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.
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