Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 2.54 0.14%
NASDAQ 4,095.52 9.29 0.23%
Ticker Volume Price Price Delta
STOXX 50 3,155.81 16.55 0.53%
FTSE 100 6,625.25 41.08 0.62%
DAX 9,409.71 91.89 0.99%
Ticker Volume Price Price Delta
NIKKEI 14,516.27 98.74 0.68%
TOPIX 1,173.37 6.78 0.58%
HANG SENG 22,760.24 64.23 0.28%

Tri-Tech Holding Reports Second Quarter 2013 Financial Results



        Tri-Tech Holding Reports Second Quarter 2013 Financial Results

Conference Call Scheduled on August 15, 2013 at 9:00 AM EDT

PR Newswire

BEIJING, Aug. 14, 2013

BEIJING, Aug. 14, 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 second quarter ended June 30,
2013.

(Logo: http://www.newscom.com/cgi-bin/prnh/20100603/CNTH016LOGO )

In discussing second quarter results, Mr. Gavin Cheng, CEO of Tri-Tech Holding
Inc. commented, "Despite an overall deterioration in financial results
compared to that from the same period in 2012, the Company saw a recovery in
operations when compared to that of first quarter 2013: our revenue increased
by 55%, our operating expenses margin declined by 15% and our gross margin
maintained relatively the same at 22.3%." Management ascribes the recovery to:

  o 11% reduction in headcount and improvements in employee productivity;
  o Consolidation of compatible business units;
  o Reduction of middle management;
  o Rigorous selection of projects to reduce exposure to riskier projects; and
  o Avoidance of projects with unfavorable payment terms.

Moving forward, the Company will further such efforts to continue on the
course of recovery."

Highlights from the Company's second quarter 2013 performance include the
following:

  o Loss from Operations was $0.49 million in the second quarter 2013,
    compared to Income from Operations of $1.63 million in the same period of
    2012. Loss from Operations decreased sharply from 2013 first quarter Loss
    from Operations of $1.6 million.
  o Net Loss was $0.6 million in the second quarter 2013, compared to Net
    Income of $1.3 million in the same period of 2012. Net Loss decreased from
    2013 first quarter Net Loss of $1.1 million.
  o The Company achieved $16.3 million in revenues in the second quarter of
    2013, a decline of 29.3% compared to $23.04 million from the same period
    in 2012. Revenues were up 55% from first quarter 2013 revenues of $10.5
    million.
  o Weighted average number of diluted shares outstanding was 8,253,406
    compared to 8,207,427 in the same period in 2012.
  o Diluted loss per share was $0.07 compared to diluted earnings per share of
    $0.17 in the same period of 2012.

2013 Q2 Financial Performance Metrics

Revenue

Our total revenues for the second quarter of 2013 were $16,284,617, a decrease
of 29.3%, compared with the amount for the same period last year. Revenue from
the Ordos project decreased from $1,855,180 for the period ended June 30, 2012
to $848,403 in the same period 2013 because the project was primarily
completed; India projects didn't recognize revenue in the second quarter of
2013, mainly because the customer underestimated of the construction
environment and there were redesigns, while in the same period of 2012, India
projects recognized a revenue of $4.0 million. 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.

Gross Margin

Our gross margin decrease was largely a result of increases in material and
equipment costs and labor subcontracting costs.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of compensation, marketing,
travel and business entertainment expenses. In the second quarter of 2013,
total selling and marketing expenses decreased by 9.1%, from $935,853 in the
second quarter of 2012 to $850,551 in the same period of 2013. The
compensation-related expenses increased by 17.6% from $396,291 in the second
quarter of 2012 to $466,200 in the same period of 2013 due to the compensation
for laying off selling and marketing employees. Traveling expenses,
entertainment expenses and other expenses declined by $155,211 because of
budget controls; therefore, the total selling and marketing expenses
decreased.

