CER Reports Financial Results for the Nine Months of 2011 and Notice to Hold AGM in Late November

Nov 14, 2011, 20:51 ET from China Energy Recovery Inc.

SHANGHAI, Nov. 14, 2011 /PRNewswire-Asia/ -- China Energy Recovery Inc. (CGYV.PK) ("CER"), an international leader in the design, fabrication and installation of waste heat recovery systems, today announced financial results for the third quarter and the nine months of fiscal 2011, ended September 30, 2011, as compared with the figures for the same period in 2010. CER also announced the detailed arrangement of the 2011 Annual Meeting of Stockholders.

Highlights for the 3rd quarter 2011, compared with the same quarter 2010:

  • Revenues increased 378% to $29.4 million.
  • Gross profit increased 265% to $5,088,000.
  • Net income of $2,605,000, compared to net loss of $854,000, an absolute increase of 405%.

Highlights for the nine months of year 2011, compared with the same period of year 2010:

  • Revenues increased 215% to $55.0 million.
  • Gross profit increased 215% to $9,469,000.
  • Net income of $3,285,000, compared to net loss of $394,000, an absolute increase of 934%.

Nine months of year 2011 results

Revenues for the nine months ended September 30, 2011, were $55.0 million, up from $17.4 million in the same period a year ago.

Gross profit in the nine months increased to $9,469,148 or 17.2 percent of sales, compared to $3,002,802 or 17.2 percent of sales in the same period a year ago. The company achieved an operating gain of $3,102,778 compared to loss of $1,092,300 in the same period a year ago.

Benefitting from increases in income from operations, net income increased to $3,285,399 compared to loss of $394,105 in the same period a year ago.

"Revenue growth in the third quarter and the nine months of the year reflects our marketing efforts and new manufacturing facility and, in particular, one significant EPC contract," CER Chief Executive Officer Qinqhuan Wu said. Mr. Wu continued, "In the nine months of 2011, with our new manufacturing facility in operation and our ability to perform more EPC contracts, we achieved great improvements in our revenues and gross profits. For the last quarter of 2011, based on our current contracts and production schedule, we anticipate positive results in line with the third quarter of the year."

Notice to hold AGM in November

China Energy Recovery will hold its 2011 Annual Meeting of Stockholders on 9:00 AM (local time), Monday, November 28, 2011 at its head office in Shanghai. The purpose of the meeting is:

  1. To elect five directors to serve for one-year terms ending in the year 2012;
  2. To ratify the appointment of PricewaterhouseCoopers ZhongTian CPA's Limited Company as the accounting firm for the fiscal year ending December 31, 2011; and
  3. To approve the China Energy Recovery 2011 Performance Equity Plan

"We are looking forward to holding the meeting, and we encourage all shareholders who can to show up at the meeting in person," CER Chief Executive Officer Qinqhuan Wu said. Mr. Wu continued, "The Board may consider holding the meeting in the United States next year."

What is Waste Heat Energy Recovery?

Industrial facilities release significant amounts of excess heat into the atmosphere in the form of hot exhaust gases or high-pressure steam. Energy recovery is the process of recovering as much as two-thirds of that wasted energy and converting it into usable heat energy or electricity, dramatically lowering energy costs. Energy recovery systems are also capable of lowering heat pollution and capturing harmful pollutants that would otherwise be released into the environment. It is estimated that if energy currently wasted by all the U.S. industrial facilities could be recovered, it could produce power equivalent to 20% of U.S. electricity generation capacity without burning any additional fossil fuel, and could help many industries to meet stringent environmental regulations.

About China Energy Recovery, Inc.

CER is an international engineering and manufacturing company that specializes in the design, construction and installation of waste heat energy recovery systems that captures and converts industrial waste energy produced by heavy industrial processes such as petroleum and chemicals refining, paper manufacturing and refining into low-cost electrical power, which enables industrial manufacturers to reduce their energy costs, shrink their emissions footprint and generate salable emissions credits.  The company's primary focus is the Chinese market; however, CER's systems are operating in heavy industrial plants located in Egypt, Korea, Vietnam and Malaysia. CER is building one of China's largest state-of-the-art, energy recovery system research and fabrication facility, which will allow CER to meet increased demand for its products and services. For more information on CER, please visit: http://www.chinaenergyrecovery.com/s/Home.asp. Information on CER's website does not comprise a part of this press release.

Forward-Looking Statement Disclaimer

This press release includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995, as amended. All statements, other than statements of historical fact, included in the press release that address activities, events or developments that CER believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made based on experience, expected future developments and other factors that CER believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of CER and may not materialize, including, without limitation, the efficacy and market acceptance of CER's products and services, CER's ability to execute on its business plan and strategies and CER's ability to successfully complete orders and collect revenues therefrom. Investors are cautioned that any such statements are not guarantees of future performance. Actual results or developments may differ materially from those projected in the forward-looking statements as a result of many factors. Furthermore, CER does not intend (and is not obligated) to update publicly any forward-looking statements, except as required by law. The contents of this release should be considered in conjunction with the warnings and cautionary statements contained in CER's filings with the Securities and Exchange Commission.

