Pansoft Announces Second Fiscal Quarter 2010 Financial Results
JINAN, China, Feb. 9 /PRNewswire-Asia-FirstCall/ -- Pansoft Company Limited (Nasdaq: PSOF) ("Pansoft" or the "Company"), a leading ERP software service provider for the oil and gas industry in China, today announced financial results for the second fiscal quarter ended December 31, 2009.
Highlights for the Second Quarter 2010
-- Total revenues were $4.9 million, an increase of 47% compared to $3.3
million for the quarter ended December 31, 2008
-- Gross profit was $2.6 million, an increase of 56% compared to $1.7
million for the quarter ended December 31, 2008
-- Gross margin was 53%, compared to 50% in the for the quarter ended
December 31, 2008
-- Operating profit was $2.1 million, an increase of 93% compared to $1.1
million for the quarter ended December 31, 2008
-- Net income was $1.9 million, an increase of 94% compared to $1.0
million for the quarter ended December 31, 2008
-- Diluted earnings per share was $0.36, an increase of 64% compared to
$0.22 for the quarter ended December 31, 2008
-- Adjusted net income excluding share-based compensation expenses was
$2.01 million, an increase of 80% compared to $1.16 million for the
quarter ended December 31, 2008.
-- Adjusted Diluted EPS excluding share-based compensation expenses was
$0.42, an increase of 68% compared to $0.25 for the quarter ended
December 31, 2008
On December 11, 2009, Pansoft's Board of Directors authorized a change in the Company's fiscal year end to June 30 from December 31 because the new fiscal year end is more consistent with the purchasing cycle of its major customers. As a result of this change, the quarter ended December 31, 2009 represents the second quarter of the fiscal year ending June 30, 2010.
To assist shareholders with understanding the change in fiscal year, the company is presenting pro-forma financial information for the twelve-month period ended December 31, 2009.
Highlights for Twelve-Month Period ended December 31, 2009
-- Total revenues were $10.0 million, an increase of 46% compared to $6.9
million for the twelve months ended December 31, 2008, exceeding the
company's previous guidance of a 40% increase
-- Gross profit was $5.0 million, an increase of 43% compared to $3.5
million for the twelve months ended December 31, 2008
-- Gross margin was 50%, compared to 51% for the twelve months ended
December 31, 2008
-- Operating profit was $3.1 million, an increase of 22% compared to $2.6
million for the twelve month ended December 31, 2008
-- Net income was $3.0 million, an increase of 31% compared to $2.3
million for the twelve months ended December 31, 2008
-- Adjusted net income excluding share-based compensation expenses was
$3.65 million, an increase of 46%, compared to $2.5 million for the
twelve months ended December 31, 2008
-- Diluted earnings per share was $0.55, an increase of 10% compared to
$0.50 for the twelve months ended December 31, 2008
-- Adjusted Diluted EPS excluding share-based compensation expenses was
$0.67, an increase of 24% compared to $0.54 for the twelve-month
period ended December 31, 2008
"Once again we delivered solid quarter and calendar year results driven by our focus on execution," said Guoqiang Lin, Pansoft's CEO. "We continued to see large orders from our long-term customers and their subsidiaries. Our centralized accounting system has been implemented at our two largest clients, PetroChina and Sinopec, and is also in the process of being integrated with other ERP systems within their operations, which should provide continued demand for our services. In addition, we have taken a number of initiatives to penetrate into new markets and win new clients and have achieved preliminary success, although yet to significantly impact our total revenue. We believe that our strategy to expand our business operations and diversify our customer base will position Pansoft well to achieve our long-term growth and profitability objectives."
"We enjoyed healthy top and bottom line growth in the second quarter of fiscal year 2010 and over the last twelve months. Adjusted EPS increased by 24% year-over-year driven by our exceptional financial and operational performance," added Allen Zhang, Pansoft's Chief Financial Officer. "Looking ahead, increasing investments in engineering capabilities, sales and marketing efforts, and system development efficiencies will continue to be key drivers for Pansoft."
