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China Clean Energy Announces First Quarter 2009 Results

Posted on: Tuesday, 12 May 2009, 06:00 CDT

FUQING CITY, China, May 12 /PRNewswire-Asia-FirstCall/ -- China Clean Energy Inc. (OTC Bulletin Board: CCGY) ("China Clean Energy", the "Company"), a producer of biodiesel fuel and environmentally-friendly specialty chemical products made from renewable resources in The People's Republic of China ("PRC"), today reported financial results for the first quarter ended March 31, 2009.

First Quarter 2009 Highlights -- Revenue totaled $2.8 million -- Gross profit totaled $356,332 -- Adjusted EBITDA was $194,118 -- Operating loss was $159,038 -- Net loss was $143,484

"The slowdown in the global economy and lower oil prices adversely affected both our specialty chemical and biodiesel business during the first quarter," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "As we move into the second quarter we are encouraged by signs of recovery in demand for our products and anticipate the first quarter of 2009 to be the low point of the year. We also expect construction of our Jiangyin plant to be completed in September 2009, with production from the new plant ramping up to full capacity by the second quarter of 2010."

First Quarter 2009 Results

China Clean Energy's net revenue in the first quarter was $2.8 million, down 37.3% from the first quarter of 2008. The decline in revenue was driven by lower sales volume and lower sales prices primarily for specialty chemical products, due to the decline in demand caused by the global economic slowdown. In addition, the sharp decline in crude oil price during the second half of 2008 has negatively affected selling prices of biodiesel in China. Compared to the first quarter of 2008 and fourth quarter of 2008, the selling price of biodiesel decreased by about 29% and 19%, respectively.

Gross profit in the first quarter of 2009 was $356,332, down 65.8% from the first quarter of 2008. Gross margin was 12.7% in the first quarter of 2009, down from 23.3% during the same period in 2008 driven by lower selling prices and higher manufacturing overhead costs.

Operating expense in the first quarter of 2009 was $515,370 representing a 29.6% decrease from $731,550 in the first quarter of 2008, driven by lower stock-based compensation expenses and decrease in selling expenses related to specialty chemical product exports. In the first quarter of 2009 the Company recorded an operating loss of $159,038 compared to an operating profit of $311,686 in the comparable period of 2008.

Adjusted EBITDA for the first quarter 2009 was $194,118 compared to $725,429 in the comparable period of 2008.

Net loss for the first quarter of 2009 was $143,484 compared to a profit of $163,783 or $0.005 per share in the first quarter of 2008.

Financial Condition

As of March 31, 2009, China Clean Energy had $2.5 million in total cash, approximately $3.4 million in working capital, and no debt. Stockholders' equity at March 31, 2009 stood at $31.5 million.

Recent Events

On April 21, 2009 the Company announced that its wholly-owned subsidiary, Fujian Zhongde Technology Co., Ltd., secured a credit line for up to RMB21 million (equivalent to approximately US$3.1 million) from Fuzhou City Commercial Bank.

On May 6, 2009 the Company announced that the construction of its Jiangyin plant is now expected to be completed in September 2009, representing a three month delay from the Company's previous estimate. The delay in the plant's construction has been due to the rainy season, as well as to delays resulting from a construction accident suffered by one of the Company's contractors. This accident has caused no other impact on the Company.

Conference Call

China Clean Energy will hold its first quarter 2009 conference call for all interested persons at 08:00 a.m. Eastern Time on May 12, 2009 to discuss its results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: +1-888-419-5570. International callers should dial +1-617-896-9871. When prompted by the operator, mention Conference Passcode 28126360. If you are unable to participate in the call at this time, a replay will be available for 14 days starting on May 12, 2009 at 10:00 a.m. Eastern Time. To access the replay, dial 888-286-8010 and International callers should dial 617-801-6888 and enter the passcode 61804670.

About China Clean Energy:

China Clean Energy, through its wholly-owned subsidiaries, Fujian Zhongde Technology Co., Ltd. and Fujian Zhongde Energy Co., Ltd, is engaged in the development, manufacturing, and distribution of biodiesel and specialty chemical products made from renewable resources. For additional information please visit: http://www.chinacleanenergyinc.com

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the Company's ability to raise additional capital to finance the Company's activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the future trading of the common stock of the Company; the ability of the Company to expand its production capacity; the period of time for which its current liquidity will enable the Company to fund its operations; the Company's ability to protect its proprietary information; general economic and business conditions; the volatility of the Company's operating results and financial condition; the Company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the Company's filings with the Securities and Exchange Commission. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company and the industry. The Company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.

--FINANCIAL TABLES FOLLOW-- CHINA CLEAN ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED) 2009 2008 REVENUES $2,806,262 $4,473,009 Less: cost of goods sold 2,449,930 3,429,773 GROSS PROFIT 356,332 1,043,236 OPERATING EXPENSE Selling and marketing 48,056 87,881 General and administrative 441,390 603,887 Research and development 25,924 39,782 Total operating expense 515,370 731,550 INCOME (LOSS) FROM OPERATIONS (159,038) 311,686 OTHER INCOME (EXPENSE) Interest income (expense), net 953 (25,667) Other income (expense) (1,101) (25,653) Change in fair value of warrants 26,064 -- Total other income (expense) 25,916 (51,320) INCOME (LOSS) BEFORE INCOME TAXES (133,122) 260,366 PROVISION FOR INCOME TAXES 10,362 96,583 NET INCOME (LOSS) (143,484) 163,783 OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustment (45,210) 1,163,218 COMPREHENSIVE INCOME (LOSS) $(188,694) $1,327,001 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE Weighted average number of shares 31,512,269 30,523,258 Earnings (loss) per share $(0.005) $0.005 CHINA CLEAN ENERGY INC. AND SUBSIDIARIES RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME

Adjusted EBITDA represents earnings before net interest expense, income tax provision, depreciation and amortization, stock based compensation, inventory write downs and other impairment charges. Our management believes adjusted EBITDA is useful to investors because it is frequently used by securities analysts, investors and other interested parties in evaluating companies in our industry. In addition, our management believes that adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of adjusted EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of non cash charges, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, our management uses adjusted EBITDA as a measure to evaluate the performance of our business. However, adjusted EBITDA is not a recognized measurement under generally accepted accounting principles, or GAAP, and when analyzing our operating performance, investors should use adjusted EBITDA in addition to, and not as an alternative for, income from operations and net income, each as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not consider certain cash requirements such as a tax and debt service payments.

Adjusted EBITDA Q1 2009 Q1 2008 Net Income (143,484) 163,783 Depreciation and Amortization 235,699 185,778 Interest (953) 25,667 Taxes 10,362 96,583 Stock-based Compensation 93,094 253,618 Inventory Write-down 25,464 -- Change in Warrants Liability (26,064) -- Total Adjusted EBITDA 194,118 725,429 Adjusted EBITDA per share 0.01 0.02 CHINA CLEAN ENERGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2009 AND DECEMBER 31, 2008 ASSETS March 31, December 31, 2009 2008 (Unaudited) CURRENT ASSETS Cash and cash equivalents $2,458,843 $2,913,711 Accounts receivable, net of allowance for doubtful accounts of $165,354 and $136,389 as of March 31, 2009 and December 31, 2008, respectively 1,265,617 1,092,768 Inventories, net 833,442 815,210 Advances for inventory and other current assets 207,477 310,773 Total current assets 4,765,379 5,132,462 PLANT AND EQUIPMENT, NET 20,112,793 19,167,624 INTANGIBLE ASSETS, NET 5,007,252 5,072,626 ADVANCES ON EQUIPMENT PURCHASES 3,251,263 3,649,192 TOTAL ASSETS $33,136,687 $33,021,904 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $957,445 $350,618 Customer deposits 61,180 31,422 Accrued liabilities 219,606 349,435 Taxes payable 144,517 156,965 Long-term bank loans - current portion -- 236,308 Total current liabilities 1,382,748 1,124,748 WARRANT LIABILITIES 269,317 -- LONG-TERM BANK LOANS -- 21,553 COMMITMENTS AND CONTINGENCIES Total liabilities 1,652,065 1,146,301 SHAREHOLDERS' EQUITY Preferred stock, par value $0.001 per share, authorized 10,000,000 shares, no shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively -- -- Common stock, par value $0.001 per share, authorized 90,000,000 shares, 31,512,269 and 21,512,269 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively 3,151 3,151 Additional paid-in capital 12,137,396 21,584,006 Statutory reserves 1,465,519 1,457,432 Retained earnings 14,753,777 5,661,025 Accumulated other comprehensive income 3,124,779 3,169,989 Total shareholders' equity 31,484,622 31,875,603 Total liabilities and shareholders' equity $33,136,687 $33,021,904 CHINA CLEAN ENERGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008 (UNAUDITED) 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(143,484) $163,783 Adjusted to reconcile net income (loss) to cash provided by operating activities: Depreciation 177,236 126,371 Bad debt expense 29,153 -- Amortization of intangible assets 58,463 59,407 Stock-based compensation expense 93,094 253,618 Writedown of inventory 25,464 -- Loss on disposal of assets -- 490 Change in fair value of warrants (26,064) -- Changes in operating assets and liabilities Accounts receivable (203,504) 1,028,595 Inventories (19,346) 440,923 Other receivables and prepaid expenses -- 32,330 Advances for inventory and other current assets 102,880 (23,660) Accounts payable 607,346 (42,189) Customer deposits 29,803 (43,216) Accrued liabilities (129,361) 66,010 Taxes payables (12,235) (144,130) Net cash provided by operating activities 589,445 1,918,332 CASH FLOWS FROM INVESTING ACTIVITIES Addition to construction in progress (558,889) (3,711,599) Purchase of equipment (2,102) (127,150) Proceeds from sale of equipment -- 1,747 Advances for equipment purchase (194,631) (5,850,585) Net cash used in investing activities (755,622) (9,687,587) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issuance of common stock -- 13,627,403 Payment on short-term bank loans (236,002) (1,048,275) Payment on long-term bank loans (21,525) (49,977) Net cash used in financing activities (257,527) 12,529,151 EFFECT OF EXCHANGE RATE ON CASH (31,164) 305,571 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (454,868) 5,065,467 CASH AND CASH EQUIVALENTS, beginning 2,913,711 1,133,555 CASH AND CASH EQUIVALENTS, ending $2,458,843 $6,199,022 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Interest expenses paid $2,652 $27,755 Income taxes paid $-- $86,113 Reclassification of advances of equipment purchase to construction in progress $587,612 -- For more information, please contact: China Clean Energy Inc. Shannon Yan, CFO Email: shannon.yan@chinacleanenergyinc.com CCG Investor Relations Inc. Crocker Coulson, President Phone: +1-646-213-1915 (New York) Ed Job, CFA Phone: +1-646-213-1914 Email: ed.job@ccgir.com

SOURCE China Clean Energy Inc.

Source: PR Newswire

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