Kaixin Auto Holdings ("Kaixin" or the "Company") (NASDAQ: KXIN),
one of the premium used car dealership networks in China, today
announced its unaudited financial results for the six months ended
June 30, 2020.
First Half of 2020 Operational Highlights
- Gross Merchandise Value (GMV)1 was US$34.2
million, representing a decrease of 84.5% from US$220.8 million in
the first half of 2019.
- Number of cars sold was 673 units, compared
with 3,657 units sold in the first half of 2019.
- Inventory turnover days were 98 days, compared
with 41 days in the first half of 2019.
First Half of 2020 Financial Highlights
- Total net revenues were US$33.3 million,
representing a decrease of 83.7% from US$204.6 million in the first
half of 2019.
- Gross profit was US$0.9 million, representing
a decrease of 89.3% from US$8.6 million in the first half of
2019.
- Loss from operations was US$5.3 million,
compared with a loss of US$8.3 million in the first half of
2019.
- Net loss attributable to the Company was
US$5.8 million, compared with a net income attributable to the
Company of US$57.3 million in the first half of 2019.
- Adjusted net loss2 (non-GAAP) was US$4.6
million, compared with an adjusted net loss of US$1.7 million in
the first half of 2019.
- Adjusted loss from operations2 (non-GAAP) was
US$4.0 million, compared with an adjusted loss from operations of
US$1.6 million in the first half of 2019.
- Adjusted EBITDA3 (non-GAAP) was negative
US$3.9 million, compared with an adjusted EBITDA of US$2.0 thousand
in the first half of 2019.
“We are one of the dealership networks in the premium used car
segment in China. Our strategy is to provide consumers with the
simplest, most comprehensive and transparent services available.
The COVID-19 pandemic and the disputes with some non-controlling
shareholders of the dealerships had a material adverse impact on
Kaixin’s used-car dealership business and the Company has
experienced a significant loss of revenues in the first half of
2020. We believe our rich corporate resources and a multitude of
value-added services would enable us to overcome the difficulty,”
commented Mr. Joseph Chen, chairman of Kaixin.
“Facing the dramatic decline of sales and gross margin of the
used-car dealerships amid the pandemic early this year, we took
prompt cost-cutting initiatives to preserve resources and improve
operating efficiency. The company has been laying off non-essential
personnel and finding ways to reduce corporate overheads. The cost
cutting effort results in significant improvement in operating
efficiency. Going forward, we will continue to refine our business
and operating model, and explore new partnerships and growth
opportunities,” added Mr. Mingjun Lin, acting chief executive
officer of Kaixin.
Ms. Lucy Yang, chief financial officer of Kaixin, said, “Our
first half 2020 revenue was US$33.3 million, a decline of 83.7%
compared with the same period last year. As we implement various
cost cutting initiatives, I am glad to see that total operating
expenses has declined to US$6.2 million in the first half of 2020
from that of US$16.9 million in the first half of 2019. Our loss
from operations was US$5.3 million, compared with a loss from
operations of US$8.3 million in the first half of 2019.”
First half 2020 Results
Total net revenues for the first half of 2020
were US$33.3 million, representing an 83.7% decrease from the first
half of 2019. The COVID-19 pandemic had a material adverse impact
on the Company’s used-car dealership business.
Cost of revenues was US$32.4 million,
representing a decrease of 83.5% from US$196.0 million in the first
half of 2019. The decrease was in line with the decrease in
revenues.
Gross profit was US$0.9 million, representing a
decrease of 89.3% from US$8.6 million in the first half of 2019.
Gross profit margin was 2.8% in the first half of 2020, compared
with 4.2% in the first half of 2019.
Operating expenses were US$6.2 million, a 63.4%
decrease from US$16.9 million in the first half of 2019. The
decrease resulted from the effort to improve operation efficiency
in headcount and personnel-related expenses.
Selling and marketing expenses were US$1.9 million, a 77.0%
decrease from US$8.0 million in the first half of 2019. The
decrease resulted from the effort to improve operation efficiency
in headcount and personnel-related expenses.
Research and development expenses were US$0.5 million, a 73.7%
decrease from US$1.9 million in the first half of 2019. The
decrease was primarily due to the decrease in headcount and
personnel-related expenses.
General and administrative expenses were US$3.8 million, a 44.9%
decrease from US$7.0 million in the first half of 2019. The
decrease was primarily due to the decrease in headcount and
personnel-related expenses.
Loss from operations was US$5.3 million,
compared with a loss from operations of US$8.3 million in the first
half of 2019.
Net loss attributable to the Company was US$5.8
million, compared with a net income attributable to the Company of
US$57.3 million in the first half of 2019 which included a large
accrual of gain from fair value change related to cooperation
agreements with dealers.
