China Natural Gas Announces Fourth Quarter and Year End 2009 Financial Results
Thursday, Mar 11, 2010
China Natural Gas, Inc., a leading provider of compressed natural gas (CNG) for vehicular fuel and pipeline natural gas for industrial, commercial and residential use in Xi'an, China, today announced its financial results for the fourth quarter and full fiscal year ended December 31, 2009.
Fourth Quarter 2009 Results
Revenue in the fourth quarter of 2009 increased 18% to $21.67 million from $18.40 million in the fourth quarter of 2008, driven by additional fueling stations and higher residential and commercial pipeline customers. Sales of natural gas grew 6% year-over-year to $16.10 million, from $15.25 million in the fourth quarter of 2008. Gasoline revenue in the fourth quarter of 2009 increased 69% to $1.94 million, from $1.15 million in the prior year's period. Installation and services revenue grew 81% year-over-year to $3.63 million, from $2.0 million a year ago. In the fourth quarter of 2009, sales of natural gas, gasoline, and installation and other services contributed 74%, 9%, and 17% of total revenue, respectively.
Gross profit in the fourth quarter of 2009 expanded 11% to $10.53 million, from $9.49 million in the prior year's same period, driven by the increased sales volume of natural gas and increased revenue from installation business. Gross margin in the fourth quarter of 2009 was 49%, compared to 52% a year ago, mainly due to a 30% increase of coal bed methane procurement cost in Henan province.
Operating income in the fourth quarter of 2009 was $6.77 million, an increase of 17% year-over-year, from $5.77 million in the prior year's period. Meanwhile, operating expenses in the fourth quarter of 2009 increased by approximately $38,518 to $3.76 million, versus $3.72 million in the prior year's period.
During the quarter, the Company recognized $442,432 non-cash gain from an estimated change in the fair value of warrants, versus zero in the fourth quarter of 2008.
Income tax expense was $1.13 million for an effective tax rate of 16%, as compared to an effective tax rate of 21% in the fourth quarter of 2008. Net income in the fourth quarter of 2009 increased 64% to $6.12 million, or $0.27 per diluted share, from $3.73 million, or $0.26 per diluted share, in the fourth quarter of 2008.
Excluding the impact of the non-cash expenses (see "About Non-GAAP Financial Measures" toward the end of this release), adjusted net income was $5.68 million, versus $4.26 million in the fourth quarter of 2008. For the fourth quarter of 2009, adjusted earnings per diluted share was $0.26, versus $0.30 per diluted share in the fourth quarter of 2008.
Mr. Qinan Ji, Chairman and CEO of China Natural Gas, commented: "We are very pleased with our strong growth and profitability for the fourth quarter and full year 2009. During this quarter, we increased our number of pipeline customers to 108,423, and we expanded the number of our CNG gas stations to 36. We continued to see higher sales volumes from the increasing number of hybrid fleet and municipal vehicles in the city Xi'an, which utilize compressed natural gas as a cleaner, cheaper and more efficient fuel alternative. We believe our strong performance in 2009 demonstrates the long-term market potential for our CNG gas stations as well as our piped natural gas and installation services for residential, commercial and industrial customers."
Financial Highlights for the Fiscal Year 2009:
-- Revenue increased 20% to $81.07 million, primarily due to the newly added fueling stations in 2008 contributing full year revenue in 2009 and the addition of 1 new fueling station during 2009, as well as the increase in installation and gasoline revenue;
-- Gross profit up 23% to $40.16 million;
-- Income from operations increased 19% to $25.05 million from 21.06 in fiscal year 2008.
-- Non-GAAP net income of $20.21 million, or $1.20 per diluted share
Revenue for fiscal year 2009 increased 20% to $81.07 million from $67.72 million in fiscal year 2008, mainly due to the newly added fueling stations in 2008 contributing full year revenue in 2009 and the addition of 1 new fueling station during 2009, the increase in installation and gasoline revenue, and an increase in the number of residential and commercial pipeline customers to 108,423 as of December 31, 2009, from 96,033 as of December 31, 2008. Revenue from sales of natural gas increased 12% to $62.24 million from $55.75 million in the prior year. Installation and other revenue increased 69% to $12.45 million from $7.36 million in the fiscal year 2008. Gasoline revenue for the fiscal year was $6.38 million.
Gross profit for fiscal year 2009 increased 23% to $40.16 million from $32.74 million in 2008. Gross profit increase was mainly due to the increased sales volume of natural gas from fueling stations with low procurement price in coal bed methane from July 2008 to May 2009 in Henan; the increased sales volume of pipeline natural gas with stable unit price and cost; and the increased installation revenue from new pipeline customers. For fiscal year 2009, gross margin increased 120 basis points to 49.5% from 48.3% in 2008. The increase in gross margin was primarily due to lower coal bed methane procurement cost in Henan Province.
Operating expenses in the fiscal year 2009 increased 29% to $15.11 million from $11.68 million, reflecting costs associated with larger business operations, as well as continued expenses related to the acquisition of Lingbao Natural Gas, Co. in October 2008 as well as the newly added fueling stations since 2008. Operating income increased 19% to $25.05 million from $21.06 million. Operating margin decreased 20 basis points to 30.9% from 31.1% in the prior year, as a result of increased operating expenses.
Net income for fiscal year 2009 increased 24% to $18.83 million, or $1.13 per share, from $15.19 million, or $1.04 per share, in the fiscal year 2008. Excluding the impact of the non-cash expenses explained above, net income would have been $20.21 million, or $1.21 per diluted share, representing a year-over-year growth of 8%.
Balance Sheet
As of December 31, 2009, the Company had cash and cash equivalents of $48.18 million, compared with $55.93 million as of September 30, 2009, and $29.2 million as of June 30, 2009.
Mr. Ji concluded: "We remain very optimistic about the market growth and potential for natural gas usage in the developing Shaanxi and Henan provinces. We will continue to focus on growing our business strategically by steadily expanding our CNG customer base, especially focusing on sales to fleet vehicles and taxis. We are confident that our strong balance sheet, our current infrastructure, technical expertise and strategic CNG expansions will help sustain our steady growth and profitability.
"We also continue to remain optimistic about the long-term opportunities in the LNG market as China aims to increase natural gas usage. As recently announced, we expect the first phase our liquefied natural gas plant, the first LNG plant approved in Shaanxi, to be completed by June 30th. Upon the completion of our new LNG plant, we intend to aggressively grow our LNG business so as to capture a sizable share of China's emerging LNG market. We believe that once in full operations, our LNG business will enable us to further strengthen our market position, accelerate our growth and will bring greater value to our shareholders."
Conference Call
Management will hold a conference call on Thursday, March 11, 2010 at 8:00 a.m. EST (5:00 a.m. Pacific) to discuss these fourth quarter and year end results.
To participate in the call please dial
A replay of the call will be available for two weeks from 11:00 a.m. March 11, 2010, EST until 11:59 p.m. EDT on March 25, 2010. The number for the replay is
About China Natural Gas, Inc.
China Natural Gas transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China's Shaanxi and Henan Provinces. The Company owns approximately 120 km of high-pressure pipelines and operates 23 CNG fuelling stations in Shaanxi Province and 12 CNG fuelling stations in Henan Province. China Natural Gas' four primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; (2) the installation, distribution and sale of piped natural gas to residential, commercial and industrial customers through Company-owned pipelines; (3) the distribution and sale of gasoline through Company-owned CNG fuelling stations for hybrid (natural gas/gasoline) powered vehicles; and (4) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.
Source: PR Newswire
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