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SmartHeat Inc. Announces Record 2009 Annual Results

 

Anticipates Rapid Earnings Growth in 2010 from Clean Technology Energy Savings Product Sales

 

NEW YORK, March 31 /PRNewswire-Asia/ --

 

  • 2009 revenue of $82.56 million, up 153% compared to $32.68 million in 2008
  • 2009 net income of $15.44 million, up 144% compared to $6.34 million in 2008
  • 2009 earnings per share (EPS) of $0.58, up 100% compared to $0.29 in 2008
  • Positive signs of economic growth in China, anticipates earnings growth momentum to continue into 2010

 

SmartHeat Inc. (Nasdaq: HEAT; website: www.smartheatinc.com), a market leader in China's clean technology energy savings industry announced today record audited 2009 financial results for the fiscal year ended December 31, 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 our outstanding financial performance for the fiscal year ending in 2009 which exceeded our expectations. Our 2009 financial results are the result of a continued favorable market environment for our industry and the successful execution of our growth strategies. China's energy savings industry continues to be supported by the Chinese government and receives significant funding through government initiatives. In addition, China's economic rebound in the fourth quarter has created a positive environment for growth in 2010 as we expect significant benefits from the continued transition to cleaner technologies and energy saving equipment."

 

Fiscal Year 2009 Financial Performance

 

Revenues were $82.56 million in fiscal year 2009 compared to $32.68 million in 2008, a 153% increase. The significant revenue increase was due to significant sales growth across all product lines as a result of:

 

  • Increasing our traditional heat supply sales as a result of growth in the China domestic infrastructure construction industry, accounting for $37.62 million or 45.6% of total sales; and
  • Adding new customers in the chemical, engineering, electric power and metal smelting industries, accounting for $25.42 million or 30.7% of our total sales; and
  • Rising heat meter sales, accounting for $7.98 million or approximately 9.7% of total sales.

 

Gross profit was $29.10 million in fiscal year 2009 compared to $10.96 million in 2008, a 165.51% increase. Gross profit increased primarily due to the decreased cost of goods sold as a percentage of sales while our sales continued to increase.

 

Operating expenses were $10.92 million in fiscal year 2009 compared to $3.42 million in 2008, a 219% increase. Operating expenses increased because of the higher general and administrative expenses incurred as a result of our growth in sales and production and fees and expenses associated with becoming a public company in 2008.

 

Operating income was $18.18 million in fiscal year 2009 compared to $7.54 million in 2008, a 141.11% 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 $15.44 million in fiscal year 2009 compared to $6.34 million in 2008, a 144% increase. Earnings per share were $0.58 in fiscal year 2009 compared to $0.29 in 2008 a 100% increase. 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 year from 18% to 15%.

 

During the fourth quarter of 2009 we recognized one-time extraordinary expenses of approximately $1.77 million of which approximately $487,000 related to PHE research and development, approximately $700,000 related to a consulting fee paid in connection with the expansion of sales network and market development in nuclear power industry and approximately $585,000 related to an accrued expense for after sale service reserve.

 

Management Comments: 2009 Financial Results and 2010 Market Guidance

 

Mr. Wang commented: "Our audited 2009 financial results exceeded management's financial performance targets as we described in early 2009. SmartHeat expects to experience significant product sales in 2010 as we anticipate a broader domestic economic expansion in China. China's businesses and residences are in the process of becoming more energy efficient and environmentally friendly due to economic incentives and policies. SmartHeat will benefit from this process. As a result, SmartHeat anticipates continued strong product sales and earnings growth in 2010 from all sectors of our customer base: government, industrial, commercial and consumers. 

 

During the fourth quarter of 2009 we experienced one-time expenses incurred to prepare the company for future growth.  We do not expect these extraordinary expenses to reoccur in 2010 and expect our SG&A to return to approximately 13 percent of sales  in 2010.  Without these extraordinary expenses SmartHeat would have met its earnings guidance in the fourth quarter.”

 

 

Investor Conference Call Instructions:

 

SmartHeat management will host an earnings conference call to discuss its 2009 financial results and business outlook for 2010.

