SHIJIAZHUANG, CHINA -- (Marketwired) -- 07/24/14 -- AutoChina International Limited ("AutoChina" or the "Company") (
Q1 2014 Operational Highlights
Q1 2014 Financial Highlights (comparisons are year over year)
Operational and Market Review
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "We were pleased with AutoChina's strong start to 2014 as we grew the number of new commercial vehicles leased by 124.0% year over year to 2,802 in the first quarter, which tends to be a seasonally weaker period for us due to the Chinese New Year holiday. We believe market conditions in China's heavy truck sector have stabilized, and we continue working to better position the Company to capitalize on the industry's positive momentum with new service offerings for the transportation and logistics industries."
Mr. Li continued, "We recently settled the lawsuit the SEC filed against the Company and 11 investors in 2012. Primarily as a result of the $4.35 million in litigation expenses incurred to settle the lawsuit, the Company reported a net loss of $2.6 million during the quarter ended March 31, 2014. Without this one-time litigation expense, AutoChina would have reported net income growth for the period, a reflection, we believe, of the value of our service offerings and the improved market conditions. We are gratified to be able to move forward and focus all of our energies on growing the business and serving our customers. With the passing of AutoChina's 5th anniversary as a public company in the United States, we remain committed to being a responsive, stable and innovative leader in commercial vehicle financing and sales in China, and continue to grow our business profitably by being proactive in a changing global economic environment."
Heavy Truck Sales
The Company leased 2,802 commercial vehicles in the first quarter of 2014, an increase of 124.0% from 1,251 in the first quarter of 2013. At March 31, 2014, the Company had 15,924 leased vehicles under its sales-type leasing program.
During the quarter, the Company repossessed 67 vehicles whose lessees had defaulted on installment payments, sold 113 repossessed vehicles (repossessed in the quarter or in prior periods), and recorded seven vehicles as losses during the three months ended March 31, 2014. In comparison, there were 250 vehicles repossessed, 129 vehicles sold and 17 loss vehicles recorded in the quarter ended March 31, 2013.
Expansion of Specialty Finance Store Network
During the 2014 first quarter, the Company established four additional commercial vehicle financing and service centers, one in Hunan province, one in Jiangxi province, and two in Guangdong province. The Company also closed one of its centers in Guangdong province. As of March 31, 2014, AutoChina operated 549 financing and service centers in 26 provinces. The Company operates commercial vehicle financing and service centers in the Anhui, Beijing, Chongqing, Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hebei, Henan, Hubei, Hunan, Inner Mongolia, Jiangsu, Jiangxi, Jilin, Liaoning, Ningxia, Shaanxi, Shandong, Shanghai, Shanxi, Sichuan, Tianjin, Yunnan, and Zhejiang areas of China.
Financial Review
2014 First Quarter
Revenues
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Three months ended Three months ended
(in thousands) March 31, 2014 March 31, 2013
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% of % of YoY %
Amount Revenue Amount Revenue Change
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Commercial vehicles $ 141,531 89.3% $ 57,107 80.0% 147.8%
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Finance 12,068 7.6% 10,501 14.7% 14.9%
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Insurance 4,390 2.8% 3,747 5.3% 17.2%
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Rent and property
management 452 0.3% -- 0.0% 100.0%
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Total revenues $ 158,441 100.0% $ 71,355 100.0% 122.0%
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Gross Profit/Margin
Net Income/Loss
Adjusted EBITDA
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
Balance Sheet Highlights
At March 31, 2014, AutoChina's cash and cash equivalents (not including restricted cash) were $38.3 million, working capital was $51.8 million, total debt was $324.4 million (including due to affiliates and accounts payable, related parties), and stockholders' equity was $248.1 million, compared to $31.4 million, $47.9 million, $295.0 million, and $252.8 million, respectively, at December 31, 2013.
Second Quarter 2014 Business Update
The Company also announced today that it recorded 4,617 new leases of commercial vehicles (primarily class 8 heavy trucks) as part of its sales-type leasing program in the second quarter of 2014, an increase of 44.5% from 3,195 vehicles leased in the second quarter of 2013. Since launching its commercial vehicle sales and leasing business in March 2008, the Company has leased over 56,000 trucks.
During the 2014 second quarter, the Company established five additional commercial vehicle financing and service centers, one in Jiangxi province, one in Guangdong province, two in Guizhou province, and one in Gansu province. As of June 30, 2014, AutoChina operated 554 financing and service centers in 26 provinces.
