China Auto Logistics Announces 2015 Full Year Results
ACCESS Newswire
Investor Conference Call Scheduled for Friday April 8, 2016 at 8:00am ET
TIANJIN, CHINA / ACCESSWIRE / April 7, 2016 / China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles and a leading provider of auto-related services, today reported a sharp narrowing of the net loss attributable to shareholders in 2015 compared with the prior year as revenues in 2015 advanced 11.4% year over year and gross profit grew nearly 17% in the same period.
The Company attributed the increase in revenues to higher automobile sales and higher rental income which was partially offset by a decline in revenues generated from its financing services business as well as its other services.
Throughout the year the Company continued to face significant competition in luxury imported auto sales and, to maintain its industry leadership, priced its vehicles very aggressively. While the Company anticipates continuing price competition, resulting in low margins in the year ahead, it also believes that going forward it will benefit from new rules governing the sales of imported autos, specifically, the “Parallel Imported Vehicles” scheme introduced by the government in August, 2014. This new scheme enables CALI to compete on equal footing with all authorized auto dealers in cities where the scheme has been implemented. As of December 31, 2015, the PRC government has selected Guangzhou, Shanghai, Shenzhen and Tianjin as four experimental cities to implement the “Parallel Imported Vehicles” scheme.
Other factors reflected in the full year loss attributable to shareholders in 2015 included substantial interest, depreciation and amortization costs. Additionally, the Company recorded an impairment loss relating to a goodwill impairment charge on the Sales of Automobiles unit which was acquired through the Zhonghe acquisition in November 2013. During the year ended December 31, 2015, the Company also entered into an arrangement with the previous owner of Zhonghe to extend the due date for the installment payment of approximately $18.5 million from November 2015 to May 2016. Nevertheless, the Company's working capital deficit, net loss, and other factors led to a decision by the Company's Independent Registered Public Accounting Firm to include a going concern opinion in its report.
Commenting on results for the year ended December 31, 2015, Mr. Tong Shiping, Chairman and CEO of the Company stated, “We were pleased to be able to report a double digit percentage increase in sales for the year as well as a year over year improvement in gross profit and profit margin. If we are able to see further improvements in the overall economy, we believe that this could have a positive impact on our sales going forward which also are likely to be helped by the new Parallel Imported Vehicles rules. We also have been encouraged by the growth in used car sales as reflected in the growth of Car King Tianjin in which we have a 40% interest. We continue to believe this used car operation has significant long term growth potential.”
Financial Highlights
- Net revenue for the year ended December 31, 2015 grew 11.40% to $448,131,741 from $402,269,611 for the prior year.
- Net loss attributable to shareholders for the year ended December 31, 2015 was ($12,014,594) or a loss per share of ($2.98) compared with a loss of ($26,863,297) or a loss per share of ($6.66), reflecting a year over year improvement of approximately 55.28%.
- The gross profit margin in 2015 increased to 1.16%. This was up from a gross profit margin of 1.10% in 2014.
- Included in operating expenses was a “Recovery of reserve in due from Car King Tianjin” totaling $(1,780,788), as increased liquidity at the used car joint venture permitted it to pay back a substantial portion of the amount owed to the Company. The Company also recorded a reserve for an uncollectable account on receivable related to financing services in the amount of $3,216,727. In addition, the Company recorded an impairment of goodwill and intangible asset in the amount of $4,281,414 on the Sales of Automobile unit which was acquired through the Zhonghe acquisition in November 2013
- The Company recorded net other expenses in 2015 of $7,241,892 including interest expense related to the Zhonghe acquisition and short-term borrowings.
- EBITDA (Earnings before interest, tax, depreciation and amortization) for the year ended December 31, 2015 was a net loss of $3,249,673, compared with a net loss of $19,877,104 in 2014. Excluding the impairment charges on goodwill and intangible assets and the Airport International Auto Mall property, EBITDA was a net income of $1,031,741 in 2015 compared with a net loss of ($831,912) in 2014.
- Net cash used in operating activities for the year ended December 31, 2015, was $(7,380,041). Net cash provided by investing activities was $$4,921,779, primarily reflecting proceeds from the sale of the Company's equity interest in Zhengji (which had no material operations in 2015). Cash flow provided by financing activities was $2,191,004, and cash and cash equivalents at the end of the period was $7,119,686.
