NEW YORK, March 15, 2011 /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 year ended December 31, 2010.
SmartHeat management is scheduled to host an investor conference
call at 8:30 a.m. EDT on March 15, 2011.
Financial Highlights:
- Revenues of $125.41 million, up
51.89% from 2009
- Operating income of $26.69
million, up 46.85% from 2009
- Net income of $22.69 million, up
46.99% from 2009
Business Highlights:
- Meets or exceeds guidance for 2010
- Commences acquisition strategy with German heat pump
manufacturer and designer GWP in the first quarter of 2011
- Continues with market expansion in Western China and nuclear industry
|
|
Financial
Summary:
|
2010
|
|
2009
|
Change
|
|
Revenue
|
$125,406,862
|
|
$82,563,869
|
51.89%
|
|
Gross Profit
|
$44,711,917
|
|
$29,096,064
|
53.67%
|
|
Gross Profit
Margin
|
35.65%
|
|
35.24%
|
|
|
Operating
Income
|
$26,691,040
|
|
$18,175,199
|
46.85%
|
|
Operating
Margin
|
21.28%
|
|
22.01%
|
|
|
Net Income
|
$22,698,443
|
|
$15,442,529
|
46.99%
|
|
Net Margin
|
18.10%
|
|
18.70%
|
|
|
Diluted EPS
|
$0.68
|
|
$0.58
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q10
|
|
4Q09
|
Change
|
|
Revenue
|
$41,793,612
|
|
$26,022,074
|
60.61%
|
|
Gross Profit
|
$15,276,581
|
|
$9,116,632
|
67.57%
|
|
Gross Profit
Margin
|
36.55%
|
|
35.03%
|
|
|
Operating
Income
|
$7,850,823
|
|
$3,148,012
|
149.39%
|
|
Operating
Margin
|
18.78%
|
|
12.10%
|
|
|
Net Income
|
$6,497,187
|
|
$2,923,175
|
122.26%
|
|
Net Margin
|
15.55%
|
|
11.23%
|
|
|
|
|
|
|
|
|
|
Revenues
In 2010, total sales increased 51.89% to $125.41 million compared to $82.56 million in 2009.
In the fourth quarter of 2010, total sales increased 60.61% to
$41.79 million compared to
$26.02 million in 4Q09. All three of
the Company's product lines contributed to higher sales in 2010 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 2010 was $55.44 million from PHE units and $60.22 million from heat exchangers, with sales
from PHE units up 42.21% compared to 2009 and sales from heat
exchangers up 69.18% compared to 2009. Sales from heat meters were
up 22.08% from 2009 and accounted for $9.74
million in revenues for 2010.
The breakdown of revenues for the fourth quarter of 2010 was
$21.64 million from PHE units and
$19.33 million from heat exchangers,
with sales from PHE units up 107.57% compared to 4Q09 and sales
from heat exchangers up 25.06% compared to 4Q09. Sales from heat
meters were up 482.29% from 4Q09 and accounted for $0.83 million in revenues for the quarter.
The following table presents the revenue contribution by
percentage for each major product line in 4Q10 in comparison with
4Q09 and fiscal year 2010 in comparison with 2009:
|
|
|
|
Percent of
Total Revenues
|
|
|
Product Line
|
|
2010
|
|
2009
|
|
4Q10
|
|
4Q09
|
|
Plate Heat Exchange (PHE)
Unit
|
|
44.21%
|
|
47.22%
|
|
51.77%
|
|
40.06%
|
|
Heat Exchanger
|
|
48.02%
|
|
43.11%
|
|
46.25%
|
|
59.40%
|
|
Heat Meters
|
|
7.77%
|
|
9.67%
|
|
1.98%
|
|
0.55%
|
|
Total
|
|
100.00%
|
|
100.00%
|
|
100.00%
|
|
100.00%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Net income in 2010 totaled $22.70
million ($0.68 per diluted
share), up 47% from $15.44 million
($0.58 per diluted share) in
2009.
Net income in the fourth quarter totaled $6.50 million, up 122.26% from $2.92 million in 4Q09. The higher net income was
driven primarily by increased sales from PHEs and PHE units.
Earnings per share for 2010 increased by $0.10 per share.
Gross Profit Margin
Gross profit margin for 2010 was 35.65%, up from 35.24% in 2009.
