Fincera Reports 2015 Third Quarter and Nine Month Financial Results

SHIJIAZHUANG, CHINA–(Marketwired – Dec 30, 2015) – Fincera Inc. (“Fincera” or the “Company”) (OTCQB: AUTCF), a leading provider of web-based financing and ecommerce services for China’s transportation and automobile industries, today reported financial results for the third quarter and nine months ended September 30, 2015.
Q3 2015 Operational Highlights

The Company began to wind down its legacy truck-leasing business in August 2015, and expects to continue servicing and collecting payments on existing commercial vehicle leases until all obligations related to the individual leases are met.
The Company’s Internet-based business segment, which was launched in November 2014, continues to grow: the electronic payments platform CeraPay was used to make payment transactions totaling over RMB1.1 billion during the month of September 2015. The online marketplace lending platform CeraVest has originated over RMB2 billion in loans since its launch in November 2014 and had a loan portfolio of approximately RMB1.6 billion at September 30, 2015.

Q3 2015 Financial Highlights (comparisons are year over year)

Total revenues of $30.2 million, compared to $179.7 million, as a result of the decrease in commercial vehicle leases initiated during the period
Gross profit of $22.1 million, or 73.0% of total revenues, compared to $21.4 million, or 11.9% of total revenues
Net loss of $676,000, or $0.03 per diluted share, compared to net income of $3.0 million, or $0.13 per diluted share
Adjusted EBITDA of $7.7 million, compared to $12.2 million

Nine Months 2015 Financial Highlights (comparisons are year over year)

Total revenues of $178.0 million, compared to $591.3 million, as a result of the decrease in commercial vehicle leases initiated during the period
Gross profit of $62.9 million, or 35.3% of total revenues, compared to $65.8 million, or 11.1% of total revenues
Net income of $5.0 million, or $0.21 per diluted share, a 4.7% increase from $4.8 million, or $0.20 per diluted share, primarily as a result of the one-time litigation expenses incurred to settle the SEC lawsuit in the first quarter of 2014
Adjusted EBITDA of $28.8 million, compared to $34.4 million

