China Clean Energy Announces Second Quarter 2009 Results
FUQING CITY,
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
(“PRC”), today reported financial results for the second quarter ended
2009
Second Quarter 2009 Highlights
-- Revenue totaled $4.3 million, up 51.8% from the first quarter 2009
-- Gross profit totaled $917,785, up 157.6% from the first quarter 2009
-- Adjusted EBITDA was $862,525
-- Operating income was $494,470, compared to a loss of $159,038 in the
first quarter 2009
-- Net loss was $76,832 on a GAAP basis
“We are very pleased with our results for the quarter, reflecting a
healthy recovery in volume and average selling prices for both our specialty
chemicals and biodiesel products from depressed first quarter levels, which
allowed us to expand our gross margins and return to profitability at the
operating level,” said Mr. Tai-ming Ou, China Clean Energy’s Chairman and CEO.
“We are also pleased to reaffirm that the Jiangyin plant is on target to come
on stream in the fourth quarter, which will allow us to substantially expand
our specialty chemical and biodiesel capacity. As we move into the third
quarter we expect to continue to benefit from the recent recovery in the
global economy and hope to make further progress on both our top and bottom
line results as we increase capacity utilization and benefit from firm
pricing.”
Second Quarter 2009 Results
China Clean Energy’s net revenue in the second quarter was
down 22.3% from the second quarter of 2008, and up 51.8% from the first
quarter 2009. The year-over-year decline in revenue was driven by lower
selling prices and lower domestic sales, primarily driven by the declining
demand in the domestic specialty-chemicals market as the economic slowdown
continued in 2009 The sequential increase in revenues was driven by higher
volume and average selling prices for both biodiesel and specialty-chemicals.
Average selling price for biodiesel was
compared to
1,493 tons in the second quarter of 2009, compared to 1,036 tons in the first
quarter of 2009. The Company did not produce biodiesel in the second quarter
of 2008. The average selling price for specialty chemicals was
the second quarter 2009 compared to
sales volumes were 2,655 tons and 1,782 tons respectively.
Gross profit in the second quarter of 2009 was
the first quarter 2009. The year-over-year decline in gross profit was driven
by lower volume, lower selling prices and higher manufacturing overhead costs.
The sequential increase in gross profit resulted from higher volume and
stronger prices. Gross margin in the second quarter 2009 was 21.5% compared to
24.8% in the comparable period 2008 and 12.7% in the first quarter 2009.
Operating expense in the second quarter of 2009 was
from
in the first quarter 2009, driven by lower stock-based compensation expenses.
In the second quarter 2009 the Company recorded an operating profit of
in 2008 and an operating loss of
Adjusted EBITDA for the second quarter 2009 was
million
2009. A table reconciling Adjusted EBITDA, which is a non-GAAP measure, to the
nearest GAAP measure is available elsewhere on this release.
Net loss for the second quarter 2009 was
compared to a profit of
and a loss of
for the second quarter includes a
compensation and a
Additional detail about these charges can be found in the 10-Q form filed with
the SEC on
Six Months Results
For the first six months of 2009, total revenue was
29.0% from the first six months of 2008. Gross profit for the first six months
of 2009 was
comparable period a year ago. Gross margin was 18.0% and 24.1% for the first
six months of 2009 and 2008, respectively. Income from operations was
down 68.3% from
was
million
of 2009 was
months of 2008. Net loss for the first six months of 2009 includes a
non-cash charge for stock based compensation and a
for warrant liability revaluation. Fully-diluted loss per share was
the first six months of 2009, compared to earnings per share of
comparable period in 2008.
Financial Condition
As of
approximately
Stockholders’ equity at
Conference Call
China Clean Energy will hold its second quarter 2009 conference call for
all interested persons at
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: +1-866- 800-8648. International callers should dial +1-617-614-2702.
When prompted by the operator, mention Conference Passcode 73793298. If you
are unable to participate in the call at this time, a replay will be available
for 14 days starting on
the replay, dial 888-286-8010 or for international callers, dial
+1-617-801-6888 and enter the passcode 32906676.
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 OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
REVENUES $4,259,747 $5,478,785 $7,066,009 $9,951,794
Less: cost of goods sold 3,341,962 4,120,332 5,791,892 7,550,105
GROSS PROFIT 917,785 1,358,453 1,274,117 2,401,689
OPERATING EXPENSES
Selling and marketing 96,370 49,040 144,426 136,921
General and
administrative 297,257 513,389 738,647 1,117,276
Research and development 29,688 51,222 55,612 91,004
Total operating
expenses 423,315 613,651 938,685 1,345,201
INCOME FROM OPERATIONS 494,470 744,802 335,432 1,056,488
OTHER INCOME (EXPENSE)
Interest income
(expense), net (397) 10,411 556 17,433
Other income (expense) (4,821) (55,240) (5,922) (85,827)
Change in fair value of
warrant liabilities (413,662) -- (387,598) --
Total other expenses (418,880) (44,829) (392,964) (68,394)
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES 75,590 699,973 (57,532) 988,094
PROVISION FOR INCOME TAXES 152,422 142,283 162,784 238,866
NET INCOME (LOSS) (76,832) 557,690 (220,316) 749,228
OTHER COMPREHENSIVE INCOME
Foreign currency
translation adjustment (1,851) 708,840 (47,061) 1,872,058
COMPREHENSIVE INCOME
(LOSS) $(78,683) $1,266,530 $(267,377) $2,621,286
BASIC AND DILUTED EARNINGS
PER SHARE
Weighted average number
of shares 31,512,269 31,512,269 31,512,269 31,017,764
Earnings per share $(0.002) $0.02 $(0.007) $0.02
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.
