WUHAN, China, May 10, 2018 /PRNewswire/ -- China Automotive Systems, Inc. (NASDAQ: CAAS) ("CAAS" or the "Company"), a leading power steering components and systems supplier in China, today announced its unaudited financial results for the first quarter ended March 31, 2018.
First Quarter 2018 Highlights
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Our sales continue to benefit from increased demand for our advanced products and exports. We are pleased to report that our sales to North America grew by 84.5% in the first quarter of 2018 compared with the same quarter last year. As we continue to invest in our electric power steering and other advanced steering technologies to position the Company for the future, our broad portfolio of steering products provides solutions to meet our customers' needs across all automotive segments."
Mr. Jie Li, chief financial officer of CAAS, commented, "We continue to focus on building our financial strength to support our growing sales volume."
First Quarter of 2018
In the first quarter of 2018, net sales were $134.0 million compared to $119.3 million in the same quarter of 2017, reflecting a 12.3% year-over-year growth. The increase in net sales was mainly due to increased sales volume, especially for legacy products for the North American and heavy-duty vehicle markets, and the effect of foreign currency exchange. The Company adopted ASC Topic 606 "Revenue from Contracts with Customer" as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605 "Revenue Recognition". No significant impact to the consolidated financial statements as a result of the adoption.
Gross profit was $21.6 million in the first quarter of each 2018 and 2017. The gross margin was 16.1% in the first quarter of 2018 compared to 18.1% in the first quarter of 2017 due to changes in the product mix.
Gain on other sales was $1.5 million in the first quarter of 2018 compared to $0.8 million in the first quarter of 2017, reflecting higher scrap volume.
Selling expenses were $5.8 million in the first quarter of 2018, compared to $4.1 million in the first quarter of 2017. The increase was primarily due to higher logistics fees reflecting higher sales volume and increased marketing expenses. Selling expenses represented 4.3% of net sales in the first quarter of 2018 compared to 3.4% in the first quarter of 2017.
General and administrative expenses ("G&A expenses") were $4.4 million in the first quarter of 2018, compared to $4.4 million in the same quarter of 2017. G&A expenses represented 3.3% of net sales in the first quarter of 2018 and 3.7% in the first quarter of 2017.
Research and development expenses ("R&D expenses") were $8.3 million in the first quarter of 2018, compared to $6.8 million in the first quarter of 2017. R&D expenses represented 6.2% of net sales in the first quarter of 2018 compared to 5.7% in the first quarter of 2017. The increase in R&D expenses was due to increased investment in EPS product research and development such as brushless motor and Advanced Driver Assistance Systems (ADAS) related projects.
Income from operations was $4.6 million in the first quarter of 2018, compared to $7.2 million in the same quarter of 2017. The decrease was primarily due to lower gross margin and higher selling and research and development expenses.
Interest expense was $0.4 million in the first quarter of 2018 compared to $0.2 million, in the same quarter of 2017. The increase was due to new bank borrowings at higher interest rates.
Net financial expense was $0.8 million in the first quarter of 2018 compared to net financial income of $0.3 million in the first quarter of 2017. The increase of net financial expense was primarily due to an increase in foreign exchange rates related to higher export sales in the first quarter of 2018.
Income before income tax expenses and equity in earnings of affiliated companies was $4.0 million in the first quarter of 2018, compared to $7.1 million in the first quarter of 2017. The decrease in income before income tax expenses and equity in earnings of affiliated companies was mainly due to lower income from operations.
Net income attributable to parent company's common shareholders was $4.3 million in the first quarter of 2018, compared to $5.7 million in the first quarter of 2017. Diluted earnings per share were $0.14 per share in the first quarter of 2018, compared to $0.18 in the first quarter of 2017.
The weighted average number of diluted common shares outstanding was 31,644,004 in the first quarter of 2018, compared to 31,649,908 in the first quarter of 2017.
Balance Sheet
As of March 31, 2018, total cash and cash equivalents, pledged cash and short-term investments were $124.5 million, total accounts receivable including notes receivable were $304.7 million, accounts payable were $237.6 million and short-term bank and government loans were $63.2 million. Total parent company stockholders' equity was $316.5 million as of March 31, 2018, compared to $299.4 million as of December 31, 2017.
Business Outlook
Management has raised its revenue guidance for the full year 2018 to US$520 million. This target is based on the Company's current views on operating and market conditions, which are subject to change.
