SHIJIAZHUANG, CHINA -- (Marketwired) -- 09/24/14 -- AutoChina International Limited ("AutoChina" or the "Company") (
Q2 2014 Operational Highlights
Q2 2014 Financial Highlights (comparisons are year over year)
Six Months 2014 Financial Highlights (comparisons are year over year)
Management Comments
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "We have seen continued positive trends in all of our markets throughout the first half of 2014 and into the summer. AutoChina is benefitting from both a reinvigorated commercial trucking market in China and the effects of the expansion of our network during the last few years. We believe that the Company is properly positioned to be able to take advantage of industry-leading shifts, such as higher emission standards on the heavy-truck segment in which we focus. In addition, we are continuing to leverage our nationwide business platform to offer additional services and financing options to our growing customer base. For example, during the quarter we launched our peer stores business, in which we work together with other commercial vehicle financing companies in order to expand our customer base. We hope to drive increased shareholder value with new initiatives such as this."
Operations - Heavy Truck Sales
The Company leased 4,617 commercial vehicles in the second quarter of 2014, compared to 3,195 in the prior-year period. At June 30, 2014, the Company had 18,834 leased vehicles under its sales-type leasing program.
During the quarter, the Company repossessed 139 vehicles whose lessees had defaulted on installment payments, sold 152 of these repossessed vehicles (repossessed in the quarter or in prior periods), and recorded six vehicles as losses during the three months ended June 30, 2014. In comparison, there were 165 vehicles repossessed, 226 vehicles sold and two loss vehicles recorded in the quarter ended June 30, 2013.
Details of the vehicles leased are as follows:
Number of
Vehicles
Leased
----------
Balance at January 1, 2013 15,078
New leases recorded in the year ended December 31, 2013 11,902
Vehicles repossessed or loss to accident in 2013 (782)
Vehicles transferred to customers at the end of lease term in
2013 (11,203)
----------
Balance at December 31, 2013 14,995
New leases recorded in the six months ended June 30, 2014 7,419
Vehicles repossessed or loss due to accident in the first six
months of 2014 (287)
Vehicles returned to lessee upon settling the outstanding
installment 71
Vehicles transferred to customers at the end of lease term in
first six months of 2014 (3,364)
----------
Balance at June 30, 2014 18,834
==========
Operations - Expansion of Specialty Finance Store Network
During the second quarter of 2014, the Company established five additional commercial vehicle sales, servicing, leasing and support centers in the provinces of Guangdong, Gansu, Guizhou, and Jiangxi. As of June 30, 2014, AutoChina operated 554 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.
Launch of Peer Stores Business
During the second quarter of 2014, AutoChina began working with third-party commercial vehicle financing stores ("peer stores") to provide financing to their customers. The first two products to be offered are financing for new commercial vehicle purchases and financing for the insurance and taxes related to the purchase of a new commercial vehicle, which were launched in April 2014 and May 2014, respectively. The Company believes that by working with peer stores it can gain a much larger addressable customer base. For example, there are currently over 2,400 peer stores participating in the program, which significantly expands AutoChina's reach beyond its own existing store network.
Financial Review
2014 Second Quarter
Revenues
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(in thousands) Three months ended Three months ended
June 30, 2014 June 30, 2013
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% of % of YoY %
Amount Revenue Amount Revenue Change
----------------------------------------------------------------------------
Commercial vehicles $ 232,104 91.7% $ 156,567 91.0% 48.2%
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Finance 14,594 5.8% 10,279 6.0% 42.0%
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Insurance 5,549 2.2% 5,258 3.0% 5.5%
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Property lease and
management 950 0.4% -- 0.0% 100.0%
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Total revenues $ 253,197 100.0% $ 172,104 100.0% 47.1%
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Gross Profit/Margin
Net Income
Adjusted EBITDA
Six Months 2014
Revenues
----------------------------------------------------------------------------
(in thousands) Six months ended Six months ended
June 30, 2014 June 30, 2014
----------------------------------------------------------------------------
% of % of YoY %
Amount Revenue Amount Revenue Change
----------------------------------------------------------------------------
Commercial vehicles $ 373,635 90.8% $ 213,674 87.8% 74.9%
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Finance 26,662 6.5% 20,780 8.5% 28.3%
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Insurance 9,939 2.4% 9,005 3.7% 10.4%
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Property lease and
management 1,402 0.3% -- 0.0% 100.0%
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Total revenues $ 411,638 100.0% $ 243,459 100.0% 69.1%
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Gross Profit/Margin
Net Income
Adjusted EBITDA
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
Balance Sheet Highlights
At June 30, 2014, AutoChina's cash and cash equivalents (not including restricted cash) were $43.2 million, working capital was $60.4 million, total debt was $383.2 million (including due to affiliates and accounts payable, related parties), and stockholders' equity was $252.8 million, compared to $31.4 million, $47.9 million, $295.0 million, and $252.8 million, respectively, at December 31, 2013.
