Tag Archives: ERP

Canadian Solar Reports Second Quarter 2020 Results

August 7, 2020 TechENT Syndication Leave a comment

GUELPH, ON, Aug. 7, 2020 — Canadian Solar Inc. ("Canadian Solar" or the "Company") (NASDAQ: CSIQ) today announced financial results for the quarter ended June 30, 2020.

Second Quarter 2020 Highlights

31% sequential increase in total module shipments to 2.9 GW, exceeding guidance of 2.5 GW to 2.7 GW.
Net revenue of $696 million exceeding guidance of $630 million to $680 million.
Gross margin of 21.2% exceeding guidance of 18.5% to 20.5%.
17% reduction in operating expenses compared to the second quarter of 2019.
Net income attributable to Canadian Solar of $20.6 million or $0.34 per diluted share.
Updated shipment guidance to 11 GW to 12 GW for 2020, and 18 GW to 20 GW for 2021.

Dr. Shawn Qu, Chairman and CEO, commented, "Despite challenging market conditions, second quarter results exceeded expectations both on revenue and profits. Over the past 19 years, we have built a strong foundation and track record based on technology innovation, all-around product execution, robust customer channels and prudent capital deployment. This foundation has helped us to dynamically adjust to changing market environments and consistently deliver a market-leading return on capital and equity.

Last week, we announced the plan to list our Module and System Solutions ("MSS") business on China’s stock market. If successful, it will give us greater access to additional, lower-cost sources of capital and allow us to grow faster at a time when we believe growth in the solar industry and market consolidation are both set to accelerate. We have started the pre-IPO capital raising process to bring in new partners to our MSS business and convert it into a Sino-foreign joint stock company, which is required by Chinese security regulations for listing in China’s stock market. This investment round is expected to be completed by the end of September, and will also allow us to immediately expand our manufacturing capacity using the best available technologies and equipment to support our newly set module shipment plan for 2021.

In addition, we believe the listing will help us unlock value for shareholders by addressing our valuation gap relative to China-listed solar companies. Meanwhile, as a Canadian-based global company, we remain fully committed to our NASDAQ listing and remain focused on expanding our Energy business worldwide by growing our high-quality project pipeline and sales, and increasing our partial ownership of select solar and storage projects."

Yan Zhuang, President and COO, said, "We are benefiting from a demand rebound across most of our markets, with our order backlog for the second half of 2020 and even next year already exceeding our previous expectations. While the current polysilicon supply disruption and shortage presents a near-term challenge, we are positioning ourselves for long-term growth. On the one hand, we will expand capacity and increase the level of vertical integration in our module business, which will allow us to capture more global market share, enhance pricing power, control costs and improve profitability in an industry that is rapidly consolidating. On the other hand, we are building our technological capabilities in the solar PV plus storage space, gearing up for new growth opportunities as adoption of clean solar energy accelerates."

Dr. Huifeng Chang, Senior VP and CFO, added, "As the industry demand and capital market conditions are both improving, we are working to strike a balance between investing for long-term growth and preserving cash. In the near term, uncertainties remain around the impact of the ongoing pandemic, geopolitical and policy risks. In the medium- to longer-term, the plan to list our MSS business in China’s stock market will give us the additional resources to deliver higher future earnings growth and return on capital. We remain disciplined in our capital allocation decisions, as always, and will continue to monitor the market and adjust to changes."

Second Quarter 2020 Results

Total module shipments in the second quarter of 2020 increased to 2,905 MW from 2,214 MW in the first quarter of 2020, and 2,143 MW in the second quarter of 2019. Growth in shipments was driven by moderate market share gains. Of the total, 281 MW was shipped to the Company’s utility-scale solar power projects in the second quarter of 2020.

Net revenue in the second quarter of 2020 was $696 million, compared to $826 million in the first quarter of 2020, and $1,036 million in the second quarter of 2019. Growth in module shipments and EPC service revenues were offset by lower average module selling prices ("ASP") and limited project sales. Project execution and sales schedules have been delayed due to the impact of COVID-19. That said, the Company is making headway and recently announced the financial closing of the 367 MWp Maplewood projects in Texas, for example.

Gross profit in the second quarter of 2020 was $147 million, compared to $223 million in the first quarter of 2020, and $183 million in the second quarter of 2019. Gross margin in the second quarter of 2020 was 21.2%, compared to 27.0% in the first quarter of 2020, and 17.6% in the second quarter of 2019. Gross margin was 18.2% excluding the benefit of a U.S. anti-dumping ("AD") and countervailing duty ("CVD") true-up of $20.4 million. The lower gross margin was anticipated given the significant decline in ASPs, partially offset by lower manufacturing costs.

Income from operations in the second quarter of 2020 was $45 million, compared to $113 million in the first quarter of 2020, and $61 million in the second quarter of 2019. The decline was partially offset by a 17% year-over-year reduction in the Company’s operating expenses to $102 million in the second quarter of 2020.

Non-cash depreciation and amortization charges in the second quarter of 2020 were $48 million, compared to $45 million in the first quarter of 2020, and $40 million in the second quarter of 2019.

Net foreign exchange loss in the second quarter was $4.5 million, compared to a net loss of $1 million in the first quarter of 2020 and a net gain of $4 million in the second quarter of 2019. The higher foreign exchange loss was mainly due to unfavorable moves in the Brazilian Real and the Thai Baht.

Income tax expense in the second quarter of 2020 was $9 million, compared to an income tax benefit of $29 million in the first quarter of 2020 and an income tax expense of $14 million in the second quarter of 2019.

Net income attributable to Canadian Solar in the second quarter of 2020 was $20.6 million, or $0.34 per diluted share, compared to net income of $110.6 million, or $1.84 per diluted share in the first quarter of 2020, and net income of $62.7 million, or $1.04 per diluted share in the second quarter of 2019.

Net cash used in operating activities in the second quarter of 2020 was approximately $114 million, compared to $105 million in the first quarter of 2019.

Module and System Solutions (MSS) Business Segment

Manufacturing Capacity

The table below sets forth the Company’s manufacturing capacity expansion plan until September 30, 2020. The Company is working on its new 2021 capacity expansion plans and will provide an update in the next quarter.

Manufacturing Capacity (MW)

	June 30, 2020 Actual	September 30, 2020 Planned	December 31, 2020 Planned
Ingot	1,850	1,920	1,920
Wafer	5,000	5,000	5,500
Cell	9,700	10,050	10,150
Module	13,950	14,010	16,060

The Company’s manufacturing capacity expansion plan is subject to change based on market conditions and the Company’s capital allocation plan.

Operating Results

The following table presents unaudited select results of operations data of the Company’s MSS business segment for the periods indicated.

MSS Business Segment Financial Results* (In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)
	Three Months Ended			Six Months Ended
	June 30, 2020	March 31, 2020	June 30, 2019	June 30, 2020	June 30, 2019
Net revenues	706,155	689,799	673,116	1,395,954	1,142,017
Cost of revenues	557,263	540,931	519,376	1,098,194	889,040
Gross profit	148,892	148,868	153,740	297,760	252,977
Operating expenses	85,670	87,370	95,303	173,040	173,799
Income (loss) from operations	63,222	61,498	58,437	124,720	79,178
Gross margin	21.1%	21.6%	22.8%	21.3%	22.2%
Operating margin	9.0%	8.9%	8.7%	8.9%	6.9%

Includes effects of both sales to* third party customers and to the Company’s Energy Business Segment. Please refer to the attached financial tables for intercompany transaction elimination information. Income from operations reflect management’s allocation and estimate as some services are shared by the Company’s two business segments.

The table below provides the geographic distribution of the net revenue of the MSS business:

*MSS Net Revenues Geographic Distribution (In Millions of U.S. Dollars, Except Percentages)**
	Q2 2020	% of Net Revenues	Q1 2020	% of Net Revenues	Q2 2019	% of Net Revenues
Asia	261	39	175	30	236	36
Americas	215	32	252	43	181	27
Europe and others	193	29	161	27	244	37
Total	669	100	588	100	661	100

*Excludes sales from the MSS business to the Energy business.

Canadian Solar shipped 2.9 GW of modules to more than 80 countries in the second quarter of 2020. The top five markets of the MSS business ranked by revenues were the U.S., Japan, China, Spain and Australia.

Multi-crystalline modules accounted for 65% of the Company’s module shipments in the second quarter of 2020, and mono-crystalline modules accounted for 35%. The Company has the flexibility to produce both multi-crystalline and mono-crystalline modules, with the mix decision depending on the relative profitability and levelized cost of electricity ("LCOE") of the alternative products.

Energy Business Segment

Energy Business Strategy

Canadian Solar has one of the world’s largest utility-scale solar project development platforms, with a track record of originating, developing, financing, building and bringing into commercial operation over 5.6 GWp of solar power plants across six continents. As a first mover, the Company has acquired extensive experience and built a leadership position in solar project development, with a current total project backlog and pipeline of 15.1 GWp.

Traditionally, the operating model for the Company’s Energy business has been to sell projects when they reach either their notice to proceed date ("NTP") or commercial operation date ("COD"), depending on the optimal exit point for each project based on its specific risk and return profile. In certain cases, the Company has retained a minority ownership interest in order to capture additional operational value throughout the partial ownership holding period, while accelerating capital turnover into developing new solar projects. An example of this is the Canadian Solar Infrastructure Fund ("CSIF"), a publicly traded investment fund akin to a real estate investment trust, holding operating solar assets in Japan. CSIF has been listed on the Tokyo Stock Exchange since 2017 and remains 15%-owned by the Company. In addition to continuing to grow its project backlog and pipeline, the Company is evaluating ways to replicate its successful Japanese strategy in other markets, focusing on those regions with strong energy demand, attractive power prices and project returns, and stable capital markets. There are two key benefits to this approach:

It will permit Canadian Solar to capture higher margins while recycling a large portion of capital. Meanwhile, it will allow the Company to build a base of stable and long-term cash flows from power sales, operations and maintenance ("O&M"), asset management and other services; and create new growth opportunities, including energy storage systems integration and optimization.
Over time, the addition of more predictable and stable revenues and cash flows from power sales, O&M, asset management and other services will help smooth typical lumpiness associated with the development and sale of solar power projects.

Management targets are to achieve the following project sales and accumulated project ownership retained in the next 5 years:

Energy Business Targets	2020	2021	2022	2023	2024
Annual Project Sales, GWp	1.1-1.3	1.8-2.3	2.4-2.9	3.2-3.7	3.6-4.1
Cumulative Projects Retained (including inventory to be sold), MWp	~30	~130	~410	~760	~960
Note: There are uncertainties regarding the closing dates of project sales in 2020 due to COVID-19 disruptions. Forecasts for annual project sales include both projects sold at NTP and COD, which have a significant impact on revenue but more limited impact on profits. Final timing and recognition of project sales may be impacted by various external factors. These targets are subject to change without notice.

To help finance this business strategy, the Company is evaluating ways to create capital partnerships with investors seeking long-term stable cash flows through investments in clean, profitable and countercyclical solar energy infrastructure investments, via public or private investment vehicles. Given the low interest rate environment, management believes the Company’s solar assets are highly attractive to investors seeking stable yields, which will help build sustainable long-term value for Canadian Solar’s shareholders. The Company will make further progress updates as it executes on this strategy.

Project Backlog and Pipeline

As of June 30, 2020, the Company’s total project backlog and pipeline totaled 15.1 GWp, of which the project backlog totaled 4.2 GWp. The backlog includes projects that have passed their Cliff Risk Date and are expected to be built in the next one to four years. A project’s Cliff Risk Date depends on the country where the project is located and is defined as the date on which the project passes the last of the high-risk development stages. This is usually the receipt of all required environmental and regulatory approvals, interconnection agreements, feed-in tariff ("FIT") arrangements and power purchase agreements ("PPAs"). All projects in the current backlog have secured a PPA or FIT or are reasonably assured of securing one.

The Company’s project pipeline totaled 10.9 GWp as of June 30, 2020. The pipeline includes early- to mid-stage project opportunities currently under development but that are yet to be de-risked.

Project Backlog and Pipeline (as of June 30, 2020)
Region	Backlog	Pipeline	Total
North America	1,544	4,101	5,645
Latin America	1,539	3,657	5,196
Europe, the Middle East and Africa ("EMEA")	383	2,148	2,531
Japan	220	0	220
Asia Pacific excluding Japan	547	927	1,474
China	0	80	80
Total	4,233	10,913	15,146
Note: Backlog represents the gross MWp size of projects, including 63 MWp in Latin America and 124 MWp in EMEA that have already been sold to third parties or are not owned by Canadian Solar.

The Company believes there are significant growth opportunities in the solar plus storage market, given declining battery storage costs, higher capacity needs and accelerating retirements of fossil fuel power plants. The Company further believes it is uniquely positioned to deliver solar plus storage solutions to its customers given its integrated business model as a top-tier module technology manufacturer and global project developer, and is committed to expanding its presence in this space.

The table below sets forth the Company’s storage project backlog and pipeline as of June 30, 2020, which almost doubled compared to the previous quarter.

	Backlog	Pipeline	Total
Storage (MWh)	1,201	3,482	4,683

Projects in Construction

In addition to its project backlog and pipeline, the Company has 839 MWp of solar projects in construction.

Projects in Construction (as of June 30, 2020)
Region	MWp	Expected COD
North America	32	2020-21
Latin America	732	2020-21
Japan	70	2020-21
Asia Pacific ex. Japan	5	2020
Total	839	–
Note: Latin America portfolio includes 508 MWp of projects already sold at NTP, with milestone revenue recognition over the 2019-2021 period.

