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15.08.2013 00:31:00
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China Natural Gas Announces Second Quarter 2013 Financial Results
XI'AN, China, Aug. 14, 2013 /PRNewswire / -- China Natural Gas, Inc. ("China Natural Gas" or the "Company") (PINK: CHNG), 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 second quarter ended June 30, 2013.
Second Quarter 2013 Results
Revenue in the second quarter of 2013 decreased by 9.6% to $34.2 million from $37.9 million in the second quarter of 2012, driven by the closure of three fueling stations in the second quarter of 2012, three fueling stations in the third quarter of 2012, one fueling station in October 2012, and one fueling station in April 2013 because of changes in market conditions. Sales revenue of natural gas decreased by 9.1% year-over-year to $31.8 million from $34.9 million in the second quarter of 2012. Gasoline revenue in the second quarter of 2013 decreased by 28.2% to $0.5 million, from $0.7 million in the same period of the prior year, mainly because the closure of one gasoline fueling stations during the fourth quarter of 2012. Installation and automobile conversion services revenue decreased by 12.9% year-over-year to $2.0 million, from $2.3 million a year ago. In the second quarter of 2013, sales of natural gas, gasoline, and installation and automobile conversion services contributed 92.7%, 1.5%, and 5.8% of total revenue, respectively.
Gross profit in the second quarter of 2013 decreased 18.7% to $11.2 million from $13.8 million in the same period of the prior year. Gross margin in the second quarter of 2013 was 32.8%, compared to 36.5% a year ago. Gross margin decreased primarily due to the decrease in gross margin for our LNG business.
Operating income in the second quarter of 2013 was $4.0 million, a decrease of 38.6% year-over-year from $6.6 million, primarily attributable to the decrease in gross profit of natural gas from fueling stations and LNG.
Income tax expense was $0.7 million at an effective tax rate of 18.2%, as compared to $1.3 million at an effective tax rate of 19.8% in the second quarter of 2012. The decrease of effective income tax rate was primarily attributable to the reduced income tax rate of 15% enjoyed by JBLNG beginning on January 1, 2013.
Net income in the second quarter of 2013 decreased by 37.4% to $3.2 million or $0.15 per diluted share from $5.1 million or $0.24 per diluted share in the second quarter of 2012.
As of June 30, 2013, the Company had $7.4 million of cash and cash equivalents on hand, compared to $10.9 million of cash and cash equivalents as of December 31, 2012. The decrease was primarily attributable to the construction of pipelines in Shaanxi Province and LNG fueling stations in Hubei Province, and the repayment of the loans from Shanghai Pudong Development Bank.
Net cash provided by operating activities was $10.0 million for the six months ended June 30, 2013, as compared to net cash provided by operations of $18.8 million for the six months ended June 30, 2012. The decrease was primarily due to the increase in advances to suppliers, accounts receivable and other receivable, and adjustments for non-cash expense items.
Conference Call
Management will hold a conference call on Friday, August 16, 2013 at 9:00 a.m. EDT (6:30 a.m. Pacific) to discuss its second quarter results.
To participate in the call please dial 1-800-860-2442, or 1 412-858-4600 for international calls, approximately 10 minutes prior to the scheduled start time.
A replay of the call will be available 1 hour after the end of the conference through End Date on Aug 26, 2013 at 9:00 am EDT. The number for the replay is 1-877-344-7529 or 1-412-317-0088 for international calls；the pass code for the replay is 10032849.
About China Natural Gas, Inc.
