Lentuo International Announces Second Quarter 2013 Financial Results PR Newswire BEIJING, Sept. 12, 2013 BEIJING, Sept. 12, 2013 /PRNewswire/ -- Lentuo International Inc. (NYSE: LAS) ("Lentuo" or the "Company"), a leading non-state-owned automobile retailer headquartered in Beijing, today reported its financial results for the second quarter ended June 30, 2013. Second Quarter 2013 Financial Highlights oNet income increased 152.9% to RMB21.3 million ($3.5 million), from net income of RMB8.4 million in the second quarter of 2012. oOverall gross margin of repair and maintenance services reached 12.1%, up from 9.1% in the second quarter of 2012. oRepair and maintenance revenue as a proportion of total revenue increased to 12.7% from 8.1% in the second quarter 2012. oRevenues decreased 4.1% to RMB760.3 million ($123.9 million), from RMB792.5 million in the second quarter 2012. oVehicles sold decreased 7.6% to 3,973 vehicles, from 4,301 vehicles in the second quarter 2012 while gross margin for new car sales increased to 6.5% from 5.1% in the second quarter of 2012. oVehicles serviced increased 8.3% to 49,650 vehicles, from 45,843 vehicles in the second quarter 2012. "I am pleased to report a significant increase in our profits year-over-year as we return to profitability after losses in the previous three quarters," commented Mr. Hetong Guo, Founder and Chairman of Lentuo. "This is the result of our continued strategic focus on the high-end car market and expansion of our after sales services. These results are indicative of our ability to capitalize on the long-term fundamentals of China's auto industry and our determination to see our strategy through." "We expect to see our operational and financial performance continue to align with our solid fundamentals as exciting new projects grow to scale such as our recently opened and fully operational FAW-Volkswagen flagship store and pre-owned car center in Beijing. Our joint-venture project with Itochu Corporation has also begun operating and leveraging the substantial financial and managerial resources Itochu has to offer as it seeks to capitalize on the growing demand for premium cars in China. Additionally, we signed a letter of intent with Hailin government to jointly develop the Hailin City Auto Mall which also marks another important step in our growth strategy as we expand our presence outside Beijing and develop our brand equity." Mr. Hetong Guo concluded, "In summary, we are excited about the opportunities that lie ahead. We have further solidified our position and ability to compete in this highly competitive market with the execution of our strategy and focus on greenfield expansion. The additional resources provided by our milestone agreements with Itochu and First Automobile Finance have assisted us in establishing and creating new revenue streams which we fully intend to capitalize on. I look forward to fully leveraging these initiatives as we seek to deliver sustainable growth over the long-term." Second Quarter 2013 Financial Performance Revenues for the three months ended June 30, 2013 decreased by 4.1% to RMB760.3 million ($123.9 million) from RMB792.5 million in the second quarter of 2012. Revenues from automobile sales decreased by 9.3% to RMB644.0 million ($104.9 million) during the second quarter of 2013 from RMB709.9 million during the same period in 2012. The Company sold 3,973 vehicles, a 7.6% decrease from 4,301 vehicles in the second quarter of 2012. For several quarters, the Company had aggressively responded to increasing competition with promotional campaigns in order to protect and expand its customer base. That having been accomplished, the Company has felt confident enough, despite continuing strong competition, to start adjusting its strategy during the second quarter and focus on improving profitability at the cost of absolute unit sales. The average new vehicle unit price for the second quarter of 2013 was RMB164,716 ($26,838), a 1.8% decrease from RMB167,730 in the same period in 2012 but up 7.4% from RMB153,299 in the first quarter of 2013. Revenues from repair and maintenance services in the second quarter of 2013 increased by 49.6% to RMB96.6 million ($15.7 million) from RMB64.6 million during the same period in 2012. The Company serviced 49,650 vehicles during