China TransInfo Announces Second Quarter 2010 Results
BEIJING, Aug. 13 /PRNewswire-Asia-FirstCall/ -- China TransInfo Technology Corp., (Nasdaq: CTFO), ("China TransInfo" or "the Company"), a leading provider of public transportation information systems technology and comprehensive solutions in the People's Republic of China ("PRC"), today reported its unaudited financial results for the second quarter ended June 30, 2010.
Second Quarter 2010 Highlights
-- Revenue increased 151.1% year-over-year to $24.0 million
-- Gross profit expanded 104.7% year-over-year to $9.6 million; gross
margin was 39.9%, up 5.6 percentage points from the first quarter of
2010
-- Operating income grew 60.9% year-over-year to $4.6 million
-- Adjusted net income increased 41.9% year-over-year to $4.1 million, or
$0.16 per fully diluted share
-- Majority-owned subsidiary, Beijing UNISITS Technology Corp. LTD
("UNISITS") was selected to design a highway management program in
Chongqing, as part of the pioneer project for the National Highway
Information Grid
-- Launched the Company's Information and Control System for major
commercial vehicles (the "IC System") at the World Expo in Shanghai
-- Launched its Fleet Management Service business in Hunan Province
"After acquiring a majority stake in UNISITS, we have maintained our focus on further enhancing the synergies between the two companies and improving gross margin. We are delighted that both UNISITS and our legacy business enjoyed strong growth and improving margins due to an increasing number of higher margin contracts," commented by Mr. Shudong Xia, Chief Executive Officer of China TransInfo. "Meanwhile, we continued to enhance our position in the transportation information industry through our participation in the National Highway Information Grid and the debut of our IC System at the World Expo in Shanghai. The launch of our Fleet Management Service business in Hunan Province is a major milestone for us, and we expect it to begin contributing to our financial results in the fourth quarter of 2010."
Second Quarter 2010 Results
For the quarter ended June 30, 2010, revenue increased 151.1% to $24.0 million from $9.6 million in the comparable period of 2009. Revenue from products and applications in the transportation business sector was $22.6 million, or 93.9% of total revenue, as compared to $6.5 million, or 68.3% of total revenue, in the same period last year, primarily as a result of the UNISITS acquisition. For the second quarter, UNISITS contributed approximately $16.31 million of sales. The remainder of revenue was derived from the digital city, land & resources, and other business sectors.
The Company's gross profit increased 104.7% to $9.6 million in the second quarter of 2010, compared to $4.7 million in the same period of 2009. Gross margin improved 5.60 percentage points to 39.9% from 34.3% in the first quarter of 2010, though still lower than 48.9% in the same period of prior year. The decrease in gross margin resulted from the consolidation of UNISITS' financials into those of China TransInfo, since UNISITS' business involves more hardware components, which have much lower gross margins than do the products and services of the Company's legacy transportation business. However, in the second quarter, gross margin of UNISITS also improved to 29.7% from 25.4% in the first quarter, while that of legacy business hit a historical high of 61.3%.
Operating expenses were $5.0 million, as compared to $1.8 million in the second quarter of 2009. The increase was primarily due to the Company's expansion initiatives, enhanced research and development efforts as well as higher staffing and professional fees. Notably, the growth of selling expenses was well below the revenue growth rate. Selling expenses increased 48.4% to $0.5 million, or 1.9% of sales in the second quarter of 2010, from $0.3 million, or 3.2% of sales, during the same period of 2009. The decrease in selling expenses as a percentage of sales was primarily because the Company won many contracts from repeat customers due to its technology leadership and reputation, rather than through aggressive sales and marketing efforts.
Operating income increased 60.9% to $4.6 million, as compared to $2.8 million in the second quarter of 2009.
Other income was $0.7 million in the second quarter of 2010, compared to $0.1 million in the second quarter of 2009. The increase was due to subsidy income of $0.7 million in the second quarter of 2010 related to government high technology grants.
Net income attributable to the Company increased 28.9% to $3.6 million, or $0.14 per diluted share, as compared to $2.8 million, or $0.13 per diluted share, in the same period of 2009. Adjusted net income attributable to the Company, excluding non-cash stock based compensation expense and amortization expense of intangibles from acquisitions, increased 41.9% to $4.1 million, or $0.16 per diluted share, as compared to $2.9 million, or $0.13 per diluted share, in the comparable period of 2009. Weighted average diluted shares outstanding increased to 25.1 million shares, from 22.4 million shares in the second quarter of 2009.