Adjusted net loss (non-GAAP) was US$4.6
million, compared with an adjusted net loss of US$1.7 million in
the first half of 2019.
Adjusted loss from operations (non-GAAP) was
US$4.0 million, compared with an adjusted loss from operations of
US$1.6 million in the first half of 2019.
Adjusted EBITDA (non-GAAP) was negative US$3.9
million, compared with an adjusted EBITDA of US$2.0 thousand in the
first half of 2019.
Business Outlook
Given the serious challenges to its operations, the Company
decided to put a halt to its used-car dealership business
operations while reexamining its business model, as publicly
announced on August 26, 2020. The management of the Company
currently expects:
- total revenues for the second half of 2020 to be of a minimal
amount. This forecast reflects the Company's current and
preliminary views on the market and operational conditions, which
are subject to change.
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of 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" and similar statements. Among other things,
the business outlook for the second half of 2020 and
quotations from management in this announcement, as well as
Kaixin’s strategic and operational plans, contain forward-looking
statements. Kaixin may also make written or oral forward-looking
statements in its filings with the U.S. Securities and Exchange
Commission ("SEC"), in its annual report to shareholders, in press
releases and other written materials and in oral statements made by
its officers, directors or employees to third parties. Statements
that are not historical facts, including statements about Kaixin’s
beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of factors could cause actual results to
differ materially from those contained in any forward-looking
statement, including but not limited to the following: our goals
and strategies; our future business development, financial
condition and results of operations; the expected growth of the
social networking site market in China; our expectations regarding
demand for and market acceptance of our services; our expectations
regarding the retention and strengthening of our relationships with
used auto dealerships; our plans to enhance user experience,
infrastructure and service offerings; competition in our industry
in China; and relevant government policies and regulations relating
to our industry. Further information regarding these and other
risks is included in our other documents filed with the SEC. All
information provided in this press release and in the attachments
is as of the date of this press release, and Kaixin does not
undertake any obligation to update any forward-looking statement,
except as required under applicable law.
About Non-GAAP Financial Measures
To supplement Kaixin's consolidated financial results presented
in accordance with United States Generally Accepted Accounting
Principles ("GAAP"), Kaixin uses "adjusted loss from operations",
"adjusted net loss" and “adjusted EBITDA”, which are defined as
non-GAAP financial measures by the SEC, in evaluating its business.
We define adjusted loss from operations as loss from operations
excluding share-based compensation expenses, provision for
financing receivable, provision for PPE, one-time provision for
other receivable and one-time listing fee and adjusted net loss as
net income (loss) excluding share-based compensation expenses, fair
value change of contingent consideration, provision for financing
receivable, provision for PPE, one-time provision for other
receivable and one-time listing fee. Adjusted EBITDA is defined as
net income (loss) excluding fair value change of contingent
consideration, share-based compensation expense, interest expenses,
income tax expenses, depreciation, provision for financing
receivable, provision for PPE, one-time provision for other
receivable and one-time listing fee. Kaixin continuously and
periodically reviews the operating results and business performance
from operational perspectives. Starting from the first quarter of
2018, there was a significant impact on net income (loss) due to
the material and significant noncash amount of fair value change of
contingent consideration relating to the used auto dealerships of
the emerging used auto business. Due to the nature of the business,
Kaixin believes that including adjusted income (loss) from
operations and excluding the impact of such fair value changes more
appropriately reflects Kaixin’s results of operations, and provides
investors with a better understanding of Kaixin’s business
performance. To facilitate investors and analysts, we present the
foresaid impact in "Reconciliation of non-GAAP results of
operations measures to the comparable GAAP financial measures"
retrospectively. We present adjusted income (loss) from operations,
net income (loss) and EBITDA because they are used by our
management to evaluate our operating performance. We also believe
that these non-GAAP financial measures provide useful information
to investors and others in understanding and evaluating our
consolidated results of operations in the same manner as our
management and in comparing financial results across accounting
periods and to those of our peer companies.
These non-GAAP financial measures are not intended to be
considered in isolation from, or as a substitute for, the financial
information prepared and presented in accordance with GAAP. For
more information on these non-GAAP financial measures, please see
the table captioned "Reconciliation of non-GAAP results of
operations measures to the comparable GAAP financial measures" at
the end of this release.
For more information, please contact:
Kaixin Auto Holdings
Investor RelationsEmail: ir@kaixin.com
_________________
1Includes automobile sales transactions at the Company’s
dealerships including cars owned by Kaixin and cars sourced by
Kaixin Affiliated Network Dealers that Kaixin sells pursuant to
profit-sharing arrangements.
