TEC Technology Announces Second-Quarter 2010 Results
JINGDE, Anhui, China, Aug. 17 /PRNewswire-Asia-FirstCall/ -- TEC Technology, Inc. (OTC Bulletin Board: HGHN) ("TEC" or the "Company"), a leading supplier of power and communications infrastructure, today announced its unaudited financial results for the second quarter ended June 30, 2010.
Second-Quarter 2010 Highlights
-- Revenue increased 99.5% to $9.4 million in the second quarter of 2010
as compared to $4.7 million in the second quarter of 2009
-- Gross profit increased 72.0% to $3.0 million in the second quarter of
2010 from $1.7 million in the second quarter of 2009
-- Operating income increased 37.3% to $2.1 million in the second quarter
of 2010 from $1.6 million in the second quarter of 2009
-- Net income was $1.8 million, or $0.08 per basic and diluted share, in
the second quarter of 2010, a 64.5% increase from $1.1 million, or
$0.06 per basic and diluted share, in the second quarter of 2009
"In the second quarter of 2010, we experienced a revenue increase, with sales nearly doubling versus the same period in the prior year, as well as solid net-income growth. We maintained our market position in both the communication and power transmission sectors," commented Mr. Chun Lu, TEC's Chairman and Chief Executive Officer. "We will diligently execute our strategies to expand sales in all of our targeted industries and markets and continue to offer excellent quality and service for our customers."
Financial Results for the Second Quarter of 2010
Revenues for the second quarter of 2010 were $9.4 million, representing a $4.7 million or 99.5% increase compared to the same period last year. The year-over-year increase in revenue resulted from an increase in sales volume to a larger number of customers, particularly in the Chinese power industry, and through higher sales to customers in the overseas communications market. The increased sales volume substantially offset lower per-unit pricing of power transmission towers. During the second quarter, 56% of revenue derived from the electrical power industry, and 44% from the communications industry.
Gross profit increased by 72.0% to $3.0 million from $1.7 million in the year-ago quarter, driven primarily by the increase in revenue. The gross margin was 31.6% in the second quarter of 2010 compared to 36.7% in the same period last year, due to higher raw-material costs, primarily steel, and to a reduction in our per-unit pricing in line with the overall trend in the China power market.
Selling, general and administrative expenses increased to $486,367 from $21,779 in the year-ago quarter. The increase in costs was attributable to the establishment and expansion of TEC's sales team in Shenzhen, China.
Income tax expense totaled $209,868, compared to $367,027 in the year-ago period.
Net income was $1.8 million, or $0.08 per basic and diluted share, a 64.5% increase from $1.1 million, or $0.06 per basic and diluted share, in the year-ago quarter.
First-Half 2010 Results
Revenue for the six months ended June 30, 2010 increased 128.0% to $14.6 million compared to $6.4 million for the six months ended June 30, 2009. Gross profit was $4.6 million, up 111.7% from $2.2 million in the six months ended June 30, 2009. The gross margin was 31.8%, compared to 34.3% in the same period of 2009. Operating income was $3.2 million, up 84.4% from $1.7 million for the same period of 2009. Net income for the six months ended June 30, 2010 was $2.3 million, or $0.10 per basic and diluted share, up 97.7% from $1.2 million, or $0.06 per basic and diluted share, in the comparable period in 2009.
Financial Condition
Cash and cash equivalents were $1.7 million as of June 30, 2010, an increase of $1.5 million from $164,927 as of December 31, 2009. Of the Company's $17.3 million in receivables, $9.8 million are due within three months and $7.5 million are due within three to six months, whose payment will contribute to cash flow from operations. The Company had $12.6 million of short-term borrowings as of June 30, 2010, roughly flat with $12.7 million as of December 31, 2010. Shareholders' equity was $7.9 million as of June 30, 2010, versus $5.5 million as of December 31, 2009, owing to strong profitability in the first half of 2010.
Cash flow from operations was $2.2 million in the six months ended June 30, 2010, versus an outflow of $3.2 million in the six months ended June 30, 2009, driven by reduction in other receivables, higher profitability and a better balance of operating assets and liabilities.
Business Outlook
The Company expects major electrical utilities and telecommunication service providers, in both China and international emerging markets, to continue to embrace TEC's high-quality towers and drive growth for the foreseeable future. "Looking at our current sales pipeline and the good customer response to our products, we are confident that we will achieve good results on the top and bottom lines in 2010," said Mr. Lu.
About TEC
TEC Technology, Inc., founded in 2006, is a leader in the design, production and sale of transmission towers and related products used in high-voltage electric power transmission and wireless communications in fast-growing Chinese and international markets. The Company's headquarters are located in Anhui Province in southeastern China, and its international sales network is located in the Shenzhen Special Economic Zone. TEC's electric transmission towers currently support 35kV, 110kV, 220kV, and 500kV transmission lines. TEC's wireless communication towers include single-tube towers, 4-strut towers and rooftop towers for 2G, 3G, and microwave networks. For more information, please visit: http://www.tectower.com
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements contained in this press release, which are not historical facts, are forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based largely on current expectations and are subject to a number of known and unknown risks, uncertainties and other factors beyond our control that could cause actual events and results to differ materially from these statements. These statements are not guarantees of future performance, and readers are cautioned not to place undue reliance on these forward-looking statements, which are relevant as of the date of the given press release and should not be relied upon as of any subsequent date. The Company undertakes no obligation to update publicly any forward-looking statements.
