• Press Releases

China Recycling Energy Corporation Reports Fourth Quarter and Full Year 2014 Financial Results

2015-03-23 08:34:47

 Mar 23, 2015

 

XI'AN, ChinaMarch 23, 2015 /PRNewswire/ -- China Recycling Energy Corp. (NASDAQ: CREG) ("CREG" or "the Company"), a leading industrial waste-to-energy solution provider in China, today announced its financial results for the fourth quarter and full year endedDecember 31, 2014.

Fourth Quarter 2014 Unaudited Financial Highlights

  • Interest income on sales-type leases increased 24.9% to US$6.98 million from US$5.59 million for the fourth quarter of 2013.
  • Total sales were US$0.12 million, compared with US$13.20 million for the fourth quarter of 2013 as no power generation system was completed and sold in the fourth quarter of 2014.
  • Net income was US$5.33 million, up 26.8% from US$4.20 million for the fourth quarter of 2013.
  • Basic and fully diluted earnings per share (EPS) was US$0.06, as compared with US$0.07 for the fourth quarter of 2013.

Full Year 2014 Audited Financial Highlights

  • Interest income on sales-type leases increased 36.8% to US$26.46 million from US$19.34 million in 2013.
  • Total sales were US$19.66 million, compared with US$63.19 million in 2013.
  • Net income was US$19.81 million, up 26.8% from US$15.63 million in 2013.
  • Basic and fully diluted earnings per share (EPS) was US$0.28, as compared with US$0.29 in 2013.

Summary of Financial Results:

(US$ in thousands, except for per share data)

Three Months Ended

December 31,

Twelve Months Ended

December 31,

 

2014

2013

2014

2013

Total Sales (1) + (2)

116

13,201

19,659

63,193

(1) Sales of Systems

0

12,921

18,869

62,013

(2) Contingent Rental
Income

116

280

790

1,180

Gross Profit

104

3,236

5,074

15,346

Interest Income on Sales-
Type Leases

6,977

5,587

26,459

19,345

Total Operating Income

7,081

8,823

31,532

34,691

Net Income

5,333

4,205

19,812

15,630

Basic EPS

0.06

0.07

0.28

0.29

Diluted EPS

0.06

0.07

0.28

0.29

Mr. Guohua Ku, Chairman and CEO of CREG commented, "We are very happy to report solid growth in our interest income on sales-type leases and net income for the fourth quarter of 2014. On a yearly basis, interest income on sales-type leases, the major and consistent regular revenue for the Company, increased 36.8% while net income increased 26.8%. With six projects under construction for a total capacity of 135MW, we look confidently to our future. We expect that a WGPG system to Shanxi Datong Coal Group and a CDQ system to Shandong Boxing will be completed in the second quarter of 2015. These two systems have a total capacity of 40MW. Given continued favorable government policies, more stringent environmental protection requirements from the government and rising awareness for energy recovery in energy-intensive industries, we continue to see strong market demand for our waste energy recycling systems."

Full Year 2014 Audited Financial Results

SALES. Total sales, including sales of systems and contingent rental income, were US$19.66 million for the full year of 2014, a decrease of US$43.53 million as compared with US$63.19 million in 2013, mainly due to fewer systems completed and sold in 2014.

Sales of systems for the full year of 2014 were US$18.87, as compared with US$62.01 million in 2013. In 2014, the Yida system was completed and sold, while the Shenqiu Phase II system, the Shanxi Datong Phase I system, the Pucheng Biomass Phase II system and the Jitie system were completed and sold in 2013. For the full year of 2014, the Company received contingent rental income ofUS$0.79 million from the usage of electricity in addition to the minimum lease payments, compared to US$1.18 million in 2013. For sales-type leases, sales and cost of sales are recorded at the time of the lease commencement; in addition to systems sales revenue, CREG's other major source of revenues is interest income from sales-type leases.

COST OF SALES. Cost of sales for the full year of 2014 was US$14.59 million, as compared with US$47.85 million in 2013. The decrease was mainly due to fewer systems completed and sold in 2014.

GROSS PROFIT and GROSS MARGINGross profit was US$5.07 million for the full year of 2014, as compared with US$15.35 millionin 2013. Blended gross margin for the full year of 2014 was 26%, compared with 24% in 2013.