Contact:

Jessica Hu


China Energy Recovery


+86-21-2028-1866*304


hudie@cerenergy.com



CHINA ENERGY RECOVERY, INC.  AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2011

(UNAUDITED)



Three months ended
September 30,


Nine months ended 
September 30,



2010


2011


2010


2011



















REVENUES









Third parties

$

6,147,651

$

18,823,066

$

17,447,570

$

31,404,912

Related  party


-


10,563,392


-


23,631,431

Total revenue


6,147,651


29,386,458


17,447,570


55,036,343










COST OF REVENUES


(4,752,909)


(24,298,399)


(14,444,768)


(45,567,195)










GROSS PROFIT


1,394,742


5,088,059


3,002,802


9,469,148










SELLING, GENERAL & ADMINISTRATIVE EXPENSES


(1,588,818)


(2,490,222)


(4,095,102)


(6,366,370)










(LOSS)/INCOME FROM  OPERATIONS


(194,076)


2,597,837


(1,092,300)


3,102,778










OTHER (EXPENSE)/INCOME, NET:









Change in fair value of warrants


(97,281)


248,332


980,617


1,164,122

Change in fair value of derivative liabilities


28,920


72,764


847,825


396,482

Non-operating income, net


30,424


765,461


1,001,780


755,525

Interest expenses, net


(477,239)


(370,400)


(1,786,380)


(1,345,664)

Total other (expense)/income, net


(515,176)


716,157


1,043,842


970,465










(LOSS)/INCOME BEFORE INCOME TAXES


(709,252)


3,313,994


(48,458)


4,073,243










PROVISION FOR INCOME TAXES


(144,497)


(709,391)


(345,647)


(787,844)










NET (LOSS)/INCOME


(853,749)


2,604,603


(394,105)


3,285,399










OTHER COMPREHENSIVE INCOME/(LOSS)









Foreign currency translation adjustment


292,890


23,868


320,890


(62,741)










COMPREHENSIVE (LOSS)/INCOME

$

(560,859)

$

2,628,471

$

(73,215)

$

3,222,658

(LOSS)/EARNINGS PER SHARE:





 




Basic

$

(0.03)

$

0.08

$

(0.01)

$

0.11

Diluted

$

(0.03)

$

0.08

$

(0.01)

$

0.11

WEIGHTED AVERAGE SHARES OUTSTANDING:





 




Basic


30,883,916


31,085,859

 

30,834,537


31,015,385

Diluted


30,883,916


31,102,815

 

30,834,537


31,032,341




CHINA ENERGY RECOVERY, INC.  AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2010 AND SEPTEMBER 30, 2011

(UNAUDITED)




December 31,


September 30,



2010


2011






ASSETS


CURRENT ASSETS:





Cash

$

2,996,076

$

6,802,619

Restricted cash


218,346


115,502

Notes receivable


1,341,359


1,554,467

Accounts receivable, net of allowance for doubtful accounts - third parties


7,059,935


7,658,742

Accounts receivable -  related parties


-


7,063,336

Inventories


8,661,800


13,861,479

Other current assets and receivables


1,185,032


502,829

Deferred financing costs


215,623


-

Advances on purchases


15,200,669


33,340,855

Total current assets


36,878,840


70,899,829






NON-CURRENT ASSETS:





Property, plant, and equipment, net


10,101,755


26,240,267

Deferred tax assets


171,776


308,577

Intangible assets


2,477,959


4,982,462

Long-term accounts receivable


4,679,121


-

Total non-current assets


17,430,611


31,531,306

Total assets

$

54,309,451

$

102,431,135





 

LIABILITIES AND SHAREHOLDERS' EQUITY





 

CURRENT LIABILITIES:





Accounts payable

$

4,557,848

$

19,094,802

Accrued expenses and other liabilities


1,912,544


4,786,477

Advances from customers-third parties


27,530,065


50,596,455

Taxes payable


1,631,507


396,229

Short-term bank loans


4,333,700


11,875,453

Short-term loans


-


7,123,016

Derivative liability, current


374,846


26,825

Long-term loan - current maturity


3,177,973


543,778

Total current liabilities


43,518,483


94,443,035






NON-CURRENT LIABILITIES:





Warrant liability


1,332,760


153,091

Derivative liability, non-current


48,461


-

Convertible note


4,691,582


-

Long-term loan


543,778


-

Total  non-current liabilities


6,616,581


153,091

Total  liabilities


50,135,064


94,596,126






SHAREHOLDERS' EQUITY:





Preferred stock ($0.001 par value; 50,000,000 shares authorized, 200,000 shares issued and outstanding as of both December 31, 2010 and September 30,  2011)






189


189

Common stock ($0.001 par value; 100,000,000  shares authorized, 30,906,266 and  31,085,859 shares issued and outstanding as of December 31, 2010 and September 30, 2011, respectively)










30,906


31,085

Additional paid-in-capital


8,313,385


8,751,170

Accumulated deficit


(4,713,541)


(1,428,142)

Statutory reserves


132,802


132,802

Accumulated other comprehensive income


410,646


347,905

Total shareholders' equity


4,174,387


7,835,009

Total liabilities and shareholders' equity

$

54,309,451

$

102,431,135




SOURCE China Energy Recovery Inc.



RELATED LINKS

http://www.chinaenergyrecovery.com/s/Home.asp