Tri-Tech Holding Q1 2010 Revenue Up 48.7% to $4.2M; Net Income Up 36.2% to $817,614 EPS $0.15
Company Anticipates Strong 2010 Growth With Rapidly Emerging Industrial Pollution Segment Sales
BEIJING, May 13 /PRNewswire-Asia-FirstCall/ -- Tri-Tech Holding Inc. (Nasdaq: TRIT), a leading Chinese company that engineers, manages and monitors China's municipal sewer systems, natural waterways and resources, announced today that revenue for the first fiscal quarter ended March 31, 2010 increased 48.7% to $4.2 million from $2.9 million in Q1 2009. Net income for the quarter was $817,614 or $0.15 per diluted share compared with net income of $600,252 or $0.17 diluted EPS in Q1 2009.
Additional First Quarter 2010 Highlights
-- Revenue from Wastewater/Tail Gas operations increased 65.8% to $2.6
million.
-- Revenue from Water Resource Management increased 23.8% to $1.6 million.
-- Revenue from Industrial Pollution Control was $60,643. Industrial
Pollution Control is a new reportable segment for 2010.
-- Gross profit (exclusive of depreciation and amortization) increased
65.3% to $1.8 million from $1.1 million in Q1 2009.
-- Gross margin improved to 41.7% vs. 37.5% for Q1 2009.
-- Income from operations increased 24.6% to $827,732 from $664,145 in Q1
2009.
-- Weighted average number of diluted shares outstanding was 5.56 million
as of March 31, 2010, compared to 3.56 million as of March 31, 2009.
Subsequent Event
On April 20, 2010, the company completed a secondary public offering of 2,142,750 ordinary shares at an offering price of $14.00 per share. The company received aggregated gross proceeds of approximately $30 million before underwriter commissions and discounts and other expenses, On May 4, 2010, the underwriters of the secondary public offering of common stock partially exercised their over-allotment option, which resulted in the issuance of an additional 224,083 ordinary shares. This over-allotment exercise brought the gross proceeds from the secondary offering to $33.1 million. The company expects to use the net proceeds of the offering for working capital and potential targeted acquisitions as well as new product development and sales and marketing. As of May 11, 2010, the company had 7,791,833 ordinary shares issued and out-standing.
First Quarter 2010 Financial Performance
Revenue
Total revenue was $4.2 million in the quarter ended March 31, 2010, an increase of $1.4 million or 48.7%, compared to revenue of $2.9 million in the same period of 2009. The increase was primarily driven by an increase in larger contracts, several of which exceeded $1.1 million. Revenue attributable to Wastewater and Tail Gas Treatment was $2.6 million, an increase of 65.8% compared to Q1 2009. Water Resource Management revenue was up 23.8% to $1.6 million and Industrial Pollution Control revenue was $60,643.
Net Income
Net income attributable to shareholders was $817,614, an increase of $0.2 million, or 36.2%, compared to $600,252 in the same period of 2009. Diluted earnings per share attributable to shareholders for the quarter were $0.15 based on net income of $817,614. This compared with net income of $600,252 or $0.17 diluted EPS in Q1 2009.
Gross profit (exclusive of depreciation and amortization)
Gross profit (exclusive of depreciation and amortization) increased 65.3% to $1.8 million for the quarter from $1.1 million in the Q1 2009. This increase reflected significant Chinese government infrastructure spending along with tight construction timelines and strong market demand. These factors result in high market value for construction projects, and such projects are driving our revenue growth. We also emphasized tight cost containment, which was aided by continued sourcing of more locally made, lower priced equipment. Gross margin (exclusive of depreciation and amortization) for the quarter was 41.7%, compared to 37.5% for the same period.
Operating income
Operating income increased 24.6% to $827,732 from $664,145 in Q1 2009. Operating margin decreased from 23.3% in Q1 2009 to 19.5%. This decrease was mainly due to rapid growth of general and administrative expenses and selling expenses, which largely reflected an increased number of sales personnel, increased travel expenses in pursuit of new contracts and professional service fees associated with being a publicly traded company since September 2009.
Liquidity and Capital Resources
As of March 31, 2010, cash and cash equivalents were $7.2 million including a U.S. dollar deposit of $1.6 million and an equivalent RMB deposit of $5.6 million. Working capital was $18.7 million, including cash and cash equivalents of $7.2 million.
Management Comment
Chief Executive Officer, Warren Zhao said, "2010 is off to an excellent start with good performance from our Wastewater/Tail Gas Treatment and Water Resources Management segments and our rapidly emerging Industrial Pollution Control segment, which we believe also has significant potential for growth.
"We continue to pursue smaller river basin flood monitoring and forecasting systems and groundwater monitoring systems across China. In the fiscal quarter ended March 31, 2010, we received awards for two projects for smaller river basin flood and forecasting systems in Zunyi and Anshun in Guizhou Province.
