Lentuo International Reports First Quarter 2014 Financial Results with Net Income of US$1.5 Million - KSLA News 12 Shreveport, Louisiana News Weather & Sports

Lentuo International Reports First Quarter 2014 Financial Results with Net Income of US$1.5 Million

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SOURCE Lentuo International Inc.

- Revenues and Gross Margins Increase Strongly -

Conference Call to Discuss Results at 8:00 a.m. EDT on June 27, 2014

Dial-in Numbers Below

BEIJING, June 27, 2014 /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 first quarter ended March 31, 2014.

First Quarter 2014 Financial Highlights

  • Building upon its return to profitability for the year 2013, net income was RMB9.0 million ($1.5 million), compared to net loss of RMB8.1 million in the first quarter of 2013.
  • Growth momentum continued with revenues increasing 11.7% to RMB782.3 million ($125.8 million), from RMB700.5 million in the first quarter 2013.
  • Gross margin for automobile sales increased to 5.7% in the first quarter of 2014 from 2.8% in the same period of 2013 with the introduction of new popular car models with higher gross margins.
  • Gross margin of repair and maintenance services increased to 41.5% from 33.9% for the same period in 2013 as the Company optimized its service offerings towards higher margin products.

"I am extremely pleased to report a profitable start to 2014, as we build upon the momentum we gained last year," commented Mr. Hetong Guo, Founder and Chairman of Lentuo International. "Our turnaround to profitability in the first quarter was the result of three main factors. First, we succeeded in raising the average selling price of our new vehicles by nearly 13%, which helped us achieve a nearly 12% increase in quarterly revenue. Second, we were able to increase our revenue from repair and maintenance services by about 33%. And third, we were able to significantly increase our gross margins on automobile sales as well as gross margins on repair and maintenance services compared to the first quarter in 2013.''

"The increase in gross margin for automobile sales", explained Mr. Guo, "was due in part to the company's introduction of more higher-priced models into its product mix and more favorable rebate policies by auto manufacturers. Gross margins on automobile repair and maintenance services increased due to the optimization of the Company's service offering mix within repair and maintenance services towards higher-margin products."

"Looking to the future," continued Mr. Guo, "we believe our new pre-owned car business will yield sustainable long-term growth. Margins on pre-owned cars in China are currently about double those on new cars, and we also anticipate achieving additional high-margin revenues on such after-sales products as financing and insurance."

"Plus, government and industry studies indicate that China's pre-owned car industry is fairly fragmented and will grow at least five-fold in the next decade, so we feel even more confident that our pre-owned car business will participate strongly in this growth."

"In addition, membership in China Automobile Dealers Association's newly launched Xing Alliance is expected to increase our 2014 pre-owned sales by about 800 cars." 

Mr. Guo concluded, "With our lean corporate structure and solid operational expertise, we are confident in our ability to seize future opportunities and deliver additional growth to our shareholders."

First Quarter 2014 Financial Performance

Revenues for the three months ended March 31, 2014 increased 11.7% to RMB782.3 million ($125.8 million) from RMB700.5 million in the first quarter of 2013.

Revenues from automobile sales increased 11.1% to RMB656.4 million ($105.6 million) during the first quarter of 2014 from RMB591.0 million during the same period in 2013. The Company sold 3,803 vehicles, a 1.3% decrease from 3,855 vehicles in the first quarter of 2013. The increase in revenues from automobile sales was primarily due to the increase in average new vehicle unit price.

The average new vehicle unit price for the first quarter of 2014 was RMB172,600 ($27,765), a 12.6% increase from RMB153,299 in the same period in 2013. The increase was mainly due to the Company's continuous optimization of its product mix as it caters to consumers' increasing demand for high-end popular car models with higher average selling prices.

Revenues from repair and maintenance services in the first quarter of 2014 increased by 33.0% to RMB97.6 million ($15.7 million) from RMB73.4 million during the same period in 2013. The Company serviced 46,650 vehicles during the three months ended March 31, 2014, essentially flat from the 46,486 vehicles serviced in the first quarter of 2013. The increase in revenues from repair and maintenance services was primarily due to the increase in average unit price for the Company's repair and maintenance services.

The average unit price for the Company's repair and maintenance services during the first quarter of 2014 was RMB2,093 ($337), a 32.5% increase from RMB1,579 during the same period in 2013. The increase was mainly 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 given the higher average selling prices.



