Tri-Tech Holding (TRIT) Full Year 2009 Revenue Up 99% to $16.8M

BEIJING, March 25 /PRNewswire-Asia-FirstCall/ — Tri-Tech Holding Inc. (Nasdaq: TRIT), a leading Chinese project development and management company that engineers, manages and monitors China’s municipal sewer systems, natural waterways and resources, announced today that revenue for the fiscal year ended December 31, 2009 increased 99% to $16.8 million from $8.4 million in 2008. Diluted earnings per share for the year were $0.92 based on net income of $3.8 million. This compares with net income of $1.7 million or $0.48 diluted EPS in 2008.

    Fourth Quarter 2009 Highlights
    -- Revenue for Q4 2009 increased 103% to $5.9 million from $2.9 million in
       Q4 2008.
    -- Gross profit (exclusive of depreciation and amortization) increased
       190% to $2.3 million for Q4 2009 from $0.8 million in Q4 2008.
    -- Q4 2009 gross margin 38% vs. 27% for Q4 2008.
    -- Income from operations increased 117% to $1.1 million from $0.5 million
       in Q3 2008.
    -- Net income increased 212% to $1.3 million from $0.4 million in Q4 2008.
    -- Diluted earnings per share increased to $0.24, from $0.12 in Q4 2008.
    -- Weighted average number of diluted shares outstanding was 5.54 million
       as of December 31, 2009, compared to 3.56 million as of December 31,
       2008.

    FY 2009 Highlights
    -- Revenue for 2009 increased 99% to $16.8 million from $8.4 million in
       2008.
    -- Wastewater and Tail Gas Treatment segment revenue increased 80% to
       $9.0 million.
    -- Water Resource Management segment revenue was up 125% to $7.8 million.
    -- Gross profit (exclusive of depreciation and amortization) increased
       112% to $6.6 million for 2009 from $3.1 million in 2008.
    -- 2009 gross margin 39% vs. 37% for 2008.
    -- Income from operations increased 126% to $4.1 million from $1.8 million
       in 2008.
    -- Net income increased 127% to $3.8 million from $1.7 million in 2008.
    -- Diluted earnings per share increased to $0.92 from $0.48 in 2008.
    -- Weighted average number of diluted shares outstanding was 4.17 million
       as of December 31, 2009, compared to 3.56 million as of December 31,
       2008.
    -- Completed successful initial public offering of 1.7 million ordinary
       shares at a price of $6.75 per share, traded on NASDAQ Capital Market
       on September 10, 2009.

FY 2009 Financial Performance

Total revenue was $16.8 million in 2009, an increase of $8.3 million, or 99%, compared to revenue of $8.4 million in 2008. The increase was driven by larger contracts, several of which exceeded $1.5 million. The revenue was primarily generated by system integration work and hardware and software sales from two operating segments. For wastewater and tail gas treatment, revenue was $9 million, an increase of $4 million or 80%, compared to $5 million in year 2008. Revenue from water resources management saw a 125% significant increase to $7.8 million from $3.5 million in 2008.

Net income

Net income attributable to shareholders was $3.8 million, an increase of $2.2 million or 127%, compared to $1.7 million in year 2008.

Diluted earnings per share for the year were $0.92 based on net income of $3.8 million. This compares with net income of $1.7 million or $0.48 diluted EPS in 2008.

Gross profit (exclusive of depreciation and amortization)

Gross profit (exclusive of depreciation and amortization) increased 112% to $6.6 million for 2009 from $3.1 million in 2008. Of total revenue, cost (exclusive of depreciation and amortization) decreased to 61%, compared with 63% in 2008, because the company sourced more locally made equipment at lower cost for the projects. Gross margin (exclusive of depreciation and amortization) for 2009 was 39%, compared to 37% for 2008.

During 2009, significant Chinese government spending along with tight construction timelines, and strong market demand resulted in high market value for construction projects. Under such business climate, Tri-Tech enjoyed rapid growth in revenue while limited cost of that revenue.

Operating income

Operating income increased 126% to $4.1 million from $1.8 million in 2008. Operating margin was 24%, compared to 21% in the year ended December 31 2008.

