WUXI, China, Aug. 14, 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 six months
ended June 30, 2015.
"In the second quarter of 2015, economic conditions in
China impacted capital spending,
particularly in our forged rolled rings and related products
business, which saw a significant drop in revenue during the
quarter. Sales in our dyeing equipment segment also declined,
as concerns regarding the ability of some of our customers to make
timely payments caused us to delay shipment of certain
orders. We also experienced softer demand for our
low-emission airflow dyeing machines, as many of our customers
upgraded to new models last year," said Mr. Jianhua Wu, Chairman and CEO of Cleantech
Solutions. "Sales to customers in the petroleum and chemical
equipment, particularly the major contract we received from a large
state-owned enterprise for parts and equipment to be used on a
major chemical project in Xinjiang, made a meaningful contribution
to revenue and partially offset the sales decline in other
segments. We remained profitable, generated positive cash
flow and closed the quarter with a stronger balance sheet."
Second Quarter 2015 Results
Revenue for the second quarter of 2015 decreased by 13.3% to
$15.2 million, compared to
$17.5 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 61.8% to
$3.0 million, compared with
$7.9 million for the comparable
period of the prior year. Fluctuations in overall capital
expenditures in China, lower oil
and coal prices and the availability of credit are adversely
affecting customer demand.
- Revenue from the dyeing and finishing equipment segment
decreased by 11.0% to $8.6 million,
compared to $9.7 million for the
second 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 the first half of 2015, as
many of its customers had upgraded to new models in 2014 and did
not require additional equipment in 2015.
- The Company generated $3.6
million in revenues from sales of equipment to customers in
the petroleum and chemical industries during the second quarter,
particularly a large state-owned enterprise, which generated
revenue of approximately $3.1
million, or 87.7% of the petroleum and chemical segment
revenue for the second quarter of 2015. This new business
segment began shipping orders in the first quarter of
2015.
Gross profit for the second quarter of 2015 decreased by 34.1%
to $2.7 million, compared to
$4.1 million for the same period in
2014. Gross margin was 17.7% during the second quarter of
2015 compared to 23.3% for the same period a year ago. The decline
in gross margin for the second 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 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.
Operating expenses decreased 6.0% to $1.0
million, compared to $1.1
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 $1.7 million,
compared to operating income of $3.0
million in the same period of 2014. Operating margin was
11.2% compared to 17.3% in the same period of 2014.
EBITDA, a non-GAAP measurement, which adds to net income
interest expense, income tax, depreciation and amortization, was
$3.8 million, compared to
$5.2 million in the second quarter of
2014. The calculation of EBITDA is shown in a table following
the financial statements.
Net income for the second quarter of 2015 was $1.2 million, or $0.31 per basic and diluted share, compared to
net income of $2.2 million, or
$0.61 per basic and diluted share, in
the second quarter of 2014.
Six Month Results
For the six months ended June 30,
2015, revenue was $30.8
million compared to $35.2
million in the first half of 2014. Gross profit was
$5.8 million, down from $8.4 million in the first half of 2014. Gross
margin was 18.7%, compared to 23.8% in the first half of
2014. Operating income was $3.5
million compared to $6.3
million in the first half of 2014. EBITDA, a non-GAAP
measurement, was $7.7 million,
compared to $10.5 million in the
first half of 2014. Net income was $2.5 million, compared to $4.6 million in the first half of 2014. Net
income per basic and diluted share was $0.63 compared to $1.29 in the first half of 2014.
Financial Condition
As of June 30, 2015, Cleantech
Solutions held cash and cash equivalents of $16.8 million compared to $7.8 million at December
31, 2014. Accounts receivable were $18.5 million compared to $20.3 million at December
31, 2014. Inventories were $4.6
million compared to $4.2
million at December 31,
2014. Total current assets were $41.2
million as of June 30, 2015.
The Company had $3.3 million in
short-term bank loans payable at June 30,
2015, compared to $3.1 million
at December 31, 2014.
Stockholders' equity was $100.9
million at June 30,
2015. In the first half of 2015, the Company generated
$8.7 million in cash flow from
operations.
Business Outlook
"Although the Chinese economy is showing some signs of
improvement, we expect capital spending by our customers to remain
low, particularly in the forged rolled rings and related products
business. Following our participation at the
17th International Exhibition on Textile Industry
in Shanghai, we received several
orders for our new air-fluid, dual-use dyeing machine and garment
washing machine which will help offset softer demand for our
low-emission air-flow dyeing machines in the second half of the
year. We expect our petroleum and chemical equipment segment
to make a larger contribution to revenues as we continue to make
good progress on fulfilling the orders we have on hand. We
are excited by the growth opportunities available in these
industries and are also exploring opportunities to expand into
other industries," Mr. Wu concluded.
