China Auto Logistics Reports Second Quarter and Six Month 2016 Financial Results
Discontinued Zhonghe Operations Sold in the Quarter Generated Significant Gains While Results From Continuing Operations in the Second Quarter Were Roughly Flat Year-Over-Year
Investor Conference Call Scheduled for Tuesday August 16th at 8:00am EDT
/EINPresswire.com/ -- TIANJIN, CHINA -- (Marketwired) -- 08/15/16 -- 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, which sold its Zhonghe subsidiary during the 2016 second quarter, today reported that the net loss attributable to CALI shareholders in this period from continuing operations was ($477,875) or $(0.12) per share, compared to ($469,783) or ($0.12) per share a year earlier, while net income attributable to CALI shareholders from discontinued operations in the quarter amounted to $5,664,104 (including a gain from disposal of $6,701,350) or $1.40 per share, compared to a loss of ($1,775,580) or ($0.44) per share during the same period in 2015.
The Company explained that the roughly flat year-over-year bottom line results in continuing operations in the 2016 second quarter primarily reflected the very slight 0.74% year-over-year increase in auto sales to approximately $92.77 million in the period. As previously reported, the Company believes these sales results were primarily a consequence of the anticipated and actual decline in the value of the Chinese renminbi (RMB) against the U.S. dollar, beginning in 2015, which until the 2016 second quarter led CALI customers to increase their purchases ahead of anticipated increased costs for imported vehicles. Mainly reflecting the stronger 2016 first quarter auto sales of $135.84 million, revenues in the first six months of 2016 were approximately 27.5% higher than in the first half of 2015.
In the six months ended June 30, 2016, the net loss attributable to shareholders from continuing operations was ($665,397) or $(0.16) per share, compared to ($1,132,864) or ($0.28) per share during the same period in 2015. Net income attributable to shareholders from discontinued operations in the 2016 six month period was $4,790,709 (including a gain from disposal of $6,701,350), or $1.19 per share, compared to a loss of ($3,778,940) or ($0.94) per share during the same period in 2015.
The net proceeds from the Zhonghe sale of approximately $21.9 million increased the Company's liquidity and helped turn the Company's working capital positive at June 30, 2016. Nevertheless, the Company's accumulated deficit at June 30, 2016, as well as the operating loss from continuing operations and negative operating cash flow in the second quarter, were key factors in the decision to continue to include a "going concern" paragraph in the Notes to the Company's condensed consolidated financial statements.
Management Comments
Mr. Tong Shiping, Chairman and CEO of the Company, commented, "This was a significant period for us in that we were able to address key problems we faced head on. With the ongoing downward shift in China's economy and real estate values, we needed to take steps to strengthen our financial situation. With our sale of Zhonghe, which included the Airport International Auto Mall in Tianjin and our 40% interest in a used car joint venture, we eliminated related payables, greatly reduced interest expense and returned to a positive working capital at June 30, 2016 from a working capital deficit at March 31, 2016. Our focus shifted back to improving our core luxury imported auto sales business and developing more profitable auto-related services such as our Financing Services business."
Second Quarter Highlights
- Effective June 1, 2016 CALI sold its Zhonghe subsidiary -- including the Airport International Auto Mall in Tianjin and CALI's 40% interest in Car King Tianjin -- to Wuxi Huitong for approximately $62.8 million. The Company transferred a payable related to the Zhonghe acquisition of approximately $36.8 million to Wuxi Huitong to offset the price of the Zhonghe sale.
- Net revenue for the three months ended June 30, 2016 of $93,819,385 compared with $93,688,413 in the same period last year. In the second quarter of 2016, 98.89% of revenue came from Auto Sales, and about 1.09% of revenue came from Financing Services.
- For the three months ended June 30, 2016, net loss from continuing operations attributable to CALI shareholders was $(477,875) or a loss of $(0.12) per share, compared with a loss of $(469,783) or $(0.12) in the second quarter of 2015.
Net income generated by discontinued operations in the second quarter of 2016 was $5,664,104 or $1.40 per share compared with a loss of $(1,775,580) or $(0.44) per share in the same quarter in 2015.
- The Company's working capital as of June 30, 2016 was $24,861,325, compared with a working capital deficit of ($30,801,730) as of December 31, 2015.
Six Month Highlights
- Net revenue for the six months ended June 30, 2016 grew 27.53% to $230,883,403 from $181,038,575 in the same period in 2015.
