Kaixin Auto Holdings Announces Unaudited Second Quarter 2019 Financial Results
Second Quarter 2019 Operational Highlights
- Number of Self-Owned and Affiliated Network Dealerships were 14 and 4, respectively, as of
June 30, 2019 , unchanged fromMarch 31, 2019 . - Gross Merchandise Value (GMV)2 was
US$108.1 million , representing a decrease of 3.1% fromUS$111.6 million in the second quarter of 2018. - Number of cars sold was 1,667 units, compared with 1,543 units sold in the second quarter of 2018.
- Inventory turnover days were 42 days, compared with 67 days in the second quarter of 2018.
Second Quarter 2019 Financial Highlights
- Total net revenues were
US$100.0 million , representing a decrease of 8.1% fromUS$108.8 million in the second quarter of 2018. - Gross profit was
US$2.5 million , representing an increase of 120.6% fromUS$1.1 million in the second quarter of 2018. - Loss from operations was
US$6.3 million , compared with a loss ofUS$13.7 million in the second quarter of 2018. - Net income attributable to the Company was
US$76.8 million , compared with a net loss attributable to the Company ofUS$ 9.6 million in the second quarter of 2018. - Adjusted loss from continuing operations3 (non-GAAP) was
US$0.5 million , compared with an adjusted loss from continuing operations ofUS$5.3 million in the second quarter of 2018. - Adjusted loss from operations3 (non-GAAP) was
US$0.3 million , compared with an adjusted loss from operations ofUS$6.4 million in the second quarter of 2018. - Adjusted EBITDA from continuing operations4(non-GAAP) was
US$0.2 million , compared with negativeUS$4.4 million in the second quarter of 2018.
“We are one of the primary dealership networks in the premium used car segment in
“In the second quarter, we saw improvement in our core operating efficiency as we benefited from strategic focus on the operational optimization of both our dealerships and our corporate headquarters. After rolling out a pilot program upgrading our SAAS system at selected dealerships, we are very pleased to see both enhanced procurement efficiency and inventory management, as well as improved communication between our dealerships and headquarters. We plan to extend the pilot program to all of our dealerships in the second half of 2019. Regarding corporate functions, in the second quarter we implemented strategic initiatives to streamline operations, in an effort to make finance, human resources, IT, procurement, legal, and facilities management more efficient and cost effective. As a result, we improved our operating loss margin by 6.3 percentage points year-over-year in the second quarter 2019. Going forward, we will continue to refine our business and operating model, targeting further market penetration and eventual profitability,” added Mr.
Ms.
Second Quarter 2019 Results
Total net revenues for the second quarter of 2019 were
Automobile sales revenues for the second quarter of 2019 were
Cost of revenues was
Gross profit was
Operating expenses were
Selling and marketing expenses were
Research and development expenses were
General and administrative expenses were
Loss from operations was
Net income attributable to the Company was
Adjusted loss from continuing operations (non-GAAP) was
Adjusted loss from operations (non-GAAP) was
Adjusted EBITDA from continuing operations (non-GAAP) was
Business Outlook
For the third quarter of 2019, the management of the Company currently expects:
- Total revenues for the third quarter of 2019 to be in the range of
US$70.0 million to US$80.0 million . This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.
Conference Call Information
The Company's management will host an earnings conference call at
Interested parties may participate in the conference call by dialing:
United States: | 1-845-675-0437 |
International: | +65-6713-5090 |
Hong Kong: | +852-3018-6771 |
Mainland China: | 400-620-8038 |
Conference ID: | 9286069 |
Additionally, a live and archived webcast of the conference call will be available on the Company's investor relations website at http://ir.kaixin.com.
A replay of the conference call will be accessible by phone at the following number until
United States: | 1-646-254-3697 |
International: |
+61-2-8199-0299 |
Hong Kong: | +852-3051-2780 |
Mainland China: | 400-632-2162 |
Replay Access Code: | 9286069 |
About
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook for the third quarter of 2019 and quotations from management in this announcement, as well as Kaixin’s strategic and operational plans, contain forward-looking statements. Kaixin may also make written or oral forward-looking statements in its filings with the
About Non-GAAP Financial Measures
To supplement Kaixin's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Kaixin uses "adjusted loss from operations", "adjusted loss from continuing operations" and “adjusted EBITDA from continuing operations”, which are defined as non-GAAP financial measures by the
These non-GAAP financial measures are not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of non-GAAP results of operations measures to the comparable GAAP financial measures" at the end of this release.
