DALIAN, China, May 18 /PRNewswire-Asia/ -- China Industrial Waste Management, Inc. (OTC Bulletin Board: CIWT), an industrial waste processor and provider of environmental protection, pollution treatment and waste management design services in the People's Republic of China ("PRC"), today announced its unaudited financial results for the first quarter of 2009 which ended March 31, 2009.
First Quarter of 2009 Results (Unaudited):
Revenues for the first quarter of 2009 were approximately $1.6 million, a decrease of 48.5% or $1.5 million from the $3.1 million reported for the first quarter of 2008. The decrease was mainly due to the sharp decrease of volume for waste processing services from industrial customers and the low selling price of recycled products. Service fees were $1.2 million and represented 74.3% of total revenue from the first quarter of 2009, compared to $1.8 million or 58.1% of total revenue for the same period in 2008. Dongtai Water contributed approximately $0.3 million to revenues in the first quarter of 2009. Most of CIWT industrial customers are engaged in export-oriented manufacturing businesses and were greatly impacted by the continued global recession. The volume of waste collection sharply decreased during the first quarter of 2009 and average daily volume decreased from 135 tons in 2008 to 79 tons in the first quarter of 2009. Sales of cupric sulphate decreased to $91,131 or 5.7% of revenue in the first quarter of 2009, from $708,843 or 22.6% of revenue in the same period of 2008. Sales of recycled products decreased 46.3% to $323,120 or 20.0% of revenue in the first quarter of 2009, from $601,885 or 19.2% of revenue in the same period of 2008.
"Our business was impacted by the global recession and slowdown of Chinese GDP growth in the first quarter of 2009. We believe this is a short term disruption and we have seen improvements in all aspects of our business by the end of the first quarter," commented Mr. Jinqing Dong, Chairman and CEO of China Industrial Waste Management. "While we are not satisfied with the results as we manage through these tough economic conditions, we are pleased with the results from several of our initiatives. Our municipal waste water treatment facility continued contributing to revenues during the first quarter. We are also conducting testing of our sludge treatment facility and we plan to commence operations in August 2009, which we expect to favorably impact our revenue and net income in 2009. In addition, we commenced trial production phase of Zhuorui in early March and we believe that we are very close to solving the remaining technical issues with our Zhuorui project."
Quarterly gross profit for the first quarter of 2009 was approximately $884,100, compared to $2.2 million for the same period last year, yielding gross margins of 54.8% and 70.4%, respectively. The decrease in gross profit and gross margins were primarily attributable to the decrease in revenue.
Operating expenses for the first quarter of 2009 were $624,036, which represents an increase of 7.2% from $581,927, compared to the same period in 2008. Operating income for the first quarter of 2009 totaled approximately $260,064, a 83.9% decrease from the $1.6 million reported for the first quarter of 2008. Operating margins were 16.1% compared to 51.8% for the first quarter of 2009 and 2008, respectively.
Net income for the first quarter of 2009 decreased 92.2% to $107,518 from $1.4 million in the same year ago period. Corresponding net profit margins were 6.7% for the quarter. The Company recorded an effective tax rate of 28.7% for the quarter. Earnings per diluted share were $0.01 compared to $0.10 for the corresponding quarter last year, based on 15.3 million and 13.8 million diluted shares outstanding, respectively.
Balance Sheet and Cash Flow Statement:
Cash and cash equivalents and restricted cash totalled $2.7 million on March 31, 2009 compared to $5.7 million on December 31, 2008. Inventory was approximately $2.5 million on March 31, 2009 compared to $2.4 million on December 31, 2008, the majority of which consists of metals extracted during the recycling process. Although the market price for metals shows a positive trend in the first quarter, management has determined that it would be more advantageous to continue holding most inventory in anticipation of expected price increases. The accounts receivable balance was $2.8 million on March 31, 2009, compared to $2.4 million on December 31, 2008 and annualized days sales outstanding for the first quarter of 2009 was 158 days. Shareholders' Equity on March 31, 2009 was $23.7 million. Net cash used in operating activities for the first three months of 2009 was $675,037.
