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:    o11% reduction in headcount and improvements in employee productivity;   oConsolidation of compatible business units;   oReduction of middle management;   oRigorous selection of projects to reduce exposure to riskier projects; and   oAvoidance 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:    oLoss 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.   oNet 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.   oThe 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.   oWeighted average number of diluted shares outstanding was 8,253,406     compared to 8,207,427 in the same period in 2012.   oDiluted 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:    oWe 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.   oWe 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.   oWe 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- 8416approximately 10 minutes before the call. International callers, please dial1 (480) 629 - 9808.The conference ID number is4635095. A live and archived webcast of the call will be available athttp://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