-- Revenues increased 83% to $37.8 million from $20.7 million in
3Q08 -- Net income increased 105% to $8.9 million from $4.3 million
in 3Q08 -- Earnings Per Share increased 98% to $0.36 from $0.18 in
3Q08 -- Affirms 2009 earnings guidance of $80 million in revenue
and $15.5 million in net income -- Successfully completed $75
million financing -- Positive signs of economic growth in China,
anticipates earnings growth momentum to continue into 2010 NEW
YORK, Nov. 16 /PRNewswire-Asia/ -- SmartHeat Inc. (NASDAQ:HEAT)
(website: http://www.smartheatinc.com/), a market leader in China's
clean technology, energy savings industry today announced record
financial results for the third quarter ended September 30, 2009.
SmartHeat's products significantly reduce heat energy costs,
increase energy efficiency and reduce air pollution. James Jun
Wang, Chairman & CEO of SmartHeat, commented, "We are excited
to announce a quarter of strong financial performance. Our third
quarter financial results are the result of a favorable market
environment for our industry and our management team diligently
executing on our growth strategies. China's energy savings industry
is supported by the Chinese government as a sector that is
receiving significant funding through government initiatives and
the Chinese stimulus package. Because of this support, China's heat
energy savings industry has not been as negatively impacted by the
current global economic slowdown. "The weakened economy has
increased customer awareness of utilizing energy saving equipment
from which we are a primary beneficiary. SmartHeat is well
positioned to potentially reap significant benefits from the
world's transition to cleaner technologies and energy saving
equipment," concluded Mr. Wang. Third Quarter Financial Performance
Revenues were $37.8 million in the third quarter of 2009 compared
to $20.7 million in the same period last year, an 83% increase. The
significant revenue increase was due significant sales growth
across all product lines as a result of: Increasing our traditional
heat supply sales as a result growth in the China domestic
infrastructure construction industry, accounting for $24.22 million
or 43% of total sales, Adding new customers in the chemical,
engineering, electric power, metal smelting industries, accounting
for $19.37 million or 34% of our total sales, Rising heat meter
sales, accounting for $7.8 million or approximately 14% of total
sales. Gross profit was $13.1 million in the third quarter of 2009
compared to $7.4 million in the same period last year, a 77%
increase. Gross profit increased primarily due to the increased
sales. Operating expenses were $2.5 million in the third quarter of
2009 compared to $2.1 million in the same period last year, an 18%
increase. Operating expenses increased in the quarter because of
the higher general and administrative expenses associated with an
increase in expenses incurred to expand our growing sales and due
to our recent financing activities. Operating income was $10.7
million in the third quarter of 2009 compared to $5.4 million in
the same period last year, a 100% increase. Operating income
increased as a result of continued economies of scale in production
costs combined with the rapid growth in revenues and improved
operating efficiency. Net income was $8.9 million in the third
quarter of 2009 compared to $4.3 million in the same period last
year, a 105% increase. Earnings per share were $0.36 in the third
quarter of 2009 compared to $0.18 in the same period last year. In
addition to the increased revenue and income from operations, net
income and EPS both benefited from a decrease in the tax rate
during the quarter from 18.5% to 15.5%. Affirms Full Year 2009
Earnings Guidance SmartHeat re-affirms its full year 2009 earnings
guidance of approximately $15.5 million in net income and
approximately $80 million in revenues compared to $6.3 million in
net income and $32.7 million in revenues in 2008. Business Outlook
Mr. Wang commented, "We continue to experience increasing order
flow and demand from our existing and new customers for our energy
savings equipment. Not only has demand for our products increased,
but our production capabilities and product offerings have
increased with recent acquisitions. "In the third quarter the
Company completed a $75 million equity offering. The net proceeds
from the offering will be used for general corporate purposes,
including the continued expansion of our product offerings, capital
expenditures, and to meet growing working capital needs to continue
our rapid growth. We believe the additional working capital will
also be used by the company to bid on additional projects which are
larger and more profitable, which we believe to be strategic fits
to our long term business plan. "We believe SmartHeat's earnings
growth momentum will continue well into 2010 as we anticipate a
broader domestic economic expansion in China next year. We are
optimistic that SmartHeat is on track to achieve solid fourth
quarter earnings growth and another year of rapid growth in 2010
for our growing list of individual and institutional shareholders,"
Mr Wang concluded. About SmartHeat Inc. Founded by James Jun Wang,
a former executive at Honeywell China, SmartHeat Inc.
