SOURCE: Fincera Inc.

Fincera Inc.

September 30, 2015 08:30 ET

Fincera Reports 2015 Second Quarter and Six Month Financial Results

Company Ceases Initiating New Truck Leases as Business Focus Continues Shift Toward Internet-Based Businesses

SHIJIAZHUANG, CHINA--(Marketwired - Sep 30, 2015) - Fincera Inc. ("Fincera" or the "Company") (OTCQB: AUTCF), a leading provider of web-based financing and ecommerce services for China's transportation and automobile industries, today reported financial results for the second quarter and six months ended June 30, 2015.

Q2 2015 Operational Highlights

  • The Company's legacy truck leasing business ceased initiating new leases in August 2015 as it is now focusing on developing its Internet-based business segment, which was launched in November 2014. The Company expects to continue servicing and collecting payments on existing commercial vehicle leases until all obligations related to the individual leases are met.
  • The Company's electronic payments platform CeraPay was used to make payment transactions totaling over RMB741 million during the month of June 2015. The online marketplace lending platform CeraVest has originated over RMB1 billion in loans since its launch in November 2014 and had a loan portfolio of approximately RMB897 million at June 30, 2015.

Q2 2015 Financial Highlights (comparisons are year over year)

  • Total revenues of $76.5 million, compared to $253.2 million, as a result of the decrease in commercial vehicle leases initiated during the period
  • Gross profit of $21.4 million, or 28.0% of total revenues, compared to $24.7 million, or 9.7% of total revenues
  • Net income of $3.0 million, or $0.12 per diluted share, compared to $4.4 million, or $0.18 per diluted share
  • Adjusted EBITDA of $11.1 million, compared to $13.5 million

Six Months 2015 Financial Highlights (comparisons are year over year)

  • Total revenues of $147.7 million, compared to $411.6 million, as a result of the decrease in commercial vehicle leases initiated during the period
  • Gross profit of $40.8 million, or 27.6% of total revenues, compared to $44.4 million, or 10.8% of total revenues
  • Net income of $5.7 million, or $0.23 per diluted share, a 215.4% increase from $1.8 million, or $0.08 per diluted share, primarily as a result of the one-time litigation expenses incurred to settle the SEC lawsuit in the first quarter of 2014
  • Adjusted EBITDA of $21.1 million, compared to $22.2 million

Management Comments
Mr. Yong Hui Li, Chairman and CEO of Fincera, stated, "In recent years, China's economy has seen a dramatic shift from manufacturing and industrials to one that is increasingly reliant on spending by its emerging middle class. Fincera's roots were originally founded upon a growing commercial vehicle industry, and as China's economy has evolved, so too has our Company. Our management team has experience in successfully transitioning business models as evidenced by our Company's shift several years ago from an auto dealership business to the commercial vehicle leasing and support business. We continue to see a strong opportunity where we can leverage our experience in the transportation industry and our extensive store network in the development of our new Internet-based businesses. CeraPay and CeraVest, the financial products we launched in late 2014, have seen continuous growth since their launches. We believe these new businesses present a significant opportunity for our Company as we continue to explore other ways in which we can help to fulfill the financing needs of individuals and small businesses throughout China."

Mr. Li continued, "Though we have ceased initiating new commercial vehicle leases as of August 2015, we will continue to serve our customers with existing leases until the terms of the individual leases are satisfied. We are excited and optimistic about Fincera's future as we work to better serve our customers with new products like CeraPay and CeraVest. We aim to be a partner to our customers, helping them grow their businesses by increasing productivity and convenience. As we move forward, we will continue to explore ways in which we can improve on this goal with new and innovative initiatives."

Internet-based Business for the Transportation Industry
From its inception in November 2014 through June 30, 2015, the Company's small business lending platform CeraVest (https://www.qingyidai.com/) has originated over RMB1 billion in loans. CeraVest had a loan portfolio of approximately RMB897 million at June 30, 2015. Fincera created CeraVest as an online lending marketplace that provides short-term operating capital for small businesses in the transportation industry. CeraVest is also a platform through which Fincera can originate loans and then sell these loans to the public. Currently, individuals may invest on the CeraVest platform and earn an annual interest rate of approximately 8.6%. Fincera earns origination fees on CeraVest loans.

