PR Newswire | Aug 19, 2021 05:30PM EDT

08/19 16:30 CDT

Cango Inc. Reports Second Quarter 2021 Unaudited Financial Results SHANGHAI, Aug. 19, 2021

SHANGHAI, Aug. 19, 2021 /PRNewswire/ -- Cango Inc. (NYSE: CANG) ("Cango" or the "Company"), a leading automotive transaction service platform in China, today announced its unaudited financial results for the second quarter of 2021.

Second Quarter 2021 Financial and Operational Highlights

* Total revenues were RMB946.7 million (US$146.6 million), a 245.5% increase from RMB274.1 million in the same period of 2020, meeting the Company's previous guidance range. The increase was mainly driven by the increased amounts of both financing transactions the Company facilitated and car trading transactions in the second quarter of 2021. * Car trading transactions revenues were RMB522.5 million (US$80.9 million), or 55.2% of total revenues in the second quarter of 2021. * Automotive financing facilitation revenues were RMB303.3 million (US$47.0 million), a 111.2% increase from RMB143.6 million in the same period of 2020. * After-market services facilitation revenues were RMB51.9 million (US$8.0 million), compared to RMB52.5 million in the same period of 2020. * The amount of financing transactions the Company facilitated in the second quarter of 2021 was RMB7,789.7 million (US$1,206.5 million). The total outstanding balance of financing transactions the Company facilitated was RMB48,637.8 million (US$7,533.0 million) as of June 30, 2021. * M1+ and M3+ overdue ratios for all financing transactions that remained outstanding and were facilitated by the Company were 1.35% and 0.69 %, respectively, as of June 30, 2021, compared to 1.23% and 0.54%, respectively, as of March 31, 2021. * The number of dealers covered by the Company was 47,740 as of June 30, 2021, compared to 47,017 as of March 31, 2021.

Mr. Jiayuan Lin, Chief Executive Officer of Cango, commented, "We entered the second quarter with a focus on navigating major challenges primarily associated with the global chip shortage. We are pleased with our second quarter performance, and thanks to solid progress in our car trading transactions business, we delivered a 245.5% year-over-year growth in total revenues, meeting our previous guidance range. The ongoing chip supply shortage, which has slowed down production and consumption in the entire auto industry, impacted our business to a certain extent and we expect the impact to linger in the second half of 2021. However, we remain dedicated to advancing key elements of our strategy and believe our solid business fundamentals give us considerable flexibility to navigate uncertain and stressful times. In late May, we launched our B2B service platform 'Cango Haoche' integrating car information with transactions, logistics, finance and insurance to directly address pain points for car dealers in the lower-tier markets. In addition, we introduced an updated service account of 'Cango Cheshenghuo' on WeChat also in the second quarter, offering consumers a one-stop service covering purchases, usage and maintenance of cars. With 'Cango Haoche' and 'Cango Cheshenghuo,' we have empowered B-end car dealers and served C-end car owners, further enhancing the bond between dealers, users and us."

"Looking ahead, we expect the impact of the supply chain-related challenges in the auto market to remain unresolved in the near term. However, we will closely monitor the situation and adapt accordingly, while staying true to our original goals and upholding our commitment to facilitating easy and enjoyable car purchase experiences for our consumers," Mr. Lin concluded.

Mr. Yongyi Zhang, Chief Financial Officer of Cango, stated, "Our second quarter financial performance was in line with our expectations. Total revenues came in at RMB946.7 million, more than tripling from a year ago. We also recorded a net income of RMB557.7 million in the second quarter. While uncertainty stemming from global chip supply chain disruptions are ongoing, we remain committed to improving our operating efficiency while continually investing in the business to deliver more value to our dealers, partners and users. We fully believe that this will enable us to continue creating value for our shareholders well into the future."

Second Quarter 2021 Financial Results

REVENUES

Total revenues in the second quarter of 2021 increased by 245.5% to RMB946.7 million (US$146.6 million) from RMB274.1 million in the same period of 2020. Revenues from car trading transactions in the second quarter of 2021 were RMB522.5 million (US$80.9 million), continuing to serve as an important revenue contributor. Revenues from automotive financing facilitation and after-market services facilitation in the second quarter of 2021 were RMB303.3 million (US$47.0 million) and RMB51.9 million (US$8.0 million), respectively.

