Attached files
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| 8-K - Sino Clean Energy Inc | v217048_8k.htm |
Sino Clean Energy, Inc. Announces Full Year 2010 Financial Results
-- FY2010 revenues increased 131% to $106.3 million; adjusted net income increased 154.7% to $27.9 million, with adjusted EPS of $1.46
-- FY2010 gross margins increased 230 bps year-over-year to 39.4%
-- Company generated $26.2 million in operating cash flow for full year 2010
-- Company provides full year 2011 guidance and expects revenues of at least $170 million and adjusted net income of at least $38 million
-- Management to host Earnings Conference Call on April 1, 2011 at 9:00 am ET
XI'AN, China, Mar. 31, 2011 -- Sino Clean Energy Inc. (Nasdaq:SCEI) ("Sino Clean Energy," or the "Company"), a leading producer and distributor of coal-water slurry fuel ("CWSF") in the People's Republic of China ("China"), today announced the Company's unaudited financial results for the fourth quarter and full year of 2010.
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SUMMARY FINANCIALS
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Fiscal Year 2010 Results
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2010
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2009
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CHANGE
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Sales
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$106.3 million
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$46.0 million
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+131.1%
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Gross Profit
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$41.8 million
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$17.1 million
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+144.4%
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Adjusted Earnings (unaudited)
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$27.9 million(1)
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$10.9 million(2)
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+154.7%
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GAAP Net Income (loss)
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$48.0 million
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($34.8) million
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--
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Adjusted EPS (Diluted)（unaudited）
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$1.46(1)
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$0.57(2)
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+156.1%
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GAAP EPS (Diluted)
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$2.70
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($3.56)
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--
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(1) Excludes non-cash gain of $28.4 million related to extinguishment of derivative liability, non-cash gain of $2.2 million for the changes in fair derivative liabilities, $1.9 million fair value of shares issued for bonus interest, and $8.6 million for amortization of notes discount.
(2) Excludes $25 million non-cash cost for private placement, non-cash gain of $7.0 million related to extinguishment of derivative liability, non-cash charges of $12.8 million for the changes in fair value of derivative liabilities, $3.9 million for amortization of notes discount, and $11.1 million related to the shares of common stock placed in escrow in connection with the Company's July 2009 financing.
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2010 Full Year Financial Results
Revenue -- For the full year of 2010 increased 131% to $106.3 million from $46.0 million in the same period of the prior year. For the year ended December 31, 2010, the Company sold 982,167 metric tons of CWSF compared to 456,197 metric tons in the same period one year ago, representing an increase of 115.3%. The Company's annual production capacity at December 31, 2010 was 850,000 metric tons, as compared to 650,000 metric tons at December 31, 2009. As of December 31, 2010, Sino Clean Energy had 43 customers under CWSF supply agreements totaling approximately 980,000 metric tons per year, compared to 30 customers totaling approximately 600,000 metric tons of CWSF per year at December 31, 2009.
Cost of Goods Sold -- Cost of goods sold was $64.4 million for the year ended December 31, 2010, compared to $28.9 million for the full year of 2009, representing an increase of 123%, which was in line with the corresponding increase in sales.
Gross Profit and Gross Profit Margin -- Gross profit increased 145% to $41.8 million in the full year of 2010, as gross profit margin improved by 230 basis points from the same period last year to 39.4% due to the higher pricing for CWSF.
Selling, General and Administrative Expenses -- Selling expenses totaled $4.6 million for the year ended December 31, 2010, as compared to $1.1 million for the year ended December 31, 2009, an increase of 309%. This increase is mainly in transportation costs which amounted to $4.5 million due to the growth of business in 2010. General and administrative expenses totaled $2.6 million for the full year of 2010, as compared to $1.8 million full year 2009, an increase of approximately 43% primarily attributable to the expansion of the Company’s operations.
Income from Operations -- Income from operations increased 145% to $34.7 million from $14.2 million due to the above-mentioned factors.
