DALIAN, China, Nov. 13 /PRNewswire-Asia/ -- China Industrial Waste Management, Inc. (OTC Bulletin Board: CIWT) ("China Industrial Waste Management" or the "Company"), a leading environmental services and solutions provider in China, announced today its financial results for the third quarter of 2009, period ended September 30, 2009.
Third Quarter 2009 Highlights
-- Operating revenue totaled $3.1 million, down 2.3% year-over-year, but
up 27.2% sequentially
-- Gross profit totaled $1.9 million, the same as last year, but up 20.5%
sequentially
-- Gross margin was 60.8%, compared to 58.4% in third quarter 2008
-- Net income totaled $0.7 million, down 19.3% year-over-year, but up
17.2% sequentially
-- Basic and diluted earnings per share were $0.04
-- Received a national subsidy of RMB 10 million (approximately $1.5
million) for capacity expansion to complete a "Centralized Hazardous
Waste Treatment Facility" in Dalian
-- Closed acquisition of 65% Equity Stake in Hunan Hanyang Environmental
Protection Science & Technology Co., Ltd.
-- Attended the "Sino-German Workshop in Response to Climate Change
Application of Sludge Treatment Technologies and Potential CDM
Projects"
"Our business continues to recover from the downturn seen in the first quarter," said Mr. Jinqing Dong, the Company's Chief Executive Officer. "Our revenues and net income are up sequentially as most of our export-oriented customers are once again approaching historical production levels and increasing their demand for industrial waste management. In addition, we have devoted additional resources to developing new clients and we are beginning to see those efforts pay off as we successfully signed up several new customers during the quarter."
Third Quarter 2009 Results
During the third quarter of 2009, operating revenue was $3.1 million, down 2.3% from $3.2 million in the third quarter of 2008, but up 27.2% from the second quarter of 2009. Revenues from service fees were $2.0 million, up 23.1% from $1.7 million in the same quarter of 2008, and up 24.1% from $1.6 million in the second quarter of 2009. The year-over-year and sequential increases were primarily due to a recovery in demand for solid waste treatment from the Company's export-oriented customers as they continued to recover from the economic crisis. Sales of recycled products were $1.1 million, down 29.7% from $1.5 million the prior year, but up 33.4% from $0.8 million sequentially. The year-over-year decrease resulted from declining waste collection volumes and a decline in prices for recycled products including cupric sulfate and aluminum as a result of the economic crisis. However, as economic conditions have improved, prices for metals and other raw materials have begun to increase from their lows, as reflected by the sequential increase in revenues from the second quarter to the third quarter of 2009.
For the three months ended September 30, 2009, cost of revenue was $1.2 million, down 8.2% from $1.3 million in the same period of 2008. Gross profit was $1.9 million, almost the same as in the third quarter of 2008, but up 20.5% from $1.6 million in the second quarter of 2009. Gross margin for third quarter 2009 was 60.8%, compared to 58.4% a year ago due to the higher volume of waste treated. Gross margin for second quarter 2009 was 64.2%.
Total operating expenses for the third quarter of 2009 were $1.0 million, up 43.6% from $0.7 million in the same period last year, driven mainly by an increase in professional fees and other expenses related to the Company's status as a public company. Income from operations was $0.9 million, down 21.8% compared to $1.2 million in the same quarter of 2008, but up 46.7% from the second quarter of 2009. Operating margin in the quarter was 29.9% versus 37.3% in last year's third quarter, but improved from 25.9% in the second quarter of 2009.
Net income was $0.7 million, compared to $0.8 million in 2008. Net margin for the third quarter of 2009 was 21.5%, compared to 26.1% a year ago.
Basic and diluted earnings per share were $0.04, compared with $0.06 for the third quarter of 2008 and $0.04 for the second quarter of 2009.
Nine Months Results
Operating revenue for the first nine months of 2009 was $7.2 million, down 27.5% from $9.9 million in the same period of 2008. Cost of revenue decreased 13.5% to $2.9 million. Gross profit was $4.3 million, compared to $6.6 million in the same period of 2008. Gross profit margin for the first nine months of 2009 was 59.7%, compared with 66.2% for the same period of 2008. Net income was $1.4 million, representing an 18.8% net margin compared to $3.6 million or a 36.0% net margin in the same period last year. Basic and diluted earnings per share for the first nine months of 2009 were $0.09 compared to $0.27 in the first nine months of 2008.
Financial Condition
As of September 30, 2009, the Company had cash and cash equivalents of $8.7 million and working capital of $5.3 million. For the first nine months, the Company generated $0.4 million from operating activities. At September 30, 2009, the Company had stockholders' equity of $24.9 million compared to $23.6 million on December 31, 2008.
