China TransInfo Technology Corp., (Nasdaq: CTFO) (“China TransInfo” or the “Company”), a leading provider of public transportation information systems technology and comprehensive solutions in the People’s Republic of China (the “PRC”), has announced its financial results for the third quarter ended September 30, 2008.
“I am pleased to report that China TransInfo has reached several significant milestones during the third quarter of 2008,” stated Mr. Shudong Xia, chief executive officer of China TransInfo. “Both revenue and diluted earnings per share have reached new highs during the most recent quarter. The successful acquisitions of Dajian Zhitong and Shanghai Yootu provided important support to our taxi media business and real time transportation business. Also, our upgrade to the Nasdaq Capital Market has provided an improved platform for us to further improve our corporate governance and transparency as well as increase our liquidity and visibility in the investment community.”
During the three months ended September 30, 2008, total revenue was $8.9 million, a 137.2%, or $5.2 million increase from $3.8 million during the same period in 2007. The significant revenue growth was primarily due to the increased brand recognition of China TransInfo and the quickly growing domestic GIS market, especially in the transportation sector. In the third quarter of 2008, revenues from our transportation, digital city, and land & resource segments accounted for 69.4%, 27.0%, and 3.6% of our total revenue, respectively. Meanwhile, our bid-to-win rate remained stable at about 90% during the quarter, similar to the same period in 2007.
Gross profit was $4.9 million during the third quarter of 2008, an increase of 140.9% from $2.0 million in the same quarter 2007. Gross margin increased slightly to 55.4% as compared to 54.5% in the same period of 2007. The increase in gross margin was due mainly to the increase in sales of higher margin software products compared with the third quarter of 2007.
Selling, general and administrative expenses in the third quarter of 2008 were $1.6 million, an increase of 348.6% from $0.4 million in the third quarter of 2007. Among them, selling expenses were approximately $0.1 million in the third quarter of 2008. Because over 70% of the Company’s products were sold through contracts commissioned by the Chinese government, marketing expenses were relatively low in comparison with competitors who do not have well-established government relationships. General and administrative expenses were approximately $1.5 million in the quarter as compared to $0.3 million in the same period of 2007. The significant increase in general and administrative expenses was mainly due to growing staff scale as well as higher administrative expenses associated with being a public company.
Operating income increased 96.9% to $3.3 million, or 37.3% of revenue, from $1.7 million, or 45.0% of revenue, in the third quarter of 2007.
During the quarter, the Company recorded other expense of $0.1 million, compared with other income of $0.4 million a year ago. Other income in the year ago period, was primarily due to a decrease in the fair value of the liability related to the Company’s warrants of $0.4 million.
Net income was $3.1 million in the three months ended September 30, 2008, or $0.14 per fully diluted share, compared with net income of $2.1 million, or $0.10 per fully diluted share, during the same period of 2007. The diluted weighted average number of shares outstanding increased from 19.9 million in the third quarter of 2007 to 21.5 million in the quarter ended September 30, 2008 as additional shares of the Company’s common stock were issued in connection with the private placement transaction in July 2008.
Net revenue was $18.7 million in the nine months ended September 30, 2008, up 133.7% from $8.0 million in the nine months ended September 30, 2007. Gross profit was $10.4 million with a gross margin of 55.8%, up 166.2% from $3.9 million and a gross margin of 49.0% in the nine months ended September 30, 2007. Operating income was $7.3 million with an operating margin of 39.3%, up 135.2% from $3.1 million and an operating margin of 39.0% in the nine months ended September 30, 2007. Net income was $7.0 million, or $0.34 per fully diluted share, up 93.4% from $3.6 million, or $0.25 per fully diluted share, in the nine months ended September 30, 2007.
“While most of the major global economies have suffered from significant downturns recently, however, according to the latest government estimates, China will maintain a positive rate of growth. Along with its continuing economic expansion, especially the recently announced $586 billion (RMB 4 trillion) economic stimulus plan, China will emphasize the development of its infrastructure on a nationwide basis. The country’s rapid urbanization has been accompanied by dramatic increases in private car ownership, necessitating the development of more advanced GIS-based transportation solutions. Our advanced GIS technologies, strong links to government agencies, and our recent $15 million financing will allow China TransInfo to more effectively take advantage of all potential opportunities in this area,” stated Shudong Xia, the Company’s CEO. “We are particularly excited about the progress of our taxi media platform in Urumqi and Huhhot. In addition, our recent acquisitions of Dajian Zhitong and Shanghai Yootu will furnish us with new tools to further enhance our taxi media and real time transportation business.”