Cleantech Solutions International Reports First Quarter 2013 Results

     Cleantech Solutions International Reports First Quarter 2013 Results

PR Newswire

WUXI, Jiangsu Province, China, May 15, 2013

WUXI, Jiangsu Province, China, May 15, 2013 /PRNewswire-FirstCall/ --
Cleantech Solutions International, Inc. ("Cleantech Solutions" or "the
Company") (NASDAQ: CLNT), a manufacturer of metal components and assemblies,
primarily used in the wind power, solar, dyeing and finishing equipment and
other clean technology industries, today announced its financial results for
the three months ended March 31, 2013.

"We got off to a strong start in 2013, achieving significant growth in revenue
and profitability. Our dyeing machine segment saw revenue increase by more
than 90% as a result of increased sales of our new equipment designed to meet
the current environmental standards. We believe this increase reflects the
response of textile manufacturers to seek to meet the policies of local PRC
governments to phase out obsolete equipment and reduce pollution from the
dyeing process," said Mr. Jianhua Wu, Chairman and CEO of Cleantech Solutions.
"In addition, sales of forged products to customers in the wind power industry
saw strong sales growth. We will continue our efforts to expand our portfolio
of precision products to meet demand in new and existing end markets with
favorable prospects for growth."

First Quarter 2013 Results

Revenue for the first quarter of 2013 increased 47.6% to $13.9 million,
compared to $9.4 million for the same period of 2012.

Revenue from the sale of forged rolled rings to the wind power industry and
other industries increased 16.9% to $6.5 million, compared to $5.6 million in
the same period last year. The increase in revenue was mainly due to improving
demand from existing customers in the wind power industry following several
quarters of reduced order flow, which was partially offset by lower market
demand for capital equipment related to the Company's forged rolled rings and
related products for other industries.

The increase in revenue is summarized as follows:

  oRevenue from the sale of forged rolled rings for the wind power industry
    increased by 45.7% to $3.7 million, compared to $2.5 million for the
    comparable period last year.

  oRevenue from the sale of forged rolled rings to other industries decreased
    7.1% to $2.8 million, compared with $3.0 million for the comparable period
    of the prior year.

  oRevenue from dyeing and finishing equipment segment increased 92.4% to
    $7.4 million, compared to $3.8 million for the first quarter of 2012.

Gross profit for the first quarter of 2013 increased 66.3% to $3.1 million,
compared to $1.9 million for the same period in 2012. Gross margin increased
to 22.5% during the first quarter of 2013 compared to 20.0% for the same
period a year ago. The increase in gross margin for the first quarter was
primarily attributable to (i) the increased operational and cost efficiencies
for forged rolled rings and related products segment, including the allocation
of fixed costs primarily consisting of depreciation, to cost of revenues as
the Company operated at higher production levels in response to higher
revenues, and (ii) the significant portion of revenue for the dyeing and
finishing equipment segment generated from the sale of airflow dyeing
machinery, which generates a higher gross margin than the Company's
traditional dyeing machinery. The principal source of dyeing revenue in the
first quarter of 2012 was traditional dyeing machinery.

Operating expenses decreased 18.8% to $0.8 million, compared to $1.0 million
in the comparable period last year. The decrease was primarily due to lower
depreciation expenses resulting from the classification of certain equipment
as held for sale in the fourth quarter of 2012, on which depreciation was
taken in the first quarter of 2012 but not in the first quarter of 2013.

Selling, general and administrative expenses for the three months ended March
31, 2013 rose 10.8% to $0.7 million, primarily due to higher travel,
entertainment and shipping costs associated with the increase in sales and an
increase in stock based compensation cost.

Operating income increased 171.4% to $2.3 million, compared to $0.8 million
for the same period of 2012. Operating margin was 16.5% compared to 8.9% in
the first quarter last year.

Other expense was $75,716, compared to $308,741 in the same period in 2012.
The decrease was primarily attributable to the decrease in warrant
modification expense of approximately $235,000 which was incurred in the 2012
quarter. The Company did not incur a comparable expense in the 2013 quarter.