"We are developing several new initiatives for industrial waste management business in new geographic markets in China. In the mean time, we continue to seek new BOT projects which could provide long-term and recurring revenue streams, while further diversifying our business. We expect our Lipp JV division to begin generating meaningful revenue and net income in the second half of 2009 due to the increasing government regulation on prevention of secondary pollution caused by sludge. We believe our diversified business will resume its previous growth momentum in the near term in a sign that the global economy has bottomed out and the China stimulus package is starting to kick in." Mr. Dong concluded.
Conference Call Information:
The conference call will take place at 10:00 a.m. ET on Monday, May 18, 2009. Interested participants should call +1 480-629-9866. Conference pass code is 4078889. This call is being web cast and can be accessed at the following link: http://viavid.net/dce.aspx?sid=00006498 .
About China Industrial Waste Management, Inc.
China Industrial Waste Management, Inc. is engaged in the collection, treatment, disposal and recycling of industrial wastes principally in Dalian and surrounding areas in Liaoning Province, People's Republic of China through its 90%-owned subsidiary Dalian Dongtai Industrial Waste Treatment Co., Ltd. ("Dongtai") and other indirect subsidiaries. Dongtai treats, disposes of and/or recycles many types of industrial wastes, and recycled waste products used by customers as raw material to produce chemical and metallurgy products. In addition, Dongtai treats or disposes of industrial waste through incineration, burial or water treatment, and provides environmental protection services, technology consultation, pollution treatment services, waste management design processing services, waste disposal solutions, waste transportation services, onsite waste management services, and environmental pollution remediation services.
Cautionary Statement Regarding Forward-Looking Information
This release may include "forward-looking statements." You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain such words as "may," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or the negative or other variations thereof or comparable terminology. These forward-looking statements are based on current expectations and projections about future events. Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, our actual performance may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission: the timing and magnitude of technological advances; the prospects for future acquisitions; the effects of political, economic and social uncertainties regarding the governmental, economic and political circumstances in the People's Republic of China, the possibility that a current customer could be acquired or otherwise be affected by a future event that would diminish their waste management requirements; the competition in the waste management industry and the impact of such competition on pricing, revenues and margins; uncertainties surrounding budget reductions or changes in funding priorities of existing government programs and the cost of attracting and retaining highly skilled personnel; our projected sales, profitability, and cash flows; our growth strategies; anticipated trends in our industries; our future financing plans; and our anticipated needs for working capital.
Forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $2,741,411 $5,714,001
Trade accounts receivable, net 2,840,584 2,414,257
Other receivables 81,169 105,329
Inventory 2,539,388 2,372,214
Advances to suppliers 695,861 550,931
Prepaid expense 16,830 17,589
Total current assets 8,915,242 11,174,321
Investment 2,749,026 2,794,248
Property, plant and equipment, net 15,700,320 15,474,915
Construction in progress 5,579,412 5,738,271
Land usage right, net of accumulated
amortization 1,800,388 1,817,427
Deposits 11,848 14,798
Related party receivable 42,285 1,256,599
Escrow account 750,000 750,000
Certificate of deposit 658,578 73,287
Other asset 345,526 348,545
TOTAL ASSETS $36,552,626 $39,442,411
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $728,140 $780,458
Short-term loan 1,463,507 3,371,198
Tax payable 92,995 215,240
Advance from customers 548,301 539,013
Deferred sales 1,072,024 972,143
Accrued expenses 16,576 361,111
Construction projects payable 3,690,930 4,742,164
Related party payable 380,512 278,490
Other payable 212,820 211,362
Total current liabilities 8,205,805 11,471,179
Asset retirement obligation 510,541 502,278
Government subsidy 1,026,691 1,028,257