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 6 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 Group LLC 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 29, 2018, 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
+1-212-521-4050
Email: Kevin.Theiss@awakenlab.com
- Tables Follow -
| China Automotive Systems, Inc. and Subsidiaries Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income (In thousands of USD, except share and per share amounts) |
|||||||||||
| Three Months Ended March 31, |
|||||||||||
| 2018 |
2017 |
||||||||||
| Net product sales ($10,846 and $9,538 sold to related parties for |
$ |
134,018 |
$ |
119,308 |
|||||||
| Cost of products sold ($8,249 and $7,363 purchased from |
112,379 |
97,679 |
|||||||||
| Gross profit |
21,639 |
21,629 |
|||||||||
| Gain on other sales |
1,513 |
788 |
|||||||||
| Less: Operating expenses |
|||||||||||
| Selling expenses |
5,827 |
4,068 |
|||||||||
| General and administrative expenses |
4,424 |
4,354 |
|||||||||
| Research and development expenses |
8,307 |
6,765 |
|||||||||
| Total operating expenses |
18,558 |
15,187 |
|||||||||
| Income from operations |
4,594 |
7,230 |
|||||||||
| Other income/(expense) |
621 |
(254) |
|||||||||
| Interest expense |
(415) |
(231) |
|||||||||
| Financial (expense)/income, net |
(765) |
332 |
|||||||||
| Income before income tax expenses and equity in earnings of |
4,035 |
7,077 |
|||||||||
| Less: Income taxes |
588 |
1,190 |
|||||||||
| Equity in earnings of affiliated companies |
585 |
51 |
|||||||||
| Net income |
4,032 |
5,938 |
|||||||||
| Net (loss)/income attributable to non-controlling interests |
(280) |
224 |
|||||||||
| Net income attributable to parent company's common |
$ |
4,312 |
$ |
5,714 |
|||||||
| Comprehensive income: |
|||||||||||
| Net income |
$ |
4,032 |
$ |
5,938 |
|||||||
| Other comprehensive income: |
|||||||||||
| Foreign currency translation gain, net of tax |
13,242 |
1,629 |
|||||||||
| Comprehensive income |
17,274 |
7,567 |
|||||||||
| Comprehensive income attributable to non-controlling interests |
236 |
278 |
|||||||||
| Comprehensive income attributable to parent company |
$ |
17,038 |
$ |
7,289 |
|||||||
| Net income attributable to parent company's common |
|||||||||||
| Basic - |
$ |
0.14 |
$ |
0.18 |
|||||||
| Diluted - |
$ |
0.14 |
$ |
0.18 |
|||||||
| Weighted average number of common shares outstanding |
|||||||||||
| Basic |
31,644,004 |
31,644,004 |
|||||||||
| Diluted |
31,644,004 |
31,649,908 |
|||||||||
| China Automotive Systems, Inc. and Subsidiaries Condensed Unaudited Consolidated Balance Sheets (In thousands of USD unless otherwise indicated) |
||||||||
| March 31, 2018 |
December 31, 2017 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
78,729 |
$ |
64,558 |
||||
| Pledged cash |
32,697 |
31,535 |
||||||
| Short-term investments |
13,040 |
29,587 |
||||||
| Accounts and notes receivable, net - unrelated parties |
282,072 |
274,989 |
||||||
| Accounts and notes receivable, net - related parties |
22,661 |
19,086 |
||||||
| Advance payments and others - unrelated parties |
12,208 |
12,790 |
||||||
| Advance payments and others - related parties |
1,068 |
20,841 |
||||||
| Inventories |
87,370 |
79,217 |
||||||
| Total current assets |
529,845 |
532,603 |
||||||
| Non-current assets: |
||||||||
| Property, plant and equipment, net |
132,899 |
126,033 |
||||||
| Intangible assets, net |
632 |
661 |
||||||
| Other receivables, net - unrelated parties |
1,624 |
2,188 |
||||||
| Advance payment for property, plant and equipment - unrelated |
8,406 |
9,657 |
||||||
| Advance payment for property, plant and equipment - related |
9,244 |
5,264 |
||||||
| Long-term investments |
29,268 |
27,596 |
||||||
| Deferred tax assets |
13,800 |
13,367 |
||||||
| Total assets |
$ |
725,718 |
$ |
717,369 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Current liabilities: |
||||||||
| Bank and government loans |
$ |
63,176 |
$ |
72,711 |
||||
| Accounts and notes payable - unrelated parties |
230,036 |
233,048 |
||||||
| Accounts and notes payable - related parties |
7,544 |
7,168 |
||||||
