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SmartHeat Inc. Announces Record 2nd Quarter 2009 Financial Results, Raises Full Year Earnings Guidance, Anticipates Growth Momentum to Continue Into 2010 from Clean Technology Product Sales

- Revenues - increased 125% to $12.5 million from $5.6 million in 2Q08 - Net income - increased 257% to $2.6 million from $0.73 million in 2Q08 - Earnings Per Share of $0.11, an increase of 267% from EPS $0.03 in 2Q08 - Raises 3rd quarter 2009 financial guidance to approximately $35 million in revenues and approximately $6.8 million in net income - Raises 2009 earnings guidance to approximately $15.5 million in net income on revenues of approximately $80 million - Successfully completed recent asset acquisition of one of China's largest industry players - Positive signs of economic growth in China, anticipates earnings growth momentum to continue into 2010
On Tuesday August 11, 2009, 6:55 am EDT

NEW YORK, Aug. 11 /PRNewswire-Asia/ -- SmartHeat Inc. (Nasdaq: HEAT - News; website: www.smartheatinc.com), a market leader in China's clean technology, energy savings industry today announced record financial results for the 2nd quarter ended June 30, 2009. SmartHeat's products significantly reduce heat energy costs, increase energy efficiency and reduce air pollution. SmartHeat is a U.S. company with its primary operations in China.

James Jun Wang, Chairman & CEO of SmartHeat, commented: "Our strong 2nd quarter financial results reflected management's excellent execution of our growth strategies in a favorable market environment for our industry. Due to China's effective implementation of its economic stimulus plan in which the energy savings industry was particularly supported by the Chinese government as a sector that receives significant funding allocations, China's heat energy savings industry has not been negatively impacted by the current global economic slowdown. As a market leader in this space, we believe SmartHeat will continue to deliver consistent and rapid earnings growth in the foreseeable future."

Mr. Wang continued: "SmartHeat noticed positive signs of economic recovery and gradual expansion in China's energy savings industry. The current economic slowdown has significantly increased customer awareness towards utilization of energy savings equipment from which we are a primary beneficiary. SmartHeat is well positioned to potentially reap significant benefits from the world's economic recovery."

Record 2nd Quarter Revenues

  • Revenues of $12.5 million, up 125%, compared to $5.6 million in Q2 2008.
  • Significant revenue increase was due to continued market expansion in a favorable market environment.
  • SmartHeat experienced significant sales and earnings growth across all product lines.

Record 2nd Quarter Net Income

  • Net income of $2.6 million, up 257%, compared to $0.73 million in Q2 2008.
  • Fully diluted EPS of $0.11, up 267%, compared to EPS of $0.03 in Q2 2008.
  • Total shares issued and outstanding as of June 30, 2009 were 24,179,900 shares.
  • The significant increase in net income was primarily due to greater economies of scale in production costs combined with rapid growth in revenues and improved operating efficiency.

Raises 3rd Quarter 2009 Earnings Guidance

Based on our anticipated greater pace of economic recovery in the 2nd half and increased customer demand for our products as we have entered our seasonally strongest quarter in a year, SmartHeat raises 3rd quarter earnings guidance to approximately $35 million in revenues and approximately $6.8 million in net income. In the 3rd quarter of 2008, SmartHeat reported revenues of $20.7 million and net income of $4.3 million.

Raises Full Year 2009 Earnings Guidance

SmartHeat raises full year 2009 earnings guidance to approximately $15.5 million in net income on approximately $80 million in revenues. In 2008, SmartHeat reported revenues of $32.7 million and net income of $6.34 million.

Business Outlook

Mr. Wang commented: "Since the beginning of the 2nd half, we have experienced greater customer order flow and willingness among our existing and new customers to increase demand for our energy savings equipment. Our recently completed asset acquisition of one of China's largest PHE manufacturers has not only expanded our production capabilities but also extended our product offerings to new customer segments. We believe SmartHeat's rapid earnings growth momentum will continue well into 2010 as we anticipate broader global economic recovery next year. We are optimistic that SmartHeat is on track to achieve solid 3rd quarter earnings growth and another year of record success in 2009 for our growing list of individual and institutional shareholders."

About SmartHeat Inc.

