WUHAN, China, June 23, 2020 /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, 2020.
First Quarter 2020 Highlights
- Net sales decreased 32.6% to $73.6
million from $109.2 million in
the first quarter of 2019 primarily due to the impact of the
COVID-19 pandemic lockdown in China
- Net sales of electric power steering ("EPS") products declined
63.5% to $8.1 million from
$22.2 million in the first quarter of
2019
- Net product sales to Fiat Chrysler and Ford in North America were $28.1 million consistent with the same quarter
last year
- Gross margin increased to 15.2% compared with 12.9% in the
first quarter of 2019
- Net income attributable to parent company's common shareholders
was $0.05 million, compared to
$1.5 million in the first quarter of
2019
- Total cash and cash equivalents and pledged cash were
$132.6 million
Mr. Qizhou Wu, chief executive
officer of CAAS, commented, "Our extraordinary sales decline
reflects the devastating impact of the COVID-19 pandemic on
China's economy and especially the
domestic Chinese automobile industry. China's GDP
declined by 6.8% year-over-year, and car sales were down 42% in the
first quarter of 2020 compared to the first quarter of 2019
according to the China Association of Automobile Manufacturers
("CAAM"). Internationally, our sales to our tier-1 North
American customers remained constant. Also, our innovative,
new powerpack brushless motors are about to start commercial
production to add a new revenue channel."
Mr. Jie Li, chief financial
officer of CAAS, commented, "Even during the most difficult quarter
in our Company's history, our operations continued to generate
positive cash flow and our cash position improved. Our
gross margin increased in the first quarter and
we have maintained net profitability during this crisis.
With our strong balance sheet and effective cashflow
management, we remain financially sound."
First Quarter of 2020
In the first quarter of 2020, net sales were $73.6 million compared to $109.2 million in the same quarter of 2019,
reflecting a 32.6% year-over-year decline. The decrease in
net sales was mainly due to lower sales volume for legacy hydraulic
products due to coronavirus lockdown and lower average selling
prices in the domestic markets during the pandemic crisis.
Gross profit was $11.2 million in the first quarter of 2020
compared with $14.0 million in the
first quarter of 2019. The gross margin increased to 15.2% in the
first quarter of 2020 compared to 12.9% in the first quarter
of 2019, mainly due to changes in the product mix.
Gain on other sales was $0.6
million in the first quarter of 2020 compared to
$1.3 million in the first quarter of
2019, reflecting lower scrap volume.
Selling expenses were $2.1 million
in the first quarter of 2020, compared to $3.1 million in the first quarter of 2019. The
decrease was primarily due to the lower freight expenses, resulting
from the suspension of the Company's operations for most of the
quarter due to the outbreak of the COVID-19 pandemic. Selling
expenses represented 2.9% of net sales in the first quarter of 2020
compared to 2.8% in the first quarter of 2019.
General and administrative expenses ("G&A expenses") were
$3.4 million in the first
quarter of 2020, compared to $4.6
million in the same quarter of 2019. The decrease was
primarily due to lower office expenses. G&A expenses
represented 4.6% of net sales in the first quarter of 2020 compared
with 4.2% in the first quarter of 2019.
Research and development expenses ("R&D expenses") were
$5.1 million in the first quarter of
2020, compared to $6.6 million in the
first quarter of 2019. R&D expenses represented 6.9% of
net sales in the first quarter of 2020 compared to 6.0% in the
first quarter of 2019. Lower R&D expenses
were primarily due to increased cost controls.
Other income was $0.1 million for
the three months ended March 31, 2020
compared to $1.4 million for the
three months ended March 31, 2019,
representing a decrease of $1.3
million, primarily due to lower governmental subsidies
and a donation made to combat COVID-19 pandemic in the
first quarter of 2020.
Income from operations was $1.2 million in the first quarter of 2020,
compared to $1.0 million in the same
quarter of 2019. The increase was primarily due to higher gross
margin and decreased operating expenses offsetting the impact of
lower sales volume in the first quarter of 2020.
Interest expense was $0.4 million
in the first quarter of 2020 compared to $0.6 million in the same quarter of 2019. The
decrease was primarily due to decreased loans.
Net financial expense was $0.5
million in the first quarter of 2020 compared to
$0.7 million in the first quarter of
2019. The increase in net financial expense was primarily due to a
decrease in foreign exchange loss in the first quarter of 2020.
