SOURCE: China Auto Logistics Inc.

China Auto Logistics Inc.

March 30, 2012 16:02 ET

China Auto Logistics 2011 Revenues Climbed 75% Over Prior Year Primarily on Strength of Imported Luxury Auto Sales and Continued Growth in Auto-Related Services

Investor Conference Call Scheduled for Tuesday, April 3rd at 8:00am ET

TIANJIN, CHINA--(Marketwire - Mar 30, 2012) - China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), one of China's leading developers of websites for buyers and sellers of imported and domestic automobiles, a top seller in China of imported luxury cars, and a leading provider of auto-related services, today announced a 75% increase in 2011 revenues as a consequence of the sharp increase in year over year sales of luxury imported automobiles which further confirmed the Company's leadership position in this fast growing Chinese auto industry niche. The Company's higher margin auto-related services businesses also achieved solid growth while helping to build auto sales through the Company's "one-stop" services concept. However, the termination of the VIP fee-based services of Goodcar in the second half of 2011, plus a one-time write off of goodwill and intangible assets for Goodcar of nearly $900,000 temporarily flattened company-wide profit growth. Consequently, while gross profit increased 14.8% in 2011, net income for the year advanced 0.10%.

Highlights

  • Net revenues in 2011 grew 75% to $452,149,602, compared with $258,236,252 a year earlier
  • Automobile Sales contributed approximately $439 million to net revenues (2010: $248 million), followed by Web-based Advertising Services with approximately $6.2 million (2010: $5.96 million), Financing Service with $4.1 million (2010: $2.3 million), Automobile Value Added Services with $1.95 million (2010: $1.16 million) and Auto Mall Management Services with $945,277 (2010: $800,050).
  • Net income attributable to shareholders in 2011 was $8,032,615, or $0.39 per share, on 20,626,441 weighted average shares outstanding, compared with $8,006,640, or $0.44 per share, on 18,277,723 weighted average shares outstanding.
  • Operating income in 2011 was $11,377,088 compared with $11,220,632 in the prior year. The largest contributor to 2011 operating income was Auto Sales, with $5,034,537 (2010: $4,262,990), followed by Web-Based Advertising with $4,375,517(2010: $5,097,853). Financing Services contributed $1,888,578 (2010: $1,462,075), Auto Mall Management added $818,026 (2010: $641,756) and Automobile Value Added Services $536,575 (2010: $953,854).

Auto Sales

The Company said that throughout 2011, while sales of domestic autos in China were lower than in prior years, the luxury auto market continued to boom. With relationships with dealers in more than 100 cities throughout China, a strong Internet presence, and the ability to offer customers a variety of "one-stop" services such as financing, the Company achieved a 77% year over year sales gain. The Company sold 4,190 autos in 2011, up from 2,778 a year earlier and also saw the average unit price per auto increase over 17% to approximately $105,000 from $89,000 in 2010.

Financing Services

During the year, the Company expanded its aggregate line of credit by more than $100 million, to $179 million, from approximately $51 million in 2010, which permitted the approximately 75% increase in 2011 net revenues from this business year over year. As of March 5, 2012, the Company's credit line was $151 million, and it does not foresee any difficulties in obtaining credit lines on an "as needed" basis going forward, having established excellent relationships with a number of leading Chinese banks.

Web-based Advertising Services

The Company has remained in a leadership position with its websites serving the full spectrum of China's "auto-living" public, and with established sites covering 35 cities throughout the country. While starting over the past two years with a "first mover" advantage, during 2011 it became evident that this was eroded somewhat by a growing number of competitors with both general and specialized sites which, in turn, created pricing pressure on the models the Company developed. As such, in the third and fourth quarter management took steps to address the situation, in particular, by determining to focus on improving service and pricing for its largest customers, namely, auto dealer subscribers. Management also concluded that the Company's VIP card program on its Goodcar site had reduced profit potential and it was decided to terminate it. Also under review are the Company's previously announced plans to expand to 60 cities. These and other adjustments made lowered revenues of the website sector in the second half of 2011. The Company will adjust its website business strategy based on the market situation in the future and strongly believes that the shutdown of the membership fee base will allow balance in advertising revenues with revenues from web-based services that continue to be developed.

