THT Heat Transfer Technology (NASDAQ: THTI) reported Tuesday that 2010 profits more than doubled, beating analyst estimates, as clean technology initiatives increasingly picked up steam in China.
For the year ending December 31, 2010, the China-based company, which provides energy-efficient heat exchangers and related services, posted net income attributable to common stockholders of $8.69 million, or $0.53 per diluted share, compared with $4.22 million, or $0.27 per diluted share, in 2009.
"Our focus on optimizing both our product mix and cost structure allowed us to almost double our net income in 2010," said chairman and CEO Guohong Zhao.
Revenue increased by 44% year-over-year to $50.25 million, due primarily to increased demand driven by Chinese government stimulus for energy-saving initiatives. Sales volume of heat exchange products rose substantially to 3,998 units in 2010, up 67% from 2,395 units in 2009.
Analysts expected earnings of $0.42 per share for 2010, on revenues of $48.44 million.
"As businesses recognize the cost effectiveness of switching to clean technology solutions and are further incentivized by government stimulus plans, our plate heat exchange products are quickly gaining traction across a range of industrial sectors, including the metallurgy, petrochemical and shipbuilding industries," added Zhao.
Gross margin during the year improved to 43.18% from 42.77% a year earlier, a result of an increase in sales of high margin products, including air-cooled heat exchangers, the company said.
Indeed, air-cooled heat exchangers saw a sales increase of more than 495% from 2009, as demand rose from water-deficient areas in China.
During the fourth quarter, THT's net income jumped 343% from the same period in 2009 to US$3.24 million, while revenues rose 29% to $15.16 million – exceeding the company’s previous forecast and analyst estimates by a wide margin.
As China faces pressures from rapid urbanization, the company’s products are increasingly in high demand to provide heating systems to growing populations in the country.
As such, THT has been investing in its business and looking for ways to expand. Total operating expenses increased by 22% to $12.11 million in 2010, as the company ramped up its research and development efforts and recruited more members to its management team.
Looking ahead, the company said it expects to generate net revenues in the range of $12.00 million to $14.00 million in first quarter of fiscal 2011 – in line with analyst estimates. For the same period in 2010, the company had sales of $10.13 million.