WUHAN, China, March 29, 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 fourth quarter and the audited results for the fiscal year ended December 31, 2017.
Fourth Quarter 2017 Highlights
Fiscal Year 2017 Highlights
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Our growth in 2017 was led by higher sales of our new advanced hydraulic products into the North American market and higher sales of hydraulic products for the commercial vehicle market in China. Our sales to North America grew by 51.4% and accounted for 16.9% of total sales in 2017. Truck sales in China grew by 16.9% in China, led by record sales of 1.1 million units of heavy-duty trucks. With our large and broad line of steering products, we are well positioned to take advantage of growth opportunities in a number of automotive segments."
Mr. Jie Li, chief financial officer of CAAS, commented, "We remain focused on increasing our financial strength. We generated $50.2 million in cash flow from operations in 2017."
Fourth Quarter of 2017
In the fourth quarter of 2017, net sales were $143.7 million compared to $149.6 million in the same quarter of 2016. The net sales decrease was mainly due to the exceptionally strong Chinese auto market in the fourth quarter of 2016 and the production for new products targeting the Company's North American customers reaching its full capacity.
Gross profit was $16.5 million in the fourth quarter of 2017, compared to $21.8 million in the fourth quarter of 2016. The decrease in gross profit was primarily due to the decrease in net sales and change of product mix.
Gain on other sales was $1.7 million, compared to $1.8 million in the fourth quarter of 2016.
Selling expenses were $6.8 million in the fourth quarter of 2017, compared to $4.9 million in the fourth quarter of 2016. The increase was primarily due to higher transportation expenses and increased marketing expenses that were related to increased revenue. Selling expenses represented 4.7% of net sales in the fourth quarter of 2017 compared to 3.3% in the fourth quarter of 2016.
General and administrative expenses ("G&A expenses") increased to $5.5 million from $4.9 million in the fourth quarter of 2016. G&A expenses represented 3.8% of net sales in the fourth quarter of 2017 compared to 3.2% of net sales in the fourth quarter of 2016. The increase in G&A expenses and G&A expenses as a percentage of net sales in the fourth quarter of 2017 was mainly due to higher personnel costs.
Research and development expenses ("R&D expenses") were $9.9 million in the fourth quarter of 2017, compared to $8.9 million in the fourth quarter of 2016. R&D expenses represented 6.9% of net sales in the fourth quarter of 2017 compared to 5.9% in the fourth quarter of 2016. The increase in R&D expenses was due to ongoing higher investment in EPS product research and development such as brushless motors and Advanced Driver Assistance Systems (ADAS) related projects. Additional engineers, newly acquired technologies, and more testing equipment accounted for most of the increase.
Loss from operations was $4.0 million in the fourth quarter of 2017, compared to income from operations of $5.0 million in the same quarter of 2016. The loss was mainly due to lower gross profit and higher investment in R&D and selling expenses.
Interest expense was $0.6 million in the fourth quarter of 2017, compared to interest expense of $0.1 million in the fourth quarter of 2016 due to higher average loans outstanding.
Net financial income was $0.2 million in the fourth quarter of 2017, which was consistent with the same quarter of 2016.
Net loss attributable to parent company's common shareholders was $39.0 million in the fourth quarter of 2017 primarily due to the one-time accrued tax of $35.7 million mandated by the recent U.S. tax reform and accrued withholding tax of $4.0 million related to the planned dividend distribution from PRC subsidiaries in order to fulfil the payment of a one-time accrued tax. In the fourth quarter of 2016 net income attributable to parent company's common shareholders was $5.8 million. Diluted loss per share was $1.23 in the fourth quarter of 2017, compared to diluted income per share of $0.18 in the fourth quarter of 2016.
The weighted average number of diluted common shares outstanding was 31,646,897 in the fourth quarter of 2017, compared to 31,711,888 in the fourth quarter of 2016.
Fiscal Year 2017
Annual net sales were $499.1 million in 2017, an 8.0% increase compared to $462.1 million in 2016. The overall increase was mainly due to higher sales of advanced legacy hydraulic products offset by the sales of electric power steering systems (EPS) sales which decreased by 6.6% in 2017. EPS sales represented 24.2% of total revenue in 2017.
Gross profit in 2017 was $84.6 million, compared to $80.9 million in 2016. The increase in gross profit was primarily due to the increase in net sales.