GAAP net income for the full year of 2010 was $48.0 million and diluted earnings per share was $2.70 based on 17.8 million shares. Adjusting for non-cash charges during each respective period, adjusted earnings was $27.9 million and $10.9 million for the full years ending December 31, 2010 and 2009, yielding $1.46 and $0.57 in diluted earnings per share, respectively.
Liquidity and Capital Resources
Cash and cash equivalents were $52.1 million at December 31, 2010 compared to $18.3 million at December 31, 2009. For the full year of 2010, the Company generated $26.2 million in net cash flow from operations, compared to $9.7 million in the full year of 2009. The Company had working capital of $58.3 million at December 31, 2010 and a current ratio of 4.0-to-1. Inventories were $1.3 million and the accounts receivable balance was $3.9 million at December 31, 2010, compared to approximately $0.9 million and $3.7 million at December 31, 2009, respectively. The annualized days sales outstanding for the full year of 2010 were 13 days.
Financial Outlook for 2011
Management is providing fiscal 2011 guidance and expects revenues of at least $170 million and net income of at least $38 million, representing an increase of approximately 60.0% and 35.7% compared to 2010 revenues and adjusted net income, respectively. This guidance assumes total sales volume of 1.4 million metric tons of CWSF in 2011.
Business Outlook for 2011
Sino Clean Energy has achieved several major milestones in the past few months. In January 2011, the Company commenced production at its new 300,000 metric ton (MT) CWSF production facility in Dongguan, Guangdong province. This facility took 4 months to build and cost approximately $11.2 million of capital expenditures for land, equipment and construction. With the successful completion of its first production facility in Guangdong province and a large base of prospective customers in this region, management announced on March 24, 2011, its intention to add an additional 750,000 MT of CWSF adjacent to the existing 300,000 MT facility. Strong support from the Dongguan government to accelerate the adoption of CWSF, including a one-time subsidy of $6,150 per steam ton per year and a mandate that all coal-fired boilers below four steam tons/hour and 10 steam tons/hour over eight years old must be renovated or eliminated by the end of 2012, which we believe will materially increase demand for our products. Management expects a rapid ramp in utilization rates at the Dongguan facility to contribute approximately $59.5 million of revenues based on 440,000 MT of production in 2011.
The Company continues to proceed with plans to build a new 500,000 MT CWSF production facility in Nanning, Guangxi province. The business development team is in the process of securing the land for the 500,000 MT facility and expect to commence construction by the end of 2011. The projected capital expenditures for the Nanning facility are approximately $24 million. Finally, management is currently evaluating its plans to proceed with the 200,000 MT capacity expansion in Shenyang and will provide updates on any developments in future news releases.
"I am pleased with our accomplishments in 2010, which included a 30.7% increase in capacity and a 131% increase in sales," stated Baowen Ren, Chairman of Sino Clean Energy. "We are convinced that the CWSF market is at the early stages of a long term growth cycle in China, driven by rapid adoption of clean and efficient sources of energy. With our experience, increasing scale and prime capital position, Sino Clean Energy will strive to extend its lead in this burgeoning market."
Conference Call
The conference call will take place at 9:00 a.m. ET on Friday, April 1, 2011. To attend the call, please use the dial-in information below. When prompted, ask for the "Sino Clean Energy call" and/or be prepared to provide the conference ID.
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Date:
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Friday, April 1, 2011
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Time:
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9:00 a.m. Eastern Time, US
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Conference Line Dial-In (U.S.):
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1-877- 941-8601
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International Dial-In:
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1-480-629-9810
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Conference ID:
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4428282 "Sino Clean Energy Call"
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Webcast link:
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http://viavid.net/dce.aspx?sid=00008378
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Please dial in at least 10 minutes before the call to ensure timely participation. A playback will be available through April 8, 2011. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 if calling internationally. Utilize the pass code 4428282 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link, http://viavid.net/dce.aspx?sid=00008378, or at ViaVid's website at http://www.viavid.net, where the webcast can be accessed through April 8, 2011.
