WUHAN, China, May 14, 2014 /PRNewswire-FirstCall/ -- China Automotive Systems, Inc. ("CAAS" or the "Company") (NASDAQ: CAAS), a leading power steering components and systems supplier in China, today announced its unaudited financial results for the first quarter ended March 31, 2014.
First Quarter 2014 Highlights
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "We are pleased to report that, for the first time, we have exceeded the $100 million sales mark in any first quarter in our history as we continued to capture market shares in China and North America.
"Sales to North America increased by 30.7% compared to the same period of last year as our key customer Chrysler reported its 48th consecutive month of year-over-year sales gains. The Jeep® brand reported that March 2014 was its best sales month with 47% growth above March 2013 sales. RAM® pickup truck sales were also up 26% in March compared with March 2013.
"Our products continue making inroads in the North American and South American vehicle markets. In China, we further consolidated our leading market position as we built a more diverse customer base of Sino-foreign joint ventures and increased shipments to our large customers."
Mr. Jie Li, chief financial officer of CAAS, commented, "We continued to maintain our strong financial condition as we planned for increased shipments in the seasonally strong second quarter. We have increased our electric power steering offerings to better meet our customers' needs and attract new customers as we are the leading producer of this steering technology in China. Our selling and general and administrative expenses are under control while we further deploy resources to enhance our research and development activities. We believe that we are financially strong with leading technology and a large market share, and we are well positioned for domestic and global growth."
First Quarter of 2014
In the first quarter of 2014, net sales increased by 17.6% to a first-quarter record of $114.3 million, compared to $97.2 million in the same quarter of 2013. The net sales increase was mainly due to higher market share in the Chinese passenger and commercial vehicle markets as well as higher sales to the North American market.
Gross profit increased by 10.2% to $21.3 million in the first quarter of 2014, compared to $19.4 million in the first quarter of 2013. The gross margin was 18.7% in the first quarter of 2014, versus 19.9% in the first quarter of 2013 and 17.3% in the fourth quarter of 2013.
Selling expenses decreased by 3.9% to $3.0 million in the first quarter of 2014, compared to $3.2 million in the first quarter of 2013. Selling expenses represented 2.7% of net sales in the first quarter of 2014, compared to 3.3% in the first quarter of 2013. The decrease was mainly due to lower personnel compensation.
General and administrative expenses ("G&A expenses") decreased by 14.1% to $3.5 million in the first quarter of 2014, compared to $4.1 million in the same quarter of 2013. The decrease was mainly due to lower legal expenses. G&A expenses represented 3.1% of net sales in the first quarter of 2014 and 4.2% in the first quarter of 2013.
Research and development expenses ("R&D expenses") increased by 73.2% to $5.9 million in the first quarter of 2014, compared to $3.4 million in the first quarter of 2013. The increase in R&D expenses was mainly due to higher expenditures for the development of our electric power steering products, and included higher personnel-related expenses and mold improvement expenses. R&D expenses represented 5.2% of net sales in the first quarter of 2014, which was an increase from 3.5% in the first quarter of 2013.
Income from operations increased by 4.5% to $9.8 million in the first quarter of 2014, compared to $9.3 million in the same quarter of 2013. As a percentage of net sales, the operating margin was 8.5% in the first quarter of 2014, compared to 9.6% in the first quarter of 2013 and 6.6% in the fourth quarter of 2013.
Net financial expenses changed by $0.4 million in the first quarter of 2014, as higher time deposits generated $0.2 million in interest income, and financial expenses declined by $0.2 million due to lower interest expenses as bank debt declined, compared with the first quarter of 2013.
Income before income tax expenses and equity in earnings of affiliated companies was $10.2 million in the first quarter of 2014, compared to $9.2 million in the first quarter of 2013. The increase in income before income tax expenses and equity in earnings of affiliated companies of $1.0 million in the first quarter of 2014 was mainly due to an increase in operating income of $0.4 million, a decrease in financial expenses of $0.4 million, and an increase in other income of $0.2 million.
Net income attributable to parent company's common shareholders was $6.8 million in the first quarter of 2014, compared to net income attributable to parent company's common shareholders of $5.9 million in the corresponding quarter of 2013. Diluted earnings per share were $0.24 in the first quarter of 2014, compared to diluted earnings per share of $0.21 in the first quarter of 2013. The weighted average number of diluted common shares outstanding was 28,063,501 in the first quarter of 2014, compared to 28,050,937 in the first quarter of 2013.
As of March 31, 2014, total cash and cash equivalents and short-term investments were $78.9 million, compared to $89.5 million as of December 31, 2013. Working capital was $186.3 million as of March 31, 2014, compared to $179.3 million as of December 31, 2013.
Business Outlook
Management reiterates its revenue guidance of 15% year-over-year growth for the full year 2014. This target is based on the Company's current views on operating and market conditions, which are subject to change.
