WUXI, China, May 16, 2016 /PRNewswire/ -- Cleantech
Solutions International, Inc. ("Cleantech Solutions" or "the
Company") (NASDAQ: CLNT), a manufacturer of textile dyeing and
finishing machines as well as metal components and assemblies used
in various clean technology and manufacturing industries and, since
the first quarter of 2015, the petroleum and chemical industries,
today announced its financial results for the three months ended
March 31, 2016.
"In the first quarter of 2016, challenging economic conditions,
falling steel prices, a continuous decline in oil prices and
limited availability of credit in China presented numerous challenges for our
business. Our forged rolled rings and related components segment
and petroleum and chemical equipment segment both experienced
significant reductions in sales and generated losses during the
quarter. Given the sharp declines in revenue and future
outlook, we are currently evaluating the long-term viability of
these two segments on an ongoing basis. The dyeing equipment
segment, which accounted for 92% of total revenue in the quarter,
experienced softer demand for our low-emission airflow dyeing
machines although it remained profitable," said Mr. Jianhua Wu, Chairman and CEO of Cleantech
Solutions. "We continue working with our strategic advisors to
assist us in implementing a new business plan with the objective of
improving our long-term growth."
First Quarter 2016 Results
Revenue for the first quarter of 2016 decreased by 68.6% to
$4.9 million, compared to
$15.6 million for the same period of
2015.
The Company experienced a significant decline in 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. Furthermore, sales of equipment to customers in the
petroleum and chemical industries declined due to the loss of its
largest customer.
- Revenue from the dyeing and finishing equipment segment
decreased by 30.6% to $4.5 million,
compared to $6.5 million for the
first quarter of 2015. The decrease was primarily related to the
challenging economic conditions and limited availability of credit
in China. Additionally, the
Company experienced a slowdown in shipments of its low-emission
airflow dyeing machines as many companies in the dyeing industry
had already upgraded to new models and did not require additional
equipment. Also, some of our customers stopped operation in the
first quarter of 2016 in order to comply with stricter
environmental requirements, which resulted in the decrease in
orders for dyeing machines from these customers. Additionally, the
Company believes that orders for new low-emission airflow dyeing
machines have slowed down in 2016 because the remaining potential
customer base included more companies that did not have the ability
to make the significant capital expenditures necessary to upgrade
their equipment.
- Revenue from the sale of forged rolled rings and related
products to the wind power and other industries fell by 96.4% to
$0.3 million, compared with
$7.3 million for the comparable
period of the prior year. The significant decrease was mainly due
to reduced demand for construction of wind power facilities, which
was the Company's principal customer base during the quarter, due
to the effects of lower oil and gas prices.
- Revenue from sales of equipment to customers in the petroleum
and chemical industries fell 92.9% to $0.1
million, compared to $1.8
million for the comparable period last year. Revenue
in this segment is highly dependent upon sales to a very small
number of Chinese petrochemical companies, whose purchasing
policies affect both revenue and gross margin for this segment. In
December 2015, the Company received a
notice of contract termination in writing from the Company's
largest customer in 2015 that alleged breach of contract for late
delivery of product and for delivery of product with quality
defects. Accordingly, the Company has not generated any revenues
from this customer in the first quarter of 2016 and does not expect
any further revenues from this customer in the future.
Gross profit for the first quarter of 2016 was $0.2 million, compared to gross profit of
$3.1 million for the same period in
2015. Gross margin was 4.3% during the first quarter of 2016
compared to 19.6% for the same period a year ago. The decline in
gross margin for the first quarter of 2016 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 segment, as a result of which
cost of revenue from this segment were greater than revenues,
resulting in a negative gross profit from the segment, (ii) lower
gross margin in the petroleum and chemical segment, primarily
attributed to the reduced scale of operations resulting from lower
revenues, which is reflected in the allocation of fixed costs,
mainly consisting of depreciation, to cost of revenues, and (iii) a
decline in gross margin from the dyeing and finishing equipment
segment reduced scale of operations, which is reflected in the
allocation of fixed costs, mainly consisting of depreciation, to
cost of revenues, and the slight increase in raw material
costs.
Operating expenses decreased 28.6% to $0.9 million, compared to $1.2 million in the comparable period last year,
due to decreases in selling, general and administrative expenses,
depreciation and research and development expenses.
Loss from operations was $0.7
million, compared to operating income of $1.8 million in the same period of 2015.
Net loss for the first quarter of 2016 was $0.8 million, or $(0.21) per basic and diluted share, compared to
net income of $1.2 million, or
$0.32 per basic and diluted share, in
the first quarter of 2015.
EBITDA, a non-GAAP measurement, which adds interest expense,
income taxes, depreciation and amortization to net (loss) income,
was $1.0 million, compared to
$3.9 million in the first quarter of
2015. The calculation of EBITDA is shown in a table following the
financial statements.