The Company has a sizable amount of premium, high FIT projects in Japan. The table below sets forth the expected COD schedule of the Company’s project backlog in development and construction in Japan, as of June 30, 2020:

Expected COD Schedule (MWp)

	2020	2021	2022 and Thereafter	Total
	13	66	211	290

Solar Power Plants in Operation

As of June 30, 2020, the Company’s power plants in operation totaled 956 MWp, with an estimated total resale value of approximately $773 million to Canadian Solar. The estimated resale value is based on selling prices that Canadian Solar is currently negotiating or transaction prices of similar assets in the relevant markets.

North America	Latin America	Japan	Asia Pacific ex. Japan	China	Total
216	100	85	96	459	956
Note: The table represents the gross MWp size of the power plants in operation, including 108 MWp in North America and 26 MWp in Asia Pacific, excluding Japan, already sold to third parties.

Operating Results

The following table presents unaudited select results of operations data of the Company’s Energy business segment for the periods indicated.

	Energy Business Segment Financial Results (In Thousands of U.S. Dollars, Except Percentages and Unless Otherwise Stated)
		Three Months Ended			Six Months Ended
		June 30, 2020	March 31, 2020	June 30, 2019	June 30, 2020	June 30, 2019
Net revenues		26,661	238,088	374,938	264,749	406,525
Cost of revenues		15,083	148,339	353,529	163,422	375,703
Gross profit		11,578	89,749	21,409	101,327	30,822
Operating expenses		16,074	22,391	26,597	38,465	48,935
Income (loss) from operations		(4,496)	67,358	(5,188)	62,862	(18,113)
Gross margin		43.4%	37.7%	5.7%	38.3%	7.6%
Operating margin		-16.9%	28.3%	-1.4%	23.7%	-4.5%

Business Outlook

The Company’s business outlook is based on management’s current views and estimates given existing market conditions, order book, production capacity, anticipated timing of project sales, and the global economic environment. This outlook is subject to uncertainty with respect to, among other things, final customer demand, project construction and sale schedules, and the global impact of the ongoing COVID-19 pandemic. Management’s views and estimates are subject to change without notice.

For the third quarter of 2020, the Company expects total module shipments to be in the range of 2.9 GW to 3.1 GW, including approximately 300 MW of module shipments to the Company’s own projects that may not be immediately recognized as revenues. Total revenues are expected to be in the range of $840 million to $890 million, with gross margin expected to be between 14% and 16%.

For the full year of 2020, the Company now expects shipments to be in the range of 11 GW to 12 GW.

Management expects the demand in 2021 to be strong, according to various research reports and Canadian Solar’s own sales feedback. At the same time, industry consolidation is set to accelerate as customer preferences become more sophisticated around quality and service, increasingly choosing top tier solar brands.

As a result, Canadian Solar is positioning itself more assertively for returns-accretive growth. The Company is currently planning for 18 GW to 20 GW of shipments in 2021.

Dr. Shawn Qu, Chairman and CEO, commented, "We are encouraged to see demand rebounding globally, as more companies and consumers worldwide insist on sustainable power sources. For our Energy Business, our pipeline growth and project execution are making progress, although uncertainty remains around the timing and recognition of certain project sales. On the MSS side, we expect near-term margin pressure given cost increases from polysilicon supply shortages; however, given our leadership position in premium markets, we are able to share a portion of the higher costs with customers. Importantly, we expect the impact of the polysilicon supply disruption to lessen over the coming quarters as polysilicon suppliers restore their temporarily shut-down capacities and restart some of the currently idled, higher-cost capacities.

We plan to expand our market share as we increase our low-cost manufacturing capacity of high-quality modules, which will be supported by the pre-IPO round of capital raising for our MSS business. The improved access to capital through the expected China listing will help us to further capitalize on accelerating secular growth in solar demand, and to unlock sustainable value for our shareholders."

Changes to the Board of Directors

Mr. Karl Olsoni was nominated by the Company and approved by shareholders as a new independent director during the 2020 Annual Meeting of Shareholders. He will serve on the Audit and Compensation Committees. Mr. Olsoni has served as a strategic advisor to the Board of Directors since January 2020.

Furthermore, the Board of Directors has accepted the resignation of Mr. Robert K. McDermott, who has played an instrumental role in the Company’s success since his appointment as lead independent director in 2006. "On behalf of our Board of Directors and the Company, I thank Bob for his valuable service and contributions and wish him well in future endeavors," said Dr. Qu.

Recent Developments

On August 4, 2020, Canadian Solar announced that it commenced the construction of a 10 MWp solar power plant in Germany.

On July 27, 2020, Canadian Solar announced that a special committee of independent directors of the Company, with the assistance of outside financial and legal advisors, completed a review of strategic alternatives available to the Company and the board of directors of the Company decided to pursue a listing of the Company’s MSS business on either the Shanghai Stock Exchange’s Science and Technology Innovation Board or the Shenzhen Stock Exchange’s ChiNext Market.

On July 21, 2020, Canadian Solar announced its wholly-owned subsidiary Recurrent Energy closed $282 million of debt financing to construct its Maplewood and Maplewood 2 solar power projects totaling 367 MWp in Texas.

On June 23, 2020, Canadian Solar announced it signed two private power purchase agreements with Braskem S.A. and COPEL Energia for a total of 274 MWp of solar power projects in Brazil.

Conference Call Information

The Company will hold a conference call at 8:00 a.m. U.S. Eastern Daylight Time on August 7, 2020 (8:00 p.m., August 7, 2020 in Hong Kong) to discuss the Company’s second quarter 2020 results and business outlook. The dial-in phone number for the live audio call is 1-866-519-4004 (toll-free from the U.S.), +852-3018-6771 (local dial-in from Hong Kong) or +1 845-675-0437 (from international locations). The passcode for the call is 8068256. A live webcast of the conference call will also be available on the Investor Relations section of Canadian Solar’s website at www.canadiansolar.com.

A replay of the call will be available two hours after the conclusion of the call until 9:00 a.m. U.S. Eastern Daylight Time on Saturday, August 15, 2020 (9:00 p.m., August 15, 2020 in Hong Kong) and can be accessed by dialing +1-855-452-5696 (toll-free from the U.S.), +852-3051-2780 (local dial-in from Hong Kong) or +1-646-254-3697 (from international locations), with passcode 8068256. A webcast replay will also be available on the investor relations section of Canadian Solar’s at www.canadiansolar.com.

About Canadian Solar Inc.

Canadian Solar was founded in 2001 in Canada and is one of the world’s largest solar power companies. It is a leading manufacturer of solar photovoltaic modules and provider of solar energy solutions and has a geographically diversified pipeline of utility-scale solar power projects in various stages of development. Over the past 19 years, Canadian Solar has successfully delivered over 46 GW of premium-quality, solar photovoltaic modules to customers in over 150 countries. Canadian Solar is one of the most bankable companies in the solar industry, having been publicly listed on NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn or visit www.canadiansolar.com.

Safe Harbor/Forward-Looking Statements

Certain statements in this press release regarding the Company’s expected future shipment volumes, gross margins are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business and economic conditions and the state of the solar industry; volatility, uncertainty, delays and disruptions related to the COVID-19 pandemic; governmental support for the deployment of solar power; future available supplies of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand from major markets such as Japan, the U.S., India, China and Brazil; changes in customer order patterns; changes in product mix; capacity utilization; level of competition; pricing pressure and declines in average selling prices; delays in new product introduction; delays in utility-scale project approval process; delays in utility-scale project construction; delays in the completion of project sales; continued success in technological innovations and delivery of products with the features customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange rate fluctuations; litigation and other risks as described in the Company’s SEC filings, including its annual report on Form 20-F filed on April 28, 2020. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. Investors should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today’s date, unless otherwise stated, and Canadian Solar undertakes no duty to update such information, except as required under applicable law.

FINANCIAL TABLES FOLLOW

The following tables provide unaudited select financial data for the Company’s Module and System Solutions ("MSS") and Energy businesses:

	Select Financial Data – Module and System Solutions, and Energy

	Three Months Ended June 30, 2020 (In Thousands of U.S. Dollars, Except Percentages)
	MSS	Energy	Elimination	Total
Net revenues	$706,155	$26,661	($36,970)	$695,846
Cost of revenues	557,263	15,083	(23,712)	548,634
Gross profit	148,892	11,578	(13,258)	147,212
Gross margin	21.1%	43.4%	—	21.2%
Income (loss) from operations	63,222	(4,496)	(13,258)	45,468

	Select Financial Data – Module and System Solutions, and Energy

	Six Months Ended June 30, 2020 (In Thousands of U.S. Dollars, Except Percentages)
	MSS	Energy	Elimination	Total
Net revenues	$1,395,954	$264,749	($139,222)	$1,521,481
Cost of revenues	1,098,194	163,422	(110,544)	1,151,072
Gross profit	297,760	101,327	(28,678)	370,409
Gross margin	21.3%	38.3%	—	24.3%
Income (loss) from operations	124,720	62,862	(28,678)	158,904

	Select Financial Data – Module and System Solutions, and Energy

	Three Months Ended June 30, 2020	Six Months Ended June 30, 2020
	(In Thousands of U.S. Dollars)
MSS Revenues:
Solar modules and other solar power products	$ 613,068	$ 1,158,962
Solar system kits	42,901	72,098
EPC services	3,164	3,922
Others (materials and components)	10,052	21,750
Subtotal	$ 669,185	$ 1,256,732
Energy Revenues:
Solar power projects	$ 2,685	$ 230,439
Electricity	1,882	2,930
O&M services	5,027	10,213
Others (EPC and development services)	17,067	21,167
Subtotal	$ 26,661	$ 264,749
Total net revenues	$ 695,846	$ 1,521,481

	Canadian Solar Inc.
	Unaudited Condensed Consolidated Statements of Operations
	(In Thousands of U.S. Dollars, Except Share and Per Share Data and Unless Otherwise Stated)

		Three Months Ended			Six Months Ended
		June 30,	March 31,	June 30,	June 30,	June 30,
		2020	2020	2019	2020	2019

Net revenues		$ 695,846	$ 825,635	$ 1,036,275	$ 1,521,481	$ 1,520,994
Cost of revenues		548,634	602,438	853,633	1,151,072	1,230,913

	Gross profit	147,212	223,197	182,642	370,409	290,081

Operating expenses:
	Selling expenses	53,463	52,659	45,361	106,122	83,292
	General and administrative expenses	46,354	52,961	65,735	99,315	117,159
	Research and development expenses	10,924	10,056	12,133	20,980	25,298
	Other operating income	(8,997)	(5,915)	(1,329)	(14,912)	(3,015)
Total operating expenses		101,744	109,761	121,900	211,505	222,734

Income from operations		45,468	113,436	60,742	158,904	67,347
Other income (expenses):
	Interest expense	(16,960)	(19,013)	(20,654)	(35,973)	(42,352)
	Interest income	2,081	2,779	4,452	4,859	6,481
	Gain (loss) on change in fair value of derivatives, net	(2,349)	33,109	(12,489)	30,759	(13,748)
	Foreign exchange gain (loss), net	(2,192)	(34,119)	16,415	(36,311)	3,828
	Investment income (loss)	1,525	(14,012)	2,002	(12,487)	2,547
Other expenses, net		(17,895)	(31,256)	(10,274)	(49,153)	(43,244)

Income before income taxes and equity in earnings of unconsolidated investees		27,573	82,180	50,468	109,751	24,103
Income tax benefit (expense)		(8,899)	29,051	(13,951)	20,154	(6,423)
Equity in earnings of unconsolidated investees		1,739	16	23,740	1,755	25,721
Net income		20,413	111,247	60,257	131,660	43,401

Less: Net income (loss) attributable to non-controlling interests		(191)	616	(2,425)	425	(2,116)

Net income attributable to Canadian Solar Inc.		$ 20,604	$ 110,631	$ 62,682	$ 131,235	$ 45,517

Earnings per share – basic		$ 0.35	$ 1.86	$ 1.05	$ 2.20	$ 0.77
Shares used in computation – basic		59,371,856	59,376,332	59,547,209	59,539,092	59,389,975
Earnings per share – diluted		$ 0.34	$ 1.84	$ 1.04	$ 2.18	$ 0.76
Shares used in computation – diluted		59,793,196	60,084,298	60,260,410	60,127,369	60,272,536

	Canadian Solar Inc.
	Unaudited Condensed Consolidated Statement of Comprehensive Income
	(In Thousands of U.S. Dollars)

		Three Months Ended			Six Months Ended
		June 30,	March 31,	June 30,	June 30,	June 30,
		2020	2020	2019	2020	2019
Net Income		20,413	111,247	60,257	131,660	43,401
Other comprehensive income (net of tax of nil):
Foreign currency translation adjustment		30,997	(45,971)	(11,170)	(14,974)	4,815
De-recognition of commodity hedge and interest rate swap		4,439	—	—	4,439	—
Loss on changes in fair value of derivatives		(104)	(4,011)	(3,310)	(4,115)	(5,680)
Comprehensive income		55,745	61,265	45,777	117,010	42,536
Less: comprehensive income(loss) attributable to non-controlling interests		3,802	(1,441)	(1,028)	2,361	(5,355)
Comprehensive income attributable to Canadian Solar Inc.		51,943	62,706	46,805	114,649	47,891

