-- $18.4 million of revenue and $3.8 million of net income for Q3
2009, up 333% and 1,045%, respectively, year-over-year -- Fully
diluted EPS of $0.08 for Q3 and $0.19 for the year up-to-date, up
from $0.01 and net loss of $0.14 per share in the same period last
year -- As of Q3, reached the guidance for the entire 2009 fiscal
year in revenue and net income XI'AN, China, Nov. 16
/PRNewswire-Asia-FirstCall/ -- China Recycling Energy Corp. (OTC
Bulletin Board: CREG; "CREG" or "the Company"), a leading
industrial waste-to-energy solution provider in China, announced on
November 16, 2009 its unaudited financial results for the third
quarter of 2009. Highlights For the three months ended September
30, 2009: -- Revenue grew by 333% to $18.4 million in the three
months ended September 30, 2009 from $4.3 million in the three
months ended September 30, 2008. -- Income from operations grew by
468% to $4.7 million in the three months ended September 30, 2009
from $0.8 million in the three months ended September 30, 2008. --
Net income grew by 10.4 times to $3.8 million for the three months
ended September 30, 2009 from approximately $333,000 for the three
months ended September 30, 2008. -- Fully diluted EPS of $0.08 for
the three months ended September 30, 2009 versus $0.01 for the
three months ended September 30, 2008. An increase of 713%,
year-over-year. For the nine months ended September 30, 2009: --
Revenue grew by 393% to $33.9 million in the nine months ended
September 30, 2009 from $6.9 million in the nine months ended
September 30, 2008. -- Income from operations grew by 667% to $9.6
million in the nine months ended September 30, 2009 from $1.2
million in the nine months ended September 30, 2008. -- Net income
was $8.1 million for the nine months ended September 30, 2009
versus net loss of $4.3 million for the nine months ended September
30, 2008. -- Fully diluted EPS of $0.19 for the nine months ended
September 30, 2009 versus net loss of $0.14 per share in the nine
months ended September 30, 2008. "We are very pleased to announce a
record quarter for CREG, based on a combination of product sales,
delivery of systems servicing a new customer and increasing
recurring revenues from our portfolio of existing waste-energy
recovery projects," Mr. Guohua Ku, Chairman and CEO of CREG, said.
"This quarter we have both expanded the scope of our business
industry sector as well as taken on larger projects. We are fully
confident that we will continue to be a leader in build, operate
and transfer (BOT) energy recovery projects in China and will
deliver increasing value to our customers and shareholders."
Financial Results For Three Months Ended September 30, 2009 For the
third quarter of 2009, CREG generated revenue of $18.4 million, a
333% increase from $4.3 million in the third quarter of 2008 and a
65% growth from $11.1 million in the second quarter of 2009. CREG
sold one energy recycling system in the third quarter. Gross profit
was $4.2 million in the third quarter of 2009, compared with $1.3
million in the third quarter of 2008 and $2.7 million in the second
quarter of 2009. Gross margin was 23.0%, compared to 24.2% in the
second quarter of 2009 and 30.1% in the third quarter of 2008. The
change in gross margin was primarily because of the higher gross
profitability of the operational rental business, which the Company
operated in the second quarter of 2008 but ended in the second
quarter of 2009, compared with only straight product sales in the
third quarter of 2009. CREG did not record any product sales in the
third quarter of 2008. Interest income on sales-type leases in the
third quarter of 2009 was $1.8 million, up 57.2% over $1.10 million
in the second quarter of 2009 and 209.3% higher than $0.6 million
in the third quarter of 2008. The growth from last year was
primarily due to the increased interest income from new energy
recovery systems that have been completed. General and
administrative expenses increased to $1.4 million in the third
quarter of 2009 from $0.6 million in the second quarter of 2009 and
$1.0 million in the third quarter of 2008. The increase was mainly
due to the overhead associated with the growth of CREG's portfolio
of projects. It is inclusive of approximately $0.7 million of
non-cash compensation expenses amortized in connection with our
ESOP plan. Income from operations in the third quarter of 2009 was
$4.7 million compared with $3.3 million in the second quarter of
2009 and $0.8 million in the third quarter of 2008. Net income was
$3.8 million in the third quarter of 2009, compared with $3.3
million in the second quarter of 2009 and $0.33 million in the
third quarter of 2008. GAAP diluted EPS was $0.08 in the third
quarter of 2009, compared with $0.07 in the second quarter of 2009
and $0.01 in the third quarter of 2008. Financial Results For Nine
Months Ended September 30, 2009 For the nine months ended September
30, 2009, CREG had total revenue of $33.9 million, a 393% increase
from the $6.9 million in revenue recorded in the same period of
2008. Of the total revenue, product sales revenue was $27.9 million
and rental income from operational leases was $5.9 million. In the
same period of 2008, CREG had rental income of $6.9 million. Gross
profit for the nine months ended September 30, 2009 was $8.2
million, 299% higher than the $2.1 million in the same period of
2008. Gross margin was 24.3% for the nine months ended September
30, 2009 versus 30.0% the same period of 2008. The change in gross
margin was primarily due to the higher profitability of operational
rental business in the year ago period, which ended in the second
quarter of 2009. For the nine months ended September 30, 2009,
interest income from sales- type leases was $4.1 million, a 140%
increase from $1.7 million in the same period of 2008. The growth
was primarily due to the expansion of the sales type lease
portfolio that began generating steady interest income this year.
