Cango Inc. Reports Third Quarter 2019 Unaudited Financial Results and Issues Notice of Annual General Meeting
SHANGHAI, Nov. 14, 2019 /PRNewswire/ -- Cango, Inc. (NYSE: CANG) ("Cango" or the "Company"), a leading automotive transaction service platform in China, today announced its unaudited financial results for the third quarter of 2019.
Third Quarter 2019 Financial and Operational Highlights
-- Total revenues in the third quarter of 2019 were RMB351.3 million
(US$49.1 million), representing a year-over-year increase of 23.2% and
outperforming the high end of the Company's guidance by 8.1%.
-- After-market services facilitation revenues in the third quarter of 2019
were RMB40.7 million (US$5.7 million), continuing to serve as an
important driver for the Company's revenue growth.
-- Income from operations in the third quarter of 2019 increased by 17.8%
to RMB89.7 million (US$12.6 million) from RMB76.2 million in the
corresponding period of 2018.
-- Net income in the third quarter of 2019 increased by 14.9% to RMB122.1
million (US$17.1million) from RMB106.3 million in the corresponding
period of 2018. Non-GAAP net income in the third quarter of 2019
increased by 21.5% to RMB146.0 million (US$20.4 million) from RMB120.2
million in the corresponding period of 2018.
-- The amount of financing transactions the Company facilitated in the
third quarter of 2019 totaled RMB5,769.4 million (US$807.2 million). The
total outstanding balance of financing transactions the Company
facilitated was RMB36,500.5 million (US$5,106.6 million) as of September
30, 2019.
-- M1+ and M3+ overdue ratios for all financing transactions that remained
outstanding and were facilitated by the Company were 0.85% and 0.33%,
respectively, as of September 30, 2019, as compared to 0.72% and 0.30%,
respectively, as of June 30, 2019.
-- The number of dealers covered by the Company continued to grow
sequentially, reaching 49,396 as of September 30, 2019, compared to
48,367 as of June 30, 2019.
Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, "In the face of adverse market conditions and industry-wide challenges, we remained focused on executing our growth strategies in the third quarter. Accordingly, we further expanded our dealership coverage, optimized our service offerings, and leveraged our industry partnerships to deliver a robust financial performance. In particular, we continued to hone our core competencies in the auto financing market through our auto loan facilitation services. Our burgeoning dealership network and highly efficient direct coverage model also enabled us to enhance the operating capacities of our partnered dealers, further improving both our service quality and efficiency in turn.
Additionally, we focused on accelerating the development of our after-market services, which have become an integral component of our long-term growth strategy. Going forward, we expect the near-term headwinds and macroeconomic slowdown to persist throughout the first half of 2020. Nonetheless, we are confident in the strength of the foundation we have built through our leadership in the auto financing market as well as strategic partnerships with some of China's largest financial institutions and original equipment manufacturers (OEMs)."
Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, "In the face of difficult macroeconomic conditions and the contraction of China's auto market, we maintained our strong growth momentum to deliver solid financial results in the third quarter of 2019. Our total revenues increased by 23.2% year over year to RMB351.3 million in the third quarter. Our after-market services facilitation business continued to serve as an important growth engine, contributing RMB40.7 million or 11.6% of our total revenues in the third quarter. More importantly, we also expanded our profitability as a result of the increased economies of scale as well as the successful implementation of our cost control initiatives. Our income from operations and net income increased, by 17.8% and 14.9% to RMB89.7 million and RMB122.1 million, respectively, in the third quarter of 2019. Going forward, we plan to continue investing in the expansion of our geographic footprint, refinement of our service offerings, and development of cutting-edge technology. We will forge ahead and strengthen our ties with additional financial institutions and OEMs, further propelling our growth trajectory in spite of the challenging macroeconomic situation."
Third Quarter 2019 Financial Results
REVENUES
Total revenues in the third quarter of 2019 were RMB351.3 million (US$49.1 million), representing a 23.2% increase from RMB285.2 million in the corresponding period of 2018. Revenues from after-market services facilitation in the third quarter of 2019 were RMB40.7 million (US$5.7 million), compared to RMB39.0 million in the same period of last year.
