China Customer Relations Centers, Inc. Announces Financial Results for the Full Year 2020 as Compared to Full Year 2019

TAI'AN,China,May 17,2021 -- 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,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,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,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,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,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,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,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,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,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,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,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.

About China Customer Relations Centers,Inc.

The Company is a leading BPO service provider in China focusing on the complex,voice-based and online-based segments of customer care services,including:

customer relationship management;

technical support;

sales;

customer retention;

marketing surveys; and

research.

The Company's service is currently delivered in Provinces of Shandong,Jiangsu,Liaoning,Guangdong,Yunnan,Hubei,Sichuan,Hebei,Anhui,Xinjiang,Guangxi,Jiangxi,Heilongjiang,and Chongqing. 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 growth,shareholder returns 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:

Sherry Zheng

Weitian Group LLC

Email: shunyu.zheng@weitian-ir.com

Phone: +1-718-213-7386

CHINA CUSTOMER RELATIONS CENTERS,INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December31,

December 31,

2020

2019

ASSETS

Cash and cash equivalents

$

43,669,538

$

25,328,486

Accounts receivable

63,493,891

42,606,485

Prepayments

2,352,988

2,396,646

Prepayment,related parties

359,142

90,429

Due from related parties,current

470,076

-

Income taxes recoverable

104,721

712,459

Other current assets

4,420,220

3,408,704

Total current assets

114,870,576

74,543,209

Equity investments

3,678,171

3,446,346

Property and equipment,net

12,156

10,115,782

Deferred tax assets

259,200

242,863

Due from related party,non-current

-

215,307

Operating lease right-of-use assets

12,265,679

9,827,114

Operating lease right-of-use assets - related party

341,078

172,121

Total non-current assets

29,087,284

24,019,533

Total assets

$

143,957,860

$

98,562,742

LIABILITIES AND EQUITY

Accounts payable

$

4,315,457

$

2,602,972

Accounts payable - related parties

260,790

149,658

Accrued liabilities and other payables

11,018,516

4,641,892

Deferred revenue

1,196,659

456,331

Wages payable

15,663,312

10,472,596

Income taxes payable

974,510

452,961

Operating lease liabilities,current

5,812

3,797,069

Operating lease liabilities - related party,current

165,734

163,995

Short-term loans

1,531,933

4,306,138

Total current liabilities

40,805,723

27,043,612

Operating lease liabilities,non-current

7,461,337

6,068,702

Operating lease liabilities – related party,non-current

175,002

-

Total non-current liabilities

7,636,339

6,702

Total liabilities

48,442,062

33,112,314

Equity

Common shares,$0.001 par value,100,000,000 shares authorized,18,329,600

shares issued and outstanding as of December 31,2020 and December 31,

2019

18,330

18,330

Additional paid-in capital

18,424,483

15,074,267

Retained earnings

66,854,353

47,347,781

Statutory reserves

7,761,226

5,818,330

Accumulated other comprehensive income (loss)

2,457,406

(3,411,744)

Total China Customer Relations Centers,Inc. shareholders' equity

95,515,798

64,846,964

Noncontrolling interest

-

603,464

Total equity

95,798

65,450,428

Total liabilities and equity

$

143,742

CHINA CUSTOMER RELATIONS CENTERS,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For The Years Ended December 31,

2020

2019

2018

Revenues,net

$

240,316,024

$

173,409,113

$

141,433,641

Cost of revenues

188,725,246

134,504,540

102,567,896

Gross profit

51,590,778

38,904,573

38,865,745

Operating expenses:

Selling,general & administrative expenses

27,772,891

26,318,771

21,908

Total operating expenses

27,908

Income from operations

23,817,887

12,585,802

17,535,837

Interest expense

(176,422)

(190,808)

(404,958)

Government grants

2,989,897

1,825,402

1,709,297

Other income

1,803,014

1,547,788

552,205

Other expense

(434,048)

(202,688)

(124,370)

Total other income

4,182,441

2,979,694

1,732,174

Income before provision for income taxes

28,328

15,565,496

19,268,011

Income tax provision

3,069,477

2,391,371

2,966,880

Net income

24,930,851

13,174,125

16,301,131

Less: net income attributable to noncontrolling interest

70,052

118,114

208,593

Net income attributable to China Customer Relations Centers,

Inc.