Recent Events
On November 4, 2009, the Company announced construction and regulatory progress related to the Build-Operate-Transfer ("BOT") municipal sludge treatment and disposal facility in Dalian, China (the "Project") that is being developed by the Company's subsidiary Dongtai Organic Waste Treatment Co. Ltd. The Company announced that six of the Project's 12 fermentation tanks are now complete and have passed examination by the Dalian Municipal Urban Construction Administration Engineering Technology Agency and that a biogas pipe network has been built.
The Company will present at the upcoming Brean Murray, Carret & Co. 2009 China Growth Conference in New York, NY on November 20, 2009.
Business Outlook
Mr. Dong added, "We expect the recovery of our business to continue through the end of this year and into next year as the global economy and our customers' export volumes continue to rebound, we devote increased resources to attracting new customers, and we continue to invest in our business. We expect the expansion of our hazardous waste management business to accelerate as a result of our Dalian Dongtai Expansion Project, which is schedule to be completed by late 2010. We also expect our results to benefit from our expansion into municipal sewage and sludge treatment BOT projects. Specifically, we expect our Dongtai Organic Waste Treatment BOT project to come online in late 2009 or early in 2010. Overall, we look forward to continued improvement in our results for the fourth quarter of 2009 and for full year 2010."
Conference Call
The Company will hold its third quarter conference call for all interested persons at 9:00 a.m. Eastern Time on Friday, November 13, 2009, to discuss its results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-888-419-5570. International callers should dial +1-617-896-9871. When prompted by the operator, mention Conference Passcode 665 937 40. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on November 13, 2009, at 11:00 a.m. Eastern Time. To access the replay, dial 1-888-286-8010 and international callers should dial +1-617-801-6888 and enter the passcode 539 983 73.
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. For more information, please visit the Company's website (http://www.chinaciwt.com ).
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.
For further information, please contact:
Company Contact:
About China Industrial Waste Management, Inc.
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
CCG Investor Relations:
Mr. Athan Dounis, Account Manager
Tel: +1-646-213-1916
Email: athan.dounis@ccgir.com
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $8,730,483 $5,714,001
Notes receivable 14,649 --
Accounts receivable, net 3,229,123 2,414,257
Other receivables 299,780 105,329
Inventory 2,290,197 2,372,214
Advance to suppliers 997,714 550,931
Deposit for business acquisition 1,464,944 --
Prepaid expense 15,382 17,589
Total current assets 17,042,272 11,174,321
Long-term equity investment 2,790,874 2,794,248
Property, plant and equipment, net 15,237,679 15,474,915
Construction in progress 7,004,555 5,738,271
Land usage right, net of accumulated
amortization 1,779,482 1,817,427
Escrow account -- 750,000
Certificate of deposit 1,757,933 73,287
Other asset 445,456 363,343
Related party receivable 57,058 1,256,599
TOTAL ASSETS $46,115,309 $39,442,411
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $698,873 $780,458
Short-term loan 6,738,742 3,371,198
Tax payable 178,397 215,240
Advance from customers 546,441 539,013
Deferred sales 925,000 972,143
Accrued expenses 8,202 361,111
Construction projects payable 1,678,542 4,742,164
Other payable 111,445 211,362
Long-term loan-current portion 457,796 --
Related party payable 380,885 278,490
Total current liabilities 11,724,323 11,471,179
Long-term loan 3,204,564 --
Asset retirement obligation 529,114 502,278
Government subsidy 2,445,659 1,028,257
TOTAL LIABILITIES 17,903,660 13,001,714
Minority interest in subsidiary 3,353,895 2,823,126
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; 15,274,035 and
15,262,035 shares issued and
outstanding as of September 30,
2009 and December 31, 2008
respectively 15,274 15,262
Additional paid-in capital 5,679,398 5,644,750
Other comprehensive income 2,274,707 2,422,167
Retained earnings 16,888,375 15,535,392
Total stockholders' equity 24,857,754 23,617,571
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $46,115,309 $39,442,411
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Service fees $2,039,002 1,656,080 $4,879,448 $5,430,145