Conference Call
Cleantech Solutions will conduct a conference call at
9:00 a.m. Eastern Daylight Time on
Friday, August 14, 2015 to discuss
financial results for the second quarter ended June 30, 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 August 21, 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:
10070624.
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 June 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
CLEANTECH
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
|
June 30
|
|
June 30
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$15,190,600
|
|
$17,528,018
|
|
$30,837,065
|
|
$35,163,289
|
|
|
|
|
|
|
|
|
|
COST OF
REVENUES
|
|
12,497,010
|
|
13,443,581
|
|
25,071,443
|
|
26,805,566
|
|
|
|
|
|
|
|
|
|
GROSS
PROFIT
|
|
2,693,590
|
|
4,084,437
|
|
5,765,622
|
|
8,357,723
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
167,396
|
|
118,410
|
|
512,092
|
|
228,269
|
Selling, general and
administrative
|
|
794,441
|
|
904,467
|
|
1,668,986
|
|
1,765,066
|
Research and
development
|
|
28,562
|
|
31,248
|
|
57,260
|
|
58,119
|
|
|
|
|
|
|
|
|
|
Total
Operating Expenses
|
|
990,399
|
|
1,054,125
|
|
2,238,338
|
|
2,051,454
|
|
|
|
|
|
|
|
|
|
INCOME FROM
OPERATIONS
|
|
1,703,191
|
|
3,030,312
|
|
3,527,284
|
|
6,306,269
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE):
|
|
|
|
|
|
|
|
|
Interest income
|
|
12,684
|
|
3,905
|
|
18,517
|
|
9,145
|
Interest expense
|
|
(56,628)
|
|
(60,099)
|
|
(113,971)
|
|
(117,826)
|
Grant income
|
|
-
|
|
199
|
|
-
|
|
32,086
|
Foreign currency transaction
gain/(loss)
|
|
-
|
|
1,270
|
|
(11)
|
|
1,270
|
Other income
|
|
-
|
|
33,866
|
|
-
|
|
33,866
|
|
|
|
|
|
|
|
|
|
Total
Other Income (Expense), net
|
|
(43,944)
|
|
(20,859)
|
|
(95,465)
|
|
(41,459)
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME
TAXES
|
|
1,659,247
|
|
3,009,453
|
|
3,431,819
|
|
6,264,810
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
432,677
|
|
791,549
|
|
962,815
|
|
1,650,548
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$ 1,226,570
|
|
$ 2,217,904
|
|
$ 2,469,004
|
|
$ 4,614,262
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
$ 1,226,570
|
|
$ 2,217,904
|
|
$ 2,469,004
|
|
$ 4,614,262
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
INCOME (LOSS):
|
|
|
|
|
|
|
|
|
Unrealized foreign currency translation gain (loss)
|
|
329,321
|
|
106,313
|
|
802,301
|
|
(675,475)
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE
INCOME
|
|
$ 1,555,891
|
|
$ 2,324,217
|
|
$ 3,271,305
|
|
$ 3,938,787
|
|
|
|
|
|
|
|
|
|
NET INCOME PER COMMON
SHARE:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.31
|
|
$
0.61
|
|
$
0.63
|
|
$
1.29
|
Diluted
|
|
$
0.31
|
|
$
0.61
|
|
$
0.63
|
|
$
1.29
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
Basic
|
|
3,939,986
|
|
3,632,222
|
|
3,937,333
|
|
3,568,219
|
Diluted
|
|
3,939,986
|
|
3,632,222
|
|
3,937,333
|
|
3,568,219
|
|
|
|
|
|
|
|
|
|
CLEANTECH
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
June 30,
2015
|
|
December 31,
2014
|
ASSETS
|
(Unaudited)
|
|
|
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$ 16,806,962
|
|
$
7,835,791
|
Restricted cash
|
164,236
|
|
488,719
|
Notes receivable
|
85,403
|
|
114,034
|
Accounts receivable, net of allowance for doubtful
accounts
|
18,488,553
|
|
20,316,037
|
Inventories, net of reserve for obsolete inventories
|
4,563,662
|
|
4,241,022
|
Advances to suppliers
|
567,348
|
|
565,581
|
Deferred tax assets
|
378,811
|
|
375,744
|
Prepaid expenses and other
|
143,981
|
|
153,260
|
|
|
|
|
Total
Current Assets
|
41,198,956
|
|
34,090,188
|
|
|
|
|
PROPERTY AND
EQUIPMENT, net
|
66,041,728
|
|
69,628,597
|
|
|
|
|
OTHER
ASSETS:
|
|
|
|
Equipment held for sale
|
425,988
|
|
422,540
|
Land use
rights, net
|
3,653,853
|
|
3,672,420
|
|
|
|
|
Total
Assets
|
$111,320,525
|
|
$
107,813,745
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term bank loans
|
$ 3,284,719
|
|
$
3,095,219
|
Bank acceptance notes payable
|
164,236
|
|
488,719
|
Accounts payable
|
5,255,158
|
|
4,322,275
|
Accrued expenses
|
496,008
|
|
1,059,579
|
Advances from customers
|
