Quarterly Revenue Growth of 21.68% from Q1 2008; Net Income Increased
37.04% from Q1 2008
BEIJING, May 15 /PRNewswire-Asia-FirstCall/ -- Telestone Technologies Corporation Ltd. ("Telestone" or the "Company") (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 first quarter of 2009.
First Quarter Highlights:
-- Revenue for the quarter of US $7.89 million, an increase of 21.68% from
the first quarter of 2008.
-- Gross margins of 59.52%, compared to 48.61% in Q1 2008.
-- Gross profit for the Q1 is US $4.7 million, increased by 49.02%
compared to Q1 2008.
-- Net income of US $1.1 million, an increase of 37.04% from Q1 2008.
"An investment in the construction of the 3G system of approximately $ 60 billion will be made in 3 years, under this background, the major telecom operators in China will accomplish the commercial launch of new 3G networks on the world telecommunication day, May 17,2009. So far we have been making full use of this opportunity. It has contributed to our revenues' increase by 21.68% as compared to the same period in 2008. We will enhance our competitive advantages in the future and I believe it will lead to continuous impressive progress," commented Mr. Han Daqing, Chairman and Chief Executive Officer of Telestone.
Our major achievements in the first quarter are as follows:
1. We standardized internal code of part products and issued product list
for our proprietary WFDSTM products. In total, 43 products are
categorized within three categories
2. We entered into a strategic cooperation with Huawei Technologies Corp.,
formed a solid foundation for future market expansion.
3. We won listing on the third edition of the independent innovative
products catalog organized by the Beijing municipal government, This
would increase future cooperation with the Chinese government and our
market share.
4. We were granted a RMB 45,000,000 (about $6,592,500) bank credit
facility, which will increase liquidity and facilitate business
expansion opportunities.
First Quarter Financial Results
Revenue
Telestone reported quarterly revenue of US $7.89 million, up 21.68% compared to US$6.48 million in Q1 2008, largely due to the increase of construction projects from our major customers with the 3G launching project in China.
Gross Profit and Gross Profit Margin
Our quarterly gross profit was $4.7 million represented a 49.02 % increase compared to Q1 2008. Our gross profit margin for Q1 was 59.52%, compared to 48.61% for Q1 2008. The increase is mainly attributable to the increases in service revenue which is resulted from two factors: the increasing quantity of services and the increase in service prices offered by our major customers.
Net Income
Due to the increase of the gross profit, for Q1 2009, our net income was $1.14million, up 37.04%, compared to Q1 2008.
BUSINESS OUTLOOK
We believe the fact that Chinese telecom restructuring and the issuance of 3G licenses in China with an investment in the construction of the 3G system of approximately $60 billion over the next three years, an average of approximately $20 billion per year, presents an excellent opportunity for our business development. With our advanced technologies, close relationships with the telecom operators in China and strong management team, we believe that we will continue to demonstrate increasingly impressive progress in the future.
Conference Call
Telestone's senior management team will then 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 May 15, 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: The event's URL is: http://www.visualwebcaster.com/event.asp?id=58346
A replay will be available after the end of the call Until: May 25, 2009 AM
All participants please dial:
U.S. Participants: +1-877-344-7529 (toll free)
International Participants: +1-412-317-0088
Passcode: 430208
About Telestone Technologies Corporation
Telestone provides wireless communications coverage solutions primarily in the PRC. These solutions include products such as repeaters, antennas and radio accessories. Telestone also provides services that include project design, project management, installation, maintenance and other after-sales services. Telestone currently has approximately 800 employees. For more information please visit http://www.telestone.com .
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 Ltd.
Nick Li
Secretary of the Board
Tel: +86-10-8367-0088 x1002
Email: nickl@telestone.com
Ya Ding
Tel: +86-10-8367-0088 x1231
Email: dingxiaoya@telestone.com
Jean Wen
Tel: +86-10-8367-0088 x1232
Email: wenjing@telestone.com
Dan Shang
Tel: +86-10-8367-0088 x1233
Email: zongbushangdan@telestone.com
Appendix: Financial Statements of Telestone Technology Corporation Ltd.
