NEW YORK, Nov. 10, 2010 /PRNewswire-Asia/ -- SmartHeat Inc.
(Nasdaq: HEAT; website: www.smartheatinc.com), a market
leader in China's clean
technology, energy savings industry, today announced record
financial results for the third quarter ended September 30, 2010. SmartHeat management is
scheduled to host an investor conference call tomorrow at
9:00 a.m. EST on November 11, 2010.
Financial Highlights:
- Revenues of $51.48 million, up
36.05% from 3Q09
- Operating income of $13.02
million, up 21.71% from 3Q09
- Net income of $11.11 million, up
25.07% from 3Q09
|
Financial
Summary:
|
|
|
|
|
3Q10
|
|
|
|
3Q09
|
|
|
Change
|
|
|
Revenue
|
|
$
|
51,476,821
|
|
|
$
|
37,835,897
|
|
|
36.05%
|
|
|
Gross
Profit
|
|
$
|
18,414,968
|
|
|
$
|
13,148,438
|
|
|
40.05%
|
|
|
Gross Profit
Margin
|
|
|
35.77
|
%
|
|
|
34.75
|
%
|
|
|
|
|
Operating
Income
|
|
$
|
13,018,212
|
|
|
$
|
10,695,856
|
|
|
21.71%
|
|
|
Operating
Margin
|
|
|
25.29
|
%
|
|
|
28.27
|
%
|
|
|
|
|
Net Income
|
|
$
|
11,106,505
|
|
|
$
|
8,880,536
|
|
|
25.07%
|
|
|
Net
Margin
|
|
|
21.58
|
%
|
|
|
23.47
|
%
|
|
|
|
|
Diluted EPS
|
|
$
|
0.34
|
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
In the third quarter of 2010, total sales increased 36.05% to
$51.48 million compared to
$37.84 million in 3Q09. All three of
the Company's product lines contributed to higher sales in the
third quarter and were a result of China's energy-saving policies, continued
growth in energy-saving industry, and our successful market
expansion.
The breakdown of revenues for the third quarter of 2010 was
$43.66 million from PHE units and
heat exchangers, with sales from PHE units up 19.64% compared to
3Q09 and sales from heat exchangers up 72.47% compared to 3Q09.
Sales from heat meters were up 5.55% from 3Q09 and accounted for
$7.82 million in revenues for the
quarter.
The following table presents the revenue contribution by
percentage for each major product line in 3Q10 in comparison with
3Q09.
|
|
|
|
Percent of
Total Revenues
|
|
|
Product Line
|
|
3Q10
|
|
3Q09
|
|
|
Plate Heat Exchange (PHE)
Unit
|
|
38.80%
|
|
44.13%
|
|
|
Heat Exchanger
|
|
46.01%
|
|
36.29%
|
|
|
Heat Meters
|
|
15.19%
|
|
19.58%
|
|
|
Total
|
|
100.00%
|
|
100.00%
|
|
|
|
|
|
|
|
|
Net Income
Net income in the quarter totaled $11.11
million ($0.34 per diluted
share), up 25.07% from $8.88 million
($0.36 per diluted share) in 3Q09.
The higher net income was driven primarily by increased sales from
PHEs and PHE units. Earnings per share decreased by $0.02 per share because of our secondary offering
in the third quarter of 2009.
Gross Profit Margin
Gross profit margin for 3Q10 was 35.77%, up from 34.75% in 3Q09.
The margin enhancement is mainly due to fixed cost leverage
resulting from significant sales growth and better product mix
arising from sales to some high-margin projects.
Operating Income
Operating income totaled $13.02
million, compared with $10.70
million in 3Q09, representing a 21.71% year over year
growth. Higher operating income was mainly due to increased sales
of the PHE and PHE unit product lines. Total operating expenses
including selling, general and administrative ("SG&A") expenses
was $5.40 million, compared with
$2.45 million a year ago. Operating
margin was 25.29% compared with 28.27% a year ago. The increase in
operating expense and decline of operating margin was mainly due to
increased sales and expansion of our business, including the hiring
of more sales personnel, higher depreciation expense, training of
the marketing team and establishing new sales offices in more
regions of China. We anticipate
robust revenue and operating income growth in the future due to the
efforts we made in 2010 to develop our sales and distribution
channels.
