China Auto Logistics Inc (CALIQ)

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China Auto Logistics Reports 2013 First Quarter Results

7:30 AM ET 5/15/13 | Marketwire

China Auto Logistics Inc. (the "Company") (NASDAQ: CALI), a top seller in China of luxury imported automobiles, a leading provider of auto-related services, and developer and operator of a leading automobile portal and auto-related websites, reported today that in the first quarter of 2013 the Company continued its aggressive luxury auto price-cutting strategy in order to expand its market share. As anticipated, this led to a year over year decline in net income on narrowed margins, despite an 11% increase in unit sales of luxury autos, and a record contribution to operating income from the Company's high margin Financing Services business.

Mr. Tong Shiping, CEO and Chairman of the Company, stated, "It is of paramount importance to the Company, and its plans to expand new and existing higher margin auto-related services, that we maintain a leadership position in luxury auto sales. While our price cutting strategy currently is squeezing margins, we believe it ultimately will shake out weaker competitors and build our market share. Meanwhile, we remain pleased with the growing contribution to our bottom line from Financing Services, and also are making progress developing other high margin auto-related services opportunities that we hope to be able to report on in the very near future."

Financial Highlights

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-- Net revenues for the three months ended March 31, 2013 increased 0.17% to $107,625,066 from $107,445,586 in the first quarter last year. The main contributor to revenues were Auto Sales which comprised 97.41%, of total revenues, followed by Financing Services, with 1.76%. The percentage contribution to revenues from web-based advertising services declined further to 0.20% reflecting the Company's decision last year to shift the focus of their online presence away from ad revenue generation, in an attempt to create other growth opportunities for their online portal. -- Income from operations in the 2013 first quarter declined to $1,464,322, primarily due to a sharply lower contribution to operating income from Auto Sales. While this was not offset by contributions to results from the Company's higher margin auto-related services businesses, including financing, web-based advertising and automobile value added services, the combined operating income of these other businesses grew strongly to $1.55 million, up from $1.24 million a year earlier, led by a record $1.05 million contribution from Financing Services, compared to a $704,000 contribution from this business in the year earlier quarter. -- Net income attributable to shareholders in the 2013 first quarter declined to $1,007,335, or $0.27 per share, compared with $1,581,477, or $0.43 per share in the first quarter of 2012. The weighted average number of diluted common shares in both periods was 3,694,394 shares.

Segment Review

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-- In the 2013 first quarter, the Company sold 1,256 automobiles, up 11% from 1,129 automobiles in the same period last year. However, the average unit selling price decreased 8.7% from $92,000 a year earlier to $84,000 per vehicle in the 2013 first quarter. This decline primarily was a consequence of a continuing aggressive pricing strategy aimed at expanding market share and maintaining market leader status. Additionally, reflecting market demand, the Company sold more lower end models of luxury vehicles where gross margins typically are lower than higher end models. -- Financing Services continued to grow strongly in the 2013 first quarter, although not fully reflected in the revenues for this segment of $1,899,410, compared with $2,000,432 in the first quarter last year. Revenues from this segment are comprised of interest income and fees for services and, while lower interest rates in the period reduced interest income, the fee portion of financing revenue grew 52.24% to $1,329,434. New financing service types and increased pricing also helped grow the Financing Services gross margin percentage in the 2013 first quarter to 69.70%, up from 43.36% in the first three months of 2012. As of March 31, 2013, the Company had aggregate credit lines of approximately $136 million, supporting this business, on which it had drawn approximately $80 million. --The Company also continued to see solid but relatively flat year over year contributions to results in the 2013 first quarter from its other higher margin auto-related services, namely, auto mall management services and automobile value added services.

Outlook

Mr. Tong commented, "We believe we will continue to operate in a strong growth market for luxury car sales in China, where most forecasters see this segment of the market outperforming the anticipated growth in general automobile sales. At the same time, we see continuing competition in the luxury automobile segment necessitating a continuation of our efforts to beat the prices of weaker competitors to expand our market share. To help us with this strategy, we envision a growing contribution over time from our current and planned higher margin auto-services related businesses."

Conference Call Invitation

The Company will discuss 2013 first quarter results during a live conference call and webcast on Friday, May 17th, at 8:00am ET.

To participate in the call, interested participants should call 1-877-941-1427 when calling within the United States or 1-480-629-9664 when calling internationally. Please ask for the China Auto Logistics 2013 First Quarter Earnings Conference Call, Conference ID: 4619448. There will be a playback available until May 24, 2013. 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: 4619448.

This call is being webcast by ViaVid Broadcasting and can be accessed by clicking on this link http://public.viavid.com/index.php?id=104737 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, and also manages China's largest imported auto mall in Tianjin. Additionally, it operates www.cali.com.cn, one of the leading automobile portals in China, as well as three major websites serving China's auto dealers and their customers. The Company also provides a growing variety of "one stop" automobile related services such as short term dealer financing. Additional information about the Company is available at www.chinaautologisticsinc.com.

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.