The increase in total debt is largely due to increased financing to support the Company's increase in total number of sales-type leases. The Company also reported a 30.9% increase in current maturities of net investment in direct financing and sales-type leases during the period.
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 (LOSS)
(Unaudited)
(in thousands except share and per share data)
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2014 2013 2014 2013
----------- ----------- ----------- -----------
Revenues
Commercial vehicles $ 232,104 $ 156,567 $ 373,635 $ 213,674
Finance 14,594 10,279 26,662 20,780
Insurance 5,549 5,258 9,939 9,005
Property lease and
management 950 -- 1,402 --
----------- ----------- ----------- -----------
Total revenues 253,197 172,104 411,638 243,459
----------- ----------- ----------- -----------
Cost of sales
Commercial vehicles 16,801 2,966 18,086 4,457
Commercial vehicles,
related parties 210,493 150,239 346,636 204,956
Insurance 631 871 1,269 1,678
Property lease and
management 613 -- 1,245 --
----------- ----------- ----------- -----------
Total cost of sales 228,538 154,076 367,236 211,091
----------- ----------- ----------- -----------
Gross profit 24,659 18,028 44,402 32,368
----------- ----------- ----------- -----------
Operating (income)
expenses
Selling and marketing 2,982 2,618 5,427 4,821
General and
administrative 12,592 11,468 24,606 23,244
Litigation expense -- -- 4,350 --
Interest expense 3,102 1,789 5,796 3,449
Interest expense,
related parties 2,814 196 4,649 377
Other income, net (2,958) (4,227) (4,947) (6,640)
----------- ----------- ----------- -----------
Total operating
expenses 18,532 11,844 39,881 25,251
----------- ----------- ----------- -----------
Income from operations 6,127 6,184 4,521 7,117
----------- ----------- ----------- -----------
Other income
Interest income 39 135 72 227
----------- ----------- ----------- -----------
Other income 39 135 72 227
----------- ----------- ----------- -----------
Income before income
taxes 6,166 6,319 4,593 7,344
Income tax provision 1,767 1,959 2,793 2,571
----------- ----------- ----------- -----------
Net income 4,399 4,360 1,800 4,773
=========== =========== =========== ===========
Foreign currency
translation adjustment (117) 4,182 (2,670) 5,010
----------- ----------- ----------- -----------
Comprehensive income
(loss) $ 4,282 $ 8,542 $ (870) $ 9,783
=========== =========== =========== ===========
Basic $ 0.19 $ 0.19 $ 0.08 $ 0.20
=========== =========== =========== ===========
Diluted $ 0.18 $ 0.18 $ 0.08 $ 0.20
=========== =========== =========== ===========
Weighted average shares
outstanding
Basic 23,549,503 23,538,919 23,548,571 23,538,919
Diluted 23,984,487 23,687,491 23,819,428 23,777,275
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
June 30, December 31,
2014 2013
------------- -------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 43,150 $ 31,370
Restricted cash 1,225 1,244
Accounts receivable, net of provision for
doubtful debts of $24,904 and $20,891 as of
June 30, 2014 and December 31, 2013,
respectively 26,955 27,931
Inventories 4,095 5,319
Prepaid expenses and other current assets 5,431 5,261
Other financing receivables 9,147 --
Current maturities of net investment in direct
financing and sales-type leases, net of
provision for doubtful debts of $146 and $389
as of June 30, 2014 and December 31, 2013,
respectively 342,503 261,684
Deferred income tax assets 7,164 5,515
------------- -------------
Total current assets 439,670 338,324
Noncurrent assets
Property, equipment and leasehold improvements,
net 80,158 82,254
Deferred income tax assets 5,175 4,126
Net investment in direct financing and sales-
type leases, net of current maturities 118,882 128,415
------------- -------------
Total assets $ 643,885 $ 553,119
============= =============
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 $154,401 and $124,654 as of June
30, 2014 and December 31, 2013, respectively) $ 206,410 $ 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 June 30, 2014 and December 31, 2013,
respectively) 1,460 1,436
Accounts payable (including accounts payable of
the consolidated VIEs without recourse to
AutoChina of $1,054 and $93 as of June 30, 2014
and December 31, 2013, respectively) 5,431 10,130