Gross profit margin for 4Q10 was 36.55%, up from 35.03% in 4Q09.
The margin maintenance for 2010 is due mainly to our effective cost
control and our cost-plus pricing.
Operating Expense
Operating expenses as a percentage of sales were 14.4% for
fiscal year 2010 and 17.8% for Q410, compared to 13.2% for fiscal
year 2009 and 22.9% for Q409. The increase in operating expenses
resulted from increased sales and expansion of our business,
including the hiring of more sales personnel, higher depreciation
expense, training the marketing team and establishing new sales
offices in more regions of China.
We believe the expansion and training of our marketing team and
other employees will increase sales and improve the efficiency of
our operations. We will continue our tight budgetary control and
cost effectiveness.
2011 Full Year Guidance
SmartHeat is announcing full year 2011 guidance of $22 - $28 million in net income on $120 - $150 million in revenues, reflecting
$0.60 - $0.80 EPS.
Outlook
Mr. James Jun Wang, Chairman and
Chief Executive Officer of Smart Heat Inc., commented: "We
maintained the momentum from the first nine months 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 payback we expected 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. We are optimistic about taking
advantage of economic development in West
China and urbanization trends throughout the country even
though China is experiencing
inflation and is responding to currency and inflationary pressures.
Furthermore, we plan to reap the benefits of our expansion into
western China and are excited
about the addition of the German heat pump manufacturer GWP, which,
with our expansion into nuclear energy products, will be a valuable
addition to our clean energy business portfolio." concluded Mr.
Wang.
Investor Conference Call Instructions:
SmartHeat management will host an earnings conference call to
discuss its 2010 financial results and 2011 outlook.
Date and time: 8:30 a.m. U.S. Eastern Daylight Saving
Time, March 15, 2011
U.S. toll free number: +1 866-800-8648
International direct dial-in: +1-617-614-2702
Conference passcode: 163 032 65
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 the 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.
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Corporate
Communications Contact:
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|
|
Ms. Jane Ai, Corporate
Secretary
|
|
|
SmartHeat Inc.
|
|
|
Tel:
011-86-24-25363366
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|
|
Email: info@SmartHeatinc.com
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|
|
|
|
|
|
|
SMARTHEAT
INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
AS OF
DECEMBER 31, 2010 AND 2009
|
|
|
|
|
|
|
|
|
|
|
2010
|
2009
|
|
ASSETS
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
Cash & cash
equivalents
|
$ 56,806,471
|
$ 48,967,992
|
|
Restricted
cash
|
1,949,742
|
1,301,573
|
|
Accounts
receivable, net
|
47,224,476
|
31,887,785
|
|
Retentions
receivable
|
2,548,401
|
885,642
|
|
Advances to
suppliers
|
8,351,579
|
7,657,791
|
|
Other receivables,
prepayments and deposits
|
6,301,772
|
3,572,600
|
|
Inventories
|
26,585,362
|
11,259,273
|
|
Deferred tax
asset
|
380,232
|
-
|
|
Notes receivable -
