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
NEW YORK, November 8, 2011 /PRNewswire-Asia/ -- SmartHeat Inc. (NASDAQ: HEAT; website: www.smartheatinc.com), a market leader in China's clean technology, energy savings industry, today announced financial results for the third quarter ended September 30, 2011. SmartHeat management is scheduled to host an investor conference call at 8:30 a.m. EST on November 8, 2011.
Mr. James Jun Wang, Chairman and Chief Executive Officer of SmartHeat Inc., made the following comments regarding the performance of SmartHeat during the third quarter of 2011: "We experienced an encouraging increase in sales and deliveries in the third quarter of 2011 compared to the second quarter of 2011, and we are well positioned to take advantage of the results of China's current anti-inflation policies. The slowdown in the heating-supply and other industrial markets in China continued, caused in part by the Chinese government's ongoing tightening of fiscal policy to fight inflation. We are overcoming the postponement and cancellation of some of our plate heat exchanger (PHE) orders in the first half of 2011, however, and maintaining our gross margin by strengthening our sales efforts through the maturation of our sales force, increasing sales channels, improving cost controls, increasing prices and continuing to improve the efficiency of our manufacturing operations, which may include staff reductions in certain plants.
"Despite the challenging sales environment, we are encouraged by the progress of synergization and integration after the acquisition of Gustrower Warmepumpen GmbH and Shenyang Bingchuan Refrigerating Machine Limited in the first quarter of 2011. ˙We anticipate increased sales in the heat pump sector from both of these companies. Despite the temporary fiscal tightening impacting our customers in China, we expect that the Chinese government will continue to require implementation of energy savings policies to reduce emissions, which we believe will continue to increase the demand for our energy-saving products in all industrial sectors. We are optimistic about taking advantage of West China's economic development and urbanization trends throughout China as well as positioning ourselves as an international forward-thinking 'green' company."
In the third quarter of 2011, total sales increased to $16.57 million compared to $7.08 million in Q2 2011 due to seasonality factors and our steps to increase sales of our PHE Units and PHEs by continuing our expansion into regional areas of China. We are encouraged by our progress in restructuring our business organization, integrating our heat pump manufacturing subsidiaries and improving operating efficiency.
Operating loss totaled $2.54 million in Q3 2011 compared with operating loss of $7.10 million in Q2 2011. Our net loss for Q3 2011 was $4.0 million compared to net loss of $6.42 million for Q2 2011. The decrease in net loss from the second quarter to the third quarter of 2011 was attributable to improved seasonal sales and our business expansion efforts, and a slowing of the growth of bad debt allowance reserves.
The Company believes that the current slowdown in heat-supply and other industrial markets caused by the Chinese government's tightened fiscal policy will be temporary and that the previous expansion and training of the Company's marketing team and other employees should result in improved sales and efficiency of its operations. Nevertheless, the Company is instituting a rigorous program of cost cutting to continue tight control of its budget and maintain cost-effectiveness and implement additional cost control measures, including a review of the staffing levels in response to the decrease in sales.
Revised Full Year 2011 Earnings Guidance
Due to the impact of significant drops of sales, impact of rising prices on business and the integration costs of Gustrower Warmepumpen GmbH and Shenyang Bingchuan Refrigerating Machine Limited Company, two companies acquired by SmartHeat in Q1 2011, the Company is revising its full year 2011 earnings guidance to $18 million to $20 million in net loss and $40 million to $50 million in revenue.
Investor Conference Call Instructions:
SmartHeat management will host an earnings conference call today to discuss its third quarter financial results and outlook.
Date and time: 8:30 a.m. U.S. Eastern Standard Time, November 8, 2011
U.S. toll free number: +1 888 419.5570
International direct dial-in: +1 617 896.9871
Conference passcode: 198 042 83
About SmartHeat Inc.
Founded by James Jun Wang, a former executive at Honeywell China, SmartHeat Inc. (www.smartheatinc.com) is a NASDAQ Global Select Market listed (NASDAQ: HEAT) U.S. company with its primary operations in China. SmartHeat is a market leader in China's clean technology energy savings industry. SmartHeat manufactures heat exchangers, 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 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, 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 the 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