BEIJING, Aug. 13 /PRNewswire-Asia-FirstCall/ -- Tri-Tech Holding Inc. (Nasdaq: TRIT), a leading total solutions provider to China's water resources, municipal wastewater and industrial pollution control markets, announced today that revenue for the second fiscal quarter ended June 30, 2010 increased 157.8% to $8.1 million from $3.1 million in Q2' 2009. Net income for the quarter was $1.4M or $0.19 per diluted share compared with net income of $0.8M or $0.24 diluted EPS in Q2' 2009.
(Logo: http://photos.prnewswire.com/prnh/20100603/CNTH016LOGO ) (Logo: http://www.newscom.com/cgi-bin/prnh/20100603/CNTH016LOGO ) Additional Second Quarter 2010 Highlights -- Revenue from Water/Wastewater Treatment and Municipal Infrastructure operations increased 190.4% to $4.3 million -- Revenue from Water Resource Management Systems and Engineering Services increased 22.2% to $2.1 million -- Revenue from Industrial Pollution Control and Safety was $1.8 million compared with $60,643 in the first quarter of 2010, a sequential gain of 2,964% -- Gross profit (exclusive of depreciation and amortization) increased 117.9% to $3 million from $1.4 million in Q2'2009 -- Gross margin decreased to 37% compared to 43.9% for Q2'2009. -- Income from operations increased 92.9% to $1.8M from $0.9M in Q2'2009. -- Weighted average number of diluted shares outstanding was 7.41 million, compared to 3.56 million as of June 30, 2009 -- Appointed Bernstein & Pinchuk LLP to serve as the company's independent auditing firm -- Set up a wholly-owned subsidiary in the U.S. and a joint venture in India; Established a new research and development base in Tianjin -- Engaged Friedman LLP to assist the company in implementing Sarbanes-Oxley 404
On August 6, 2010, the company completed its first acquisition of 100% equity ownership of Beijing Satellite Science & Technology Co. (BSST), a total solution provider in industrial pollution control and production process safety fields, for total consideration of $3.8 million.
Second Quarter 2010 Financial Performance
Revenue was $8.1 million in the quarter ended June 30, 2010, an increase of $5 million, or 157.8%, compared to revenue of $3.1 million in the same period of 2009. This reflected increases in the number and size of new contractual engagements. During the quarter, the company was awarded several contracts with sales exceeding $2.6 million (equal to RMB 18 million). For Water/Wastewater Treatment and Municipal Infrastructure, revenue was $4.3 million, an increase of 2.8 million or 190.4%, compared to $1.5 million in Q2'2009. Revenue from Water Resources Management Systems and Engineering Services saw a 22.2% increase to $2.1 million from $1.7 million in Q2'2009. Revenue from Industrial Pollution Control and Safety was $1.8 million, an increase of 2,964% from last quarter.
Net income attributable to the shareholders of TRIT was $1.4 million, an increase of $569,905, or 66.9%, compared to net income attributable to the shareholders of TRIT of $851,682 in the same period of 2009.
Diluted EPS was $0.19 based on net income of $1.4 million and diluted shares outstanding of 7.41 million as of June 30, 2010. This compares with net income of $851,682 or $0.24 diluted EPS based on diluted shares outstanding of 3.56 million in Q2'2009.
Gross profit (exclusive of depreciation and amortization) increased 117.9% to $3 million for the quarter from 1.4 million in Q2'2009. This increase reflected an increased number of contracts.
Gross margin (exclusive of depreciation and amortization) for the quarter decreased to 37% compared to 43.9% for the same quarter in 2009. This was because the increased rate in cost of revenue (exclusive of depreciation and amortization) was greater than the increase rate in revenue, which resulted from a decline in the proportion of revenue of high-gross margin software sales and an increase in the proportion of revenue of low-gross-margin hardware sales and EPC.
Operating income increased 92.9% to $1.8 million from $0.9 million in Q2'2009. Operating margin was 21.9%, compared to 29% in Q2'2009. Operating expenses for the quarter were $1.2 million, an increase of $771,764, or 167.7%, compared to operating expenses of $460,079 in the same period of 2009. The significant increase in operating expenses mainly reflected the rapid growth rate of general and administrative and selling expenses.
Liquidity and Capital Resources
As of June 30, 2010, cash and cash equivalents were $31.6 million, including a U.S. dollar deposit of $9 million and an equivalent RMB deposit of $22.6 million. As of June 30, 2010, working capital was $50.6 million.
Six months 2010 Financial Performance
Revenue for the first six months ended June 30, 2010 was $12.3 million, an increase of $6.3 million, or 105.9%, compared to revenue of $6 million in the same period of 2009. In the six months ended June 30, 2010, net income attributable to the shareholders of TRIT was up 54.2% to $2.2 million, compared with $1.5 million for the first six months of 2009. Diluted EPS was $0.34 compared to $0.41 for the same period of 2009.