$

24,860,799

13,056,011

16,092,538

Comprehensive income

Net income

$

24,851

$

13,125

$

16,131

Other comprehensive income (loss)

Foreign currency translation adjustment

5,855,857

(828,331)

(2,741,283)

Total Comprehensive income

30,786,708

12,345,794

13,559,848

Less: Comprehensive income attributable to noncontrolling

interest

56,759

109,238

140,467

Comprehensive income attributable to China Customer

Relations Centers,Inc.

$

30,729,949

$

12,236,556

$

13,419,381

Earnings per share attributable to China Customer Relations

Centers,Inc.

Basic

$

1.36

$

0.71

$

0.88

Diluted

$

1.36

$

0.71

$

0.88

Weighted average common shares outstanding

Basic

18,600

18,600

Diluted

18,600

CHINA CUSTOMER RELATIONS CENTERS,INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended December 31,

2020

2019

2018

Cash flows from operating activities

Net income

$

24,131

Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation

4,070,582

3,404,912

2,635,242

Allowance for credit losses

-

-

952,439

Loss on disposal of property and equipment

59,366

19,091

34,166

Deferred income taxes

-

238,883

(196,909)

Non-cash lease expense

4,319,670

3,501,753

-

Changes in operating lease right-of-use assets and operating

lease liabilities upon lease modification

634,328

-

-

Changes in assets and liabilities:

Accounts receivable

(17,048,770)

(13,057,615)

(7,937,804)

Due from related parties

(9,929)

-

-

Prepayments

(298,525)

(2,097,963)

(887,778)

Prepayments,related parties

(248,456)

-

(95,244)

Other current assets

(740,237)

(1,510,847)

(970,199)

Operating lease liabilities

(3,955,614)

(3,037,030)

-

Accounts payable

1,454,416

2,017,431

147,818

Accounts payable - related parties

95,611

(10,440)

122,630

Wages payable

4,245,097

3,511,093

1,884,440

Income taxes recoverable

620,277

(192,965)

(548,893)

Income taxes payable

464,576

94,336

(153,896)

Deferred revenue

671,332

100,245

(221,771)

Accrued liabilities and other payables

4,934,855

(941,772)

1,077,098

Net cash provided by operating activities

24,049,979

5,213,237

12,142,470

Cash flows from investing activities

Purchase of property and equipment

(5,334,709)

(4,481,450)

(4,768,139)

Proceeds from sale of property and equipment

7,179

36,693

9,197

Advance to equity investee

(435,445)

-

(1,461)

Collection from equity investee

429,068

-

-

Advance to related parties

(381,309)

(214,111)

(105,827)

Repayment from related parties

171,179

198,017

117,802

Net cash used in investing activities

(5,544,037)

(4,460,851)

(4,748,428)

Cash flows from financing activities

Contribution from noncontrolling investor in subsidiary

108,970

-

-

Dividend distributed to noncontrolling investor in subsidiary

-

(213,722)

(355,232)

Borrowings from short-term loans

4,351,712

4,452,368

3,891,596

Repayment of short-term loans

(7,124,316)

(3,694,345)

(3,625,448)

Net cash provided by (used in) financing activities

(2,634)

544,301

(89,084)

Effect of exchange rate changes on cash and cash

equivalents

2,498,744

(388,113)

(1,513,411)

Net change in cash and cash equivalents

18,341,052

908,574

5,791,547

Cash and cash equivalents,beginning of the year

25,486

24,912

18,628,365

Cash and cash equivalents,end of the year

$

43,486

$

24,912

Supplemental cash flow information

Interest paid

$

175,811

$

190,808

$

404,958

Income taxes paid

$

2,924,643

$

2,993,733

$

3,929,237

Non-cash investing and financing activities

Transfer from prepayments to property and equipment

$

705,933

$

904,309

$

392,637

Liabilities assumed in connection with purchase of property

and equipment

$

7,200

$

24,512

$

88,112

Liability assumed in connection with acquisition of

noncontrolling interest

$

830,308

$

-

$

-

Operating lease right-of-use assets obtained in exchange for

operating lease liability

$

7,165

$

5,496,939

$

-

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