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Press Release

China TransInfo Announces First-Quarter 2012 Results

-- Backlog Increases to Approximately $194 Million

PR Newswire

BEIJING, May 14, 2012 /PRNewswire-Asia-FirstCall/ -- China TransInfo Technology Corp. (NASDAQ: CTFO) ("China TransInfo" or the "Company"), a leading provider of comprehensive intelligent transportation systems ("ITS") in China through its affiliate, China TransInfo Technology Group Co., Ltd. (the "Group Company"), today reported financial results for the first quarter ended March 31, 2012.

First-Quarter 2012 Highlights:

  • Revenues decreased 20.7% year over year to $28.9 million
  • Net income was $2.4 million, or $0.10 per diluted share
  • Adjusted net income was $2.7 million, or $0.11 per diluted share(*)
  • Backlog increased to approximately $194 million

"Although first-quarter revenues declined year-over-year, this was primarily due to the timing of contract progress and execution, and we won nearly $58 million in new contracts in the quarter versus $13 million a year ago.  Moreover, our backlog increased by 12% to approximately $194 million, indicating a stronger book of business for China TransInfo," commented Mr. Shudong Xia. "On the bottom line, we maintained solid profitability despite the lower revenue level and a higher tax rate. We remain committed to growing our business alongside the favorable dynamics of China's transportation market."

First-Quarter 2012 Results

For the quarter ended March 31, 2012, revenue decreased 20.7% to $28.9 million from $36.5 million in the year-ago quarter.  The decrease in revenue was driven primarily by a 20.5% decrease in transportation revenue, mainly due to fluctuations in the progress of existing contracts and execution in the ITS business.  Revenue from products and applications in the transportation business sector was $27.9 million, or 96.5% of total revenue, compared to $35.1 million, or 96.3% of total revenue, in the year-ago quarter.  The remainder of revenue derived from other business categories.

Gross profit decreased 7.8% to $9.6 million in the first quarter of 2012, as compared to $10.4 million in the year-ago quarter. The gross margin in the first quarter of 2012 increased to 33.1% from 28.5% in the year-ago quarter, mainly due to higher-margin projects executed during the quarter versus the year-ago quarter. This represents a year-over-year margin improvement of approximately 465 basis points versus 28.5% in the year-ago quarter.

Selling expenses were $1.1 million, compared to $0.8 million in the first quarter of 2011, mainly due to enhanced effort for new contract bidding activity, which incurred greater travel and sales-administration expenses. General and administrative expenses were $5.9 million, compared to $5.5 million in the year-ago quarter. The increase was primarily due to the development of Beijing Transwiseway's commercial vehicle location-based services (LBS) business, which incurred higher labor and administrative expenses.  Total operating expenses were $6.9 million, an increase of 9.7% from $6.3 million in the year-ago quarter. Operating income decreased to $2.6 million from $4.1 million in the first quarter of 2011.

In the first quarter, subsidy income was $0.6 million, as compared to $0.2 million in the year-ago quarter.

Net income decreased 18.5% to $2.4 million, or $0.10 per diluted share, compared to $3.0 million, or $0.12 per diluted share, in the year-ago quarter. Adjusted net income, which excludes $0.3 million in non-cash stock-based compensation expense and $0.01 million in intangible amortization expense from acquisitions, decreased 19.2% to $2.7 million, or $0.11 per diluted share, compared to $3.3 million, or $0.13 per diluted share, in the comparable period of 2011(*).  Weighted average diluted shares outstanding increased to 25,280,702 shares from 25,273,542 shares in the year-ago quarter.

(*) Please refer to the table at the end of this press release for a reconciliation of net income and diluted earnings per share ("EPS") to exclude non-cash stock-based compensation and amortization expense of intangibles from acquisitions.

Financial Condition

As of March 31, 2012, cash and cash equivalents totaled $31.8 million, compared to $45.0 million as of December 31, 2011. For the quarter ended March 31, 2012, cash flow from operations was an outflow of $9.4 million. Working capital increased to $102.9 million compared to $97.3 million as of December 31, 2011.  Stockholders' equity was $157.4 million compared to $149.9 million as of December 31, 2011.

Business Outlook

China TransInfo has successfully developed a first-generation commercial vehicle monitoring and control platform for the Ministry of Transport. To date, the Company has recorded more than 1.39 million vehicles registered on the platform and approximately 491,000 active users. In addition, the Company's variable interest entity, Beijing Zhangcheng Science and Technology Co., Ltd. officially released its new pedestrian navigation product named "PalmGo" on April 26, 2012. PalmGo is an application for Android-based smartphones which guides users to reach their destination via various public transportation options including buses, subways, and by walking. Moreover, PalmGo provides public transport information, such as estimated arrival times for selected transport connections and also provides walking navigation, voice navigation, point-of-interest (POI) location, among other features.

Mr. Xia continued, "At the end of the first quarter, our sales backlog was approximately $194 million, compared to $173 million at the end of 2011. We signed roughly $57.85 million in contracts during the first quarter.  For 2012, we continue to expect revenues of approximately $170 million and adjusted net income of approximately $14 million, excluding non-cash, stock-based compensation expense and amortization expense of intangibles from acquisitions."

Conference Call

The Company will host a conference call on Monday, May 14, 2012, at 8:00 a.m. Eastern Daylight Time to discuss its financial results for the first quarter ended March 31, 2012.

The earnings release will be available on the Investor Relations page of the Company's website at: http://www.chinatransinfo.com/news.html.

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 79509439.

A replay will be available for 14 days starting on Monday, May 14, 2012 at 10:00 a.m. Eastern Daylight Time and can be accessed by dialing (855) 859-2056. International callers should dial +1 (404) 537-3406. When prompted, enter conference pass code 79509439.

An archived webcast of the call will be available on the Company's website at http://www.chinatransinfo.com/WebCast.aspx?sortId=44&sortPId=5.  To listen to the live webcast, please go to the Company's website at least fifteen minutes prior to the start of the call to register, download and install any necessary audio software.

Use of Non-GAAP Financial Information

GAAP results for the three months ended March 31, 2012 and 2011 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 below.

 

 

CHINA TRANSINFO TECHNOLOGY CORP. AND SUBSIDIARIES

 

Table 1 - Reconciliation of Non-GAAP Financial Data

 


For the three months ended

For the three months ended


March 31, 2012,

March 31, 2011,


Net Income

Diluted EPS

Net Income

Diluted EPS

Amount per consolidated statement of operations

$2,419,296

$0.10

$2,967,276

$0.12






Adjustments:





Amortization of intangible assets from acquisitions (1)

11,275

0.00

48,850

0.00

Non-cash share based compensation

252,671

0.01

302,937

0.01






Adjusted Amount

$2,683,241

$0.11

$3,319,063

$0.13

 

(1) Amortization of intangible assets from acquisitions of Beijing Transwiseway 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-formulator 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 Transport. 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.

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.

Company Contact:
Ms. Fan Zhou, Investor Relations Director

China TransInfo Technology Corp.

E-mail: ir@ctfo.com

Tel: + 86 10–5169 1657

Investor Relations Contact:

Mr. John Harmon, CFA, Sr. Acct. Manager

CCG Investor Relations

E-mail: john.harmon@ccgir.com

Tel: +86 10–8573 1014

Website: www.ccgirasia.com

- FINANCIAL TABLES FOLLOW -


 

 

CHINA TRANSINFO TECHNOLOGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 



 Three Months Ended March, 31,



2012


2011

Net sales


$

28,928,717


$

36,499,159

Cost of sales



(19,346,112)



(26,106,038)

Gross profit



9,582,605



10,393,121

Total operating expenses



(6,937,046)



(6,321,059)

Income from operations



2,645,559



4,072,062

Non-operating income (expense):







Interest income



34,888



39,726

Interest expense



(109,464)



(250,573)

Subsidy income



646,001



195,626

Other income, net



153,008



75,476

Total non-operating income



724,433



60,255








Income before income taxes, noncontrolling interests, and gain on equity investments in affiliates



3,369,992



4,132,317

Income taxes



(578,268)



(501,125)

Net income before non-controlling interests and gain on equity investments in affiliates net income



2,791,724



3,631,192








Gain on equity investments in affiliates due to proportional shares of the affiliates net income



379,253



332,636

Net income before non-controlling interests



3,170,977



3,963,828

Non-controlling interests in net income of subsidiary



(751,681)



(996,552)

Net income


$

2,419,296


$

2,967,276

 Weighted average number of shares of outstanding:







 Basic



25,270,069



25,270,069

 Diluted



25,280,702



25,273,542

 Earnings per share -







 Basic


$

0.10


$

0.12

 Diluted


$

0.10


$

0.12

 Comprehensive income







Net income including noncontrolling interest


$

3,170,977


$

3,963,828

Translation adjustments



835,533



634,187

 Comprehensive income


$

4,006,510


$

4,598,015

Comprehensive income attributable to non-controlling interests


$

751,681


$

996,552

Comprehensive income attributable to CTFO


$

3,254,829


$

3,601,463

 

 

CHINA TRANSINFO TECHNOLOGY CORP.

