SOURCE: China Auto Logistics Inc.

March 28, 2017 07:30 ET

China Auto Logistics Reports 2016 Full Year Results

Investor Conference Call Scheduled for Wednesday, March 29th at 8:00am EDT

TIANJIN, CHINA--(Marketwired - Mar 28, 2017) - 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, today reported that strong fourth quarter Auto Sales were a key factor in the approximately 4.6% year over year increase achieved in net revenues in 2016. Additionally, improved 2016 year over year bottom line results in Financing Services, despite lower year over year sales in this business, helped to significantly reduce the Company's net loss from continuing operations in 2016 compared with year ago results. 

Financial Highlights

  • Net revenue for the year ended December 31, 2016 was $467,060,769, a gain of 4.64% over net revenue of $446,344,447 in the prior year.

  • The 2016 net loss attributable to shareholders of China Auto Logistics from continuing operations of $(741,176) or $(0.18) per share, was a significant improvement over the net loss reported in 2015 of $(9,554,918) or $(2.37) per share.

  • 2016 total net income, which included net income from discontinued operations of $4,724,832, increased to $3,983,656, or $0.99 per share, as compared with a loss of $(12,014,594) or $(2.98) per share in 2015.

  • Net revenue from Sales of Automobiles increased 4.99% to $462,712,818 in 2016 on a 5.7% increase in sales volume, while operating income from this business in 2016 increased to $261,478 from a loss in 2015 of $(3,778,533).

  • Despite a decline in net revenue from Financing Services in 2016 of approximately 22.51% to $4,314,291, operating income from this business increased to $1,168,420 from a loss of $(1,664,990) a year earlier.

  • For the full year ended December 31, 2016 the Company reported sharply lower interest expense of $1,519,016 as compared with $2,858,299 in 2015, as a result of lower average balance of short-term borrowings following the sale of Zhonghe in June of 2016.

  • Cash, cash equivalents totaled $3,004,932 as of December 31, 2016.

  • As of December 31, 2016 the Company also had positive working capital of $23,576,035 as compared with a working capital deficit of $(30,801,730) as of the same date in 2015. Despite an improved financial picture, the Company reported negative operating cash flow for 2016 and a smaller but still accumulated deficit as of December 31, 2016 which were key factors in determining the inclusion of a "going concern" paragraph in the Notes to the Company's Condensed Consolidated Financial Statements for 2016.

Sales of Automobiles

During 2016, the Company sold 4,438 automobiles, up 5.7% from the prior year's sales volume of 4,199 automobiles. However, the average unit sales price in 2016 declined slightly from $105,000 in 2015 to $104,000, and the gross margin dropped to 0.20% in 2016 compared with 0.26% in the prior year. This was a reflection of the continuing competition in the imported automobile market, and the Company's attempt to remain a leader in this market.

The Company's top three selling brands in 2016 were Land Rover, Mercedes Benz and Toyota. The strongest sales in 2016 occurred in the first quarter, followed by weaker second and third quarters, reflecting the reaction of the Company's dealer customers to currency fluctuations. The strong sales of $139.9 million recognized in the fourth quarter, in part, may have reflected customers' depletion of built up inventories earlier in the year.

The Company believes that sales during 2016 were helped somewhat by the implementation of the government's parallel import scheme, which placed importers such as CALI on equal competitive footing with authorized automobile importers.

Financing Services

Financing Services in 2016 was again the largest contributor to the Company's operating income given its typically much larger profit margins compared with automobile sales. While net revenues from this business decreased approximately 22.51% to $4,314,291 in 2016 compared with $5,567,208 in 2015, reflecting declines in both fee income and interest income, the gross margin for this business increased to 46.28% in 2016 compared with 39.52% in 2015.

As of December 31, 2016, the Company had aggregate credit lines of approximately $125 million to support its financing services, of which $78 million remained available to be used. These credit lines are with several of China's largest commercial banks, and the Company has not had any formidable difficulties in obtaining these bank lines.

Management Comments on Results and Outlook

Mr. Tong Shiping, Chairman and CEO of China Auto Logistics, commented, "During the past year we made the decision to sell Zhonghe, which strengthened our financial situation and permitted us to compete more effectively in the still very competitive imported automobile space. We were aided further by the implementation of the still new 'Parallel Imported Vehicle' scheme, which has created a much better climate for sales by wholesalers such as ourselves, as our customers can now obtain the same benefits buying from us as they would have buying from 'authorized' dealers." He added, "In fact, we believe the new scheme strengthens certain advantages that we will continue to capitalize on, such as faster access to the newest luxury models."

"Over the near term, while we will aim to continue our leadership in imported vehicles, and, at the least, maintain our current margins," Mr. Tong said, "we also will continue to try to expand our higher margin financing services, as well as add new services, such as online sales, which is one such new service we are continuing to explore."

"Longer term," Mr. Tong continued, "we remain very positive about the outlook for luxury imported automobile sales in China as the economy continues to grow and create new wealthy consumers."

