Auto China International Reports Q3 Results

AutoChina TruckAutoChina International released its Q3 results along with 9 month results for calendar 2014.  Total revenues for 9 months ended in September were stated to be $591.3 million, a 40% increase over same period last year of $419.8 million.  AutoChina International Limited is a provider of financing solutions for China’s transportation industry including commercial truck leasing.  AutoChina launched a new peer store business in Q2 2014 to facilitate market access and attack a highly fragmented transportation market.  AutoChina is said to be currently working with over 2400 peer store locations to provide financing for vehicles.  As previously announced AutoChina is in the process of a nationwide rollout of K-Pay and a peer to peer lending platform called K-Lend.  K-Pay is an electronic payment processing platform for customers.  K-Lend is a P2P lending service that expects to provide short term working capital for small to medium sized businesses in the transportation industry.

Mr. Yong Hui Li, Chairman and CEO of AutoChina, commented on the financial results;

“We continue to be pleased with the steady growth in our truck-leasing business. The 2014 third quarter was the first full quarter in which our new peer stores business operated, and it was a significant contributor to our total number of commercial vehicles leased during the period. Our third quarter 2014 revenues were impacted by the significant portion of commercial vehicles leased through our peer stores business, which decreases the average price per vehicle as trucks leased through the peer stores typically are leased without a trailer while trucks leased directly through AutoChina’s store network are usually leased with a trailer. We are pleased with the positive initial reception of our peer stores business and look forward to growing our network of peer stores in the coming months. In a highly fragmented market like China’s heavy truck industry, we are confident in this strategy for expanding our customer base in China.”

Regarding the new services provided by AutoChina Mr. Li stated;AutoChina Logo

“We also continue to explore ways in which we can better serve our customers, which led to our introduction of K-Pay, AutoChina’s electronic payment platform, and K-Lend, a peer-to-peer lending platform. We understand that it can be very difficult for small business owners to receive a line of credit from a bank, or other traditional ways of financing a business. With K-Pay and K-Lend, we are hoping to fill our customers’ needs and making it more convenient for them to operate their businesses with support from AutoChina and others within the transportation industry. We expect to launch both of these platforms before the end of 2014.”

Q3 2014 Operational Highlights

3,409 commercial vehicles leased in third quarter of 2014, a 7.6% increase from 3,166 in prior-year period
Of the 3,409 vehicles leased, 1,254 trucks were leased through AutoChina’s store network, and 2,155 trucks were leased through AutoChina’s peer stores
During the third quarter of 2014, the Company established five additional commercial vehicle sales, servicing, leasing and support centers, and also closed five centers, with 554 total locations as of September 30, 2014

Q3 2014 Financial Highlights (comparisons are year over year)

Total revenues of $179.7 million, up 1.9% from $176.4 million
Gross profit of $21.4 million, up 14.8% from $18.6 million
Net income of $3.0 million, or $0.13 per diluted share, compared to $3.3 million, or $0.14 per diluted share, primarily as a result of increased interest expenses
Adjusted EBITDA of $12.2 million, an increase of 36.1% from $9.0 million

Nine Months 2014 Financial Highlights (comparisons are year over year)

Total revenues of $591.3 million, up 40.8% from $419.8 million, largely due to the increase in new commercial vehicle leases initiated during the first nine months of 2014
Gross profit of $65.8 million, up 29.0% from $51.0 million
Net income of $4.8 million, or $0.20 per diluted share, compared to $8.0 million, or $0.34 per diluted share, primarily as a result of the one-time litigation expenses incurred to settle the SEC lawsuit in first quarter 2014
Adjusted EBITDA of $34.4 million, an increase of 48.1% from $23.2 million

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