OPERATING COST AND EXPENSES
Total operating cost and expenses in the third quarter of 2019 were RMB261.6 million (US$36.6 million), compared to RMB209.0 million in the corresponding period of 2018.
-- Cost of revenue in the third quarter of 2019 increased by 10.5% to
RMB125.4 million (US$17.5 million) from RMB113.5 million in the
corresponding period of 2018. As a percentage of total revenues, cost of
revenue decreased to 35.7% in the third quarter of 2019 from 39.8% in
the corresponding period of 2018. As a result, the Company's gross
profit margin expanded to 64.3% in the third quarter of 2019 from 60.2%
in the corresponding period of 2018, further demonstrating the increased
economies of scale as well as the effectiveness of the Company's cost
control initiatives.
-- Sales and marketing expenses in the third quarter of 2019 decreased by
1.9% to RMB47.6 million (US$6.7 million) from RMB48.5 million in the
corresponding period of 2018. As a percentage of total revenues, sales
and marketing expenses decreased to 13.5% in the third quarter of 2019
from 17.0% in the corresponding period of 2018. The decrease was a
result of the Company's efforts to maintain stable sales and marketing
expenses while growing its revenues concurrently.
-- General and administrative expenses were RMB52.3 million (US$7.3
million), or 14.9% of total revenues, in the third quarter of 2019,
compared to RMB40.7 million, or 14.3% of total revenues, in the
corresponding period of 2018. The increase was mainly due to higher
share-based compensation expenses in the third quarter of 2019.
-- Research and development expenses in the third quarter of 2019 increased
to RMB13.2 million (US$1.8 million) from RMB10.8 million in the
corresponding period of 2018. The increase was a result of increased
investments in the Company's research and development projects as it
grew its total revenues. As a percentage of total revenues, research and
development expenses remained stable at 3.8% in the third quarter of
2019 compared to the corresponding period of 2018.
INCOME FROM OPERATIONS
Income from operations was RMB89.7 million (US$12.6 million) in the third quarter of 2019, representing a year-over-year increase of 17.8% from RMB76.2 million in the corresponding period of 2018.
NET INCOME
Net income was RMB122.1 million (US$17.1 million) in the third quarter of 2019, representing a year-over-year increase of 14.9% from RMB106.3 million in the corresponding period of 2018. Non-GAAP adjusted net income increased by 21.5% to RMB146.0 million (US$20.4 million) from RMB120.2 million in the corresponding period of 2018. Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information, see "Use of Non-GAAP Financial Measure."
NET INCOME PER ADS
Basic and diluted net income per American Depositary Share (ADS) in the third quarter of 2019 were both RMB0.78 (US$0.11). Non-GAAP adjusted basic and diluted net income per ADS in the third quarter of 2019 were both RMB0.94 (US$0.13). Each ADS represents two of the Company's Class A ordinary shares.
BALANCE SHEET
As of September 30, 2019, the Company had cash and cash equivalents of RMB1,851.2 million (US$259.0 million), compared to RMB1,609.6 million as of June 30, 2019.
Business Outlook
For the fourth quarter of 2019, the Company expects total revenues to be between RMB380 million and RMB400 million. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.
Notice of Annual General Meeting
The Company will hold its annual general meeting of shareholders (the "AGM") at 18F, Building 2, Youyou Century Plaza, 428 Yang Gao Nan Lu, Shanghai, China, on December 23, 2019 at 10:00 A.M. Beijing Time. No proposal will be submitted to shareholders for approval at the AGM. Instead, the AGM will serve as an open forum for shareholders and holders of the Company's ADSs to discuss the Company's affairs with management. The chairman of the AGM will conduct and lead the AGM and may accept questions from shareholders at his sole and absolute discretion.
The board of directors of the Company has fixed the close of business on November 25, 2019 (Eastern Standard Time) as the record date (the "Record Date") for determining the shareholders entitled to receive notice of and attend the AGM or any adjournment or postponement thereof.
Holders of record of the ordinary shares, par value US$0.0001 per share, of the Company (the "Ordinary Shares"), at the close of business on the Record Date are entitled to attend the AGM and any adjournment or postponement thereof in person.