Automobile Value Added Services

Goodcar was a significant contributor to this segment in 2011, which saw revenues grow approximately 68%. With the decision to terminate VIP cards offered through Goodcar, it was determined there was an impairment loss of goodwill and intangible assets relating to the Goodcar acquisition totaling $893,583, which lowered the contribution to operating income of the Automobile Value Added Services segment by this amount. Going forward, the development of new value added services such as auto insurance, remains a Company priority and, in time, such new online services are expected to become a significant contributor to the Company's bottom line.

Auto Mall Management Services

This business continued to provide a very healthy contribution to the Company's bottom line in 2011, and, in 2012, management will continue to review additional opportunities in this sector, including a domestic auto mall in Tianjin.

Outlook

"We are very pleased with the dramatic growth we have achieved this year," stated Mr. Tong Shiping, CEO and Chairman of the Company, "and firmly believe the brief pause in our earnings growth in the second half of 2011 as we adjusted our web strategy has allowed us to reset our clock to resume on a successful path in 2012."

"In particular," he said, "we continue to see our bottom line growth coming primarily from growth in our auto related services, not just advertising, but from a ramping up of such services as auto-insurance where we recently announced cooperative agreements with some of China's leading insurers. When all the pieces are in place, we will be well positioned to succeed given our strong relationships throughout China, and our increasingly well known Internet sites."

He added, "We also continue to envision increasing our business in the domestic auto sector, but will pay careful attention to the timing of our moves. All in all, the outlook for growth in 2012 and future years remains very bright."

Conference Call Invitation

The Company will discuss 2011 year end results during a live conference call and webcast on Tuesday, April 3rd at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-2068 when calling within the United States or 1-480-629-9712 when calling internationally. Please ask for the China Auto Logistics 2011 Year End Earnings Conference Call, Conference ID: 4527628. There will be a playback available until 04/10/12. 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: 4527628.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://viavid.net/dce.aspx?sid=00009566 or at ViaVid's website at www.viavid.net.

SEE ATTACHED TABLES*

*Note: The attached tables are provided as a convenience and should be read in conjunction with the Company's 10-K filed with U.S. Securities and Exchange Commission.

About China Auto Logistics Inc.

