Tri-Tech Holding Reports First Quarter 2013 Financial Results Conference Call Scheduled on May 15, 2013 at 8:00 PM EDT PR Newswire BEIJING, May 15, 2013 BEIJING, May 15, 2013 /PRNewswire-FirstCall/ -- Tri-Tech Holding Inc. (Nasdaq: TRIT), which provides turn-key water resources management, water and wastewater treatment, industrial safety and pollution control solutions, announced its financial performance for the first quarter ended March 31, 2013. Highlights include the following: oIn the first quarter, the Company's revenues declined by 45.5% to $10.5 million, compared to $19.2 million in first quarter 2012. oIn the first quarter, gross profit declined by 55.3% to $2.3 million compared to $5.2 million in first quarter 2012. Gross margin decreased to 22.3% from 27.1% in the first quarter of 2012. oThe Company had a Loss from operations of $1.6 million, compared to income from operations of $1.5 million in first quarter of 2012. oNet loss was $1.1 million, compared to net income of $1.4 million in the same period of 2012. oWeighted average number of diluted shares outstanding was 8,238,406 compared to 8,317,224 in the same period in 2012. oDiluted earnings per share was a loss of $0.13 compared to a gain of $0.17 per share in the same period of 2012 (Logo: http://photos.prnewswire.com/prnh/20100603/CNTH016LOGO) Mr. Gavin Cheng, CEO of Tri-Tech Holding Inc. commented, "The Company has experienced another quarter of loss due primarily to delays in implementing a number of projects as clients required project design adjustments. These delays in turn slowed project-related revenue recognition. As new competitors entered the market and competed on pricing, our gross margin suffered. In an effort to broaden its market coverage, the Company increased spending and efforts in sales and marketing. The Company believes its strategies will position the Company well for the long term and thanks our shareholders for their continued confidence in these efforts and our Company." FY2012 Financial Performance Metrics Revenue Revenue decreases were primarily attributable to a decrease of 50.7% in the system integration category, from $18,532,662 in the first quarter of 2012 to $9,137,158 in the same period for 2013. Of the system integration category, revenue from the Ordos project decreased from $3,132,366 for the period ended March 31, 2012 to $559,116 in the same period 2013 because the project was primarily completed. In order to reduce cash flow pressures, we evaluated the projects we planned to bid on and elected not to bid on domestic BT projects, which typically require significant investments and feature slower client payment periods. At the same time, these BT projects are typically higher-value projects, so the absence of these projects from 2013 results significantly reduced our revenues. Gross Margin Our gross margin decrease was largely a result of increases in material and equipment costs and labor subcontracting costs. Shifting from BT projects, which usually have higher gross margins, also contributed the lower gross margin. Selling and Marketing Expenses Selling and marketing expenses consist primarily of compensation, marketing, travel and business entertainment expenses. In the first quarter of 2013, total selling and marketing expenses increased by 24.5%, from $838,993 in the first quarter of 2012 to $1,044,526 in the same period of 2013 as a result of the increased efforts required to drive revenue from a larger number of lower-value projects in light of our move away from BT projects. General and Administrative Expenses General and administrative expenses consist primarily of compensation costs, rental expenses, professional fees, and other overhead expenses. General and administrative expenses increased by $45,651 from $2,853,360 in the first quarter of 2012 to $2,899,011 in the first quarter of 2013 due largely to first quarter 2013 costs associated with reducing our headcount in the fourth quarter of 2012. Loss before Income Taxes In the quarter ended March 31, 2013, our net loss before provision for income taxes was $1,192,508, a decrease of $2,939,690 compared to net income before income tax of $1,747,182 in the same period in 2012. The Company's provision for income taxes decreased by 82.6%, from $314,493 in the first three months of 2012 to $54,749 in the same period in 2013. Some of the entities were income tax free because of loss while the others were taxable, so the Company had income tax expenses in spite of overall net loss. In the period ended March 31, 2013, net loss attributable to the shareholders of TRIT was $1,098,773, a decrease of $2,536,898, from net income of $1,438,125 for the