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2009 revenue of $82.56 million, up 153% compared to $32.68 million in 2008 -- 2009 net income of $15.44 million, up 144% compared to $6.34 million in 2008 -- 2009 earnings per share (EPS) of $0.58, up 100% compared to $0.29 in 2008 -- Positive signs of economic growth in China, anticipates earnings growth momentum to continue into 2010
SmartHeat Inc. (Nasdaq: HEAT; website: www.smartheatinc.com), a market leader in China's clean technology energy savings industry announced today record audited 2009 financial results for the fiscal year ended December 31, 2009. SmartHeat's products significantly reduce heat energy costs, increase energy efficiency and reduce air pollution.
James Jun Wang, Chairman & CEO of SmartHeat, commented, "We are excited to announce our outstanding financial performance for the fiscal year ending in 2009 which exceeded our expectations. Our 2009 financial results are the result of a continued favorable market environment for our industry and the successful execution of our growth strategies. China's energy savings industry continues to be supported by the Chinese government and receives significant funding through government initiatives. In addition, China's economic rebound in the fourth quarter has created a positive environment for growth in 2010 as we expect significant benefits from the continued transition to cleaner technologies and energy saving equipment."
Fiscal Year 2009 Financial Performance
Revenues were $82.56 million in fiscal year 2009 compared to $32.68 million in 2008, a 153% increase. The significant revenue increase was due to significant sales growth across all product lines as a result of:
-- Increasing our traditional heat supply sales as a result of growth in
the China domestic infrastructure construction industry, accounting
for $37.62 million or 45.6% of total sales; and
-- Adding new customers in the chemical, engineering, electric power and
metal smelting industries, accounting for $25.42 million or 30.7% of
our total sales; and
-- Rising heat meter sales, accounting for $7.98 million or approximately
9.7% of total sales.
Gross profit was $29.10 million in fiscal year 2009 compared to $10.96 million in 2008, a 165.51% increase. Gross profit increased primarily due to the decreased cost of goods sold as a percentage of sales while our sales continued to increase.
Operating expenses were $10.92 million in fiscal year 2009 compared to $3.42 million in 2008, a 219% increase. Operating expenses increased because of the higher general and administrative expenses incurred as a result of our growth in sales and production and fees and expenses associated with becoming a public company in 2008.
Operating income was $18.18 million in fiscal year 2009 compared to $7.54 million in 2008, a 141.11% increase. Operating income increased as a result of continued economies of scale in production costs combined with the rapid growth in revenues and improved operating efficiency.
Net income was $15.44 million in fiscal year 2009 compared to $6.34 million in 2008, a 144% increase. Earnings per share were $0.58 in fiscal year 2009 compared to $0.29 in 2008 a 100% increase. In addition to the increased revenue and income from operations, net income and EPS both benefited from a decrease in the tax rate during the year from 18% to 15%.
During the fourth quarter of 2009 we recognized one-time extraordinary expenses of approximately $1.77 million of which approximately $487,000 related to PHE research and development, approximately $700,000 related to a consulting fee paid in connection with the expansion of sales network and market development in nuclear power industry and approximately $585,000 related to an accrued expense for after sale service reserve.
Management Comments: 2009 Financial Results and 2010 Market Guidance
Mr. Wang commented: "Our audited 2009 financial results exceeded management's financial performance targets as we described in early 2009. SmartHeat expects to experience significant product sales in 2010 as we anticipate a broader domestic economic expansion in China. China's businesses and residences are in the process of becoming more energy efficient and environmentally friendly due to economic incentives and policies. SmartHeat will benefit from this process. As a result, SmartHeat anticipates continued strong product sales and earnings growth in 2010 from all sectors of our customer base: government, industrial, commercial and consumers.
During the fourth quarter of 2009 we experienced one-time expenses incurred to prepare the company for future growth. We do not expect these extraordinary expenses to reoccur in 2010 and expect our SG&A to return to approximately 13 percent of sales in 2010. Without these extraordinary expenses SmartHeat would have met its earnings guidance in the fourth quarter."