- As of December 31, 2015, the Company had a working capital deficit of $30,801,730, including $67,290,734 in current liabilities for short-term borrowings due between January and August 2016. Additionally, $35,742,198 related to the Zhonghe Acquisition is payable to Hezhong. Approximately $18.5 million of this amount is due on May 30, 2016 and the remaining amount is due in November 2016.
Operating Highlights
- Sales of Automobiles – In 2015, the continuing highly competitive market for imported luxury automobiles resulted in a continuation of the Company's strategy to sell its autos at a low gross margin in order to maintain or expand its market share and retain its market leader status. The Company's strategy also focuses on selling higher end luxury models where it sees an opportunity for somewhat higher margins. In 2015 the Company sold 4,199 automobiles compared with 3,737 in 2014 - - an increase of approximately 12.36%. At the same time, the Company was able to increase the gross margin on sales from 0.02% to 0.26% year over year with an average unit selling price in both years of approximately $105,000. The sharp increase in sales in the third quarter reflected customer concern about future price increases resulting from the devaluation of the RMB which the Company sees as possibly being an ongoing trend in 2016.
- Financing Services –Net revenue from this business decreased 24.8% to $5,567,208 in 2015 from $7,403,202. Fee income from Financing Services in 2015 declined approximately 27.87% year over year. A key reason for the decline in revenues and fee income from Financing Services was the need to reutilize the Company's capital following the Zhonghe acquisition and startup of Car King. This resulted in the Company limiting its very popular temporary credit service for auto dealers. Going forward, the Company aims to generate additional fee income via better management of its future cash flow. Facility lines of credit available to the Company for its Financing Services were approximately $93 million as of December 31, 2015. As of March 18, 2016, the Company's aggregate credit lines were approximately $166 million.
- Airport Auto Mall Automotive Services – The two businesses operated under this segment are (1) selling used cars through Car King Tianjin, a joint venture with Car King in which the Company owns 40%, and (2) leasing a portion of the Airport International Auto Mall. Throughout 2015, the used car business continued to grow. Revenue for Car King Tianjin reached $8,059,578 in 2015, an increase of 135%, from $3,430,914 in 2014. A total of 1,394 autos were sold through Car King Tianjin in 2015 compared with 858 a year earlier. Since the Company owns less than 50% of Car King Tianjin, Car King Tianjin's financial statements have not been consolidated into the Company's consolidated financial statements. In the third quarter of 2015, Car King Tianjin remitted approximately $1.8 million to the Company, which was recorded as a recovery of reserve in due from Car King Tianjin in the amount of $1,780,788. The Company recorded rental income of $1,787,294 during the year ended December 31, 2015 which included deferred rent for the period from July 1, 2014 to December 31, 2014.
Looking Ahead
Mr. Tong concluded, “While we have some key hurdles to overcome in 2016 we believe we will be successful in meeting our payment schedule on the Zhonghe acquisition which will open the door to pursuing our growth goals. The latter include continuing growth in luxury auto sales with a possible expansion into retail sales. We continue to be encouraged as well by the growth in used car sales and see continuing demand in this area going forward. We also believe that the steps being taken by our government to stimulate growth in China's economy will be successful and have a positive effect on us as well as other sellers of luxury goods and services.”
Conference Call Invitation
The Company will discuss 2015 year end results during a live conference call and webcast on Friday,April 8, 2016 at 8:00am ET.
To participate in the call, interested participants should call 1-888-287-5563 when calling within the United States or 1-719-785-1765 when calling internationally. Please ask for the China Auto Logistics 2015 Year End Investor Conference Call. Conference ID: 5401129. There will be a playback available until 4/15/16. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 5401129.
This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=119056 at ViaVid's website at http://viavid.com.
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About China Auto Logistics Inc.
China Auto Logistics Inc. is one of China's top sellers of imported luxury vehicles. It also provides a growing variety of "one stop" automobile related services such as short term dealer financing. Additionally, in November, 2013, it acquired the owner and operator of the 26,000 square meter Airport International Auto Mall in Tianjin for $91.4 million, which, among other things, is now the flagship site for its joint venture with Car King (China) Used Car Trading Co., Ltd.
Information Regarding Forward-Looking Statements
Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission. We do not undertake any obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise.
CONTACTS:
Ken Donenfeld DGI Investor Relations Inc. kdonenfeld@dgiir.com Tel: 212-425-5700 Fax:646-381-9727
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