Fiscal 2009 sales revenue increased by 7.47% year-over-year Full-year net profit increased by 40.83% year-over-year
SIPING, China, March 30 /PRNewswire-Asia-FirstCall/ -- THT Heat Transfer Technology, Inc. (OTC Bulletin Board: THTI, "the Company", or "THT"), a leading provider of heat exchangers and heat exchange solutions in China's clean technology industry, today announced its unaudited financial results for the fiscal year ended December 31, 2009.
Fiscal Year 2009 Financial Highlights -- Sales revenue increased by 7.47% year-over-year to US$34.89 million -- Gross profit increased by 45.93% year-over-year to US$14.92 million -- Operating income increased by 43.77% year-over-year to US$4.98 million -- Net income increased by 38.82% year-over-year to US$4.14 million -- Basic and fully diluted net income per share was US$0.27, compared with net income per share of US$0.20 for 2008
Chairman and Chief Executive Officer Guohong Zhao commented, "I am pleased to report that we achieved healthy results for fiscal year 2009 despite the residual impact of slower economic growth in the first half of 2009. During the year, we continued to enhance our nationwide sales network and increase our market share, at the same time as optimizing our product mix. These achievements allowed us to deliver solid results and further enhance profitability.
"Looking ahead, clean technology and energy saving industries continue to receive strong government support, as evidenced by the government's recent decision to further strengthen its policies on emission reductions. Moreover, the government has pledged to increase spending on energy efficient technologies, as well as to continue investing in clean technology and other technologies that promote the growth of a low carbon economy. The government's stimulus package will also continue to lend strong support to market growth.
"This favorable market environment and the trend towards improving energy efficiency and reducing businesses' emission footprints create enormous potential for THT. Our leading market position, diversified product mix and applications, and superior R&D achievements make THT well positioned to capitalize on growth in the clean technology sector," Mr. Zhao concluded.
Fiscal Year 2009 Unaudited Financial Results Revenue
Sales revenue for fiscal year 2009 was US$34.89 million, a 7.47% increase from US$32.47 million in 2008. During the year, sales volume of heat exchange products rose by a substantial 44.89% to 2,395 units in 2009, up from 1,653 units in 2008. The increase was attributable to China's broad economic recovery, the government's continued focus on environmental protection initiatives, as well as the Company's intensified sales initiatives to seize market share.
During the year, the high efficiency heat exchange unit saw the highest growth, of 240%, as a result of intensified efforts to expand sales in the district heat system market. This segment accounted for 16.7% of total revenue during the year.
Despite impressive sales volume increases, the Company experienced a fall in average selling prices. This decline was directly linked to a 40% fall in the price of steel, which is THT's major raw material input, from the start of 2009. As a result of lower raw material prices, average selling prices decreased by 25.84% during 2009.
Cost of Sales
Cost of sales for fiscal year 2009 decreased by 10.22% to US$19.97 million from US$22.24 million in 2008. The decline was mainly attributable to the push to optimize product mix and the drop in prices of major raw material inputs. In addition, the market price of steel dropped by 40% in 2009. As a result, the unit cost of sales decreased by 38.03% in 2009.
Gross Profit and Gross Margin
Gross profit increased to US$14.92 million in 2009, representing a 45.93% increase from US$10.23 million in 2008.
The gross margin increased to 42.77% in 2009 from 31.50% in 2008, an expansion of 11.27 percentage points. The significant improvement in gross margin was mainly due to efforts to optimize the product mix and maximize profitability. In response to strong market demand, and as a result of intensive sales initiatives, there was a significant increase in sales of high-margin products to the petrochemical and shipbuilding industries, including air-cooled heat exchangers, plate heat exchangers, and plate and frame heat exchangers. Sales of these products accounted for 50% of total sales revenue, compared with 35% in 2008.
Operating Expenses
Administrative expenses were US$3.06 million in 2009, a 39.48% increase from US$2.2 million in 2008. The year-over-year increase was driven primarily by additions to the management team and the higher expenses associated with being a public reporting company. As a result of additions to the management team, salary and administration costs increased by 24.44% to US$1.12 million in 2009 from US$0.90 million in 2008. The cost of being a public reporting company resulted in a rise in expenses amounting to US$0.45 million in 2009.
Research and development (R&D) expenses increased by 8.21% to US$1.10 million during the year from US$1.01 million in 2008, primarily due to continued efforts to strengthen the R&D function and an increase in capacity to further expand and build out the product pipeline.
Selling expenses amounted to US$5.78 million in 2009, a year-over-year increase of 63%. The increase was primarily due to expansion of the sales force and a rise in transportation costs. During the year, wages for sales personnel increased by 46% year-over-year to US$1.32 million, and related travel expenses increased 118% year-over-year to US$3.22 million. Transportation costs increased by 32% to US$0.78 million in 2009 from US$0.60 million in 2008 due to higher sales volume during the year.
Accordingly, total operating expenses increased by 47.03% to US$9.94 million in 2009 from US$6.76 million in 2008.
Income Before Income Taxes
Income before income taxes for fiscal year 2009 increased by 44.43% to US$4.81 million from US$3.33 million in 2008.
Income Tax
Income tax expenses increased to US$0.66 million in 2009 from US$0.34 million in 2008. The effective tax rate remained the same during the period.
Net Income
Net income attributable to shareholders was US$4.14 million in 2009, an increase of 38.82% compared to US$2.98 million in 2008.
Basic and fully diluted net income per share was US$0.27 in 2009, compared with US$0.20 in 2008.