 

Date and time: 7:30 am U.S. Eastern Daylight Time, Wednesday March 31, 2010

 

 

Participant dial-in numbers:

 

 

U.S. toll free number:

1 888 339-2688

International direct dial-in:

1 617 847-3007

Conference pass code:

119 470 41

 

 

To listen to a replay of the earnings conference call:

 

 

U.S. toll free number:

1 888 286-8010

International direct dial in:

1 617 801-6888

Conference pass code:

628 492 79

 

 

 

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) 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.

 

 

Corporate Communications Contact:

    Ms. Jane Ai, Corporate Secretary

    SmartHeat Inc.

    Tel: 011-86-24-25363366

    Email: info@SmartHeatinc.com

  

 

 

 

                          SMARTHEAT, INC. AND SUBSIDIARIES

                            CONSOLIDATED BALANCE SHEETS

                          AS OF DECEMBER 31, 2009 and 2008

 

                                                   2009          2008

ASSETS

 

CURRENT ASSETS

     Cash & cash equivalents                   $48,967,992    $1,435,212

     Restricted cash                             1,301,573       462,048

     Accounts receivable, net                   31,887,785    11,390,169

     Retentions receivable                         885,642       290,852

     Advances to suppliers                       7,657,791       412,524

     Other receivables, prepayments and

      deposits                                   3,572,600       698,834

     Inventories                                11,259,273     6,107,583

     Notes receivable -bank acceptances            397,248        14,631

                                             ---------------------------

 

        Total current assets                   105,929,904    20,811,853

 

NON-CURRENT ASSETS

     Restricted cash                                48,361       219,472

     Accounts receivable, net                      237,384       310,810

     Retentions receivable                         349,931       166,912

     Intangible assets, net                      4,071,021     1,155,131

     Property and equipment, net                 7,739,609     2,436,553

                                              --------------------------

 

       Total noncurrent assets                  12,446,306     4,288,878

 

                                              --------------------------

TOTAL ASSETS                                  $118,376,210   $25,100,731

                                              ==========================

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

CURRENT LIABILITIES

     Accounts payable                           $3,493,196    $1,210,906

     Unearned revenue                            2,130,637       850,408

     Taxes payable                               2,140,627     1,327,775

     Accrued liabilities and other payables      3,685,272     1,330,812

     Due to minority shareholder                         -         5,303

     Notes payable - bank acceptances            1,806,564             -

     Loans payable                               4,393,544     2,443,450

                                              --------------------------

 

         Total current liabilities              17,649,840     7,168,654

 

DEFERRED TAX LIABILITY                               8,526        38,854

 

COMMITMENTS AND CONTINGENCIES

 

STOCKHOLDERS' EQUITY

     Common stock, $0.001 par value;

      75,000,000 shares authorized,

      32,794,875 and 24,179,900 shares

      issued and outstanding at

      December 31, 2009 and 2008, respectively      32,795        24,180

     Paid in capital                            74,917,370     8,223,453

     Statutory reserve                           2,872,006     1,150,542

     Accumulated other comprehensive income        969,988       984,629

     Retained earnings                          21,231,484     7,510,419

                                              --------------------------

 

         Total Company stockholders' equity    100,023,643    17,893,223

 

         NONCONTROLLING INTEREST                   694,201             -

                                              --------------------------

 

         TOTAL EQUITY                          100,717,844    17,893,223

 

                                              --------------------------

TOTAL LIABILITIES AND EQUITY                  $118,376,210   $25,100,731

                                              ==========================

 

 

 

                     SMARTHEAT, INC. AND SUBSIDIARIES

      CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

                                                YEARS ENDED DECEMBER 31,

                                                   2009          2008

                                               -------------------------

Net sales                                      $82,563,869   $32,676,082

 

Cost of goods sold                              53,467,805    21,717,735

                                               -------------------------

 

Gross profit                                    29,096,064    10,958,347

 

Operating expenses

     Selling expenses                            3,934,749     1,564,977

     General and administrative expenses         6,986,116     1,851,693

                                               -------------------------

 

     Total operating expenses                   10,920,865     3,416,670

                                               -------------------------

 

Income from operations                          18,175,199     7,541,677

 

Non-operating income (expenses)

     Interest income                               409,221       405,266

     Interest expense                             (518,382)     (314,192)

     Financial expense                             (30,304)            -

     Other income                                  116,795        11,738

     Other expenses                                 (2,838)      (13,709)