- Income from continuing operations grew 105.85% in the first six months of 2016 to $330,875 compared with $160,739 in the first six months of 2015.
- Net loss from continuing operations attributed to CALI shareholders in the first six months of 2016 was $(665,397) or $(0.16) per share, down from a loss of $(1,132,864) or $(0.28) per share in the year earlier period. In the first six months of 2016, income from discontinued operations was $4,790,709, or $1.19 per share compared with a loss of $(3,778,940) or $(0.94) per share in the same period in 2015.
Operations
- Auto Sales revenue in the second quarter of 2016 was $92,774,929, an increase of 0.74% from the same period a year earlier, primarily due to a 7% year-over-year increase in sales volume. In the 2016 second quarter the Company sold 905 automobiles at an average unit selling price of $103,000 compared with 846 automobiles a year earlier at an average unit selling price of $109,000. As compared with an approximately 5.5% devaluation of the renminbi (RMB) against the U.S. dollar in the full year ended December 31, 2015, during the second quarter of 2016 the decline of the RMB against the U.S. dollar was 2.4%.
- Revenue from Financing Services decreased 35% year-over-year in the 2016 second quarter to $1,027,280, as fee income in this business declined 27.8% in the quarter as compared to the same period in 2015. As has been the case in recent prior quarters, the Company's working capital allocations did not permit sales of certain products to customers that in the past were very popular. With improving liquidity, the Company hopes to be able to restore these products.
- As of August 12, 2016, the Company had aggregate credit lines of approximately $125 million and approximately $61 million available to utilize in its Financing Services.
Outlook
"A continuation in the remainder of the year of the economic trends and competition that has been prevalent over the past few quarters, continues to make us cautious about further gains in profits and margins in Auto Sales in the second half of the year," stated Mr. Tong. He added, "We believe, however, that conditions have stabilized and we are in a better position to compete. We remain positive about the luxury auto market in China and our leadership role in it, which we believe offers growth possibilities, especially when conditions will permit us to pursue our goal of expanding throughout China. Our optimism in this regard has been buoyed by the 'Parallel Imported Vehicles' scheme initiated by our government which gives us equal footing with all auto dealers."
Conference Call Invitation
The Company will discuss 2016 second quarter results during a live conference call and webcast on Tuesday, August 16, 2016 at 8:00am EDT.
To participate in the call, interested participants should call 1-800-239-9838 when calling within the United States or 1-913-312-0404 when calling internationally. Please ask for the China Auto Logistics 2016 Second Quarter Earnings Conference Call. Conference ID: 8066758. There will be a playback available until 08/23/16. 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: 8066758.
This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=120843 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. It also provides a variety of "one stop" automobile related services such as short term dealer financing. Future growth is anticipated to come from the Company's Auto Sales business as well as further growth in the Company's higher margin financing services.
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.
CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30,
2016 December 31,
(Unaudited) 2015
------------- -------------
ASSETS:
Current assets:
Cash and cash equivalents $ 4,014,335 $ 7,119,686
Restricted cash 24,479,115 23,799,346
Receivable related to financing services 63,160,184 82,105,826
Inventories 18,905,090 12,163,511
Advances to suppliers 62,923,559 100,807,121
Prepaid expenses 81,438 29,372
Recoverable and accrued value added tax
receivable 1,528,381 369,940
------------ ------------
Total current assets 175,092,102 226,394,802
Property, plant, and equipment, net 371,070 72,742
Other assets 31,700 -
Non current assets of discontinued operations - 61,755,609
------------ ------------
Total assets $175,494,872 $288,223,153
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Bank overdraft $ - $ 2,131,009
Lines of credit related to financing services 60,660,883 73,004,179
Short term borrowings 14,149,381 67,290,734
Accounts payable 3,381,642 1,334,829
Notes payable to suppliers 27,094,560 33,509,483
Accrued expenses 220,653 273,497
Customer deposits 40,863,657 39,901,621
Deferred revenue 78,332 121,456
Due to former shareholder 2,045,070 2,093,182
Due to director 1,157,071 722,028
Income tax payable 579,528 656,098
Deferred tax liability - 246,745
Current liabilities of discontinued
operations - 35,911,671
------------ ------------
Total current liabilities 150,230,777 257,196,532
Non current liability of discontinued
operations - 9,248,814
------------ ------------
Total liabilities 150,230,777 266,445,346
------------ ------------
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, 4,034,394 shares issued
and outstanding as of June 30, 2016 and
December 31, 2015, respectively 4,034 4,034
Additional paid-in capital 22,979,734 22,979,734
Accumulated other comprehensive income 5,137,133 5,776,306
Retained earnings (3,221,910) (7,347,222)
------------ ------------
Total China Auto Logistics Inc.
