WUHAN, China, Nov. 12, 2019 /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 third quarter and nine months ended September 30, 2019.
Third Quarter 2019 Highlights
First Nine Months of 2019 Highlights
Mr. Qizhou Wu, the Chief Executive Officer of CAAS, commented, "Our sales reflected the continuing slow growth in the economy as China's gross domestic product grew by 6.0% in the quarter ended September 30th, the slowest quarterly growth rate since 1992. In the automobile sector, the sales of Chinese-branded cars were down 13.2% year-on-year in the month of September and accounted for 18.5% of the total car sales. This market share represented a decline of 1.2% in market share compared with September 2018. For the first nine months of 2019, total sales of Chinese-branded passenger cars were 18.5% lower than the same period in 2018. The sales of Chinese-branded SUVs declined by 8.0% year-on-year with a decrease of 2.6 percentage points in market share over the previous year. The sales of Chinese brand MPVs were down 10.5% year on year. As a leading supplier of steering products to Chinese-branded vehicles, our sales reflect the current market conditions. However, government stimulus measures including tax cuts and infrastructure investments, have started to improve the economy and if necessary, there may be more infrastructure spending to stabilize economic growth."
"In addition, we are positive about the prospects for our developmental projects. Our electric power steering ("EPS") joint venture with KYB (China) Investment Co., Ltd. will add more resources to quickly improve our products and market share. Our new electric motor product development for power steering systems with Hyoseong Electric Co. Ltd. and our new recirculating-ball steering system development for a global client's autonomous vehicle development offer new avenues for future growth."
Mr. Jie Li, the Chief Financial Officer of CAAS, commented, "We continue to focus on building our financial strength to offer customers advanced products as well as develop new products to enhance our global presence. During the 3rd quarter, we purchased approximately 96,000 shares of common stock in the open market. We are committed to enhancing long-term shareholder value."
Third Quarter of 2019
In the third quarter of 2019, net sales were $100.5 million compared to $112.1 million in the same quarter of 2018. The decrease in net product sales was mainly due to a change in the product mix and lower domestic sales volume due to softer demand in the Chinese domestic brand automobile market. Net product sales to North America grew 11.6% to $33.8 million compared to $30.3 million for the same quarter in 2018. The increase in export sales to North America was mainly due to higher sales of the Company's more advanced products. Net product sales for the Company's electric power steering ("EPS") products were $18.5 million, or 18.4% of net sales.
Gross profit was $17.3 million in the third quarter of 2019, compared to $15.4 million in the third quarter of 2018. Gross margin was 17.2% compared to 13.7% for the same period of 2018, mainly due to changes in the product mix.
Selling expenses were $3.6 million in the third quarter of 2019, compared to $3.4 million in the third quarter of 2018. Selling expenses represented 3.6% of net sales in the third quarter of 2019, compared to 3.0% in the third quarter of 2018.
General and administrative expenses ("G&A expenses") were $4.4 million in the third quarter of 2019, compared to $3.7 million in the same quarter of 2018. The increase was primarily due to higher professional fees. G&A expenses represented 4.4% of net sales in the third quarter of 2019 compared with 3.3% in the third quarter of 2018.
Research and development expenses ("R&D expenses") were $6.1 million in the third quarter of 2019, compared to $7.0 million in the third quarter of 2018. R&D expenses represented 6.1% of net sales in the third quarter of 2019 compared with 6.1% in the third quarter last year. The lower R&D expenses were mainly due to more strict cost controls over R&D expenditures.
Net financial income was $1.6 million in the third quarter of 2019 compared to net financial income of $0.8 million in the third quarter of 2018, which was mainly due to the increase in foreign exchange gain as a result of the significant appreciation of USD against RMB.
Income from operations was $4.3 million in the third quarter of 2019, compared to $1.8 million in the same quarter of 2018. The increase was mainly due to increased gross profit and higher gross margin.
Income before income tax expenses and equity in earnings of affiliated companies was $5.3 million in the third quarter of 2019, compared to $1.8 million in the third quarter of 2018. The increase in income before income tax expenses and equity in earnings of affiliated companies was mainly due to higher operating income in the third quarter of 2019 compared with the third quarter of 2018.