Also launched in November 2014, the Company's electronic payments platform CeraPay (https://www.dianfubao.com/) was used to make payment transactions totaling over RMB741 million during the month of June 2015. Fincera developed CeraPay as a convenient platform through which customers could make electronic payments and the Company could make credit advances to its customers, allowing customers to pay for their everyday truck-operating needs at participating merchants within the CeraPay network. Fincera earns transaction fees through its CeraPay platform. The CeraPay network had over 22,000 active users (individuals and merchants) during the month of June. The Company continues to actively market CeraPay to potential customers and merchants in the transportation industry in an effort to increase the user base.

Fincera's Internet-based business segment generated revenues of $7.9 million in the second quarter ended June 30, 2015, and $11.6 million in the six months ended June 30, 2015. This business did not exist in the prior-year periods.

Legacy Truck Leasing Business
The Company leased 1,227 commercial vehicles in the second quarter of 2015, compared to 4,617 in the prior-year period. The year-over-year decrease in commercial vehicle leases initiated was largely due to the Company's shift in business focus to its Internet-based businesses. Of the 1,227 vehicles leased, 347 trucks were leased through Fincera's store network, and 880 were leased through peer stores. At June 30, 2015, the Company had 19,500 leased vehicles under its sales-type leasing program.

The Company repossessed 193 vehicles whose lessees had defaulted on installment payments, sold 131 repossessed vehicles (repossessed in the quarter or in prior periods), and recognized 5 lost vehicles during the quarter ended June 30, 2015. In comparison, there were 100 vehicles repossessed, 77 vehicles sold and 20 lost vehicles recorded in the quarter ended June 30, 2014. 

Asset Securitization
During the 2015 second quarter, the Company completed a landmark securitization of approximately $101.8 million of its legacy truck leases pursuant to the China Securities Regulatory Commission 2014 announcement No. 49 regarding asset securitizations. The securitization, for which BDO China provided an opinion letter, resulted in the creation of bonds with credit ratings of AA to AAA, bearing interest at rates ranging from 6.8% to 7.9% per annum with approximately a 30-month term. The bonds are tradable on the Shanghai Stock Exchange Integrated Electronic Platform for Fixed-income Securities. The securitization resulted in a cost-effective method of financing for the Company and demonstrates strong investor confidence in the Company's legacy truck-leasing receivables.

Specialty Finance Store Network
As of June 30, 2015, the number of Fincera's commercial vehicle financing and service centers remained unchanged at 555 centers in 26 provinces, municipalities, and autonomous regions in China. The Company operates commercial vehicle financing and service centers in the Anhui, Beijing, Chongqing, Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hebei, Henan, Hubei, Hunan, Inner Mongolia, Jiangsu, Jiangxi, Jilin, Liaoning, Ningxia, Shaanxi, Shandong, Shanghai, Shanxi, Sichuan, Tianjin, Yunnan, and Zhejiang areas of China. In recent months, the focus of these locations has shifted to promoting the Company's Internet-based financing businesses. The Company expects these service centers to be crucial to the development of its Internet-based businesses as the majority of new user acquisitions are expected to originate from the rural areas where Fincera has its service centers.

Financial Review

2015 Second Quarter

Revenues

  • Total revenues for the second quarter ended June 30, 2015, were $76.5 million, compared to $253.2 million in the prior-year period.

             
(in thousands)   Three months ended
June 30, 2015
    Three months ended
June 30, 2014
   
    Amount   % of Revenue     Amount   % of Revenue   YoY % Change  
Commercial vehicles   $ 55,380   72.4 %   $ 232,104   91.6 % (76.1 )%
Finance     7,978   10.4 %     14,594   5.8 % (45.3 )%
Insurance and service     10,827   14.1 %     5,549   2.2 % 95.1 %
Property lease and management     2,358   3.1 %     950   0.4 % 148.2 %
Total revenues   $ 76,543   100.0 %   $ 253,197   100.0 % (69.8 )%
                             