INTEREST INCOME ON SALES TYPE LEASES. Interest income on sales-type leases, which is a major and consistent regular revenue for the Company, was US$26.46 million for the full year of 2014, an increase of 36.8% from US$19.34 million in 2013. In 2014, interest income was derived from sixteen sales-type leases, including the CHPG system at Jing Yang Shengwei (5 year term, expired on June 30, 2014), the TRT system at Zhangzhi (13 year term originally but terminated early on September 24, 2014), the BMPG systems at Pucheng Phase I and II (15 year and 11.9 year term, respectively), the BMPG systems at Shenqiu Phase I and II (11 year and 9.5 year term, respectively), five power and steam generating systems at Erdos (20 year term), the WHPG system at Zhong Gang (9 year term originally but terminated early on December 22, 2014), the WHPG systems at Jitie (24 year term), two BPRT systems at Datong (30 year term), and the WGPG system at Yida (15 years). In comparison, interest income on sales-type leases was derived from fifteen systems in 2013.

OPERATING EXPENSES. Operating expenses totaled US$3.49 million for the full year of 2014, a decrease of 16.0% as compared with US$4.16 million in 2013, mainly due to a US$0.59 million decrease in consulting expenses compared to 2013.

NON-OPERATING INCOME (EXPENSES). Non-operating expenses consisted of non-sales-type lease interest income, interest expenses, bank charges and miscellaneous expenses. For the full year of 2014, net non-operating expenses were US$2.20 million, compared with US$7.83 million in 2013. For the full year of 2014, the Company had US$3.43 million in interest expense on loans, andUS$1.02 million in other income consisting mainly of US$0.93 million in income from the sale of a TRT system to Zhangzhi andUS$1.76 million in income from the sale of a WHPG system to Zhong Gang, but offset by US$1.58 million in financial expenses. In addition, the Company had US$0.19 million in interest income in 2014. For the full year of 2013, the Company had US$6.72 million in interest expense on loans, a US$1.29 million one-time commission to the fund management company for initiating and completing aRMB460 million (US$75.0 million) financing for the Company, and US$0.23 million in interest income.

INCOME TAX EXPENSE. Income tax expense was US$6.11 million for the full year of 2014, decreased by 11.3% as compared withUS$6.89 million in 2013. The decrease in income tax expense was mainly due to a decrease in the consolidated effective income tax rate, which was 23.7% in 2014, compared with 30.3% in 2013. This is mainly due to the 15% preferential income tax rate of the Company's wholly owned subsidiary Xi'an TCH in 2014, and income tax rate of Xi'an TCH for the year of 2013 was 25%. In July 2013, Xi'an TCH was re-approved for high-tech enterprise status and enjoyed a 15% preferential income tax rate effective January 1, 2013.

NET INCOME. Net income for the full year of 2014 was US$19.81 million, an increase of 26.8% as compared with US$15.63 million in 2013. This increase in net income was mainly due to the increased interest income on sales-type leases and lower non-operating expenses in 2014 compared to 2013.

For the full year of 2014, basic and fully diluted EPS was US$0.28, compared with US$0.29 in 2013.

Financial Position as of December 31, 2014

As of December 31, 2014, the Company had cash and cash equivalents of US$35.87 million compared with US$7.70 million as ofDecember 31, 2013. Other current assets were US$9.70 million and current liabilities were US$26.66 million. Total shareholders' equity was US$207.86 million compared with US$154.68 million as of December 31, 2013.The net tangible asset per share wasUS$2.50 as of December 31, 2014.