Management Comments
Mr. Yong Hui Li, Chairman and CEO of Fincera, stated, “The 2015 third quarter marked a critical juncture in our Company’s history as we made the decision to begin winding down our legacy truck-leasing business. At the same time, I am very pleased that our CeraPay and CeraVest products continue to gain traction and have already begun to make significant contributions to our Company financially. Despite our revenues decreasing during this period, the much higher profit margins of our new Internet-based businesses, compared to that of our legacy truck-leasing business, are already quite evident. For example, although our third quarter revenues decreased by over 80% from the prior-year period, primarily as a result of the winding down of our legacy truck-leasing business, our gross profit actually posted a slight increase. In leveraging our brand and experience in China’s transportation industry and extensive geographic coverage, we remain confident in the long-term growth potential of these new businesses, which will continue to lead to higher margins and profitability. On October 15, we also launched TruShip (www.che001.com), our new ecommerce platform for merchants, such as dealerships and leasing companies, in the trucking industry to establish an online presence. The TruShip platform is a natural extension of our existing CeraPay and CeraVest offerings as Fincera provides CeraVest-financing incentives to merchants that use TruShip to transact and collect payments online using CeraPay. We have been pleased thus far with TruShip’s initial reception and expect to launch additional features on the platform in the near future. We continue looking to explore ways in which we can help small businesses in the transportation industry take advantage of technology to thrive in today’s digital age.”
Internet-based Business for the Transportation Industry
From its inception in November 2014 through September 30, 2015, the Company’s small business lending platform CeraVest (https://www.qingyidai.com/) has originated over RMB2 billion in loans. CeraVest had a loan portfolio of approximately RMB1.6 billion at September 30, 2015. Fincera created CeraVest as an online lending marketplace that provides short-term operating capital for small businesses in the transportation industry. CeraVest is also a platform through which Fincera can originate loans and then sell these loans to the public. Currently, individuals may invest on the CeraVest platform and earn an annual interest rate of approximately 8.6%. Fincera earns origination fees on CeraVest loans.
Also launched in November 2014, the Company’s electronic payments platform CeraPay (https://www.dianfubao.com/) was used to make payment transactions totaling over RMB1.1 billion during the month of September 2015. Fincera developed CeraPay as a convenient platform through which customers could make electronic payments and the Company could make credit advances to its customers, allowing customers to pay for their everyday truck-operating needs at participating merchants within the CeraPay network. Fincera earns transaction fees through its CeraPay platform. The CeraPay network had over 28,000 active users (individuals and merchants) during the month of September. The Company continues to actively market CeraPay to potential customers and merchants in the transportation industry in an effort to increase the user base.
Fincera’s Internet-based business segment generated revenues of $13.1 million in the third quarter ended September 30, 2015, and $24.7 million in the nine months ended September 30, 2015. This business did not exist in the prior-year periods. Quarter over quarter, revenues from Fincera’s Internet-based business segment increased 65.8% from $7.9 million in the second quarter ended June 30, 2015.
Legacy Truck-Leasing Business
The Company leased 160 commercial vehicles in the third quarter of 2015, compared to 3,409 in the prior-year period. The year-over-year decrease in commercial vehicle leases initiated was largely due to the Company winding down its legacy truck-leasing business. At September 30, 2015, the Company had 15,017 leased vehicles under its sales-type leasing program.
The Company repossessed 112 vehicles whose lessees had defaulted on installment payments, sold 123 repossessed vehicles (repossessed in the quarter or in prior periods), and recognized 1 lost vehicle during the quarter ended September 30, 2015. In comparison, there were 91 vehicles repossessed, 110 vehicles sold and 7 lost vehicles recorded in the quarter ended September 30, 2014. 
Specialty Finance Store Network
During the 2015 third quarter, the Company closed two service centers located in Hebei and Shandong provinces. As of September 30, 2015, Fincera operated 553 centers in 26 provinces, municipalities, and autonomous regions in China. The Company operates service centers in the Anhui, Beijing, Chongqing, Fujian, Gansu, Guangdong, Guangxi, Guizhou, Hebei, Henan, Hubei, Hunan, Inner Mongolia, Jiangsu, Jiangxi, Jilin, Liaoning, Ningxia, Shaanxi, Shandong, Shanghai, Shanxi, Sichuan, Tianjin, Yunnan, and Zhejiang areas of China. In the second half of 2015, the focus of these locations has shifted to promoting the Company’s Internet-based financing businesses. The Company anticipates these service centers will be crucial to the development of its Internet-based businesses to aid in new user acquisitions.
Financial Review
2015 Third Quarter
Revenues

Total revenues for the third quarter ended September 30, 2015, were $30.2 million, compared to $179.7 million in the prior-year period.

(in thousands)
Three months ended
September 30, 2015
 
Three months ended
September 30, 2014   
 
 

 
Amount
% of Revenue
 
Amount
% of Revenue
 
YoY % Change

Commercial vehicles $
7,560
25.0
%
 
$
159,795
88.9
%
 
(95.3
)%

Finance
 
9,189
30.4
%
 
 
14,572
8.1
%
 
(36.9
)%

Insurance and service
 
11,013
36.4
%
 
 
3,730
2.1
%
 
195.3
%

Property lease and management
 
2,486
8.2
%
 
 
1,575
0.9
%
 
57.8
%

Total revenues
$
30,248
100.0
%
 
$
179,672
100.0
%
 
(83.2
)%

Commercial vehicle revenue decreased to $7.6 million, compared to $159.8 million in the prior-year period, primarily as a result of a decrease in new commercial vehicle leases following the Company’s decision to begin winding down the legacy truck-leasing business in August 2015. Fincera plans to continue servicing and collecting payments on existing commercial vehicle leases until all obligations related to the individual leases are met. The decrease in commercial vehicles revenue was slightly offset by an increase in average price per vehicle, from $46,900 per vehicle in the 2014 third quarter to $47,300 per vehicle in the 2015 third quarter.
Finance revenue decreased to $9.2 million, or 30.4% of total revenues, during the third quarter of 2015, from $14.6 million in the prior-year period, as a result of the decrease in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect. This was partially offset by an increase in finance revenue from CeraVest as this business did not exist in the prior-year period.
Insurance and service revenue increased 195.3% to $11.0 million, from $3.7 million in the prior-year period, primarily as a result of an increase in CeraPay revenues, which was partially offset by a decrease in insurance commissions due to a decrease in the number of trucks leased directly from Fincera’s stores during the period as compared to those leased through peer stores for which it does not sell the truck insurance.
Property lease and management revenue from the Company’s office-leasing business totaled $2.5 million, compared to $1.6 million in the prior-year period. This business commenced in April 2013.