Adjusted EBITDA, a non-GAAP measurement, which adds back to net income
interest expense, income tax, warrant modification expense, depreciation and
amortization, was up 60.9% to $3.9 million, compared to $2.4 million in the
same quarter last year. The calculation of adjusted EBITDA is shown in a
table following the financial tables.

Net income for the first quarter of 2013 was $1.6 million, or $0.56 per
diluted share, compared to $0.3 million, or $0.12 per diluted share, in the
first quarter of 2012. Diluted earnings per share were calculated using
diluted weighted average shares of 2,894,586 and 2,523,936 for the three
months ended March 31, 2013 and 2012, respectively. All share and per share
information has been adjusted to reflect a one-for-ten reverse stock split
effective March 6, 2012.

Financial Condition

As of March 31, 2013, Cleantech Solutions held cash and cash equivalents of
$1.2 million compared with $1.4 million at December 31, 2012. Accounts
receivable were $9.5 million and total current assets of $20.9 million. The
Company had $3.0 million in short-term bank loans payable, up from $2.2
million at December 31, 2012. Stockholders' equity was $80.0 million at March
31, 2013.

In the first quarter of 2013, the Company generated $1.7 million in cash flow
from operations. The increase in short term loans, combined with cash flow
from operations, was used to purchase approximately $2.7 million of equipment
to expand capacity of airflow dyeing machines.

In May 2013, the Company repaid short-term bank loans in the amount of $0.8
million and reborrowed the same amount from Bank of Communications at an
interest rate of 6.72%.

Business Outlook

"In 2013, we expect our dyeing machine segment to continue to perform well.
We have a number of new contracts in the pipeline and have purchased new
equipment to expand capacity to meet this demand. While near-term challenges
remain in both the wind and solar markets, the long-term outlooks are
positive.

"In the meantime, we will continue to seek to diversify our revenue base and
modify our product lines to respond to the needs of other heavy equipment
industries and clean technology industries. We are working with our customers
to fine tune prototypes of new after-treatment textile equipment and are
working to become a licensed, or qualified, supplier of components to China's
oil and gas industry," Mr. Wu said. "We are optimistic about our prospects
for 2013, and will continue to utilize our expertise in manufacturing
precision products to generate profitable growth."

Conference Call

Cleantech Solutions will conduct a conference call at 9:00 a.m. Eastern Time
on Thursday, May 16, 2013 to discuss financial results for the first quarter
ended March 31, 2013.

To participate in the live conference call, please dial the following number
five to ten minutes prior to the scheduled conference call time: (866)
759-2078. International callers should dial (706) 643-0585. When prompted,
please enter conference passcode: 71671996.

If you are unable to participate in the conference call at this time, a replay
will be available for 14 days starting on May 16, 2013 at 12:00 pm ET. To
access the replay, dial (855) 859-2056. International callers dial (404)
537-3406, and enter passcode: 71671996.

Use of Non-GAAP Financial Measures

The Company has included in this press release certain non-GAAP financial
measures. The Company believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing the performance of
the Company and when planning and forecasting future periods. Readers are
cautioned not to view non-GAAP financial measures on a stand-alone basis or as
a substitute for GAAP measures, or as being comparable to results reported or
forecasted by other companies, and should refer to the reconciliation of GAAP
measures with non-GAAP measures also included herein.

About Cleantech Solutions International

Cleantech Solutions is a manufacturer of metal components and assemblies,
primarily used in clean technology and manufacturing industries. The Company
supplies forging products, fabricated products and machining services to a
range of clean technology customers, primarily in the wind power sector and
supplies dyeing and finishing equipment to the textile industry. Cleantech
Solutions is committed to achieving long-term growth through ongoing
technological improvement, capacity expansion, and the development of a strong
customer base. The Company's website is
www.cleantechsolutionsinternational.com. Any information on the Company's
website or any other website is not a part of this press release.

