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Cleantech Solutions International Reports First Quarter 2017 Results

2017-05-16 19:30
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WUXI, China, May 16, 2017 /PRNewswire/ -- Cleantech Solutions International, Inc. ("Cleantech Solutions" or "the Company") (NASDAQ: CLNT) today announced its financial results for three months ended March 31, 2017.

"In the first quarter of 2017, we saw a slight uptick in revenue as some of our customers who had temporarily ceased operations to comply with stricter environmental requirements last year resumed normal operations. Although higher raw material costs impacted margin and contributed to the slight loss for the quarter, we generated positive cash flow from operations and improved our cash position from the end of 2016," said Mr. Jianhua Wu, Chairman and CEO of Cleantech Solutions. "We expect our revenues to remain relatively stable in the near future and are focused on improving the long-term outlook for our business. We continue to develop our next generation dyeing and finishing equipment based on the patented ozone-ultrasonic technology.  We remain excited about our investment in Shengxin, a newly formed company that plans to build solar farms in Guizhou and Yunnan provinces, and are exploring opportunities to produce precision components for other high growth industries."

First Quarter 2017 Results

Revenue for the first quarter of 2017 increased by 2.9% to $4,658,000, compared to $4,527,000 for the same period in 2016. The Company's only source of revenue is from the dyeing and finishing business, since the forged rolled rings and related products and petroleum and chemical equipment businesses are discontinued.  In the first quarter of 2016, some of the Company's customers temporarily ceased operations to comply with stricter environmental requirements, resulting in fewer orders for dyeing machines from these customers.  In first quarter of 2017, these customers restored normal operations, resulting in a slight increase in revenues in the quarter.

Gross profit for the first quarter of 2017 was $586,000, compared to gross profit of $821,000 for the same period in 2016. Gross margin was 12.6% during the first quarter of 2017 compared to 18.1% for the same period in 2016. The decline in gross margin was primarily attributable to higher raw material costs.

Operating expenses decreased by 12.3% to $682,000, compared to $778,000 for the same period in 2016.  The decrease was primarily due to a reduction of stock-based consulting fees, which was partially offset by an increase in research and development expenses for the development of new dyeing and finishing products. 

Loss from operations was $96,000, compared to income from operations of $43,000 for the same period in 2016.

Loss from continuing operations was $146,000, or $(0.10) per basic and diluted share, compared to loss from continuing operations of $103,000, or $(0.10) per basic and diluted share for the same period in 2016.

Loss from discontinued operations (Refer to "Discontinued Operations" discussion below) was nil for the first quarter of 2017. This compares to loss from discontinued operations of $741,000, or $(0.72) per basic and diluted share for the first quarter of 2016.

Net loss for the first quarter of 2017 was $146,000, or $(0.10) per basic and diluted share, compared to net loss of $844,000, or $(0.82) per basic and diluted share, for the same period in 2016.   

Basic and diluted earnings per share were based on 1,415,441 and 1,025,172 weighted average shares outstanding, respectively, for the three months ended March 31, 2017 and 2016. All share and per share information has been adjusted to reflect a 1-for-4 reverse stock split effective March 20, 2017.

Financial Condition

As of March 31, 2017, Cleantech Solutions held cash and cash equivalents of $2,829,000 compared to $1,481,000 at December 31, 2016. Accounts receivable were $15,397,000 compared to $13,922,000 at December 31, 2016. Inventories were $2,795,000 compared to $2,394,000 at December 31, 2016. The Company had $2,176,000 and $638,000 in short-term bank loans and bank acceptance notes payable, respectively, at March 31, 2017, up from $2,160,000 and $547,000, respectively, at December 31, 2016. Working capital was $22,621,000 at March 31, 2017 compared to $21,539,000 at December 31, 2016. Stockholders' equity was $65,662,000 at March 31, 2017 compared to $65,312,000 at December 31, 2016. 

In the first quarter of 2017, the Company generated $1,338,000 in operating cash flow, primarily due to increases in accounts payable and advances from customers which were offset by increases in accounts receivable, advances to suppliers and inventory and the net loss for the period. 

