PR Newswire | May 17, 2021 07:20AM EDT

Year 2020 as Compared to Full Year 2019

05/17 06:19 CDT

China Customer Relations Centers, Inc. Announces Financial Results for the Full Year 2020 as Compared to Full Year 2019 TAI'AN, China, May 17, 2021

TAI'AN, China, May 17, 2021 /PRNewswire/ -- China Customer Relations Centers, Inc. (NASDAQ: CCRC) ("CCRC" or the "Company"), a leading e-commerce and financial services business process outsourcing ("BPO") service provider in China, today announced its financial results for the year ended December 31, 2020.

Full Year of 2020 Financial Results

Revenues

For the year ended December 31, 2020, revenues increased by $66.91 million, or 38.6%, to $240.32 million from $173.41 million for the same period of the prior year. Our revenue growth in the year of 2020 resulted primarily from acquiring new customers and increased sales volumes to our existing clients.

We continued to increase our service capacity, which increased by 6,889 seats, or 30.8%, to 29,249 seats as of December 31, 2020 from 22,360 seats at the end of 2019.

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, IT costs, and facilities support expenses. Cost of revenues increased by $54.22 million, or 40.3%, to $188.73 million for the year ended December 31, 2020 from $134.50 million for the same period of the prior year. The increase in cost of revenues was in line with the increase in revenues. As a percentage of revenues, cost of revenues was 78.5% for the year ended December 31, 2020, compared to 77.6% for the same period of the prior year.

Gross profit and gross margin

Gross profit increased by $12.69 million, or 32.6%, to $51.59 million for the year ended December 31, 2020 from $38.90 million for the same period of the prior year. Gross margin decreased by 1.0 percentage point to 21.5% for the year ended December 31, 2020 from 22.4% for the same period of the prior year.

Selling, general and administrative expense

Selling, general and administrative ("SG&A") expenses consists primarily of sales and administrative employee-related expenses, professional fees, travel costs, research and development costs, and other corporate expenses. SG&A expenses increased by $1.45 million, or 5.5%, to $27.78 million for the year ended December 31, 2020 from $26.32 million for the same period of the prior year. As a percentage of revenues, SG&A expenses decreased from 15.2% for the year ended December 31, 2019 to 11.6% for the year ended December 31, 2020.

Operating income and operating margin

Income from operations increased by $11.23 million, or 89.2%, to $23.82 million for the year ended December 31, 2020 from $12.59 million for the same period of the prior year. The increase in operating income was related to increased gross profit which was partially offset by increased SG&A expenses. Operating margin was 9.9% for the year ended December 31, 2020, compared to 7.3% for the same period of the prior year.

Other income

We recognized government grants, which are discretionary and unpredictable in nature, of $2.99 million during the year ended December 31, 2020, compared to $1.83 million recognized during the same period of the prior year. Total other income, net of other expenses, increased by $1.20 million, or 40.4%, to $4.18 million for the year ended December 31, 2020 from $2.98 million for the same period of the prior year.

Income before provision for income taxes

Income before provision for income taxes increased by $12.44 million, or 79.9%, to $28.00 million for the year ended December 31, 2020 from $15.57 million for the same period of the prior year. The increase in income before provision for income taxes was due to increased operating income as well as government grants and other income.

Income taxes

Provision for income taxes was $3.07 million for the year ended December 31, 2020, compared to $2.39 million for the same period of the prior year.

Net income and earnings per share

Net income increased by $11.76 million, or 89.2%, to $24.93 million for the year ended December 31, 2020 from $13.17 million for the same period of the prior year. After deducting net income attributable to noncontrolling interest, net income attributable to common shareholders was $24.86 million, or $1.36 per basic and diluted share, for the year ended December 31, 2020, compared to $13.06 million, or $0.71 per basic and diluted share, for the same period of the prior year.

Financial Conditions

As of December 31, 2020, the Company had cash of $43.67 million, compared to $25.33 million at December 31, 2019. Total working capital was $74.06 million as of December 31, 2020, compared to $47.50 million at the end of 2019.

