BEIJING, June 1 /PRNewswire-Asia-FirstCall/ -- China Solar & Clean Energy Solutions, Inc. ("CSOL" or "China Solar" or the "Company") (OTC Bulletin
Board: CSOL), a premier manufacturer and distributor of solar water heaters, renewable energy solutions, and space heating devices in the People's Republic of China, last Thursday reported its financial results for the first quarter ended March 31, 2009.
Mr. Deli Du, Chief Executive Officer and President of CSOL, commented, "As the first quarter is the solar industry's seasonally slowest in terms of manufacturing and sales, we focused our corporate efforts on completing our planned business transition. We undertook company-wide efforts to improve our operating efficiency and internal controls. We began to implement a
company-wide ERP system as part of our accounting systems upgrade to ensure CSOL will be fully compliant with strict requirements by the Sarbanes-Oxley Act ("SOX") and other pertinent financial regulations. We engaged our staff in ongoing training led by experienced consultants to help standardize our financial reporting. We hired an excellent financial executive, as we are very pleased with the arrival of Ms. Yinan Zhao as our Acting Chief Financial Officer. We welcome her solid knowledge of financial systems and markets, extensive experience in accounting, taxation, and asset valuation functions, and impressive professional certifications including Certified Public Accountant (CPA), Certified Tax Administrator (CTA) and Certified Valuation Analyst (CVA). To that extent, although our broad efforts to upgrade our systems and internal controls caused our delayed quarterly filing, I am satisfied with our visible progress during the first quarter, as we continue to lay a strong foundation for the remainder of 2009 and beyond."
First Quarter 2009 Results
First quarter 2009 revenue of $6.2 million decreased by $2.1 million, or 25.4%, from $8.3 million in the first quarter of 2008, primarily due to lower sales from the Solar Heater and Heat Pipe segments. Revenues for the Solar Heater/Boiler Related Products segment decreased by $1.2 million, or 45.3%, to $1.5 million, due to deeper price competition and fewer units shipped. Heat Pipe revenues decreased by $1.9 million, or 34.8%, to $3.6 million, as the Company shifted its focus on winning large energy projects which typically require longer completion terms. Energy-saving revenues and Solar Heat Collector revenues were $0.4 million and $0.7 million, respectively, versus zero revenue in the first quarter of 2008, as the Company completed its acquisition of Shenzhen Peng Sang Pu ("SZPSP") at the end of March 2008.
Gross profit in the first quarter of 2009 decreased by $1.3 million, to $1.2 million, as compared to $2.5 million for the same period last year. Correspondingly, gross margin decreased to 19.4% from 29.6% in the prior year's first quarter, mainly due to a combination of lower prices and higher costs of key raw materials, such as stainless steel. Operating expenses increased to $2.1 million for the first quarter of 2009, as compared to $1.3 million a year ago, primarily due to the subsequent increase in administrative, sales, depreciation and amortization expenses related to the acquisition of SZPSP.
Operating loss was ($0.9) million in the first quarter 2009, as compared to income from operations of $1.2 million a year ago. Similarly, first quarter 2009 net loss was ($0.9) million, versus net income of $0.4 million in the same period of 2008. Consequently, net loss per share was ($0.07) in the first quarter of 2009, as compared to diluted net income per share of $0.03 in the first quarter of 2008.
Cash and cash equivalents decreased to $1.4 million as of March 31, 2009, compared to $2.4 million as of December 31, 2008, due to net operating loss and net increase in working capital during the quarter. Net cash used in operating activities was $0.8 million for the first quarter of 2009, as compared to net cash used in operating activities of $4.1 million for the first quarter of prior year. While accounts receivable decreased to $6.7 million from $7.3 million as of December 31, 2008, inventories increased to $7.2 million from $6.9 million. Accounts payable decreased to $4.7 million from $5.3 million, and other payables and accrued liabilities decreased by approximately $1.0 million to $7.3 million from $8.4 million. The net increase in working capital was partially due to the consolidation of SZPSP.
Business Discussion
"While we continue to invest into our corporate infrastructures in preparation for our return to revenue growth and profitability, we have yet to realize immediate benefits from these investments, and therefore, our first quarter 2009 revenue and profits declined accordingly. However, I remain optimistic in China Solar's valuable assets and franchises. I am energized by our solid management team and our disciplined efforts to streamline operations and enhance systems to ensure timely financial reporting and regulatory compliance. I believe that once we complete our transition, we can maintain a solid financial team and system, improve internal controls, and enhance corporate transparency. We aim to utilize these improvements for the full benefit of our shareholders.
"In addition, we continue to expand our nation-wide distribution channels and integrate our diverse resources to achieve greater synergies across our product and service offerings, as well as our various subsidiaries. We seek to leverage our marketing and promotion efforts to enhance our brand awareness across both the consumer and government sectors. We are expanding our partnerships and innovating joint-capabilities with leading clean energy institutions as we bid for key wins in new State-sponsored energy projects.
"Looking ahead, I am confident in our management team and in our competitive advantages, and I believe China Solar will emerge from the currently challenging economic cycle a strong and profitable industry leader. I am optimistic about our solid portfolio of technologies and products in development. I remain encouraged by the government's initiatives to expand the availability of and access to electricity in China's immense rural areas, which will create substantially higher demand for our products and solutions. I am excited by our unique business model and pioneering solutions for solar projects in hot water systems throughout China's numerous Universities.
"As we near the completion of our business transition, I firmly believe that CSOL will eventually achieve strong revenue growth, margin expansions, and solid profits and cash flows in the near future. We are dedicated to growing a strong, profitable and responsive enterprise at China Solar, and importantly, to serving the best interests of our supportive shareholders and to maximizing our shareholders' value," concluded Mr. Du.
