SmartHeat Inc. Announces First Quarter 2012 Financial Results
NEW YORK, May 15, 2012 /PRNewswire-Asia/ -- SmartHeat Inc. (NASDAQ: HEAT; website: www.smartheatinc.com), a market leader in China's clean technology, energy savings industry, today announced financial results for the quarter ended March 31, 2012.
Financial Summary
Net sales in the three months ended March 31, 2012, were $6.75 million, while net sales in the three months ended March 31, 2011, were $7.89 million, an overall decrease of $1.15 million or 15%. The decrease in sales was due primarily to the decrease in sales volume in the three months ended March 31, 2012, compared to the same period of 2011. Sales volume of PHEs, PHE Units, heat meters and heat pumps decreased 17%, 21%, 72% and 19%, respectively, in the first quarter of 2012 compared to 2011.
Gross profit was $1.67 million in the three months ended March 31, 2012, compared to $2.56 million in the same period of 2011, or gross profit margins of 25% and 32%, respectively. The decreased gross profit was due primarily to our decreased sales, production volume and average selling price.
Operating expenses totaled $9.55 million in the three months ended March 31, 2012, compared to $7.08 million in the same period of 2011, an increase of $2.47 million or 35%. Operating expenses as a percentage of sales were 142% in the three months ended March 31, 2012, compared to 90% in the three months ended March 31, 2011. The increase in operating expenses mainly resulted from: bad debt allowance for other receivables of $0.39 million for the three months ended March 31, 2012, compared with $0 for the same period of 2011; provision for inventory allowance of $0.13 million for the three months ended March 31, 2012, compared with $0 for the same period of 2011; and an after-sales service expense of $1.63 million for the three months ended March 31, 2012, compared with $0.66 million for the same period of 2011 for equipment installation and modifications of products under warranty as part of our continued process of improving product quality and introducing newly-developed technology to maintain existing customers and attract new contracts.
Our net loss for the three months ended March 31, 2012, was $6.9 million compared to net loss of $3.9 million for the same period of 2011, an increase of $2.98 million or 75%. Net loss as a percentage of sales was 103% in the three months ended March 31, 2012, and net loss as a percentage of sales was 50% in the comparable period of 2011. This increase in net loss was attributable to decreased net sales and increased bad debt allowance and inventory provision reserve in the first quarter of 2012.
About SmartHeat Inc.
Founded by James Jun Wang, a former executive at Honeywell China, SmartHeat Inc. (www.smartheatinc.com) is a NASDAQ Global Select 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), heat meters and heat pumps. SmartHeat's products directly address air pollution problems in China where massive coal burning for cooking and heating is the only source of economical heat energy in China. With broad product applications, SmartHeat's products significantly reduce heating costs, increase energy use and reduce air pollution. SmartHeat's customers include global Fortune 500 companies, 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.
Contact Corporate Communications:
Ms. Jane Ai, Corporate Secretary
SmartHeat Inc.
