CAAS achieves record Net Sales of US$28.4 million; Gross Margin returns to 32%
WUHAN, Hubei, China, May 15 /Xinhua-PRNewswire-FirstCall/ -- China
AutomotiveSystems, Inc. (Nasdaq: CAAS), a leading power steering components
and systems supplier in China, today announced financial results for the
first quarter, ended March 31, 2007.
2007 First Quarter Highlights:
-- Net sales increased to US$28.4 million, reflecting 35% year-over-year
growth;
-- Net sales from steering components for passenger and light-duty
vehicles increased to US$21.0 million, reflecting a 35% year-over-year
growth;
-- Net sales from steering components for commercial vehicles increased to
US$ 7.4 million, reflecting a 38% increase year-over-year;
-- Operating income for the first quarter of 2007 increased to $5.2
million, reflecting a 98% year-over-year growth;
-- Net income was US$1.6 million, reflecting 50% year-over-year growth;
and
-- Diluted earnings per share was US$0.07, reflecting 40% year-over-year
growth
CAAS reported net sales of $28.4 million for the first quarter ended March
31, compared with $21.0 million in the same period in 2006 and $27.7 million
for the fourth quarter of 2006, reflecting a 35% year-over-year growth and a
3% quarter-over-quarter growth respectively. Net income for the first quarter
of 2007 was $1.6 million, or $0.07 per diluted share, as compared with $1.1
million, or $0.05 per diluted share, in the same period a year ago and $1.4
million, or $0.06 per diluted share, for the fourth quarter of 2006,
reflecting a 50% year-over-year and 15% quarter-over-quarter growth
respectively.
Net sales from steering products for passenger and light-duty vehicles for
the first quarter of 2007 increased to $21.0 million as compared with $15.5
million reported in the same period for 2006, reflecting a 35% year-over-year
growth. Net sales from steering products for commercial vehicles for the first
quarter of 2007 increased to $7.4 million as compared with $5.4 million
reported in the same period for 2006, reflecting a 38% year-over-year growth.
"After reporting strong sales growth in 2006, we are extremely pleased
that we have commenced 2007 with another record high in quarterly sales. As a
result of quality improvements and technological advances, Chinese home grown
auto makers posted strong performances in the passenger vehicle market. In
addition, two of our key customers, Chery and Geely Auto, moved into the top 5
auto sellers by China Association of Auto Manufacturers during the first
quarter. Chery's recent agreement with Chrysler to distribute Chery's economy
car in North America and Europe clearly represents a substantial opportunity
for fuel efficient and environmental friendly Chinese cars in the global
marketplace. Our joint venture with Chery Auto and new facility is expected to
come on line early in the 3rd quarter. We believe that we are well positioned
to capture these new global opportunities with our key customers. On the
commercial vehicle side, heavy duty truck makers became the biggest winners as
both production and sales growth exceeded 60% as compared to first quarter
2006. Our customers, FAW, Sinotruk and Dongfeng motors continue to dominate
the Chinese domestic truck market.'' said Mr. Hanlin Chen, Chairman and Chief
Executive Officer of China Automotive Systems.
Gross profit for the first quarter of 2007 increased to $9.2 million as
compared with $6.9 million reported in the same period for 2006 and $8.4
million for the fourth quarter of 2006, reflecting a 32% year-over-year
increase and a 10% quarter-over-quarter increase respectively. Operating
income for the first quarter of 2007 increased to $5.2 million as compared
with $2.6 million reported in the same period for 2006 and $3.6 million for
the fourth quarter of 2006, reflecting a 98% year-over-year growth and a 44%
quarter-over-quarter growth respectively.
Total cash and cash equivalents as of March 31, 2007 totaled $17.4 million
as compared to $27.4 million as of December 31, 2006. Stockholder's equity
increased to $56.4 million as of March 31, 2006 from $53.4 million as of
December 31, 2006.
Mr. Daming Hu, chief financial officer stated, "We are pleased to see that
our cost control program has started to produce positive results, especially
given the recent pricing pressure within the auto-parts industry. Gross
margins were 32.4% for the three months ended March 31, 2007, having recovered
significantly from 30.3% in the fourth quarter of 2006 and only slightly down
from 33.1% for the same period of 2006. Average selling price pressure from
our OEM customers was partially offset by our effective cost reduction
program. In the beginning of 2007, we expected that the sales price of
automotive parts would reduce by approximately 5%-7% during 2007 as compared
to 2006. To counter such pricing pressure, we continue to streamline our
production management and raw material purchasing to reduce costs. During the
first quarter, we successfully controlled our selling expenses and general
administrative expenses. As we stabilized our sales team to focus on
relationships with large OEM customers, we see our selling expenses only
increase by 6.8%. We have further tightened our credit control on new accounts
and strengthened accounts receivable collections. As a result, we recovered
part of the provision for doubtful accounts recorded in prior years; lowered
credit grants to existing and new customers and decreased our general and
administrative expenses by nearly 26% as compared to the same period in 2006.
We strive to continue to implement our cost control program and improve the
bottom line in the coming quarters."
