Wednesday, China Security and Surveillance Technology, Inc (CSR), a provider of digital surveillance technology in China, reported higher profit for the third quarter, but fell short of analysts' estimates. The company also provided guidance for full year 2009 and 2010.
The Shenzhen, China-based company's third-quarter net income increased 140.4% to US$ 22 million from US$ 9.15 million a year ago. Earnings per share more than doubled to US$ 0.41 from US$ 0.20 in third quarter of 2008.
On average, three analysts polled by Thomson Reuters estimated earnings of US$ 0.58 per share for the quarter. Analysts' estimates typically exclude special items.
Third quarter results include total non-cash items of US$ 2.54 million or US$ 0.05 per share, compared to US$ 11.47 million or US$ 0.25 per share in the prior-year period. Non-cash items included in the third quarter results were US$ 3.90 million or US$ 0.07 per share related to redemption accretion on convertible notes, US$ 3.22 million or US$ 0.06 per share related to depreciation and amortization of long-lived assets due to the acquisition of subsidiaries, US$ 4.74 million or US$ 0.09 per share related to employee stock compensation, and a non-cash gain on modification of convertible notes of US$ 9.32 million or US$ 0.17 per share.
Revenues for the third quarter grew 34% to US$ 159.82 million from US$ 119.29 million for the third quarter of 2008. Analysts expected revenue of US$ 177.50 million for the quarter.
The growth in revenue was driven by growth of the installation segment and continued strong demand for the company's products and services in both the government and corporate sectors.
Organic revenue was US$ 152.77 million, or 95.6% of total revenue, while revenue from acquired companies was US$ 7.05 million, or 4.4% of total revenue. Organic revenue grew 43.8% from US$ 106.21 million, or 89% of total revenue, in the same period of 2008.
Gross profits increased to US$ 35.34 million from US$ 32.01 million in the prior-year period, while gross margin declined to 22.1% from 26.8% in the prior year's third quarter.
Income from operations to US$ 17.21 million from US$ 15.33 million in the prior-year quarter.
Guo Shen Tu, chief executive officer of CSR, said, "We are satisfied with our solid revenue growth and earnings in the third quarter, as we continued to see strong organic growth, driven by robust demand for our products and services across our three core business segments."
Looking forward to full year 2009, the company reaffirmed its revenue projection in the range of US$ 600 to US$ 630 million and expects GAAP earnings per share in the range of US$ 0.95 to US$ 0.98. On a consensus, analysts currently expect earnings of US$ 1.99 per share on revenues of US$ 622.85 million.
For full year 2010, the company forecast revenue in the range of US$ 800 to US$ 820 million and GAAP earnings per share to range between US$ 1.15 and US$ 1.20. Analysts' consensus estimate is for earnings of US$ 2.14 per share on revenues of US$ 774.18 million.
CSR is losing $0.66 or 10.80%, and is trading at $5.45 on a volume of 3.03 million shares on the New York Stock Exchange.
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