AutoChina International Reports 2013 Second Quarter and Six Months Financial Results, Including an 89.1% Increase in Commercial Vehicles Leased
(firmenpresse) - SHIJIAZHUANG, CHINA -- (Marketwired) -- 09/13/13 -- AutoChina International Limited ("AutoChina" or the "Company") (OTCBB: AUTCF), China's largest commercial vehicle sales, servicing, leasing, and support network, today reported financial results for the second quarter and six months ended June 30, 2013.
3,195 commercial vehicles leased in second quarter of 2013, an 89.1% increase from 1,690 in prior-year period
AutoChina opened one new commercial vehicle financing and service center in Fujian province in the second quarter of 2013. As of June 30, 2013, the Company operated 535 financing and service centers, compared to 514 at June 30, 2012.
AutoChina expects margin expansion as finance and insurance income grows as a percentage of revenue
Total revenues of $172.1 million, up 64.2% from $104.8 million, largely due to the increase in new commercial vehicle leases initiated during Q2 2013
Gross profit of $18.0 million, compared to $25.3 million, primarily as a result of the significantly larger number of new trucks purchased for leases initiated during Q2 2013, which is relatively low margin, and greater finance income, which is relatively high margin, in Q2 2012 due to a higher number of vehicles being under lease during such period
Net income of $4.4 million, compared to $8.4 million
Adjusted EBITDA of $10.0 million, compared to $15.3 million
Total revenues of $243.5 million, up 17.1% from $207.9 million
Gross profit of $32.4 million, compared to $50.0 million
Net income of $4.8 million, compared to $16.4 million
Adjusted EBITDA of $14.2 million, compared to $31.5 million
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "For the second quarter of 2013, we were pleased to have achieved more than 3,000 new commercial vehicle leases. This marks the first time AutoChina has exceeded this number since the third quarter of 2011 when we began seeing a downward turn in the market. As a result of the significantly higher number of new commercial vehicle leases signed in the second quarter of 2013, we reported $172.1 million in revenues for the period, a year-over-year increase of 64.2%. However, our margins were adversely impacted by the increase in new leases, which increased the revenue contributions from the lower-margin initial establishment of new leases relative to the higher-margin monthly amortized finance income. We anticipate margins will improve as these new leases generate finance income over the next two years, increasing the percentage of revenues from finance and insurance income."
Mr. Li continued, "According to a report by Research in China, China's heavy truck industry began to show signs of stabilization in terms of both output and sales volume, with sales volume increasing 8.36% year over year in the first half of 2013. We are encouraged by these statistics and by the improved results from the stores we opened in southern China in 2011 and 2012. We continue to believe that China's continued investment in economic development and infrastructure will support steady, long-term growth in the heavy truck market. AutoChina intentionally slowed its geographic expansion during a period of weaker demand and worked to provide our customers with services in addition to specialty finance, such as various types of insurance and access to logistics services and a truck marketplace via a new customer-facing website. We understand that AutoChina's customers operate in commercial markets that are prone to cyclical fluctuations but believe that this product expansion has helped to lay a foundation for growth now that the market has begun to show signs of improvement. We will continue working to grow our specialty finance business while exploring other potential opportunities that we believe will help to diversify our business and add value to our shareholders."
Heavy Truck Sales
The Company leased 3,195 commercial vehicles in the second quarter of 2013, an 89.1% increase from 1,690 in the second quarter of 2012, primarily as a result of increasing stabilization in China's heavy truck market and improved performance from AutoChina's commercial vehicle financing and service centers that were part of the Company's expansion efforts in southern China in 2011 and 2012.
Since launching its commercial vehicle sales and leasing business in March 2008, the Company has leased over 41,000 trucks. The Company repossessed 165 vehicles whose lessees had defaulted on installment payments, sold 226 of these vehicles and other vehicles repossessed in prior periods, and recorded two vehicles as total losses during the three months ended June 30, 2013. In comparison, there were 281 vehicles repossessed, 138 vehicles sold and five loss vehicles recorded in the three months ended June 30, 2012.
Used Vehicle Leasing
Under the Company's used commercial vehicle sale-leaseback program, 38 used trucks were leased in the second quarter of 2013, compared to 244 in the prior-year period.
Insurance Agency Services
The Company launched its own insurance agency business in December 2011 and during the 2013 second quarter signed agreements with three additional major insurance companies to sell insurance: China Continent Property and Casualty Insurance Co., Ltd, China Pacific Insurance Group, and People's Insurance Company of China. AutoChina now has seven such agreements in place. AutoChina's 535 store locations are each licensed to sell insurance from these carrier partners.
Expansion of Specialty Finance Store Network
During the 2013 second quarter, AutoChina opened one new commercial vehicle financing and service center in Fujian province. As of June 30, 2013, the Company operated 535 financing and service centers, compared to 514 centers at June 30, 2012. 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.
