Recon Technology, a leading Chinese non-state-owned oil and gas high-tech products and services provider, has reported financial results for its FY '10 second quarter ended December 31, 2009.
2Q FY '10 Highlights
- Revenue for 2Q FY '10 increased 27% to $7.3 million from $5.8 million in 2Q FY '09 attributable to strong sales of oil field furnaces, increasing demand of automation products and high value-added oil-field services.
- Gross profit increased 44% to $3.6 million for 2Q FY '10 from $2.5 million in 2Q FY '09.
- 2Q FY '10 gross margin increased to 49% from 43% in 2Q FY '09, primarily due to Recon's focus on higher margins services such as software and service solutions.
- Income from operations rose 34% to $2.5 million compared with $1.9 million in 2Q FY '09.
- Net income was $1.8 million, an increase of 31% over $1.4 million in 2Q FY '09.
- Earnings per diluted share were $0.45, compared to $0.62 per diluted share in 2Q FY '09, reflecting an increase in shares issued associated with the company's 2009 IPO.
- Weighted average number of diluted shares outstanding was 4.05 million, compared to 2.25 million in 2Q FY '09.
First Six Months FY '10 Highlights
- Revenue was $10.6 million, an increase of 46% over $7.3 million for the six months ended December 31, 2008.
- Gross profit increased 67% to $4.6 million vs. $2.7 million for the same period in 2008
- Gross margin increased to 43% from 37% for the six months ended December 31, 2008
- Income from operations was $2.7 million, a gain of 55% from $1.8 million for the same period in 2008
- Net income increased 47% to $1.9 million compared to $1.3 million for the first six months of FY '09.
- Earnings per diluted share were $0.51 compared to $0.57 per diluted share for the first six months of FY '09, reflecting an increase in shares issued associated with the company's 2009 IPO.
- Weighted average number of diluted shares outstanding was 3.70 million, compared to 2.25 million for the six months ended December 31, 2008.
Liquidity and Capital Resources
The company's cash balance on December 31, 2009 was approximately $6.6 million. Recon had short-term debt of $829,000 and no long-term debt. Working capital was $15.9 million. Stockholders' equity totaled $14.9 million. The current ratio was 2.78, up from 1.90 at June 30, 2009. Net cash provided in financing activities totaled $8.7 million for the six months ended December 31, 2009, including payback of notes payable and proceeds from IPO on July 30, 2009.
Shenping Yin, Recon's Chief Executive Officer, said, "We are happy to report sustained growth in our second fiscal quarter. Our strong financial results reflect our ability to optimize our product lines in expanding our business. We are benefiting from robust demand from major oil companies for high-tech solutions and new software systems. We believe that operators of the Chinese oilfields have a growing need for new computerized systems and production enhancing measures in maturing oil and gas wells and thus have a strong ongoing need for our proprietary technology."