First Quarter Highlights -- Revenues increased 154.0% to $4.1 million compared to the first quarter of 2009 -- Gross profit more than doubled to $2.7 million -- Gross margin increased to 65.4% from 54.8% -- Operating income increased over eight-fold to $1.6 million -- Operating margin increased to 38.1% from 11.3% -- Net income was $0.6 million, or $0.04 per diluted share, compared to $0.1 million, or $0.01 per diluted share -- Adjusted net income, excluding the impact of a one-time non-cash settlement expense related to a consulting firm which provided business advisory and private placement services to the Company, was $1.0 million, or $0.06 per diluted share.* -- Operating cash flow was $1.1 million versus negative cash flow from operations of $0.9 million in the prior year period -- Dongtai Organic, the Company's sludge treatment business, began generating revenues, contributing $1.0 million to first quarter sales -- Received a $3.1 million subsidy from the PRC government toward the construction of the Hazardous Waste Treatment Center of Changsha City, Hunan Province
"We are very pleased with our first quarter results," said Mr.
First Quarter 2010 Results
For the three months ended
Revenues from service fees, which consist of service fees generated from
industrial solid waste treatment, sewage treatment and sludge treatment, were
Sales of recycled commodities were
Gross profit was
Income from operations was
In
Net income was
*See the table following this press release for a reconciliation of net income and diluted EPS to exclude the one-time non-cash charge related to the settlement expense.
Financial Condition
As of
Recent Developments -- In January 2010, the Company received a $3.1 million subsidy from the PRC government toward the construction of the Hazardous Waste Treatment Center of Changsha City, Hunan Province. This amount represents the first installment of a total expected government subsidy of approximately $16.1 million for this project. -- In January 2010, in recognition of his contributions to the economy of Dalian City, a major seaport and industrial center in Northeast China, the prestigious "Top Ten People in Dalian's Economy" award was bestowed on Mr. Jinqing Dong, the Company's founder and Chief Executive Officer. This award has historically been bestowed on leaders in industry, academia and politics, and include those who play a key role in Dalian's success as a city that has grown into an important industrial center. The award was presented by the city's senior officers in Dalian's Radio and TV Broadcasting Hall.
Business Outlook for 2010
China Industrial Waste Management continues to see evidence of a strong recovery from the recession. The Company's industrial customers are raising their production levels from the lows of last year, prices of recycled commodities are increasing, and the Company expects these trends to continue through the balance of the year.
The Dalian Dongtai expansion project, which is one of 55 hazardous waste
treatment centers sponsored by the National Development and Reform Commission
and one of two such centers in
Dongtai Organic operates the first BOT (Build-Operate-Transfer) plant in
the PRC to implement centralized wastewater sludge processing. During the
project's 20-year franchised period, this sludge-to-energy plant is expected
to dispose of the sludge derived from all sewage treatment plants located in
urban
For the second quarter of 2010, the Company expects revenues of between
Mr. Dong added, "We are optimistic about our business prospects going
forward. Our customers have returned to healthy production volumes and we see
this trend continuing. We are also starting to benefit from the investments
we made in expanding into sludge treatment via our Dongtai Organic BOT plant
which is now starting to ramp up and will account for a growing percentage of
our revenues going forward. Come the fourth quarter, our Dongtai Expansion
project is expected to come online and begin contributing to our financial
results. Overall, we believe we are well positioned to capitalize on the
growing market for industrial waste treatment in
Conference Call
The Company will host a conference call at
To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1 (877) 331 - 5105. International callers should dial +1 (631) 865 - 5293. The Conference Pass Code is 73236106.
If you are unable to participate in the call at this time, a replay will
be available for 14 days starting on
The Second Annual CCG China Rising Investment Conference
The Company will present at the upcoming Second Annual China Rising
Investment Conference hosted by CCG Investor Relations in
The date, time and location of CIWT's presentation are as follows: Event: Second Annual CCG China Rising Investment Conference Date: May 17, 2010 Time: 9:30 a.m. ET Venue: The Carnegie Room Grand Hyatt New York 109 East 42nd Street New York, NY 10017
The Second Annual China Rising Investment Conference hosted by CCG Investor Relations will provide over 300 fund managers and investors access to senior management of a wide range of Chinese growth companies in sectors including consumer staples, agriculture, pharmaceuticals, infrastructure, information technology, advanced materials, capital goods, and alternative energy. The conference will include over 30 U.S.-listed Chinese companies and a number of private companies.