Conference Call
Management will conduct a conference call on May 14, 2014 at 8:00 A.M. EDT/8:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management's presentation. To participate, please call the following numbers 10 minutes before the call start time and ask to be connected to the "China Automotive Systems" conference call:
Phone Number: | +1-877-407-8031 (North America) |
Phone Number: | +1-201-689-8031 (International) |
A telephone replay of the call will be available after the conclusion of the conference call through 11:59 P.M. EDT on June 14, 2014. The dial-in details for the replay are:
U.S. Toll Free Number | +1-877-660-6853 |
International dial-in number | +1-201-612-7415 |
Use Conference ID "13581483" to access the replay.
About China Automotive Systems, Inc.
Based in Hubei Province, the 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 eight Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 4.0 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Chrysler N.A. in North America. For more information, please visit: http://www.caasauto.com.
Forward-Looking Statements
This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. These forward-looking statements include statements regarding the qualitative and quantitative effects of the accounting errors, the periods involved, the nature of the Company's review and any anticipated conclusions of the Company or its management and other statements that are not historical facts. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Form 10-K annual report filed with the Securities and Exchange Commission on March 31, 2014, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.
For further information, please contact:
Jie Li
Chief Financial Officer
China Automotive Systems, Inc.
Email: jieli@chl.com.cn
Kevin Theiss
Investor Relations
Grayling
Tel: +1-646-284-9409
Email: kevin.theiss@grayling.com
(Tables Follow)
China Automotive Systems, Inc. and Subsidiaries | ||||||
Condensed Unaudited Consolidated Balance Sheets | ||||||
(In thousands of USD unless otherwise indicated) | ||||||
March, 31, 2014 | December 31, 2013 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 42,955 | $ | 53,979 | ||
Pledged cash deposits | 32,435 | 33,963 | ||||
Short-term investments | 35,933 | 35,510 | ||||
Accounts and notes receivable, net - unrelated parties | 282,833 | 267,639 | ||||
Accounts and notes receivable, net - related parties | 21,811 | 17,194 | ||||
Advance payments and others - unrelated parties | 4,037 | 3,156 | ||||
Advance payments and others - related parties | 792 | 866 | ||||
Inventories | 55,849 | 51,392 | ||||
Assets held for sale | 917 | 925 | ||||
Current deferred tax assets | 5,441 | 5,783 | ||||
Total current assets | 483,003 | 470,407 | ||||
Non-current assets: | ||||||
Property, plant and equipment, net | 79,225 | 80,018 | ||||
Intangible assets, net | 635 | 686 | ||||
Other receivables, net - unrelated parties | 335 | 252 | ||||
Other receivables, net - related parties | 63 | 108 | ||||
Advance payment for property, plant and equipment - unrelated parties | 3,611 | 3,488 | ||||
Advance payment for property, plant and equipment - related parties | 1,726 | 2,097 | ||||
Long-term investments | 4,039 | 4,023 | ||||
Non-current deferred tax assets | 4,539 | 4,528 | ||||
Total assets | $ | 577,176 | $ | 565,607 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Bank and government loans | $ | 38,940 | $ | 37,381 | ||
Accounts and notes payable - unrelated parties | 201,318 | 198,419 | ||||
Accounts and notes payable - related parties | 4,508 | 4,634 | ||||
Customer deposits | 1,847 | 1,677 | ||||
Accrued payroll and related costs | 6,680 | 7,052 | ||||
Accrued expenses and other payables | 28,726 | 29,062 | ||||
Accrued pension costs | 4,787 | 4,626 | ||||
Taxes payable | 9,460 | 7,792 | ||||
Amounts due to shareholders/directors | 360 | 312 | ||||
Deferred tax liabilities | 126 | 117 | ||||
Total current liabilities | 296,752 | 291,072 | ||||
Long-term liabilities: | ||||||
Advances payable | 2,739 | 2,764 | ||||
Total liabilities | $ | 299,491 | $ | 293,836 | ||
Commitments and Contingencies (Note 30) | ||||||
Stockholders' equity: | ||||||
Common stock, $0.0001 par value - Authorized - | $ | 3 | $ | 3 | ||
Additional paid-in capital | 39,565 | 39,565 | ||||
Retained earnings- | ||||||
Appropriated | 10,048 | 10,048 | ||||
Unappropriated | 152,797 | 146,023 | ||||
Accumulated other comprehensive income | 30,065 | 32,061 | ||||
Treasury stock - 217,283 and 217,283 shares at March 31, 2014 | (1,000) | (1,000) | ||||
Total parent company stockholders' equity | 231,478 | 226,700 | ||||
Non-controlling interests | 46,207 | 45,071 | ||||
Total stockholders' equity | 277,685 | 271,771 | ||||
Total liabilities and stockholders' equity | $ | 577,176 | $ | 565,607 | ||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income | ||||||
(Unaudited, in thousands of USD, except share and per share amounts) | ||||||