Tel: 011-86-24-25363366
Email: [email protected]
| SMARTHEAT INC. AND SUBSIDIARIES |
||||
| CONSOLIDATED BALANCE SHEETS |
||||
| March 31, 2012 |
December 31, 2011 |
|||
| (Unaudited) |
||||
| ASSETS |
||||
| CURRENT ASSETS |
||||
| Cash & equivalents |
$ 15,853,549 |
$ 12,419,922 |
||
| Restricted cash |
4,595,887 |
2,688,691 |
||
| Accounts receivable, net |
40,103,024 |
47,055,517 |
||
| Retentions receivable |
3,213,372 |
3,583,898 |
||
| Advances to suppliers |
14,013,756 |
17,603,984 |
||
| Other receivables (net), prepayments and deposits |
6,184,693 |
6,663,330 |
||
| Taxes receivable |
585,654 |
- |
||
| Inventories, net |
54,391,322 |
53,648,549 |
||
| Notes receivable - bank acceptances |
1,083,269 |
1,916,320 |
||
| Total current assets |
140,024,526 |
145,580,211 |
||
| NONCURRENT ASSETS |
||||
| Restricted cash |
243,464 |
204,991 |
||
| Retentions receivable |
501,419 |
670,291 |
||
| Advance to supplier for equipment |
2,087,183 |
1,122,914 |
||
| Construction in progress |
1,338,051 |
522,876 |
||
| Property and equipment, net |
11,091,109 |
11,348,601 |
||
| Intangible assets, net |
15,287,187 |
15,419,805 |
||
| Goodwill |
2,161,368 |
2,098,332 |
||
| Other noncurrent asset |
5,027 |
10,044 |
||
| Total noncurrent assets |
32,714,808 |
31,397,854 |
||
| TOTAL ASSETS |
$ 172,739,334 |
$ 176,978,065 |
||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
| CURRENT LIABILITIES |
||||
| Accounts payable |
$ 9,631,362 |
$ 12,660,100 |
||
| Advance from customers |
4,964,406 |
4,585,218 |
||
| Taxes payable |
23,644 |
1,178,712 |
||
| Accrued liabilities and other payables |
3,993,972 |
4,136,298 |
||
| Notes payable - bank acceptances |
1,971,908 |
3,278,232 |
||
| Loans payable |
18,588,247 |
10,633,402 |
||
| Total current liabilities |
39,173,539 |
36,471,962 |
||
| DEFERRED TAX LIABILITY |
164,904 |
189,516 |
||
| LONG-TERM PAYABLE |
2,065,361 |
2,281,023 |
||
| COMMITMENTS AND CONTINGENCIES |
||||
| STOCKHOLDERS' EQUITY |
||||
| Common stock, $0.001 par value; 75,000,000 |
3,956 |
3,956 |
||
| Paid-in capital |
103,004,904 |
102,985,737 |
||
| Statutory reserve |
5,396,014 |
5,396,014 |
||
| Accumulated other comprehensive income |
11,389,924 |
11,119,887 |
||
| Retained earnings |
10,513,268 |
17,445,733 |
||
| Total Company stockholders' equity |
130,308,066 |
136,951,327 |
||
| NONCONTROLLING INTEREST |
1,027,464 |
1,084,237 |
||
| TOTAL EQUITY |
131,335,530 |
138,035,564 |
||
| TOTAL LIABILITIES AND EQUITY |
$ 172,739,334 |
$ 176,978,065 |
||
| SMARTHEAT INC. AND SUBSIDIARIES |
||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
||||
| THREE MONTHS ENDED MARCH 31, |
||||
| 2012 |
2011 |
|||
| (Unaudited) |
||||
| Net sales |
$ 6,746,398 |
$ 7,892,149 |
||
| Cost of goods sold |
5,074,937 |
5,330,229 |
||
| Gross profit |
1,671,461 |
2,561,920 |
||
| Operating expenses |
||||
| Selling |
2,373,762 |
1,929,155 |
||
| General and administrative |
4,677,214 |
3,349,354 |
||
| Provision for bad debt allowance |
2,495,891 |
1,797,946 |
||
| Total operating expenses |
9,546,867 |
7,076,455 |
||
| Loss from operations |
(7,875,406) |
(4,514,535) |
||
| Non-operating income (expenses) |
||||
| Interest income |
48,139 |
75,334 |
||
| Interest expense |
(282,580) |
(130,172) |
||
| Financial expense |
(51,131) |
(20,427) |
||
| Foreign exchange transaction loss |
(16,345) |
(125,100) |
||
| Other income |
1,162,964 |
32,705 |
||
| Total non-operating income (expenses), net |
861,047 |
(167,660) |
||
| Loss before income tax |
(7,014,359) |
(4,682,195) |
||
| Income tax benefit |
(24,104) |
(680,899) |
||
| Net loss before noncontrolling interest |
(6,990,255) |
(4,001,296) |
||
