omniture

Lentuo International Announces First Quarter 2012 Financial Results

2012-06-13 04:03 1880

BEIJING, June 13, 2012 /PRNewswire-Asia/ -- 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, 2012.

First Quarter 2012 Financial Highlights

  • Revenues increased 26.5% to RMB 756.8 million ($120.2 million) in the first quarter 2012 from RMB 598.2 million in the first quarter 2011.
  • Vehicles sold increased 46.4% to 3,655 vehicles in the first quarter 2012 from 2,496 vehicles in the first quarter 2011.
  • Vehicles serviced increased 27.6% to 39,487 vehicles in the first quarter 2012 from 30,958 vehicles in the first quarter 2011.
  • Net income decreased 43.8% to RMB 16.8 million ($2.7 million) in the first quarter 2012 from RMB 29.9 million in the first quarter 2011.

"We are pleased with our strong revenue performance during the first quarter thanks to the successful execution of our expansion strategy in 2011," stated Mr. Hetong Guo, Founder and Chairman of Lentuo. "The five new dealerships added in the second half of 2011 contributed roughly 28% of our revenue for the quarter, adding strong momentum for the rest of the year. Our geographic expansion has also begun to pay off with the three new dealerships located outside Beijing accounting for almost one fifth of our revenues. We have also made encouraging progress in our efforts to control cost more effectively as a percentage of revenues and we will continue to work hard to further reduce cost."

Mr. Guo concluded, "Going forward, we will continue to look for growth opportunities with a priority on organic expansion. While we may selectively consider potential acquisitions, these will be analyzed with a strict focus on market conditions, price, funding availability and cost, and overall value for our shareholders."

First Quarter 2012 Financial Performance

Revenues for the three months ended March 31, 2012 increased 26.5% to RMB 756.8 million ($120.2 million) from RMB 598.2 million in the first quarter of 2011.

Revenues from automobile sales increased 28.5% to RMB 670.4 million ($106.5 million) compared to RMB 521.8 million in the same period in 2011. The increase was primarily due to higher vehicle sales and volume resulting from the addition of five new dealerships in the second half of 2011.

Revenues from repair and maintenance services in the first quarter of 2012 increased 8.7% to RMB 74.9 million ($11.9 million) compared to RMB 68.9 million in the same period in 2011.



Revenues
(in thousands of Renminbi)



1Q 12


1Q 11


4Q 11

Sales of automobiles







Beijing


552,410


521,784


724,302

Outside Beijing


117,962


-


182,835

Total


670,372


521,784


907,137








Repair and maintenance services







Beijing


60,164


68,940


82,174

Outside Beijing


14,741


-


21,962

Total


74,905


68,940


104,136



Percent of Total Revenues

Product Line


1Q 12


1Q 11


4Q 11

Sales of automobiles


88.6%


87.2%


87.5%

Automobile repair and maintenance services


9.9%


11.5%


10.0%

Sales of leased automobiles


0.9%


-


1.8%

Other services


0.6%


1.2%


0.7%

Total


100%


100%


100%


During the first quarter of 2012, the Company sold 3,655 vehicles, representing a 46.4% increase from 2,496 vehicles in the first quarter of 2011. The increase in vehicles sold was mainly due to the addition of the five new dealerships.

The average new vehicle unit price for the first quarter of 2012 was RMB 185,228 ($29,413), an 11.4% decrease from RMB 209,048 for the same period in 2011. The vehicles sold by the five new dealerships sell for lower prices than vehicles sold by the original Lentuo dealerships.

The Company serviced 39,487 vehicles during the three months ended March 31, 2012, representing a 27.6% increase over the 30,958 vehicles serviced in the first quarter of 2011. The increase was primarily due to the addition of the five new dealerships.

Cost of goods sold increased 31.8% to RMB 684.4 million ($108.7 million) in the first quarter of 2012 from RMB 519.3 million in the same period of 2011 as a result of higher revenue and sales volumes, driven in part by the addition of the five new dealerships

Gross profit decreased 8.3% to RMB 72.4 million ($11.5 million) for the quarter, down from RMB 78.9 million in the first quarter of 2011. This was mainly due to the decrease in overall gross margin.