Interested parties and investors may find more information for the conference by visiting the following website: http://www.chinarisingcosnference.com .
Use of Adjusted Financial Measures
GAAP results for the three months ended
CHINA INDUSTRIAL WASTE MANAGEMENT, INC. COMBINED AND CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the Three Months Ended March 31, 2010 2009 Revenues Service fees $2,944,558 $1,197,699 Sales of recycled commodities 1,150,283 414,251 Total revenues 4,094,841 1,611,950 Cost of revenues Cost of service fees 1,028,493 470,163 Cost of recycled commodities 388,459 257,687 Total cost of revenues 1,416,952 727,850 Gross profit 2,677,890 884,100 Operating expenses Selling expenses 151,624 177,315 General and administrative expenses 968,094 525,371 Total operating expenses 1,119,718 702,686 Income from operations 1,558,172 181,414 Other income (expense) Other income 7,167 14,675 Other expense (228,323) (63,841) Settlement expense (439,821) -- Total other income (expense) (660,977) (49,166) Net income before tax provision Tax provision 133,001 45,029 Net income 87,220 764,194 Net income attributable to the noncontrolling interest 155,339 (29,784) Net income attributable to the Company $608,855 $117,003 Foreign currency translation adjustment 1,532 (16,302) Comprehensive income attributable to the Company 610,387 100,701 Comprehensive income attributable to the noncontrolling interest 155,339 (29,784) Comprehensive income $765,726 $70,918 Basic and diluted weighted average shares outstanding Basic 15,327,507 15,262,035 Diluted 16,401,437 15,262,035 Basic and diluted net earnings per share Basic $0.04 $0.01 Diluted $0.04 $0.01 CHINA INDUSTRIAL WASTE MANAGEMENT, INC. COMBINED AND CONSOLIDATED BALANCE SHEETS March 31, 2010 December 31, 2009 (Unaudited) (Audited) ASSETS Current assets Cash and cash equivalents $10,311,215 $11,419,129 Notes receivable 256,462 335,780 Accounts receivable, net 3,113,248 2,021,421 Construction reimbursement receivable 106,728 846,270 Other receivables 61,794 91,872 Inventories 2,392,768 2,085,029 Advances to suppliers 654,558 800,694 Deferred expense 19,793 14,650 Total current assets 16,916,566 17,614,845 Long-term equity investment 87,903 87,900 Property, plant and equipment, net 31,894,224 32,319,145 Construction in progress 9,924,250 9,123,927 Land usage right, net of 1,983,332 1,994,394 accumulated amortization BOT franchise right 4,102,083 4,102,023 Certificate of deposit 293,006 293,002 Restricted cash 3,104,627 96,707 Other asset 1,204,761 1,074,531 Deferred tax asset 385,951 377,381 Related party receivable 234,405 234,401 TOTAL ASSETS $70,131,108 $67,318,256 LIABILITIES Current liabilities Accounts payable $673,656 $418,435 Short-term loan 6,739,137 6,739,038 Tax payable 398,810 200,957 Advance from customers 561,392 544,125 Deferred sales 724,766 958,930 Accrued expenses 29,488 301,531 Construction projects payable 3,119,419 3,932,297 Other payable 116,710 235,211 Long-term loan-current portion 2,245,158 2,245,125 Related party payable 380,908 380,902 Total current liabilities 14,989,444 15,956,551 Long-term loan 13,194,424 13,755,512 Asset retirement obligation 619,611 610,445 Government subsidy 5,533,509 2,464,079 TOTAL LIABILITIES 34,336,988 32,786,587 EQUITY Stockholders' equity of the Company Preferred stock: par value $.001; 5,000,000 shares authorized; none issued and outstanding -- -- Common stock: par value $.001; 95,000,000 shares authorized; 15,336,535 and 15,274,035 shares issued and outstanding as of March 31, 2010 and December 31, 2009, respectively 15,337 15,274 Additional paid-in capital 7,602,626 7,162,867 Deferred stock-based compensation (826,478) (884,139) Accumulated other comprehensive income 2,327,824 2,326,292 Retained earnings 18,099,775 17,490,919 Total stockholders' equity of the Company 27,219,084 26,111,213 Noncontrolling interest 8,575,036 8,420,456 TOTAL EQUITY 35,794,120 34,531,669 TOTAL LIABILITIES AND EQUITY $70,131,108 $67,318,256 CHINA INDUSTRIAL WASTE MANAGEMENT, INC. COMBINED AND CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Three Months ended March 31, 2010 2009 Cash flows from operating activities: Net income attributable to the Company $608,855 $117,003 Adjustments to reconcile net