Gain on other sales mainly consisted of the net amount retained from the sales of materials, property, plant and equipment and scraps. For the year ended December 31, 2017, gain on other sales amounted to $7.6 million, compared to $3.8 million in 2016. The increase in gain on other sales was primarily due to the disposal of a building and higher scrap volume in 2017.
Selling expenses were $19.9 million in 2017, compared to $17.2 million in 2016, which was mainly due to higher transportation and marketing expenses during the year. Selling expenses represented 4.0% in 2017, compared to 3.7% of net sales in 2016.
G&A expenses were $19.5 million in 2017, compared to $16.8 million in 2016. The increase was primarily due to higher personnel costs and allowance for doubtful accounts. G&A expenses represented 3.9% of net sales in 2017 compared to 3.6% of net sales in 2016.
R&D expenses were $33.5 million in 2017, compared to $27.7 million in 2016. R&D expenses represented 6.7% of net sales in 2017, compared to 6.0% of net sales in 2016. The increase in R&D expenses was due to ongoing higher investment in EPS product research and development such as brushless motors and Advanced Driver Assistance Systems (ADAS)-related projects. Additional engineers, newly acquired technologies, and more testing equipment represented most of the increase.
Operating income was $19.3 million in 2017, compared to $23.0 million in 2016. The decrease was primarily due to higher operating expenses in 2017.
Interest expense was $1.8 million in 2017, compared to interest expense of $0.7 million in 2016 due primarily to an increase in loans outstanding and higher interest rates.
Net financial income was $2.2 million in 2017, compared to net financial income of $1.4 million in 2016 due primarily to an increase in interest income.
Income before income tax expenses and equity in earnings of affiliated companies was $20.4 million for 2017, compared to $24.9 million for 2016. This decline was mainly due to lower income from operations and higher interest expense.
Income tax expense was $41.6 million for the year ended December 31, 2017, compared to $2.5 million for the year ended December 31, 2016, representing an increase of $39.1 million. The increase in 2017 resulted primarily from a one-time accrued tax of $35.6 million recognized in the fourth quarter of 2017 that represented management's estimate of the amount of U.S. corporate income tax for the mandatory repatriation of the Company's share of previously deferred earnings of certain non-U.S. subsidiaries of the Company as mandated by the recent U.S. tax reform. We elected to pay the one-time accrued tax over eight years commencing in April 2018. In addition, withholding tax of $4.0 million was accrued in the fourth quarter of 2017 in order to fund the payment of such one-time accrued tax since the Company plans to distribute dividends from its PRC subsidiaries to the Company. Excluding the one-time accrued tax and withholding tax discussed above, income tax expense was $1.9 million, representing a decrease of $0.6 million which was mainly due to the decrease in income before income tax. The effective tax rate (excluding the impact of the one-time transition tax) was consistent from 2016 to 2017 at approximately 10%.
Net loss attributable to parent company's common shareholders was $19.3 million in 2017, compared to net income attributable to parent company's common shareholders of $22.5 million in 2016. Diluted loss per share was $0.61 in 2017, compared to diluted income per share of $0.70 in 2016.
The weighted average number of diluted common shares outstanding was 31,646,897 in 2017, compared to 31,957,052 in 2016.
Balance Sheet
As of December 31, 2017, total cash and cash equivalents, pledged cash and short-term investments were $125.7 million, total accounts receivable including notes receivable were $294.1 million, accounts payable were $240.2 million and bank and government loans were $73. million. Total parent company stockholders' equity was $299.4 million as of December 31, 2017, compared to $305.9 million as of December 31, 2016. Net cash flow from operating activities was $50.2 million in 2017.
