Cleantech Solutions International Reports First Quarter 2017 Results

WUXI, China, May 16, 2017 /PRNewswire/ -- Cleantech Solutions International, Inc. ("Cleantech Solutions" or "the Company") (NASDAQ: CLNT) today announced its financial results for three months ended March 31, 2017.

"In the first quarter of 2017, we saw a slight uptick in revenue as some of our customers who had temporarily ceased operations to comply with stricter environmental requirements last year resumed normal operations. Although higher raw material costs impacted margin and contributed to the slight loss for the quarter, we generated positive cash flow from operations and improved our cash position from the end of 2016," said Mr. Jianhua Wu, Chairman and CEO of Cleantech Solutions. "We expect our revenues to remain relatively stable in the near future and are focused on improving the long-term outlook for our business. We continue to develop our next generation dyeing and finishing equipment based on the patented ozone-ultrasonic technology.  We remain excited about our investment in Shengxin, a newly formed company that plans to build solar farms in Guizhou and Yunnan provinces, and are exploring opportunities to produce precision components for other high growth industries."

First Quarter 2017 Results

Revenue for the first quarter of 2017 increased by 2.9% to $4,658,000, compared to $4,527,000 for the same period in 2016. The Company's only source of revenue is from the dyeing and finishing business, since the forged rolled rings and related products and petroleum and chemical equipment businesses are discontinued.  In the first quarter of 2016, some of the Company's customers temporarily ceased operations to comply with stricter environmental requirements, resulting in fewer orders for dyeing machines from these customers.  In first quarter of 2017, these customers restored normal operations, resulting in a slight increase in revenues in the quarter.

Gross profit for the first quarter of 2017 was $586,000, compared to gross profit of $821,000 for the same period in 2016. Gross margin was 12.6% during the first quarter of 2017 compared to 18.1% for the same period in 2016. The decline in gross margin was primarily attributable to higher raw material costs.

Operating expenses decreased by 12.3% to $682,000, compared to $778,000 for the same period in 2016.  The decrease was primarily due to a reduction of stock-based consulting fees, which was partially offset by an increase in research and development expenses for the development of new dyeing and finishing products. 

Loss from operations was $96,000, compared to income from operations of $43,000 for the same period in 2016.

Loss from continuing operations was $146,000, or $(0.10) per basic and diluted share, compared to loss from continuing operations of $103,000, or $(0.10) per basic and diluted share for the same period in 2016.

Loss from discontinued operations (Refer to "Discontinued Operations" discussion below) was nil for the first quarter of 2017. This compares to loss from discontinued operations of $741,000, or $(0.72) per basic and diluted share for the first quarter of 2016.

Net loss for the first quarter of 2017 was $146,000, or $(0.10) per basic and diluted share, compared to net loss of $844,000, or $(0.82) per basic and diluted share, for the same period in 2016.   

Basic and diluted earnings per share were based on 1,415,441 and 1,025,172 weighted average shares outstanding, respectively, for the three months ended March 31, 2017 and 2016. All share and per share information has been adjusted to reflect a 1-for-4 reverse stock split effective March 20, 2017.

Financial Condition

As of March 31, 2017, Cleantech Solutions held cash and cash equivalents of $2,829,000 compared to $1,481,000 at December 31, 2016. Accounts receivable were $15,397,000 compared to $13,922,000 at December 31, 2016. Inventories were $2,795,000 compared to $2,394,000 at December 31, 2016. The Company had $2,176,000 and $638,000 in short-term bank loans and bank acceptance notes payable, respectively, at March 31, 2017, up from $2,160,000 and $547,000, respectively, at December 31, 2016. Working capital was $22,621,000 at March 31, 2017 compared to $21,539,000 at December 31, 2016. Stockholders' equity was $65,662,000 at March 31, 2017 compared to $65,312,000 at December 31, 2016. 

In the first quarter of 2017, the Company generated $1,338,000 in operating cash flow, primarily due to increases in accounts payable and advances from customers which were offset by increases in accounts receivable, advances to suppliers and inventory and the net loss for the period. 

Discontinued Operations

On December 30, 2016, the Company sold 100% of the stock of Wuxi Fulland Wind Energy Equipment Co., Ltd. ("Fulland Wind") to an unrelated party and discontinued the Company's forged rolled rings and related components business. Additionally, the Company's management decided to discontinue its petroleum and chemical equipment segment due to significant declines in revenues and the loss of its major customer. As such, the assets and liabilities of these two segments were classified on the unaudited condensed consolidated balance sheets as assets and liabilities of discontinued operations as of March 31, 2017 and December 31, 2016 and the operating results were classified as discontinued operations in the unaudited condensed consolidated statements of operations for the three months ended March 31, 2016.

About Cleantech Solutions International

Cleantech Solutions, through its affiliated companies, designs, manufactures and distributes a line of proprietary high and low temperature dyeing and finishing machinery to the textile industry. 

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary and affiliated companies. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. The business of Shengxin involves a high degree of risk, the Company does not have any control over the operations of Shengxin, and the Company can give no assurance as to whether Shengxin will ever generate revenue or positive cash flow or whether the Company can or will supply components to Shengxin. 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, including factors described in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Form 10-K for the year ended December 31, 2016 and in our Form 10-Q for the quarter ended March 31, 2017. All forward-looking statements attributable to the Company or to 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.

Company Contacts:

Cleantech Solutions International, Inc.
May Liu, Investor Relations
E-mail: ir@cleantechsolutionsinternational.com
+852-31060372 
Web: www.cleantechsolutionsinternational.com

Compass Investor Relations
Elaine Ketchmere, CFA
Email: eketchmere@compass-ir.com
+1-310-528-3031
Web:  www.compassinvestorrelations.com

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SOURCE Cleantech Solutions International, Inc.