China Natural Gas (http://www.naturalgaschina.com) transports and sells natural gas to vehicular fueling terminals, as well as commercial, industrial and residential customers through its distribution networks in China'sShaanxi, Henan and Hubei Provinces. As of June 30, 2013, the Company owns approximately 120 km of high-pressure pipelines and operates 19 CNG fueling stations in Shaanxi Province, 10 CNG fuelling stations in Henan Province and 1 CNG fueling station in Hubei Province. China Natural Gas' five primary business lines include: (1) the distribution and sale of CNG through Company-owned CNG fueling 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) production and sales of LNG through our LNG production facility in Jingbian County, Shaanxi Province，and sales of LNG through our mobile fueling truck; (4) the distribution and sale of gasoline through Company-owned CNG fueling stations for hybrid (natural gas/gasoline) powered vehicles; and (5) the conversion of gasoline-fueled vehicles to hybrid (natural gas/gasoline) powered vehicles through its auto conversion division.
SAFE HARBOR: FORWARD-LOOKING STATEMENTS
This press release includes statements that may constitute forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. China Natural Gas, Inc. may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission on forms 10-K, 10-Q and 8-K, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees tofourth parties. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, but are not limited to, risks outlined in the Company's filings with the U.S. Securities and Exchange Commission, including its registration statements on Forms S-1 and S-3, in each case as amended. The Company does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
This release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or selling security holder and that will contain detailed information about the company and management, as well as financial statements.
CHINA NATURAL GAS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE30, 2013 AND DECEMBER 31, 2012 (Stated in US Dollars) | ||||||||||
June 30, | (Audited) | |||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | $ | 7,385,901 | $ | 10,857,456 | ||||||
Accounts receivable, net | 2,580,664 | 2,148,379 | ||||||||
Other receivables, net | 1,005,614 | 458,605 | ||||||||
Employee advances | 353,408 | 399,031 | ||||||||
Inventories | 2,916,691 | 2,473,933 | ||||||||
Advances to suppliers | 9,259,807 | 4,869,606 | ||||||||
Prepaid expense and other current assets | 3,009,853 | 3,541,431 | ||||||||
Total current assets | 26,511,938 | 24,748,441 | ||||||||
Investment in unconsolidated joint ventures | - | 1,587,000 | ||||||||
Property and equipment, net | 181,454,681 | 179,515,563 | ||||||||
Construction in progress | 61,900,042 | 53,393,933 | ||||||||
Goodwill | 857,269 | 839,806 | ||||||||
Other intangible assets | 21,233,562 | 21,400,924 | ||||||||
Prepaid expenses and other assets | 7,538,785 | 7,015,142 | ||||||||
TOTAL ASSETS | $ | 299,496,277 | $ | 288,500,809 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Senior notes- current maturities | $ | 39,149,998 | $ | 38,352,498 | ||||||
Current portion of bank loan payable | 4,860,000 | 4,761,000 | ||||||||
Redeemable liabilities - warrants | 17,500,000 | 17,500,000 | ||||||||
Accounts payable and accrued liabilities | 6,554,897 | 6,756,278 | ||||||||
Other payable - related party | 840,041 | 1,616,429 | ||||||||
Short-term borrowing - related party | 2,679,945 | 2,679,945 | ||||||||
Unearned revenue | 3,283,380 | 3,663,570 | ||||||||
Accrued interest | 2,854,030 | 1,936,584 | ||||||||
Taxes payable | 1,507,698 | 2,232,546 | ||||||||
Total current liabilities | 79,229,989 | 79,498,850 | ||||||||
