BEIJING, July 07, 2020 (GLOBE NEWSWIRE) — Kaixin Auto Holdings (“Kaixin” or the “Company”) (NASDAQ: KXIN), one of the primary dealership networks in the premium used car segment in China, today announced its unaudited financial results for the twelve months ended December 31, 2019. The Company anticipates to file its 2019 Form 20-F with the SEC within 5 days of this announcement. The delay in our filing is mainly due to additional work in preparation of our financial statements involving retroactive adjustments to prior years’ equity accounts as a result of the consummation of the reverse recapitalization on April 30, 2019.
2019 Financial HighlightsTotal net revenues were US$334.7 million, representing a decrease of 22.4% from US$431.4 million in 2018.Gross loss was US$5.5 million, compared with a gross profit of US$17.4 million in 2018.Loss from operations was US$133.4 million, compared with a loss of US$34.1 million in 2018.Net loss attributable to the Company was US$69.1 million, compared with a net loss attributable to the Company of US$89.5 million in 2018.Adjusted loss from operations (non-GAAP) 1 was US$12.8 million, compared with an adjusted loss from operations (non-GAAP) of US$11.6 million in 2018.Adjusted loss from continuing operations (non-GAAP) 1 was US$14.0 million, compared with an adjusted loss from continuing operations (non-GAAP) of US$16.9 million in 2018.Adjusted EBITDA from continuing operations (non-GAAP) 1 was negative US$16.0 million, compared with negative US$11.6 million in 2018.2019 Operational HighlightsNumber of Self-Owned and Affiliated Network Dealerships were 14 and 7, respectively, as of December 31, 2019, versus 14 and 4 as of December 31, 2018.Gross Merchandise Value (GMV)2 was US$375.8 million, representing a decrease of 16.5% from US$449.9 million in 2018.Number of cars sold was 6,005 units, compared with 7,438 units sold in 2018.2019 ResultsTotal net revenues for 2019 were US$334.7 million, representing a 22.4% decrease from that of $431.4 million in 2018.The decline in total net revenues of the Company mostly arose from a decrease in the auto sales business. In addition to macroeconomic headwinds in China, the main factors that contributed to the declining sales include a reduction of the overall inventory scales and the restructuring of the Company’s Dealerships that led to interruption of business operations in some locations during 2019. The restructuring is part of the Company’s effort to address disagreement with noncontrolling shareholders of certain dealerships and reallocate resources to better performing dealerships.Total cost of revenues was US$340.2 million which includes an inventory write-down of $17.8 million, representing a decrease of 17.8% from US$414.0 million in 2018.Gross loss was US$5.5 million, versus a gross profit of US$17.4 million in 2018. The gross loss in 2019 is largely due to the inventory write-down of $17.8 million. Gross loss margin was 1.6% in 2019, compared with a gross profit margin of 4.0% in 2018.Operating expenses were US$128.0 million, a 148.4% increase from US$51.5 million in 2018. The increase is largely due to a loss of $74.1 million from goodwill impairment in 2019.Selling and marketing expenses were US$14.4 million, a 40.3% decrease from US$24.1 million in 2018. The decrease resulted from the effort to improve operation efficiency in headcount and personnel-related expenses in response to the decrease in revenues.Research and development expenses were US$3.4 million, a 24.0% decrease from US$4.4 million in 2018. The decrease was primarily due to the decrease in headcount and personnel-related expenses.General and administrative expenses were US$36.1 million, a 57.1% increase from US$23.0 million in 2018. The increase was primarily due to a loss of $22.3 million from write-offs of prepaid expenses and other current assets.In addition, the Company reports a gain from change in fair value of the contingent considerations related to cooperation agreements with dealers of US$65.6 million in 2019, compared with a loss from change in fair value of contingent considerations of US$49.5 million in 2018. The change in fair value of contingent considerations in 2019 mainly results from the changes in the Company’s stock price. The company has a loss of $74.1 million from goodwill impairment in 2019.Loss from continuing operations was US$69.1 million, 22.3% lower than the loss from continuing operations of US$88.9 million in 2018.Net loss attributable to the Company was US$69.1 million, 22.9% lower than the net loss attributable to the Company of US$89.5 million in 2018.Adjusted loss from operations (non-GAAP) was US$12.8 million, a 10.3% increase compared with an adjusted loss from operations (non-GAAP) of US$11.6 million in 2018.Adjusted loss from continuing operations (non-GAAP) was US$14.0 million, a 17.3% decrease compared with an adjusted loss from continuing operations (non-GAAP) of US$16.9 million in 2018.Adjusted EBITDA from continuing operations (non-GAAP) was negative US$16.0 million, a 37.1% increase compared with an adjusted EBITDA from continuing operations (non-GAAP) of