China Wind Systems (NASDAQ:CWS)

WUXI, China, June 16, 2011 /PRNewswire-Asia/ -- Cleantech Solutions International, Inc. (formerly known as China Wind Systems, Inc.) (NASDAQ: CWS), a manufacturer of technically advanced metal components and assemblies, primarily used in the wind power, solar and other clean technology industries, today announced that the Company has changed its corporate name to Cleantech Solutions International, Inc. on June 13, 2011. In connection with the name change, the Company's common stock will begin trading on the NASDAQ under the new ticker symbol of "CLNT" as of June 16, 2011.

The change of corporate name was approved at the Company's 2011 annual meeting of stockholders, at which the stockholders elected Jianhua Wu, Drew Bernstein, Min Li, Xi Liu, and Tianxiang Zhou as directors to serve until the 2012 annual meeting and approved an amendment to the Company's certificate of incorporation which changed the corporate name to Cleantech Solutions International, Inc.

"Our new corporate name more clearly reflects our strategic focus on delivering solutions to the clean technology industries in China and internationally. We are expanding our strategic focus beyond the wind energy sector to cover solar power and other clean technology industries," commented Mr. Jianhua Wu, Chairman and Chief Executive Officer of Cleantech Solutions.

"We believe the new corporate name reflects our market position as a leading supplier of forged components to the wind power and other industries and clean energy equipment or components to the solar and textile industry. We are committed to continually expanding our production capacity and broadening our product portfolio by delivering clean technology solutions in the future."

First Quarter 2011 Financial Highlights

• Revenue increased 4.3% year-over-year to $17.6 million
• Revenue from the sale of forged products to the wind power and other industries increased 13.2% year-over-year to $13.4 million, or 76.4% of revenue
• Revenue from the sale of forged products exclusively to the wind power industry increased 46.5% year-over-year to $10.2 million, or 58.0% of revenue
• Operating income increased 24.1% year-over-year to $3.6 million
• Net income increased 36.9% to $2.7 million
• Diluted earnings per share were $0.10, compared to $0.08 in the same period of 2010

"During the first quarter of 2011, sales to the wind power industry increased as we expanded our customer base and delivered large scale orders of forging equipment used in the wind power industry. As a result of our increased focus on the wind power segment, sales of our forging equipment to other industries continued to soften. In addition, the decrease in revenue from the sale of dyeing and finishing equipment reflects the business cycle as well as delays in purchasing new equipment designed to meet stricter environmental standards imposed by the Chinese government as textile manufacturers evaluate both their projected business in uncertain economic times and new equipment designed to meet the new standards. Longer-term, we believe the new policies will generate a demand for our next generation dye machine models that were introduced in November 2010, which we believe meets the new standards," commented Mr. Jianhua Wu, Chairman and Chief Executive Officer of China Wind Systems. "During the quarter, we continued our efforts to capitalize on the attractive growth opportunities in the clean energy sector. We recently received two follow-on purchase orders of solar chamber subassemblies worth $1.1 million."

Business Outlook

China Wind Systems delivered sample product units used in the solar power industry over the past few months. Following successful inspection and approval by its customer, the Company received a total of two purchase orders for approximately $1.1 million from its customer to deliver solar chamber subassemblies. The Company will supply these units of solar chamber subassemblies by June 2011.

The Company is currently producing subassemblies for equipment used in the wafer production of multi crystalline silicon products and plans to roll out products used for mono crystalline silicon products over the next few months. The Company expects the market for the mono crystalline silicon products to present a significant growth opportunity in the next 12-18 months time frame. In 2011, the Company plans to purchase new manufacturing equipment to enhance efficiency and ramp up production of its solar segment.

"We are confident that sales of our next generation air dyeing machines, which meet the PRC government's environmental standards, will continue to grow. In the coming quarters, we expect to see increased sales of our new dye machine models," commented Mr. Wu. "We will continue to focus on the wind energy sector and work with our existing and potential customers to maintain our market position despite the difficult pricing environment. We are also pleased with our co-operation with our first customer in the solar industry and are excited about the growing opportunities in the clean energy sector both domestically and internationally."

Fourth Quarter Results:

• Revenue for the fourth quarter of 2010 increased 41.5% to $22.5 million, compared to $15.9 million in the same period of 2009.
• Gross profit for the fourth quarter of 2010 increased 41.0% to $6.1 million, compared to $4.3 million for the same period in 2009.
• Diluted earnings per share were $0.13, compared to $0.11 in the same period of 2009.