OPERATING COST AND EXPENSES

Total operating cost and expenses in the second quarter of 2021 were RMB933.5 million (US$144.6 million) compared to RMB207.4 million in the same period of 2020. This was mainly due to the related costs incurred by car trading transactions business. Primarily as a result of the increase in revenues from car trading transactions, sales and marketing expenses, general and administrative expenses and research and development expenses each decreased as a percentage of total revenues in the second quarter of 2021, compared to the same period of 2020.

* Cost of revenue in the second quarter of 2021 increased to RMB697.8 million (US$108.1 million) from RMB102.8 million in the same period of 2020. As a percentage of total revenues, cost of revenue in the second quarter of 2021 was 73.7% compared to 37.5% in the same period of 2020, and the change was primarily due to an increase in the amount of car trading transactions. For automotive financing facilitation and after-market services facilitation, cost of revenue as a percentage of relevant revenues was around 41.6% in the second quarter of 2021. * Sales and marketing expenses in the second quarter of 2021 were RMB60.9 million (US$9.4 million) compared to RMB42.4 million in the same period of 2020. As a percentage of total revenues, sales and marketing expenses in the second quarter of 2021 was 6.4% compared to 15.5% in the same period of 2020. * General and administrative expenses in the second quarter of 2021 were RMB64.7 million (US$10.0 million) compared to RMB66.0 million in the same period of 2020. As a percentage of total revenues, general and administrative expenses in the second quarter of 2021 was 6.8% compared to 24.1% in the same period of 2020. * Research and development expenses in the second quarter of 2021 were RMB15.6 million (US$2.4 million) compared to RMB12.9 million in the same period of 2020. As a percentage of total revenues, research and development expenses in the second quarter of 2021 was 1.7% compared to 4.7% in the same period of 2020. * Net loss on risk assurance liabilities in the second quarter of 2021 was RMB35.9 million (US$5.6 million) compared to a net gain of RMB42.9 million in the same period of 2020.

INCOME FROM OPERATIONS

Income from operations in the second quarter of 2021 was RMB13.2 million (US$2.1 million), compared to RMB66.7 million in the same period of 2020.

FAIR VALUE CHANGE OF EQUITY INVESTMENT

Fair value change of equity investment in the second quarter of 2021 was a gain of RMB603.4 million (US$93.5 million) compared to nil in the same period of 2020. The gain in the second quarter of 2021 is mainly due to the investment in Li Auto. As of June 30, 2021, Cango held 8,000,000 American Depositary Shares of Li Auto. Each American Depositary Share of Li Auto represents two Class A ordinary shares of Li Auto.

NET INCOME

Primarily due to the fair value change of the Company's investment in Li Auto, net income in the second quarter of 2021 was RMB557.7 million (US$86.4 million). Non-GAAP adjusted net income in the second quarter of 2021 was RMB578.3 million (US$89.6 million). Non-GAAP adjusted net income excludes the impact of share-based compensation expenses. For further information, see "Use of Non-GAAP Financial Measure."

NET INCOME PER ADS

Basic and diluted net income per American Depositary Share (ADS) in the second quarter of 2021 were RMB3.85(US$0.60) and RMB3.75(US$0.58). Non-GAAP adjusted basic and diluted net income per ADS in the second quarter of 2021 were RMB3.99(US$0.62) and RMB3.89(US$0.60). Each ADS represents two Class A ordinary shares of the Company.

BALANCE SHEET

As of June 30, 2021, the Company had cash and cash equivalents of RMB1,498.9 million (US$232.2 million), compared to RMB1,631.0 million as of March 31, 2021.

As of June 30, 2021, the Company had short-term investments of RMB3,127.2 million (US$484.3 million), compared to RMB2,627.6 million as of March 31, 2021.

Business Outlook

For the third quarter of 2021, the Company expects total revenues to be between RMB700 million and RMB750 million. This forecast reflects the Company's current and preliminary views on the market and operational conditions, which are subject to change.

The Company's investment in Li Auto and the change in fair value of investment due to the price volatility of the stock may have a significant impact on the Company's third quarter of 2021 financial results.

Share Repurchase Program

Pursuant to the share repurchase program announced on March 2, 2021, we had repurchased 5,397,207 American depositary shares ("ADSs") with cash in the aggregate amount of approximately US$48.4 million up to July 31, 2021.