The notice of the annual general meeting is available on the Company's website at ir.cangoonline.com. The Company filed its annual report on Form 20-F for the fiscal year ended December 31, 2018, with the U.S. Securities and Exchange Commission (the "SEC") April 25, 2019, U.S. Eastern Time. The annual report can be accessed on the Company's investor relations website at ir.cangoonline.com or the SEC's website at www.sec.gov. The Company will also provide a hard copy of its annual report containing its audited consolidated financial statements, free of charge, to its shareholders and American Depositary Share holders upon request.
Conference Call Information
The Company's management will hold a conference call on Thursday, November 14, 2019, at 8:00 P.M. Eastern Time or Friday, November 15, 2019, at 9:00 A.M. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:
International: +1-412-902-4272
United States Toll Free: +1-888-346-8982
Mainland China Toll Free: 4001-201-203
Hong Kong, China Toll Free:
800-905-945
Conference ID:
Cango Inc.
The replay will be accessible through November 21, 2019, by dialing the following numbers:
International:
+1-412-317-0088
United States Toll Free:
+1-877-344-7529
Access Code: 10136898
A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.cangoonline.com/.
About Cango, Inc.
Cango Inc. (NYSE: CANG) is a leading automotive transaction service platform in China connecting dealers, financial institutions, car buyers, and other industry participants. Founded in 2010 by a group of pioneers in China's automotive finance industry, the Company is headquartered in Shanghai and engages car buyers through a nationwide dealer network. The Company's services primarily consist of automotive financing facilitation, automotive transaction facilitation, and after-market services facilitation. By utilizing its competitive advantages in technology, data insights, and cloud-based infrastructure, Cango is able to connect its platform participants while bringing them a premium user experience. Cango's platform model puts it in a unique position to add value for its platform participants and business partners as the automotive and mobility markets in China continue to grow and evolve. For more information, please visit: www.cangoonline.com.
Definition of Overdue Ratios
The Company defines "M1+ overdue ratio" as (i) exposure at risk relating to financing transactions for which any installment payment is 30 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.
The Company defines "M3+ overdue ratio" as (i) exposure at risk relating to financing transactions for which any installment payment is 90 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.
Use of Non-GAAP Financial Measure
In evaluating the business, the Company considers and uses Non-GAAP adjusted net income, a non-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines Non-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income enables the management to assess the Company's operating results without considering the impact of share-based compensation expenses, which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors' assessment of its operating performance.
Non-GAAP adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using Non-GAAP adjusted net income is that it does not reflect all items of expense that affect the Company's operations. Share-based compensation expenses have been and may continue to be incurred in the business and are not reflected in the presentation of Non-GAAP adjusted net income. Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.
The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.
Reconciliations of Cango's non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.1477 to US$1.00, the noon buying rate in effect on September 30, 2019, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States 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" section and quotations from management in this announcement, contain forward-looking statements. Cango may also make written or oral forward-looking statements in its periodic reports 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. Statements that are not historical facts, including statements about Cango'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: Cango's goal and strategies; Cango's expansion plans; Cango's future business development, financial condition and results of operations; Cango's expectations regarding demand for, and market acceptance of, its solutions and services; Cango's expectations regarding keeping and strengthening its relationships with dealers, financial institutions, car buyers and other platform participants; general economic and business conditions; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Cango's filings with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Cango does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Investor Relations Contact
Caesar Cao
Cango Inc.
Tel: +86 21 3183 5088 ext.5521
Email: ir@cangoonline.com
Jack Wang
ICR Inc.
Tel: +1 (646) 405-5056
Email: ir@cangoonline.com
CANGO INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in Renminbi ("RMB") and US dollar ("US$"), except for number of shares and per share data?
