THT Heat Transfer Technology, Inc. Announces First Quarter 2013 Results

SIPING, China, May 14, 2013 /PRNewswire/ -- THT Heat Transfer Technology, Inc. (NASDAQ: THTI, "the Company", or "THT"), a leading provider of heat exchangers and heat exchange solutions in China's clean technology industry, today announced its unaudited financial results for the first quarter ended March 31, 2013.

First Quarter 2013 Financial Highlights

  • Sales revenue decreased by 30.9% year-over-year to US$7.9 million.
  • Gross profit decreased by 35.1% year-over-year to US$3.0 million.
  • Gross margin was 37.8%, compared to 40.2% for the first quarter 2012.
  • Operating income decreased by 16.1% year-over-year to US$0.7 million.
  • Net income attributable to common stockholders was US$0.3 million, a decrease compared with US$0.6 million for the first quarter 2012. 
  • Basic and fully diluted net income per share was US$0.02, a decrease compared with US$0.03 for the first quarter 2012. 

Chairman and Chief Executive Officer Guohong Zhao commented, "Amid a challenging economic environment in China, we had sales revenue for the first quarter in the middle of our guidance range. While labor costs and raw materials continued to increase as expected, we did see our average unit selling price increase by US$3,000 compared to the same quarter in 2012. Additionally, we demonstrated the strategic flexibility of our operations by lowering expenses largely in line with the decreased sales revenues. Even with these bright spots, however, the macroeconomic headwinds that we continued to face this quarter negatively impacted our gross margin.

"As we move into the next quarter and the year ahead, we expect industry and macroeconomic downturns to continue to impact our business, with increasing competition and production costs putting pressure on profit margins. In response, we will continue to improve the quality of our products, invest in R&D, and focus our sales and marketing efforts on opportunities such as increasing our sales of heat exchange units. We continue to believe in our business and expect this more diversified revenue stream to bolster our strategic positioning for a return to growth when the broader economy improves."

First Quarter 2013 Financial Results

Revenue

Sales revenue for the first quarter 2013 was US$7.9 million, a 30.9% decrease from US$11.4 million during the same period of 2012. The decrease was primarily attributable to lower sales revenue from heat exchange units, plate heat exchangers (PHEs) and shell-and-tube heat exchangers. Sales volume of heat exchange products totaled 383 units in the first quarter 2013, a decrease of 277 units from 660 units in the same period of 2012. The decrease was mainly caused by decreased market demand around the Chinese New Year of 2013 coupled with an overall economic slowdown in China.

For the first quarter 2013, sales revenue from PHEs was US$3.8 million, a decrease of 26.2% compared with US$5.1 million in the same period of 2012. Sales revenue from heat exchange units decreased by US$1.4 million, or 38.5%, to US$2.3 million from US$3.7 million in the same period of 2012. Sales revenue from shell-and-tube heat exchangers decreased by 94.9% to US$42,671 from US$0.8 million in the first quarter of 2012. During the first quarter 2013, sales revenue from air-cooled heat exchangers totaled US$0.7 million, an increase of 45.4% as compared to US$0.5 million in the first quarter 2012.

Cost of Sales

Cost of sales for the first quarter 2013 decreased 28.1% to US$4.9 million from US$6.8 million in first quarter 2012. The decrease largely reflected the lower sales revenue.

Gross Profit and Gross Margin

Gross profit decreased 35.1% to US$3.0 million during the first quarter 2013, from US$4.6 million in the same period of 2012, mainly due to the lower sales revenue. Gross margin was 37.8% for the first quarter 2013, as compared to 40.2% during the same period of 2012. The decrease in gross margin was mainly attributable to an increase in the Company's labor and raw material costs.

Operating Expenses

Administrative expenses decreased 17.7% to US$1.0 in the first quarter 2013, from US$1.3 million for the same period of 2012. The decrease was primarily due to decreases in the Company's audit fees and travelling expenses.

Research and development expenses decreased 17.8% year-over-year to US$0.2 million, from US$0.3 million in the first quarter 2012. The decrease was primarily due to the lower number of new products currently under development.

Selling expenses decreased 53.8% to US$1.0 million for the first quarter 2013, from US$2.3 million during the same period of 2012. The decrease was mainly attributable to a decrease in travelling expenses incurred by the Company's sales personnel.

This resulted in a 39.3% decrease in total operating expenses to US$2.3 million in the first quarter 2013 from US$3.8 million for the same period of 2012.

Income before Income Tax

Income before income taxes was US$0.4 million in the first quarter 2013, a decrease of 41.8% compared with US$0.7 million in the same period of 2012. The decrease was mainly due to a decrease in taxable income.

Income Tax

Income tax was US$60,388 in the first quarter 2013, compared with US$75,964 in the same period of 2012.

Net Income

Net income attributable to common shareholders was US$0.3 million in the first quarter 2013, a 43.7% decrease compared to US$0.6 million in the same period of 2012.

Basic and fully diluted net income per share was US$0.02 in the first quarter 2013, compared with US$0.03 in the same period of 2012.

Liquidity

As of March 31, 2013, the Company had cash and cash equivalents of US$8.4 million and restricted cash of US$1.6 million. During the first quarter 2013, there was a net cash outflow of US$2.3 million, compared with US$5.5 million in the same period of 2012.

