BEIJING, Nov. 13, 2014 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON), ("Recon" or the "Company"), a leading independent oilfield services provider operating primarily in China, today reported that in its fiscal 2015 first quarter ended September 30, 2014, results were impacted by capital expenditure reductions by its industry leading state-owned customers reflecting changing industry conditions. One major consequence was the temporary postponement of a number of oil and gas projects. To a lesser extent, the reduced capital expenditures also resulted in some reduction in sales opportunities for Recon as compared to the same period last year. These factors translated to a year over year decline in FY 2015 first quarter revenues and profitability and resulted in a loss in the period.
Mr. Sheping Yin, Chairman and CEO of Recon stated, "We fully expect that projects originally scheduled to be completed in the quarter will be completed in subsequent periods during the fiscal year. Coupled with the continuing high degree of interest we are seeing in our products and technology we are anticipating a significant recovery and increase in revenues as projects are expected to be completed during this fiscal year that we believe will keep us on track with our growth plans."
Financial Highlights
In the first quarter ended September, 30, 2014:
-- Revenues declined 62.6% to $699,450 from $1,870,951* in the first fiscal
quarter last year for the reasons noted above. Nevertheless, we believe
customer interest in Recon products and technology remained strong.
-- With the decline in revenues, adjusted net income attributable to Recon
(non-U.S. GAAP)** declined to a loss of approximately $(432,936) from a
gain of approximately $135,862* in the same period last year.
-- Adjusted EBIDTA (non-U.S. GAAP) decreased year over year from
approximately $240,611* in the first quarter of FY 2014 to a loss of
approximately $(368,662) in first quarter of FY 2015.
-- The net loss attributable to Recon (U.S. GAAP) was approximately
$(676,299), compared with net income of approximately $7,548* a year
earlier.
-- Diluted EPS (U.S. GAAP) was a loss of $(0.14) per share in the first
quarter of FY 2015, compared with a net profit of $0.002 per share in
the first quarter of FY2014.
-- Adjusted diluted EPS** (non-U. S. GAAP) was a loss of $(0.09) compared
with a gain of $0.03 in the year ago first quarter.
* Based on the exchange
rate of RMB 6.1534 to US
$1.00.
** Non-U.S. GAAP measures
are explained in tables 1
and 2 below. Non-U.S.
GAAP adjusted net income
(loss) and EPS exclude
certain special non-cash
after tax expenses
totaling $243,363, or
$0.05 per share that are
included in net income
(loss).
Other FY 2015 First Quarter Highlights
-- Finished goods in inventory totaled $2.4 million, of which approximately
20% were furnaces shipped to customer sites.
-- Gross margins declined to 14.3% from 46% a year earlier mainly
reflecting the sharp decline in revenues, as well as decreased revenue
from higher gross margin software.
-- Operating income declined to a loss of $(722,446) compared with $81, 687
in the year ago quarter.
-- Current assets as of September 30, 2014 were approximately $20.5
million, including approximately $7.5 million in accounts receivable and
about $1 million in cash and cash equivalents.
-- The Company reported no long term debt and total current liabilities of
approximately $7.3 million as of September 30, 2014. After the end of
the quarter, the Company received a short term loan of $975,071 from a
founder of the Company.
-- Working capital as of September 30, 2014 was approximately $13.2
million.
-- Weighted average outstanding ordinary shares as of September 30, 2014
were approximately 4.76 million.
Outlook
Mr. Yin commented further, "Despite reduced drilling and lower oil prices -- as well as the continuing reforms taking place in China's oil industry -- we see continuing opportunity to expand our share of our customers' budgets with products and services that improve their productivity, safety and reduce their costs. Currently they are looking to us primarily for hardware -- in particular our oilfield furnaces -- as well as our automation products and services. We believe that with current conditions in the industry, the budgets of our customers will be shifting from exploration to increased production and development expenditures. We think we can meet their needs with our products and will continue to seek additional opportunities to expand our role on their behalf."
Research and Development and Fracking
"While focused on generating increasing near term revenue and profit," Mr. Yin continued, "we are also focused on developing new products with our outstanding research and development team that we count on to expand our Company's role in China's oil and gas fields in the future. A particular focus in recent months has been on reducing the high cost of fracking in China, which has been a major obstacle to its growth. We are confident of achieving breakthroughs in this area that will keep Recon in the forefront of future fracking activity in China."
Growth Goals: at least 20% year over year
"In our year end press release," Mr. Yin said, "we announced and discussed the growth goals we have developed. It is our belief that an achievable goal for Recon is average annual revenue growth of a minimum of 20%. Additionally, we believe that if we couple this with appropriate acquisitions, we can aim to double our revenues over the next two to three years. We further believe that with respect to our current fiscal year 2015, despite the poor start, we are still on track to achieve at least 20% year over year growth in revenues which should become more evident over the course of the year."
Conference Call Invitation
The Company will discuss Fiscal Year 2015 First Quarter results during a live conference call and webcast on Friday, November 14, 2014 at 8:00 am Eastern Standard Time.
