EHI CAR SERVICES LTD (ADR) - Net revenues increased by 33.7% year-over-year to RMB615.6 million
- Net income was RMB30.8 million with diluted earnings per ADS reaching RMB0.44
- Non-GAAP adjusted EBITDA increased by 34.6% year-over-year to RMB271.9 million
- Continued margin expansion by achieving non-GAAP adjusted EBIT margin of 15.4% and non-GAAP adjusted EBITDA margin of 44.2%
SHANGHAI, June 5, 2017 /PRNewswire/ -- eHi Car Services Limited ("eHi" or the "Company") (NYSE: EHIC), a leading car rental and car services provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2017.
Mr. Ray Zhang, eHi's Chairman and Chief Executive Officer, said, "We are pleased to make progress in our operations and to be able to report outstanding financial results in the first quarter 2017. Our robust topline growth, along with margin expansion and improved profitability, was driven by robust consumer demand through the proactive addition of vehicles in preparation for the Chinese New Year holiday, broadened brand recognition and impeccable service quality, as well as enhanced economies of scale. To further capture Chinese travelers' evolving needs, we also launched our car sharing business in April that offers free-floating, time-sharing car rentals to customers with a fully automated rental and payment process. Although our car sharing business is at its nascent stage with current coverage of seven top-tier cities, we look forward to exploring and growing this model to efficiently complement our car rental business. With our deep understanding of Chinese travelers' transportation needs and industry expertise, we are focused on providing the best-in-class services through technology-driven platforms and diversified service offerings.
"China's per capita disposable income and population in the driving age continue to increase, and we see exponential growth in demand for car rental and car services in China, as Chinese travelers spend to satisfy leisure and business travel needs while being less sensitive to pricing. Our fleet utilization rate of 73.7% and total RevPAC of RMB152 in the first quarter were further testaments to our strategy. Given the healthy market conditions, we will maintain our current pricing strategy and commit to executing on our growth plan and achieving our strategic objectives," Mr. Zhang concluded.
Mr. Colin Sung, eHi's Chief Financial Officer, said, "We are pleased to kick off the year 2017 by delivering strong year-over-year net revenues growth of 33.7% and net income of RMB30.8 million in the first quarter. I am also very pleased to report our continued margin expansion, reflected in a strong non-GAAP adjusted EBIT margin of 15.4% and non-GAAP adjusted EBITDA margin of 44.2%. Benefiting from our extensive nationwide service network and existing fleet, our newly launched car sharing business will not only enable us to provide a wide range of vehicle model selections to satisfy growing customer demand, but to further improve our operating efficiency and fleet utilization rates without additional capital expenditures. Looking ahead, we will continue our efforts to balance growth and profitability with an ongoing goal to extend our margin expansion through increased efficiencies and scalability."
First Quarter 2017 Highlights
Net revenues increased by 33.7% year-over-year to RMB615.6 million (US$89.4 million(1)) for the first quarter of 2017, from RMB460.5 million for the first quarter of 2016, driven by increased net revenues from both car rentals and car services.
Three months ended March 31, Year-Over-Year
----------------------------
(RMB '000) 2016 2017 Comparison
---- ---- ----------
Car rentals 363,977 496,676 36.5%
Car services 96,533 118,895 23.2%
------ -------
Total Net 460,510 615,571 33.7%
Revenues
Average Available Fleet RevPAC(3)
Size(2)
(RMB)
2016Q1 2017Q1 Year-Over- 2016Q1 2017Q1 Year-Over-
Year Year
Comparison Comparison
----------
Car rentals 32,007 42,041 31.3% 126 131 4.0%
Car services 2,327 2,921 25.5% 461 452 (2.0%)
----- ----- --- ---
Total 34,334 44,962 31.0% 149 152 2.0%
====== ====== === ===
- Fleet utilization rate4 for car rentals was 73.7% for the first quarter of 2017, compared with 75.3% for the first quarter of 2016.