Net income attributable to parent company's common shareholders was $4.2 million in the third quarter of 2019, compared to net income attributable to parent company's common shareholders of $0.4 million in the third quarter of 2018. Diluted earnings per share were $0.13 in the third quarter of 2019, compared to diluted earnings per share of $0.01 in the third quarter of 2017.
The weighted average number of diluted common shares outstanding was 31,492,035 in the third quarter of 2019, compared to 31,645,556 in the third quarter of 2018.
First Nine Months of 2019
Net sales for the first nine months of 2019 were $315.5 million, compared to $371.9 million in the first nine months of 2018. Nine-month gross profit was $46.5 million, compared to $54.0 million in the corresponding period last year. Nine-month gross margin was 14.8%, compared to 14.5% for the corresponding period in 2018. For the nine months ended September 30, 2019, gain on other sales amounted to $4.9 million, compared to $3.0 million for the corresponding period in 2018. Income from operations was $8.1 million compared to $7.0 million in the first nine months of 2018. Operating margin was 2.6%, compared to 1.9% for the corresponding period of 2018.
Net income attributable to parent company's common shareholders was $8.2 million compared with $5.5 million in the corresponding period last year. Diluted earnings per share were $0.26 in the first nine months of 2019, compared to diluted earnings per share of $0.17 for the corresponding period in 2018.
As of September 30, 2019, total cash and cash equivalents and pledged cash deposits were $102.3 million. Total accounts receivable including notes receivable were $234.3 million. Accounts payable including notes payable were $176.7 million, and short-term loans were $56.0 million. Total parent company stockholders' equity was $304.9 million as of September 30, 2019, compared to $304.8 million as of December 31, 2018.
Net cash provided by operating activities was $4.1 million in the first nine months of 2019 compared with net cash provided by operating activities of $9.0 million in the first nine months of 2018. Payments to acquire property, plant and equipment were $23.6 million compared with $24.3 million in the first nine months of 2018. Approximately 96,000 shares of common stock were repurchased during the third quarter of 2019, and the Company expects to repurchase more shares in the future.
Business Outlook
Management has reiterated its revenue guidance for the full year 2019 to $430 million. 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 November 12, 2019 at 8:00 A.M. EST/9:00 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)
Mainland China Toll Free: +86-400-120-2840
A replay of the call will be available on the Company's website under investor relations section.
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 nine 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 28, 2019, 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@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 September 30, |
|||||
2019 |
2018 |
||||
Net product sales ($12,277 and $8,207 sold to related parties for the three |
$ |
100,542 |
$ |
112,084 |
|
Cost of products sold ($6,474 and $4,659 purchased from related parties for |
83,225 |
96,718 |
|||
Gross profit |
17,317 |
15,366 |
|||
Gain on other sales |
1,102 |
482 |
|||
Less: Operating expenses |
|||||
Selling expenses |
3,563 |
3,353 |
|||
General and administrative expenses |
4,429 |
3,708 |
|||
Research and development expenses |
6,112 |
6,957 |
|||
Total operating expenses |
14,104 |
14,018 |
|||
Income from operations |
4,315 |
1,830 |
|||
Other income/(expense), net |
171 |
(461) |
|||
Interest expense |
(787) |
(431) |
|||
Financial income, net |
1,552 |
815 |
|||
Income before income tax expenses and equity in earnings of affiliated |
5,251 |
1,753 |
|||
Less: Income taxes |
948 |
326 |
|||
Equity in loss of affiliated companies |
(226) |
(1,049) |
|||
Net income |
4,077 |
378 |
|||