To participate in the call, interested participants should call 1-866-620-9467 or 0086-010-95057 when calling within the United States or 010-95057 when calling from China. The Password for the Recon Technology First Quarter Investor Conference Call is: 9739 9962. Playback of the call will be available on the Recon website: www.recon.cn
SEE ATTACHED TABLES
Recon Technology, Ltd. is China's first independent oil and gas field service company listed on NASDAQ (RCON). Closely working with leading global partners, Recon has achieved rapid growth supplying China's largest oil and gas exploration companies, including Sinopec and China National Petroleum Corporation, with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures. The solutions Recon provides are aimed at increasing gas and petroleum extraction levels, reducing impurities, improving safety and lowering production costs. For additional information, please visit www.recon.cn
Cautionary Statements
Statements made in this release with respect to Recon's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Recon. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. Recon cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. Therefore investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Investor Relations Contacts:
China
Liu Jia
Chief Financial Officer
Recon Technology, Ltd.
info@recon.cn
+86 (10) 84945799
U.S.
Ken Donenfeld
DGI Investor Relations
kdonenfeld@dgiir.com
1-212-425-5700
Table 1 Adjusted EBITDA
Adjusted EBITDA.
We define adjusted EBITDA as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. We think it is useful to an equity investor in evaluating our operating performance because: (1) it is widely used by investors in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which the assets were acquired; and (2) it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating results.
For the Three Months Ended
September 30,
-------------
2013 2014 2014 Increase / Percentage
RMB RMB USD (Decrease) Change
--- --- --- --------- ------
Reconciliation of Adjusted EBITDA
to Net Income (loss)
Net income (loss) RMB 206,354 RMB (4,161,545) $(676,299) RMB (4,367,899) (2,116.7)%
Provision for income taxes 207,327 30,245 4,915 (177,082) (85.4)%
Interest expense and foreign currency adjustment 126,959 243,918 39,639 116,959 92.1%
Change in fair value of warrants liability - (274,399) (44,593) (274,399) (100)%
Loss from investment 374,614 - - (374,614) (100)%
Restricted shares issued for consulting services - 1,171,331 190,355 1,171,331 100%
Stock compensation expense 414,954 600,578 97,601 185,624 44.7%
Depreciation and amortization 150,368 121,347 19,720 (29,021) (19.3)%
------- ------- ------ -------
Adjusted EBITDA RMB 1,480,576 RMB (2,268,525) $(368,662) RMB (3,749,101) (253.2)%
=== ========= === ========== ========= === ==========
Adjusted EBITDA decreased by approximately RMB3.7 million ($0.6 million) to approximately loss of RMB2.3 million ($0.4 million) for the three months ended September 30, 2014 compared to approximately income of RMB1.5 million income for the same period in 2013. This decrease was due to decreased revenue and increased professional service consulting expense.
Table 2 Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share
For the Three Months Ended
September 30,
-------------
2013 2014 2014
RMB RMB USD
--- --- ---
Reconciliation of Net Income (loss) attributable to Recon Technology, Ltd
to Adjusted Net Income (loss) attributable to Recon Technology, Ltd
Net income (loss) attributable to Recon Technology, Ltd RMB 46,444 RMB (4,161,545) $(676,299)
Noncash items (A):
Change in fair value of warrants liability - (274,399) (44,593)
Loss from investment 374,614 - -
Restricted shares issued for consulting services - 1,171,331 190,355
Stock compensation expense 414,954 600,578 97,601
------- ------- ------
Adjusted net income (loss) attributable to Recon Technology, Ltd RMB 836,012 RMB (2,664,035) $(432,936)
=== ======= === ========== =========
Reconciliation of U.S. GAAP Earnings (Loss) Per Share
to Non U.S. GAAP Adjusted Earnings (Loss) Per Share
U.S. GAAP earnings (loss) per share RMB 0.01 RMB (0.87) $(0.14)
=== ==== === ===== ======
Impact of special items on earnings per share 0.20 0.31 0.05
==== ==== ====
Non U.S. GAAP adjusted earnings (loss) per share RMB 0.21 RMB (0.56) $(0.09)
=== ==== === ===== ======
Weighted - average shares -diluted 3,951,811 4,757,112 4,757,112
========= ========= =========
(A) Noncash items are certain expenses that are included in our U.S. GAAP reported results. There was no income tax benefit associated with the noncash items. The non-GAAP financial
measures are provided to enhance investors' overall understanding of Recon's current financial performance.
FOR ADDITIONAL INFORMATION WE URGE YOU TO PLEASE CAREFULLY STUDY THE COMPANY'S FIRST QUARTER REPORT ON FORM 10-Q FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION NOVEMBER 13, 2014.
RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
As of June 30, As of September 30, As of September 30,
-------------- ------------------- -------------------
2014 2014 2014
---- ---- ----
ASSETS RMB RMB U.S. Dollars
--- --- ------------
Current assets
Cash and cash equivalents RMB 18,094,586 RMB 6,030,111 $979,964
Trade accounts receivable, net 43,553,737 38,445,529 6,247,851
Trade accounts receivable- related parties, net 7,479,298 7,934,047 1,289,376
Inventories, net 14,336,602 17,216,371 2,797,863
Other receivables, net 18,293,043 22,759,066 3,698,616
Other receivables- related parties 1,414,433 - -
Purchase advances, net 25,759,065 26,500,238 4,306,601
Purchase advances- related parties 394,034 1,500,000 243,767
Prepaid expenses 2,634,664 4,388,693 713,214
Prepaid expenses - related parties 230,000 - -
Deferred tax asset 1,209,961 1,211,995 196,963
--------- --------- -------
Total current assets 133,399,423 125,986,050 20,474,215
Property and equipment, net 1,321,538 1,296,199 210,648
Long-term trade accounts receivable, net 14,456,317 13,588,962 2,208,366
Long-term other receivable 5,353,104 4,706,703 764,895
--------- --------- -------
Total Assets RMB 154,530,382 RMB 145,577,914 $23,658,124
=== =========== === =========== ===========
LIABILITIES AND EQUITY
Current liabilities
Short-term bank loans RMB 10,000,000 RMB 8,000,000 $1,300,094
Trade accounts payable 11,413,505 9,846,517 1,600,175
Trade accounts payable-related parties - 389,143 63,240
Other payables 1,765,079 1,041,711 169,290
Other payable- related parties 3,306,024 3,441,336 559,258
Deferred revenue 4,419,824 4,136,518 672,233
Advances from customers 801,385 282,035 45,834
Accrued payroll and employees' welfare 417,624 446,297 72,529
Accrued expenses 203,051 217,106 35,281
Taxes payable 7,589,846 6,830,082 1,109,969
Short-term borrowings- related parties 5,207,728 5,209,561 846,615
Deferred tax liability 180,186 180,186 29,282
Warrants liability 5,021,621 4,745,754 771,241
Total current liabilities 50,325,873 44,766,246 7,275,041
---------- ---------- ---------
Commitments and Contingency
Equity
Common stock, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 4,717,336 and 4,726,711 shares issued and
outstanding as of June 30, 2014 and September 30, 2014, respectively) 616,865 617,943 100,421
Additional paid-in capital 83,061,058 83,829,527 13,623,286
Appropriated retained earnings 4,148,929 4,148,929 674,250
Unappropriated retained earnings 8,431,453 4,269,908 693,910
Accumulated other comprehensive loss (279,275) (280,077) (45,518)
Total shareholders' equity 95,979,030 92,586,230 15,046,349
Non-controlling interest 8,225,479 8,225,438 1,336,734
--------- --------- ---------
Total equity 104,204,509 100,811,668 16,383,083
----------- ----------- ----------
Total Liabilities and Equity RMB 154,530,382 RMB 145,577,914 $23,658,124
=== =========== === =========== ===========
- - -
RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the three months ended
September 30,
-------------
2013 2014 2014
---- ---- ----
RMB RMB USD
--- --- ---
Revenues
Hardware and software RMB 11,097,092 RMB 4,245,509 $689,945
Service - 58,491 9,505
Hardware and software - related parties 415,618 - -
------- ---
Total revenues 11,512,710 4,304,000 699,450
---------- --------- -------
Cost of revenues
Hardware and software RMB 6,118,674 RMB 3,688,686 $599,455
Hardware and software - related parties 102,936 - -
------- --- ---
Total cost of revenues 6,221,610 3,688,686 599,455
Gross profit 5,291,100 615,314 99,995
--------- ------- ------
Selling and distribution expenses 1,353,922 700,790 113,887
General and administrative expenses 2,741,923 3,703,291 601,828
Research and development expenses 692,600 656,729 106,726
Operating expenses 4,788,445 5,060,810 822,441
--------- --------- -------
Income (loss) from operations 502,655 (4,445,496) (722,446)
------- ---------- --------
Other income (expenses)
Subsidy income 333,712 214,703 34,892
Interest income 103,201 83,032 13,494
Interest expense (221,259) (241,844) (39,302)
Loss from investment (374,614) - -
Change in fair value of warrants liability - 274,399 44,593
Gain?loss?from foreign currency exchange 94,300 (2,074) (337)
Other expense (24,314) (14,020) (2,278)
------- ------- ------
Other income (expenses) (88,974) 314,196 51,062
------- ------- ------
Income (loss) before income tax 413,681 (4,131,300) (671,384)
Provision for income tax 207,327 30,245 4,915
-----
Net Income (loss) 206,354 (4,161,545) (676,299)
Less: Net income attributable to non-controlling interest 159,910 - -
---
Net Income (loss) attributable to Recon Technology, Ltd RMB 46,444 RMB (4,161,545) $(676,299)
=== ====== === ========== =========
Comprehensive income (loss)
Net income (loss) 206,354 (4,161,545) (676,299)
Foreign currency translation adjustment (5,604) (802) (138)
------ ---- ----
Comprehensive income (loss) 200,750 (4,162,347) (676,437)
Less: Comprehensive income attributable to non-controlling interest 159,349 (41) (14)
------- --- ---
Comprehensive income (loss) attributable to Recon Technology, Ltd RMB 41,401 RMB (4,162,306) $(676,423)
=== ====== === ========== =========
Earnings per common share - basic and diluted RMB 0.01 RMB (0.87) $(0.14)
=== ==== === ===== ======
Weighted - average shares -basic and diluted 3,951,811 4,757,112 4,757,112
========= ========= =========
RECON TECHNOLOGY, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30,
----------------------------------------
2013 2014 2014
---- ---- ----
RMB RMB U.S. Dollars
--- --- ------------
Cash flows from operating activities:
Net income (loss) RMB 206,354 RMB (4,161,545) $(676,299)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation 150,368 121,347 19,720
Provision/(recovery of) for doubtful accounts 84,728 (68,361) (11,109)
Share based compensation 414,954 600,578 97,601
Loss from investment 374,614 - -
Deferred tax provision/(benefit) 11,868 (2,034) (331)