Gross Profit/Margin

Gross profit increased 3.4% to $22.1 million in the three months ended September 30, 2015, from $21.4 million in the prior-year period.
Gross margin increased to 73.0% for the three months ended September 30, 2015, from 11.9% in the prior-year period, primarily due to increased contributions from the Internet-based businesses CeraVest and CeraPay. In addition, there were a higher number of leases outstanding and lower number of new leases initiated during the period, which resulted in a higher proportion of monthly amortized finance income. An increase in property lease and management revenue also contributed to the increase in gross margin.

Net Income/Loss

Net loss was $676,000 million, or $0.03 per diluted share based on 24.0 million diluted weighted average shares outstanding, in the three months ended September 30, 2015, compared to net income of $3.0 million, or $0.13 per share based on 23.7 million diluted weighted average shares outstanding, in the three months ended September 30, 2014.

Adjusted EBITDA

Adjusted EBITDA, which is EBITDA excluding stock-based compensation and the previously mentioned one-time litigation expense, was $7.7 million for the quarter ended September 30, 2015, compared to $12.2 million in the prior-year quarter.

Nine Months 2015
Revenues

Total revenues for the nine months ended September 30, 2015, were $178.0 million, compared to $591.3 million in the prior-year period.

(in thousands)
 
Nine months ended
September 30, 2015
 
  Nine months ended
September 30, 2014 
 

 
 
Amount
 
% of Revenue
 
Amount
 
% of Revenue
 
YoY % Change

Commercial vehicles
 
$
115,076
 
64.7
%
 
$
533,430
 
90.2
%
 
(78.4
)%

Finance
 
 
31,916
 
17.9
%
 
 
41,234
 
7.0
%
 
(22.6
)%

Insurance and service
 
 
24,005
 
13.5
%
 
 
13,669
 
2.3
%
 
75.6
%

Property lease and management
 
 
6,977
 
3.9
%
 
 
2,977
 
0.5
%
 
134.4
%

Total revenues
 
$
177,974
 
100.0
%
  $
591,310
 
100.0
%
 
(69.9
)%

Commercial vehicle revenues decreased to $115.1 million from $533.4 million in the prior-year period, primarily as a result of the decrease in new leases initiated during the first nine months of 2015. Fincera’s legacy commercial vehicle sales, servicing, leasing and support business recorded 2,567 new leases in the nine months ended September 30, 2015, compared to 10,828 new leases in the nine months ended September 30, 2014. A decrease in average price per vehicle, from $49,300 per vehicle in the first nine months of 2014 to $44,800 per vehicle in the first nine months of 2015, also contributed to the decrease in commercial vehicle revenues.
Finance revenues decreased to $31.9 million, or 17.9% of total revenues, during the nine months ended September 30, 2015, compared to $41.2 million in the prior-year period, as a result of the decrease in the total outstanding number of commercial vehicle sales, servicing, leasing and support contracts in effect.
The Company’s insurance and service revenue increased 75.6% to $24.0 million during the first nine months of 2015 from $13.7 million in the first nine months of 2014.
Property lease and management revenue from the Company’s office-leasing business totaled $7.0 million during the period, compared to $3.0 million in the prior-year period. This business commenced in April 2013.

Gross Profit/Margin

Gross profit for the nine months ended September 30, 2015, was $62.9 million, representing gross margin of 35.3%, an increase from gross margin of 11.1% in the first nine months of 2014, which is primarily due to reasons stated in the 2015 third quarter financial review.

Net Income

Net income for the nine months ended September 30, 2015, increased 4.7% to $5.0 million, or $0.21 per share based on 24.0 million diluted weighted average shares outstanding, from $4.8 million, or $0.20 per share based on 23.8 million diluted weighted average shares outstanding, in the prior-year period. The increase in net income was primarily due to a one-time $4.35 million litigation expense incurred to settle the SEC lawsuit in the 2014 first quarter.

Adjusted EBITDA

Adjusted EBITDA, which is EBITDA excluding stock-based compensation and the previously mentioned one-time litigation expense, for the nine months ended September 30, 2015, was $28.8 million, compared to $34.4 million in the prior-year period.

