CHINA CLEAN ENERGY INC. 
By FUQING CITY,
Fourth Quarter 2009 Highlights
-- Revenue totaled $4.9 million, up 18.5% from the same period in 2008
-- Gross profit totaled $0.9 million, up 52.4% from the same period in
2008
-- Gross margin increased 410 basis points to 18.4% from 14.3%
-- Operating income was $0.3 million, compared to operating loss of $0.2
million in the fourth quarter 2008
-- Net income was $0.6 million, or $0.02 per fully-diluted share, compared
to a net loss of $0.6 million, or $0.02 per fully-diluted share in the
fourth quarter 2008
-- Cash and cash equivalents of $4.2 million at year-end 2009, compared to
$2.9 million at year-end 2008
Fiscal Year 2009 Highlights
-- Total revenue decreased 12.3% in 2009 to $15.9 million
-- Gross profit totaled $2.9 million
-- Gross margin was 18.5%
-- Operating income was $0.9 million
-- Net loss was $0.3 million, or $0.01 per fully-diluted share, compared
to net income of $0.6 million, or $0.02 per fully-diluted share in 2008
-- Adjusted net income (Non-GAAP) was $1.0 million, or $0.03 per
fully-diluted share
"We are pleased to report strong fourth quarter revenue growth and margin
expansion reflecting an improvement in demand for our products in the back end
of the year," said Mr. Tai-ming Ou, China Clean Energy's Chairman and CEO. "In
addition, our Jiangyin plant started operation on a commercial basis in
Fourth Quarter 2009 Results
China Clean Energy's net revenue in the fourth quarter was
Gross profit in the fourth quarter of 2009 was
Operating expense in the fourth quarter of 2009 was
Net income for the fourth quarter of 2009 was
Fiscal Year 2009 Results
For the full year 2009, net revenues were
Financial Condition
As of
Recent Developments
In
In
In
In
Business Outlook
China Clean Energy's new plant in Jiangyin is expected to achieve a ramp- up to full capacity by the end of the year 2010 and 50% capacity by the end of second quarter of 2010. As previously disclosed, the Jiangyin plant will increase the Company's specialty chemicals capacity by 30,000 tons per year to a total of 40,000 tons per year and the biodiesel capacity by 40,000 tons per year to a total 50,000 tons per year. Before the end of second quarter of 2010, the Company expected to increase the specialty chemicals production by 15,000 tons per year and the biodiesel production by 20,000 tons per year.
Mr. Ou added, "We expect to see more demand from our existing customers.
The Jiangyin plant enables us to provide three times more specialty chemicals
and four times more biodiesel and with better quality. With the smoothly
running operation in our new plant, we are confident to exceed our recently
released revenue guidance for the first quarter of 2010 of
Conference Call
China Clean Energy will hold its fourth quarter and fiscal year 2009
conference call for all interested persons at
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. All statements other than statements of historical fact in this announcement are forward- looking statements, including but not limited to, the effectiveness, profitability, and the marketability of the Company's products; the future trading of the common stock of the Company; the ability of the Company to capitalize on its expanded 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, it cannot assure you that the Company's 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)
Three months ended Twelve months ended
December 31, December 31,
2009 2008 2009 2008
REVENUES $ 4,878,426 $ 4,116,463 $ 15,933,351 $ 18,169,835
Less: cost of goods sold 3,981,493 3,527,754 12,993,260 14,310,907
GROSS PROFIT 896,933 588,709 2,940,091 3,858,928
OPERATING EXPENSES
Selling and marketing 48,840 55,941 286,055 249,583
General and administrative 537,090 693,993 1,641,535 2,328,472
Research and development 60,809 31,341 143,944 154,499
Total operating
expenses 646,739 781,275 2,071,534 2,732,554
INCOME FROM OPERATIONS 250,194 (192,566) 868,557 1,126,374
OTHER INCOME (EXPENSE)
Interest income
(expense), net 6,619 6,989 -- 24,707
Other income (expense) 11,350 (176,686) 7,997 (184,625)
Change in fair value
of warrant liabilities 389,172 -- (964,391) --
Total other income
(expense) 407,141 (169,697) (956,394) (159,918)
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES 657,335 (362,263) (87,837) 966,456
PROVISION FOR INCOME TAXES 29,797 191,848 236,613 369,640
NET INCOME (LOSS) 627,538 (554,111) (324,450) 596,816
OTHER COMPREHENSIVE INCOME
Foreign currency
translation adjustment (225) 70,785 (3,742) 1,958,547
COMPREHENSIVE INCOME
(LOSS $ 627,313 $ (483,326) $ (328,192) $ 2,555,363
BASIC AND DILUTED
EARNINGS (LOSS) PER SHARE
Weighted average
number of shares 31,512,269 31,512,269 31,512,269 31,293,091
Earnings per share $ 0.02 $ (0.02) $ (0.01) $ 0.02
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
RECONCILIATION OF ADJUSTED NET INCOME TO NET INCOME
The management of China Clean Energy uses non-GAAP adjusted net earnings to measure the performance of the Company's business internally by excluding non-recurring items as well as non-cash charges related to the warrants issued in connection with the Company's 2008 Private Placement offering. The Company's management believes that these non-GAAP adjusted financial measures allow the management to focus on managing business operating performance because these measures reflect the essential operating activities of China Clean Energy and provide a consistent method of comparison to historical periods. The Company believes that providing the non-GAAP measures -- which management uses internally -- to its investors is useful to investors for a number of reasons. The non-GAAP measures provide a consistent basis for investors to understand the Company's financial performance in comparison to historical periods without variation of non-recurring items and non-operating related charges. In addition, it allows investors to better evaluate the Company's performance using the same methodology and information as those used by the management. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the non-GAAP financial measure. However, the management of China Clean Energy compensates for these limitations by providing the relevant disclosure of the items excluded.