2Adjusted loss from operations and adjusted net loss are
non-GAAP measures. We define adjusted loss from operations as loss
from operations excluding share-based compensation expenses,
provision for financing receivable, provision for PPE, one-time
provision for other receivable and one-time listing fee. We define
adjusted net loss as net (loss) income excluding fair value change
of contingent consideration, share-based compensation expenses,
provision for financing receivable, provision for PPE, one-time
provision for other receivable, and one-time listing fee. See
"About Non-GAAP Financial Measures" below.
3Adjusted EBITDA is a non-GAAP financial
measure. It is defined as net (loss) income excluding fair value
change of contingent consideration, share-based compensation
expense, interest expenses, income tax expenses, depreciation,
provision for financing receivable, provision for PPE, one-time
provision for other receivable and one-time listing fee. See "About
Non-GAAP Financial Measures" below.
|
|
|
|
|
|
KAIXIN
AUTO HOLDINGS |
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
(In thousands of
US dollars) |
|
|
|
|
|
|
|
|
December 31, |
|
|
June 30, |
|
|
2019 |
|
|
2020 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
3,190 |
|
|
$ |
1,040 |
|
Accounts receivable, net |
|
219 |
|
|
|
247 |
|
Prepaid expenses and other
current assets |
|
27,586 |
|
|
|
30,565 |
|
Inventory |
|
20,990 |
|
|
|
17,536 |
|
Total current
assets |
|
51,985 |
|
|
|
49,388 |
|
|
|
|
|
|
|
|
|
Non-current
assets: |
|
|
|
|
|
|
|
Property and equipment,
net |
|
153 |
|
|
|
110 |
|
Right-of-use lease assets |
|
2,252 |
|
|
|
1,700 |
|
Total non-current
assets |
|
2,405 |
|
|
|
1,810 |
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
$ |
54,390 |
|
|
$ |
51,198 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
4,122 |
|
|
$ |
1,072 |
|
Short-term debt |
|
16,630 |
|
|
|
15,213 |
|
Accrued expenses and other
current liabilities |
|
17,302 |
|
|
|
17,525 |
|
Short-term lease
liabilities |
|
1,785 |
|
|
|
2,216 |
|
Amounts due to related
parties |
|
4,214 |
|
|
|
2,614 |
|
Advance from customers |
|
1,677 |
|
|
|
4,946 |
|
Income tax payable |
|
5,319 |
|
|
|
5,251 |
|
Total current
liabilities |
|
51,049 |
|
|
|
48,837 |
|
|
|
|
|
|
|
|
|
Non-current
liabilities: |
|
|
|
|
|
|
|
Long-term lease
liabilities |
|
810 |
|
|
|
322 |
|
Total non-current
liabilities |
|
810 |
|
|
|
322 |
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES |
$ |
51,859 |
|
|
$ |
49,159 |
|
|
|
|
|
|
|
|
|
Shareholders'
Equity: |
|
|
|
|
|
|
|
Ordinary shares |
|
5 |
|
|
|
6 |
|
Additional paid-in
capital |
|
186,450 |
|
|
|
191,894 |
|
Statutory reserves |
|
4,004 |
|
|
|
4,004 |
|
Accumulated deficit |
|
(192,189 |
) |
|
|
(197,967 |
) |
Accumulated other
comprehensive income (loss) |
|
(2,840 |
) |
|
|
(2,884 |
) |
|
|
|
|
|
|
|
|
Total Kaixin Auto
Holdings shareholders' equity |
|
(4,570 |
) |
|
|
(4,947 |
) |
|
|
|
|
|
|
|
|
Non-controlling interest |
|
7,101 |
|
|
|
6,986 |
|
|
|
|
|
|
|
|
|
TOTAL
EQUITY |
|
2,531 |
|
|
|
2,039 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
$ |
54,390 |
|
|
$ |
51,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KAIXIN
AUTO HOLDINGS |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) |
(In thousands of
US dollars, except share and per share data) |
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
|
2019 |
|
|
2020 |
Net revenues |
|
|
|
|
|
|
|
Automobile sales |
$ |
200,914 |
|
|
$ |
32,996 |
|
Others |
|
3,685 |
|
|
|
299 |
|
Total net revenues |
|
204,599 |
|
|
|
33,295 |
|
|
|
|
|
|
|
|
|
Cost of
revenues |
|
|
|
|
|
|
|
Automobile sales |
|
(193,304 |
) |
|
|
(32,374 |
) |
Provision for financing receivable |