About CAAS
Based in Hubei Province, People's Republic of China, China Automotive
Systems, Inc. is a leading supplier of power steering components and systems
to the Chinese automotive industry, operating through seven Sino-foreign joint
ventures. The Company offers a full range of steering system parts for
passenger automobiles and commercial vehicles. The Company currently offers 4
separate series of power steering and 307 models of power steering with an
annual production capacity of 800,000 sets, steering columns, steering oil
pumps and steering hoses. Its customer base is comprised of leading Chinese
auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co.,
Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd.
and Chery Automobile Co., Ltd. etc. For more information, please visit:
http://www.caasauto.com
Safe Harbor Statement
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations or beliefs, including, but not
limited to, statements concerning the Company's operations, financial
performance and, condition. For this purpose, statements that are not
statements of historical fact may be deemed to be forward-looking statements.
The Company cautions that these statements by their nature involve risks and
uncertainties, and actual results may differ materially depending on a variety
of important factors, including, among others, the impact of competitive
products, pricing and new technology; changes in consumer preferences and
tastes; and effectiveness of marketing; changes in laws and regulations;
fluctuations in costs of production, and other factors as those discussed in
the Company's reports filed with the Securities and Exchange Commission from
time to time.
China Automotive Systems, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31
2007 2006
Net product sales, including $902,584
and $583,539 to related parties at
March 31, 2007 and 2006 $28,383,392 $20,964,452
Cost of product sold, including
$1,051,480 and $655,995 purchased
from related parties at March 31,2007
and 2006 19,191,486 14,019,255
Gross profit 9,191,906 6,945,197
Add: Gain on other sales 112,094 82,715
Less: Operating expenses-
Selling expenses 1,593,646 1,492,488
General and administrative expenses 1,509,027 2,037,537
R&D expenses 119,465 189,747
Depreciation and amortization 893,251 688,490
Total Operating expenses 4,115,389 4,408,262
Income from operations 5,188,611 2,619,650
Add: Other income, net 38,462 624
Financial (expenses) (394,997) (334,386)
Income before income taxes 4,832,076 2,285,888
Less: Income taxes 1,294,080 200,711
Income before minority interests 3,537,996 2,085,177
Less: Minority interests 1,894,895 990,779
Net income $1,643,101 $1,094,398
Net income per common share
Basic and diluted $0.07 $0.05
Weighted average number of common
shares outstanding
Basic 23,938,078 22,680,813
Diluted 23,949,809 22,704,753
China Automotive Systems, Inc.
Condensed Consolidated Balance Sheets
March 31, December 31,
2007 2006
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $17,356,752 $27,418,500
Pledged cash deposits 2,989,674 3,484,335
Accounts and notes receivable, net, including
$2,090,888 and $1,770,933 from related parties
at March 31, 2007 and December 31, 2006, net of
an allowance for doubtful accounts of
$4,208,453 and $4,086,218 at March 31, 2007 and
December 31, 2006. 60,477,292 57,234,383
Advance payments and other, including $181,590
and $487,333 to related parties at March 31,
2007 and December 31, 2006. 920,857 837,014
Inventories 20,351,984 15,464,571
Total current assets $102,096,559 $104,438,803
Long-term Assets:
Property, plant and equipment, net $40,535,608 $40,848,046
Intangible assets, net 433,388 3,140,548
Other receivables, net, including $840,220 and
$738,510 from related parties at March 31, 2007
and December 31, 2006, net of an allowance for
doubtful accounts of $697,472 and $898,203 at
March 31, 2007 and December 31, 2006. 1,432,340 966,715
Advance payment for property, plant and
equipment, including $1,159,667 and $488,873 to
related parties at March 31, 2007 and December
31, 2006. 3,705,310 2,640,708
Long-term investments 70,513 73,718
Total assets $148,273,718 $152,108,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $8,333,333 $15,384,615
Accounts and notes payable, including $893,901
and $640,405 to related parties at March 31,
2007 and December 31, 2006. 40,842,532 37,647,913
Customer deposits 134,917 146,171
Accrued payroll and related costs 1,610,700 1,506,251
Accrued expenses and other payables 8,298,907 11,078,186
Accrued pension costs 3,276,133 3,266,867
Taxes payable 7,114,338 5,914,362
Amounts due to shareholders/directors 318,065 358,065
Total current liabilities $69,928,925 $75,302,430
Long-term liabilities:
Advances payable 313,151 313,151
Total liabilities $70,242,076 $75,615,581
Minority interests $21,665,326 $23,112,667
Stockholders' equity:
Preferred stock, $0.0001 par value - Authorized
- 20,000,000 shares Issued and outstanding - None $-- $--
Common stock, $0.0001 par value - Authorized -
80,000,000 shares Issued and Outstanding -
23,959,702 shares and 23,851,581 shares at March
31, 2007 and December 31, 2006, respectively 2,396 2,385
Additional paid-in capital 29,994,873 28,651,959
Retained earnings-Appropriated 6,209,909 6,209,909
Unappropriated 17,690,338 16,047,237
Accumulated other comprehensive income 2,468,800 2,468,800
Total stockholders' equity $56,366,316 $53,380,290
Total liabilities and stockholders' equity $148,273,718 $152,108,538
For further information, please contact:
Christopher Chu
The Global Consulting Group
Tel: +1-646-284-9426
Email: cchu@hfgcg.com