As of August 13, 2010, the company had a total backlog of $20.9 million, including $15 million in municipal water and wastewater services, $1.1 million in water resources services and $4.8 million in industrial sector services.
Updated 2010 Outlook
For 2010, the company reaffirms its previously announced guidance that revenues will range between $40.6 million and $50.5 million. Net income is expected to reach between $7 million and $9.2 million. These are the company's targets, not predictions of actual performance. The foregoing statements regarding targets are forward-looking and actual results may differ materially.
Chief Executive Officer Warren Zhao said, "Strong results from our Water/Wastewater Treatment and Municipal Infrastructure, Water Resources, Management Systems and Engineering Services and our newly formed Industrial Pollution Control and Safety business segments have provided a solid foundation toward meeting our performance expectations for the year. We have a large pipeline of projects as well as increasing opportunities for new business.
"As a result of our successful capital raise, our company is financially strong enough to execute our plans with over $31 million in cash and working capital of over $50 million.
Comments on Three Operating Segments
Water/Wastewater Treatment and Municipal Infrastructure
"We had a record quarter in our Water/Wastewater Treatment and Municipal Infrastructure business, our largest operating segment. Subsequently, we have expanded the geographical footprint of our municipal wastewater business from our current base of operations in Tianjin and Hebei Province to Hubei, Inner Mongolia, Xinjiang, Shaanxi, Sichuan and Heilongjiang provinces. To facilitate this, we established a branch office in Wuhan, the capital of Hubei Province. We are also preparing to set up sales offices in Chengdu in Sichuan Province and Harbin in Heilongjiang Province and project offices in Xi'an in Shaanxi Province, Ordos in Inner Mongolia Autonomous Region and Urumqi in the Xinjiang Uygur Autonomous Region.
"Our expansion activities have already produced results. After months of effort, we successfully won the bid for a $6 million project to upgrade and expand a wastewater treatment plant in Kuitun City of Xinjiang Uygur Autonomous Region. This project is financed by a Japanese Yen credit under an agreement between China's Ministry of Finance and Japan's Bank for International Cooperation. Winning our first project funded by a foreign government financial institution indicates Tri-Tech has reached a new level and has the capability of competing and winning high-end projects.
"The potential going forward is quite large. For instance, we have also identified $35 million in project leads within the provinces that we recently expanded. But, in fact, we expect to secure significant contracts in all of our newly expanded provinces in 2010. Due to a shortage of fresh water sources, the Chinese government now requires all new power plants in coastal areas to build seawater desalination plants to provide the process water to operate the power plants as well as provide water for adjacent commercial and residential users. As a result, the seawater desalination market is growing rapidly, especially in the Bohai Bay Area that is surrounded by the major cities of Tianjin, Tangshan, Dalian and Qinhuangdao. By the end of 2010, the total capacity of sea water desalination will increase to 500,000 cubic meters per day or 150 million cubic meters a year, becoming the largest sea water desalination industrial base in China. We expect to participate in this potential market by leveraging our existing technologies in water treatment.
Water Resources Management and Engineering Services
"In our water resources management and engineering services segment, we continued to see enormous opportunities in flood and torrent control. Recent media reports of torrent related disasters and severe drought in the southern provinces in China underscore the government's commitment to expand its national drought and flood control command system and mountain torrent forecasting projects. RMB1.14 billion is being allocated to the National Drought and Flood Control Command System (phase II) projects by the central government and local governments. We expect funding for these projects to commence in the third quarter of this year after flood season. The central government has acknowledged the effectiveness of torrent pilot control projects in 103 counties and has now mandated expansion beyond the pilot areas. We participated in such pilot projects in 17 of those 103 counties. Currently the China's Ministry of Water Conservancy (MWC) is deploying a new phase that will cover 200 to 300 counties with central and local investment totaling RMB900 million.
"We expect additional business opportunities in water quantity and quality monitoring, water quality labs and portable testing devices in conjunction with substantial spending allocated in this sector as the MWC initiates building 98 hydrological experiment stations with spending of RMB490 million in non-structural measures for flood control in the Eleventh-Five-Year Plan.
Industrial Pollution Control and Safety
"In our newly reportable segment, Industrial Pollution Control and Safety, during the second quarter, we completed several projects including a turnkey air pollution control project for Interface production facilities in Taicang, Jiangsu Province. Interface is an Atlanta based company that is a worldwide leader in design, production and sales of environmentally responsible modular carpet. We are actively pursuing several other large projects in this segment with various petrochemical companies, including a wastewater treatment project for Daqing Refining & Chemical Company, a biofiltration odor control system for Daqing Petrochemical Co. and a VOC abatement Phase II project for a Rubber Plant of the Yanshan Petrochemical Co. We believe our acquisition of BSST provides us with the strategic ability to penetrate the industrial pollution control market in various large industries, especially production automation and safety in the petroleum and petrochemical industry.