same period in 2012. Liquidity and Capital Resources Our liquidity and available capital resources are impacted by four key components: (i)cash and cash equivalents, (ii)operating activities, (iii)financing activities, and (iv)investing activities. Cash and Cash Equivalents As of March 31, 2013, our cash and cash equivalents amounted to $6,014,862. The restricted cash as of March 31, 2013 and December 31, 2012 amounted to $7,523,965 and $7,816,967, respectively, which are not included in the total amount of cash and cash equivalents. The restricted cash consisted of deposits as collateral for the issuance of letters of credit. Our subsidiaries that own these deposits do not have material cash obligations to any third parties. Therefore, the restriction does not impact our liquidity. Operating Activities Net cash used in operating activities was $693,046 for the three months ended March 31, 2013, compared with $7,731,944 in the same period in 2012. The decrease of $7,038,898 in operating cash outflow was caused by our strategic adjustments and cost control efforts in 2012. Net accounts and notes receivable increased from $18,598,110 on December 31, 2012 to $19,689,826 on March 31, 2013, an increase of 5.9%. Current unbilled receivables increased from $27,954,525 on December 31, 2012 to $28,267,776 on March 31, 2013, an increase of 1.1%. The remaining portion was mainly due to the decreased accounts payable and cost accruals, due to the drop in total revenue. Investing Activities Net cash used in investing activities was $177,287 during the three months ended March 31, 2013, a decrease of $197,800 from net cash used in investing activities of $375,087 in the same period of 2012.Currently we have no further plan to add capital expenditure. Financing Activities The cash used in by financing activities was $1,365,888 in the three months ended March 31, 2013, compared to cash provided by financing activities of $3,317,057 in the same period of 2012. The decrease was due to paying back bank borrowings and loans from third-party companies and a noncontrolling shareholder. Restricted Net Assets As of both March 31, 2013 and December 31, 2012,restricted retained earnings were $2,246,910, and restricted net assets were $4,878,975. Unrestricted retained earnings as of March 31, 2013 and December 31, 2012 were $15,939,623 and $17,038,396, respectively, which were the amounts available for distribution in the form of dividends or for reinvestment. Working Capital and Cash Flow Management As of March 31, 2013, our working capital was $24,916,099, with current assets totaling $86,514,353 and current liabilities totaling $61,598,254. Of the current assets, cash and cash equivalents was $6,014,862. We believe our current assets are sufficient to meet our capital requirements for the next 12 months. To support our operations, we plan to sell our real property in Baoding, along with all construction including the costs of construction and operation expended since acquisition for approximately $18 million. We acquired this property on November 26, 2010. The sale is expected to close before the end of 2013 and we expect to break even on the sale. This fund will support our operating cash flow and the corporate bond will be removed from financing cash flow. Order Backlog and Pipelines The Company's backlog represents the amount of contract work remaining to be completed, that is, revenues from existing contracts and work in progress expected to be recognized in current period, based on the assumption that these projects will be completed on time according to the project schedules. The Company evaluates the ongoing projects regularly and updates the schedules as appropriate. The following table provides backlogs by segments for as of March 31, 2013 and December 31, 2012, respectively. March 31, 2013 December 31, 2012 USD Million % of Total Backlog USD Million % of Total Backlog Segment 1: 37.8 60.2% 38.7 64.4% Segment 2: 8.3 13.3% 6.7 11.1% Segment 3: 16.6 26.5% 14.7 24.5% Total 62.7 100.0% 60.1 100.0% Our pipeline represents the values of projects we have been actively pursuing. The pipeline by the ended of March 31, 2013 was $38.1 million in Segment 1, $23.7 million in Segment 2 and $5.4 million in Segment 3. Having a dynamic nature, the values of secured projects move from pipeline into backlog and backlog to revenue based on percentage of completion, sometimes simultaneously. The backlog increased by $2.6 million from December 31, 2012 to March 31, 2013, which is because we successfully bid for new contracts. Conference Call Tri-Tech Chairman Warren Zhao, CEO Gavin Cheng, CFO & President Phil Fan and COO Peter Dong will host a