The following table provides the non-GAAP financial measure and a reconciliation of the non-GAAP measure to the GAAP net income.
Three months ended Twelve months ended
December 31, December 31,
2009 2008 2009 2008
Net Income (Loss) $627,538 $(554,111) $(324,450) $596,816
Add back (Deduct):
Change in fair value
of warrant $(389,172) $-- $964,391 $--
Stock-based
compensation $83,029 $142,875 $404,582 $903,769
Adjusted Net Income $321,395 $(411,236) $1,044,523 $1,500,585
Diluted EPS $0.02 $(0.02) $(0.01) $0.02
Add back (Deduct):
Change in fair value
of warrant $(0.01) $-- $0.03 $--
Stock-based
compensation $0.003 $0.005 $0.01 $0.03
Adjusted EPS $0.01 $(0.01) $0.03 $0.05
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
ASSETS 2009 2008
CURRENT ASSETS
Cash and cash equivalents $4,154,814 $2,913,711
Accounts receivable, net of
allowance for doubtful accounts of
$69,733 and $136,389 as of September
30, 2009 and December 31, 2008,
respectively 1,766,952 1,092,768
Inventories, net 464,842 815,210
Advances for inventory and other
current assets 188,659 310,773
Other current assets 11,000 --
Prepaid tax credit 69,466 --
Total current assets 6,655,733 5,132,462
PLANT AND EQUIPMENT, NET 25,119,034 19,167,624
INTANGIBLE ASSETS, NET 4,860,645 5,072,626
ADVANCES ON EQUIPMENT PURCHASES -- 3,649,192
TOTAL ASSETS $36,635,412 $33,021,904
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $157,433 $350,618
Accrued liabilities 279,516 349,435
Customer deposits 71,090 31,422
Taxes payable 130,287 156,965
Short-term bank loans 3,080,700 --
Long-term bank loans - current
portion -- 236,308
Total current liabilities 3,719,026 1,124,748
WARRANT LIABILITIES 1,259,774 --
LONG-TERM BANK LOANS - NET OF
CURRENT PORTION -- 21,553
COMMITMENTS AND CONTINGENCIES -- --
Total liabilities 4,978,800 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 December 31,
2009 and 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 December 31,
2009 and 2008, respectively 31,512 31,512
Additional paid-in capital 12,420,523 21,555,645
Statutory reserves 1,630,882 1,457,432
Retained earnings 14,407,448 5,661,025
Accumulated other comprehensive
income 3,166,247 3,169,989
Total shareholders' equity 31,656,612 31,875,603
Total liabilities and
shareholders' equity $36,635,412 $33,021,904
CHINA CLEAN ENERGY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve months ended December 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (324,450) 596,816
Adjusted to reconcile net income
(loss) to cash provided by
operating activities:
Depreciation 710,051 707,177
Change in allowance for
uncollectible accounts (42,602) (294,534)
Change in warrant liabilities 964,391 --
Amortization of intangible
assets 211,851 225,731
Stock-based compensation 404,582 903,769
Writedown on inventory -- 93,838
Loss on disposal of assets -- 177,905
Deferred tax assets (69,424) --
Impairment on fixed assets -- 74,817
Changes in operating assets and
liabilities
Accounts receivable (631,169) 2,159,868
Inventories 350,154 536,611
Advances for inventory purchase 122,038 (116,310)
Other current assets (11,000) --
Accounts payable (193,068) 186,224
Customer deposit 39,644 (160,299)
Other payables and accrued
liabilities (69,890) 222,185
Taxes payables (26,660) (196,992)
Net cash provided by operating
activities 1,434,448 5,116,806
CASH FLOWS FROM INVESTING ACTIVITIES
Addition to construction in
progress -- (11,635,579)
Purchase of equipment (3,010,857) (2,182,310)
Proceeds from sale of equipment -- 160,871
Advances for equipment purchases -- (2,667,896)
Net cash used in investing
activities (3,010,857) (16,324,914)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of
common stock -- 13,627,403
Payment on short-term bank loans -- (1,081,102)
Proceeds from short-term bank
loans 3,078,810 --
Payment on long-term bank loans (257,702) (213,336)
Net cash provided by financing
activities 2,821,108 12,332,965
EFFECT OF EXCHANGE RATE ON CASH (3,596) 673,299
INCREASE IN CASH AND CASH EQUIVALENTS 1,241,103 1,780,156
CASH AND CASH EQUIVALENTS, beginning
of period 2,913,711 1,133,555
CASH AND CASH EQUIVALENTS, end of
period 4,154,814 2,913,711
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Interest expenses paid (net of
amount capitalized) 114,717 50,672
Income taxes paid 283,103 298,024
For more information, please contact:
China Clean Energy Inc.
William Chen, CFO
Email: william.chen@chinacleanenergyinc.com
Web: http://www.chinacleanenergyinc.com
CCG Investor Relations Inc.
Ed Job, CFA
Email: ed.job@ccgir.com
Michael Crawford, Sr. MI Executive
Phone: +1-646-833-3341
Email: michael.crawford@ccgir.com
Web: http://www.ccgirasia.comSOURCE China Clean Energy Inc.