Change in fair value of warrants liability - (274,399) (44,593)
Restricted shares issued to consulting firm - 1,171,331 190,355
Changes in operating assets and liabilities:
Trade accounts receivable 2,568,115 5,087,718 826,814
Trade accounts receivable-related parties 263,726 508,979 82,715
Inventories (4,673,420) (2,879,769) (467,996)
Notes receivable 2,578,855 - -
Other receivable, net (1,703,837) (3,818,122) (620,491)
Other receivables related parties, net (428,699) 1,414,433 229,862
Purchase advance, net (2,097,795) (1,752,557) (284,811)
Purchase advance-related party, net - (1,105,966) (179,733)
Tax recoverable (199,225) - -
Prepaid expense (224,273) (1,754,029) (285,050)
Prepaid expense - related party, net - 230,000 37,378
Trade accounts payable 1,090,211 (1,566,988) (254,654)
Trade accounts payable-related parties (3,994,718) 389,143 63,240
Other payables (1,013,574) (723,368) (117,556)
Other payables-related parties (1,568,907) 135,312 21,990
Deferred income 78,484 (283,306) (46,041)
Advances from customers (35,385) (519,350) (84,400)
Accrued payroll and employees' welfare 136,258 28,673 4,660
Accrued expenses 9,543 14,055 2,284
Taxes payable 11,396 (759,764) (123,471)
Net cash used in operating activities (7,960,359) (9,967,989) (1,619,916)
---------- ---------- ----------
Cash flows from investing activities:
Purchase of property and equipment (6,720) (96,008) (15,602)
Net cash used in investing activities (6,720) (96,008) (15,602)
------ ------- -------
Cash flows from financing activities:
Proceeds from short-term bank loans 7,560,000 - -
Repayments of short-term bank loans - (2,000,000) (325,024)
Repayment of short-term borrowings (40,000) - -
Repayment of short-term borrowings-related parties (5,236,377) - -
Net cash provided by (used in) financing activities 2,283,623 (2,000,000) (325,024)
--------- ---------- --------
Effect of exchange rate fluctuation on cash and cash equivalents 14,967 (478) (77)
------ ---- ---
Net decrease in cash and cash equivalents (5,668,489) (12,064,475) (1,960,619)
Cash and cash equivalents at beginning of year 12,350,392 18,094,586 2,940,583
---------- ---------- ---------
Cash and cash equivalents at end of year RMB 6,681,903 RMB 6,030,111 $979,964
=== ========= === ========= ========
Supplemental cash flow information
Cash paid during the period for interest RMB 212,187 RMB 230,035 $37,383
=== ======= === ======= =======
Cash paid during the period for taxes RMB - RMB 32,280 $5,246
=== === === ====== ======
Non-cash investing and financing activities
Cancelation of prior issuance of 40,625 shares of common stock for professional services - 1,002,721 162,954
SOURCE Recon Technology, Ltd.
SOURCE: Recon Technology, Ltd.
Recon Reports Lower First Quarter Results But Maintains Full Year Growth Outlook
Following Temporary First Quarter Delays Anticipates Significant Pick Up in Project Completions in Subsequent Quarters
Recon Technology Fiscal Year 2015 First Quarter Investor Conference Call Scheduled for Friday, November 14th at 8:00am EST
PR Newswire
BEIJING, Nov. 13, 2014
BEIJING, Nov. 13, 2014 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON), ("Recon" or the "Company"), a leading independent oilfield services provider operating primarily in China, today reported that in its fiscal 2015 first quarter ended September 30, 2014, results were impacted by capital expenditure reductions by its industry leading state-owned customers reflecting changing industry conditions. One major consequence was the temporary postponement of a number of oil and gas projects. To a lesser extent, the reduced capital expenditures also resulted in some reduction in sales opportunities for Recon as compared to the same period last year. These factors translated to a year over year decline in FY 2015 first quarter revenues and profitability and resulted in a loss in the period.
Mr. Sheping Yin, Chairman and CEO of Recon stated, "We fully expect that projects originally scheduled to be completed in the quarter will be completed in subsequent periods during the fiscal year. Coupled with the continuing high degree of interest we are seeing in our products and technology we are anticipating a significant recovery and increase in revenues as projects are expected to be completed during this fiscal year that we believe will keep us on track with our growth plans."
Financial Highlights
In the first quarter ended September, 30, 2014:
- Revenues declined 62.6% to $699,450 from $1,870,951* in the first fiscal quarter last year for the reasons noted above. Nevertheless, we believe customer interest in Recon products and technology remained strong.
- With the decline in revenues, adjusted net income attributable to Recon (non-U.S. GAAP)** declined to a loss of approximately $(432,936) from a gain of approximately $135,862* in the same period last year.
- Adjusted EBIDTA (non-U.S. GAAP) decreased year over year from approximately $240,611* in the first quarter of FY 2014 to a loss of approximately $(368,662) in first quarter of FY 2015.
- The net loss attributable to Recon (U.S. GAAP) was approximately $(676,299), compared with net income of approximately $7,548* a year earlier.
- Diluted EPS (U.S. GAAP) was a loss of $(0.14) per share in the first quarter of FY 2015, compared with a net profit of $0.002 per share in the first quarter of FY2014.
- Adjusted diluted EPS** (non-U. S. GAAP) was a loss of $(0.09) compared with a gain of $0.03 in the year ago first quarter.
|
* Based on the exchange rate of RMB 6.1534 to US $1.00. |
|
** Non-U.S. GAAP measures are explained in tables 1 and 2 below. Non-U.S. GAAP adjusted net income (loss) and EPS exclude certain special non-cash after tax expenses totaling $243,363, or $0.05 per share that are included in net income (loss). |
Other FY 2015 First Quarter Highlights
- Finished goods in inventory totaled $2.4 million, of which approximately 20% were furnaces shipped to customer sites.