shareholders' equity 24,898,991 21,412,852
Noncontrolling interests 365,104 364,955
------------ ------------
Total equity 25,264,095 21,777,807
------------ ------------
Total liabilities and shareholders' equity $175,494,872 $288,223,153
============ ============
CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- ---------------------------
2016 2015 2016 2015
------------ ------------ ------------- -------------
Net revenue $93,819,385 $93,688,413 $230,883,403 $181,038,575
Cost of revenue 93,173,641 92,856,032 229,286,547 179,724,352
----------- ----------- ------------ ------------
Gross profit 645,744 832,381 1,596,856 1,314,223
----------- ----------- ------------ ------------
Operating expenses:
Selling and marketing 168,224 187,231 352,305 361,529
General and
administrative 426,480 368,995 913,676 791,955
----------- ----------- ------------ ------------
Total operating
expenses 594,704 556,226 1,265,981 1,153,484
----------- ----------- ------------ ------------
Income from continuing
operations 51,040 276,155 330,875 160,739
----------- ----------- ------------ ------------
Other income
(expenses)
Interest income 18,113 30,118 214,463 114,368
Interest expense (526,993) (701,309) (1,129,032) (1,428,233)
Gain on sale of
property and
equipment - (8,254) 2,707 (8,254)
Miscellaneous 1,886 162 3,455 162
----------- ----------- ------------ ------------
Total other expenses (506,994) (679,283) (908,407) (1,321,957)
----------- ----------- ------------ ------------
Loss from continuing
operations before
income taxes (455,954) (403,128) (577,532) (1,161,218)
Income tax expense
(benefit) 21,768 67,209 87,737 (27,377)
----------- ----------- ------------ ------------
Net loss from
continuing operations (477,722) (470,337) (665,269) (1,133,841)
----------- ----------- ------------ ------------
Discontinued
operations:
Income (loss) from
operations of
discontinued Airport
Automall Automotive
Services (including
gain on disposal of
$6,701,350 for the
three months and six
months ended June
30, 2016) 5,565,026 (1,968,978) 4,543,918 (4,107,829)
Income tax benefit (99,078) (193,398) (246,791) (328,889)
----------- ----------- ------------ ------------
Net income (loss) from
discontinued
operations 5,664,104 (1,775,580) 4,790,709 (3,778,940)
----------- ----------- ------------ ------------
Net income (loss) 5,186,382 (2,245,917) 4,125,440 (4,912,781)
Less: Net income
(loss) attributable
to noncontrolling
interests 153 (554) 128 (977)
----------- ----------- ------------ ------------
Net income (loss)
attributable to
shareholders of China
Auto Logistics Inc. $ 5,186,229 $(2,245,363) $ 4,125,312 $ (4,911,804)
----------- ----------- ------------ ------------
Net income (loss)
attributable to
shareholders of China
Auto Logistics Inc.
- continuing
operations $ (477,875) $ (469,783) $ (665,397) $ (1,132,864)
- discontinued
operations 5,664,104 (1,775,580) 4,790,709 (3,778,940)
----------- ----------- ------------ ------------
$ 5,186,229 $(2,245,363) $ 4,125,312 $ (4,911,804)
=========== =========== ============ ============
Earnings (loss) per
share attributable to
shareholders of China
Auto Logistics Inc.