Conference Call Invitation

The Company will discuss 2016 year end results during a live conference call and webcast on Wednesday, March 29, 2017 at 8:00am EDT.

To participate in the call, interested participants should call 1-877-419-6591 when calling within the United States or 1-719-325-4745 when calling internationally. Please ask for the Conference ID: 5567235. There will be a playback available until 04/05/17. To listen to the playback, please call 1-844-512-2921 when calling within the United States or 1-412-317-6671 when calling internationally. Use the Replay Pin Number: 5567235.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=123536 at ViaVid's website at http://viavid.com.

SEE ATTACHED TABLES

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.

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. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
  December 31,
  2016   2015
ASSETS:      
Current assets:      
Cash and cash equivalents $ 3,004,932   $ 7,119,686
Restricted cash   22,703,835     23,799,346
Receivable related to financing services, net   48,549,972     82,105,826
Inventories, net   13,049,065     12,163,511
Advances to suppliers, net   71,921,388     100,807,121
Prepaid expenses   376,581     29,372
Value added tax receivable   615,555     369,940
Total current assets   160,221,328     226,394,802
           
Property, plant, and equipment, net   317,282     72,742
Other assets   30,329     -
Non current assets of discontinued operations   -     61,755,609
Total assets $ 160,568,939   $ 288,223,153
           
LIABILITIES AND SHAREHOLDERS' EQUITY:          
Current liabilities:          
Bank overdraft $ -   $ 2,131,009
Lines of credit related to financing services   47,081,763     73,004,179
Short term borrowings   12,961,389     67,290,734
Accounts payable   365,120     1,334,829
Notes payable to suppliers   25,922,779     33,509,483
Accrued expenses   131,128     273,497
Customer deposits   46,047,515     39,901,621
Deferred revenue   48,171     121,456
Due to former shareholder   1,956,625     2,093,182
Due to director   1,550,745     722,028
Income tax payable   580,058     656,098
Current liabilities of discontinued operations   -     36,158,416
Total current liabilities   136,645,293     257,196,532
           
Non current liability of discontinued operations   -     9,248,814
Total liabilities   136,645,293     266,445,346
           
Commitments and contingencies          
           
           
           
CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
(Continued)  
   
  December 31,  
  2016     2015  
           
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 December 31, 2016 and 2015, respectively   4,034       4,034  
Additional paid-in capital   22,979,734       22,979,734  
Accumulated other comprehensive income   3,939,898       5,776,306  
Accumulated deficit   (3,363,566 )     (7,347,222 )
Total China Auto Logistics Inc. shareholders' equity   23,560,100       21,412,852  
Noncontrolling interests   363,546       364,955  
Total equity   23,923,646       21,777,807  
               
Total liabilities and shareholders' equity $ 160,568,939     $ 288,223,153  
   
   
   
CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
   
  Year Ended December 31,  
  2016     2015  
           
Net revenue $ 467,060,769     $ 446,344,447  
Cost of revenue   464,099,247       442,944,716  
Gross profit   2,961,522       3,399,731  
               
Operating expenses:              
Selling and marketing   700,928       761,307  
General and administrative   1,869,156       1,649,559  
Reserve for uncollectible account on receivable related to financing services   158,092       3,216,727  
Impairment loss on goodwill and intangible asset   -       4,281,414  
Total operating expenses   2,728,176       9,909,007  
               
Income (loss) from operations   233,346       (6,509,276 )
               
Other income (expenses):              
Interest income   541,070       278,392  
Interest expense   (1,519,016 )     (2,858,299 )
Gain (loss) on disposal of property and equipment   5,613       (8,085 )
Loss on sale of equity interest in subsidiary   -       (210,895 )
Foreign exchange gain   109,670       -  
Miscellaneous   -       1,879  
Total other expenses   (862,663 )     (2,797,008 )
               
Loss from continuing operations before income tax expense   (629,317 )     (9,306,284 )
               
Income tax expense   113,163       249,988  
               
Net loss from continuing operations   (742,480 )     (9,556,272 )
               
               
Discontinued operations:              
Income (loss) from operations of discontinued Airport Automall Automotive Services (including gain on disposal of $6,629,243 for 2016)   4,479,736       (3,435,730 )
Income tax benefit   245,096       976,054  
Net income (loss) from discontinued operations   4,724,832       (2,459,676 )
               
Net income (loss)   3,982,352       (12,015,948 )
Less: Net loss attributable to noncontrolling interests   (1,304 )     (1,354 )
Net income (loss) attributable to shareholders of China Auto Logistics Inc. $ 3,983,656       (12,014,594 )
               
Net income (loss) attributable to shareholders of China Auto Logistics Inc.              
- continuing operations $ (741,176 )     (9,554,918 )
- discontinued operations   4,724,832       (2,459,676 )
  $ 3,983,656       (12,014,594 )
income (loss) per share attributable to shareholders of China Auto Logistics Inc. from              
- continuing operations - basic and diluted $ (0.18 )     (2.37 )
- discontinued operations - basic and diluted $ 1.17       (0.61 )
Total income (loss) per share attributable to shareholders of China Auto Logistics Inc. $ 0.99     $ (2.98 )
               