Net Investment in Sales-Type Leases as of December 31, 2014

The components of the net investment in sales-type leases as of December 31, 2014 and December 31, 2013 are as follows:

(US$)

December 31
2014

December 31, 
2013

Total future minimum lease payments receivable

583,820,886

560,187,391

Less: executory cost

(134,771,919)

(134,447,605)

Less: unearned interest income

(268,028,368)

(241,234,839)

Net investment in sales - type leases

181,020,599

184,504,947

Current portion

6,561,984

9,063,386

Noncurrent portion

174,458,615

175,441,561

As of December 31, 2014, the future minimum rentals to be received on non-cancelable sales-type leases by years were as follows: 

2015

42,114,725

2016

40,398,758

2017

40,398,758

2018

40,300,703

2019

40,202,647

Thereafter

380,405,295

Total

US$583,820,886

Recent Business Development

At the end of December, 2014, the Company transferred its Waste Heat Power Generation System ("WHPG System") system originally leased to Zhong Gang Group Bin Hai Industry Co., Ltd. ("Zhong Gang") to Zhong Gang for a price of about US$9.8 million (RMB60.0 million). Under the original lease contract, CREG was leasing the WHPG System to Zhong Gang for 9 years from the day the system became operational in October 2010 until September 2019. According to Company's estimates,the system transfer price is fairly close to the discounted cash flow value of the total principal repayment and interest income on sales-type leases of US$11.3 million(RMB69.3 million) receivable by the Company during the period from January 1, 2015 to September 30, 2019.

Financial Results Conference Call

The Company will host a conference call at 8:00 a.m. EST on Tuesday, March 24, 2015, to discuss the Company's fourth quarter and full year 2014 financial results. Mr. Guohua Ku, Chief Executive Officer, and Mr. David Chong, Chief Financial Officer, will be hosting the call.

Listeners may access the call by dialing:

International: +1-412-902-4272

US Toll Free: 1-888-346-8982

China Toll Free: 4001-201203

Conference Reference: China Recycling Energy Corp. conference call

A telephone replay will be available shortly after the call until March 31, 2015 by dialing the following numbers:

International: +1-412-317-0088

US Toll Free: 1-877-344-7529

Replay Access Code: 10062384

 

10K Filing

For more information regarding China Recycling Energy Corp.'s financial performance during the full year ended December 31, 2014, please refer to the Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on March 23, 2015.

About China Recycling Energy Corp.

China Recycling Energy Corp. (NASDAQ: CREG) ("CREG" or "the Company") is based in Xi'an, China and provides environmentally friendly waste-to-energy technologies to recycle industrial byproducts for steel mills, cement factories and coke plants in China. Byproducts include heat, steam, pressure, and exhaust to generate large amounts of lower-cost electricity and reduce the need for outside electrical sources. The Chinese government has adopted policies to encourage the use of recycling technologies to optimize resource allocation and reduce pollution. Currently, recycled energy represents only an estimated 1 percent of total energy consumption and this renewable energy resource is viewed as a growth market due to intensified environmental concerns and rising energy costs as the Chinese economy continues to expand. The management and engineering teams have over 20 years of experience in industrial energy recovery in China. For more information about CREG, please visit http://www.creg-cn.com.

 

Safe Harbor Statement

This press release may contain certain "forward-looking statements" relating to the business of China Recycling Energy Corp. and its subsidiary companies. 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, 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. Investors 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 Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website at 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:

Mr. David Chong, Chief Financial Officer
China Recycling Energy Corp.
Tel: +86-1370-1813139; +65-9721 6163
Email: chongscd@creg-cn.com

Christensen

Ms. Xiaoyan Su (China)
Vice President
Tel: +86-10-5900-3429
Email: xsu@christensenir.com

Mr. Christian Arnell (China)
Vice President
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

 

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 CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED BALANCE SHEETS 

 AS OF DECEMBER 31, 2014 AND 2013 

     
 

2014

2013

     

 ASSETS 

   
     

 CURRENT ASSETS 

   

      Cash and equivalents  

$                              35,871,030

$                                   7,701,530

      Restricted cash 

-

2,296,249

      Accounts receivable 

16,330

71,573

      Current portion of investment in sales type leases, net  

6,561,984

9,063,386

      Interest receivable on sales type leases 

974,526

765,010

      Prepaid expenses  

951,180

1,045,802

      Other receivables 

1,196,684

1,813,220

      Notes receivable 

-

656,071

      Prepaid loan fees - current 

-

83,649

     

         Total current assets 

45,571,734

23,496,490

     

 NON-CURRENT ASSETS 

   

      Prepaid loan fees - noncurrent 

-

125,474

      Investment in sales type leases, net 

174,458,615

175,441,561

      Long term investment 

821,205

738,513

      Long term deposit 

60,525

385,073

      Property and equipment, net 

25,116

44,243

      Construction in progress 

154,340,627

83,719,596

     

