CDT Environmental Technology Investment Holdings Limited (Nasdaq: CDTG), a Chinese provider of waste treatment systems and services, filed its annual report on Form 20-F for the fiscal year ended December 31, 2025, with the U.S. Securities and Exchange Commission on May 15, 2026. The report, available on the SEC's website at www.sec.gov or CDT's website at https://www.cdthb.cn, revealed a significant decline in financial performance, with total revenues falling 38.8% year-over-year to approximately $18.2 million, down from $29.7 million in 2024.
The revenue decrease was primarily driven by a 39.2% drop in sewage treatment system installations, which generated $17.3 million compared to $28.4 million in the prior year. The company attributed this to prolonged local government review and approval processes that delayed projects initiated between 2021 and 2024, as well as a reduction in new projects secured in 2025. Sewage treatment services revenue also declined by 29.8% to $0.9 million, reflecting reduced demand amid the ongoing economic downturn in the People's Republic of China.
Despite the revenue contraction, gross profit margin improved to 41.5% from 37.8% in 2024, driven by a higher proportion of profitable projects completed in 2025. However, total operating expenses surged 107.7% to $19.2 million, primarily due to a $1.7 million increase in stock-based compensation and a $14.7 million provision for credit losses, net of recoveries. This provision was made in response to heightened credit risk and collectability concerns, even as the company noted that its customers are mainly state-owned enterprises backed by local governments. CDT currently expects to realize outstanding balances, net of allowance, within twelve months and has received approximately $1.9 million of its accounts receivable as of the report's issuance date.
The company reported a net loss of $10.3 million for 2025, compared to net income of $1.4 million in 2024, reflecting the impact of project delays, fewer new contracts, and the economic slowdown. As of December 31, 2025, working capital stood at $26.4 million, slightly up from $26.0 million.
Looking ahead, CDT provided an update on current and planned projects. As of March 31, 2026, the company had three projects in backlog: Phase VI of the Jimei Guankou Project, the Xiamen Xinglin Pipeline Network Renovation Project, and the Hubei Wuxue Project, with a total provisional contract value of approximately RMB 187 million (about US$26.8 million). Additionally, CDT is bidding on two new wastewater treatment system projects, with results expected by the third quarter of 2026.
In a strategic move to diversify revenue streams, CDT is exploring new energy opportunities, including converting organic solid waste into renewable energy. The company is in discussions with potential industry partners and is in the planning stages, with a focus on supporting China's 'Dual Carbon' goals and achieving sustainable development objectives.
CEO Li Yunwu commented, 'During fiscal year 2025, customer demand across our primary end markets aligned with expectations, despite macroeconomic headwinds in China and isolated project delays. Our cost optimization program continued to deliver benefits as we expanded our operating margin by 370 basis points year-over-year.' He added that the company expects improvement in core sales growth and stable margins in 2026, underpinned by the $26.8 million backlog and ongoing bidding activities.
For business leaders, CDT's results highlight the challenges of operating in China's current economic environment, particularly for companies reliant on government contracts. The significant provision for credit losses underscores the importance of managing receivables risk, even with state-owned clients. However, the company's shift toward new energy and its focus on cost efficiency may offer a pathway to recovery and long-term growth, aligning with broader industry trends toward sustainability and decarbonization.
