Compressed and pipeline natural gas provider China Natural Gas, Inc. (CHNG) Tuesday reported a decline in profit for the third quarter, impacted negatively by higher operating expenses as well as change in fair value of warrants. Revenues increased over 9%, driven by additional fueling stations and higher residential and commercial pipeline customers. The company also reaffirmed its full year revenue and net income projections.
Net income for the quarter declined to $4.65 million or $0.29 per share from $5.14 million or $0.35 per share last year. Latest quarter results included $0.36 million of change in fair value of warrants.
Excluding the items, net income was $5.08 million or $0.32 per share, lower than $5.26 million or $0.36 per share in the same quarter last year.
Quarterly revenues increased 9.4% to $20.13 million from $18.40 million last year, driven by additional fueling stations and higher residential and commercial pipeline customers.
Gasoline revenues increased 37.5% to $1.6 million from $1.2 million in the prior-year quarter. Installation and services revenues grew 63.4% to $3.0 million from $1.9 million a year ago. Natural gas revenues were $15.45 million, up marginally from $15.35 million in the previous year.
Gross margin in quarter was 48.3%, compared to 51.6% a year ago, mainly due to higher procurement costs of natural gas in Henan.
Total operating expenses increased to $3.83 million from $3.07 million last year, mainly due to additional expenses related to the acquisition of Lingbao Natural Gas, Co. and the addition of three new fueling stations added since the third quarter of 2009.
As of September 30, China Natural increased cash and cash equivalents to $55.9 million, compared to $9.7 million as of June 30, 2009.
For the nine-month period, net income was $12.71 million or $0.85 per share, higher than $11.46 million or $0.78 per share in the comparable period. Year-to-date, total revenues were $59.40 million, up from $49.32 million in the prior year.
Further, China Natural reaffirmed its full year net income guidance range of $17.5 million to $18.5 million, a 15% to 22% growth from $15.2 million in 2008. The company also reaffirmed its projection for the full year of revenue growing 15% to 20% to a range of $78 million to $83 million, from $68 million last year.
CHNG closed Monday's regular trading at $9.45 per share on the Nasdaq.
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