See “Non-GAAP Financial Measures” below for a description of Adjusted EBITDA.
Balance Sheet Highlights
At September 30, 2015, Fincera’s cash and cash equivalents (not including restricted cash) were $156.0 million, working capital was $172.0 million, total debt was $570.1 million (including due to affiliates and accounts payable, related parties), and stockholders’ equity was $257.9 million, compared to $26.0 million, $141.5 million, $327.5 million, and $263.1 million, respectively, at December 31, 2014. 
About Fincera Inc.
Founded in 2005, Fincera Inc. (OTCQB: AUTCF) provides innovative web-based financing and ecommerce services for China’s transportation and automobile industries. The Company also operates over 550 finance and service centers in 26 provinces, municipalities, and autonomous regions across China. Fincera’s current service offerings include a B2B payment network and a web-based small business lending platform. The Company’s website is http://www.fincera.net. Fincera trades on the OTCQB venture stage marketplace for early stage and developing U.S. and international companies. OTCQB companies are current in their reporting and undergo an annual verification and management certification process.
Safe Harbor Statement
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 about the Company. Forward-looking statements are statements that are not historical facts. Such forward-looking statements, based upon the current beliefs and expectations of the Company’s management, are subject to risks and uncertainties, which could cause actual results to differ from the forward-looking statements. The following factors, among others, could cause actual results to meaningfully differ from those set forth in the forward-looking statements:

Changing principles of generally accepted accounting principles;
Continued compliance with government regulations;
Legislation or regulatory environments, requirements or changes adversely affecting the transportation or financial services industry in China;
Fluctuations in consumer demand in the transportation industry;
Management of rapid growth;
General economic conditions;
Changes in government policy;
China’s overall economic conditions and local market economic conditions;
The Company’s ability to expand through strategic acquisitions;
The Company’s business strategy and plans, including whether its new financial services products are accepted by consumers;
The results of future financing efforts; and
Geopolitical events.

The information set forth herein should be read in light of such risks. The Company does not assume any obligation to update the information contained in this press release.

 

FINCERA INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME (UNAUDITED)

(in thousands except share and per share data)

 

 
 
Three months ended September 30,
 
 
Nine months ended September 30,
 

 
 
2015
 
 
2014
 
 
2015
 
 
2014
 

 
 
 
 
 
 
 
 
 
 
 
 
 

Revenues  
 
 
 
 
 
 
 
 
 
 
 

 
Commercial vehicles
 
$
7,560
 
 
$
159,795
 
 
$
115,076
 
 
$
533,430
 

 
Finance
 
 
9,189
 
 
 
14,572
 
 
 
31,916
 
 
 
41,234
 

 
Insurance and service
 
 
11,013
 
 
 
3,730
 
 
 
24,005
 
 
 
13,669
 

 
Property lease and management
 
 
2,486
 
 
 
1,575
 
 
 
6,977
 
 
 
2,977
 

 
 
Total revenues
 
 
30,248
 
 
 
179,672
 
 
 
177,974
 
 
 
591,310
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Cost of sales
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 

 
Commercial vehicles
 
 

 
 
 
14,010
 
 
 
4,038
 
 
 
32,096
 

 
Commercial vehicles, related parties
 
 
6,617
 
 
 
143,189
 
 
 
108,096
 
 
 
489,825
 

 
Insurance and service
 
 
869
 
 
 
433
 
 
 
1,166
 
 
 
1,702
 

 
Property lease and management
 
 
673
 
 
 
674
 
 
 
1,799
 
 
 
1,919
 

 
 
Total cost of sales
 
 
8,159
 
 
 
158,306
 
 
 
115,099
 
 
 
525,542
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Gross profit
 
 
22,089
 
 
 
21,366
   
 
62,875
 
 
 
65,768
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Operating (income) expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Selling and marketing
 
 
2,849
 
 
 
2,599
 
 
 
8,304
 
 
 
8,026
 

 
General and administrative
 
 
15,402
 
 
 
11,227
 
 
 
39,917
 
 
 
35,833
 

 
Litigation expense
 
 

 
 
 

 
 
 

 
 
 
4,350
 

 
Interest expense
 
 
5,745
 
 
 
