Home
 About SmartHeat
 Our people
 Products
Investor relations
 Press room
 Contact us
 
 
 

SmartHeat Inc. Announces Third Quarter 2009 Financial Results, Affirms Full Year Earnings Guidance and Anticipates Growth Momentum to Continue Into 2010

-- Revenues increased 83% to $37.8 million from $20.7 million in 3Q08
-- Net income increased 105% to $8.9 million from $4.3 million in 3Q08
-- Earnings Per Share increased 98% to $0.36 from $0.18 in 3Q08
-- Affirms 2009 earnings guidance of $80 million in revenue and $15.5 million in net income
-- Successfully completed $75 million financing
-- Positive signs of economic growth in China, anticipates earnings growth momentum to continue into 2010


On 6:55 am EST, Monday November 16, 2009

NEW YORK, Nov. 16 /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 third quarter ended September 30, 2009. SmartHeat's products significantly reduce heat energy costs, increase energy efficiency and reduce air pollution.

James Jun Wang, Chairman & CEO of SmartHeat, commented, "We are excited to announce a quarter of strong financial performance. Our third quarter financial results are the result of a favorable market environment for our industry and our management team diligently executing on our growth strategies. China's energy savings industry is supported by the Chinese government as a sector that is receiving significant funding through government initiatives and the Chinese stimulus package. Because of this support, China's heat energy savings industry has not been as negatively impacted by the current global economic slowdown.

"The weakened economy has increased customer awareness of utilizing energy saving equipment from which we are a primary beneficiary. SmartHeat is well positioned to potentially reap significant benefits from the world's transition to cleaner technologies and energy saving equipment," concluded Mr. Wang.

Third Quarter Financial Performance

Revenues were $37.8 million in the third quarter of 2009 compared to $20.7 million in the same period last year, an 83% increase. The significant revenue increase was due significant sales growth across all product lines as a result of:

Increasing our traditional heat supply sales as a result growth in the China domestic infrastructure construction industry, accounting for $24.22 million or 43% of total sales,

Adding new customers in the chemical, engineering, electric power, metal smelting industries, accounting for $19.37 million or 34% of our total sales,

Rising heat meter sales, accounting for $7.8 million or approximately 14% of total sales.

Gross profit was $13.1 million in the third quarter of 2009 compared to $7.4 million in the same period last year, a 77% increase. Gross profit increased primarily due to the increased sales.

Operating expenses were $2.5 million in the third quarter of 2009 compared to $2.1 million in the same period last year, an 18% increase. Operating expenses increased in the quarter because of the higher general and administrative expenses associated with an increase in expenses incurred to expand our growing sales and due to our recent financing activities.

Operating income was $10.7 million in the third quarter of 2009 compared to $5.4 million in the same period last year, a 100% increase. Operating income increased as a result of continued economies of scale in production costs combined with the rapid growth in revenues and improved operating efficiency.

Net income was $8.9 million in the third quarter of 2009 compared to $4.3 million in the same period last year, a 105% increase. Earnings per share were $0.36 in the third quarter of 2009 compared to $0.18 in the same period last year. In addition to the increased revenue and income from operations, net income and EPS both benefited from a decrease in the tax rate during the quarter from 18.5% to 15.5%.

Affirms Full Year 2009 Earnings Guidance

SmartHeat re-affirms its full year 2009 earnings guidance of approximately $15.5 million in net income and approximately $80 million in revenues compared to $6.3 million in net income and $32.7 million in revenues in 2008.

Business Outlook

Mr. Wang commented, "We continue to experience increasing order flow and demand from our existing and new customers for our energy savings equipment. Not only has demand for our products increased, but our production capabilities and product offerings have increased with recent acquisitions.

"In the third quarter the Company completed a $75 million equity offering. The net proceeds from the offering will be used for general corporate purposes, including the continued expansion of our product offerings, capital expenditures, and to meet growing working capital needs to continue our rapid growth. We believe the additional working capital will also be used by the company to bid on additional projects which are larger and more profitable, which we believe to be strategic fits to our long term business plan.

"We believe SmartHeat's earnings growth momentum will continue well into 2010 as we anticipate a broader domestic economic expansion in China next year. We are optimistic that SmartHeat is on track to achieve solid fourth quarter earnings growth and another year of rapid growth in 2010 for our growing list of individual and institutional shareholders," Mr Wang concluded.

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.

