304 0 Kommentare China Auto Logistics Reports 2014 First Quarter Results

TIANJIN, CHINA--(Marketwired - May 15, 2014) - China Auto Logistics Inc. (the "Company" or "CALI") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, a leading provider of auto-related services and a soon to be entrant in used car sales in China, today reported that revenues in its first quarter ended March 31, 2014, were down slightly compared with last year's first quarter to approximately $107 million. Higher interest and non-cash depreciation expense coupled with reduced Financial Services income, with no offsetting revenues of any magnitude or income as yet from the new used car joint venture, Car King Tianjin, or the recently acquired Airport International Auto Mall, led to an approximately $1.35 million loss in the first quarter. On a positive note, the Company saw gross margins in its Auto Sales business, which contributed almost 98% of revenues in the first quarter, improve slightly for the first time in several quarters and believes they have stabilized.

Mr. Tong Shiping, Chairman and CEO of the Company commented, "While maintaining our leadership position in the highly competitive imported luxury auto sales business, we also were able to stabilize margins with an improved mix of sales that greatly increased our average price per vehicle. While this business is likely to remain highly competitive, we remain optimistic about its long-term future. At the same time, we were able to move ahead with major steps in our diversification strategy with the acquisition we made, and the used car joint venture we concluded near the end of 2013. Both should begin to come on stream in the second half of the year." He added, "It will be somewhat painful to absorb the additional expense as we finalize our strategy. However, we believe it will be very worthwhile, given the size and growth of the used car market in China, and the excellent location of the new mall in what we hope will become another Free Trade Zone before year end."

Financial Highlights

Revenues in the first quarter of 2014 were $106,975,050, down 0.60% from $107,625,066 a year earlier. The 2014 figure does not include revenues from Car King Tianjin, which are accounted for under the equity method of accounting as the Company's equity interest is less than half at 40%. Sales of Automobiles accounted for 97.90% of revenues in the quarter, up from 97.41% a year earlier.
Gross profit margins for sales of automobiles stabilized at 0.17% in the quarter, up from 0.04% a year earlier. Nevertheless, the overall gross profit margin in the quarter was 1.33% compared with 2.07% in the first quarter last year, as gross profits declined to $1,423,797 from $2,227,719 year over year. A key factor in this result was a decline in the gross margins of Financing Services to 36.45% in the quarter from 69.7% a year earlier, as the Company temporarily ceased providing certain Financing Services due to a reutilization of available funds to finance the Zhonghe acquisition and to provide a working capital loan to Car King Tianjin.
The aforementioned reduction in Financing Services offerings, one fewer month of Auto Mall Management Services revenue due to the expiration of the Auto Mall Management Services contract in February, and a decline in revenues from Value Added Auto Services and Web Based Advertising Services all contributed to a loss in income from operations in the quarter of $7,562, compared with operating income of $1,464,322 a year earlier.
Car King Tianjin had a net loss in the quarter of $738,160, which resulted in a reported loss to the Company of $295,264 from its 40% equity investment.
There were also significant acquisition related interest, depreciation and amortization costs in the quarter. In particular, interest expense in the quarter increased to $1,322,583 from $76,636 a year earlier, and depreciation on the Airport International Auto Mall property increased this expense to $644,889 from $28,153 a year earlier.
Reflecting in particular the reduced income from operations (particularly from Financing Services) and the increased interest and depreciation costs, a loss attributable to shareholders was incurred in the quarter of $1,346,167, or ($0.33) per share, as compared with year earlier net income of $1,007,335, or $0.27 per share.

Operational Highlights

Sales of Automobiles in the quarter continued to be affected by the slower economy and steep competition in the luxury imported auto space. Revenue in the quarter was down 0.1% year over year. While the Company sold 981 automobiles in the quarter, down 22% from a year earlier volume of 1,256 automobiles, the average unit selling price increased to $106,000 compared with $84,000 a year earlier. This increase came largely from the sale of higher end vehicles and resulted in a small increase in gross margin.

Financing Services revenues in the quarter declined 18.76% year over year to $1,543,169, as the decision was made to discontinue the fee service of providing customers with credit beyond the financing terms provided by banks. The Company determined that the working capital needed to provide this service would be better utilized in financing the Zhonghe acquisition and provide working capital to Car King Tianjin. The contribution from financing fees to operating income also therefore declined to $570,531 although interest income increased to $972,638. In future periods, it is anticipated that the revenue lost from discontinuing this product will be replaced by restoring the product or by other new products.

