China Industrial Waste Management Announces 2011 First Quarter Financial Results
DALIAN, China, May 16, 2011 /PRNewswire-Asia/ -- China Industrial Waste Management, Inc. (OTCBB: CIWT) ("China Industrial Waste Management" or the "Company"), a leading environmental services and solutions provider in China, today announced its financial results for the first quarter ended March 31, 2011.
First Quarter Highlights
- Revenues increased 48.1% to $6.1 million
- Gross profit increased 15.2% to $3.1 million
- Operating income increased 10.3% to $1.7 million
- Net income attributable to the Company increased 101.4% to $1.2 million
- Diluted earnings per share doubled to $0.08
"We are pleased to announce strong financial performance for the first quarter and begin 2011 on a strong note. We achieved substantial revenue, net income, and EPS growth," said Mr. Jason Dong, Chairman and Chief Executive Officer. "In the first quarter of 2011, we had increased demand for waste disposal services from our customers; our sales of recycled commodities increased as a result of favorable market prices; and our sludge treatment business generated additional service fees. In addition, our discarded domestic appliance disposal operations contributed to our revenues."
First Quarter 2011 Results
Revenues increased 48.1% to $6.1 million from $4.1 million in the same period last year. The increase in revenue was mainly attributable to (i) the increased demand for waste disposal services from our customers, (ii) the increase in service fees generated by our sludge treatment as it processed more sludge in the first quarter of 2011, (iii) the increase in sales of waste iron and aluminum which experienced favorable market prices, and (iv) the addition of revenues generated from our discarded domestic appliance disposal operations commenced August 1, 2010 under a national program jointly sponsored by the PRC Ministries of Commerce, Finance and Environmental Protection.
Revenues from service fees increased 28.3% to $3.8 million, or 62.3% of total revenues, from $2.9 million, or 71.9% of total revenues, in the prior year period.
Sales of recycled commodities increased 98.9% to $2.3 million, or 37.7% of revenues, compared to $1.2 million, or 28.1% of revenues, in the same period last year. The sharp increase is attributable to higher selling prices and sales volume for these products.
Gross profit increased 15.2% to $3.1 million from $2.7 million in the same period last year. Gross margin was 50.8% compared to 65.4% in the prior year period. The decline in gross margin is primarily attributable to (i) the increased service fee revenue generated by our non-hazardous waste treatment operations, which has a lower gross profit margin compared with service fee revenue generated by our hazardous waste treatment operations, and (ii) the increased costs of labor, transportation and raw materials related to producing recycled waste products.
Income from operations increased 10.3% to $1.7 million from $1.6 million in the prior year period. Operating margin was 28.3% compared to 38.1% in the prior year period. The decrease in operating margin is primarily due to the reasons related to the aforementioned decline in gross margin offset by the fact that operating expenses as a percent of sales actually decreased by 4.8% to 22.5% in the first quarter of 2011 from 27.3% in the same period last year.
Net income attributable to the Company increased 101.4% to $1.2 million from $0.6 million in the same period last year. Diluted earnings per share increased 100.0% to $0.08 from $0.04 in the same period last year.
Financial Condition
As of March 31, 2011, the Company had cash and cash equivalents of $5.9 million. Working capital was $5.9 million. Shareholder's equity increased 4.8% to $33.9 million from $32.3 million at the end of 2010. Operating cash flow was $0.8 million versus $1.1 million in the prior year period. The decrease was due to, among other things, the payment of accrued staff bonuses, an increase in accounts receivable in the amount of $640,266, and a decrease in other payable in the amount of $457,682, due to payment to subcontractor.
Recent Developments
The Company's 70%-owned subsidiary, Dalian Zhuorui Resource Recycling Co., Ltd. ("Zhuorui"), is engaged in the separation and purification of waste catalysts generated from the oil refinery process. Zhuorui has successfully completed its trial production period and has commenced production including ammonium metavanadate, molybdic acid, and nickel powder. Metals contained in waste catalyst are a scarce resource and the Company expects a significant increase in the selling prices for Zhuorui's final products. The Company may decide to selectively sell some of those products in fiscal year 2011 depending on market conditions.
