China Energy Recovery, Inc. (China Energy Recovery), a provider of waste heat energy recovery solutions, has reported total revenues of $23.2 million for the year-end 2008, up 95.6%, compared with the total revenues of $11.85 million in the previous year-end. It has also reported a net income of $1.1 million, or $0.041 per diluted share, for the year-end 2008, up 73.3%, compared with net income of $640,919, or $0.031 per diluted share, in the previous year-end.
Full Year 2008 Financial Results:
Product sales generated revenue of $18.5 million, or 79.8% of the total revenue, and increased by 125.7% from $8.2 million in 2007. Design services generated revenue of $1.27 million, or 5.5% of the total revenue, and increased by 187.8% from $0.44 million in 2007. Revenue from an engineering, procurement and construction (EPC) project that required the company’s special technological expertise accounted for $3.42 million, or 14.7% of the total revenue.
Gross profit increased to $5.07 million, a 138.2% increase from $2.13 million in 2007. The company’s gross margin was 21.9%, compared to 18% in 2007. The increase in the company’s gross margin is mainly due to an increase of licensing and design service contracts, which normally achieve greater margins, and our obtaining higher margin orders leveraging our special technical expertise.
Operating income increased by 110.6% to $1.61 million in 2008 from $0.76 million in 2007. If the expenses of $1.47 million related to public company operations, including $0.72 million in non-cash, stock-based service and compensation expenses and finance expense, were excluded so as to be comparable to 2007 in which the company did not incur such expenses, operating income would have amounted to $3.08 million.
Without the aforementioned non-cash expenses of $0.72 million, net income would have been $1.83 million, an increase of 185.9% over that of 2007. Further, to be comparable to 2007, without the $1.47 million expenses related to public company operations, net income would have been $2.58 million, representing a growth of 303.1% over that of 2007.
Fourth Quarter of 2008 Financial Results:
Revenue for the fourth quarter of 2008 increased by 67.1% year over year to a record $7.2 million from $4.31 million in the fourth quarter of 2007.
I am very proud to have achieved another record year of growth in 2008, stated Qinghuan Wu, chairman and chief executive officer of China Energy Recovery. In 2008, we continued to strengthen our leadership position in supplying superior energy recovery systems to the chemical and paper-making industries in China. Going public on an American exchange in 2008 helped us open a new era for the company and has helped increase the awareness for the company internationally. Though there will continue to be challenges in 2009 resulting from the global economic recession, we believe the company will continue to grow and capitalize on market opportunities created by the increasing demands for greater energy efficiency and global environmental protection initiatives. The market recognition for our superior design and engineering capabilities coupled with our expertise in waste energy recovery has helped us achieve a well-earned reputation for quality — something we’ve endeavored for since the company’s founding. We intend to continue to strengthen our core competencies, streamline our business model and expand into other market segments such as cement manufacturing. We will also continue to seek opportunities to expand our manufacturing capacity for our core products. All these efforts will lay a solid foundation for the sustained, long-term growth for the company in order to maintain a reputation as a world leader in waste energy recovery.
Waste Heat Energy Recovery:
Industrial facilities discharge the considerable amounts of excess heat into the atmosphere in the form of hot exhaust gases or high-pressure steam. Energy recovery is the process of recovering vast amounts of that wasted energy and converting it into usable heat energy or electricity, dramatically lowering energy costs. Energy recovery systems are also capable of capturing harmful pollutants that would otherwise be released into the environment. It is estimated that if energy currently wasted by all the US industrial facilities could be recovered, it could produce power equivalent to 20% of US electricity generation capacity without burning any additional fossil fuel, and could help many industries to meet stringent environmental regulations.