eHi Car Services Announces Third Quarter 2015 Results

Net revenues increased 78.9% year-over-year

Nov 18, 2015, 05:00 ET from eHi Car Services Limited

SHANGHAI, Nov. 18, 2015 /PRNewswire/ -- eHi Car Services Limited ("eHi" or the "Company") (NYSE: EHIC), a leading car rentals and car services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Highlights

  • Net revenues increased by 78.9% year-over-year to RMB393.8 million (US$62.0 million[1]) for the third quarter of 2015 from RMB220.1 million for the third quarter of 2014.

Three months ended September 30,

Year-Over-Year

(RMB '000)

2014

2015

Comparison

Car rentals

155,512

300,700

93.4%

Car services

64,603

93,080

44.1%

Total Net Revenues

220,115

393,780

78.9%

  • Non-GAAP adjusted EBITDA[2] increased by 116.4% year-over-year to RMB165.3 million (US$26.0 million) for the third quarter of 2015 from RMB76.4 million for the third quarter of 2014.
  • Non-GAAP adjusted EBITDA margin[3] was 42.0% for the third quarter of 2015, compared with 34.7% for the third quarter of 2014.
  • Net income for the third quarter of 2015 was RMB6.0 million (US$1.0 million), compared with a net loss of RMB26.9 million for the third quarter of 2014.
  • Average available fleet size[4] increased by 73.6% year-over-year to 28,499 vehicles for the third quarter of 2015 from 16,419 vehicles for the third quarter of 2014. As of September 30, 2015, total period-end fleet size[5] was 35,107 vehicles.
  • Total fleet RevPAC[6] increased to RMB150 for the third quarter of 2015 from RMB146 for the third quarter of 2014.
  • Fleet utilization rate[7] for car rentals was 73.8% for the third quarter of 2015, compared with 70.3% for the third quarter of 2014.

[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 RMB 6.3556 to US$1.00, the effective noon buying rate as of September 30, 2015 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]

Non-GAAP adjusted EBITDA is defined as net income or loss before depreciation and amortization, share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. 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.

[3]

Non-GAAP adjusted EBITDA margin is defined as the percentage of Non-GAAP adjusted EBITDA of the net revenues.

[4]

"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 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 which it may consider to dispose when appropriate opportunities arise.

[5]

"Period-end fleet size" refers to the aggregate number of vehicles in the Company's car rentals and car services fleets as of the last day of a given period to which the Company holds legal title, including vehicles that the Company has written off in accordance with its accounting policy and vehicles that are currently missing but have not been written off.

[6]

"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.

[7]

"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.

Mr. Ray Zhang, eHi's Chairman and Chief Executive Officer, said, "Our third quarter results were driven by the solid advancement in our car rentals and car services businesses, our established reputation for quality and service, and economies of scale. During the third quarter, we continued to expand our national footprint and fleet size per store, strengthen partnerships with corporations and government agencies, while managing our operations more efficiently. Looking ahead, our strategy will remain focused on fleet expansion, operating efficiency improvement, technology innovation and customer experience enhancement to achieve sustainable long-term growth."

"Today is the one-year anniversary of our listing as a public company on the New York Stock Exchange. We have made significant progress and achieved multiple milestones in the past year. I would like to thank our customers for their loyalty and support, our employees for their dedication and contributions, and our shareholders and partners for their understanding and patience. We look forward to maximizing shareholder value and embracing a bright future by continued successful execution of our growth plan for the years to come," Mr. Zhang concluded.

Mr. Colin Sung, eHi's Chief Financial Officer, said, "We maintained healthy growth momentum across the board in the third quarter with top line increasing by 78.9% year-over-year and achieving bottom line profitability. While we continued to advance the core areas of our business through our growth initiatives, we are also taking prudent steps to improve our cost structure, resulting in the improvement in non-GAAP adjusted EBITDA margin in the third quarter. With our sound balance sheet, sufficient capital and access to additional financing opportunities, we remain confident in our long-term growth prospects."

Third Quarter 2015 Financial Results

Net revenues for the third quarter of 2015 were RMB393.8 million (US$62.0 million), up 78.9% year-over-year, which was attributable to increases in net revenues from both car rentals and car services.

Net revenues from car rentals for the third quarter of 2015 were RMB300.7 million (US$47.3 million), up 93.4% year-over-year, primarily driven by increases in the Company's average available fleet size and RevPAC for car rentals.

Net revenues from car services for the third quarter of 2015 were RMB93.1 million (US$14.6 million), up 44.1% year-over-year, primarily driven by increases in the Company's average available fleet size for car services, as well as increased demand from the Company's corporate and individual clients.

Vehicle operating expenses for the third quarter of 2015 were RMB303.7 million (US$47.8 million), up 66.0% year-over-year, primarily due to increases in depreciation, labor and vehicle insurance costs.  

