Q4 2008 Financial Highlights (1) * Sales of $109.8 million, an increase of 29.1% year-over-year * Net income of $1.9 million; EBITDA of $4.9 million * $21.2 million net cash generated from operations for the quarter ended on December 31, 2008 2008 Year Ended Financial Highlights (1) * Record sales of $440.6 million, an increase of 49.5% from 2007 * Net income of $8.0 million; EBITDA of $18.0 million * $21.3 million net cash generated from operations for the year ended on December 31, 2008
BEIJING, May 20, 2009 (GLOBE NEWSWIRE) -- AutoChina International Limited ("AutoChina" or the "Company") (OTCBB:SCRQF) (OTCBB:SCRWF) (OTCBB:SCRUF), a leading one-stop commercial vehicle financing and passenger automobile sales company in China, today reported financial results for the fourth quarter and year ended December 31, 2008. (1)
(1) These financial results reflect those of the Company's operating
subsidiary, AutoChina Group, Inc. ("AGI") on a stand-alone basis,
without adjustment, prior to its acquisition by the Company on
April 9, 2009.
The Company's Chairman and CEO, Mr. Yong Hui Li, noted, "We remain very optimistic about the growth opportunity at each of our business segments. Our passenger automobile sale performance in the fourth quarter was affected by a slower rate of growth in China's auto industry in the second half of 2008. However, our growth began to accelerate during December 2008, and auto industry growth has continued into 2009. Passenger auto sales in China have been strong when compared to the rest of the global economy, as overall 2009 first quarter vehicle sales in China grew by 3.8% year-over-year. This increase was partially the result of a nationwide tax-cut for the purchase of smaller, more fuel efficient cars. While still early in the year, we are confident that AutoChina will continue to see stable growth from our platform business."
Mr. Li continued, "We are also especially proud of the organic growth that we continue to generate in our commercial auto (or "heavy truck") finance business, despite challenging general economic conditions. We grew our total number of branches from 0 to 103 in 2008, and this expansion is expected to continue throughout 2009. While our sales in this segment were negatively affected by the nationwide downturn in transportation of goods in the fourth quarter of 2008, we have since seen sales improve in the last four months. We greatly benefit from having a team of dedicated employees that manages an integrated company with strong relationships with top vendors in all aspects of our operations and diverse distribution channels with automotive dealers and other marketing partnerships. We believe that we have the right management team in place to continue developing this segment of our business."
Mr. Li concluded, "We believe that AutoChina is currently well-positioned to capitalize on the auto industry expansion in China and build on a leadership position in the highly fragmented commercial vehicle financing market. The Company's financial situation is very strong with approximately $20.1 million in cash as of March 31, 2009. We look forward to the future with confidence."
Letter to Shareholders
The Company also announced that in an effort to provide additional background on its business structure and focus in the coming months, it has made available a letter to shareholders from Mr. Li describing the Company's primary business segments, passenger automobile sales through its dealership network and commercial vehicle sales and financing. The letter is currently available on AutoChina's corporate website at: http://www.autochinagroup.cn/en/InvestorNews/.
2008 Fourth Quarter Financial Review
To facilitate an understanding of AGI's results of operations, a summary of financial results is included below:
In USD thousands, except share numbers and EPS
(unaudited) (unaudited)
Q4 2008 Q4 2007
------------------- -------------------
% of % of Y-O-Y %
Amount Revenue Amount Revenue CHANGE
----------- ------- ----------- ------- -------
Total sales $ 109,780 100.0% $ 85,008 100.0% 29.1%
Consumer auto sales $ 95,752 87.2% $ 77,157 90.8% 24.1%
Commercial vehicle
financing $ 957 0.9% $ -- 0% N/A
Parts and service $ 12,891 11.7% $ 7,785 9.2% 65.6%
Insurance services $ 180 0.2% $ 66 0.1% 172.7%
Gross profit $ 6,988 6.4% $ 6,687 7.9% 4.5%
SG&A $ 4,849 4.4% $ 2,890 3.4% 67.8%
Operating income $ 2,508 2.3% $ 3,813 4.5% (34.2)%
Net income $ 1,933 1.8% $ 2,549 3.0% (24.2)%
EBITDA $ 4,883 4.4% $ 4,305 5.1% 13.4%
After giving effect
to merger with
Spring Creek
Acquisition Corp:
Pro forma
outstanding number
of common shares 10,716,720
Pro forma earnings
per share $ 0.18
For the three months ended December 31, 2008, total sales increased 29.1% to $109.8 million, from $85.0 million in the comparable prior fiscal year period. AGI's sales by segment were as follows:
* $95.8 million, or 87.2%, related to consumer auto sales; * $957,000, or 0.9%, related to commercial vehicle finance; * $12.9 million, or 11.7%, related to parts and services; and * $180,000, or 0.2%, related to commission on the sale of third party insurance products and services.
As a percentage of total sales, overall gross margin decreased to 6.4% for the three months ended December 31, 2008, down from 7.9% for the prior fiscal year period. The decline in margins is largely due to the economic slowdown during the period and AGI's incurring of expenses without offsetting revenue in the opening of 57 commercial vehicle branches during the last two months of 2008.
For the three months ended December 31, 2008, selling, general and administrative (SG&A) expenses were $4.8 million, compared to $2.9 million for the same period of the prior year. As a percentage to total revenues, SG&A expenses were 4.4% and 3.4% for the three months ended December 31, 2008 and 2007, respectively.
Net income for the fourth quarter of 2008 decreased to $1.9 million compared to $2.5 million in the fourth quarter of 2007, primarily as a result of lower gross margins for the period. EBITDA for the quarter ended December 31, 2008 increased to $4.9 million from $4.3 million in the prior year quarter. A table reconciling adjusted EBITDA to net income can be found at the end of this release. On a pro-forma basis after giving effect to AutoChina's definitive share exchange agreement with Spring Creek, the Company reported earnings per share of $0.18 for the three months ended December 31, 2008.
2008 Year End Financial Review
In USD thousands, except share numbers and EPS
(unaudited) (unaudited)
2008 2007
------------------- --------------------
% of % of Y-O-Y %
Amount Revenue Amount Revenue CHANGE
----------- ------- ----------- ------- -------
Total sales $ 440,585 100.0% $ 294,665 100.0% 49.5%
Consumer auto sales $ 365,916 83.1% $ 270,508 91.8% 35.3%
Commercial vehicle
financing $ 34,059 7.7% $ -- 0% N/A
Parts and service $ 40,218 9.1% $ 24,003 8.1% 67.6%
Insurance services $ 392 0.1% $ 154 0.1% 154.5%
Gross profit $ 25,913 5.9% $ 17,484 5.9% 48.2%
SG&A $ 14,198 3.2% $ 9,346 3.2% 51.9%
Operating income $ 12,551 2.8% $ 8,493 2.9% 47.8%
Net income (loss) $ 8,043 1.8% $ 4,775 1.6% 68.4%
EBITDA $ 17,954 4.1% $ 10,200 3.5% 76.0%
After giving effect
to merger with
Spring Creek
Acquisition Corp:
Pro forma
outstanding
number of common
shares 10,716,720
Pro forma earnings
per share $ 0.75
For the year ended December 31, 2008, total sales increased 49.5% to $440.6 million, from $294.7 million in the comparable prior year. AGI's sales by segment were as follows:
* $365.9 million, or 83.1% of revenues, related to consumer auto sales; * $34.1 million, or 7.7%, related to commercial vehicle financing; * $40.2 million, or 9.1%, related to parts and services; and * $392,000, or 0.1%, related to insurance service.
