China Auto Logistics Reports 2013 First Quarter Results

China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, a leading provider of auto-related services, and developer and operator of a leading automobile portal and auto-related websites, reported today that in the first quarter of 2013 the Company continued its aggressive luxury auto price-cutting strategy in order to expand its market share. As anticipated, this led to a year over year decline in net income on narrowed margins, despite an 11% increase in unit sales of luxury autos, and a record contribution to operating income from the Company's high margin Financing Services business.

 

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "It is of paramount importance to the Company, and its plans to expand new and existing higher margin auto-related services, that we maintain a leadership position in luxury auto sales. While our price cutting strategy currently is squeezing margins, we believe it ultimately will shake out weaker competitors and build our market share. Meanwhile, we remain pleased with the growing contribution to our bottom line from Financing Services, and also are making progress developing other high margin auto-related services opportunities that we hope to be able to report on in the very near future." 

 

Financial Highlights

-Net revenues for the three months ended March 31, 2013 increased 0.17% to $107,625,066 from $107,445,586 in the first quarter last year. The main contributor to revenues were Auto Sales which comprised 97.41%, of total revenues, followed by Financing Services, with 1.76%. The percentage contribution to revenues from web-based advertising services declined further to 0.20% reflecting the Company's decision last year to shift the focus of their online presence away from ad revenue generation, in an attempt to create other growth opportunities for their online portal.

 

-Income from operations in the 2013 first quarter declined to $1,464,322, primarily due to a sharply lower contribution to operating income from Auto Sales. While this was not offset by contributions to results from the Company's higher margin auto-related services businesses, including financing, web-based advertising and automobile value added services, the combined operating income of these other businesses grew strongly to $1.55 million, up from $1.24 million a year earlier, led by a record $1.05 million contribution from Financing Services, compared to a $704,000 contribution from this business in the year earlier quarter.

 

-Net income attributable to shareholders in the 2013 first quarter declined to $1,007,335, or $0.27 per share, compared with $1,581,477, or $0.43 per share in the first quarter of 2012. The weighted average number of diluted common shares in both periods was 3,694,394 shares.

 

Segment Review

-In the 2013 first quarter, the Company sold 1,256 automobiles, up 11% from 1,129 automobiles in the same period last year. However, the average unit selling price decreased 8.7% from $92,000 a year earlier to $84,000 per vehicle in the 2013 first quarter. This decline primarily was a consequence of a continuing aggressive pricing strategy aimed at expanding market share and maintaining market leader status. Additionally, reflecting market demand, the Company sold more lower end models of luxury vehicles where gross margins typically are lower than higher end models.

 

-Financing Services continued to grow strongly in the 2013 first quarter, although not fully reflected in the revenues for this segment of $1,899,410, compared with $2,000,432 in the first quarter last year. Revenues from this segment are comprised of interest income and fees for services and, while lower interest rates in the period reduced interest income, the fee portion of financing revenue grew 52.24% to $1,329,434. New financing service types and increased pricing also helped grow the Financing Services gross margin percentage in the 2013 first quarter to 69.70%, up from 43.36% in the first three months of 2012. As of March 31, 2013, the Company had aggregate credit lines of approximately $136 million, supporting this business, on which it had drawn approximately $80 million. 

 

-The Company also continued to see solid but relatively flat year over year contributions to results in the 2013 first quarter from its other higher margin auto-related services, namely, auto mall management services and automobile value added services.

 

Outlook

Mr. Tong commented, "We believe we will continue to operate in a strong growth market for luxury car sales in China, where most forecasters see this segment of the market outperforming the anticipated growth in general automobile sales. At the same time, we see continuing competition in the luxury automobile segment necessitating a continuation of our efforts to beat the prices of weaker competitors to expand our market share. To help us with this strategy, we envision a growing contribution over time from our current and planned higher margin auto-services related businesses."

 

Conference Call Invitation

The Company will discuss 2013 first quarter results during a live conference call and webcast on Friday, May 17th, at 8:00am ET.

 

To participate in the call, interested participants should call 1-877-941-1427 when calling within the United States or 1-480-629-9664 when calling internationally. Please ask for the China Auto Logistics 2013 First Quarter Earnings Conference Call, Conference ID: 4619448. There will be a playback available until May 24, 2013. 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: 4619448.