Conference Call Information

The Company's management will hold a conference call on Thursday, August 19, 2021, at 9:00 P.M. Eastern Time or Friday, August 20, 2021, at 9:00 A.M. Beijing Time to discuss the financial results. Listeners may access the call by dialing the following numbers:

International: +1-412-902-4272

United States Toll Free: +1-888-346-8982

Mainland China Toll Free: 4001-201-203

Hong Kong, China Toll Free:800-905-945

Conference ID: Cango Inc.

The replay will be accessible through August 26, 2021, by dialing the following numbers:

International: +1-412-317-0088

United States Toll Free: +1-877-344-7529

Access Code: 10159690

A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.cangoonline.com/.

About Cango Inc.

Cango Inc. (NYSE: CANG) is a leading automotive transaction service platform in China connecting dealers, financial institutions, car buyers, and other industry participants. Founded in 2010 by a group of pioneers in China's automotive finance industry, the Company is headquartered in Shanghai and engages car buyers through a nationwide dealer network. The Company's services primarily consist of automotive financing facilitation, car trading transactions, and after-market services facilitation. By utilizing its competitive advantages in technology, data insights, and cloud-based infrastructure, Cango is able to connect its platform participants while bringing them a premium user experience. Cango's platform model puts it in a unique position to add value for its platform participants and business partners as the automotive and mobility markets in China continue to grow and evolve. For more information, please visit: www.cangoonline.com.

Definition of Overdue Ratios

The Company defines "M1+ overdue ratio" as (i) exposure at risk relating to financing transactions for which any installment payment is 30 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.

The Company defines "M3+ overdue ratio" as (i) exposure at risk relating to financing transactions for which any installment payment is 90 to 179 calendar days past due as of a specified date, divided by (ii) exposure at risk relating to all financing transactions which remain outstanding as of such date, excluding amounts of outstanding principal that are 180 calendar days or more past due.

Use of Non-GAAP Financial Measure

In evaluating the business, the Company considers and uses Non-GAAP adjusted net income, a non-GAAP measure, as a supplemental measure to review and assess its operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. The Company defines Non-GAAP adjusted net income as net income excluding share-based compensation expenses. The Company presents the non-GAAP financial measure because it is used by the management to evaluate the operating performance and formulate business plans. Non-GAAP adjusted net income enables the management to assess the Company's operating results without considering the impact of share-based compensation expenses, which are non-cash charges. The Company also believes that the use of the non-GAAP measure facilitates investors' assessment of its operating performance.

Non-GAAP adjusted net income is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. This non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using Non-GAAP adjusted net income is that it does not reflect all items of expense that affect the Company's operations. Share-based compensation expenses have been and may continue to be incurred in the business and are not reflected in the presentation of Non-GAAP adjusted net income. Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

The Company compensates for these limitations by reconciling the non-GAAP financial measure to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating the Company's performance. The Company encourages you to review its financial information in its entirety and not rely on a single financial measure.

Reconciliations of Cango's non-GAAP financial measure to the most comparable U.S. GAAP measure are included at the end of this press release.

Exchange Rate Information

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.4566 to US$1.00, the noon buying rate in effect on June 30, 2021, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the United States 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" and similar statements. Among other things, the "Business Outlook" section and quotations from management in this announcement, contain forward-looking statements. Cango may also make written or oral forward-looking statements in its periodic reports 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. Statements that are not historical facts, including statements about Cango's beliefs and expectations, are forward-looking statements. 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: Cango's goal and strategies; Cango's expansion plans; Cango's future business development, financial condition and results of operations; Cango's expectations regarding demand for, and market acceptance of, its solutions and services; Cango's expectations regarding keeping and strengthening its relationships with dealers, financial institutions, car buyers and other platform participants; 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 Cango'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 Cango does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contact

Yihe LiuCango Inc.Tel: +86 21 3183 5088 ext.5581Email: ir@cangoonline.comTwitter: https://twitter.com/Cango_Group

Emilie WuThe Piacente Group, Inc.Tel: +86 21 6039 8363Email: ir@cangoonline.com

CANGO INC.UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET(Amounts in Renminbi ("RMB") and US dollar ("US$"), except for number of sharesand per share data?

