LianDi Clean Technology Inc. Reports Financial Results for Fourth Quarter and Fiscal ....
LianDi Clean Technology Inc. Reports Financial Results for Fourth Quarter and Fiscal Year 2010; Provides Fiscal Year 2011 Guidance
· FY 2010 revenue and adjusted net income exceed guidance
· FY2010 revenue increased 148.6% to $77.7 million, with adjusted net income of $15.5 million up 119.2%
· FY 2010 cash flow from operations was $34.7 million and balance sheet on March 31, 2010 had $59.2 million
· FY 2011 Guidance: Revenue of $117 million and net income of $24.6 million
· Operating results and outlook driven by continued strong demand for petroleum products and growing focus on clean technology in China
BEIJING ¨C June 24, 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 fourth quarter and fiscal year ended March 31, 2010.
SUMMARY FINANCIALS
| Fiscal Year 2010 Results (USD) | |||
| (years ended March 31,) | 2010* | 2009 | CHANGE |
| Sales | $77.7 million | $31.3 million | +148.6% |
| Gross Profit | $18.6 million | $9.9 million | +88.4% |
| GAAP Net Income | $15.0 million | $7.1 million | +112.2% |
| Adjusted Net Income | $15.5 million | $7.1 million | +119.2% |
| GAAP EPS (Diluted) | $0.53 | $0.26 | +103.8% |
| Adjusted EPS (Diluted) | $0.55 | $0.26 | +111.5% |
* Fiscal year 2010 included a one-time expense of $275,000 related to the Company¡¯s reverse merger with Remediation Services, Inc. completed in February 2010, and $219,148 in unrealized exchange loss related to a shareholder's loan to the Company.
| Fourth Quarter 2010 Results (USD) (unaudited) | |||
| (three months ended March 31,) | Q4 2010* | Q4 2009 | CHANGE |
| Sales | $32.0 million | $23.0 million | +39.4% |
| Gross Profit | $5.0 million | $7.5 million | -33.9% |
| GAAP Net Income | $3.7 million | $6.3 million | -40.6% |
| Adjusted Net Income | $3.9 million | $6.3 million | -37.7% |
| GAAP EPS (Diluted) | $0.12 | $0.23 | -47.8% |
| Adjusted EPS (Diluted) | $0.13 | $0.23 | -43.5% |
* Q4 FY 2010 included a one-time expense of $275,000 related to the Company¡¯s reverse merger with Remediation Services, Inc. completed in February 2010, and $90,991 in unrealized exchange gain related to a shareholder's loan to the Company.
Fourth Quarter FY2010 Results
For the fourth quarter ended March 31, 2010, the Company reported revenue of $32.0 million, an increase of 39.4% over revenue of $23.0 million generated in the same period of fiscal year 2009. The increase resulted from higher sales of equipment and engineering services to the Company¡¯s petroleum and petrochemical customers.
Cost of goods sold for the quarter ended March 31, 2010 was approximately $27.2 million, compared to $15.5 million for the quarter ended March 31, 2009. Gross profit was $5.0 million and gross margins were 15.5%, compared to $7.5 million in gross profit and gross margins of 32.6% during the fourth quarter of fiscal 2009. The reason for the year-over-year decrease in gross profit and margins was primarily due to recognition of separate software sales for each reporting period. Specifically, the 2009 fourth quarter included $4.8 million of software based revenues which contain margins of 96% compared to $nil in the fourth quarter of 2010, with all software based revenues recognized in the first nine months of 2010, which drove the variance in the two reporting periods.
Operating expenses for the quarter ended March 31, 2010, were approximately $1.3 million, compared to $0.8 million in the same period in 2009. Selling expenses in the fourth quarter of fiscal 2010 were $0.9 million compared to $0.4 million in the fourth quarter of 2009, and general and administration expenses totaled $0.4 million in both respective periods.
Net income for the fourth quarter of fiscal 2010 totaled approximately $3.7 million, or $0.12 per diluted share based on weighted average shares outstanding of 30.9 million compared to $6.3 million, or $0.23 per diluted share based on weighted average shares outstanding of 27.4 million. Results for the fourth quarter of FY2010 included a one-time expense of $275,000 related to the Company¡¯s reverse merger with Remediation Services, Inc. completed in February 2010, and $90,991 in unrealized exchange gain related to a shareholder's loan to the Company. Adjusting for these items, adjusted net income for the fourth quarter of FY2010 would have been $3.9 million with corresponding adjusted net income per diluted share of $0.13. (See ¡°Reconciliation of GAAP Net Income to Adjusted Net Income¡± table below.)