Airport Auto Mall Services - A small amount of revenue was generated in the quarter by leasing space in the Airport International Auto Mall to Car King Tianjin. The Company continues to finalize its plans for both the facility and the used car business, and expects that they will begin to come to fruition in the second half of this year.

Outlook

"As we indicated last quarter," Mr. Tong said, "We anticipate having to work very hard to try to overcome the continuing obstacles in the luxury auto sales space, including the slow economy, the government's concerns with auto pollution and fierce competition. However, we believe stability on the auto sales bottom line will continue as we focus on the best possible approach to optimizing our entry into the used car arena, and determining the best possible uses of our new auto mall. Our optimism for the longer term is well founded, we believe, given our size and stature in the auto industry, and the growth still being forecasted for both luxury autos and used cars, as well for auto related services such as dealer financing."

Commenting on the recent publicity surrounding the SEC complaint filed against several individuals for alleged improprieties with respect to CALI shares, Mr. Tong stated, "We spend a lot of time and effort to comply with SEC requirements and operate our business with the best interests of our shareholders in mind. As such, we strongly endorse the SEC's actions whenever they take steps to protect shareholders and try to maintain an even playing field for all investors."

Conference Call Invitation

The Company will discuss 2014 first quarter results during a live conference call and webcast on Monday, May 19, 2014 at 8:00 am Eastern Time.

To participate in the call, interested participants should call 1-877-941-8416 when calling within the United States or 1-480-629-9808 when calling internationally. Please ask for the China Auto Logistics 2014 First Quarter Earnings Conference Call, Conference ID: 4683974. There will be a playback available until May 26, 2014. To listen to the playback, please call 1-877-870-5176 when calling within the United States or 1-858-384-5517 when calling internationally. Use the Replay Pin Number: 4683974.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http: http://public.viavid.com/index.php?id=109326 or at ViaVid's website at http://viavid.com

About China Auto Logistics Inc.

China Auto Logistics Inc. is one of China's top sellers of imported luxury vehicles. It also provides a growing variety of "one stop" automobile related services such as short term dealer financing. Additionally, in November, 2013, it acquired the owner and operator of the 26,000 square meter Airport International Automall in Tianjin for $91.4 million, with plans to develop it, among other things, as the flagship site for a used car business, with Car King (China) Used Car Trading Co., Ltd.

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.



CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

				March 31, 2014 (Unaudited)		December 31, 2013
ASSETS
Current assets
	Cash and cash equivalents			$	10,364,520	$	15,041,505
	Restricted cash				38,116,578		29,665,536
	Accounts receivable - trade, Car King Tianjin				324,575		-
	Receivable related to auto mall management fees				-		255,712
	Receivables related to financing services				104,290,689		68,568,562
	Inventories				17,903,606		15,343,671
	Advances to suppliers				42,189,218		38,074,096
	Prepaid expenses				45,436		12,311
	Value added tax refundable				714,859		283,478
	Deferred tax assets				12,657		48,345
		Total current assets			213,962,138		167,293,216

Property and equipment, net					71,722,521		72,977,985
Ownership interest in Car King Tianjin					280,028		577,904
Due from Car King Tianjin					1,298,301		-
Goodwill					19,990,877		20,159,365
Intangible assets, net					514,993		547,155
		Total Assets		$	307,768,858	$	261,555,625

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Bank overdraft			$	2,415,942	$	2,439,429
	Lines of credit related to financing services				94,060,031		66,173,312
	Short term borrowings				34,612,971		6,259,598
	Accounts payable				189,517		-
	Notes payable to suppliers				11,360,132		21,275,203
	Accrued expenses				398,536		236,599
	Customer deposits				36,569,643		35,205,567
	Deferred revenue				179,793		202,428
	Payable related to acquisition of Zhonghe - current portion, net				15,883,504		15,706,581
	Due to shareholders				2,204,875		2,223,458
	Due to director				504,380		597,393
	Income tax payable				230,470		174,540
	Deferred tax liability				718,202		786,413
		Total current liabilities			199,327,996		151,280,521

Payable related to acquisition of Zhonghe, excluding current portion, net					35,685,728		35,306,223
Deferred tax liability					11,902,184		12,239,842
			Total liabilities		246,915,908		198,826,586
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, 2014 and December 31, 2013				4,034		4,034
	Additional paid-in capital				22,979,734		22,979,734
	Accumulated other comprehensive income				7,114,641		7,642,886
	Retained earnings				30,184,501		31,530,669
		Total China Auto Logistics Inc. shareholders' equity			60,282,910		62,157,323
Noncontrolling interests					570,040		571,716
		Total equity			60,852,950		62,729,039