Business Outlook
The Company is currently building in Dalian one of the most advanced one-stop service centers for industrial solid waste treatment in China (the "Dagushan Expansion Project"). The construction of the Dagushan Expansion Project is now 90% complete and we expect it to become operational in the third quarter of 2011. Once fully operational, this new facility will increase our hazardous industrial solid waste treatment capacity to 114,000 tons per year.
The Company reaffirms that for the first half of 2011, the Company expects revenues of between $10 million and $12 million and net income attributable to the Company of between $2.0 million and $2.5 million.
Conference Call
The Company will host a conference call at 9:00 a.m. Eastern Daylight Time (EDT) on Monday, May 16, 2011, to discuss its financial results for the first quarter of 2011.
To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 275-8968. International callers should call +1 (706) 643-1666. The Conference Pass Code is 65634929.
If you are unable to participate in the call at this time, a replay will be available for fourteen days starting on Monday, May 16, 2011 at 11:00 a.m. EDT. To access the replay, call (800) 642-1687. International callers should call +1 (706) 645-9291. The Conference Pass Code is 65634929.
About China Industrial Waste Management, Inc.
China Industrial Waste Management is a leading environmental services and solutions provider in China. The Company is based in Dalian, Liaoning Province, China and has been engaged in the industrial solid waste treatment business since 1991. Today, the Company is the largest industrial solid waste management enterprise in northeastern China. China Industrial Waste Management's main businesses are industrial solid waste treatment and recycling, municipal sewage and sludge treatment, and environmental protection engineering. For more information, please visit the Company's website (www.chinaciwt.com).
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 the People's Republic of China, the possibility that a current customer could be acquired or otherwise be affected by a future event that would diminish their waste management requirements; the competition in the waste management industry and the impact of such competition on pricing, revenues and margins; uncertainties surrounding budget reductions or changes in funding priorities of existing government programs and the cost of attracting and retaining highly skilled personnel; our projected sales, profitability, and cash flows; our growth strategies; anticipated trends in our industries; our future financing plans; and our anticipated needs for working capital. Forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
- Financial Tables Follow-
CHINA INDUSTRIAL WASTE MANAGEMENT, INC. |
|||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
|||||
(UNAUDITED) |
|||||
For the Three Months Ended March 31, |
|||||
2011 |
2010 |
||||
Revenues |
|||||
Service fees |
$ 3,777,184 |
$ 2,944,558 |
|||
Sales of recycled commodities |
2,288,444 |
1,150,283 |
|||
Total revenues |
6,065,628 |
4,094,841 |
|||
Cost of revenues |
|||||
Cost of service fees |
1,689,096 |
1,028,493 |
|||
Cost of recycled commodities |
1,292,309 |
388,458 |
|||
Total cost of revenues |
2,981,405 |
1,416,951 |
|||
|
|
||||
Gross profit |
3,084,223 |
2,677,890 |
|||
Operating expenses |
|||||
Selling expenses |
180,441 |
151,624 |
|||
Research and development expenses |
94,608 |
71,486 |
|||
General and administrative expenses |
1,090,184 |
896,608 |
|||