     Exchange loss                                 (26,255)      (12,044)

     Subsidy income                                165,598        16,230

                                               -------------------------

 

     Total non-operating income, net               113,835        93,289

 

Income before income tax                        18,289,034     7,634,966

 

Income tax expense                               2,858,186     1,293,660

                                               -------------------------

 

Income from operations                          15,430,848     6,341,306

 

Less: Income (loss) attributable to

 noncontrolling interest                          (11,681)         5,966

 

                                               -------------------------

Net income to SmartHeat Inc.                    15,442,529     6,335,340

 

Other comprehensive item

     Foreign currency translation                  (14,641)      510,770

                                               -------------------------

 

Comprehensive Income                           $15,427,888    $6,846,110

                                               =========================

 

Basic weighted average shares outstanding       26,535,502    22,176,322

                                               -------------------------

 

Diluted weighted average shares outstanding     26,592,066    22,176,432

                                               -------------------------

 

Basic earnings per share                             $0.58         $0.29

                                               =========================

 

Diluted earnings per share                           $0.58         $0.29

                                               =========================

 

 

 

                    SMARTHEAT, INC. AND SUBSIDIARIES

                  CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

                                                YEARS ENDED DECEMBER 31,

                                                   2009          2008

                                               -------------------------

 

CASH FLOWS FROM OPERATING ACTIVITIES:

    Income including noncontrolling interest   $15,430,848    $6,341,306

    Adjustments to reconcile income including

     noncontrolling interest to net cash used

     in operating activities:

    Depreciation and amortization                  635,368       252,598

    Unearned interest on accounts receivable       120,522      (127,819)

    Stock option compensation expense                3,292         5,613

    Changes in deferred tax liability              (30,353)         (163)

       (Increase) decrease in current assets:

         Accounts receivable                   (20,724,401)   (4,943,868)

         Retentions receivable                    (777,062)      (74,797)

         Advances to suppliers                  (7,233,127)       62,759

         Other receivables, prepayments and

          deposits                              (2,230,595)      182,577

         Inventory                              (5,143,857)    2,405,678

       Increase (decrease) in current

        liabilities:

         Accounts payable                        4,051,684    (2,389,649)

         Unearned revenue                        1,278,907    (2,993,636)

         Taxes payable                             811,275       779,408

         Accrued liabilities and other

          payables                              (5,776,850)     (261,040)

                                              --------------------------

 

    Net cash used in operating activities      (19,584,349)     (761,033)

                                              --------------------------

 

CASH FLOWS FROM INVESTING ACTIVITIES:

         Increase in restricted cash              (667,502)     (108,040)

         Cash purchased at acquisition                   -        55,426

         Acquisition of property & equipment      (942,442)     (439,861)

         Notes receivable                                -       (14,635)

                                               -------------------------

 

    Net cash used in investing activities       (1,609,944)     (507,110)

                                               -------------------------

 

CASH FLOWS FROM FINANCING ACTIVITIES:

         Cash contribution from noncontrolling

          interest                                 705,882             -

         Change in due to minority shareholders          -          (663)

         Repayment to shareholder                        -      (343,913)

         Proceeds from short term loans          4,552,774     5,136,069

         Repayment on short term loans          (1,870,976)   (7,583,873)

         Warrants exercised                        380,850             -

         Shares issued                          65,007,390     5,100,000

                                               -------------------------

 

    Net cash provided by financing activities   68,775,920     2,307,620

                                               -------------------------

 

EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH

 EQUIVALENTS                                       (48,847)        2,588

 

NET INCREASE IN CASH & CASH EQUIVALENTS         47,532,780     1,042,065

 

CASH & CASH EQUIVALENTS, BEGINNING OF YEAR       1,435,212       393,147

                                               -------------------------

 

CASH & CASH EQUIVALENTS, END OF YEAR           $48,967,992    $1,435,212

                                               =========================

 

Supplemental Cash flow data:

  Income tax paid                               $1,500,415      $660,127

                                               =========================

  Interest paid                                   $338,513      $274,969

                                               =========================

 

 

CONTACT:  Ms. Jane Ai, Corporate Secretary, SmartHeat Inc., 011-86-24-25363366, info@SmartHeatinc.com

 

 

 
Copyright © SmartHeat, Inc. 2008
 
 
 
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