LONG-TERM LIABILITIES: | ||||||||||
Bank loan payable, net of current portion | 3,240,000 | 4,761,000 | ||||||||
Total liabilities | $ | 82,469,989 | $ | 84,259,850 | ||||||
STOCKHOLDERS' EQUITY: | ||||||||||
Preferred stock, par value $0.0001 per share, 5,000,000 authorized, none issued and outstanding | $ | - | $ | - | ||||||
Common stock, par value $0.0001 per share, 45,000,000 authorized, 21,458,654 issued and outstanding at June30, 2013 and December 31, 2012, respectively | 2,145 | 2,145 | ||||||||
Additional paid-in capital | 83,649,675 | 83,501,637 | ||||||||
Accumulated other comprehensive income | 26,073,493 | 21,276,931 | ||||||||
Statutory reserves | 12,737,218 | 11,818,087 | ||||||||
Retained earnings | 94,272,625 | 87,410,615 | ||||||||
Noncontrolling interests | 291,132 | 231,544 | ||||||||
Total stockholders' equity | 217,026,288 | 204,240,959 | ||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 299,496,277 | $ | 288,500,809 | ||||||
CHINA NATURAL GAS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE30, 2013 AND 2012 (Stated in US Dollars) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues | |||||||||||||||
Natural gas | $ | 31,765,252 | $ | 34,927,804 | $ | 63,945,320 | $ | 64,327,491 | |||||||
Gasoline | 503,680 | 701,168 | 978,679 | 1,527,063 | |||||||||||
Installation and others | 1,979,026 | 2,272,723 | 4,823,289 | 4,324,459 | |||||||||||
34,247,958 | 37,901,695 | 69,747,288 | 70,179,013 | ||||||||||||
Cost of revenues | |||||||||||||||
Natural gas | 21,696,966 | 22,462,516 | 42,650,396 | 41,737,375 | |||||||||||
Gasoline | 453,364 | 655,614 | 874,025 | 1,443,758 | |||||||||||
Installation and others | 849,457 | 955,283 | 2,046,105 | 1,807,528 | |||||||||||
22,999,787 | 24,073,413 | 45,570,526 | 44,988,661 | ||||||||||||
Gross profit | 11,248,171 | 13,828,282 | 24,176,762 | 25,190,352 | |||||||||||
Operating expenses | |||||||||||||||
Selling | 6,034,037 | 5,619,864 | 11,587,891 | 10,570,664 | |||||||||||
General and administrative | 1,177,469 | 1,636,029 | 2,709,459 | 4,347,675 | |||||||||||
7,211,506 | 7,255,893 | 14,297,350 | 14,918,339 | ||||||||||||
Income from operations | 4,036,665 | 6,572,389 | 9,879,412 | 10,272,013 | |||||||||||
Other income (expense): | |||||||||||||||
Interest income | 10,973 | 9,853 | 20,696 | 20,599 | |||||||||||
Interest expense | (171,992) | (275,643) | (361,371) | (707,680) | |||||||||||
Loss on disposal of fixed assets | (358) | - | (57,403) | - | |||||||||||
Loss on sales of long term investment | (500) | - | (80,150) | - | |||||||||||
Other income (expense), net | 9,543 | 18,763 | 35,742 | (14,330) | |||||||||||
Change in fair value of warrants | - | (1,146) | - | (1,229) | |||||||||||
Foreign currency exchange loss | (4,456) | 1,494 | (5,269) | (504,446) | |||||||||||
(156,790) | (246,679) | (447,755) | (1,207,086) | ||||||||||||
Income before income tax | 3,879,875 | 6,325,710 | 9,431,657 | 9,064,927 | |||||||||||
Provision for income tax | 705,467 | 1,251,128 | 1,590,928 | 2,042,599 | |||||||||||
Net income | 3,174,408 | 5,074,582 | 7,840,729 | 7,022,328 | |||||||||||
Less: Income (loss) attributable to noncontrolling interests | 32,735 | 28,876 | 59,588 | (199,183) | |||||||||||
Net income attributable to China Natural Gas, Inc. | 3,141,673 | 5,045,706 | 7,781,141 | 7,221,511 | |||||||||||
Other comprehensive income | |||||||||||||||
Foreign currency translation gain | 3,494,137 | (17,584) | 4,796,562 | 1,741,216 | |||||||||||
Comprehensive income | $ | 6,635,810 | $ | 5,028,122 | $ | 12,577,703 | $ | 8,962,727 | |||||||
Weighted average shares outstanding | |||||||||||||||
Basic | 21,458,654 | 21,458,654 | 21,458,654 | 21,458,654 | |||||||||||
Diluted | 21,458,654 | 21,458,654 | 21,458,654 | 21,458,654 | |||||||||||