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 decreased by $604,506 from $3,247,546 in the second
quarter of 2012 to $2,643,040 in the second quarter of 2013. Of this decrease,
$26,206 was for officers' salaries. Salaries for mid-level management,
technical support team, and other office staff decreased by $78,792 from the
amount in the second quarter of 2012 to the amount in the second quarter of
2013. Rental expenses decreased by $25,426 from the amount in the second
quarter of 2012 to the amount in the second quarter of 2013, because the
Company stopped to rent some of the office space in Beijing. Other general and
administrative expenses decreased by $383,380 from the amount  in the second
quarter of 2012 to the amount in the second quarter of 2013, including mainly
office expenses, utilities, travel, communication, other services support and
bad debt expenses. We had a $96,954 non-cash option expense as a part of other
general and administrative expense in the second quarter 2013 and $439,675 in
the same period of 2012, which also contributed to the decrease of general and
administrative expense.  

Loss before Income Taxes

In the second quarter ended June 30, 2013, our net loss before provision for
income taxes was $715,779, a decrease of $2,310,568 compared to that of
$1,594,789 in the same period in 2012. The Company's provision for income
taxes decreased by 65.3%, from the amount in the second three months of 2012
to the amount in the same period in 2013.  In the second period ended June 30,
2013, net loss attributable to the shareholders of TRIT was $ 602,020, a
decrease of 143.9%, from net income of $1,370,887 for the same period in 2012,
mainly due to the significant decline of revenues.

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 June 30, 2013, our cash and cash equivalents amounted to $5,506,711. The
restricted cash as of June 30, 2013 and December 31, 2012 amounted to
$16,678,766 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 $8,470,131 for the six months ended
June 30, 2013, compared with net cash used in operating activities of
$8,297,972 in the same period in 2012. The increase of $172,159 in operating
cash outflow was due to the received payment of $11.5 million from Ordos
project in March 2013 and reduced by the prepayments to various suppliers for
projects. Net accounts and notes receivable increased from $18,598,110 as of
December 31, 2012 to $23,473,583 as of June 30, 2013, an increase of 26.2%.
Current unbilled receivables increased from $27,954,525 as of December 31,
2012 to $32,346,776 as of June 30, 2013, an increase of 15.7%.

Investing Activities

Net cash provided by investing activities was $9,379,917 during the six months
ended June 30, 2013, an increase of $9,486,306 from net cash used in investing
activities of $106,389 in the same period of 2012. The increase was attributed
to the advance payment from the real property buyer of Baoding. Currently we
have no further plans to add capital expenditures.

Financing Activities

The cash provided by financing activities was $6,288,392 for the six months
ended June 30, 2013, compared to cash provided by financing activities of
$5,409,603 in the same period of 2012. The increase was due to the proceeds
from bank borrowings, loan from third-party companies and noncontrolling
shareholders.

Restricted Net Assets

Our ability to pay dividends is primarily dependent on receiving distributions
of funds from our subsidiaries, VIEs and other affiliated entities, which is
restricted by certain regulatory requirements. Relevant Chinese statutory laws
and regulations permit payments of dividends by our Chinese affiliates only
out of their retained earnings, if any, as determined in accordance with PRC
accounting standards and regulations. In addition, our PRC affiliates are
required to set aside at least 10% of their after-tax profit after deducting
any accumulated deficit based on PRC accounting standards each year to our
general reserves until the accumulated amount of such reserves reach 50% of
our registered capital. These reserves are not distributable as cash
dividends. Our off-shore subsidiaries, TIS and Tri-Tech International
Investment, Inc. ("TTII"), do not have material cash obligations to third
parties. Therefore, the dividend restriction does not impact our liquidity.
There is no significant difference between accumulated profit calculated
pursuant to PRC accounting standards and our accumulated profit calculated
pursuant to U.S. GAAP. As of June 30, 2013 and December 31, 2012, restricted
retained earnings were $2,246,910 for both, and restricted net assets were
$1,878,976 and $4,878,975, respectively. Unrestricted retained earnings as of
June 30, 2013 and December 31, 2012 were $15,337,603 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 June 30, 2013, our working capital was $21,955,413, with current assets
totaling $106,325,297 and current liabilities totaling $84,369,884.