General and administrative expenses were $2.7 million for the nine
months ended September 30, 2009, an increase of 7% over $2.5
million over the same period last year. Inclusive of $1.1 million
non-cash ESOP compensation expense and regardless of rapid business
expansion, G & A expenses were largely contained primarily due
to efficient control of employee compensation and marketing. For
the nine months ended September 30, 2009, income from operations
was $9.6 million compared with $1.2 million in the same period of
2008, resulting in a 677% increase year-over-year. For the nine
months ended September 30, 2009, GAAP net income was $8.1 million
compared with a net loss of $4.3 million in the same period of
2008. For the nine months ended September 30, 2009, GAAP diluted
EPS was $0.19, compared with a diluted loss per share of $0.14 in
the same period of 2008. As of September 30, 2009, cash and cash
equivalents, inclusive of restricted cash, were $10.1 million,
compared with $7.3 million at year-end 2008. Total investments in
sales-type leases were $43.2 million, compared with $16.8 million
as of the end of 2008. Total shareholders' equity was $43.9
million, compared with $32.4 million at December 31, 2008. Net cash
provided by operating activities was $12.4 million in the nine
months of 2009, compared with net cash outflow from operations of
$4.4 million in the same period of 2008. Business Guidance For the
nine months ended Sept 30, 2009, CREG recorded $ 33.9 million in
sales revenues and an additional $4.1 million revenue in interest
income on sale-type leasing, with a result of $8.1 million in net
income. During the first nine months of 2009, the company has
reached its previous guidance for the entire 2009 fiscal year,
which was in the range of $33 million to $36 million, with net
income, excluding non-cash charges, of approximately $8 million.
Subsequent Events On October 26, 2009, CREG's subsidiaries, Xi'an
TCH and Erdos TCH (collectively "the Borrower") jointly entered
into a Non Promissory Short Term Revolving Financing Agreement,
dated and effective from October 12, 2009, with Citi Bank (China)
Co., Ltd., Shanghai Branch (the "Lender") for a line of credit
amount up to RMB20 million. On November 6, 2009, the Company's
Board approved an increase in the size of the Board of Directors
from three members to six members and the appointment of Mr. Sean
Shao, Mr. Julian Ha and Mr. Timothy Driscoll as new members of the
Board. Mr. Shao is expected to chair the Audit Committee of the
Board and serve on the Nominating Committee. Mr. Ha is expected to
chair the Compensation Committee of the Board and serve on the
Audit Committee of the Board. Mr. Driscoll is expected to chair the
Nominating Committee of the Board and serve on the Compensation
Committee of the Board. About China Recycling Energy Corp. China
Recycling Energy Corp. (OTCBB: CREG.OB; "CREG" or "the Company") is
based in Xi'an, China and provides environmentally friendly
waste-to-energy technologies to recycle industrial byproducts for
steel mills, cement factories and coke plants in China. Byproducts
include heat, steam, pressure, and exhaust to generate large
amounts of lower-cost electricity and reduce the need for outside
electrical sources. The Chinese government has adopted policies to
encourage the use of recycling technologies to optimize resource
allocation and reduce pollution. Currently, recycled energy
represents only an estimated 1% of total energy consumption and
this renewable energy resource is viewed as a growth market due to
intensified environmental concerns and rising energy costs as the
Chinese economy continues to expand. The management and engineering
teams have over 20 years of experience in industrial energy
recovery in China. For more information about CREG, please visit
http://www.creg-cn.com/ . Safe Harbor Statement This press release
may contain certain "forward-looking statements" relating to the