2009 revenue of $82.56 million, up 153% compared to $32.68 million in 2008 -- 2009 net income of $15.44 million, up 144% compared to $6.34 million in 2008 -- 2009 earnings per share (EPS) of $0.58, up 100% compared to $0.29 in 2008 -- Positive signs of economic growth in China, anticipates earnings growth momentum to continue into 2010
SmartHeat Inc. (Nasdaq: HEAT; website: www.smartheatinc.com), a market leader in China's clean technology energy savings industry announced today record audited 2009 financial results for the fiscal year ended December 31, 2009. SmartHeat's products significantly reduce heat energy costs, increase energy efficiency and reduce air pollution.
James Jun Wang, Chairman & CEO of SmartHeat, commented, "We are excited to announce our outstanding financial performance for the fiscal year ending in 2009 which exceeded our expectations. Our 2009 financial results are the result of a continued favorable market environment for our industry and the successful execution of our growth strategies. China's energy savings industry continues to be supported by the Chinese government and receives significant funding through government initiatives. In addition, China's economic rebound in the fourth quarter has created a positive environment for growth in 2010 as we expect significant benefits from the continued transition to cleaner technologies and energy saving equipment."
Fiscal Year 2009 Financial Performance
Revenues were $82.56 million in fiscal year 2009 compared to $32.68 million in 2008, a 153% increase. The significant revenue increase was due to significant sales growth across all product lines as a result of:
-- Increasing our traditional heat supply sales as a result of growth in
the China domestic infrastructure construction industry, accounting
for $37.62 million or 45.6% of total sales; and
-- Adding new customers in the chemical, engineering, electric power and
metal smelting industries, accounting for $25.42 million or 30.7% of
our total sales; and
-- Rising heat meter sales, accounting for $7.98 million or approximately
9.7% of total sales.
Gross profit was $29.10 million in fiscal year 2009 compared to $10.96 million in 2008, a 165.51% increase. Gross profit increased primarily due to the decreased cost of goods sold as a percentage of sales while our sales continued to increase.
Operating expenses were $10.92 million in fiscal year 2009 compared to $3.42 million in 2008, a 219% increase. Operating expenses increased because of the higher general and administrative expenses incurred as a result of our growth in sales and production and fees and expenses associated with becoming a public company in 2008.
Operating income was $18.18 million in fiscal year 2009 compared to $7.54 million in 2008, a 141.11% increase. Operating income increased as a result of continued economies of scale in production costs combined with the rapid growth in revenues and improved operating efficiency.
Net income was $15.44 million in fiscal year 2009 compared to $6.34 million in 2008, a 144% increase. Earnings per share were $0.58 in fiscal year 2009 compared to $0.29 in 2008 a 100% increase. In addition to the increased revenue and income from operations, net income and EPS both benefited from a decrease in the tax rate during the year from 18% to 15%.
During the fourth quarter of 2009 we recognized one-time extraordinary expenses of approximately $1.77 million of which approximately $487,000 related to PHE research and development, approximately $700,000 related to a consulting fee paid in connection with the expansion of sales network and market development in nuclear power industry and approximately $585,000 related to an accrued expense for after sale service reserve.
Management Comments: 2009 Financial Results and 2010 Market Guidance
Mr. Wang commented: "Our audited 2009 financial results exceeded management's financial performance targets as we described in early 2009. SmartHeat expects to experience significant product sales in 2010 as we anticipate a broader domestic economic expansion in China. China's businesses and residences are in the process of becoming more energy efficient and environmentally friendly due to economic incentives and policies. SmartHeat will benefit from this process. As a result, SmartHeat anticipates continued strong product sales and earnings growth in 2010 from all sectors of our customer base: government, industrial, commercial and consumers.
During the fourth quarter of 2009 we experienced one-time expenses incurred to prepare the company for future growth. We do not expect these extraordinary expenses to reoccur in 2010 and expect our SG&A to return to approximately 13 percent of sales in 2010. Without these extraordinary expenses SmartHeat would have met its earnings guidance in the fourth quarter."