We believe our current assets are sufficient to meet our capital requirements
for the next 12 months. However, we may require additional cash to undertake
larger projects or to complete strategic acquisitions in the future. In the
event our current capital is insufficient to fund these and other business
plans, we may take the following actions to meet such working capital needs:

  o We may look into the possibility of optimizing our funding structure by
    obtaining short- and/or long-term debt through commercial loans. We are
    actively exploring opportunities with other major Chinese banks, and we
    expect to obtain additional lines of credit to pursue favorable project
    opportunities in the future. Other financing instruments into which we are
    currently looking include supply chain financing, project financing, trust
    fund financing and capital leasing.
  o We may focus on improving our collection of accounts receivable. Most of
    our clients are central, provincial and local governments. We believe that
    our clients are in good financial conditions. Therefore, we expect good
    collectability from relatively high quality accounts receivables. The
    accounts receivable collection should catch up with our rapid growth in
    the near future. Given the high contractual interest rate on unpaid
    amounts for long-term projects, we expect that some clients may choose to
    pay before such interest starts to accrue.
  o We avoided Build & Transfer projects, which tend to constrain our cash. We
    received a payment of $7.3 million from Ordos project in July 2013, which
    eased our cash flow pressure to some extent.

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. We expect to use these funds to support our operating cash
flow and to repay the corporate bond from financing cash flow.

Order Backlog and Pipeline

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 backlog by segments for as of June 30, 2013 and
December 31, 2012, respectively.

            June 30, 2013                December 31, 2012
           USD Million % of Total        USD Million % of Total       % Change
                       Backlog                       Backlog
Segment 1: 36.6        66.3%             38.7        64.4%            (5.4)  %
Segment 2: 6.3         11.4%             6.7         11.1%            (6.4)  %
Segment 3: 12.3        22.3%             14.7        24.5%            (16.6) %
Total      55.2        100.0%            60.1        100.0%           (8.2)  %

Pipeline represents the values of projects we have been actively pursuing. The
pipeline as of June 30, 2013 and December 31, 2012 was as below:

            June 30, 2013                December 31, 2012
           USD Million % of Total        USD Million % of Total       % Change
                       Pipeline                      Pipeline
Segment 1: 20.3        29.4%             50.7        57.6%            (60.0) %
Segment 2: 18.5        26.8%             2.5         2.8%             640.0  %
Segment 3: 30.3        43.8%             34.8        39.5%            (12.9) %
Total      69.1        100.0%            88.0        100.0%           (21.5) %

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 decreased by $5.0 million from December
31, 2012 to June 30, 2013, because of the projects' progress in the second
quarter of 2013. Being rigorous in project selection also narrowed down the
number of candidate projects.  

Conference Call

Tri-Tech Chairman Warren Zhao, CEO Gavin Cheng, CFO & President Phil Fan and
COO Peter Dong will host a conference call at 9:00AM EDT, August 15, 2013,
(9:00PM Beijing/Hong Kong Time on August 15, 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- 8416 approximately 10
minutes before the call. International callers, please dial 1 (480) 629 -
9808. The conference ID number is 4635095. A live and archived webcast of the
call will be available at http://public.viavid.com/index.php?id=105720. 

-FINANCIAL TABLES –

 