Canadian Solar Inc.
Unaudited Condensed Consolidated Balance Sheets
(In Thousands of U.S. Dollars)

		June 30,	December 31,
		2020	2019
ASSETS
Current assets:
	Cash and cash equivalents	$ 578,815	$ 668,770
	Restricted cash	398,739	526,723
	Accounts receivable trade, net	421,691	436,815
	Accounts receivable, unbilled	16,096	15,256
	Amounts due from related parties	18,052	31,232
	Inventories	547,106	554,070
	Value added tax recoverable	109,358	108,920
	Advances to suppliers	49,504	47,978
	Derivative assets	5,989	5,547
	Project assets	653,750	604,083
	Prepaid expenses and other current assets	397,300	253,542
Total current assets		3,196,400	3,252,936
Restricted cash		16,766	9,927
Property, plant and equipment, net		970,065	1,046,035
Solar power systems, net		49,654	52,957
Deferred tax assets, net		136,267	153,963
Advances to suppliers		41,484	40,897
Prepaid land use right		58,800	60,836
Investments in affiliates		79,322	152,828
Intangible assets, net		22,430	22,791
Project assets		492,519	483,051
Right-of-use assets		30,162	37,733
Other non-current assets		164,661	153,253
TOTAL ASSETS		$ 5,258,530	$ 5,467,207

Canadian Solar Inc.
Unaudited Condensed Consolidated Balance Sheets (Continued)
(In Thousands of U.S. Dollars)

		June 30,	December 31,
		2020	2019
Current liabilities:
	Short-term borrowings	$ 1,015,749	$ 933,120
	Long-term borrowings on project assets – current	179,978	286,173
	Accounts payable	460,817	585,601
	Notes payable	472,000	544,991
	Amounts due to related parties	3,989	10,077
	Other payables	448,973	446,454
	Advance from customers	69,546	134,806
	Derivative liabilities	10,461	10,481
	Operating lease liabilities	17,218	18,767
	Other current liabilities	112,496	121,527
Total current liabilities		2,791,227	3,091,997
Accrued warranty costs		47,280	55,878
Long-term borrowings		580,442	619,477
Derivatives liabilities		5,374	1,841
Liability for uncertain tax positions		15,543	15,353
Deferred tax liabilities		54,689	56,463
Loss contingency accruals		26,828	28,513
Operating lease liabilities		15,523	20,718
Financing liabilities		75,457	76,575
Other non-current liabilities		97,207	75,334
Total LIABILITIES		3,709,570	4,042,149
Equity:
	Common shares	686,425	703,806
	Treasury stock	—	(11,845)
	Additional paid-in capital	22,989	17,179
	Retained earnings	924,836	793,601
	Accumulated other comprehensive loss	(126,193)	(109,607)
Total Canadian Solar Inc. shareholders’ equity		1,508,057	1,393,134
Non-controlling interests in subsidiaries		40,903	31,924
TOTAL EQUITY		1,548,960	1,425,058
TOTAL LIABILITIES AND EQUITY		$ 5,258,530	$ 5,467,207

About Non-GAAP Financial Measures

To supplement its financial disclosures presented in accordance with GAAP, the Company uses non-GAAP measures which are adjusted from the most comparable GAAP measures for certain items as described below. The Company presents non-GAAP net income and diluted earnings per share so that readers can better understand the underlying operating performance of the business before the impact of AD/CVD true-up provisions. The non-GAAP numbers are not measures of financial performance under U.S. GAAP, and should not be considered in isolation or as an alternative to other measures determined in accordance with GAAP. These non-GAAP measures may differ from non-GAAP measures used by other companies, and therefore their comparability may be limited.

Statement of Operations Data:
(In Thousands of U.S. Dollars, Except Share and Per Share Data)

		Three Months Ended		Six Months Ended
		June 30, 2020	June 30, 2019	June 30, 2020	June 30, 2019

GAAP net income attributable to Canadian Solar Inc.		20,604	62,682	131,235	45,517
Non-GAAP income adjustment items:
	AD/CVD provision true-up	(20,397)	(21,617)	(20,397)	(21,617)
	Tax impact	5,054	5,365	5,054	5,365
Non-GAAP net income attributable to Canadian Solar Inc.		5,261	46,430	115,892	29,265

GAAP income per share – diluted		$ 0.34	$ 1.04	$ 2.18	$ 0.76
Non-GAAP income per share – diluted		$ 0.09	$ 0.77	$ 1.93	$ 0.49
Shares used in computation – diluted		59,793,196	60,260,410	60,127,369	60,272,536

X Financial Reports First Quarter 2020 Unaudited Financial Results

June 30, 2020 TechENT Syndication Leave a comment

SHENZHEN, China, June 30, 2020 — X Financial (NYSE: XYF) (the “Company” or “we”), a leading technology-driven personal finance company in China, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

Net revenues decreased by 31.9% to RMB529.0 million (US$74.5 million) from RMB776.4 million in the same period of 2019.
Loss from operations was RMB130.0 million (US$18.3 million), compared with income from operations of RMB279.1 million in the same period of 2019.
Net loss attributable to X Financial shareholders was RMB196.3 million (US$27.7 million), compared with net income attributable to X Financial shareholders of RMB209.0 million in the same period of 2019.
Non-GAAP^[1] adjusted net loss attributable to X Financial shareholders was RMB159.9 million (US$22.5 million), compared with non-GAAP adjusted net income attributable to X Financial shareholders of RMB251.2 million in the same period of 2019.
Net loss per basic and diluted American depositary share (“ADS”)^[2] were RMB1.22 (US$0.17) and RMB1.22 (US$0.17) respectively, compared with net income per basic and diluted American depositary share (“ADS”) of RMB1.36 and RMB1.30, respectively, in the same period of 2019.
Non-GAAP adjusted net loss per basic and adjusted diluted ADS were RMB1.00 (US$0.14) and RMB1.00 (US$0.14), respectively, compared with non-GAAP adjusted net income per basic and adjusted diluted ADS of RMB1.64 and RMB1.56, respectively, in the same period of 2019.

First Quarter 2020 Operational Highlights

The total loan facilitation amount^[3] was RMB6,823 million, representing a decrease of 29.1% from RMB9,629 million in the same period of 2019 and a decrease of 23.2% from RMB8,890 million in the fourth quarter of 2019.
The loan facilitation amount of Xiaoying Credit Loan^[4] was RMB4,631 million, representing a decrease of 41.6% from RMB7,932 million in the same period of 2019 and a decrease of 25.1% from RMB6,185 million in the fourth quarter of 2019. Xiaoying Credit Loan accounted for 67.9% of the Company’s total loan facilitation amount, compared with 82.4% in the same period of 2019.
The total outstanding loan balance^[5] as of March 31, 2020 was RMB14,370 million, compared with RMB20,187 million as of March 31, 2019 and RMB17,267 million as of December 31, 2019.
The average loan amount per transaction^[6] of Xiaoying Term Loan^[7] was RMB15,745, representing an increase of 37.7% from RMB11,434 in the same period of 2019 and an increase of 7.8% from RMB14,611 for the fourth quarter of 2019.
The average consumption amount per user^[8] of Xiaoying Revolving Loan^[9] was RMB 8,582, representing an increase of 3.8% from RMB8,268 for the fourth quarter of 2019.
The delinquency rates for all outstanding loans that are past due for 31-90 days and 91–180 days as of March 31, 2020 were 6.71% and 7.12%, respectively, compared with 4.05% and 5.11%, respectively, as of December 31, 2019, and 3.56% and 5.21%, respectively, as of March 31, 2019.
The number of cumulative borrowers, each of whom made at least one transaction on the Company’s lending platform, as of March 31, 2020 was 5,732,385.
Total cumulative registered users reached 42.6 million as of March 31, 2020.
Institutional funding accounted for 81.7% of the total loan facilitation amount, compared with 50.2% in the fourth quarter of 2019.
The Gross Merchandise Value (“GMV”)^[10] of Xiaoying Online Mall^[11] was RMB60.8 million, representing a decrease of 62.2% from RMB160.9 million in the fourth quarter of 2019.

Mr. Justin Tang, the Founder, Chief Executive Officer and Chairman of the Company, commented, “Despite challenges created by the Coronavirus Disease (the “COVID-19”) pandemic adversely impacting our operating environment, we made meaningful progress in expanding institutional funding for all new loan products originated on our platform during the quarter. Institutional funding accounted for 81.7% of the loans facilitated through our platform in the first quarter, representing an increase from 50.2% in the previous quarter. We rapidly built upon this with institutional funding which accounts for 100% of funding for the loans facilitated through our platform now.”

“Maintaining full compliance with current regulations and adapting to the ever changing macroeconomic environment have been critical to our success so far. We continued to diversify our institutional funding sources and deepen our relationships with financial partners. Building our platform out to scale and strengthening the confidence our funding partners have in us is an important part of our long-term strategy as we continue to provide the most user-friendly and convenient financial services to borrowers all over China.

“As of March 31, 2020, the total credit lines provided by our institutional partners expanded to RMB58.6 billion from RMB46.7 billion as of December 31, 2019. Given the current uncertainties in the market, this further proves that our asset quality and risk management capabilities continue to be well recognized by our institutional partners despite the impact from the pandemic. We are currently in discussions with a number of our partners about further reducing our funding costs.”

“We continue to adopt a strategic and disciplined approach to risk management and have implemented stricter criteria when assessing borrowers because we believe it is even more important now for the sustainability of our business. An adjustment period is therefore expected and is reflected in the lower number of active borrowers during the quarter. The number of active borrowers this quarter was 428,366, representing a decrease of 29.7% from 609,368 in the fourth quarter of 2019. Evaluating borrowers with stricter criteria is critical to reducing loan default rates at their later stages and strengthening our ability to generate stronger results when the market is expected to rebound during the second half of 2020”.

“In conclusion, there is no doubt that economic disruption from the COVID-19 pandemic will force all businesses that rely on consumption to once again adjust their strategies rapidly. Most importantly, the fundamental drivers underpinning the enormous growth opportunities in China’s personal finance industry have not changed. As we continue to evolve from a pure financial services provider to a more comprehensive business services provider, we are confident that we are well positioned to not just survive these challenging market conditions, but thrive when the market rebounds. We are committed to providing our customers the most user-friendly, convenient and comprehensive financial services, in addition to the best loan solutions on the market.”

Mr. Simon Cheng, President of the Company, added, “Over the past few quarters, we continued to ramp up our technology-driven risk infrastructure and strengthened customer acquisition. This solid foundation allowed us to successfully manage a rise in delinquency rates during the peak of the pandemic and has positioned us to emerge even stronger. The downturn in economic activity created by the pandemic has begun to gradually improve. While restrictions put in place to contain the pandemic continue to ease and life returns to normal, we have seen an improvement in delinquency rates in April 2020. We also saw a significant rebound of both loan facilitation amount and number of active borrowers of Xiaoying Credit Loan in April, which strengthens our confidence in the gradual recovery taking place in China.”

“Overall, the evolving health crisis and growing impact from COVID-19 have been weighing heavily on consumer sentiment in China, which is reflected in the performance of Yaoqianhua and Xiaoying Online Mall during the quarter. In order to control the impact of COVID-19, we have taken a more stringent risk policy. The GMV of Xiaoying Online Mall declined 62.2% from the fourth quarter of 2019 to RMB60.8 million. The number of active users of Yaoqianhua reached around 463,000 as of March 31,2020 as compared to approximately 408,000 as of December 31, 2019. Transaction volumes for Yaoqianhua, our revolving loan product previously known as Xiaoying Wallet, declined slightly to RMB2,192 million from RMB2,204 million last quarter. Yaoqianhua’s outstanding loan balance increased to RMB1,801 million as of March 31, 2020 from RMB1,503 million as of December 31, 2019 and now has an approved cumulative credit line of RMB11 billion with a credit utilization rate of around 28.0% as of March 31, 2020.”

“We believe the pandemic has significantly affected consumer behavior and at the same time created many more new opportunities for us to drive future growth. In addition, China’s central and local governments have recently begun rolling out a series of policies to guide businesses as they resume production and jump-start domestic consumption once again. Driven by supportive government policies in place and with consumer sentiment steadily recovering, we anticipate a strong but gradual recovery in Yaoqianhua and Xiaoying Online Mall.”

“We have also hit 100% of our institutional funding target. We remain in active negotiations with funding partners to further decrease funding costs and are in talks with other prospective financial partners which should bring down funding costs even further. At present, we have ample funding sources to meet growing demand as consumer sentiment improves.”

Mr. Kevin Zhang, Chief Financial Officer of the Company, added, “We delivered solid results in the first quarter relative to guidance as we anticipated that it would be a challenging quarter. The total loan facilitation amount was RMB6,823 million, representing a decline compared with our previously announced guidance.”

“We are taking decisive action to streamline expenses against weaker top-line growth, but remain confident that demand for our highly-customized personal finance solutions will once again strengthen as the recovery from the pandemic unfolds. Our revenue and net income decreased both quarter-over-quarter and year-over-year. Even though the total number of loans facilitated^[12] of Xiaoying Term Loan in the first quarter decreased year-over-year, the average loan amount per transaction was RMB15,745, an increase of 37.7% from the same period of 2019 and an increase of 7.8% sequentially. The average consumption amount per user of Xiaoying Revolving Loan also increased 3.8% from the fourth quarter of 2019 to RMB8,582.”