business of China Recycling Energy Corp. and its subsidiary
companies. All statements, other than statements of historical fact
included herein are "forward-looking statements." These
forward-looking statements are often identified by the use of
forward-looking terminology such as "believes," "expects" or
similar expressions, involve known and unknown risks and
uncertainties. Although the Company believes that the expectations
reflected in these forward-looking statements are reasonable, they
do involve assumptions, risks and uncertainties, and these
expectations may prove to be incorrect. Investors should not place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. 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 at http://www.sec.gov/ . All forward-looking
statements attributable to the Company or 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. For
more information, please contact: In China: Mr. Leo Wu Investor
Relations China Recycling Energy Corp. Email: In USA: Mr. Howard
Gostfrand American Capital Ventures, Inc. Email: Financial
Statements Attached CHINA RECYCLING ENERGY CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 30, December 31,
2009 2008 (Unaudited) (Restated) ASSETS CURRENT ASSETS Cash &
cash equivalents $5,683,300 $7,267,344 Restricted cash 4,395,153 --
Investment in sales type leases, net 4,212,046 1,970,591 Interest
receivable on sales type leases 461,737 82,406 Prepaid expenses --
3,849,087 Other receivables 248,037 102,850 Inventory -- 10,534,633
Total current assets 15,000,273 23,806,911 NON-CURRENT ASSETS
Investment in sales type leases, net 39,012,834 14,837,879 Advance
for equipment -- 2,642,889 Property and equipment, net 90,860
95,359 Construction in progress 9,432,787 3,731,016 Intangible
assets, net -- 3,482 Total non-current assets 48,536,480 21,310,625
TOTAL ASSETS $63,536,753 $45,117,536 LIABILITIES AND STOCKHOLDERS'
EQUITY CURRENT LIABILITIES Accounts payable $2,035,574 $1,186,902
Notes payable - bank acceptances 1,466,467 -- Short term loan
2,928,686 -- Unearned revenues -- 658,415 Tax payable 220,732
1,313,949 Accrued liabilities and other payables 2,977,962
3,528,527 Convertible notes 8,000,000 5,000,000 Accrued interest on
convertible notes 228,676 168,494 Total current liabilities
17,858,098 11,856,287 DEFERRED TAX LIABILITY, NET 1,732,129 823,407
CONTINGENCIES AND COMMITMENTS STOCKHOLDERS' EQUITY Common stock,
$0.001 par value; 100,000,000 shares authorized, 38,778,035 and
36,425,094 shares issued and outstanding as of September 30, 2009
and December 31, 2008, respectively 38,778 36,425 Additional paid
in capital 37,074,978 30,475,360 Statutory reserve 2,349,198
1,319,286 Accumulated other comprehensive income 3,617,330
3,582,587 Accumulated deficit 613,562 (2,991,995) Total Company
stockholders' equity 43,693,846 32,421,663 Noncontrolling interest
252,679 16,179 Total equity 43,946,525 32,437,842 TOTAL LIABILITIES
AND EQUITY $63,536,753 $45,117,536 CHINA RECYCLING ENERGY
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS Of OPERATIONS
(unaudited) NINE MONTHS ENDED THREE MONTHS ENDED SEPTEMBER 30
SEPTEMBER 30 2009 2008 2009 2008 (Restated) (Restated) Revenue
Sales of products $27,938,697 $-- $18,425,620 $-- Rental income
5,946,892 6,876,223 -- 4,259,807 Total revenue 33,885,589 6,876,223
18,425,620 4,259,807 Cost of sales Cost of products 21,497,172 --
14,179,421 -- Rental expense 4,148,572 4,810,011 -- 2,977,402 Total
cost of sales 25,645,744 4,810,011 14,179,421 2,977,402 Gross
profit 8,239,845 2,066,212 4,246,199 1,282,405 Interest income on
sales-type leases 4,117,305 1,716,544 1,783,833 576,817 Total
operating income 12,357,150 3,782,756 6,030,032 1,859,222 Operating
expenses General and administrative expenses 2,730,971 2,543,563
1,375,230 1,039,784 Total operating expenses 2,730,971 2,543,563
1,375,230 1,039,784 Income from operations 9,626,179 1,239,193
