Rino International (RINO), one of the top China water and remediation plays, reported earnings after the bell today. Growth was excellent, but it didn’t quite meet Wall St estimates. The company reported an adjusted EPS of .53/share which was a big jump from the year ago quarter (.28/share), but missed by a penny and was significantly less than last quarter’s record quarter of .68/share. Revenues came in at $53 million which was a 32% increase over the year ago quarter.
CEO Zou Dejun commented on the quarter: “During the fourth quarter of 2009, we experienced continued momentum in installations of our anti-oxidation systems and wastewater treatment systems. In addition, we completed a total of 5 FGD desulphurization systems for a total of 5 customers during the fourth quarter. We would like to extend our gratitude to all our investors for their support in the $100 million December financing, which will provide the necessary working capital to secure more projects while expanding our production capacity. To that end, we recently acquired 50-year land use rights for approximately 57.5 acres in a large scale industrial plant located in Dalian Changxing Island Harbor Industrial Zone and will build out a new facility during 2010 to be used to expand its R&D and manufacturing capabilities for a wide range of its environmental protection equipment.”
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He went on to discuss the potential of its markets..
“With inadequate wastewater infrastructure and existing systems reaching their useful life, we are optimistic about further growth opportunities for this product segment. Mandates by the State Environmental Protection Agency (SEPA) calling for the iron and steel producers to significantly reduce sulphur emissions and specific goals set by China’s MIIT to attain this reduction helped drive adoption and enabled us to increase our average contract size for our desulphurization projects by approximately 39% over 2008. As evidenced by our recently announced agreement with Shougang Jingtang Steel Company, we are beginning to implement the BOT model in our desulphurization business, which is aimed at meeting our customer’s operating, financial and regulatory objectives, while providing long-term recurring revenue for RINO. We continue to diversify our business through increased sales of anti-oxidation application equipment and the associated coating, and commercialization of our new energy efficient sludge treatment system based on proprietary Rotary Drum Film Dryer (“DWM”) technology, which addresses an estimated $28.8 billion market in China, several times larger than that for our existing products. With a strong working capital position, we are well positioned to continue our growth momentum and capitalize this long-term secular growth opportunity in China.”
Looking ahead, the company expects revenue growth in all product lines and is targeting 17% revenue growth for 2010 (around $225 million) with gross margins between 35 – 40%.
Shares were down about 5% in after hours trading. The stock is working on the right side of a new base and that’s still intact as long as it can hold support between 20 – 21.