Liquidity and Capital Resources

As of December 31, 2009, cash and cash equivalents were $7.2 million, including a deposit of $3.3 million. As of December 31, 2009, working capital was $17 million, including cash and cash equivalents of $7.2 million.

Order Backlog

As of December 31, 2009, the company had a total backlog of $11.5 million to be collected in 2010, including $9.3 million in municipal water and wastewater services, $1.5 million in water resources services and $0.7 million in industrial sector services. The backlog represents the amount of our existing contract work remaining to be completed in 2010 for which we have not been paid in full, based on the assumptions that our customers will approve these projects upon completion.

Management Comment

Chief Executive Officer Warren Zhao said, “We are pleased with the financial results in our first year as a publicly-traded company. The strong growth in our two business segments has highlighted the strength of our business model, which we believe will continue to get stronger as we work to help alleviate China’s critical water resource crisis.

“We are currently pursuing smaller river basin flood monitoring and forecasting systems and groundwater monitoring systems across the country. In 2009, we received awards for five projects for smaller river basin flood and forecasting systems.

“Through local distributors and partnerships, we are promoting our proprietary products targeting the water monitoring and dispatching systems of the Northward Rerouting of Southern River engineering construction. We believe that the entire Northward Rerouting of Southern River engineering project has a market potential of approximately $43.5 million.

“In 2009, the Chinese government launched the 103 Pilot-County Mountain Torrent Forecast Plan. Accordingly, the government allocated approximately $29 million to fund these projects to deal with frequent mountain torrents devastation. During the year, we won the bids for 14 of these pilot projects, which was in line with our internal expectations on the bid win rate.

“At present, our wastewater treatment business is focused on Tianjin City and Hebei Province. In 2009, we won 26 contracts from this targeted wastewater treatment market, including pump stations, treatment plants, odor control systems, automatic controls and instruments.

“We are actively pursuing opportunities in the industrial wastewater and process tail gas treatment markets in the oil and gas industry and the petrochemical industry such as SINOPEC and PetroChina. Additionally, we intend to strengthen our industrial pollution control services by penetrating adjacent industry verticals such as the power generation industry.

“Currently almost all newly-designed sewage treatment plants have odorous gas containment and control requirements. Therefore, we expect an increase in the sales of our proprietary bio-filtration odor control systems.

“In order to pursue several major new projects and increase our interaction with our clients, we recently set up branch offices in Tianjin Dongli Economic Development Zone, Tianjin Baodi Economic Development Zone and Hebei Province.

“In our municipal wastewater business, we plan to expand our target market. In our current business footprint in only Hebei and Tianjin, the government is building 80 new wastewater treatment plants. We believe significant opportunities exist in 32 other provinces, municipalities and autonomous regions in China.

“We intend to expand our role from sub-contractor to prime-contractor. Since inception, we have grown from a provider of system controls to a company capable of managing the whole installation of municipal water and wastewater facilities. As we continue to grow, we will focus our business on more complex installation projects.

“We also intend to further develop our water resource management services from partial management solutions to full management of large-scale river basin projects. We believe the Chinese government’s allocation of significant investment offers us huge business opportunities.

“In addition to organic growth, we are targeting selected acquisitions. In general, our markets are highly fragmented with small competitors. We will consider acquiring companies that we believe will add significant value to our business. These targets may have strong customer relationships but limited market reach, or may possess specialized skills but the businesses have not scaled up. When evaluating targets, we use a disciplined, conservative approach to ensure the acquisitions are strategic and accretive,” Zhao said.

About Tri-Tech Holding Inc.

Tri-Tech designs customized sewage treatment and odor control systems for China’s municipalities and its larger cities. These systems combine software, information management systems, resource planning and local and distant networking hardware that includes sensors, control systems, programmable logic controllers, supervisory control and data acquisition systems. The company also designs systems that track natural waterway levels for drought control, monitor groundwater quality and assist the government in managing its water resources. Tri-Tech owns seven software copyrights and two technological patents and employs 120 people. Please visit http://www.Tri-Tech.cn for more information.

An online investor kit including a company profile, press releases, current price quotes, stock charts and other valuable information for investors is available at http://www.hawkassociates.com/profile/trit.cfm . To subscribe to future releases via e-mail alert, visit http://www.hawkassociates.com/about/alert/ .

Tri-Tech Holding Inc. has based these forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward- looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

    For further information, please contact:

    Hawk Associates
     Susan Zhou
     Tel:   +1-305-451-1888
     Email: tritech@hawkassociates.com

                           TRI-TECH HOLDING INC.
    CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
                                  AUDITED

                                    For the Year Ended      Quarter Ended
                                      December 31,           December 31,
                                     2009       2008       2009       2008
                                             (Restated)
    Revenues:
    System integration           $12,023,686 $6,119,266 $4,499,924 $1,410,327
    Products                       2,511,962  1,115,811    633,914  1,051,322
    Software revenue               2,264,246  1,214,881    760,887    436,943
    Total revenues                16,799,895  8,449,958  5,894,726  2,898,592
    Cost of revenues: (exclusive
     of depreciation and
     amortization shown
     separately below)
    System integration             8,003,667  4,219,892  3,095,900  1,058,291
    Products                       2,115,052  1,036,401    528,438  1,000,909
    Cost of software                  57,207     65,947     15,143     62,012
    Total cost of
     revenues(exclusive of
     depreciation and
     amortization shown
     separately below)            10,175,925  5,322,240  3,639,482  2,121,212
    Operating expenses:
    Depreciation and amortization
     expenses                        119,173     88,731     43,724     29,009
    Other operating expenses       2,448,721  1,242,415  1,078,606    227,350
    Total operating expenses       2,567,894  1,331,146  1,122,330    256,359
    Operating income (loss):       4,056,076  1,796,572  1,132,914    521,021
    Other income (expenses):
     Interest income                  26,855     17,475      1,729        931
     Interest expense                 (5,683)    (7,833)    (1,510)    (5,444)
     Government allowance            107,380    102,644     58,338     37,401
     Other expense                    (7,592)    (1,774)    (2,899)      (483)
    Total other income
     (expenses), net                 120,961    110,512     55,660     32,404
    Income before provision for
     income taxes and
     noncontrolling interests
     income                        4,177,037  1,907,084  1,188,574    553,425
    Provision for income taxes      (308,085)  (202,247)  (758,550)  (141,771)
    Net income                     3,868,952  1,704,837  1,330,955    411,654
    Noncontrolling Interests
     Income                           18,182      8,685      5,730    (13,525)
    Net income attributable to
     Tri-Tech Holding Inc          3,850,770  1,696,152  1,325,225    425,179
    Other comprehensive income
    Foreign currency translation
     adjustment                       15,899    259,708    (51,216)   (46,834)
    Comprehensive income           3,884,851  1,964,545  1,279,739    378,345
    Comprehensive income
     attributable to
     noncontrolling interests         18,312     17,211      5,155     17,211
    Comprehensive income
     attributable to Tri-Tech
     Holding Inc.                  3,866,538  1,947,334  1,274,584    361,134
    Net income attributable to
     Tri-Tech Holding Inc. per
     share:
    Basic                              $0.94      $0.48      $0.25      $0.12
    Diluted                            $0.92      $0.48      $0.24      $0.12
    Shares used in computation:
    Basic                          4,081,301  3,555,000  5,255,000  3,555,000
    Diluted                        4,170,879  3,555,000  5,544,343  3,555,000