“We are also pleased to see total cumulative registered users on the platform reach 42.6 million as of March 31, 2020, demonstrating the continued value that we are able to offer borrowers, even during such challenging market conditions. The number of active borrowers during the quarter decreased by 29.7%. The delinquency rates for all outstanding loans that are past due for 31-90 days and 91–180 days as of March 31, 2020 were 6.71% and 7.12% respectively, compared with 4.05% and 5.11%, respectively as of December 31, 2019.

“The percentage of loan products we facilitated that were covered by ZhongAn Insurance decreased further to 67.7% during the quarter as we continue to reduce our insurance coverage rate to lower our customer borrowing costs. In its place, we have expanded our partnerships with additional third-party, high-quality financial guarantee companies to strengthen trust in the quality of our underlying assets and risk management systems.”

“We are squarely focused on our mission to create more value for our customers and shareholders. After successfully adapting to the regulatory changes in 2019, we are now navigating the ongoing impact of the health crisis is having on the industry in 2020. While regulatory and capital requirements continue to put pressure on the sustainability of the sector this year, we remain in full compliance with current regulations and are confident in our ability to stand out among our peers by capitalizing on market consolidation and increasing protection for our investors. We will continue to prioritize operational efficiency in driving long-term value for our shareholders.”

[1] The Company uses in this press release the following non-GAAP financial measures: (i) adjusted net income, (ii) adjusted net income attributable to X Financial shareholders, (iii) adjusted net income per basic ADS, and (iv) adjusted net income per diluted ADS, each of which excludes share-based compensation expense. For more information on non-GAAP financial measure, please see the section of “Use of Non-GAAP Financial Measures Statement” and the table captioned “Reconciliations of GAAP and Non-GAAP Results” set forth at the end of this press release.

[2] Each American depositary share (“ADS”) represents two Class A ordinary shares.

[3] Represents the total amount of loans that X Financial facilitated during the relevant period.

[4] X Financial integrated Xiaoying Card Loan and Xiaoying Preferred Loan into one general product category, Xiaoying Credit Loan, in 2018.

[5] Represents the total amount of loans outstanding for loans X Financial facilitated at the end of the relevant period. Loans that are delinquent for more than 180 days are charged-off and are excluded in the calculation of delinquency rate by balance, except for Xiaoying Housing Loan. Xiaoying Housing Loan is a secured loan product and the Company is entitled to payment by exercising its rights to the collateral. X Financial does not charge off the loans delinquent for more 180 days and such loans are included in the calculation of delinquency rate by balance.

[6] Calculated by dividing the total loan facilitation amount by the number of loans facilitated during the relevant period.

[7] Xiaoying Term Loan refers to the loan’s with fixed repayment periods including Xiaoying Credit Loan, Xiaoying Housing Loan, Internet Channel.

[8] Calculated by dividing the total amount of consumption by the number of active users during the relevant period.

[9] Xiaoying Revolving Loan refers to the loans with revolving credit, including Yaoqianhua which was previously named as Xiaoying Wallet.

[10] Gross Merchandise Volume (“GMV”) refers a total sales value for merchandise sold through Xiaoying Online Mall.

[11] Xiaoying Online Mall was launched in March 2019 and is a product that provides loan installments to our individual customers enabling them to purchase goods online

[12] Represents the total number of transactions of loan facilitation during the relevant period.

First Quarter 2020 Financial Results

Net revenues decreased by 31.9% to RMB529.0 million (US$74.5 million) from RMB776.4 million in the same period of 2019, primarily due to a decrease in transaction volumes as a more stringent risk policy been taken to address COVID-19 impact, which was also partially offset by an increase in the proportion of net revenue generated by the loans facilitated through the Consolidated Trusts which was recorded over the life of the underlying financing using the effective interest method.

Loan facilitation service fees under the direct model decreased by 60.7% to RMB246.0 million (US$34.6 million) from RMB626.4 million in the same period of 2019, primarily due to a decrease in the total transaction volumes under the direct model compared with the same period of 2019.

Loan facilitation service fees under the intermediary model increased by 5.3% to RMB37.0 million (US$5.2 million) from RMB35.2 million in the same period of 2019, primarily due to an increase in the total volume of products offered through the intermediary model as the Company continuing the main strategy to attract more institutional investors throughout 2020.

Post-origination service fees decreased by 12.2% to RMB64.1 million (US$9.0 million) from RMB73.0 million in the same period of 2019, as a result of the cumulative effect of decreased volume of loans facilitated in the previous quarters. Revenues from post-origination services are recognized on a straight-line basis over the term of the underlying loans as the services are being provided.

Financing income increased by 880.9% to RMB174.6 million (US$24.6 million) from RMB17.8 million in the same period of 2019, which was consistent with the increase of average loan balances held by the Consolidated Trusts due to the establishment of new trusts since the second half of 2019.

Other revenue decreased by 69.7% to RMB7.3 million (US$1.0 million) from RMB24.1 million in the same period of 2019, primarily due to a decrease in penalty fees.

Origination and servicing expenses increased by 26.2% to RMB424.9 million (US$59.9 million) from RMB336.5 million in the same period of 2019, primarily due to the following factors: (i) an increase in customer acquisition costs for the revolving credit product, Yaoqianhua, and (ii) an increase in interest expense related to loans facilitated through the Consolidated Trusts.

General and administrative expenses increased by 24.3% to RMB69.9 million (US$9.9 million) from RMB56.3 million in the same period of 2019, primarily due to an increase in management fee paid to third-party trusts companies compared with the same period of 2019.

Sales and marketing expenses decreased by 61.5% to RMB11.8 million (US$1.7 million) from RMB30.7 million in the same period of 2019, primarily due to a reduction in promotional and advertising expenses since the outbreak of COVID-19.

Provision for contingent guarantee liabilities was RMB17.9 million (US$2.5 million), primarily attributable to the increase, caused by the pandemic, in estimated default rate of the loans subject to guarantee liabilities facilitated in prior periods.

Provision for accounts receivable and contract assets increased by 23.7% to RMB82.1 million (US$11.6 million) from RMB66.4 million in the same period of 2019, primarily due to a combined effect of (a) the new current expected credit loss model that took into account the deterioration in the economic outlook caused by the COVID-19 pandemic, and (b) an increase in the estimated default rates since the COVID-19 outbreak.

Provision for loans receivable was RMB42.8 million (US$6.0 million), compared with RMB7.5 million in the same period of 2019, primarily due to the increase of expected credit loss for revolving loan product when compared with the first quarter of 2019.

Loss from operation was RMB130.0 million (US$18.3 million), compared with income from operation of RMB279.1 million in the same period of 2019.

Loss before income taxes and gain from equity in affiliates was RMB228.3 million (US$32.2 million), compared with income before income taxes and gain from equity in affiliates of RMB259.0 million in the same period of 2019.

Income tax benefit was RMB31.2 million (US$4.4 million), compared with income tax expense of RMB53.6 million in the same period of 2019, primarily arose from the net operating loss.

Net loss attributable to X Financial shareholders was RMB196.3 million (US$27.7 million), compared with net income attributable to X Financial shareholders of RMB209.0 million in the same period of 2019.

Non-GAAP adjusted net loss attributable to X Financial shareholders was RMB159.9 million (US$22.5 million), compared with non-GAAP adjusted net income attributable to X Financial shareholders of RMB251.2 million in the same period of 2019.

Net loss per basic and diluted ADS were RMB1.22 (US$0.17) and RMB1.22 (US$0.17), respectively, compared with net income per basic and diluted ADS of RMB1.36 and RMB1.30, respectively, in the same period of 2019.

Non-GAAP adjusted net loss per basic and diluted ADS were RMB1.00 (US$0.14) and RMB1.00 (US$0.14), respectively, compared with non-GAAP adjusted net income per basic and diluted ADS of RMB1.64 and RMB1.56, respectively, in the same period of 2019.

Cash and cash equivalents was RMB611.6 million (US$86.2 million) as of March 31, 2020, compared with RMB1,006.0 million as of December 31, 2019.

Business Outlook

As the Company continues to assess the impact of the COVID-19 outbreak and market indicators around the recovery in the first half of 2020, it is anticipated that the Company’s total loan facilitation amount for the second quarter of 2020 will also be negatively impacted and the Company expects a second-quarter loss with drop in revenue. The Company plans to provide a business update in the second quarter 2020 Earnings Release. This forecast reflects the Company’s current and preliminary views, which are subject to change.

Conference Call

X Financial’s management team will host an earnings conference call at 8:00 AM U.S. Eastern Time on Tuesday, June 30, 2020 (8:00 PM Beijing / Hong Kong Time on the same day).

Dial-in details for the earnings conference call are as follows:

United States:	1-888-346-8982
Hong Kong:	852-301-84992
Mainland China:	4001-201203
International:	1-412-902-4272
Passcode:	X Financial

Please dial in ten minutes before the call is scheduled to begin and provide the passcode to join the call.

A replay of the conference call may be accessed by phone at the following numbers until July 7, 2020:

United States:	1-877-344-7529
International:	1-412-317-0088
Passcode:	10145375

Additionally, a live and archived webcast of the conference call will be available at http://ir.xiaoyinggroup.com.

About X Financial

X Financial (NYSE: XYF) (the “Company”) is a leading technology-driven personal finance company in China focused on meeting the huge demand for credit from individuals and small-to-medium-sized enterprise owners. The Company’s proprietary big data-driven risk control system, WinSAFE, builds risk profiles of prospective borrowers using a variety data-driven credit assessment methodology to accurately evaluate a borrower’s value, payment capability, payment attitude and overall creditworthiness. X Financial has established a strategic partnership with ZhongAn Online P&C Insurance Co., Ltd. in multiple areas of its business operations to directly complement its cutting-edge risk management and credit assessment capabilities. ZhongAn Online P&C Insurance Co., Ltd. provides credit insurance on X Financial’s investment products which significantly enhances investor confidence and allows the Company to attract a diversified and low-cost funding base from individuals, enterprises and financial institutions to support its growth. X Financial leverages financial technology to provide convenient, efficient, and secure investment services to a wide range of high-quality borrowers and mass affluent investors which complements traditional financial institutions and helps to promote the development of inclusive finance in China.

For more information, please visit: http://ir.xiaoyinggroup.com.

Use of Non-GAAP Financial Measures Statement

In evaluating our business, we consider and use non-GAAP measures as supplemental measures to review and assess our operating performance. We present the non-GAAP financial measures because they are used by our management to evaluate our operating performance and formulate business plans. We also believe that the use of the non-GAAP financial measures facilitates investors’ assessment of our operating performance.

We use in this press release the following non-GAAP financial measures: (i) adjusted net income, (ii) adjusted net income attributable to X Financial shareholders, (iii) adjusted net income per basic ADS, and (iv) adjusted net income per diluted ADS, each of which excludes share-based compensation expense. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. These non-GAAP financial measures have limitations as analytical tools, and when assessing our operating performance, investors should not consider them in isolation, or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP.

We mitigate these limitations by reconciling the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, which should be considered when evaluating our performance. We encourage you to review our financial information in its entirety and not rely on a single financial measure.

For more information on these non-GAAP financial measures, please see the table captioned “Reconciliations of GAAP and Non-GAAP results” set forth at the end of this press release.

New Accounting Pronouncements

In June 2016, the FASB issued Accounting Standard Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Group’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. The Company have adopted the new standard effective January 1, 2020, using a modified retrospective basis under which prior comparative periods are not restated. The impact of the adoption of this guidance on the Group’s consolidated statements of comprehensive income after tax amounts to RMB17.2 million as of January 1, 2020.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars 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 RMB7.0989 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of March 31, 2020.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “potential,” “continue,” “ongoing,” “targets,” “guidance” and similar statements. The Company may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (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 the Company’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: the Company’s goals and strategies; its future business development, financial condition and results of operations; the expected growth of the credit industry, and marketplace lending in particular, in China; the demand for and market acceptance of its marketplace’s products and services; its ability to attract and retain borrowers and investors on its marketplace; its relationships with its strategic cooperation partners; competition in its industry; and relevant government policies and regulations relating to the corporate structure, business and industry. 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 announcement is current as of the date of this announcement, and the Company does not undertake any obligation to update such information, except as required under applicable law.

For more information, please contact:

X Financial
Mr. Kevin Zhang
E-mail: ir@xiaoying.com

Christensen

In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com

In US
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@christensenir.com

X Financial
Unaudited Condensed Consolidated Balance Sheets

(In thousands, except for share and per share data)	As of December 31, 2019	As of March 31, 2020
	RMB	RMB	USD
ASSETS
Cash and cash equivalents	1,005,980	611,598	86,154
Restricted cash	514,323	964,185	135,822
Accounts receivable and contract assets, net of allowance for doubtful accounts	771,154	441,168	62,146
Loans receivable from Xiaoying Credit Loans and Revolving Loans, net	289,553	222,356	31,323
Loans at fair value	2,782,333	2,197,569	309,565
Prepaid expenses and other current assets	1,226,170	2,013,654	283,658
Financial guarantee derivative	719,962	498,980	70,290
Deferred tax assets, net	465,441	520,232	73,283
Long term investments	292,142	295,630	41,644
Property and equipment, net	20,139	18,027	2,539
Intangible assets, net	35,127	34,869	4,912
Loan receivable from Xiaoying Housing Loans, net	89,536	91,460	12,884
Other non-current assets	68,772	48,121	6,779
TOTAL ASSETS	8,280,632	7,957,849	1,120,999

LIABILITIES
Payable to investors at fair value of the Consolidated Trusts	3,006,349	2,510,839	353,694
Guarantee liabilities	17,475	32,305	4,551
Short-term bank borrowings	–	341,495	48,105
Accrued payroll and welfare	63,649	37,145	5,233
Other tax payable	58,086	68,675	9,674
Income tax payable	340,996	321,845	45,337
Deposit payable to channel cooperators	108,923	58,293	8,212
Accrued expenses and other liabilities	274,440	339,343	47,803
Other non-current liabilities	42,300	27,690	3,901
Deferred tax liabilities	1,309	649	91
TOTAL LIABILITIES	3,913,527	3,738,279	526,601

Commitments and Contingencies
Equity:
Common shares	201	201	28
Additional paid-in capital	2,987,363	3,024,054	425,989
Retained earnings	1,311,194	1,114,853	157,046
Other comprehensive income	67,101	79,216	11,159
Total X Financial shareholders’ equity	4,365,859	4,218,324	594,222
Non-controlling interests	1,246	1,246	176
TOTAL EQUITY	4,367,105	4,219,570	594,398

TOTAL LIABILITIES AND EQUITY	8,280,632	7,957,849	1,120,999

X Financial
Unaudited Condensed Consolidated Statements of Comprehensive Income

	Three Months Ended March 31,
(In thousands, except for share and per share data)	2019	2020	2020
	RMB	RMB	USD
Net revenues
Loan facilitation service-Direct Model	626,382	245,960	34,648
Loan facilitation service-Intermediary Model	35,162	37,012	5,214
Post-origination service	73,007	64,113	9,031
Financing income	17,801	174,617	24,598
Other revenue	24,066	7,290	1,027
Total net revenue	776,418	528,992	74,518

Operating costs and expenses:
Origination and servicing	336,539	424,875	59,851
General and administrative	56,268	69,929	9,851
Sales and marketing	30,685	11,813	1,664
Provision for contingent guarantee liabilities	–	17,876	2,518
Provision for accounts receivable and contract assets	66,404	82,116	11,567
Provision for loans receivable	7,460	42,831	6,033
Credit losses for other financial assets	–	9,597	1,352
Total operating costs and expenses	497,356	659,037	92,836

Income (loss) from operations	279,062	(130,045)	(18,318)
Interest income, net	763	6,453	909
Foreign exchange gain (loss)	(873)	(84)	(12)
Change in fair value of financial guarantee derivative	(52,991)	(77,522)	(10,920)
Fair value adjustments related to Consolidated Trusts	32,556	(32,352)	(4,557)
Other income (loss), net	456	5,236	738

Income (loss) before income taxes and gain from equity in affiliates	258,973	(228,314)	(32,160)

Income tax benefit (expense)	(53,605)	31,153	4,388
Gain from equity in affiliates	3,796	820	116
Net income (loss)	209,164	(196,341)	(27,656)
Less: net income (loss) attributable to non-controlling interests	200	–	–
Net income (loss) attributable to X Financial shareholders	208,964	(196,341)	(27,656)

Net income (loss)	209,164	(196,341)	(27,656)
Other comprehensive income, net of tax of nil:
Foreign currency translation adjustments	(18,883)	12,115	1,707
Comprehensive income (loss)	190,281	(184,226)	(25,949)
Less: comprehensive income (loss) attributable to non controlling interests	200	–	–
Comprehensive income (loss) attributable to X Financial shareholders	190,081	(184,226)	(25,949)

Net income per share—basic	0.68	(0.61)	(0.09)
Net income per share—diluted	0.65	(0.61)	(0.09)

Net income per ADS—basic	1.36	(1.22)	(0.17)
Net income per ADS—diluted	1.30	(1.22)	(0.17)

Weighted average number of ordinary shares outstanding—basic	306,025,409	320,667,943	320,667,943
Weighted average number of ordinary shares outstanding—diluted	322,662,503	326,872,712	326,872,712

X Financial
Unaudited Reconciliations of GAAP and Non-GAAP Results

	Three Months Ended March 31,
(In thousands, except for share and per share data)	2019	2020	2020
	RMB	RMB	USD
GAAP net income (loss)	209,164	(196,341)	(27,656)
Add: Share-based compensation expenses (net of tax of nil)	42,199	36,402	5,128
Non-GAAP adjusted net income (loss)	251,363	(159,939)	(22,528)

Net income (loss) attributable to X Financial shareholders	208,964	(196,341)	(27,656)
Add: Share-based compensation expenses (net of tax of nil)	42,199	36,402	5,128
Non-GAAP adjusted net income (loss) attributable to X Financial shareholders	251,163	(159,939)	(22,528)

Non-GAAP adjusted net income (loss) per share—basic	0.82	(0.50)	(0.07)
Non-GAAP adjusted net income (loss) per share—diluted	0.78	(0.50)	(0.07)

Non-GAAP adjusted net income (loss) per ADS—basic	1.64	(1.00)	(0.14)
Non-GAAP adjusted net income (loss) per ADS—diluted	1.56	(1.00)	(0.14)

Weighted average number of ordinary shares outstanding—basic	306,025,409	320,667,943	320,667,943
Weighted average number of ordinary shares outstanding—diluted	322,662,503	326,872,712	326,872,712

LightInTheBox Reports First Quarter 2020 Financial Results

June 19, 2020 TechENT Syndication Leave a comment

BEIJING, June 19, 2020 — LightInTheBox Holding Co., Ltd. (NYSE: LITB) (“LightInTheBox” or the “Company”), a cross-border e-commerce platform that delivers products directly to consumers around the world, today announced its unaudited financial results for the first quarter ended March 31, 2020.

First Quarter 2020 Highlights

Total revenues increased 1.3% year-over-year to $51.5 million.
Gross margin expanded further to 46.4% from 40.4% last quarter and 34.8% in the same quarter of 2019.
Third consecutive quarter of GAAP profitability despite impact from COVID-19 pandemic with net income of $0.7 million, compared with a net loss of $14.1 million in the same quarter of 2019.
Adjusted EBITDA improved significantly, increasing to earnings of $1.4 million, compared with a loss of $7.9 million in the same quarter of 2019.

Mr. Jian He, Chief Executive Officer of LightInTheBox, commented, “We responded quickly and decisively to the outbreak of COVID-19 by implementing a number of strategic initiatives to provide us with the flexibility needed to adapt to a challenging global economic environment. Seasonally, the first quarter is generally the slowest quarter of the year, so the COVID-19 induced economic disruption made the operating environment even more difficult. We took advantage of the temporary slowdown to deepen relationships with high-quality suppliers, optimize our product portfolio and category mix, and improve order fulfillment speed. We also prioritized the health and safety of our employees to ensure business continuity and adequately prepare for the resumption of normal operations while demonstrating our commitment to corporate social responsibility by including free medical face masks in numerous orders shipped to markets that were being impacted heavily by the pandemic. Despite the challenging operational environment, our financial results this quarter are a reflection of our ability to adapt and is highlighted by our third and consecutive quarter of GAAP profitability which I believe demonstrates the long-term growth trajectory we are on. We remain focused on executing our strategy and are very encouraged by our improvements to date. We are already starting to see certain product categories regain strong growth momentum towards the end of the second quarter as global markets begin re-opening and expect that both our operating and financial results will continue to improve going forward.”

First Quarter 2020 Financial Results

Total revenues increased by 1.3% year-over-year to $51.5 million from $50.9 million in the same quarter of 2019. Revenues generated from product sales were $49.9 million, compared with $49.8 million in the same quarter of 2019. Revenues from service and others were $1.6 million, compared with $1.1 million in the same quarter of 2019.

The number of orders for product sales was 1.0 million in the first quarter of 2020, compared with 1.2 million in the same quarter of 2019. The number of customers for product sales was 0.8 million for the first quarter of 2020, compared with 0.6 million in the same quarter of 2019.

Revenues generated from product sales in the apparel category were $13.4 million in the first quarter of 2020, compared with $14.4 million in the same quarter of 2019. As a percentage of product sales, apparel revenues accounted for 26.8% in the first quarter of 2020, compared with 28.9% in the same quarter of 2019. Revenues generated from product sales from other general merchandise were $36.5 million in the first quarter of 2020.

Total cost of revenues was $27.6 million in the first quarter of 2020, compared with $33.2 million in the same quarter of 2019. Cost for product sales was $26.9 million in the first quarter of 2020, compared with $32.8 million in the same quarter of 2019. Cost for service and others was $0.7 million in the first quarter of 2020, compared with $0.4 million in the same quarter of 2019.

Gross profit in the first quarter of 2020 was $23.9 million, compared with $17.7 million in the same quarter of 2019. Gross margin was 46.4% in the first quarter of 2020, compared with 34.8% in the same quarter of 2019. The increase in gross margin was a result of the Company’s continuous efforts to drive revenues from categories with higher margins.

Total operating expenses in the first quarter of 2020 were $27.1 million, compared with $26.5 million in the same quarter of 2019.

Fulfillment expenses in the first quarter of 2020 were $5.0 million, compared with $5.2 million in the same quarter of 2019. As a percentage of total revenues, fulfillment expenses were 9.8% in the first quarter of 2020, compared with 10.2% in the same quarter of 2019 and 10.7% in the fourth quarter of 2019.
Selling and marketing expenses in the first quarter of 2020 were $14.8 million, compared with $9.3 million in the same quarter of 2019. As a percentage of total revenues, selling and marketing expenses were 28.7% for the first quarter of 2020, compared with 18.3% in the same quarter of 2019 and 23.9% in the fourth quarter of 2019.
G&A expenses in the first quarter of 2020 were $7.3 million, compared with $12.0 million in the same quarter of 2019. As a percentage of total revenues, G&A expenses were 14.1% for the first quarter of 2020, compared with 23.6% in the same quarter of 2019 and 11.8% in the fourth quarter of 2019. Included in G&A expenses, R&D expenses in the first quarter of 2020 were $3.5 million, compared with $4.2 million in the same quarter of 2019.

Net income was $0.7 million in the first quarter of 2020, compared with a net loss of $14.1 million in the same quarter of 2019.

Net income per American Depository Share (“ADS”) was $0.01 in the first quarter of 2020, compared with net loss per ADS of $0.21 in the same quarter of 2019. Each ADS represents two ordinary shares. The diluted net income per ADS was $0.01 in the first quarter of 2020, compared with the diluted net loss per ADS of $0.21 in the same quarter of 2019.

In the first quarter of 2020, the Company’s basic weighted average number of ADSs used in computing the net income per ADS was 102,240,901 and the diluted weighted average number of ADSs was 112,122,548.

Adjusted EBITDA, which represents gain / (loss) from operations before share-based compensation expense, change in fair value of convertible promissory notes, interest income, interest expense, income tax expense and depreciation and amortization expenses, was earnings of $1.4 million in the first quarter of 2020, compared with a loss of $7.9 million in the same quarter of 2019.

As of March 31, 2020, the Company had cash and cash equivalents and restricted cash of $35.6 million, compared with $40.4 million as of December 31, 2019.

Business Outlook

For the second quarter of 2020, based on current information available to the Company and business seasonality, the Company expects net revenues to be between $105 million and $120 million.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use the following non-GAAP financial measures to help evaluate our operating performance:

“Adjusted EBITDA” represents gain /(loss) from operations before share-based compensation expense, change in fair value of convertible promissory notes, interest income, interest expense, income tax expense and depreciation and amortization expenses. Although other companies may calculate adjusted EBITDA differently or not present it at all, we believe that the adjusted EBITDA helps to identify underlying trends in our operating results, enhancing their understanding of the past performance and future prospects.

Conference Call

The Company will hold a conference call to discuss the results at 7:00 a.m. Eastern Time on June 19, 2020 (7:00 p.m. Beijing Time on the same day).

Preregistration Information

Participants can register for the conference call by navigating to http://apac.directeventreg.com/registration/event/8893322. Once preregistration has been complete, participants will receive dial-in numbers, an event passcode, and a unique registrant ID.

To join the conference, simply dial the number in the calendar invite you receive after preregistering, enter the event passcode followed by your unique registrant ID, and you will be joined to the conference instantly.

A telephone replay will be available two hours after the conclusion of the conference call through June 26, 2020. The dial-in details are:

US/Canada:	+1-855-452-5696
Hong Kong:	800-963-117
International:	+61-2-8199-0299
Passcode:	8893322

Additionally, a live and archived webcast of the conference call will be available on the Company’s Investor Relations website at http://ir.lightinthebox.com.

About LightInTheBox Holding Co., Ltd.

LightInTheBox is a cross-border e-commerce platform that delivers products directly to consumers around the world. The Company offers customers a convenient way to shop for a wide selection of products at attractive prices through its www.lightinthebox.com, www.miniinthebox.com, www.ezbuy.com and other websites and mobile applications, which are available in 23 major languages and cover more than 140 countries.

For more information, please visit www.lightinthebox.com.

