Camelot Information Systems Reports Wider Loss As Revenue Misses the Mark (CIS)

Chinese enterprise application services provider Camelot Information Systems CIS reported first quarter operations Monday that missed analyst expectations on both the top and bottom lines. The company also updated its outlook for the second quarter and for the full year.

First Quarter Results

For the first quarter of 2013 ended March 31, Camelot reported a loss per share of $0.02, better than the expected loss per share of $0.03. However, after adjusting for one-time items and accounting benefits, the company reported an adjusted loss per share of $0.09, below the street's forecast. Adjusted loss per share was well below the earnings per share of $0.05 reported in the first quarter a year ago.

Revenues were also weak in the quarter. Camelot reported first quarter revenues of $59.63 million vs. the expected $62.94 million. Revenues did see sequential year-over-year growth from $57.12 million in the first quarter last year. The Enterprise Application Services segment saw revenues of $36.496 million, down from last year's $39.308 million as gross margins contracted. Strength was seen in the Financial Industry IT Services segment where revenues rose to $23.138 million from $17.815 million a year ago as margins expanded.

Outlook

In the second quarter, the company expects net revenues of Second Quarter of 2013 Camelot expects net revenues in the second quarter of 2013 of approximately $ 62 million, roughly flat with the same period in 2012. In addition, Camelot expects an adjusted net income attributable to Camelot of approximately $1.0 million in the second quarter of 2013.

For full-year 2013, Camelot expects net revenues of approximately $260 million, representing a 2.3 percent increase from the prior year. Camelot also expects full-year 2013 adjusted net income attributable to Camelot of approximately $5.0 million, representing a 14.4 percent decrease from the prior year.

Management Comments

"Camelot achieved modest revenue growth in the first quarter of 2013, despite slower customer contract activities with large State-owned customers. Our FIS segment is running at full capacity and delivered strong growth as compared to the first quarter of last year."

"EAS has higher exposure to these large customers and reported lower revenues and margins," commented Mr. Simon Ma, Camelot's Chairman and Chief Executive Officer. "We believe our business remains fundamentally solid, although our customer activity remains slow, and we are monitoring the contract activity of our large customers."

Market Impact

Camelot shares did not trade in the pre-market. The stock closed higher by 2.21 percent Friday. The stock has nearly doubled from its 52-week low made on January 2 but is below the 52-week high of $2.56 by 38.37 percent.