 

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=104737 or at ViaVid's website at http://viavid.com.

 

About China Auto Logistics Inc.

China Auto Logistics Inc. is one of China's top sellers of imported luxury vehicles, and also manages China's largest imported auto mall in Tianjin. Additionally, it operates www.cali.com.cn, one of the leading automobile portals in China, as well as three major websites serving China's auto dealers and their customers. The Company also provides a growing variety of "one stop" automobile related services such as short term dealer financing. Additional information about the Company is available at www.chinaautologisticsinc.com.

 

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.

 

 

 

 

CHINA AUTO LOGISTICS INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

Net revenue

 

$

107,625,066

 

 

$

107,445,586

 

Cost of revenue

 

 

105,397,347

 

 

 

103,915,001

 

 

 

Gross profit

 

 

2,227,719

 

 

 

3,530,585

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

170,034

 

 

 

245,677

 

 

General and administrative

 

 

593,363

 

 

 

841,276

 

 

 

Total operating expenses

 

 

763,397

 

 

 

1,086,953

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

1,464,322

 

 

 

2,443,632

 

 

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

 

 

 

 

 

 

 

Interest income

 

 

222,288

 

 

 

13,364

 

 

Interest expense

 

 

(76,636

)

 

 

(86,024

)

 

Loss on disposal of property and equipment

 

 

-

 

 

 

(45,596

)

 

Foreign exchange loss

 

 

(166,151

)

 

 

-

 

 

 

Total other expenses

 

 

(20,499

)

 

 

(118,256

)

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

1,443,823

 

 

 

2,325,376

 

 

 

 

 

 

 

 

 

 

Income taxes

 

 

435,500

 

 

 

736,589

 

 

 

 

 

 

 

 

 

 

Net income

 

 

1,008,323

 

 

 

1,588,787

 

 

 

 

 

 

 

 

 

 

Less: Net income attributable to noncontrolling interests

 

 

988

 

 

 

7,310

 

 

 

 

 

 

 

 

 

 

Net income attributable to shareholders of China Auto Logistics Inc.

 

$

1,007,335

 

 

$

1,581,477

 

 

 

 

 

 

 

 

 

 

Earnings per share attributable to shareholders of China Auto Logistics Inc.

 

 

 

 

 

 

 

 

 

- basic and diluted

 

$

0.27

 

 

$

0.43

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

- basic and diluted

 

 

3,694,394

 

 

 

3,694,394

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHINA AUTO LOGISTICS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

March 31, 2013 (Unaudited)

 

December 31,   2012

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,331,532

 

$

8,888,749

 

Restricted cash

 

 

26,079,907

 

 

27,015,351

 

Accounts receivable - trade, net of allowance for doubtful accounts of $0 as of March 31, 2013

 

 

3,358,600

 

 

-

 

Receivables related to financing services

 

 

71,618,325

 

 

57,134,815

 

Notes receivable

 

 

3,191,523

 

 

1,587,024

 

Inventories

 

 

13,180,620

 

 

27,141,004

 

Advances to suppliers

 

 

75,516,551

 

 

43,019,343

 

Prepaid expenses

 

 

17,055

 

 

19,071

 

Value added tax refundable

 

 

-

 

 

338,513

 

Deferred tax assets

 

 

718,093

 

 

714,161

 

 

Total current assets

 

 

196,012,206

 

 

165,858,031

 

 

 

 

 

 

 

Property and equipment, net

 

 

289,524

 

 

314,126

Other assets

 

 

9,476

 

 

23,559

 

 

Total Assets

 

$

196,311,206

 

$

166,195,716

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Lines of credit related to financing services

 

$

79,949,410

 

$

51,528,018

 

Short term borrowings

 

 

7,210,226

 

 

19,673,128

 

Accounts payable

 

 

262,691

 

 

-

 

Notes payable to suppliers

 

 

12,766,093

 

 

12,696,196

 

Accrued expenses

 

 

321,109

 

 

356,114

 

Value added tax payable

 

 

131,191

 

 

-

 

Customer deposits

 

 

31,645,433

 

 

19,131,420

 

Deferred revenue

 

 

233,686

 

 

241,598

 

Due to shareholders

 

 

2,168,037

 

 

2,156,166

 