Investor Relations Contact

Christensen
Ms. Xiaoyan Su
Tel: +86 (10) 5900 3429
Email: ir@lightinthebox.com

OR
Christensen
Ms. Linda Bergkamp
Tel: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com

Forward-Looking Statements

LightInTheBox may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in press releases and other written materials and in oral statements made by its officers, directors or employees to fourth parties. 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: LightInTheBox’s goals and strategies; LightInTheBox’s future business development, results of operations and financial condition; the expected growth of the global online retail market; LightInTheBox’s ability to attract customers and further enhance customer experience and product offerings; LightInTheBox’s ability to strengthen its supply chain efficiency and optimize its logistics network; LightInTheBox’s expectations regarding demand for and market acceptance of its products; competition; fluctuations in 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 LightInTheBox’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 LightInTheBox does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

LightInTheBox Holding Co., Ltd.
Unaudited Condensed Consolidated Balance Sheets
(U.S. dollars in thousands, or otherwise noted)


	As of December 31,	As of March 31,
	2019	2020
ASSETS
Current Assets
Cash and cash equivalents	37,736	33,902
Restricted cash	2,709	1,684
Accounts receivable, net of allowance for doubtful accounts	1,356	1,411
Amounts due from related parties	4,600	2,802
Inventories	7,357	7,316
Prepaid expenses and other current assets	3,619	4,121
Total current assets	57,377	51,236
Property and equipment, net	3,502	3,245
Intangible assets, net	8,516	8,350
Goodwill	27,922	27,465
Operating lease right-of-use assets	12,233	13,504
Long-term rental deposits	778	723
Long-term investments	2,873	6,634
TOTAL ASSETS	113,201	111,157

LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	17,643	11,957
Amounts due to related parties	186	167
Advance from customers	21,731	28,921
Operating lease liabilities	3,470	4,642
Accrued expenses and other current liabilities	28,642	24,273
Total current liabilities	71,672	69,960

Operating lease liabilities	8,801	9,173
Long-term payable	847	726
TOTAL LIABILITIES	81,320	79,859

EQUITY
Ordinary shares	14	17
Additional paid-in capital	262,888	278,804
Forward contracts	15,769	—
Treasury shares, at cost	(27,512)	(28,268)
Accumulated other comprehensive loss	(1,444)	(2,165)
Accumulated deficit	(217,888)	(217,267)
Non-controlling interests	54	177
TOTAL EQUITY	31,881	31,298
TOTAL LIABILITIES AND EQUITY	113,201	111,157

LightInTheBox Holding Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
(U.S. dollars in thousands, except per share data, or otherwise noted)

	Three-month Period Ended
	March 31,	March 31,
	2019	2020
Revenues
Product sales	49,789	49,936
Services and others	1,084	1,582
Total revenues	50,873	51,518
Cost of revenues
Product sales	(32,785)	(26,905)
Services and others	(357)	(712)
Total Cost of revenues	(33,142)	(27,617)
Gross profit	17,731	23,901
Operating expenses
Fulfillment	(5,265)	(5,049)
Selling and marketing	(9,269)	(14,780)
General and administrative	(11,984)	(7,268)
Other operating income	—	13
Total operating expenses	(26,518)	(27,084)
Loss from operations	(8,787)	(3,183)
Interest income	123	47
Interest expense	(20)	(30)
Change in fair value of convertible promissory notes	(5,337)	—
Other Income,net	—	3,913
Total other (loss) / income	(5,234)	3,930
(Loss) / Income before income taxes and gain from an equity method investment	(14,021)	747
Income tax expense	(216)	(3)
Gain from an equity method investment	127	—
Net (loss) / income	(14,110)	744
Less: Net income attributable to non-controlling interests	32	123
Net (loss) /income attributable to LightInTheBox Holding Co., Ltd.	(14,142)	621

Weighted average numbers of shares used in calculating (loss) / income per ordinary share
—Basic	134,458,170	204,481,801
—Diluted	134,458,170	224,245,096

Net (loss) / income per ordinary share
—Basic	(0.11)	0.00
—Diluted	(0.11)	0.00

Net (loss) / income per ADS (2 ordinary shares equal to 1 ADS)
—Basic	(0.21)	0.01
—Diluted	(0.21)	0.01

LightInTheBox Holding Co., Ltd.
Unaudited Reconciliations of GAAP and Non-GAAP Results
(U.S. dollars in thousands, or otherwise noted)


	Three-month Period Ended
	March 31,	March 31,
	2019	2020

Net (loss) / income	(14,110)	744

Less: Interest income	123	47
Interest expense	(20)	(30)
Income tax expense	(216)	(3)
Depreciation and amortization	(628)	(551)
EBITDA	(13,369)	1,281

Less: Share-based compensation	(157)	(149)
Change in fair value of convertible promissory notes	(5,337)	—
Adjusted EBITDA*	(7,875)	1,430


* Adjusted EBITDA represents gain /(loss) from operations before share-based compensation expense, change in fair value of convertible promissory notes, interest income, interest expense, income tax expense and depreciation and amortization expenses.

51job, Inc. Reports First Quarter 2020 Financial Results

May 8, 2020 TechENT Syndication Leave a comment

SHANGHAI, May 8, 2020 /PRNewswire/ — 51job, Inc. (Nasdaq: JOBS) (“51job” or the “Company”), a leading provider of integrated human resource services in China, announced today its unaudited financial results for the first quarter of 2020 ended March 31, 2020.

First Quarter 2020 Financial Highlights:

Net revenues decreased 13.2% over Q1 2019 to RMB791.1 million (US$111.7 million)
Online recruitment services revenues decreased 10.8%
Other human resource related revenues decreased 18.2%
Income from operations was RMB170.0 million (US$24.0 million)
Fully diluted earnings per share was RMB3.02 (US$0.43)
Excluding share-based compensation expense, gain from foreign currency translation and change in fair value of equity securities investment, as well as the related tax effect of these items, non-GAAP adjusted fully diluted earnings per share was RMB3.27 (US$0.46), which exceeded the Company’s expectations
Cash and short-term investments balance increased to RMB11,231.1 million (US$1,586.1 million) as of March 31, 2020

Commenting on the results, Rick Yan, President and Chief Executive Officer of 51job, said, “Despite a decline in revenues and profitability in the first quarter that reflected the significant impact of the COVID-19 pandemic on economic activity and recruitment market demand in China, I’m very proud of how quickly our 51job team has rallied together to adapt to these unprecedented circumstances. Tapping into our large HR services ecosystem of innovative solutions and strategic partners, we are assisting and supporting employers, workers and job seekers in every possible way, including contactless services such as online job fairs, AI assessment and video interviewing. Although companies have resumed operations and employees have returned to work, the current market sentiment is still cautious and uncertain due to the ongoing pandemic and its unpredictable consequences on China and globally. But we have confidence in our proven business model, and with our ample financial resources, we remain committed to leading with high quality services, improving the user experience and driving operational excellence, all of which will position and strengthen 51job to capture more opportunities in the future.”

First Quarter 2020 Unaudited Financial Results

Net revenues for the first quarter ended March 31, 2020 were RMB791.1 million (US$111.7 million), a decrease of 13.2% from RMB911.9 million for the same quarter in 2019.

Online recruitment services revenues for the first quarter of 2020 were RMB547.0 million (US$77.3 million), representing a 10.8% decrease from RMB613.4 million for the same quarter of the prior year. The decline was due to the disruptive social and economic impact of the COVID-19 pandemic on companies in China, including temporary office and facility closures, travel restrictions and quarantines, which hindered business operations, reduced recruitment demand and curtailed employer spending on the Company’s online recruitment platforms in the first quarter of 2020.

Other human resource related revenues for the first quarter of 2020 decreased 18.2% to RMB244.1 million (US$34.5 million) from RMB298.5 million for the same quarter in 2019. The decrease was primarily due to fewer in-person training seminars and recruitment events conducted in the first quarter of 2020 as a result of the COVID-19 pandemic and the restrictions instituted on public gatherings.

Gross profit for the first quarter of 2020 was RMB536.8 million (US$75.8 million) compared with RMB662.5 million for the same quarter of the prior year. Gross margin, which is gross profit as a percentage of net revenues, was 67.9% in the first quarter of 2020 compared with 72.7% for the same quarter in 2019. The decrease in gross margin was primarily due to a lower level of revenues in the first quarter of 2020 while cost of services increased 2.0% from the year-ago quarter, mainly as a result of greater employee compensation expenses which were largely offset by less direct costs related to training and recruitment events.

Operating expenses for the first quarter of 2020 decreased 3.2% to RMB366.8 million (US$51.8 million) from RMB379.0 million for the same quarter in 2019. Sales and marketing expenses for the first quarter of 2020 decreased 4.3% to RMB276.2 million (US$39.0 million) from RMB288.7 million for the same quarter of the prior year primarily due to a decrease in performance-based bonuses and selling expenses, which was partially offset by greater spending on advertising and promotion activities. General and administrative expenses for the first quarter of 2020 were RMB90.6 million (US$12.8 million), slightly higher than RMB90.2 million for the same quarter of the prior year.

Income from operations for the first quarter of 2020 was RMB170.0 million (US$24.0 million) compared with RMB283.5 million for the first quarter of 2019. Operating margin, which is income from operations as a percentage of net revenues, was 21.5% in the first quarter of 2020 compared with 31.1% for the same quarter in 2019. Excluding share-based compensation expense, operating margin would have been 26.2% in the first quarter of 2020 compared with 34.3% for the same quarter in 2019.

The Company recognized a gain from foreign currency translation of RMB10.2 million (US$1.4 million) in the first quarter of 2020 compared with RMB13.8 million in the first quarter of 2019 primarily due to the impact of the change in exchange rate between the Renminbi and the U.S. dollar on the Company’s U.S. dollar cash deposits.

In the first quarter of 2020, the Company recognized a mark-to-market, non-cash gain of RMB9.9 million (US$1.4 million) associated with a change in fair value of equity securities investment in Huali University Group Limited, which is traded on the Hong Kong Stock Exchange.

Other income in the first quarter of 2020 included local government financial subsidies of RMB4.5 million (US$0.6 million) compared with RMB62.5 million in the first quarter of 2019.

Net income attributable to 51job for the first quarter of 2020 was RMB205.2 million (US$29.0 million) compared with net loss of RMB(84.8) million for the same quarter in 2019. Fully diluted earnings per share for the first quarter of 2020 was RMB3.02 (US$0.43) compared with loss per share of RMB(1.38) for the same quarter in 2019.

In the first quarter of 2020, total share-based compensation expense was RMB37.1 million (US$5.2 million) compared with RMB29.3 million in the first quarter of 2019.

Excluding share-based compensation expense, gain from foreign currency translation, and changes in fair value of equity securities investment and convertible senior notes, as well as the related tax effect of these items, non-GAAP adjusted net income attributable to 51job for the first quarter of 2020 was RMB222.3 million (US$31.4 million) compared with RMB349.5 million for the first quarter of 2019. Non-GAAP adjusted fully diluted earnings per share was RMB3.27 (US$0.46) in the first quarter of 2020 compared with RMB5.33 in the first quarter of 2019.

As of March 31, 2020, cash and short-term investments totaled RMB11,231.1 million (US$1,586.1 million) compared with RMB9,940.6 million as of December 31, 2019.

Business Outlook

Based on current market and operating conditions, the Company’s net revenues target for the second quarter of 2020 is in the estimated range of RMB775 million to RMB825 million (US$109.5 million to US$116.5 million). Excluding share-based compensation expense, any gain or loss from foreign currency translation and any change in fair value of equity securities investment, as well as the related tax effect of these items, the Company’s non-GAAP fully diluted earnings target for the second quarter of 2020 is in the estimated range of RMB4.35 to RMB4.85 (US$0.61 to US$0.68) per share, which factors in the receipt of local government financial subsidies of approximately RMB120 million (US$17.4 million) in the second quarter of 2020. The Company expects total share-based compensation expense in the second quarter of 2020 to be in the estimated range of RMB37 million to RMB39 million (US$5.2 million to US$5.5 million). The above forecast reflects 51job’s current and preliminary view, which is subject to change and substantial uncertainty.

Guidance for earnings per share is provided on a non-GAAP basis due to the inherent difficulty in forecasting the future impact of certain items, such as gain/loss from foreign currency translation and change in fair value of equity securities investment. The Company is not able to provide a reconciliation of these non-GAAP items to expected reported GAAP earnings per share, without unreasonable efforts, due to the unknown effect and potential significance of such future impact.

Currency Convenience Translation

For the convenience of readers, certain Renminbi amounts have been translated into U.S. dollar amounts at the rate of RMB7.0808 to US$1.00, the noon buying rate on March 31, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board.

Conference Call Information

The Company’s management will hold a conference call at 9:00 p.m. Eastern Time on May 7, 2020 (9:00 a.m. Beijing / Hong Kong time zone on May 8, 2020) to discuss its first quarter 2020 financial results, operating performance and business outlook. To dial in to the call, please use the following telephone numbers:

US: +1-888-346-8982
International: +1-412-902-4272
Hong Kong: +852-3018-4992
Conference ID: 51job

The call will also be available live and on replay through 51job’s investor relations website, http://ir.51job.com.