"In 2010, we are closely tracking post-disaster reconstruction projects led by the Water Authority of Sichuan Province, Guangdong drought control projects, Henan drought control protects and Guangxi international river monitoring projects.
"Our Wastewater and Tail Gas Treatment business segment focuses on Tianjin City and Hebei Province. Services include pump stations, treatment plants, odor control systems and controls and instruments. In the fiscal quarter ended March 31, 2010, we won contracts for the Beitang Wastewater Treatment Plant and the Hejian Wastewater Treatment Plant in Hebei Province.
"We are making excellent progress in penetrating adjacent industry vertical opportunities in the industrial wastewater and process tail gas treatment markets in the petrochemical industry. We are also pursuing opportunities in the power generation industry and the oil and gas industry. In the fiscal quarter ended March 31, 2010, we won an industrial wastewater treatment contract in Jinxi City of Liaoning Province from Jinxi Petrochemical Co., a subsidiary of PetroChina. We are increasing our efforts to obtain these types of contracts.
"In a similar manner, we are further developing our water resource management services from partial management solutions to full management solutions for large scale river basin projects. We believe the Chinese government's decision to initiate new programs and allocate significant investment for their implementation offers our company significant business opportunities. In addition, the severe drought in Southwest China will accelerate investment in water conservancy.
"In our municipal wastewater business, we plan to expand beyond our existing base of operations. In our current business footprint, local governments are building 80 new wastewater treatment plants. This growth represents development activities in only two provinces. We believe significant opportunities exist in the other 32 provinces, municipalities and autonomous regions in China."
Conference Call
Tri-Tech CEO Warren Zhao, President Phil Fan and CFO Peter Dong will host a conference call at 10:00 AM EDT tomorrow, Friday, May 14, (10:00 PM Beijing/Hong Kong Time on May 14) to review the company's financial results and respond to questions and comments.
To participate, call U.S. Toll Free Number 1-877-941-8416 approximately 10 minutes before the call. International callers, please dial 1-480-629-9812. The conference ID number is 4299302. A live webcast of the call will be available at http://viavid.net/dce.aspx?sid=0000753F . Both an MP3 file one hour after the call and a transcript 48 hours after the call will be available. These will be archived for 90 days via http://www.tri-tech.cn and http://www.hawkassociates.com .
About Tri-Tech Holding Inc.
Tri-Tech designs customized sewage treatment and odor control systems for China's municipalities and its larger cities. These systems combine software, information management systems, resource planning and local and distant networking hardware that includes sensors, control systems, programmable logic controllers, supervisory control and data acquisition systems. The company also designs systems that track natural waterway levels for drought control, monitor groundwater quality and assist the government in managing its water resources. The company is also moving into the industrial pollution control market. Tri-Tech owns seven software copyrights and two technological patents and employs 140 people. Please visit http://www.Tri-Tech.cn for more information.
An online investor kit including a company profile, press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.hawkassociates.com/profile/trit.cfm . To subscribe to future releases via e-mail alert, visit http://www.hawkassociates.com/about/alert/ .
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. Among other things, expectations about expansion into adjacent industry verticals, growth of our Industrial Pollution Control Services, and the potential development of the company's other existing service lines contain forward-looking statements. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
For more information, please contact:
Investor Contact:
Hawk Associates
Frank Hawkins
Amy Lin
Phone: +1-305-451-1888
Email: [email protected]
- FINANCIAL TABLES -
TRI-TECH HOLDING INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2010 2009
(Unaudited)
ASSETS
Current Assets
Cash $ 7,202,236 $ 7,171,464
Restricted cash -- 1,501,128
Accounts receivable, net of
allowance for doubtful accounts
of $62,448 and $56,491 as of
March 31, 2010 and December 31,
2009, respectively 3,568,779 4,338,239
Unbilled revenue 6,471,224 3,952,763
Other receivables 359,784 273,602
Inventories 1,989,636 1,573,324
Deposits on projects 978,687 585,153
Prepayments to suppliers
and subcontractors 3,088,153 1,898,900
Total current assets 23,658,499 21,294,573
Long-term unbilled revenue 1,724,331 1,723,852
Plant and equipment, net 432,226 374,009
Proprietary technology, net 1,073,497 797,854
$ 26,888,553 $ 24,190,288
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and cost
accrual on projects $ 3,912,821 $ 3,367,056
Customer deposits 628,796 494,047
Billings in excess of
revenue -- 8,650
Other payables 120,228 8,633
Accrued liabilities 72,433 103,190
Deferred income taxes -- 141,478
Income taxes payable 239,106 144,232
Total current liabilities 4,973,384 4,267,286
Long-term liabilities 47,277 58,171
5,020,661 4,325,457
Equity
Tri-Tech Holding Inc.