4,654,802 819,438 Non-operating income (expenses) Interest income
29,702 -- 29,702 (57,029) Interest expense (320,546) (4,706,567)
113,222 -- Other expense (68,842) (2,239) (66,078) (1,238) Other
income -- 1,621 -- 17 Exchange loss (2,718) (81,969) (329) (1,524)
Total non- operating income (expenses) (362,405) (4,789,154) 76,516
(59,774) Income (loss) before income tax 9,263,774 (3,549,961)
4,731,318 759,664 Income tax expense 1,166,684 796,458 941,962
427,960 Net income (loss) from operations 8,097,089 (4,346,419)
3,789,355 331,704 Less: Net income (loss) attributable to
noncontrolling interest (10,898) 83 (7,740) 27 Net income (loss)
8,107,987 (4,346,502) 3,797,095 331,677 Other comprehensive item
Foreign currency translation gain (loss) 34,743 1,918,236 35,835
807,806 Comprehensive income (loss) $8,142,730 $(2,428,266)
$3,832,930 $1,139,483 Basic weighted average shares outstanding
37,829,964 30,642,187 38,778,035 36,425,094 Diluted weighted
average shares outstanding ** 43,915,609 34,256,352 47,900,894
37,404,892 Basic net earnings (loss) per share * $0.21 $(0.14)
$0.10 $0.01 Diluted net earning (loss) per share * $0.19 $(0.14)
$0.08 $0.01 * Interest expense on convertible notes are added back
to net income for the computation of diluted EPS. * Basic and
diluted loss per share is the same due to anti-dilutive feature of
the securities. ** Diluted weighted average shares outstanding
includes estimated shares upon conversion of the Second Note issued
on April 29, 2008 with conversion price contingent upon future net
profits. CHINA RECYCLING ENERGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2009 2008 (Restated) CASH FLOWS FROM
OPERATING ACTIVITIES: Net income (loss) including noncontrolling
interest $8,097,089 $(4,346,419) Adjustments to reconcile net
income (loss) including noncontrolling interest to net cash
provided by(used in) operating activities: Depreciation and
amortization 23,155 10,848 Amortization of discount related to
conversion feature of convertible note -- 4,684,932 Stock option
compensation expense 1,129,328 1,129,151 Accrued interest on
convertible notes 60,182 42,466 Changes in deferred tax 1,731,344
357,751 (Increase) decrease in current assets: Interest receivable
on sales type leases (379,331) 65,045 Advance to suppliers and
prepaid expenses 3,828,438 (6,567,350) Other receivables (113,744)
(49,847) Increase (decrease) in current liabilities: Accounts
payable 847,314 (1,217,170) Unearned revenue (658,655) -- Tax
payable (1,917,728) 336,805 Accrued liabilities and other payables
(260,167) 1,097,127 Net cash provided by (used in) operating
activities 12,387,225 (4,456,661) CASH FLOWS FROM INVESTING
ACTIVITIES: Restricted cash (4,393,159) (823,428) Investment in
sales type leases (9,484,917) 734,692 Increase investment in
subsidiary (16,100) -- Acquisition of property and equipment
(15,096) (113,906) Construction in progress (8,255,441) (9,986,879)
Net cash used in investing activities (22,164,713) (10,189,521)
CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock
2,000,000 9,032,258 Convertible notes 3,000,000 5,000,000
Short-term bank loan 2,927,358 429,615 Repayment to management --
(74,699) Cash contribution from noncontrolling interest 263,439 --
Net cash provided by financing activities 8,190,797 14,387,174
EFFECT OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS 2,647
330,608 NET INCREASE IN CASH & CASH EQUIVALENTS (1,584,044)
71,600 CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 7,267,344
1,634,340 CASH & CASH EQUIVALENTS, END OF PERIOD $5,683,300
$1,705,940 Supplemental Cash flow data: Income tax paid $1,307,406
$152,049 Interest paid $319,086 $-- DATASOURCE: China Recycling
Energy Corp. CONTACT: In China: Mr. Leo Wu, Investor Relations,
China Recycling Energy Corp., ; In USA: Mr. Howard Gostfrand,
American Capital Ventures, Inc., Web site: http://www.creg-cn.com/
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