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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Autochina International Limited (MM) | NASDAQ:AUTC | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 8.01 | 0 | 01:00:00 |
AutoChina International Limited (“AutoChina” or the “Company”) (NASDAQ: AUTC), China’s largest commercial vehicle sales, servicing, leasing, and support network, today reported unaudited financial results for its first quarter ended March 31, 2011.
Q1 2011 Financial Highlights
Operational Highlights
Guidance for 2011
Market Overview
Mr. Yong Hui Li, Chairman and CEO of AutoChina, stated, “We were pleased to achieve double-digit growth on the top and bottom line during the first quarter, which is historically the Company’s slowest period due to seasonality caused by the Chinese New Year holiday. Since the latter half of 2010, we have seen demand in the heavy-truck market normalize from its previously high growth levels. In 2010, heavy truck sales in China rose by roughly 60% when compared to heavy truck sales in 2009. We feel this was an extraordinary jump over the historical growth in the market, driven in part by the effects of the government's stimulus program. However, we are still seeing steady growth in our sector. According to China Automotive Review, sales of heavy-duty trucks, including chassis and semi-tractor trailers, in the first quarter of 2011 totaled 299,436 units, up 8.4% from the first quarter of 2010. We believe that China’s continuing economic development will keep driving demand for commercial vehicles in the long term.”
Operational Review
AutoChina’s commercial vehicle sales, servicing, leasing and support business recorded 2,559 lease-to-own loans (“leases”) in the three months ended March 31, 2011, compared to 2,506 for the three months ended March 31, 2010.
The Company had a total of 21,727 leases outstanding as of March 31, 2011. During the quarter, 8 vehicles experienced default or were lost due to accidents. Since inception and through March 31, 2011, a total of 68 vehicles have experienced defaults or were lost due to accidents out of over 23,000 total vehicles leased.
During the 2011 first quarter, AutoChina’s value-added services (diesel, tire, and insurance financing) programs, which were launched in early 2010, continued to expand. As of March 31, 2011, over 80 tire outlets and over 60 fueling stations were participating in the program. Revenues from value-added services totaled $1.1 million during the quarter.
During the first quarter of 2011, the Company established a total of 18 additional commercial vehicle sales, servicing, leasing and support centers in Anhui, Guangxi, Jilin, Shaanxi, Shandong, Shanxi, and Yunnan provinces, bringing the total number of locations to 318 as of March 31, 2011. Three of these new stores were opened in provinces (Jilin, Guangxi, and Yunnan) in which the company did not previously have operations. The Company expects to operate at least 500 locations by the end of 2011.
Mr. Li continued, “During the 2011 first quarter, we continued our expansion into the far northern and southern regions of China, opening store branches in the Jilin, Yunnan, and Guangxi provinces where AutoChina did not previously have a presence. As we expand our store footprint in China, we continue to expect significant overall growth in our business, as new stores and market expansion are the primary drivers behind AutoChina’s sales.”
2011 First Quarter Financial Review
Balance Sheet Highlights
At March 31, 2011, AutoChina’s cash and cash equivalents (not including restricted cash) were $86.1 million, working capital was $132.1 million, total debt was $324.1 million (including due to affiliates), and stockholders’ equity was $242.0 million, compared to $30.9 million, $128.2 million, $253.5 million, and $229.9 million, respectively, at December 31, 2010.
Lease Securitization Program and Bank Financing
Since November 2010, AutoChina has begun securitizing a portion of its commercial vehicle leases through a partnership with CITIC Trust Co. Ltd. Under this lease securitization program, up to RMB60 million, or $9.1 million, of AutoChina’s commercial truck leases will be securitized and sold to investors each month through CITIC Trust.
As of March 31, 2011, the Company had short-term borrowings of $156.1 million, including $117.5 million in loans from various Chinese banks and $38.6 million in lease securitization borrowings. In addition, the Company also had long-term borrowings of $42.7 million from a Chinese bank. The Company’s total borrowings have a blended interest rate of 6.88% per annum.
Company Launches Used Commercial Vehicle Sale-Leaseback Program
In September 2010, AutoChina began market trials leasing used commercial vehicles. Since then the Company has formalized its used commercial vehicles leasing program, which leverages its existing business model and store network. AutoChina provides this valuable service to both former and new AutoChina customers, allowing them to place the vehicles that they own outright into a sale-leaseback program. The resulting lease is structured similarly to those that AutoChina provides to customers purchasing new heavy trucks. Customers in the sale-leaseback program also have access to all of AutoChina’s value-added services. AutoChina evaluates applicants of this new program with its existing strict credit procedures and implements highly conservative loan-to-values (LTVs) to further mitigate its risk exposure.