About China Solar & Clean Energy Solutions, Inc
China Solar & Clean Energy Solutions, Inc. operates through its wholly owned subsidiaries Bazhou Deli Solar Energy Heating Co. Ltd. ("Deli Solar (Bazhou)"), Beijing Deli Solar Technology Development Co., Ltd., Shenzhen PengSangPu Solar Industrial Products Corporation and its 51% ownership in Tianjin Huaneng Group, all located in the PRC. The Company manufactures and distributes hot water and space heating devices to customers in the PRC, in addition to waste heat recovery systems. For more information, please visit http://www.delisolar.com .
Cautionary Statement Regarding Forward Looking Information
Safe Harbor Statement:
Certain statements in this news release may contain forward-looking information about China Solar & Clean Energy Solutions and its subsidiaries business and products within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. The actual results may differ materially depending on a number of risk factors including, but not limited to, the general economic and business conditions in the PRC, market and customer acceptance and demand for products, ability to market products, fluctuations in foreign currency markets, the use of estimates in the preparation of financial statements, the impact of competitive products and pricing, the ability to develop and launch new products on a timely basis, the regulatory environment, fluctuations in operating results, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Solar & Clean Energy Solutions undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
For more information, please contact:
Peggy Yuan
Investor Relations
China Solar & Clean Energy Solutions, Inc.
Tel: +86-10-6386-0500
Email: delisolar@yahoo.com.cn
Michael Tieu
ICR
Tel: +86-10-6599-7960
Email: Michael.tieu@icrinc.com
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Currency expressed in United States Dollars ("US$"),
except for number of shares)
(Unaudited)
For the three months ended
March 31,
2009 2008
Revenue, net $ 6,195,691 $ 8,300,076
Cost of revenue 4,991,878 5,845,016
Gross profit 1,203,813 2,455,060
Operating expenses
Depreciation and amortization 304,988 149,167
Selling and distribution 545,899 502,563
General and administrative 1,266,344 601,653
Total operating expenses 2,117,231 1,253,383
Other income (expenses):
Other income 38,807 41,090
Interest income 37,532 --
Other expense (9,431) --
Interest expense (47,159) (33,838)
Total other income 19,749 7,252
Income before income taxes and minority
interest (893,669) 1,208,929
Income tax expenses 36,873 346,263
Minority interest 10,006 473,015
NET INCOME/(LOSS) $ (940,548) $ 389,651
NET INCOME/(LOSS) AVAILABLE TO COMMON
STOCKHOLDERS $ (940,548) $ 389,651
Net income/(loss) per share - Basic $ (0.07) $ 0.05
Net income/(loss) per share - Diluted $ (0.07) $ 0.03
Weighted average shares outstanding - Basic
13,799,450 8,009,713
Weighted average shares outstanding - Diluted 13,799,450 15,284,770
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Currency expressed in United States Dollars ("US$"),
except for number of shares)
March 31, December 31,
2009 2008
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,361,842 $ 2,404,996
Investment, at fair value 95,086 --
Accounts receivable, net 6,658,667 7,284,255
Inventories 7,240,423 6,950,844
Other receivables and prepayments 6,706,201 7,870,575
Lease receivables, current 156,199 156,579
Total current assets 22,218,418 24,667,249
Property and equipment, net 15,306,283 15,366,009
Goodwill 2,284,903 2,284,903
Other intangible assets, net 3,536,044 3,596,184
Lease receivables, non current 684,528 654,578
TOTAL ASSETS $44,030,176 $46,568,923
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, net $ 4,696,729 $ 5,301,349
Income tax payable 2,210,157 2,236,298
Other payables and accrued liabilities 7,343,061 8,386,698
Total current liabilities 14,249,947 15,924,345
Long-term liabilities:
Deferred tax liabilities 15,779 15,779
Minority interests 1,713,804 1,704,248
Stockholders' equity:
Convertible preferred stock: par value
$0.001, 25,000,000 shares authorized,
373,566 (unaudited) 373,566 shares
issued and outstanding, respectively 373 373
Common stock, $0.001 par value,
66,666,667 shares authorized,
13,799,450 (unaudited) and 13,799,450
shares issued and outstanding,
respectively 13,799 13,799
Additional paid-in capital 22,966,404 22,966,404
Accumulated other comprehensive loss 1,681,724 1,615,081
Retained earnings 2,425,240 3,365,788
Profit earning reserves 963,106 963,106
Total stockholders' equity 28,050,646 28,924,551
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $44,030,176 $46,568,923
CHINA SOLAR & CLEAN ENERGY SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Currency expressed in United States Dollars ("US$"))
(Unaudited)
Three months ended
March 31,
2009 2008
Cash flows from operating activities:
Net cash used in operating activities
$ (829,589) $(4,104,526)
Cash flows from investing activities:
Purchase of property, plant and equipment (185,122) (730,974)
Cash paid for investment in acquisition (95,086) --
Net cash used in investing activities (280,208) (730,974)
Cash flows from financing activities:
Proceeds from private placement sale of stock -- 9,995,156
Proceeds from warrants exercised -- 107,500
Net cash provided by financing activities -- 10,102,656
Foreign currency translation adjustment 66,643 --
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,043,154) 5,267,156
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 2,404,996 5,466,637
CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 1,361,842 $10,733,793
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for income taxes $ 63,014 $ 31,978
Cash paid for interest expenses $ 47,159 $ 33,838