Cost of revenues (vehicle operating expenses) for the first quarter of 2017 was RMB423.5 million (US$61.5 million), up 28.0% year-over-year, primarily driven by increased depreciation and labor costs.
In the first quarter of 2017, 3,605 used vehicles were disposed of, and 833 used vehicles were under sales contracts pending title transfer. The Company recognized a disposal gain of RMB9.0 million (US$1.3 million) in aggregate for these 4,438 vehicles(5). In addition, a disposal gain of RMB1.2 million (US$0.2 million) was recognized in the first quarter of 2017 as a result of the completion of title transfer during such period. These disposal gains were both recognized as adjustments to the vehicle-related depreciation expense as part of the cost of revenues.
Gross profit(6) for the first quarter of 2017 was RMB192.1 million (US$27.9 million), up 48.0% year-over-year. Gross profit margin for the first quarter of 2017 was 31.2%, compared with 28.2% for the first quarter of 2016. Gross profit margin improvement was primarily due to a percentage decrease of vehicle-related depreciation in terms of net revenues.
Selling and marketing expenses for the first quarter of 2017 were RMB34.7 million (US$5.0 million), up 55.1% year-over -year, as the Company expanded advertising and branding activities in the first quarter of 2017, including the marketing activities associated with the NBA China and NBA All-Star Stephen Curry.
General and administrative expenses for the first quarter of 2017 were RMB67.1 million (US$9.7 million), up 17.6% year-over-year, primarily due to increased employee-related costs including salaries and welfare expenses as a result of increased headcount in the first quarter of 2017.
Interest expense for the first quarter of 2017 was RMB55.6 million (US$8.1 million), decreased by 1.0% year-over-year, primarily attributable to paying down some debts bearing relatively higher interest rates.
Net income for the first quarter of 2017 was RMB30.8 million (US$4.5 million), compared with a net loss of RMB3.7 million for the first quarter of 2016. Net income margin for the first quarter of 2017 was 5.0%, compared with a net loss margin of (0.8%) for the first quarter of 2016.
Basic and diluted earnings per ADS for the first quarter of 2017 were RMB0.44 (US$0.06) each, compared with basic and diluted loss per ADS of RMB0.05 each for the first quarter of 2016.
Non-GAAP adjusted EBIT(7) increased by 73.3% year-over-year to RMB94.8 million (US$13.8 million) for the first quarter of 2017, from RMB54.7 million for the first quarter of 2016. Non-GAAP adjusted EBIT margin(7) increased to 15.4% for the first quarter of 2017, from 11.9% for the first quarter of 2016.
Non-GAAP adjusted EBITDA(8) increased by 34.6% year-over-year to RMB271.9 million (US$39.5 million) for the first quarter of 2017, from RMB201.9 million for the first quarter of 2016. Non-GAAP adjusted EBITDA margin(8) increased to 44.2% for the first quarter of 2017, from 43.8% for the first quarter of 2016.
As of March 31, 2017, the Company's cash, cash equivalents and restricted cash balance was RMB711.3 million (US$103.3 million).
Outlook
The Company estimates that net revenues for the second quarter of 2017 will range from RMB635 million to RMB650 million, and for full year of 2017 will range from RMB2.9 billion to RMB3.0 billion. This outlook reflects the Company's current and preliminary view, which is subject to change.
Conference Call Information
The Company's management will host an earnings conference call at 8:00 AM U.S. Eastern Time on June 5, 2017 (8:00 PM Beijing/Hong Kong time on June 5, 2017).
Dial-in details for the earnings conference call are as follows:
United States (toll free): 1-888-346-8982
International: 1-412-902-4272
Hong Kong (toll free): 800-905-945
Hong Kong: 852-3018-4992
China: 400-120-1203
Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the "eHi Car Services call."
Additionally, a live and archived webcast of the conference call will be available on the investor relations section of eHi's website at http://ir.ehi.com.cn.
