Quarterly Revenue Growth of 100.56% from Q2 2008
BEIJING, Aug. 13 /PRNewswire-Asia/ -- Telestone Technologies Corporation ("Telestone", the "Company" or "we") (Nasdaq: TSTC), a leading developer and provider of wireless communication coverage solutions based in the People's Republic of China, today announced its unaudited financial results for the second quarter of 2009.
Second Quarter Highlights:
-- Revenue for the quarter of approximately US$12.13 million, an increase
of 100.56% from the second quarter of 2008.
-- Gross income of approximately US$5.0 million, an increase of 45.09%
from the second quarter of 2008.
-- Net income of approximately US$1.97 million, an increase of 10.79% from
the second quarter of 2008.
"I am very glad to announce our second quarter financial results. Our total revenue was approximately $12.13 million, increasing by 100.56% compared with the same period of 2008," Mr. Han Daqing, Chairman and Chief Executive Officer of Telestone commented. Mr. Han stated, "This significant increase is attributed to the construction of the 3G system in China. So far, we believe we have been making full use of this business opportunity. In order to maintain our position in the wireless telecommunication industry, we will continue to improve our technology, business management and market exploration for the benefits of our stockholders."
Our major achievements in the second quarter are as follows:
First, regarding marketing development, we believe that our strategic cooperation with Huawei Technologies Corp has achieved further development, which is building a solid foundation for future market expansion, especially for overseas market development. We believe that this development has a positive effect on our customer base growth.
Second, we have improved our WFDSTM technology and products. As a result, the Company's technology center compiled a catalogue of WFDSTM products that have achieved the transition from our advanced research achievements to actual productivity. Due to our technology, we have attained certain achievements, including having six products of Telestone being selected into the Chinese government's purchase list of Zhongguancun self-developed products. In addition, our trademark has been recognized as a well-known trademark of Beijing by the local Industry and Commerce Bureau. Also, We have won the title of A-Rated Good Credit enterprise, which entitles us to credits guaranteed by Beijing Zhongguancun Sci-tech Guaranty Co. funded by the Chinese government.
Third, we believe that we have improved our measures to collect accounts receivables and enhanced our expense management. We have been taking a variety of measures to collect accounts receivables. During the reporting period, more than RMB 22 million of overdue accounts receivables had been collected and compared with the first quarter of 2009, accounts receivable turnover has improved by nearly 30%. We also have enhanced our expense management. As a result, our general and administrative expenses decreased by 18%, as compared to the previous fiscal quarter of 2008.
Second Quarter Financial Results
Revenue
For the three months and six months ended June 30, 2009, our revenues were approximately $ 12.13 million and $20.03 million, representing increases of 100.56% and $59.74%, respectively, as compared to the same periods in 2008. The revenue increase is due to the telecom carriers' increase of their investments in 3G fixed assets. Accordingly, we have more business opportunities in 3G indoor coverage projects and equipment sales.
Gross Profit and Gross Profit Margin
For the three months and six months ended June 30, 2009, our gross profit was approximately $5.0 million and $9.7 million, representing an increase of 45.09% and an increase of 46.96%, respectively, as compared to the same periods of 2008. Our gross margin for the three months and six months ended June 30, 2009 were 41.28% and 48.47%, respectively. Our gross profit increase during the reporting period is attributable to the same factors as the increase in revenue.
Net Income
For the three and six months ended June 30, 2009, our net income was $1.97 million and $3.1 million, respectively, representing increases of 10.79% and 19.14%, respectively, as compared to the same periods in 2008.
Business Outlook
We believe the Chinese government's investment in the construction of the 3G system, which will cost approximately $60 billion over three years, presents an excellent opportunity for our business development. With our technology, close relationships with the telecom operators in China and experienced management team, we believe that we will continue to demonstrate increasingly impressive growth in the future.
Conference Call
Telestone's senior management team will host a conference call and audio webcast at 8:00 am U.S. Eastern Time/5:00 am U.S. Pacific Time/8:00 pm Beijing time on August 14, 2009. The conference call will last for approximately one hour.
The dial-in information is:
U.S. Participants: +1-800-860-2442
International Participants: +1-412-858-4600
Passcode for all: Telestone
A live audio webcast of the conference call will also be available through the following link: http://www.visualwebcaster.com/event.asp?id=61134 .
Safe Harbor Statement
Statements about the Company's future expectations, including future revenue and earnings and all other statements in this press release, other than historical facts, are "forward-looking" statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve risks and uncertainties and are subject to change at any time. The Company's actual results could differ materially from expected results. In reflecting subsequent events or circumstances, the Company undertakes no obligation to update forward-looking statements.