- Gross margins declined to 14.3% from 46% a year earlier mainly reflecting the sharp decline in revenues, as well as decreased revenue from higher gross margin software.
- Operating income declined to a loss of $(722,446) compared with $81, 687 in the year ago quarter.
- Current assets as of September 30, 2014 were approximately $20.5 million, including approximately $7.5 million in accounts receivable and about $1 million in cash and cash equivalents.
- The Company reported no long term debt and total current liabilities of approximately $7.3 million as of September 30, 2014. After the end of the quarter, the Company received a short term loan of $975,071 from a founder of the Company.
- Working capital as of September 30, 2014 was approximately $13.2 million.
- Weighted average outstanding ordinary shares as of September 30, 2014 were approximately 4.76 million.
Outlook
Mr. Yin commented further, "Despite reduced drilling and lower oil prices -- as well as the continuing reforms taking place in China's oil industry -- we see continuing opportunity to expand our share of our customers' budgets with products and services that improve their productivity, safety and reduce their costs. Currently they are looking to us primarily for hardware -- in particular our oilfield furnaces -- as well as our automation products and services. We believe that with current conditions in the industry, the budgets of our customers will be shifting from exploration to increased production and development expenditures. We think we can meet their needs with our products and will continue to seek additional opportunities to expand our role on their behalf."
Research and Development and Fracking
"While focused on generating increasing near term revenue and profit," Mr. Yin continued, "we are also focused on developing new products with our outstanding research and development team that we count on to expand our Company's role in China's oil and gas fields in the future. A particular focus in recent months has been on reducing the high cost of fracking in China, which has been a major obstacle to its growth. We are confident of achieving breakthroughs in this area that will keep Recon in the forefront of future fracking activity in China."
Growth Goals: at least 20% year over year
"In our year end press release," Mr. Yin said, "we announced and discussed the growth goals we have developed. It is our belief that an achievable goal for Recon is average annual revenue growth of a minimum of 20%. Additionally, we believe that if we couple this with appropriate acquisitions, we can aim to double our revenues over the next two to three years. We further believe that with respect to our current fiscal year 2015, despite the poor start, we are still on track to achieve at least 20% year over year growth in revenues which should become more evident over the course of the year."
Conference Call Invitation
The Company will discuss Fiscal Year 2015 First Quarter results during a live conference call and webcast on Friday, November 14, 2014 at 8:00 am Eastern Standard Time.
To participate in the call, interested participants should call 1-866-620-9467 or 0086-010-95057 when calling within the United States or 010-95057 when calling from China. The Password for the Recon Technology First Quarter Investor Conference Call is: 9739 9962. Playback of the call will be available on the Recon website: www.recon.cn
SEE ATTACHED TABLES
Recon Technology, Ltd. is China's first independent oil and gas field service company listed on NASDAQ (RCON). Closely working with leading global partners, Recon has achieved rapid growth supplying China's largest oil and gas exploration companies, including Sinopec and China National Petroleum Corporation, with advanced automated technologies, efficient gathering and transportation equipment and reservoir stimulation measures. The solutions Recon provides are aimed at increasing gas and petroleum extraction levels, reducing impurities, improving safety and lowering production costs. For additional information, please visit www.recon.cn
Cautionary Statements
Statements made in this release with respect to Recon's current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Recon. Forward-looking statements include, but are not limited to, those statements using words such as "believe," "expect," "plans," "strategy," "prospects," "forecast," "estimate," "project," "anticipate," "aim," "intend," "seek," "may," "might," "could" or "should," and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management's assumptions, judgments and beliefs in light of the information currently available to it. Recon cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, including but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. Therefore investors should not place undue reliance on such forward-looking statements. Actual results may differ significantly from those set forth in the forward-looking statements.
All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Investor Relations Contacts:
China
Liu Jia
Chief Financial Officer
Recon Technology, Ltd.
info@recon.cn
+86 (10) 84945799
U.S.
Ken Donenfeld
DGI Investor Relations
kdonenfeld@dgiir.com
1-212-425-5700
Table 1 Adjusted EBITDA
Adjusted EBITDA.
We define adjusted EBITDA as net income (loss) adjusted for income tax expense, interest expense, loss from investment, non-cash stock compensation expense, depreciation and amortization. We think it is useful to an equity investor in evaluating our operating performance because: (1) it is widely used by investors in our industry to measure a company's operating performance without regard to items such as interest expense, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which the assets were acquired; and (2) it helps investors more meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our capital structure and asset base from our operating results.
