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
- Net sales were $100.5 million
compared to $112.1 million in the
third quarter of 2018;
- Gross profit increased to $17.3
million from $15.4 million,
and the gross margin rose to 17.2% from 13.7% in the third quarter
of 2018;
- Income from operations was $4.3
million, with an operating margin of 4.3%, compared with
Income from operations of $1.8
million, or a 1.6% operating margin in the same quarter last
year;
- Net income attributable to parent company's common shareholders
was $4.2 million, or diluted earnings
per share of $0.13, compared to net
income attributable to parent company's common shareholders of
$0.4 million, or diluted earnings per
share of $0.01 in the third quarter
of 2018;
- Approximately 96,000 shares of common stock were
repurchased.
First Nine Months of 2019 Highlights
- Net sales were $315.5 million
compared to $371.9 million in the
first nine months of 2018;
- Gross margin was 14.8% compared with 14.5% in the same period
last year;
- Income from operations was $8.1
million compared with $7.0
million in the same period last year;
- Diluted earnings per share attributable to parent company's
common shareholders was $0.26
compared with $0.17 for the first
nine months of 2018;
- Cash and cash equivalents and pledged cash deposits were
$102.3 million as of September 30, 2019;
- Net cash flow from operating activities was $4.1 million.
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
months ended September 30, 2019 and 2018)
|
$
|
100,542
|
|
$
|
112,084
|
Cost of products sold
($6,474 and $4,659 purchased from related parties for
the three months ended September 30, 2019 and 2018)
|
|
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
companies
|
|
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
share
|
|
|
|
|
|
|
|
|
|
|
|
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
months ended September 30, 2019 and 2018)
|
$
|
315,483
|
|
$
|
371,884
|
Cost of products sold
($18,108 and $20,336 purchased from related parties
for the nine months ended September 30, 2019 and 2018)
|
|
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
companies
|
|
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;
Issued - 32,338,302 and 32,338,302 shares as of September 30,
2019
and December 31, 2018, respectively
|
$
|
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
and December 31, 2018, respectively
|
|
(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
cash provided by operating activities:
|
|
|
|
|
|
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
included in other non-current assets
|
|
185
|
|
|
453
|
Cash received from
property, plant and equipment sales
|
|
1,164
|
|
|
263
|
Payments to acquire
property, plant and equipment (including
$514 and $6,747 paid to related parties for the nine months
ended September 30, 2019 and 2018, respectively)
|
|
(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
and equipment
|
|
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-
wholly owned subsidiaries
|
|
(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
|
View original
content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-unaudited-2019-third-quarter-results-300956017.html
SOURCE China Automotive Systems, Inc.