|
(2,594 |
) |
|
|
- |
|
Others |
|
(71 |
) |
|
|
(1 |
) |
Total cost of
revenues |
|
(195,969 |
) |
|
|
(32,375 |
) |
|
|
|
|
|
|
|
|
Gross
profit |
|
8,630 |
|
|
|
920 |
|
|
|
- |
|
|
|
- |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling and marketing |
|
(8,040 |
) |
|
|
(1,852 |
) |
Research and development |
|
(1,916 |
) |
|
|
(503 |
) |
General and administrative |
|
(6,963 |
) |
|
|
(3,837 |
) |
|
|
- |
|
|
|
- |
|
Total operating
expenses |
|
(16,919 |
) |
|
|
(6,192 |
) |
|
|
- |
|
|
|
- |
|
Loss from
operations |
|
(8,289 |
) |
|
|
(5,272 |
) |
|
|
|
|
|
|
|
|
Other income, net |
|
1,506 |
|
|
|
84 |
|
Fair value change of
contingent consideration |
|
65,594 |
|
|
|
- |
|
Interest income |
|
59 |
|
|
|
5 |
|
Interest expenses |
|
(1,034 |
) |
|
|
(607 |
) |
Total non-operating
income (loss) |
|
66,125 |
|
|
|
(518 |
) |
|
|
|
|
|
|
|
|
Income (loss) before
provision of income tax and noncontrolling interest, net of
tax |
|
57,836 |
|
|
|
(5,790 |
) |
Income tax expenses |
|
(628 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net income (loss) |
|
57,208 |
|
|
|
(5,790 |
) |
Net loss attributable to
non-controlling interests |
|
101 |
|
|
|
12 |
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Kaixin Auto Holdings |
$ |
57,309 |
|
|
$ |
(5,778 |
) |
Net income (loss) per share
attributable to Kaixin Auto Holdings shareholders: |
|
|
|
|
|
|
|
Basic |
$ |
1.94 |
|
|
$ |
(0.10 |
) |
Diluted |
$ |
1.09 |
|
|
$ |
(0.10 |
) |
|
|
|
|
|
|
|
|
Weighted average number of
shares used in calculating net (loss) income per ordinary share
attributable to Kaixin Auto Holdings shareholders: |
|
|
|
|
|
|
|
Basic |
|
29,609,923 |
|
|
|
59,649,464 |
|
Diluted |
|
52,809,497 |
|
|
|
59,649,464 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP results of operations measures
to the comparable GAAP financial measures |
(In thousands of
US dollars) |
|
|
|
|
|
|
|
For the Six Months Ended |
|
|
June 30, |
|
|
June 30, |
|
2019 |
|
|
2020 |
|
|
|
|
|
|
|
|
Loss from operations |
$ |
(8,289 |
) |
|
$ |
(5,272 |
) |
Add back: Shared-based compensation expenses |
|
2,510 |
|
|
|
1,232 |
|
Add back: Provision for financing receivable |
|
2,594 |
|
|
|
- |
|
Add back: Provision for PPE |
|
507 |
|
|
|
- |
|
Add back: One-time provision for other receivable |
|
150 |
|
|
|
- |
|
Add back: One-time listing fee |
|
905 |
|
|
|
- |
|
Adjusted loss from
operations |
$ |
(1,623 |
) |
|
$ |
(4,040 |
) |
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
57,208 |
|
|
$ |
(5,790 |
) |
Add back: Fair value change of contingent consideration |
|
(65,594 |
) |
|
|
- |
|
Add back: Shared-based compensation expenses |
|
2,510 |
|
|
|
1,232 |
|
Add back: Provision for financing receivable |
|
2,594 |
|
|
|
- |
|
Add back: Provision for PPE |
|
507 |
|
|
|
- |
|
Add back: One-time provision for other receivable |
|
150 |
|
|
|
- |
|
Add back: One-time listing fee |
|
905 |
|
|
|
- |
|
Adjusted net
loss |
$ |
(1,720 |
) |
|
$ |
(4,558 |
) |
|
|
|
|
|
|
|
|
Net income
(loss) |
$ |
57,208 |
|
|
$ |
(5,790 |
) |
Add back: Fair value change of contingent consideration |
|
(65,594 |
) |
|
|
- |
|
Add back: Shared-based compensation expenses |
|
2,510 |
|
|
|
1,232 |
|
Add back: Provision for financing receivable |
|
2,594 |
|
|
|
- |
|
Add back: Provision for PPE |
|
507 |
|
|
|
- |
|
Add back: One-time provision for other receivable |
|
150 |
|
|
|
- |
|
Add back: One-time listing fee |
|
905 |
|
|
|
- |
|
Add back: Interest expenses |
|
975 |
|
|
|
602 |
|
Add back: Income tax expenses |
|
628 |
|
|
|
- |
|
Add back: Depreciation |
|
119 |
|
|
|
41 |
|
Adjusted
EBITDA |
$ |
2 |
|
|
$ |
(3,915 |
) |
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