SHIJIAZHUANG, CHINA -- (Marketwired) -- 09/13/13 -- AutoChina International Limited ("AutoChina" or the "Company") (
Operational Highlights
Q2 2013 Financial Highlights (comparisons are year over year)
Six Months 2013 Financial Highlights (comparisons are year over year)
Operational and Market Review
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "For the second quarter of 2013, we were pleased to have achieved more than 3,000 new commercial vehicle leases. This marks the first time AutoChina has exceeded this number since the third quarter of 2011 when we began seeing a downward turn in the market. As a result of the significantly higher number of new commercial vehicle leases signed in the second quarter of 2013, we reported $172.1 million in revenues for the period, a year-over-year increase of 64.2%. However, our margins were adversely impacted by the increase in new leases, which increased the revenue contributions from the lower-margin initial establishment of new leases relative to the higher-margin monthly amortized finance income. We anticipate margins will improve as these new leases generate finance income over the next two years, increasing the percentage of revenues from finance and insurance income."
Mr. Li continued, "According to a report by Research in China, China's heavy truck industry began to show signs of stabilization in terms of both output and sales volume, with sales volume increasing 8.36% year over year in the first half of 2013. We are encouraged by these statistics and by the improved results from the stores we opened in southern China in 2011 and 2012. We continue to believe that China's continued investment in economic development and infrastructure will support steady, long-term growth in the heavy truck market. AutoChina intentionally slowed its geographic expansion during a period of weaker demand and worked to provide our customers with services in addition to specialty finance, such as various types of insurance and access to logistics services and a truck marketplace via a new customer-facing website. We understand that AutoChina's customers operate in commercial markets that are prone to cyclical fluctuations but believe that this product expansion has helped to lay a foundation for growth now that the market has begun to show signs of improvement. We will continue working to grow our specialty finance business while exploring other potential opportunities that we believe will help to diversify our business and add value to our shareholders."
Heavy Truck Sales
The Company leased 3,195 commercial vehicles in the second quarter of 2013, an 89.1% increase from 1,690 in the second quarter of 2012, primarily as a result of increasing stabilization in China's heavy truck market and improved performance from AutoChina's commercial vehicle financing and service centers that were part of the Company's expansion efforts in southern China in 2011 and 2012.
Since launching its commercial vehicle sales and leasing business in March 2008, the Company has leased over 41,000 trucks. The Company repossessed 165 vehicles whose lessees had defaulted on installment payments, sold 226 of these vehicles and other vehicles repossessed in prior periods, and recorded two vehicles as total losses during the three months ended June 30, 2013. In comparison, there were 281 vehicles repossessed, 138 vehicles sold and five loss vehicles recorded in the three months ended June 30, 2012.
Used Vehicle Leasing
Under the Company's used commercial vehicle sale-leaseback program, 38 used trucks were leased in the second quarter of 2013, compared to 244 in the prior-year period.
Insurance Agency Services
The Company launched its own insurance agency business in December 2011 and during the 2013 second quarter signed agreements with three additional major insurance companies to sell insurance: China Continent Property and Casualty Insurance Co., Ltd, China Pacific Insurance Group, and People's Insurance Company of China. AutoChina now has seven such agreements in place. AutoChina's 535 store locations are each licensed to sell insurance from these carrier partners.
Expansion of Specialty Finance Store Network
During the 2013 second quarter, AutoChina opened one new commercial vehicle financing and service center in Fujian province. As of June 30, 2013, the Company operated 535 financing and service centers, compared to 514 centers at June 30, 2012. 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
Note: As part of the transaction to purchase the Kai Yuan Center office space, AutoChina, through its wholly owned subsidiary AutoChina Group Inc., acquired 100% of the equity of Heat Planet Holdings Limited ("Heat Planet") and its subsidiaries, which was controlled by Mr. Li. Heat Planet's primary asset consists of the 23 floors, or over 60,000 square meters, of newly constructed office space in the Kai Yuan Center building. The acquisition closed on September 11, 2012. As both AutoChina and the acquired companies were under the common control of Mr. Li immediately before and after the merger, the transaction was accounted for as common control merger, and using merger accounting as if the merger had been consummated at the beginning of the earliest period presented, and no gain or loss is recognized. The Company has adjusted its financial statements for the six months ended June 30, 2012, to account for operating results of Heat Planet and its subsidiaries to reflect the merger under common control.
2013 Second Quarter
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
Six Months 2013
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
Balance Sheet Highlights
At June 30, 2013, AutoChina's cash and cash equivalents (not including restricted cash) were $65.4 million, working capital was $84.9 million, total debt was $177.0 million (including due to affiliates and accounts payable, related parties), and stockholders' equity was $240.1 million, compared to $75.8 million, $105.4 million, $170.3 million, and $228.4 million, respectively, at December 31, 2012.
