TAI'AN, China, Nov. 22, 2019 /PRNewswire/ -- China Customer
Relations Centers, Inc. (NASDAQ: CCRC) ("CCRC" or the "Company"), a
leading call center business process outsourcing ("BPO") service
provider in China, today announced
its financial results for the six months ended June 30, 2019.
First Half of 2019 Highlights (all comparisons to prior year
unless noted)
- Revenues increased by 11.0% to $73.3
million driven by continued expansion of business.
- Gross profit decreased by 7.8% to $18.7
million. Gross margin decreased by 5.1 percentage points to
25.5%.
- Operating income decreased by 57.2% to $5.3 million. Operating margin was 7.3%, compared
to 18.8% for the same period of the prior year.
- Net income attributable to common shareholders decreased by
54.7% to $5.0 million.
- EPS attributable to common shareholders was $0.27, versus $0.60
for the same period of the prior year.
- As of June 30, 2019, the Company
had service capacity of 21,216 seats, compared to 18,384 seats at
the end of 2018.
First Half of 2019 Unaudited Financial Results
|
|
For the Six Months
Ended June 30,
|
($ millions,
except per share data)
|
|
2019
|
|
2018
|
|
%
Change
|
Revenues
|
|
$73.3
|
|
$66.0
|
|
11.0%
|
Gross
profit
|
|
$18.7
|
|
$20.2
|
|
-7.8%
|
Gross
margin
|
|
25.5%
|
|
30.6%
|
|
-5.1 pp
|
Operating
income
|
|
$5.3
|
|
$12.4
|
|
-57.2%
|
Operating
margin
|
|
7.3%
|
|
18.8%
|
|
-11.5 pp
|
Net income
attributable to CCRC
|
|
$5.0
|
|
$11.0
|
|
-54.7%
|
EPS - basic and
diluted
|
|
$0.27
|
|
$0.60
|
|
-54.7%
|
Revenues
For the six months ended June 30,
2019, revenues increased by $7.2
million, or 11.0%, to $73.3
million from $66.0 million for
the same period of the prior year. We continued to see strong
demand for our business from existing BPO clients as well as new
clients during the six months ended June 30,
2019. As of June 30, 2019, The
Company had 33 call center locations in 16 provinces, autonomous
regions and municipalities in China, including Shandong, Jiangsu, Anhui, Hebei,
Xinjiang, Guangxi, Jiangxi, Chongqing, Beijing, Henan, Shanghai, Sichuan, Yunnan, Guangdong, Heilongjiang and Hubei with a capacity approximately of 21,216
seats which increased by 15.4% from 18,384 seats at the end of
2018.
Cost of revenues
Cost of revenues consists primarily of salaries, payroll taxes
and employee benefits costs of our customer service associates and
other operations personnel. Cost of revenues also includes direct
communications costs, rent expense, information technology costs,
and facilities support. Cost of revenues increased by $8.8 million, or 19.3%, to $54.6 million for the six months ended
June 30, 2019 from $45.8 million for the same period of the prior
year. As a percentage of revenues, cost of revenues was 74.5% for
the six months ended June 30, 2019,
compared to 69.4% for the same period of the prior year.
Gross profit and gross margin
Gross profit decreased by $1.6
million, or 7.8%, to $18.7
million for the six months ended June
30, 2019 from $20.2 million
for the same period of the prior year. Gross margin decreased by
5.1 percentage points to 25.5% for the six months ended
June 30, 2019 from 30.6% for the same
period of the prior year.
Selling, general and administrative expense
Selling, general and administrative ("SG&A") expenses
increased by $5.5 million, or 71.2%,
to $13.3 million for the six months
ended June 30, 2019 from $7.8 million for the same period of the prior
year. The increase in SG&A expenses was primarily related to
higher payroll expenses as a result of increased headcount, as well
as increased marketing and R&D expenses. As a percentage of
revenues, SG&A expenses increased from 11.8% for the six months
ended June 30, 2018 to 18.2% for the
six months ended June 30, 2019.
Operating income and operating margin
Income from operations decreased by $7.1
million, or 57.2%, to $5.3
million for the six months ended June
30, 2019 from $12.4 million
for the same period of the prior year. The decrease in operating
income was mainly due to a significant increase in SG&A
expenses. Operating margin was 7.3% for the six months ended
June 30, 2019, compared to 18.8% for
the same period of the prior year.
