NF Energy Saving Corporation Announces Second Quarter 2011 Results

SHENYANG, Liaoning, China, Aug. 12, 2011 /PRNewswire-Asia-FirstCall/ -- NF Energy Saving Corporation. (NASDAQ: NFEC) ("NF Energy" or the "Company"), a leading energy saving services and solutions provider for China's power, petrochemical, coal, metallurgy, construction, and municipal infrastructure development industries, today reported financial results for its second quarter ended June 30, 2011.

Second Quarter 2011 Highlights

• Revenues decreased 32.3% year-over-year to $4.9 million
• Gross profit decreased 44.5% year-over-year to $1.1 million, representing a gross margin of 23.0%
• Net income was $0.5 million or $0.09 per diluted share, representing a net margin of 10.2%

"We continue to make progress in moving our operations to our new factory.  However progress has been slower than originally expected due to the difficulty in obtaining the necessary financing.  The rate of growth of operations and financial results going forward will depend to a great degree on the amount of additional financing we can obtain and when we can obtain it. With the capital markets in turmoil financing visibility is low.  We will therefore no longer give guidance with respect to our 2011 full year results.  We will keep investors informed of our progress and we remain very positive about the market for our products and the growth opportunities ahead," said Mr. Gang Li, the Company's Chief Executive Officer.

Second Quarter 2011 Results

Total revenue of $4.9 million for the three months ended June 30, 2011, decreased 32.3% from $7.2 million in the same period of 2010. This decrease is mainly due to a decrease in product and service revenue, in turn due to the move to the Company's new factory being incomplete during the quarter.  

Gross profit in the second quarter of 2011 was $1.1 million, a decrease of 44.5% over the $2.0 million in gross profit generated in the second quarter of 2010. The decrease in gross profit was primarily due to the period-over-period decrease in the product and service revenues. The reduction in margin was due to certain manufacturing operations being subcontracted out pending the completion of the Company's new factory.

Total operating expenses were $0.4 million for the three months ended June 30, 2011, as compared to $0.2 million for the same period of 2010, mainly due to the Company receiving its land use rights for the new facility located in Yinzhou District Industrial Park, paying the land use rights tax and occurring the amortization of intangible assets for the land use right. The Company also pays the NASDAQ listing fees. There was an increase in legal and professional fees, and IR fees during the three months ended June 30, 2011.

Income from operations was $0.7 million for the three months ended June 30, 2011, as compared to $1.8 million for the same period of 2010, a decrease of $1.1million or approximately 62.5%. This decrease is primarily due to lower revenue and gross margin and the increase in operating expenses.

Net income for the second quarter was $0.5 million, or $0.09 per diluted share compared to net income of $1.4 million or $0.26 per diluted share in the same period of 2010.

Six Months ended June 30, 2011 Results

Revenue for the first six months of 2011 was $7.5 million, down 25% from the first six months of 2010. Gross profit was $1.9 million, down 29% from gross profit of $2.7 million in the comparable period a year ago. Gross margin was 26%, compared to 27% in the prior year period. Operating income was $1.2 million, down 50% from $2.3 million in the first six months of 2010. Net income was $0.8 million, down 54% from $1.7 million in the first six months of 2010. Diluted earnings per share were $0.15 for the first six months of 2011 compared to $0.32 in the first six months of 2010.

Financial Condition

As of June 30, 2011, the Company had $0.4 million in cash and cash equivalents compared to $0.8 million in cash and cash equivalents on December 31, 2010. Working capital was $9.8 million.

The Company used $0.6 million in net cash from operating activities for the six months ended June 30, 2011, compared to generating $1.9 million in the same period of 2010.  Payments on construction in progress totaled $2.5 million.  The Company raised $3.0 million from a bank loan and the issuance of short-term notes.  

Conference Call

NF Energy will host a conference call at 9:00 a.m. EDT on Friday, August 12, 2011, to discuss the Company's second quarter 2011 financial results. Hosting the call will be Mr. Gang Li, Chief Executive Officer, and Ms. Lihua Wang, Chief Financial Officer.

To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-877-275-8968 for U.S. based callers, or  +1-706-643-1666 for international callers. The conference pass code for the call is 90441510.

If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Friday, August 12, 2011 at 11:00 a.m. EDT. To access the replay, U.S. based callers should dial 1-855-859-2056, international callers should dial +1-404-537-3406. The conference pass code will remain 90441510

About NF Energy Saving Corporation

NF Energy Saving Corporation (NASDAQ:NFEC) is a China-based provider of integrated energy conservation solutions utilizing energy-saving equipment, technical services and energy management re-engineering project operations to provide energy saving services to clients. The Company's customers are mainly concentrated in the electrical generation (large-scale thermal power generation, hydroelectric power, wind power, and nuclear power), water supply, and heat supply industries. For more information, visit http://www.nfenergy.com

Safe Harbor Statement

The statements contained herein that are not historical facts are considered "forward-looking statements." Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, statements regarding the efficacy of investment in research and development are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including, but not limited to, the effect of political, economic, and market conditions and geopolitical events; legislative and regulatory changes that affect our business; the availability of funds and working capital; the actions and initiatives of current and potential competitors; investor sentiment; and our reputation. We do not undertake any responsibility to publicly release any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to update you on the occurrence of any unanticipated events, which may cause actual results to differ from those expressed or implied by any forward-looking statements. The factors discussed herein are expressed from time to time in more detail in our filings with the Securities and Exchange Commission available at http://www.sec.gov.

– FINANCIAL TABLES FOLLOW –

SOURCE NF Energy Saving Corporation

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED