WUHAN, China, May 12, 2023 /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, 2023.
First Quarter 2023 Highlights
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Passenger vehicle unit sales declined by 7.3% year-over-year and commercial vehicle unit sales decreased by 2.9% in China according to statistics from the China Association of Automobile Manufacturers. However, we are pleased to report a 4.3% year-over-year growth in sales in the first quarter of 2023 with much stronger margins and profits in this unsettled automotive environment. Our electric power steering ("EPS") products continue to gain market share and our traditional hydraulic steering products' market share grew as well. In addition to a better product mix, our margins benefitted from stricter cost controls in the first quarter of 2023."
"We anticipate de-regulation of strict COVID restrictions aided by more governmental growth policies, will help the Chinese economy recover over the next several quarters. We look forward to the Chinese economy and automotive markets resuming normal activities in the future."
Mr. Jie Li, chief financial officer of CAAS, commented, "We had cash and cash equivalents, pledged cash and short-term investments of $164.3 million at the quarter end. Lower unit costs improved margins and profits in this quarter, and our cost controls will continue to be diligent in the future."
First Quarter of 2023
Net sales increased by 4.3% to $142.2 million in the first quarter of 2023, compared to $136.4 million in the first quarter of 2022. The net sales increase was mainly due to the gradual recovery of the Chinese economy post-COVID-19. Net sales of traditional steering products and parts were $94.4 million for the first quarter of 2023, which is consistent with $95.4 million for the same period in 2022. Net sales of electric power steering ("EPS") products rose 16.6% to $47.8 million from $41.0 million for the same period in 2022. Henglong KYB sales of passenger vehicle EPS products surged by 24.8% year-over-year to $37.2 million. EPS product sales were 33.6% of the total net sales for the first quarter of 2023, compared with 30.1% for the same period in 2022. North American net export sales rose by 5.5% to $34.7 million in the first quarter of 2023 compared with $32.9 million in the first quarter of 2022. Steering product sales to the commercial vehicle markets declined slightly year-over-year in the 2023 first quarter.
Gross profit climbed by 46.9% to $21.6 million from $14.7 million in the first quarter of 2022. Gross margin in the first quarter of 2023 was 15.2% compared to 10.8% for the first quarter of 2022, mainly due to a change in the Company's product mix and an increase in average selling price for the three months ended March 31, 2023.
Gain on other sales was $0.7 million, compared to $0.9 million in the first quarter of 2022.
Selling expenses declined 20.9% to $3.4 million from $4.3 million in the first quarter of 2022. This decline in selling expenses was primarily due to lower transportation, marketing and office expenses and the impact from appreciation of the USD against the RMB. Selling expenses represented 2.4% of net sales in the first quarter of 2023 compared to 3.2% in the first quarter of 2022.
General and administrative expenses ("G&A expenses") were $4.8 million, which is consistent with $4.8 million of the first quarter of 2022. G&A expenses represented 3.4% of net sales in the first quarter of 2023 compared with 3.5% of net sales in the first quarter of 2022.
Research and development expenses ("R&D expenses") decreased by 21.0% to $6.4 million compared to $8.1 million in the first quarter of 2022, mainly due to a decrease of tooling charges and the depreciation of the RMB against the USD. R&D expenses represented 4.5% of net sales in the first quarter of 2023 compared to 6.0% in the first quarter of 2022.
Net other income was $1.5 million for the first quarter of 2023, compared to $3.5 million for the first quarter of 2022. This decrease was mainly due to less government subsidies received in the first quarter of 2023.
Income from operations was $7.7 million in the first quarter of 2023, compared to loss from operations of $1.5 million in the first quarter of 2022. The 2023 first quarter income was primarily due to higher gross profits and lower operating expenses compared with the first quarter of 2022.
Interest expense was $0.2 million in the first quarter of 2023, compared to $0.4 million in the first quarter of 2022.
Net financial loss was $0.4 million in the first quarter of 2023 compared with a net financial income of $2.0 million in the first quarter of 2022. The net financial loss in the first quarter of 2023 was primarily due to foreign exchange losses.
Income before income tax expenses and equity in earnings of affiliated companies was $8.6 million in the first quarter of 2023 compared to $3.6 million in the first quarter of 2022. The increase in income before income tax expenses and equity in earnings of affiliated companies in the first quarter of 2022 was mainly due to higher income from operations partially offset by a loss in net financial loss.
Equity in income of affiliated companies was $0.1 million in the first quarter of 2023, compared with equity in loss of affiliated companies of $2.5 million in the first quarter of 2022.