3,034
 
 
 
13,703
 
 
 
8,830
 

 
Interest expense, related parties
 
 
2,564
 
 
 
3,505
 
 
 
5,510
 
 
 
8,154
 

  Other income, net
 
 
(2,979
)
 
 
(3,429
)
 
 
(11,265
)
 
 
(8,376
)

 
 
Total operating expenses
 
 
23,581
 
 
 
16,936
 
 
 
56,169
 
 
 
56,817
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Loss) income from operations
 
 
(1,492
)
 
 
4,430
 
 
 
6,706
 
 
 
8,951
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Other income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Interest income
 
 
256
 
 
 
55
 
 
 
298
 
 
 
127  

 
 
Other income
 
 
256
 
 
 
55
 
 
 
298
 
 
 
127
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(Loss) income before income taxes
 
 
(1,236
)
 
 
4,485
 
 
 
7,004
 
 
 
9,078
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Income tax (benefit) provision
 
 
(560
)
 
 
1,508
 
 
 
2,002
 
 
 
4,301
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net (loss) income
 
 
(676
)
 
 
2,977
 
 
 
5,002
 
 
 
4,777
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Foreign currency translation adjustment
 
 
(10,531
)
 
 
14
 
 
 
(10,271
)
 
 
(2,656
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Comprehensive (loss) income
 
$
(11,207
)
 
$
2,991
 
 
$
(5,269
)
 
$
2,121
 

(Loss) earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Basic
 
$
(0.03
)
 
$
0.13
 
$
0.21
 
$
0.20

 
Diluted
 
$
(0.03
)
 
$
0.13
 
$
0.21
 
$
0.20

 
 
 
 
 
 
 
 
   
 
 
 
 

Weighted average shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Basic
 
 
23,549,644
 
 
 
23,549,644
 
 
23,549,644
 
 
23,548,933

 
Diluted
 
 
24,012,958
 
 
 
23,703,997
 
 
24,046,939
 
 
23,787,245

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

FINCERA INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except share and per share data)

 

 
 
September 30,
 
December 31,

 
 
2015
 
2014

 
 
(unaudited)
 
 

ASSETS
 
 
 
 

Current assets
 
 
 
 

 
Cash and cash equivalents
 
$
156,000
 
$
26,027

 
Restricted cash
 
 
160
 
 
988

 
Accounts receivable, net of provision for doubtful debts of $36,396 and $29,074 as of September 30, 2015 and December 31, 2014, respectively
 
 
52,584
 
 
28,915

 
Inventories
 
 
5,592
 
 
4,746

 
Deposits for inventories  
 
894
 
 

 
Prepaid expenses and other current assets
 
 
5,079
 
 
5,520

 
Prepaid expenses, related parties
 
 
24
 
 
50

 
Loans receivable, net
 
 
227,096
 
 
19,105

 
Other financing receivables, net
 
 
161,031
 
 
29,401

 
Other financing receivables, net, related party
 
 

 
 
782

 
Short-term net investment in sales-type leases
 
 
16,561
 
 
56,975

 
Current maturities of long-term net investment in direct financing and sales-type leases, net of provision for doubtful accounts of nil and $22 as of September 30, 2015 and December 31, 2014, respectively
 
 
111,657
 
 
285,983

 
Deferred income tax assets
 
 
11,410
 
 
8,751

 
 
Total current assets
 
 
748,088
 
 
467,243

 
 
 
 
 
 
 

Noncurrent assets
 
 
 
 
 
 

Property, equipment and leasehold improvements, net
 
 
74,990
 
 
80,152

Deferred income tax assets
 
 
6,191
 
 
6,080

Long-term net investment in direct financing and sales-type leases, net of current maturities
 
 
8,550
 
 
59,170

 
 
 
 
 
 
 

Total assets
 
$
837,819  
$
612,645

 
 
 
 
 
 
 

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 

Current liabilities
 
 
 
 
 
 

 
Short-term borrowings (including short-term borrowings of the consolidated variable interest entities (“VIEs”) without recourse to Fincera of $78,600 and $138,912 as of September 30, 2015 and December 31, 2014, respectively)
 
$
94,320
 
$
155,342

 
Note financing payables
 
 
131,111
 
 

 
Note financing payables, related parties
 
 
2,801
 
 