Mr. Li concluded, “We continue to focus on methods to further evolve our business. We feel that our existing store network and financing structure can be easily scaled and adapted to other areas, namely used commercial trucks through a sale-leaseback program. This program will allow new and existing AutoChina customers who need to generate funding quickly to pay the sale-leaseback over time and better manage their cash flow. We also expect to conduct certain smaller-scale testing trials in the coming weeks, applying our financing program and services to other asset classes where there is a need, such as cement mixers, cranes, other construction equipment, or even large-scale medical equipment. We believe that this added option will prove valuable to a new customer base, and we look forward to keeping shareholders apprised of our progress.”
Outlook for 2011
AutoChina reiterates its previously announced financial guidance for 2011. The Company believes revenue from its commercial vehicle sales, servicing, leasing and support business will be between $900 million and $950 million and net income between $52 million and $57 million.
Estimated Financial Results
(unaudited) ($ in millions)
For the year ended For the year ended December 31, 2011 December 31, 2010 Percent Gain Total Revenue $900 - $950 $622.1 44.7% - 52.7% Net Income $52 - $57 $37.5 38.7% - 52.0%Conference Call Information
AutoChina’s CFO, Jason Wang, will discuss these results in a conference call (with accompanying presentation) later this morning (June 6, 2011) at 10:00 a.m. Eastern Time. The dial-in numbers are:
(877) 407-8033 (U.S.)(201) 689-8033 (International)
The call will also be simultaneously broadcast over the Internet. To listen to the live webcast, please go to the Company’s investor relations site, http://www.autochinaintl.com, or click the below conference call link: http://www.investorcalendar.com/IC/CEPage.asp?ID=164283. The Company will also have an accompanying slide presentation available in PDF format 30 minutes prior to the conference call at the “Investor Relations” section of the AutoChina website.
Additional Information Available in Filing on Form 6-K
Additional information with respect to the Company, including more detailed information with respect to the Company’s March 31, 2011, financial statements, will be available on Form 6-K, which the Company will file with the Securities and Exchange Commission today (June 6, 2011) and will be available without charge at www.sec.gov.
About AutoChina International Limited
AutoChina International Limited is China’s largest one-stop commercial vehicle sales, servicing, leasing and support network. AutoChina’s operating subsidiary was founded in 2005 by Chairman and CEO, Yong Hui Li, a nationally recognized entrepreneur in China. The Company owns and operates 333 commercial vehicle financing centers in China; and primarily provides sales-type, lease-to-own loans for local customers. The Company’s website is http://www.autochinaintl.com.
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:
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 INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in thousands except share and per share data)
Three months ended March 31, 2011 2010 Revenues Commercial vehicles$
116,642 $ 110,498 Finance and insurance 19,591 9,607 Agency revenue, related parties — 627 Total revenues 136,233 120,732 Cost of sales Commercial vehicles 32,130 24,578 Commercial vehicles, related parties 80,868 80,303 Total 112,998 104,881 Gross profit 23,235 15,851 Operating expenses Selling and marketing 1,746 1,215 General and administrative 5,149 3,224 Interest expense 3,323 1,612 Interest expense - related parties 643 1,646 Other income, net (600 ) (121 ) Total operating expenses 10,261 7,576 Income from operations 12,974 8,275 Other income (expense), net Interest income 23 413 Income from operations before income taxes 12,997 8,688 Income tax provision 2,999 2,442 Net income$
9,998 $ 6,246Earnings (loss) per share
Basic
$
0.51
$
0.43
Diluted
$
0.50
$
0.33
Weighted average shares outstanding
Basic
19,615,766
14,614,434
Diluted
20,121,712
18,702,904
AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
