CHINA RECYCLING ENERGY CORP. XI'AN, China, March 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 ended December 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 Three Months Twelve Months
share data) Ended Ended
December 31, 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 116 280 790 1,180
Income
------
Gross Profit 104 3,236 5,074 15,346
------------ --- ----- ----- ------
Interest Income on Sales- 6,977 5,587 26,459 19,345
Type Leases
-----------
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 of US$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 MARGIN. Gross profit was US$5.07 million for the full year of 2014, as compared with US$15.35 million in 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, and US$1.02 million in other income consisting mainly of US$0.93 million in income from the sale of a TRT system to Zhangzhi and US$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 a RMB460 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 with US$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 of December 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 was US$2.50 as of December 31, 2014.
Net Investment in Sales-Type Leases as of December 31, 2014
The components of the net investment in sales-type leases as of December 31, 2014 and December 31, 2013 are as follows:
(US$) December 31, December 31,
2014 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
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) (222,265) 4,655,178
attributable to China Recycling Energy Corp
---
Foreign currency translation gain (loss) (1,588) 3,592
attributable to noncontrolling interest
---
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
===== =====
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.
