UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16

OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of October 2018

 

Commission file number: 001-37655

 

CHINA CUSTOMER RELATIONS CENTERS, INC.

(Registrant's name)

 

c/o Shandong Taiying Technology Co., Ltd.

1366 Zhongtianmen Dajie, Xinghuo Science and Technology Park, High-tech Zone, Taian City, Shandong Province,
People’s Republic of China 27100

(Address of principal executive office)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F ☒    Form 40-F

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

 

 

 

 

 

 

 

Explanatory Note:

 

On October 12, 2018, China Customer Relations Centers, Inc. (the “Registrant”) issued a press release announcing its financial results for the first half year 2018. A copy of the press release is attached hereto as Exhibit 99.1.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  CHINA CUSTOMER RELATIONS CENTERS, INC.
   
  By: /s/ Gary Wang
    Gary Wang
    Chairman and Chief Executive Officer

 

Dated: October 12, 2018

 

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EXHIBIT INDEX

 

Number   Description of Exhibit
     
99.1   Press Release dated October 12, 2018 announcing financial results for the first half year 2018.

 

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Exhibit 99.1

 

China Customer Relations Centers, Inc. Announces Company Record Financial Results for the First Half of 2018

 

Both Revenues and Net Profit Hit Company Record Highs, Following Growth of 90% and 172%, Respectively

 

TAI’AN, China, Oct. 12, 2018 /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 months ended June 30, 2018.

 

First Half of 2018 Highlights (all comparisons to prior year unless noted)

 

Revenues increased by 90.1% to a Company record of $66.0 million driven by continued expansion of its business.

 

Gross profit increased by 103.6% to $20.2 million. Gross margin increased by 2% to 30.6%.

 

Operating income increased by 305.8% to $12.4 million. Operating margin increased by 10% to 18.8%.

 

Net income attributable to common shareholders increased by 172.2% to $11.0 million.

 

EPS attributable to common shareholders was $0.60, versus $0.22 for the same period of last year.

 

As of June 30, 2018, the Company had service capacity of 15,709 seats, compared to 13,992 seats at the end of 2017.

 

Mr. Gary Wang, Chairman and Chief Executive Officer of CCRC, commented, “We continue to see strong momentum in our business with both revenues and net profit reaching Company record highs following growth of 90.1% and 172.2%, respectively, in the first half of 2018. Gross and operating margins also increased by 2% and 10% percent, respectively, as we also managed our costs and expenses carefully while pursuing growth. As we continue to gain growth from BPO clients, new clients also contributed significantly to the growth in the first half of 2018. These new clients included some high-profile companies such as, Bank of China (Hefei City Branch), China Unicom (Chongqing Provincial Branch), China Post (Chongqing Provincial Branch), China Mobile (Yunnan Provincial Branch), and BAIC BJEV.”

 

Six Months Ended June 30, 2018 Financial Results (Unaudited)  

 

   For the Six Months Ended June 30, 
($ millions, except per share data)  2018   2017   % Change 
Revenues  $66.0   $34.7    90.1%
Gross profit  $20.2   $9.9    103.6%
Gross margin   30.6%   28.6%   2.0pp
Operating income  $12.4   $3.1    305.8%
Operating margin   18.8%   8.8%   10.0pp
Net income attributable to CCRC  $11.0   $4.0    172.2%
EPS attributable to CCRC - basic and diluted  $0.60   $0.22    172.2%

 

 

 

 

Revenues

 

For the six months ended June 30, 2018, revenues increased by $31.3 million, or 90.1%, to a company record high of $66.0 million from $34.7 million for the same period of last year. We continued to see strong demand for our business from existing BPO clients as well as new clients during the six months ended June 30, 2018. As of June 30, 2018, The Company had call centers located at 24 cities across 14 provinces, autonomous regions and municipalities in China, including Shandong, Jiangsu, Anhui, Hebei, Xinjiang, Guangxi, Jiangxi, Chongqing, Beijing, Henan, Shanghai, Sichuan, Yunnan and Guangdong with a capacity approximately of 15,709 seats.

 

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, information technology costs, and facilities support. Cost of revenues increased by $21.0 million, or 84.7%, to $45.8 million for the six months ended June 30, 2018 from $24.8 million for the same period of last year. As a percentage of revenues, cost of revenues was 69.4% for the six months ended June 30, 2018, compared to 71.4% for the same period of last year.

 

Gross profit and gross margin

 

Gross profit increased by $10.3 million, or 103.6%, to $20.2 million for the six months ended June 30, 2018 from $9.9 million for the same period of last year. Gross margin increased by 2% to 30.6%, the highest level since 2013, for the six months ended June 30, 2018 from 28.6% for the same period of last year.