Other income
We received government grants, which are discretionary and
unpredictable in nature, of $0.6
million during the six months ended June 30, 2019, in line with the amount received
during the same period of the prior year. Government grants as a
percentage of net income were 11.0% for the six months ended
June 30, 2019, compared to 5.2% for
the same period of the prior year. Total other income, net of other
expenses, increased by $0.2 million,
or 35.0%, to $0.7 million for the six
months ended June 30, 2019 from
$0.5 million for the same period of
the prior year.
Income before provision for income taxes
Income before provision for income taxes decreased by
$6.9 million, or 53.5%, to
$6.0 million for the six months ended
June 30, 2019 from $13.0 million for the same period of the prior
year. The decrease in income before provision for income taxes was
mainly due to the increase in SG&A expenses and the decrease of
gross profit.
Income taxes
Provision for income taxes was $1.0
million for the six months ended June
30, 2019, compared to $1.9
million for the same period of the prior year.
Net income and earnings per share
Net income decreased by $6.0
million, or 54.4%, to $5.1
million for the six months ended June
30, 2019 from $11.1 million
for the same period of the prior year. After deducting net income
attributable to noncontrolling interest, net income attributable to
common shareholders was $5.0 million,
or $0.27 per basic and diluted share,
for the six months ended June 30,
2019, compared to $11.0
million, or $0.60 per basic
and diluted share, for the same period of the prior year.
Financial Conditions
As of June 30, 2019, the Company
had cash of $21.8 million, compared
to $24.4 million at December 31, 2018. Total working capital was
$43.8 million as of June 30, 2019, compared to $41.1 million at the end of 2018.
Net cash used in operating activities was $1.3 million for the six months ended
June 30, 2019, compared to
$0.1 million for the same period of
the prior year. Net cash used in investing activities was
$1.3 million for the six months ended
June 30, 2019, compared to
$1.6 million for the same period of
the prior year. Net cash provided by financing activities was
$31,215 for the six months ended
June 30, 2019, compared to
$3.9 million for the same period of
the prior year.
Notice
Rounding amounts and percentages: Certain amounts and
percentages included in this press release have been rounded for
ease of presentation. Percentage figures included in this press
release have not in all cases been calculated on the basis of such
rounded figures, but on the basis of such amounts prior to
rounding. For this reason, certain percentage amounts in this press
release may vary from those obtained by performing the same
calculations using the figures in the financial statements. In
addition, certain other amounts that appear in this press release
may not sum due to rounding.
About China Customer Relations Centers, Inc.
The Company is a leading BPO service provider in China focusing on the complex, voice-based and
online-based segments of customer care services, including:
- customer relationship management;
- technical support;
- sales;
- customer retention;
- marketing surveys; and
- research.
The Company's service is currently delivered from call centers
located in Provinces of Shandong,
Jiangsu, Henan, Guangdong, Yunnan, Hubei, Jiangxi, Hebei, Anhui,
Sichuan, the Xinjiang Uygur
Autonomous Region, the Guangxi Zhuang Autonomous Region, and
Chongqing City, with a capacity of
approximately 21,216 seats. More information about the Company can
be found at: www.ccrc.com.
Forward-Looking Statement
This press release contains forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include statements concerning plans,
objectives, goals, strategies, future events or performance, and
underlying assumptions and other statements that are other than
statements of historical facts. When the Company uses words such as
"may," "will," "intend," "should," "believe," "expect,"
"anticipate," "project," "estimate" or similar expressions that do
not relate solely to historical matters, it is making
forward-looking statements. Specifically, the Company's
statements regarding its: 1) anticipated increase in SG&A
costs; and 2) continued growth and business outlook, are
forward-looking statements. Forward-looking statements are not
guarantee of future performance and involve risks and uncertainties
that may cause the actual results to differ materially from the
Company's expectations discussed in the forward-looking statements.
These statements are subject to uncertainties and risks including,
but not limited to, the following: the Company's goals and
strategies; the Company's future business development; product and
service demand and acceptance; changes in technology; economic
conditions; the growth of the call center business process
outsourcing market in China;
reputation and brand; the impact of competition and pricing;
government regulations; fluctuations in general economic and
business conditions in China and
assumptions underlying or related to any of the foregoing and other
risks contained in reports filed by the Company with the Securities
and Exchange Commission. For these reasons, among others,
investors are cautioned not to place undue reliance upon any
forward-looking statements in this press release. Additional
factors are discussed in the Company's filings with the U.S.
Securities and Exchange Commission, which are available for review
at www.sec.gov. The Company undertakes no obligation to publicly
revise these forward‐looking statements to reflect
events or circumstances that arise after the date hereof.