A replay of the conference call will be accessible by phone at the following numbers until June 12, 2017:
United States (toll free): 1-877-344-7529
International: 1-412-317-0088
Replay Access Code: 10107913
About eHi Car Services Limited
eHi Car Services Limited (NYSE: EHIC) is one of the leading car rental and car services providers in China. The Company's mission is to provide comprehensive mobility solutions as an alternative to car ownership by best utilizing existing resources and sharing economy to create optimal value. eHi distinguishes itself in China's fast-growing car rental and car services market through its complementary business model, customer-centric corporate culture, broad geographic coverage, efficient fleet management, leading brand name, and commitment to technological innovation. eHi is the exclusive strategic partner in China of Enterprise, the largest car rental company in the world, and is the designated and preferred business partner of Ctrip, a leader in the online travel agency industry in China. For more information regarding eHi, please visit http://en.1hai.cn.
About Non-GAAP Financial Measures
To supplement its unaudited condensed consolidated financial statements which are presented in accordance with U.S. GAAP, the Company uses adjusted EBIT and adjusted EBITDA as non-GAAP financial measures. Adjusted EBIT represents net income or loss before share-based compensation, interest expense, interest income and provision for income taxes. Adjusted EBITDA represents net income or loss before depreciation and amortization, share-based compensation, interest expense, interest income and provision for income taxes. The Company's management believes that adjusted EBIT and adjusted EBITDA facilitate a better understanding of operating results from quarter to quarter and provide management with a better capability to plan and forecast future periods. For more information on the non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.
Non-GAAP information is not prepared in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for GAAP results. A limitation of using these Non-GAAP financial measures excludes depreciation and amortization, share-based compensation, interest expense, interest income and provision for income taxes, as applicable, that have been and will continue to be significant recurring portions of the Company's business for the foreseeable future.
Safe Harbor Statement
This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and 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," "confident" and similar statements. eHi may also make written or oral forward-looking statements in its reports filed with or furnished to the 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. Any statements that are not historical facts, including statements about eHi's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: eHi's goals and strategies; its future business development, financial condition and results of operations; its ability to achieve and sustain profitability; its heavy reliance on its proprietary technology platform; its ability to compete successfully against current and future competitors; the expected growth of China's car rentals and car services market; its ability to sustain its growth rates and manage its expansion plan; its ability to dispose used vehicles at desirable prices or timing or through appropriate channels; its ability to raise sufficient capital to fund and expand its operations at a reasonable cost; various government policies on automobile control and purchase restrictions in certain Chinese cities; its ability to enhance its brand recognition and maintain a high level of customer satisfaction; its ability to control the losses resulting from customer violation of traffic rules; and its ability to obtain all of the requisite permits, licenses or making all of the requisite filings or registrations or meeting other regulatory requirements for operating car rentals and car services business in China. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this press release is current as of the date of the press release, and eHi does not undertake any obligation to update such information, except as required under applicable law.
(1) The Company's business is
conducted in China and
substantially all of its revenues
are denominated in Renminbi (RMB).
However, this earnings announcement
contains translations of RMB
amounts into U.S. dollars (US$) at
specified rates solely for the
convenience of the reader. Unless
otherwise noted, all translations
from RMB to U.S. dollars are made
at a rate of RMB6.8832 to US$1.00,
the effective noon buying rate as
of March 31, 2017 in The City of
New York for cable transfers of RMB
as certified for customs purposes
by the Federal Reserve Bank of New
York.
(2) "Average available fleet size"
is calculated by dividing the
aggregate number of days in which
the Company's fleet was in
operation during a given period by
the total number of days during the
same period. In determining the
size of the Company's fleet in
operation, eHi includes all
vehicles in its car rentals and/or
car services fleets except for
vehicles that have been written off
in accordance with its accounting
policy and vehicles that have not
been consistently made available
for rent and that it may consider
to dispose of when appropriate
opportunities arise.