Overall gross margin for the first quarter of 2012 decreased to 9.6% from 13.2% in the first quarter of 2011. Specifically, the gross margin for automobile sales decreased to 5.5% in the first quarter of 2012 from 6.0% in the same period of 2011, while the gross margin of repair and maintenance services decreased to 46.6%, as compared to 58.5% for the same period in 2011. While margins contracted primarily as a result of various discount programs designed to drive vehicle sales as well as repair and maintenance volumes, they have remained higher than average margins in the sector. Additionally, margins in the first quarter of 2011 were unusually high due to higher margins on cars sold in late 2010 ahead of the restrictions on car sales implemented in Beijing as of late December, 2010. A large number of these revenues were recognized in the first quarter of 2011 when cars were actually delivered. The Company intends to maintain its gross margin at or slightly above its peer group average.

Selling, marketing and distribution expenses increased 67.3% to RMB 20.3 million ($3.2 million) in the first quarter of 2012 from RMB 12.2 million in the same period a year ago, primarily as a result of the five new dealerships. As a percentage of revenues, selling, marketing and distribution expenses decreased to 2.7% in the first quarter of 2012 from 3.2% in the fourth quarter of 2011 and increased from 2.0% in the first quarter of 2011.

General and administrative expenses increased by 26.9% to RMB 12.9 million ($2.0 million) in the first quarter of 2012 from RMB 10.2 million in the same quarter of 2011, primarily due to the addition of new dealerships and the hiring of additional staff to support growth. As a percentage of revenues, general and administrative expenses decreased to 1.7% in the first quarter of 2012 from 2.5% in the fourth quarter of 2011 and remained essentially flat from one year ago.

Operating income for the first quarter of 2012 decreased 30.8% to RMB 39.1 million ($6.2 million) from RMB 56.6 million for the same period in 2011. The change in operating income was primarily the result of a decrease in gross profit and increased expenses as a result of expanding operations.

Operating margin for the first quarter of 2012 was 5.2%, compared to 9.5% for the same quarter in 2011. The decrease in operating margin was primarily attributable to a decrease in overall gross margin and increased expenses as a percentage of revenue as a result of expanding operations.

Primarily as a result of the foregoing, net income attributable to controlling interest was RMB 16.8 million ($2.7 million), a decrease of 43.8% from RMB 29.9 million for the same period in 2011.

Basic and diluted earnings per ordinary share were RMB 0.28 ($0.04) for the first quarter of 2012 compared to RMB 0.51 for the first quarter of 2011, decreasing 45.1%. This translates to basic and diluted earnings per ADS of RMB 0.56 ($0.09) in the first quarter of 2012. Each ADS represents two ordinary shares. Weighted average ordinary shares outstanding in the first quarter of 2012 remained unchanged from one year ago at 58,937,912.

Liquidity and capital resources

As of March 31, 2012, the Company had cash and cash equivalents of RMB 73.3 million ($11.6 million), compared to RMB 766.6 million as of March 31, 2011.

Expansion Strategy Update

The Company remains focused on three regions that it believes offer the best economic returns currently: Northeast, Southeast and Southwest China. These regions present numerous opportunities for expansion in second and third-tier cities where a growing number of middle class Chinese enjoy a higher standard of living. As acquisitions are expected to become more expensive, the Company has shifted its focus to organic growth and will concentrate on opening greenfield dealerships.

The Company is still in the process of completing its acquisition of an Audi dealership in Zhejiang Province and expects to close the deal in the second half of 2012.

The opening of the new flagship store in Beijing is scheduled for the third quarter of 2012.

Conference Call

Lentuo's management will host a conference call to discuss the results at 8:00 p.m. Eastern Daylight Time on June 12, 2012 (8:00 a.m. Beijing time on June 13, 2012).

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

U.S. Toll Free

+1 877-941-8416

International Dial In

+1 480-629-9808

A telephone replay of the call will be available after the conclusion of the conference call at 11:00 p.m. Eastern Daylight Time on June 12, 2012 through 11:59 p.m. Eastern Standard Time on June 19, 2012. The dial-in details for the replay are:

U.S. Toll Free

+1 877-870-5176

International Dial In:

+1 858-384-5517

Passcode:

4544848

A live webcast of the conference call will be available on the investor relations section of Lentuo's website at: http://ir.lentuo.net 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 of RMB 6.2975 to US $1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on March 30, 2012.

About Lentuo International Inc.