Total operating expenses |
1,365,233 |
1,119,718 |
|||
Income from operations |
1,718,990 |
1,558,172 |
|||
Other income (expense) |
|||||
Interest expense |
(240,325) |
(225,803) |
|||
Bank interest income |
7,922 |
- |
|||
Other income |
120,788 |
7,167 |
|||
Other expense |
(3,955) |
(2,520) |
|||
Settlement expense |
- |
(439,821) |
|||
Total other expense |
(115,570) |
(660,977) |
|||
Net income before tax provision |
1,603,420 |
897,195 |
|||
Tax provision |
(269,596) |
(133,001) |
|||
Net income |
1,333,824 |
764,194 |
|||
Net income attributable to the noncontrolling interest |
(107,479) |
(155,339) |
|||
Net income attributable to the Company |
$ 1,226,345 |
$ 608,855 |
|||
Foreign currency translation adjustment |
261,671 |
1,532 |
|||
Comprehensive income attributable to the Company |
1,488,016 |
610,387 |
|||
Comprehensive income attributable to the noncontrolling interest |
181,217 |
155,339 |
|||
Comprehensive income |
$ 1,669,233 |
$ 765,726 |
|||
Basic and diluted weighted average shares outstanding |
|||||
Basic |
15,336,535 |
15,327,507 |
|||
Diluted |
15,336,535 |
16,401,437 |
|||
Basic and diluted net earnings per share |
|||||
Basic |
$ 0.08 |
$ 0.04 |
|||
Diluted |
$ 0.08 |
$ 0.04 |
|||
CHINA INDUSTRIAL WASTE MANAGEMENT, INC. |
|||||
CONSOLIDATED BALANCE SHEETS |
|||||
March 31, 2011 |
December 31, 2010 |
||||
(Unaudited) |
(Audited) |
||||
ASSETS |
|||||
Current assets |
|||||
Cash and cash equivalents |
$ 5,865,833 |
$ 8,163,880 |
|||
Notes receivable |
220,256 |
86,364 |
|||
Accounts receivable, net |
6,328,174 |
5,731,847 |
|||
Other receivables |
731,547 |
359,383 |
|||
Inventories |
4,660,680 |
4,652,148 |
|||
Advances to suppliers |
1,552,771 |
1,624,433 |
|||
Deferred expense |
185,607 |
210,752 |
|||
Related party receivable |
344,689 |
291,552 |
|||
Deferred tax assets |
121,705 |
61,145 |
|||
Total current assets |
20,011,262 |
21,181,504 |
|||
|
|||||
Long-term equity investment |
152,711 |
151,515 |
|||
Property, plant and equipment, net |
32,157,991 |
32,384,139 |
|||
Construction in progress |
21,333,856 |
18,642,061 |
|||
Land usage right, net of accumulated amortization |
2,025,724 |
2,022,384 |
|||
BOT franchise right |
4,275,919 |
4,242,424 |
|||
Deposits |
77,762 |
77,152 |
|||
Restricted cash |
1,607,845 |
1,788,510 |
|||
Other assets |
1,248,308 |
1,233,580 |
|||
Deferred tax assets |
584,581 |
504,017 |
|||
TOTAL ASSETS |
$ 83,475,959 |
$ 82,227,286 |
|||
LIABILITIES |
|||||
Current liabilities |
|||||
Short-term loans |
$ 3,054,228 |
$ 3,030,303 |
|||
Accounts payable |
3,022,277 |
2,458,260 |
|||
Tax payable |
863,005 |
513,243 |
|||
Advance from customers |
609,005 |
610,508 |
|||
Deferred sales |
798,500 |
394,862 |
|||
Accrued expenses |
52,757 |
804,205 |
|||
Construction projects payable |
2,491,470 |
3,070,169 |
|||
Other payable |
378,459 |
836,141 |
|||
Long-term loan-current portion |
2,340,302 |
2,321,970 |
|||
Related party payable |
473,405 |
393,939 |
|||
Total current liabilities |
14,083,408 |
14,433,600 |
|||
|
|||||
Long-term loans |
17,758,425 |
17,964,962 |
|||
Asset retirement obligation |
585,144 |
571,109 |
|||
Government subsidy |
7,734,310 |
7,673,724 |
|||
TOTAL LIABILITIES |
40,161,287 |
40,643,395 |
|||
Commitments and contingencies |
|||||
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; |
15,337 |
15,337 |
|||
Additional paid-in capital |
7,606,512 |
7,602,625 |
|||
Deferred stock-based compensation |
(595,833) |
(653,494) |
|||
Accumulated other comprehensive income |
3,610,967 |
3,349,296 |
|||
Retained earnings |
23,220,713 |