For more information, please contact:
Company Contact:
Mr. Kai Sun
Vice President of Investor Relations
Email: [email protected]
Tel: +1-408-429-9345
Investor Relations Contact:
Mr. John Harmon
Sr. Account Manager, CCG Investor Relations
Email: [email protected]
Tel: +1-646-833-3424
- Financial Tables Follow -
TEC Technology, Inc.
Consolidated Balance Sheets
June 30, December 31,
2010 2009
Assets
Current Assets
Cash and equivalents $1,708,052 $164,927
Accounts receivable, net of allowance for
doubtful accounts 17,359,204 8,791,842
Inventory 9,783,133 7,066,787
Deposits and prepaid expenses 2,080,886 2,716,237
Other receivables 1,683,344 3,802,358
Taxes recoverable -- 4,889
Total current assets 32,614,619 22,547,040
Property, plant and equipment, net of
accumulated depreciation 3,714,259 3,353,841
Land use rights, net of accumulated
amortization 2,039,015 2,051,837
Long-term accounts receivable, net of
allowance for doubtful accounts 136,068 --
Total Assets 38,503,961 27,952,718
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable 12,422,388 5,012,224
Other payables and accrued expenses 5,137,663 3,251,687
Taxes payable 387,549 1,306,915
Customer deposits 62,156 113,867
Short-term borrowings 12,557,325 12,733,709
Total current liabilities 30,567,081 22,418,402
Commitments and contingencies -- --
Total liabilities 30,567,081 22,418,402
Shareholders' equity
Common stock 30,182 19,195
Additional paid-in capital 962,126 951,605
Retained earnings 6,576,576 4,235,616
Accumulated other comprehensive loss 367,996 327,900
Total shareholders' equity 7,936,880 5,534,316
Total Liabilities and Shareholders' Equity 38,503,961 27,952,718
TEC Technology, Inc.
Consolidated Statements of Income and Other Comprehensive Income
Three Months Ended Six Months Ended
June 30, June 30,
2010 2009 2010 2009
Net sales $9,427,220 $4,725,600 $14,606,979 $6,407,520
Total cost of sales 6,443,918 2,990,817 9,957,895 4,211,649
Gross Profit 2,983,302 1,734,783 4,649,084 2,195,871
Selling and marketing
expenses (486,367) (21,779) (789,867) (95,229)
General and administrative
expenses (363,402) (158,828) (644,948) (356,708)
Total operating expenses (849,769) (180,607) (1,434,815) (451,937)
Income (loss) from
operations 2,133,533 1,554,176 3,214,269 1,743,934
Government grant 179,417 63,010 179,417 63,010
Other income 13,694 29,414 13,695 29,338
Interest expense (292,217) (170,159) (679,560) (255,452)
Net other income (expenses) (99,106) (77,735) (486,448) (163,104)
Net income before provision
for income taxes 2,034,427 1,476,441 2,727,821 1,580,830
Provision for income taxes (209,868) (367,027) (386,861) (396,811)
Net income (loss) 1,824,559 1,109,414 2,340,960 1,184,019
Foreign currency translation
gain 20,048 (12,813) 40,096 (16,747)
Comprehensive income 1,844,607 1,096,601 2,381,056 1,167,272
Basic EPS $0.08 $0.06 $0.10 $0.06
Diluted EPS $0.08 $0.06 $0.10 $0.06
Basic shares outstanding 22,856,798 19,194,421 22,856,798 19,194,421
Diluted weighted shares
outstanding 22,856,798 19,194,421 22,856,798 19,194,421
TEC Technology, Inc.
Consolidated Statements of Cash Flows
Six Months Ended June 30,
2010 2009
Cash Flows from Operating Activities
Net Income $2,340,960 $1,184,019
Adjustments to Net Income
Depreciation 129,824 73,445
Amortization of intangible assets 21,127 21,110
Changes in Operating Assets and Liabilities
Decrease (increase) in inventory (2,716,346) (1,217,770)
Decrease in deposits and prepaid expenses 635,351 (1,817,596)
Decrease (increase) in accounts receivable (8,703,430) (3,414,988)
Increase in other receivables 2,119,014 (1,304,119)
Decrease in taxes recoverable 4,889 92,151
Increase in taxes payable (919,366) 105,034
Increase in accounts payable 7,410,164 1,346,905
Decrease in customer deposits (51,711) (28,811)
Increase in other payables and accrued
expenses 1,885,976 1,841,442
Net cash provided by operating activities 2,156,452 (3,119,178)
Cash Flows from Investing Activities
Purchases of property and equipment (455,446) (334,335)
Purchases of land rights -- (1,643,546)
Net cash (used in) provided by investing
activities (455,446) (1,977,881)
Cash Flows from Financing Activities
Common stock issued 10,987 --
Additional paid-in capital issued 10,521 290,276
Proceeds from short-term borrowings -- 4,860,390
Repayment of short-term borrowings (176,384) --
Net cash used in financing activities (154,876) 5,150,666
Effect of exchange rate changes on cash and
cash
equivalents (3,005) 3,125
Net increase in cash and cash equivalents 1,543,125 56,732
Cash and cash equivalents at beginning of
period 164,927 704,854
Cash and cash equivalents at end of period $1,708,052 $761,586
SOURCE TEC Technology, Inc.
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