Attached files

file filename
8-K - FORM 8-K - China TransInfo Technology Corp.d8k.htm

Exhibit 99.1

For Immediate Release  
   
Company Contact: Investor Relations Contact:
Ms. Fan Zhou, Investor Relations Director Mr. Athan Dounis
China TransInfo Technology Corp Email: athan.dounis@ccgir.com
Email: ir@ctfo.com Tel: +1-646-213-1916
Tel:+ 86 10 –5169 1657 Website: www.ccgirasia.com

China TransInfo Announces First Quarter 2011 Results

Beijing, China – May 12, 2011, China TransInfo Technology Corp. (NASDAQ: CTFO) ("China TransInfo" or the "Company"), a leading provider of comprehensive intelligent transportation solutions ("ITS") in China through its affiliate, China TransInfo Technology Group Co., Ltd. (the "Group Company"), today reported its financial results for the three months ended March 31, 2011.

First Quarter 2011 Highlights

  • Revenue increased 46.7% year-over-year to $36.5 million

  • Gross profit increased 21.8% year-over-year to $10.4 million

  • Operating income increased 11.1% year-over-year to $4.1 million

  • Net income increased 68.7% year-over-year to $3.0 million

  • Earnings per share increased 54.2% to $0.12

  • Adjusted net income, which excludes non-cash stock based compensation expense of $0.3 million and amortization expense of intangibles from acquisitions of $0.05 million, increased 49.5% year-over-year to $3.3 million, or $0.13 per diluted share*

“We are pleased with our first quarter results as we achieved strong increases in revenue, net income and earnings per share,” commented by Mr. Shudong Xia, Chairman and Chief Executive Officer. “We continue to see very positive market trends in our industry as the government sector in China moves forward with its plans to build more roads and increase intelligent transportation system spending to improve transportation efficiency. At this stage of the market’s development, we believe it is strategically important for us to focus on maximizing market share and consolidating our leadership position in the industry. As a result, and as is reflected in our first quarter financial results, in many cases we have pursued new contracts aggressively even if it meant a lower margin contribution. As the ITS industry evolves and matures, we believe that there will be substantial new businesses opportunities addressing users of the ITS infrastructure. The commercial vehicle LBS business is a good example: an increasing portion of the new businesses will be represented by the companies with dominant positions in industry. ”


   
CTFO Reports First Quarter 2011 Results

page 2


First Quarter 2011 Results

For the quarter ended March 31, 2011, revenue increased 46.7% to $36.5 million from $24.9 million in the comparable period of 2010. Approximately 91.9% of this increase is attributable to the increase in transportation revenue mainly resulting from the Company’s organic growth in the transportation business. Revenue from products and applications in the transportation business sector was $35.1 million, or 96.3% of total revenue, compared to $24.5 million, or 98.3% of total revenue, in the same period last year. The remainder of revenue was derived from the digital city, land and resources, and other business sectors.

The Company’s gross profit increased 21.8% to $10.4 million in the first quarter of 2011 compared to $8.5 million in the same period of 2010. Gross margin in the first quarter of 2011 decreased to 28.5% from 34.3% in the same period of 2010, mainly due to the fact that the Company had expanded operations in ITS businesses and substantially increased sales but on average resulted in a relatively lower gross margin profile in the first quarter of 2011 compared to the same period of 2010.

Selling, general and administrative expenses were $6.3 million compared to $4.9 million in the first quarter of 2010. The increase was primarily due to the Company’s expanded operations and sales volume as well as enhanced marketing activities. Operating income increased 11.1% to $4.1 million from $3.7 million in the first quarter of 2010.

Net income increased 68.7% to $3.0 million, or $0.12 per diluted share, compared to $1.8 million, or $0.08 per diluted share, in the same period of 2010. Adjusted net income, which excludes non-cash stock based compensation expense of $0.3 million and amortization expense of intangibles from acquisitions of $0.05 million, increased 49.5% to $3.3 million, or $0.13 per diluted share, compared to $2.2 million, or $0.10 per diluted share, in the comparable period of 2010.* Weighted average diluted shares outstanding increased to 25.3 million shares from 23.1 million shares in the same period of 2010.

(*) See the table following this press release for a reconciliation of net income and diluted EPS to exclude non-cash stock based compensation expense and amortization expense of intangibles from acquisitions.