Table 1: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL DATA
For the three months ended
June 30, 2010 June 30, 2009
Diluted Diluted
Net Income EPS Net Income EPS
Adjusted Amount 4,073,296 0.16 2,870,742 0.13
Adjustments
Amortization of intangible assets
from acquisitions (1) 47,100 0.00 4,362 0.00
Non-cash share based compensation 416,278 0.02 66,737 0.00
Amount per consolidated statement of
operations 3,609,917 0.14 2,799,643 0.13
For the six months ended
June 30, 2010 June 30, 2009
Diluted Diluted
Net Income EPS Net Income EPS
Adjusted Amount 6,293,896 0.26 4,383,448 0.20
Adjustments
Amortization of intangible assets
from acquisitions (1) 94,175 0.00 8,721 0.00
Non-cash share based compensation 830,765 0.03 126,398 0.01
Amount per consolidated statement of
operations 5,368,956 0.22 4,248,329 0.19
(1) Amortizations of intangible assets from acquisitions for Q1 2010
includes amortizations of intangible assets from acquisitions of
China TranWiseway in 2008 and UNISITS in 2009
Six Months Results
Revenue for the six months ended June 30, 2010 increased 204.1% to $48.9 million, as compared to $16.1 million in the same period of 2009. Gross profit expanded 126.3% to $18.1 million from $8.0 million a year ago. Operating income grew 91.6% to $8.2 million from $4.3 million in the first six months of 2009. Net income attributable to the Company increased 26.4% to $5.4 million, or $0.22 per diluted share, as compared to net income of $4.2 million, or $0.19 per diluted share, in the first six months of 2009. Adjusted net income attributable to the Company excluding non-cash expenses increased 43.6% to $6.3 million, or $0.26 per diluted share, as compared to $4.4 million, or $0.20 per fully diluted share, in the first six months of 2009. Weighted average fully diluted shares outstanding increased to 24.1 million shares from 22.4 million shares in the first six months of 2009.
Financial Condition
As of June 30, 2010, cash and cash equivalents totaled $25.2 million, compared to $27.4 million as of December 31, 2009. Working capital increased to $62.5 million, compared to $44.4 million as of December 31, 2009. Stockholders' equity was $95.4 million, compared to $77.8 million as of December 31, 2009. Cash used in operating activities was $11.6 million, primarily the result of an increase in accounts receivable due to increased sales, seasonally slow collections, and an increase in other receivables and certain prepaid expenses. The Company believes these are all seasonal factors and expects cash flow from operations to improve in the second half of 2010.
Business Outlook
"There are vast business opportunities available in China's transportation information industry, due in large part to the government's emphasis on leveraging technology to manage the country's overwhelming traffic flow. The acquisition of UNISITS further strengthens our leading position in the Intelligent Transportation Systems (ITS) market and we look forward to increasing penetration in the highway segment while consolidating our foothold in the urban transportation market," commented Mr. Xia. "Our new fleet management business represents a largely untapped commercial market that enjoys strong support from the government. We believe we are well positioned to emerge as a major player in this evolving market."
For fiscal 2010, the Company reaffirms its previous guidance for revenue of approximately $120 million and adjusted net income of approximately $18 million. Historically, the Company sees lower sales during the first half than the second half of the year due to governmental seasonal budgeting activities.
Conference Call
The Company will host a conference call on Friday, August 13, 2010 at 8:00 a.m. Eastern Time to discuss its financial results for the second quarter ended June 30, 2010.
To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (877) 406-6165. International callers should dial (706) 902-4263. When prompted by the operator, enter conference pass code 895 061 40.
A replay will be available for 14 days starting on Friday, August 13, 2010 at 9:00 a.m. Eastern Time and can be accessed by dialing (800) 642-1687. International callers should dial (706) 645-9291. When prompted, enter conference pass code 895 061 40.
Use of Non-GAAP Financial Information
GAAP results for the three and six months ended June 30, 2010 and 2009 include non-cash share based compensation and amortization of intangible assets from acquisitions. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non-GAAP financial information, which are adjusted net income and adjusted earnings per share, excluding the impact of these items in this release. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. The additional adjusted information is not meant to be considered in isolation or as a substitute for GAAP financials. The adjusted financial information that the Company provides also may differ from the adjusted information provided by other companies. Management believes that these adjusted financial measures are useful to investors because they exclude non-cash expenses that management excludes when it internally evaluates the performance of the Company's business and makes operating decisions, including internal budgeting, and performance measurement, as these measures provide a consistent method of comparison to historical periods. As a result, the provision of these adjusted measures allows investors to evaluate the Company's performance using the same methodology and information as that used by the Company's management. Moreover, management believes that these adjusted measures reflect the essential operating activities of the Company. Non-GAAP measures are subject to inherent limitations because they do not include all of the expenses included under GAAP and because they involve the exercise of judgment of which charges are excluded from the adjusted financial measure. However, the Company's management compensates for these limitations by providing the relevant disclosure of the items excluded. A reconciliation of adjustments to GAAP results appears in Table 1 in this release.