Net cash provided by operating activities was $24.05 million for the year ended December 31, 2020, compared to $5.21 million for the same period of the prior year. Net cash used in investing activities was $5.54 million for the year ended December 31, 2020, compared to $4.46 million for the same period of the prior year. Net cash used in financing activities was $2.66 million for the year ended December 31, 2020, compared to net cash provided by financing activities of $0.54 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 in Provinces of Shandong, Jiangsu, Liaoning, Guangdong, Yunnan, Hubei, Sichuan, Hebei, Anhui, Xinjiang, Guangxi, Jiangxi, Heilongjiang, and Chongqing. 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 growth, shareholder returns 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:

Sherry Zheng Weitian Group LLCEmail: shunyu.zheng@weitian-ir.comPhone: +1-718-213-7386

CHINA CUSTOMER RELATIONS CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, December?31,

2020 2019

ASSETS

Cash and cash equivalents $ 43,669,538 $ 25,328,486

Accounts receivable 63,493,891 42,606,485

Prepayments 2,352,988 2,396,646

Prepayment, related parties 359,142 90,429

Due from related parties, current 470,076 -

Income taxes recoverable 104,721 712,459

Other current assets 4,420,220 3,408,704

Total current assets 114,870,576 74,543,209

Equity investments 3,678,171 3,446,346

Property and equipment, net 12,543,156 10,115,782

Deferred tax assets 259,200 242,863

Due from related party, non-current - 215,307

Operating lease right-of-use assets 12,265,679 9,827,114

Operating lease right-of-use assets - related party 341,078 172,121

Total non-current assets 29,087,284 24,019,533

Total assets $ 143,957,860 $ 98,562,742

LIABILITIES AND EQUITY

Accounts payable $ 4,315,457 $ 2,602,972

Accounts payable - related parties 260,790 149,658

Accrued liabilities and other payables 11,018,516 4,641,892

Deferred revenue 1,196,659 456,331

Wages payable 15,663,312 10,472,596

Income taxes payable 974,510 452,961

Operating lease liabilities, current 5,678,812 3,797,069

Operating lease liabilities - related party, current 165,734 163,995

Short-term loans 1,531,933 4,306,138

Total current liabilities 40,805,723 27,043,612

Operating lease liabilities, non-current 7,461,337 6,068,702

Operating lease liabilities - related party, non-current 175,002 -

Total non-current liabilities 7,636,339 6,068,702

Total liabilities 48,442,062 33,112,314

Equity

Common shares, $0.001 par value, 100,000,000 shares authorized, 18,329,600 shares issued and outstanding as of December 31, 2020 and December 31, 18,330 18,330 2019

Additional paid-in capital 18,424,483 15,074,267

Retained earnings 66,854,353 47,347,781

Statutory reserves 7,761,226 5,818,330

Accumulated other comprehensive income (loss) 2,457,406 (3,411,744)

Total China Customer Relations Centers, Inc. shareholders' equity 95,515,798 64,846,964

Noncontrolling interest - 603,464

Total equity 95,515,798 65,450,428

Total liabilities and equity $ 143,957,860 $ 98,562,742

CHINA CUSTOMER RELATIONS CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For The Years Ended December 31,

2020 2019 2018

Revenues, net $ 240,316,024 $ 173,409,113 $ 141,433,641

Cost of revenues 188,725,246 134,504,540 102,567,896

Gross profit 51,590,778 38,904,573 38,865,745

Operating expenses:

Selling, general & administrative expenses 27,772,891 26,318,771 21,329,908

Total operating expenses 27,772,891 26,318,771 21,329,908

Income from operations 23,817,887 12,585,802 17,535,837

Interest expense (176,422) (190,808) (404,958)

Government grants 2,989,897 1,825,402 1,709,297

Other income 1,803,014 1,547,788 552,205

Other expense (434,048) (202,688) (124,370)

Total other income 4,182,441 2,979,694 1,732,174

Income before provision for income taxes 28,000,328 15,565,496 19,268,011

Income tax provision 3,069,477 2,391,371 2,966,880

Net income 24,930,851 13,174,125 16,301,131

Less: net income attributable to noncontrolling interest 70,052 118,114 208,593

Net income attributable to China Customer Relations Centers, $ 24,860,799 13,056,011 16,092,538 Inc.

