DALIAN, China, Aug. 17 /PRNewswire-Asia/ -- China Industrial Waste
Management, Inc. (CIWT) ("China Industrial Waste
Management" or the "Company"), a PRC-based industrial waste processor and
provider of environmental protection, pollution treatment and waste management
design services, announced today its financial results for the second quarter
of 2009, period ended June 30, 2009.
Second Quarter 2009 Highlights
-- Operating revenue was $2.5 million, down 31.7% from last year
-- Gross profit declined to $1.6 million versus $2.5 million
-- Gross margin was 64.2%, compared to 69.6%
-- Net income decreased 58.1% to $0.6 million
-- Basic and diluted earnings per share were $0.04 compared to $0.10 in
the year earlier period
-- Established a subsidiary company, Yingkou Dongtai Industrial Waste
Treatment Co., Ltd. to provide waste collection and transportation,
storage and waste pre-processing for industrial users in Yingkou,
Liaoning
-- Appointed four independent directors and formed board committees
Second Quarter 2009 Results
During the second quarter of 2009, operating revenue was $2.5 million,
down 31.7% from $3.6 million in the second quarter of 2008. Revenues from
service fees were $1.6 million, down 16.0% from $2.0 million in the same
quarter of 2008, but up 37.2% from $1.2 million sequentially. The decrease was
primarily due to the lower demand for solid waste treatment from the Company's
export-oriented customers since the global economic crisis in late 2008. Sales
of recycled products were $0.8 million, down 50.5% from $1.6 million the prior
year, but up 95.7% from $0.4 million sequentially. The decrease resulted from
declining waste collection volumes, as well as the decline in prices for
recycled products including cupric sulfate and aluminum as a result of the
economic crisis.
"We are pleased to see most of our business sectors have improved since
the first quarter," said Mr. Jinqing Dong, the Company's Chief Executive
Officer. "Some of our customers are approaching normal production levels, and
some are even expanding their production capacity. We expect that the economic
recovery will continue to stimulate industrial waste treatment demand for the
remainder of 2009. In addition, we are anticipating that our centralized
solid waste treatment facility will be completed by the end of this year so we
can better meet increasing demand from our customers."
For the three months ended June 30, 2009, cost of revenue was $0.9 million,
down 19.5% from $1.1 million in the same period of 2008. Gross profit was $1.6
million, down 37.0% from $2.5 million in 2008. Gross margin for the second
quarter 2009 was 64.2%, compared to 69.6% a year ago due to the lower volume
of waste treated.
Total operating expenses for the second quarter of 2009 were $0.9 million,
up 25.1% from $0.8 million in 2008, driven mainly by an increase in R&D
expenses. Income from operations was $0.6 million, compared to $1.7 million in
2008. Operating margin in the quarter was 25.9% versus 48.7% in last year's
second quarter.
As a result of the significant drop in operating revenues, net income
declined 58.1% to $0.6 million from $1.4 million in 2008. Net margin for the
second quarter of 2009 was 23.4%, compared to 38.2% a year ago.
Basic and diluted earnings per share were $0.04, compared with $0.10 for
the second quarter of 2008.
Six Months Results
Operating revenue for the first six months of 2009 was $4.1 million, down
39.5% from $6.7 million in 2008. Cost of revenue decreased 20.5% to $1.6
million. Gross profit was $2.5 million, compared to $4.7 million in the same
period 2008. Gross profit margin for the first six months of 2009 was 60.5%,
compared with 70.0% for the same period 2008. Net income was $0.7 million,
representing a 16.8% net margin compared to $2.7 million or a 40.9% net margin.
Basic and diluted earnings per share for the first six months of 2009 were
$0.05 compared to $0.21 in the first six months of 2008.
Financial Condition
As of June 30, 2009, the Company had cash and cash equivalents of $8.0
million and working capital of $1.9 million. Inventory was approximately $2.5
million on June 30, 2009 compared to $2.4 million on December 31, 2008, the
majority of which consists of metals extracted during the recycling process.
At June 30, 2009, the Company had stockholders' equity of $24.1 million
compared to $23.6 million on December 31, 2008.