As a percentage of total sales, overall gross margin remained flat at 5.9% for the 12 months ended December 31, 2008 and 2007, respectively. For the year ended December 31, 2008, SG&A expenses were $14.2 million, compared to $9.3 million for the same period of the prior year. As a percentage to total revenues, SG&A expenses were flat at 3.2% for the years ended December 31, 2008 and 2007, respectively.
Net income for 2008 was $8.0 million for the year ended December 31, 2008, compared to $4.8 million in the prior year. EBITDA for the year ended December 31, 2008 increased to $18.0 million from $10.2 million in the prior year. On a pro-forma basis after giving effect to the Company's definitive share exchange agreement with Spring Creek, AutoChina reported earnings per share of $0.75 for the twelve months ended December 31, 2008.
Balance Sheet Highlights
As of December 31, 2008, the Company had cash and cash equivalents of $17.4 million; working capital of $31.4 million, and stockholders' equity of $60.6 million.
About AutoChina International Limited:
AutoChina International Limited, f/k/a Spring Creek Acquisition Corp. (OTCBB:SCRQF) (OTCBB:SCRWF) (OTCBB:SCRUF), is a leading one-stop commercial and consumer auto sales and financing company in China. Founded in 2005 by nationally recognized Chairman and CEO, Yong Hui Li, AutoChina operates in two primary business segments: commercial vehicle sales and financing (truck leasing) and sales of branded passenger automobiles through its nationally recognized dealer network.
The Spring Creek Acquisition Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5980
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:
* 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 automobile 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 GROUP INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of US$, except share and per share data)
Three months ended Year ended
December 31, December 31,
------------------- -------------------
2008 2007 2008 2007
-------- -------- -------- --------
(Unaudited) Audited
------------------- -------------------
Revenues
New automobiles $ 95,752 $ 77,157 $365,916 $270,508
Commercial vehicles 957 -- 34,059 --
Parts and services 12,891 7,785 40,218 24,003
Insurance service, net 180 66 392 154
-------- -------- -------- --------
Total revenues $109,780 85,008 440,585 294,665
Costs of sales
New automobiles 89,929 69,709 351,037 258,610
Commercial vehicles 782 -- 31,970 --
Parts and services 12,081 8,612 31,665 18,571
-------- -------- -------- --------
Total cost of sales 102,792 78,321 414,672 277,181
Gross profit 6,988 6,687 25,913 17,484
-------- -------- -------- --------
Operating expenses
Selling and marketing 2,151 960 6,692 3,304
General and administrative 2,698 1,930 7,506 6,042
Other income, net (369) (16) (836) (355)
-------- -------- -------- --------
Total operating expenses 4,480 2,874 13,362 8,991
======== ======== ======== ========
Income from operations 2,508 3,813 12,551 8,493
Finance income (expenses)
Floor plan interest expense (390) (305) (1,020) (601)
Other interest expense (49) (489) (1,785) (1,510)
Interest income 948 48 2,799 288
-------- -------- -------- --------
Total finance expenses, net 509 (746) (6) (1,823)
======== ======== ======== ========
Equity in earnings (loss)
of unconsolidated
subsidiaries 10 133 (40) 139
Minority interests (379) (600) (1,309) (1,260)
-------- -------- -------- --------
Income before income taxes 2,648 2,600 11,196 5,549
Income taxes provision
(benefit) 724 449 3,009 983
-------- -------- -------- --------
Income from continuing
operations 1,924 2,151 8,187 4,566
Income (loss) from
discontinued operations,
net of taxes 9 398 (144) 209
-------- -------- -------- --------
Net income $ 1,933 $ 2,549 $ 8,043 $ 4,775
======== ======== ======== ========
Weighted average number of
common shares 1,000 1,000 1,000 1,000
Weighted average number of
diluted common shares 1,000 1,000 1,000 1,000
Basic earnings (loss)
per share 1,933 2,549 8,043 4,775
======== ======== ======== ========
Diluted earnings (loss)
per share 1,933 2,549 8,043 4,775
======== ======== ======== ========
Other comprehensive income
(loss)
Net income (loss) 1,933 2,549 8,043 4,775
Translation adjustments 87 1,171 3,348 2,113
-------- -------- -------- --------
Comprehensive income (loss) $ 2,020 $ 3,720 $ 11,391 $ 6,888
======== ======== ======== ========
AUTOCHINA GROUP INC.
