-- $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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