  • Commercial vehicle revenue decreased to $55.4 million, compared to $232.1 million in the prior-year period, primarily as a result of a decrease in new commercial vehicle leases initiated during the period. The revenue decrease was also impacted by a decrease in average price per vehicle, from $50,300 per vehicle in the 2014 second quarter to $45,100 per vehicle in the 2015 second quarter. The decrease in average price per vehicle is a result of a higher proportion of leases originated through the Company's peer stores business, whose trucks typically are leased without a trailer as opposed to trucks leased directly through Fincera's own store network, which are usually leased with a trailer.
  • Finance revenue decreased to $8.0 million, or 10.4% of total revenues, during the second quarter of 2015, from $14.6 million in the prior-year period, as a result of the decrease in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect. This was partially offset by an increase in finance revenue from CeraVest as this business did not exist in the prior-year period.
  • Insurance and service revenue increased 95.1% to $10.8 million, from $5.5 million in the prior-year period, primarily as a result of an increase in CeraPay revenues, which was partially offset by a decrease in insurance commissions due to a decrease in the number of trucks leased directly from Fincera's stores during the period as compared to those leased through peer stores for which it does not sell the truck insurance.
  • Property lease and management revenue from the Company's office-leasing business totaled $2.4 million, compared to $950,000 in the prior-year period. This business commenced in April 2013.

Gross Profit/Margin

  • Gross profit was $21.4 million in the three months ended June 30, 2015, compared to $24.7 million in the prior-year period.
  • Gross margin increased to 28.0% for the three months ended June 30, 2015, from 9.7% in the prior-year period, primarily due to the higher number of leases outstanding and lower number of new leases initiated during the period, which resulted in a higher proportion of monthly amortized finance income. In addition, income from CeraVest and CeraPay and increased property lease and management revenue contributed to the increase in gross margin.

Net Income

  • Net income was $3.0 million, or $0.12 per diluted share based on 24.3 million diluted weighted average shares outstanding, in the three months ended June 30, 2015, compared to $4.4 million, or $0.18 per share based on 24.0 million diluted weighted average shares outstanding, in the three months ended June 30, 2014.

Adjusted EBITDA

  • Adjusted EBITDA, which is EBITDA excluding stock-based compensation and the previously mentioned one-time litigation expense, was $11.1 million for the quarter ended June 30, 2015, compared to $13.5 million in the prior-year quarter.

Six Months 2015

Revenues

  • Total revenues for the six months ended June 30, 2015, were $147.7 million, compared to $411.6 million in the prior-year period.

               
(in thousands)   Six months ended
June 30, 2015
     Six months ended
June 30, 2014
   
    Amount   % of Revenue     Amount % of Revenue   YoY % Change  
Commercial vehicles   $ 107,516   72.8 %   $ 373,635 90.8 % (71.2 )%
Finance     22,727   15.4 %     26,662 6.5 % (14.8 )%
Insurance and service     12,992   8.8 %     9,939 2.4 % 30.7 %
Property lease and management     4,491   3.0 %     1,402 0.3 % 220.3 %
Total revenues   $ 147,726   100.0 %   $ 411,638 100.0 % (64.1 )%
                           
  • Commercial vehicle revenues decreased to $107.5 million from $373.6 million in the prior year, primarily as a result of the decrease in new leases initiated during the first half of 2015. Fincera's commercial vehicle sales, servicing, leasing and support business recorded 2,407 new leases in the six months ended June 30, 2015, compared to 7,419 new leases in the six months ended June 30, 2014. A decrease in average price per vehicle, from $50,400 per vehicle in the first half of 2014 to $44,700 per vehicle in the first half of 2015, also contributed to the decrease in commercial vehicle revenues.
  • Finance revenues decreased to $22.7 million, or 15.4% of total revenues, during the six months ended June 30, 2015, compared to $26.7 million in the prior-year period, as a result of the decrease in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect.
  • The Company's insurance and service revenue increased 30.7% to $13.0 million during the first half of 2015 from $9.9 million in the first half of 2014.
  • Property lease and management revenue from the Company's office-leasing business totaled $4.5 million during the period. This business did not exist during the prior-year period.

Gross Profit/Margin

  • Gross profit for the six months ended June 30, 2015, was $40.8 million, representing gross margin of 27.6%, an increase from gross margin of 10.8% in the first half of 2014, which is primarily due to reasons stated in the 2015 second quarter financial review.

Net Income

  • Net income for six months ended June 30, 2015, increased 215.4% to $5.7 million, or $0.23 per share based on 24.3 million diluted weighted average shares outstanding, from $1.8 million, or $0.08 per share based on 23.8 million diluted weighted average shares outstanding, in the prior-year period. The increase in net income was primarily due to a one-time $4.35 million litigation expense incurred to settle the SEC lawsuit in the 2014 first quarter.

Adjusted EBITDA

  • Adjusted EBITDA, which is EBITDA excluding stock-based compensation and the previously mentioned one-time litigation expense, for the six months ended June 30, 2015, was $21.1 million, compared to $22.2 million in the prior-year period.