Three Months Ended March 31, | ||||||
2014 | 2013 | |||||
Net product sales, including $11,810 and $8,143 to related parties for three months ended March 31, 2014 and 2013 | $ | 114,306 | $ | 97,164 | ||
Cost of products sold, including $7,283 and $6,665 purchased | 92,969 | 77,802 | ||||
Gross profit | 21,337 | 19,362 | ||||
Gain on other sales | 909 | 674 | ||||
Less: Operating expenses | ||||||
Selling expenses | 3,042 | 3,164 | ||||
General and administrative expenses | 3,545 | 4,126 | ||||
Research and development expenses | 5,888 | 3,400 | ||||
Total operating expenses | 12,475 | 10,690 | ||||
Income from operations | 9,771 | 9,346 | ||||
Other income, net | 239 | 70 | ||||
Financial income (expenses), net | 213 | (201) | ||||
Income before income tax expenses and equity in earnings of affiliated companies | 10,223 | 9,215 | ||||
Less: Income taxes | 1975 | 1,747 | ||||
Equity in earnings of affiliated companies | 63 | 58 | ||||
Net income | 8,311 | 7,526 | ||||
Net income attributable to non-controlling interests | 1,537 | 1,586 | ||||
Net income attributable to parent company's common shareholders | $ | 6,774 | $ | 5,940 | ||
Comprehensive income: | ||||||
Net income | $ | 8,311 | $ | 7,526 | ||
Other comprehensive income (loss): | ||||||
Foreign currency translation gain (loss), net of tax | (2,397) | 612 | ||||
Comprehensive income | 5,914 | 8,138 | ||||
Comprehensive income attributable to non-controlling interests | 1,136 | 1,689 | ||||
Comprehensive income attributable to parent company | $ | 4,778 | $ | 6,449 | ||
Net income attributable to parent company's common shareholders per share | ||||||
Basic - | $ | 0.24 | $ | 0.21 | ||
Diluted- | $ | 0.24 | $ | 0.21 | ||
Basic | 28,043,019 | 28,043,019 | ||||
Diluted | 28,063,501 | 28,050,937 | ||||
China Automotive Systems, Inc. and Subsidiaries | |||||||
Condensed Unaudited Consolidated Statements of Cash Flows | |||||||
(Unaudited, in thousands of USD unless otherwise indicated) | |||||||
Three Months Ended March 31, | |||||||
2014 | 2013 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 8,311 | $ | 7,526 | |||
Adjustments to reconcile net income from operations to net cash | |||||||
Depreciation and amortization | 3,713 | 3,468 | |||||
Increase (decrease) in allowance for doubtful accounts | 2 | (95) | |||||
Inventory write downs | 1,080 | 224 | |||||
Deferred income taxes | 248 | 738 | |||||
Equity in earnings of affiliated companies | (63) | (58) | |||||
Amortization of debt issue cost | - | 38 | |||||
Gain on fixed assets disposals | (35) | (165) | |||||
Changes in operating assets and liabilities: | |||||||
(Increase) decrease in: | |||||||
Pledged deposits | 1,223 | 321 | |||||
Accounts and notes receivable | (22,366) | (21,381) | |||||
Advance payments and others | (839) | (1,529) | |||||
Inventories | (5,992) | (1,839) | |||||
Increase (decrease) in: | |||||||
Accounts and notes payable | 4,594 | 9,985 | |||||
Customer deposits | 181 | 32 | |||||
Accrued payroll and related costs | (312) | 189 | |||||
Accrued expenses and other payables | (56) | 900 | |||||
Accrued pension costs | 202 | (89) | |||||
Taxes payable | 1,738 | 382 | |||||
Advances payable | - | (16) | |||||
Net cash use in operating activities | (8,371) | (1,369) | |||||
Cash flows from investing activities: | |||||||
Increase in other receivables | (46) | (122) | |||||
Cash received from property, plant and equipment sales | 152 | 405 | |||||
Payments to acquire property, plant and equipment | (3,501) | (2,843) | |||||
Payments to acquire intangible assets | (3) | (60) | |||||
Purchase of short-term investments | (13,002) | - | |||||
Proceeds from maturities of short-term investments | 12,259 | - | |||||
Dividends from investment under cost method | 11 | - | |||||
Net cash used in investing activities | (4,130) | (2,620) | |||||
Cash flows from financing activities: | |||||||
Proceeds from government and bank loan | 5,146 | 8,101 | |||||
Repayments of bank loan | (3,251) | (1,595) | |||||
Decrease in amounts due to shareholders/directors | 52 | (40) | |||||
Net cash provided by financing activities | 1,947 | 6,466 | |||||
Effects of exchange rate on cash and cash equivalents | (470) | 226 | |||||
Net increase (decrease) in cash and cash equivalents | (11,024) | 2,703 | |||||
Cash and cash equivalents at beginning of period | 53,979 | 87,649 | |||||
Cash and cash equivalents at end of period | $ | 42,955 | $ | 90,352 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Three Months Ended | |||||||
2014 | 2013 | ||||||
Cash paid for interest | $ | 256 | $ | 374 | |||
Cash paid for income taxes | $ | 1,204 | $ | 1,263 | |||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||
Three Months Ended | |||||||
2014 | 2013 | ||||||
Advance payments for acquiring property, plant and equipment | $ | 5,337 | $ | 5,138 | |||
Dividends payable to non-controlling interests | $ | 34 | $ | 163 | |||