Telestone Technologies Corporation
Condensed Consolidated Statements of Operations and Other Comprehensive Income
For the 3 months ended March 31, 2009 and 2008
(Dollars in thousands except share data and per share amounts)
(Unaudited)
Three months ended March 31,
2009 2008
US$'000 US$'000
Operating revenues:
Net sales of equipment 3,263 3,930
Service income 4,633 2,559
Total operating revenues 7,896 6,489
Cost of operating revenues:
Cost of net sales 1,898 2,100
Cost of service 1,298 1,235
Total cost of operating revenues 3,196 3,335
Gross income 4,700 3,154
Operating expenses:
Sales and marketing 2,181 1,515
General and administrative 843 674
Research and development 136 130
Depreciation and amortization 90 77
Total operating expenses 3,250 2,396
Operating income 1,450 758
Interest expense (41) (36)
Other income, net 267 318
Income before income taxes 1,676 1,040
Income taxes (529) (203)
Net income 1,147 837
Other comprehensive income
Foreign currency translation adjustment 245 1,460
Comprehensive income 1,392 2,297
Earnings per share:
Weighted average number of common
stock outstanding
Basic 10,404,550 10,404,550
Dilutive effect of warrants -- 81,366
Diluted 10,404,550 10,485,916
Net income per share of common stock
Basic and diluted (US$) 0.11 0.08
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
March 31, December 31,
2009 2008
ASSETS US$'000 US$'000
Current assets:
Cash and cash equivalents 4,636 7,866
Accounts receivable, net of allowance 68,002 62,136
Due from related parties 2,004 1,826
Inventories 10,313 7,843
Prepayment 1,484 2,347
Other current assets 1,327 1,352
Total current assets 87,766 83,370
Goodwill 3,119 3,119
Property, plant and equipment, net 1,174 1,050
4,293 4,169
Total assets 92,059 87,539
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans 1,758 2,918
Accounts payable - Trade 14,685 11,776
Customer deposits for sales of equipment 777 739
Due to related parties 1,711 1,673
Taxes payable 7,623 6,805
Accrued expenses and other accrued
liabilities 11,682 11,197
Total current liabilities 38,236 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$0.001 par value:
Authorized - 100,000,000 shares as of
March 31, 2009 and December 31, 2008 -- --
Issued and outstanding - 10,404,550
shares as of
March 31, 2009 and December 31, 2008 11 11
Additional paid-in capital 18,989 18,989
Dedicated reserves 3,978 3,787
Other comprehensive income 5,818 5,573
Retained earnings 25,027 24,071
Total stockholders' equity 53,823 52,431
Total liabilities and stockholders'
equity 92,059 87,539
Condensed Consolidated Statements of Changes in Stockholders' Equity
For the 3 months ended March 31, 2009
(Dollars in thousands except share data and per share amounts)
Common stock
issued
Other
Additional compre-
Number paid-in Dedicated hensive Retained
of shares Amount capital reserves income earnings Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at
January 1,
2008 10,404,550 11 18,989 3,199 3,017 17,610 42,826
Net income -- -- -- -- -- 7,049 7,049
Foreign
currency
translation
adjustment -- -- -- -- 2,556 -- 2,556
Transfer to
dedicated
reserves -- -- -- 588 -- (588) --
Balance at
December
31, 2008 10,404,550 11 18,989 3,787 5,573 24,071 52,431
Balance at
January 1,
2009
Net income -- -- -- -- -- 1,147 1,147
Foreign
currency
translation
adjustment -- -- -- -- 245 -- 245
Transfer to
dedicated
reserves -- -- -- 191 -- (191) --
Balance at
March 31,
2009
(unaudited) 10,404,550 11 18,989 3,978 5,818 25,027 53,823
Condensed Consolidated Statements of Cash Flows
For the 3 months ended March 31, 2009 and 2008
(Dollars in thousands except share data and per share amounts)
(Unaudited)
Three months ended March 31,
2009 2008
US$'000 US$'000
Cash flows from operating activities
Net income 1,147 837
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 90 77
Allowance for doubtful accounts 307 74
Changes in assets and liabilities:
Accounts receivable (5,917) (1,811)
Due from related parties (170) -
Inventories (2,438) 858
Prepayment 873 (166)
Other current assets 30 (39)
Accounts payable 2,860 129
Customer deposits for sales of equipment 35 109
Due to related parties 31 (7)
Taxes payable 789 198
Accrued expenses and other accrued
liabilities 440 (683)
Net cash used in operating activities (1,923) (424)
Cash flows from investing activities
Purchase of property, plant and equipment (203) (28)
Net cash used in investing activities (203) (28)
Cash flows from financing activities
Repayment of short-term bank loans (1,172) --
Repayment of long-term loan -- (7)
Net cash used in financing activities (1,172) (7)
Net decrease in cash and cash equivalents (3,298) (459)
Cash and cash equivalents, beginning of the
period 7,866 5,473
Effect on exchange rate changes 68 (96)
Cash and cash equivalents, end of the period 4,636 4,918
Supplemental disclosure of cash flows information
Interest received 7 10
Interest paid (32) (36)
Tax paid (1) (5)