As part of the transaction to purchase the Kai Yuan Center office space, AutoChina, through its wholly owned subsidiary AutoChina Group Inc., acquired 100% of the equity of Heat Planet Holdings Limited ("Heat Planet") and its subsidiaries, which was controlled by Mr. Li. Heat Planet's primary asset consists of the 23 floors, or over 60,000 square meters, of newly constructed office space in the Kai Yuan Center building. The acquisition closed on September 11, 2012. As both AutoChina and the acquired companies were under the common control of Mr. Li immediately before and after the merger, the transaction was accounted for as common control merger, and using merger accounting as if the merger had been consummated at the beginning of the earliest period presented, and no gain or loss is recognized. The Company has adjusted its financial statements for the six months ended June 30, 2012, to account for operating results of Heat Planet and its subsidiaries to reflect the merger under common control.
2013 Second Quarter
Revenues for the second quarter ended June 30, 2013, were $172.1 million, a 64.2% increase from $104.8 million in the prior-year period. The Company reported $156.6 million in commercial vehicle revenues, and $15.5 million, or 9.0% of total revenues, in revenues related to finance and insurance.
Cost of sales during the period totaled $154.1 million, with an average cost per commercial vehicle of $48,000. Gross margin decreased to 10.5% for the three months ended June 30, 2013, from 24.2% for the prior-year period, primarily due to the significantly higher number of new leases established during the period, which increased the revenue contributions from the lower-margin initial establishment of new leases relative to the higher-margin monthly amortized finance income. AutoChina expects margins to improve as these new leases generate finance income over the next two years, increasing the percentage of revenues from finance and insurance income.
Net income in the three months ended June 30, 2013, was $4.4 million, or $0.18 per share based on 23.7 million diluted weighted average shares outstanding, compared to $8.4 million, or $0.36 per share based on 23.6 million diluted weighted average shares outstanding, in the three months ended June 30, 2012.
Adjusted EBITDA, which is EBITDA excluding stock-based compensation and accretion of stock repurchase obligation, was $10.0 million for the quarter ended June 30, 2013, compared to $15.3 million in the prior-year quarter.
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
Six Months 2013
Revenues for the six months ended June 30, 2013, were $243.5 million, a 17.1% increase from $207.9 million in the prior-year period. The Company reported $213.7 million in commercial vehicle revenues, and $29.8 million, or 12.2% of total revenues, in revenues related to finance and insurance.
Gross profit for the six months ended June 30, 2013, was $32.4 million, compared to $50.0 million in the prior-year period. Gross margin decreased to 13.3% for the six months ended June 30, 2013, from 24.0% for the prior-year period, primarily due to the reasons stated in the 2013 second quarter financial review.
Net income for six months ended June 30, 2013, was $4.8 million, or $0.20 per share based on 23.8 million diluted weighted average shares outstanding, compared to $16.4 million, or $0.70 per share based on 23.6 million diluted weighted average shares outstanding, in the prior-year period.
Adjusted EBITDA for the six months ended June 30, 2013, was $14.2 million, compared to $31.5 million in the prior-year period.
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
At June 30, 2013, AutoChina's cash and cash equivalents (not including restricted cash) were $65.4 million, working capital was $84.9 million, total debt was $177.0 million (including due to affiliates and accounts payable, related parties), and stockholders' equity was $240.1 million, compared to $75.8 million, $105.4 million, $170.3 million, and $228.4 million, respectively, at December 31, 2012.
AutoChina International Limited is China's largest commercial vehicle sales, servicing, leasing, and support network. AutoChina's operating subsidiary was founded in 2005 by nationally recognized Chairman and CEO, Yong Hui Li. As of June 30, 2013, the Company owned and operated 535 commercial vehicle financing centers across China, and primarily provides sales-type leasing and support services for local customers. The Company's website is .
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:
Continued compliance with government regulations;
Changing legislation or regulatory environments;
Requirements or changes affecting the businesses in which the Company is engaged;
Industry trends, including factors affecting supply and demand;
Labor and personnel relations;
Credit risks affecting the Company's revenue and profitability;
Changes in the commercial vehicle industry;
The Company's ability to effectively manage its growth, including implementing effective controls and procedures and attracting and retaining key management and personnel;
Changing interpretations of generally accepted accounting principles;
General economic conditions; and
Other relevant risks detailed in the Company's filings with the Securities and Exchange Commission.
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.
AutoChina 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 accretion of stock repurchase obligations. 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 of therein. For example, Adjusted EBITDA does not include net interest expense, but because AutoChina has borrowed money to finance its operations, interest expense is a necessary and ongoing part of its costs and has assisted AutoChina in generating revenue; Adjusted EBITDA does not include taxes, although payment of taxes is a necessary and ongoing part of AutoChina's operations; and Adjusted EBITDA does not include depreciation and amortization expense, but because AutoChina 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, since it omits the impact of these expenses incurred by AutoChina.
AutoChina 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 AutoChina's historical performance and liquidity. AutoChina 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
At the Company
Jason Wang
Chief Financial Officer
(858) 997-0680
The Equity Group Inc.
Carolyne Yu
Senior Associate
(415) 568-2255
Adam Prior
Senior Vice President
(212) 836-9606
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Datum: 13.09.2013 - 06:30 Uhr
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