Business Outlook
The current expansion project of Dongtai, which is one of fifty-five
hazardous waste treatment centers sponsored by central government and one of
two centers in Liaoning province, commenced construction at the end of July
2008. The Company expects the facility to be operational in early 2010.
Management believes that with the operation of the new centralized hazardous
waste treatment center, coupled with continued increase in international
companies relocating to Dalian, Dongtai is positioned to capitalize on this
rapid environmental development in Liaoning Province.
The Company anticipates that revenues from its waste treatment, sales of
waste recovery and valuable materials will continue to grow in the next year,
despite the economic recession. It also anticipates that revenue generated
from waste water treatment, which is based on waste water volume and
guaranteed by the local government, will grow steadily as the amount of water
which needs to be treated increases in the future.
"With the economic recovery in China, we expect that the industrial waste
management market will increase significantly from levels seen at the
beginning of this year," commented Mr. Dong. "We look forward to improved
second half results as volumes for our industrial waste treatment business
increase and prices for recycled products recover."
Recent Events
On July 30, the Company announced that its 90% owned subsidiary, Dalian
Dongtai Industrial Waste Treatment, Co., Ltd. has received a national subsidy
of RMB 10 million (approximately $1,464,129) for capacity expansion to
complete a "Centralize Hazardous Waste Treatment Facility" in Dalian, Liaoning
Province, China.
On August 10, the Company announced that it has completed trial production
of the first 6 fermentation tanks for sludge treatment, a municipal
Build-Operate-Transfer project in Dalian. Results of the trial production show
that the facility can generate stable biogas as well.
Conference Call
The Company will hold its second quarter conference call for all
interested persons at 9:00 a.m. Eastern Time on Tuesday, August 18, 2009 to
discuss its results. To participate in the live conference call, please dial
the following number five to ten minutes prior to the scheduled conference
call time: 1-888-419-5570. International callers should dial +1-617-896-9871.
When prompted by the operator, mention Conference Passcode 603 086 07. If you
are unable to participate in the call at this time, a replay will be available
for 14 days starting on August 18, 2009 at 11:00 a.m. Eastern Time. To access
the replay, dial 1-888-286-8010 and International callers should dial
+1-617-801-6888 and enter the passcode 391 519 27.
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 Dalian
and surrounding areas in Liaoning Province, People's Republic of China through
its 90%-owned subsidiary Dalian Dongtai Industrial Waste Treatment Co., Ltd.
("Dongtai") and other indirect subsidiaries. Dongtai treats, disposes of
and/or recycles many types of industrial wastes, and recycled waste products
used by customers as raw material to produce chemical and metallurgy products.
In addition, Dongtai treats or disposes of industrial waste through
incineration, burial or water treatment, and provides environmental protection
services, technology consultation, pollution treatment services, waste
management design processing services, waste disposal solutions, waste
transportation services, onsite waste management services, and environmental
pollution remediation services. For more information, please visit:
http://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 BALANCE SHEETS
June 30, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $7,950,100 $5,714,001
Notes receivable 357,822 --
Accounts receivable, net 2,761,994 2,414,257
Other receivables 207,979 105,329
Inventory 2,498,498 2,372,214
Advances to suppliers 746,297 550,931
Deferred expense 16,105 17,589
Total current assets 14,538,795 11,174,321
Investment 2,731,477 2,794,248
Property, plant and equipment, net 15,427,251 15,474,915
Construction in progress 6,329,944 5,738,271
Land usage right, net of accumulated
amortization 1,790,195 1,817,427
Escrow account -- 750,000
Certificate of deposit 292,817 73,287
Other asset 418,187 363,343
Related party receivable 27,743 1,256,599
TOTAL ASSETS $41,556,409 $39,442,411
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $784,666 $780,458
Short-term loan 6,734,795 3,371,198
Tax payable 58,556 215,240
Advance from customers 556,397 539,013
Deferred sales 963,531 972,143