    Contact Corporate Communications:
    Ms. Jane Ai, Corporate Secretary
    SmartHeat Inc.
    Tel: 011-86-24-25363366
    Email: info@SmartHeatinc.com

                       SMARTHEAT, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS

                                      SEPTEMBER 30, 2009 DECEMBER 31, 2008
                                         (UNAUDITED)
    ASSETS

    CURRENT ASSETS
         Cash & cash equivalents             $60,294,695        $1,435,212
         Restricted cash                       1,043,524           462,048
         Accounts receivable, net             20,276,792        11,390,169
         Retentions receivable                   553,105           290,852
         Advances to suppliers                 3,474,936           412,524
         Other receivables,
          prepayments and deposits             3,282,014           698,834
         Inventories                          14,394,162         6,107,583
         Note receivable - bank acceptance        70,655            14,631
                                                  ------            ------
            Total current assets             103,389,881        20,811,853

    NON-CURRENT ASSETS
         Restricted cash                          19,185           219,472
         Accounts receivable, net                582,375           310,810
         Retentions receivable                 2,309,852           166,912
         Construction in progress                 60,230                 -
         Intangible assets, net                4,122,844         1,155,131
         Property and equipment, net           7,578,356         2,436,553
                                               ---------         ---------
           Total noncurrent assets            14,672,842         4,288,878

                                            ------------       -----------
    TOTAL ASSETS                            $118,062,723       $25,100,731
                                            ============       ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    CURRENT LIABILITIES
         Accounts payable                     $6,030,827        $1,210,906
         Unearned revenue                      2,084,036           850,408
         Notes payable - bank acceptance       1,000,543                 -
         Taxes payable                         2,147,376         1,327,775
         Accrued liabilities
          and other payables                   7,071,473         1,330,812
         Due to minority shareholder                   -             5,303
         Loans payable                         5,564,504         2,443,450
                                               ---------         ---------
             Total current liabilities        23,898,759         7,168,654


    DEFERRED TAX LIABILITY                        15,519            38,854

    COMMITMENTS AND CONTINGENCIES

    STOCKHOLDERS' EQUITY
         Common stock, $0.001 par
          value; 75,000,000 shares
          authorized, 32,756,575
          and 24,179,900 shares
          issued and outstanding
          at September 30, 2009
          and December 31, 2008,
          respectively                            32,757            24,180
         Paid in capital                      71,679,770         8,223,453
         Statutory reserve                     2,689,432         1,150,542
         Accumulated other
          comprehensive income                 1,255,603           984,629
         Retained earnings                    18,490,884         7,510,419
                                              ----------         ---------
             Total stockholders' equity       94,148,446        17,893,223
                                            ------------       -----------

    TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY                   $118,062,723       $25,100,731
                                            ============       ===========



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

                                FOR THE NINE MONTHS      FOR THE THREE MONTHS
                                ENDED SEPTEMBER 30,       ENDED SEPTEMBER 30,
                                 2009         2008         2009         2008
                                 ----         ----         ----         ----

    Net sales             $56,541,795  $29,345,571  $37,835,897  $20,708,288

    Cost of goods sold     36,562,363   19,502,070   24,687,460   13,273,914
                           ----------   ----------   ----------   ----------
    Gross profit           19,979,433    9,843,501   13,148,438    7,434,374

    Operating expenses
         Selling expenses   2,325,471    1,664,882    1,165,939    1,056,854
         General and
          administrative
          expenses          2,626,775    1,470,577    1,286,643    1,024,107
                            ---------    ---------    ---------    ---------
         Total operating
          expenses          4,952,245    3,135,459    2,452,581    2,080,961
                            ---------    ---------    ---------    ---------
    Income from
     operations            15,027,187    6,708,042   10,695,856    5,353,413

    Non-operating
     income (expenses)
         Interest income      145,839      318,070       65,418       57,387
         Interest expense    (209,462)    (257,116)     (91,850)     (94,076)
         Subsidy income        21,443       16,141      (13,897)       7,000
         Financial expense   (222,625)           -     (222,625)           -
         Other expense        (13,676)      11,199      (13,676)
         Other income          61,644        9,744       60,675        1,454
                               ------        -----       ------        -----
         Total non-operating
          income (expenses)  (203,162)      73,163     (191,081)     (41,911)

    Income before
     income tax             14,824,026    6,781,205   10,504,776    5,311,502

    Income tax expense      2,304,672    1,246,935    1,624,240      980,907
                            ---------    ---------    ---------      -------
    Net income from
     operations            12,519,354    5,534,270    8,880,536    4,330,595

    Less: net income
     attributable to
     noncontrolling interest        -        5,934            -        5,934
                                  ---        -----          ---        -----

    Net income             12,519,354    5,528,336    8,880,536    4,324,661

    Other comprehensive item
         Foreign currency
          translation         270,399      578,670      257,256      167,774
                              -------      -------      -------      -------
    Comprehensive Income  $12,789,753    6,107,006   $9,137,792   $4,492,435
                          ===========    =========   ==========   ==========