TRI-TECH HOLDING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                  June 30, 2013   December 31,
                                                  (Unaudited)     2012
ASSETS
Current assets
Cash*                                           $ 5,506,711     $ 8,098,657
Restricted cash*                                  14,095,989      4,352,443
Accounts and notes receivable, net of allowance
for doubtful accounts of $1,735,507 and           31,841,682      18,598,110
$1,475,771 as of June 30, 2013 and December 31,
2012, respectively*
Unbilled revenue*                                 23,978,677      27,954,525
Other current assets*                             3,724,019       3,825,770
Inventories*                                      10,431,357      8,459,073
Deposits on projects*                             1,193,325       1,469,550
Prepayments to suppliers and subcontractors*      15,553,537      9,353,490
Total current assets                              106,325,297     82,111,618
Long-term unbilled revenue*                       45,327,393      51,219,694
Long-term accounts receivable                     746,583         413,770
Plant and equipment, net*                         1,685,334       1,764,784
Construction in progress                          5,786,168       5,359,466
Intangible assets, net*                           10,684,790      10,902,932
Long-term restricted cash                         2,582,777       3,464,524
Goodwill                                          1,441,278       1,441,278
Total Assets                                    $ 174,579,620   $ 156,678,066
LIABILITIES AND EQUITY
Current liabilities
Accounts payable                                $ 6,669,304     $ 5,890,511
Costs accrual on projects*                        24,071,455      23,637,751
Advance from customers*                           1,442,889       1,157,247
Advance from potential buyer of assets            8,979,565       -
Loans from third party companies and              10,214,396      6,400,659
individuals*
Amount due to noncontrolling interest investor    6,817,202       9,047,068
Amount due to related party                       1,682,143       1,656,420
Other payables*                                   663,962         461,258
Taxes payable*                                    6,362,946       5,577,533
Accrued liabilities*                              504,185         485,354
Payable on investment consideration               582,966         582,966
Deferred income taxes*                            1,803,240       1,782,786
Deferred revenue                                  241,193         289,485
Short-term bank borrowing (including VIE
short-term borrowing of the consolidated VIEs
without recourse to Tri-Tech Holdings of          13,962,011      8,150,041
$9,108,192 and $2,754,158 as of June 30, 2013
and December 31, 2012, respectively)*
Total current liabilities                         83,997,457      65,119,079
Noncurrent deferred income taxes                  3,801,078       3,699,790
Long-term bank borrowings                         13,545          17,976
Corporate Bond                                    7,935,122       7,935,122
Total Liabilities                                 95,747,202      76,771,967
Equity
Tri-Tech Holding Inc. shareholders' equity
Ordinary shares ($0.001 par value, 30,000,000
shares authorized; 8,274,506 and 8,259,506
shares issued as of June 30, 2013 and December    8,274           8,259
31, 2012, respectively; 8,253,406 and 8,238,406
shares outstanding as of June 30, 2013 and
December 31, 2012, respectively)
Additional paid-in-capital                        50,354,573      50,119,428
Statutory reserves                                2,246,910       2,246,910
Retained earnings                                 15,337,603      17,038,396
Treasury shares (21,100 shares in treasury as
of June 30, 2013 and December 31, 2012,           (193,750)       (193,750)
respectively)
Accumulated other comprehensive income            5,774,960       5,086,827
Total Tri-Tech Holding Inc. shareholders'         73,528,570      74,306,070
equity
Noncontrolling interests                          5,303,848       5,600,029
Total equity                                      78,832,418      79,906,099
Total Liabilities and Equity                    $ 174,579,620   $ 156,678,066

 

 

TRI-TECH HOLDING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
                                          For The Three Months Ended June 30,
                                          2013                 2012
                                          (Unaudited)          (Unaudited)
Revenues:
              System integration          13,122,252           21,741,770
              Hardware products           3,162,365            1,298,764
      Total revenues                      16,284,617           23,040,534
Cost of revenues
              System integration          9,906,489            16,608,958
              Hardware products           2,750,880            607,510
      Total cost of revenues              12,657,369           17,216,468
Gross profit                              3,627,248            5,824,066
Operating expenses:
              Selling and marketing       850,551              935,853
expenses
              General and                 2,643,040            3,247,546
administrative expenses
              Research and development    182,912              11,528
expenses
      Total operating expenses            3,676,503            4,194,927
(Loss) income from operations             (49,255)             1,629,139
Other expense:
              Other income (expense),     (18,536)             410,889
net
              Interest income             18,903               40,770
              Interest expense            (666,891)            (559,158)
              Investment gain             -                    73,149
Total other expenses                      (666,524)            (34,350)
(Loss) income before provision for        (715,779)            1,594,789
income taxes
Provision for income taxes                99,644               287,062
Net (loss) income                         (815,423)            1,307,727
Less: Net loss attributable to            (213,403)            (63,160)
noncontrolling interests
Net (loss) income attributable to       $ (602,020)       $    1,370,887
Tri-Tech Holding Inc. shareholders
Net (loss) income                         (815,423)            1,307,727
Other comprehensive income
              Foreign currency            985,913              95,884
translation adjustment
Comprehensive  income                     170,490              1,403,611
Less: Comprehensive loss attributable     (111,230)            (56,632)
to noncontrolling interests
Comprehensive income attributable to    $ 281,720         $    1,460,243
Tri-Tech Holding Inc.
Weighted average number of ordinary
shares outstanding:
              Basic                       8,253,406            8,207,427
              Diluted                     8,253,406            8,207,427
Net (loss) income attributable to
Tri-Tech Holding Inc. shareholders per
share are:
              Basic                     $ (0.07)          $    0.17
              Diluted                   $ (0.07)          $    0.17