For more information, please contact:
Tony Tian, CFA
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1-732-910-9692
CHINA CUSTOMER
RELATIONS CENTERS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
|
(Unaudited)
|
|
|
ASSETS
|
Cash and cash
equivalents
|
$
|
21,752,754
|
$
|
24,419,912
|
Accounts
receivable, net
|
|
35,526,298
|
|
30,050,506
|
Prepayments
|
|
2,223,098
|
|
1,689,835
|
Prepayment,
related party
|
|
93,524
|
|
91,618
|
Due from
related parties, net
|
|
156,612
|
|
199,994
|
Income taxes
recoverable
|
|
323,421
|
|
527,995
|
Other current
assets
|
|
2,058,991
|
|
1,959,923
|
Total current
assets
|
|
62,134,698
|
|
58,939,783
|
Equity
investments
|
|
3,497,145
|
|
3,491,653
|
Property and
equipment, net
|
|
8,100,759
|
|
8,290,460
|
Deferred tax
assets
|
|
486,774
|
|
486,009
|
Operating lease
right-of-use assets (1)
|
|
6,048,124
|
|
-
|
Operating lease
right-of-use assets - related party (1)
|
|
246,424
|
|
-
|
Total non-current
assets
|
|
18,379,226
|
|
12,268,122
|
Total
assets
|
$
|
80,513,924
|
$
|
71,207,905
|
|
|
|
|
|
LIABILITIES
AND EQUITY
|
Accounts
payable
|
$
|
454,489
|
$
|
610,724
|
Accounts
payable - related parties
|
|
107,787
|
|
162,112
|
Accrued
liabilities and other payables
|
|
3,498,630
|
|
5,673,159
|
Deferred
revenue
|
|
248,642
|
|
361,636
|
Wages
payable
|
|
7,500,248
|
|
7,082,138
|
Income taxes
payable
|
|
308,838
|
|
364,157
|
Operating lease
liabilities, current (1)
|
|
2,371,341
|
|
-
|
Operating lease
liabilities - related party, current (1)
|
|
162,134
|
|
-
|
Short term
loan
|
|
3,641,342
|
|
3,635,623
|
Total current
liabilities
|
|
18,293,451
|
|
17,889,549
|
Operating lease
liabilities, non-current (1)
|
|
3,762,816
|
|
-
|
Operating lease
liabilities - related party, non-current (1)
|
|
84,290
|
|
-
|
Total non-current
liabilities
|
|
3,847,106
|
|
-
|
Total
liabilities
|
|
22,140,557
|
|
17,889,549
|
|
|
|
|
|
Equity
|
|
|
|
|
Common shares,
$0.001 par value, 100,000,000 shares authorized, 18,329,600 shares
issued and outstanding as of June 30, 2019 and December 31,
2018
|
|
18,330
|
|
18,330
|
Additional
paid-in capital
|
|
15,074,267
|
|
11,202,396
|
Retained
earnings
|
|
40,384,829
|
|
40,065,822
|
Statutory
reserves
|
|
4,714,362
|
|
3,916,149
|
Accumulated
other comprehensive loss
|
|
(2,599,026)
|
|
(2,592,289)
|
Total China Customer
Relations Centers, Inc. shareholders'
equity
|
|
57,592,762
|
|
52,610,408
|
Noncontrolling
interest
|
|
780,605
|
|
707,948
|
Total
equity
|
|
58,373,367
|
|
53,318,356
|
Total
liabilities and equity
|
$
|
80,513,924
|
$
|
71,207,905
|
|
|
|
|
|
(1) On January 1,
2019, the Company adopted ASU 2016-02, "Leases (Topic 842)", using
the optional transition method where no adjustments are made to the
comparative periods. Adoption of the standard resulted in the
recognition of operating lease right-of-use assets and operating
lease liabilities for lease contracts having terms beyond 12 months
period on the consolidated balance sheet as of January 1,
2019.
|
CHINA CUSTOMER
RELATIONS CENTERS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
For The Six Months
Ended June 30,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Revenues,
net
|
$
|
73,274,748
|
$
|
66,036,657
|
Cost of
revenues
|
|
54,623,472
|
|
45,803,839
|
Gross
profit
|
|
18,651,276
|
|
20,232,818
|
Operating
expenses:
|
|
|
|
|
Selling, general
& administrative expenses
|
|
13,329,194
|
|
7,787,102
|
|
Total operating
expenses
|
|
13,329,194
|
|
7,787,102
|
Income from
operations
|
|
5,322,082
|
|
12,445,716
|
Interest
expense
|
|
(30,475)
|
|
(120,659)
|
Government
grants
|
|
555,229
|
|
572,245
|
Other
income
|
|
201,945
|
|
80,470
|
Other
expense
|
|
(20,722)
|
|
(9,270)
|
|
Total other
income
|
|
705,977
|
|
522,786
|
Income before
provision for income taxes
|
|
6,028,059
|
|
12,968,502
|
Income tax
provision
|
|
961,021
|
|
1,863,761
|
Net
income
|
|
5,067,038
|
|
11,104,741
|
Less: net income
attributable to noncontrolling interest
|
|
77,947
|
|
96,893
|
Net income
attributable to China Customer Relations Centers,
Inc.