TOTAL LIABILITIES 9,743,037 13,001,714
Minority interest in subsidiary 3,103,708 2,823,126
Commitments and contingencies
Stockholders' equity
Preferred stock: par value $.001; 5,000,000
shares authorized; none issued and
outstanding -- --
Common stock: par value $.001; 95,000,000
shares authorized; 15,262,035 and
13,220,843 shares issued and
outstanding at March 31, 2009
and December 31, 2008 respectively 15,262 15,262
Additional paid-in capital 5,644,750 5,644,750
Other comprehensive income 2,402,960 2,422,167
Retained earnings 15,642,909 15,535,392
Total stockholders' equity 23,705,881 23,617,571
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $36,552,626 $39,442,411
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
For the Three Months Ended
March 31,
2009 2008
Revenue
Service fees $1,197,699 $1,819,552
Sales of cupric sulfate 91,131 708,843
Sales of recycled commodities 323,120 601,885
Operating revenue 1,611,950 3,130,280
Costs of revenues
Cost of service fees 470,163 371,035
Cost of cupric sulfate 87,976 286,526
Cost of recycled commodities 169,711 270,532
Costs of revenue 727,850 928,093
Gross profit 884,100 2,202,187
Operating expenses
Selling expenses 177,315 228,081
General and administrative expenses 446,722 353,846
Total operating expenses 624,036 581,927
Income from operations 260,064 1,620,260
Other income (expense)
Investment loss (40,951) (9,039)
Interest income 1,271 6,298
Other income 47 5,880
Other expense (63,560) (2)
Total other income (103,192) 3,137
Net income from continuing operations before
minority interest, income tax provision 156,871 1,623,397
Income tax provision 45,029 107,230
Net income before minority interest 111,842 1,516,167
Minority interest 4,324 140,550
Net income 107,518 1,375,617
Foreign currency translation adjustment (19,207) 589,954
Comprehensive income (loss) $88,311 $1,965,571
Basic and diluted weighted average
shares outstanding 15,262,035 13,755,274
Basic and diluted net earnings per share $0.01 $0.10
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months
Ended March 31,
2009 2008
Cash flows from operating activities:
Net income $107,518 $1,375,617
Adjustments to reconcile net income to net
Cash provided by operating activities:
Minority interest 4,324 140,550
Depreciation 258,611 114,404
Amortization 17,039 4,148
Bad debt allowance -- (3,534)
Accretion expenses 8,263 9,311
Loss on equity investment 45,222 --
Subsidy received from government -- 348,326
Changes in operating assets and liabilities:
Accounts receivable (426,327) (949,529)
Inventory (167,174) (160,551)
Other receivables 24,160 (314,010)
Advance to suppliers (144,930) 1,884
Prepaid expense 759 24,734
Deposits 2,950 (481,423)
Other assets 3,019 --
Accrued expense and deferred sales (244,654) 33,961
Accounts payable (50,860) 637,869
Advance from customers 9,288 --
Tax payable (122,245) 40,196
Net cash provided by (used in) operating
activities (675,037) 821,953
Cash flows from investing activities:
Investment in subsidiary -- 9,039
Purchase of property and equipment (32,456) (59,015)
Certificate of deposit (585,291) --
Construction contracts -- (1,121,648)
Due from related party -- 11,751
Related party loan 1,214,314 --
Due to related party 102,022 41,799
Net cash provided by (used in) investing
activities 698,589 (1,118,074)
Cash flows from financing activities:
Repayment of construction projects payable (1,051,234) --
Proceeds from short term loans -- 1,114,462
Repayment of short term loans (1,907,691) --
Net cash provided by (used in) financing
activities (2,958,925) 1,114,462
Effect of exchange rate on cash (37,217) 146,633
Net increase (decrease) in cash and cash
equivalents (2,972,590) 964,974
Cash and cash equivalents, beginning of period $5,714,001 $3,260,307
Cash and cash equivalents, end of period $2,741,411 $4,225,281
Supplemental cash flow information:
Cash paid during the year for:
Interest $32,078 $--
Income taxes $143,518 $--
Non-cash investing and financing
activities:
Contributed anaerobic fermentation
equipment $(292,701) $--
Transfer out of construction in
progress $158,859 $--
Transfer of construction in progress
to property, plant and equipment $(158,859) $--
Change in reporting entity $276,253 $--
For more information, please contact:
Ms. Guo Xin, CFO
Tel: +86-411-8581-1229
Email: hellenguo@chinaciwt.com
Mr. Zhang Dazhi, Company Secretary
Tel: +86-411-8259-5339
Email: darcy.zhang@chinaciwt.com
Web: http://www.chinaciwt.com
Investors Contact:
Mr. Matthew Hayden, HC International
Tel: +1-561-245-5155
Email: matt.hayden@hcinternational.net
Web: http://www.hcinternational.net