959,530
|
|
495,461
|
VAT and service taxes payable
|
237,376
|
|
500,569
|
Income taxes payable
|
56,990
|
|
531,120
|
|
|
|
|
Total
Current Liabilities
|
10,454,017
|
|
10,492,942
|
|
|
|
|
Total
Liabilities
|
10,454,017
|
|
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 June 30, 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 June 30, 2015 and December 31, 2014, respectively)
|
3,940
|
|
3,860
|
Additional paid-in capital
|
33,792,177
|
|
33,517,857
|
Retained earnings
|
52,258,013
|
|
50,039,267
|
Statutory reserve
|
3,544,457
|
|
3,294,199
|
Accumulated other comprehensive income - foreign currency
translation adjustment
|
11,267,921
|
|
10,465,620
|
|
|
|
|
Total
Stockholders' Equity
|
100,866,508
|
|
97,320,803
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$111,320,525
|
|
$
107,813,745
|
CLEANTECH
SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
|
|
|
June 30
|
|
|
|
|
|
2015
|
|
2014
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
Net income
|
|
$ 2,469,004
|
|
$ 4,614,262
|
|
Adjustments to
reconcile net income from operations to net cash
provided by operating
activities:
|
|
|
|
|
|
Depreciation
|
|
4,144,514
|
|
4,084,790
|
|
Amortization of land use rights
|
|
48,352
|
|
48,141
|
|
Stock-based compensation
|
|
274,400
|
|
181,108
|
|
Decrease in allowance for doubtful accounts
|
|
(6,216)
|
|
-
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Notes receivable
|
|
29,446
|
|
599,395
|
|
Accounts receivable
|
|
1,991,705
|
|
1,464,659
|
|
Inventories
|
|
(286,891)
|
|
(3,224,025)
|
|
Prepaid value-added taxes on purchases
|
|
-
|
|
374,452
|
|
Prepaid and other current assets
|
|
10,366
|
|
(5,553)
|
|
Advances to suppliers
|
|
2,838
|
|
14,859
|
|
Accounts payable
|
|
894,079
|
|
(283,743)
|
|
Accrued expenses
|
|
(568,800)
|
|
(381,669)
|
|
VAT and service taxes payable
|
|
(266,229)
|
|
38,824
|
|
Income taxes payable
|
|
(476,587)
|
|
(1,154,225)
|
|
Advances from customers
|
|
458,219
|
|
(1,060,826)
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
|
8,718,200
|
|
5,310,449
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
Purchase of property and equipment
|
|
(5,616)
|
|
(6,280,015)
|
|
|
|
|
|
|
|
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
(5,616)
|
|
(6,280,015)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
Proceeds from bank loans
|
|
2,944,641
|
|
2,280,242
|
|
Repayments of bank loans
|
|
(2,781,050)
|
|
(2,280,242)
|
|
Decrease in restricted cash
|
|
327,182
|
|
325,749
|
|
Decrease in bank acceptance notes payable
|
|
(327,182)
|
|
(325,749)
|
|
Net proceeds from sale of common stock
|
|
-
|
|
1,623,691
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED BY
FINANCING ACTIVITIES
|
|
163,591
|
|
1,623,691
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH EQUIVALENTS
|
|
94,996
|
|
(2,343)
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
|
8,971,171
|
|
651,782
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
7,835,791
|
|
1,114,873
|
|
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS - end of period
|
|
$ 16,806,962
|
|
$ 1,766,655
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
Interest
|
|
$
113,971
|
|
$ 117,826
|
|
Income taxes
|
|
$ 1,439,402
|
|
$ 2,804,773
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
Property and
equipment acquired on credit as payable
|
|
$
-
|
|
$ 390,060
|
|
Common stock issued
for future service
|
|
$
-
|
|
$ 181,107
|
Reconciliation of Net Income to
EBITDA
|
(Amounts expressed in US$)
|
|
|
|
For the Three Months
Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income
|
|
$ 1,226,570
|
|
$ 2,217,904
|
|
$ 2,469,004
|
|
$ 4,614,262
|
Add: income
tax
|
|
432,677
|
|
791,549
|
|
962,815
|
|
1,650,548
|
Add: interest
expense
|
|
56,628
|
|
60,099
|
|
113,971
|
|
117,826
|
Add: depreciation and
amortization
|
2,094,273
|
|
2,143,492
|
|
4,192,866
|
|
4,132,931
|
Adjusted
EBITDA
|
|
$ 3,810,148
|
|
$5,213,044
|
|
$ 7,738,656
|
|
$10,515,567
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-second-quarter-2015-results-300128633.html
SOURCE Cleantech Solutions International, Inc.