TMCnet News
Recon Technology, Ltd. Reports Fiscal Year 2016 Third Quarter Financial ResultsBEIJING, May 16, 2016 /PRNewswire/ -- Recon Technology, Ltd. (NASDAQ: RCON) ("Recon" or the "Company") a leading independent oilfield services provider operating primarily in China, today reported its financial results for the third quarter of fiscal year 2016, which ended March 31, 2016. Q3 FY2016 Financial Highlights:
Mr. Shenping Yin, Chairman and CEO of Recon stated, "Affected by unfavorable oil prices and tough market competition, our business has remained sluggish. We cannot determine when this market situation will recover, but our management team is working to expand into new markets based on our long-term business relationships and good reputation in the industry. " Q3 FY2016 Financial Results Revenues For the three months ended March 31, 2016, total revenues decreased by 77.3% to RMB 4.5 million ($0.7 million) from RMB 20.0 million for the same period last fiscal year mainly as a result of weak demand from our clients, affected by global unfavorable oil prices. Revenues from non-related party hardware and software sales decreased by RMB 13.8 million, or 75.3%, to RMB 4.5 million ($0.7 million) for the three months ended March 31, 2016, compared to RMB 18.3 million for the same period last fiscal year. The Company booked no revenues from related-party hardware and software sales for the three months ended March 31, 2016, as compared to RMB 1.6 million for the same period last fiscal year. Gross profit and gross margin Cost of revenues decreased by RMB 10.9 million, or 79.4%, to RMB 2.8 million ($0.4 million) for the three months ended March 31, 2016 from RMB 13.8 million for the same period last fiscal year. Gross profit decreased by RMB 4.5 million, or 72.8%, to RMB 1.7 million ($0.3 million) for the three months ended March 31, 2016 from RMB 6.2 million for the same period of last fiscal year. Overall gross margin as a percentage of revenue was 37.5% for the three months ended March 31, 2016, compared to 31.2% for the same period of last fiscal year. Operating income (loss) and operating (loss) margin Selling and distribution expenses decreased by RMB 0.3 million, or 26.2%, to RMB 0.8 million ($0.1 million) for the three months ended March 31, 2016 from RMB 1.1 million for the same period last fiscal year. General and administrative expenses increased by RMB 3.7 million, or 88.5%, to RMB 7.9 million ($1.2 million) for the three months ended March 31, 2016 from RMB 4.2 million for the same period last fiscal year. Research and development expenses increased by RMB 0.7 million, or 125.7%, to RMB 1.2 million ($0.2 million) for the three months ended March 31, 2016 from RMB 0.5 million for the same period last fiscal year as a result of increased research and development effort on automation platform system. Total operating expenses increased by RMB 4.1 million, or 70.2%, to RMB 9.9 million ($1.5 million) for the three months ended March 31, 2016 from RMB 5.8 million for the same period last fiscal year. Operating loss was RMB 8.2 million ($1.3 million) for the three months ended March 31, 2016, compared to operating income of RMB 0.4 million for the same period last fiscal year. Operating loss margin was 181.6% for the three months ended March, 2016, compared to operating profit margin of 2.0% for the same period last fiscal year. Net loss Net loss to our shareholders for the three months ended March 31, 2016 was RMB 9.6 million ($1.5 million), or RMB 1.66 ($0.26) per diluted share, compared to net loss of RMB 1.5 million, or RMB0.32 per diluted share, for the same period last fiscal year. Non-GAAP Measures Adjusted EBITDA (non-GAAP), which we define as net income (loss) adjusted for income tax expense (benefit), interest expense, change in fair value of warrants liability, restricted shares issued for consulting services, non-cash stock compensation expense, depreciation and amortization, was negative RMB 4.9 million ($0.7 million) for the three months ended March 31, 2016, compared to RMB 1.7 million for the same period last fiscal year. Adjusted net loss attributable to our shareholders was RMB 6.7 million ($1.0 million), or RMB 1.16 ($0.18) per diluted share, for the three months ended March 31, 2016, compared to RMB 0.6 million, or RMB 0.12 per diluted share, for the same