|
For the Three Months Ended | ||||||||||||||
|
September 30, | ||||||||||||||
|
2013 |
2014 |
2014 |
Increase / |
Percentage | ||||||||||
|
RMB |
RMB |
USD |
(Decrease) |
Change | ||||||||||
|
Reconciliation of Adjusted EBITDA |
||||||||||||||
|
to Net Income (loss) |
||||||||||||||
|
Net income (loss) |
RMB |
206,354 |
RMB |
(4,161,545) |
$ |
(676,299) |
RMB |
(4,367,899) |
(2,116.7) |
% | ||||
|
Provision for income taxes |
207,327 |
30,245 |
4,915 |
(177,082) |
(85.4) |
% | ||||||||
|
Interest expense and foreign currency adjustment |
126,959 |
243,918 |
39,639 |
116,959 |
92.1 |
% | ||||||||
|
Change in fair value of warrants liability |
- |
(274,399) |
(44,593) |
(274,399) |
(100) |
% | ||||||||
|
Loss from investment |
374,614 |
- |
- |
(374,614) |
(100) |
% | ||||||||
|
Restricted shares issued for consulting services |
- |
1,171,331 |
190,355 |
1,171,331 |
100 |
% | ||||||||
|
Stock compensation expense |
414,954 |
600,578 |
97,601 |
185,624 |
44.7 |
% | ||||||||
|
Depreciation and amortization |
150,368 |
121,347 |
19,720 |
(29,021) |
(19.3) |
% | ||||||||
|
Adjusted EBITDA |
RMB |
1,480,576 |
RMB |
(2,268,525) |
$ |
(368,662) |
RMB |
(3,749,101) |
(253.2) |
% | ||||
Adjusted EBITDA decreased by approximately RMB3.7 million ($0.6 million) to approximately loss of RMB2.3 million ($0.4 million) for the three months ended September 30, 2014 compared to approximately income of RMB1.5 million income for the same period in 2013. This decrease was due to decreased revenue and increased professional service consulting expense.
Table 2 Adjusted Net Income (Loss) and Adjusted Earnings (Loss) Per Share
|
For the Three Months Ended | |||||||||
|
September 30, | |||||||||
|
2013 |
2014 |
2014 | |||||||
|
RMB |
RMB |
USD | |||||||
|
Reconciliation of Net Income (loss) attributable to Recon Technology, Ltd |
|||||||||
|
to Adjusted Net Income (loss) attributable to Recon Technology, Ltd |
|||||||||
|
Net income (loss) attributable to Recon Technology, Ltd |
RMB |
46,444 |
RMB |
(4,161,545) |
$ |
(676,299) | |||
|
Noncash items (A): |
|||||||||
|
Change in fair value of warrants liability |
- |
(274,399) |
(44,593) | ||||||
|
Loss from investment |
374,614 |
- |
- | ||||||
|
Restricted shares issued for consulting services |
- |
1,171,331 |
190,355 | ||||||
|
Stock compensation expense |
414,954 |
600,578 |
97,601 | ||||||
|
Adjusted net income (loss) attributable to Recon Technology, Ltd |
RMB |
836,012 |
RMB |
(2,664,035) |
$ |
(432,936) | |||
|
Reconciliation of U.S. GAAP Earnings (Loss) Per Share |
|||||||||
|
to Non U.S. GAAP Adjusted Earnings (Loss) Per Share |
|||||||||
|
U.S. GAAP earnings (loss) per share |
RMB |
0.01 |
RMB |
(0.87) |
$ |
(0.14) | |||
|
Impact of special items on earnings per share |
0.20 |
0.31 |
0.05 | ||||||
|
Non U.S. GAAP adjusted earnings (loss) per share |
RMB |
0.21 |
RMB |
(0.56) |
$ |
(0.09) | |||
|
Weighted - average shares -diluted |
3,951,811 |
4,757,112 |
4,757,112 | ||||||
|
(A) Noncash items are certain expenses that are included in our U.S. GAAP reported results. There was no income tax benefit associated with the noncash items. The non-GAAP financial | |||||||||
FOR ADDITIONAL INFORMATION WE URGE YOU TO PLEASE CAREFULLY STUDY THE COMPANY'S FIRST QUARTER REPORT ON FORM 10-Q FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION NOVEMBER 13, 2014.
|
RECON TECHNOLOGY, LTD | ||||||||
|
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
As of June 30, |
As of September 30, |
As of September 30, | ||||||
|
2014 |
2014 |
2014 | ||||||
|
ASSETS |
RMB |
RMB |
U.S. Dollars | |||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
RMB |
18,094,586 |
RMB |
6,030,111 |
$ |
979,964 | ||
|
Trade accounts receivable, net |
43,553,737 |
38,445,529 |
6,247,851 | |||||
|
Trade accounts receivable- related parties, net |
7,479,298 |
7,934,047 |
1,289,376 | |||||
|
Inventories, net |
14,336,602 |
17,216,371 |
2,797,863 | |||||
|
Other receivables, net |
18,293,043 |
22,759,066 |
3,698,616 | |||||
|
Other receivables- related parties |
1,414,433 |
- |
- | |||||
|
Purchase advances, net |
25,759,065 |
26,500,238 |
4,306,601 | |||||
|
Purchase advances- related parties |
394,034 |
1,500,000 |
243,767 | |||||
|
Prepaid expenses |
2,634,664 |
4,388,693 |
713,214 | |||||
|
Prepaid expenses - related parties |
230,000 |
- |
- | |||||
|
Deferred tax asset |
1,209,961 |
1,211,995 |
196,963 | |||||
|
Total current assets |
133,399,423 |
125,986,050 |
20,474,215 | |||||