Earnings per share | |||||||||||||||
Basic | $ | 0.15 | $ | 0.24 | $ | 0.36 | $ | 0.34 | |||||||
Diluted | $ | 0.15 | $ | 0.24 | $ | 0.36 | $ | 0.34 | |||||||
CHINA NATURAL GAS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIXMONTHS ENDED JUNE30, 2013 AND 2012 (Stated in US Dollars) | ||||||||
2013 | 2012 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | 7,840,729 | 7,022,328 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 6,938,760 | 6,945,862 | ||||||
Provision for (recovery of)doubtful accounts | 110,063 | 202,100 | ||||||
Loss (Gain) on disposal of equipment | 57,403 | - | ||||||
Loss (Gain) on sales of long term investment | 80,150 | - | ||||||
Stock-based compensation | 148,038 | 296,076 | ||||||
Change in fair value of warrants | - | 1,229 | ||||||
Change in assets and liabilities: | ||||||||
Accounts receivable | (493,607) | 1,035,676 | ||||||
Other receivables | (963,970) | (146,652) | ||||||
Employee advances | 53,069 | (137,270) | ||||||
Inventories | (387,209) | (591,244) | ||||||
Advances to suppliers | (4,243,935) | (336,767) | ||||||
Prepaid expense and other current assets | 655,917 | 3,527,412 | ||||||
Accounts payable and accrued liabilities | 494,285 | 1,830,593 | ||||||
Unearned revenue | (451,580) | (311,342) | ||||||
Accrued interest | 917,446 | (25,477) | ||||||
Taxes payable | (763,178) | (462,934) | ||||||
Net cash provided by operating activities | 9,992,381 | 18,849,590 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payment for acquisition of property and equipment | (1,411,550) | (3,592,657) | ||||||
Proceeds from sales of property and equipment | 7,178 | - | ||||||
Proceeds from sales of long term investment | 721,350 | - | ||||||
Additions to construction in progress | (10,367,064) | (10,459,937) | ||||||
Prepayment on long-term assets | (170,460) | 52,892 | ||||||
Payment for acquisition of business | - | (657,007) | ||||||
Payment for intangible assets | - | (1,511,611) | ||||||
Net cash used in investing activities | (11,220,546) | (16,168,320) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Repayment of short-term borrowing and other payable, related parties | (801,500) | - | ||||||
Repayment of long-term debt | (1,603,000) | (793,500) | ||||||
Repayment of senior notes | - | (3,333,334) | ||||||
Increase in restricted cash | - | (1,890,641) | ||||||
Net cash (used in) provided by financing activities | (2,404,500) | (6,017,475) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 161,110 | 17,388 | ||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (3,471,555) | (3,318,817) | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 10,857,456 | 9,622,883 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 7,385,901 | $ | 6,304,066 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid, net of capitalized interest | $ | 284,978 | $ | 481,583 | ||||
Income taxes paid | $ | 2,001,258 | $ | 1,967,965 | ||||
Non-cash transactions for investing and financing activities: | ||||||||
Construction materials transferred to Construction in progress | $ | - | $ | 67,142 | ||||
Construction in progress transferred to property and equipment | $ | 3,143,182 | $ | 18,507,550 | ||||
Capitalized interest - amortization of discount of notes payable and issuance cost | $ | - | $ | 2,040,389 | ||||
Other assets transferred to construction in progress | $ | 94,345 | $ | 2,395,267 | ||||
For more information, please contact:
China Natural Gas, Inc.
Zhaoyang Qiao, CFO
Phone: +86-29-8832-7391
Email: qiaochaoyang@naturalgaschina.com
Jackie Shi
Investor Relations Director
Phone: +86-29-8832-3325 x922
Cell: +86-139-9287-9998
Email: yjshi@naturalgaschina.com
SOURCE China Natural Gas, Inc.
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