SOURCE: China Auto Logistics Inc.

May 15, 2017 07:30 ET

China Auto Logistics Reports 2017 First Quarter Results

Investor Conference Call Scheduled for Tuesday, May 16th at 8:00am ET

TIANJIN, CHINA--(Marketwired - May 15, 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 announced results for its first quarter ended March 31, 2017. 

In the 2017 first quarter, the Company incurred a net loss attributable to shareholders from continuing operations of $(135,246) or $(0.03) per share. This compared with a somewhat higher loss in the same quarter last year of $(187,522) or $(0.05) per share and a total loss attributable to shareholders in the 2016 first quarter of $(1,060,917) or $(0.21)) per share. The latter figures include a loss from operations that were discontinued during 2016 and are not included in 2017 results.

In what is typically the Company's slowest quarter, net revenues of approximately $111 million in the 2017 first quarter were approximately 19% lower than in the first quarter of 2016 when stronger than anticipated sales were spurred largely by customer response to a rapid devaluation of the Chinese currency. 

Commenting on the quarter, Mr. Tong Shiping, Chairman and CEO of the Company, stated: "Despite a still relatively slower economy, increased competition, and increased government taxation on some luxury items, I believe we have continued to stabilize our business and are prepared to capitalize on any future overall improvements in the Chinese economy." He added, "While auto sales were down compared with unusually strong first quarter results in 2016, they nevertheless remained approximately 27% higher than in the first quarter of 2015. Also, we continue to be the sole one-stop provider of Financing Services to auto dealers in Tianjin, and this remains a base for our leadership, as does our much stronger financial position following the decision to sell our Zhonghe operations last year."

Financial Highlights for the First Quarter ended March 31, 2017

  • Net revenue was $110,533,781 compared with $137,064,018 in the first quarter of 2016.

  • Net loss from continuing operations attributable to shareholders of $(135,246) was an approximately 28% improvement over the net loss in the same quarter last year of $(187,522), and compared with a net loss attributable to shareholders (including discontinued operations) in the 2016 first quarter of $(1,060,917).

  • On a per share basis, a net loss per share attributable to shareholders of $(0.03) improved from $(0.05) per share in the first quarter last year and a total loss (including discontinued businesses) of $(0.26) per share in the 2016 first quarter.

  • Net revenue from Sales of Automobiles decreased 19.17% to $109,795,054 on an approximately 15% decrease in sales volume; operating income from Sales of Automobiles declined to $29,958.

  • On net revenues of $737,932, Financing Services contributed $402,996 in income from operations including $290,353 in a recovery from a reserve for uncollected accounts; in the prior year first quarter operating income was $394,067 on net revenues of $1,220,602.

  • As a result of a lower average balance of short term borrowings following the sale of Zhonghe in June of 2016, interest expense (excluding operating interest expense related to Financing Services) was $206,344 in the quarter, down from $602,039 in the first quarter of 2016.

  • Cash and cash equivalents as of March 31, 2017 were $3,003,497.

  • Working capital as of March 31, 2017, was $23,670,308 as compared with $23,576,035 as of December 31, 2016. Due mainly to the Company's continuing operating losses, negative operating cash flow, and accumulated deficit, the Company included a "going concern" paragraph in the Notes to the Company's Condensed Consolidated Financial Statements for the quarter ended March 31, 2017.

Sales of Automobiles

During the first quarter of 2017 the Company sold 1,104 automobiles compared with 1,304 in the same period in 2016, while the average unit selling price in the 2017 first quarter was $99,000 compared with $104,000 in the first quarter of 2016. Typically, due to the Chinese New Year holidays, the first quarter is the Company's slowest quarter of the year. In 2016, however, as has been detailed in prior reports, the devaluations of the Chinese Renminbi ("RMB") in that year and in 2015, contributed to a strong boost in sales in the second half of 2015 and the first quarter of 2016, as auto dealer customers decided to build their inventories in anticipation of higher prices based on the currency devaluations.

In the 2017 first quarter the Company also was affected by a new 10% sales tax on all autos selling for more than approximately $190,000. This was announced in December of 2016 and had an immediate impact on the Company's sales of higher end cars, which also tend to have the highest profit margins. Consequently, the Company experienced a decline in the quarter in its gross margin, which slipped to 0.17% in this period, compared with 0.29% in the same period a year earlier. The top three brands sold by the Company -- Land Rover, Mercedes Benz and Toyota -- accounted for 73% of net auto sales in the first quarter, down from 79% in the prior year first quarter.

