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 November 13, 2015 - 5:05 PM EST
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Hongli Clean Energy Technologies Corp. Reports Fiscal Year 2016 Q1 Financial Results

55% of Quarter’s Revenue Derived From Syngas Sales

PINGDINGSHAN, China, Nov. 13, 2015 (GLOBE NEWSWIRE) -- Hongli Clean Energy Technologies Corp. (NASDAQ:CETC) (“Hongli” or the “Company”), a vertically integrated producer of clean energy products located in Henan Province, today reported its financial results for the first quarter of fiscal year 2016, which ended September 30, 2015.

First Quarter Financial Highlights:

  • Revenue of syngas was $3.5 million for the quarter ended September 30, 2015 with sales volume of 35.8 million cubic meters and an average selling price per cubic meter of $0.10, which revenue accounted for 55.0% of the Company’s total revenue, highlighting the Company’s successful transformation from a coke and coal producer to clean energy producer.


  • Net income for the quarter ended September 30, 2015 was $1.7 million, or $0.07 per diluted share, compared to net loss of ($2.6) million, or ($0.12) per diluted share, for the same period of last fiscal year. The swing from loss to earnings per share represents a positive 158% change.

  • Gross profit for the quarter ended September 30, 2015 decreased by $0.2 million, or 7.73%, to $2.1 million, but gross margin improved by 15.9 percent to 32.7% for the quarter ended September 30, 2015. The decrease in gross profit (7.73%) was mainly due to the decline in the sales of coal and coke despite the higher gross profit contributed from the sales of syngas and the increase in margin was due to increasing sales of syngas.

  • Cost of revenues for the quarter ended September 30, 2015 decreased by 61.6%, from $11.3 million to $4.3 million compared to the same period last year. The decrease was mainly driven by lower sale volumes for coal and coke products and the low cost of revenue from syngas. 

  • Revenue decreased by $7.1 million or 52.54% to $6.4 million for the three months ended September 30, 2015. Such decrease resulted from decreased sales of coal and coke products  to steel plants, offset by increased sales of the Company’s new product, syngas.


Average price of syngas was approximately $0.10 or RMB 0.62 per cubic meter. The Company has long-term syngas supply agreements with customers to provide syngas at a fixed vending price of $0.10 or RMB 0.62 per cubic meter. Due to restrictions on coal consumption by the Chinese government, the use of syngas is encouraged and its price is currently lower than natural gas. The vending price of syngas is stable and we expect the price to increase.

On October 8, 2015, the Company and Bairui Trust entered into a supplemental agreement to extend the due date of one of its outstanding loans. The loan of $29.3 million or RMB 180 million was originally due on October 2, 2015. In accordance with the supplemental agreement, the due date was extended to April 2, 2016. Interest expense, which mainly resulted from interest accrued for the loans from Bairui Trust and Capital Paradise Limited, was $1.3 million, a decrease of $0.2 million or 14.71%, from $1.5 million as compared to the same period a year ago.  The decrease in interest expense mainly resulted from the decrease of the principal of the loan from Bairui Trust. Hongli’s CEO Mr. Jianhua Lv commented, “We view ourselves as one of the most innovative energy companies in China, and we are committed to bringing highly efficient clean fuel or 'syngas' to our customers. We’re proud to announce that as of the end of September 2015, a majority of our revenue is derived from syngas and we believe we have successfully transformed from a traditional coal and coke producer into a syngas producer and innovative clean energy company.  Such transformation not only helped us successfully weather adverse market conditions due to stricter environmental requirements imposed by the Chinese government, but the transformation also positively contributed to our future business development.” Mr. Lv added, “With the improvement of our operating technology and expansion of our production capacity of clean-burning gas, we expect that syngas will contribute a higher proportion of our future revenues. In the third quarter of this fiscal year, we expect to utilize a technology called ‘Separation Pressure Swing Adsorption’ to generate hydrogen (where purity level is above 99.96%) and use ‘Deep Cryogenic technology’ to produce liquefied natural gas (where purity level is above 99.99%). Our technological innovations will bring our customers a bigger selection of clean energy.”

About Hongli Clean Energy Technologies Corp. Previously known as SinoCoking Coal and Coke Chemical Industries, Inc., Hongli Clean Energy Technologies Corp. (“Hongli” or the “Company”) is a Florida corporation and an emerging producer of clean energy products located in Pingdingshan City, Henan Province, China. The Company has historically been a vertically-integrated coal and coke processor of basic and value-added coal products for steel manufacturers, power generators, and various industrial users. The Company has been producing metallurgical coke since 2002, and acts as a key supplier to regional steel producers in central China. The Company also produces and supplies thermal coal to its customers in central China. The Company currently owns its assets and conducts its operations through its subsidiaries, Top Favour Limited and PingdingshanHongyuan Energy Science and Technology Development Co., Ltd., and its affiliated companies, Henan Province PingdingshanHongli Coal & Coke Co., Ltd., Baofeng Coking Factory, BaofengHongchang Coal Co., Ltd., BaofengHongguang Environment Protection Electricity Generating Co., Ltd., Zhonghong Energy Investment Company, Henan Hongyuan Coal Seam Gas Engineering Technology Co., Ltd., BaofengShuangri Coal Mining Co., Ltd., and BaofengXingsheng Coal Mining Co., Ltd.

For additional information on the Company, please go to http://www.cetcchina.net/ or refer to the company's periodic reports filed with the Securities and Exchange Commission (http://www.cetcchina.net/sec-filings.html). Investors wishing to receive the Company's corporate communications as they become available may go to the company's Investor Relations site (http://www.cetcchina.net/corporate-overview.html) and register under Email Alerts.

Also, investors may submit questions directly to Mr. Lv and his staff to receive non-confidential information about the company's operations and products at the company's "Ask Management" blog (http://www.cetcchina.net/ask-management.html).

Forward-Looking Statements This press release contains forward-looking statements, particularly as related to, among other things, the business plans of the Company, statements relating to goals, plans and projections regarding the Company's financial position and business strategy. The words or phrases "plans," "would be," "will allow," "intends to," "may result," "are expected to," "will continue," "anticipates," "expects," "estimate," "project," "indicate," "could," "potentially," "should," "believe," "think," "considers" or similar expressions are intended to identify "forward-looking statements." These forward-looking statements fall within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934 and are subject to the safe harbor created by these sections. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of risks and uncertainties. Such forward-looking statements are based on current expectations, involve known and unknown risks, a reliance on third parties for information, transactions or orders that may be cancelled, and other factors that may cause our actual results, performance or achievements, or developments in our industry, to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties related to the fluctuation of local, regional, and global economic conditions, the performance of management and our employees, our ability to obtain financing, competition, general economic conditions and other factors that are detailed in our periodic reports and on documents we file from time to time with the Securities and Exchange Commission. Statements made herein are as of the date of this press release and should not be relied upon as of any subsequent date, and the Company specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.

 

HONGLI CLEAN ENERGY TECHNOLOGIES CORP. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
  September 30,  June 30, 
  2015  2015 
  (Unaudited)    
ASSETS        
CURRENT ASSETS        
Cash $139,233  $81,605 
Accounts receivable, net  15,953,238   13,970,451 
Other receivables and deposits  8,473   4,928,967 
Inventories  5,947,825   3,191,605 
Advances to suppliers  4,088,692   8,216,127 
Prepaid expenses  -   16,670 
Total current assets  26,137,461   30,405,425 
         
PLANT AND EQUIPMENT, net  24,025,967   18,750,242 
         
CONSTRUCTION IN PROGRESS  56,597,357   65,420,768 
         
OTHER ASSETS        
Security deposit  -   - 
Prepayments  18,915,410   19,674,034 
Intangible assets, net  54,021,548   56,355,185 
Long-term investments  2,807,643   2,920,247 
Other assets  110,170   114,589 
Total other assets  75,854,771   79,064,055 
         
Total assets $182,615,556  $193,640,490 
         
LIABILITIES AND EQUITY        
         
CURRENT LIABILITIES        
Current maturity of long term loans $43,159,496  $44,471,220 
Accounts payable, trade  275,501   70,164 
Other payables and accrued liabilities  5,735,039   4,503,689 
Other payables - related party  506,464   736,596 
Acquisition payable  -   4,747,250 
Customer deposits  77,210   80,306 
Taxes payable  977,399   907,472 
Current portion of warrants liability  -   289,481 
Total current liabilities  50,731,109   55,806,178 
         
LONG TERM LIABILITIES        
Long term loans  -   - 
Warrants liability  380,237   2,626,168 
Total long term liabilities  380,237   2,626,168 
         
Total liabilities  51,111,346   58,432,346 
         
COMMITMENTS AND CONTINGENCIES        
         
EQUITY        
Common stock, $0.001 par value, 100,000,000 shares authorized, 23,960,217 shares issued and outstanding as of September 20, 2015 and June 30, 2015, respectively  23,960   23,960 
Additional paid-in capital  6,846,397   6,846,397 
Statutory reserves  3,689,941   3,689,941 
Retained earnings  110,539,595   108,831,633 
Accumulated other comprehensive income  6,072,717   11,484,613 
Total SinoCoking Coal and Coke Chemicals Industries, Inc's equity  127,172,610   130,876,544 
         
NONCONTROLLING INTERESTS  4,331,600   4,331,600 
         
Total equity  131,504,210   135,208,144 
         
Total liabilities and equity $182,615,556  $193,640,490 

 

HONGLI CLEAN ENERGY TECHNOLOGIES CORP. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
 
  For the Three Months Ended September 30, 
  2015  2014 
       
REVENUE $6,442,238  $13,573,836 
         
COST OF REVENUE  4,337,321   11,292,494 
         
GROSS PROFIT  2,104,917   2,281,342 
         
OPERATING EXPENSES:        
Selling  25,666   34,164 
General and administrative  1,160,299   887,795 
Total operating expenses  1,185,965   921,959 
         
INCOME (LOSS) FROM OPERATIONS  918,952   1,359,383 
         
OTHER INCOME (EXPENSE)        
Interest income  32   102,251 
Interest expense  (1,276,981)  (1,497,213)
Other finance expense  (4,945)  (663)
Other income, net  -   - 
Change in fair value of warrants  2,535,412   (2,027,162)
Total other income (expense), net  1,253,518   (3,422,787)
         
INCOME (LOSSES) BEFORE INCOME TAXES  2,172,470   (2,063,404)
         
PROVISION FOR INCOME TAXES  464,508   489,853 
         
NET INCOME (LOSS)  1,707,962   (2,553,257)
         
OTHER COMPREHENSIVE INCOME (LOSS)        
Foreign currency translation adjustment  (5,411,896)  (5,034)
         
COMPREHENSIVE INCOME (LOSS) $(3,703,934) $(2,558,291)
         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES        
Basic and diluted  23,960,217   21,310,527 
         
EARNINGS (LOSSES) PER SHARE        
Basic and diluted $0.07  $(0.12)

 

HONGLI CLEAN ENERGY TECHNOLOGIES CORP. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED)
 
  For the Three Months Ended September 30, 
  2015  2014 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) $1,707,962  $(2,553,257)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:        
Depreciation  381,353   279,032 
Amortization and depletion  163,144   17,674 
Write-off other receivables and advances to suppliers  -   - 
Change in fair value of warrants  (2,535,412)  2,027,162 
Bad debt expense  278,759   116,359 
Amortization of prepaid expenses  16,670   8,333 
Change in operating assets and liabilities        
Accounts receivable, net  (2,984,556)  (2,641,476)
Other receivables  4,805,308   (72,829)
Inventories  (2,924,859)  3,224,546 
Advances to suppliers  4,015,343   263,038 
Prepaid expenses  -   - 
Accounts payable, trade  211,335   (2,303,148)
Other payables and accrued liabilities  1,014,930   (675,686)
Customer deposits  -   - 
Taxes payable  106,579   925,584 
Net cash provided by (used in) operating activities  4,256,556   (1,384,668)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Collection of loans receivable  -   4,500,000 
Payments of gasification equipment  -   (7,026,661)
Payments of coal mine acquisition  (4,636,439)  - 
Net cash provided by (used in) investing activities  (4,636,439)  (2,526,661)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Preceeds from short-term loans - CPL  1,362,700   - 
Repayment of short-term loans - CPL  (1,045,892)  - 
Proceeds from issuance of common stock  -   13,204,538 
Proceeds from (payment to) related parties  (206,883)  2,016,383 
Net cash provided by (used in) financing activities  109,925   15,220,921 
         
EFFECT OF EXCHANGE RATE ON CASH  327,586   78,629 
         
INCREASE (DECREASE) IN CASH  57,628   11,388,221 
         
CASH, beginning of period  81,605   191,992 
         
CASH, end of period $139,233  $11,580,213 
         
SUPPLEMENTAL CASH FLOW INFORMATION:        
Cash paid for income tax $316,152  $336,180 
Cash paid for interest expense, net of capitalized interest $-  $2,123,933 
         
NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES        
Common stock issued for a service fee $-  $100,000 
Issuance of warrants related to the sale of common stock $-  $10,048,116 
Transfer of construction in progress into plant and equipment $6,400,540  $- 


Company Contact:

Song Lv, CFO
Phone: + 86-375-2882-999
Email: lvsong@sinocoking.net
Website: http://www.cetcchina.net/

Source: GlobeNewswire (November 13, 2015 - 5:05 PM EST)

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