Sales of cupric sulfate 440,816 423,891 879,347 1,804,481
Sales of recycled
commodities 641,011 1,115,150 1,427,418 2,671,634
Operating revenue 3,120,829 3,195,121 7,186,213 9,906,260
Cost of service fees 541,971 478,550 1,452,911 1,165,466
Cost of cupric sulfate 168,717 212,132 410,881 737,235
Cost of recycled
commodities 511,382 639,923 1,034,513 1,447,399
Costs of revenue 1,222,070 1,330,605 2,898,305 3,350,100
Gross profit 1,898,759 1,864,516 4,287,908 6,556,160
Operating expenses
Selling expenses 274,692 233,783 641,066 648,886
General and
administrative expenses 691,709 439,021 1,818,789 1,356,797
Total operating expenses 966,401 672,804 2,459,855 2,005,683
Income from operations 932,358 1,191,712 1,828,053 4,550,477
Other income(expense)
Investment income (loss) (30,093) (5,494) (89,681) (15,946)
Interest income 9,319 11,441 5,431 17,627
Other income 14,389 1,934 61,846 8,388
Other expense (99,361) (168,349) (139,872) (170,010)
Total other income
(expense) (105,746) (160,468) (162,276) (159,941)
Net income from continuing
operations before
minority interest and
income tax 826,612 1,031,244 1,665,777 4,390,536
Income tax expense 110,463 103,499 215,750 437,945
Income from continuing
operations 716,149 927,745 1,450,027 3,952,591
Minority interest 44,184 95,033 97,044 384,470
Net income $671,965 $832,712 $1,352,983 $3,568,121
Foreign currency
translation adjustment 53,672 202,900 (147,460) 948,408
Comprehensive income $725,637 $1,035,612 $1,205,523 $4,516,529
Basic weighted average
shares outstanding 15,271,948 13,902,510 15,267,387 13,392,040
Diluted weighted average
shares outstanding 15,271,948 13,902,510 15,267,387 13,392,040
Basic and diluted net
earnings per share $0.04 $0.06 $0.09 $0.27
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For Nine Months ended September 30,
2009 2008
Cash flows from operating activities:
Net income $1,352,983 $3,568,121
Adjustments to reconcile net income
to net cash
provided by operating activities:
provided by operating activities: 97,044 547,178
Depreciation 935,665 491,426
Amortization 51,310 28,296
Bad debt allowance -- 7,782
Stock and options issued for
services 34,660 117,100
Accretion expenses 27,086 59,533
Investment loss (income) 89,681 (156,393)
Government subsidy recognized as
income (46,944) --
Changes in operating assets and
liabilities:
Notes receivable (14,637) --
Accounts receivable (815,494) (1,780,297)
Inventory 80,664 (534,458)
Other receivables (179,182) (145,967)
Advance to suppliers (446,709) 120,626
Prepaid expense 2,196 --
Other asset (87,621) (298,283)
Escrow account -- (750,000)
Accrued expense and deferred
sales (398,997) (7,701)
Accounts payable (125,006) 680,002
Other payable (99,899) --
Advance from customers 7,714 --
Tax payable (36,645) 31,433
Net cash provided by operating
activities 427,869 1,978,398
Cash flows from investing activities
Deposit for business acquisition (1,463,722) --
Long-term equity investment (87,823) --
Purchase of property and
equipment (238,158) (530,282)
Construction contracts (1,433,045) (5,381,376)
Purchase of intangible assets (23,830) --
Repayment from related party 1,197,860 --
Due from related party -- (589,738)
Due to related party -- (242,284)
Certificate of deposit (1,683,280) --
Net cash used in investing
activities (3,731,998) (6,743,680)
Cash flows from financing activities
Repayment of construct project
payable (3,014,586) --
Proceeds from short-term loans 6,733,120 3,433,235
Repayment of short-term loans (3,366,560) (1,447,069)
Proceeds from long-term loan 3,659,304 --
Proceeds from related party loan 102,461 --
Cash released from escrow account 750,000
Subsidy received from government 1,463,722 405,410
Proceeds from issuance of common
stock -- 3,277,903
Stock subscription -- 220,000
Net cash provided by financing
activities 6,327,461 5,889,479
Effect of exchange rate on cash (6,850) 948,430
Net increase in cash and cash
equivalents 3,016,482 2,072,627
Cash and cash equivalents, beginning
of period 5,714,001 3,260,307
Cash and cash equivalents, end of
period $8,730,483 $5,332,934
Supplemental cash flow information:
Cash paid during the year for:
Interest $245,523 $163,140
Income taxes $329,537 $337,971
Non-cash investing and
financing activities:
Common stock issuance cost $ -- $113,000
Contributed anaerobic
fermentation equipment $292,744 $ --
Transfer out of
construction in progress $(166,761) $ --
Transfer of construction
in progress to property,
plant and equipment $166,761 $ --
Change in reporting entity $276,418 $ --