Accounts payable, related parties (including
accounts payable of the consolidated VIEs
without recourse to AutoChina of $119,888 and
$44,044 as of June 30, 2014 and December 31,
2013, respectively) 121,955 57,586
Other payables and accrued liabilities
(including other payables and accrued
liabilities of the consolidated VIEs without
recourse to AutoChina of $13,125 and $10,323 as
of June 30, 2014 and December 31, 2013,
respectively) 22,023 17,146
Due to affiliates (including due to affiliates
of the consolidated VIEs without recourse to
AutoChina of $589 and $86 as of June 30, 2014
and December 31, 2013, respectively) 14,089 38,143
Customer deposits (including customer deposits
of the consolidated VIEs without recourse to
AutoChina of $353 and $319 as of June 30, 2014
and December 31, 2013, respectively) 3,834 1,680
Income tax payable (including income tax payable
of the consolidated VIEs without recourse to
AutoChina of $2,104 and $2,761 as of June 30,
2014 and December 31, 2013, respectively) 4,046 3,599
Total current liabilities 379,248 290,457
------------- -------------
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - Continued
(in thousands except share and per share data)
June 30, December 31,
2014 2013
------------- -------------
(unaudited)
Total current liabilities 379,248 290,457
------------- -------------
Noncurrent liabilities
Long-term payables (including long-term
payables of the consolidated VIEs without
recourse to AutoChina of $11,672 and $8,955
as of June 30, 2014 and December 31, 2013,
respectively) 11,831 9,857
------------- -------------
Total liabilities 391,079 300,314
------------- -------------
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 - 23,549,644 shares at June 30,
2014; 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 328,502 327,631
Statutory reserves 22,947 22,947
Accumulated losses (127,809) (129,609)
Accumulated other comprehensive income 29,142 31,812
------------- -------------
Total shareholders' equity 252,806 252,805
------------- -------------
Total liabilities and shareholders' equity $ 643,885 $ 553,119
============= =============
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Six Months Ended
June 30,
2014 2013
--------- ---------
Net cash used in operating activities $ (70,542) $ (14,977)
--------- ---------
Cash flow from investing activities:
Purchase of property, equipment and leasehold
improvements (4,897) (1,095)
--------- ---------
Net cash used in investing activities (4,897) (1,095)
--------- ---------
Cash flow from financing activities:
Proceeds from borrowings 103,645 57,363
Repayments of borrowings (57,017) (43,877)
Proceeds from affiliates for debt 9,937 7,651
Repayment to affiliates (33,700) (19,843)
Increase in accounts payable, related parties 346,636 204,956
Repayment to accounts payable, related parties (281,595) (201,207)
--------- ---------
Net cash provided by financing activities 87,906 5,043
--------- ---------
Net cash provided by (used in) operating, investing
and financing activities 12,467 (11,029)
--------- ---------
Effect of foreign currency translation on cash and
cash equivalents (687) 608
--------- ---------
Net increase (decrease) in cash and cash equivalents 11,780 (10,421)
Cash and cash equivalents, beginning of the period 31,370 75,777
--------- ---------
Cash and cash equivalents, end of the period $ 43,150 $ 65,356
========= =========
Supplemental disclosure of cash flow information:
Interest paid $ 7,695 $ 3,589
========= =========
Income taxes paid $ 5,044 $ 5,855
========= =========
Non-GAAP Financial Measures ($ in thousands)
A reconciliation of Adjusted EBITDA to net income is provided below:
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
-------- -------- -------- --------
Net income attributable to
shareholders $ 4,399 $ 4,360 $ 1,800 $ 4,773
Interest expenses 5,916 1,985 10,445 3,826
Interest income (39) (135) (72) (227)
Income tax provision 1,767 1,959 2,793 2,571
Stock-based compensation 434 943 871 1,941
Depreciation & Amortization 978 869 1,966 1,342
Litigation expense - - 4,350 -
-------- -------- -------- --------
Adjusted EBITDA $ 13,455 $ 9,981 $ 22,153 $ 14,226
======== ======== ======== ========
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