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SinoTech Energy Q3 revenue up 205%, lifts full year revenue guidance

Published: 17:57 04 Aug 2011 BST

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SinoTech Energy (NASDAQ: CTE), provider of enhanced oil recovery, said sales skyrocketed 205% during third-quarter helped by the expansion of its fleet and execution of operations. 

Its shares rose one cent to $4.14 in recent trade Thursday on Nasdaq Stock Markets. It has a 52-week high of $9, while its 52-week low is $3.60. 

Sales grew 205% to $29.8 million in the third-quarter that ended March 31. That compares to $9.7 million in the same period last year. 

China-based SinoTech Energy attributes this growth to its expansion of Lateral Hydraulic Drilling (LHD) fleet and effective execution of operations. 

Net income registered at $13.2 million, or 20 cents per diluted share, versus a net loss of $7.4 million one year ago. 

Analysts had expected SinoTech Energy to earn 16 cents per share on revenues of $27 million, according to Yahoo Finance.

"Rapid expansion of our LHD fleet has enabled SinoTech to triple sales in the third quarter we are confident that continued successful execution on this strategy will drive very robust growth in the coming quarters," Guoqiang Xin Chief Executive of SinoTech said in a statement.

Cost of sales jumped 259% to $8.7 million, up from $2.4 million. The rise stems from operating costs as a result from the addition of two new LHD units in late March, SinoTech said. 

Gross margin clocked in at 71%, down from 75%. The year-over-year decline stems from changes in the sales mix, with sales for the LHD business accounting for 78.6% of sales in the third quarter, compared to 52.8% in the same period last year. 

The company’s expenses for the third quarter were $4.2 million, up from $2.7 million the year before. The increase stems from the expansion of the company’s operating scale and a write-off of intangible assets of $0.8 million during the third quarter. 

Further, operating income jumped 16.6% to $17 million, up from $4.7 million. The company said the rise mostly came from rapid growth in sales and effective expenses control. 

Moving forward, SinoTech Energy now expects total sales for the full-year to be around US$108 million to US$112 million, up from its previous predications of US$100 million to US$105 million. 

It also added four LHD units to its fleet in late July, bringing its total to 16. The company expects to take delivery of a further four units in the first quarter of fiscal year 2012, which would bring its fleet size to 20 units by the end of this year.

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