Lentuo International Inc. (NYSE: LAS) (“Lentuo” or the “Company”), the largest non-state-owned automobile retailer in Beijing, China as measured by new vehicle sales revenues in 2009, today announced its unaudited financial results for the third quarter of 2010. Third Quarter 2010 Financial Highlights
- Revenues in the third quarter of 2010 increased 56.0% year-over-year to RMB945.9 million ($141.4 million).
- The number of vehicles sold in the third quarter of 2010 increased 29.5% year-over-year to 4,871 units.
- The average unit price for the third quarter 2010 increased 23% year-over-year to RMB176,000.
- Net income was RMB45.0 million ($6.7 million), an increase of 2.5% from RMB43.9 million in the comparable period of 2009. Diluted earnings per American depositary share (“ADS”) were RMB1.06 ($0.16). Each ADS represents two ordinary shares of the Company.
Third Quarter 2010 Financial PerformanceRevenues in the third quarter 2010 increased by 56.0% to RMB945.9 million ($141.4 million) from RMB606.3 million in the same period of 2009. The revenue growth was driven by the increased sales volume of new vehicles and increased average unit price, as well as the increased volume of automobile repair and maintenance services. For the third quarter 2010, we sold 4,871 vehicles, representing a 29.5% increase from 3,761 in the same period of 2009. The average unit price for the third quarter 2010 was RMB176,000, a 23% increase from RMB143,000 in the same period of 2009. In addition, we serviced approximately 32,210 vehicles at our dealerships in the three months ended September 30, 2010, representing a 15.4% increase over the third quarter of 2009. The growth was primarily driven by the increased market demand and our enhanced sales efforts, consistent with the trend in recent quarters. Cost of goods sold increased by 64.6% to RMB851.8 million ($127.3 million) in the third quarter of 2010 from RMB517.4 million in the same quarter of 2009, primarily as a result of increased sales of new vehicles, as well as automobile repair and maintenance services. As a percentage of revenues, cost of goods sold increased to 90.1% in the third quarter of 2010 from 85.3% in the third quarter of 2009. Gross profit increased by 5.8% to RMB94.1 million ($14.1 million) from RMB88.9 million for the third quarter of 2009. The increase in gross profit was primarily due to the increase in revenues both from new vehicles sales and automobile repair and maintenance services. Gross margin for the third quarter of 2010 decreased to 9.9% from 14.7% for the third quarter of 2009 for a number of reasons. Firstly, new vehicle sales as a portion of total revenues increased in the third quarter of 2010 to 90.9% from 89.2% in the same period of 2009. Secondly, gross margin of automobile repair and maintenance services decreased in the third quarter of 2010 to 54.6% from 65.1% in the same period of 2009 due to discounts on repair and maintenance we offered to existing customers. Selling, marketing and distribution expenses increased by 4.1% to RMB10.2 million ($1.5 million) in the third quarter of 2010 from RMB9.8 million in the same quarter of 2009, primarily as a result of the increased performance-related bonuses paid to our salespersons in line with our increased revenues. As a percentage of our revenues, selling, marketing and distribution expenses decreased to 1.1% in the third quarter of 2010 from 1.6% in the third quarter of 2009. General and administrative expenses decreased by 5.9% to RMB8.4 million ($1.3 million) in the third quarter of 2010 from RMB8.9 million in the same quarter of 2009, primarily due to our stricter expense controls. As a percentage of our revenues, general and administrative expenses decreased to 0.9% in the third quarter of 2010 from 1.5% in the third quarter of 2009. Operating Income for the third quarter 2010 increased by 7.4% to RMB75.4 million ($11.3 million) from RMB70.2 million in the same period in 2009. Operating margin in the third quarter of 2010 was 8.0%, compared to 11.6% in the same quarter of 2009. The decrease of the operating margin was mainly attributable to the decrease in gross margin as well as the increased selling, marketing and distribution expenses discussed above. Income tax expenses in the third quarter of 2010 were RMB18.0 million ($2.7 million), representing an effective tax rate of 28.5%, increasing from 27.9% in the same period of 2009. Net income was RMB45.0 million ($6.7 million), an increase of 2.6% from RMB43.9 million in the comparable period of 2009. Diluted earnings per ADS were RMB1.06 ($0.16) in the third quarter of 2010 compared to RMB1.11 in the third quarter of 2009. As of September 30, 2010, the Company had cash and cash equivalents of RMB266.9 million ($39.9 million), compared to RMB72.1 million as of December 31, 2009. Net cash provided by operating activities was RMB165.3 million ($24.7 million) in the nine months ended September 30, 2010, compared to RMB193.1 million in the nine months ended September 30, 2009. Initial Public Offering On December 10, 2010, Lentuo’s ADSs began trading on the New York Stock Exchange under the ticker symbol “LAS.” Lentuo issued 6,500,000 ADSs, each representing two ordinary shares, at a price of $8.00 per ADS and received total proceeds of US$52.0 million.