See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.

Balance Sheet Highlights
At June 30, 2015, Fincera's cash and cash equivalents (not including restricted cash) were $43.7 million, working capital was $285.0 million, total debt was $285.1 million (including due to affiliates and accounts payable, related parties), and stockholders' equity was $269.1 million, compared to $26.0 million, $141.5 million, $327.5 million, and $263.1 million, respectively, at December 31, 2014. 

In June 2015, the Company securitized approximately $101.8 million of its legacy truck-leasing assets, which were sold to qualified investors. The bonds bear interest at rates from 6.8% to 7.9% per annum, have a maturity of approximately 2.5 years and bear credit ratings of AA to AAA. The bonds trade on the Shanghai Stock Exchange Integrated Electronic Platform for Fixed-income Securities.

About Fincera Inc.
Founded in 2005, Fincera Inc. (OTCQB: AUTCF) provides innovative web-based financing and ecommerce services for China's transportation and automobile industries. The Company also operates over 550 finance and service centers in 26 provinces, municipalities, and autonomous regions across China. Fincera's current service offerings include a B2B payment network and a web-based small business lending platform. The Company's website is http://www.fincera.net. Fincera trades on the OTCQB venture stage marketplace for early stage and developing U.S. and international companies. OTCQB companies are current in their reporting and undergo an annual verification and management certification process.

Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the Company. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of the Company's management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to meaningfully differ from those set forth in the forward-looking statements:

  • Changing principles of generally accepted accounting principles;
  • Continued compliance with government regulations;
  • Legislation or regulatory environments, requirements or changes adversely affecting the transportation or financial services industry in China;
  • Fluctuations in consumer demand in the transportation industry;
  • Management of rapid growth;
  • General economic conditions;
  • Changes in government policy;
  • China's overall economic conditions and local market economic conditions;
  • The Company's ability to expand through strategic acquisitions;
  • The Company's business strategy and plans, including whether its new financial services products are accepted by consumers;
  • The results of future financing efforts; and
  • Geopolitical events.

The information set forth herein should be read in light of such risks. The Company does not assume any obligation to update the information contained in this press release.

 
 
FINCERA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(in thousands except share and per share data)
           
  Three months ended June 30,     Six months ended June 30,  
  2015     2014     2015     2014  
Revenues                              
  Commercial vehicles $ 55,380     $ 232,104     $ 107,516     $ 373,635  
  Finance   7,978       14,594       22,727       26,662  
  Insurance and service   10,827       5,549       12,992       9,939  
  Property lease and management   2,358       950       4,491       1,402  
    Total revenues   76,543       253,197       147,726       411,638  
                               
Cost of sales                              
  Commercial vehicles   2,731       16,801       4,038       18,086  
  Commercial vehicles, related parties   51,617       210,493       101,479       346,636  
  Insurance and service   192       631       297       1,269  
  Property lease and management   556       613       1,126       1,245  
    Total cost of sales   55,096       228,538       106,940       367,236  
                               
Gross profit   21,447       24,659       40,786       44,402  
                               
Operating (income) expenses                              
  Selling and marketing   2,853       2,982       5,455       5,427  
  General and administrative   13,230       12,592       24,515       24,606  
  Litigation expense   --       --       --       4,350  
  Interest expense   4,540       3,102       7,958       5,796  
  Interest expense, related parties   1,236       2,814       2,946       4,649  
  Other income, net   (4,852 )     (2,958 )     (8,286 )     (4,947 )
    Total operating expenses   17,007       18,532       32,588       39,881  
                               
Income from operations   4,440       6,127       8,198       4,521  
                               
Other income                              
  Interest income   25       39       42       72  
    Other income   25       39       42       72  
                               
Income before income taxes   4,465       6,166       8,240       4,593  
                               
Income tax provision   1,455       1,767       2,562       2,793  
                               
Net income   3,010       4,399       5,678       1,800  
                               
Foreign currency translation adjustment   1,265       (117 )     260       (2,670 )
                               
Comprehensive income (loss) $ 4,275     $ 4,282     $ 5,938     $ (870 )
                               
Earnings per share                              
Basic $ 0.13     $ 0.19     $ 0.24     $ 0.08  
Diluted $ 0.12     $ 0.18     $ 0.23     $ 0.08  
                               