Updates Full Year 2010 Earnings Guidance and Target 2011
Earnings Guidance
SmartHeat is updating its full year 2010 guidance from
$106 - $116 million in revenues to
$110 - $120 million in revenues and
from $20 - $22 million in net income
to $22 - $24 million in net
income.
In addition, SmartHeat is announcing full year 2011 guidance of
$25 - $30 million in net income on
$135 - $160 million in revenues.
Outlook
Mr. James Jun Wang, Chairman and
Chief Executive Officer of Smart Heat Inc., commented: "We
maintained the momentum from the first half of 2010 and delivered
another set of strong results. We thank our hard working employees
who are dedicated to executing our operational strategy. We are
quite pleased to see the significant business expansion to
West China and are very satisfied
with the growth across all our existing business lines and the
benefits we expect to receive from investments made to expand our
sales and distribution channels."
"Government requirements to implement energy savings and
emission reduction have increased the demand for our energy-saving
products in all industrial sectors. Taking advantage of economic
development in West China and
urbanization trends throughout China will be continue to be part of our
long-term strategy. Based on the successful expansion to
West China's market and some
second and third tier cities, SmartHeat is well positioned to reap
significant benefits," concluded Mr. Wang.
Investor Conference Call Instructions:
SmartHeat management will host an earnings conference call
tomorrow to discuss its third quarter financial results and
outlook.
Date and time: 9:00 a.m. U.S.
Eastern Standard Time, November 11,
2010
U.S. toll free number: +1-888-339-2688
International direct dial-in: +1-617-847-3007
Conference passcode: 95275033
About SmartHeat Inc.
Founded by James Jun Wang, a
former executive at Honeywell China, SmartHeat Inc.
(www.smartheatinc.com) is a NASDAQ Global 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 purposes is the only source of economical heat energy
in China. With broad product
applications, SmartHeat's products significantly reduce heating
costs, increase energy use, reduce air pollution, and have broad
applications. SmartHeat's customers include global Fortune 500
companies as well as 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 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.
|
Corporate Communications
Contact:
|
|
|
Ms. Jane Ai, Corporate
Secretary
|
|
|
SmartHeat Inc.
|
|
|
Tel:
011-86-24-25363366
|
|
|
Email: info@SmartHeatinc.com
|
|
|
|
SMARTHEAT
INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
September
30, 2010 (Unaudited)
|
December 31,
2009
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
Cash & cash
equivalents
|
$
14,724,091
|
$
48,967,992
|
|
|
Restricted
cash
|
1,296,318
|
1,301,573
|
|
|
Accounts
receivable, net
|
50,052,608
|
31,887,785
|
|
|
Retentions
receivable
|
2,096,943
|
885,642
|
|
|
Advances to
suppliers
|
12,623,696
|
7,657,791
|
|
|
Other receivables,
prepayments and deposits
|
5,352,081
|
3,572,600
|
|
|
Inventories
|
32,457,863
|
11,259,273
|
|
|
Notes receivable -
bank acceptances
|
944,769
|
397,248
|
|
|
|
|
|
|
Total
current assets
|
119,548,369
|
105,929,904
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
Deferred tax
asset
|
14,837
|
-
|
|
|
Restricted
cash
|
92,013
|
48,361
|
|
|
Accounts
receivable, net
|
219,725
|
237,384
|
|
|
Retentions
receivable
|
734,238
|
349,931
|