For more information, please contact:
Lei Song
Tel: (86 10) 8448 1818 ext. 2111
Email: kaixin.ir@renren-inc.com
Tel: +86 (10) 6508-0677
Email: Kaixin@tpg-ir.com
Tel: +1 (212) 481-2050
Email: Kaixin@tpg-ir.com
SOURCE:
_________________________
1 The operation data and financial information other than presented in “Discontinued operations” in this press release excludes
2 Includes automobile sales transactions at the Company’s dealerships including cars owned by Kaixin and cars sourced by Kaixin Affiliated Network Dealers that Kaixin sells pursuant to profit-sharing arrangements.
3 Adjusted loss from continuing operations and adjusted loss from operations are non-GAAP measures. We define adjusted loss from continuing operations as (loss) income from continuing operations excluding share-based compensation expenses, fair value change of contingent consideration, provision for financing receivable, provision for PPE, one-time provision for other receivable, and one-time listing fee. We define adjusted loss from operations as loss from operations excluding share-based compensation expenses, provision for financing receivable, provision for PPE, one-time provision for other receivable and one-time listing fee. See "About Non-GAAP Financial Measures" below.
4 Adjusted EBITDA from continuing operations is a non-GAAP financial measure. It is defined as (loss) income from continuing operations excluding fair value change of contingent consideration, share-based compensation expense, interest expenses, income tax expenses, depreciation, provision for financing receivable, provision for PPE, one-time provision for other receivable and one-time listing fee. See "About Non-GAAP Financial Measures" below.
KAIXIN AUTO HOLDINGS | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||
(In thousands of US dollars) | ||||||||
December 31, | June 30, | |||||||
2018 | 2019 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,950 | $ | 7,283 | ||||
Restricted Cash | 5,818 | - | ||||||
Accounts receivable, net | 1,480 | 745 | ||||||
Financing receivable, net | 3,486 | 107 | ||||||
Prepaid expenses and other current assets | 38,714 | 45,557 | ||||||
Inventory | 57,950 | 43,704 | ||||||
Total current assets | 115,398 | 97,396 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 813 | 196 | ||||||
Goodwill | 75,021 | 75,136 | ||||||
Right-of-use lease assets | - | 3,643 | ||||||
Total non-current assets | 75,834 | 78,975 | ||||||
TOTAL ASSETS | $ | 191,232 | $ | 176,371 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 4,975 | $ | 5,099 | ||||
Short-term debt | 49,887 | 17,657 | ||||||
Accrued expenses and other current liabilities | 10,644 | 12,071 | ||||||
Short-term lease liabilities | - | 1,878 | ||||||
Amounts due to related parties | 78,108 | 4,228 | ||||||
Advance from customers | 4,078 | 1,146 | ||||||
Contingent consideration | 11,929 | - | ||||||
Income tax payable | 7,590 | 7,974 | ||||||
Total current liabilities | 167,211 | 50,053 | ||||||
Non-current liabilities: | ||||||||
Long-term contingent consideration | 93,741 | - | ||||||
Long-term lease liabilities | - | 1,166 | ||||||
Total non-current liabilities | 93,741 | 1,166 | ||||||
TOTAL LIABILITES | $ | 260,952 | $ | 51,219 | ||||
Shareholders' Equity: | ||||||||
Ordinary shares | 2 | 4 | ||||||
Additional paid-in capital | 38,559 | 180,609 | ||||||
Statutory reserves | 4,004 | 4,004 | ||||||
Accumulated deficit | (146,073 | ) | (88,764 | ) | ||||
Accumulated other comprehensive income (loss) | 1,382 | (1,075 | ) | |||||
Total Kaixin Auto Holdings shareholders' equity | (102,126 | ) | 94,778 | |||||
Non-controlling interest | 32,406 | 30,374 | ||||||
TOTAL EQUITY | (69,720 | ) | 125,152 | |||||