|
Property and equipment, net |
1,321,538 |
1,296,199 |
210,648 | |||||
|
Long-term trade accounts receivable, net |
14,456,317 |
13,588,962 |
2,208,366 | |||||
|
Long-term other receivable |
5,353,104 |
4,706,703 |
764,895 | |||||
|
Total Assets |
RMB |
154,530,382 |
RMB |
145,577,914 |
$ |
23,658,124 | ||
|
LIABILITIES AND EQUITY |
||||||||
|
Current liabilities |
||||||||
|
Short-term bank loans |
RMB |
10,000,000 |
RMB |
8,000,000 |
$ |
1,300,094 | ||
|
Trade accounts payable |
11,413,505 |
9,846,517 |
1,600,175 | |||||
|
Trade accounts payable-related parties |
- |
389,143 |
63,240 | |||||
|
Other payables |
1,765,079 |
1,041,711 |
169,290 | |||||
|
Other payable- related parties |
3,306,024 |
3,441,336 |
559,258 | |||||
|
Deferred revenue |
4,419,824 |
4,136,518 |
672,233 | |||||
|
Advances from customers |
801,385 |
282,035 |
45,834 | |||||
|
Accrued payroll and employees' welfare |
417,624 |
446,297 |
72,529 | |||||
|
Accrued expenses |
203,051 |
217,106 |
35,281 | |||||
|
Taxes payable |
7,589,846 |
6,830,082 |
1,109,969 | |||||
|
Short-term borrowings- related parties |
5,207,728 |
5,209,561 |
846,615 | |||||
|
Deferred tax liability |
180,186 |
180,186 |
29,282 | |||||
|
Warrants liability |
5,021,621 |
4,745,754 |
771,241 | |||||
|
Total current liabilities |
50,325,873 |
44,766,246 |
7,275,041 | |||||
|
Commitments and Contingency |
||||||||
|
Equity |
||||||||
|
Common stock, ($ 0.0185 U.S. dollar par value, 25,000,000 shares authorized; 4,717,336 and 4,726,711 shares issued and outstanding as of June 30, 2014 and September 30, 2014, respectively) |
616,865 |
617,943 |
100,421 | |||||
|
Additional paid-in capital |
83,061,058 |
83,829,527 |
13,623,286 | |||||
|
Appropriated retained earnings |
4,148,929 |
4,148,929 |
674,250 | |||||
|
Unappropriated retained earnings |
8,431,453 |
4,269,908 |
693,910 | |||||
|
Accumulated other comprehensive loss |
(279,275) |
(280,077) |
(45,518) | |||||
|
Total shareholders' equity |
95,979,030 |
92,586,230 |
15,046,349 | |||||
|
Non-controlling interest |
8,225,479 |
8,225,438 |
1,336,734 | |||||
|
Total equity |
104,204,509 |
100,811,668 |
16,383,083 | |||||
|
Total Liabilities and Equity |
RMB |
154,530,382 |
RMB |
145,577,914 |
$ |
23,658,124 | ||
|
- |
- |
- | ||||||
|
RECON TECHNOLOGY, LTD | |||||||||
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | |||||||||
|
For the three months ended | |||||||||
|
September 30, | |||||||||
|
2013 |
2014 |
2014 | |||||||
|
RMB |
RMB |
USD | |||||||
|
Revenues |
|||||||||
|
Hardware and software |
RMB |
11,097,092 |
RMB |
4,245,509 |
$ |
689,945 | |||
|
Service |
- |
58,491 |
9,505 | ||||||
|
Hardware and software - related parties |
415,618 |
- |
- | ||||||
|
Total revenues |
11,512,710 |
4,304,000 |
699,450 | ||||||
|
Cost of revenues |
|||||||||
|
Hardware and software |
RMB |
6,118,674 |
RMB |
3,688,686 |
$ |
599,455 | |||
|
Hardware and software - related parties |
102,936 |
- |
- | ||||||
|
Total cost of revenues |
6,221,610 |
3,688,686 |
599,455 | ||||||
|
Gross profit |
5,291,100 |
615,314 |
99,995 | ||||||
|
Selling and distribution expenses |
1,353,922 |
700,790 |
113,887 | ||||||
|
General and administrative expenses |
2,741,923 |
3,703,291 |
601,828 | ||||||
|
Research and development expenses |
692,600 |
656,729 |
106,726 | ||||||
|
Operating expenses |
4,788,445 |
5,060,810 |
822,441 | ||||||
|
Income (loss) from operations |
502,655 |
(4,445,496) |
(722,446) | ||||||
|
Other income (expenses) |
|||||||||
|
Subsidy income |
333,712 |
214,703 |
34,892 | ||||||
|
Interest income |
103,201 |
83,032 |
13,494 | ||||||
|
Interest expense |
(221,259) |
(241,844) |
(39,302) | ||||||
|
Loss from investment |
(374,614) |
- |
- | ||||||
|
Change in fair value of warrants liability |
- |
274,399 |
44,593 | ||||||
|
Gain（loss）from foreign currency exchange |
94,300 |
(2,074) |
(337) | ||||||
|
Other expense |
(24,314) |
(14,020) |
(2,278) | ||||||
|
Other income (expenses) |
(88,974) |
314,196 |
51,062 | ||||||
|
Income (loss) before income tax |
413,681 |
(4,131,300) |
(671,384) | ||||||
|
Provision for income tax |
207,327 |
30,245 |
4,915 | ||||||
|
Net Income (loss) |
206,354 |
(4,161,545) |
(676,299) | ||||||
|
Less: Net income attributable to non-controlling interest |
159,910 |
- |
- | ||||||
|
Net Income (loss) attributable to Recon Technology, Ltd |
RMB |
46,444 |
RMB |
(4,161,545) |
$ |
(676,299) | |||
|
Comprehensive income (loss) |
|||||||||
|
Net income (loss) |
206,354 |
