omniture

China Automotive Systems Reports Unaudited 2021 Third Quarter Results

2021-11-12 19:00 2871

WUHAN, China, Nov. 12, 2021 /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, 2021.

 Third Quarter 2021 Highlights

  • Net sales decreased 5.4% to $108.2 million compared with $114.4 million in the third quarter of 2020;
  • Electric power steering ("EPS") product sales increased by 76.0% to $29.4 million;
  • Gross profit increased 23.5% to $16.8 million and gross margin increased to 15.5% from 11.9% in the third quarter of 2020;
  • Income from operations was $0.6 million compared with income from operations of $0.1 million in the third quarter of 2020;
  • Net loss attributable to parent company's common shareholders was $0.3 million, or diluted loss per share of $0.01, compared to net income attributable to parent company's common shareholders of $2.4 million, or diluted earnings per share of $0.08, in the third quarter of 2020.

First Nine Months of 2021 Highlights

  • Net sales rose by 32.4% to $359.2 million compared to $271.2 million in the first nine months of 2020;
  • Gross profit increased 60.8% to $52.4 million and gross margin increased to 14.6% from 12.0% in the first nine months of 2020;
  • Income from operations was $4.9 million compared with loss from operations of $4.1 million in the first nine months of 2020;
  • Net income attributable to parent company's common shareholders was $6.1 million, or diluted income per share of $0.20, compared to net loss attributable to parent company's common shareholders of $1.8 million, or diluted loss per share of $0.06, in the first nine months of 2020;
  • Cash and cash equivalents and pledged cash were $115.0 million as of September 30, 2021.

Mr. Qizhou Wu, the Chief Executive Officer of CAAS, commented, "Passenger car sales declined by 13% in the third quarter of 2021 while commercial vehicles sales declined by 24.0%, according to statistics from the China Association of Automobile Manufacturers.  U.S. auto sales were down approximately 13% for the third quarter of 2021 and September monthly sales decreased by 26% as a chip shortage further reduced production."

"Our activity in Europe has accelerated.  During the third quarter of 2021, we developed a new steering system for one of Europe's leading auto brands, Alfa Romeo.  The 2021 Tonale is Alfa Romeo's first luxury plug-in-hybrid SUV model. Purchase orders for approximately 100,000 annual units are expected for this new CAAS steering system.  In July 2021, we received the SGS TÜV ISO26262:2018 ASIL-D certification from SGS TUS, which is headquartered in Germany. The D certification is the highest and most stringent safety standard.  And our related party, Swedish Sentient AB's technology is receiving significant interest especially for its autonomous driving capabilities."

"While both the Chinese and North American auto markets are temporarily disrupted due to the shortage of chips, our EPS sales are growing stronger and our South American operations are booming." 

Mr. Jie Li, the Chief Financial Officer of CAAS, commented, "We maintained our strong financial position as cash and cash equivalents and pledged cash was $115.0 million and working capital was $145.6 million at September 30, 2021. We have sufficient production capacity so our capital spending has been reduced. Our investment in new technologies will lead us to new growth products in the future."

Third Quarter of 2021

In the third quarter of 2021, net sales decreased by 5.4% to $108.2 million compared to $114.4 million in the same quarter of 2020. The decrease in net product sales was mainly due to the decline in market demand as a result of the chips shortage and other overall auto market trends. Sales of the Company's hydraulic products decreased 19.3%.  Net product sales for the Company's EPS products increased by 76.0% to $29.4 million, or 27.2% of net sales, compared with $16.7 million, or 14.6% of net sales, in the third quarter of 2020.  Net product sales to North America decreased by 16.2% to $31.0 million, due to lower sales volumes, compared with $37.0 million for the same quarter in 2020.   

Gross profit was $16.8 million in the third quarter of 2021, compared to $13.6 million in the third quarter of 2020.  Gross margin was 15.5% compared to 11.9% for the same period of 2020, mainly due to changes in the product mix.

Selling expenses were $4.8 million in the third quarter of 2021, compared to $3.8 million in the third quarter of 2020. The higher selling expenses were mainly related to higher personnel and logistics expenses. Selling expenses represented 4.4% of net sales in the third quarter of 2021, compared to 3.3% in the third quarter of 2020.