About Sino Clean Energy
Sino Clean Energy is a U.S. publicly traded company and a China-based producer and distributor of coal-water slurry fuel ("CWSF"). With locations in Shaanxi Province and Liaoning Province, Sino Clean Energy is one of the leading CWSF producers in China. For more information about Sino Clean Energy, please visit http://www.sinocei.net/.
About Non-GAAP Financial Measures
This press release contains non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they exclude non-cash charges that our management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, because these measures provide a consistent method of comparison to historical periods. Moreover, management believes these non-GAAP measures reflect the essential operating activities of Sino Clean Energy. Accordingly, management excludes the change in derivative liabilities, gains (losses) on extinguishment of derivative liabilities, expenses related to escrow shares, the fair value of shares issued for bonus interest, and amortization of note discount when making operational decisions. The Company believes that providing the non-GAAP measures that management uses to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods. In addition, it allows investors to evaluate the Company's performance using the same methodology and information as that used by our management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, our management compensates for these limitations by providing the relevant disclosure of the items excluded.
The following table provides the non-GAAP financial measure and the related GAAP measure and provides a reconciliation of the non-GAAP measure to the equivalent GAAP measure.
Reconciliation of GAAP Net Income (Loss) to Adjusted Earnings (Unaudited)
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Year Ended
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December 31
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（Unaudited）
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(Unaudited)
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2010
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2009
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Net Income(loss)
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48,005,406 | (34,824,688 | ) | |||||
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Expense related to escrow shares
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- | 11,125,071 | ||||||
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Gain on extinguishment of derivative liability
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(28,404,181 | ) | (7,046,556 | ) | ||||
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Change in fair derivative liabilities
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(2,197,831 | ) | 12,770,113 | |||||
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Gain on value of shares issued for bonus interest
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1,864,701 | - | ||||||
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Cost of private placement
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- | 24,977,114 | ||||||
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Amortization of notes discount
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8,601,975 | 3,942,185 | ||||||
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Adjusted earnings
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27,870,070 | 10,943,239 | ||||||
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Basic adjusted earnings per common share
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$ | 1.46 | $ | 0.57 | ||||
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Diluted adjusted earnings per common share
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$ | 1.46 | $ | 0.57 | ||||
Safe Harbor Statement
This press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. There can be no assurance that such statements will prove to be accurate and the actual results and future events could differ materially from management's current expectations. Such factors include, but are not limited to uncertainties in product demand, the impact of competitive products and pricing, our ability to obtain regulatory approvals, changing economic conditions around the world and other factors detailed from time to time in the Company's filings with the United States Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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For more information, please contact:
Company:
Ming Lee
Assistant to the Chairman
Tel: +86-29-8406-7376 (China)
Email: marin_lm@163.com
Investor Relations:
HC International, Inc.