21,994,368 |
|||
Total stockholders' equity of the Company |
33,857,696 |
32,308,132 |
|||
Noncontrolling interest |
9,456,976 |
9,275,759 |
|||
TOTAL EQUITY |
43,314,672 |
41,583,891 |
|||
TOTAL LIABILITIES AND EQUITY |
$ 83,475,959 |
$ 82,227,286 |
|||
CHINA INDUSTRIAL WASTE MANAGEMENT, INC. |
|||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||
(UNAUDITED) |
|||||
For the Three Months ended March 31, |
|||||
2011 |
2010 |
||||
|
|||||
Cash flows from operating activities: |
|||||
Net income attributable to the Company |
$ 1,226,345 |
$ 608,855 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
Nontrolling interest |
107,479 |
155,339 |
|||
Depreciation |
561,365 |
526,771 |
|||
Amortization |
12,568 |
15,837 |
|||
Amortization of deferred stock-based compensation |
57,661 |
57,661 |
|||
Bad debt allowance |
42,548 |
35,547 |
|||
Stock and warrant issued for settlement |
- |
439,821 |
|||
Option issued for service |
3,887 |
- |
|||
Accretion expenses |
14,035 |
9,155 |
|||
Government subsidy recognized as income |
- |
(7,167) |
|||
Changes in operating assets and liabilities: |
|||||
Notes receivable |
(133,892) |
79,307 |
|||
Accounts receivable |
(640,266) |
(1,091,651) |
|||
Construction reimbursement receivable |
- |
703,933 |
|||
Other receivables |
(372,164) |
30,073 |
|||
Inventories |
(8,532) |
(307,645) |
|||
Advance to suppliers |
(90,482) |
146,118 |
|||
Deferred expense |
25,145 |
(5,142) |
|||
Other asset |
(14,728) |
(128,064) |
|||
Deferred tax assets |
(141,124) |
(8,562) |
|||
Accounts payable |
564,017 |
255,163 |
|||
Tax payable |
349,762 |
197,810 |
|||
Advance from customers |
(1,503) |
17,256 |
|||
Accrued expense |
(751,448) |
(390,470) |
|||
Deferred income |
403,638 |
(234,131) |
|||
Other payable |
(457,682) |
- |
|||
Net cash provided by operating activities |
756,629 |
1,105,814 |
|||
Cash flows from investing activities |
|||||
Purchase of property and equipment |
(60,205) |
(101,464) |
|||
Construction in progress |
(2,391,175) |
(726,790) |
|||
Purchase of intangible assets |
- |
(6,871) |
|||
Due from related party |
(53,137) |
- |
|||
Net cash used in investing activities |
(2,504,517) |
(835,125) |
|||
Cash flows from financing activities |
|||||
Repayment of construction project payable |
(578,699) |
(812,769) |
|||
Repayment of long-term loans |
(346,747) |
(561,174) |
|||
Proceeds from related party loan |
79,466 |
- |
|||
Decrease in Restricted cash |
180,665 |
- |
|||
Net cash used in financing activities |
(665,315) |
(1,373,943) |
|||
Effect of exchange rate on cash |
115,156 |
(4,660) |
|||
Net decrease in cash and cash equivalents |
(2,298,047) |
(1,107,914) |
|||
Cash and cash equivalents, beginning of period |
8,163,880 |
11,419,129 |
|||
Cash and cash equivalents, end of period |
$ 5,865,833 |
$ 10,311,215 |
|||
Supplemental cash flow information: |
|||||
Cash paid during the period for: |
|||||
Interest |
$ 400,220 |
$ 347,272 |
|||
Income taxes |
$ - |
$ 87,884 |
|||
Non-cash investing and financing activities: |
|||||
Stock and warrant issued for settlement |
$ - |
$ 439,821 |
|||
Transfer of construction in progress to property, plant and equipment |
$ 21,584 |
$ - |
|||
Company Contact: |
|
Mr. Darcy Zhang, Corporate Secretary |
|
Tel: +86-411-8259-5339 |
|
Email: [email protected] |
|
Website: www.chinaciwt.com |
|
CCG Investor Relations: |
|
Mr. Athan Dounis |
|
Phone: +1-646-213-1916 |
|
Email: [email protected] |
|
Website: www.ccgirasia.com |
|
SOURCE China Industrial Waste Management, Inc.
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