Three Months to Six Months to
June 30, June 30,
Adjusted EBITDA 2009 2008 2009 2008
Net Income (Loss): $(76,832) $557,690 $(220,316) $749,228
Depreciation and
Amortization $227,436 $235,360 $463,135 $421,138
Interest 397 (10,411) (556) (17,433)
Taxes 152,422 142,283 162,784 238,866
Stock-based Compensation 145,429 253,619 238,523 507,238
Inventory Write-down 11 29,043 25,475 29,043
Change in Warrants Liability 413,662 -- 387,598 --
Total Adjusted EBITDA $862,525 $1,207,584 $1,056,643 $1,928,080
Adjusted EBITDA per share $0.027 $0.038 $0.034 $0.062
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
2009 2008
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $4,531,327 $2,913,711
Restricted cash 508,751 --
Accounts receivable, net of allowance for
doubtful accounts of $69,638 and $136,389
as of June 30, 2009 and December 31, 2008,
respectively 1,323,122 1,092,768
Inventories, net 892,514 815,210
Advances for inventory and other current assets 739,644 310,773
Total current assets 7,995,358 5,132,462
PLANT AND EQUIPMENT, NET 23,775,465 19,167,624
INTANGIBLE ASSETS, NET 4,957,424 5,072,626
ADVANCES ON EQUIPMENT PURCHASES -- 3,649,192
TOTAL ASSETS $36,728,247 $33,021,904
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $502,041 $350,618
Accrued liabilities 180,188 349,435
Customer deposits 120,195 31,422
Taxes payable 66,668 156,965
Short-term notes payables 548,306 --
Short-term bank loans 3,076,500 --
Long-term bank loans - current portion -- 236,308
Total current liabilities 4,493,898 1,124,748
WARRANT LIABILITIES 682,981 --
LONG-TERM BANK LOANS - NET OF CURRENT PORTION -- 21,553
COMMITMENTS AND CONTINGENCIES
Total liabilities 5,176,879 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 June 30, 2009
and December 31, 2008, respectively -- --
Common stock, par value $0.001 per share,
authorized 90,000,000 shares, 31,512,269 and
31,512,269 shares issued and outstanding as
of June 30, 2009 and December 31, 2008,
respectively 31,512 31,512
Additional paid-in capital 12,254,464 21,555,645
Statutory reserves 1,523,242 1,457,432
Retained earnings 14,619,222 5,661,025
Accumulated other comprehensive income 3,122,928 3,169,989
Total shareholders' equity 31,551,368 31,875,603
Total liabilities and shareholders' equity $36,728,247 $33,021,904
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(220,316) $749,228
Adjusted to reconcile net income (loss)
to cash provided by operating activities:
Depreciation 354,796 313,931
Recovery of Bad debt expense (66,597) (189,579)
Amortization of intangible assets 108,339 107,207
Stock-based compensation expense 238,523 507,238
Writedown on inventory 25,475 29,043
Loss on disposal of assets -- 490
Change in fair value of warrants 387,598 --
Changes in operating assets and liabilities
Accounts receivable (165,357) 1,497,611
Inventories (103,928) 136,437
Other receivables and prepaid expenses -- (2,902,377)
Advances for inventory and other
current assets (605,385) 183,807
Accounts payable 151,967 30,537
Accrued liabilities (169,614) 45,657
Customer deposits 88,859 (187,969)
Taxes payables (90,124) (155,297)
Short-term notes payable 548,568 --
Net cash provided by operating activities 482,803 165,964
CASH FLOWS FROM INVESTING ACTIVITIES
Addition to construction in progress (1,335,147) (2,484,544)
Purchase of equipment (9,878) (1,950,320)
Proceeds from sale of equipment -- 1,747
Advances for equipment purchases -- (2,408,720)
Net cash used in investing activities (1,345,025) (6,841,837)
CASH FLOWS FROM FINANCING ACTIVITIES
Restricted cash (508,751) --
Net proceeds from issuance of common stock -- 13,627,403
Proceeds from short-term bank loans 3,077,970 --
Payments on short-term bank loans -- (1,054,467)
Payments on long-term bank loans (257,527) (111,805)
Net cash provided by financing activities 2,311,692 12,461,131
EFFECT OF EXCHANGE RATE ON CASH 168,145 468,834
INCREASE IN CASH AND CASH EQUIVALENTS 1,617,616 6,254,092
CASH AND CASH EQUIVALENTS, beginning of period 2,913,711 1,133,555
CASH AND CASH EQUIVALENTS, end of period $4,531,327 $7,387,647
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest expenses paid $18,823 $36,861
Income taxes paid $116,755 $86,113
Reclassification of advances of equipment
purchase to construction in progress $3,645,958 --
Reclassification of advances for inventory
and other assets to construction in progress $175,884 --
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.