Ted Haberfield, Executive VP
Tel: +1-760-755-2716
Email: thaberfield@hcinternational.net
Web: http://www.hcinternational.net
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--Financial Tables—
Sino Clean Energy Inc. and Subsidiaries
Consolidated Balance Sheets
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December 31,
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December 31,
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2010
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2009
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ASSETS
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Cash and cash equivalents
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$
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52,055,857
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$
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18,302,558
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Accounts receivable, net
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3,856,941
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3,655,473
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Inventories
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1,261,334
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892,609
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Prepaid inventories
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10,242,878
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5,453,095
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Prepaid expenses
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1,384
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259,627
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Tax recoverable
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-
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138,495
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Other receivables
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49,664
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65,584
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Amount due from Suoang BST
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10,307,912
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-
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Land use right – current portion
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40,079
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38,739
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Total current assets
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77,816,049
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28,806,180
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Land use right – non-current portion
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1,799,889
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1,778,562
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Property, plant and equipment, net
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13,609,932
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12,557,691
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Prepayments and deposits
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9,409,091
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729,328
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Goodwill
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762,018
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762,018
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Total assets
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103,396,979
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44,633,779
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LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIENCY)
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Accounts payable and accrued expenses
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$
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1,560,183
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$
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2,672,211
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Taxes payable
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3,329,844
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1,577,249
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Mortgage payable – current portion
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5,450
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-
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Amount due to directors
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48,457
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73,466
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Derivative liabilities
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14,555,027
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16,752,858
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Total current liabilities
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19,498,961
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21,075,784
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Mortgage payable –non-current portion
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160,095
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-
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Convertible notes, net of discount
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-
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1,615,025
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Derivative liabilities
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-
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28,404,181
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Total liabilities
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19,659,056
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51,094,990
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Shareholders’ Equity (Deficiency)
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Preferred stock, $0.001 par value, 50,000,000 shares authorized
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None issued and outstanding
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Common stock, $0.001 par value, 30,000,000 shares authorized,
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23,452,270 and 10,849,863 issued and outstanding as of
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December 31, 2010 and 2009 respectively
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23,452
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10,850
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Additional paid-in capital
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66,567,560
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25,432,804
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Retained earnings (accumulated deficit)
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9,221,924
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(35,802,987
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)
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Statutory reserves
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4,739,048
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1,758,553
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Accumulated other comprehensive income
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3,185,939
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2,139,569
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Total shareholders’ equity (deficiency)
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83,737,923
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-6,461,211
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Total liabilities and shareholders’ equity
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$
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103,396,979
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$
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44,633,779
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Sino Clean Energy Inc. and Subsidiaries
Consolidated Statements of Operations and Other Comprehensive Income (Loss)
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For the years ended December 31, 2010 and 2009
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(Amounts expressed in U.S. Dollars)
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Years Ended December 31,
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2010
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2009
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Revenue
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$ | 106,273,785 | $ | 46,012,353 | ||||
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Cost of goods sold
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(64,444,862 | ) | (28,922,846 | ) | ||||
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Gross profit
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41,828,923 | 17,089,507 | ||||||
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Selling expenses
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4,600,685 | 1,125,884 | ||||||
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General and administrative expenses
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2,574,200 | 1,796,032 | ||||||
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Income from operations
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34,654,038 | 14,167,591 | ||||||
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Other income (expenses)
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||||||||
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Interest expense and finance costs
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(10,464,567 | ) | (4,937,441 | ) | ||||
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Expense related to escrow shares
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- | (11,125,071 | ) | |||||
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Interest income
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105,096 | 43,285 | ||||||
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Gain on extinguishment of derivative liability
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28,404,181 | 7,046,556 | ||||||
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Change in fair value of derivative liabilities (warrants)
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2,197,831 | (12,770,113 | ) | |||||
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Cost of private placement
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- | (24,977,114 | ) | |||||
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Sundry income (expenses)
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- | (29,293 | ) | |||||
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Total other income (expenses)
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20,242,541 | (46,749,191 | ) | |||||