Financial Condition

As of March 31, 2011, cash and cash equivalents totaled $25.0 million compared to $43.9 million as of December 31, 2010. Working capital increased to $84.4 million compared to $73.8 million as of December 31, 2010. Stockholders’ equity was $129.2 million compared to $111.2 million as of December 31, 2010.

 


   
CTFO Reports First Quarter 2011 Results

page 3


Recent Events

  • On April 28, 2011, CCTV (China Central Television) featured China TransInfo on CCTV-1's prime-time news program.

  • On April 16, 2011, Mr. Liu Qi, Secretary of the CPC Beijing Municipal Committee and Mr. Guo Jinlong, Mayor of Beijing Municipal Government, together with other top Beijing municipal government leaders, visited China TransInfo's Beijing headquarters, where the Company presented its ITS business development and proposed a plan aimed at mitigating traffic jams in the city of Beijing.

  • In April 2011, the Company announced it will serve as the Director-General of the Zhongguancun Intelligent Transportation Industry Association, which the Company played a key role in helping establish.

  • On April 4, 2011, the Company announced that the Group Company's subsidiary, Beijing Zhangcheng Science and Technology Co., Ltd., recently signed a development agreement with Nissan Motor Co., Ltd. to work on a New Energy and Industrial Technology Development Organization project, which is the first national cooperation between China and Japan aimed at improving the use of energy efficiency and protecting the environment in China through the application of a New Traffic Information System. The two-year agreement is valued at JPY340.9 million, or approximately $4.1 million.

  • On March 28, 2011, Beijing Zhangcheng Science and Technology Co., Ltd. (Palmcity) signed a two-year contract with Dongfeng-Yulon Motors Co. Ltd. to preinstall the Company’s real time traffic data software in Dongfeng-Yulon’s vehicles on a license basis for RMB128 Yuan per vehicle for a two-year term. Dongfeng-Yulon is an automobile manufacturing joint venture between China's Dongfeng Motor and Taiwan’s Yulon Motor, targeting middle class consumers in China.

Business Outlook

Following the issuance of the relevant technology standards by the PRC Ministry of Transport (“MOT”) in April 2011, the Company has begun the installation of its commercial vehicle monitoring and controlling terminals in Heibei province. In the first phase of its plan to be executed in 2011, MOT selected eight pilot provinces to carry out the commercial vehicle monitoring and controlling services. As of this date, the Company has established local branches and offices in six of the eight provinces. As the rollout progresses, the Company expects its recurring-revenue commercial vehicle LBS business to drive a long-run increase in the Company’s gross margin performance.

Mr. Xia commented, “At the end of the first quarter, our sales backlog was $183 million compared to $212 million at the year end of 2010. The first quarter is normally our slowest season as the Chinese New Year and other government conferences delay new bidding processes for ITS projects. It is also typically a negative cash flow quarter, since we increase spending on project bids, fees and other related expenses, whereas receivables collection is normally more active in the latter part of the year. Following the seasonal pattern of our business, as the year progresses we expect our cash flow to turn positive and our contract awards to pick up. For fiscal 2011, we continue to expect revenue of between $151 million and $159 million and adjusted net income of between $20 million and $24 million. Adjusted net income excludes non-cash stock based compensation expense and amortization expense of intangibles from acquisitions.”


   
CTFO Reports First Quarter 2011 Results

page 4


Mr. Xia concluded, “We are very excited about our business for the balance of 2011 and beyond. We see large and growing market opportunities in the ITS market in China, as the Chinese Government has been making great effort to promote transportation safety and improve transportation efficiency. With our first mover advantage and market leadership position, we believe we have strong prospects for continued success.”

Conference Call

The Company will host a conference call on Thursday, May 12, 2011, at 8:00 a.m. Eastern Time to discuss its financial results for the three months ended March 31, 2011. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (866) 759-2078. International callers should dial +1 (706) 643-0585. When prompted by the operator, enter conference pass code 65224341. A replay will be available for 14 days starting on Thursday, May 12, 2011 at 10:00 a.m. Eastern Time and can be accessed by dialing (800) 642-1687. International callers should dial +1 (706) 645-9291. When prompted, enter conference pass code 65224341.