Due to director

 

 

513,698

 

 

512,023

 

Income tax payable

 

 

511,817

 

 

400,932

 

 

Total current liabilities

 

 

135,713,391

 

 

106,695,595

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

China Auto Logistics Inc. shareholders' equity

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 shares authorized, none issued and outstanding

 

 

-

 

 

-

 

Common stock, $0.001 par value, 95,000,000 shares authorized, 3,694,394 shares issued and outstanding as of March 31, 2013 and December 31, 2012

 

 

3,694

 

 

3,694

 

Additional paid-in capital

 

 

21,994,074

 

 

21,994,074

 

Accumulated other comprehensive income

 

 

6,012,505

 

 

5,923,398

 

Retained earnings

 

 

32,013,744

 

 

31,006,409

 

 

Total China Auto Logistics Inc. shareholders' equity

 

 

60,024,017

 

 

58,927,575

 

Noncontrolling interests

 

 

573,798

 

 

572,546

 

 

Total equity

 

 

60,597,815

 

 

59,500,121

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

196,311,206

 

$

166,195,716

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHINA AUTO LOGISTICS INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

1,008,323

 

 

$

1,588,787

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by (used for) operating activities

 

 

 

 

 

 

 

 

Depreciation on property and equipment

 

 

28,153

 

 

 

50,567

 

Amortization on intangible assets

 

 

-

 

 

 

59,743

 

Loss on disposal of property and equipment

 

 

-

 

 

 

45,596

 

 

 

 

 

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Restricted cash

 

 

1,082,394

 

 

 

1,751,337

 

Accounts receivable - trade

 

 

(3,353,088

)

 

 

15,902

 

Receivables related to financing services

 

 

(14,271,668

)

 

 

(9,536,708

)

Notes receivable

 

 

(1,593,143

)

 

 

(7,145,693

)

Inventories

 

 

14,086,651

)

 

 

877,760

 

Advances to suppliers

 

 

(32,207,433

)

 

 

(21,996,325

)

Prepaid expenses, other current assets and other assets

 

 

16,308

 

 

 

66,181

 

Value added tax receivable

 

 

339,818

 

 

 

400,777

 

Accounts payable

 

 

262,260

 

 

 

(1,505

)

Line of credit related to financing services

 

 

28,162,474

 

 

 

(6,989,185

)

Notes payable to suppliers

 

 

-

 

 

 

12,703,454

 

Accrued expenses

 

 

(36,527

)

 

 

(34,984

)

Value added tax payable

 

 

130,975

 

 

 

-

 

Customer deposits

 

 

12,388,325

 

 

 

19,849,649

 

Deferred revenue

 

 

(9,227

)

 

 

(72,992

)

Income tax payable

 

 

108,500

 

 

 

(30,820

)

Net cash provided by (used in) operating activities

 

 

6,143,095

 

 

 

(8,398,459

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(1,864

)

 

 

-

 

Net cash used in investing activities

 

 

(1,864

)

 

 

-

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from short-term borrowings

 

 

5,842,297

 

 

 

6,242,480

 

Repayments of short-term borrowings

 

 

(18,582,569

)

 

 

-

 

Proceeds from director

 

 

202,203

 

 

 

499,907

 

Repayments to director

 

 

(198,263

)

 

 

-

 

Net cash flows (used in) provided by financing activities

 

 

(12,736,332

)

 

 

6,742,387

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate change on cash

 

 

37,884

 

 

 

(517

)

 

 

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

 

(6,557,217

)

 

 

(1,656,589

)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at the beginning of period

 

 

8,888,749

 

 

 

8,184,793

 

Cash and cash equivalents at the end of period

 

$

2,331,532

 

 

$

6,528,204

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CHINA AUTO LOGISTICS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Continued)

 

 

 

Three Months Ended March 31,

 

 

2013

 

2012

 

 

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

Interest paid

 

$

788,038

 

$

1,213,210

Income taxes paid

 

$

544,000

 

$

736,589

 

 

 

 

 

 

 

 

Contacts :Sun Jiazhen sjz_cali@126.comKen Donenfeld DGI Investor Relations Inc. kdonenfeld@dgiir.comTel: 212-425-5700 Fax: 646-381-9727

 

 

SOURCE: China Auto Logistics Inc.

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