As of December 31, As of June 30, 2020 2021

RMB RMB US$

ASSETS:

Current assets:

Cash and cash equivalents 1,426,899,576 1,498,947,545 232,157,412

Restricted cash - current 9,693,008 34,767,022 5,384,726

Short-term investments 4,342,356,612 3,127,171,118 484,337,131

Accounts receivable, net 141,594,170 157,050,941 24,324,093

Finance lease receivables - current, net 2,035,397,525 1,717,714,853 266,040,153

Short-term consumer financing receivables, net 23,168 - -

Financing receivables, net 20,105,893 43,575,286 6,748,952

Short-term contract asset 364,618,635 714,635,512 110,682,946

Prepayments and other current assets 558,360,959 887,766,346 137,497,498

Total current assets 8,899,049,546 8,181,628,623 1,267,172,911

Non-current assets:

Restricted cash - non-current 878,299,140 845,590,108 130,965,231

Goodwill 145,063,857 145,063,857 22,467,530

Property and equipment, net 10,311,971 21,032,036 3,257,448

Intangible assets 44,887,871 44,683,992 6,920,669

Long-term contract asset 281,374,110 474,407,237 73,476,325

Deferred tax assets 170,951,082 374,774,207 58,045,133

Finance lease receivables - non-current, net 1,454,499,864 1,186,837,807 183,817,769

Other non-current assets 261,495,158 427,327,797 66,184,648

Total non-current assets 3,246,883,053 3,519,717,041 545,134,753

TOTAL ASSETS 12,145,932,599 11,701,345,664 1,812,307,664

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Short-term debts 355,816,940 779,104,385 120,667,903

Long-term debts-current 1,228,783,730 1,122,603,494 173,869,141

Accrued expenses and other current liabilities 324,734,202 352,398,112 54,579,517

Risk assurance liabilities 460,829,299 642,664,973 99,536,129

Income tax payable 87,132,455 388,784,530 60,215,056

Total current liabilities 2,457,296,626 3,285,555,494 508,867,746

Non-current liabilities:

Long-term debts 977,791,191 836,810,348 129,605,419

Deferred tax liability 330,765,029 171,705,298 26,593,764

Other non-current liabilities 4,870,616 2,479,512 384,028

Total non-current liabilities 1,313,426,836 1,010,995,158 156,583,211

Total liabilities 3,770,723,462 4,296,550,652 665,450,957

Shareholders' equity

Ordinary shares 204,260 204,260 31,636

Treasury shares (56,419,225) (356,910,505) (55,278,398)

Additional paid-in capital 4,591,455,557 4,624,962,530 716,315,480

Accumulated other comprehensive income (115,386,427) (147,245,016) (22,805,349)

Retained earnings 3,955,354,972 3,283,783,743 508,593,338

Total Cango Inc.'s equity 8,375,209,137 7,404,795,012 1,146,856,707

Total shareholders' equity 8,375,209,137 7,404,795,012 1,146,856,707

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 12,145,932,599 11,701,345,664 1,812,307,664

CANGO INC.UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OFCOMPREHENSIVE INCOME(Amounts in Renminbi ("RMB") and US dollar ("US$"), except for number of sharesand per share data)

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

RMB RMB US$ RMB RMB US$

Revenues 274,054,751 946,746,211 146,632,316 520,052,725 2,070,532,922 320,684,714

Loan facilitation income and other related income 143,604,125 303,346,685 46,982,419 263,332,523 715,037,501 110,745,207

Leasing income 69,275,783 64,708,395 10,022,054 143,557,538 137,836,071 21,348,089

After-market services income 52,472,658 51,866,024 8,033,024 101,528,861 114,395,515 17,717,609

Automobile trading income 6,228,508 522,544,976 80,931,911 7,601,416 1,094,109,857 169,456,038

Others 2,473,677 4,280,131 662,908 4,032,387 9,153,978 1,417,771

Operating cost and expenses:

Cost of revenue 102,817,046 697,786,112 108,073,307 193,414,759 1,466,833,661 227,183,605

Sales and marketing 42,437,952 60,885,719 9,429,997 88,212,181 118,729,278 18,388,824

General and administrative 66,040,192 64,658,358 10,014,304 123,451,858 126,048,975 19,522,500

Research and development 12,901,613 15,638,883 2,422,155 25,458,298 29,233,130 4,527,635