About AutoChina International Limited
AutoChina International Limited focuses on providing innovative financing solutions for China's transportation industry. Founded in 2005, we are China's largest commercial vehicle sales, servicing, leasing, and support network. As of June 30, 2014, the Company owned and operated 554 commercial vehicle financing centers in 26 provinces across China, and primarily provides sales-type leasing and support services for local customers. The Company's website is http://www.autochinaintl.com.
Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the Company. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of the Company's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to meaningfully differ from those set forth in the forward-looking statements:
The information set forth herein should be read in light of such risks. The Company does not assume any obligation to update the information contained in this press release.
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENT OF INCOME AND COMPREHENSIVE INCOME
(in thousands except share and per share data)
Three months ended March 31,
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2014 2013
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(unaudited) (unaudited)
Revenues
Commercial vehicles $ 141,531 $ 57,107
Finance 12,068 10,501
Insurance 4,390 3,747
Property lease and management 452 --
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Total revenues 158,441 71,355
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Cost of sales
Commercial vehicles 1,285 1,491
Commercial vehicles, related parties 136,143 54,717
Insurance 638 807
Property lease and management 632 --
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Total cost of sales 138,698 57,015
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Gross profit 19,743 14,340
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Operating (income) expenses
Selling and marketing 2,445 2,203
General and administrative 12,014 11,776
Litigation expense 4,350 --
Interest expense 2,694 1,660
Interest expense, related parties 1,835 181
Other income, net (1,989) (2,413)
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Total operating expenses 21,349 13,407
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Income (loss) from operations (1,606) 933
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Other income
Interest income 33 92
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Other income 33 92
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Income (loss) before income taxes (1,573) 1,025
Income tax provision (1,026) (612)
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Net (loss)/income (2,599) 413
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Foreign currency translation adjustment (2,553) 828
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Comprehensive (loss)/income $ (5,152) $ 1,241
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Earnings per share
Basic $ (0.11) $ 0.02
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Diluted $ (0.11) $ 0.02
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Weighted average shares outstanding
Basic 23,547,628 23,538,919
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Diluted 23,547,628 23,876,548
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AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
March 31, December 31,
2014 2013
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(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 38,263 $ 31,370
Restricted cash 1,224 1,244
Accounts receivable, net of provision for
doubtful debts of $23,393 and $20,891
respectively 27,630 27,931
Inventories 4,523 5,319
Prepaid expenses and other current assets 5,686 5,261
Current maturities of net investment in
direct financing and sales-type leases, net
of provision for doubtful debts of $205 and
$389, respectively 288,753 261,684
Deferred income tax assets 6,535 5,515
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Total current assets 372,614 338,324
Noncurrent assets
Property, equipment and leasehold
improvements, net 80,843 82,254
Deferred income tax assets 4,437 4,126
Net investment in direct financing and
sales-type leases, net of current
maturities 122,289 128,415
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Total assets $ 580,183 $ 553,119
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings (including short-term
borrowings of the consolidated variable
interest entities ("VIEs") without recourse
to AutoChina of $126,786 and $124,654 as of
March 31, 2014 and December 31, 2013,
respectively) $ 162,546 $ 160,737
Long-term payables, current portion
(including long-term payables, current of
the consolidated VIEs without recourse to
AutoChina of nil and nil as of March 31,
2014 and December 31, 2013, respectively) 1,452 1,436
Accounts payable (including accounts payable
of the consolidated VIEs without recourse
to AutoChina of $349 and $93 as of March
31, 2014 and December 31, 2013,
respectively) 6,371 10,130
Accounts payable, related parties (including
accounts payable of the consolidated VIEs
without recourse to AutoChina of 65,836 and
$44,044 as of March 31, 2014 and December
31, 2013, respectively) 72,423 57,586
Other payables and accrued liabilities
(including other payables and accrued
liabilities of the consolidated VIEs
without recourse to AutoChina of $10,527
and $10,323 as of March 31, 2014 and
December 31, 2013, respectively) 21,763 17,146
Due to affiliates (including due to
affiliates of the consolidated VIEs without
recourse to AutoChina of $490 and $86 as of
March 31, 2014 and December 31, 2013,
respectively) 48,593 38,143
Customer deposits (including customer
deposits of the consolidated VIEs without
recourse to AutoChina of $324 and $319 as
of March 31, 2014 and December 31, 2013,
respectively) 3,774 1,680
Income tax payable (including income tax
payable of the consolidated VIEs without
recourse to AutoChina of $1,791 and $2,761
as of March 31, 2014 and December 31, 2013,
respectively) 3,921 3,599
Total current liabilities 320,843 290,457