Founded by James Jun Wang, a former executive at Honeywell China, SmartHeat Inc. (www.smartheatinc.com) is a NASDAQ Global Market listed (Nasdaq: HEAT - News) US company with its primary operations in China. SmartHeat is a market leader in China's clean technology energy savings industry. SmartHeat manufactures standard plate heat exchangers (PHEs), custom plate heat exchanger units (PHE Units) and heat meters. SmartHeat's products directly address air pollution problems in China where massive coal burning for cooking and heating purposes is the only source of economical heat energy in China. With broad product applications, SmartHeat's products significantly reduce heating costs, increase energy use and reduce air pollution. SmartHeat's customers include global Fortune 500 companies as well as municipalities and industrial/residential users. China's heat transfer market is currently estimated at approximately $2.4 billion with double-digit annual growth according to China Heating Association.

Safe Harbor Statement

All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. SmartHeat's actual results may differ from its projections. Further, preliminary results are subject to normal year-end adjustments. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect SmartHeat's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in SmartHeat's filings with the Securities and Exchange Commission.

                          SMARTHEAT, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS

                                                        AS OF        AS OF
                                                      JUNE 30,    DECEMBER 31,
                                                        2009         2008
                                                    (UNAUDITED)

    ASSETS

    CURRENT ASSETS
         Cash & cash equivalents                     $2,408,714  $1,435,212
         Restricted cash                                933,312     462,048
         Accounts receivable, net                     8,997,822  11,390,169
         Retentions receivable                          357,683     290,852
         Advances to suppliers                        2,909,069     412,524
         Other receivables, prepayments and deposits  1,366,965     698,834
         Inventories                                  8,220,181   6,107,583
         Note receivable - bank acceptance               14,637      14,631
                                                         ------      ------

            Total current assets                     25,208,383  20,811,853

    NON-CURRENT ASSETS
         Restricted cash                                 23,345     219,472
         Accounts receivable, net                       740,116     310,810
         Retentions receivable                        1,420,830     166,912
         Intangible assets, net                       4,179,143   1,155,131
         Property and equipment, net                  7,363,041   2,436,553
                                                      ---------   ---------

           Total noncurrent assets                   13,726,475   4,288,878

                                                    ----------- -----------
    TOTAL ASSETS                                    $38,934,858 $25,100,731
                                                    =========== ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES
         Accounts payable                            $1,620,935  $1,210,906
         Unearned revenue                             1,691,800     850,408
         Notes payable - bank acceptance                762,710           -
         Taxes payable                                  559,085   1,327,775
         Accrued liabilities and other payables       5,968,709   1,330,812
         Due to minority shareholder                          -       5,303
         Loans payable                                5,562,142   2,443,450
                                                      ---------   ---------

             Total current liabilities               16,165,381   7,168,654

    OTHER PAYABLES - NONCURRENT                       1,200,586           -

    DEFERRED TAX LIABILITY                               23,488      38,854

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY
         Common stock, $0.001 par value;
          75,000,000 shares authorized, 24,179,900
          shares issued and outstanding at
          June 30, 2009 and December 31, 2008,
          respectively                                   24,180      24,180
         Paid in capital                              8,223,671   8,223,453
         Statutory reserve                            1,530,781   1,150,542
         Accumulated other comprehensive income         997,772     984,629
         Retained earnings                           10,768,999   7,510,419
                                                     ----------   ---------

             Total stockholders' equity              21,545,403  17,893,223

                                                    ----------- -----------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $38,934,858 $25,100,731
                                                    =========== ===========

    The accompanying notes are an integral part of these consolidated
    financial statements

                         SMARTHEAT, INC. AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                                   (UNAUDITED)

                                FOR THE SIX MONTHS     FOR THE THREE MONTHS
                                   ENDED JUNE 30,          ENDED JUNE 30,
                                ------------------     --------------------
                                2009         2008        2009        2008
                                ----         ----        ----        ----
    Net sales               $18,705,898  $8,637,283  $12,498,395  $5,558,232

    Cost of goods sold       11,874,903   6,228,156    7,973,956   4,115,200
                             ----------   ---------    ---------   ---------

    Gross profit              6,830,995   2,409,127    4,524,439   1,443,032

    Operating expenses
         Selling expenses     1,159,532     608,028      698,619     410,607
         General and
          administrative
          expenses            1,340,132     446,470      770,610     162,325
                              ---------     -------      -------     -------
         Total operating
          expenses            2,499,664   1,054,498    1,469,229     572,932
                              ---------   ---------    ---------     -------

