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China Auto Logistics Reports 2017 Second Quarter and Six Month Results

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China Auto Logistics Reports 2017 Second Quarter and Six Month Results

China Auto Logistics Reports 2017 Second Quarter and Six Month Results

Investor Conference Call Scheduled for Tuesday, August 15th at 8:00am ET

TIANJIN, CHINA--(Marketwired - Aug 14, 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 second quarter and first six months ended June 30, 2017. 

Net revenues in the 2017 second quarter rose sharply year over year, to approximately $138 million -- a gain of approximately 48% -- mainly on the strength of increased sales of automobiles compared with relatively weak auto sales in the second quarter of 2016.

The increased revenues offset by lower gross margins contributed to a narrowing of the year over year loss from continuing operations attributable to shareholders in the 2017 second quarter to $342,109 or an $0.08 loss per share, as compared with a loss of $477,875 or a $0.12 loss per share in the second quarter of 2016. Total net income attributable to shareholders in the 2016 second quarter was approximately $5.2 million or $1.28 in earnings per share, as it includes approximately $5.7 million or $1.40 per share in income from discontinued operations.

In the first six months of 2017, revenues from continuing operations increased approximately 8% to approximately $249 million, while the net loss from continuing operations attributable to shareholders decreased approximately 28% to approximately $477,000, or a $0.12 loss per share. In the first six months of 2016 the loss was approximately $665,000, or a loss of $0.16 per share. Total net income attributable to shareholders in the first six months of 2016 was approximately $4.1 million, or $1.03 per share, including approximately $4.8 million, or $1.19 in earnings per share from discontinued operations.

Commenting on these results, Mr. Tong Shiping, Chairman and CEO of the Company, stated: "We were pleased to see the year over year rebound in auto sales in the second quarter. However, we also clearly saw our already tight margins further impacted by the recent tax imposed on purchasers of our higher margin, high end autos which kept buyers of these autos away. We think at some point we'll see high end buyers return and, meanwhile, are continuing to fight to maintain our position as a leader in the industry."

Financial Highlights for the Second Quarter ended June 30, 2017

  • Net revenue in the 2017 second quarter increased 48% to $138,758,902 from $93,819,385 in the second quarter of 2016.


  • The net loss from continuing operations attributable to shareholders in the 2017 second quarter improved from $477,875, or a $0.12 loss per share a year earlier, to $342,109 or a loss per share of $0.08. The net income from discontinued operations attributable to shareholders was $0 in the 2017 second quarter compared to $5,664,104 or earnings per share of $1.40 in the 2016 second quarter.


  • Net revenues from Sales of Automobiles increased 48.63% year over year to $137,892,079 while sales volume also grew. Average unit selling prices declined, however, largely due to the impacts triggered by an additional 10% tax imposed on "super luxury cars," which typically are the most profitable autos sold by the Company.


  • Net revenues for Financing Services in the 2017 second quarter decreased year over year 16.17% to $861,173. The decrease included a year over year decline in fee income of 37.74% to $294,188, mainly reflecting increased competition.

Financial Highlights for the Six Months Ended June 30, 2017

  • Net revenue from continuing operations in the first six months of 2017 was $249,292,683, an increase of 7.97% from $230,883,403 in the same period of 2016.


  • As the gross profit margin in the first six months of 2017 declined to 0.40% compared with 0.69% in the year earlier period, the Company's gross profit also declined and led to a net loss from continuing operations attributable to shareholders of $477,355, or a loss of $0.12 per share. This nevertheless was a slight improvement over the prior year first half loss of $665,397 or a loss of $0.16 per share. The total net income attributable to shareholders in the first six months of 2016, including results of discontinued operations, was $4,125,312, or $1.03 per share.


  • Interest expense (excluding operating interest expense related to Financing Services) was $429,905 in the first half of 2017, compared with $1,129,032 in the first six months of 2016.


  • Cash and cash equivalents as of June 30, 2017 was $1,567,726.


  • Working capital as of June 30, 2017 was $23,626,413 as compared with working capital as of December 31, 2016 of $23,576,035. The Company has included a "going concern" paragraph in the Notes to the Company's Condensed Consolidated Financial Statements for the quarter and six months ended June 30, 2017 reflecting the continuing operating losses, accumulated deficit and negative operating cash flow.

Sales of Automobiles

A total of 1,398 automobiles were sold in the 2017 second quarter, up 54% from the 905 vehicles sold in the same period a year earlier. However, the average unit selling price in the 2017 quarter decreased to $99,000 from $103,000 a year earlier. As previously explained, the Company saw a decline in sales of its higher margin high end luxury vehicles in 2017 following the imposition of the additional 10% luxury tax by the government. The Company believes sales were unusually low in the second quarter of 2016 due to a depletion of the inventories built up in the prior quarters when dealers stocked up inventories in anticipation of increased prices due to a sudden devaluation of the RMB starting in August of 2015. The Company believes the government's "Parallel Imported Vehicle" scheme did not offset the depletion of built up inventories during the quarter, but the Company continues to believe this program will help boost sales over time.

Financing Services

The Company believes continuing competition eroded both fee income and margins in this business in the 2017 second quarter. Year over year revenue declined 16.17% to $861,173 from $1,027,280 in the prior year period. Most reflective of the competitive situation was the 37.74% year over year decline in fee income to $294,188 in the second quarter of 2017 from $472,545 in the same period of 2016. The remaining portion of revenue consisted of interest income of $566,985, up slightly from $554,735 in the second quarter of 2016. 

As of August 10, 2017, the Company had aggregate credit lines of $136 million, and did not incur any difficulties in accessing these lines and bank loan facilities, nor does it anticipate any difficulty in this regard over the near term.

Outlook

"Much of our future growth in Auto Sales," Mr. Tong commented, "is dependent on the continuing growth and strengthening of the Chinese economy. While there is always reason to have some concerns about this, generally, we remain quite confident about the economy and, concomitantly, future sales of imported luxury and 'super luxury' vehicles."

He added, "While we remain cautious about steps we may take to improve our profitability, we are aware of the need and are staying focused on the issue."

Conference Call Invitation

The Company will discuss 2017 second quarter results during a live conference call and webcast on Tuesday, August 15, 2017 at 8:00am ET.

To participate in the call, interested participants should call 1-800-334-0872 when calling within the United States or 1-719-457-2607 when calling internationally. Please ask for the Conference ID: 9672875. There will be a playback available until 08/22/17. 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: 9672875.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link: http://public.viavid.com/index.php?id=125899 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
    June 30, 2017

(Unaudited)
  December 31, 2016
ASSETS:            
Current assets:            
Cash and cash equivalents   $ 1,567,726   $ 3,004,932
Restricted cash     16,033,081     22,703,835
Receivable related to financing services, net     58,119,145     48,549,972
Inventories     11,969,891     13,049,065
Advances to suppliers, net     70,433,770     71,921,388
Prepaid expenses     74,733     376,581
Value added tax receivable     258,595     615,555
Total current assets     158,456,941     160,221,328
             
Property, plant, and equipment, net     290,053     317,282
Other assets     31,076     30,329
Total assets   $ 158,778,070   $ 160,568,939
             
LIABILITIES AND SHAREHOLDERS' EQUITY:            
Current liabilities:    
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