For further information please contact:
Telestone Technologies Corporation
Dan Shang
Tel: +86-10-8367-0088 x1233
Email: zongbushangdan@telestone.com
Jean Wen
Tel: +86-10-8367-0088 x1232
Email: wenjing@telestone.com
Appendix: Financial Statements of Telestone Technology Corporation
Telestone Technologies Corporation
Condensed Consolidated Statements of Operations and Other Comprehensive Income
For the 3 months ended March 31, 2009 and 2008
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
US$'000 US$'000 US$'000 US$'000
Operating revenues:
Net sales of
equipment 7,142 2,385 10,405 6,315
Service income 4,988 3,663 9,621 6,222
Total operating
revenues 12,130 6,048 20,026 12,537
Cost of operating
revenues:
Cost of net sales (4,741) (1,427) (6,639) (3,530)
Cost of service (2,382) (1,170) (3,680) (2,402)
Total cost of operating
revenues (7,123) (2,597) (10,319) (5,932)
Gross income 5,007 3,451 9,707 6,605
Operating expenses:
Sales and marketing 1,847 1,083 4,028 2,598
General and
administrative 478 580 1,321 1,253
Research and
development 193 123 329 253
Depreciation and
amortization 84 84 174 161
Total operating
expenses 2,602 1,870 5,852 4,265
Operating income 2,405 1,581 3,855 2,340
Interest expense (89) (107) (130) (143)
Other income, net 22 625 289 943
Income before income
taxes 2,338 2,099 4,014 3,140
Income taxes (366) (319) (895) (522)
Net income 1,972 1,780 3,119 2,618
Other comprehensive
income
Foreign currency
translation adjustment (114) 29 131 1,489
Comprehensive income 1,858 1,809 3,250 4,107
Earnings per share:
Weighted average number
of common stock
outstanding
Basic 10,404 10,404 10,404 10,404
Dilutive effect
of warrants -- 62 -- 72
Diluted 10,404 10,466 10,404 10,476
Net income per share
of common stock
Basic and diluted (US$) 0.19 0.17 0.30 0.25
Condensed Consolidated Balance Sheets
As of March 31, 2009 and December 31, 2008
(Dollars in thousands except share data and per share amounts)
(Unaudited)
As of As of
June 30, December 31,
2009 2008
ASSETS US$'000 US$'000
Current assets:
Cash and cash equivalents 3,902 7,866
Accounts receivable, net of allowance 70,780 62,136
Due from related parties 1,428 1,826
Inventories 10,577 7,843
Prepayment 5,090 2,347
Other current assets 857 1,352
Total current assets 92,634 83,370
Goodwill 3,119 3,119
Property, equipments and software, net 1,178 1,050
4,297 4,169
Total assets 96,931 87,539
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans 3,652 2,918
Accounts payable - Trade 19,101 11,776
Customer deposits for sales of equipment 908 739
Due to related parties 1,707 1,673
Taxes payable 5,483 6,805
Accrued expenses and other accrued liabilities 10,399 11,197
Total current liabilities 41,250 35,108
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, US$0.001 par value,
10,000,000 shares authorized, no shares issued -- --
Common stock and paid-in-capital, US$0.001
par value:
Authorized - 100,000,000 shares as of June
30, 2009 and December 31, 2008 -- --
Issued and outstanding - 10,404,550 shares
as of June 30, 2009 and December 31, 2008 11 11
Additional paid-in capital 18,989 18,989
Dedicated reserves 4,133 3,787
Other comprehensive income 5,704 5,573
Retained earnings 26,844 24,071
Total stockholders' equity 55,681 52,431
Total liabilities and stockholders' equity 96,931 87,539
Condensed Consolidated Statements of Changes in Stockholders' Equity
For the 3 months ended March 31, 2009
(Dollars in thousands except share data and per share amounts)
Common stock
Additional
Number paid-in Dedicated
of shares Amount capital reserves
US$'000 US$'000 US$'000
Balance at January 1,
2009 10,404,550 11 18,989 3,787
Net income -- -- -- --
Foreign currency
translation adjustment -- -- -- --
Transfer to dedicated
reserves -- -- -- 346
Balance at June 30,
2009 10,404,550 11 18,989 4,133
Other
comprehensive Retained
income earnings Total
US$'000 US$'000 US$'000
Balance at January 1,
2009 5,573 24,071 52,431
Net income -- 3,119 3,119
Foreign currency
translation adjustment 131 -- 131
Transfer to dedicated
reserves -- (346) --
Balance at June 30, 2009 5,704 26,844 55,681
Condensed Consolidated Statements of Cash Flows
For the 6 months ended June 30, 2009 and 2008
(Dollars in thousands except share data and per share amounts)
Six months ended June 30,
2009 2008
US$'000 US$'000
Cash flows from operating activities
Net income 3,119 2,618
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Loss on disposal of property, plant and
equipment -- 1
Depreciation and amortization 174 161
Allowance for doubtful accounts 283 200
Changes in assets and liabilities:
Accounts receivable (8,644) (5,216)
Due from related parties 398 34
Inventories (2,734) 636
Prepayment (2,743) (397)
Other current assets 444 149
Accounts payable 7,325 383
Customer deposits for sales of equipment 169 530
Due to related parties 34 (579)
Taxes payable (1,321) 491
Accrued expenses and other accrued
liabilities (798) (340)
Net cash used in operating activities (4,294) (1,329)
Cash flows from investing activities
Purchase of property, plant and equipment (371) (27)
Proceeds from disposal of property, plant and
equipment -- 23
Net cash used in investing activities (371) (4)
Cash flows from financing activities
Repayment of short-term bank loans (2,918) (16)
Proceeds from short-term bank loan 3,652 714
Net cash used in financing activities 734 698
Net decrease in cash and cash equivalents (3,931) (635)
Cash and cash equivalents, beginning of the
period 7,866 5,473
Effect on exchange rate changes (33) 15
Cash and cash equivalents, end of the period 3,902 4,853
Supplemental disclosure of cash flows
information
Interest received 7 2
Interest paid (65) (59)
Tax paid (2,486) (50)