"In the fourth quarter of 2010, we continued to expand our market presence in the wind sector.  We reported strong year-over-year and quarter-over-quarter revenue growth from our business selling forged products to the wind industry," commented Mr. Jianhua Wu, Chairman and Chief Executive Officer of China Wind Systems. "During the quarter, we delivered precision forged products from our newly built electro-slag remelting (ESR) facility while maintaining output from our traditional forged rolled ring facility. However, gross margin for our ESR products did not meet our previously anticipated level and we are revising down our margin guidance for our ESR products to 32%-35% range. In addition, our next generation, energy efficient and environmentally friendly dyeing machines continue to gain increased traction and we are receiving strong customer interest."

"Our next generation dye machine models continue to generate increased interest from new and existing customers and we expect to achieve a higher sales contribution from this segment. We believe clean energy solutions will drive our future growth and profitability and we are committed to focusing on this area to create both environmental benefits and sustainable shareholder value."

Business Outlook

As previously announced in November 2010, China Wind received a conditional purchase order for approximately $1.0 million to supply precision manufactured subassemblies for solar cell manufacturing equipment. The Company has completed delivery of two initial units to the customer and has received purchase orders to supply 15 additional units by May 2011.

In addition, the Company has received positive customer feedback on its next generation air dye machine equipment which it launched in November 2010. The next generation dye machine model is designed to be environmentally friendly and energy and cost efficient as it uses mostly airflow instead of water to help dye clothing. Since its introduction, the Company has recorded sales of approximately $1.0 million through March 29, 2011, reflecting, in part, government policies which encourage the use of energy efficient and environmentally friendly equipment. The Company also expects to deliver another 11 units of air dye machine for total revenue of $0.9 million by the second quarter of fiscal 2011. Mr. Wu concluded, "In addition to supplying components to the wind industry, we have made significant progress in delivering clean energy products and solutions in other sectors.  In the solar market, we are pleased with the initial feedback from our customer.  We are confident that our products will meet our customer's requirements and look forward to entering into a long term supply contract. This will mark a major milestone for China Wind Systems as we diversify our product offering to the solar industry.  

"Our next generation dye machine models continue to generate increased interest from new and existing customers and we expect to achieve a higher sales contribution from this segment. We believe clean energy solutions will drive our future growth and profitability and we are committed to focusing on this area to create both environmental benefits and sustainable shareholder value."

Third Quarter 2010 Highlights and Recent Events

• Net revenue increased 31.8% year over year to $21.3 million 
• Operating income increased 21.0% year over year to $4.1 million
• Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 28.2% year over year  to $5.1 million
• Net income increased 19.0% to $3.0 million
• Diluted earnings per share rose 33.3% to $0.12; year ago diluted earnings per share reflects a $0.5 milliondeemed preferred dividend.  
• In July 2010, the Company delivered the first customer shipment of its Electro-Slag Remelted (ESR) forged products.
• In August 2010, the Company received a$4.5 millioncontract to supply rolled rings to Luoyang Xin Qiang Lian Bearing Co., Ltd.

"In the third quarter of 2010, we achieved significant progress in terms of new orders for our wind power business," commented Mr. Jianhua Wu, Chairman and CEO of China Wind Systems, Inc. "In keeping with our aim to supply high quality components to the renewable energy sector, we recently expanded into the solar market as supplier of precision components for solar cell manufacturing equipment with a $1 million conditional purchase order. We expect to receive increased interest from renewable energy players, which will be an important driver for China Wind's future revenue and net income growth."

Business Outlook

"We anticipate continued growth from our wind power business as industry analysts estimate that the Chinese government will spend as much as RMB1.5 trillion, or $224 billion, on wind power over the next decade, representing 30% of the RMB5.0 trillion planned alternative energy spending," said Mr. Wu. "We also see potential expansion and growth opportunities in different industries within the alternative energy sector, such as our recent conditional purchase contract to supply precision components for solar cell manufacturing equipment. We already possess the required manufacturing skills due to our prior experience in manufacturing heavy machinery. Based on our customer's current estimates and anticipated order flow, if this initial order proves successful, its potential purchases on annual basis during 2011 could total between $12 million and $20 million."

The Company maintains its 2010 revenue estimate to be in the range of $76.5 million to $85.0 million, and lowered its estimates for EBITDA, a non-GAAP measurement, to be $20.0 million from a prior range of $22.7 million to $25.2 million and net income to be $12.0 million from a prior range of $15.5 million and $16.3 million.

The Company revised its 2010 guidance as its new ESR facility took longer than anticipated to achieve target gross margins.

Second Quarter 2010 Highlights:

• Net revenue increased 39.7% year over year to $19.0 million.
  
  • Revenue from the sale of forged products to the wind power and other industries increased 40.5% year over year to $13.8 million, or 72.5% of net revenues.
    