|
$
|
4,989,091
|
$
|
11,007,848
|
|
|
|
|
|
|
Comprehensive
income
|
|
|
|
|
Net
income
|
$
|
5,067,038
|
$
|
11,104,741
|
Other comprehensive
income (loss)
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(6,737)
|
|
(1,097,615)
|
Total
Comprehensive income
|
|
5,060,301
|
|
10,007,126
|
Less: Comprehensive
income attributable to noncontrolling interest
|
|
140,467
|
|
74,487
|
Comprehensive
income attributable to China Customer Relations Centers,
Inc.
|
$
|
4,919,834
|
$
|
9,932,639
|
|
|
|
|
|
|
Earnings per share
attributable to China Customer Relations Centers,
Inc.
|
|
|
|
|
Basic
|
$
|
0.27
|
$
|
0.60
|
Diluted
|
$
|
0.27
|
$
|
0.60
|
Weighted average
common shares outstanding
|
|
|
|
|
Basic
|
|
18,329,600
|
|
18,329,600
|
Diluted
|
|
18,329,600
|
|
18,329,600
|
CHINA CUSTOMER
RELATIONS CENTERS, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
For The Six Months
Ended June 30,
|
|
2019
|
|
2018
|
|
$
|
|
$
|
Cash flows from
operating activities
|
|
|
|
Net
income
|
5,067,038
|
|
11,104,741
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
2,845,134
|
|
1,219,183
|
Loss on disposal of
property and equipment
|
68,475
|
|
3,366
|
Deferred income
taxes
|
-
|
|
(128,150)
|
Changes in assets and
liabilities:
|
|
|
|
Accounts receivable,
net
|
(5,493,897)
|
|
(9,911,512)
|
Due from related
parties, net
|
-
|
|
(94,772)
|
Prepayments
|
(917,156)
|
|
(1,178,806)
|
Prepayment, related
party
|
(1,783)
|
|
-
|
Operating lease
liabilities
|
(843,053)
|
|
-
|
Other current
assets
|
(97,228)
|
|
(377,832)
|
Accounts
payable
|
(130,978)
|
|
624,601
|
Accounts payable -
related parties
|
(55,237)
|
|
(6,414)
|
Wages
payable
|
412,029
|
|
398,411
|
Income taxes
recoverable
|
207,879
|
|
-
|
Income taxes
payable
|
(56,564)
|
|
322,647
|
Deferred
revenue
|
(114,931)
|
|
(186,486)
|
Accrued liabilities
and other payables
|
(2,226,854)
|
|
(1,896,512)
|
Net cash used in
operating activities
|
(1,337,126)
|
|
(107,535)
|
Cash flows from
investing activities
|
|
|
|
Purchase of property
and equipment
|
(1,371,577)
|
|
(1,720,478)
|
Proceeds from sale of
property and equipment
|
28,210
|
|
71
|
Repayment from
related parties
|
44,222
|
|
117,802
|
Net cash used in
investing activities
|
(1,299,145)
|
|
(1,602,605)
|
Cash flows from
financing activities
|
|
|
|
Borrowings from short
term loans
|
3,725,560
|
|
3,891,596
|
Repayment of short
term loans
|
(3,694,345)
|
|
-
|
Net cash provided
by financing activities
|
31,215
|
|
3,891,596
|
Effect of exchange
rate changes on cash and cash equivalents
|
(62,102)
|
|
(358,552)
|
Net change in cash
and cash equivalents
|
(2,667,158)
|
|
1,822,904
|
Cash and cash
equivalents, beginning of the period
|
24,419,912
|
|
18,628,365
|
Cash and cash
equivalents, end of the period
|
21,752,754
|
|
20,451,269
|
Supplemental cash
flow information
|
|
|
|
Interest
paid
|
82,531
|
|
120,659
|
Income
taxes paid
|
1,139,416
|
|
1,647,613
|
Non-cash investing
and financing activities
|
|
|
|
Transfer from
prepayments to property and equipment
|
-
|
|
176,730
|
Liabilities assumed
in connection with purchase of property and equipment
|
17,792
|
|
49,318
|
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SOURCE China Customer Relations Centers, Inc.