LianDi Clean Technology Inc. Reports Financial Results for First Fiscal Quarter of 2011

BEIJING ¨C August 16, 2010 ¨C LianDi Clean Technology Inc. (OTC BB: LNDT), (¡°LianDi¡± or the ¡°Company¡±), a leading provider of clean technology, downstream flow equipment, engineering services and software to China¡¯s leading petroleum and petrochemical companies, today announced financial results for the first fiscal quarter ended June 30, 2010.
SUMMARY FINANCIALS

(1) Adjusted net income available to common stockholders and EPS for Q1 2011 excludes a $1.1 million deemed dividend related to preferred stock issued in the February 26, 2010 private placement.
First Quarter FY2011 Results
For the first fiscal quarter ended June 30, 2010, the Company reported revenue of $9.2 million, an increase of 27.7% compared to revenue of $7.2 million generated in the same period of fiscal year 2010. Growth was driven by a 300% year-over-year increase in sales of our software sets, which totaled $2.8 million for the first quarter of 2011.
During the first quarter the Company performed equipment delivery and installation work on seven projects for customers.
Cost of goods sold for the quarter ended June 30, 2010 was approximately $5.2 million, which was nearly equal to the year ago period. Gross profit was $4.0 million and gross margins were 43.4% for the quarter ended June 30, 2010, compared to $2.0 million in gross profit and gross margins of 28.0% during the first quarter of fiscal 2010. The year-over-year increases in gross profit and margins were primarily due increased software sales, which typically carry 85%-90% gross margins compared to 15%-25% gross margins for equipment delivery and installations.
Operating expenses for the quarter ended June 30, 2010, were approximately $0.7 million, compared to $0.6 million in the same period in 2009. Selling expenses in the first quarter of fiscal 2011 were $0.1 million compared to $0.3 million in the first fiscal quarter of 2010. General and administrative expenses in the first quarter of fiscal 2011 were $0.5 million compared to $0.3 million in the first fiscal quarter of 2010 due primarily to $0.16 million related to higher legal, printing and accounting fees related to public company reporting, which we did not have last year.
GAAP net income available to common stockholders for the first quarter of 2011 totaled $1.8 million. Adjusted net income available to common stockholders for the first quarter of fiscal 2011, excluding a $1.1 million deemed preferred stock dividend was approximately $2.9 million, or $0.09 per diluted share based on weighted average shares outstanding of 37.2 million, compared to $1.3 million, or $0.05 per diluted share based on weighted average shares outstanding of 27.4 million.
Mr. Jianzhong Zuo, Chairman, Chief Executive Officer and President of the Company said, ¡°my team recently traveled to Houston to meet with DeltaValve executives, and we expect a final, comprehensive agreement to be executed by the end of the year.¡±
¡°We are optimistic about meeting our 2011 fiscal year guidance, as reflected in the significant increase in our signed contracts and order backlog. Our performance during the first quarter of fiscal year 2011 reflects our ability to successfully service the needs of our petroleum and petrochemical based customers located throughout China. As the industry continues its growth trend, LianDi¡¯s products, technical services and optimization software allow companies to produce, distribute and handle petroleum based products more efficiently and in ways that are safer for the environment.¡±
¡°We are currently advancing several large development projects which will drive future incremental revenue growth. In addition, we are making further progress with our DeltaValve initiative focused on building and installing unheading units used in the delayed coking process, which will be the first of their kind in China.
Balance Sheet and Cash Flow
As of June 30, 2010, the Company had cash and cash equivalents of $48.9 million, compared to $8.4 million at June 30, 2009. The increase in the Company¡¯s cash position in part reflects net proceeds from a $27.6 private placement completed by the Company on February 26, 2010, The Company had total stockholders¡¯ equity of $48.7 million at June 30, 2010, with total assets of $77.9 million compared to total liabilities of $14.4 million. The current ratio was 5.0 with working capital of $58.2 million on June 30, 2010. Cash outflow from operations was $3.8 million.
Fiscal year 2011 Guidance
For fiscal year 2011 management reaffirmed revenue guidance of $117 million, representing year-over-year growth of 50.6% over fiscal 2010, and net income guidance of approximately $24.6 million for fiscal year 2011, representing year-over-year growth of approximately 58.7%. Management expects software sales to contribute 8 to 10% of total revenues for fiscal year 2011.
We had 34 contracts with an aggregate value of $60.3 million in our backlog at June 30, 2010, representing a 100% and 82% increase year-over-year, respectively.