eHi Car Services Announces First Quarter 2016 Results

SHANGHAI, May 23, 2016 /PRNewswire/ -- eHi Car Services Limited ("eHi" or the "Company") (NYSE: EHIC), a leading car rentals and car services provider in China, today announced its unaudited financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Highlights

• Net revenues increased by 55.8% year-over-year to RMB460.5 million (US$71.4 million[1]) for the first quarter of 2016, from RMB295.5 million for the first quarter of 2015.

• Gross profit[2] increased by 132.9% year-over-year to RMB129.7 million (US$20.1 million) for the first quarter of 2016, from RMB55.7 million for the first quarter of 2015. Gross profit margin increased significantly year-over-year to 28.2% for the first quarter of 2016, from 18.9% for the first quarter of 2015.
• Non-GAAP adjusted EBITDA[3] increased by 74.5% year-over-year to RMB201.9 million (US$31.3 million) for the first quarter of 2016, from RMB115.7 million for the first quarter of 2015. Non-GAAP adjusted EBITDA margin[4] increased to 43.8% for the first quarter of 2016, from 39.2% for the first quarter of 2015.
• Net loss was RMB3.7 million (US$0.6 million) for the first quarter of 2016, compared to a net income of RMB3.6 million for the first quarter of 2015 (including a RMB16.9 million gain from waiver of warrant during the same period).
• Average available fleet size[5] for car rentals increased by 62.8% year-over-year to 32,007 vehicles for the first quarter of 2016, from 19,659 vehicles for the first quarter of 2015. Average available fleet size for car services increased by 74.0% year-over-year to 2,327 vehicles for the first quarter of 2016, from 1,338 vehicles for the first quarter of 2015. Total average available fleet size increased by 63.5% year-over-year to 34,334 vehicles for the first quarter of 2016, from 20,997 vehicles for the first quarter of 2015. As of March 31, 2016, total period-end fleet size[6] was 39,458 vehicles.
• RevPAC[7] for car rentals maintained at RMB126 for the first quarter of 2016, compared to RMB128 for the first quarter of 2015. RevPAC for car services decreased to RMB461 for the first quarter of 2016, from RMB574 for the first quarter of 2015, which was primarily attributable to an increase in car services with more economic vehicle models. As a result, total fleet RevPAC decreased to RMB149 for the first quarter of 2016, from RMB156 for the first quarter of 2015.
• Fleet utilization rate[8] for car rentals reached a record-high 75.3% for the first quarter of 2016, compared to 71.3% for the first quarter of 2015.

Mr. Ray Zhang, eHi's Chairman and Chief Executive Officer, said, "We are pleased with our strong operating and financial performance in the first quarter of 2016, which was driven by continued fleet expansion, our renowned reputation for service quality and strong consumer demand during the Chinese New Year holiday period. Additionally, the demand for our rental cars from the car hailing industry is increasing. To better serve the needs of our customers and further enhance our competitive position, in April we established a strategic cooperation relationship with SAIC Motor Corporation Limited to collaborate in key areas including vehicle procurement and financing, used car sales and brand promotion. Furthermore, we recently joined with the Chinese Football Association Super League ("CSL") in a marketing campaign to showcase eHi ad placements in all CSL game sites, live TV broadcasts and replays for the remainder of the 2016 season, with a goal to further grow our brand awareness."

Mr. Colin Sung, eHi's Chief Financial Officer, said, "In the first quarter, we continued to benefit from expanding economies of scale as demonstrated by significantly improving gross margin to 28.2% from 18.9% in the year-ago period, while also increasing non-GAAP adjusted EBITDA margin to 43.8% from 39.2% in the year-ago period. We achieved rental fleet utilization rate of 75.3% for the first quarter of 2016, which was the highest quarterly utilization rate recorded in the past three years. With a healthy balance sheet and diversified funding sources, we will continue to emphasize operating efficiency and margin improvement during the remainder of the year. "

First Quarter 2016 Financial Results

Net revenues for the first quarter of 2016 were RMB460.5 million (US$71.4 million), up 55.8% year-over-year, attributable to increases in net revenues from both car rentals and car services.

Net revenues from car rentals for the first quarter of 2016 were RMB364.0 million (US$56.4 million), up 60.8% year-over-year, primarily driven by the growing average available fleet size for car rentals in response to customer demand.

Net revenues from car services for the first quarter of 2016 were RMB96.5 million (US$15.0 million), up 39.7% year-over-year, primarily driven by increased demand from existing and new customers for car services.

Cost of revenues (vehicle operating expenses) for the first quarter of 2016 was RMB330.8 million (US$51.3 million), up 37.9% year-over-year, primarily driven by increased depreciation and labor costs, and partially offset by savings in vehicle insurance expenses.

In the first quarter of 2016, 463 used vehicles were disposed of, and 539 used vehicles were under sales contracts pending title transfer. The Company recorded a loss of RMB2.0 million (US$0.3 million) in aggregate for these 1,002 vehicles. The loss was recognized as an adjustment to the vehicle-related depreciation expense as part of the cost of revenues.

Gross profit for the first quarter of 2016 was RMB129.7 million (US$20.1 million), up 132.9% year-over-year. Gross profit margin for the first quarter of 2016 was 28.2%, compared to 18.9% for the first quarter of 2015.

Selling and marketing expenses for the first quarter of 2016 were RMB22.4 million (US$3.5 million), up 111.2% year-over-year, primarily due to increased channel marketing and promotion fees as the Company expanded branding and channel promotion activities in the first quarter of 2016.

General and administrative expenses for the first quarter of 2016 were RMB57.0 million (US$8.8 million), up 67.6% year-over-year, primarily due to increases in employee-related costs including salaries and welfare expenses,  as well as unrealized exchange loss. 