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the
business of the Company and its subsidiary and affiliated companies. These
forward looking statements are often identified by the use of forward-looking
terminology such as "believes," "expects" or similar expressions. Such forward
looking statements involve known and unknown risks and uncertainties that may
cause actual results to be materially different from those described herein
and in the conference call referred to in this press release as anticipated,
believed, estimated or expected. Investors should not place undue reliance on
these forward-looking statements, which speak only as of the date of this
press release. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of a variety of
factors, including those discussed in the Company's periodic reports that are
filed with the Securities and Exchange Commission and available on its
website, including factors described in "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
our Form 10-K for the year ended December 31, 2012 and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
our Form 10-Q for the quarter ended March 31, 2013. All forward-looking
statements attributable to the Company or to persons acting on its behalf are
expressly qualified in their entirety by these factors other than as required
under the securities laws. The Company does not assume a duty to update these
forward-looking statements.

Company Contact:

Mr. Adam Wasserman                              Elaine Ketchmere, CFA
Chief Financial Officer                         CCG Investor Relations
Cleantech Solutions International, Inc.         Tel: +1 310 954-1345
Email:                                          Email:
adamw@cleantechsolutionsinternational.com      Elaine.Ketchmere@ccgir.com
Web: www.cleantechsolutionsinternational.com   Web: www.ccgirasia.com

- Financial Tables Follow -



CLEANTECH SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
INCOME
                                                   For the Three Months Ended
                                                   March 31,
                                                   2013           2012
REVENUES                                           $ 13,884,699   $ 9,409,229
COST OF REVENUES                                     10,754,609     7,526,543
GROSS PROFIT                                         3,130,090      1,882,686
OPERATING EXPENSES:
Depreciation                                    107,214        374,612
Selling, general and administrative             738,000        666,123
Total Operating Expenses                     845,214        1,040,735
INCOME FROM OPERATIONS                               2,284,876      841,951
OTHER INCOME (EXPENSE):
Interest income                                 481            5,504
Interest expense                                (105,127)      (90,033)
Foreign currency gain                           -              4,276
Warrant modification expense                    -              (235,133)
Other income                                    28,930         6,645
Total Other Income (Expense), net            (75,716)       (308,741)
INCOME BEFORE INCOME TAXES                           2,209,160      533,210
INCOME TAXES                                         586,560        230,415
NET INCOME                                         $ 1,622,600    $ 302,795
COMPREHENSIVE INCOME:
NET INCOME                                   $ 1,622,600    $ 302,795
OTHER COMPREHENSIVE INCOME:
Unrealized foreign currency               428,440        451,702
translation gain
COMPREHENSIVE INCOME                         $ 2,051,040    $ 754,497
NET INCOME PER COMMON SHARE:
Basic                                          $ 0.56         $ 0.14
Diluted                                        $ 0.56         $ 0.12
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic                                            2,894,586      2,167,523
Diluted                                          2,894,586      2,523,936





CLEANTECH SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                  March 31,      December 31,
                                                  2013           2012
                                                  (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                     $ 1,151,418    $ 1,445,728
Restricted cash                                 955,171        -
Notes receivable                                221,843        88,029
Accounts receivable, net of allowance for       9,470,017      10,078,623
doubtful accounts
Inventories, net of reserve for obsolete        6,653,981      5,897,555
inventory
Advances to suppliers                           1,341,777      593,104
Prepaid VAT on purchases                        646,322        542,032
Prepaid expenses and other                      417,300        428,326
Total Current Assets                        20,857,829     19,073,397
PROPERTY AND EQUIPMENT – net                        60,923,316     59,436,100
OTHER ASSETS:
Deferred tax assets                              554,921        551,890
Equipment held for sale                          7,157,652      7,118,555
Land use rights, net                             3,753,446      3,756,342
Total Assets                              $ 93,247,164   $ 89,936,284
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank loans                         $ 3,024,707    $ 2,216,558
Bank acceptance notes payable                   955,171        -
Accounts payable                                5,300,010      5,474,479
Accrued expenses                                478,956        986,824
Capital lease obligation - current portion      255,125        251,413
Advances from customers                         2,412,457      1,851,987
VAT and service taxes payable                   96,560         206,527
Income taxes payable                            633,748        822,082
Total Current Liabilities                   13,156,734     11,809,870
OTHER LIABILITIES:
Capital lease obligation - net of current       45,732         132,756
portion
Total Liabilities                          13,202,466     11,942,626
STOCKHOLDERS' EQUITY:
Preferred stock ($0.001 par value;                            
10,000,000 shares authorized; 0 share
 issued and outstanding at March 31, 2013    -              -
and December 31, 2012)
Common stock ($0.001 par value; 50,000,000                    
shares authorized; 2,894,586
 sharesissued and outstanding at March      2,894          2,894
31, 2013 and December 31, 2012)
Additional paid-in capital                      28,987,128     28,987,128
Retained earnings                               39,950,365     38,401,734
Statutory reserve                               2,553,707      2,479,738
Accumulated other comprehensive gain -          8,550,604      8,122,164
foreign currency translation adjustment
Total Stockholders' Equity                  80,044,698     77,993,658
Total Liabilities and Stockholders'       $ 93,247,164   $ 89,936,284
Equity