Business Outlook
Management has provided revenue guidance for the full year 2018 of $510 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 Consolidated Balance Sheets (In thousands of USD, except share and per share amounts)
|
||||||||
| December 31, |
||||||||
| 2017 |
2016 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ |
64,558 |
$ |
31,092 |
||||
| Pledged cash |
31,535 |
30,799 |
||||||
| Short-term investments |
29,587 |
30,475 |
||||||
| Accounts and notes receivable, net - unrelated parties |
274,989 |
285,731 |
||||||
| Accounts and notes receivable, net - related parties |
19,086 |
20,984 |
||||||
| Advance payments and others - unrelated parties |
12,790 |
10,203 |
||||||
| Advance payments and others - related parties |
20,841 |
624 |
||||||
| Inventories |
79,217 |
68,050 |
||||||
| Total current assets |
532,603 |
477,958 |
||||||
| Non-current assets: |
||||||||
| Long-term time deposits |
- |
865 |
||||||
| Property, plant and equipment, net |
126,033 |
101,478 |
||||||
| Intangible assets, net |
661 |
617 |
||||||
| Other receivables, net - unrelated parties |
2,188 |
2,252 |
||||||
| Advance payment for property, plant and equipment - unrelated parties |
9,657 |
14,506 |
||||||
| Advance payment for property, plant and equipment - related parties |
5,264 |
5,005 |
||||||
| Long-term investments |
27,596 |
16,431 |
||||||
| Deferred tax assets |
13,367 |
12,587 |
||||||
| Total assets |
$ |
717,369 |
$ |
631,699 |
||||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
| Current liabilities: |
||||||||
| Bank and government loans |
$ |
72,711 |
$ |
40,820 |
||||
| Accounts and notes payable - unrelated parties |
233,048 |
216,993 |
||||||
| Accounts and notes payable - related parties |
7,168 |
6,803 |
||||||
| Customer deposits |
1,128 |
700 |
||||||
| Accrued payroll and related costs |
8,577 |
6,971 |
||||||
| Accrued expenses and other payables |
40,127 |
35,882 |
||||||
| Accrued pension costs |
4,051 |
4,130 |
||||||
| Taxes payable |
5,927 |
11,674 |
||||||
| Amounts due to shareholders/directors |
343 |
312 |
||||||
| Advances payable (current portion) |
383 |
382 |
||||||
| Total current liabilities |
373,463 |
324,667 |
||||||
| Long-term liabilities: |
||||||||
| Long-term government loan |
306 |
608 |
||||||
| Advances payable |
359 |
339 |
||||||
| Deferred tax liabilities |
4,393 |
193 |
||||||
| Long-term taxes payable |
32,719 |
- |
||||||
| Total liabilities |
411,240 |
325,807 |
||||||
| Commitments and Contingencies (Note 31) |
||||||||
| Stockholders' Equity |
||||||||
| Common stock, $0.0001 par value - Authorized - 80,000,000 shares Issued – 32,338,302 and 32,338,302 shares at December 31, 2017 and 2016, respectively |
3 |
3 |
||||||
| Additional paid-in capital |
64,406 |
64,764 |
||||||
| Retained earnings- |
||||||||
| Appropriated |
10,707 |
10,549 |
||||||
| Unappropriated |
209,459 |
228,963 |
||||||
| Accumulated other comprehensive income/(loss) |
17,780 |
(892) |
||||||
| Treasury stock – 694,298 and 694,298 shares at December 31, 2017 and 2016, respectively |
(2,907) |
(2,907) |
||||||
| Total parent company stockholders' equity |
299,448 |
300,480 |
||||||
| Non-controlling interests |
6,681 |
5,412 |
||||||
| Total stockholders' equity |
306,129 |
305,892 |
||||||
| Total liabilities and stockholders' equity |
$ |
717,369 |
$ |
631,699 |
||||
|
China Automotive Systems, Inc. and Subsidiaries Consolidated Statements of Income (In thousands of USD, except share and per share amounts)
|
||||||||
| Year Ended December 31, |
||||||||
| 2017 |
2016 |
|||||||
| Net product sales ($37,583 and $39,845 sold to related parties for the years ended December 31, 2017 and 2016) |
$ |
499,063 |
$ |
462,050 |
||||
| Cost of products sold ($28,994 and $27,747 purchased from related parties for the years ended December 31, 2017 and 2016) |
414,429 |
381,131 |
||||||
| Gross profit |
84,634 |
80,919 |
||||||
| Net gain on other sales |
7,635 |
3,803 |
||||||
| Operating expenses: |
||||||||
| Selling expenses |
19,912 |
17,159 |
||||||