¡°Our performance during the fourth quarter of fiscal year 2010 reflects the rapid growth in petroleum exploration, refining and consumption in China, driven by the country¡¯s economic recovery and growth,¡± stated Mr. Jianzhong Zuo, Chairman, Chief Executive Officer and President of the Company. ¡°We continue to anticipate substantial opportunities ahead for our company, as reflected in the significant increase in our signed contracts and order backlog. In addition, the growing emphasis on clean technology in China¡¯s petroleum and petrochemical industries, which is being supported by government directives, provides an excellent growth conduit as we diversify our product base in fiscal 2011.¡±
Fiscal Year 2010 Financial Results
For the fiscal year ended March 31, 2010, LianDi reported revenue of $77.7 million, up 148.6% from revenue of $31.3 million for the year ended March 31, 2009, which was driven by a significant increase in the distribution of a wide array of products and installation service contracts. Specifically, for the year ended March 31, 2010, the Company completed 56 projects, which included both sales and installation of equipment, as compared to 38 projects during fiscal 2009. For the years ended March 31, 2010 and 2009, the Company also sold 73 sets and 55 sets of data processing software, respectively, with the total amount of sales for fiscal 2010 of $6.4 million compared to $4.8 million in fiscal 2009. As of March 31, 2010, the Company had seven uncompleted contracts, totaling approximately $13.0 million. Subsequent to March 31, 2010, the Company has signed eight new contracts totaling approximately $18.3 million.
Cost of sales for the year ended March 31, 2010 increased to $59.1 million from $21.4 million for the year ended March 31, 2009. Gross profit was $18.6 million and gross margins were 23.9%, compared to $9.9 million in gross profit and gross margins of 31.5% during fiscal year 2009. The level of overall gross margin was affected by the relative percentage of separate software sales volume for each reporting period.
Operating expenses for the fiscal year ended March 31, 2010 were approximately $3.1 million, compared to $2.5 million in the same period in 2009. Selling expenses increased to $1.7 million for fiscal year 2010 from $1.2 million for fiscal year 2009, which was driven by increased freight charges increased marketing expenses and expansion of the Company¡¯s sales force to support the Company¡¯s growth. General and administrative expenses increased to $1.3 million for the year ended March 31, 2010 from $1.2 million for the year ended March 31, 2009. As a percentage of total revenue, general and administrative expenses decreased to 2% from 4% for the same period last year.
For the year ended March 31, 2010, net income increased 112.2% to $15.0 million, or $0.53 per diluted share based on weighted average shares outstanding of 28.2 million, from $7.1 million, or $0.26 per diluted share based on weighted average shares outstanding of 27.4 million, for the year ended March 31, 2009. Net income margins were 19.4% and 22.7% for fiscal years 2010 and 2009, respectively. Results for fiscal year 2010 included a one-time expense of $275,000 related to the Company¡¯s reverse merger with Remediation Services, Inc. completed in February 2010, and $219,148 in unrealized exchange loss related to a shareholder's loan to the Company. Adjusting for these items, adjusted net income for fiscal year 2010 would have been $15.5 million with corresponding adjusted net income per diluted share of $0.55. (See ¡°Reconciliation of GAAP Net Income to Adjusted Net Income¡± table below.)
Balance Sheet and Cash Flow
As of March 31, 2010, the Company had cash and cash equivalents of $59.2 million, compared to $5.0 million at March 31, 2009. The increase in the Company¡¯s cash position reflects in part include the addition of net proceeds from a $27.6 million private placement completed by the Company on February 26, 2010, immediately following the reverse merger with Remediation Services, Inc. The Company had total stockholders¡¯ equity of $46.4 million at March 31, 2010, with total assets of $75.1 million versus total liabilities of $14.7 million. For fiscal year 2010, the Company generated $34.7 million in cash from operations versus utilization of $4.4 million in fiscal year 2009.
Fiscal year 2011 Guidance
For fiscal year 2011 management provided 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 8-10% of total revenues for fiscal year 2011.
¡°We anticipate another strong year for fiscal 2011 as we continue to meet the needs of our valued domestic and international petroleum and petrochemical customers. Our business benefits as China increases its crude oil imports and expands oil production domestically, while oil refiners are required to clean-up their production process,¡± added Mr. Zuo. ¡°We look forward to advancing key development projects which will drive future incremental revenue growth as they come on line. This includes the first installation of our totally enclosed unheading units from DeltaValve for the delayed coking process, which will be the first of their kind in China.