Financial Condition
As of March 31, 2016, Cleantech
Solutions held cash and cash equivalents of $18.9 million compared to $18.8 million at December
31, 2015. Accounts receivable were $16.2 million at March 31,
2016 compared to $15.8 million
at December 31, 2015. Inventories
were $2.1 million at March 31, 2016 compared to $1.8 million at December
31, 2015. The Company had $3.0
million in short-term bank loans payable at March 31, 2016, down slightly from $3.1 million at December
31, 2015. Working capital was $26.6
million at March 31, 2016
compared to $24.9 million at
December 31, 2015. Stockholders'
equity was $80.4 million at
March 31, 2016. In the first quarter
of 2016, the Company generated $0.1
million in cash flow from operations compared to
$5.0 million in the first quarter of
2015.
Business Outlook
"We are continuing to evaluate the viability of the our forged
rolled rings and related components segment and our petroleum and
chemical equipment segment on an ongoing basis, and may exit these
businesses if we determine that it will be unlikely we can operate
them profitably. In our core dyeing equipment business, we are
focused on re-engaging with our existing clients, exploring
opportunities to expand into Southeast
Asia and introducing newer, more energy-efficient and
environmentally-friendly models that we believe will entice textile
manufacturers to upgrade their equipment. We continue working with
our strategic advisors to develop a new business plan focused on
long-term growth," Mr. Wu
concluded.
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 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,
2015 and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our Form 10-Q for the
quarter ended March 31, 2016. 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.
Ryan Hua, Vice President of
Operations
E-mail: ryanhua@cleantechsolutionsinternational.com
+86-510-8339-7559
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
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)
INCOME
|
|
|
For the Three Months
Ended
|
|
March 31,
|
|
2016
|
|
2015
|
|
|
|
|
REVENUES
|
$
4,919,491
|
|
$ 15,646,465
|
COST OF
REVENUES
|
4,706,611
|
|
12,574,433
|
GROSS
PROFIT
|
212,880
|
|
3,072,032
|
OPERATING
EXPENSES:
|
|
|
|
Depreciation
|
160,738
|
|
344,696
|
Selling, general and
administrative
|
711,378
|
|
874,545
|
Research and
development
|
18,401
|
|
28,698
|
Total
Operating Expenses
|
890,517
|
|
1,247,939
|
(LOSS) INCOME FROM
OPERATIONS
|
(677,637)
|
|
1,824,093
|
OTHER INCOME
(EXPENSE):
|
|
|
|
Interest income
|
11,962
|
|
5,833
|
Interest expense
|
(55,714)
|
|
(57,343)
|
Foreign currency transaction
gain (loss)
|
114
|
|
(11)
|
Total
Other Expense, net
|
(43,638)
|
|
(51,521)
|
(LOSS) INCOME BEFORE
INCOME TAXES
|
(721,275)
|
|
1,772,572
|
INCOME
TAXES
|
122,818
|
|
530,138
|
NET (LOSS)
INCOME
|
$
(844,093)
|
|
$
1,242,434
|
COMPREHENSIVE (LOSS)
INCOME:
|
|
|
|
NET (LOSS)
INCOME
|
$
(844,093)
|
|
$
1,242,434
|
OTHER COMPREHENSIVE
INCOME:
|
|
|
|
Unrealized foreign currency translation gain
|
525,948
|
|
472,980
|
COMPREHENSIVE (LOSS)
INCOME
|
$
(318,145)
|
|
$
1,715,414
|
NET (LOSS) INCOME PER
COMMON SHARE:
|
|
|
|
Basic
|
$
(0.21)
|
|
$
0.32
|
Diluted
|
$
(0.21)
|
|
$
0.32
|
WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING:
|
|
|
|
Basic
|
4,100,689
|
|
3,934,653
|
Diluted
|
4,100,689
|
|
3,934,653
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$ 18,948,981
|
|
$ 18,790,370
|
Restricted cash
|
255,897
|
|
647,080
|
Notes receivable
|
119,031
|
|
132,497
|
Accounts receivable, net of allowance for doubtful
accounts
|
16,192,325
|
|
15,823,859
|
Inventories, net of reserve for obsolete inventories
|
2,068,206
|
|
1,827,084
|
Advances to suppliers
|
1,080,998
|
|
1,038,884
|
Deferred tax assets
|
222,362
|
|
220,895
|
Prepaid expenses and other
|
1,135,994
|
|
992,055
|
Total
Current Assets
|
40,023,794
|
|
39,472,724
|
PROPERTY AND
EQUIPMENT, net
|
50,408,449
|
|
51,753,964
|
OTHER
ASSETS:
|
|
|
|
Land use
rights, net
|
3,381,601
|
|
3,382,071
|
Total
Assets
|
$ 93,813,844
|
|
$
94,608,759
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES:
|
|
|
|
Short-term bank loans
|
$
3,024,240
|
|
$