    Income from operations    4,331,331   1,354,629    3,055,210     870,100

    Non-operating income (expenses)
         Interest income         80,421     260,683       63,740     113,545
         Interest expense      (117,612)   (163,040)     (64,760)    (96,412)
         Subsidy income          35,340       9,141       35,340       9,141
         Other expense          (11,199)          -      (10,119)     (2,891)
         Other income               969       8,290          969           -
                                    ---       -----          ---           -

         Total non-operating
          income (expenses)     (12,081)    115,074       25,170      23,383

    Income before income
     tax                      4,319,250   1,469,703    3,080,380     893,483

    Income tax expense          680,432     266,028      462,831     161,071
                                -------     -------      -------     -------

    Net income                3,638,818   1,203,675    2,617,549     732,412

    Other comprehensive item
         Foreign currency
          translation            13,143     410,896       11,433     168,802
                                 ------     -------       ------     -------

    Comprehensive Income     $3,651,961   1,614,571   $2,628,982    $901,214
                             ==========   =========   ==========    ========

    Basic weighted average
     shares outstanding      24,179,900  20,213,419   24,179,900  21,926,838
                             ----------  ----------   ----------  ----------

    Diluted weighted
     average shares
     outstanding             24,191,063  20,213,419   24,206,099  21,926,838
                             ----------  ----------   ----------  ----------

    Basic earnings per share      $0.15       $0.06        $0.11       $0.03
                                  =====       =====        =====       =====

    Diluted earnings per share    $0.15       $0.06        $0.11       $0.03
                                  =====       =====        =====       =====

    The accompanying notes are an integral part of these consolidated
    financial statements

                        SMARTHEAT, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                                       FOR THE SIX MONTHS
                                                         ENDED JUNE 30,
                                                        2009        2008
                                                        ----        ----

    CASH FLOWS FROM OPERATING ACTIVITIES:
         Net income                                  $3,638,818  $1,203,675
         Adjustments to reconcile net income
          to net cash (used in) provided by
          operating activities:
         Depreciation and amortization                  194,027     104,038
         Unearned interest on accounts receivable        68,292     (22,366)
         Stock option compensation expense                  218           -
         Decrease in deferred tax liability             (15,380)          -
          (Increase) decrease in current assets:
                Accounts receivable                   1,349,607  (1,803,120)
                Retentions receivable                (1,320,413)    346,914
                Advances to suppliers                (2,487,309) (1,888,198)
                Other receivables, prepayments
                 and deposits                        (1,468,178)   (277,990)
                Inventories                          (2,109,938)  2,874,481
           Increase (decrease) in current liabilities:
                Accounts payable                      1,721,658   1,358,223
                Unearned revenue                        840,957  (1,709,100)
                Taxes payable                          (769,124)   (167,960)
                Accrued liabilities and other payables  226,202     423,418
                                                        -------     -------

         Net cash (used in) provided by operating
          activities                                   (130,563)    442,015
                                                       --------     -------

    CASH FLOWS FROM INVESTING ACTIVITIES:
                Restricted cash                        (274,835)   (229,833)
                Construction in progress                      -     (39,549)
                Acquisition of property &  equipment   (239,005)   (119,299)
                                                       --------    --------

                Net cash used in investing activities  (513,840)   (388,681)
                                                       --------    --------

    CASH FLOWS FROM FINANCING ACTIVITIES:
                Payment of assets acquisition
                 liability                           (1,500,139)          -
                Repayment to shareholder                      -     (44,862)
                Proceeds from (Repayment to) short
                 term loans                           3,117,362    (213,152)
                                                      ---------    --------

         Net cash provided by (used in) financing
          activities                                  1,617,223    (258,014)
                                                      ---------    --------

    EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH
     EQUIVALENTS                                            682      19,028

    NET INCREASE (DECREASE) IN CASH & CASH
     EQUIVALENTS                                        973,502    (185,652)

    CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD      1,435,212     393,147
                                                      ---------     -------

    CASH & CASH EQUIVALENTS, END OF PERIOD           $2,408,714    $207,495
                                                     ==========    ========

    Supplemental Cash flow data:
       Income tax paid                                 $995,787    $197,756
                                                       ========    ========
       Interest paid                                   $121,259     $87,887
                                                       ========     =======

    The accompanying notes are an integral part of these consolidated
    financial statements

 

Contact Information:
____________________________________
Ms. Jane Ai
Corporate Secretary
SmartHeat Inc.
Tel: 011-86-13309831658
Email: info@SmartHeatinc.com

____________________________________
Source: SmartHeat, Inc.

 

 
Copyright © SmartHeat, Inc. 2008
 
 
 
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