         Total non-current assets 

329,706,088

260,454,460

     

 TOTAL ASSETS 

$                            375,277,822

$                               283,950,950

     

 LIABILITIES AND STOCKHOLDERS' EQUITY 

   
     

 CURRENT LIABILITIES 

   

      Accounts payable 

$                                1,140,181

$                                   2,642,663

      Notes payable - bank acceptances 

163,425

5,740,622

      Taxes payable  

2,614,311

1,560,829

      Accrued liabilities and other payables 

3,250,744

1,517,191

      Due to related parties 

40,954

2,420,391

      Deferred tax liability  

1,035,337

1,371,766

      Loans payable - current 

15,729,694

14,925,618

      Interest payable on entrusted loans 

285,257

287,887

      Current portion of long term payable 

2,401,405

1,441,051

     

          Total current liabilities 

26,661,308

31,908,018

     

 NONCURRENT LIABILITIES 

   

       Deferred tax liability, net 

13,302,537

11,954,619

       Refundable deposit from customers for systems leasing 

1,650,597

1,164,526

       Long term payable  

-

2,385,422

       Loans payable 

63,114,888

18,862,045

       Entrusted loan payable 

62,428,501

62,654,792

     

          Total noncurrent liabilities 

140,496,523

97,021,405

     

          Total liabilities 

167,157,831

128,929,422

     

 CONTINGENCIES AND COMMITMENTS 

   
     

 STOCKHOLDERS' EQUITY 

   

      Common stock, $0.001 par value; 100,000,000 shares  

83,009

60,910

            authorized, 83,009,035 and 60,910,058 shares issued and  

            outstanding as of  December 31, 2014 and 2013, respectively 

      Additional paid in capital 

111,517,578

78,130,053

      Shares to be issued 

187,500

-

      Statutory reserve 

11,888,170

9,672,754

      Accumulated other comprehensive income 

15,987,138

16,209,403

      Retained earnings  

68,199,797

50,603,291

     

          Total Company stockholders' equity  

207,863,192

154,676,411

     

          Noncontrolling interest 

256,799

345,117

     

          Total equity 

208,119,991

155,021,528

     

 TOTAL LIABILITIES AND EQUITY 

$                            375,277,822

$                               283,950,950

 

 CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) 

 
     
 

 YEARS ENDED DECEMBER 31, 

 

2014

2013

     
     

 Revenue 

   

      Sales of systems 

$                            18,868,632

$                          62,013,135

      Contingent rental income 

790,437

1,180,055

     

 Total revenue 

19,659,069

63,193,190

     

 Cost of sales 

   

      Cost of contingent rental income and systems 

14,585,462

47,847,313

     

 Total cost of sales 

14,585,462

47,847,313

     

 Gross profit 

5,073,607

15,345,877

     

 Interest income on sales-type leases 

26,458,713

19,344,855

     

      Total operating income 

31,532,320

34,690,732

     

 Operating expenses 

   

      General and administrative  

3,494,711

4,160,742

     

      Total operating expenses 

3,494,711

4,160,742

     

 Income from operations 

28,037,609

30,529,990

     

 Non-operating income (expenses) 

   

      Interest income  

192,812

226,772

      Interest expense  

(3,431,241)

(6,718,729)

      Investment income 

20,739

-

      Other income (expenses) 

1,016,540

(1,335,626)

     

      Total non-operating expenses, net 

(2,201,150)

(7,827,583)

     

 Income before income tax 

25,836,459

22,702,407

 Income tax expense  

6,111,267

6,886,601

     

 Income before noncontrolling interest 

19,725,192

15,815,806

     

 Less: income (loss) attributable to noncontrolling interest 

(86,730)

186,270

     

 Net income attributable to China Recycling Energy Corp 

19,811,922

15,629,536

     

 Other comprehensive items 

   

      Foreign currency translation gain (loss) 
     attributable to China Recycling Energy Corp 

(222,265)

4,655,178

      Foreign currency translation gain (loss)
     attributable to noncontrolling interest 

(1,588)

3,592

     