CONDENSED CONSOLIDATED BALANCE SHEET

 


March 31,


December 31,


2012


2011






ASSETS






Current Assets:






Cash and cash equivalents

$

31,832,178


$

45,032,637

Restricted cash


4,703,288



3,560,246

Accounts receivable, net of allowance for doubtful accounts  of $171,829
and $169,060 ,respectively


43,507,607



36,902,155

Inventories


5,493,449



5,993,121

Costs and estimated earnings in excess of billings on uncompleted contracts


55,430,507



42,917,900

Prepayments


7,682,784



8,828,290

Other receivables


18,032,086



15,636,967

Deferred tax assets


26,635



26,467

Total current assets


166,708,534



158,897,783







Long-term investments


11,084,600



10,638,712

Property and equipment, net


11,122,125



10,848,345

Long-term prepayment for land use right


3,717,965



3,694,493

Intangible assets, net


17,414,130



16,383,300

Goodwill


10,775,552



10,707,525

Other assets


408,646



337,258

Total assets

$

221,231,552


$

211,507,416







LIABILITIES AND SHAREHOLDERS' EQUITY






Current Liabilities:






Accounts payable

$

37,021,042


$

29,010,462

Short-term borrowings from banks


6,001,047



7,791,300

Billings in excess of costs and estimated earnings on uncompleted contracts


14,448,150



12,760,278

Accrued liabilities and other current liabilities


6,384,121



12,043,530

Total current liabilities


63,854,360



61,605,570







Other long-term liability


27,086



-







Total liabilities


63,881,446



61,605,570







Commitments and contingencies












Stockholders' equity :






Common stock, par value $0.001 per share, 150,000,000 shares authorized,
25,270,069 and 25,270,069 issued and outstanding, respectively


25,270



25,270

Additional paid-in capital


53,191,622



51,484,878

Retained earnings


63,803,929



61,384,633

Accumulated other comprehensive income


10,454,222



9,618,689

Total China TransInfo Technology Corp Stockholders equity


127,475,043



122,513,470

Non-controlling inerests


29,875,063



27,388,376







Total stockholders' equity


157,350,106



149,901,846







Total liabilities and stockholders' equity

$

221,231,552


$

211,507,416


 

 

CHINA TRANSINFO TECHNOLOGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 


Three Months Ended March 31,


2012


2011

Cash flows from operating activities:






Net income

$

2,419,296


$

2,967,276

Adjustments to reconcile net income to net cash used in operating
activities:






Non-controlling interests


751,681



996,552

Depreciation and amortization expenses


671,583



652,129

Stock-based compensation


273,749



310,538

Gain on equity investments in affiliates due to proportional shares of
the affiliates net income


(379,253)



(332,636)

Dividends income


-



(14,693)

Loss on disposal of property and equipment


13,776



6,655

Allowance for doubtful accounts


1,699



-

(Increase) Decrease in assets:






Restricted cash


(1,123,252)



(1,192,248)

Accounts receivable


(6,388,792)



(4,785,754)

Inventories


539,106



(262,205)

Prepaid expenses and other current assets


1,204,353



1,467,418

Other receivables


(2,371,040)



(1,749,678)

Cost and estimated earnings  in excess of billings on uncompleted
contracts


(12,270,848)



(3,280,538)

Other assets


(69,418)



(228)

(Decrease) Increase in liabilities:






Accounts payable


7,846,033



(5,689,594)

Billings in excess of costs and estimated earnings on uncompleted
contracts


1,610,860



(2,288,006)

Accrued liabilities and other current liabilities


(2,156,519)



(3,115,251)

Other long-term liability


27,155



-

Net cash used in operating activities

$

(9,399,831)


$

(16,310,263)







Cash flows from investing activities:






Proceeds from disposal of property and equipment

$

750


$

13,500

Purchases of property and equipment


(798,532)



(984,331)

Purchases of intangible assets


(1,029,261)



(211,214)

Payments for acquisition of companies


(210,092)



(201,334)

Dividends from equity or cost investees


-



14,693

Net cash used in investing activities


(2,037,135)



(1,368,686)







Cash flows from financing activities:






Proceeds from short-term borrowings


1,331,602



3,043,600

Payments of short-term borrowings


(3,176,000)



(4,641,490)

Non-controlling interest's capital contribution


-



190,225

Payment of dividends to non-controlling interests from subsidiaries


(238,200)



-

Net cash used in financing activities


(2,082,598)



(1,407,665)







Effect of foreign currency exchange translation


319,105



219,746







Net decrease in cash and cash equivalents


(13,200,459)



(18,866,868)







Cash and cash equivalents - beginning


45,032,637



43,916,597

Cash and cash equivalents - ending

$

31,832,178


$

25,049,729







Supplemental disclosures:






Interest paid

$

109,464


$

251,866

Income taxes paid

$

569,751


$

444,346

SOURCE China TransInfo Technology Corp.

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