About AutoChina International Limited
AutoChina International Limited is China's largest commercial vehicle sales, servicing, leasing, and support network. AutoChina's operating subsidiary was founded in 2005 by nationally recognized Chairman and CEO, Yong Hui Li. As of June 30, 2013, the Company owned and operated 535 commercial vehicle financing centers 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
(Unaudited)
(in thousands except share and per share data)
Three months ended Six months ended
June 30, June 30,
------------------------ ------------------------
2013 2012 2013 2012
----------- ----------- ----------- -----------
As Adjusted As Adjusted
Revenues
Commercial vehicles $ 156,567 $ 81,293 $ 213,674 $ 161,736
Finance 10,279 19,546 20,780 40,278
Insurance 5,258 3,982 9,005 5,875
----------- ----------- ----------- -----------
Total revenues 172,104 104,821 243,459 207,889
----------- ----------- ----------- -----------
Cost of sales
Commercial vehicles 2,966 1,827 4,457 4,574
Commercial vehicles,
related parties 150,239 77,182 204,956 152,979
Insurance 871 470 1,678 470
----------- ----------- ----------- -----------
Total cost of sales 154,076 79,479 211,091 158,023
----------- ----------- ----------- -----------
Gross profit 18,028 25,342 32,368 49,866
----------- ----------- ----------- -----------
Operating (income)
expenses
Selling and marketing 2,618 2,727 4,821 4,851
General and
administrative 11,468 8,815 23,244 16,945
Interest expense 1,789 2,976 3,449 6,771
Interest expense,
related parties 196 230 377 511
Other income, net (4,227) (322) (6,640) (890)
----------- ----------- ----------- -----------
Total operating
expenses 11,844 14,426 25,251 28,188
----------- ----------- ----------- -----------
Income from operations 6,184 10,916 7,117 21,677
----------- ----------- ----------- -----------
Other income
Interest income 135 117 227 152
----------- ----------- ----------- -----------
Other income, net 135 117 227 152
----------- ----------- ----------- -----------
Income before income
taxes 6,319 11,033 7,344 21,829
Income tax provision (1,959) (2,635) (2,571) (5,403)
----------- ----------- ----------- -----------
Net income $ 4,360 $ 8,398 $ 4,773 $ 16,426
----------- ----------- ----------- -----------
Foreign currency
translation adjustment 4,182 (1,552) 5,010 (1,360)
----------- ----------- ----------- -----------
Comprehensive income $ 8,542 $ 6,846 $ 9,783 $ 15,067
=========== =========== =========== ===========
Earnings per share
Basic $ 0.19 $ 0.36 $ 0.20 $ 0.70
=========== =========== =========== ===========
Diluted $ 0.18 $ 0.36 $ 0.20 $ 0.70
=========== =========== =========== ===========
Dividend declared per
share $ -- $ -- $ -- $ 0.25
=========== =========== =========== ===========
Weighted average shares
outstanding
Basic 23,538,919 23,538,919 23,538,919 23,538,919
=========== =========== =========== ===========
Diluted 23,687,491 23,561,344 23,777,275 23,613,692
=========== =========== =========== ===========
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
June 30, December 31,
2013 2012
----------- --------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 65,356 $ 75,777
Restricted cash 973 160
Accounts receivable, net of provision for
doubtful debts of $16,409 and $12,041
respectively 34,509 32,956
Inventories 6,350 6,728
Deposits for inventories 265 20
Prepaid expenses and other current assets 11,291 4,512
Current maturities of net investment in
direct financing and sales-type leases,
net of provision for doubtful debts of
$249 and $296, respectively 179,601 196,213
Deferred income tax assets 1,863 --
------------ ---------------
Total current assets 300,208 316,366
Construction in progress -- 76,669
Property, equipment and leasehold
improvements, net 82,831 4,985
Deferred income tax assets 3,757 2,547
Net investment in direct financing and sales-
type leases, net of current maturities 69,272 38,739
------------ ---------------
Total assets $ 456,068 $ 439,306
============ ===============
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 $89,015 and
$75,412 as of June 30, 2013 and December
31, 2012, respectively) $ 116,529 $ 102,458
Long-term payables, current portion
(including long-term borrowings, current
of the consolidated VIEs without recourse
to AutoChina of nil and nil as of June 30,
2013 and December 31, 2012, respectively) 644 --
Accounts payable (including accounts
payable of the consolidated VIEs without
recourse to AutoChina of $1,097 and $68 as
of June 30, 2013 and December 31, 2012,
respectively) 9,860 16,392
Accounts payable, related parties
(including accounts payable of the
consolidated VIEs without recourse to
AutoChina of $4,397 and $706 as of June