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Income before provision for income taxes
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54,896,579 | (32,581,600 | ) | |||||
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Provision for income taxes
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6,891,173 | 2,243,088 | ||||||
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Net income before non-controlling interest
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48,005,406 | (34,824,688 | ) | |||||
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Net income
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48,005,406 | (34,824,688 | ) | |||||
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Other comprehensive (loss) income
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Transfer to reserve
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- | |||||||
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Foreign currency translation adjustment
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1,046,370 | 16,344 | ||||||
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Comprehensive (loss) income
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$ | 49,051,776 | $ | (34,808,344 | ) | |||
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Weight average number of shares
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-Basic
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15,855,682 | 9,792,922 | ||||||
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-Diluted
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17,758,159 | 9,792,922 | ||||||
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Income (Loss) per common share
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||||||||
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-Basic
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$ | 3.03 | $ | (3.56 | ) | |||
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-Diluted
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$ | 2.70 | $ | (3.56 | ) | |||
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Sino Clean Energy Inc. and Subsidiaries
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Consolidated Statements of Cash Flows
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For the years ended December 31, 2010 and 2009
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(Amounts expressed in U.S. Dollars)
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Year ended December 31,
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2010
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2009
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Cash flow from operating activities :
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Net income
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$ | 48,005,406 | $ | (34,824,688 | ) | |||
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Adjustments to reconcile net income to cash provided by operating activities :
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||||||||
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Depreciation and amortization (include land)
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2,166,551 | 1,530,238 | ||||||
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Amortization of deferred debt issuance costs
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- | 274,278 | ||||||
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Amortization of discount on convertible notes
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8,601,975 | 3,942,185 | ||||||
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Interest expenses
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- | - | ||||||
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Expense related to escrow shares
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- | 11,125,071 | ||||||
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Fair value of common stock issued for bonus interest
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1,864,701 | |||||||
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Fair value of shares issued for services
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- | 454,935 | ||||||
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Cost of private placement
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- | 24,977,114 | ||||||
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Gain on extinguishment of derivative liability
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(28,404,181 | ) | (7,046,556 | ) | ||||
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Change in fair value of derivative liabilities
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(2,197,831 | ) | 12,770,113 | |||||
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Change in fair value of options
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125,846 | |||||||
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Loss on sales of property, plant and equipment
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(2,738 | ) | ||||||
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Reverse of stock split
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- | |||||||
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Intangible assets (as PPE)
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- | - | ||||||
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Inter-co current account
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- | - | ||||||
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Change in operating assets and liabilities :
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Accounts receivable
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(73,205 | ) | (2,755,844 | ) | ||||
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Deffered expenses
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- | - | ||||||
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Other receivables
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17,731 | (48,598 | ) | |||||
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Prepaid expenses
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260,236 | (172,669 | ) | |||||
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Refundable advance
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- | 731,861 | ||||||
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Inventories
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(329,428 | ) | (847,541 | ) | ||||
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Prepaid inventories
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(4,486,361 | ) | (3,456,511 | ) | ||||
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Tax recoverables
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139,707 | (138,495 | ) | |||||
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Accounts payable and accrued expenses
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(1,129,657 | ) | 1,759,335 | |||||
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Government grant receivable
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- | 146,314 | ||||||
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Other payable
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- | - | ||||||
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Taxes payables
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1,659,372 | 1,271,346 | ||||||
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Net cash provided from operating activities
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26,218,124 | 9,691,888 | ||||||
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Cash flows from investing activities :
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||||||||
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Deposits and prepayment
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(8,438,469 | ) | 265,067 | |||||
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Deferred offering
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35,000 | - | ||||||
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Amount due from Suoang BST
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(10,341,262 | ) | - | |||||
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Prepaid long term
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(0 | ) | ||||||
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Proceeds from displosal of property, plant and equipment
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2,955 | - | ||||||
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Purchase of property, plant and equipment
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(2,735,696 | ) | (4,654,910 | ) | ||||
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Net cash used in investing activities
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(21,477,472 | ) | (4,389,843 | ) | ||||
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Cash flows from financing activities :
|
||||||||
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Payment of advances from director
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(25,000 | ) | (391,583 | ) | ||||
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Proceeds from mortgage payable
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163,983 | - | ||||||
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Repayment of mortgage payable
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(2,570 | ) | - | |||||
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Proceeds from issuance of common stock
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28,282,810 | 9,874,370 | ||||||
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Payment of convertible notes
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- | (400,000 | ) | |||||
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Cash received from exercise of options
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23,980 | |||||||
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Cash received from exercise of warrants
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633,021 | - | ||||||
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Net cash provided from (used in) financing activities
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29,076,224 | 9,082,787 | ||||||
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Effect of foreign currency translation
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(63,577 | ) | 3,420 | |||||
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Net increase in cash and cash equivalents
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33,753,299 | 14,388,252 | ||||||
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Cash and cash equivalents, beginning of period
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18,302,558 | 3,914,306 | ||||||
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Cash and cash equivalents, end of period
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$ | 52,055,857 | $ | 18,302,558 | ||||