Net (loss)/income attributable to non-controlling interests |
(172) |
1 |
|||
Net income attributable to parent company's common shareholders |
$ |
4,249 |
$ |
377 |
|
Comprehensive income: |
|||||
Net income |
$ |
4,077 |
$ |
378 |
|
Other comprehensive income: |
|||||
Foreign currency translation loss, net of tax |
(9,703) |
(13,012) |
|||
Comprehensive loss |
(5,626) |
(12,634) |
|||
Comprehensive loss attributable to non-controlling interests |
(892) |
(619) |
|||
Comprehensive loss attributable to parent company |
$ |
(4,734) |
$ |
(12,015) |
|
Net income attributable to parent company's common shareholders per |
|||||
Basic - |
$ |
0.13 |
$ |
0.01 |
|
Diluted - |
$ |
0.13 |
$ |
0.01 |
|
Weighted average number of common shares outstanding |
|||||
Basic |
31,492,035 |
31,644,004 |
|||
Diluted |
31,492,035 |
31,645,556 |
|||
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) |
|||||
Nine Months Ended September 30, |
|||||
2019 |
2018 |
||||
Net product sales ($39,458 and $29,909 sold to related parties for the nine |
$ |
315,483 |
$ |
371,884 |
|
Cost of products sold ($18,108 and $20,336 purchased from related parties |
268,936 |
317,858 |
|||
Gross profit |
46,547 |
54,026 |
|||
Gain on other sales |
4,856 |
2,972 |
|||
Less: Operating expenses |
|||||
Selling expenses |
10,507 |
14,067 |
|||
General and administrative expenses |
13,453 |
12,574 |
|||
Research and development expenses |
19,351 |
23,349 |
|||
Total operating expenses |
43,311 |
49,990 |
|||
Income from operations |
8,092 |
7,008 |
|||
Other income, net |
1,131 |
760 |
|||
Interest expense |
(2,086) |
(1,647) |
|||
Financial income, net |
2,439 |
947 |
|||
Income before income tax expenses and equity in earnings of affiliated |
9,576 |
7,068 |
|||
Less: Income taxes |
1,820 |
1,116 |
|||
Equity in loss of affiliated companies |
(222) |
(546) |
|||
Net income |
7,534 |
5,406 |
|||
Net loss attributable to non-controlling interests |
(692) |
(130) |
|||
Net income attributable to parent company's common shareholders |
$ |
8,226 |
$ |
5,536 |
|
Comprehensive income: |
|||||
Net income |
$ |
7,534 |
$ |
5,406 |
|
Other comprehensive income: |
|||||
Foreign currency translation loss, net of tax |
(10,221) |
(17,237) |
|||
Comprehensive loss |
(2,687) |
(11,831) |
|||
Comprehensive loss attributable to non-controlling interests |
(1,454) |
(814) |
|||
Comprehensive loss attributable to parent company |
$ |
(1,233) |
$ |
(11,017) |
|
Net income attributable to parent company's common shareholders per share |
|||||
Basic - |
$ |
0.26 |
$ |
0.17 |
|
Diluted - |
$ |
0.26 |
$ |
0.17 |
|
Weighted average number of common shares outstanding |
|||||
Basic |
31,498,553 |
31,644,004 |
|||
Diluted |
31,501,108 |
31,645,622 |
|||
China Automotive Systems, Inc. and Subsidiaries |
|||||
Condensed Unaudited Consolidated Balance Sheets |
|||||
(In thousands of USD unless otherwise indicated) |
|||||
September 30, 2019 |
December 31, 2018 |
||||
ASSETS |
|||||
Current assets: |
|||||
Cash and cash equivalents |
$ |
83,820 |
$ |
86,346 |
|
Pledged cash |
18,491 |
29,623 |
|||
Accounts and notes receivable, net - unrelated parties |
212,390 |
237,519 |
|||
Accounts and notes receivable - related parties |
21,877 |
18,825 |
|||
Inventories |
87,175 |
88,021 |
|||
Other current assets |
23,229 |
35,094 |
|||
Total current assets |
446,982 |
495,428 |
|||
Non-current assets: |
|||||
Property, plant and equipment, net |
137,673 |
129,853 |
|||
Long-term investments |
33,976 |
32,620 |
|||
Other non-current assets |
31,669 |
32,598 |
|||
Total assets |
$ |
650,300 |
$ |
690,499 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||
Current liabilities: |
|||||
Short-term loans |
$ |
56,042 |
$ |
60,952 |
|
Accounts and notes payable - unrelated parties |
168,839 |
205,643 |
|||
Accounts and notes payable - related parties |
7,889 |
4,477 |
|||
Accrued expenses and other payables |
41,635 |
47,032 |
|||
Other current liabilities |
23,176 |
23,196 |
|||
Total current liabilities |
297,581 |
341,300 |
|||
Long-term liabilities: |