The Company disposed of 636 used vehicles during the third quarter of 2015 through various sales channels and recorded a gain of RMB1.1 million (US$0.2 million). The gain was recognized as an adjustment to the vehicle-related depreciation expense as part of the Company's vehicle operating expenses. During the third quarter of 2014, the Company disposed of 466 used vehicles and recorded a loss of RMB0.3 million.  

Selling, general and administrative expenses for the third quarter of 2015 were RMB61.2 million (US$9.6 million), up 44.6% year-over-year, primarily due to increases in employee-related costs such as salaries and welfare expenses as a result of increases in the number of employees, and to a lesser extent, due to increases in channel promotion fees.

Profit from operations for the third quarter of 2015 was RMB34.3 million (US$5.4 million), compared with loss from operations of RMB5.0 million for the third quarter of 2014.

Net income for the third quarter of 2015 was RMB6.0 million (US$1.0 million), compared with a net loss of RMB26.9 million for the third quarter of 2014.  

Basic and diluted earnings per ADS for the third quarter of 2015 were RMB0.09 (US$0.01) each, compared with basic and diluted loss per ADS of RMB33.15 each for the third quarter of 2014.

Non-GAAP adjusted EBITDA for the third quarter of 2015 was RMB165.3 million (US$26.0 million), up 116.4% year-over-year, mainly due to the continued increase in average available fleet size.  

Non-GAAP adjusted EBITDA margin for the third quarter of 2015 was 42.0%, compared with 34.7% for the third quarter of 2014.  

As of September 30, 2015, the Company's cash, cash equivalents and restricted cash totaled RMB1.8 billion (US$281.6 million).  

Outlook

The Company estimates that its fiscal year 2015 net revenues will be approximately RMB1.5 billion, which would represent an increase of approximately 76% from RMB851.2 million in 2014. The Company estimates that its total period-end fleet size as of December 31, 2015 will reach approximately 38,000 vehicles, which would represent an increase of approximately 92% from 19,746 vehicles as of December 31, 2014. This forecast 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 November 18, 2015 (9:00 PM Beijing/Hong Kong time on November 18, 2015).

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 call 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 November 25, 2015:

United States (toll free): 1-877-344-7529 International: 1-412-317-0088 Replay Access Code: 10076132 

About eHi Car Services Limited

eHi Car Services Limited (NYSE: EHIC) is China's No. 1 car services provider and No. 2 car rentals provider in terms of market share by revenues in 2013, according to Frost & Sullivan. 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 EBITDA as a non-GAAP financial measure. Adjusted EBITDA represents net income or loss before depreciation and amortization, share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. The Company's management believes that adjusted EBITDA facilitate 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 adjusted EBITDA is that adjusted EBITDA excludes depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes 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; 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.

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.  Mr. Don Markley Tel: +1-212-481-2050 E-Mail: ehi@thepiacentegroup.com  

 

eHi Car Services Limited Unaudited Condensed Consolidated Balance Sheets

December 31, 2014

September 30,

2015

September 30,

2015

RMB

RMB

USD

Unaudited

Unaudited

Unaudited

ASSETS

Current assets:

Cash and cash equivalents

926,207,744

1,378,191,256

216,846,758

Restricted cash

192,758,072

411,544,000

64,752,974

Accounts receivable, net

111,885,971

145,274,452

22,857,708

Prepayments and other current assets

195,605,733

317,773,216

49,998,933

Total current assets

1,426,457,520

2,252,782,924

354,456,373

Cost method investment

152,975,000

-

-

Property and equipment, net

1,940,047,599

3,619,246,486

569,457,877

Intangible assets

38,246,326

45,294,078

7,126,641

Vehicle purchase deposits

174,184,628

75,380,873

11,860,544

Other non-current assets

23,728,439

27,190,813

4,278,245

Total assets

3,755,639,512

6,019,895,174

947,179,680

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

5,487,316

116,951,908

18,401,395

Accrued expenses and other current liabilities

127,913,033

152,755,631

24,034,808

Income tax payable

2,095,273

87,804,489

13,815,295

Short-term borrowings

540,519,348

851,139,111

133,919,553

Total current liabilities

676,014,970

1,208,651,139

190,171,051

Long-term borrowings

713,232,869

874,472,455

137,590,858

Other non-current liabilities

-

1,400,000

220,278

Total liabilities

1,389,247,839

2,084,523,594

327,982,187

Shareholders' equity

Common shares

727,825

866,013

136,260

Additional paid-in capital

3,621,645,725

4,428,380,300

696,768,252

Accumulated other comprehensive income

1,144,629

54,567,052

8,585,665

Accumulated deficits

(1,257,126,506)

(548,441,785)

(86,292,684)

Total shareholders' equity

2,366,391,673

3,935,371,580

619,197,493

Total liabilities and shareholders' equity

3,755,639,512

6,019,895,174

947,179,680

 

eHi Car Services Limited Unaudited Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

2014

2015

2015

2014

2015

RMB

RMB

USD

RMB

RMB

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Net revenues:

Car rentals

155,511,911

300,700,336

47,312,659

423,064,011

779,070,657

Car services

64,603,059

93,079,632

14,645,294

181,589,190

250,087,845

Total net revenues

220,114,970

393,779,968

61,957,953

604,653,201

1,029,158,502

Vehicle operating expenses

(182,990,832)

(303,707,282)

(47,785,777)

(499,003,676)

(818,556,937)

Selling and marketing expenses

(8,104,945)

(15,694,495)

(2,469,396)

(24,131,658)

(39,853,995)

General and administrative expenses

(34,237,455)

(45,528,982)

(7,163,601)

(90,201,101)

(127,320,622)

Other operating income

193,721

5,475,372

861,504

12,875,416

7,862,113

Total operating expenses

(225,139,511)

(359,455,387)

(56,557,270)

(600,461,019)

(977,869,441)

Profit/(loss) from operations

(5,024,541)

34,324,581

5,400,683

4,192,182

51,289,061

Interest income

201,453

572,788

90,123

3,032,809

1,843,965

Interest expense

(21,424,821)

(31,010,270)

(4,879,204)

(52,378,641)

(86,985,661)

Gains from waiver of warrants

-

-

-

-

16,869,935

Gains from sale of cost method investment

-

-

-

-

803,059,728

Other income/(expense), net

(146,664)

2,980,438

468,947

(542,471)

9,280,208

Income/(loss) before income taxes

(26,394,573)

6,867,537

1,080,549

(45,696,121)

795,357,236

Provision for income taxes

(545,068)

(827,299)

(130,169)

(1,929,369)

(86,672,515)

Net income/(loss)

(26,939,641)

6,040,238

950,380

(47,625,490)

708,684,721

Accretion on Series A convertible redeemable preferred shares to redemption value

(19,702)

-

-

(59,088)

-

Accretion on Series B convertible redeemable preferred shares to redemption value

(979,249)

-

-

(2,928,413)

-

Accretion on Series C convertible redeemable preferred shares to redemption value

(21,899,343)

-

-

(63,469,688)

-

Accretion on Series D convertible redeemable preferred shares to redemption value

(14,949,715)

-

-

(43,274,527)

-

Accretion on Series E convertible redeemable preferred shares to redemption value

(29,774,326)

-

-

(81,056,418)

-

Accretion on Class A convertible redeemable preferred shares to redemption value

(6,493,511)

-

-

(19,080,808)

-

Net income/(loss) attributable to common shareholders

(101,055,487)

6,040,238

950,380

(257,494,432)

708,684,721

Net income/(loss)

(26,939,641)

6,040,238

950,380

(47,625,490)

708,684,721

Changes in cumulative foreign currency translation adjustment, net of tax of nil

(598,704)

53,567,007

8,428,317

140,448

53,422,423

Comprehensive income/(loss)

(27,538,345)

59,607,245

9,378,697

(47,485,042)

762,107,144

Weighted average number of common shares used in computing net income/(loss) per share

Basic

6,096,842

136,598,332

136,598,332

6,096,842

123,368,430

Diluted

6,096,842

138,760,460

138,760,460

6,096,842

125,568,477

Net income/(loss) per share attributable to common shareholders

Basic

(16.58)

0.04

0.01

(42.23)

5.74

Diluted

(16.58)

0.04

0.01

(42.23)

5.64

Earnings/(loss) per ADS*

Basic

(33.15)

0.09

0.01

(84.47)

11.49

Diluted

(33.15)

0.09

0.01

(84.47)

11.29

*Each ADS represents two Class A common shares

 

eHi Car Services Limited Reconciliation of GAAP and Non-GAAP Results

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

2014

2015

2015

2014

2015

RMB

RMB

USD

RMB

RMB

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Net Income/(Loss)

(26,939,641)

6,040,238

950,380

(47,625,490)

708,684,721

Add / (subtract):

Depreciation and amortization

74,668,223

124,517,370

19,591,757

196,615,912

336,762,058

Share-based compensation

6,899,965

3,498,581

550,472

9,161,273

9,665,155

Interest income

(201,453)

(572,788)

(90,123)

(3,032,809)

(1,843,965)

Interest expense

21,424,821

31,010,270

4,879,204

52,378,641

86,985,661

Provision for income taxes

545,068

827,299

130,169

1,929,369

86,672,515

Gains from waiver of warrants

-

-

-

-

(16,869,935)

Gains from sale of cost method investment

-

-

-

-

(803,059,728)

Adjusted EBITDA

76,396,983

165,320,970

26,011,859

209,426,896

406,996,482

SOURCE eHi Car Services Limited