(http://www.smartheatinc.com/) is a NASDAQ Global Market listed
(NASDAQ:HEAT) US company with its primary operations in China.
SmartHeat is a market leader in China's clean technology energy
savings industry. SmartHeat manufactures standard plate heat
exchangers (PHEs), custom plate heat exchanger units (PHE Units)
and heat meters. SmartHeat's products directly address air
pollution problems in China where massive coal burning for cooking
and heating purposes 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 as well as 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 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:
SMARTHEAT, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2009 DECEMBER 31, 2008 (UNAUDITED) ASSETS CURRENT
ASSETS Cash & cash equivalents $60,294,695 $1,435,212
Restricted cash 1,043,524 462,048 Accounts receivable, net
20,276,792 11,390,169 Retentions receivable 553,105 290,852
Advances to suppliers 3,474,936 412,524 Other receivables,
prepayments and deposits 3,282,014 698,834 Inventories 14,394,162
6,107,583 Note receivable - bank acceptance 70,655 14,631 ------
------ Total current assets 103,389,881 20,811,853 NON-CURRENT
ASSETS Restricted cash 19,185 219,472 Accounts receivable, net
582,375 310,810 Retentions receivable 2,309,852 166,912
Construction in progress 60,230 - Intangible assets, net 4,122,844
1,155,131 Property and equipment, net 7,578,356 2,436,553 ---------
--------- Total noncurrent assets 14,672,842 4,288,878 ------------
----------- TOTAL ASSETS $118,062,723 $25,100,731 ============
=========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES Accounts payable $6,030,827 $1,210,906 Unearned revenue
2,084,036 850,408 Notes payable - bank acceptance 1,000,543 - Taxes
payable 2,147,376 1,327,775 Accrued liabilities and other payables
7,071,473 1,330,812 Due to minority shareholder - 5,303 Loans
payable 5,564,504 2,443,450 --------- --------- Total current
liabilities 23,898,759 7,168,654 DEFERRED TAX LIABILITY 15,519
38,854 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common
stock, $0.001 par value; 75,000,000 shares authorized, 32,756,575
and 24,179,900 shares issued and outstanding at September 30, 2009
and December 31, 2008, respectively 32,757 24,180 Paid in capital
71,679,770 8,223,453 Statutory reserve 2,689,432 1,150,542
Accumulated other comprehensive income 1,255,603 984,629 Retained
earnings 18,490,884 7,510,419 ---------- --------- Total
stockholders' equity 94,148,446 17,893,223 ------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $118,062,723 $25,100,731
============ =========== SMARTHEAT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(UNAUDITED) FOR THE NINE MONTHS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, ENDED SEPTEMBER 30, 2009 2008 2009 2008 ---- ----
---- ---- Net sales $56,541,795 $29,345,571 $37,835,897 $20,708,288
Cost of goods sold 36,562,363 19,502,070 24,687,460 13,273,914
---------- ---------- ---------- ---------- Gross profit 19,979,433
9,843,501 13,148,438 7,434,374 Operating expenses Selling expenses
2,325,471 1,664,882 1,165,939 1,056,854 General and administrative
expenses 2,626,775 1,470,577 1,286,643 1,024,107 ---------
--------- --------- --------- Total operating expenses 4,952,245
3,135,459 2,452,581 2,080,961 --------- --------- ---------
--------- Income from operations 15,027,187 6,708,042 10,695,856
5,353,413 Non-operating income (expenses) Interest income 145,839
318,070 65,418 57,387 Interest expense (209,462) (257,116) (91,850)
(94,076) Subsidy income 21,443 16,141 (13,897) 7,000 Financial
