Recon Technology Announces Strong Revenue and Profit Gains as China Oil Services Business Rapidly Expands

BEIJING, Feb. 11 /PRNewswire-Asia-FirstCall/ -- Recon Technology, Ltd. (Nasdaq: RCON), a leading Chinese non-state-owned oil and gas high-tech products and services provider, today reported financial results for its FY '10 second quarter ended December 31, 2009.

    Q2 FY '10 Highlights
    -- Revenue for Q2 FY '10 increased 27% to $7.3 million from $5.8 million
       in Q2 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 Q2 FY '10 from $2.5
       million in Q2 FY '09.
    -- Q2 FY '10 gross margin increased to 49% from 43% in Q2 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 Q2 FY '09.
    -- Net income was $1.8 million, an increase of 31% over $1.4 million in Q2
       FY '09.
    -- Earnings per diluted share were $0.45, compared to $0.62 per diluted
       share in Q2 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 Q2 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 $1.3million 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."

Conference Call

Recon CEO Mr. Shenping Yin and CFO Ms. Jia Liu will host a conference call at 10:00 AM Eastern Time tomorrow on Friday February 12 (11:00 PM Beijing/Hong Kong Time on February 12) to review the company's financial results and respond to questions and comments.

To participate, call U.S. Toll Free Number 1-877-941-4775 approximately 10 minutes before the call. International callers, please dial 1-480-629-9761. The conference ID number is 4221464. An MP3 file will be available after the call for 90 days via http://www.hawkassociates.com/profile/rcon.cfm .

About Recon Technology, Ltd.

Recon Technology, Ltd. has been providing leading Chinese oil and gas companies with automation services that increase efficiency and profitability in exploring, extracting, producing, processing, refining and transporting petroleum products for over 10 years. The company's proprietary computerized process control system manages oil production in real-time to increase extraction levels, reduce impurities in extracted petroleum and lower production costs. In addition, as one of only two acoustic system providers in the world, Recon's acoustic pipeline monitoring system is widely used to prevent gas leakage in the transport pipeline. Recon's technology is based on three software copyrights, eight product patents and four pending patents. Recon Technology is the first Chinese non-state-owned oil and gas service company to go public in the U.S. More information may be found at http://www.recon.cn or e-mail: [email protected].

Recon's online investor kit, including an investment profile, press releases, current price quotes, stock charts and more is available at http://www.hawkassociates.com/profile/rcon.cfm . To receive notification of future releases via e-mail, subscribe at http://www.hawkassociates.com/about/alert/ .

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks 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.

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.

    For more information, please contact:

     Investor Contact:
     Hawk Associates
     Susan Zhou
     Tel:   +1-305-451-1888
     Email: [email protected]

SOURCE Recon Technology, Ltd.