|
|
Deposit for land
use right
|
9,597,390
|
-
|
|
|
Intangible assets,
net
|
4,127,767
|
4,071,021
|
|
|
Construction in
progress
|
80,254
|
-
|
|
|
Property and
equipment, net
|
8,044,911
|
7,739,609
|
|
|
|
|
|
|
Total
noncurrent assets
|
22,911,135
|
12,446,306
|
|
|
|
|
|
|
TOTAL ASSETS
|
$
142,459,504
|
$
118,376,210
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
Accounts
payable
|
$
5,421,730
|
$
3,493,196
|
|
|
Unearned
revenue
|
4,283,004
|
2,130,637
|
|
|
Taxes
payable
|
2,799,694
|
2,140,627
|
|
|
Accrued
liabilities and other payables
|
4,887,566
|
3,685,272
|
|
|
Notes payable -
bank acceptances
|
1,516,865
|
1,806,564
|
|
|
Loans
payable
|
4,476,877
|
4,393,544
|
|
|
|
|
|
|
Total current liabilities
|
23,385,736
|
17,649,840
|
|
|
|
|
|
|
DEFERRED TAX
LIABILITY
|
-
|
8,526
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
Common stock,
$0.001 par value; 75,000,000
shares authorized, 32,811,125 and 32,794,875
shares issued and outstanding at September 30,
2010
and December 31, 2009, respectively
|
32,811
|
32,795
|
|
|
Paid in
capital
|
75,163,813
|
74,917,370
|
|
|
Statutory
reserve
|
4,613,151
|
2,872,006
|
|
|
Accumulated other
comprehensive income
|
2,901,709
|
969,988
|
|
|
Retained
earnings
|
35,673,363
|
21,231,484
|
|
|
|
|
|
|
Total Company stockholders' equity
|
118,384,847
|
100,023,643
|
|
|
|
|
|
|
NONCONTROLLING INTEREST
|
688,921
|
694,201
|
|
|
|
|
|
|
TOTAL EQUITY
|
119,073,768
|
100,717,844
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$
142,459,504
|
$
118,376,210
|
|
|
|
|
|
SMARTHEAT
INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
NINE MONTHS
ENDED SEPTEMBER 30,
|
|
|
THREE
MONTHS ENDED SEPTEMBER 30,
|
|
|
2010
|
2009
|
|
|
2010
|
2009
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
83,613,250
|
$
56,541,795
|
|
|
$
51,476,821
|
$
37,835,897
|
|
|
Cost of goods sold
|
54,177,914
|
36,562,363
|
|
|
33,061,854
|
24,687,460
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
29,435,336
|
19,979,432
|
|
|
18,414,968
|
13,148,438
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
Selling
expenses
|
5,972,651
|
2,325,471
|
|
|
3,335,303
|
1,165,939
|
|
|
General and administrative expenses
|
4,622,468
|
2,626,775
|
|
|
2,061,453
|
1,286,643
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses
|
10,595,119
|
4,952,245
|
|
|
5,396,756
|
2,452,582
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
18,840,217
|
15,027,187
|
|
|
13,018,212
|
10,695,856
|
|
|
|
|
|
|
|
|
|
|
Non-operating income
(expenses)
|
|
|
|
|
|
|
|
|
Interest
income
|
322,462
|
145,839
|
|
|
122,898
|
65,418
|
|
|
Interest
expense
|
(41,871)
|
(209,462)
|
|
|
(46,916)
|
(91,850)
|
|
|
Financial
expense
|
(36,430)
|
(222,625)
|
|
|
(17,427)
|
(222,625)
|
|
|
Exchange
loss
|
24,652
|
-
|
|
|
68,323
|
-
|
|
|
Other
income
|
135,715
|
21,443
|
|
|
51,910
|
(14,866)
|
|
|
Other
expenses
|
(1,269)
|
61,644
|
|
|
150
|
72,843
|
|
|
|
|
|
|
|
|
|
|
Total
non-operating income
(expenses),
net
|
403,259
|
(203,161)
|
|
|
178,938
|
(191,080)
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax
|
19,243,476
|
14,824,026
|
|
|
13,197,149
|
10,504,776
|
|
|
Income tax expense
|
3,059,182
|
2,304,672
|
|
|
2,092,876
|
1,624,240
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
16,184,294
|
12,519,354
|
|
|
11,104,273
|
8,880,536
|
|
|
|
|
|
|
|
|
|
|
Less: Income attributable to
noncontrolling interest
|
16,962
|
-
|
|
|
2,232
|
-
|
|
|
|
|
|
|
|
|
|
|
Income to SmartHeat
Inc.