As of December 31, As of September 30,
2018 2019
RMB
RMB
US$
ASSETS:
Current assets:
Cash and cash equivalents 2,912,901,189 1,851,224,670 258,995,855
Restricted Cash 298,900,155 610,535,955 85,417,121
Short-term investments 265,869,717 461,521,579 64,569,243
Accounts receivable, net 86,513,830 173,891,886 24,328,369
Financing receivable, net 5,420,617 7,747,866 1,083,966
Short-term loan principal, net 17,335,171 2,425,280
Short-term finance leasing receivable, net 1,123,703,618 1,457,631,421 203,930,134
Prepaid expenses and other current assets 61,272,518 95,901,127 13,417,061
Total current assets 4,754,581,644 4,675,789,675 654,167,029
Non-current assets:
Restricted Cash 668,627,618 812,822,983 113,718,117
Long-term investments 292,099,059 573,024,376 80,169,058
Equity method investments 1,448,416
Goodwill 145,063,857 145,063,857 20,295,180
Property and equipment, net 18,286,218 15,607,057 2,183,508
Intangible assets 1,693,407 34,163,538 4,779,655
Deferred tax assets 100,194,993 86,202,225 12,060,135
Long-term finance leasing receivable, net 1,282,457,409 1,517,138,233 212,255,443
Other non-current assets 36,687,583 9,128,673 1,277,148
Total non-current assets 2,546,558,560 3,193,150,942 446,738,244
TOTAL ASSETS 7,301,140,204 7,868,940,617 1,100,905,273
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 660,000,000 1,110,000,000 155,294,710
Long-term debts-current 467,194,051 736,392,574 103,025,109
Accrued expenses and other current liabilities 211,458,501 177,268,347 24,800,754
Risk assurance liabilities 173,210,363 202,952,134 28,394,048
Income tax payable 53,517,717 39,803,161 5,568,667
Total current liabilities 1,565,380,632 2,266,416,216 317,083,288
Non-current liabilities:
Long-term borrowings 472,793,340 230,173,405 32,202,443
Other non-current liabilities 7,599,404
Total non-current liabilities 480,392,744 230,173,405 32,202,443
Total liabilities 2,045,773,376 2,496,589,621 349,285,731
Shareholders' equity
Ordinary shares 204,260 204,260 28,577
Treasury shares (20,638,881) (2,887,486)
Additional paid-in capital 4,444,078,463 4,505,539,185 630,348,110
Accumulated other comprehensive income 109,452,996 152,281,596 21,304,979
Accumulated retained earnings 698,036,438 729,406,743 102,047,756
Total Cango Inc.'s equity 5,251,772,157 5,366,792,903 750,841,936
Non-controlling interests 3,594,671 5,558,093 777,606
Total shareholders' equity 5,255,366,828 5,372,350,996 751,619,542
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,301,140,204 7,868,940,617 1,100,905,273
CANGO INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(Amounts in Renminbi ("RMB") and US dollar ("US$"), except for number of shares and per share data)
Three months ended September 30, Nine months ended September 30,
2018 2019 2018 2019
RMB
RMB
US$
RMB
RMB
US$
Revenues 285,171,140 351,290,100 49,147,292 770,278,151 1,039,252,359 145,396,751
Operating cost and expenses:
Cost of revenue 113,539,426 125,416,378 17,546,396 275,576,495 382,046,832 53,450,317
Sales and marketing 48,494,188 47,576,811 6,656,241 120,292,212 137,627,725 19,254,827
General and administrative 40,703,732 52,318,827 7,319,673 98,798,322 170,500,860 23,853,947
Research and development 10,833,449 13,181,083 1,844,101 26,766,990 38,774,937 5,424,813
Net (gain) loss on risk assurance liabilities (14,055,654) 7,489,058 1,047,758 (15,239,157) 27,719,897 3,878,156
Provision for financing receivables 9,464,769 15,577,884 2,179,426 22,928,882 39,273,822 5,494,610
Total operating cost and expenses 208,979,910 261,560,041 36,593,595 529,123,744 795,944,073 111,356,670
Income from operations 76,191,230 89,730,059 12,553,697 241,154,407 243,308,286 34,040,081
Interest and investment Income, net 15,045,281 41,110,413 5,751,558 41,368,719 82,699,347 11,570,064
Income (Loss) from equity method investments 43,795,483 42,399,341 (926,205) (129,581)
