China Industrial Waste Management Inc. (CIWT)

[IndoInvest]

China Industrial Waste Management Announces 2011 First Quarter Financial Results
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DALIAN, China, May 16, 2011 /PRNewswire-Asia/ -- China Industrial Waste Management, Inc. (OTCBB: CIWT) ("China Industrial Waste Management" or the "Company"), a leading environmental services and solutions provider in China, today announced its financial results for the first quarter ended March 31, 2011.
First Quarter Highlights
Revenues increased 48.1% to $6.1 million
Gross profit increased 15.2% to $3.1 million
Operating income increased 10.3% to $1.7 million
Net income attributable to the Company increased 101.4% to $1.2 million
Diluted earnings per share doubled to $0.08

"We are pleased to announce strong financial performance for the first quarter and begin 2011 on a strong note. We achieved substantial revenue, net income, and EPS growth," said Mr. Jason Dong, Chairman and Chief Executive Officer. "In the first quarter of 2011, we had increased demand for waste disposal services from our customers; our sales of recycled commodities increased as a result of favorable market prices; and our sludge treatment business generated additional service fees. In addition, our discarded domestic appliance disposal operations contributed to our revenues."
First Quarter 2011 Results
Revenues increased 48.1% to $6.1 million from $4.1 million in the same period last year. The increase in revenue was mainly attributable to (i) the increased demand for waste disposal services from our customers, (ii) the increase in service fees generated by our sludge treatment as it processed more sludge in the first quarter of 2011, (iii) the increase in sales of waste iron and aluminum which experienced favorable market prices, and (iv) the addition of revenues generated from our discarded domestic appliance disposal operations commenced August 1, 2010 under a national program jointly sponsored by the PRC Ministries of Commerce, Finance and Environmental Protection.
Revenues from service fees increased 28.3% to $3.8 million, or 62.3% of total revenues, from $2.9 million, or 71.9% of total revenues, in the prior year period.
Sales of recycled commodities increased 98.9% to $2.3 million, or 37.7% of revenues, compared to $1.2 million, or 28.1% of revenues, in the same period last year. The sharp increase is attributable to higher selling prices and sales volume for these products.
Gross profit increased 15.2% to $3.1 million from $2.7 million in the same period last year. Gross margin was 50.8% compared to 65.4% in the prior year period. The decline in gross margin is primarily attributable to (i) the increased service fee revenue generated by our non-hazardous waste treatment operations, which has a lower gross profit margin compared with service fee revenue generated by our hazardous waste treatment operations, and (ii) the increased costs of labor, transportation and raw materials related to producing recycled waste products.
Income from operations increased 10.3% to $1.7 million from $1.6 million in the prior year period. Operating margin was 28.3% compared to 38.1% in the prior year period. The decrease in operating margin is primarily due to the reasons related to the aforementioned decline in gross margin offset by the fact that operating expenses as a percent of sales actually decreased by 4.8% to 22.5% in the first quarter of 2011 from 27.3% in the same period last year.
Net income attributable to the Company increased 101.4% to $1.2 million from $0.6 million in the same period last year. Diluted earnings per share increased 100.0% to $0.08 from $0.04 in the same period last year.
Financial Condition
As of March 31, 2011, the Company had cash and cash equivalents of $5.9 million. Working capital was $5.9 million. Shareholder's equity increased 4.8% to $33.9 million from $32.3 million at the end of 2010. Operating cash flow was $0.8 million versus $1.1 million in the prior year period. The decrease was due to, among other things, the payment of accrued staff bonuses, an increase in accounts receivable in the amount of $640,266, and a decrease in other payable in the amount of $457,682, due to payment to subcontractor.
Recent Developments
The Company's 70%-owned subsidiary, Dalian Zhuorui Resource Recycling Co., Ltd. ("Zhuorui"), is engaged in the separation and purification of waste catalysts generated from the oil refinery process. Zhuorui has successfully completed its trial production period and has commenced production including ammonium metavanadate, molybdic acid, and nickel powder. Metals contained in waste catalyst are a scarce resource and the Company expects a significant increase in the selling prices for Zhuorui's final products. The Company may decide to selectively sell some of those products in fiscal year 2011 depending on market conditions.
Business Outlook
The Company is currently building in Dalian one of the most advanced one-stop service centers for industrial solid waste treatment in China (the "Dagushan Expansion Project"). The construction of the Dagushan Expansion Project is now 90% complete and we expect it to become operational in the third quarter of 2011. Once fully operational, this new facility will increase our hazardous industrial solid waste treatment capacity to 114,000 tons per year.
The Company reaffirms that for the first half of 2011, the Company expects revenues of between $10 million and $12 million and net income attributable to the Company of between $2.0 million and $2.5 million.
Conference Call
The Company will host a conference call at 9:00 a.m. Eastern Daylight Time (EDT) on Monday, May 16, 2011, to discuss its financial results for the first quarter of 2011.
To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: [phone]. International callers should call [phone]. The Conference Pass Code is 65634929.
If you are unable to participate in the call at this time, a replay will be available for fourteen days starting on Monday, May 16, 2011 at 11:00 a.m. EDT. To access the replay, call [phone]. International callers should call [phone]. The Conference Pass Code is 65634929.
About China Industrial Waste Management, Inc.
China Industrial Waste Management is a leading environmental services and solutions provider in China. The Company is based in Dalian, Liaoning Province, China and has been engaged in the industrial solid waste treatment business since 1991. Today, the Company is the largest industrial solid waste management enterprise in northeastern China. China Industrial Waste Management's main businesses are industrial solid waste treatment and recycling, municipal sewage and sludge treatment, and environmental protection engineering. For more information, please visit the Company's website (www.chinaciwt.com).
Cautionary Statement Regarding Forward-Looking Information
This release may include "forward-looking statements." You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements contain such words as "may," "project," "might," "expect," "believe," "anticipate," "intend," "could," "would," "estimate," or the negative or other variations thereof or comparable terminology. These forward-looking statements are based on current expectations and projections about future events. Investors are cautioned that forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties that cannot be predicted or quantified and, consequently, our actual performance may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors, as well as other factors described from time to time in our reports filed with the Securities and Exchange Commission: the timing and magnitude of technological advances; the prospects for future acquisitions; the effects of political, economic and social uncertainties regarding the governmental, economic and political circumstances in the People's Republic of China, the possibility that a current customer could be acquired or otherwise be affected by a future event that would diminish their waste management requirements; the competition in the waste management industry and the impact of such competition on pricing, revenues and margins; uncertainties surrounding budget reductions or changes in funding priorities of existing government programs and the cost of attracting and retaining highly skilled personnel; our projected sales, profitability, and cash flows; our growth strategies; anticipated trends in our industries; our future financing plans; and our anticipated needs for working capital. Forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.