Use of Non-GAAP Financial Information

GAAP results for the three months ended March 31, 2011 and 2010 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.


   
CTFO Reports First Quarter 2011 Results

page 5


CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP FINANCIAL DATA

  For the three months ended  
    31-March-11     31-March-10  
    Net     Diluted     Net     Diluted  
    Income     EPS     Income     EPS  
Adjusted Amount $ 3,319,063 $ 0.13 $ 2,220,600 $ 0.10
Adjustments Amortization of intangible assets from acquisitions (1) $ 48,850 $ 0.00 $ 47,075 $ 0.00
Non-cash share based compensation $ 302,937 $ 0.01 $ 414,486 $ 0.02
Amount per unaudited consolidated statement of operations $ 2,967,276 $ 0.12 $ 1,759,039 $ 0.08

(1)

Amortizations of intangible assets from acquisitions of China TranWiseway in 2008 and UNISITS in 2009.

About China TransInfo

China TransInfo, through its affiliate, the Group Company and the Group Company's PRC operating subsidiaries, is primarily focused on providing urban and highway transportation management solutions and information services. The Company is a leading transportation information products and comprehensive solutions provider, and aims to be the largest real time transportation information service provider and major fleet management service provider in China. As the co-formula1tor of several transportation technology \national standards, the Company owns nine patents and has won a majority of the model cases awarded by the PRC Ministry of Transportation. As a result, the Company is playing a key role in setting the standards for transportation information solutions in China. For more information, please visit the Company's website at http://www.chinatransinfo.com.


   
CTFO Reports First Quarter 2011 Results

page 6


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—

 

 



   
CTFO Reports First Quarter 2011 Results

page 7


CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(Unaudited)
    Three Months Ended March 31,  
    2011     2010  
     Net sales $  36,499,159   $  24,887,475  
     Cost of sales   26,106,038     16,354,299  
     Gross profit   10,393,121     8,533,176  
     Total operating expenses   6,321,059     4,867,457  
     Income from operations   4,072,062     3,665,719  
     Non-operating income (expenses):            
               Interest income   39,726     30,486  
               Interest expense   (250,573 )   (97,854 )
               Subsidy income   195,626     26,443  
               Other expense, net   75,476     (56,911 )
     Total non-operating income (expenses)   60,255     (97,836 )
     Income before income taxes, non-controlling interests, and gain on equity investments in affiliates   4,132,317     3,567,883  
     Income taxes   501,125     375,796  
     Net income before non-controlling interests and gain on equity            
               investments in affiliates net income   3,631,192     3,192,087  
     Gain (loss) on equity investments in affiliates due to proportional shares            
               of the affiliates net income   332,636     (358,795 )
     Net income before non-controlling interests   3,963,828     2,833,292  
     Non-controlling interests in net income of subsidiary   996,552     1,074,253  
     Net income $  2,967,276   $  1,759,039  
     Weighted average number of shares outstanding:            
               Basic   25,270,069     23,011,775  
               Diluted   25,273,542     23,100,630  
     Earnings per share:            
               Basic $  0.12   $  0.08  
               Diluted $  0.12   $  0.08  