TOAL LIABILITIES AND EQUITY | $ | 191,232 | $ | 176,371 | ||||
KAIXIN AUTO HOLDINGS | ||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) | ||||||||||||||||||||||
(In thousands of US dollars, except share and per share data) | ||||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||
2018 | 2019 | 2019 | 2018 | 2019 | ||||||||||||||||||
Net revenues | ||||||||||||||||||||||
Automobile sales | $ | 106,700 | $ | 102,620 | $ | 98,294 | $ | 199,556 | $ | 200,914 | ||||||||||||
Financing income | 194 | - | - | 2,317 | - | |||||||||||||||||
Others | 1,858 | 2,026 | 1,659 | 4,210 | 3,685 | |||||||||||||||||
Total net revenues | 108,752 | 104,646 | 99,953 | 206,083 | 204,599 | |||||||||||||||||
Cost of revenues | ||||||||||||||||||||||
Automobile sales | (101,649 | ) | (98,472 | ) | (94,832 | ) | (189,926 | ) | (193,304 | ) | ||||||||||||
Cost of financing income | (952 | ) | - | - | (3,130 | ) | - | |||||||||||||||
Provision for financing receivable | (4,872 | ) | - | (2,594 | ) | (4,872 | ) | (2,594 | ) | |||||||||||||
Others | (140 | ) | (57 | ) | (14 | ) | (193 | ) | (71 | ) | ||||||||||||
Total cost of revenues | (107,613 | ) | (98,529 | ) | (97,440 | ) | (198,121 | ) | (195,969 | ) | ||||||||||||
Gross profit | 1,139 | 6,117 | 2,513 | 7,962 | 8,630 | |||||||||||||||||
Operating expenses: | ||||||||||||||||||||||
Selling and marketing | (6,357 | ) | (4,359 | ) | (3,681 | ) | (13,124 | ) | (8,040 | ) | ||||||||||||
Research and development | (1,253 | ) | (974 | ) | (942 | ) | (2,405 | ) | (1,916 | ) | ||||||||||||
General and administrative | (7,228 | ) | (2,817 | ) | (4,146 | ) | (17,357 | ) | (6,963 | ) | ||||||||||||
Total operating expenses | (14,838 | ) | (8,150 | ) | (8,769 | ) | (32,886 | ) | (16,919 | ) | ||||||||||||
Loss from operations | (13,699 | ) | (2,033 | ) | (6,256 | ) | (24,924 | ) | (8,289 | ) | ||||||||||||
Other (expense) income | 1,990 | 1,102 | 404 | 2,205 | 1,506 | |||||||||||||||||
Fair value change of contingent consideration | (8,538 | ) | (17,733 | ) | 83,327 | (15,677 | ) | 65,594 | ||||||||||||||
Interest income | 156 | 43 | 16 | 495 | 59 | |||||||||||||||||
Interest expenses | (765 | ) | (630 | ) | (404 | ) | (1,894 | ) | (1,034 | ) | ||||||||||||
Total non-operating (loss) income | (7,157 | ) | (17,218 | ) | 83,343 | (14,871 | ) | 66,125 | ||||||||||||||
(Loss) income before provision of income tax and noncontrolling interest, net of tax | (20,856 | ) | (19,251 | ) | 77,087 | (39,795 | ) | 57,836 | ||||||||||||||
Income tax expenses | (234 | ) | (365 | ) | (263 | ) | (1,110 | ) | (628 | ) | ||||||||||||
(Loss) income from continuing operations | (21,090 | ) | (19,616 | ) | 76,824 | (40,905 | ) | 57,208 | ||||||||||||||
Discontinued operations | ||||||||||||||||||||||
Income from discontinued operations, net of income tax | 11,341 | - | - | 10,062 | - | |||||||||||||||||
Net (loss) income | (9,749 | ) | (19,616 | ) | 76,824 | (30,843 | ) | 57,208 | ||||||||||||||
Net loss (income) attributable to non-controlling interests | 100 | 108 | (7 | ) | 120 | 101 | ||||||||||||||||
Net (loss) income attributable to Kaixin Auto Holdings | $ | (9,649 | ) | $ | (19,508 | ) | $ | 76,817 | $ | (30,723 | ) | $ | 57,309 | |||||||||
Net income per share from discontinued operations attributable to Kaixin Auto Holdings shareholders: | ||||||||||||||||||||||
Basic | $ | 0.45 | $ | - | $ | - | $ | 0.40 | $ | - | ||||||||||||
Diluted | $ | 0.45 | $ | - | $ | - | $ | 0.40 | $ | - | ||||||||||||
Net (loss) income per share attributable to Kaixin Auto Holdings shareholders: | ||||||||||||||||||||||
Basic | $ | (0.39 | ) | $ | (0.78 | ) | $ | 2.25 | $ | (1.23 | ) | $ | 1.94 | |||||||||
Diluted | $ | (0.39 | ) | $ | (0.78 | ) | $ | 1.67 | $ | (1.23 | ) | $ | 1.09 | |||||||||