Use of Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with United States Generally Accepted Accounting Principles (“GAAP”), 51job uses non-GAAP financial measures of income before income tax expense, income tax expense, adjusted net income, adjusted net income attributable to 51job and adjusted earnings per share, which are adjusted from results based on GAAP to exclude share-based compensation expense, gain from foreign currency translation, and changes in fair value of equity securities investment and convertible senior notes, as well as the related tax effect of these items. The Company believes excluding share-based compensation expense and its related tax effect from its non-GAAP financial measures is useful for its management and investors to assess and analyze the Company’s core operating results as such expense is not directly attributable to the underlying performance of the Company’s business operations and do not impact its cash earnings. The Company believes excluding gain from foreign currency translation, and changes in fair value of equity securities investment and convertible senior notes, as well as the related tax effect, from its non-GAAP financial measures is useful for its management and investors as such translation, mark-to-market gain or loss is not indicative of the Company’s core business operations and will not result in cash settlement nor impact the Company’s cash earnings. 51job also believes these non-GAAP financial measures excluding share-based compensation expense, gain from foreign currency translation, and changes in fair value of equity securities investment and convertible senior notes, as well as the related tax effect of these items, are important in helping investors to understand the Company’s current financial performance and future prospects and to compare business trends among different reporting periods on a consistent basis. The presentation of these additional measures should not be considered a substitute for or superior to GAAP results or as being comparable to results reported or forecasted by other companies. The non-GAAP measures have been reconciled to GAAP measures in the attached financial statements.

About 51job

Founded in 1998, 51job is a leading provider of integrated human resource services in China. With a comprehensive suite of HR solutions, 51job meets the needs of enterprises and job seekers through the entire talent management cycle, from initial recruitment to employee retention and career development. The Company’s main online recruitment platforms (http://www.51job.com, http://www.yingjiesheng.com, http://www.51jingying.com, http://www.lagou.com, and http://www.51mdd.com), as well as mobile applications, connect millions of people with employment opportunities every day. 51job also provides a number of other value-added HR services, including business process outsourcing, training, professional assessment, campus recruitment, executive search and compensation analysis. 51job has a call center in Wuhan and a nationwide network of sales and service locations spanning more than 30 cities across China.

Contact

Linda Chien
Investor Relations, 51job, Inc.
Tel: +86-21-6879-6250
Email: ir@51job.com

Safe Harbor Statement

This announcement contains 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,” “targets, “confident” and similar statements. Among other things, statements that are not historical facts, including statements about 51job’s beliefs and expectations, the business outlook and quotations from management in this announcement, as well as 51job’s strategic and operational plans, are or contain forward-looking statements. 51job may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, 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. All forward-looking statements are based upon management’s expectations at the time of the statements and 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: execution of 51job’s strategies and business plans; growth and trends of the human resource services industry in China; market acceptance of 51job’s products and services; competition in the industry; 51job’s ability to control costs and expenses; 51job’s ability to retain key personnel and attract new talent; relevant government policies and regulations relating to 51job’s industry, corporate structure and business operations; seasonality in the business; fluctuations in the value of the Renminbi against the U.S. dollar and other currencies; risks related to acquisitions or investments 51job has made or will make in the future; accounting adjustments that may occur during the quarterly or annual close or auditing process; and fluctuations in general economic and business conditions in China and globally, including the impact of the coronavirus or other pandemic. Further information regarding these and other risks are included in 51job’s filings with the U.S. Securities and Exchange Commission. All information provided in this press release and in the attachments is as of the date of the press release and based on assumptions that 51job believes to be reasonable as of this date, and 51job undertakes no obligation to update any forward-looking statement, except as required under applicable law.

51job, Inc.
Consolidated Statements of Operations and Comprehensive Income

	For the Three Months Ended
	March 31, 2019	March 31, 2020	March 31, 2020
(In thousands, except share and per share data)	(unaudited)	(unaudited)	(unaudited)
	RMB	RMB	US$ (Note 1)

Revenues:
Online recruitment services	613,376	547,017	77,254
Other human resource related revenues	298,485	244,094	34,473

Net revenues	911,861	791,111	111,727
Cost of services (Note 2)	(249,364)	(254,303)	(35,914)

Gross profit	662,497	536,808	75,813

Operating expenses:
Sales and marketing (Note 3)	(288,728)	(276,192)	(39,006)
General and administrative (Note 4)	(90,243)	(90,642)	(12,801)

Total operating expenses	(378,971)	(366,834)	(51,807)

Income from operations	283,526	169,974	24,006

Gain from foreign currency translation	13,780	10,171	1,436
Interest and investment income, net	32,556	44,315	6,258
Change in fair value of equity securities investment	—	9,891	1,397
Change in fair value of convertible senior notes	(418,786)	—	—
Other income, net	62,328	4,335	612

Income (Loss) before income tax expense	(26,596)	238,686	33,709
Income tax expense	(60,056)	(36,771)	(5,193)

Net income (loss)	(86,652)	201,915	28,516
Net loss attributable to non-controlling interests	1,836	3,331	470

Net income (loss) attributable to 51job, Inc.	(84,816)	205,246	28,986

Net income (loss)	(86,652)	201,915	28,516
Other comprehensive income (loss)	(318)	308	43

Total comprehensive income (loss)	(86,970)	202,223	28,559

Earnings (Loss) per share:
Basic	(1.38)	3.07	0.43
Diluted (Note 5)	(1.38)	3.02	0.43

Weighted average number of common shares outstanding:
Basic	61,645,331	66,802,054	66,802,054
Diluted	61,645,331	68,005,680	68,005,680


Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB7.0808
to US$1.00 on March 31, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical
release of the Federal Reserve Board.
(2) Includes share-based compensation expense of RMB4,661 and RMB5,917 (US$836) for the three months ended
March 31, 2019 and 2020, respectively.
(3) Includes share-based compensation expense of RMB4,007 and RMB5,087 (US$718) for the three months ended
March 31, 2019 and 2020, respectively.
(4) Includes share-based compensation expense of RMB20,618 and RMB26,120 (US$3,689) for the three months ended
March 31, 2019 and 2020, respectively.
(5) Diluted loss per share for the three months ended March 31, 2019 was calculated in accordance with the
“if converted” method. The potential conversion of the convertible senior notes was excluded in the computation of diluted
loss per share for the three months ended March 31, 2019 because the effect would be anti-dilutive. The impact of share
options was also excluded in the computation of diluted loss per share for the three months ended March 31, 2019
because the effect would be anti-dilutive. On April 15, 2019, the convertible senior notes matured, and the note holders
requested the conversion of the senior notes into 4,035,664 shares.

51job, Inc.
Reconciliation of GAAP and Non-GAAP Results

	For the Three Months Ended
	March 31, 2019	March 31, 2020	March 31, 2020
(In thousands, except share and per share data)	(unaudited)	(unaudited)	(unaudited)
	RMB	RMB	US$ (Note 1)

GAAP income (loss) before income tax expense	(26,596)	238,686	33,709
Add: Share-based compensation	29,286	37,124	5,243
Less: Gain from foreign currency translation	(13,780)	(10,171)	(1,436)
Less: Change in fair value of equity securities investment	—	(9,891)	(1,397)
Add: Change in fair value of convertible senior notes	418,786	—	—
Non-GAAP income before income tax expense	407,696	255,748	36,119

GAAP income tax expense	(60,056)	(36,771)	(5,193)
Tax effect of non-GAAP line items	8	(31)	(4)
Non-GAAP income tax expense	(60,048)	(36,802)	(5,197)

Non-GAAP adjusted net income	347,648	218,946	30,922

Non-GAAP adjusted net income attributable to 51job, Inc.	349,484	222,277	31,392

Non-GAAP adjusted earnings per share:
Basic	5.67	3.33	0.47
Diluted (Note 2)	5.33	3.27	0.46

Weighted average number of common shares outstanding:
Basic	61,645,331	66,802,054	66,802,054
Diluted	67,336,334	68,005,680	68,005,680


Notes:
(1) The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB7.0808
to US$1.00 on March 31, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical
release of the Federal Reserve Board.
(2) Diluted earnings per share for the three months ended March 31, 2019 was calculated in accordance with the “if
converted” method. This included the add-back of interest expense of RMB9,403 related to the convertible senior notes
to the numerator of non-GAAP adjusted net income attributable to 51job for the three months ended March 31, 2019.
The maximum number of 4,035,672 potentially converted shares related to the convertible senior notes was added to the
denominator of diluted common shares for the three months ended March 31, 2019. On April 15, 2019, the convertible
senior notes matured, and the note holders requested the conversion of the senior notes into 4,035,664 shares.

51job, Inc.
Consolidated Balance Sheets

		As of
		December 31, 2019	March 31, 2020	March 31, 2020
(In thousands, except share and per share data)		(unaudited)	(unaudited)	(unaudited)
		RMB	RMB	US$ (Note 1)

ASSETS

Current assets:
	Cash	2,294,904	2,899,211	409,447
	Restricted cash	66,169	3,085	436
	Short-term investments	7,645,686	8,331,892	1,176,688
	Accounts receivable (net of allowance of RMB21,952 and
	RMB19,344 as of December 31, 2019 and March 31, 2020,
	respectively)	266,437	211,017	29,801
	Prepayments and other current assets	669,208	184,437	26,047

Total current assets		10,942,404	11,629,642	1,642,419

Non-current assets:
	Long-term investments	1,482,544	1,495,713	211,235
	Property and equipment, net	271,932	268,239	37,883
	Goodwill	1,036,124	1,036,124	146,329
	Intangible assets, net	203,162	192,612	27,202
	Right-of-use assets	320,809	313,250	44,239
	Other long-term assets	10,420	12,537	1,770
	Deferred tax assets	22,147	24,527	3,464

Total non-current assets		3,347,138	3,343,002	472,122

Total assets		14,289,542	14,972,644	2,114,541

LIABILITIES, MEZZANINE EQUITY AND EQUITY

Current liabilities:
	Accounts payable	48,114	75,234	10,625
	Salary and employee related accrual	162,775	111,389	15,731
	Taxes payable	267,596	131,891	18,627
	Advance from customers	1,108,518	979,627	138,350
	Lease liabilities, current	34,817	35,591	5,026
	Other payables and accruals	1,211,642	1,924,001	271,721

Total current liabilities		2,833,462	3,257,733	460,080

Non-current liabilities:
	Lease liabilities, non-current	50,763	45,775	6,465
	Deferred tax liabilities	214,307	209,679	29,612

Total non-current liabilities		265,070	255,454	36,077

Total liabilities		3,098,532	3,513,187	496,157

Mezzanine equity:
	Redeemable non-controlling interests	216,974	213,298	30,123

Shareholders’ equity:
	Common shares (US$0.0001 par value: 500,000,000 shares
	authorized, 66,784,688 and 66,902,685 shares issued and
	outstanding as of December 31, 2019 and March 31, 2020,
	respectively)	53	54	8
	Additional paid-in capital	4,901,466	4,967,497	701,545
	Statutory reserves	17,930	17,930	2,532
	Accumulated other comprehensive income	254,524	254,832	35,989
	Retained earnings	5,774,358	5,979,604	844,481

Total 51job, Inc. shareholders’ equity		10,948,331	11,219,917	1,584,555

Non-controlling interests		25,705	26,242	3,706

Total equity		10,974,036	11,246,159	1,588,261

Total liabilities, mezzanine equity and equity		14,289,542	14,972,644	2,114,541


Note (1): The conversion of Renminbi amounts into U.S. dollar amounts is based on the noon buying rate of RMB7.0808 to US$1.00
on March 31, 2020 in New York for cable transfers of Renminbi as set forth in the H.10 weekly statistical release of the Federal
Reserve Board.

View original content:http://www.prnewswire.com/news-releases/51job-inc-reports-first-quarter-2020-financial-results-301054710.html

Source: 51job, Inc.

PR Newswire

Fang Announces Fourth Quarter and Fiscal Year 2019 Unaudited Financial Results

April 24, 2020 TechENT Syndication Leave a comment

BEIJING, April 24, 2020 /PRNewswire/ — Fang Holdings Limited (NYSE: SFUN) (“Fang” or the “Company”), a leading real estate Internet portal in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2019.

Fourth Quarter 2019 Highlights

Total revenues were $49.3 million, a decrease of 26.7% from $67.3 million in the corresponding period of 2018.
Operating loss from continuing operations was $21.0 million, compared to an operating income from continuing operations of $21.1 million in the corresponding period of 2018.
Net loss was $26.2 million, compared to a net loss of $29.4 million in the corresponding period of 2018.

Fiscal Year 2019 Highlights

Total revenues were $219.7 million, a decrease of 8.5% from $240.0 million in 2018.
Operating income from continuing operations was $24.1 million, an increase of 145.7% from $9.8 million in 2018.
Net loss was $7.7 million, compared to a net loss of $114.9 million in 2018.

“In 2019, we had challenges but also achievements,” commented Mr. Jian Liu, CEO of Fang. “For the year of 2020, challenges and opportunities co-exist because of the potential effects of COVID-19. I believe our new initiatives, including online live broadcastings, online exhibitions and VR live, will be strong drivers of our business.”

Fourth Quarter 2019 Financial Results

Revenues

Fang reported total revenues of $49.3 million in the fourth quarter of 2019, a decrease of 26.7% from $67.3 million in the corresponding period of 2018.

Revenue from marketing services was $18.9 million in the fourth quarter of 2019, a decrease of 35.0% from $29.1 million in the corresponding period of 2018, mainly due to the decrease in aggregate market demand.
Revenue from listing services was $12.7 million in the fourth quarter of 2019, a decrease of 25.3% from $16.9 million in the corresponding period of 2018, mainly due to the decrease in the number of paying customers.
Revenue from leads generation services was $14.4 million in the fourth quarter of 2019, an increase of 16.2% from $12.4 million in the corresponding period of 2018.
Revenue from financial services was $1.4 million in the fourth quarter of 2019, a decrease of 69.2% from $4.6 million in the corresponding period of 2018, mainly due to the decrease in average loan receivable balance.

