Deli Solar (USA), Inc. Announces Record Second Quarter 2007 Financial Results

LOS ANGELES and BEIJING, Aug. 13 /Xinhua-PRNewswire-FirstCall/ -- Deli Solar (USA), Inc. (OTC Bulletin Board: DLSL), an established significant seller of solar water heaters and space heating devices in the People's Republic of China (the "PRC"), announced its results for the second quarter which ended June 30, 2007.

Sales for the second quarter of 2007 increased 33% to $9.4 million compared to $7.1 million for the same quarter in 2006. Revenues were comprised of over 63,000 solar water heaters and 37,000 boilers sold during the quarter. Gross profit for the three months ended June 30, 2007 was $1.9 million, an increase of approximately 30% from the second quarter of 2006. Gross margins were 20.5% to 21.1% for the second quarter of 2007 and 2006 respectively.

Operating expenses for the three months ended June 30, 2007 decreased 4% to $1.1 million compared to the same period in 2006 and a result of prudent management of general and administrative expenses despite a 32% increase in advertising expenses focused on gaining market share.

Operating income for the second quarter of 2007 totaled $0.8 million compared to $0.3 million for the same period in 2006, representing a 163% increase. Net income for the 2007 second quarter increased 113% to $0.6 million, representing earnings per share of $.10, from $0.3 million in net income, or $.04 per share during the second quarter of 2006. Calculations were based upon 6.6 million and 8 million shares outstanding respectively.

"Revenue growth was driven by higher unit sales of solar water heaters and residential boilers which benefited from continued investment in brand marketing, sales promotions and further expansion of our sales distribution network," commented Mr. Deli Du, President and Chief Executive Officer. ''While margins were slightly impacted by competition and pricing pressure, our ability to prudently manage raw material and organizational costs enabled us to dramatically increase operating profitability. In addition, we made further progress installing our new flat plate collector production and water assembly line, which we expect to be fully operational during September 2007. We expect this to enhance our production efficiencies and improve the quality of our products while contributing a positive impact on future operating margins,'' continued Mr. Du.

Six Month Results

Sales increased approximately 32% to $12.4 million for six months ended June 30, 2007 as compared to $9.4 million for the same period last year resulting from continued investment in brand marketing, sales promotion and development of a sales distribution network. Operating expenses for the six months ended June 30, 2007 were $1.6 million as compared to $1.5 million for the same period in 2006, an increase of 4%. Operating income for the six months ended June 30, 2007 was $1.1 million, increased 109% as compared to $0.5 million for the six months ended June 30, 2006.

Net income was $0.9 million in the six months ended June 30, 2007, compared with $0.5 million in the same period last year, an increase of $0.4 million, or approximately 84%. This equated to earnings of $.14 per share compared to $.06 per share for the first six months of 2006 based on 6.4 million and 8 million fully diluted shares respectively.

Balance Sheet and Cash Flow Discussion

The Company reported $5.7 million in cash and equivalents on June 30, 2007, a current ratio of 12.3 to 1 and was debt free. The Company completed a $2.5 million financing in June 2007. Net cash flow from operations was $0.3 million for the six months ended June 30, 2007, a slight increase from the same year ago period. In addition, the Company incurred approximately $0.4 million in capital expenditures on new facilities and assembly lines at its Bazhou factory during the first six months of 2007.

"We continue to make further progress on our acquisition strategy as we signed a purchase agreement on May 18, 2007 to buy 51% of Tianjin Huaneng Energy Equipment Company, which manufactures energy saving boilers and environmental protection equipment for industrial customers. As part of the acquisition we paid approximately $1.6 million in July 2007 with approximately $100,000 balance due and a separate finders' fee. We also agreed to invest approximately $2.5 million into the new company to expand production capabilities and operations. With an effective accounting date of July 1, 2007, we anticipate this purchase will contribute to both revenues and profitability during the balance of this year. Separately, we continue to pursue the purchase of a 60% equity stake in Shenzhen Xiongri Solar Power Co., Ltd., which provides solar water heaters for commercial customers and multi-family developers throughout Shenzhen,'' Mr. Du concluded.

About Deli Solar (USA), Inc.

Deli Solar (USA) Inc. operates through its wholly owned subsidiaries Bazhou Deli Solar Energy Heating Co. Ltd. ("Deli Solar (Bazhou)") and Beijing Deli Solar Technology Development Co., Ltd. ("Deli Solar (Beijing)"), both located in the PRC. The Company sells and distributes hot water and space heating devices to customers in the PRC. For more information, please visit http://www.delisolar.com .