General and administrative expenses ("G&A expenses") were $6.2 million in the third quarter of 2021, compared to $5.1 million in the same quarter of 2020. The increase was primarily due to the increased bad debt provision for accounts receivable. G&A expenses represented 5.7% of net sales in the third quarter of 2021 compared with 4.5% of net sales in the third quarter of 2020.

Research and development expenses ("R&D expenses") were $5.7 million in the third quarter of 2021, compared to $6.1 million in the third quarter of 2020.  R&D expenses represented 5.3% of net sales in the third quarters each of 2021 and 2020. Lower R&D was mainly due to reduced personnel expenses.

Income from operations was $0.6 million in the third quarter of 2021, compared to income from operations of $0.1 million in the same quarter of 2020. The higher income from operations was mainly due to higher gross profit and higher gross margin in the third quarter of 2021.

Other income was $2.4 million in the third quarter of 2021 compared with $0.4 million in the third quarter of 2020 primarily due to higher government subsidies received in the third quarter of 2021.

Financial expense, net was $0.8 million in the third quarter of 2021 compared with $2.3 million in the third quarter of 2020 mainly due to lower foreign exchange losses.

Income before income tax expenses and equity in earnings of affiliated companies was $1.9 million in the third quarter of 2021, compared to loss before income tax expenses and equity in earnings of affiliated companies of $2.3 million in the third quarter of 2020. The increase of income before income tax expenses and equity in earnings of affiliated companies was mainly due to higher other income and lower financial expense compared with the third quarter of 2020.

Income tax expense was $2.4 million in the third quarter of 2021, compared to an income tax benefit of $0.2 million for the third quarter of 2020, which was mainly due to an increase in the valuation allowance recognized in the third quarter of 2021.

Net loss attributable to parent company's common shareholders was $0.3 million in the third quarter of 2021, compared to net income attributable to parent company's common shareholders of $2.4 million in the third quarter of 2020. Diluted loss per share was $0.01 in the third quarter of 2021, compared with diluted earnings per share of $0.08 in the third quarter of 2020.

The weighted average number of diluted common shares outstanding was 30,851,776 in the third quarter of 2021, compared to 31,113,374 in the third quarter of 2020.

First Nine Months of 2021

Net sales for the first nine months of 2021 increased by 32.4% to $359.2 million, compared to $271.2 million in the first nine months of 2020. Gross profit for the first nine months of 2021 increased by 60.8% to $52.4 million, compared to $32.6 million in the corresponding period last year. Gross margin for the first nine months of 2021 was 14.6%, compared to 12.0% for the corresponding period in 2020. For the nine months ended September 30, 2021, gain on other sales amounted to $2.5 million, compared to $2.9 million for the corresponding period in 2020.  Income from operations was $4.9 million compared to loss from operations of $4.1 million in the first nine months of 2020.

Net income attributable to parent company's common shareholders was $6.1 million compared with net loss attributable to parent company's common shareholders of $1.8 million in the corresponding period last year. Diluted income per share was $0.20 in the first nine months of 2021, compared to diluted loss per share of $0.06 for the corresponding period in 2020.

As of September 30, 2021, total cash and cash equivalents and pledged cash deposits were $115.0 million. Total accounts receivable including notes receivable were $227.3 million. Accounts payable including notes payable were $215.1 million, and short-term loans were $42.2 million. Total parent company stockholders' equity was $326.3 million as of September 30, 2021, compared to $319.4 million as of December 31, 2020. 

Net cash used in operating activities was $5.9 million in the first nine months of 2021 compared with net cash provided by operating activities of $52.7 million in the first nine months of 2020.  Payments to acquire property, plant and equipment were $5.3 million compared with $8.9 million in the first nine months of 2020.

Business Outlook

Management reiterated its revenue guidance of $495 million for the full year 2021. 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, 2021 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: +1-888-506-0062 (North America)
Phone Number: +1-973-528-0011 (International)
Mainland China Toll Free: +86-400-120-3199

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 ten 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 Fiat Chrysler Automobiles (FCA) and Ford Motor Company 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 30, 2021, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of a deteriorating market outlook for automobile sales, a slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control, could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increased costs and reduced revenue.  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,




2021



2020


Net product sales ($14,691 and $16,840 sold to related parties for the three
   months ended September 30, 2021 and 2020)


$

108,231



$

114,417


Cost of products sold ($6,505 and $7,012 purchased from related parties for the
   three months ended September 30, 2021 and 2020)