Interest expense (4,757,534) (3,288,553) (460,085) (14,259,589) (13,295,127) (1,860,057)
Foreign exchange (loss) gain, net (6,739,620) 1,964,457 274,838 682,896 2,087,258 292,018
Other income 11,925,506 17,304,702 2,421,017 32,971,660 38,897,980 5,442,028
Other expenses 6,669,254 (300,706) (42,070) (528,669) (1,485,366) (207,810)
Net income before income taxes 142,129,600 146,520,372 20,498,955 343,788,765 351,286,173 49,146,743
Income tax expenses (35,866,227) (24,388,408) (3,412,064) (88,882,439) (60,196,464) (8,421,795)
Net income 106,263,373 122,131,964 17,086,891 254,906,326 291,089,709 40,724,948
Less: Net incomeattributable to the noncontrolling 3,447,788 4,491,935 628,445 7,546,938 5,692,189 796,367
interest shareholders
Net income attributable to Cango Inc.'s shareholders 102,815,585 117,640,029 16,458,446 247,359,388 285,397,520 39,928,581
Accretion of Series C Preferred Shares (6,991,289)
Net income attributable to Cango Inc.'s ordinary 109,806,874 117,640,029 16,458,446 247,359,388 285,397,520 39,928,581
shareholders
Net income per ADS(Note 1):
Basic 0.73 0.78 0.11 1.82 1.89 0.26
Diluted 0.73 0.78 0.11 1.80 1.89 0.26
ADSs used in net income per ADS computation
(Note 1):
Basic 150,049,511 151,057,825 151,057,825 135,592,860 151,287,968 151,287,968
Diluted 150,049,511 151,057,825 151,057,825 137,062,696 151,287,968 151,287,968
Other comprehensive income, net of tax
Unrealized gain (loss) on available-for-sale securities 11,384 167,515 (146,801) (20,538)
Reclassification of losses to net income (276,843) (38,732)
Foreign currency translation adjustment 63,386,168 53,891,387 7,539,682 107,277,023 43,252,244 6,051,211
Total comprehensive income 169,660,925 176,023,351 24,626,573 362,350,864 333,918,309 46,716,889
Total comprehensive income attributable to Cango 166,213,137 171,531,416 23,998,128 354,803,926 328,226,120 45,920,522
Inc.'s shareholders
Note 1: Each ADS represents two ordinary shares.
CANGO INC.
RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS
(Amounts in Renminbi ("RMB") and US dollar ("US$"), except for number of shares and per share data
Three months ended September 30, Nine months ended September 30,
2018 2019 2018 2019
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
RMB
RMB
US$
RMB
RMB
US$
Net income 106,263,373 122,131,964 17,086,890 254,906,326 291,089,709 40,724,948
Add: Share-based compensation expenses 13,971,837 23,910,159 3,345,154 19,439,077 61,460,722 8,598,671
Cost of revenue 572,846 980,317 137,151 797,003 2,519,891 352,546
Sales and marketing 2,976,001 5,092,863 712,518 4,140,523 13,091,132 1,831,517
General and administrative 9,696,453 16,593,648 2,321,537 13,490,717 42,653,735 5,967,477
Research and development 726,537 1,243,330 173,948 1,010,834 3,195,963 447,132
Non-GAAP adjusted net income 120,235,210 146,042,123 20,432,044 274,345,403 352,550,431 49,323,619
Less: Net income attributable to the noncontrolling interest 3,447,788 4,491,935 628,445 7,546,938 5,692,189 796,367
shareholders
Net income attributable to Cango Inc.'s shareholders 116,787,422 141,550,188 19,803,599 266,798,465 346,858,242 48,527,252
Accretion of Series C Preferred Shares (6,991,289)
Net income attributable to Cango Inc.'s ordinary shareholders 123,778,711 141,550,188 19,803,599 266,798,465 346,858,242 48,527,252
Non-GAAP adjusted net income per ADS-basic (Note 1) 0.82 0.94 0.13 1.97 2.29 0.32
Non-GAAP adjusted net income per ADS-diluted (Note 1) 0.82 0.94 0.13 1.95 2.29 0.32
Weighted average ADS outstanding-basic 150,049,511 151,057,825 151,057,825 135,592,860 151,287,968 151,287,968
Weighted average ADS outstanding-diluted 150,049,511 151,057,825 151,057,825 137,062,696 151,287,968 151,287,968
Note 1: Each ADS represents two ordinary shares.
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SOURCE Cango Inc.