 
Short-term bonds payable
 
 
99,580
 
 

 
Long-term borrowings, current portion
 
 
14,148
 
 
2,451

 
Long-term payables, current portion
 
 

 
 
899

 
Accounts payable (including accounts payable of the consolidated VIEs without recourse to Fincera of $92,559 and $384 as of September 30, 2015 and December 31, 2014, respectively)
 
 
23,630
 
 
5,692

 
Accounts payable, related parties (including accounts payable, related parties of the consolidated VIEs without recourse to Fincera of $140,030 and $106,525 as of September 30, 2015 and December 31, 2014, respectively)
 
 
140,464
 
 
108,211

 
Other payables and accrued liabilities (including other payables and accrued liabilities of the consolidated VIEs without recourse to Fincera of $13,532 and $13,206 as of September 30, 2015 and December 31, 2014, respectively)
 
 
40,383
 
 
20,121

 
Due to affiliates (including due to affiliates of the consolidated VIEs without recourse to Fincera of $1,053 and $1,002 as of September 30, 2015 and December 31, 2014, respectively)
 
 
19,758
 
 
25,644

 
Customer deposits (including customer deposits of the consolidated VIEs without recourse to Fincera of $2826 and $460 as of September 30, 2015 and December 31, 2014, respectively)
 
 
7,821
 
 
4,912

 
Income tax payable (including income tax payable of the consolidated VIEs without recourse to Fincera of $848 and $1,508 as of September 30, 2015 and December 31, 2014, respectively)
 
 
2,032
   
2,511

 
 
 
 
 
 
 

 

 

FINCERA INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS – Continued

(in thousands except share and per share data)

 

 
 
September 30,
 
 
December 31,
 

 
 
2015
 
 
2014
 

 
 
(unaudited)
 
 
 
 

 
 
 
 
 
 
 

Total current liabilities
 
 
576,048
 
 
 
325,783
 

 
 
 
 
 
 
 
 
 

Noncurrent liabilities
 
 
 
 
 
 
 
 

Long-term borrowings
 
 

 
 
 
14,708
 

Long-term payables (including long-term payables of the consolidated VIEs without recourse to Fincera of $3,859 and $9,102 as of September 30, 2015 and December 31, 2014, respectively)
 
 
3,859
 
 
 
9,102
 

 
 
 
 
 
 
 
 
 

Total liabilities
 
 
579,907
 
 
 
349,593
 

 
 
 
 
 
 
 
   

Commitments and Contingencies
 
 

 
 
 

 

 
 
 
 
 
 
 
 
 

Stockholders’ equity
 
 
 
 
 
 
 
 

 
Preferred shares, $0.001 par value authorized – 1,000,000 shares; issued – none
 
 

 
 
 

 

 
Ordinary shares – $0.001 par value authorized – 1,000,000,000 shares; issued and outstanding – 23,549,644 shares at September 30, 2015 issued and outstanding – 23,549,644 shares at December 31, 2014
 
 
24
 
 
 
24
 

 
Additional paid-in capital
 
 
329,013
 
 
 
328,884
 

 
Statutory reserves
 
 
26,222
 
 
 
26,222
 

 
Accumulated losses
 
 
(117,716
)
 
 
(122,718
)

 
Accumulated other comprehensive income
 
 
20,369
 
 
 
30,640
 

 
Total stockholders’ equity
 
 
257,912
 
 
 
263,052
 

 
 
 
 
 
 
 
 
 

 
 
Total liabilities and stockholders’ equity
 
$
837,819
 
 
$
612,645
 

 

 

 

FINCERA INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

 

 
 
Nine Months Ended September 30,
 

 
 
2015
 
 
2014
 

 
 
 
 
 
 
 

Net cash (used in) operating activities
 
$
(75,433
)
 
$
(57,947
)

 
 
 
 
 
 
 
 
 

Cash flow from investing activities:
 
 
 
 
 
 
 
 

 
Purchase of property, equipment and leasehold improvements
 
 
(1,814
)
 
 
(6,645
)

 
 
 
 
 
 
 
 
 

Net cash (used in) investing activities
 
 
(1,814
)
 
 
(6,645
)

 
 
 
 
 
 
 
 
 

Cash flow from financing activities:
 
 
 
 
 
 
 
 