Weighted average number of shares used in calculating net (loss) income per ordinary share attributable to Kaixin Auto Holdings shareholders: | ||||||||||||||||||||||
Basic | 24,984,300 | 24,984,300 | 34,193,535 | 24,984,300 | 29,609,923 | |||||||||||||||||
Diluted | 24,984,300 | 24,984,300 | 46,046,897 | 24,984,300 | 52,809,497 | |||||||||||||||||
Weighted average number of shares used in calculating net income per ordinary share from discontinued operations attributable to Kaixin Auto Holdings shareholders: | ||||||||||||||||||||||
Basic | 24,984,300 | 24,984,300 | 34,193,535 | 24,984,300 | 29,609,923 | |||||||||||||||||
Diluted | 24,984,300 | 24,984,300 | 46,046,897 | 24,984,300 | 52,809,497 | |||||||||||||||||
Reconciliation of Non-GAAP results of operations measures to the comparable GAAP financial measures | ||||||||||||||||||||||
(In thousands of US dollars) | ||||||||||||||||||||||
For the Three Months Ended | For the Six Months Ended | |||||||||||||||||||||
June 30, | March 31, | June 30, | June 30, | June 30, | ||||||||||||||||||
2018 | 2019 | 2019 | 2018 | 2019 | ||||||||||||||||||
Loss from operations | $ | (13,699 | ) | $ | (2,033 | ) | $ | (6,256 | ) | $ | (24,924 | ) | $ | (8,289 | ) | |||||||
Add back: Shared-based compensation expenses | 2,412 | 635 | 1,875 | 9,827 | 2,510 | |||||||||||||||||
Add back: Provision for financing receivable | 4,872 | - | 2,594 | 4,872 | 2,594 | |||||||||||||||||
Add back: Provision for PPE | - | - | 507 | - | 507 | |||||||||||||||||
Add back: One-time provision for other receivable | - | - | 150 | - | 150 | |||||||||||||||||
Add back: One-time listing fee | 1 | 62 | 843 | 1 | 905 | |||||||||||||||||
Adjusted loss from operations | $ | (6,414 | ) | $ | (1,336 | ) | $ | (287 | ) | $ | (10,224 | ) | $ | (1,623 | ) | |||||||
(Loss) income from continuing operations | $ | (21,090 | ) | $ | (19,616 | ) | $ | 76,824 | $ | (40,905 | ) | $ | 57,208 | |||||||||
Add back: Fair value change of contingent consideration | 8,538 | 17,733 | (83,327 | ) | 15,677 | (65,594 | ) | |||||||||||||||
Add back: Shared-based compensation expenses | 2,412 | 635 | 1,875 | 9,827 | 2,510 | |||||||||||||||||
Add back: Provision for financing receivable | 4,872 | - | 2,594 | 4,872 | 2,594 | |||||||||||||||||
Add back: Provision for PPE | - | - | 507 | - | 507 | |||||||||||||||||
Add back: One-time provision for other receivable | - | - | 150 | - | 150 | |||||||||||||||||
Add back: One-time listing fee | 1 | 62 | 843 | 1 | 905 | |||||||||||||||||
Adjusted loss from continuing operations | $ | (5,267 | ) | $ | (1,186 | ) | $ | (534 | ) | $ | (10,528 | ) | $ | (1,720 | ) | |||||||
(Loss) income from continuing operations | $ | (21,090 | ) | $ | (19,616 | ) | $ | 76,824 | $ | (40,905 | ) | $ | 57,208 | |||||||||
Add back: Fair value change of contingent consideration | 8,538 | 17,733 | (83,327 | ) | 15,677 | (65,594 | ) | |||||||||||||||
Add back: Shared-based compensation expenses | 2,412 | 635 | 1,875 | 9,827 | 2,510 | |||||||||||||||||
Add back: Provision for financing receivable | 4,872 | - | 2,594 | 4,872 | 2,594 | |||||||||||||||||
Add back: Provision for PPE | - | - | 507 | - | 507 | |||||||||||||||||
Add back: One-time provision for other receivable | - | - | 150 | - | 150 | |||||||||||||||||
Add back: One-time listing fee | 1 | 62 | 843 | 1 | 905 | |||||||||||||||||
Add back: Interest expenses | 609 | 587 | 388 | 1,399 | 975 | |||||||||||||||||
Add back: Income tax expenses | 234 | 365 | 263 | 1,110 | 628 | |||||||||||||||||
Add back: Depreciation | 21 | 64 | 55 | 21 | 119 | |||||||||||||||||
Adjusted EBITDA from continuing operations | $ | (4,403 | ) | $ | (170 | ) | $ | 172 | $ | (7,998 | ) | $ | 2 | |||||||||
Source: Kaixin Auto Holdings