    Basic weighted average
     shares outstanding    24,430,806   21,503,588   24,924,435   24,055,878
                           ----------   ----------   ----------   ----------
    Diluted weighted average
     shares outstanding    24,513,092   21,503,647   25,010,735   24,056,054
                           ----------   ----------   ----------   ----------
    Basic earnings per share    $0.51        $0.26        $0.36        $0.18
                                =====        =====        =====        =====
    Diluted earnings per share  $0.51        $0.26        $0.36        $0.18
                                =====        =====        =====        =====



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


                                                 FOR THE NINE MONTHS ENDED
                                                       SEPTEMBER 30,
                                                     2009        2008
                                                     ----        ----

    CASH FLOWS FROM OPERATING ACTIVITIES:
        Net income including noncontrolling
         interest                             $12,519,354  $5,534,270
        Adjustments to reconcile net
         income including noncontrolling
         interest to net cash used in
         operating activities:
        Depreciation and
         amortization                             409,371     173,821
        Unearned interest on accounts
         receivable                               195,901     (71,804)
        Stock option compensation expense           1,755       1,270
        Decrease in deferred tax liability        (23,357)          -
           (Increase) decrease in current assets:
              Accounts receivable              (9,305,812) (4,995,840)
              Retentions receivable            (2,403,726)    107,279
              Advances to suppliers            (3,051,902)    320,260
              Other receivables, prepayments
               and deposits                       485,060  (2,346,526)
              Inventories                      (8,277,813)    118,223
              Note receivable                     (55,986)   (201,118)
           Increase (decrease) in current
            liabilities:
              Accounts payable                  5,782,299     928,337
              Unearned revenue                  1,232,371  (1,581,803)
              Taxes payable                       818,141     864,934
              Accrued liabilities and
               other payables                  (4,450,011)   (266,072)
                                               ----------    --------

        Net cash used in operating activities  (6,124,354) (1,414,769)
                                               ----------  ----------

    CASH FLOWS FROM INVESTING ACTIVITIES:
              Restricted cash                    (380,457)   (101,542)
              Construction in progress            (60,203)    (83,027)
              Acquisition of property &
               equipment                       (3,610,566)   (287,398)
                                               ----------    --------
        Net cash used in investing activities  (4,051,225)   (471,967)
                                               ----------    --------

    CASH FLOWS FROM FINANCING ACTIVITIES:
              Due to minority shareholders              -        (660)
              Due from / (to) shareholder               -    (587,644)
              Short term loans                 12,117,636           -
              Repayment of short term loans    (9,216,986) (1,361,113)
              Issuance of common stock         66,138,390   5,100,000
                                               ----------   ---------

        Net cash provided by financing
         activities                            69,039,040   3,150,583
                                               ----------   ---------

    EFFECT OF EXCHANGE RATE CHANGE ON
     CASH & CASH EQUIVALENTS                       (3,978)     (9,482)

    NET INCREASE IN CASH & CASH EQUIVALENTS    58,859,482   1,254,365

    CASH & CASH EQUIVALENTS, BEGINNING
     OF PERIOD                                  1,435,213     448,573
                                                ---------     -------

    CASH & CASH EQUIVALENTS, END OF PERIOD    $60,294,695  $1,702,938
                                              ===========  ==========

    Supplemental Cash flow data:
       Income tax paid                         $1,272,797    $426,809
                                               ==========    ========
       Interest paid                             $219,061    $201,269
                                                 ========    ========

 

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

____________________________________
Source: SmartHeat, Inc.

 

 
Copyright © SmartHeat, Inc. 2008
 
 
 
SmartHeat
NewsRelease
 

SmartHeat Announces Appointment of Chief Financial Officer, Audit Committee Chairman
July 14,2012

SmartHeat Inc. Announces First Quarter 2012 Financial Results
May 16,2012

SmartHeat, Inc. Announces Financial Results for 2011
April 5,2012

SmartHeat 3Q 2011 Financials
November 8,2011

SmartHeat Inc. Announces Third Quarter 2011 Financial Results, is Well Positioned for Future, Investor Conference Call at 8:30 a.m. EST on November 8, 2011
November 8,2011

SmartHeat Inc. to Report Second Quarter 2011 Financial Results on August 9, 2011, Before U.S. Market Opens
August 8,2011

SmartHeat Inc. to Report First Quarter 2011 Financial Results on May 10, 2011, Before U.S. Market Opens
May 12,2011

SmartHeat Inc. Announces Record Full Year 2010 Financial Results - 52% Revenue Growth, 47% Net Income Growth
March 19,2011