About China TransInfo
China TransInfo, through its affiliate, China TransInfo Technology Group Co., Ltd., (the "Group Company") and the Group Company's PRC operating subsidiaries, is primarily focused on providing transportation information services and comprehensive solutions based on Geographic Information System (GIS) technologies. The Company aims to become the largest transportation information products and comprehensive solutions provider, as well as the largest real time transportation information platform operator and provider in China. In addition, the Company is developing its transportation system to include Electronic Toll Collection technology. As the co-formulator of several transportation technology national standards, the Company owns software copyrights for 89 software products and has won 5 of the 10 model cases sponsored by the PRC Ministry of Communications. The Company's affiliation with Peking University provides the Company access to the University's GeoGIS Research Laboratory, including over 30 Ph.D. researchers. As a result, the Company is playing a key role in setting the standards for electronic transportation information solutions. For more information, please visit the Company's website at http://www.chinatransinfo.com .
Safe Harbor Statement
This press release contains certain statements that may include "forward looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
-FINANCIAL TABLES FOLLOW-
Table 2: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Income Statement
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Net sales $24,045,906 $9,577,921 $48,933,381 $16,091,316
Cost of sales 14,463,937 4,895,845 30,818,236 8,086,742
Gross profit 9,581,969 4,682,076 18,115,145 8,004,574
Total operating Expenses 4,999,719 1,834,616 9,867,176 3,700,335
Income from operations 4,582,250 2,847,460 8,247,969 4,304,239
Non-operating income
(expense):
Interest income 46,442 18,744 76,928 32,483
Interest expense (105,457) (44,268) (203,311) (89,989)
Subsidy income 727,581 89,982 754,024 119,284
Other expense, net (17,918) 7,063 (74,829) 6,868
Total non-operating
income 650,648 71,521 552,812 68,646
Income before income taxes,
non-controlling interests,
and gain on equity
investments in affiliates 5,232,898 2,918,981 8,800,781 4,372,885
Income taxes: 464,027 24,203 839,823 24,082
Net income before non-
controlling interests
and gain on equity
investments in
affiliates net income 4,768,871 2,894,778 7,960,958 4,348,803
Gain (loss) on equity
investments in
affiliates due to
proportional shares of
the affiliates
net income 57,206 -- (301,589) --
Net income before non-
controlling interests 4,826,077 2,894,778 7,659,369 4,348,803
Non-controlling
interests in net
income of subsidiary 1,216,160 95,135 2,290,413 100,474
Net income $3,609,917 $2,799,643 $5,368,956 $4,248,329
Weighted average
number of shares of
outstanding:
Basic 25,051,414 22,215,551 24,031,595 22,201,432
Diluted 25,096,523 22,394,557 24,088,927 22,376,216
Earnings per share -
Basic $0.14 $0.13 $0.22 $0.19
Diluted $0.14 $0.13 $0.22 $0.19
Comprehensive income
Net income
including
noncontrolling
interest $4,826,077 $2,894,778 $7,659,369 $4,348,803
Translation
adjustments 340,372 60,485 341,398 (105,465)
Comprehensive income $5,166,449 $2,955,263 $8,000,767 $4,243,338
Comprehensive income
attributable to
noncontrolling interest $1,216,160 $95,135 $2,290,413 $100,474
Comprehensive income
attributable to CTFO $3,950,289 $2,860,128 $5,710,354 $4,142,864
Table 3: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, December 31,
2010 2009
(Unaudited)
ASSETS
Cash and cash equivalents $25,224,837 $27,400,420
Restricted cash 2,931,719 1,591,076
Accounts receivable, net of allowance for
doubtful accounts of $45,071 and $38,209,
respectively 22,330,831 14,968,778
Inventories 539,611 482,286
Costs and estimated earnings in excess of
billings on incompleted contracts 35,672,455 33,853,708
Prepaid expenses and other current assets 12,877,524 5,871,997
Other receivables 10,048,905 8,416,096
Deferred income tax assets 24,769 28,715
Total current assets 109,650,651 92,613,076
Property and equipment, net 10,055,682 10,541,486
Long-term investments 6,996,939 8,027,122
Intangible assets, net 5,302,110 4,494,781
Goodwill 10,020,447 9,979,631