March 31, December 31, 2011 2010 (unaudited) (unaudited) ASSETS Current assets Cash and cash equivalents $ 86,088 $ 30,931 Accounts receivable, net of provision for doubtful debts of $1,740 and $1,464, respectively 26,311 22,101 Inventories 1,079 1,412 Deposits for inventories 970 1,003 Prepaid expenses and other current assets 12,850 17,113 Prepaid expenses, related parties 9 604 Current maturities of net investment in sales-type leases, net of provision for doubtful debts of $735 and $281, respectively 305,757 282,108 Deferred income tax assets 1,174 618 Total current assets 434,238 355,890 Property, equipment and leasehold improvements, net 2,818 2,669 Deferred income tax assets 420 64 Net investment in sales-type leases, net of current maturities 150,081 142,005 Total assets $ 587,557 $ 500,628 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Short-term borrowings $ 156,076 $ 117,485 Accounts payable 1,284 911 Accounts payable, related parties 57,467 16,202 Other payables and accrued liabilities 9,586 7,425 Due to affiliates 67,813 77,295 Customer deposits 2,287 1,198 Income tax payable 4,611 7,147 Deferred income tax liabilities 3,026 — Total current liabilities 302,150 227,663 Long term debt Deferred income tax liabilities 397 614 Other long-term liabilities 286 — Long-term borrowings 42,706 42,485 Total liabilities 345,539 270,762Commitment and Contingency
Shareholders’ equity Preferred shares, $0.001 par value authorized - 1,000,000 shares; issued - none — —Ordinary shares - $0.001 par value authorized - 50,000,000 shares; issued and outstanding – 19,615,766 shares and 19,615,766 shares at March 31, 2011 and December 31, 2010, respectively
20 20 Additional paid-in capital 170,809 169,842 Retained earnings 62,435 52,437 Accumulated other comprehensive income 8,754 7,567 Total shareholders’ equity 242,018 229,866 Total liabilities and shareholders’ equity $ 587,557 $ 500,628AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands)
Three months ended March 31, 2011 2010 Cash flow from operating activities: Net income $ 9,998 $ 6,246 Adjustments to reconcile net income attributable to shareholders to net cash used in operating activities: Depreciation and amortization 306 215 Provision for bad debts 730 206 Deferred income taxes 1,889 1,748 Stock-based compensation expenses 967 735 Changes in operating assets and liabilities, net of acquisitions and divestitures: Accounts receivable (4,354) (369 ) Note receivable — (1,120 ) Net investment in sales-type leases (29,577) (54,831 ) Inventories 339 (465 ) Deposits for inventories 38 9,276 Prepaid expense and other current assets (4,666) (532 ) Trade notes payable — (12,450 ) Accounts payable 367 (961 ) Other long-term liabilities 285 — Other payable and accrued liabilities 2,113 541 Customers deposits 1,078 1,720 Income tax payable (2,562) (179 ) Net cash used in operating activities (23,049) (50,220 ) Cash flow from investing activities: Purchase of property, equipment and leasehold improvements (440) (319 ) Increase in restricted cash — (2,664 ) Decrease in security deposits 9,000 — Net cash provided by (used in) investing activities 8,560 (2,983 )AUTOCHINA INTERNATIONAL LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) – Continued
(in thousands)
Three months ended March 31, 2011 2010 Cash flow from financing activities: Proceeds from borrowings 73,198 50,982 Repayments of borrowings (35,388) (8,788 ) Proceeds from affiliates 61,570 — Repayment to affiliates (71,414) (9,479 ) Proceeds from accounts payable, related parties 80,857 2,281 Repayment to accounts payable, related parties (39,258) — Issue of shares on exercise of warrants — 10,296 Issue of shares for cash, net of offering costs of $3,680 — 66,320 Net cash provided by financing activities 69,565 111,612 Net cash provided by operating, financing and investing activities 55,076 58,409 Effect of foreign currency translation on cash 81 (7 ) Net increase in cash and cash equivalents 55,157 58,402 Cash and cash equivalents, beginning of the period 30,931 36,768 Cash and cash equivalents, end of the period 86,088 95,170 Supplemental disclosure of cash flow information: Interest paid $ 2,453 $ 3,665 Income taxes paid $ 3,639 $ 3,380A reconciliation of Adjusted EBITDA to net income is provided below:
Three months ended March 31, 2011 2010 (Table in 000s) Net income $ 9,998 $ 6,246 Interest expenses 3,966 3,258 Interest income (23) (413) Income tax provision 2,999 2,442 Stock-based compensation 967 735 Depreciation and amortization 306 215 Adjusted EBITDA $ 18,213 $ 12,483USE OF NON-GAAP MEASURES
AutoChina defines Adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization, as well as certain other adjustments, including 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 Adjusted EBITDA, such as: 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 this non-GAAP financial measure 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 accompanying table has more details on the reconciliations between GAAP financial measures that are most directly comparable to Non-GAAP financial measures.
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