Cost of Revenue

Cost of revenue was $4.1 million in the fourth quarter of 2019, a decrease of 41.6% from $7.0 million in the corresponding period of 2018, primarily due to the decline in sales and the optimization in cost structure.

Operating Expenses

Operating expenses were $68.4 million in the fourth quarter of 2019, an increase of 74.3% from $39.2 million in the corresponding period of 2018.

Selling expenses were $26.3 million in the fourth quarter of 2019, an increase of 78.9% from $14.7 million in the corresponding period of 2018, mainly due to the increase in promotional expense.
General and administrative expenses were $42.1 million in the fourth quarter of 2019, an increase of 71.6% from $24.5 million in the corresponding period of 2018, mainly due to the increase in staff related costs.

Operating (Loss)/Income from Continuing Operations

Operating loss from continuing operations was $21.0 million in the fourth quarter of 2019, compared to operating income from continuing operations of $21.1 million in the corresponding period of 2018.

Change in Fair Value of Securities

Change in fair value of securities for the fourth quarter of 2019 was a loss of $3.5 million, compared to a loss of $31.4 million in the corresponding period of 2018, mainly due to the fluctuation in market price of investments in equity securities.

Income Tax Benefits/Expenses

Income tax benefits were $3.4 million in the fourth quarter of 2019, compared to an expense of $23.7 million in the corresponding period of 2018.

Net Loss

Net loss was $26.2 million in the fourth quarter of 2019, compared to a net loss of $29.4 million in the corresponding period of 2018.

Fiscal Year 2019 Financial Results

Revenues

Fang reported total revenues of $219.7 million for 2019, a decrease of 8.5% from $240.0 million in 2018.

Revenue from marketing services was $94.6 million for 2019, a decrease of 3.8% from $98.4 million in 2018.
Revenue from listing services was $63.5 million for 2019, a decrease of 22.4% from $81.7 million in 2018, mainly due to the decreased number of paying members in listing services.
Revenue from leads generation services was $43.3 million for 2019, an increase of 103.3% from $21.3 million in 2018, driven by the increase in effectiveness of services and customer acceptance.
Revenue from financial services was $9.6 million for 2019, a decrease of 47.1% from $18.1 million in 2018.

Cost of Revenue

Cost of revenue was $26.5 million for 2019, a decrease of 42.9% from $46.4 million in 2018, primarily due to cost savings from optimizing our core business.

Operating Expenses

Operating expenses were $174.6 million for 2019, a decrease of 7.2% from $188.3 million in 2018.

Selling expenses were $73.6 million for 2019, an increase of 24.6% from $59.1 million in 2018.
General and administrative expenses were $101.1 million for 2019, a decrease of 21.8% from $129.2 million in 2018, mainly due to the decrease in bad debt.

Operating Income from Continuing Operations

Operating income from continuing operations increased from $9.8 million in 2018 to $24.1 million for 2019.

Change in Fair Value of Securities

Change in fair value of securities for 2019 was a loss of $46.1 million, compared to a loss of $167.4 million in 2018, mainly due to the fluctuation in market price of investments in equity securities.

Income Tax Benefits

Income tax benefits were $12.5 million for 2019, a decrease of 34.2% from $19.0 million in 2018, primarily due to the effect of change in fair value of equity securities and the reversal of previously recorded ASC 740 (FIN 48) income tax and interest liability.

Net Loss

Net loss was $7.7 million for 2019, compared to a net loss of $114.9 million in 2018.

Business Outlook

Based on current operations and market conditions, Fang’s management predicts a positive net income for the year of 2020, which represents management’s current and preliminary view and is subject to change.

Conference Call Information

Fang’s management team will host a conference call on the same day at 8:00 AM U.S. Eastern Time (8:00 PM on the same day, Beijing/Hong Kong time). The dial-in details for the live conference call are:

International Toll:	+65 67135600
Toll-Free/Local Toll:
United States	+1 877-440-9253 / +1 631-460-7472
Hong Kong	+852 800-906-603 / +852 3018-6773
Mainland China	+86 800-870-0075 / +86 400-120-0948
Direct Event Passcode	1578624#

Please register in advance of the conference using the link provided below. Upon registering, you will be provided with participant dial-in numbers, Direct Event passcode (1578624#) and unique registrant ID. Get prompted 10 min prior to the start of the conference. Enter the Direct Event Passcode above (1578624#), and your unique Registrant ID, followed by the pound or hash (#) sign to get into the call.

Direct Event online registration: http://apac.directeventreg.com/registration/event/8819045

A telephone replay of the call will be available after the conclusion of the conference call from 11:00 AM ET on April 24, 2020 through 9:59 AM ET May 2, 2020. The dial-in details for the telephone replay are:

International Toll:	+61 2-8199-0299
Toll-Free/Local Toll:
United States	+1 855-452-5696 / +1 646-254-3697
Hong Kong	+852 800-963-117 / +852 3051-2780
Mainland China	+86 400-602-2065 / +86 800-870-0206
Conference ID:	8819045

A live and archived webcast of the conference call will be available on Fang’s website at http://ir.fang.com.

About Fang

Fang operates a leading real estate Internet portal in China in terms of the number of page views and visitors to its websites. Through its websites, Fang provides primarily marketing, listing, leads generation and financial services for China’s fast-growing real estate and home furnishing and improvement sectors. Its user-friendly websites support active online communities and networks of users seeking information on, and other value-added services for, the real estate and home furnishing and improvement sectors in China. Fang currently maintains approximately 74 offices to focus on local market needs and its website and database contains real estate related content covering 665 cities in China. For more information about Fang, please visit http://ir.fang.com.

Safe Harbor Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking 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,” “is expected to,” “anticipates,” “aim,” “future,” “intends,” “plans,” “believes,” “are likely to,” “estimates,” “may,” “should” and similar expressions, and include, without limitation, statements regarding Fang’s future financial performance, revenue guidance, growth and growth rates, market position and continued business transformation. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Fang’s control, which may cause its actual results, performance or achievements to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, without limitation, the impact of Fang’s transformation back to a technology-driven Internet platform and the impact of current and future government policies affecting China’s real estate market. Further information regarding these and other risks, uncertainties or factors is included in Fang’s filings with the U.S. Securities and Exchange Commission. Fang does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

Fang Holdings Limited
Unaudited Condensed Consolidated Balance Sheets^[1]
(in thousands of U.S. dollars, except share data and per share data)

ASSETS		December 31,	December 31,
		2019	2018
Current assets:
	Cash and cash equivalents	181,702	171,183
	Restricted cash, current	218,112	245,474
	Short-term investments	118,979	16,043
	Accounts receivable, net	67,369	58,687
	Funds receivable	8,372	5,474
	Prepayments and other current assets	32,954	27,894
	Commitment deposits	188	191
	Loans receivable, current	60,490	117,602
	Amounts due from related parties	369	–
	Current assets of discontinued operations	–	26,289
Total current assets		688,535	668,837
Non-current assets:
	Property and equipment, net	695,457	727,739
	Land use rights	–	33,153
	Loans receivable, non-current	–	6,249
	Deferred tax assets	6,362	2,202
	Deposits for non-current assets	618	902
	Restricted cash, non-current portion	42,452	6,990
	Long-term investments	341,946	373,233
	Other non-current assets	39,400	4,558
	Non-current assets of discontinued operations	–	573
Total non-current assets		1,126,235	1,155,599
Total assets		1,814,770	1,824,436

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Short-term loans	267,029	297,811
	Short term bond payable	102,779	–
	Deferred revenue	136,859	142,473
	Accrued expenses and other liabilities	118,977	118,924
	Customers’ refundable fees	5,538	3,976
	Income tax payable	3,834	2,383
	Amounts due to related parties	9,227	19
	Current liabilities of discontinued operations	–	35,327
Total current liabilities		644,243	600,913
Non-current liabilities:
	Long-term loans	182,321	123,215
	Convertible senior notes	169,146	254,435
	Deferred tax liabilities	84,964	97,578
	Other non-current liabilities	138,001	150,837
	Non-current liabilities of discontinued operations	–	2,258
Total non-current liabilities		574,432	628,323
Total Liabilities		1,218,675	1,229,236

Equity:
	Class A ordinary shares, par value Hong Kong Dollar (“HK$”) 1 per share, 600,000,000 shares authorized for Class A and Class B in aggregate, issued shares as of December 31, 2018 and December 31, 2019: 72,069,645 and 71,775,686; outstanding shares as of December 31, 2018 and December 31, 2019: 65,004,587 and 65,403,005	9,244	9,286
	Class B ordinary shares, par value HK$1 per share, 600,000,000 shares authorized for Class A and Class B in aggregate, and 24,336,650 shares and 24,336,650 shares issued and outstanding as at December 31, 2018 and December 31, 2019, respectively	3,124	3,124
	Less: Treasury stock	(123,226)	(136,615)
	Additional paid-in capital	528,357	517,802
	Accumulated other comprehensive loss	(93,070)	(75,837)
	Retained earnings	270,973	276,746
Total Fang Holdings Limited shareholders’ equity		595,402	594,506
	Noncontrolling interests	693	694
Total equity		596,095	595,200
TOTAL LIABILITIES AND EQUITY		1,814,770	1,824,436

Unaudited Condensed Consolidated Statements of Comprehensive Loss^[1]
(in thousands of U.S. dollars, except share data and per share data)

		Three months ended		Year ended
		December 31,	December 31,	December 31,	December 31,
		2019	2018	2019	2018
Revenues:
	Marketing services	18,919	29,117	94,639	98,377
	Leads generation services	14,414	12,407	43,300	21,303
	Listing services	12,662	16,948	63,471	81,741
	Value-added services	1,712	1,381	5,893	5,182
	Financial services	1,426	4,637	9,561	18,060
	E-commerce services	191	2,787	2,847	15,384
Total revenues		49,324	67,277	219,711	240,047

Cost of revenues:
	Cost of services	(4,086)	(6,995)	(26,472)	(46,392)
Total Cost of Revenues		(4,086)	(6,995)	(26,472)	(46,392)

Gross Profit		45,238	60,282	193,239	193,655

Operating (expenses) income:
	Selling expenses	(26,290)	(14,692)	(73,568)	(59,064)
	General and administrative expenses	(42,099)	(24,539)	(101,080)	(129,224)
	Other income	2,197	5	5,477	4,427

Operating (loss) / Income from continuing operations		(20,954)	21,056	24,068	9,794

	Foreign exchange gain/loss	(46)	(606)	153	(598)
	Interest income	4,319	1,910	9,200	10,202
	Interest expense	(9,006)	(5,217)	(25,932)	(21,174)
	Investment income, net	86	1,011	2,644	6,816
	Realized gain on sale of available-for-sale securities	(721)	148	861	761
	Change in fair value of securities	(3,450)	(31,361)	(46,062)	(167,402)
	Government grants	184	584	927	1,224
	Other non-operating loss	–	(7)	–	(30)
Loss before income taxes and noncontrolling interests from continuing operations		(29,588)	(12,482)	(34,141)	(160,407)
Income tax benefits(expenses)
	Income tax benefits	3,370	(23,697)	12,495	18,989
Net (loss) income from continuing operations, net of income taxes		(26,218)	(36,179)	(21,646)	(141,418)
Income from discontinued operations, net of income taxes		–	6,777	13,937	26,509
Net loss		(26,218)	(29,402)	(7,709)	(114,909)
	Net loss attributable to noncontrolling interests	(1)	2	(1)	2
Net loss attributable to Fang Holdings Limited shareholders		(26,217)	(29,404)	(7,708)	(114,911)
Earnings per share for Class A and Class B ordinary shares and per ADS:
	Basic	(0.29)	(0.33)	(0.09)	(1.29)
	Diluted	(0.29)	(0.33)	(0.09)	(1.29)
Earnings from continuing operations per share for Class A and Class B ordinary shares and per ADS:
	Basic	(0.29)	(0.41)	(0.24)	(1.59)
	Diluted	(0.29)	(0.41)	(0.24)	(1.59)
Earnings from discontinued operations per share for Class A and Class B ordinary shares and per ADS:
	Basic	–	0.08	0.16	0.30
	Diluted	–	0.07	0.15	0.29
Weighted average number of Class A and Class B ordinary shares outstanding and ADSs outstanding:
	Basic	89,739,655	89,180,170	89,510,533	88,749,432
	Diluted	89,739,655	90,473,173	90,073,715	91,994,057

^[1] Impact of the Separation of China Index Holdings Ltd (NASDAQ: CIH) (“CIH”) on the Company’s Financial Statements: The separation of CIH represents a strategic shift of Fang and has a major effect on Fang’s results of operations, the business operated by CIH has been reclassified as discontinued operations. For the periods presented in this press release, the assets and liabilities of the discontinued operations are presented separately on the consolidated balance sheets, and the results of the discontinued operations, less applicable income taxes, are reported as a separate component of income, which is income from discontinued operations, on the consolidated statements of comprehensive income (loss).

View original content:http://www.prnewswire.com/news-releases/fang-announces-fourth-quarter-and-fiscal-year-2019-unaudited-financial-results-301046759.html

techENT

Tag Archives: ERP

Canadian Solar Reports Second Quarter 2020 Results

X Financial Reports First Quarter 2020 Unaudited Financial Results

LightInTheBox Reports First Quarter 2020 Financial Results

51job, Inc. Reports First Quarter 2020 Financial Results

Fang Announces Fourth Quarter and Fiscal Year 2019 Unaudited Financial Results

Tech Your Way