(4,161,545) |
(676,299) | ||||||
|
Foreign currency translation adjustment |
(5,604) |
(802) |
(138) | ||||||
|
Comprehensive income (loss) |
200,750 |
(4,162,347) |
(676,437) | ||||||
|
Less: Comprehensive income attributable to non-controlling interest |
159,349 |
(41) |
(14) | ||||||
|
Comprehensive income (loss) attributable to Recon Technology, Ltd |
RMB |
41,401 |
RMB |
(4,162,306) |
$ |
(676,423) | |||
|
Earnings per common share - basic and diluted |
RMB |
0.01 |
RMB |
(0.87) |
$ |
(0.14) | |||
|
Weighted - average shares -basic and diluted |
3,951,811 |
4,757,112 |
4,757,112 | ||||||
|
RECON TECHNOLOGY, LTD | ||||||||
|
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
|
For the three months ended September 30, | ||||||||
|
2013 |
2014 |
2014 | ||||||
|
RMB |
RMB |
U.S. Dollars | ||||||
|
Cash flows from operating activities: |
||||||||
|
Net income (loss) |
RMB |
206,354 |
RMB |
(4,161,545) |
$ |
(676,299) | ||
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
|
Depreciation |
150,368 |
121,347 |
19,720 | |||||
|
Provision/(recovery of) for doubtful accounts |
84,728 |
(68,361) |
(11,109) | |||||
|
Share based compensation |
414,954 |
600,578 |
97,601 | |||||
|
Loss from investment |
374,614 |
- |
- | |||||
|
Deferred tax provision/(benefit) |
11,868 |
(2,034) |
(331) | |||||
|
Change in fair value of warrants liability |
- |
(274,399) |
(44,593) | |||||
|
Restricted shares issued to consulting firm |
- |
1,171,331 |
190,355 | |||||
|
Changes in operating assets and liabilities: |
||||||||
|
Trade accounts receivable |
2,568,115 |
5,087,718 |
826,814 | |||||
|
Trade accounts receivable-related parties |
263,726 |
508,979 |
82,715 | |||||
|
Inventories |
(4,673,420) |
(2,879,769) |
(467,996) | |||||
|
Notes receivable |
2,578,855 |
- |
- | |||||
|
Other receivable, net |
(1,703,837) |
(3,818,122) |
(620,491) | |||||
|
Other receivables related parties, net |
(428,699) |
1,414,433 |
229,862 | |||||
|
Purchase advance, net |
(2,097,795) |
(1,752,557) |
(284,811) | |||||
|
Purchase advance-related party, net |
- |
(1,105,966) |
(179,733) | |||||
|
Tax recoverable |
(199,225) |
- |
- | |||||
|
Prepaid expense |
(224,273) |
(1,754,029) |
(285,050) | |||||
|
Prepaid expense - related party, net |
- |
230,000 |
37,378 | |||||
|
Trade accounts payable |
1,090,211 |
(1,566,988) |
(254,654) | |||||
|
Trade accounts payable-related parties |
(3,994,718) |
389,143 |
63,240 | |||||
|
Other payables |
(1,013,574) |
(723,368) |
(117,556) | |||||
|
Other payables-related parties |
(1,568,907) |
135,312 |
21,990 | |||||
|
Deferred income |
78,484 |
(283,306) |
(46,041) | |||||
|
Advances from customers |
(35,385) |
(519,350) |
(84,400) | |||||
|
Accrued payroll and employees' welfare |
136,258 |
28,673 |
4,660 | |||||
|
Accrued expenses |
9,543 |
14,055 |
2,284 | |||||
|
Taxes payable |
11,396 |
(759,764) |
(123,471) | |||||
|
Net cash used in operating activities |
(7,960,359) |
(9,967,989) |
(1,619,916) | |||||
|
Cash flows from investing activities: |
||||||||
|
Purchase of property and equipment |
(6,720) |
(96,008) |
(15,602) | |||||
|
Net cash used in investing activities |
(6,720) |
(96,008) |
(15,602) | |||||
|
Cash flows from financing activities: |
||||||||
|
Proceeds from short-term bank loans |
7,560,000 |
- |
- | |||||
|
Repayments of short-term bank loans |
- |
(2,000,000) |
(325,024) | |||||
|
Repayment of short-term borrowings |
(40,000) |
- |
- | |||||
|
Repayment of short-term borrowings-related parties |
(5,236,377) |
- |
- | |||||
|
Net cash provided by (used in) financing activities |
2,283,623 |
(2,000,000) |
(325,024) | |||||
|
Effect of exchange rate fluctuation on cash and cash equivalents |
14,967 |
(478) |
(77) | |||||
|
Net decrease in cash and cash equivalents |
(5,668,489) |
(12,064,475) |
(1,960,619) | |||||
|
Cash and cash equivalents at beginning of year |
12,350,392 |
18,094,586 |
2,940,583 | |||||
|
Cash and cash equivalents at end of year |
RMB |
6,681,903 |
RMB |
6,030,111 |
$ |
979,964 | ||
|
Supplemental cash flow information |
||||||||
|
Cash paid during the period for interest |
RMB |
212,187 |
RMB |
230,035 |
$ |
37,383 | ||
|
Cash paid during the period for taxes |
RMB |
- |
RMB |
32,280 |
$ |
5,246 | ||
|
Non-cash investing and financing activities |
||||||||
|
Cancelation of prior issuance of 40,625 shares of common stock for professional services |
- |
1,002,721 |
162,954 | |||||
SOURCE Recon Technology, Ltd.
Web Site: http://www.recon.cn