|
16,201,256
|
12,519,354
|
|
|
11,106,505
|
8,880,536
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive
item
|
|
|
|
|
|
|
|
|
Foreign currency
translation
|
1,931,721
|
270,399
|
|
|
1,418,870
|
257,256
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
$
18,132,977
|
$
12,789,753
|
|
|
$
12,525,375
|
$
9,137,792
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
32,804,292
|
24,430,806
|
|
|
32,811,125
|
24,924,435
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares
outstanding
|
32,846,171
|
24,513,092
|
|
|
32,817,520
|
25,010,735
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.49
|
$
0.51
|
|
|
$
0.34
|
$
0.36
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
0.49
|
$
0.51
|
|
|
$
0.34
|
$
0.36
|
|
|
|
|
|
|
|
|
|
SMARTHEAT
INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
(UNAUDITED)
|
|
|
NINE MONTHS
ENDED SEPTEMBER 30,
|
|
|
2010
|
2009
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
Income including noncontrolling interest
|
$
16,184,294
|
$
12,519,354
|
|
|
Adjustments to reconcile income including
noncontrolling
|
|
|
|
|
interest to net cash used in operating
activities:
|
|
|
|
|
Depreciation and amortization
|
709,544
|
409,371
|
|
|
Allowance for accounts receivable
|
15,744
|
-
|
|
|
Unearned interest on accounts receivable
|
(74,520)
|
195,901
|
|
|
Stock option compensation expense
|
142,869
|
1,755
|
|
|
Stock issued for consulting service
|
18,090
|
-
|
|
|
Changes in deferred tax
|
(23,160)
|
(23,357)
|
|
|
(Increase)
decrease in current assets:
|
|
|
|
|
Accounts receivable
|
(17,807,291)
|
(9,305,812)
|
|
|
Retentions receivable
|
(1,547,759)
|
(2,403,726)
|
|
|
Advances to suppliers
|
(4,761,889)
|
(3,051,902)
|
|
|
Other receivables, prepayments and
deposits
|
1,995,914
|
485,060
|
|
|
Inventory
|
(20,659,166)
|
(8,277,813)
|
|
|
Note receivables
|
(404,449)
|
(55,986)
|
|
|
Increase
(decrease) in current liabilities:
|
|
|
|
|
Accounts payable
|
3,635,847
|
5,782,299
|
|
|
Unearned revenue
|
2,079,159
|
1,232,371
|
|
|
Taxes payable
|
608,861
|
818,141
|
|
|
Accrued liabilities and other
payables
|
128,354
|
(4,450,011)
|
|
|
|
|
|
|
Net cash used in operating activities
|
(19,759,558)
|
(6,124,354)
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
Change in restricted cash
|
(12,593)
|
(380,457)
|
|
|
Acquisition of property &
equipment
|
(3,277,320)
|
(3,610,566)
|
|
|
Acquisition of intangible
asset
|
(170,689)
|
-
|
|
|
Deposit for land use right
|
(9,448,356)
|
-
|
|
|
Construction in progress
|
(79,008)
|
(60,203)
|
|
|
|
|
|
|
Net cash used in investing activities
|
(12,987,966)
|
(4,051,226)
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
Proceeds from short term
loan
|
4,407,357
|
12,117,636
|
|
|
Repayment to short term loan
|
(4,407,357)
|
(9,216,986)
|
|
|
Payment on notes payable
|
(1,812,243)
|
-
|
|
|
Issuance of common stock
|
-
|
66,138,390
|
|
|
Warrants exercised
|
85,500
|
-
|
|
|
|
|
|
|
Net cash provided by (used in) financing
activities
|
(1,726,743)
|
69,039,040
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGE
ON CASH & CASH EQUIVALENTS
|
230,366
|
(3,978)
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
& CASH EQUIVALENTS
|
(34,243,901)
|
58,859,482
|
|
|
|
|
|
|
CASH & CASH EQUIVALENTS,
BEGINNING OF PERIOD
|
48,967,992
|
1,435,213
|
|
|
|
|
|
|
CASH & CASH EQUIVALENTS, END
OF PERIOD
|
$
14,724,091
|
$
60,294,695
|
|
|
|
|
|
|
Supplemental Cash flow
data:
|
|
|
|
|
Income tax
paid
|
$
1,634,509
|
$
1,272,797
|
|
|
Interest paid
|
$
137,787
|
$
219,061
|
|
|
|
|
SOURCE SmartHeat Inc.