Weighted average number of common shares outstanding              
- basic and diluted   4,034,494       4,034,494  
   
   
   
CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  
   
  Year Ended December 31,  
  2016     2015  
           
Net income (loss) $ 3,982,352     $ (12,015,948 )
               
Other comprehensive loss              
- Foreign currency translation adjustments   (1,836,513 )     (1,553,261 )
               
Comprehensive income (loss)   2,145,839       (13,569,209 )
               
Less: Comprehensive (loss) income attributable to noncontrolling Interests   (1,409 )     74  
               
Comprehensive income (loss) attributable to shareholders of China Auto Logistics Inc. $ 2,147,248     $ (13,569,283 )
   
   
   
CHINA AUTO LOGISTICS INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
   
    Year Ended December 31,  
    2016     2015  
             
Cash flows from operating activities:            
Net income (loss)   $ 3,982,352     $ (12,015,948 )
Add: loss from discontinued operations     1,904,411       2,459,676  
                 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities                
Depreciation and amortization     80,709       165,950  
(Gain) loss on disposal of property and equipment     (5,613 )     8,085  
Impairment loss on goodwill and intangible asset     -       4,281,414  
Reserve for uncollectible account on receivable related to financing services     158,092       3,216,727  
(Recovery) allowance for uncollectible advances to suppliers     (75,267 )     102,573  
Gain on sale of Zhonghe     (6,629,243 )     -  
Loss on sale of equity interest in subsidiary     -       210,895  
                 
Changes in operating assets and liabilities:                
Restricted cash     (33,595,344 )     (12,828,262 )
Receivables related to financing services     29,317,679       11,541,198  
Inventories     (2,009,455 )     (282,015 )
Advances to suppliers     (65,408,469 )     (37,540,818 )
Prepaid expenses, other current assets and other assets     (365,559 )     (6,936 )
Value added tax receivable     (284,980 )     71,697  
Other assets     (31,702 )     -  
Accounts payable     (922,577 )     1,295,039  
Lines of credit related to financing services     (22,117,471 )     13,906,901  
Notes payable     35,751,865       18,898,271  
Accrued expenses     247,112       (38,617 )
Customer deposits     10,114,574       3,769,780  
Deferred revenue     (68,318 )     (685,079 )
Income tax payable     (34,741 )     16,438  
Cash used in operating activities from continuing operations     (49,991,945 )     (3,453,031 )
Cash used in operating activities from discontinued operations     (322,172 )     (3,927,010 )
Net cash used in operating activities     (50,314,117 )     (7,380,041 )
                 
Cash flows from investing activities:                
Cash proceeds from sale of Zhonghe, net of cash at Zhonghe of $172,812 and amount owed to Zhonghe of $4,023,656     21,385,037       -  
Sale of equity interest in subsidiary     -       3,048,483  
Proceeds from sales of property and equipment     8,430       11,197  
Purchase of property and equipment     (336,949 )     (3,603 )
Cash provided by investing activities from continuing operations     21,056,518       3,056,077  
Cash provided by investing activities from discontinued operations     -       1,865,702  
Net cash provided by investing activities     21,056,518       4,921,779  
                 
Cash flows from financing activities:                
Bank overdraft     (2,082,149 )     (167,582 )
Proceeds from short-term borrowings     86,557,148       73,464,249  
Repayments of short-term borrowings     (59,726,535 )     (71,250,503 )
Proceeds from a director     686,185       599,120  
Repayment of amount due to director     -       (454,280 )
Cash provided by financing activities from continuing operations     25,434,649       2,191,004  
Cash provided by financing activities from discontinued operations     -       -  
Net cash provided by financing activities     25,434,649       2,191,004  
                 
Effect of exchange rate change on cash     (291,804 )     (407,008 )
                 
Net decrease in cash and cash equivalents     (4,114,754 )     (674,266 )
                 
Cash and cash equivalents at the beginning of year     7,119,686       7,793,952  
Cash and cash equivalents at the end of year   $ 3,004,932     $ 7,119,686  
                 
Supplemental disclosure of cash flow information:                
Interest paid   $ 6,148,825     $ 11,525,429  
Income taxes paid   $ 147,905     $ 193,615  
                 
Non cash investing activities:                
Amount due to Zhengji to offset the sales price of equity interest in Zhengji   $ -     $ 5,231,941  
Assumption of outstanding payable to former owner of Zhonghe by Huitong to offset the sale price of Zhonghe   $ 36,137,505     $ -  

Contact Information

  • CONTACT:

    Ken Donenfeld
    DGI Investor Relations Inc.
    kdonenfeld@dgiir.com
    Tel: 212-425-5700
    Fax: 646-381-9727