negative US$11.6 million in 2018.About Kaixin Auto HoldingsKaixin Auto Holdings is one of the primary dealership networks in the premium used car segment in China. Supported by the rapid growth of China’s used car market and leveraging its own hybrid business model that offers both strong online and offline presence, Kaixin has transformed from a tech-enabled financing platform into a nationwide dealer network that combines its own and affiliated dealers as well as value-added services.Safe Harbor StatementThis announcement may contain forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar statements. Among other things, the business outlook for 2020 and quotations from management in this announcement, as well as Kaixin’s strategic and operational plans, contain forward-looking statements. Kaixin may also make written or oral forward-looking statements in its filings with the U.S. Securities and Exchange Commission (“SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Kaixin’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: our goals and strategies; our future business development, financial condition and results of operations; the expected growth of the social networking site market in China; our expectations regarding demand for and market acceptance of our services; our expectations regarding the retention and strengthening of our relationships with used auto dealerships; our plans to enhance user experience, infrastructure and service offerings; competition in our industry in China; and relevant government policies and regulations relating to our industry. Further information regarding these and other risks is included in our other documents filed with the SEC. All information provided in this press release and in the attachments is as of the date of this press release, and Kaixin does not undertake any obligation to update any forward-looking statement, except as required under applicable law.About Non-GAAP Financial MeasuresTo supplement Kaixin’s consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), Kaixin uses “adjusted loss from operations (non-GAAP)”, “adjusted loss from continuing operations (non-GAAP)” and “adjusted EBITDA from continuing operations (non-GAAP)”, which are defined as non-GAAP financial measures by the SEC, in evaluating its business. We define adjusted loss from operations (non-GAAP) as loss from operations excluding share-based compensation expenses, provision for financing receivable, provision for PPE, and assets write-offs, if any, involving inventory, goodwill, etc; and adjusted loss from continuing operations (non-GAAP) as loss from continuing operations excluding share-based compensation expenses, fair value change of contingent consideration, provision for financing receivable, provision for PPE, and assets write-offs, if any, involving inventory, goodwill, etc. Adjusted EBITDA from continuing operations (non-GAAP) is defined as (loss) income from continuing operations excluding fair value change of contingent consideration, share-based compensation expense, interest expenses, income tax expenses, depreciation, provision for financing receivable, provision for PPE, assets write-offs, if any, involving inventory, goodwill, etc. Kaixin continuously and periodically reviews the operating results and business performance from operational perspectives. Starting from the first quarter of 2018, there was a significant impact on net income (loss) due to the material and significant noncash amount of fair value change in contingent consideration relating to the used auto dealerships of the emerging used auto business. Due to the nature of the business, Kaixin believes that including adjusted income (loss) from operations and excluding the impact of such fair value changes more appropriately reflects Kaixin’s results of operations, and provides investors with a better understanding of Kaixin’s business performance. We present adjusted income (loss) from operations (non-GAAP), adjusted income (loss) from continuing operations (non-GAAP) and EBITDA from continuing operations (non-GAAP) because they are used by our management to evaluate our operating performance. We also believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our consolidated results of operations in the same manner as our management and in comparing financial results across accounting periods and to those of our peer companies.These non-GAAP financial measures are not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned “Reconciliation of non-GAAP results of operation measures to the comparable GAAP financial measures” at the end of this release.For more information, please contact:Kaixin Auto Holdings
Randall Xu
Tel: (86 10) 8448 1818 ext. 2960
Email: randall.xu@renren-inc.comSOURCE: Kaixin Auto Holdings_________________________1See “About Non-GAAP Financial Measures” for details.2Includes automobile sales transactions at the Company’s dealerships including cars owned by Kaixin and cars sourced by Kaixin Affiliated Network Dealers that Kaixin sells pursuant to profit-sharing arrangements.
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