Financing Services

With slightly higher year over net operating income of $402,996 in the 2017 first quarter, bolstered by a recovery from a reserve for uncollected accounts, Financing Services continued to be the biggest contributor to the Company's income from operations in the period. Nevertheless, continuing intense competition which reduced customers and customer transactions - - as reflected in particular in lower revenues, reduced fee income and reduced profit margins - - impacted results in the quarter. Revenues, which consist of both fee income and interest income, declined 39.54% to $737,932 in the 2017 quarter from $1,220,602 in the same quarter last year. Fee income was reduced to $272,892 in the 2017 first quarter, from $543,735 in the year earlier period. Gross margin in the 2017 first quarter remained relatively high at 36.98%, but was down from 44.55% in the first quarter last year. As of March 31, 2017, the Company had an aggregate amount of credit lines of $134 million, of which approximately $94 million was available for use in Financing Services.

Outlook

"Over the near term, we do not expect to see any significant improvements in our gross margins in auto sales, if the new 'super luxury' tax remains a factor in our sales mix," Mr. Tong stated. "However," he added, "we have built up our inventory in the first quarter in anticipation of an improving outlook for auto sales. We think an improving economy will contribute to this, as well as benefits we anticipate from the Parallel Import Scheme that is being implemented in Tianjin and other key cities, which we believe provides us with some great long term advantages competing with official authorized automobile dealers."

"At the same time," Mr. Tong said, "we continue to study potential opportunities to expand into new higher margin services such as internet sales."

Conference Call Invitation

The Company will discuss 2017 first quarter results during a live conference call and webcast on Tuesday, May 16, 2017 at 8:00am ET.

To participate in the call, interested participants should call 1-877-723-9502 when calling within the United States or 1-�719-325-4842 when calling internationally. Please ask for the Conference ID: 2619356. There will be a playback available until 05/23/17. 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: 2619356.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=124481 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.
       CONDENSED CONSOLIDATED BALANCE SHEETS
    March 31, 2017
(Unaudited)
    December 31, 2016  
ASSETS:                
Current assets:                
Cash and cash equivalents   $ 3,003,497     $ 3,004,932  
Restricted cash     10,074,978       22,703,835  
Accounts receivable     1,451,267       -  
Receivable related to financing services, net     41,544,212       48,549,972  
Inventories     12,013,616       13,049,065  
Advances to suppliers, net     66,914,400       71,921,388  
Prepaid expenses     34,967       376,581  
Value added tax receivable     350,956       615,555  
Total current assets     135,387,893       160,221,328  
                 
Property, plant, and equipment, net     299,136       317,282  
Other assets     30,563       30,329  
Total assets   $ 135,717,592     $ 160,568,939  
                 
LIABILITIES AND SHAREHOLDERS' EQUITY:                
Current liabilities:                
Lines of credit related to financing services   $ 39,787,152     $ 47,081,763  
Short term borrowings     13,061,405       12,961,389  
Accounts payable     1,358,132       365,120  
Notes payable to suppliers     11,610,137       25,922,779  
Accrued expenses     149,987       131,128  
Customer deposits     41,599,221       46,047,515  
Deferred revenue     54,854       48,171  
Due to former shareholder     1,971,723       1,956,625  
Due to director     1,634,987       1,550,745  
Income tax payable     489,987       580,058  
Total current liabilities     111,717,585       136,645,293  
                 
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 March 31, 2017 and December 31, 2016, respectively     4,034       4,034  
Additional paid-in capital     22,979,734       22,979,734  
Accumulated other comprehensive income     4,151,790       3,939,898  
Accumulated deficit     (3,498,812 )     (3,363,566 )
Total China Auto Logistics Inc. shareholders' equity     23,636,746       23,560,100  
Noncontrolling interests     363,261       363,546  
Total equity     24,000,007       23,923,646  
                 
Total liabilities and shareholders' equity   $ 135,717,592     $ 160,568,939  
                 
 
    CHINA AUTO LOGISTICS INC.
    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
    Three Months Ended
March 31
 
    2017     2016  
             
Net revenue   $ 110,533,781     $ 137,064,018  
Cost of revenue     110,069,887       136,112,906  
Gross profit     463,894       951,112  
                 
Operating expenses:                
Selling and marketing     182,598       184,081  
General and administrative     612,623          
556,009
 
Recovery from reserve for uncollectible account on receivable related to financing services     (290,353 )     (68,813 )
Total operating expenses     504,868       671,277  
                 
(Loss) income from operations     (40,974 )     279,835  
                 
Other income (expenses):                
Interest income     16,269       196,350  
Interest expense     (206,344 )     (602,039 )
Gain on disposal of property and equipment     -       2,707  
Foreign exchange gain     1,143       -  
Miscellaneous     -       1,569  
Total other expenses     (188,932 )     (401,413 )
                 
Loss from continuing operations before income tax expense     (229,906 )     (121,578 )
                 