CONSOLIDATED BALANCE SHEETS
(In thousands of US$, except share data)
December 31,
-------------------
2008 2007
-------- --------
Assets:
Current assets:
Cash and cash equivalents $ 17,406 $ 12,820
Restricted cash 40,824 24,734
Accounts receivable 4,272 2,104
Inventories 37,463 26,910
Deposits for inventories 21,621 21,524
Prepaid expenses and other current assets 5,474 9,396
Due from affiliates -- 5,487
Due from unconsolidated subsidiary 529 --
Current maturities of net investment in
sales-type leases 14,867 --
Deferred income tax assets 1,020 177
Assets of discontinued operations -- 6,755
-------- --------
Total current assets 143,476 109,907
Investment in unconsolidated subsidiaries 229 770
Property, equipment and leasehold
improvements, net 26,907 18,030
Net investment in sales-type leases, net
of current maturities 8,492 --
Net non-current deferred income tax assets -- 6
Goodwill 941 170
-------- --------
Total assets $180,045 $128,883
======== ========
Current liabilities:
Floor plan notes payable -
manufacturer affiliated $ 12,379 $ 10,808
Floor plan notes payable -
non-manufacturer affiliated -- 685
Notes payable 3,921 6,725
Trade notes payable 60,134 35,828
Notes payable, related parties -- 12,538
Accounts payables 19,637 1,324
Other payables and accrued liabilities 5,189 3,101
Due to affiliates 5,894 2,075
Customer deposits 3,224 5,527
Income tax payable 1,674 725
Liabilities of discontinued operations -- 5,281
-------- --------
Total current liabilities 112,052 84,617
-------- --------
Long term debt:
Net deferred income tax liabilities 405 --
-------- --------
Total liabilities 112,457 84,617
-------- --------
Minority interests 6,950 6,461
-------- --------
Shareholders' equity:
Common stock - $0.001 par value,
50,000,000 shares authorized,
1,000 shares issued and outstanding -- --
Additional paid-in capital 35,921 24,479
Statutory reserves 741 62
Accumulated other comprehensive income 6,185 2,837
Retained earnings 17,791 10,427
-------- --------
Total shareholders' equity 60,638 37,805
-------- --------
Total liabilities and shareholders' equity $180,045 $128,883
======== ========
AUTOCHINA GROUP, INC
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE
($ in 000s)
A reconciliation of EBITDA to net income is provided below:
Three months Year
ended ended
December 31, December 31,
-------------- ---------------
2008 2007 2008 2007
------ ------ ------ ------
(Unaudited) Audited
-------------- ---------------
Net income 1,933 2,549 8,043 4,775
Plus: total finance exp, net (509) 746 6 1,823
Plus: interest income -
commercial vehicle financing 838 -- 2,239 --
Plus: equity in earnings (10) (133) 40 (139)
Plus: Minority interests 379 600 1,309 1,260
Plus: income tax (benefit) 724 449 3,009 983
Plus: loss from
discontinued operation (9) (398) 144 (209)
------ ------ ------ ------
Income from operations 3,346 3,813 14,790 8,493
Plus: depreciation
and amortization 1,537 492 3,164 1,707
------ ------ ------ ------
EBITDA 4,883 4,305 17,954 10,200
====== ====== ====== ======
Use of Non-GAAP Measures
AutoChina defines EBITDA as net income before interest expense, income taxes, depreciation and amortization. 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 EBITDA, and the material limitations of EBITDA, such as: 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; EBITDA does not include taxes, although payment of taxes is a necessary and ongoing part of AutoChina's operations; and 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, 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.