bank acceptances
|
1,457,457
|
397,248
|
|
|
|
|
|
Total
current assets
|
151,605,492
|
105,929,904
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
Deferred tax
asset
|
22,266
|
-
|
|
Restricted
cash
|
502,672
|
48,361
|
|
Accounts
receivable, net
|
-
|
237,384
|
|
Retentions
receivable
|
1,062,167
|
349,931
|
|
Intangible assets,
net
|
14,243,734
|
4,071,021
|
|
Construction in
progress
|
81,204
|
-
|
|
Property and
equipment, net
|
8,381,019
|
7,739,609
|
|
|
|
|
|
Total
noncurrent assets
|
24,293,062
|
12,446,306
|
|
|
|
|
|
TOTAL ASSETS
|
$ 175,898,554
|
$ 118,376,210
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
Accounts
payable
|
$
4,490,333
|
$
3,493,196
|
|
Unearned
revenue
|
1,131,193
|
2,130,637
|
|
Taxes
payable
|
2,000,456
|
2,140,627
|
|
Accrued
liabilities and other payables
|
3,039,701
|
3,685,272
|
|
Notes payable -
bank acceptances
|
2,207,280
|
1,806,564
|
|
Loans
payable
|
9,059,749
|
4,393,544
|
|
|
|
|
|
Total current liabilities
|
21,928,712
|
17,649,840
|
|
|
|
|
|
DEFERRED TAX
LIABILITY
|
-
|
8,526
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
Common stock,
$0.001 par value; 75,000,000
shares authorized, 38,551,939 and 32,794,875
shares issued and outstanding at December 31,
2010
and 2009, respectively
|
38,552
|
32,795
|
|
Paid in
capital
|
102,251,027
|
74,917,370
|
|
Statutory
reserve
|
5,301,918
|
2,872,006
|
|
Accumulated other
comprehensive income
|
4,252,261
|
969,988
|
|
Retained
earnings
|
41,500,015
|
21,231,484
|
|
|
|
|
|
Total Company stockholders' equity
|
153,343,773
|
100,023,643
|
|
|
|
|
|
NONCONTROLLING INTEREST
|
626,069
|
694,201
|
|
|
|
|
|
TOTAL EQUITY
|
153,969,842
|
100,717,844
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY
|
$ 175,898,554
|
$ 118,376,210
|
|
|
|
|
SMARTHEAT
INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
FOR THE
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
|
|
|
|
|
|
|
|
|
|
|
2010
|
2009
|
2008
|
|
|
|
|
|
|
Net sales
|
$ 125,406,862
|
$ 82,563,869
|
$ 32,676,082
|
|
Cost of goods sold
|
80,694,945
|
53,467,805
|
21,717,735
|
|
|
|
|
|
|
Gross profit
|
44,711,917
|
29,096,064
|
10,958,347
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
Selling
expenses
|
8,559,665
|
3,934,749
|
1,564,977
|
|
General and
administrative expenses
|
9,461,212
|
6,986,116
|
1,851,693
|
|
|
|
|
|
|
Total operating
expenses
|
18,020,877
|
10,920,865
|
3,416,670
|
|
|
|
|
|
|
Income from
operations
|
26,691,040
|
18,175,199
|
7,541,677
|
|
|
|
|
|
|
Non-operating income
(expenses)
|
|
|
|
|
Interest
income
|
433,534
|
409,221
|
405,266
|
|
Interest
expense
|
(131,350)
|
(518,382)
|
(314,192)
|
|
Financial
expense
|
(49,751)
|
(30,304)
|
-
|
|
Exchange gain
(loss)
|
33,932
|
(26,255)
|
(12,044)
|
|
Other
income
|
201,291
|
282,393
|
27,968
|
|
Other
expenses
|
(26,954)
|
(2,838)
|
(13,709)
|
|
|
|
|
|
|
Total
non-operating income, net
|
460,702
|
113,835
|
93,289
|
|
|
|
|
|
|
Income before income
tax
|
27,151,742
|
18,289,034
|
7,634,966
|
|
Income tax expense
|
4,533,112
|
2,858,186
|
1,293,660
|
|
|
|
|
|
|
Income from
operations
|
22,618,630
|
15,430,848
|
6,341,306
|
|
|
|
|
|
|
Less: Income (loss) attributable
to noncontrolling interest
|
(79,813)
|
(11,681)
|
5,966
|
|
|
|
|
|
|
Income to SmartHeat
Inc.