CLEANTECH SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                For the Three Months
                                                Ended
                                                March 31,
                                                2013            2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                      $ 1,622,600     $ 302,795
Adjustments to reconcile net income from
operations to net cash
provided by operating activities:
Depreciation                                      1,569,551       1,547,345
Amortization of land use rights                   23,511          23,383
Decrease in allowance for doubtful accounts       -               (46,670)
Warrant modification expense                      -               235,133
Stock-based compensation expense                  -               28,190
Changes in operating assets and liabilities:
Notes receivable                                  (133,241)       (102,846)
Accounts receivable                               663,513         685,966
Inventories                                       (723,549)       (1,240,453)
Prepaid value-added taxes on purchases            (101,245)       355,356
Prepaid and other current assets                  11,776          (26,863)
Advances to suppliers                             (744,915)       (495,856)
Accounts payable                                  (204,399)       (640,500)
Accrued expenses                                  (532,717)       (231,302)
VAT and service taxes payable                     (111,027)       -
Income taxes payable                              (192,720)       (317,478)
Advances from customers                           549,929         49,622
NET CASH PROVIDED BY OPERATING ACTIVITIES         1,697,067       125,822
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment                (2,708,871)     (557,365)
NET CASH USED IN INVESTING ACTIVITIES             (2,708,871)     (557,365)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease               (85,364)        (83,881)
Proceeds from bank loans                          1,749,971       949,349
Repayments of bank loans                          (954,529)       (632,899)
(Increase) decrease in restricted cash            (954,529)       31,645
Increase (decrease) in bank acceptance notes      954,529         (79,337)
payable
NET CASH PROVIDED BY FINANCING ACTIVITIES         710,078         184,877
EFFECT OF EXCHANGE RATE ON CASH AND CASH          7,416           5,135
EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS         (294,310)       (241,531)
CASH AND CASH EQUIVALENTS - beginning of          1,445,728       1,152,607
period
CASH AND CASH EQUIVALENTS - end of period       $ 1,151,418     $ 911,076
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for:
Interest                                        $ 105,127       $ 90,033
Income taxes                                    $ 779,280       $ 547,893
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired on credit as    $ 20,681        $ -
payable
Series A preferred converted to common shares   $ -             $ 4,582
Common stock issued for future service          $ -             $ 82,320





CLEANTECH SOLUTIONS INTERNATIONAL, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(AMOUNTS EXPRESSED IN US$)
                                   For the Three Months Ended
                                   March 31,
                                   2013            2012
Net income                  $      1,622,600   $   302,795
Add: income tax                    586,560         230,415
Add: interest expense              105,127         90,033
Add: warrant modification expense  -               235,133
Add: depreciation and amortization 1,593,062       1,570,728
Adjusted EBITDA             $      3,907,349   $   2,429,104







SOURCE Cleantech Solutions International, Inc.

Website: http://www.chinawindsystems.com
 
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