Revenues
(in thousands of Renminbi)





1Q 14


1Q 13


% Increase
(Decrease)

Sales of automobiles







  Beijing


507,905


482,391


5.3%

  Outside Beijing


148,492


108,576


36.8%

Total


656,397


590,967


11.1%








Repair and maintenance services







  Beijing


77,259


56,736


36.2%

  Outside Beijing


20,368


16,671


22.2%

Total


97,627


73,407


33.0%

 



Revenues
(in thousands of Renminbi)





1Q 14


1Q 13


% Increase
(Decrease)

Sales of automobiles







  German Branded


442,651


392,698


12.7%

  Japanese Branded


213,746


198,269


7.8%

Total


656,397


590,967


11.1%








Repair and maintenance services







  German Branded


62,872


45,989


36.7%

  Japanese Branded


34,755


27,418


26.8%

Total


97,627


73,407


33.0%

 



Percent of Total Revenues

Revenue Category


1Q 14


1Q 13

Sales of automobiles


83.9%


84.3%

Automobile repair and maintenance services


12.5%


10.5%

Sales of leased automobiles


2.4%


4.3%

Other services


1.2%


0.9%

Total


100%


100%


Cost of goods sold increased by 6.9% to RMB700.0 million ($112.6 million) in the first quarter of 2014 from RMB654.7 million in the same period of 2013 as a result of higher revenue.

Gross profit increased by 79.5% to RMB82.4 million ($13.3 million) in the first quarter of 2014 from RMB45.9 million in the same quarter of 2013. The increase in gross profit was mainly due to the increase in overall gross profit margin and revenue.

Overall gross margin for the first quarter of 2014 increased 390 basis points to 10.5% from 6.6% in the first quarter of 2013. Specifically, the gross margin for automobile sales increased to 5.7% in the first quarter of 2014 from 2.8% in the same period of 2013, while the gross margin of repair and maintenance services increased to 41.5% from 33.9% for the same period in 2013. The increase in gross margin for automobile sales was due in part to the continued momentum in market demand for new popular models with higher gross margins, and more favorable rebate policies by the auto manufacturers as well as the gradual recovery of Japanese-branded car sales. Gross margin for automobile repair and maintenance services increased due to the optimization of the Company's service offering mix within repair and maintenance services towards higher-margin products.

Selling, marketing and distribution expenses increased by 19.0% to RMB28.0 million ($4.5 million) in the first quarter of 2014 from RMB23.5 million during the same period of 2013. The increase was primarily due to higher revenue and additional staff at the new dealerships and wage inflation. As a percentage of revenues, selling, marketing and distribution expenses increased to 3.6% in the first quarter of 2014 from 3.4% in the first quarter of 2013.

General and administrative expenses was RMB16.0 million ($2.6 million) in the first quarter of 2014 comparing with RMB15.7 million during the same quarter of 2013. As a percentage of revenues, general and administrative expenses decreased to 2.0% in the first quarter of 2014 from 2.2% in the first quarter of 2013.

Operating income for the first quarter of 2014 was RMB38.4million ($6.2 million), compared to operating income of RMB10.2 million for the same period in 2013.

Operating margin for the first quarter of 2014 was 4.9%, an increase from 1.5% during the same quarter in 2013. The increase in operating margin was primarily attributable to the increase in overall gross margin.

Net income attributable to controlling interest was RMB9.0 million ($1.5 million) for the first quarter of 2014, compared to net loss of RMB8.1 million for the same period in 2013.

Basic and diluted earnings per ordinary share were RMB0.14 ($0.02) for the first quarter of 2014 compared to basic and diluted loss per ordinary share of RMB0.14 for the first quarter of 2013. This translates into basic and diluted earnings per ADS of RMB0.28 ($0.05) in the first quarter of 2014. Each ADS represents two ordinary shares. Weighted average ordinary shares outstanding in the first quarter of 2014 is 65,137,912.

Liquidity and Capital Resources

As of March 31, 2014, the Company had cash and cash equivalents of RMB226.3 million ($36.4 million), compared to RMB266.6 million as of December 31, 2013.

Expansion Strategy Update

The Company joined China Automobile Dealers Association's ("CADA") newly launched Xing Certified Pre-Owned Car Alliance ("Xing Alliance") last week. The Company expects to increase pre-owned car sales by about 800 cars in 2014. Lentuo is the only publicly listed company among the first nine to join the Xing Alliance which is expected to provide the first pre-owned quality certification standard in China.

The Xing Alliance will oversee the nationwide rollout of CADA's pre-owned car technical inspection and analysis procedures. All Xing Alliance pre-owned cars will receive a complete technical inspection and analysis to ensure they have no significant frame or internal damage, are in excellent working order and meet or exceed CADA standards for a particular make and model. Only those cars which successfully pass these standards will receive Xing Alliance Certification.

Conference Call

Lentuo's management will host a conference call to discuss the results at 8:00 a.m. Eastern Daylight Time on June 27, 2014 (8:00 p.m. Beijing time on the same day).

The dial-in details for the live conference call are:

U.S. Toll Free

+1 888-364-3108

International Dial In

+1 719-325-2495

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 June 27, 2014 through 11:59 p.m. Eastern Daylight Time on July 4, 2014. The dial-in details for the replay are:

U.S. Toll Free

+1 877-870-5176

International Dial In:

+1 858-384-5517

Passcode:

7058292

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 of RMB 6.2164 to US $1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on March 31, 2014.

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.