|
22,698,443
|
15,442,529
|
6,335,340
|
|
|
|
|
|
|
Other comprehensive
item
|
|
|
|
|
Foreign currency
translation gain (loss)
|
3,282,273
|
(14,641)
|
510,770
|
|
|
|
|
|
|
Comprehensive Income
|
$ 25,980,716
|
$ 15,427,888
|
$ 6,846,110
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
33,419,416
|
26,535,502
|
22,176,322
|
|
|
|
|
|
|
Diluted weighted average shares
outstanding
|
33,453,684
|
26,592,066
|
22,176,432
|
|
|
|
|
|
|
Basic earnings per
share
|
$
0.68
|
$
0.58
|
$
0.29
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
0.68
|
$
0.58
|
$
0.29
|
|
|
|
|
|
|
SMARTHEAT
INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
FOR THE
YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010
|
2009
|
2008
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
Income including noncontrolling interest
|
$ 22,618,630
|
$ 15,430,848
|
$ 6,341,306
|
|
|
Adjustments to reconcile income including
noncontrolling
|
|
|
|
|
|
interest to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
1,011,815
|
635,368
|
252,598
|
|
|
Unearned interest on accounts receivable
|
(71,133)
|
120,522
|
(127,819)
|
|
|
Stock option compensation expense
|
195,083
|
3,292
|
5,613
|
|
|
Stock issued for consulting service
|
18,090
|
-
|
-
|
|
|
Changes in deferred tax
|
(410,616)
|
(30,353)
|
(163)
|
|
|
(Increase)
decrease in current assets:
|
|
|
|
|
|
Accounts receivable
|
(14,716,105)
|
(20,724,401)
|
(4,943,868)
|
|
|
Retentions receivable
|
(2,285,983)
|
(777,062)
|
(74,797)
|
|
|
Advances to suppliers
|
(462,687)
|
(7,233,127)
|
62,759
|
|
|
Other receivables, prepayments and deposits
|
715,988
|
(2,806,803)
|
182,577
|
|
|
Inventories
|
(14,651,940)
|
(5,143,857)
|
2,405,678
|
|
|
Increase
(decrease) in current liabilities:
|
|
|
|
|
|
Accounts payable
|
3,634,538
|
4,051,684
|
(2,389,649)
|
|
|
Unearned revenue
|
(1,042,449)
|
1,278,907
|
(2,993,636)
|
|
|
Taxes payable
|
(193,868)
|
811,275
|
779,408
|
|
|
Accrued liabilities and other payables
|
(3,993,197)
|
(5,776,851)
|
(261,040)
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
(9,633,834)
|
(20,160,557)
|
(761,033)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING
ACTIVITIES:
|
|
|
|
|
|
Change in restricted cash
|
(1,037,592)
|
(667,502)
|
(108,040)
|
|
|
Acquisition of property & equipment
|
(1,112,629)
|
(942,442)
|
(439,861)
|
|
|
Acquisition of intangible asset
|
(10,120,267)
|
-
|
-
|
|
|
Notes receivable
|
(495,873)
|
-
|
(14,635)
|
|
|
Cash purchased at acquisition
|
-
|
-
|
55,426
|
|
|
Construction in progress
|
(79,444)
|
-
|
-
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
(12,845,805)
|
(1,609,944)
|
(507,110)
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES:
|
|
|
|
|
|
Proceeds from short-term loan
|
4,431,642
|
4,552,774
|
5,136,069
|
|
|
Change in due to minority shareholders
|
-
|
-
|
(663)
|
|
|
Cash contribution from noncontrolling interest
|
-
|
705,882
|
-
|
|
|
Repayment to shareholder
|
-
|
-
|
(343,913)
|
|
|
Repayment to short-term loan
|
-
|
(2,605,768)
|
(7,583,873)
|
|
|
Payment on notes payable
|
(2,117,001)
|
-
|
-
|
|
|
Issuance of common stock
|
27,040,742
|
65,007,390
|
5,100,000
|
|
|
Warrants exercised
|
85,500
|
1,691,850
|
-
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
29,440,883
|
69,352,128
|
2,307,620
|
|
|
|
|
|
|
|
|
EFFECT OF EXCHANGE RATE CHANGE
ON CASH & CASH EQUIVALENTS
|
877,235
|
(48,847)
|
2,588
|
|
|
|
|
|
|
|
|
NET INCREASE IN CASH & CASH
EQUIVALENTS
|
7,838,479
|
47,532,780
|
1,042,065
|
|
|
|
|
|
|
|
|
CASH & CASH EQUIVALENTS,
BEGINNING OF YEAR
|
48,967,992
|
1,435,212
|
393,147
|
|
|
|
|
|
|
|
|
CASH & CASH EQUIVALENTS, END
OF YEAR
|
$ 56,806,471
|
$ 48,967,992
|
$ 1,435,212
|
|
|
|
|
|
|
|
|
Supplemental Cash flow
data:
|
|
|
|
|
|
Income tax
paid
|
$ 3,738,517
|
$ 1,500,415
|
$
660,127
|
|
|
Interest paid
|
$
242,961
|
$
338,513
|
$
274,969
|
|
|
|
|
|
|
SOURCE SmartHeat Inc.