91,439




100,842


Gross profit



16,792




13,575


Gain on other sales



487




1,497


Less: Operating expenses









Selling expenses



4,802




3,800


General and administrative expenses



6,174




5,142


Research and development expenses



5,712




6,072


Total operating expenses



16,688




15,014


Income from operations



591




58


Other income



2,407




350


Interest expense



(255)




(403)


Financial expense, net



(821)




(2,313)


Income/(loss) before income tax expenses and equity in earnings of affiliated
   companies



1,922




(2,308)


Less: Income taxes expense/(benefit)



2,441




(189)


Add: Equity in earnings of affiliated companies



251




3,632


Net (loss)/income



(268)




1,513


Less: Net income/(loss) attributable to non-controlling interests



42




(848)


Accretion to redemption value of redeemable non-controlling interests



(7)




(3)


Net (loss)/income attributable to parent company's common shareholders


$

(317)



$

2,358


Comprehensive income:









Net (loss)/income


$

(268)



$

1,513


Other comprehensive income:









Foreign currency translation (loss)/income, net of tax



(1,338)




12,774


Comprehensive (loss)/income



(1,606)




14,287


Comprehensive (loss)/income attributable to non-controlling interests



(40)




77


Accretion to redemption value of redeemable non-controlling interests



(7)




(3)


Comprehensive (loss)/income attributable to parent company


$

(1,573)



$

14,207











Net (loss)/income attributable to parent company's common shareholders per
   share -


















Basic


$

(0.01)



$

0.08











Diluted


$

(0.01)



$

0.08


Weighted average number of common shares outstanding -









Basic



30,851,776




31,112,076


Diluted



30,851,776




31,113,374


 

 

 

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,




2021



2020


Net product sales ($47,016 and $40,439 sold to related parties for the nine months
   ended September 30, 2021 and 2020)


$

359,176



$

271,156


Cost of products sold ($21,916 and $16,298 purchased from related parties for the nine
   months ended September 30, 2021 and 2020)



306,807




238,598


Gross profit



52,369




32,558


Gain on other sales



2,528




2,935


Less: Operating expenses









Selling expenses



14,857




8,895


General and administrative expenses



16,852




13,330


Research and development expenses



18,318




17,390


Total operating expenses



50,027




39,615


Income/(loss) from operations



4,870




(4,122)


Other income, net



5,636




1,724


Interest expense



(892)




(1,214)


Financial expense, net



(878)




(2,903)


Income/(loss) before income tax expenses and equity in earnings of affiliated
   companies



8,736




(6,515)


Less: Income taxes expense



3,280




294


Add: Equity in earnings of affiliated companies



435




3,454


Net income/(loss)



5,891




(3,355)


Less: Net loss attributable to non-controlling interests



(219)




(1,590)


Accretion to redemption value of redeemable non-controlling interests



(21)




(3)


Net income/(loss) attributable to parent company's common shareholders


$

6,089



$

(1,768)


Comprehensive income:









Net income/(loss)


$

5,891



$

(3,355)


Other comprehensive income:









Foreign currency translation income, net of tax



1,977




8,171


Comprehensive income



7,868




4,816


Comprehensive loss attributable to non-controlling interests



(92)




(1,062)


Accretion to redemption value of redeemable non-controlling interests



(21)




(3)


Comprehensive income attributable to parent company


$

7,939



$

5,875











Net income/(loss) attributable to parent company's common shareholders per share -


















Basic


$

0.20



$

(0.06)











Diluted


$

0.20



$

(0.06)


Weighted average number of common shares outstanding -









Basic



30,851,776




31,153,162


Diluted



30,855,967




31,153,162











Share-based compensation included in operating expense above is as follows:









General and administrative expenses



88




-


 

 

China Automotive Systems, Inc. and Subsidiaries


Condensed Unaudited Consolidated Balance Sheets


(In thousands of USD unless otherwise indicated)






September 30,
2021



December 31,
2020


ASSETS









Current assets:









Cash and cash equivalents


$

80,729



$

97,248


Pledged cash



34,272




30,813


Accounts and notes receivable, net - unrelated parties



200,221




216,519


Accounts and notes receivable - related parties



27,055




17,621


Inventories



106,427




88,325


Other current assets



28,762




25,132


Total current assets



477,466




475,658


Non-current assets:









Property, plant and equipment, net



129,249




141,004


Land use rights, net



10,623




10,774


Long-term investments



40,742




49,766


Other non-current assets



28,066




30,358


Total assets


$

686,146



$

707,560











LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY









Current liabilities:









Short-term loans


$

42,210



$

44,238


Accounts and notes payable - unrelated parties



203,132




212,522


Accounts and notes payable - related parties



11,975




12,730


Accrued expenses and other payables



52,293




55,607


Other current liabilities



22,228




29,387


Total current liabilities



331,838




354,484


Long-term liabilities:









Other long-term payable



-




1,126


Long-term tax payable



21,074




23,884


Other non-current liabilities



6,437




8,151


Total liabilities


$

359,349



$

387,645











Mezzanine equity:









Redeemable non-controlling interests



544




523











Stockholders' equity:









Common stock, $0.0001 par value - Authorized - 80,000,000 shares; Issued –
32,338,302 and 32,338,302 shares as of September 30, 2021 and December 31, 2020,
respectively


$

3



$

3


Additional paid-in capital



63,731




64,273


Retained earnings-









Appropriated



11,303




11,303


Unappropriated



221,580




215,491


Accumulated other comprehensive income



19,263




17,413


Treasury stock –1,486,526 and 1,486,526 shares as of September 30, 2021 and
December 31, 2020, respectively



(5,261)




(5,261)


Total parent company stockholders' equity



310,619




303,222


Non-controlling interests



15,634




16,170


Total stockholders' equity



326,253




319,392


Total liabilities, mezzanine equity and stockholders' equity


$

686,146



$

707,560


 

 

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,




2021



2020


Cash flows from operating activities:









Net income/(loss)


$

5,891



$

(3,355)


Adjustments to reconcile net income/(loss) from operations to net cash (used in)/provided
   by operating activities:









Share-based compensation



88




-


Depreciation and amortization



19,686




15,935


Provision/(reversal) of credit losses



1,644




(360)


Deferred income taxes



2,573




464


Equity in gain of affiliated companies



(435)




(3,454)


Government subsidy reclassified from government loans



-




287


Loss on fixed assets disposals



71




67


(Increase)/decrease in:









Accounts and notes receivable



6,631




29,454


Inventories



(17,500)




2,644


Other current assets



(129)




1,214


Increase/(decrease) in:









Accounts and notes payable



(11,506)




10,493


Accrued expenses and other payables



(2,325)




2,451


Long-term taxes payable



(2,809)




(2,809)


Other current liabilities



(7,462)




(289)


Other non-current liabilities



(285)




-


Net cash used in operating activities



(5,867)




52,742











Cash flows from investing activities:









(Decrease)/increase in demand loans included in other non-current assets



(357)




44


Repayment of loan from a related party



154




-


Cash received from property, plant and equipment sales



252




1,444


Payments to acquire property, plant and equipment (including $929 and $1,677 paid to
   related parties for the nine months ended September 30, 2021 and 2020, respectively)



(5,344)




(8,879)


Payments to acquire intangible assets



(505)




(422)


Investment under the equity method



(308)




(5,360)


Purchase of short-term investments and long-term time deposits



(46,212)




(42,716)


Proceeds from maturities of short-term investments



40,016




21,626


Cash received from long-term investment



10,116




448


Net cash used in investing activities



(2,188)




(33,815)











Cash flows from financing activities:









Proceeds from bank loans



42,700




39,586


Repayments of bank loans



(44,854)




(50,550)


Repayments of the borrowing for sale and leaseback transaction



(3,328)




(3,078)


Cash received from capital contributions by non-controlling interest holder



-




722


Deemed distribution to shareholders



-




(88)


Acquisition of non-controlling interest



(538)




(81)


Repurchase of common shares



-




(1,000)


Net cash used in financing activities



(6,020)




(14,489)











Effects of exchange rate on cash, cash equivalents and pledged cash



1,015




2,647


Net (decrease)/increase in cash, cash equivalents and pledged cash



(13,060)




7,085


Cash, cash equivalents and pledged cash at beginning of the period



128,061




106,403


Cash, cash equivalents and pledged cash at end of the period


$

115,001



$

113,488


 

Cision View original content:https://www.prnewswire.com/news-releases/china-automotive-systems-reports-unaudited-2021-third-quarter-results-301422819.html

Source: China Automotive Systems, Inc.
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