|
|
|
|
31,887
|
Foreign currency
transaction loss
|
|
|
(11)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
Total Other Income
(Expense), net
|
|
|
(51,521)
|
|
|
|
(20,600)
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
|
1,772,572
|
|
|
|
3,255,357
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
|
530,138
|
|
|
|
858,999
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
1,242,434
|
|
|
$
|
2,396,358
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
NET INCOME
|
|
$
|
1,242,434
|
|
|
$
|
2,396,358
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS):
|
|
|
|
|
|
|
|
Unrealized foreign
currency translation gain (loss)
|
|
|
472,980
|
|
|
|
(781,788)
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$
|
1,715,414
|
|
|
$
|
1,614,570
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.32
|
|
|
$
|
0.68
|
Diluted
|
|
$
|
0.32
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
Basic
|
|
|
3,934,653
|
|
|
|
3,503,502
|
Diluted
|
|
|
3,934,653
|
|
|
|
3,503,502
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
March 31,
2015
|
|
|
December 31,
2014
|
ASSETS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
12,855,900
|
|
|
$
|
7,835,791
|
Restricted
cash
|
|
|
409,226
|
|
|
|
488,719
|
Notes
receivable
|
|
|
112,520
|
|
|
|
114,034
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
18,073,455
|
|
|
|
20,316,037
|
Inventories, net of
reserve for obsolete inventories
|
|
|
5,204,565
|
|
|
|
4,241,022
|
Advances to
suppliers
|
|
|
599,757
|
|
|
|
565,581
|
Deferred tax
assets
|
|
|
377,552
|
|
|
|
375,744
|
Prepaid expenses and
other
|
|
|
158,685
|
|
|
|
153,260
|
Total Current
Assets
|
|
|
37,791,660
|
|
|
|
34,090,188
|
|
|
|
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
|
|
67,884,885
|
|
|
|
69,628,597
|
|
|
|
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
|
|
|
|
Equipment held for
sale
|
|
|
424,573
|
|
|
|
422,540
|
Land use rights,
net
|
|
|
3,665,902
|
|
|
|
3,672,420
|
Total
Assets
|
|
$
|
109,767,020
|
|
|
$
|
107,813,745
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
|
|
|
|
Short-term bank
loans
|
|
$
|
3,028,269
|
|
|
$
|
3,095,219
|
Bank acceptance notes
payable
|
|
|
409,226
|
|
|
|
488,719
|
Accounts
payable
|
|
|
5,220,009
|
|
|
|
4,322,275
|
Accrued
expenses
|
|
|
546,021
|
|
|
|
1,059,579
|
Advances from
customers
|
|
|
821,788
|
|
|
|
495,461
|
VAT and service taxes
payable
|
|
|
259,729
|
|
|
|
500,569
|
Income taxes
payable
|
|
|
171,361
|
|
|
|
531,120
|
Total Current
Liabilities
|
|
|
10,456,403
|
|
|
|
10,492,942
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
10,456,403
|
|
|
|
10,492,942
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
|
|
|
|
Preferred stock
($0.001 par value; 10,000,000 shares authorized; 0 share issued and
outstanding at March 31, 2015 and December 31, 2014)
|
|
|
-
|
|
|
|
-
|
Common stock ($0.001
par value; 50,000,000 shares authorized; 3,939,986 and 3,859,986
shares issued and outstanding at March 31, 2015 and December 31,
2014, respectively)
|
|
|
3,940
|
|
|
|
3,860
|
Additional paid-in
capital
|
|
|
33,792,177
|
|
|
|
33,517,857
|
Retained
earnings
|
|
|
51,145,303
|
|
|
|
50,039,267
|
Statutory
reserve
|
|
|
3,430,597
|
|
|
|
3,294,199
|
Accumulated other
comprehensive income - foreign currency translation
adjustment
|
|
|
10,938,600
|
|
|
|
10,465,620
|
Total Stockholders'
Equity
|
|
|
99,310,617
|
|
|
|
97,320,803
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity
|
|
$
|
109,767,020
|
|
|
$
|
107,813,745
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For the Three Months
Ended
|
|
|
March 31,
|
|
|
2015
|
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net income
|
|
$
|
1,242,434
|
|
|
$
|
2,396,358
|
Adjustments to
reconcile net income from operations to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2,074,507
|
|
|
|
1,965,274
|
Amortization of land
use rights
|
|
|
24,086
|
|
|
|
24,165
|
Stock-based
compensation
|
|
|
274,400
|
|
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Notes
receivable
|
|
|
2,054
|
|
|
|
626,267
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
|
2,330,169
|
|
|
|
1,438,666
|
Inventories
|
|
|
(939,030)
|
|
|
|
(1,423,313)
|
Prepaid value-added
taxes on purchases
|
|
|
-
|
|
|
|
369,574
|
Prepaid and other
current assets
|
|
|
(4,835)
|
|
|
|
(13,343)
|
Advances to
suppliers
|
|
|
(31,318)
|
|
|
|
78,486
|
Accounts
payable
|
|
|
873,118
|
|
|
|
(598,233)
|
Accrued
expenses
|
|
|
(515,767)
|
|
|
|
(427,424)
|
VAT and service taxes
payable
|
|
|
(242,190)
|
|
|
|
(52,228)
|
Income taxes
payable
|
|
|
(360,739)
|
|
|
|
(294,175)
|
Advances from
customers
|
|
|
322,533
|
|
|
|
(321,360)
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
|
|
5,049,422
|
|
|
|
3,768,714
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(4,755)
|
|
|
|
(2,868,611)
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
|
(4,755)
|
|
|
|
(2,868,611)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from bank
loans
|
|
|
2,200,202
|
|
|
|
981,098
|
Repayments of bank
loans
|
|
|
(2,281,691)
|
|
|
|
(981,098)
|
Decrease in
restricted cash
|
|
|
81,489
|
|
|
|
277,978
|
Decrease in bank
acceptance notes payable
|
|
|
(81,489)
|
|
|
|
(277,978)
|
NET CASH USED IN
FINANCING ACTIVITIES
|
|
|
(81,489)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH EQUIVALENTS
|
|
|
56,931
|
|
|
|
(13,870)
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
|
|
5,020,109
|
|
|
|
886,233
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
|
7,835,791
|
|
|
|
1,114,873
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
|
$
|
12,855,900
|
|
|
$
|
2,001,106
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
57,343
|
|
|
$
|
57,727
|
Income
taxes
|
|
$
|
890,876
|
|
|
$
|
1,153,173
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Property and
equipment acquired on credit as payable
|
|
$
|
-
|
|
|
$
|
267,324
|
|
|
|
Reconciliation of Net
Income (Loss) to EBITDA
|
(Amounts expressed in
US$)
|
|
|
|
|
For the Three Months
Ended
December 31,
|
|
|
|
2014
|
|
|
|
2013
|
Net income
(loss)
|
|
$
|
1,242,434
|
|
|
$
|
2,396,358
|
Add: income
tax
|
|
|
530,138
|
|
|
|
858,999
|
Add: interest
expense
|
|
|
57,343
|
|
|
|
57,727
|
Add: depreciation and
amortization
|
|
|
2,098,593
|
|
|
|
1,989,439
|
Adjusted
EBITDA
|
|
$
|
3,928,508
|
|
|
$
|
5,302,523
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-first-quarter-2015-results-300084292.html
SOURCE Cleantech Solutions International, Inc.