| Customer deposits |
1,398 |
1,128 |
||||||
| Accrued payroll and related costs |
7,841 |
8,577 |
||||||
| Accrued expenses and other payables |
38,952 |
40,127 |
||||||
| Accrued pension costs |
4,786 |
4,051 |
||||||
| Taxes payable |
9,902 |
5,927 |
||||||
| Amounts due to shareholders/directors |
364 |
343 |
||||||
| Advances payable (current portion) |
398 |
383 |
||||||
| Total current liabilities |
364,397 |
373,463 |
||||||
| Long-term liabilities: |
||||||||
| Long-term government loan |
318 |
306 |
||||||
| Advances payable |
373 |
359 |
||||||
| Long-term taxes payable |
32,719 |
32,719 |
||||||
| Deferred tax liabilities |
4,508 |
4,393 |
||||||
| Total liabilities |
$ |
402,315 |
$ |
411,240 |
||||
| Stockholders' equity: |
||||||||
| Common stock, $0.0001 par value - Authorized - 80,000,000 |
$ |
3 |
$ |
3 |
||||
| Additional paid-in capital |
64,406 |
64,406 |
||||||
| Retained earnings- |
||||||||
| Appropriated |
10,707 |
10,707 |
||||||
| Unappropriated |
213,771 |
209,459 |
||||||
| Accumulated other comprehensive income |
30,506 |
17,780 |
||||||
| Treasury stock –694,298 and 694,298 shares as of March 31, 2018 |
(2,907) |
(2,907) |
||||||
| Total parent company stockholders' equity |
316,486 |
299,448 |
||||||
| Non-controlling interests |
6,917 |
6,681 |
||||||
| Total stockholders' equity |
323,403 |
306,129 |
||||||
| Total liabilities and stockholders' equity |
$ |
725,718 |
$ |
717,369 |
||||
| China Automotive Systems, Inc. and Subsidiaries Condensed Unaudited Consolidated Statements of Cash Flows (In thousands of USD unless otherwise indicated) |
||||||||
| Three Months Ended March 31, |
||||||||
| 2018 |
2017 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ |
4,032 |
$ |
5,938 |
||||
| Adjustments to reconcile net income from operations to net cash |
||||||||
| Depreciation and amortization |
4,342 |
4,189 |
||||||
| Accrual/(reversal) of provision for doubtful accounts |
275 |
(19) |
||||||
| Inventory write downs |
1,543 |
813 |
||||||
| Deferred income taxes |
33 |
(63) |
||||||
| Equity in earnings of affiliated companies |
(585) |
(51) |
||||||
| Gain on fixed assets disposals |
12 |
17 |
||||||
| Changes in operating assets and liabilities |
||||||||
| (Increase)/decrease in: |
||||||||
| Pledged cash |
72 |
(2,618) |
||||||
| Accounts and notes receivable |
559 |
2,480 |
||||||
| Advance payments and others |
(128) |
52 |
||||||
| Inventories |
(6,592) |
(1,444) |
||||||
| Increase/(decrease) in: |
||||||||
| Accounts and notes payable |
(11,950) |
(1,592) |
||||||
| Customer deposits |
246 |
123 |
||||||
| Accrued payroll and related costs |
(1,064) |
(431) |
||||||
| Accrued expenses and other payables |
(4,031) |
(1,467) |
||||||
| Accrued pension costs |
576 |
(247) |
||||||
| Taxes payable |
5,230 |
(3,318) |
||||||
| Net cash (used in)/provided by operating activities |
(7,430) |
2,362 |
||||||
| Cash flows from investing activities: |
||||||||
| Increase in other receivables |
647 |
20 |
||||||
| Cash received from property, plant and equipment sales |
26 |
26 |
||||||
| Payments to acquire property, plant and equipment (including $5,224 |
(8,192) |
(3,245) |
||||||
| Purchase of short-term investments |
(1,414) |
- |
||||||
| Proceeds from maturities of short-term investments |
19,108 |
2,433 |
||||||
| Loan to a related party |
- |
(29,044) |
||||||
| Cash received from repayment of the loan to a related party |
20,430 |
- |
||||||
| Net cash provided by/(used in) investing activities |
30,605 |
(29,810) |
||||||
| Cash flows from financing activities: |
||||||||
| Proceeds from bank loans |
19,672 |
27,754 |
||||||
| Repayments of bank loans |
(31,037) |
(245) |
||||||
| Net cash (used in)/provided by financing activities |
(11,365) |
27,509 |
||||||
| Effects of exchange rate on cash and cash equivalents |
2,361 |
150 |
||||||
| Net (decrease)/increase in cash and cash equivalents |
14,171 |
211 |
||||||
| Cash and cash equivalents at beginning of period |
64,558 |
31,092 |
||||||
| Cash and cash equivalents at end of period |
$ |
78,729 |
$ |
31,303 |
||||
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