Net cash used in operating activities was US$2.6 million for the first quarter 2013, compared with US$5.2 million for the same period of 2012. The decrease in net cash used in operating activities was mainly because the account receivables decreased US$4.5 million in the first quarter of 2013 but increased US$0.3 million in the same period in 2012 while the inventories increased US$3.0 million in 2013 but decreased US$0.5 million in the same period in 2012..

Net cash provided by investing activities was US$0.2 million for the first quarter 2013, compared with net cash used in investing activities of US$0.4 million for the same period of 2012, primarily due to change in restricted cash as requested by the banks in order to issue performance bonds.

No financing activities occurred for the three months ended March 31, 2013 and 2012.

Second Quarter 2013 Guidance

THT expects to generate sales revenue in the range of US$9 million to US$11 million in the second quarter 2013, compared with US$11.2 million in the same period of 2012. This represents the Company's preliminary view, and is subject to change.

About THT Heat Transfer Technology, Inc.

Through its Chinese operating subsidiaries, THT Heat Transfer Technology, Inc. designs, manufactures and sells plate heat exchangers, shell-and-tube heat exchangers, heat exchanger units and other heat exchanger products with total heat exchange solutions. Heat exchangers play an integral part in helping customers improve energy efficiency. Used in a number of industries, THT's products focus on energy conservation, emission reduction and other environmentally friendly applications. Its six major product categories are plate heat exchangers, shell-and-tube heat exchangers, air-cooled heat exchangers, weld plate heat exchangers, heat exchanger units and plate-and-shell heat exchangers. The Company also offers comprehensive heat exchange solutions.

THT's in-house R&D capabilities enable it to deliver tailored products that better meet the changing demands of its customers. The Company has a strong record of delivering high-quality products and services to leading domestic and international customers. THT has completed over 3,000 projects and has provided heat exchange solutions to several Fortune 500 companies. The Company is headquartered in Siping City, Jilin Province, China. For more information, please visit the Company's website at www.tht.cn.

Safe Harbor Statement

This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the risk factor sections of the Company's periodic reports that are filed with the Securities and Exchange Commission and are available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

Contact:

The Company:
Mr. Jack Xiao
Investor Relations Manager
THT Heat Transfer Technology, Inc.
Tel:+86 (434) 326 6779
Email: IR@tht.cn

Investor Relations (Beijing):
Xiaoyan Su
Taylor Rafferty
Tel: +852 3196 3712
Email: tht@taylor-rafferty.com

Investor Relations (US):
Mahmoud Siddig
Taylor Rafferty
Tel: +1 (212) 889 4350
Email: tht@taylor-rafferty.com

- FINANCIAL TABLES FOLLOW - 

THT Heat Transfer Technology, Inc.

Consolidated Balance Sheets

As of March 31, 2013 and December 31, 2012

(Stated in thousands of US Dollars)



March 31, 2013

(Unaudited)

December 31, 2012

(Audited)




Assets                                                                              



Current assets



Cash and cash equivalents

8,380

10,703

Restricted cash

1,603

1,838

Accounts receivable, net

33,667

37,683

Inventories, net

35,038

31,892

Other current assets

18,384

14,049

Total current assets

97,072

96,165

Long-term accounts receivable

1,000

1,237

Other non-current assets

13,852

14,067

Total assets

111,924

111,469




Liabilities



Current liabilities



Short-term bank loans

18,807

18,705

Other current liabilities

32,768

33,080

Total current liabilities

51,575

51,785

Long-term loan

956

951

Total liabilities

52,531

52,736

Total shareholders' equity

59,977

59,311

Noncontrolling interests

(584)

(578)

Total liabilities and equity

111,924

111,469

 


THT Heat Transfer Technology, Inc.

Unaudited Consolidated Statements of Income

(Stated in thousands of US Dollars, except number of shares and per share data)



Three months ended March 31,


2013

2012




Sales revenue                                                                              

7,910

11,449

Cost of sales

(4,919)

(6,844)




Gross profit

2,991

4,605




Operating expenses



    Administrative expenses

1,031

1,253

    Research and development expenses

209

254

    Selling expenses

1,043

2,254




Total operating expenses

2,283

3,761




Operating income

708

844

Interest income

10

8

Other income

131

230

Financial costs

(452)

(401)

Other expense

(1)





Income before income taxes

396

681

Income taxes

(60)

(76)




Net income before noncontrolling interests

336

605

Net (loss) income attributable to noncontrolling interest

(22)

(48)




Net income attributable to the equity stockholders

314

557




Earnings per share attributable to THT Heat Transfer



    Technology Inc. common stockholders

$0.02

$0.03




Weighted average number of shares outstanding



- Basic and diluted

20,453,500

20,453,500

 

THT Heat Transfer Technology, Inc.

Unaudited Consolidated Statements of Cash Flows

For the three months ended March 31, 2013 and 2012

(Stated in thousands of US Dollars)



Three months ended March 31,


2013

2012

Net cash used in operating activities


(2,621)


(5,172)

Net cash used in investing activities


240


(360)

Net cash provided by (used in) financing activities


-


-

Effect of exchange rate changes on cash and cash equivalents


58


55

Net decrease in cash and cash equivalents


(2,323)


(5,477)

Cash and cash equivalents at beginning of the period


10,703


7,340

Cash and cash equivalents at end of the period


8,380


1,863

SOURCE THT Heat Transfer Technology, Inc.



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