| General and administrative expenses |
19,543 |
16,841 |
||||||
| Research and development expenses |
33,544 |
27,706 |
||||||
| Total operating expenses |
72,999 |
61,706 |
||||||
| Operating income |
19,270 |
23,016 |
||||||
| Other income, net |
678 |
1,116 |
||||||
| Interest expense |
1,753 |
656 |
||||||
| Financial income, net |
2,180 |
1,428 |
||||||
| Income before income tax expenses and equity in earnings of affiliated companies |
20,375 |
24,904 |
||||||
| Less: Income taxes |
41,633 |
2,484 |
||||||
| Add: Investment income, net |
2,619 |
557 |
||||||
| Net (loss)/income |
(18,639) |
22,977 |
||||||
| Net income attributable to non-controlling interest |
707 |
466 |
||||||
| Net (loss)/income attributable to parent company's common shareholders |
(19,346) |
22,511 |
||||||
| Net (loss)/income attributable to parent company's common shareholders per share – |
||||||||
| Basic |
$ |
(0.61) |
$ |
0.70 |
||||
| Diluted |
$ |
(0.61) |
$ |
0.70 |
||||
| Weighted average number of common shares outstanding – |
||||||||
| Basic |
31,644,004 |
31,954,407 |
||||||
| Diluted |
31,646,897 |
31,957,052 |
||||||
|
China Automotive Systems, Inc. and Subsidiaries Consolidated Statements of Comprehensive Income (In thousands of USD unless otherwise indicated)
|
||||||||
| Year Ended December 31, |
||||||||
| 2017 |
2016 |
|||||||
| Net (loss)/income |
$ |
(18,639) |
$ |
22,977 |
||||
| Other comprehensive income/(loss): |
||||||||
| Foreign currency translation income/(loss) |
19,384 |
(19,996) |
||||||
| Comprehensive income |
745 |
2,981 |
||||||
| Comprehensive income/(loss) attributable to non-controlling interest |
1,352 |
(226) |
||||||
| Comprehensive (loss)/income attributable to parent company |
$ |
(607) |
$ |
3,207 |
||||
|
China Automotive Systems, Inc. and Subsidiaries Consolidated Statements of Changes in Stockholders' Equity (In thousands of USD, except share and per share amounts)
|
||||||||
| 2017 |
2016 |
|||||||
| Common Stock |
||||||||
| Balance at January 1, 2017 and 2016– 32,338,302 and 32,338,302 shares, respectively |
$ |
3 |
$ |
3 |
||||
| Balance at December 31, 2017 and 2016– 32,338,302 and 32,338,302 shares, respectively |
$ |
3 |
$ |
3 |
||||
| Additional Paid-in Capital |
||||||||
| Balance at January 1 |
$ |
64,764 |
$ |
64,627 |
||||
| Stock-based compensation |
100 |
137 |
||||||
| Acquisition of the non-controlling interest in Brazil Henglong |
(458) |
- |
||||||
| Balance at December 31 |
$ |
64,406 |
$ |
64,764 |
||||
| Retained Earnings— Appropriated |
||||||||
| Balance at January 1 |
$ |
10,549 |
$ |
10,379 |
||||
| Appropriation of retained earnings |
158 |
170 |
||||||
| Balance at December 31 |
$ |
10,707 |
$ |
10,549 |
||||
| Unappropriated |
||||||||
| Balance at January 1 |
$ |
228,963 |
206,622 |
|||||
| Net (loss)/income attributable to parent company |
(19,346) |
22,511 |
||||||
| Appropriation of retained earnings |
(158) |
(170) |
||||||
| Balance at December 31 |
$ |
209,459 |
$ |
228,963 |
||||
| Accumulated Other Comprehensive (Loss)/Income |
||||||||
| Balance at January 1 |
$ |
(892) |
18,412 |
|||||
| Other comprehensive loss related to the non-controlling interests acquired by the Company |
(67) |
- |
||||||
| Net foreign currency translation adjustment attributable to parent company |
18,739 |
(19,304) |
||||||
| Balance at December 31 |
$ |
17,780 |
$ |
(892) |
||||
| Treasury Stock |
||||||||
| Balance at January 1, 2017 and 2016 – 694,298 and 217,283 shares, respectively |
(2,907) |
(1,000) |
||||||
| Repurchase of common stock in 2017 and 2016 – nil and 477,015 shares, respectively |
- |
(1,907) |
||||||
| Balance at December 31, 2017 and 2016 – 694,298 and 694,298 shares, respectively |
$ |
(2,907) |
(2,907) |
|||||
| Total parent company stockholders' equity |
$ |
299,448 |
$ |
300,480 |
||||
| Non-controlling Interest |
||||||||
| Balance at January 1 |
$ |
5,412 |
$ |
8,252 |
||||
| Net foreign currency translation adjustment attributable to non-controlling interest |
645 |
(692) |
||||||
