NEW YORK and HARBIN, China, Aug. 17, 2010 (GLOBE NEWSWIRE) -- Eastern Environment Solutions Corp. (OTCBB:EESC), a leading provider of municipal solid waste (MSW) processing and disposal services in northeast China, today announced its results of the second quarter of 2010 and provided an update on its landfill operations and newly launched plastic bottle recycling business.
Second Quarter 2010 Financial Highlights (year-over-year):
- Revenue increased 1071% to $5.2 million
- Gross profit increased 706% to $2.9 million
- Income from operations increased 1173% to $2.8 million
- Operating margin increased 385 basis points to 53.3% from 49.5%
- Net income increased to $2.4 million from $180,511 in Q2 2009
- $7.2 million of working capital and shareholders' equity of $16.7 million
Ms. Feng Yan, Chairman and Chief Executive Officer, stated, "We are extremely pleased with our second quarter results, as illustrated by a dramatic increase in revenue, both sequentially and year-over-year. Our second quarter net income also reached a record $2.4 million, or $0.16 per diluted share.These strong quarterly results illustrate the success of our strategic plans, and we look forward to continued year-over-year revenue growth and improved profitability in the second half of 2010 and 2011."
Ms. Feng continued, "The major factor contributing to our strong sequential revenue growth was the shift in our strategy to include recycling polyethylene terephthalate (PET) plastic bottles and plastic bottle caps, which we implemented in the first quarter of this year and began generating substantial revenue in the second quarter. In addition to separating plastic bottles and plastic bottle caps from our own landfill, we have established relationship with local collection points which provide us with much larger and more stable supplies of plastic bottle waste than we had previously collected on our own."
Ms. Feng says, "In addition to providing a valuable new revenue stream, our PET recycling removes waste from our landfill and, in turn, increases our overall disposal capacity at the landfill. Looking ahead, we are focused on further expanding our waste processing operations by implementing additional recycling technologies that will provide new revenue streams from our landfill. At the same time, we are actively seeking new landfills we can either develop or acquire. Given the overwhelming growth of Harbin and other cities within Heilongjiang Province, there is enormous demand and government support for new landfills and recycling technologies."
Ms. Feng continued, "During the quarter, we also enhanced our leadership team with the addition of three new independent directors. These three new board members bring a wealth of industry experience as well as financing and accounting experience that will be instrumental as we prepare for the next phase of our growth. As a result of these board appointments, we believe we meet most of the qualifications to list on a senior exchange."
Revenue for the second quarter ended June 30, 2010 was $5.2 million, compared to $447,670 for the second quarter ended June 30, 2009. The increased revenue reflects the strong growth of the PET recycling business during the second quarter of 2010, coupled with the initial resumption of landfill operations in late 2009 and an increase in authorized tons of waste per day granted by the HMUAB in February 2010. Gross profit was $2.9 million for the three months ended June 30, 2010, as compared to $365,269 for the three months ended June 30, 2009. Operating income was $2.8 million for the three months ended June 30, 2010, as compared to $220,872 for the three months ended June 30, 2009. Net income for the three months ended June 30, 2010 was $2.4 million, or $0.16 per diluted share, compared to net income of $180,511, or $0.01 per diluted share, for the same period last year.
As of June 30, 2010, the Company had cash and cash equivalents of $851,877, working capital of $7.2 million, and shareholders' equity of $16.7 million.
About Eastern Environment Solutions Corp.
Eastern Environment Solutions Corp. is the first regional environmental engineering company to operate under a Build-Operate-Transfer ("BOT") contract in China. The landfill is 17 km away from urban areas. The Harbin Municipal Urban Administrative Bureau, authorized by the Harbin Municipal Government, signed a franchise contract for 17 years with the company. The landfill can be used to dispose of 1,500 tons of MSW per day, or approximately 42% of the total municipal solid waste produced by the population of Harbin. Additional information about the Company is available at www.useesc.com/">www.useesc.com.
In addition to historical information, this press releases contains forward-looking statements, which are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements represent Management's belief as to the future of Eastern Environment Solutions, Corp. Whether those beliefs become reality will depend on many factors that are not under Management's control. Many risks and uncertainties exist that could cause actual results to differ materially from those reflected in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the section entitled "Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.