from
- continuing
operations - basic
and diluted $ (0.12) (0.12) $ (0.16) $ (0.28)
=========== =========== ============ ============
- discontinued
operations - basic
and diluted $ 1.40 $ (0.44) $ 1.19 $ (0.94)
=========== =========== ============ ============
Total earnings (loss)
per share
attributable to
shareholders of
China Auto Logistics
Inc. $ 1.28 (0.56) 1.03 (1.22)
=========== =========== ============ ============
Weighted average
number of common
shares Outstanding
- basic and diluted 4,034,494 4,034,494 4,034,494 4,034,494
=========== =========== ============ ============
CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2016 2015 2016 2015
----------- ------------ ----------- ------------
Net income (loss) $5,186,382 $(2,245,917) $4,125,440 $(4,912,781)
Other comprehensive income
(loss)
Foreign currency
translation adjustments (791,646) 118,130 (639,152) 289,529
---------- ----------- ---------- -----------
Comprehensive income
(loss) 4,394,736 (2,127,787) 3,486,288 (4,623,252)
Less: Comprehensive income
(loss) attributable to
noncontrolling interests 158 (437) 149 (745)
---------- ----------- ---------- -----------
Comprehensive income
(loss) attributable to
shareholders of China
Auto Logistics Inc. $4,394,578 $(2,127,350) $3,486,139 $(4,622,507)
========== =========== ========== ===========
CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
----------------------------
2016 2015
------------- -------------
Cash flows from operating activities
Net income (loss) $ 4,125,440 $ (4,912,781)
Add: loss from discontinued operations 1,910,641 3,778,940
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities
Depreciation on property, plant and equipment 35,721 38,111
Amortization on customer relations - 55,620
(Gain) loss on disposal of property and
equipment (5,702) 8,254
Change in Inventory reserve (68,813) 26,272
Change in reserve for advances to suppliers (76,554) 104,719
Gain on sale of Zhonghe (6,701,350) -
Changes in operating assets and liabilities:
Restricted cash (34,912,920) (14,434,440)
Accounts receivable 1,291
Receivables related to financing services 17,396,618 (11,075,069)
Inventories (7,387,423) (1,215,690)
Advances to suppliers (54,067,994) (56,164,079)
Prepaid expenses, other current assets and
other assets (54,291) 13,613
Value added tax receivable (1,187,901) (174,339)
Other assets (32,244)
Accounts payable 2,110,661 1,091,016
Line of credit related to financing services (10,833,045) 30,775,774
Notes payable to suppliers 36,344,159 21,221,809
Accrued expenses 429,317 (48,145)
Accrued interest 897,826 (2,118,118)
Customer deposits 2,889,429 33,608,269
Deferred revenue (41,013) 527,282
Income tax payable (62,549) (174)
------------ ------------
Cash (used in) provided by operating
activities from continuing operations (49,291,987) 1,108,135
Cash used in operating activities from
discontinued operations (1,299,109) (2,836,578)
------------ ------------
Net cash used in operating activities (50,591,096) (1,728,443)
------------ ------------
Cash flows from investing activities
Cash proceeds from sale of Zhonghe, net of
cash at Zhonghe of $175,767 and amount owed
to Zhonghe of $4,092,476 21,750,802 -
Proceeds from disposal of property and
equipment 8,563 9,275
Purchase of property and equipment (336,327) -
------------ ------------
Cash provided by investing activities from
continuing operations 21,423,038 9,275
Cash provided by investing activities from
discontinued operations - -
------------ ------------
Net cash provided by investing activities 21,423,038 9,275
------------ ------------
Cash flows from financing activities
Bank overdraft (2,117,974) 4,953
Proceeds from short-term borrowings 80,346,450 25,316,614
Repayments of short-term borrowings (52,438,207) (26,137,618)
Proceeds from director 384,826 389,120
Repayments to director - (244,990)
------------ ------------
Cash provided by (used in) financing
activities from continuing operations 26,175,095 (671,921)
Cash provided by (used in) financing
activities from discontinued operations - -
------------ ------------
Net cash provided by (used in) financing
activities 26,175,095 (671,921)
------------ ------------
Effect of exchange rate change on cash (112,388) 41,811
------------ ------------
Net decrease in cash and cash equivalents (3,105,351) (2,349,278)
Cash and cash equivalents at the beginning of
period 7,119,686 7,793,952
------------ ------------
Cash and cash equivalents at the end of period $ 4,014,335 $ 5,444,674
------------ ------------
Supplemental disclosure of cash flow
information
Interest paid $ 2,790,801 $ 7,588,543
------------ ------------
Income taxes paid $ 150,355 $ 70,844
------------ ------------
Non-cash activities:
Reclassification of the balance in due to
former shareholder to other payable after an
assignment of the balance to an unrelated
party $ - $ 2,231,346
============ ============
Increase in advances to Car King Tianjin for
unpaid rent $ - $ 246,354
============ ============
Assumption of outstanding payable to former
owner of Zhonghe by Huitongto offset the sale
price of Zhonghe $ 36,755,594 $ -
============ ============
CONTACTS:
Ken Donenfeld
DGI Investor Relations Inc.
kdonenfeld@dgiir.com
Tel: 212-425-5700
Fax: 646-381-9727