Accrued expenses 11,203 361,111
Construction projects payable 3,026,140 4,742,164
Other payable 121,829 211,362
Related party payable 378,600 278,490
Total current liabilities 12,635,717 11,471,179
Asset retirement obligation 519,773 502,278
Government subsidy 980,141 1,028,257
TOTAL LIABILITIES 14,135,631 13,001,714
Minority interest in subsidiary 3,307,719 2,823,126
Stockholders' equity
Preferred stock: par value $.001;
5,000,000 shares authorized; none
issued and outstanding -- --
Common stock: par value $.001;
95,000,000 shares authorized;
15,271,035 and 15,262,035 shares
issued and outstanding at June 30,
2009 and December 31, 2008
respectively 15,271 15,262
Additional paid-in capital 5,660,341 5,644,750
Other comprehensive income 2,221,035 2,422,167
Retained earnings 16,216,412 15,535,392
Total stockholders' equity 24,113,059 23,617,571
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $41,556,409 $39,442,411
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Service fees $1,642,748 $1,954,513 $2,840,447 $3,774,065
Sales of cupric
sulfate 347,400 671,747 438,530 1,380,590
Sales of recycled
commodities 463,286 964,599 786,407 1,566,484
Operating revenue 2,453,434 3,590,859 4,065,384 6,721,139
Cost of service fees 370,713 315,881 840,876 686,916
Cost of cupric
sulfate 154,187 238,577 242,164 525,103
Cost of recycled
commodities 353,420 536,944 523,131 807,476
Costs of revenue 878,320 1,091,402 1,606,171 2,019,495
Gross profit 1,575,114 2,499,457 2,459,213 4,701,644
Operating expenses
Selling expenses 44,691 187,022 222,008 415,103
General and
administrative
expenses 894,786 563,930 1,341,507 917,776
Total operating
expenses 939,477 750,952 1,563,515 1,332,879
Income from
operations 635,637 1,748,505 895,698 3,368,765
Other income(expense)
Investment income
(loss) -18,640 -1,413 -59,589 -10,452
Interest income -5,159 -112 -3,888 6,186
Other income 47,410 574 47,457 6,454
Other expense 23,049 -1,659 -40,511 -1,661
Total other income
(expense) 46,660 -2,610 -56,531 527
Net income from
continuing operations
before minority
interest and
income tax 682,297 1,745,895 839,167 3,369,292
Income tax expense 60,257 227,216 105,287 334,446
Income from
continuing
operations 622,040 1,518,679 733,880 3,034,846
Minority interest 48,536 148,887 52,860 289,437
Net income $573,504 $1,369,792 $681,020 $2,745,409
Foreign currency
translation
adjustment -181,925 155,554 -201,132 745,508
Comprehensive income $391,579 $1,525,346 $479,888 $3,490,917
Basic weighted
average shares
outstanding 15,268,068 13,234,434 15,265,085 13,234,434
Diluted weighted
average shares
outstanding 15,268,068 13,234,434 15,265,085 13,234,434
Basic and diluted
net earnings
per share $0.04 $0.10 $0.05 $0.21
CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months Ended
June 30,
2009 2008
Cash flows from operating activities:
Net income $681,020 $2,745,409
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest 52,860 1,219,099
Depreciation & Amortization 615,399 375,706
Bad debt allowance -- 6,701
Stock issued for services 15,600 117,100
Accretion expenses 18,055 39,722
Loss on equity investment 62,771 -111,440
Government subsidy -48,116 402,916
Changes in operating assets and
liabilities:
Accounts receivable -347,737 -1,495,466
Note receivable -357,822 --
Inventory -126,284 -436,565
Other receivables -102,650 -95,489
Advance to suppliers -195,366 -1,007,316
Accrued expense and deferred sales -358,521 109,736
Accounts payable 4,208 714,043
Tax payable -156,684 -39,446
Others -105,372 --
Net cash provided by (used in) operating
activities -348,639 2,544,710
Cash flows from investing activities
Purchase of property and equipment -65,563 -523,265
Construction contracts -830,143 -3,156,825
Purchase of software -20,137 --
Due from related party 1,228,856 -309,335
Due to related party 100,110 -201,661
Certificate of deposit -219,530 -491,861
Net cash provided by (used in) investing
activities 193,593 -4,682,947
Cash flows from financing activities
Repayment of construction projects payable -1,716,024 --
Proceeds from loans 6,732,430 3,433,235
Repayment of short term loan -3,366,215 --
Net cash provided by financing activities 1,650,191 3,433,235
Cash released from escrow account 750,000 --
Effect of exchange rate on cash -9,046 629,020
Net increase in cash and cash equivalents 2,236,099 1,924,018
Cash and cash equivalents, beginning of
period 5,714,001 3,260,307
Cash and cash equivalents, end of period $7,950,100 $5,184,325
Supplemental cash flow information:
CSOURCE China Industrial Waste Management, Inc.