period last fiscal year. Year-to-Date (Nine Months) FY2016 Financial Results Revenues Total revenues for the nine months ended March 31, 2016 decreased by RMB 8.7 million, or 19.0%, to RMB 37.0 million ($5.7 million) from RMB 45.7 million for the same period last fiscal year. This decrease was mainly due to decreased sales of furnaces and consignment stock products for oilfield projects. Revenues from hardware and software to non-related parties decreased by RMB 7.2 million, or 16.8%, to RMB 35.8 million ($5.6 million) for the nine months ended March 31, 2016 from RMB 43.1 million for the same period last fiscal year, mainly due to the decrease in sales of furnaces and automation products, affected by low demand from clients. Revenues from service increased to RMB 1.1 million ($0.2 million) for the nine months ended March 31, 2016 from RMB 0.1 million for the same period last fiscal year. The Company didn't book any revenues from sales of hardware and software to related parties for the nine months ended March 31, 2016, versus RMB 2.4 million for the same period last fiscal year. Gross profit and gross margin Cost of revenues decreased by RMB 0.7 million, or 2.3%, to RMB 29.1 million ($4.5 million) for the nine months ended March 31, 2016 from RMB 29.8 million for the same period last fiscal year. Gross profit decreased by RMB 8.0 million, or 50.4%, to RMB 7.9 million ($1.2 million) for the nine months ended March 31, 2016 from RMB 15.8 million for the same period last fiscal year. Overall gross margin was 21.3% for the nine months ended March 31, 2016, compared to 34.7% for the same period last fiscal year. The decrease in overall gross margin was mainly due to the decrease in software sales with high margins and fierce competition of our equipment sales. Operating income (loss) and operating (loss) margin Selling and distribution expenses increased by RMB 0.4 million, or 12.3%, to RMB 3.4 million ($0.5 million) for the nine months ended March 31, 2016 from RMB 3.0 million for the same period last fiscal year. General and administrative expenses increased by RMB 6.9 million, or 57.4%, to RMB 18.9 million ($2.9 million) for the nine months ended March 31, 2016 from RMB 12.0 million for the same period last fiscal year. Research and development expenses increased by RMB 3.3 million, or 135.6%, to RMB 5.8 million ($0.9 million) for the nine months ended March 31, 2016 from RMB 2.4 million for the same period last fiscal year as a result of increased research and development effort on downhole service tools and automation platform system. Total operating expenses increased by RMB 10.6 million, or 60.4%, to RMB 28.1 million ($4.3 million) for the nine months ended March 31, 2016 from RMB 17.5 million for the same period last fiscal year. Operating loss was RMB 20.2 million ($3.1 million) for the nine months ended March 31, 2016, compared to RMB 1.7 million for the same period last fiscal year. Operating loss margin was 54.6% for the nine months ended March 2016, compared to 3.6% for the same period last fiscal year. Net loss Net loss to our shareholders for the nine months ended March 31, 2016 was RMB 21.0 million ($3.2 million), or RMB3.75 ($0.58) per diluted share, compared to net loss of RMB 0.4 million, or RMB 0.08 per diluted share, for the same period last fiscal year. Non-GAAP Measures Adjusted EBITDA (non-GAAP), which we define as net income (loss) adjusted for income tax expense (benefit), interest expense, change in fair value of warrants liability, restricted shares issued for consulting services, non-cash stock compensation expense, depreciation and amortization, was negative RMB 13.0 million ($2.0 million) for the nine months ended March 31, 2016, compared to RMB 2.9 million for the same period last fiscal year. Adjusted net loss attributable to our shareholders was RMB15.0 million ($2.3 million), or RMB 2.68 ($0.41) per diluted share, for the nine months ended March 31, 2016, compared to net income of RMB 0.7million, or RMB 0.15 per diluted share, for the same period last fiscal year. Financial Position As of March 31, 2016, the Company had cash of RMB 2.6 million ($0.4 million), short-term bank loans of RMB 7.0 million ($1.1 million), and short-term borrowings from related parties of RMB 8.6 million ($1.3 million), compared to RMB12.3 million, RMB 7.0 million, and RMB 