the three months ended June 30, 2013, an 8.3% increase from the 45,843 vehicles serviced in the second quarter of 2012. The increase in revenues from repair and maintenance services was primarily due to a number of marketing and promotional campaigns launched by the Company in order to promote its service offerings and improve customer satisfaction. The increase was also partially due to the optimization of the Company's service offering mix within repair and maintenance services towards higher-priced products which tend to contribute more to profits such as severe accident repair services. Revenues (in thousands of Renminbi) 2Q 13 2Q 12 % Increase (Decrease) Sales of automobiles Beijing 540,156 583,122 (7.4)% Outside Beijing 103,850 126,734 (18.1)% Total 644,006 709,856 (9.3)% Repair and maintenance services Beijing 78,403 48,922 60.3% Outside Beijing 18,209 15,667 16.2% Total 96,612 64,589 49.6% Revenues (in thousands of Renminbi) 2Q 13 2Q 12 % Increase (Decrease) Sales of automobiles German Branded 413,479 463,780 (10.8)% Japanese Branded 230,527 246,076 (6.3)% Total 644,006 709,856 (9.3)% Repair and maintenance services German Branded 62,714 39,820 57.5% Japanese Branded 33,898 24,769 36.9% Total 96,612 64,589 49.6% PercentofTotalRevenues Revenue Category 2Q 13 2Q 12 Sales of automobiles 84.7% 89.6% Automobile repair and maintenance 12.7% 8.1% services Sales of leased automobiles 1.4% 1.5% Other services 1.2% 0.8% Total 100% 100% Cost of goods sold decreased by 7.3% to RMB668.0 million ($108.8 million) in the second quarter of 2013 from RMB720.5 million in the same period of 2012 as a result of lower revenue. Gross profit increased by 28.2% to RMB92.2 million ($15.0 million) in the second quarter of 2013 from RMB71.9 million in the same quarter of 2012. The increase in gross profit was mainly due to the increase in overall gross profit margin. Overall gross margin for the second quarter of 2013 increased to 12.1% from 9.1% in the second quarter of 2012. Specifically, the gross margin for automobile sales increased to 6.5% in the second quarter of 2013 from 5.1% in the same period of 2012, while the gross margin of repair and maintenance services decreased to 40.0% as compared to 52.3% for the same period in 2012 but up from 33.9% in the first quarter of 2013. The increase in gross margin for automobiles sales was primarily due to the optimization of the Company's product mix towards higher-margin cars of the same brand. Gross margin for repair and maintenance services declined primarily due to various promotional campaigns launched by the Company aimed at increasing repair and maintenance revenue as a proportion of total revenue. Overall gross margin increased due to the increased contribution of repair and maintenance services revenue as a proportion of total revenue. Selling, marketing and distribution expenses increased by 7.6% to RMB25.9 million ($4.2 million) in the second quarter of 2013 from RMB24.1 million during the same period of 2012. The increase was primarily due to additional staff at the new dealerships and wage inflation. As a percentage of revenues, selling, marketing and distribution expenses increased to 3.4% in the second quarter of 2013 from 3.0% in the second quarter of 2012. General and administrative expenses increased by 3.3% to RMB16.6 million ($2.7 million) in the second quarter of 2013 from RMB16.1 million during the same quarter of 2012. The increase was primarily the result of the addition of staff for the new dealerships. As a percentage of revenues, general and administrative expenses increased to 2.2% in the second quarter of 2013 from 2.0% in the second quarter of 2012. Operating income for the second quarter of 2013 was RMB49.7 million ($8.1 million), an increase of 56.5% from RMB31.7 million for the same period in 2012. Operating margin for the second quarter of 2013 was 6.5%, compared to 4.0% for the same quarter in 2012. The increase in operating margin was primarily attributable to the 300 basis point increase in overall gross margin and the 60 basis point increase in operating expenses as a percentage of revenue. Net income attributable to controlling interest increased 152.9% to RMB21.3 million ($3.5 million)during the second quarter of 2013 from RMB8.4 million for the same period in 2012. Basic