| EASTERN ENVIRONMENT SOLUTIONS, CORP. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| June 30, | December 31, | |
| 2010 | 2009 | |
| (Unaudited) | ||
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $ 851,877 | $ 428,052 |
| Accounts receivable | 7,975,281 | 4,253,203 |
| Inventory | 13,882 | 42,650 |
| Other receivables | 783 | 440,208 |
| Loans to related parties | 65,949 | 42,828 |
| Total Current Assets | 8,907,772 | 5,206,941 |
|
Property and equipment, net of accumulated depreciation of $1,450,323 and $1,312,131, respectively |
6,312,971 | 6,319,005 |
| Other asset: | ||
| Advance to suppliers | 3,809,414 | 3,783,981 |
| Total Other Asset | 3,809,414 | 3,783,981 |
| Total Assets | $19,030,157 | $ 15,309,927 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Bank loan payable - current portion | $ 966,592 | $ 966,592 |
| Accounts payable | 815 | 810 |
| Taxes payable | 665,887 | 174,375 |
| Accrued expenses and other payables | 78,733 | 92,192 |
| Total Current Liabilities | 1,712,027 | 1,233,969 |
| Long-term liabilities: | ||
| Bank loan payable - net of current portion | 604,120 | 1,087,416 |
| Total Liabilities | 2,316,147 | 2,321,385 |
| Commitments and Contingencies | ||
| Stockholders' Equity | ||
|
Common stock, $0.0001 par value, 100,000,000 shares authorized; 14,970,186 shares issued and outstanding as of June 30, 2010 and December 31, 2009 |
1,497 | 1,497 |
| Additional paid-in-capital | 4,021,929 | 3,836,165 |
| Accumulated other comprehensive income | 1,964,023 | 1,945,261 |
| Statutory reserves | 186,156 | 186,156 |
| Retained earnings - Unappropriated | 10,540,405 | 7,019,463 |
| Total Stockholders' Equity | 16,714,010 | 12,988,542 |
| Total Liabilities and Stockholders' Equity | $19,030,157 | $ 15,309,927 |
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ||||
| (UNAUDITED) | ||||
| SIX MONTHS ENDED JUNE 30, | THREE MONTHS ENDED JUNE 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Revenues | $ 6,831,506 | $ 890,019 | $ 5,243,752 | $ 447,670 |
| Cost of Revenues | 2,507,747 | 185,630 | 2,297,916 | 82,401 |
| Gross Profit | 4,323,759 | 704,389 | 2,945,836 | 365,269 |
| Selling, General and Administrative | 294,925 | 282,026 | 149,007 | 144,397 |
| Income from operations | 4,028,834 | 422,363 | 2,796,829 | 220,872 |
| Other Income (Expense) | ||||
| Interest income | 23,547 | 8,215 | 321 | 714 |
| Other expense | (112) | (50) | 8 | -- |
| Total other income, net | 23,435 | 8,165 | 329 | 714 |
| Income from Operations before Income Taxes | $ 4,052,269 | $ 430,528 | $ 2,797,158 | $ 221,586 |
| Provision for Income Taxes | 531,327 | 79,275 | 361,740 | 41,075 |
| Net Income | 3,520,942 | 351,253 | 2,435,418 | 180,511 |
| Other Comprehensive Income (Loss) -- | ||||
| Foreign currency translation Income (loss) | 18,762 | (26,999) | 67,337 | 795 |
| Comprehensive Income | $ 3,539,704 | $ 324,254 | $ 2,502,754 | $ 181,306 |
| Basic & Diluted Income Per Share | ||||
| Basic | $ 0.29 | $ 0.03 | $ 0.20 | $ 0.02 |
| Diluted | $ 0.24 | $ 0.02 | $ 0.16 | $ 0.01 |
| Weighted Average Number of Common Shares Outstanding | ||||
| Basic | 12,078,791 | 11,210,717 | 12,186,074 | 11,318,660 |
| Diluted | 14,970,186 | 14,970,186 | 14,970,186 | 14,970,186 |
| EASTERN ENVIRONMENT SOLUTIONS, CORP. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (UNAUDITED) | ||
| SIX MONTHS ENDED JUNE 30, | ||
| 2010 | 2009 | |
| Cash Flows From Operating Activities: | ||
| Net income | $ 3,520,942 | $ 351,253 |
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
| Depreciation and amortization | 128,533 | 122,590 |
| Amortization of stock-based compensation | 185,764 | 191,376 |
| Changes in operating assets and liabilities: | ||
| Accounts receivable | (3,722,078) | (887,314) |
| Inventory | 28,768 | 22,703 |
| Accounts payable | 5 | (77) |
| Taxes payable | 491,512 | 79,281 |
| Accrued expenses and other payables | (13,459) | 35,114 |
| Net cash provided by (used in) operating activities | 619,987 | (85,074) |
| Cash Flows From Investing Activities: | ||
| Purchase of property and equipment | (2,284) | -- |
| Payment of capitalized interests for construction loan | (78,059) | (187,204) |
| Payments on loans to unrelated party | -- | (343,815) |
| Collections on loans to unrelated party | 439,425 | 211,909 |
| Payments on loans to related party | (23,121) | -- |
| Net cash provided by investing activities | 335,961 | (319,110) |
| Cash Flows From Financing Activities | ||
| Repayment of bank loan payable | (483,296) | (48,330) |
| Net cash used in financing activities | (483,296) | (48,330) |
| Effect of exchange rate changes on cash and cash equivalents | (48,827) | (24,173) |
| Increase (decrease) in Cash and Cash Equivalents | 423,825 | (476,687) |
| Cash and Cash Equivalents - Beginning of period | 428,052 | 1,112,487 |
| Cash and Cash Equivalents - End of period | $ 851,877 | $ 635,800 |