Financial Results Highlights for the Three Months Ended December 31, 2009
Total revenue for the three months ended December 31, 2009 was $4.9 million, a 47% increase from $3.3 million in the three months ended December 31, 2008. The increase in revenue was due to the increased number and value of contracts for development and integration services.
Cost of sales was $2.3 million, an increase of 38% from $1.7 million in the three months ended December 31, 2008. Cost of sales increased at a slower pace than revenue as a result of cost control measures designed to contain expenses.
Gross profit in the quarter was $2.6 million, an increase of 56% from $1.7 million in three months ended December 31, 2008. Gross margin was 53%, compared to 50% in the three months ended December 31, 2008.
Operating expenses were $0.5 million, a decrease of 13% from $0.6 million in the three months ended December 31, 2008.
Operating profit was $2.1 million, an increase of 93% from $1.1 million in the three months ended December 31, 2008. Operating margin was 42% compared to 32% in three months ended December 31, 2008.
Net income was $1.9 million, an increase of 94% from $1.0 million in the corresponding period in 2008. The significant increases in our operating and net profits were due to a substantial increase in revenues from our major contracts and reduction of operating expenses. Diluted earnings per share were $0.36, an increase of 64% from $0.22 in the corresponding period in 2008. Adjusted Diluted EPS excluding share-based compensation expenses was $0.42, an increase of 68% compared to $0.25 for three months ended December 31, 2008.
Financial Results Highlights for the Twelve Months ended December 31, 2009
Pansoft has changed its fiscal year end to June 30. A transition report on Form 20-F will be filed for the six-month transition period ended June 30, 2009. The results for the six-month period ended December 31, 2009 will be included in the annual report on Form 20-F for the fiscal year ending June 30, 2010. To further assist shareholders in understanding the transition to the new fiscal year, pro-forma operating results for the twelve months ended December 31, 2009 are provided below.
Total revenue for the twelve months ended December 31, 2009 was $10.0 million, an increase of 46% from $6.9 million in the twelve months ended December 31, 2008. The increase in revenue was mainly due to increase in number of contracts as well as size of contracts signed with our major long-term clients. This is consistent with Pansoft's strategy to become an important part of the clients' IT platform and solicit their IT expansion projects.
Cost of sales was $5.1 million, an increase of 49% from $3.4 million in the twelve months ended in 2008. Cost of sales increased at a faster rate than revenue growth due to a significant increase in the number of employees as a part of our corporate expansion strategy and technical team enhancement.
Gross profit was $5.0 million, an increase of 43% from $3.5 million in the twelve months ended in 2008. Gross margin was 50%, compared to 51% for the twelve months ended December 31, 2008.
Operating expenses were $1.9 million, an increase of 100% from $0.9 million in the twelve months ended in 2008. Operating expenses consist primarily of general and administrative expenses, selling expenses, professional fees and stock option expenses. The increase in operating expenses in 2009 was mainly due to the increase in stock-based compensation and public listing expenses, which accounted for 34% and 20% of total operating expenses, respectively.
Operating profit was $3.1 million, an increase of 22% from $2.6 million in the twelve months ended December 31, 2008. Operating margin was 31%, compared to 37% in the twelve months ended December 31, 2008.
Net income was $3.0 million, an increase of 31% from $2.3 million in the corresponding period in 2008. Adjusted net income, excluding stock-based compensation totaled $3.7 million, an increase of 46% compared to $2.5 million in the twelve months ended December 31, 2008. Diluted earnings per share were $0.55, an increase of 10% from $0.50 in the corresponding period in 2008. Adjusted diluted EPS excluding share-based compensation expenses was $0.67, an increase of 24% from $0.54 for the twelve months ended December 31, 2008.
As of December 31, 2009, Pansoft's cash and cash equivalents are $14.7 million, an increase of 21% compared to $12.2 million on December 31, 2008. The increase in cash and cash equivalents was primarily a result of increased collection of accounts receivable in the last calendar quarter of 2009. Cash flow from operating activities in 2009 was $2.8 million, an increase of 80% compared to $1.5 million from the twelve months ended December 31, 2008.