| Less: Loss attributable to noncontrolling interest |
(57,790) |
(47,494) |
||
| Net loss to SmartHeat Inc. |
(6,932,465) |
(3,953,802) |
||
| Other comprehensive item |
||||
| Foreign currency translation gain |
270,037 |
1,793,230 |
||
| Foreign currency translation gain |
1,017 |
- |
||
| Comprehensive loss attributable to SmartHeat Inc. |
$ (6,662,428) |
$ (2,160,572) |
||
| Comprehensive loss attributable to noncontrolling interest |
$ (56,773) |
$ (47,494) |
||
| Basic weighted average shares outstanding |
3,955,774 |
3,855,194 |
||
| Diluted weighted average shares outstanding |
3,955,774 |
3,855,194 |
||
| Basic loss per share |
$ (1.75) |
$ (1.03) |
||
| Diluted loss per share |
$ (1.75) |
$ (1.03) |
||
| SMARTHEAT INC. AND SUBSIDIARIES |
||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| THREE MONTHS ENDED MARCH 31, |
||||
| 2012 |
2011 |
|||
| (Unaudited) |
||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||
| Loss including noncontrolling interest |
$ (6,990,255) |
$ (4,001,296) |
||
| Adjustments to reconcile net loss including noncontrolling |
||||
| interest to net cash used in operating activities: |
||||
| Depreciation and amortization |
467,833 |
366,811 |
||
| Provision for bad debts |
2,063,016 |
1,797,946 |
||
| Provision for other receivables |
386,536 |
- |
||
| Provision for inventory impairment |
126,156 |
- |
||
| Unearned interest on accounts receivable |
(26,081) |
(27,755) |
||
| Stock option expense |
19,167 |
51,085 |
||
| Changes in deferred tax |
(24,760) |
(752,593) |
||
| (Increase) decrease in current assets: |
||||
| Accounts receivable |
4,966,662 |
(844,730) |
||
| Retentions receivable |
542,728 |
163,638 |
||
| Advances to suppliers |
3,666,981 |
(4,101,704) |
||
| Other receivables, prepayments and deposits |
98,927 |
(4,840,886) |
||
| Inventories |
(778,158) |
(2,877,453) |
||
| Taxes receivable |
(583,212) |
- |
||
| Increase (decrease) in current liabilities: |
||||
| Accounts payable |
(3,039,905) |
2,270,069 |
||
| Unearned revenue |
89,621 |
619,602 |
||
| Taxes payable |
(1,155,066) |
(2,020,415) |
||
| Accrued liabilities and other payables |
(177,567) |
(1,263,461) |
||
| Net cash used in operating activities |
(347,377) |
(15,461,142) |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||
| Change in restricted cash |
(1,938,601) |
753,705 |
||
| Acquisition of property & equipment |
(8,693) |
(830,858) |
||
| Acquisition of intangible assets |
(7,927) |
(63,176) |
||
| Cash paid for acquisition |
- |
(13,488,030) |
||
| Cash from acquisition of subsidiaries |
- |
448,849 |
||
| Notes receivable |
833,325 |
777,259 |
||
| Advance for equipment purchase |
(964,269) |
- |
||
| Construction in progress |
(812,935) |
(160,210) |
||
| Net cash used in investing activities |
(2,899,100) |
(12,562,461) |
||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||
| Proceeds from short-term loans |
7,927,197 |
486,086 |
||
| Cash contribution from noncontrolling interest |
- |
744,512 |
||
| Notes payable |
(1,307,041) |
- |
||
| Payment on notes payable |
- |
(1,342,691) |
||
| Net cash provided by (used in) financing activities |
6,620,156 |
(112,093) |
||
| EFFECT OF EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS |
59,948 |
307,134 |
||
| NET INCREASE (DECREASE) IN CASH & EQUIVALENTS |
3,433,627 |
(27,828,562) |
||
| CASH & EQUIVALENTS, BEGINNING OF PERIOD |
12,419,922 |
56,806,471 |
||
| CASH & EQUIVALENTS, END OF PERIOD |
$ 15,853,549 |
$ 28,977,909 |
||
| Supplemental cash flow data: |
||||
| Income tax paid |
$ 207,724 |
$ 1,343,218 |
||
| Interest paid |
$ 282,456 |
$ 141,263 |
||
SOURCE SmartHeat Inc.
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