 

Selling, general and administrative expense

 

Selling, general and administrative expenses increased by $0.9 million, or 13.3%, to $7.8 million for the six months ended June 30, 2018 from $6.9 million for the same period of last year. The increase in selling, general and administrative expenses was a result of higher payroll and bonus expenses paid to the administrative and research personnel and the management team. As a percentage of revenues, SG&A decreased from 19.8% for the six months ended June 30, 2017 to 11.8% for the six months ended June 30, 2018. We are able to maintain our current cost level for administration departments despite the increase in our business for the first half of 2018 due to increased efficiency in our management team. 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 2018 due to the continuing expansion of our business.

 

Operating income and operating margin

 

Income from operations increased by $9.4 million, or 305.8%, to $12.4 million for the six months ended June 30, 2018 from $3.1 million for the same period of last year. The increase in operating income was mainly driven by an increase in revenues and improvement in gross margin and partially offset by increases in selling, general and administrative expenses. Operating margin was 18.8% for the six months ended June 30, 2018, compared to 8.8% for the same period of last year.

 

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Other income

 

We received government grants, which are discretionary and unpredictable in nature, of $0.6 million during the six months ended June 30, 2018, compared to $1.3 million during the same period of last year. Government grants as a percentage of net income were 5.2% for the six months ended June 30, 2018, compared to 31.0% for the same period of last year. Total other income, net of other expenses, decreased by $0.9 million, or 63.2%, to $0.5 million for the six months ended June 30, 2018 from $1.4 million for the same period of last year.

 

Income before provision for income taxes

 

Income before provision for income taxes increased by $8.5 million, or 188.9%, to $13.0 million for the six months ended June 30, 2018 from $4.5 million for the same period of last year. The increase in income before provision for income taxes was mainly due to the increase in income from operations and partially offset by decrease in other income.

 

Income taxes

 

Provision for income taxes was $1.9 million for the six months ended June 30, 2018, compared to $0.3 million for the same period of last year.

 

Net income and earnings per share

 

Net income increased by $6.9 million, or 162.7%, to $11.1 million for the six months ended June 30, 2018 from $4.2 million for the same period of last year. After deducting net income attributable to noncontrolling interest, net income attributable to common shareholders was $11.0 million, or $0.60 per basic and diluted share, for the six months ended June 30, 2018, compared to $4.0 million, or $0.22 per basic and diluted share, for the same period of last year.

 

Financial Conditions

 

As of June 30, 2018, the Company had cash of $20.5 million, compared to $18.6 million at December 31, 2017. Total working capital was $39.4 million as of June 30, 2018, compared to $30.0 million at the end of 2017.

 

Net cash used in operating activities was $0.1 million for the six months ended June 30, 2018, compared to net cash provided by operating activities of $1.1 million for the same period of last year. Net cash used in investing activities was $1.6 million for the six months ended June 30, 2018, compared to $2.3 million for the same period of last year. Net cash provided by financing activities was $3.9 million for the six months ended June 30, 2018, compared to net cash used in financing activities of $0.1 million for the same period of last year.

 

Recent Development

 

On August 11, 2018, The Company held its 2018 Annual Meeting of Stockholders at its headquarters in Tai’An City, Shandong Province.  The Company’s shareholders: 1) reelected Weixin Wang and Owens Meng as Class II Directors; 2) ratified the appointment of MaloneBailey, LLP as its independent registered public accounting firm for the fiscal year of 2018; and 3) approved the 2018 Share Incentive Plan.

 

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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 segment of customer care services, including:

 

customer relationship management;

 

technical support;

 

sales;

 

customer retention;

 

marketing surveys; and

 

research.

 

The Company’s service is currently delivered from call centers located at over 24 cities across 14 provinces, autonomous regions and municipalities in China, including Shandong, Jiangsu, Anhui, Hebei, Xinjiang, Guangxi, Jiangxi, Chongqing, Beijing, Henan, Shanghai, Sichuan, Yunnan and Guangdong with a capacity of approximately 15,709 seats. 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: 1) anticipated increase in administrative costs; and 2) continued growth 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:

 

Tony Tian, CFA                          
Weitian Group LLC
Email: ttian@weitianco.com
Phone: +1-732-910-9692

 

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CHINA CUSTOMER RELATIONS CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31, 
   2018   2017 
   (Unaudited)     
ASSETS        
Cash and cash equivalents  $20,451,269   $18,628,365 
Accounts receivable, net   32,819,649    23,689,583 
Notes receivable - related party   951,791    968,277 
Prepayments   2,221,324    1,277,149 
Due from related parties, net   193,170    219,051 
Other current assets   1,429,910    1,084,929 
Total current assets   58,067,113    45,867,354 
Equity investments   3,625,871    3,688,676 
Property and equipment, net   6,655,375    6,067,338 
Deferred tax assets   431,388    313,463 
Total non-current assets   10,712,634    10,069,477 
Total assets  $68,779,747   $55,936,831 
           
