AutoChina International Reports 2014 Third Quarter and Nine Month Financial Results
(firmenpresse) - SHIJIAZHUANG, CHINA -- (Marketwired) -- 12/22/14 -- AutoChina International Limited ("AutoChina" or the "Company") (OTCBB: AUTCF), a leading provider of innovative financing solutions for China''s transportation industry, today reported financial results for the third quarter and nine months ended September 30, 2014.
3,409 commercial vehicles leased in third quarter of 2014, a 7.6% increase from 3,166 in prior-year period
Of the 3,409 vehicles leased, 1,254 trucks were leased through AutoChina''s store network, and 2,155 trucks were leased through AutoChina''s peer stores
During the third quarter of 2014, the Company established five additional commercial vehicle sales, servicing, leasing and support centers, and also closed five centers, with 554 total locations as of September 30, 2014
Total revenues of $179.7 million, up 1.9% from $176.4 million
Gross profit of $21.4 million, up 14.8% from $18.6 million
Net income of $3.0 million, or $0.13 per diluted share, compared to $3.3 million, or $0.14 per diluted share, primarily as a result of increased interest expenses
Adjusted EBITDA of $12.2 million, an increase of 36.1% from $9.0 million
Total revenues of $591.3 million, up 40.8% from $419.8 million, largely due to the increase in new commercial vehicle leases initiated during the first nine months of 2014
Gross profit of $65.8 million, up 29.0% from $51.0 million
Net income of $4.8 million, or $0.20 per diluted share, compared to $8.0 million, or $0.34 per diluted share, primarily as a result of the one-time litigation expenses incurred to settle the SEC lawsuit in first quarter 2014
Adjusted EBITDA of $34.4 million, an increase of 48.1% from $23.2 million
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, "We continue to be pleased with the steady growth in our truck-leasing business. The 2014 third quarter was the first full quarter in which our new peer stores business operated, and it was a significant contributor to our total number of commercial vehicles leased during the period. Our third quarter 2014 revenues were impacted by the significant portion of commercial vehicles leased through our peer stores business, which decreases the average price per vehicle as trucks leased through the peer stores typically are leased without a trailer while trucks leased directly through AutoChina''s store network are usually leased with a trailer. We are pleased with the positive initial reception of our peer stores business and look forward to growing our network of peer stores in the coming months. In a highly fragmented market like China''s heavy truck industry, we are confident in this strategy for expanding our customer base in China."
Mr. Li continued, "We also continue to explore ways in which we can better serve our customers, which led to our introduction of K-Pay, AutoChina''s electronic payment platform, and K-Lend, a peer-to-peer lending platform. We understand that it can be very difficult for small business owners to receive a line of credit from a bank, or other traditional ways of financing a business. With K-Pay and K-Lend, we are hoping to fill our customers'' needs and making it more convenient for them to operate their businesses with support from AutoChina and others within the transportation industry. We expect to launch both of these platforms before the end of 2014."
The Company leased 3,409 commercial vehicles in the third quarter of 2014, compared to 3,166 in the prior-year period. Of the 3,409 vehicles leased during the 2014 third quarter, 1,254 trucks were leased through AutoChina''s store network, and 2,155 trucks were leased through AutoChina''s peer stores. At September 30, 2014, the Company had 20,932 leased vehicles under its sales-type leasing program.
During the quarter, the Company repossessed 91 vehicles whose lessees had defaulted on installment payments, sold 110 repossessed vehicles (repossessed in the quarter or in prior periods), and recorded seven vehicles as losses during the three months ended September 30, 2014. In comparison, there were 173 vehicles repossessed, 230 vehicles sold and 11 loss vehicles recorded in the quarter ended September 30, 2013.
Details of the vehicles leased are as follows:
During the third quarter of 2014, the Company established five additional commercial vehicle sales, servicing, leasing and support centers, one in Guangdong province, three in Guangxi province, and one in Guizhou province. The Company also closed five centers in the provinces of Hebei, Liaoning, Shanghai, and Zhejiang. As of September 30, 2014, AutoChina operated 554 financing and service centers in 26 provinces. 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.
During the second quarter of 2014, AutoChina began working with third-party commercial vehicle financing stores ("peer stores") to provide financing to their customers. The first two products to be offered are financing for new commercial vehicle purchases and financing for the insurance and taxes related to the purchase of a new commercial vehicle, which were launched in April 2014 and May 2014, respectively. The Company believes that by working with peer stores it can gain a much larger addressable customer base without investment in additional infrastructure. For example, there are currently over 2,400 peer stores participating in the program, which significantly expands AutoChina''s reach beyond its own existing store network.
AutoChina continues to make progress on the development of K-Pay, the electronic payment platform the Company announced in April 2014. K-Pay was developed to provide a convenient method for customers to make electronic payments and for the Company to make credit advances to its customers, allowing customers to pay for their everyday truck-operating needs at participating merchants within the K-Pay network. It is now undergoing trials with a group of more than 2,000 users.
The Company is also developing a new peer-to-peer lending platform called K-Lend, an online marketplace that is anticipated to provide short-term operating capital for small- to medium-sized businesses in the transportation industry. For example, it will allow individuals to purchase loans from their peers, such as AutoChina customers.
AutoChina expects to launch both K-Pay and K-Lend nationwide before the end of 2014.