Weighted average shares outstanding                              
Basic   23,549,644       23,549,503       23,549,644       23,548,571  
Diluted   24,258,035       23,984,487       24,262,250       23,819,428  
                               
                               
 
FINCERA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
             
    June 30,     December 31,  
    2015     2014  
    (unaudited)        
ASSETS                
Current assets                
  Cash and cash equivalents   $ 43,706     $ 26,027  
  Restricted cash     166       988  
  Accounts receivable, net of provision for doubtful debts of $33,760 and $29,074 as of June 30, 2015 and December 31, 2014, respectively     46,465       28,915  
  Inventories     6,384       4,746  
  Deposits for inventories, related parties     14,020       --  
  Prepaid expenses and other current assets     10,735       5,520  
  Prepaid expenses, related parties     947       50  
  Loans receivable, net     121,187       19,105  
  Other financing receivables, net     115,096       29,401  
  Other financing receivables, net, related party     --       782  
  Short-term net investment in sales-type leases     33,936       56,975  
  Current maturities of long-term net investment in direct financing and sales-type leases, net of provision for doubtful accounts of $3 and $22 as of June 30, 2015 and December 31, 2014, respectively     173,315       285,983  
  Deferred income tax assets     10,243       8,751  
    Total current assets     576,200       467,243  
                 
Noncurrent assets                
Property, equipment and leasehold improvements, net     78,698       80,152  
Deferred income tax assets     6,610       6,080  
Long-term net investment in direct financing and sales-type leases, net of current maturities     18,920       59,170  
                 
Total assets   $ 680,428     $ 612,645  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities                
  Short-term borrowings (including short-term borrowings of the consolidated variable interest entities ("VIEs") without recourse to Fincera of $81,785 and $138,912 as of June 30, 2015 and December 31, 2014, respectively)   $ 98,142     $ 155,342  
  Note financing payables (including note financing payable of the consolidated variable interest entities ("VIEs") without recourse to Fincera of nil and nil as of June 30, 2015 and December 31, 2014, respectively)     79,374       --  
  Long-term borrowings, current portion (including long-term borrowings, current portion of the consolidated VIEs without recourse to Fincera of nil and nil as of June 30, 2015 and December 31, 2014, respectively)     3,271       2,451  
  Long-term payables, current portion (including long-term payables, current portion of the consolidated VIEs without recourse to Fincera of nil and nil as of June 30, 2015 and December 31, 2014, respectively)     161       899  
  Accounts payable (including accounts payable of the consolidated VIEs without recourse to Fincera of $798 and $384 as of June 30, 2015 and December 31, 2014, respectively)     11,969       5,692  
  Accounts payable, related parties (including accounts payable, related parties of the consolidated VIEs without recourse to Fincera of $45,330 and $106,525 as of June 30, 2015 and December 31, 2014, respectively)     45,330       108,211  
  Other payables and accrued liabilities (including other payables and accrued liabilities of the consolidated VIEs without recourse to Fincera of $14,191 and $13,206 as of June 30, 2015 and December 31, 2014, respectively)     31,438       20,121  
  Due to affiliates (including due to affiliates of the consolidated VIEs without recourse to Fincera of $1,068 and $1,002 as of June 30, 2015 and December 31, 2014, respectively)     10,241       25,644  
  Customer deposits (including customer deposits of the consolidated VIEs without recourse to Fincera of $2,585 and $460 as of June 30, 2015 and December 31, 2014, respectively)     7,844       4,912  
  Income tax payable (including income tax payable of the consolidated VIEs without recourse to Fincera of $1,326 and $1,508 as of June 30, 2015 and December 31, 2014, respectively)     3,442       2,511  
                 
Total current liabilities     291,212       325,783  
                 
Noncurrent liabilities                
Long-term borrowings (including long-term borrowings of the consolidated VIEs without recourse to Fincera of nil and nil as of June 30, 2015 and December 31, 2014, respectively)     13,086       14,708  
Long-term bonds payable (including long-term borrowings of the consolidated VIEs without recourse to Fincera of nil and nil as of June 30, 2015 and December 31, 2014, respectively)     101,837       --  
Long-term payables (including long-term payables of the consolidated VIEs without recourse to Fincera of $5,197 and $9,102 as of June 30, 2015 and December 31, 2014, respectively)     5,197       9,102  
                 