China Auto Logistics Inc. operates www.cali.com.cn, one of the leading automobile portals for car dealers and consumers of vehicles and auto-related services in China. Additionally, it is one of China's top sellers of luxury imported cars and a leading developer of websites for buyers and sellers of imported and domestic automobiles. These include www.188.com, China's only site for imported car dealers and consumers; www.at160.com, focused on domestic auto sales, and www.goodcar.cn, a highly popular internet destination for auto drivers attracted by discount cards for a variety of automotive products and services. The Company believes the integration of these wide ranging sites and services in a single portal serving a broad spectrum of China's "auto living" public, as well as the addition of new web-based auto-related services for businesses and consumers, will drive future growth. For additional information visit 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.
CONSOLIDATED STATEMENTS OF INCOME
Year Ended December 31,
2011 2010
Net revenue $ 452,149,602 $ 258,236,252
Cost of revenue 436,010,820 244,176,707
Gross profit 16,138,782 14,059,545
Operating expenses:
Selling and marketing 1,488,408 1,117,202
General and administrative 2,379,703 1,721,711
Impairment loss of goodwill and intangible assets 893,583 -
Total operating expenses 4,761,694 2,838,913
Income from operations 11,377,088 11,220,632
Other income (expenses):
Interest income 63,922 58,714
Interest expenses (16,641 ) (144,440 )
Miscellaneous 11,466 (8,079 )
Total other income (expenses) 58,747 (93,805 )
Income before income taxes 11,435,835 11,126,827
Income taxes 3,303,177 3,002,557
Net income 8,132,658 8,124,270
Less: Net income attributable to noncontrolling interests 100,043 117,630
Net income attributable to shareholders of China Auto Logistics Inc. $ 8,032,615 $ 8,006,640
Earnings per share attributable to shareholders of China Auto Logistics Inc.
- basic and diluted $ 0.39 $ 0.44
Weighted average number of common share outstanding
- basic and diluted 20,626,441 18,277,723
CHINA AUTO LOGISTICS INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2011 2010
ASSETS:
Current assets:
Cash and cash equivalents $ 8,184,793 $ 17,733,502
Restricted cash 18,805,876 5,969,306
Accounts receivable - trade, net of allowance of doubtful accounts of $2,796 and $2,633 in 2011 and 2010, respectively 107,936 145,840
Receivables related to financing services 89,252,244 39,106,056
Notes receivable 4,761,225 -
Inventories 28,702,113 19,052,212
Advances to suppliers 44,746,804 13,752,616
Prepaid expenses 141,665 179,526
Value added tax receivable 625,724 40,950
Deferred tax assets - 10,057
Total current assets 195,328,380 95,990,065
Property and equipment, net 642,672 756,110
Goodwill 3,736,573 4,321,930
Intangible assets, net 1,419,830 1,677,649
Other assets 37,637 54,034
Total assets $ 201,165,092 $ 102,799,788
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Lines of credit related to financing services $ 87,710,957 $ 36,038,949
Short term borrowings 4,285,102 -
Accounts payable 1,566 -
Accrued expenses 446,264 481,804
Customer deposits 46,865,945 17,464,320
Deferred revenue 319,974 260,705
Due to shareholders 3,296,548 5,420,484
Due to director 22,316 573,922
Income tax payable 1,161,664 1,239,119
Total current liabilities 144,110,336 61,479,303
Deferred tax liability 359,342 419,413
Total liabilities 144,469,678 61,898,716
CHINA AUTO LOGISTICS INC.
CONSOLIDATED BALANCE SHEETS
(Continued)
December 31,
2011 2010
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, 22,163,427 shares and 19,163,427 shares issued and outstanding as of December 31, 2011 and 2010, respectively 22,163 19,163
Additional paid-in capital 21,975,605 16,728,605
Accumulated other comprehensive income 5,699,444 3,313,472
Retained earnings 28,439,322 20,406,707
Total China Auto Logistics Inc. shareholders' equity 56,136,534 40,467,947
Noncontrolling interests 558,880 433,125
Total equity 56,695,414 40,901,072
Total liabilities and shareholders' equity $ 201,165,092 $ 102,799,788
CHINA AUTO LOGISTICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2011 2010
Cash flows from operating activities:
Net income $ 8,132,658 $ 8,124,270
Adjustments to reconcile net income to net cash (used for) provided by operating activities
Depreciation and amortization 491,480 257,952
Loss on disposal of property and equipment 7,736 1,092
Loss on goodwill and intangible assets 893,583 -
Changes in operating assets and liabilities, net of effects related to acquisition of Goodcar:
Restricted cash (11,728,394 ) (1,513,895 )
Accounts receivable - trade 43,315 44,048
Receivables related to financing services (48,199,401 ) (28,822,054 )
Notes receivable (4,740,909 ) -
Inventories (8,262,509 ) (1,886,865 )
Advances to suppliers (29,615,008 ) 4,838,755
Prepaid expenses, other current assets and other assets 63,445 (108,219 )
Value added tax receivable (534,814 ) 333,087
Deferred tax assets 10,107 (9,889 )
Accounts payable (26,109 ) -
Lines of credit related to financing services 49,036,447 27,562,343
Notes payable - (2,929,437 )
Accrued expenses 382,793 484,542
Customer deposits 28,140,166 11,234,004
Deferred revenue 47,899 (44,301 )
Income tax payable (133,267 ) (1,129,874 )
Deferred tax liability (84,278 ) (10,319 )
Net cash (used for) provided by operating activities (16,075,060 ) 16,425,240
Cash flows from investing activities:
Cash acquired related to the acquisition of Goodcar - 1,677,446
Proceeds from disposal of property and equipment 30,004 78,987
Purchase of property and equipment (127,145 ) (298,197 )
Net cash (used for) provided by investing activities (97,141 ) 1,458,236
Cash flows from financing activities:
Proceeds from issuance of common stock 5,250,000 -
Proceeds from short-term borrowings 4,266,818 -
Repayments of short-term borrowings - (3,266,397 )
Repayments to shareholders (2,754,479 ) -
Proceeds from a director 38,710 1,054,585
Repayment of amount due to director (590,796 ) (500,337 )
Net cash flows provided by (used for) financing activities 6,210,253 (2,712,149 )
CHINA AUTO LOGISTICS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
Year Ended December 31,
2011 2010
Effect of exchange rate change on cash 413,239 307,117
Net (decrease) increase in cash and cash equivalents (9,548,709 ) 15,478,444
Cash and cash equivalents at the beginning of year 17,733,502 2,255,058
Cash and cash equivalents at the end of year $ 8,184,793 $ 17,733,502
Supplemental disclosure of cash flow information:
Interest paid $ 1,665,633 $ 699,235
Income taxes paid $ 3,507,184 $ 4,152,639
Non-cash activities
Increase in balance due to shareholders for accrued expenses paid by shareholder $ 440,113 $ 601,234

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