| Net income attributable to non-controlling interest |
707 |
466 |
||||||
| Other comprehensive income related to the non-controlling interests acquired by the Company |
67 |
- |
||||||
| Acquisition of the non-controlling interest in Brazil Henglong |
458 |
- |
||||||
| Non-controlling interests change due to the disposal of Fujian Qiaolong |
- |
(2,150) |
||||||
| Distribution of retained earnings |
(608) |
(464) |
||||||
| Balance at December 31 |
$ |
6,681 |
$ |
5,412 |
||||
| Total stockholders' equity |
$ |
306,129 |
$ |
305,892 |
||||
|
China Automotive Systems, Inc. and Subsidiaries Consolidated Statements of Cash Flows (In thousands of USD unless otherwise indicated)
|
||||||||
| Year Ended December 31, |
||||||||
| 2017 |
2016 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ |
(18,639) |
$ |
22,977 |
||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Stock-based compensation |
100 |
137 |
||||||
| Depreciation and amortization |
15,358 |
13,926 |
||||||
| Deferred income taxes |
4,143 |
(1,628) |
||||||
| Inventory write downs |
5,109 |
3,210 |
||||||
| Accrual/(reversal) of provision for doubtful accounts |
887 |
(21) |
||||||
| Equity in earnings of affiliated companies |
(2,617) |
(556) |
||||||
| Gain on disposal of Fujian Qiaolong |
- |
(698) |
||||||
| Gain on disposal of fixed assets |
(2,184) |
(23) |
||||||
| Changes in operating assets and liabilities (net of the impact of disposal of Fujian Qiaolong): |
||||||||
| (Increase) decrease in: |
||||||||
| Pledged cash |
1,254 |
(799) |
||||||
| Accounts and notes receivable |
30,908 |
(56,251) |
||||||
| Advance payments and other |
(529) |
(2,331) |
||||||
| Inventories |
(12,156) |
(15,442) |
||||||
| Increase (decrease) in: |
||||||||
| Accounts and notes payable |
2,533 |
35,455 |
||||||
| Customer deposits |
411 |
(646) |
||||||
| Accrued payroll and related costs |
1,182 |
1,143 |
||||||
| Accrued expenses and other payables |
560 |
10,548 |
||||||
| Accrued pension costs |
(331) |
(231) |
||||||
| Taxes payable |
(8,555) |
3,130 |
||||||
| Long-term taxes payable |
32,719 |
- |
||||||
| Advances payable |
- |
(75) |
||||||
| Net cash provided by operating activities |
50,153 |
11,825 |
||||||
| Cash flows from investing activities: |
||||||||
| Purchase of short-term investments and long-term time deposits |
(32,145) |
(28,210) |
||||||
| Proceeds from maturities of short-term investments and long-term time deposits |
35,780 |
20,657 |
||||||
| Decrease in other receivables |
198 |
2,388 |
||||||
| Cash received from disposal of Fujian Qiaolong |
- |
1,953 |
||||||
| Cash received from property, plant and equipment sales |
2,231 |
1,284 |
||||||
| Cash paid to acquire property, plant and equipment (including $12,691 and $8,021 paid to related parties for the years ended December 31, 2017 and 2016, respectively) |
(27,096) |
(39,585) |
||||||
| Cash paid to acquire intangible assets |
(201) |
(161) |
||||||
| Loan to a related party |
(29,044) |
- |
||||||
| Cash received from repayment of the loan to a related party |
10,591 |
- |
||||||
| Investment under equity method |
(7,629) |
(10,556) |
||||||
| Net cash used in investing activities |
(47,315) |
(52,230) |
||||||
|
Cash flows from financing activities: |
||||||||
| Proceeds from bank and government loans |
72,237 |
14,313 |
||||||
| Repayment of bank and government loans |
(43,154) |
(6,973) |
||||||
| Repurchase of common stock |
- |
(1,907) |
||||||
| Dividends paid to the holders of the Company's common stock |
- |
(544) |
||||||
| Dividends paid to the non-controlling interest holders of joint venture companies |
(623) |
(464) |
||||||
| Net cash provided by financing activities |
28,460 |
4,425 |
||||||
| Cash and cash equivalents affected by foreign currency |
2,168 |
(2,604) |
||||||
| Net increase/(decrease) in cash and cash equivalents |
33,466 |
(38,584) |
||||||
| Cash and equivalents at beginning of year |
31,092 |
69,676 |
||||||
| Cash and equivalents at end of year |
$ |
64,558 |
$ |
31,092 |
||||
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