 
Proceeds from borrowings and note financing payable
 
 
448,124
 
 
 
186,944
 

 
Repayments of borrowings and note financing payable
 
 
(267,862
)
 
 
(183,853
)

 
Proceeds from affiliates
 
  48,701
 
 
 
51,464
 

 
Repayment to affiliates
 
 
(53,764
)
 
 
(75,777
)

 
Increase in accounts payable, related parties
 
 
113,606
 
 
 
489,825
 

 
Repayment to accounts payable, related parties
 
 
(76,256
)
 
 
(414,050
)

 
 
 
 
 
 
 
 
 

Net cash provided by financing activities
 
 
212,549
 
 
 
54,553
 

 
 
 
 
 
 
 
 
 

Net cash provided by (used in) operating, investing and financing activities
 
 
135,302
 
 
 
(10,039
)

 
 
 
 
 
 
 
 
 

Effect of foreign currency translation on cash and cash equivalents
 
 
(5,329
)
 
 
(638
)

 
 
 
 
 
 
 
 
 

Net increase (decrease) in cash and cash equivalents
 
 
129,973
 
 
 
(10,677
)

 
 
 
 
 
 
 
 
 

Cash and cash equivalents, beginning of the period
   
26,027
 
 
 
31,370
 

 
 
 
 
 
 
 
 
 

Cash and cash equivalents, end of the period
 
$
156,000
 
 
$
20,693
 

 
 
 
 
 
 
 
 
 

Supplemental disclosure of cash flow information:
 
 
 
 
 
 
 
 

 
Interest paid
 
$
16,829
 
 
$
11,419
 

 
Income taxes paid
 
$
5,250
 
 
$
7,990
 

 

 

 

Non-GAAP Financial Measures ($ in thousands)

 

A reconciliation of Adjusted EBITDA to net income is provided below:

 

 
 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 

 
 
2015
 
 
2014
 
 
2015
 
 
2014
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Net income attributable to shareholders
 
$
(676
)
 
$
2,977
 
 
$
5,002
 
 
$
4,777  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Interest expenses
 
 
8,309
 
 
 
6,539
 
 
 
19,213
 
 
 
16,984
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Interest income
 
 
(256
)
 
 
(55
)
 
 
(298
)
 
 
(127
)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Income tax provision
 
 
(560
)
 
 
1,508
 
 
 
2,002
 
 
 
4,301
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Stock-based compensation
 
 
23
 
 
 
276
 
 
 
129
 
 
 
1,147
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Depreciation & Amortization
 
 
887
 
 
 
966
 
 
 
2,764
 
 
 
2,932
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Litigation expense
 
 
–  
 
 

 
 
 

 
 
 
4,350
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Adjusted EBITDA
 
$
7,727
 
 
$
12,211
 
 
$
28,812
 
 
$
34,364
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

USE OF NON-GAAP MEASURES
Fincera defines Adjusted EBITDA as net income before interest expense (income), income taxes, depreciation and amortization, as well as the exclusion of stock-based compensation and one-time litigation expenses. Adjusted EBITDA excludes certain financial information that would be included in net income (loss), the most directly comparable GAAP financial measure. Users of this financial information should consider the type of material events and transactions that are excluded from Adjusted EBITDA, and the material limitations associated therewith. For example, Adjusted EBITDA does not include net interest expense, but because Fincera has borrowed money to finance its operations, interest expense is a necessary and ongoing part of its costs and has assisted Fincera in generating revenue; Adjusted EBITDA does not include taxes, although payment of taxes is a necessary and ongoing part of Fincera’s operations; and Adjusted EBITDA does not include depreciation and amortization expense, but because Fincera uses capital assets to generate revenue, depreciation and amortization expense is a necessary element of its cost structure. Therefore, Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income, as determined in accordance with GAAP. 
Fincera believes that the presentation of these non-GAAP financial measures is warranted and useful to its shareholders because it provides an additional analytical tool for understanding the Company’s financial performance by excluding certain items that may obscure trends in the core operating performance of the Company’s business. Using Adjusted EBITDA also facilitates management’s internal comparisons to Fincera’s historical performance and liquidity. Fincera computes Adjusted EBITDA using the same consistent method from quarter to quarter. The table above has more details on the reconciliations between GAAP financial measures that are most directly comparable to Non-GAAP financial measures.