 LIABILITIES AND EQUITY          
Accounts payable  $1,124,730   $495,177 
Accounts payable - related parties   39,698    46,661 
Accrued liabilities and other payables   2,826,636    4,724,823 
Deferred revenue   417,941    607,660 
Wages payable   5,853,536    5,565,078 
Income taxes payable   842,443    541,321 
Short term loan   7,553,897    3,842,371 
Total current liabilities   18,658,881    15,823,091 
Total liabilities   18,658,881    15,823,091 
Equity          
Common shares, $0.001 par value, 100,000,000 shares authorized, 18,329,600 shares issued and outstanding as of June 30, 2018 and December 31, 2017   18,330    18,330 
Additional paid-in capital   11,202,396    11,202,396 
Retained earnings   35,478,905    25,292,402 
Statutory reserves   3,418,376    2,597,031 
Accumulated other comprehensive income (loss)   (994,341)   80,868 
Total China Customer Relations Centers, Inc. shareholders’ equity   49,123,666    39,191,027 
Noncontrolling interest   997,200    922,713 
Total equity   50,120,866    40,113,740 
Total liabilities and equity  $68,779,747   $55,936,831 

 

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CHINA CUSTOMER RELATIONS CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

 

   For The Six Months Ended
June 30,
 
   2018   2017 
         
Revenues, net  $66,036,657   $34,737,119 
Cost of revenues   45,803,839    24,799,720 
Gross profit   20,232,818    9,937,399 
Operating expenses:          
Selling, general & administrative expenses   7,787,102    6,870,337 
Total operating expenses   7,787,102    6,870,337 
Income from operations   12,445,716    3,067,062 
Interest expense   (120,659)   - 
Government grants   572,245    1,309,558 
Other income   80,470    170,032 
Other expense   (9,270)   (57,080)
Total other income   522,786    1,422,510 
Income before provision for income taxes   12,968,502    4,489,572 
Income tax provision   1,863,761    262,223 
Net income   11,104,741    4,227,349 
Less: net income attributable to noncontrolling interest   96,893    183,128 
Net income attributable to China Customer Relations Centers, Inc.  $11,007,848   $4,044,221 
           
Comprehensive income          
Net income  $11,104,741   $4,227,349 
Other comprehensive income (loss)          
Foreign currency translation adjustment   (1,097,615)   707,037 
Total Comprehensive income   10,007,126    4,934,386 
Less: Comprehensive income attributable to noncontrolling interest   74,487    201,341 
Comprehensive income attributable to China Customer Relations Centers, Inc.  $9,932,639   $4,733,045 
           
Earnings per share attributable to China Customer Relations Centers, Inc.          
Basic  $0.60   $0.22 
Diluted  $0.60   $0.22 
Weighted average common shares outstanding          
Basic   18,329,600    18,329,600 
Diluted   18,329,600    18,329,600 

 

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CHINA CUSTOMER RELATIONS CENTERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   For The Six Months Ended
June 30,
 
   2018   2017 
         
Cash flows from operating activities        
Net income  $11,104,741   $4,227,349 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:          
Depreciation   1,219,183    808,302 
Loss on disposal of property and equipment   3,366    2,541 
Deferred income taxes   (128,150)   (54,388)
Changes in assets and liabilities:          
Accounts receivable   (9,911,512)   (556,543)
Due from related parties, net   (94,772)   - 
Prepayments   (1,178,806)   (1,341,182)
Other current assets   (377,832)   (415,423)
Accounts payable   624,601    (171,593)
Accounts payable - related parties   (6,414)   (73,387)
Wages payable   398,411    546,565 
Income taxes payable   322,647    (707,263)
Deferred revenue   (186,486)   (42,085)
Accrued liabilities and other payables   (1,896,512)   (1,125,830)
Net cash provided by (used in) operating activities   (107,535)   1,097,063 
Cash flows from investing activities          
Purchase of property and equipment   (1,720,478)   (251,460)
Proceeds from sale of property and equipment   71    73 
Payments for equity investments   -    (2,025,526)
Advances to related parties   -    (21,821)
Repayments from related parties   117,802    - 
Net cash used in investing activities   (1,602,605)   (2,298,734)
Cash flows from financing activities          
Contribution from noncontrolling investor in subsidiary   -    353,581 
Repayments to related parties   -    (465,828)
Borrowings from short term loan   3,891,596    - 
Net cash provided by (used in) financing activities   3,891,596    (112,247)
Effect of exchange rate changes on cash and cash equivalents   (358,552)   312,268 
Net change in cash and cash equivalents   1,822,904    (1,001,650)
Cash and cash equivalents, beginning of the period  $18,628,365   $15,947,268 
Cash and cash equivalents, end of the period  $20,451,269   $14,945,618 
Supplemental cash flow information          
Interest paid  $120,659   $43,591 
Income taxes paid  $1,647,613   $739,233 
Non-cash investing and financing activities          
Transfer from prepayments to property and equipment  $176,730   $472,105 
Liabilities assumed in connection with purchase of property and equipment  $49,318   $292,585 

 

 

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