eHi Car Services Announces Fourth Quarter and Full Year 2015 Results

SHANGHAI, March 28, 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 fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Highlights

• Net revenues increased by 71.0% year-over-year to RMB421.5 million (US$65.1 million[1]) for the fourth quarter of 2015, from RMB246.5 million for the fourth quarter of 2014.

• Gross profit (net revenues less vehicle operating expenses reported as cost of revenues) [2] increased by 280.6% year-over-year to RMB102.0 million (US$15.8 million) for the fourth quarter of 2015, from RMB26.8 million for the fourth quarter of 2014. Gross profit margin was 24.2% for the fourth quarter of 2015, compared with 10.9% for the fourth quarter of 2014.
• Non-GAAP adjusted EBITDA[3] increased by 131.5% year-over-year to RMB166.7 million (US$25.7 million) for the fourth quarter of 2015, from RMB72.0 million for the fourth quarter of 2014. Non-GAAP adjusted EBITDA margin[4] was 39.6% for the fourth quarter of 2015, compared with 29.2% for the fourth quarter of 2014.
• Net loss for the fourth quarter of 2015 was RMB12.3 million (US$1.9 million), compared with a net loss of RMB45.5 million for the fourth quarter of 2014.
• Average available fleet size[5] increased by 97.8% year-over-year to 32,255 vehicles for the fourth quarter of 2015, from 16,305 vehicles for the fourth quarter of 2014. As of December 31, 2015, total period-end fleet size[6] was 38,070 vehicles.
• Total fleet RevPAC[7] decreased to RMB142 for the fourth quarter of 2015, from RMB164 for the fourth quarter of 2014.
• Fleet utilization rate[8] for car rentals was 70.4% for the fourth quarter of 2015, compared with 73.1% for the fourth quarter of 2014.

Full Year 2015 Highlights

• Net revenues increased by 70.4% to RMB1,450.6 million (US$223.9 million[1]) for the full year of 2015, from RM851.2 million for the full year of 2014.

• Gross profit[2] increased by 136.0% year-over-year to RMB312.7 million (US$48.3 million) for the full year of 2015, from RMB132.5 million for the full year of 2014. Gross profit margin was 21.6% for the full year of 2015, compared with 15.6% for the full year of 2014.
• Non-GAAP adjusted EBITDA[3] increased by 103.9% to RMB573.7 million (US$88.6 million) for the full year of 2015, from RMB281.4 million for the full year of 2014. Non-GAAP adjusted EBITDA margin[4] was 39.5% for the full year of 2015, compared with 33.1% for the full year of 2014.
• Net income for the full year of 2015 was RMB696.3 million (US$107.5 million), compared with a net loss of RMB93.1 million for the full year of 2014.
• Average available fleet size[5] increased by 87.5% to 26,460 vehicles for the full year of 2015, from 14,111 vehicles for the full year of 2014.
• Total fleet RevPAC[7] decreased to RMB150 for the full year of 2015, from RMB165 for the full year of 2014.
• Fleet utilization rate[8] for car rentals was 71.4% for the full year of 2015, compared with 71.8% for the full year of 2014.

Mr. Ray Zhang, eHi's Chairman and Chief Executive Officer, said, "2015 was another year of significant growth for eHi, driven by considerable advancements in both car rentals and car services businesses. We expanded our total fleet size by over 92% year-over-year, while maintaining the rental fleet utilization rate above 71% for the full year of 2015. We also continued strategic expansion of services network, deep penetration in existing market, and further diversification of our services offerings. Looking ahead to 2016, while our strategy focuses on delivering strong and organic growth, we will also explore potential strategic cooperation and investment opportunities to enhance our operating synergies and competitive positions."

Mr. Colin Sung, eHi's Chief Financial Officer, said, "We are pleased with our solid financial results, in particular achieving over 70% year-over-year net revenue growth in fourth quarter and full year of 2015, while continually improving our gross profit margin and non-GAAP adjusted EBITDA margin. With a goal to extend our rapid growth trend in 2016, we look forward to leveraging the economies of scale and further improving operating efficiency."

Fourth Quarter 2015 Financial Results

Net revenues for the fourth quarter of 2015 were RMB421.5 million (US$65.1 million), up 71.0% year-over-year, attributable to increases in net revenues from both car rentals and car services.

Net revenues from car rentals for the fourth quarter of 2015 were RMB321.5 million (US$49.6 million), up 83.0% year-over-year, primarily driven by the growing average available fleet size for car rentals and customer demand.

Net revenues from car services for the fourth quarter of 2015 were RMB100.0 million (US$15.4 million), up 41.2% year-over-year, primarily driven by increased demand from existing and new customers for car services.

Cost of revenues (vehicle operating expenses) for the fourth quarter of 2015 were RMB319.4 million (US$49.3 million), up 45.4% year-over-year, primarily driven by increased depreciation and labor costs, and partially offset by savings in vehicle insurance expenses.

In the fourth quarter of 2015, 1,002 used vehicles were disposed of, and 907 used vehicles were under sales contracts pending title transfer. The Company recorded a loss of RMB1.6 million (US$0.2 million) in aggregate for these 1,909 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 fourth quarter of 2015 was RMB102.0 million (US$15.8 million), up 280.6% year-over-year. Gross profit margin for the fourth quarter of 2015 was 24.2%, compared with 10.9% for the fourth quarter of 2014. Commencing with the fourth quarter of 2015, the Company has begun reporting gross profit as a GAAP measure (please refer to "Recent Developments" for further discussion).

Selling and marketing expenses for the fourth quarter of 2015 were RMB25.2 million (US$3.9 million), up 125.4% year-over-year, primarily due to increased channel marketing and promotion fees as the Company expanded branding and channel promotion activities in the fourth quarter of 2015.