  • Revenue from the sale of forged products exclusively to the wind power industry increased 152.1% year over year to $9.2 million, or 48.4% of net revenue.
    
• Operating income increased 59.4% year over year to $4.0 million.
  
• Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 46.4% year over year to $4.7 million.
  
• Net income increased 69.8% to $3.0 million, or $0.12 per diluted share

"During the quarter, our forged products continued to experience strong growth, led by a significant increase in demand from our wind power customers," commented Mr. Jianhua Wu, Chairman and CEO of China Wind Systems, Inc. "In addition, we are currently in final stages of negotiations with a number of wind power component clients to supply shafts and other forged products in the second half of 2010. We believe wind power is becoming an economically viable source of clean and renewable energy, promotes energy conservation and reduces carbon emissions in China, and we believe that the Chinese government will continue to extend strong support to this sector. We plan to leverage on what we see as our competitive edge in the industry to strengthen our market position."

Business Outlook

In response to growing demand for the Company's forged products for the wind industry, China Wind Systems plans to add an additional small-scale production line to complement its current forging facility and support strong order flow. The Company is in final stage of negotiations with a number of wind power component clients to supply shafts and other forged products in the second half of 2010.

"We have received positive feedback on our ESR and forged products and heightened interest from a number of potential wind energy clients, some of whom received trial products from us," commented Mr. Wu. "In the short term, we plan to add a new fabrication machine to meet the customization requirements by our clients. Our ESR production line has quickly ramped up to full utilization during the third quarter of 2010, and we plan on expanding ESR production as we receive orders from new customers. We anticipate significant growth in demand for our ESR products as they gain wide acceptance among wind power component manufacturers. With the Chinese government's recently announced commitment to invest RMB 5.0 trillion (or $737.5 billion) in new energy, we believe the wind energy sector in China will continue to flourish."

The Company reaffirms its 2010 financial guidance estimating:

• Revenues to be in the range of $76.5 million to $85.0 million.
  
• EBITDA, a non-GAAP measurement, is expected to be in the range of $22.7 million to $25.2 million.
  
• Net income is anticipated to be between $15.5 million and $16.3 million.

The Company anticipates stronger demand for both its traditional forged products and ESR forged products in 2010, as management expects stronger sales of precision forged products used in large wind turbines. The Company anticipates revenue contributed by its wind industry segment will increase by approximately 75% year over year to $35 million.

"We are energized by the strong business momentum that marked the first quarter of 2010," commented Mr. Jianhua Wu, Chairman and CEO of China Wind Systems, Inc. "Given that China is expanding its wind energy capacity more than any other country in the world, we believe that demand for our forged components will continue to demonstrate high growth, particularly with our newly launched super-strength ESR products."

"Thus far in 2010, we have experienced strong order flows, particularly for our forged components designed for the wind power industry," commented Mr. Wu. "We remain in active negotiations with numerous wind energy players since firmly establishing ourselves as a superior provider of high quality forged components in China. As we deliver the first batch of ESR products, we are confident that we will sign more customers, further strengthening our competitive position in the industry. Given the Chinese government's commitment to reduce carbon dioxide emissions, we believe the industry growth momentum will continue to support the expansion of our business."

The Company expects 2010

• Revenues to be in the range of $76.5 million to $85 million. In 2010.
  
• Earnings before interest, tax, depreciation and amortization, which is generally referred to as EBITDA and is a non-GAAP financial measure, is expected to be in the range of $22.7 million to $25.2 million. (In the Company's press release dated May 11, EBITDA for 2009 was incorrectly stated as $11.0 million; EBITDA in 2009 was $12.6 million.)
  
• Adjusted net income, which excludes non-cash expenses related to convertible securities and warrants, is anticipated to be between $15.5 million and $16.3 million.

The Company anticipates stronger demand for both its traditional forged products and ESR forged products in 2010, as management expects stronger sales of precision forged products used in large wind turbines. The Company anticipates revenue contributed by its wind industry segment will increase by approximately 75% year over year to $35 million.

"As we continue to increase the utilization rate at our forging facility, we anticipate gaining momentum for our sales activity," commented Mr. Wu. "Upon completion of our ESR production line, we expect to be in a stronger position to apply for the highly valued international certifications that we believe are necessary for us to win larger contracts to supply wind energy components to major industry players. In addition, we expect to achieve higher gross margins in our ESR forged product line, which is anticipated at approximately 35%-40%. Given anticipated consolidation in the wind energy components industry, we are focused on improving the quality of our products to further distinguish the Company."

Source: PR Newswire (November 17, 2009)