Website: http://lentuo.investorroom.com/

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. Jiangyu Luo
CFO
Lentuo International Inc.
Telephone +86 139 1029 1120?
Email: luojiangyu@lentuo.net

Christensen

Mr. Christian Arnell
Telephone +86 10 5900 1548 in Beijing
Email: carnell@christensenir.com

Ms. Linda Bergkamp
Phone:  +1-480-614-3004 (U.S.A.)
Email: lbergkamp@christensenir.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


Mar 31, 2013


Mar 31, 2014


RMB


RMB


 US$ 

Revenues






  Sales of automobiles

590,967


656,397


105,591

  Automobile repair and maintenance services

73,407


97,627


15,705

  Sales of leased automobiles

29,914


18,596


2,991

  Other services

6,258


9,694


1,560

Total revenues

700,546


782,314


125,847







Cost of goods sold






  Sales of automobiles

(574,132)


(619,069)


(99,586)

  Automobile repair and maintenance services

(48,524)


(57,076)


(9,182)

  Sales of leased automobiles

(31,838)


(22,942)


(3,691)

  Other services

(156)


(851)


(136)

Total cost of goods sold

(654,650)


(699,938)


(112,595)







Gross profit

45,896


82,376


13,252







Operating expenses






  Selling, marketing and distribution expenses

(23,545)


(28,014)


(4,506)

  General and administrative expenses

(15,684)


(15,962)


(2,568)

Loss from impairment of
intangible assets





0

Total operating expenses

(39,229)


(43,976)


(7,074)







Other income, net

3,574


25


4







Operating income

10,241


38,425


6,182







Interest expenses

(18,972)


(17,791)


(2,862)







Income before income tax expenses

(8,731)


20,634


3,319

Income tax expenses

(228)


(8,202)


(1,319)







Net income and comprehensive
income

(8,959)


12,432


2,000

Net income and comprehensive
income attributable to non-
controlling interest

(908)


3,383


544







Net income and comprehensive
income attributable to controlling
interest

(8,051)


9,049


1,456







Earnings per ordinary share:






Basic and diluted earnings per
ordinary share

(0.14)


0.14


0.02







Weighted average ordinary shares
outstanding:






Basic and diluted

58,937,912


65,137,912


65,137,912







 



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)




December 31, 2013


Mar 31, 2014


RMB


RMB


US$

Assets






Current assets






   Cash and cash equivalents

266,571


226,341


36,410

   Restricted cash

331,075


314,575


50,604

   Accounts receivable (net of allowance for doubtful

   accounts of nil as of March 31, 2014 and

   December 31, 2013)

45,312


38,255


6,154

   Inventories, net

417,524


505,577


81,330

   Leased automobiles held for sale, net

225,620


213,175


34,292

   Advances to suppliers

468,985


354,882


57,088

   Prepaid expenses and other current assets

72,667


82,981


13,349

   Amounts due from related parties

53,000


-


-

   Deferred tax assets

7,823


8,477


1,364

Total current assets

1,888,577


1,744,263


280,591







Non-current assets






   Property and equipment, net

768,549


794,876


127,868

   Land use rights, net

17,691


17,534


2,821

   Intangible assets, net

101,238


100,559


16,176

   Goodwill

73,634


73,634


11,845

   Long-term prepayments

447,722


447,722


72,023

   Long-term investment

22,500


22,500


3,619

   Deferred tax assets

3,561


3,511


565

Total non-current assets

1,434,895


1,460,336


234,917







Total assets

3,323,472


3,204,599


515,508







Liabilities and Stockholders' Equity






Current liabilities






   Accounts payable

7,151


7,363


1,184

   Bills payable

735,749


596,375


95,936

   Advances from customers

55,970


53,510


8,608

   Accrued expenses and other current liabilities

526,041


506,351


81,454

   Amounts due to related parties

-


-


-

   Unrecognized tax benefits

4,963


4,963


798

   Taxes payable

60,993


62,473


10,050

   Short-term loans

726,689


753,779


121,257

Total current liabilities

2,117,556


1,984,814


319,287







Non-current liabilities






   Long-term bank loans

33,000


33,000


5,309

   Deferred tax liabilities

30,393


31,831


5,120

Total non-current liabilities

63,393


64,831


10,429







Total liabilities

2,180,949


2,049,645


329,716







Shareholders' Equity






   Ordinary shares, par value US$0.00001 per share






   Authorized – 500,000,000 shares as of

   March 31, 2014 and December 31, 2013 Issued and   
   outstanding – 65,137,912 shares as of March 31,
   2014 and December 31, 2013

4


4


1

   Additional paid-in capital

721,611


721,611


116,082

   Receivables from issuance of ordinary shares

(79,850)


(79,850)


(12,845)

   Retained earnings

352,974


362,023


58,237






-

Total equity for controlling interest

994,739


1,003,788


161,475

Non-controlling interest

147,784


151,166


24,317

Total shareholder's equity

1,142,523


1,154,954


185,792







Total liabilities and stockholder's equity

3,323,472


3,204,599


515,508







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