conference call at 8:00PM EDT, May 15, 2013, (8:00AM Beijing/Hong Kong Time on May 16, 2013) to review the company's financial results and outlook of operations, to discuss our growth strategies and to respond to questions and comments. To participate, call U.S. toll free number(877) 941- 8416approximately 10 minutes before the call. International callers, please dial1 (480) 629 - 9808.The conference ID number is4619281. A live and archived webcast of the call will be available athttp://public.viavid.com/index.php?id=104728.An MP3 file will be available one hour after the call and will be archived for 90 days atwww.tri-tech.cn/ir. - FINANCIAL TABLES - TRI-TECH HOLDING INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31,2013 December 31,2012 (Unaudited) ASSETS Current assets Cash $ 6,014,862 $ 8,098,657 Restricted cash 4,977,526 4,352,443 Accounts and notes receivable, net of allowance for doubtful accounts of $1,549,227 and $1,475,771 as of March 19,689,826 18,598,110 31, 2013 and December 31, 2012, respectively Unbilled revenue 28,267,776 27,954,525 Other current assets 3,618,626 3,825,770 Inventories 9,677,020 8,459,073 Deposits on projects 1,285,829 1,469,550 Prepayments to suppliers and 12,982,888 9,353,490 subcontractors Total current assets 86,514,353 82,111,618 Long-term unbilled revenue 42,624,081 51,219,694 Long-term accounts receivable 517,748 413,770 Plant and equipment, net 1,672,292 1,764,784 Construction in progress 5,537,946 5,359,466 Intangible assets, net 10,750,434 10,902,932 Long-term restricted cash 2,546,439 3,464,524 Goodwill 1,441,278 1,441,278 Total Assets $ 151,604,571 $ 156,678,066 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 4,732,420 $ 5,890,511 Costs accrual on projects 22,165,069 23,637,751 Advance from customers 865,281 1,157,247 Loans from third party companies and 4,619,651 6,400,659 individual Amount due to noncontrolling interest 6,525,751 9,047,068 investor Amount due to related party 1,668,604 1,656,420 Other payables 581,208 461,258 Taxes payable 6,021,909 5,577,533 Accrued liabilities 524,101 485,354 Payable on investment consideration 582,966 582,966 Deferred income taxes 2,040,315 1,782,786 Deferred revenue 264,386 289,485 Short-term bank borrowing (including VIE short-term borrowing of the consolidated VIEs without recourse to 11,006,593 8,150,041 Tri-Tech Holdings of $6,221,064 and $2,754,158 as of March 31, 2013 and December 31, 2012, respectively) Total current liabilities 61,598,254 65,119,079 Noncurrent deferred income taxes 3,489,747 3,699,790 Long-term bank borrowings 16,475 17,976 Corporate Bond 7,935,122 7,935,122 Total Liabilities 73,039,598 76,771,967 Equity Tri-Tech Holding Inc. shareholders' equity Ordinary shares ($0.001 par value, 30,000,000 shares authorized; 8,259,506 and 8,259,506 shares issued as of March 31, 2013 and December 31, 2012, respectively; 8,259 8,259 8,238,406 and 8,238,406 shares outstanding as of March 31, 2013 and December 31, 2012, respectively) Additional paid-in-capital 50,257,633 50,119,428 Statutory reserves 2,246,910 2,246,910 Retained earnings 15,939,623 17,038,396 Treasury shares (21,100 shares in treasury as of March 31, 2013 (193,750) (193,750) and December 31, 2012, respectively) Accumulated other comprehensive income 4,891,220 5,086,827 Total Tri-Tech Holding Inc. shareholders' 73,149,895 74,306,070 equity Noncontrolling interests 5,415,078 5,600,029 Total equity 78,564,973 79,906,099 Total Liabilities and Equity $ 151,604,571 $ 156,678,066 TRI-TECH HOLDING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For The Three Months Ended March 31, 2013 2012 (Unaudited) (Unaudited) Revenues: System integration $ 9,137,158 $ 18,532,662 Hardware products 1,341,670 688,650 Total revenues 10,478,828 19,221,312 Cost of revenues System integration 7,180,386 13,584,217 Hardware products 963,749 419,595 Total cost of revenues 8,144,135 14,003,812 Grossprofit 2,334,693 5,217,500 Operating expenses: Selling and marketing expenses 1,044,526 838,993 General and administrative expenses 2,899,011 2,853,360 Research and development expenses 9,162 68,870 Total operating expenses 3,952,699 3,761,223 (Loss) Income from operations (1,618,006) 1,456,277 Other income (expense): Other income (expense), net 1,187,348 672,495 Interest income 10,268 41,774 Interest expense (772,118) (435,773) Investment gain - 5,409 Fair Value change on contingent investment consideration - 7,000 Total other income (expenses), net 425,498 290,905 (Loss) Income before provision for income taxes (1,192,508) 1,747,182 Provision for income taxes 54,749 314,493 Net (loss) income (1,247,257) 1,432,689 Less: Net (loss) income attributable to noncontrolling interests (148,484) (5,436) Net (loss) income attributable to Tri-Tech Holding Inc. shareholders $ (1,098,773) $ 1,438,125 Net (loss) income (1,247,257) 1,432,689 Other comprehensive income Foreign currency translation adjustment (232,074) 193,353 Comprehensive (loss) income (1,479,331) 1,626,042 Less: Comprehensive (loss) income attributable to noncontrolling interests (184,951) 8,429 Comprehensive (loss) income attributable to Tri-Tech Holding Inc. $ (1,294,380) $ 1,617,613 Net (loss) income attributable to Tri-Tech Holding Inc. shareholders per share are: Basic $ (0.13) $ 0.18 Diluted $ (0.13) $ 0.17 Weighted average number of ordinary shares outstanding: Basic 8,238,406 8,208,480 Diluted 8,238,406 8,317,224 TRI-TECH HOLDING INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For The Three Months Ended March 31, 2013 2012 (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (1,247,257) $ 1,432,689 Adjustments to reconcile net (loss) income to cash used in operating activities: Amortization of share-based compensation expense 138,205 90,913 Depreciationandamortization 309,944 285,479 Provision for doubtful accounts 65,773 152,717 Loss on disposal of plant and equipment 12,003 - Deferred income taxes 54,749 314,493 Fair value change on contingent investment consideration - (7,000) Gain on investment in joint venture - (5,409) Changes in operating assets and liabilities: Accounts and notes receivable (1,241,770) (3,160,643) Unbilled revenue 8,289,666 (8,837,581) Restricted cash 316,761 280,518 Other current assets 386,473 (1,258,278) Inventories (1,231,663) 762,767 Prepaid expenses (38,225) (133,743) Prepayments (3,574,243) (267,700) Accounts payable (1,397,701) (5,294,693) Notes payable - (59,248) Cost accrual on projects (1,556,734) 10,693,084 Advance from customers (401,072) (634,643) Other payables (32,707) (1,856,643) Taxes payable 427,581 (154,840) Accrued liabilities 53,717 (74,183) Deferred revenue (26,546) - Net cash used in operating activities (693,046) (7,731,944) CASH FLOWS FROM INVESTING ACTIVITIES: Cash proceeds from disposal of plant and equipment 1,150 - Payment to purchase plant and equipment (27,718) (118,550) Cash paid for construction in progress (150,719) (41,125) Payment in business acquisition - (75,159) Payment of loan to joint venture - (250,000) Payment of loan to third-party companies - (190,253) Collection of loan to third-party companies - 300,000 Net cash used in investing activities (177,287) (375,087) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from bank borrowings 4,243,848 3,408,695 Payment of bank borrowing (1,435,083) - Proceeds from loan from third-party companies - 215,620 Payment of loan from third-party companies (1,291,799) (307,258) Payment of loan from non-controlling shareholders (2,882,854) - Net cash (used in) provided by financing activities (1,365,888) 3,317,057 EFFECTS OF EXCHANGE RATE CHANGE IN CASH 152,426 394,818 NET DECREASE IN CASH (2,083,795) (4,395,156) CASH, beginning of the period 8,098,657 11,935,746 CASH, end of the period $ 6,014,862 $ 7,540,590 Supplemental disclosure for cash flow information: Income taxes paid $ 87,637 $ 154,361 Interest paid on debt $ 534,748 $ 151,606 Supplemental disclosure for noncash investing activity: Fair value change on contingent consideration payable - (7,000) Gain on long-term investment to India Joint Venture - 5,409 About Tri-Tech Holding Inc. Tri-Tech is an innovative provider of consulting, engineering, procurement, construction and technical services. The Company supports government, state owned entities and commercial clients by providing efficiency oriented solutions focused on treatment of water and waste water, management of water resources and water-efficient irrigation, as well as industrial emission and safety controls. With software copyrights, product patents, and capable employees in China, the U.S. and India, Tri-Tech's capabilities span the cycle of innovation. Please visit www.tri-tech.cn for more information. An online investor kit including a company profile, presentations, press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.tri-tech.cn/ir. To subscribe to future releases via e-mail alert, visit http://www.tri-tech.cn/ir/info/request. This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof. For more information, please contact: Tri-Tech Holding Inc. www.tri-tech.cn IR Department +86 10 57323666 firstname.lastname@example.org SOURCE Tri-Tech Holding Inc. Website: http://www.Tri-Tech.cn Website: http://www.tri-tech.cn/ir Website: http://www.tri-tech.cn/ir/info/request
Tri-Tech Holding Reports First Quarter 2013 Financial Results
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