Liquidity
As of December 31, 2009, the Company had cash and cash equivalents of US$5.38 million and restricted cash of US$1.38 million. During the year, there was a net cash outflow of US$7.20 million, compared with a net cash inflow of US$12.25 million in 2008. The change was mainly due to the combination of a prepayment of US$3.8 million to suppliers for contracts to secure raw materials at lower prices, a higher accounts receivable figure of US$8.23 million as a result of a larger volume of long-term projects in thermoelectric industry, and some customers postponing projects during the economic crisis. In addition, cash flow from financing activities was lower as the company received US$8.60 million net cash from short-term loans and shareholder capital injections in 2008.
First Quarter Fiscal 2010 Guidance
THT expects to generate net revenues in the range of US$9.00 million to US$11.00 million in first quarter fiscal 2010, compared with US$4.36 million in the same period of 2009. This represents The Company's current and preliminary view, and is subject to change.
About THT
Through its Chinese operating subsidiaries, THT Heat Transfer Technology, Inc. designs, manufactures and sells plate heat exchangers, shell-and-tube heat exchangers, heat exchanger units and other heat exchanger products with total heat exchange solutions. Heat exchangers play an integral part in helping customers improve energy efficiency. Used in a number of industries, THT's products focus on energy conservation, emission reduction and other environmentally friendly applications. Its six major product categories are plate heat exchangers, shell-and-tube heat exchangers, air-cooled heat exchangers, weld plate heat exchangers, heat exchanger units and plate-and- shell heat exchangers. The Company also offers comprehensive heat exchange solutions.
THT's in-house R&D capabilities enable it to deliver tailored products that better meet the changing demands of its customers. The Company has a strong record of delivering high-quality products and services to leading domestic and international customers. THT has completed over 3,000 projects and has provided heat exchange solutions to several Fortune 500 companies. The Company is headquartered in Siping City, Jilin Province, China. For more information, please visit the Company's website at http://www.tht.cn/ .
Safe Harbor Statement
This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, and involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the risk factor sections of the Company's periodic reports that are filed with the Securities and Exchange Commission and are available on its website (http://www.sec.gov/ ). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
For more information, please contact: The Company: Mr. Jianjun He Chief Financial Officer THT Heat Transfer Technology, Inc. Tel: +86-434-3266779 Email: IR@tht.cn Investor Relations (HK): Pamela Leung Taylor Rafferty Tel: +852-2167-2018 Email: tht@taylor-rafferty.com Investor Relations (US): Fares Ezziddin Taylor Rafferty Tel: +1-212-493-6962 Email: tht@taylor-rafferty.com THT Heat Transfer Technology, Inc. Unaudited Condensed Consolidated Balance Sheets As of December 31, 2009 and December 31, 2008 (Stated in US Dollars thousands) December 31,2009 December 31,2008 Assets Current assets Cash and cash equivalents 5,380 12,579 Restricted cash 1,376 1,594 Accounts receivable, net 14,882 6,845 Inventories 10,158 10,813 Other current assets 6,897 2,937 Total current assets 38,693 34,768 Long-term accounts receivable 1,000 430 Other non-current assets 7,406 6,880 Total assets 47,099 42,078 Liabilities Current liabilities Short-term bank loans 5,850 4,419 Other current liabilities 16,764 15,499 Total current liabilities 22,615 19,918 Long-term debt 1,609 3,374 Total liabilities 24,224 23,292 Total shareholders equity 22,634 18,467 Non controlling interests 241 319 Total liabilities and equity 47,099 42,078 THT Heat Transfer Technology, Inc. Unaudited Condensed Consolidated Statements of Income (Stated in US Dollars thousands) Year ended December 31, 2009 2008 Sales revenue $34,891 $32,467 Cost of sales (19,968) (22,240) Gross profit 14,923 10,227 Operating expenses Administrative expenses 3,065 2,197 Research and development expenses 1,096 1,013 Selling expenses 5,782 3,553 Total operating expenses 9,943 6,763 Operating income / (loss) 4,980 3,464 Interest income 17 22 Other income / (expense) 491 337 Interest expense (681) (495) Income before income taxes 4,807 3,328 Income taxes (664) (344) Net income before non-controlling interests 4,143 2,984 Net (income)/loss attributable to non controlling interest 77 12 Net income attributable to the equity shareholders 4,220 2,996 Earnings per share attributable to THT Heat Transfer Technology Inc. common stockholders $0.27 $0.20 Weighted average number of shares outstanding - Basic and diluted 15,408,219 14,800,000 THT Heat Transfer Technology, Inc. Unaudited Condensed Consolidated Statements of Cash Flows For Fiscal Year ended December 31, 2009 and 2008 (Stated in US Dollars thousands) Fiscal Year Ended December 31, 2009 2008 Net cash provided by (used in) operating activities $(6,251) $4,563 Net cash provided by (used in) investing activities (1,249) 1,042 Net cash provided by financing activities 342 8,596 Effect of exchange rate changes on cash (42) 138 Net increase/(decrease) in cash and cash equivalents 12,254 (7,199) Cash at beginning of the period 12,579 325 Cash at end of the period $5,380 $12,579
THT Heat Transfer Technology, Inc.
CONTACT: Mr. Jianjun He, Chief Financial Officer of THT Heat Transfer
Technology, Inc., +86-434-3266779, IR@tht.cn; or Investor Relations (HK),
Pamela Leung, Taylor Rafferty, +852-2167-2018, tht@taylor-rafferty.com; or
Investor Relations (US), Fares Ezziddin, Taylor Rafferty, +1-212-493-6962,
tht@taylor-rafferty.com
Web site: http://www.tht.cn/