Business Outlook
Despite the worldwide financial crisis and economic recession in 2009, Pansoft has delivered strong performance, including a 46% increase in revenue in the twelve months ended December 31, 2009, exceeding its previous guidance of 40% revenue growth. In addition, Pansoft's net profit increased by 31% and adjusted net income increased by 46%.
The Company expects its customization, integration services and solutions will continue to win major contracts from large customers. Going forward the Company intends to expand its business by reorganizing its technical service and development force by establishing four new business departments with the objective to penetrate into new markets and industries. Pansoft's management believes that demand for its services will continue to grow as the Company leverages its advanced technology and application development expertise within the system integration services domain. Pansoft expects to achieve 40% organic growth in revenue year-over-year for the fiscal year ending in June 30, 2010.
"In addition, the Company has RMB 100 million, or approximately $14.7 million, in cash or cash equivalent on its balance sheet. This cash reserve allows the Company to focus aggressively on potential acquisition targets as part of its strategy to expand into additional industries," said Hugh Wang, Chairman of Board.
Adjusted Financial Measures
This release contains adjusted financial measures. These adjusted financial measures, which are used as measures of the Company's performance, should be considered in addition to, not as a substitute for, measures of the Company's financial performance prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The Company's adjusted financial measures may be defined differently than similar terms used by other companies. Accordingly, care should be exercised in understanding how the Company defines its adjusted financial measures.
Reconciliations of the Company's adjusted measures to the nearest GAAP measures are set forth in the section below titled "Reconciliation of adjusted financials to GAAP Results." These adjusted measures include adjusted gross profit, adjusted operating expenses, adjusted income from operations, non-GAAP net income, adjusted diluted net income per share and adjusted gross margin.
The Company's management uses adjusted financial measures to gain an understanding of the Company's comparative operating performance (when comparing such results with previous periods or forecasts) and future prospects. The Company's adjusted financial measures exclude certain special items, including stock-based compensation charge from its internal financial statements for purposes of its internal budgets. Adjusted financial measures are used by the Company's management in their financial and operating decision-making, because management believes they reflect the Company's ongoing business in a manner that allows meaningful period-to-period comparisons. The Company's management believes that these adjusted financial measures provide useful information to investors and others in the following ways: 1) in understanding and evaluating the Company's current operating performance and future prospects in the same manner as management does, if they so choose, and 2) in comparing in a consistent manner the Company's current financial results with the Company's past financial results.
The Company's management believes excluding stock-based compensation from its adjusted financial measures is useful for itself and investors, as such expense will not result in future cash payment and is not an indicator used by management to measure the Company's core operating results and business outlook.
The adjusted financial measures have limitations. They do not include all items of income and expense that affect the Company's operations. Specifically, these adjusted financial measures are not prepared in accordance with GAAP, may not be comparable to adjusted financial measures used by other companies and, with respect to the adjusted financial measures that exclude certain items under GAAP, do not reflect any benefit that such items may confer to the Company. Management compensates for these limitations by also considering the Company's financial results as determined in accordance with GAAP.
Conference Call Information
The Company will host a conference call at 8:30 a.m. ET on February 9, 2010 (9:30 p.m. Beijing Time) to review the Company's financial results and answer questions.
To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 877-369-6556. International callers should dial +1 706-758-6238. The conference ID for the call is 54471389.
If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Tuesday, February 9, 2010 at 10:00 a.m. ET. To access the replay, dial 800-642-1687. International callers should dial +1 706-645-9291 and enter the conference ID 54471389.
A live and archived webcast of the call will be available on the Company's website at http://www.pansoft.com/ .
About Pansoft Company Limited
Pansoft is a leading enterprise resource planning ("ERP") software and professional services provider for the oil and gas industry in China. Its ERP software offers comprehensive solutions in various business operations including accounting, order processing, delivery, invoicing, inventory control and customer relationship management.