Other assets 976,674 826,671
Total assets $143,002,503 $126,482,767
LIABILITIES AND
STOCKHOLDERS' EQUITY
Accounts payable $23,649,449 $20,728,539
Short-term borrowings from banks 8,911,650 7,481,700
Billings in excess of costs and estimated
earnings on incompleted contracts 11,100,255 17,021,936
Accrued expenses and other current liabilities 3,510,331 3,022,140
Total current liabilities 47,171,685 48,254,315
Other long-term liabilities 389,756 389,489
Total liabilities 47,561,441 48,643,804
Commitments and contingencies -- --
Stockholders' equity
Preferred stock, $0.001 par value per share,
authorized 10,000,000 shares, no shares
issued and outstanding at June 30, 2010 and
December 31, 2009 -- --
Common stock, $0.001 par value per share,
authorized 150,000,000 shares, issued and
outstanding 25,245,069 and 22,452,745 shares,
respectively 25,245 22,453
Additional paid-in capital 43,222,562 25,253,666
Retained earnings 37,317,279 31,948,323
Non-controlling interests 12,419,532 18,499,475
Accumulated other comprehensive income 2,456,444 2,115,046
Total stockholders' equity 95,441,062 77,838,963
Total liabilities and stockholders' equity $143,002,503 $126,482,767
Table 4: CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (unaudited)
Six Months Ended June 30,
2010 2009
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $5,368,956 $4,248,329
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-controlling interests 2,290,413 100,474
Depreciation and amortization expense 1,021,829 491,752
Stock-based compensation 843,481 126,398
Gain on equity investments in affiliates due
to proportional shares of the affiliates
net income 301,589 --
Loss on disposal of property and equipment 6,370 --
Allowance for doubtful accounts 6,677 --
(Increase) Decrease in assets:
Restricted cash (1,328,611) (371,248)
Accounts receivable (7,277,274) (1,452,048)
Inventories (55,123) (38,898)
Prepaid expenses and other current assets (3,950,462) 606,919
Other receivables (1,596,043) (63,283)
Cost of estimated earnings in
excess of billings on incompleted contracts (1,673,328) (4,938,381)
Other assets (2,451,029) --
Decrease (Increase) in liabilities:
Accounts payable 2,824,509 (882,636)
Billings in excess of costs and
estimated on incompleted contracts (5,966,489) (365,051)
Accrued expenses and other current liabilities 77,457 (833,370)
Net cash used in operating activities (11,557,078) (3,371,043)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in other non-current asset -- (38,081)
Proceeds from disposal of property and equipment 5,520 --
Purchases of property and equipment (420,344) (1,204,584)
Disposal of property and equipment 11,889 --
Payments for acquisition of companies (258,761) (475,620)
Dividends from subsidiaries'
and variable interest entity 50,973 --
Purchases of intangible assets (888,986) (1,414,756)
Net cash used in investing activities (1,499,709) (3,133,041)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from short-term borrowings 4,474,045 --
Payments of short-term borrowings (3,080,490) --
Non-controlling interest
shareholders' capital contribution -- 87,960
Proceeds from issuing common shares 10,000,000 --
Payments to related parties -- (449,153)
Payments of transaction costs
related to shares issuance -- (32,500)
Payments to third parties for stock financing (610,439) --
Net cash used in financing activities 10,783,116 (393,693)
Effect of foreign currency translation 98,088 (16,643)
Net decrease in cash and cash equivalents (2,175,583) (6,914,420)
Cash and cash equivalents - beginning of period 27,400,420 16,122,464
Cash and cash equivalents - end of period $25,224,837 $9,208,044
Supplemental disclosures of cash flow information:
Interest paid $90,874 $89,989
Income taxes paid $447,795 $20,364
For more information, please contact:
Company Contact:
Ms. Fan Zhou, Investor Relations Director
China TransInfo Technology Corp.
Email: [email protected]
Tel +86-10-5169-1657
Investor Relations Contact:
Mr. Athan Dounis, Account Manager
Email: [email protected]
Tel: +1-646-213-1916
Mr. Crocker Coulson, President
Email: [email protected]
Tel: +1-646-213-1915
CCG Investor Relations
Web: http://www.ccgirasia.com
SOURCE China TransInfo Technology Corp.
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