Research and development
"We continued to invest heavily in research and development in support of our various initiatives including new products and advanced treatment processes. We established a new R&D base, Tianjin Baoding Environmental Technology Ltd. (Tianjin Baoding), in the Tianjin Baodi Economic Development Area. As the R&D base for Tri-Tech, Tianjin Baoding will focus on research and development, pilot testing, pre-installation and pre-assembly and manufacturing of the company's proprietary products.
"In addition, we have established cooperative relationships with several companies in the United States and Europe with innovative technologies. The technologies we are pursuing include MBR membrane technology, forward osmosis membrane, the latest ecological engineering for wastewater treatment, advanced solid-liquid separation technology and energy saving mixers in anaerobic, aerobic and anoxic cells. We invested significant resources to develop a large-scale water resources management software platform to consolidate our current independent, specialized software applications and platforms. We expect to complete this development by the end of 2010. We also intend to invest resources to develop water quantity and water quality monitoring technologies and upgrade our proprietary products.
Related Strategic Initiatives
"In addition to organic growth we are prospecting for additional new opportunities outside of our company. Acquisitions are a key part of our strategy to enhance our business growth and to acquire innovative technology that will enable us to provide quality products, systems and best engineering to our clients.
Management Team Enhancement
"In order to grow successfully, we must have the best talent in our industry. For instance, in the month of June we appointed three senior executives that substantially strengthen our water and wastewater treatment management team. Their seasoned experience and outstanding track records and achievements in water and wastewater treatment fields greatly enhance our competitive advantages in local, domestic and international markets. Their appointments reflect the ongoing growth of our company that values talent- oriented vision, advanced technologies and quality management. This underscores our dedication to be a leading solutions provider in the water, wastewater treatment and pollution control markets," Mr. Zhao said.
Tri-Tech CEO Warren Zhao, President Phil Fan and CFO Peter Dong will host a conference call at 9:00 AM EDT, Monday, August 16, (9:00 PM Beijing/Hong Kong Time on August 16) 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 4338089. A live webcast of the call will be available at http://viavid.net/dce.aspx?sid=000078CB . 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 15 software copyrights and two technological patents and employs 200 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 Phone: +1-305-451-1888 Email: [email protected] -FINANCIAL TABLES- TRI-TECH HOLDING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME For The Six Months Ended For The Three Months Ended June 30, June 30, 2010 2009 2010 2009 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues: System integration $9,095,217 $3,378,358 $5,587,132 $2,058,755 Hardware products: 2,274,841 1,394,141 1,927,760 296,986 Software products revenues: 970,834 1,221,837 587,886 787,788 Total revenues 12,340,892 5,994,336 8,102,778 3,143,529 Cost of revenues: (exclusive of depreciation and amorti- zation shown separately below) System integration 5,589,260 2,354,968 3,438,045 1,471,335 Hardware products 1,956,082 1,149,323 1,646,342 261,443 Cost of software 24,455 42,064 14,172 31,853 Total cost of revenues (exclusive of depreciation and amorti- zation shown separately below) 7,569,797 3,546,355 5,098,559 1,764,631 Operating expenses: Depreciation and amortization expenses 74,608 45,400 34,166 23,817 Selling and Marketing expenses 502,286 212,647 300,092 108,340 General and Admini- strative expenses 1,594,093 606,970 897, 585 327,922 Total operating expenses 2,170,987 865,017 1,231,843 460,079 Income from operations 2,600,108 1,582,964 1,772,376 918,819 Other income (expenses): Other expense (20,755) (1,153) (15,906) (763) Interest income 19,696 835 10,002 400 Interest expense (2,763) (3,659) (1,134) (3,659) Tax rebates 81,516 22,767 24,551 22,767 Total other income, net 77,694 18,790 17,513 18,745 Income before provision for income taxes and noncontrolling interests income 2,677,802 1,601,754 1,789,889 937,564 Provision for income taxes 419,420 136,095 351,647 72,532 Net income before allocation to Non-controlling Interests 2,258,382 1,465,659 1,438,242 865,032 Less: Net income attributable to Non-controlling Interests 19,180 13,725 16,655 13,350 Net income attributable to Tri-Tech Holding Inc. $2,239,202 $1,451,934 $1,421,587 $851,682 Other compre- hensive income Foreign currency translation adjustment 67,985 16,743 70,709 3,534 Comprehensive income 2,326,367 1,482,402 1,508,951 868,566 Less: Compre- hensive income attributable to non-controlling interests 24,034 13,666 21,703 13,317 Comprehensive income attri- butable to Tri-Tech Holding Inc. $2,302,333 $1,468,736 $1,487,247 $855,249 Net income attributable to Tri-Tech Holding Inc. per share: Basic $0.36 $0.41 $0.20 $0.24 Diluted $0.34 $0.41 $0.19 $0.24 Weighted Average number of Common Shares outstanding: Basic 6,267,348 3,555,000 7,254,714 3,555,000 Diluted 6,505,580 3,555,000 7,413,836 3,555,000 TRI-TECH HOLDING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS June 30, December 31, 2010 2009 (Unaudited) ASSETS Current Assets Cash $31,610,527 $7,171,464 Restricted cash 1,546,167 1,501,128 Accounts receivable, net of allowance for doubtful accounts of $54,829 and $56,491 as of June 30, 2010 and December 31, 2009, respectively 13,161,324 4,338,239 Unbilled revenue 2,775,731 3,952,763 Other receivables 1,970,918 273,602 Inventories 2,073,546 1,573,324 Deposits on projects 984,770 585,153 Prepayments to suppliers and subcontractors 2,035,757 1,898,900 Total current assets 56,158,740 21,294,573 Long-term accounts receivable 328,622 -- Long-term unbilled revenue 1,404,697 1,723,852 Plant and equipment, net 474,845 374,009 Proprietary technology, net 1,058,985 797,854 $59,425,889 $24,190,288 LIABILITIES AND EQUITY Current liabilities Accounts payable and cost accrual on projects $3,436,095 $3,367,056 Customer deposits 759,539 494,047 Billings in excess of revenue -- 8,650 Other payables 532,663 8,633 Accrued liabilities 61,113 103,190 Deferred income taxes -- 141,478 Income taxes payable 686,970 144,232 Current portion of long-term liabilities 36,556 -- Total current liabilities 5,512,936 4,267,286 Long-term liabilities -- 58,171 5,512,936 4,325,457 COMMITMENTS AND CONTINGENCIES Equity Tri-Tech Holding Inc. shareholders' equity Common stock ($0.001 par value, 30,000,000 shares authorized; 7,791,833 and 5,255,000 shares issued as of June 30, 2010 and December 31, 2009, respectively.) 7,792 5,255 Additional paid-in-capital 44,783,948 12,942,650 Statutory reserves 50,655 50,655 Retained earnings 8,572,545 6,333,343 Treasury stock (122,080) -- Accumulated other comprehensive income 440,228 377,097 Total Tri-Tech Holding Inc. shareholders' equity 53,733,088 19,709,000 Noncontrolling Interests 179,865 155,831 Total equity 53,912,953 19,864,831 $59,425,889 $24,190,288 TRI-TECH HOLDING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Six Months Ended June 30, 2010 2009 (Unaudited) (Unaudited) Cash flows from operating activities: Net income before allocation to non-controlling interests $2,258,382 $1,465,659 Adjustments to reconcile net income before non-controlling interests to net cash (used in) provided by operation activities: Amortization of option expenses 183,977 -- Amortization of warrants 8,766 -- Depreciation and amortization 74,608 45,729 Provision for doubtful accounts (1,963) 469 Deferred income taxes (149,875) 17,020 Changes in operating assets and liabilities: Restricted cash (36,684) -- Accounts receivable (8,755,106) (884,804) Unbilled revenue 1,192,722 (666,139) Other receivables (2,083,909) (336,473) Inventories (489,111) (196,872) Prepayments and deferred expenses (206,504) 118,516 Accounts payable 50,330 339,921 Customer deposits 261,458 136,774 Billings in excess of revenue (8,654) -- Other payables 602,216 87,924 Accrued liabilities (42,430) (22,885) Taxes payable 539,222 61,916 Net cash (used in) provided by operating activities (6,602,555) 166,755 Cash flows from investing activities: Payment to purchase plant and equipment (135,574) (191,841) Payment to purchase intangible asset (293,033) -- Payment of installment of purchasing vehicle (21,824) -- Net cash used in investing activities (450,431) (191,841) Cash flows from financing activities: Proceeds from the exercise of warrants into common stock 1,377,000 -- Proceeds from the Issuance of common stock 30,666,876 -- Payment of financing expenses to agencies (392,784) -- Payment in repurchase treasury stock (122,080) -- Repayments from third parties of advances -- (139,041) Repayments to third parties of advances -- (410,818) Net cash provided by financing activities 31,529,012 (549,859) Effect of exchange rate fluctuation on cash and cash equivalents (36,963) 45,436 Net increase (decrease) in cash and cash equivalents 24,439,063 (529,509) Cash and cash equivalents, beginning of period 7,171,464 732,418 Cash and cash equivalents, end of period $31,610,527 $202,909 Supplemental disclosure of cash flow information: Income taxes paid $183,954 $15,163 Interest paid on debt $2,763 $3,659
SOURCE Tri-Tech Holding Inc.