General and administrative expenses for the fourth quarter of 2015 were RMB56.2 million (US$8.7 million), up 34.1% year-over year, primarily due to increases in employee-related costs such as salaries and welfare expenses, as well as unrealized exchange loss. 

Profit from operations for the fourth quarter of 2015 was RMB23.5 million (US$3.6 million), compared with a loss from operations of RMB22.0 million for the fourth quarter of 2014.

Net loss for the fourth quarter of 2015 was RMB12.3 million (US$1.9 million), compared with a net loss of RMB45.5 million for the fourth quarter of 2014.

Non-GAAP adjusted EBITDA for the fourth quarter of 2015 was RMB166.7 million (US$25.7 million), up 131.5% year-over-year. Non-GAAP adjusted EBITDA margin for the fourth quarter of 2015 was 39.6%, compared with 29.2% for the fourth quarter of 2014.

Full Year 2015 Financial Results

Net revenues for the full year of 2015 were RMB1,450.6 million (US$223.9 million), up 70.4% compared with the full year of 2014, attributable to increases in net revenues from both car rentals and car services.

Revenues from car rentals for the full year of 2015 were RMB1,100.6 million (US$169.9 million), up 83.8% compared with the full year of 2014, primarily driven by the growing average available fleet size for car rentals and customer demand.

Revenues from car services for the full year of 2015 were RMB350.1 million (US$54.0 million), up 38.7% compared with the full year of 2014, primarily driven by increased demand from new and existing customers for car services.

Cost of revenues (vehicle operating expenses) for the full year of 2015 were RMB1,138.0 million (US$175.7 million), up 58.3% compared with the full year of 2014, primarily due to increased depreciation and labor costs.

In 2015, 4,140 used vehicles were disposed of, and 907 used vehicles were under sales contracts pending title transfer. The Company recorded a loss of RMB5.1 million (US$0.8 million) in aggregate for these 5,047 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 full year of 2015 was RMB312.7 million (US$48.3 million), up 136.0% year-over-year. Gross profit margin for the full year of 2015 was 21.6%, compared with 15.6% for the full year of 2014.

Selling and marketing expenses for the full year of 2015 were RMB65.1 million (US$10.0 million), up 84.2% compared with the full year of 2014, primarily due to increased sales and promotion activities. 

General and administrative expenses for the full year of 2015 were RMB183.5 million (US$28.3 million), up 38.9% compared with the full year of 2014, primarily due to increases in employee-related costs such as salaries and welfare expenses, and to a lesser extent, increases in outside professional service fees.

Profit from operations for the full year of 2015 was RMB74.8 million (US$11.5 million), compared with a loss from operations of RMB17.9 million for the full year of 2014.

Net income for the full year of 2015 was RMB696.3 million (US$107.5 million), compared with a net loss of RMB93.1 million for the full year of 2014. Net income for the full year of 2015 included a net gain of RMB736.8 million (US$113.7 million) related to sales of investment assets.

Non-GAAP adjusted EBITDA for the full year of 2015 was RMB573.7 million (US$88.6 million), up 103.9% compared with the full year of 2014. Non-GAAP adjusted EBITDA margin for the full year of 2015 was 39.5%, compared with 33.1% for the full year of 2014.

As of December 31, 2015, the Company's cash, cash equivalents and restricted cash balance was RMB2.8 billion (US$434.9 million).

Recent Developments

In December 2015, the Company completed the offering of its three-year US$200 million senior unsecured notes (the "Notes"). The Notes were issued with a yield of 7.75%, and bear a fixed interest rate of 7.50% per annum, with interest payable semi-annually in arrears. The Company intends to use the net proceeds for capital expenditures and other general corporate purposes, including refinancing outstanding indebtedness and enhancing its capital structure.

As previously announced in July 2015, the Company entered into a five-year framework agreement with China Development Bank, which includes various financing products for an aggregate amount of RMB1.5 billion. In January 2016, the Company drew down an aggregate amount of RMB220 million in bank loans under this framework agreement. The bank loans have a term of three years and are used for the Company's fleet expansion.

In January 2016, the Company entered into agreements with Shanghai Chenghuan Car Rental Company Limited ("Shanghai Chenghuan"), pursuant to which the Company agreed to extend, through entrusted bank loans, an aggregate amount of RMB50 million to Shanghai Chenghuan. The loans have a term of one year and bear an interest rate of 7.75% per annum. Shanghai Chenghuan's shareholders and affiliated companies provided certain security interests. After one year, the Company has the option to convert its creditor rights into equity interests in Shanghai Chenghuan at a pre-determined valuation. Shanghai Chenghuan is a middle-to-high-end car rentals and car services provider in the local market, and is an independent third party.

Commencing with the fourth quarter of 2015, the Company began reporting gross profit as a GAAP measure included in its results of operations. This measure is defined as net revenues reduced by cost of revenues, which the Company previously reported under the caption "vehicle operating expenses." The Company has evaluated its presentation of results of operations and has concluded all relevant costs of revenue are included in "vehicle operating expenses." Accordingly, this presentation of an additional profit measure within results of operations, which also reflects a measure relied upon by management, will be reflected for all historical periods in the Company's forthcoming annual report on Form 20-F.

Outlook

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 forecast 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 March 28, 2016 (8:00 AM Beijing/Hong Kong time on March 29, 2016).

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

United States (toll free): 1-888-346-8982
International: 1-412-902-4272
Hong Kong (toll free): 800-905-945
Hong Kong: 852-3018-4992
China: 400-120-1203

Participants should call 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 April 4, 2016:

United States (toll free): 1-877-344-7529
International: 1-412-317-0088
Replay Access Code: 10082901

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