Strategic Adjustments and Financial OutlookIn light of the new regulations in Beijing, the Company has quickly and proactively made some key changes to its expansion strategy for 2011, including (i) adjusting Company’s target of new dealership openings from 6 in Beijing and 4 outside of Beijing, to 3 in Beijing and at least 7 in other cities, (ii) stepping up the proposed pace of merger and acquisition activities in the first quarter of 2011, (iii) continuing to increase the proportion of the contribution of maintenance services to overall revenues and profit, and taking necessary measures to achieve this and (iv) further adjusting the mix of brands sold and models sold to drive more sales of high-end vehicles. The Company estimates that its revenues for the fourth quarter of 2010 will be approximately RMB1,180 million (US$176 million) to RMB1,220 million (US$182 million), representing a year-over-year growth rate of approximately 81% to 88%. This guidance is based on the current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. 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 RMB6.6905 to US$1.00, as set forth in the H.10 statistical release of the Federal Reserve Board on September 30, 2010. About Lentuo International Inc. Lentuo is the largest non-state-owned automobile retailer in Beijing, China as measured by new vehicle sales revenues in 2009, according to the China Automobile Dealers Association (“CADA”). Lentuo operates six franchise dealerships, ten automobile showrooms, one automobile repair shop and one car leasing company in Beijing, the largest new passenger vehicle market among all cities in China. Three of Lentuo’s six dealerships are among the leading dealerships in China for their respective brands, as measured by the volume of new vehicle sales by individual dealership.
Safe Harbor StatementThis 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.
|LENTUO INTERNATIONAL INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET|
|As of December||As of September 30,|
|Cash and cash equivalents||72,082||266,872||39,888|
|Accounts receivable (net of allowance for doubtful accounts of nil as of December 31, 2009 and September 30, 2010)||15,935||50,103||7,489|
|Advances to suppliers||251,632||258,555||38,644|
|Prepaid expenses and other current assets||17,932||36,955||5,524|
|Amounts due from related parties||308,085||54,821||8,194|
|Total current assets||1,125,851||1,390,949||207,899|
|Property and equipment, net||267,696||221,189||33,060|
|Land use rights, net||9,142||5,842||874|
|Deferred initial public offering costs||3,635||10,104||1,510|
|Deferred tax assets||465||464||69|
|Total non-current assets||280,938||237,599||35,513|
|As of December||As of September 30,|
|LIABILITIES AND SHAREHOLDERS’ EQUITY|
|Advances from customers||25,821||36,702||5,486|
|Deposits from third parties||162,114||78,999||11,808|
|Accrued expenses and other current liabilities||92,553||135,556||20,261|
|Amounts due to related parties||1,229||-||-|
|Unrecognized tax benefits||49,525||4,963||742|
|Total current liabilities||1,124,420||1,234,628||184,534|
|Commitments and Contingencies|
|Ordinary shares, par value US$0.00001 per share|
|Authorized – 500,000,000 shares as of December 31, 2009 and September 30, 2010||1||1||-|
|Issued and outstanding – 39,908,389 shares as of December 31, 2009 and 45,937,912 as of September 30, 2010|
|Additional paid-in capital||53,973||176,200||26,336|
|Total shareholders’ equity||282,369||393,920||58,878|
|TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY||1,406,789||1,628,548||243,412|
|LENTUO INTERNATIONAL INC UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME|
|Three months ended September 30|
|Sales of automobiles||540,672||859,381||128,448|
|Automobile repair and maintenance services||64,685||82,051||12,264|
|Cost of goods sold:||(494,735)||(814,088)||(121,678)|
|Sales of automobiles||(22,606)||(37,237)||(5,566)|
|Automobile repair and maintenance services||(60)||(466)||(70)|
|Selling, marketing and distribution expenses||(9,767)||(10,230)||(1,529)|
|General and administrative expenses||(8,921)||(8,445)||(1,262)|
|Total operating expenses||(18,688)||(18,675)||(2,791)|
|Other income (expenses), net||(279)||(300)||(45)|
|Income before income tax expenses||60,831||62,970||9,411|
|Income tax expenses||(17,026)||(17,955)||(2,684)|
|Income from continuing operations||43,805||45,015||6,727|
|Income from discontinued operations, net of tax||72||-||-|
|Net income attributable to ordinary shareholders and comprehensive income||43,877||45,015||6,727|
|Earnings per share:|
|From continuing operations||1.10||1.06||0.16|
|From discontinued operations||0.01||-||-|
|Basic and diluted earnings per share||1.11||1.06||0.16|
|Weighted average ordinary shares outstanding:|
|Basic and diluted||39,908,389||42,595,459||42,595,459|