Net income attributable to parent company's common shareholders was $6.8 million in the first quarter of 2023, compared to a net loss attributable to parent company's common shareholders of $0.1 million in the first quarter of 2022. Diluted income per share was $0.23 in the first quarter of 2023, compared to net loss per share of nil in the first quarter of 2022.
The weighted average number of diluted common shares outstanding was 30,193,082 in the first quarter of 2023 compared to 30,851,776 in the first quarter of 2022.
Balance Sheet
As of March 31, 2023, total cash and cash equivalents, pledged cash and short-term investments were $164.3 million, total accounts receivable including notes receivable were $244.9 million, accounts payable including notes payable were $239.6 million and short-term bank loans were $45.7 million. Total parent company stockholders' equity was $322.8 million as of March 31, 2023, compared to $311.7 million as of December 31, 2022.
Business Outlook
Management has reiterated revenue guidance for the full fiscal year 2023 of $560.0 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 May 12, 2023 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 see the dial-in information below, enter the call 10 minutes before the aforementioned start time and ask to be connected to the "China Automotive Systems" conference call with pin number 677473:
Phone Number: +1-877-545-0523 (North America)
Phone Number: +1-973-528-0016 (International)
Mainland China Toll Free: +86-400-120-3199
A replay of the call will be available on the Company's website under the 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 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 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. 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 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 30, 2023, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. 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.
jieli@chl.com.cn
Kevin Theiss
Awaken Advisors
+1-212-510-8922
Kevin@awakenlab.com
-Tables Follow -
China Automotive Systems, Inc. and Subsidiaries |
||||||
Condensed Unaudited Consolidated Balance Sheets |
||||||
(In thousands of USD unless otherwise indicated) |
||||||
March 31, 2023 |
December 31, 2022 |
|||||
ASSETS |
||||||
Current assets: |
||||||
Cash and cash equivalents |
$ |
99,244 |
$ |
121,216 |
||
Pledged cash |
43,639 |
37,735 |
||||
Accounts and notes receivable, net - unrelated parties |
232,593 |
214,308 |
||||
Accounts and notes receivable, net - related parties |
12,302 |
10,016 |
||||
Inventories |
105,498 |
112,236 |
||||
Other current assets |
35,334 |
25,207 |
||||
Total current assets |
528,610 |
520,718 |
||||
Non-current assets: |
||||||
Property, plant and equipment, net |
104,931 |
106,606 |
||||
Land use rights, net |
9,616 |
9,555 |
||||
Long-term investments |
64,634 |
59,810 |
||||
Other non-current assets |
19,282 |
17,663 |
||||
Total assets |
$ |
727,073 |
$ |
714,352 |
||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY |
||||||
Current liabilities: |
||||||
Short-term loans |
$ |
45,684 |
$ |
45,671 |
||
Accounts and notes payable-unrelated parties |
224,111 |
218,412 |
||||
Accounts and notes payable-related parties |
15,530 |
16,695 |
||||
Accrued expenses and other payables |
46,153 |
48,311 |
||||
Other current liabilities |
32,799 |
35,106 |
||||
Total current liabilities |
364,277 |
364,195 |
||||
Long-term liabilities: |
||||||
Long-term tax payable |
15,805 |
15,805 |
||||
Other non-current liabilities |
7,168 |
6,937 |
||||
Total liabilities |
$ |
387,250 |
$ |
386,937 |
||
Commitments and Contingencies |
||||||
Mezzanine equity: |
||||||
Redeemable non-controlling interests |
561 |
582 |
||||
Stockholders' equity: |
||||||
Common stock, $0.0001 par value - Authorized - 80,000,000 shares; Issued – 32,338,302 and |
$ |
3 |
$ |
3 |
||
Additional paid-in capital |
63,731 |
63,731 |
||||
Retained earnings- |
||||||
Appropriated |
11,851 |
11,851 |
||||
Unappropriated |
253,994 |
247,174 |
||||
Accumulated other comprehensive income |
875 |
(3,413) |
||||
Treasury stock – 2,152,600 and 2,152,600 shares as of March 31, 2023 and December 31, |
(7,695) |
(7,695) |
||||
Total parent company stockholders' equity |
322,759 |
311,651 |
||||
Non-controlling interests |
16,503 |
15,182 |
||||
Total stockholders' equity |
339,262 |
326,833 |
||||
Total liabilities, mezzanine equity and stockholders' equity |
$ |
727,073 |
$ |
714,352 |
||