|||||
Long-term government loans |
7,352 |
291 |
|||
Other long-term payable |
5,818 |
8,726 |
|||
Long-term tax payable |
26,693 |
29,503 |
|||
Other non-current liabilities |
7,950 |
5,852 |
|||
Total liabilities |
$ |
345,394 |
$ |
385,672 |
|
Stockholders' equity: |
|||||
Common stock, $0.0001 par value - Authorized - 80,000,000 shares; |
$ |
3 |
$ |
3 |
|
Additional paid-in capital |
64,429 |
64,429 |
|||
Retained earnings- |
|||||
Appropriated |
11,104 |
11,104 |
|||
Unappropriated |
219,665 |
211,439 |
|||
Accumulated other comprehensive income |
(7,604 |
1,855 |
|||
Treasury stock - 885,867 and 711,698 shares as of September 30, 2019 |
(3,396 |
(2,953 |
|||
Total parent company stockholders' equity |
284,201 |
285,877 |
|||
Non-controlling interests |
20,705 |
18,950 |
|||
Total stockholders' equity |
304,906 |
304,827 |
|||
Total liabilities and stockholders' equity |
$ |
650,300 |
$ |
690,499 |
|
China Automotive Systems, Inc. and Subsidiaries |
|||||
Condensed Unaudited Consolidated Statements of Cash Flows |
|||||
(In thousands of USD unless otherwise indicated) |
|||||
Nine Months Ended September 30, |
|||||
2019 |
2018 |
||||
Cash flows from operating activities: |
|||||
Net income |
$ |
7,534 |
$ |
5,406 |
|
Adjustments to reconcile net income from operations to net |
|||||
Depreciation and amortization |
13,050 |
13,590 |
|||
(Reversal)/accrual of provision for doubtful accounts |
(692) |
253 |
|||
Inventory write downs |
3,150 |
4,971 |
|||
Deferred income taxes |
(601) |
(134) |
|||
Equity in loss of affiliated companies |
222 |
546 |
|||
(Gain)/loss on fixed assets disposals |
(692) |
6 |
|||
Changes in operating assets and liabilities |
|||||
(Increase)/decrease in: |
|||||
Accounts and notes receivable |
16,243 |
29,758 |
|||
Inventories |
(4,765) |
(18,220) |
|||
Other current assets |
4,745 |
(1,604) |
|||
Increase/(decrease) in: |
|||||
Accounts and notes payable |
(28,811) |
(28,744) |
|||
Accrued expenses and other payables |
(4,374) |
3,513 |
|||
Long-term taxes payable |
(2,810) |
- |
|||
Other current liabilities |
1,882 |
(334) |
|||
Net cash provided by operating activities |
4,081 |
9,007 |
|||
Cash flows from investing activities: |
|||||
Decrease in demand loans and employee housing loans |
185 |
453 |
|||
Cash received from property, plant and equipment sales |
1,164 |
263 |
|||
Payments to acquire property, plant and equipment (including |
(23,560) |
(24,295) |
|||
Payments to acquire intangible assets |
(1,435) |
- |
|||
Investment under equity method |
(2,491) |
(5,957) |
|||
Purchase of short-term investments |
(19,647) |
(19,974) |
|||
Proceeds from maturities of short-term investments |
27,040 |
26,793 |
|||
Government subsidy received for purchase of property, plant |
1,898 |
- |
|||
Cash received from long-term investment |
579 |
- |
|||
Cash received from repayment of the loan to a related party |
- |
20,430 |
|||
Net cash used in investing activities |
(16,267) |
(2,287) |
|||
Cash flows from financing activities: |
|||||
Proceeds from bank and government loans |
54,675 |
67,938 |
|||
Repayments of bank and government loans |
(52,486) |
(69,025) |
|||
Proceeds from sale and leaseback transaction |
- |
11,758 |
|||
Repayments of the borrowing for sale and leaseback transaction |
(3,143) |
(2,181) |
|||
Dividends paid to non-controlling interest holders of non- |
(333) |
(524) |
|||
Cash received from capital contributions by non-controlling interest holder |
3,542 |
15,728 |
|||
Repurchase of common shares |
(443) |
- |
|||
Net cash provided by financing activities |
1,812 |
23,694 |
|||
Effects of exchange rate on cash, cash equivalents and pledged cash |
(3,284) |
(4,603) |
|||
Net (decrease)/increase in cash, cash equivalents and pledged cash |
(13,658) |
25,811 |
|||
Cash, cash equivalents and pledged cash at beginning of the period |
115,969 |
96,093 |
|||
Cash, cash equivalents and pledged cash at end of the period |
$ |
102,311 |
$ |
121,904 |
|
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