30, 2013 and December 31, 2012,
respectively) 6,057 2,228
Other payables and accrued liabilities
(including other payables and accrued
liabilities of the consolidated VIEs
without recourse to AutoChina of $8,122
and $4,857 as of June 30, 2013 and
December 31, 2012, respectively) 18,589 15,049
Due to affiliates (including due to
affiliates of the consolidated VIEs
without recourse to AutoChina of $131 and
$86 as of June 30, 2013 and December 31,
2012, respectively) 53,732 65,595
Customer deposits (including customer
deposits of the consolidated VIEs without
recourse to AutoChina of $537 and $161 as
of June 30, 2013 and December 31, 2012,
respectively) 2,854 1,956
Income tax payable (including income tax
payable of the consolidated VIEs without
recourse to AutoChina of $4,495 and $1,931
as of June 30, 2013 and December 31, 2012,
respectively) 7,011 2,551
Deferred income tax liabilities (including
deferred income tax liabilities of the
consolidated VIEs without recourse to
AutoChina of nil and nil as of June 30,
2013 and December 31, 2012, respectively) -- 4,717
------------ ---------------
Total current liabilities 215,276 210,946
------------ ---------------
Noncurrent liabilities
Long-term payables (including long-term
borrowings of the consolidated VIEs
without recourse to AutoChina of nil and
nil as of June 30, 2013 and December 31,
2012, respectively) 707 --
Total liabilities 215,983 210,946
============ ===============
Commitment and Contingency
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 - 23,538,919 shares at
June 30, 2013 and December 31, 2012,
respectively 24 24
Additional paid-in capital 325,798 323,856
Statutory reserves 16,997 16,997
Accumulated losses (130,714) (135,487)
Accumulated other comprehensive income 27,980 22,970
------------ ---------------
Total shareholders' equity 240,085 228,360
------------ ---------------
Total liabilities and shareholders'
equity $ 456,068 $ 439,306
============ ===============
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30,
----------------------------
2013 2012
------------- -------------
As Adjusted
Net cash provided by (used in) operating
activities $ (14,977) $ 136,433
------------- -------------
Cash flow from investing activities:
Capital expenditure on construction in
progress -- (74,111)
Purchase of property, equipment and
leasehold improvements (1,095) (1,689)
Repayment (borrowing) of due from an
affiliate -- 7,903
------------- -------------
Net cash used in investing activities (1,095) (67,897)
------------- -------------
Cash flow from financing activities:
Proceeds from borrowings 57,363 29,185
Repayments of borrowings (43,877) (102,315)
Proceeds from affiliates for debt 7,651 113,419
Repayment to affiliates (19,843) (73,480)
Increase in accounts payable, related
parties 204,956 152,979
Repayment to accounts payable, related
parties (201,207) (136,116)
Dividend paid -- (5,885)
Capital distribution -- (29,358)
------------- -------------
Net cash provided by used in financing
activities 5,043 (51, 571)
------------- -------------
Net cash provided by (used in) operating,
investing and financing activities (11,029) 16,965
------------- -------------
Effect of foreign currency translation on cash
and cash equivalents 608 (213)
------------- -------------
Net increase (decrease) in cash and cash
equivalents (10,421) 16,752
Cash and cash equivalents, beginning of the
period 75,777 43,048
------------- -------------
Cash and cash equivalents, end of the period $ 65,356 $ 59,800
============= =============
Supplemental disclosure of cash flow
information:
Interest paid $ 3,589 $ 10,894
============= =============
Income taxes paid $ 5,855 $ 4,930
============= =============
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,
2013 2012 2013 2012
--------- --------- --------- ---------
Net income $ 4,360 $ 8,398 $ 4,773 $ 16,426
Interest expenses 1,985 3,206 3,826 7,282
Interest income (135) (117) (227) (152)
Income tax provision 1,959 2,635 2,571 5,403
Stock-based compensation 943 706 1,941 1,648
Depreciation & Amortization 869 496 1,342 919
--------- --------- --------- ---------
Adjusted EBITDA $ 9,981 $ 15,324 $ 14,226 $ 31,526
========= ========= ========= =========
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 accretion of stock repurchase obligations. 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.
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CONTACT
At the Company
Jason Wang
Chief Financial Officer
(858) 997-0680
jcwang@kywmall.com
Investor Relations
The Equity Group Inc.
Carolyne Yu
Senior Associate
(415) 568-2255
cyu@equityny.com
Adam Prior
Senior Vice President
(212) 836-9606
aprior@equityny.com