		Total liabilities and shareholders' equity		$	307,768,858	$	261,555,625

CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

				Three Months Ended March 31,
				2014			2013

Net revenue				$	106,975,050		$	107,625,066
Cost of revenue					105,551,253			105,397,347
			Gross profit		1,423,797			2,227,719

Operating expenses:
	Selling and marketing				186,527			170,034
	General and administrative				1,244,832			593,363
		Total operating expenses			1,431,359			763,397

(Loss) income from operations					(7,562	)		1,464,322

Other income (expenses)
	Interest income				60,900			222,288
	Interest expense				(1,322,583	)		(76,636	)
	Gain on disposal of property and equipment				11,694			-
	Equity loss - share of investee company loss				(295,264	)		-
	Foreign exchange loss				(96	)		(166,151	)
		Total other expenses			(1,545,349	)		(20,499	)

(Loss) income before income taxes					(1,552,911	)		1,443,823

Income tax (benefit) expense					(205,873	)		435,500

Net (loss) income					(1,347,038	)		1,008,323

Less: Net (loss) income attributable to noncontrolling interests					(871	)		988

Net (loss) income attributable to shareholders of China Auto Logistics Inc.				$	(1,346,167	)	$	1,007,335

(Loss) earnings per share attributable to shareholders of China Auto Logistics Inc.- basic and diluted				$	(0.33	)	$	0.27

Weighted average number of common share Outstanding - basic and diluted					4,034,494			3,694,394

CHINA AUTO LOGISTICS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Three Months Ended March 31,
	2014			2013
Cash flows from operating activities
Net (loss) income	$	(1,347,038	)	$	1,008,323

Adjustments to reconcile net (loss) income to net cash provided by(used in) operating activities
Depreciation on property and equipment		672,605			28,153
Gain on disposal of property and equipment		(11,694	)		-
Equity loss - share of investee company loss		295,264			-
Change of Inventory reserve		(142,203	)		-
Change of deferred tax assets		35,551			-
Change of deferred tax liabilities		(101,202	)		-

Changes in operating assets and liabilities:
Restricted cash		10,270,967			1,082,394
Accounts receivable - trade, Car King Tianjin		(327,033	)		(3,353,088	)
Receivable related to auto mall management fees		255,494			-
Receivables related to financing services		(36,569,995	)		(14,271,668	)
Notes receivable		-			(1,593,143	)
Inventories		(2,566,324	)		14,086,651
Advances to suppliers		(4,466,903	)		(32,207,433	)
Prepaid expenses, other current assets and other assets		(33,479	)		16,308
Value added tax receivable		(437,033	)		339,818
Accounts payable		190,380			262,260
Line of credit related to financing services		28,655,094			28,162,474
Notes payable to suppliers		(9,810,975	)		-
Accrued expenses		164,962			(36,527	)
Accrued interest		792,178			-
Value added tax payable		-			130,975
Customer deposits		1,670,872			12,388,325
Deferred revenue		(21,101	)		(9,227	)
Income tax payable		57,823			108,500
Net cash (used in) provided by operating activities		(12,773,790	)		6,143,095

Cash flows from investing activities
Proceeds from disposal of property and equipment		17,954			-
Purchase of property and equipment		(652	)		(1,864	)
Advances to Car King Tianjin		(1,308,130	)		-
Net cash used in investing activities		(1,290,828	)		(1,864	)

Cash flows from financing activities
Bank overdraft		(3,122	)		-
Proceeds from short-term borrowings		31,875,389			5,842,297
Repayments of short-term borrowings		(3,254,646	)		(18,582,569	)
Decrease in restricted cash related to short-term borrowings		(19,035,807	)		-
Proceeds from director		205,942			202,203
Repayments to director		(310,728	)		(198,263	)
Net cash provided by (used in) financing activities		9,477,028			(12,736,332	)

Effect of exchange rate change on cash		(89,395	)		37,884

Net decrease in cash and cash equivalents		(4,676,985	)		(6,557,217	)

Cash and cash equivalents at the beginning of period		15,041,505			8,888,749
Cash and cash equivalents at the end of period	$	10,364,520		$	2,331,532

Supplemental disclosure of cash flow information
Interest paid	$	1,590,426		$	788,038
Income taxes paid	$	-		$	544,000