Comprehensive income

Net income $ 24,930,851 $ 13,174,125 $ 16,301,131

Other comprehensive income (loss)

Foreign currency translation adjustment 5,855,857 (828,331) (2,741,283)

Total Comprehensive income 30,786,708 12,345,794 13,559,848

Less: Comprehensive income attributable to noncontrolling 56,759 109,238 140,467 interest

Comprehensive income attributable to China Customer $ 30,729,949 $ 12,236,556 $ 13,419,381 Relations Centers, Inc.

Earnings per share attributable to China Customer Relations Centers, Inc.

Basic $ 1.36 $ 0.71 $ 0.88

Diluted $ 1.36 $ 0.71 $ 0.88

Weighted average common shares outstanding

Basic 18,329,600 18,329,600 18,329,600

Diluted 18,329,600 18,329,600 18,329,600

CHINA CUSTOMER RELATIONS CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended December 31,

2020 2019 2018

Cash flows from operating activities

Net income $ 24,930,851 $ 13,174,125 $ 16,301,131

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation 4,070,582 3,404,912 2,635,242

Allowance for credit losses - - 952,439

Loss on disposal of property and equipment 59,366 19,091 34,166

Deferred income taxes - 238,883 (196,909)

Non-cash lease expense 4,319,670 3,501,753 -

Changes in operating lease right-of-use assets and operating 634,328 - - lease liabilities upon lease modification

Changes in assets and liabilities:

Accounts receivable (17,048,770) (13,057,615) (7,937,804)

Due from related parties (9,929) - -

Prepayments (298,525) (2,097,963) (887,778)

Prepayments, related parties (248,456) - (95,244)

Other current assets (740,237) (1,510,847) (970,199)

Operating lease liabilities (3,955,614) (3,037,030) -

Accounts payable 1,454,416 2,017,431 147,818

Accounts payable - related parties 95,611 (10,440) 122,630

Wages payable 4,245,097 3,511,093 1,884,440

Income taxes recoverable 620,277 (192,965) (548,893)

Income taxes payable 464,576 94,336 (153,896)

Deferred revenue 671,332 100,245 (221,771)

Accrued liabilities and other payables 4,934,855 (941,772) 1,077,098

Net cash provided by operating activities 24,049,979 5,213,237 12,142,470

Cash flows from investing activities

Purchase of property and equipment (5,334,709) (4,481,450) (4,768,139)

Proceeds from sale of property and equipment 7,179 36,693 9,197

Advance to equity investee (435,445) - (1,461)

Collection from equity investee 429,068 - -

Advance to related parties (381,309) (214,111) (105,827)

Repayment from related parties 171,179 198,017 117,802

Net cash used in investing activities (5,544,037) (4,460,851) (4,748,428)

Cash flows from financing activities

Contribution from noncontrolling investor in subsidiary 108,970 - -

Dividend distributed to noncontrolling investor in subsidiary - (213,722) (355,232)

Borrowings from short-term loans 4,351,712 4,452,368 3,891,596

Repayment of short-term loans (7,124,316) (3,694,345) (3,625,448)

Net cash provided by (used in) financing activities (2,663,634) 544,301 (89,084)

Effect of exchange rate changes on cash and cash 2,498,744 (388,113) (1,513,411) equivalents

Net change in cash and cash equivalents 18,341,052 908,574 5,791,547

Cash and cash equivalents, beginning of the year 25,328,486 24,419,912 18,628,365

Cash and cash equivalents, end of the year $ 43,669,538 $ 25,328,486 $ 24,419,912

Supplemental cash flow information

Interest paid $ 175,811 $ 190,808 $ 404,958

Income taxes paid $ 2,924,643 $ 2,993,733 $ 3,929,237

Non-cash investing and financing activities

Transfer from prepayments to property and equipment $ 705,933 $ 904,309 $ 392,637

Liabilities assumed in connection with purchase of property $ 7,200 $ 24,512 $ 88,112 and equipment

Liability assumed in connection with acquisition of $ 830,308 $ - $ - noncontrolling interest

Operating lease right-of-use assets obtained in exchange for $ 7,069,165 $ 5,496,939 $ - operating lease liability

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SOURCE China Customer Relations Centers, Inc.