expense (222,625) - (222,625) - Other expense (13,676) 11,199
(13,676) Other income 61,644 9,744 60,675 1,454 ------ ----- ------
----- Total non-operating income (expenses) (203,162) 73,163
(191,081) (41,911) Income before income tax 14,824,026 6,781,205
10,504,776 5,311,502 Income tax expense 2,304,672 1,246,935
1,624,240 980,907 --------- --------- --------- ------- Net income
from operations 12,519,354 5,534,270 8,880,536 4,330,595 Less: net
income attributable to noncontrolling interest - 5,934 - 5,934 ---
----- --- ----- Net income 12,519,354 5,528,336 8,880,536 4,324,661
Other comprehensive item Foreign currency translation 270,399
578,670 257,256 167,774 ------- ------- ------- -------
Comprehensive Income $12,789,753 6,107,006 $9,137,792 $4,492,435
=========== ========= ========== ========== Basic weighted average
shares outstanding 24,430,806 21,503,588 24,924,435 24,055,878
---------- ---------- ---------- ---------- Diluted weighted
average shares outstanding 24,513,092 21,503,647 25,010,735
24,056,054 ---------- ---------- ---------- ---------- Basic
earnings per share $0.51 $0.26 $0.36 $0.18 ===== ===== ===== =====
Diluted earnings per share $0.51 $0.26 $0.36 $0.18 ===== =====
===== ===== SMARTHEAT, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2009 2008 ---- ---- CASH FLOWS FROM OPERATING
ACTIVITIES: Net income including noncontrolling interest
$12,519,354 $5,534,270 Adjustments to reconcile net income
including noncontrolling interest to net cash used in operating
activities: Depreciation and amortization 409,371 173,821 Unearned
interest on accounts receivable 195,901 (71,804) Stock option
compensation expense 1,755 1,270 Decrease in deferred tax liability
(23,357) - (Increase) decrease in current assets: Accounts
receivable (9,305,812) (4,995,840) Retentions receivable
(2,403,726) 107,279 Advances to suppliers (3,051,902) 320,260 Other
receivables, prepayments and deposits 485,060 (2,346,526)
Inventories (8,277,813) 118,223 Note receivable (55,986) (201,118)
Increase (decrease) in current liabilities: Accounts payable
5,782,299 928,337 Unearned revenue 1,232,371 (1,581,803) Taxes
payable 818,141 864,934 Accrued liabilities and other payables
(4,450,011) (266,072) ---------- -------- Net cash used in
operating activities (6,124,354) (1,414,769) ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES: Restricted cash (380,457)
(101,542) Construction in progress (60,203) (83,027) Acquisition of
property & equipment (3,610,566) (287,398) ---------- --------
Net cash used in investing activities (4,051,225) (471,967)
---------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Due to
minority shareholders - (660) Due from / (to) shareholder -
(587,644) Short term loans 12,117,636 - Repayment of short term
loans (9,216,986) (1,361,113) Issuance of common stock 66,138,390
5,100,000 ---------- --------- Net cash provided by financing
activities 69,039,040 3,150,583 ---------- --------- EFFECT OF
EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS (3,978) (9,482)
NET INCREASE IN CASH & CASH EQUIVALENTS 58,859,482 1,254,365
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 1,435,213 448,573
--------- ------- CASH & CASH EQUIVALENTS, END OF PERIOD
$60,294,695 $1,702,938 =========== ========== Supplemental Cash
flow data: Income tax paid $1,272,797 $426,809 ========== ========
Interest paid $219,061 $201,269 ======== ======== DATASOURCE:
SmartHeat Inc. CONTACT: Corporate Communications, Ms. Jane Ai,
Corporate Secretary, of SmartHeat Inc., Tel: 011-86-24-25363366,
Web Site: http://www.smartheatinc.com/
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