3,081,332
|
Bank acceptance notes payable
|
245,041
|
|
647,080
|
Accounts payable
|
3,380,071
|
|
3,489,815
|
Accrued expenses
|
5,814,769
|
|
6,361,079
|
Advances from customers
|
697,789
|
|
433,050
|
VAT and service taxes payable
|
94,297
|
|
269,284
|
Income taxes payable
|
206,050
|
|
259,987
|
Total
Current Liabilities
|
13,462,257
|
|
14,541,627
|
Total
Liabilities
|
13,462,257
|
|
14,541,627
|
Commitments and
contingencies
|
|
|
|
STOCKHOLDERS'
EQUITY:
|
|
|
|
Preferred stock ($0.001 par
value; 10,000,000 shares authorized;
0
shares issued and
outstanding at March 31, 2016 and December
31, 2015,
respectively)
|
-
|
|
-
|
Common stock ($0.001 par
value; 50,000,000 shares authorized;
4,403,986 and
3,943,986 shares issued and outstanding at March
31, 2016 and December
31, 2015, respectively)
|
4,404
|
|
3,944
|
Additional paid-in capital
|
34,405,473
|
|
33,803,333
|
Retained earnings
|
36,163,683
|
|
37,007,776
|
Statutory reserve
|
3,555,468
|
|
3,555,468
|
Accumulated other comprehensive income - foreign
currency
translation
adjustment
|
6,222,559
|
|
5,696,611
|
|
|
|
|
Total
Stockholders' Equity
|
80,351,587
|
|
80,067,132
|
Total
Liabilities and Stockholders' Equity
|
$ 93,813,844
|
|
$
94,608,759
|
CLEANTECH SOLUTIONS
INTERNATIONAL, INC. AND SUBSIDIARIES
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
For the Three Months
Ended
|
|
March 31,
|
|
|
2016
|
|
2015
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(844,093)
|
|
$
|
1,242,434
|
|
Adjustments to
reconcile net (loss) income from
operations to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation
|
|
|
1,674,728
|
|
|
2,074,507
|
|
Amortization of land use
rights
|
|
|
22,599
|
|
|
24,086
|
|
Stock-based compensation and
fees
|
|
|
428,250
|
|
|
274,400
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Notes receivable
|
|
|
14,145
|
|
|
2,054
|
|
Accounts
receivable
|
|
|
(259,741)
|
|
|
2,330,169
|
|
Inventories
|
|
|
(225,787)
|
|
|
(939,030)
|
|
Prepaid and other current
assets
|
|
|
(26,969)
|
|
|
(4,835)
|
|
Advances to
suppliers
|
|
|
(34,725)
|
|
|
(31,318)
|
|
Accounts payable
|
|
|
(131,047)
|
|
|
873,118
|
|
Accrued expenses
|
|
|
(516,730)
|
|
|
(515,767)
|
|
VAT and service taxes
payable
|
|
|
(174,300)
|
|
|
(242,190)
|
|
Income taxes
payable
|
|
|
(54,883)
|
|
|
(360,739)
|
|
Advances from
customers
|
|
|
258,198
|
|
|
322,533
|
NET CASH PROVIDED BY
OPERATING ACTIVITIES
|
|
|
129,645
|
|
|
5,049,422
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchase of property and
equipment
|
|
|
(9,332)
|
|
|
(4,755)
|
NET CASH USED IN
INVESTING ACTIVITIES
|
|
|
(9,332)
|
|
|
(4,755)
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds from bank
loans
|
|
|
1,529,176
|
|
|
2,200,202
|
|
Repayments of bank
loans
|
|
|
(1,605,635)
|
|
|
(2,281,691)
|
|
Decrease in restricted
cash
|
|
|
389,940
|
|
|
81,489
|
|
Decrease in bank acceptance
notes payable
|
|
|
(400,644)
|
|
|
(81,489)
|
NET CASH USED IN
FINANCING ACTIVITIES
|
|
|
(87,163)
|
|
|
(81,489)
|
EFFECT OF EXCHANGE
RATE ON CASH AND CASH
EQUIVALENTS
|
|
|
125,461
|
|
|
56,931
|
NET INCREASE IN CASH
AND CASH EQUIVALENTS
|
|
|
158,611
|
|
|
5,020,109
|
CASH AND CASH
EQUIVALENTS - beginning of period
|
|
|
18,790,370
|
|
|
7,835,791
|
CASH AND CASH
EQUIVALENTS - end of period
|
|
$
|
18,948,981
|
|
$
|
12,855,900
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
INFORMATION:
|
|
|
|
|
|
|
|
Cash paid
for:
|
|
|
|
|
|
|
|
Interest
|
|
$
|
55,714
|
|
$
|
57,343
|
|
Income taxes
|
|
$
|
177,701
|
|
$
|
890,876
|
NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Stock issued for
future services
|
|
$
|
110,350
|
|
$
|
-
|
|
Stock issued for
accrued liabilities
|
|
$
|
64,000
|
|
$
|
-
|
RECONCILIATION OF NET
(LOSS) INCOME TO EBITDA
|
|
|
For the Three Months
Ended
|
|
March 31,
|
|
2016
|
|
2015
|
|
|
|
|
Net (loss)
income
|
$(844,093)
|
|
$1,242,434
|
Add: income
taxes
|
122,818
|
|
530,138
|
Add: interest
expense
|
55,714
|
|
57,343
|
Add:
depreciation and amortization
|
1,697,327
|
|
2,098,593
|
EBITDA
|
$1,031,766
|
|
$3,928,508
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-first-quarter-2016-results-300269079.html
SOURCE Cleantech Solutions International, Inc.