16.9 million, respectively, at June 30, 2015. Working capital as of March 31, 2016 was RMB 64.3 million ($10.0 million) as compared to RMB 72.4 million at June 30, 2015. Net cash used in operating activities was RMB 1.3 million ($0.2 million) for the nine-month ended March 31, 2016, compared to net cash used in operating activities of RMB 16.2 million for the same period last fiscal year. Net cash used in investing activities was RMB 0.4 million ($0.06 million) for the nine months ended March 31, 2016, compared to RMB 0.16 million for the same period last fiscal year. Net cash used in financing activities was RMB 8.0 million ($1.2 million) for the nine months ended March 31, 2016, compared to net cash provided by financing activities of RMB 3.0 million for the same period of last fiscal year. During the nine-month period ended March 31, 2016, we repaid RMB 16.7 million ($2.6 million) of short-term borrowings to two related parties, repaid RMB 0.50 million ($0.08 million) short-term bank loans, and received RMB 8.5 million ($1.3 million) from one related party. We also issued 15,874 shares of common stocks through an at-the-market offering and received net proceeds of RMB 0.17 million ($0.03 million) during the nine-month period ended March 31, 2016. Recent Development On May 2, 2016, the Company filed an 8K/A for QHHY's audited FS for fiscal year 2014 and fiscal year 2015, with a review report for the quarter ended December 31, 2015. On February 12, 2016, the Company filed a current report on Form 8-K/A for QHHY's audited financial statements for fiscal year 2014 and fiscal year 2015, with a review report for the quarter ended September 30, 2015. On February 2, 2016, Beijing BHD Petroleum Technology Co., Ltd. ("BHD"), a wholly-owned subsidiary of the Company, received two orders for a total of RMB 2.1 million (~US$0.3 million) from PetroChina's oilfield companies. The first order, dated January 12, 2016, is to supply two heat exchanger units, a major component of furnaces, to PetroChina's Jilin Oilfield for RMB 650 thousand (~US$0.1 million), with a scheduled delivery date of no later than March 15, 2016. The second order, dated January 21, 2016, is to supply two furnaces to PetroChina's Huabei Oilfield for RMB 1.47 million (~US$0.2 million), with a scheduled delivery date of February 29, 2016. On January 20, 2016, Nanjing Recon Technology Co., Ltd. ("Nanjing Recon"), a subsidiary of the Company, obtained qualifications to provide services for some state-owned electric companies and, as a result, has participated in bidding projects, including projects for China Huadian Corp. On January 12, 2016, BHD executed an agreement (the "Agreement") with Qinghai Oilfield, a PetroChina subsidiary, to sell chemical agents (the "Chemicals") to Qinghai Oilfield. The Chemicals, including Ion Modifiers and Water Quality Stabilizers, are designed and tested by BHD and are to be used for wastewater treatment at the Qinghai Oilfield. This Agreement, which is valued at RMB 3.98 million (~$0.6 million), is expected to be completed by the end of fiscal year 2016. On December 14, 2015, BHD won a major bidding contract with PetroChina and was deemed a Class A Furnace Supplier to all PetroChina's oilfield companies. With this bidding and qualification, BHD will participate in PetroChina's furnace procurement program, which was worth over RMB 2.9 billion (approximately $457 million) during the period Oct. 2015 to Sep. 2017. The Company also announced that BHD has secured a RMB 3.22 million (~$0.5 million) contract to supply five furnaces to PetroChina's Huabei Oilfield under this bidding process. On December 1, 2015, the Company entered into a share purchase agreement to acquire 100% of the equity interest in Qinghai Huayou Downhole Technologies Co., Ltd. ( "QHHY"), a PRC corporation and oilfield service provider in Qinghai province. About Recon Technology, Ltd. Recon Technology, Ltd. is China's first independent oil and gas field service company listed on NASDAQ (RCON). Working closely with leading global partners, Recon has been focusing on 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. Contact: Recon Technology, Ltd.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/recon-technology-ltd-reports-fiscal-year-2016-third-quarter-financial-results-300269613.html SOURCE Recon Technology, Ltd. |