Income tax (benefit) expense     (94,579 )     65,969  
                 
Net loss from continuing operations     (135,327 )     (187,547 )
                 
                 
Discontinued operations:                
Loss from operations of discontinued Airport Automall Automotive Services     -       (1,021,108 )
Income tax benefit     -       (147,713 )
Net loss from discontinued operations     -       (873,395 )
                 
Net loss     (135,327 )     (1,060,942 )
Less: Net loss attributable to noncontrolling interests     (81 )     (25 )
Net loss attributable to shareholders of China Auto Logistics Inc.   $ (135,246 )     (1,060,917 )
                 
Net loss attributable to shareholders of China Auto Logistics Inc.                
- continuing operations   $ (135,246 )     (187,522 )
- discontinued operations     -       (873,395 )
    $ (135,246 )     (1,060,917 )
Loss per share attributable to shareholders of China Auto Logistics Inc. from                
- continuing operations - basic and diluted   $ (0.03 )     (0.05 )
- discontinued operations - basic and diluted   $ -       (0.21 )
Total loss per share attributable to shareholders of China Auto Logistics Inc.   $ (0.03 )   $ (0.26 )
                 
Weighted average number of common shares outstanding                
- basic and diluted     4,034,494       4,034,494  
                 
   
CHINA AUTO LOGISTICS INC.  
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)  
    Three Months Ended
March 31,
 
    2017     2016  
                 
Net loss   $ (135,327 )   $ (1,060,942 )
                 
Other comprehensive income                
Foreign currency translation adjustments     211,688       152,494  
                 
Comprehensive income (loss)     76,361       (908,448 )
                 
Add: Comprehensive loss attributable to noncontrolling interests     (285 )     (9 )
                 
Comprehensive income (loss) attributable to shareholders of China Auto Logistics Inc.   $ 76,646     $ (908,439 )
                 
 
 CHINA AUTO LOGISTICS INC.   
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)   
    Three Months Ended
March 31,
 
    2017     2016  
Cash flows from operating activities            
Net loss   $ (135,327 )   $ (1,060,942 )
Add: loss from discontinued operations     -       873,395  
                 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities                
Recovery on reserve for uncollectible account on receivable related to financing services     (290,353 )     (68,813)  
Depreciation on property, plant and equipment     21,879       9,234  
Gain on sale of property and equipment     -       (5,702 )
                 
Changes in operating assets and liabilities:                
Restricted cash     12,808,420       (15,046,585 )
Accounts receivable - trade     (1,451,763 )     -  
Receivables related to financing services     7,673,264       18,706,213  
Inventories     1,136,529       (10,321,688 )
Advances to suppliers     5,563,861       (79,577 )
Prepaid expenses, other current assets and other assets     344,638       3,142  
Value added tax receivable     269,441       (1,707,930 )
Accounts payable     990,532       1,983,994  
Line of credit related to financing services     (7,660,527 )     (12,176,165 )
Notes payable to suppliers     (14,517,627 )     15,291,689  
Accrued expenses     18,193       (26,560 )
Customer deposits     (4,805,254 )     6,461,553  
Deferred revenue     6,315       (8,140 )
Income tax payable     (94,579 )     3,503  
Cash (used in) provided by operating activities from continuing operations     (122,358 )     2,830,621  
Cash used in operating activities from discontinued operations     -       (17,589 )
Net cash (used in) provided by operating activities     (122,358 )     2,813,032  
                 
Cash flows from investing activities                
Proceeds from sale of property and equipment     -       8,563  
Purchase of property and equipment     (1,278 )     (120,436 )
Cash provided by investing activities from continuing operations     (1,278 )     (111,873 )
Cash provided by investing activities from discontinued operations     -       -  
Net cash used in investing activities     (1,278 )     (111,873 )
                 
Cash flows from financing activities                
Bank overdraft     -       168,552  
Proceeds from short-term borrowings     4,355,288       28,442,541  
Repayments of short-term borrowings     (4,355,288 )     (33,452,706 )
Proceeds from director     99,998       161,486  
Cash provided by (used in) financing activities from continuing operations     99,998       (4,680,127 )
Cash provided by financing activities from discontinued operations     -       -  
Net cash provided by (used in) financing activities     99,998       (4,680,127 )
                 
Effect of exchange rate change on cash     22,203       19,719  
                 
Net decrease in cash and cash equivalents     (1,435 )     (1,959,249 )
                 
Cash and cash equivalents at the beginning of period     3,004,932       7,119,686  
Cash and cash equivalents at the end of period   $ 3,003,497     $ 5,160,437  
                 
Supplemental disclosure of cash flow information                
Interest paid   $ 667,892     $ 1,554,729  
Income taxes paid   $ -     $ 62,466  
                 

Contact Information

  • CONTACT:

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