Total liabilities     411,332       349,593  
                 
Commitments and Contingencies     --       --  
                 
Stockholders' equity                
  Preferred shares, $0.001 par value authorized - 1,000,000 shares; issued - none     --       --  
  Ordinary shares - $0.001 par value authorized - 1,000,000,000 shares; issued and outstanding - 23,549,644 shares at June 30, 2015 issued and outstanding - 23,549,644 shares at December 31, 2014     24       24  
  Additional paid-in capital     328,990       328,884  
  Statutory reserves     26,222       26,222  
  Accumulated losses     (117,040 )     (122,718 )
  Accumulated other comprehensive income     30,900       30,640  
  Total stockholders' equity     269,096       263,052  
                   
    Total liabilities and stockholders' equity   $ 680,428     $ 612,645  
                 
                 
 
FINCERA INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
       
    Six Months Ended June 30,  
    2015     2014  
             
Net cash (used in) operating activities   $ (24,472 )   $ (70,542 )
                 
Cash flow from investing activities:                
  Purchase of property, equipment and leasehold improvements     (1,715 )     (4,897 )
                 
Net cash (used in) investing activities     (1,715 )     (4,897 )
                 
Cash flow from financing activities:                
  Proceeds from borrowings and note financing payable     291,471       103,645  
  Repayments of borrowings and note financing payable     (169,469 )     (57,017 )
  Proceeds from affiliates     40,348       9,937  
  Repayment to affiliates     (55,751 )     (33,700 )
  Increase in accounts payable, related parties     104,425       346,636  
  Repayment to accounts payable, related parties     (167,239 )     (281,595 )
                 
Net cash provided by financing activities     43,785       87,906  
                 
Net cash provided by operating, investing and financing activities     17,598       12,467  
                 
Effect of foreign currency translation on cash and cash equivalents     81       (687 )
                 
Net increase in cash and cash equivalents     17,679       11,780  
                 
Cash and cash equivalents, beginning of the period     26,027       31,370  
                 
Cash and cash equivalents, end of the period   $ 43,706     $ 43,150  
                 
Supplemental disclosure of cash flow information:                
    Interest paid   $ 11,751     $ 7,695  
    Income taxes paid   $ 3,755     $ 5,044  
                 
                 

Non-GAAP Financial Measures ($ in thousands)

A reconciliation of Adjusted EBITDA to net income is provided below:

           
  Three Months Ended
June 30,
    Six Months Ended
June 30,
 
           
  2015     2014     2015     2014  
Net income attributable to shareholders $ 3,010     $ 4,399     $ 5,678     $ 1,800  
Interest expenses   5,776       5,916       10,904       10,445  
Interest income   (25 )     (39 )     (42 )     (72 )
Income tax provision   1,455       1,767       2,562       2,793  
Stock-based compensation   -       434       106       871  
Depreciation & Amortization   919       978       1,877       1,966  
Litigation expense   -       -       -       4,350  
Adjusted EBITDA $ 11,135     $ 13,455     $ 21,085     $ 22,153  
                               
                               

USE OF NON-GAAP MEASURES
Fincera defines Adjusted EBITDA as net income before interest expense (income), income taxes, depreciation and amortization, as well as the exclusion of stock-based compensation and one-time litigation expenses. Adjusted EBITDA excludes certain financial information that would be included in net income (loss), the most directly comparable GAAP financial measure. Users of this financial information should consider the type of material events and transactions that are excluded from Adjusted EBITDA, and the material limitations associated therewith. For example, Adjusted EBITDA does not include net interest expense, but because Fincera has borrowed money to finance its operations, interest expense is a necessary and ongoing part of its costs and has assisted Fincera in generating revenue; Adjusted EBITDA does not include taxes, although payment of taxes is a necessary and ongoing part of Fincera's operations; and Adjusted EBITDA does not include depreciation and amortization expense, but because Fincera uses capital assets to generate revenue, depreciation and amortization expense is a necessary element of its cost structure. Therefore, Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, as determined in accordance with GAAP. 

Fincera believes that the presentation of these non-GAAP financial measures is warranted and useful to its shareholders because it provides an additional analytical tool for understanding the Company's financial performance by excluding certain items that may obscure trends in the core operating performance of the Company's business. Using Adjusted EBITDA also facilitates management's internal comparisons to Fincera's historical performance and liquidity. Fincera computes Adjusted EBITDA using the same consistent method from quarter to quarter. The table above has more details on the reconciliations between GAAP financial measures that are most directly comparable to Non-GAAP financial measures.

Contact Information