Net (gain) loss on risk assurance liabilities (42,928,191) 35,903,834 5,560,796 33,957,484 57,642,765 8,927,727

Provision for credit losses 26,119,771 58,636,181 9,081,588 70,214,542 99,268,133 15,374,676

Total operation cost and expense 207,388,383 933,509,087 144,582,147 534,709,122 1,897,755,942 293,924,967

Income (Loss) from operations 66,666,368 13,237,124 2,050,169 (14,656,397) 172,776,980 26,759,747

Interest and investment income 21,675,128 4,128,041 639,352 50,808,295 22,369,008 3,464,518

Fair value change of equity investment - 603,413,645 93,456,873 - 156,488,012 24,236,907

Interest expense (369,637) (234,274) (36,284) (1,736,923) (813,242) (125,955)

Foreign exchange gain (loss), net 621,774 (938,526) (145,359) (3,439,945) (735,132) (113,857)

Other income 7,317,072 7,568,769 1,172,253 25,790,703 11,176,345 1,730,995

Other expenses (527,390) (193,817) (30,018) (581,495) (6,479,822) (1,003,597)

Net income before income taxes 95,383,315 626,980,962 97,106,986 56,184,238 354,782,149 54,948,758

Income tax expenses (25,152,250) (69,243,099) (10,724,390) (20,639,459) (70,915,821) (10,983,462)

Net income 70,231,065 557,737,863 86,382,596 35,544,779 283,866,328 43,965,296

Less: Net income attributable to non-controlling interests - - - 3,646,196 - -

Net income attributable to Cango Inc.'s shareholders 70,231,065 557,737,863 86,382,596 31,898,583 283,866,328 43,965,296

Earnings per ADS attributable to ordinary shareholders:

Basic 0.47 3.85 0.60 0.21 1.93 0.30

Diluted 0.47 3.75 0.58 0.21 1.89 0.29

Weighted average ADS used to compute earnings per ADS attributable to ordinaryshareholders:

Basic 150,605,540 144,829,122 144,829,122 150,789,465 147,012,155 147,012,155

Diluted 150,819,440 148,579,948 148,579,948 151,899,153 150,005,282 150,005,282

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustment (5,444,800) (42,140,854) (6,526,787) 23,229,550 (31,858,589) (4,934,267)

Total comprehensive income 64,786,265 515,597,009 79,855,809 58,774,329 252,007,739 39,031,029

Total comprehensive income attributable to Cango Inc.'s shareholders 64,786,265 515,597,009 79,855,809 55,128,133 252,007,739 39,031,029

CANGO INC.RECONCILIATIONS OF GAAP AND NON-GAAP RESULTS(Amounts in Renminbi ("RMB") and US dollar ("US$"), except for number of sharesand per share data)

Three months ended June 30, Six months ended June 30,

2020 2021 2020 2021

(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

RMB RMB US$ RMB RMB US$

Net income 70,231,065 557,737,863 86,382,596 35,544,779 283,866,328 43,965,296

Add: Share-based compensation expenses 22,096,880 20,522,138 3,178,474 45,415,178 40,433,303 6,262,321

Cost of revenue 905,973 783,983 121,424 1,862,024 1,454,657 225,298

Sales and marketing 4,706,635 4,004,166 620,166 9,673,432 7,521,055 1,164,863

General and administrative 15,335,232 14,987,159 2,321,215 31,518,128 29,678,982 4,596,689

Research and development 1,149,040 746,830 115,669 2,361,594 1,778,609 275,471

Non-GAAP adjusted net income 92,327,945 578,260,001 89,561,070 80,959,957 324,299,631 50,227,617

Less: Net income attributable to non-controlling interests - - - 3,646,196 - -

Net income attributable to Cango Inc.'s shareholders 92,327,945 578,260,001 89,561,070 77,313,761 324,299,631 50,227,617

Non-GAAP adjusted net income per ADS-basic 0.61 3.99 0.62 0.51 2.21 0.34

Non-GAAP adjusted net income per ADS-diluted 0.61 3.89 0.60 0.51 2.16 0.33

Weighted average ADS outstanding-basic 150,605,540 144,829,122 144,829,122 150,789,465 147,012,155 147,012,155

Weighted average ADS outstanding-diluted 150,819,440 148,579,948 148,579,948 151,899,153 150,005,282 150,005,282

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SOURCE Cango Inc.