Profit from operations for the first quarter of 2016 was RMB50.4 million (US$7.8 million), up 299.6% year-over-year.

Interest expense for the first quarter of 2016 was RMB56.1 million (US$8.7 million), up 114.5% year-over-year, primarily attributable to the interest expense associated with the Company's senior unsecured notes of US$200 million due 2018. 

Net loss for the first quarter of 2016 was RMB3.7 million (US$0.6 million), compared to a net income of RMB3.6 million for the first quarter of 2015. Net loss for the first quarter of 2016 was primarily due to the increase in interest expense. Net income for the first quarter of 2015 included RMB16.9 million income in connection with a waiver of warrant in investment assets.

Non-GAAP adjusted EBITDA for the first quarter of 2016 was RMB201.9 million (US$31.3 million), up 74.5% year-over-year. Non-GAAP adjusted EBITDA margin for the first quarter of 2016 was 43.8%, compared to 39.2% for the first quarter of 2015.

As of March 31, 2016, the Company's cash, cash equivalents and restricted cash balance was RMB2.6 billion (US$404.5 million).

Recent Development

In April 2016, the Company signed a Memorandum of Understanding to establish a strategic cooperation with SAIC Motor Corporation Limited ("SAIC"), the largest automotive manufacturer on China's A-share market. The strategic cooperation will enable eHi and SAIC to collaborate in-depth in several key areas, including vehicle procurement and financing, used car sales and brand promotion. Notably, SAIC will provide comprehensive support and preferential policies for eHi related to vehicle procurement, post-sale services and vehicle maintenance, while eHi will cooperate with SAIC to explore growth opportunities in China's automotive market through a wide range of initiatives, including test drives, financial leasing and alternative vehicles.

Outlook

The Company reiterates its full-year 2016 outlook previously announced on March 29, 2016. The Company estimates that net revenues for the full year of 2016 will increase approximately 50% from 2015, and total period-end fleet size will reach approximately 57,000 vehicles as of December 31, 2016. This outlook reflects the Company's current and preliminary view, which is subject to change.

Conference Call Information

The Company's management will host an earnings conference call at 8:00 PM U.S. Eastern Time on May 23, 2016 (8:00 AM Beijing/Hong Kong time on May 24, 2016).

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

Participants should dial-in at least 5 minutes before the scheduled start time and ask to be connected to the "eHi Car Services call."

Additionally, a live and archived webcast of the conference call will be available on the investor relations section of eHi's website at http://ir.ehi.com.cn.

A replay of the conference call will be accessible by phone at the following numbers until May 30, 2016:

About eHi Car Services Limited

eHi Car Services Limited (NYSE: EHIC) is China's No. 1 car services provider and No. 2 car rentals provider in terms of market share by revenues in 2013, according to Frost & Sullivan. The Company's mission is to provide comprehensive mobility solutions as an alternative to car ownership by best utilizing existing resources and sharing economy to create optimal value. eHi distinguishes itself in China's fast-growing car rental and car services market through its complementary business model, customer-centric corporate culture, broad geographic coverage, efficient fleet management, leading brand name, and commitment to technological innovation. eHi is the exclusive strategic partner in China of Enterprise, the largest car rental company in the world, and is the designated and preferred business partner of Ctrip, a leader in the online travel agency industry in China. For more information regarding eHi, please visit http://en.1hai.cn.

About Non-GAAP Financial Measures

To supplement its unaudited condensed consolidated financial statements which are presented in accordance with U.S. GAAP, the Company uses adjusted EBITDA as a non-GAAP financial measure. Adjusted EBITDA represents net income or loss before depreciation and amortization, share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. The Company's management believes that adjusted EBITDA facilitates a better understanding of operating results from quarter to quarter and provide management with a better capability to plan and forecast future periods. For more information on the non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP and Non-GAAP Results" set forth at the end of this press release.

Non-GAAP information is not prepared in accordance with GAAP and may be different from non-GAAP methods of accounting and reporting used by other companies. The presentation of this additional information should not be considered a substitute for GAAP results. A limitation of using adjusted EBITDA is that adjusted EBITDA excludes depreciation and amortization, share-based compensation, interest expenses, interest income and provision for income taxes that have been and will continue to be significant recurring portions of the Company's business for the foreseeable future.

Safe Harbor Statement

This press release contains forward-looking statements made under the "safe harbor" provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. eHi may also make written or oral forward-looking statements in its reports filed with or furnished to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Any statements that are not historical facts, including statements about eHi's beliefs and expectations, are forward-looking statements that involve factors, risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such factors and risks include, but not limited to the following: eHi's goals and strategies; its future business development, financial condition and results of operations; its ability to achieve and sustain profitability; its heavy reliance on its proprietary technology platform; its ability to compete successfully against current and future competitors; the expected growth of China's car rentals and car services market; its ability to sustain its growth rates and manage its expansion plan; its ability to dispose used vehicles at desirable prices or timing or through appropriate channels; its ability to raise sufficient capital to fund and expand its operations at a reasonable cost; various government policies on automobile control and purchase restrictions in certain Chinese cities; its ability to enhance its brand recognition and maintain a high level of customer satisfaction; its ability to control the losses resulting from customer violation of traffic rules; and its ability to obtain all of the requisite permits, licenses or making all of the requisite filings or registrations or meeting other regulatory requirements for operating car rentals and car services business in China. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC. All information provided in this press release is current as of the date of the press release, and eHi does not undertake any obligation to update such information, except as required under applicable law.

For investor and media inquiries, please contact:

eHi Car Services Limited
Tel: +86 (21) 6468-7000 ext. 8742
E-mail: [email protected]

The Piacente Group, Inc. 
Mr. Don Markley
Tel: +1-212-481-2050
E-mail: [email protected]

SOURCE eHi Car Services Limited