 Comprehensive income attributable to China Recycling Energy Corp 

$                            19,589,657

$                          20,284,714

     

 Comprehensive income (loss) attributable to noncontrolling interest 

$                                 (88,318)

$                               189,862

     

 Basic weighted average shares outstanding 

69,627,116

53,850,289

 Diluted weighted average shares outstanding  

69,627,116

54,383,418

     

 Basic earnings per share  

$                                       0.28

$                                     0.29

 Diluted earnings per share 

$                                       0.28

$                                     0.29

 

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 CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES 

 CONSOLIDATED STATEMENTS OF CASH FLOWS 

     
 

 YEARS ENDED DECEMBER 31, 

 

2014

2013

     
     

 CASH FLOWS FROM OPERATING ACTIVITIES: 

   

             Income including noncontrolling interest 

$                        19,725,192

$                      15,815,806

             Adjustments to reconcile income including noncontrolling 

   

                  interest to net cash used in operating activities: 

   

             Changes in sales type leases receivables  

(18,868,632)

(62,013,135)

             Shares issued for the cost of system purchase 

14,491,450

16,481,108

             Stock compensation for IR service 

187,500

-

             Depreciation and amortization 

20,931

49,001

             Amortization of prepaid loan fees 

207,550

82,070

             Investment income 

(20,739)

-

             Changes in deferred tax 

1,055,464

3,933,596

             Loss on disposal of property and equipment 

127

-

                          Changes in assets and liabilities: 

   

                                    Interest receivable on sales type leases 

(211,447)

172,368

                                    Collection of principal on sales type leases 

21,675,548

10,874,735

                                    Prepaid expenses 

90,489

(150,383)

                                    Accounts receivable 

54,767

12,537

                                    Other receivables 

865,198

(1,153,941)

                                    Construction in progress 

(70,645,162)

(58,881,561)

                                    Accounts payable 

(7,021,743)

4,281,365

                                    Taxes payable 

1,054,964

143,084

                                    Interest payable on entrusted loans 

(1,584)

(39,157)

                                    Accrued liabilities and other payables 

1,731,604

(47,957)

                                    Accrued interest on convertible notes 

-

(383,929)

                                    Refundable deposit from customers for systems leasing 

488,353

547,134

     

             Net cash used in operating activities 

(35,120,170)

(70,277,259)

     

 CASH FLOWS FROM INVESTING ACTIVITIES: 

   

             Changes of restricted cash 

2,278,980

503,363

             Acquisition of property and equipment 

(2,165)

(23,321)

             Long term investment 

-

(12,793,704)

     

             Net cash provided by (used in) investing activities 

2,276,815

(12,313,662)

     

 CASH FLOWS FROM FINANCING ACTIVITIES: 

   

             Notes receivable  

651,137

(643,687)

             Proceeds from loans  

60,832,479

89,633,420

             Repayment of loans 

(15,830,769)

(44,399,439)

             Long term payable 

(1,405,711)

(1,307,011)

             Contribution from noncontrolling interest 

-

400,695

             Distribution to acquire noncontrolling interest 

-

(226,600)

             Purchase of noncontrolling interest share 

-

(1,287,374)

             Proceeds from shares issued to officer 

18,918,173

-

             Advance from related parties 

(2,361,837)

2,334,814

     

             Net cash provided by financing activities 

60,803,472

44,504,818

     

 EFFECT OF EXCHANGE RATE CHANGE ON CASH & EQUIVALENTS 

209,383

783,329

     

 NET INCREASE (DECREASE) IN CASH & EQUIVALENTS 

28,169,500

(37,302,774)

 CASH & EQUIVALENTS, BEGINNING OF YEAR 

7,701,530

45,004,304

     

 CASH & EQUIVALENTS, END OF YEAR 

$                        35,871,030

$                        7,701,530

     

 Supplemental cash flow data: 

   

    Income tax paid 

$                          3,990,323

$                        3,326,464

    Interest paid 

$                        13,834,312

$                      14,294,572

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-recycling-energy-corporation-reports-fourth-quarter-and-full-year-2014-financial-results-300054209.html

SOURCE China Recycling Energy Corp.

Copyright 2008 China Recycling Energy Corporation. All rights reserved.