income to net cash provided by operating activities: Noncontrolling interest 155,339 (29,784) Depreciation 526,771 264,575 Amortization 15,837 13,334 Amortization of deferred stock-based compensation 57,661 -- Bad debt allowance 35,547 -- Stock and warrant issued for settlement 439,821 -- Accretion expenses 9,155 9,023 Government subsidy recognized as income (7,167) -- Changes in operating assets and liabilities: Notes receivable 79,307 -- Accounts receivable (1,091,651) (433,130) Construction reimbursement receivable 703,933 -- Other receivables 30,073 15,744 Inventories (307,645) (172,530) Advance to suppliers 146,118 (146,727) Deferred expense (5,142) 731 Other asset (128,064) (82,855) Deferred tax assets (8,562) -- Accounts payable 255,163 (132,754) Tax payable 197,810 (110,180) Advance from customers 17,256 10,104 Accrued expense (390,470) (334,615) Deferred income (234,131) 101,315 Net cash provided by (used in) operating activities 1,105,814 (910,746) Cash flows from investing activities Purchase of property and equipment (101,464) (98,532) Construction in progress (726,790) (3,022,054) Purchase of intangible assets (6,871) -- Certificate of deposit -- (804,564) Net cash used in investing activities (835,125) (3,925,150) Cash flows from financing activities Repayment of construction project payable (812,769) (886,924) Repayment of short-term loans -- (1,901,697) Proceeds from long-term loan -- 6,202,458 Repayment of long-term loans (561,174) -- Proceeds from related party loan -- 102,399 Net cash provided by (used in) financing activities (1,373,943) 3,516,236 Effect of exchange rate on cash (4,660) (3,322) Net decrease in cash and cash equivalents (1,107,914) (1,322,982) Cash and cash equivalents, beginning of period 11,419,129 5,710,784 Cash and cash equivalents, end of period $10,311,215 $4,387,802 Supplemental cash flow information: Cash paid during the year for: Interest $347,272 $94,545 Income taxes $87,884 $43,518 CHINA INDUSTRIAL WASTE MANAGEMENT, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Three Months Ended March 31, Adjusted Net Income and Diluted EPS 2010 2009 GAAP Net Income $608,855 $117,003 Settlement Expense $(439,821) $-- Adjusted Amount Net Income $1,048,676 $117,003 Weighted average number of shares - Diluted 16,401,437 15,262,035 Adjusted Diluted EPS $0.06 $0.01
About China Industrial Waste Management, Inc.
China Industrial Waste Management, Inc. is engaged in the collection,
treatment, disposal and recycling of industrial wastes principally in
Cautionary Statement Regarding Forward-Looking Information
This release may include "forward-looking statements." You can identify
these statements by the fact that they do not relate strictly to historical or
current facts. These statements contain such words as "may," "project,"
"might," "expect," "believe," "anticipate," "intend," "could," "would,"
"estimate," or the negative or other variations thereof or comparable
terminology. These forward-looking statements are based on current
expectations and projections about future events. Investors are cautioned that
forward-looking statements are not guarantees of future performance or results
and involve risks and uncertainties that cannot be predicted or quantified and,
consequently, our actual performance may differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following factors, as well
as other factors described from time to time in our reports filed with the
Securities and Exchange Commission: the timing and magnitude of technological
advances; the prospects for future acquisitions; the effects of political,
economic and social uncertainties regarding the governmental, economic and
political circumstances in
For more information, please contact: Company Contact: Ms. Guo Xin, Chief Financial Officer Tel: +86-411-8581-1229 Email: hellenguo@chinaciwt.com Mr. Zhang Dazhi, Director of Investor Relations Tel: +86-411-8259-5339 Email: darcy.zhang@chinaciwt.com Web: http://www.chinaciwt.com CCG Investor Relations: Mr. Athan Dounis, Account Manager Phone: +1-646-213-1916 Email: athan.dounis@ccgir.com Mr. Crocker Coulson, President Phone: +1-646-213-1915 Email: crocker.coulson@ccgir.com Web: http://www.ccgirasia.com
SOURCE China Industrial Waste Management, Inc.