Lentuo is a leading non-state-owned automobile retailer headquartered in Beijing. Lentuo operates 11 franchise dealerships, 10 automobile showrooms, one automobile repair shop, 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. Jennifer Chen
CFO
Lentuo International Inc.
Email: chenjianping@lentuo.net

Christensen
Mr. Christian Arnell
Telephone +86 10 5826 4939 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


March 31, 2011


March 31, 2012


RMB


RMB


US$

Revenues






Sales of automobiles

521,784


670,372


106,450

Automobile repair and maintenance services

68,940


74,905


11,894

Sales of leased automobiles

-


6,636


1,054

Other services

7,459


4,887


776

Total revenues

598,183


756,800


120,174







Cost of goods sold






Sales of automobiles

(490,596)


(633,581)


(100,608)

Automobile repair and maintenance services

(28,639)


(39,974)


(6,348)

Sales of leased automobiles

-


(10,611)


(1,685)

Other services

(58)


(265)


(42)

Total cost of goods sold

(519,292)


(684,431)


(108,683)







Gross profit

78,891


72,369


11,491







Operating expenses






Selling, marketing and distribution expenses

(12,156)


(20,341)


(3,230)

General and administrative expenses

(10,154)


(12,886)


(2,046)

Total operating expenses

(22,310)


(33,227)


(5,276)







Operating income

56,581


39,142


6,215







Interest income

578


1,333


212

Interest expenses

(10,828)


(18,272)


(2,901)

Exchange loss

(3,592)


(3)


-

Other income, net

2


261


41







Income before income tax expenses

42,741


22,461


3,567

Income tax expenses

(12,841)


(6,368)


(1,011)







Net income and comprehensive income

29,900


16,093


2,556

Net income and comprehensive income attributable to non-controlling interest

-


(673)


(107)







Net income and comprehensive income attributable to controlling interest

29,900


16,766


2,663







Earnings per ordinary share:






Basic and diluted earnings per ordinary share

0.51


0.28


0.04







Weighted average ordinary shares outstanding:






Basic and diluted

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)


For the three months ended


March 31, 2011


March 31, 2012


RMB


RMB


US$

Assets






Current assets






Cash and cash equivalents

766,557


73,297


11,639

Restricted cash

248,980


277,709


44,098

Accounts receivable (net of allowance for doubtful
accounts of nil as of March 31, 2010 and 2011)

44,520


33,067


5,251

Inventories, net

390,961


454,304


72,140

Leased automobiles held for sale, net

-


146,070


23,195

Advances to suppliers

199,315


293,799


46,653

Prepaid expenses and other current assets

51,456


260,712


41,399

Amounts due from related parties

-


43,667


6,934

Deferred tax assets

5,006


6,489


1,030

Total current assets

1,706,795


1,589,114


252,339







Non-current assets






Property and equipment, net

222,415


403,845


64,128

Land use rights, net

5,771


18,679


2,966

Intangible assets, net

-


134,287


21,324

Goodwill

-


73,634


11,693

Long term prepayments

-


105,750


16,792

Deferred tax assets

860


6,030


958

Total non-current assets

229,046


742,225


117,861







Total assets

1,935,841


2,331,339


370,200







Liabilities and Stockholders' Equity






Current liabilities






Accounts payable

1,925


11,315


1,795

Bills payable

274,460


646,791


102,706

Advances from customers

40,781


40,199


6,383

Deposits from third parties

111,486


-


-

Accrued expenses and other current liabilities

391,052


339,997


53,989

Amounts due to related parties

14,145


37,417


5,942

Unrecognized tax benefits

4,963


4,963


788

Taxes payable

108,443


42,059


6,679

Short-term loans

222,233


320,459


50,887

Total current liabilities

1,169,488


1,443,200


229,169







Non-current liabilities






Deferred tax liabilities

-


38,956


6,186

Total non-current liabilities

-


38,956


6,186







Total liabilities

1,169,488


1,482,156


235,355







Shareholders' Equity






Ordinary shares, par value US$0.00001 per share






Authorized - 500,000,000 shares as of March 31, 2011
and 2012 issued and outstanding -58,937,912 shares
as of March 31, 2011 and 2012

4


4


1

Additional paid-in capital

469,761


469,761


74,595

Retained earnings

296,588


351,371


55,795







Total equity for controlling interest

766,353


821,136


130,391

Non-controlling interest

-


28,047


4,454

Total shareholder's equity

766,353


849,183


134,845







Total liabilities and stockholder's equity

1,935,841


2,331,339


370,200

Source: Lentuo International Inc.
collection