Forward-Looking Statements
This press release contains forward-looking statements concerning Pansoft Company Limited, including but are not limited to, statements regarding Pansoft's acquisition strategies, projected revenue growth, contracts with customers, timing of development projects, and efforts to achieve business growth. The actual results may differ materially depending on a number of risk factors including but not limited to, the following: general economic and business conditions, development, shipment and market acceptance of products, additional competition from existing and new competitors, purchase cycle of major customers, changes in technology or product techniques, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. Pansoft Company Limited undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
Unaudited Consolidated Statements of Income and Comprehensive Income
(In US Dollars)
(Unaudited) (Unaudited)
For Three Months Ended For Six Months Ended
In USD December 31, December 31,
2009 2008 2009 2008
Sales 4,910,177 3,343,408 7,115,646 5,514,446
Cost of sales 2,308,226 1,670,275 3,336,573 2,365,278
Gross profit 2,601,951 1,673,133 3,779,073 3,149,168
Gross Margin 53% 50% 53% 57%
Expenses
G/M expenses 119,431 355,625 236,399 486,452
Selling
expenses 160,297 21,010 254,917 29,516
Professional
fees 87,656 51,423 217,437 78,535
Stock based
compensation 151,127 164,197 302,254 203,012
Gain on
disposition
of property
& equipment (955) (30) (964) (184)
Total Expenses 517,556 592,225 1,010,043 797,331
Income from
operations 2,084,395 1,080,908 2,769,030 2,351,837
Other income
(expenses) net 17,950 13,995 17,035 13,995
Government grant 30 -- 47 --
Finance cost (1,952) (3,326) (1,930) (3,781)
Interest
income 48,502 56,262 86,562 83,817
Income before
provision from
income taxes 2,148,925 1,147,839 2,870,744 2,445,868
Provision for
current
income taxes 74,759 197,563 74,759 197,563
Provision for
deferred
income taxes 139,356 (45,526) 173,120 190,633
Net income 1,934,810 995,802 2,622,865 2,057,672
Other
comprehensive
(loss) income (720) (24,358) 9,749 34,493
Comprehensive
income 1,934,090 971,444 2,632,614 2,092,165
For 12 Months Ended
In USD December 31,
2009 2008
(Unaudited) (Audited)
Sales 10,055,552 6,891,710
Cost of sales 5,051,491 3,395,695
Gross profit 5,004,061 3,496,015
Gross Margin 50% 51%
Expenses
G/M expenses 485,641 566,716
Selling expenses 376,711 36,047
Professional fees 387,824 140,072
Stock based compensation 644,228 203,012
Gain on disposition of property &
equipment (1,696) (1,558)
Total Expenses 1,892,708 944,289
Income from operations 3,111,353 2,551,726
Other income (expenses) net 13,263 14,532
Government grant 161,028 --
Finance cost (1,952) (4,199)
Interest income 150,150 126,294
Income before provision from income
taxes 3,433,842 2,688,353
Provision for current income taxes 87,541 197,563
Provision for deferred income taxes 340,216 190,633
Net income 3,006,085 2,300,157
Other comprehensive (loss) income (7,968) 328,521
Comprehensive income 2,998,117 2,628,678
Consolidated Balance Sheet (In US Dollars)
December 31, December 31,
2009 2008
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents $14,708,248 12,185,950
Account receivables, net 1,747,376 1,136,159
Unbilled revenues 3,393,563 2,221,142
Prepayment, deposits and
other receivables 107,040 107,785
Inventory 117,967 68,348
Income tax receivable
Total current assets 20,074,194 15,719,384
Non-current assets
Property and equipment, net 689,462 650,708
Deferred software
development cost -- 73,287
Total assets $20,763,656 16,443,379
Liabilities
Current liabilities
Accounts payable and accrued
liabilities $648,957 905,748
Deferred revenue 891,297 181,192
Income tax payable 76,794 192,470