and diluted earnings per ordinary share were RMB0.36 ($0.06) for the second quarter of 2013 compared to basic and diluted earnings per ordinary share of RMB0.14 for the second quarter of 2012. This translates into basic and diluted earnings per ADS of RMB0.72 ($0.12) in the second quarter of 2013. Each ADS represents two ordinary shares. Weighted average ordinary shares outstanding in the second quarter of 2013 remained unchanged from one year ago at 58,937,912. Liquidity and Capital Resources As of June 30, 2013, the Company had cash and cash equivalents of RMB323.7 million ($52.7 million), compared to RMB318.9 million as of December 31, 2012. Expansion Strategy Update Lentuo's new FAW-Volkswagen flagship store in Beijing officially opened in mid-July and is performing up to expectations. Lentuo's centralized pre-owned car center housed within the FAW-Volkswagen flagship store has also officially opened and has begun selling used vehicles and providing other value-added services. The pre-owned car center will consolidate and centralize the pre-owned car business activities previously managed by individual dealerships and bring them under the management of Lentuo's headquarters. As the Company continues its dealership expansion outside Beijing, the pre-owned car business will span across various regions enabling low-end vehicles traded-in at Lentuo's Beijing dealerships to be sold in tier two and tier three cities in China. Lentuo signed a letter of intent with the Hailin Economic and Technological Development Zone in Hailin City, Heilongjiang Province, China to jointly develop the Hailin-Lentuo Auto Mall. The Hailin-Lentuo Auto Mall will include numerous full-service 4S dealerships from some of the world's leading brands with a large inventory of new and pre-owned cars, state-of-the-art showrooms, repair and maintenance service centers, vehicle insurance vendors, leasing services, auto parts, carwash services, etc. The Company's joint venture agreement with Itochu, a Fortune Global 500 company, has received all necessary government approvals and has become operational. The joint-venture will focus on the expansion of Lentuo's high-end car dealerships across China, starting with the new Audi 4S dealership under construction in southern Beijing. The joint-venture will also scale up its higher margin repair and maintenance services. Conference Call Lentuo's management will host a conference call to discuss the results at 8:00 a.m. Eastern Daylight Time on September 12, 2013 (8:00 p.m. Beijing time on the same day). The dial-in details for the live conference call are: U.S. Toll Free +1 877-941-2068 International Dial In +1480-629-9712 A telephone replay of the call will be available after the conclusion of the conference call at 11:00 a.m. Eastern Daylight Time on September 12, 2013 through 11:59 p.m. Eastern Daylight Time on September 19, 2013. The dial-in details for the replay are: U.S. Toll Free +1877-870-5176 International Dial In: +1858-384-5517 Passcode: 4638997 A live webcast of the conference call will be available on the investor relations section of Lentuo's website at: http://lentuo.investorroom.com/ or alternately at http://ViaVid.net. Exchange Rate This announcement contains translations of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of readers. Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the exchange rate ofRMB 6.1374to US$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board onJune 28, 2013. About Lentuo International Inc. Lentuo is a leading non-state-owned automobile retailer headquartered in Beijing. Lentuo operates 12 franchise dealerships, 10 automobile showrooms, one automobile repair shops and one car leasing company. Safe Harbor Statement This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in 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," "target," "going forward," "outlook" and similar statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. For more information, please contact: Ms.JiangyuLuo Acting CFO Lentuo International Inc. Email:email@example.com Christensen Mr. Christian Arnell Telephone +86 10 5826 4939 in Beijing Email: firstname.lastname@example.org Ms. Linda Bergkamp Phone: +1-480-614-3004 (U.S.A.) Email: email@example.com Lentuo International Inc. Consolidated Statements