Revenues
Total revenues for the third quarter ended September 30, 2014, were $179.7 million, a 1.9% increase from $176.4 million in the prior-year period.
Commercial vehicle revenue remained flat at $159.8 million, compared to $159.5 million in the prior-year period, primarily as a result of a decrease in average price per vehicle, from $50,400 per vehicle in the 2013 third quarter to $46,900 per vehicle in the 2014 third quarter. The decrease in average price per vehicle is a result of a higher proportion of leases originated by the Company''s new peer stores business, whose trucks typically are leased without a trailer as opposed to trucks leased directly through AutoChina''s own store network, which are usually leased with a trailer.
Finance revenue increased 37.8% to $14.6 million, or 8.1% of total revenues, during the third quarter of 2014, from $10.6 million in the prior-year period, as a result of the increase in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect.
Insurance revenue was $3.7 million, compared to $6.0 million in the prior-year period, primarily as a result of a decrease in the number of trucks leased directly from AutoChina''s stores during the period as compared to those leased through the Company''s peer stores for which it does not sell the truck insurance.
Property lease and management revenue from the Company''s office-leasing business totaled $1.6 million, compared to $242,000 in the prior-year period. This business commenced in April 2013.
Gross Profit/Margin
Gross profit increased 14.8% to $21.4 million in the three months ended September 30, 2014, from $18.6 million in the prior-year period.
Gross margin increased to 11.9% for the three months ended September 30, 2014, from 10.6% in the prior-year period, primarily due to the higher number of leases outstanding during the period, which results in a higher amount of monthly amortized finance income. Increased property lease and management revenue also contributed to the increase in gross margin.
Net Income
Net income was $3.0 million, or $0.13 per diluted share based on 23.7 million diluted weighted average shares outstanding, in the three months ended September 30, 2014, compared to $3.3 million, or $0.14 per share based on 23.6 million diluted weighted average shares outstanding, in the three months ended September 30, 2013.
Adjusted EBITDA
Adjusted EBITDA, which is EBITDA excluding stock-based compensation and the previously mentioned one-time litigation expense, increased 36.1% to $12.2 million for the quarter ended September 30, 2014, compared to $9.0 million in the prior-year quarter.
Revenues
Total revenues for the nine months ended September 30, 2014, were $591.3 million, a 40.8% increase from $419.8 million in the prior-year period.
Commercial vehicle revenues increased 42.9% to $533.4 million from $373.2 million in the prior-year period, primarily as a result of the increase in new leases initiated during the first nine months of 2014. An increase in average price per vehicle, from $49,000 per vehicle in the first nine months of 2013 to $49,300 per vehicle in the first nine months of 2014, also contributed to the growth in commercial vehicle revenues.
Finance revenues increased 31.5% to $41.2 million, or 7.0% of total revenues, during the nine months ended September 30, 2014, compared to $31.4 million in the prior-year period, as a result of an increase in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect.
The Company''s insurance-related revenue was $13.7 million, compared to $15.0 million in the prior-year period, primarily due to reasons stated in the 2014 third quarter financial review.
Property lease and management revenue from the Company''s office-leasing business totaled $3.0 million during the period, compared to $242,000 in the prior-year period. This business commenced in April 2013.
Gross Profit/Margin
Gross profit for the nine months ended September 30, 2014, increased 29.0% to $65.8 million, representing gross margin of 11.1%, a decrease from gross margin of 12.1% for the same period in 2013, which is primarily due to the significantly higher number of new leases established during the first nine months of 2014, which has a lower margin than the monthly amortized finance income. In addition, the launch of the new peer stores business impacted gross margin as leases initiated through the new peer stores business have a lower gross margin than leases initiated through the Company''s own store branch network. Increased property lease and management revenue partially offset the decrease in gross margin.
Net Income
Net income for the nine months ended September 30, 2014, was $4.8 million, or $0.20 per share based on 23.8 million diluted weighted average shares outstanding, compared to $8.0 million, or $0.34 per share based on 23.7 million diluted weighted average shares outstanding, in the prior-year period. The decrease 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 nine months ended September 30, 2014, was $34.4 million, a 48.1% increase from $23.2 million in the prior-year period.
See "Non-GAAP Financial Measures" below for a description of Adjusted EBITDA.
At September 30, 2014, AutoChina''s cash and cash equivalents (not including restricted cash) were $20.7 million, working capital was $111.6 million, total debt was $327.0 million (including due to affiliates and accounts payable, related parties), and stockholders'' equity was $256.1 million, compared to $31.4 million, $47.9 million, $295.0 million, and $252.8 million, respectively, at December 31, 2013.
The increase in total debt is largely due to increased financing to support the Company''s increase in total number of sales-type leases. The Company also reported a 33.3% increase in current maturities of net investment in direct financing and sales-type leases during the period.
AutoChina International Limited focuses on providing innovative financing solutions for China''s transportation industry. Founded in 2005, we are China''s largest commercial vehicle sales, servicing, leasing, and support network. As of September 30, 2014, the Company owned and operated 554 commercial vehicle financing centers in 26 provinces 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 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 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.
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.
Jason Wang
Chief Financial Officer
(858) 997-0680
The Equity Group Inc.
Carolyne Y. Sohn
Senior Associate
(415) 568-2255
Adam Prior
Senior Vice President
(212) 836-9606
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Datum: 22.12.2014 - 15:05 Uhr
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