(3) "RevPAC" refers to average daily
net revenue per available car,
which is calculated by dividing the
net revenues during a given period
by the aggregate number of days in
which the Company's fleet was in
operation during the same period.
4 "Fleet utilization rate" refers
to the aggregate transaction days
for the Company's car rental fleet
during a given period divided by
the aggregate days the car rental
fleet was in operation during the
same period.
5 The gain of RMB9.0 million is a
net amount of (i) the disposal gain
and loss of the 3,605 used vehicles
which were disposed of, and (ii)
the disposal loss of the 833 used
vehicles which were under sales
contracts pending title transfer.
If there is any disposal gain for
the vehicles pending title
transfer, such a gain will be
recognized in the next period when
the title transfer has been
completed.
6 Gross profit is defined as net
revenues less cost of net revenues
(vehicle operating expenses).
Gross profit margin is defined as
the percentage representing gross
profit divided by net revenues.
7 Non-GAAP adjusted EBIT is
defined as net income before share-
based compensation, interest
expense, interest income and
provision for income taxes. For
more information, refer to "About
Non-GAAP Financial Measures" and
"Reconciliation of GAAP and Non-
GAAP Results" at the end of this
press release. Non-GAAP adjusted
EBIT margin is defined as the
percentage representing Non-GAAP
adjusted EBIT divided by net
revenues.
8 Non-GAAP adjusted EBITDA is
defined as net income before
depreciation and amortization,
share-based compensation, interest
expense, interest income and
provision for income taxes. For
more information, refer to "About
Non-GAAP Financial Measures" and
"Reconciliation of GAAP and Non-
GAAP Results" at the end of this
press release. Non-GAAP adjusted
EBITDA margin is defined as the
percentage representing Non-GAAP
adjusted EBITDA divided by net
revenues.
For investor and media inquiries, please contact:
eHi Car Services Limited
Tel: +86 (21) 6468-7000 ext. 8742
E-mail: ir@ehic.com.cn
The Piacente Group, Inc.
Ms. Brandi Piacente
Tel: +1-212-481-2050
E-mail: ehi@tpg-ir.com
eHi Car Services Limited
Unaudited Condensed Consolidated Balance Sheets
December 31, March 31, March 31,
2016 2017 2017
---- ---- ----
RMB RMB USD
Unaudited Unaudited Unaudited
ASSETS
Current assets:
Cash and cash equivalents 529,518,517 550,912,256 80,037,229
Restricted cash 257,059,302 160,423,913 23,306,589
Accounts receivable, net 214,767,818 267,362,387 38,842,746
Prepayments and other current assets 727,787,345 971,096,411 141,082,115
Short term loans receivable 50,000,000 50,000,000 7,264,063
Assets held for sale 160,732,289 76,433,727 11,104,388
Deferred tax assets, current 1,839,973 - -
--------- --- ---
Total current assets 1,941,705,244 2,076,228,694 301,637,130
------------- ------------- -----------
Property and equipment, net 5,723,569,175 5,293,533,040 769,051,174
Intangible assets 64,101,470 63,840,616 9,274,845
Vehicle purchase deposits 420,922,908 385,547,676 56,012,854
Deferred tax assets, non-current 649,675 2,489,648 361,700
Other non-current assets 10,010,628 29,081,741 4,225,033
---------- ---------- ---------
Total assets 8,160,959,100 7,850,721,415 1,140,562,736
------------- ------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 179,877,847 65,196,185 9,471,784
Accrued expenses and other current liabilities 284,574,997 239,152,338 34,744,356
Income tax payable 5,436,989 11,628,549 1,689,410
Short-term debt 926,219,333 761,682,630 110,658,216
----------- ----------- -----------
Total current liabilities 1,396,109,166 1,077,659,702 156,563,766
------------- ------------- -----------
Long-term debt 2,767,822,989 2,730,375,911 396,672,465