 

 

TRI-TECH HOLDING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                             For The Six Months Ended June 30,
                                             2013               2012
                                             (Unaudited)        (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income                          $ (2,062,680)    $   2,740,416
Adjustments to reconcile net (loss) income to cash provided
by operating activities:
Amortization of share-based compensation     235,145            530,588
expense
Depreciation and amortization                643,102            582,513
Provision for doubtful accounts              228,656            243,367
Fair value change on contingent investment   -                  (7,000)
consideration
Loss on disposal of plant and equipment      16,702             -
Gain on investment in joint venture          -                  (78,558)
Deferred income taxes                        (41,007)           472,578
(Increase) decrease in current assets :
Accounts receivable                          (13,284,694)       (3,492,534)
Unbilled revenue                             10,491,452         (11,925,515)
Restricted cash                              205,683            -
Other current assets                         474,278            (907,482)
Inventories                                  (1,964,231)        1,164,228
Prepaid expenses                             (21,095)           (145,032)
Prepayments                                  (5,575,111)        (3,513,501)
(Increase) decrease in current liabilities
:
Accounts payable                             592,229            (3,495,129)
Notes payable                                -                  (871,833)
Cost accrual on projects                     753,716            4,560,906
Advance from customers                       (232,865)          1,392,326
Other payables                               751,897            4,585,357
Taxes payable                                398,981            (66,531)
Accrued liabilities                          (26,902)           (67,136)
Deferred revenue                             (53,387)           -
Net cash used in operating activities      $ (8,470,131)    $   (8,297,972)
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash received                     -                  348,969
Restricted cash related to advance from      (8,979,565)        -
potential buyer of assets
Advance from potential buyer of assets       8,979,565
Payment in business acquisition              -                  (35,273)
Cash paid on investment consideration        -                  (75,159)
Cash acquired from business combination      -                  31,336
Cash proceeds from disposal of PPE           27,405             -
Payment to purchase plant and equipment      (108,709)          (205,204)
Cash paid to acquire intangible asset        -                  (36,970)
Cash paid for construction in progress       (319,048)          (164,126)
Payment of loan to third-party companies     -                  665,885
Collection of loan to third-party            -                  (423,069)
companies
Net cash (used in) provided by investing   $ (400,352)      $   106,389
activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings                7,518,779          8,538,745
Payment of bank borrowing                    (1,925,854)        (1,753,987)
Proceeds from amount due to shareholder      6,491
Proceeds from loan from third-party          5,712,976          215,620
companies and individuals
Payment of loan from third-party companies   (2,125,078)        (379,499)
and individuals
Proceeds from loan from  non-controlling                        776,865
shareholders
Payment of loan from non-controlling         (2,898,922)        (1,988,141)
shareholders
Net cash provided by financing activities  $ 6,288,392      $   5,409,603
EFFECTS OF EXCHANGE RATE CHANGE IN CASH      (9,855)            408,797
DECREASE IN CASH                           $ (2,591,946)    $   (2,373,183)
CASH, beginning of the period                8,098,657          11,935,746
CASH, end of the period                      5,506,711          9,562,563
Supplemental disclosure for cash flow
information:
Income taxes paid                            108,777            154,361
Interest paid on debt                        836,104            386,107
Supplemental disclosure for noncash
investing activity:
Issued 30,207 and 35,974 ordinary shares
as one of the consideration in business      -                  229,875
combination
Gain on long-term investment to India        -                  78,558
Joint Venture
Fair value change on contingent              -                  7,000
consideration payable

 

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
ir@tri-tech.cn

SOURCE Tri-Tech Holding Inc.

Website: http://www.Tri-Tech.cn
Website: http://www.tri-tech.cn/ir/info/request
Website: http://www.tri-tech.cn/ir
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement