China Industrial Waste Management, Inc. Announces Third Quarter 2009 Financial Results

China Industrial Waste Management, Inc. Announces Third Quarter 2009 Financial
Results

DALIAN, China, Nov. 12 /PRNewswire-Asia/ -- China Industrial Waste
Management, Inc. (OTC Bulletin Board: CIWT) ("China Industrial Waste
Management" or the "Company"), a leading environmental services and solutions
provider in China, announced today its financial results for the third quarter
of 2009, period ended September 30, 2009.
Third Quarter 2009 Highlights
-- Operating revenue totaled $3.1 million, down 2.3% year-over-year, but
up 27.2% sequentially
-- Gross profit totaled $1.9 million, the same as last year, but up 20.5%
sequentially
-- Gross margin was 60.8%, compared to 58.4% in third quarter 2008
-- Net income totaled $0.7 million, down 19.3% year-over-year, but up
17.2% sequentially
-- Basic and diluted earnings per share were $0.04
-- Received a national subsidy of RMB 10 million (approximately $1.5
million) for capacity expansion to complete a "Centralized Hazardous
Waste Treatment Facility" in Dalian
-- Closed acquisition of 65% Equity Stake in Hunan Hanyang Environmental
Protection Science & Technology Co., Ltd.
-- Attended the "Sino-German Workshop in Response to Climate Change
Application of Sludge Treatment Technologies and Potential CDM
Projects"

"Our business continues to recover from the downturn seen in the first
quarter," said Mr. Jinqing Dong, the Company's Chief Executive Officer. "Our
revenues and net income are up sequentially as most of our export-oriented
customers are once again approaching historical production levels and
increasing their demand for industrial waste management. In addition, we have
devoted additional resources to developing new clients and we are beginning to
see those efforts pay off as we successfully signed up several new customers
during the quarter."
Third Quarter 2009 Results
During the third quarter of 2009, operating revenue was $3.1 million, down
2.3% from $3.2 million in the third quarter of 2008, but up 27.2% from the
second quarter of 2009. Revenues from service fees were $2.0 million, up 23.1%
from $1.7 million in the same quarter of 2008, and up 24.1% from $1.6 million
in the second quarter of 2009. The year-over-year and sequential increases
were primarily due to a recovery in demand for solid waste treatment from the
Company's export-oriented customers as they continued to recover from the
economic crisis. Sales of recycled products were $1.1 million, down 29.7% from
$1.5 million the prior year, but up 33.4% from $0.8 million sequentially. The
year-over-year decrease resulted from declining waste collection volumes and a
decline in prices for recycled products including cupric sulfate and aluminum
as a result of the economic crisis. However, as economic conditions have
improved, prices for metals and other raw materials have begun to increase
from their lows, as reflected by the sequential increase in revenues from the
second quarter to the third quarter of 2009.
For the three months ended September 30, 2009, cost of revenue was $1.2
million, down 8.2% from $1.3 million in the same period of 2008. Gross profit
was $1.9 million, almost the same as in the third quarter of 2008, but up
20.5% from $1.6 million in the second quarter of 2009. Gross margin for third
quarter 2009 was 60.8%, compared to 58.4% a year ago due to the higher volume
of waste treated. Gross margin for second quarter 2009 was 64.2%.
Total operating expenses for the third quarter of 2009 were $1.0 million,
up 43.6% from $0.7 million in the same period last year, driven mainly by an
increase in professional fees and other expenses related to the Company's
status as a public company. Income from operations was $0.9 million, down
21.8% compared to $1.2 million in the same quarter of 2008, but up 46.7% from
the second quarter of 2009. Operating margin in the quarter was 29.9% versus
37.3% in last year's third quarter, but improved from 25.9% in the second
quarter of 2009.
Net income was $0.7 million, compared to $0.8 million in 2008. Net margin
for the third quarter of 2009 was 21.5%, compared to 26.1% a year ago.
Basic and diluted earnings per share were $0.04, compared with $0.06 for
the third quarter of 2008 and $0.04 for the second quarter of 2009.
Nine Months Results
Operating revenue for the first nine months of 2009 was $7.2 million, down
27.5% from $9.9 million in the same period of 2008. Cost of revenue decreased
13.5% to $2.9 million. Gross profit was $4.3 million, compared to $6.6 million
in the same period of 2008. Gross profit margin for the first nine months of
2009 was 59.7%, compared with 66.2% for the same period of 2008. Net income
was $1.4 million, representing an 18.8% net margin compared to $3.6 million or
a 36.0% net margin in the same period last year. Basic and diluted earnings
per share for the first nine months of 2009 were $0.09 compared to $0.27 in
the first nine months of 2008.
Financial Condition
As of September 30, 2009, the Company had cash and cash equivalents of
$8.7 million and working capital of $5.3 million. For the first nine months,
the Company generated $0.4 million from operating activities. At September 30,
2009, the Company had stockholders' equity of $24.9 million compared to $23.6
million on December 31, 2008.
Recent Events
On November 4, 2009, the Company announced construction and regulatory
progress related to the Build-Operate-Transfer ("BOT") municipal sludge
treatment and disposal facility in Dalian, China (the "Project") that is being
developed by the Company's subsidiary Dongtai Organic Waste Treatment Co. Ltd.
The Company announced that six of the Project's 12 fermentation tanks are now
complete and have passed examination by the Dalian Municipal Urban
Construction Administration Engineering Technology Agency and that a biogas
pipe network has been built.
The Company will present at the upcoming Brean Murray, Carret & Co. 2009
China Growth Conference in New York, NY on November 20, 2009.
Business Outlook
Mr. Dong added, "We expect the recovery of our business to continue
through the end of this year and into next year as the global economy and our
customers' export volumes continue to rebound, we devote increased resources
to attracting new customers, and we continue to invest in our business. We
expect the expansion of our hazardous waste management business to accelerate
as a result of our Dalian Dongtai Expansion Project, which is schedule to be
completed by late 2010. We also expect our results to benefit from our
expansion into municipal sewage and sludge treatment BOT projects.
Specifically, we expect our Dongtai Organic Waste Treatment BOT project to
come online in late 2009 or early in 2010. Overall, we look forward to
continued improvement in our results for the fourth quarter of 2009 and for
full year 2010."
Conference Call
The Company will hold its third quarter conference call for all interested
persons at 9:00 a.m. Eastern Time on Friday, November 13, 2009, to discuss its
results. To participate in the live conference call, please dial the following
number five to ten minutes prior to the scheduled conference call time:
1-888-419-5570. International callers should dial +1-617-896-9871. When
prompted by the operator, mention Conference Passcode 665 937 40. If you are
unable to participate in the call at this time, a replay will be available for
14 days starting on November 13, 2009, at 11:00 a.m. Eastern Time. To access
the replay, dial 1-888-286-8010 and international callers should dial
+1-617-801-6888 and enter the passcode 539 983 73.
About China Industrial Waste Management, Inc.
China Industrial Waste Management, Inc. is engaged in the collection,
treatment, disposal and recycling of industrial wastes principally in Dalian
and surrounding areas in Liaoning Province, People's Republic of China through
its 90%-owned subsidiary Dalian Dongtai Industrial Waste Treatment Co., Ltd.
("Dongtai") and other indirect subsidiaries. Dongtai treats, disposes of
and/or recycles many types of industrial wastes, and recycled waste products
used by customers as raw material to produce chemical and metallurgy products.
In addition, Dongtai treats or disposes of industrial waste through
incineration, burial or water treatment, and provides environmental protection
services, technology consultation, pollution treatment services, waste
management design processing services, waste disposal solutions, waste
transportation services, onsite waste management services, and environmental
pollution remediation services. For more information, please visit the
Company's website (http://www.chinaciwt.com ).
Cautionary Statement Regarding Forward-Looking Information
This release may include "forward-looking statements." You can identify
these statements by the fact that they do not relate strictly to historical or
current facts. These statements contain such words as "may," "project,"
"might," "expect," "believe," "anticipate," "intend," "could," "would,"
"estimate," or the negative or other variations thereof or comparable
terminology. These forward-looking statements are based on current
expectations and projections about future events. Investors are cautioned that
forward-looking statements are not guarantees of future performance or results
and involve risks and uncertainties that cannot be predicted or quantified
and,
consequently, our actual performance may differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following factors, as well
as other factors described from time to time in our reports filed with the
Securities and Exchange Commission: the timing and magnitude of technological
advances; the prospects for future acquisitions; the effects of political,
economic and social uncertainties regarding the governmental, economic and
political circumstances in the People's Republic of China, the possibility
that a current customer could be acquired or otherwise be affected by a future
event that would diminish their waste management requirements; the competition
in the waste management industry and the impact of such competition on
pricing,
revenues and margins; uncertainties surrounding budget reductions or changes
in funding priorities of existing government programs and the cost of
attracting and retaining highly skilled personnel; our projected sales,
profitability, and cash flows; our growth strategies; anticipated trends in
our industries; our future financing plans; and our anticipated needs for
working capital. Forward-looking statements speak only as of the date on which
they are made, and, except to the extent required by federal securities laws,
we undertake no obligation to update any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events.
For further information, please contact:

Company Contact:
About China Industrial Waste Management, Inc.
Ms. Guo Xin, CFO
Tel: +86-411-8581-1229
Email: hellenguo@chinaciwt.com

Mr. Zhang Dazhi, Company Secretary
Tel: +86-411-8259-5339
Email: darcy.zhang@chinaciwt.com
Web: http://www.chinaciwt.com

CCG Investor Relations:
Mr. Athan Dounis, Account Manager
Tel: +1-646-213-1916
Email: athan.dounis@ccgir.com

Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS

September 30, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current assets
Cash and cash equivalents $8,730,483 $5,714,001
Notes receivable 14,649 --
Accounts receivable, net 3,229,123 2,414,257
Other receivables 299,780 105,329
Inventory 2,290,197 2,372,214
Advance to suppliers 997,714 550,931
Deposit for business acquisition 1,464,944 --
Prepaid expense 15,382 17,589
Total current assets 17,042,272 11,174,321

Long-term equity investment 2,790,874 2,794,248
Property, plant and equipment, net 15,237,679 15,474,915
Construction in progress 7,004,555 5,738,271
Land usage right, net of accumulated
amortization 1,779,482 1,817,427
Escrow account -- 750,000
Certificate of deposit 1,757,933 73,287
Other asset 445,456 363,343
Related party receivable 57,058 1,256,599
TOTAL ASSETS $46,115,309 $39,442,411

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $698,873 $780,458
Short-term loan 6,738,742 3,371,198
Tax payable 178,397 215,240
Advance from customers 546,441 539,013
Deferred sales 925,000 972,143
Accrued expenses 8,202 361,111
Construction projects payable 1,678,542 4,742,164
Other payable 111,445 211,362
Long-term loan-current portion 457,796 --
Related party payable 380,885 278,490
Total current liabilities 11,724,323 11,471,179

Long-term loan 3,204,564 --
Asset retirement obligation 529,114 502,278
Government subsidy 2,445,659 1,028,257
TOTAL LIABILITIES 17,903,660 13,001,714

Minority interest in subsidiary 3,353,895 2,823,126

Stockholders' equity
Preferred stock: par value $.001;
5,000,000
shares authorized; none issued and
outstanding -- --
Common stock: par value $.001;
95,000,000 shares
authorized; 15,274,035 and
15,262,035 shares issued and
outstanding as of September 30,
2009 and December 31, 2008
respectively 15,274 15,262
Additional paid-in capital 5,679,398 5,644,750
Other comprehensive income 2,274,707 2,422,167
Retained earnings 16,888,375 15,535,392
Total stockholders' equity 24,857,754 23,617,571

TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $46,115,309 $39,442,411

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008

Service fees $2,039,002 1,656,080 $4,879,448 $5,430,145
Sales of cupric sulfate 440,816 423,891 879,347 1,804,481
Sales of recycled
commodities 641,011 1,115,150 1,427,418 2,671,634
Operating revenue 3,120,829 3,195,121 7,186,213 9,906,260

Cost of service fees 541,971 478,550 1,452,911 1,165,466
Cost of cupric sulfate 168,717 212,132 410,881 737,235
Cost of recycled
commodities 511,382 639,923 1,034,513 1,447,399
Costs of revenue 1,222,070 1,330,605 2,898,305 3,350,100

Gross profit 1,898,759 1,864,516 4,287,908 6,556,160

Operating expenses
Selling expenses 274,692 233,783 641,066 648,886
General and
administrative expenses 691,709 439,021 1,818,789 1,356,797
Total operating expenses 966,401 672,804 2,459,855 2,005,683

Income from operations 932,358 1,191,712 1,828,053 4,550,477

Other income(expense)
Investment income (loss) (30,093) (5,494) (89,681) (15,946)
Interest income 9,319 11,441 5,431 17,627
Other income 14,389 1,934 61,846 8,388
Other expense (99,361) (168,349) (139,872) (170,010)
Total other income
(expense) (105,746) (160,468) (162,276) (159,941)

Net income from continuing
operations before
minority interest and
income tax 826,612 1,031,244 1,665,777 4,390,536

Income tax expense 110,463 103,499 215,750 437,945

Income from continuing
operations 716,149 927,745 1,450,027 3,952,591

Minority interest 44,184 95,033 97,044 384,470

Net income $671,965 $832,712 $1,352,983 $3,568,121

Foreign currency
translation adjustment 53,672 202,900 (147,460) 948,408

Comprehensive income $725,637 $1,035,612 $1,205,523 $4,516,529

Basic weighted average
shares outstanding 15,271,948 13,902,510 15,267,387 13,392,040

Diluted weighted average
shares outstanding 15,271,948 13,902,510 15,267,387 13,392,040

Basic and diluted net
earnings per share $0.04 $0.06 $0.09 $0.27

CHINA INDUSTRIAL WASTE MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

For Nine Months ended September 30,
2009 2008

Cash flows from operating activities:
Net income $1,352,983 $3,568,121
Adjustments to reconcile net income
to net cash
provided by operating activities:
provided by operating activities: 97,044 547,178
Depreciation 935,665 491,426
Amortization 51,310 28,296
Bad debt allowance -- 7,782
Stock and options issued for
services 34,660 117,100
Accretion expenses 27,086 59,533
Investment loss (income) 89,681 (156,393)
Government subsidy recognized as
income (46,944) --

Changes in operating assets and
liabilities:
Notes receivable (14,637) --
Accounts receivable (815,494) (1,780,297)
Inventory 80,664 (534,458)
Other receivables (179,182) (145,967)
Advance to suppliers (446,709) 120,626
Prepaid expense 2,196 --
Other asset (87,621) (298,283)
Escrow account -- (750,000)
Accrued expense and deferred
sales (398,997) (7,701)
Accounts payable (125,006) 680,002
Other payable (99,899) --
Advance from customers 7,714 --
Tax payable (36,645) 31,433
Net cash provided by operating
activities 427,869 1,978,398

Cash flows from investing activities
Deposit for business acquisition (1,463,722) --
Long-term equity investment (87,823) --
Purchase of property and
equipment (238,158) (530,282)
Construction contracts (1,433,045) (5,381,376)
Purchase of intangible assets (23,830) --
Repayment from related party 1,197,860 --
Due from related party -- (589,738)
Due to related party -- (242,284)
Certificate of deposit (1,683,280) --
Net cash used in investing
activities (3,731,998) (6,743,680)

Cash flows from financing activities
Repayment of construct project
payable (3,014,586) --
Proceeds from short-term loans 6,733,120 3,433,235
Repayment of short-term loans (3,366,560) (1,447,069)
Proceeds from long-term loan 3,659,304 --
Proceeds from related party loan 102,461 --
Cash released from escrow account 750,000
Subsidy received from government 1,463,722 405,410
Proceeds from issuance of common
stock -- 3,277,903
Stock subscription -- 220,000
Net cash provided by financing
activities 6,327,461 5,889,479

Effect of exchange rate on cash (6,850) 948,430

Net increase in cash and cash
equivalents 3,016,482 2,072,627

Cash and cash equivalents, beginning
of period 5,714,001 3,260,307
Cash and cash equivalents, end of
period $8,730,483 $5,332,934

Supplemental cash flow information:
Cash paid during the year for:
Interest $245,523 $163,140
Income taxes $329,537 $337,971
Non-cash investing and
financing activities:
Common stock issuance cost $ -- $113,000
Contributed anaerobic
fermentation equipment $292,744 $ --
Transfer out of
construction in progress $(166,761) $ --
Transfer of construction
in progress to property,
plant and equipment $166,761 $ --
Change in reporting entity $276,418 $ --

SOURCE China Industrial Waste Management, Inc.

Company Contact - Ms. Guo Xin, CFO, +86-411-8581-1229, or
hellenguo@chinaciwt.com; or Mr. Zhang Dazhi, Company Secretary,
+86-411-8259-5339, or darcy.zhang@chinaciwt.com; CCG Investor Relations: Mr.
Athan Dounis, Account Manager, +1-646-213-1916, or athan.dounis@ccgir.com; or
Mr. Crocker Coulson, President, +1-646-213-1915 (New York), or
crocker.coulson@ccgir.com