of Income and Comprehensive Income (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), except for number of shares and per share data) For the three months ended Jun 30, 2012 Jun 30, 2013 RMB RMB US$ Revenues Sales of automobiles 709,856 644,006 104,931 Automobile repair and 64,589 96,612 15,742 maintenance services Sales of leased 11,585 10,412 1,696 automobiles Other services 6,454 9,264 1,509 Total revenues 792,484 760,294 123,879 Cost of goods sold Sales of automobiles (673,874) (601,922) (98,074) Automobile repair and (30,834) (57,938) (9,440) maintenance services Sales of leased (15,492) (7,816) (1,274) automobiles Other services (335) (372) (61) Total cost of goods sold (720,535) (668,048) (108,849) Gross profit 71,949 92,246 15,030 Operating expenses Selling, marketing and (24,087) (25,923) (4,224) distribution expenses General and (16,123) (16,649) (2,713) administrative expenses Total operating expenses (40,210) (42,572) (6,936) Operating income 31,739 49,674 8,094 Interest expenses (17,417) (17,084) (2,784) Other income, net 696 (292) (48) Income before income tax 15,018 32,298 5,262 expenses Income tax expenses (6,321) (10,300) (1,678) Net income and 8,697 21,998 3,584 comprehensive income Net income and comprehensive income 256 651 106 attributable to non-controlling interest Net income and comprehensive income 8,441 21,347 3,478 attributable to controlling interest Earnings per ordinary share: Basic and diluted earnings 0.14 0.36 0.06 per ordinary share Weighted average ordinary shares outstanding: Basic and diluted 58,937,912 58,937,912 58,937,912 Lentuo International Inc. Consolidated Balance Sheets (Amounts in thousands of Renminbi ("RMB") and U.S. dollars ("US$"), except for number of shares and per share data) December31,2012 Jun 30, 2013 RMB RMB US$ Assets Current assets Cash and cash equivalents 318,909 323,685 52,740 Restricted cash 437,875 332,074 54,107 Accounts receivable (net of allowance for doubtful accounts of nil as of 41,399 29,518 4,810 September 30, 2012 and December 31, 2011) Inventories, net 432,722 584,783 95,282 Leased automobiles held 206,604 235,805 38,421 for sale, net Advances to suppliers 316,067 400,146 65,198 Prepaid expenses and 35,148 73,959 12,050 other current assets Amounts due from related 57,830 120,600 19,650 parties Deferred tax assets 6,756 9,776 1,593 Total current assets 1,853,310 2,110,346 343,850 Non-current assets Property and equipment, 560,700 588,288 95,853 net Land use rights, net 18,256 15,251 2,485 Intangible assets, net 106,058 107,811 17,566 Goodwill 73,634 73,634 11,998 Long-term prepayments 26,500 26,500 4,318 Long-term investment 11250 11,250 1,832 Deferred tax assets 9,624 11,697 1,906 Total non-current assets 806,022 834,431 135,958 Total assets 2,659,332 2,944,777 479,809 Liabilities and Stockholders' Equity Current liabilities Accounts payable 6,458 23,911 3,896 Bills payable 887,100 654,987 106,721 Advances from customers 49,974 41,190 6,711 Accrued expenses and 444,553 473,464 77,144 other current liabilities Unrecognized tax benefits 4,963 4,963 809 Taxes payable 54,369 44,078 7,182 Short-term loans 365,274 502,910 81,942 Total current liabilities 1,812,691 1,745,503 284,404 Non-current liabilities Long-term bank loans 0 40,000 6,517 Deferred tax liabilities 31,770 31,364 5,110 Total non-current 31,770 71,364 11,628 liabilities Total liabilities 1,844,461 1,816,867 296,032 Shareholders' Equity Ordinary shares, par value US$0.00001 per share Authorized- 500,000,000 shares as of September 30, 2012 and December 31, 2011 Issued and 4 4 1 outstanding- 58,937,912 shares as of September 30, 2012 and December 31, 2011 Additional paid-in 469,761 641,761 104,566 capital Retained earnings 329,147 342,443 55,795 Total equity for 798,912 984,208 160,362 controlling interest Non-controlling interest 15,959 143,702 23,414 Total shareholder's equity 814,871 1,127,910 183,776 Total liabilities and 2,659,332 2,944,777 479,809 stockholder's equity  4S refers to authorized dealerships in China that provide Sales, Spare parts, Service and Survey services. SOURCE Lentuo International Inc. Website: http://lentuo.investorroom.com/ Website: http://ViaVid.net
Lentuo International Announces Second Quarter 2013 Financial Results
Press spacebar to pause and continue. Press esc to stop.