Discontinued Operations

On December 30, 2016, the Company sold 100% of the stock of Wuxi Fulland Wind Energy Equipment Co., Ltd. ("Fulland Wind") to an unrelated party and discontinued the Company's forged rolled rings and related components business. Additionally, the Company's management decided to discontinue its petroleum and chemical equipment segment due to significant declines in revenues and the loss of its major customer. As such, the assets and liabilities of these two segments were classified on the unaudited condensed consolidated balance sheets as assets and liabilities of discontinued operations as of March 31, 2017 and December 31, 2016 and the operating results were classified as discontinued operations in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2016.

About Cleantech Solutions International

Cleantech Solutions, through its affiliated companies, designs, manufactures and distributes a line of proprietary high and low temperature dyeing and finishing machinery to the textile industry. 

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. The business of Shengxin involves a high degree of risk, the Company does not have any control over the operations of Shengxin, and the Company can give no assurance as to whether Shengxin will ever generate revenue or positive cash flow or whether the Company can or will supply components to Shengxin. 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, 2016 and in our Form 10-Q for the quarter ended March 31, 2017. 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.
May Liu, Investor Relations
E-mail: ir@cleantechsolutionsinternational.com
+852-31060372 
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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE GAIN (LOSS)

(Unaudited)












For the Three Months Ended





March 31,





2017


2016








REVENUES

$

4,657,454

$

4,526,700

COST OF REVENUES


4,071,600


3,705,479

GROSS PROFIT


585,854


821,221








OPERATING EXPENSES:






Depreciation


268,365


137,909


Selling, general and administrative


307,659


621,522


Research and development


106,077


18,401



Total operating expenses


682,101


777,832








(LOSS) INCOME FROM OPERATIONS


(96,247)


43,389








OTHER INCOME (EXPENSE):






Interest income


1,878


8,416


Interest expense


(39,690)


(32,610)


Loss on equity method investment


(18,355)


-


Foreign currency transaction gain


-


108


Other income


16,992


-



Total other expense, net


(39,175)


(24,086)








(LOSS) INCOME FROM CONTINUING OPERATIONS BEFORE PROVISION
FOR INCOME TAXES

(135,422)


19,303


Income taxes provision


11,062


122,818








LOSS FROM CONTINUING OPERATIONS


(146,484)


(103,515)








LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES

-


(740,578)








NET LOSS

$

(146,484)

$

(844,093)








COMPREHENSIVE GAIN (LOSS):






Net loss

$

(146,484)

$

(844,093)


Other comprehensive gain:







Unrealized foreign currency translation gain


496,124


525,948


Comprehensive gain (loss)

$

349,640

$

(318,145)








NET LOSS PER COMMON SHARE:






Continuing operations - Basic and diluted

$

(0.10)

$

(0.10)


Discontinued operations - basic and diluted


-


(0.72)


Net loss per common share - basic and diluted

$

(0.10)

$

(0.82)








WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:




Basic and diluted


1,415,441


1,025,172

 

 

CLEANTECH SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS












March 31,
2017

December 31,
2016





(Unaudited)








ASSETS












CURRENT ASSETS:






Cash and cash equivalents

$

2,828,692

$

1,481,498


Restricted cash


642,263


551,047


Notes receivable


82,697


133,913


Accounts receivable, net of allowance for doubtful accounts

15,397,185


13,922,371


Inventories, net of reserve for obsolete inventories

2,795,003


2,394,179


Advances to suppliers


1,503,012


1,116,525


Deferred tax assets


389,308


386,381


Receivable from sale of subsidiary


4,874,793


4,838,152


Prepaid expenses and other


1,313,122


9,074


Assets of discontinued operations


498,330


1,758,986










Total current assets


30,324,405


26,592,126








OTHER ASSETS:






Equity method investment


8,657,630


8,610,759


Property and equipment, net


29,138,898


29,878,675


Intangible assets, net


5,244,236


5,283,695










Total other assets


43,040,764


43,773,129










Total assets

$

73,365,169

$

70,365,255








LIABILITIES AND STOCKHOLDERS' EQUITY








CURRENT LIABILITIES:






Short-term bank loans

$

2,176,247

$

2,159,889


Bank acceptance notes payable


638,366


547,172


Accounts payable


2,453,499


864,870


Accrued expenses


273,802


368,395


Advances from customers


1,506,630


427,446


VAT and service taxes payable


26,827


47,319


Income taxes payable


78,325


79,467


Liabilities of discontinued operations

549,796


558,661










Total current liabilities


7,703,492


5,053,219










Total liabilities


7,703,492


5,053,219








Commitments and contingencies








STOCKHOLDERS' EQUITY:






Preferred stock ($0.001 par value; 10,000,000 shares authorized;



No shares issued and outstanding at March 31, 2017 and December 31,
2016)

-


-


Common stock ($0.001 par value; 12,500,000 shares authorized;



1,415,441 shares issued and outstanding at March 31, 2017 and
December 31, 2016)

1,415


1,415


Additional paid-in capital


35,549,542


35,549,542


Retained earnings


26,385,014


26,531,498


Statutory reserve


2,352,592


2,352,592


Accumulated other comprehensive income - foreign currency translation
adjustment

1,373,114


876,989










Total stockholders' equity


65,661,677


65,312,036










Total liabilities and stockholders' equity

$

73,365,169

$

70,365,255

 

 

CLEANTECH SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)












For the Three Months Ended





March 31,





2017


2016

CASH FLOWS FROM OPERATING ACTIVITIES:





Net loss

$

(146,484)

$

(844,093)


Adjustments to reconcile net loss from operations to net cash




provided by operating activities:







Depreciation


968,190


955,279



Depreciation - discontinued operations


-


719,449



Amortization of intangible assets


79,531


22,599



Loss on equity method investment


18,355


-



Stock-based compensation and fees


9,074


428,250


Changes in operating assets and liabilities:







Notes receivable


52,267


14,145



Accounts receivable


(1,370,349)


(73,789)



Inventories


(382,965)


(202,137)



Prepaid and other current assets


(7,374)


(25,938)



Advances to suppliers


(378,300)


(27,153)



Assets of discontinued operations


(31,792)


(218,205)



Accounts payable


1,583,204


6,033



Accrued expenses


(95,971)


(361,554)



VAT and service taxes payable


(20,865)


(93,838)



Income taxes payable


(1,746)


(54,883)



Advances from customers


1,076,712


287,252



Liabilities of discontinued operations


(13,106)


(401,772)








Net cash provided by operating activities


1,338,381


129,645








CASH FLOWS FROM INVESTING ACTIVITIES:





Purchase of property and equipment


(1,444)


(9,332)








Net cash used in investing activities


(1,444)


(9,332)








CASH FLOWS FROM FINANCING ACTIVITIES:





Proceeds from bank loans


-


1,529,176


Repayments of bank loans


-


(1,605,635)


(Increase) decrease in restricted cash


(87,112)


458,753


Increase in restricted cash - discontinued operations

-


(68,813)


Increase (decrease) in bank acceptance notes payable

87,112


(458,753)


Increase in bank acceptance notes payable - discontinued operations

-


58,109








Net cash used in financing activities


-


(87,163)








Effect of exchange rate changes on cash and cash equivalents

10,257


125,461








Net increase in cash and cash equivalents


1,347,194


158,611








Cash and cash equivalents - beginning of period


1,481,498


18,790,370








Cash and cash equivalents - end of period

$

2,828,692

$

18,948,981








SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


Cash paid in continuing operations for:







Interest

$

39,690

$

32,610



Income taxes

$

12,808

$

177,701









Cash paid in discontinued operations for:







Interest

$

-

$

23,104



Income taxes

$

-

$

-








NON-CASH INVESTING AND FINANCING ACTIVITIES:




Stock issued for future services

$

-

$

110,350


Stock issued for accrued liabilities

$

-

$

64,000


Increase in prepaid expenses and other from sale of equipment

$

1,306,677

$

-

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cleantech-solutions-international-reports-first-quarter-2017-results-300458200.html

Source: Cleantech Solutions International, Inc.

Related stocks: NASDAQ-SMALL:CLNT

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