shareholders' equity
Common stock ($0.001 par value,
30,000,000 shares authorized;,
5,389,000 and 5,255,000 shares
issued as of March 31, 2010 and
December 31, 2009, respectively;
as of March 31, 2010, 340,000
shares issued were held in
escrow.) 5,389 5,255
Additional paid-in-capital 14,128,162 12,942,650
Statutory reserves 50,655 50,655
Retained earnings 7,150,957 6,333,343
Accumulated other
comprehensive income 374,567 377,097
Total Tri-Tech Holding
Inc. shareholders' equity 21,709,730 19,709,000
Noncontrolling Interests 158,162 155,831
Total equity 21,867,892 19,864,831
$ 26,888,553 $ 24,190,288
TRI-TECH HOLDING INC.
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
For The Three Months Ended March 31,
2010 2009
(Unaudited) (Unaudited)
Revenues:
System integration $3,508,085 $ 1,319,603
Hardware products 347,081 1,097,155
Software products 382,948 434,049
Total revenues 4,238,114 2,850,807
Cost of revenues: (exclusive of
depreciation and amortization
shown separately below)
System integration 2,151,215 883,633
Hardware products 309,740 887,880
Software products 10,283 10,211
Total cost of revenues
(exclusive of depreciation
and amortization shown
separately below) 2,471,238 1,781,724
Operating expenses:
Depreciation and amortization
expense 40,442 21,583
Selling and Marketing expenses 202,194 104,306
General and Administrative
expenses 696,508 279,049
Total operating expenses 939,144 404,938
Income from operations 827,732 664,145
Other income (expenses):
Other expense (4,850) (390)
Interest income 9,694 435
Interest expense (1,629) --
Tax rebates 56,965 --
Total other income
(expenses), net 60,180 45
Income before provision for
income taxes and noncontrolling
interests income 887,912 664,190
Provision for income taxes 67,773 63,563
Net income before allocation to
noncontrolling interests 820,139 600,627
Less: Net income attributable to
noncontrolling interests 2,525 375
Net income attributable
to Tri-Tech $817,614 $ 600,252
Holding Inc
Other comprehensive
income
Foreign currency
translation adjustment (2,724) 13,208
Comprehensive income $817,415 $ 613,835
Less: Comprehensive
income attributable to
noncontrolling interests 2,331 349
Comprehensive income attributable
to Tri-Tech Holding Inc. $815,084 $ 613,486
Net income attributable to Tri-Tech
Holding Inc. per share:
Basic $0.16 $ 0.17
Diluted $0.15 $ 0.17
Weighted Average number
of common shares outstanding:
Basic 5,269,011 3,555,000
Diluted 5,559,260 3,555,000
TRI-TECH HOLDING INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For The Three Months Ended
March 31,
2010 2009
(Unaudited) (Unaudited)
Cash flows from operating
activities:
Net income before allocation
to noncontrolling interests $ 820,139 $ 600,627
Adjustments to reconcile net
income before noncontrolling
interests to net cash provided
by (used in) operation
activities:
Amortization of option
expenses 91,480 --
Amortization of warrants 8,766 --
Depreciation and amortization 40,442 21,748
Provision for doubtful
accounts 5,940 10,178
Deferred income taxes (149,838) 42,668
Changes in operating assets
and liabilities:
Restricted cash 1,501,414 --
Accounts receivable 764,660 258,395
Unbilled revenue (2,517,140) (744,534)
Other receivables (479,436) 51,281
Inventories (359,426) (368,318)
Prepayments and deferred
expenses (1,164,248) 340,332
Accounts payable 488,386 256,795
Customer deposits 134,600 167,149
Billings in excess of revenue (8,652) --
Other payables 175,051 (23,449)
Accrued liabilities (30,782) --
Taxes payable 94,825 189,667
Net cash (used in) provided
by operating activities (583,819) 802,539
Cash flows from investing
activities:
Payment to purchase plant and
equipment (80,766) (950)
Payment to purchase
intangible asset (292,959) --
Payment of installment of vehicle
purchase (10,909) --
Short-term loan to third
parties -- (213,584)
Net cash used in investing
activities (384,634) (214,534)
Cash flows from financing
activities:
Proceeds from exercise of
warrants into common stock 1,085,400 --
Net cash provided by
financing activities 1,085,400 --
Effect of exchange rate
changes on cash
and cash equivalents (86,175) (171,539)
Net increase in cash and cash
equivalents 30,772 416,466
Cash and cash equivalents,
beginning of period 7,171,464 732,418
Cash and cash equivalents,
end of period $ 7,202,236 $1,148,884
Supplemental Data:
Income taxes paid $ 122,786 $ --
Interest paid on debt $ 1,629 $ --
SOURCE Tri-Tech Holding Inc.
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