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, |
||||||
2023 |
2022 |
|||||
Net product sales ($13,576 and $11,004 sold to related parties for the three months ended March 31, 2023 and |
$ |
142,243 |
$ |
136,396 |
||
Cost of products sold ($7,015 and $7,540 purchased from related parties for the three months ended March 31, 2023 |
120,625 |
121,662 |
||||
Gross profit |
21,618 |
14,734 |
||||
Gain on other sales |
653 |
931 |
||||
Less: Operating expenses |
||||||
Selling expenses |
3,384 |
4,312 |
||||
General and administrative expenses |
4,753 |
4,754 |
||||
Research and development expenses |
6,390 |
8,137 |
||||
Total operating expenses |
14,527 |
17,203 |
||||
Income/(loss) from operations |
7,744 |
(1,538) |
||||
Other income, net |
1,502 |
3,519 |
||||
Interest expense |
(249) |
(402) |
||||
Financial (expense)/income, net |
(422) |
2,015 |
||||
Income before income tax expenses and equity in earnings of affiliated companies |
8,575 |
3,594 |
||||
Less: Income taxes |
829 |
958 |
||||
Add: Equity in earnings/(loss) of affiliated companies |
137 |
(2,487) |
||||
Net income |
7,883 |
149 |
||||
Less: Net income attributable to non-controlling interests |
1,055 |
200 |
||||
Accretion to redemption value of redeemable non-controlling interests |
(8) |
(8) |
||||
Net income/(loss) attributable to parent company's common shareholders |
$ |
6,820 |
$ |
(59) |
||
Comprehensive income: |
||||||
Net income |
$ |
7,883 |
$ |
149 |
||
Other comprehensive income: |
||||||
Foreign currency translation income, net of tax |
4,554 |
1,437 |
||||
Comprehensive income |
12,437 |
1,586 |
||||
Comprehensive income attributable to non-controlling interests |
1,321 |
289 |
||||
Accretion to redemption value of redeemable non-controlling interests |
(8) |
(8) |
||||
Comprehensive income attributable to parent company |
$ |
11,108 |
$ |
1,289 |
||
Net income/(loss) attributable to parent company's common shareholders per share - |
||||||
Basic |
$ |
0.23 |
$ |
(0.00) |
||
Diluted |
$ |
0.23 |
$ |
(0.00) |
||
Weighted average number of common shares outstanding - |
||||||
Basic |
30,185,702 |
30,851,776 |
||||
Diluted |
30,193,082 |
30,851,776 |
||||
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, |
||||||||
2023 |
2022 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ |
7,883 |
$ |
149 |
||||
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
4,856 |
6,207 |
||||||
(Reversal)/provision of credit losses |
(217) |
100 |
||||||
Deferred income taxes |
1,019 |
286 |
||||||
Equity in (earnings)/loss of affiliated companies |
(137) |
2,487 |
||||||
Loss on fixed assets disposals |
15 |
37 |
||||||
(Increase)/decrease in: |
||||||||
Accounts and notes receivable |
(17,383) |
(11,184) |
||||||
Inventories |
8,285 |
2,532 |
||||||
Other current assets |
(1,206) |
(1,281) |
||||||
Increase/(decrease) in: |
||||||||
Accounts and notes payable |
1,360 |
(1,407) |
||||||
Accrued expenses and other payables |
(2,868) |
(2,041) |
||||||
Other current liabilities |
(3,023) |
(135) |
||||||
Net cash used in operating activities |
(1,416) |
(4,250) |
||||||
Cash flows from investing activities: |
||||||||
(Increase)/decrease in demand loans included in other non-current assets |
(14) |
242 |
||||||
Cash received from property, plant and equipment sales |
31 |
95 |
||||||
Payments to acquire property, plant and equipment (including $2,376 and $794 paid to related |
(3,160) |
(1,024) |
||||||
Payments to acquire intangible assets |
- |
(40) |
||||||
Investment under the equity method |
(5,841) |
(4,724) |
||||||
Purchase of short-term investments |
(34,795) |
(44,693) |
||||||
Proceeds from maturities of short-term investments |
26,541 |
1,801 |
||||||
Cash received from long-term investment |
557 |
2,704 |
||||||
Net cash used in investing activities |
(16,681) |
(45,639) |
||||||
Cash flows from financing activities: |
||||||||
Proceeds from bank loans |
20,135 |
16,088 |
||||||
Repayments of bank loans |
(20,534) |
(15,701) |
||||||
Repayments of the borrowing for sale and leaseback transaction |
- |
(1,130) |
||||||
Net cash used in financing activities |
(399) |
(743) |
||||||
Effects of exchange rate on cash, cash equivalents and pledged cash |
2,428 |
583 |
||||||
Net decrease in cash, cash equivalents and pledged cash |
(16,068) |
(50,049) |
||||||
Cash, cash equivalents and pledged cash at beginning of the period |
158,951 |
159,498 |
||||||
Cash, cash equivalents and pledged cash at end of the period |
$ |
142,883 |
$ |
109,449 |
||||