Deferred tax liabilities, non-current 1,061,542 1,061,542 154,222
Other non-current liabilities 4,835,862 8,943,479 1,299,320
--------- --------- ---------
Total liabilities 4,169,829,559 3,818,040,634 554,689,773
------------- ------------- -----------
Shareholders' equity:
Common shares 878,463 878,484 127,627
Additional paid-in capital 4,474,702,198 4,478,418,624 650,630,321
Accumulated other comprehensive income 43,201,465 50,236,061 7,298,358
Accumulated deficits (527,652,585) (496,852,388) (72,183,343)
------------ ------------ -----------
Total shareholders' equity 3,991,129,541 4,032,680,781 585,872,963
------------- ------------- -----------
Total liabilities and shareholders' equity 8,160,959,100 7,850,721,415 1,140,562,736
------------- ------------- -------------
eHi Car Services Limited
Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)
For the Three Months Ended March 31,
------------------------------------
2016 2017 2017
RMB RMB USD
--- --- ---
Unaudited Unaudited Unaudited
Net revenues:
Car rentals 363,977,398 496,676,274 72,157,757
Car services 96,533,057 118,895,405 17,273,275
---------- ----------- ----------
Total net revenues 460,510,455 615,571,679 89,431,032
----------- ----------- ----------
Cost of revenues (330,775,689) (423,505,544) (61,527,421)
------------ ------------ -----------
Gross profit 129,734,766 192,066,135 27,903,611
----------- ----------- ----------
Selling and marketing expenses (22,355,437) (34,680,579) (5,038,438)
General and administrative expenses (57,016,459) (67,062,104) (9,742,867)
Other operating income 38,636 217,199 31,555
------ ------- ------
Total operating expenses (79,333,260) (101,525,484) (14,749,750)
----------- ------------ -----------
Profit from operations 50,401,506 90,540,651 13,153,861
---------- ---------- ----------
Interest income 1,560,192 2,193,709 318,703
Interest expense (56,139,093) (55,576,034) (8,074,156)
Other income, net 704,265 557,820 81,041
------- ------- ------
Income / (loss) before income taxes (3,473,130) 37,716,146 5,479,449
Provision for income taxes (268,216) (6,915,949) (1,004,758)
-------- ---------- ----------
Net income / (loss) (3,741,346) 30,800,197 4,474,691
---------- ---------- ---------
Net income / (loss) (3,741,346) 30,800,197 4,474,691
Changes in cumulative foreign currency translation (1,183,682) 7,034,596 1,021,995
adjustment, net of tax of nil
Comprehensive income / (loss) (4,925,028) 37,834,793 5,496,686
---------- ---------- ---------
Weighted average number of common shares used in
computing net income / (loss) per share
Basic 136,911,050 138,631,520 138,631,520
Diluted 136,911,050 139,404,909 139,404,909
Net income / (loss) per share attributable to common
shareholders
Basic (0.03) 0.22 0.03
Diluted (0.03) 0.22 0.03
Earnings / (loss) per ADS*
Basic (0.05) 0.44 0.06
Diluted (0.05) 0.44 0.06
eHi Car Services Limited
Reconciliation of GAAP and Non-GAAP Results
For the Three Months Ended March 31,
------------------------------------
2016 2017 2017
RMB RMB USD
--- --- ---
Unaudited Unaudited Unaudited
Net Income / (loss) (3,741,346) 30,800,197 4,474,691
Add / (subtract):
Share-based compensation 3,609,425 3,716,447 539,930
Interest income (1,560,192) (2,193,709) (318,703)
Interest expense 56,139,093 55,576,034 8,074,156
Provision for income taxes 268,216 6,915,949 1,004,758
------- --------- ---------
Adjusted EBIT 54,715,196 94,814,918 13,774,832
---------- ---------- ----------
Depreciation and amortization 147,191,410 177,042,928 25,721,021
----------- ----------- ----------
Adjusted EBITDA 201,906,606 271,857,846 39,495,853
----------- ----------- ----------
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SOURCE eHi Car Services Limited
