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28.04.2017 23:05
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China Customer Relations Centers, Inc. Announces Second Half and Full Year 2016 Financial Results
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PR Newswire
TAI'AN, China, April 28, 2017
TAI'AN, China, April 28, 2017 /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 and twelve months ended December 31, 2016.
Second Half 2016 Financial Highlights (all comparisons to prior year unless noted)
- Revenues increased by 13.6% to $38.3 million driven by continued expansion of business.
- Gross margin increased by 4.1 percentage points to 25.1%.
- Net income increased by 25.6% to $3.7 million.
- Earnings per share increased by 10.3% to $0.20, versus $0.18 for the same period of last year.
Full Year 2016 Financial Highlights
- Revenues increased by 22.5% to $72.7 million driven by continued expansion of business.
- Gross margin expanded by 6.0 percentage points to 27.0% while operating margin increased by 3.0 percentage points to 11.8%, due to improved operating efficiency and the non-renewal of less profitable customer contracts.
- Net income increased by 73.4% to $8.3 million. Earnings per share increased by 50.0% to $0.45.
Mr. Gary Wang, Chairman and Chief Executive Officer of CCRC, commented, "2016 turned out to be another strong year for CCRC with revenues and net income increasing by 22.5% and 73.4%, respectively, highlighting continuing momentum in our business. While our relationships with key existing clients, such as the provincial subsidiaries of China Mobile and China Telecom, remained steady and strong in 2016, our expanding footprint and increasing publicity post our successful IPO in late 2015 allowed us to keep attracting new clients and extend growth momentum in 2016 and into 2017. Looking ahead, we firmly believe that CCRC is poised to capture its fair share of the quickly evolving Chinese call center BPO market."
Six Months Ended December, 2016 Unaudited Financial Results
| | | For the Six Months Ended December 31, | ||||||
| ($ millions, except per share data | | 2016 | | 2015 | | % Change | ||
| Revenues | | $38.3 | | $33.7 | | 13.6% | ||
| Gross profit | | $9.6 | | $7.1 | | 35.9% | ||
| Gross margin | | 25.1% | | 21.0% | | 4.1 pp | ||
| Operating income | | $3.4 | | $3.3 | | 3.7% | ||
| Operating margin | | 8.9% | | 9.7% | | (0.8 pp) | ||
| Net income | | $3.7 | | $3.0 | | 25.6% | ||
| EPS | | $0.20 | | $0.18 | | 10.3% | ||
Revenues
For the six months ended December 31, 2016, revenues increased by $4.6 million, or 13.6%, to $38.3 million from $33.7 million for the same period last year. This increase was mainly driven by the growth of our BPO business with increased sales to our existing BPO clients and sales to new BPO clients.
Cost of revenue
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 $2.0 million, or 7.7%, to $28.7 million for the six months ended December 31, 2016 from $26.6 million for the same period last year. As a percentage of revenues, cost of revenues was 74.9% for the six months ended December 31, 2016, compared to 79.0% for the same period last year.
Gross profit and gross margin
Gross profit increased by $2.5 million, or 35.9%, to $9.6 million for the six months ended December 31, 2016 from $7.1 million for the same period last year. Gross margin increased by 4.1 percentage points to 25.1% for the six months ended December 31, 2016 from 21.0% for the same period last year. The increase in gross margin was primarily due to improvement in overall operating efficiency and the termination of certain less profitable customer contracts.
Selling, general and administrative expense
Selling, general and administrative expenses increased by $2.4 million, or 63.6%, to $6.2 million for the six months ended December 31, 2016 from $3.8 million for the same period last year. The increase in selling, general and administrative expenses was a result of higher payroll and bonus expenses paid to the administrative personnel and the management team, and increase in our research and development activities. We anticipate that our administrative expenses, particularly those related to support personnel costs, professional fees, as well as Sarbanes-Oxley compliance, will continue to increase in 2017 due to becoming a public company.
Operating income and operating margin
Income from operations increased by $0.1 million, or 3.7%, to $3.4 million for the six months ended December 31, 2016 from $3.3 million for the same period last year. The increase in operating income was mainly driven by an increase in revenues as a result of expansion of our BPO business and improvement in gross margin as a result of improvement in overall operating efficiency. Operating margin was 8.9% for the six months ended December 31, 2016, compared to 9.7% for the same period last year.
Government grants
We received government grants, which are discretionary and unpredictable in nature, of $0.4 million during the six months ended December 31, 2016, compared to $0.6 million during the same period of last year. Government grants as a percentage of net income were 9.6% for the six months ended December 31, 2016, compared to 21.2% for the same period of last year.
Income taxes
Provision for income taxes was $0.4 million for the six months ended December 31, 2016, compared to $0.8 million for the same period of last year. We were entitled to a preferential enterprise income tax ("EIT") rate of 15% in 2015 and 2016. The standard enterprise income tax rate in China is 25%.
Net income
Net income increased by $0.7 million, or 25.6%, to $3.7 million for the six months ended December 31, 2016 from $3.0 million for the same period last year. Earnings per basic and diluted share was $0.20 for the six months ended December 31, 2016, compared to $0.18 for the same period of last year.
Full Year 2016 Financial Results
| | | For the Twelve Months Ended December 31, | ||||
| ($ millions, except per share data) | | 2016 | | 2015 | | % Change |
| Revenues | | $72.7 | | $59.4 | | 22.5% |
| Gross profit | | $19.6 | | $12.5 | | 57.6% |
| Gross margin | | 27.0% | | 21.0% | | 6.0 pp |
| Operating income | | $8.6 | | $5.2 | | 64.4% |
| Operating margin | | 11.8% | | 8.8% | | 3.0 pp |
| Net income | | $8.3 | | $4.8 | | 73.4% |
| EPS | | $0.45 | | $0.30 | | 50.0% |
Revenues
For the year of 2016, revenues increased by $13.4 million, or 22.5%, to $72.7 million from $59.4 million for 2015. This increase was mainly driven by the growth of our BPO business with increased sales to our existing BPO clients and sales to new BPO clients. Revenues generated from inbound calling, outbound calling and other services accounted for 78%, 14%, and 8% of total revenues in 2016.
The provincial subsidiaries of China Mobile and China Telecom remained the two largest customers and accounted for 34% and 14%, respectively, of total revenues in 2016. Top 5 customers accounted for 71% of revenues in 2016.
Cost of revenue
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 $6.2 million, or 13.2%, to $53.1 million for the year of 2016 from $46.9 million for 2015. As a percentage of revenues, cost of revenues was 73.0% for the year of 2016, compared to 79.0% for 2015.
Gross profit and gross margin
Gross profit increased by $7.2 million, or 57.6%, to $19.6 million for the year of 2016 from $12.5 million for 2015. Gross margin increased by 6.0 percentage points to 27.0% for the year of 2016 from 21.0% for 2015. The increase in gross margin was primarily due to improvement in overall operating efficiency and the termination of certain less profitable businesses.
Selling, general and administrative expense
Selling, general and administrative expenses increased by $3.8 million, or 52.7%, to $11.1 million for the year of 2016 from $7.3 million for 2015. The increase in selling, general and administrative expenses was a result of higher payroll and bonus expenses paid to the administrative personnel and the management team and increase in our research and development activities. We anticipate that our administrative expenses, particularly those related to support personnel costs, professional fees, as well as Sarbanes-Oxley compliance, will continue to increase in 2017 due to becoming a public company. We expect to incur additional expenses of between $0.5 million and $1 million per year that we did not experience as a private company.
Operating income and operating margin
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