   
CTFO Reports First Quarter 2011 Results

page 8

CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets

    March 31, 2011     December 31, 2010  
ASSETS            
Cash and cash equivalents $  25,049,729   $  43,916,597  
Restricted cash   10,395,546     3,131,660  
Accounts receivable, net of allowance for doubtful accounts of $93,360 and $92,794, respectively   31,860,586     26,881,280  
Inventories   1,349,437     1,079,221  
Costs and estimated earnings in excess of billings on uncompleted contracts   42,172,458     38,626,089  
Prepaid expenses and other current assets   17,201,361     18,551,801  
Other receivables   12,387,934     10,632,452  
Deferred tax assets   25,677     25,508  
Total current assets   140,442,728     142,844,608  
Property and equipment, net   10,641,682     10,878,276  
Long-term investments   9,152,214     8,760,692  
Intangible assets, net   14,331,676     7,402,829  
Goodwill   10,387,796     10,319,768  
Other assets   322,015     319,679  
Total assets $  185,278,111   $  180,525,852  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Accounts payable $  26,040,542   $  32,296,459  
Short-term borrowings from banks   12,216,000     13,728,850  
Billings in excess of costs and estimated earnings on uncompleted contracts   11,877,469     14,080,475  
Accrued expenses and other current liabilities   5,952,356     8,988,180  
Total current liabilities   56,086,367     69,093,964  
Other long-term liabilities   -     200,699  
Total liabilities   56,086,367     69,294,663  
Commitments and contingencies   -     -  
Stockholders’ equity            
       Preferred stock, $0.001 par value per share, authorized 10,000,000 shares, no   -     -  
             shares issued and outstanding at March 31, 2011 and December 31, 2010            
       Common stock, $0.001 par value per share, 150,000,000 shares authorized,   25,270     25,270  
             25,270,069 shares issued and outstanding            
       Additional paid-in capital   48,914,249     42,887,452  
       Retained earnings   50,384,757     47,417,481  
       Non-controlling interests   24,205,537     15,873,242  
       Accumulated other comprehensive income   5,661,931     5,027,744  
Total stockholders’ equity   129,191,744     111,231,189  
Total liabilities and stockholders’ equity $  185,278,111   $  180,525,852  


   
CTFO Reports First Quarter 2011 Results

page 9


CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES  
Condensed Consolidated Statements of Cash Flows (unaudited)  
    Three Months Ended March 31,  
    2011     2010  
CASH FLOWS FROM OPERATING ACTIVITIES:            
     Net income $  2,967,276   $  1,759,039  
     Adjustments to reconcile net income to net cash provided by operating            
           Non-controlling interests   996,552     1,074,253  
           Depreciation and amortization expense   652,129     394,025  
           Stock-based compensation   310,538     420,845  
           Gain on equity investments in affiliates due to proportional shares of the affiliates net income   (332,636 )   358,795  
           Dividends income   (14,693 )   -  
           Loss on disposal of property and equipment   6,,655     -  
           Bad debt expense   -     40,670  
           Adjustments to reconcile net income to net cash provided by operating            
                 Restricted cash   (1,192,248 )   (824,320 )
                 Accounts receivable   (4,785,754 )   (3,825,934 )
                 Inventories   (262,205 )   204,326  
                 Prepaid expenses and other current assets   1,467,418     (2,687,271 )
                 Other receivables   (1,749,678 )   (3,071,267 )
                 Costs of estimated earnings in excess of billings on uncompleted   (3,280,538 )   2,509,661  
                 Other assets   (228 )      
                 Accounts payable   (5,689,594 )   (2,063,780 )
                 Billings in excess of costs and estimated on uncompleted contracts   (2,288,006 )   (4,416,053 )
                 Accrued expenses and other current liabilities   (3,115,251 )   (89,361 )
Net cash used in operating activities   (16,310,263 )   (10,216,372 )
CASH FLOWS FROM INVESTING ACTIVITIES:            
       Proceeds from disposal of property and equipment   13,500     -  
       Purchases of property and equipment   (984,331 )   (297,871 )
       Payments for acquisition of companies   (201,334 )   -  
       Purchases of intangible assets   (211,214 )   (384,661 )
       Dividends from equity or cost investees   14,693        
Net cash used in investing activities   (1,368,686 )   (682,532 )
CASH FLOWS FROM FINANCING ACTIVITIES:            
       Proceeds from short-term borrowings   3,043,600     73,325  
       Payments of short-term borrowings   (4,641,490 )   (146,650 )
       Non-controlling interest shareholders’ capital contribution   190,225        
       Proceeds from issuing common stocks   -     10,000,000  
       Payments of transaction costs related to stock issuance   -     (610,428 )
Net cash (used in) provided by financing activities   (1,407,665 )   9,316,247  
Net decrease in cash and cash equivalents   (18,866,868 )   (1,586,518 )
Cash and cash equivalents – beginning of period   43,916,597     27,400,420  
Cash and cash equivalents – end of period $  25,049,729   $  25,813,902  
Supplemental disclosures of cash flow information:            
       Interest paid $  251,866   $  90,778  
       Income taxes paid $  444,346   $ 231,841  
Supplemental disclosures of cash flow for non-cash transaction:            
       Restricted cash $  6,030,000   $  -  
       Non-controlling interest shareholders’ capital contribution $  6,030,000   $  -