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Noncurrent liabilities
Long-term payables (including long-term
payables of the consolidated VIEs without
recourse to AutoChina of $10,730 and $8,955
as of March 31, 2014 and December 31, 2013,
respectively) 11,250 9,857
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Total liabilities 332,093 300,314
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AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued
(in thousands except share and per share data)
March 31, December 31,
2014 2013
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(unaudited)
Commitments and Contingencies -- --
Shareholders' equity
Preferred shares, $0.001 par value
authorized - 1,000,000 shares; issued -
none -- --
Ordinary shares - $0.001 par value
authorized - 100,000,000 shares; issued and
outstanding - 23,549,356 shares at March
31, 2014, respectively; and $0.001 par
value authorized - 100,000,000 shares;
issued and outstanding - 23,545,939 shares
at December 31, 2013, respectively 24 24
Additional paid-in capital 328,068 327,631
Statutory reserves 22,947 22,947
Accumulated losses (132,208) (129,609)
Accumulated other comprehensive income 29,259 31,812
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Total shareholders' equity 248,090 252,805
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Total liabilities and shareholders' equity $ 580,183 $ 553,119
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AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended March 31,
----------------------------
2014 2013
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(unaudited)
Net cash (used in) provided by operating
activities $ (18,351) $ 22,807
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Cash flow from investing activities:
Capital expenditure on construction in
progress -- (601)
Purchase of property, equipment and
leasehold improvements (3,419) (303)
Decrease (increase) in restricted cash -- (1,273)
Net cash used in investing activities (3,419) (2,177)
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Cash flow from financing activities:
Proceeds from borrowings 60,223 23,882
Repayments of borrowings (57,218) (43,626)
Proceeds from affiliates for debt 10,852 5
Increase in accounts payable, related
parties 136,144 54,717
Repayment to accounts payable, related
parties (120,706) (50,222)
Net cash provided by (used in) financing
activities 28,415 (15,244)
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Net cash provided by operating, investing and
financing activities 6,645 5,386
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Effect of foreign currency translation on cash
and cash equivalents (632) 207
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Net increase in cash and cash equivalents 6,893 5,593
Cash and cash equivalents, beginning of the
period 31,370 75,777
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Cash and cash equivalents, end of the period $ 38,263 $ 81,370
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Supplemental disclosure of cash flow
information:
Interest paid $ 3,732 $ 2,185
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Income taxes paid $ 2,035 $ 2,904
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Non-GAAP Financial Measures ($ in thousands)
A reconciliation of Adjusted EBITDA to net income is provided below:
Three Months Ended
March 31,
2014 2013
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Net income (loss) attributable to shareholders $ (2,599) $ 413
Interest expenses 4,529 1,841
Interest income (33) (92)
Income tax provision 1,026 612
Stock-based compensation 437 998
Depreciation & Amortization 988 473
Litigation expense 4,350 -
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Adjusted EBITDA $ 8,698 $ 4,245
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USE OF NON-GAAP MEASURES
AutoChina defines Adjusted EBITDA as net income before interest expense (income), income taxes, depreciation and amortization, as well as the exclusion of stock-based compensation and one-time litigation expenses. Adjusted EBITDA excludes certain financial information that would be included in net income (loss), the most directly comparable GAAP financial measure. Users of this financial information should consider the type of material events and transactions that are excluded from Adjusted EBITDA, and the material limitations of therein. For example, Adjusted EBITDA does not include net interest expense, but because AutoChina has borrowed money to finance its operations, interest expense is a necessary and ongoing part of its costs and has assisted AutoChina in generating revenue; Adjusted EBITDA does not include taxes, although payment of taxes is a necessary and ongoing part of AutoChina's operations; and Adjusted EBITDA does not include depreciation and amortization expense, but because AutoChina uses capital assets to generate revenue, depreciation and amortization expense is a necessary element of its cost structure. Therefore, Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, as determined in accordance with GAAP, since it omits the impact of these expenses incurred by AutoChina.
AutoChina believes that the presentation of these non-GAAP financial measures is warranted and useful to its shareholders because it provides an additional analytical tool for understanding the Company's financial performance by excluding certain items that may obscure trends in the core operating performance of the Company's business. Using Adjusted EBITDA also facilitates management's internal comparisons to AutoChina's historical performance and liquidity. AutoChina computes Adjusted EBITDA using the same consistent method from quarter to quarter. The table above has more details on the reconciliations between GAAP financial measures that are most directly comparable to Non-GAAP financial measures.
At the Company
Jason Wang
Chief Financial Officer
(858) 997-0680
jcwang@kywmall.com
Investor Relations
The Equity Group Inc.
Carolyne Y. Sohn
Senior Associate
(415) 568-2255
csohn@equityny.com
Adam Prior
Senior Vice President
(212) 836-9606
aprior@equityny.com