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Cheetah Net Supply Chain Service Inc. Announces Second Quarter 2023 Results

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Cheetah Net Supply Chain Service Inc. reports Q2 2023 results. Gross profit margin expanded 400 basis points to 10.3%. Average selling price per vehicle increased by 10.4% to $131,430. Net cash provided by operating activities was $4.1 million for the first six months of 2023. Cash balance increased to $0.6 million compared to December 31, 2022.
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  • Gross profit margin expanded 400 basis points to 10.3%. Average selling price per vehicle increased by 10.4% to $131,430. Net cash provided by operating activities was $4.1 million for the first six months of 2023. Cash balance increased to $0.6 million compared to December 31, 2022.
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Gross Profit Margin Expanded 400 Basis Points to 10.3%

CHARLOTTE, N.C., Sept. 05, 2023 (GLOBE NEWSWIRE) -- Cheetah Net Supply Chain Service Inc. (“Cheetah” or the “Company”) (Nasdaq CM: CTNT) today reported results for the three and six months ended June 30, 2023.

  • Average selling price per vehicle increased by 10.4% to $131,430, compared to $118,794 for the second quarter of 2022.
  • Gross profit margin expanded 400 basis points to 10.3% from 6.3% for the second quarter of 2022.
  • Net cash provided by operating activities was $4.1 million for the first six months of 2023, compared to net cash used by operating activities of $1.7 million for the first six months of 2022.
  • Cash balance of $0.6 million as of June 30, 2023, an increase of $0.5 million compared to December 31, 2022.

“Leveraging our keen insight into shifts in demand for luxury automobile brands in China and procurement optimization skills, we delivered a 400-basis point expansion in our gross profit margin for the second quarter, sustained positive net income, and generated positive operating cash flow. Our plan is to continue executing our strategy of focusing on higher-priced automobile models while effectively managing the spread between procurement costs and selling prices to maximize the overall profit of each vehicle transaction,” said Cheetah’s Chairman and CEO Tony Liu.

“To further optimize the profitability of our current luxury automotive export business, we are looking to add logistics and warehousing capabilities, either through internal development or acquisitions,” added Mr. Liu. “With an integrated platform of logistics and warehousing services in place, we will be well-positioned to scale our current business by marketing our services to third-party parallel importers. Our long-term ambition is to become an integrated provider of international trade services for small- and medium-sized traders. A key first step toward achieving that ambition was the recent completion of our IPO. We’re just getting started and excited about the future.”

Second Quarter 2023 Financial Results

Revenue for the quarter was $12.2 million compared to $20.8 million for the second quarter last year, reflecting lower volume partially offset by a higher average selling price per vehicle. During the quarter, Cheetah sold 93 vehicles compared to 175 last year; the average selling price per vehicle increased by 10.4% to $131,430 compared to $118,794 as a result of the Company’s focus on selling higher-priced vehicles.

Total cost of revenue was $11.0 million compared to $19.5 million for the same period last year, a decline of 43.7% attributable to the lower sales volume. Gross profit was $1.2 million, a decrease of 4.3% compared to $1.3 million for the second quarter of 2022. Gross profit margin increased by 400 basis points to 10.3% from 6.3%, demonstrating the Company’s ability to optimize its cost management and adapt to market dynamics. Average procurement cost per vehicle increased by 6.0% while the average selling price per vehicle increased by 10.6%.

Selling expenses were $0.1 million compared to $36,720 for the prior year period, reflecting staff additions and a change in ocean freight expenses. General and administrative expenses increased to $0.5 million from $0.3 million due to professional fees associated with the Company’s IPO and staff additions.

As a result of the lower gross profit and higher operating expenses, income from operations declined to $0.5 million compared to $0.9 million for the second quarter of 2022.

Total other expenses decreased to $0.3 million from $0.8 million, primarily reflecting decreased interest expenses due to reduced inventory financing and letter of credit financing activities.         

Net income was $0.1 million, or $0.01 per share, compared to $81,805, or $0.01 per share, for the second quarter of 2022.

First Half 2023 Financial Results

Revenue for the first six months was $22.4 million compared to $33.6 million for the same period last year, reflecting the lower volume partially offset by higher average selling price per vehicle. During the period, Cheetah sold 175 vehicles compared to 296 last year; the average selling price per vehicle increased by 12.9% to $128,214 compared to $113,537 as a result of the Company’s focus on selling higher-priced vehicles.

Total cost of revenue was $20.0 million compared to $31.8 million for the same period last year, a decline of 37.0% attributable to the lower sales volume. Gross profit was $2.4 million, an increase of 35.0% compared to $1.8 million for the first six months of 2022. Gross profit margin increased by 540 basis points to 10.7% from 5.3% for the first six months of 2022, demonstrating the Company’s ability to optimize its cost management and adapt to market dynamics to enhance its overall financial performance. Average procurement cost per vehicle increased by 3.6% while the average selling price per vehicle increased by 12.9%.

Selling expenses were $0.4 million compared to $0.3 million for the prior year period reflecting staff additions and a change in ocean freight expenses. General and administrative expenses increased to $1.1 million from $0.5 million due to professional fees associated with the Company’s IPO and staff additions.

Income from operations was $0.8 million compared to $0.9 million for the first half of 2022.  

Total other expenses decreased to $0.8 million from $1.5 million, primarily reflecting decreased interest expenses due to reduced inventory financing and letter of credit financing activities.         

Net income was $47,812, or $0.003 per share, compared to a net loss of $0.5 million, or $(0.03) per share, for the first six months of 2022.

Forward-Looking Statements

This press release contains certain forward-looking statements, including statements that are predictive in nature. Forward-looking statements are based on the Company’s current expectations and assumptions. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. These statements may be identified by the use of forward-looking expressions, including, but not limited to, “anticipate,” “believe,” “continue,” “estimate,” “expect,” “future,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters, but the absence of these words does not mean that a statement is not forward-looking. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Important factors that could cause actual results to differ materially from those in the forward-looking statements are set forth in the Company’s filings with the SEC, including its registration statement on Form S-1, as amended, under the caption “Risk Factors.”

For more information, please contact:

Cheetah Net Supply Chain Service Inc. 
Robert W. Cook
Chief Financial Officer
(704) 972-0209
robert.c@cheetah-net.com

LHA Investor Relations
Jody Burfening
(212)-838-3777
jburfening@lhai.com

CHEETAH NET SUPPLY CHAIN SERVICE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 Three Months Ended June 30, Six Months Ended June 30,
 2023
 2022
 2023
 2022
REVENUE$12,223,026  $20,788,964  $22,437,468  $33,607,035 
            
COST OF REVENUE           
Cost of vehicles 10,319,991   18,977,349   18,824,494   30,736,345 
Fulfillment expenses 650,666   503,452   1,217,548   1,096,004 
Total cost of revenue 10,970,657   19,480,801   20,042,042   31,832,349 
            
GROSS PROFIT 1,252,369   1,308,163   2,395,426   1,774,686 
            
OPERATING EXPENSES           
Selling expenses 141,340   36,720   419,123   289,107 
General and administrative expenses 565,400   347,302   1,146,470   582,850 
Total operating expenses 706,740   384,022   1,565,593   871,957 
            
INCOME FROM OPERATIONS 545,629   924,141   829,833   902,729 
            
OTHER INCOME (EXPENSES)           
Interest expense, net (334,855)  (819,921)  (771,914)  (1,533,109)
Other income, net 1,968   2,134   3,902   4,246 
Total other expenses, net (332,887)  (817,787)  (768,012)  (1,528,863)
            
INCOME (LOSS) BEFORE INCOME TAX PROVISION 212,742   106,354   61,821   (626,134)
            
Income tax provision 56,997   24,549   14,009   (153,242)
            
NET INCOME (LOSS)$155,745  $81,805  $47,812  $(472,892)
            
Earnings (loss) per share - basic and diluted$0.01  $0.01  $0.00  $(0.03)
Weighted average shares - basic and diluted 16,666,000   15,000,000   16,666,000   15,000,000 


CHEETAH NET SUPPLY CHAIN SERVICE INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET DATA
       
 June 30,    December 31,
 2023 2022
ASSETS       
CURRENT ASSETS:       
Cash$592,126 $58,381
Accounts receivable 2,146,882  7,086,651
Inventories, net 6,962,926  5,965,935
TOTAL CURRENT ASSETS  10,833,602   14,492,525
TOTAL ASSETS$ 11,144,196 $ 14,719,404
      
TOTAL CURRENT LIABILITIES  7,712,446   12,195,607
      
TOTAL LIABILITIES  8,551,029   12,874,049
      
TOTAL STOCKHOLDERS’ EQUITY  2,593,167   1,845,355
      
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$ 11,144,196 $ 14,719,404


CHEETAH NET SUPPLY CHAIN SERVICE INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
      
 Six Months Ended
 June 30,
 2023     2022 
Cash flows from operating activities:       
Net income (loss)$ 47,812  $ (472,892)
Net cash provided by (used in) operating activities  4,145,363    (1,668,223)
      
Cash flows from financing activities:       
Net cash (used in) provided by financing activities  (3,611,618)   1,372,452 
      
Net increase (decrease) in cash  533,745    (295,771)
Cash, beginning of period  58,381    500,977 
Cash, end of period$ 592,126  $ 205,206 

Cheetah Net Supply Chain Service Inc.

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