Deferred income taxes 531,330 172,505
Total current liabilities 2,148,378 1,451,915
Long-term liabilities
Deferred income taxes -- 18,531
Total liabilities 2,148,378 1,470,446
Shareholders' equity
Common stock (30,000,000 common
shares authorized; par value of
$0.0059 per share; 5,438,232
shares issued and outstanding
as of September 30, 2009)
Share capital 32,080 32,080
Additional paid-in capital 8,866,282 8,222,054
Retained earnings 8,270,822 5,711,114
Statutory reserves -- 363,063
Accumulated other
comprehensive income 636,654 644,622
Total stockholders' equity 18,615,278 14,972,933
Total liabilities and
stockholders equity $20,763,656 16,443,379
RECONCILIATION OF ADJUSTED FINANCIALS TO GAAP RESULTS
(In US Dollars)
For 12 Months Ended December 31,
Actual Adjust- Adjusted Adjust- Adjusted
Results ment Results ment Results
2009 2009 2008
Sales 10,055,552 10,055,552 6,891,710
Cost of sales 5,051,491 5,051,491 3,395,695
Gross profit 5,004,061 5,004,061 3,496,015
50% 50% 51%
Expenses
General and
administrative
expenses 485,641 485,641 566,716
Selling
expenses 376,711 376,711 36,047
Professional
fees 387,824 387,824 140,072
Stock based
compensation 644,228 (644228) -- (203,012) --
(a) (a)
Gain on
disposition of
property and
equipment (1,696) (1,696) (1,558)
1,892,708 1,248,480 741,277
Income from
operations 3,111,353 3,755,581 2,754,738
Other income
(expenses), net 13,263 13,263 14,532
Government grant 161,028 161,028 --
Finance cost (1,952) (1,952) (4,199)
Interest income 150,150 150,150 126,294
Income before
provision from
income taxes 3,433,842 4,078,070 2,891,365
Provision for
current income
taxes 87,541 87,541 197,563
Provision for
deferred income
taxes 340,216 340,216 190,633
Net income 3,006,085 3,650,313 2,503,169
Other
comprehensive
(loss) income (7,968) (7,968) 328,521
Comprehensive
income 2,998,117 3,642,345 2,831,690
Basic and diluted
net income per
share 0.55 0.67 0.54
Basic and diluted
weighted average
number of shares
outstanding 5,438,232 5,438,232 4,613,027
(a) To adjust stock-based compensation charges
For Three Months Ended December 31,
Actual Adjust- Adjusted Adjust- Actual
Results ment Results ment Results
2009 2009 2008
Sales 4,910,177 4,910,177 3,343,408
Cost of
sales 2,308,226 2,308,226 1,670,275
Gross profit 2,601,951 2,601,951 1,673,133
53% 53% 50%
Expenses
General
and
admini-
strative
expenses 119,431 119,431 355,625
Selling
expenses 160,297 160,297 21,010
Profess-
ional fees 87,656 87,656 51,423
Stock based
compen-
sation 151,127 (151,127) -- (164,197) --
(b) (b)
Gain on
disposition of
property and
equipment (955) (955) (30)
517,556 366,429 428,028
Income from
operations 2,084,395 2,235,522 1,245,105
Other income
(expenses), net 17,950 17,950 13,995
Government grant 30 30 --
Finance cost (1,952) (1,952) (3,326)
Interest income 48,502 48,502 56,262
Income before
provision from
income taxes 2,148,925 2,300,052 1,312,036
Provision for
current income
taxes 74,759 74,759 197,563
Provision for
deferred
income taxes 139,356 139,356 (45,526)
Net income 1,934,810 2,085,937 1,159,999
Other
comprehensive
(loss) income (720) (720) (24,358)
Comprehensive
income 1,934,090 2,085,217 1,135,641
Basic and
diluted net
income per
share 0.36 0.42 0.25
Basic and
diluted
weighted
average
number of
shares
outstanding 5,438,232 5,438,232 4,613,027
(a) To adjust stock-based compensation charges
For more information, please contact:
Pansoft Company Limited
Allen Zhang, Chief Financial Officer
Phone: +86-531-8887-1159
Email: [email protected]
CCG Investor Relations Inc.
Mr. Crocker Coulson, President
Phone: +1-646-213-1915 (New York)
Email: [email protected]
Web: http://www.ccgirasia.com
SOURCE Pansoft Company Limited
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