                                  TRI-TECH HOLDING INC.
                              CONSOLIDATED BALANCE SHEETS

                                                December 31,      December 31,
                                                    2009              2008
                                                                    (Restated)
    ASSETS
    Current Assets
    Cash                                         $7,171,464          $732,418
    Restricted cash                               1,501,128                --
    Accounts receivable, net of allowance
     for doubtful accounts of $56,491 and
     $62,286 as of December 31, 2009 and
     December 31, 2008, respectively              4,338,239         3,105,859
    Unbilled revenue                              3,952,763         1,429,846
    Notes receivable                                     --             7,316
    Other receivables                               273,602           166,395
    Inventories                                   1,573,324         1,466,468
    Deposits on projects                            585,153           266,973
    Prepayments to suppliers and
     subcontractors                               1,898,900           567,346
    Total current assets                         21,294,573         7,742,621
    Long-term unbilled revenue                    1,723,852                --
    Plant and equipment, net                        374,009           174,128
    Proprietary technology, net                     797,854           857,475
     Total assets                               $24,190,288        $8,774,224
    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
    Accounts payable and cost accrual on
     projects                                    $3,367,056        $1,589,103
    Commercial paper and other short-term
     notes payable
     Non-related parties                                 --           271,041
     Related party                                       --            14,631
    Customer deposits                               494,047           436,372
    Billings in excess of revenue                     8,650            30,639
    Other payables                                    8,633            81,721
    Accrued liabilities                             103,190            84,660
    Deferred income taxes                           141,478            83,643
    Income taxes payable                            144,232           141,818
    Other taxes payable                                  --            90,908
    Total current liabilities                     4,267,286         2,824,536
    Long-term liabilities                            58,171                --
     Total liabilities                            4,325,457         2,824,536
    Shareholders' equity
    Tri-Tech Holding Inc. shareholders'
     equity
     Common stock (30,000,000 shares
      authorized and $0.001 par value,
      5,255,000 and 3,555,000 issued as of
      December 31, 2009 and 2008,
      respectively; on December 31, 2009,
      340,000 shares issued were held in
      escrow. See note 12 for more
      discussion.)                                    5,255             3,555
    Additional paid-in-capital                   12,942,650         2,914,058
    Statutory reserves                               50,655            50,655
    Retained earnings                             6,333,343         2,482,573
    Accumulated other comprehensive
     income                                         377,097           361,328
    Total Tri-Tech Holding Inc.
     shareholders' equity                        19,709,000         5,812,169
    Noncontrolling Interests                        155,831           137,519
    Total shareholders' equity                   19,864,831         5,949,688
    Total liabilities and shareholders'
     equity                                     $24,190,288        $8,774,224

                                    TRI-TECH HOLDING INC.
                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                              For The Year Ended December 31,
                                                   2009        2008(Restated)
    Cash flows from operating activities:
    Net income                                  $3,868,952        $1,704,838
    Adjustments to reconcile net income
     to cash:
    Depreciation                                    59,244            30,892
    Amortization                                    60,588            57,839
    Allowance for doubtful accounts                  1,322            22,935
    Deferred income taxes                           66,061            74,429
    Changes in operating assets and
     liabilities:
    Restricted cash                             (1,500,534)               --
    Accounts receivable                         (1,230,305)       (1,528,876)
    Unbilled revenue                            (4,243,749)         (360,048)
    Other receivables                             (424,813)         (104,235)
    Inventories                                   (161,817)         (330,918)
    Prepayments and deferred expenses           (1,315,244)         (163,280)
    Accounts payable                             1,761,867           145,002
    Customer deposits                               57,244            (5,286)
    Billings in excess of revenue                  (22,009)               --
    Other payables                                 218,941           112,280
    Accrued liabilities                             18,443                --
    Taxes payable                                 (140,036)          (48,606)
    Net cash provided by operating
     activities                                 (2,925,845)         (393,034)
    Cash flows from investing activities:
    Additions to equipment                        (197,087)          (91,351)
    Cash flows from financing activities:
    Common stock                                10,105,170                --
    (Repayments to)advances from third
     parties                                      (278,507)          678,485
    Repayment from a related party of an
     advance                                            --            (4,750)
    Net cash provided by (used in)
     financing activities                        9,826,663           673,735
    Effect of exchange rate changes on
     cash and cash equivalents                    (264,685)          175,355
    Net increase in cash                         6,439,046           364,705
    Cash, beginning of year                        732,418           367,713
    Cash, end of period                         $7,171,464          $732,418
    Supplemental Data:
    Income taxes paid                             $239,743               $--
    Interest paid on debt                           $4,538            $7,832
    Borrow money from third party, using
     in purchase transportation equipment
     on April 2009.                                $87,221               $--