Income before income tax expenses and equity in earnings of
affiliated companies was $0.4 million in the first quarter of 2020,
compared to $1.2 million in the first
quarter of 2019. The decrease in income before income tax
expenses and equity in earnings of affiliated companies in the
first quarter of 2020 was mainly due to lower income from
operations and lower other income.
Net income attributable to parent company's common shareholders
was $0.05 million in the first
quarter of 2020, compared to $1.5
million in the first quarter of 2019. Diluted earnings per
share were nil per share in the first quarter of 2020,
compared to $0.05 in the first
quarter of 2019.
The weighted average number of diluted common shares outstanding
was 31,174,119 in the first quarter of 2020, compared to
31,513,297 in the first quarter of 2019.
Balance Sheet
As of March 31, 2020, total cash
and cash equivalents and pledged cash were $132.6 million, total accounts receivable
including notes receivable were $196.5
million, accounts payable were $165.8
million and bank and government loans were $51.1 million. Total parent company stockholders'
equity was $283.8 million as of
March 31, 2020, compared to
$289.2 million as of
December 31, 2019.
Business Outlook
By mid-March, most of the Company's production operations were
up and running after the lockdown restrictions were lifted by the
respective local governments as the COVID-19 outbreak
subsided in China. In April,
the Company regained its full operating capacity and reopened its
Wuhan headquarters after a
temporary relocation to Jingzhou City in March.
Mr. Qizhou Wu, chief executive
officer of CAAS, further commented, "Industry data show that April
and May auto sales in China
experienced a strong rebound. We remain cautiously hopeful that the
resilience of Chinese economy and large consumer base will propel a
reasonable recovery of the auto sector in the remaining part of the
year."
Management reiterates its revenue guidance for the full
year 2020 of $360 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 June 23, 2020 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 call the
following numbers 10 minutes before the call start time and ask to
be connected to the "China Automotive Systems" conference call:
US Toll
Free:
|
+1-877-407-8031
|
International:
|
+1-201-689-8031
|
China (toll
free):
|
+ 86 400 120
2840
|
A replay of the call will be available on the Company's website
under the investor
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 Chrysler Group LLC 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 May 14, 2020 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 the deteriorating market outlook for automobile sales,
the 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 March
31,
|
|
|
|
2020
|
|
|
2019
|
|
Net product sales
($7,494 and $12,836 sold to related parties for the three
months ended March 31, 2020 and 2019)
|
|
$
|
73,555
|
|
|
$
|
109,193
|
|
Cost of products sold
($3,134 and $5,504 purchased from related parties for
the three months ended March 31, 2020 and 2019)
|
|
|
62,403
|
|
|
|
95,148
|
|
Gross
profit
|
|
|
11,152
|
|
|
|
14,045
|
|
Gain on other
sales
|
|
|
600
|
|
|
|
1,269
|
|
Less: Operating
expenses
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
2,118
|
|
|
|
3,085
|
|
General and
administrative expenses
|
|
|
3,429
|
|
|
|
4,590
|
|
Research and
development expenses
|
|
|
5,053
|
|
|
|
6,602
|
|
Total operating
expenses
|
|
|
10,600
|
|
|
|
14,277
|
|
Income from
operations
|
|
|
1,152
|
|
|
|
1,037
|
|
Other income,
net
|
|
|
117
|
|
|
|
1,407
|
|
Interest
expense
|
|
|
(365)
|
|
|
|
(568)
|
|
Financial expense,
net
|
|
|
(531)
|
|
|
|
(665)
|
|
(Loss)/income before
income tax expenses and equity in earnings of
affiliated companies
|
|
|
373
|
|
|
|
1,211
|
|
Less: Income
taxes
|
|
|
514
|
|
|
|
198
|
|
Equity in
(loss)/earnings of affiliated companies
|
|
|
(347)
|
|
|
|
211
|
|
Net
(loss)/income
|
|
|
(488)
|
|
|
|
1,224
|
|
Net loss attributable
to non-controlling interests
|
|
|
(533)
|
|
|
|
(243)
|
|
Net income
attributable to parent company's common shareholders
|
|
$
|
45
|
|
|
$
|
1,467
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
Net
(loss)/income
|
|
$
|
(488)
|
|
|
$
|
1,224
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
|
Foreign currency
translation (loss)/income, net of tax
|
|
|
(4,961)
|
|
|
|
6,363
|
|
Comprehensive
(loss)/income
|
|
|
(5,449)
|
|
|
|
7,587
|
|
Comprehensive
(loss)/income attributable to non-controlling interests
|
|
|
(897)
|
|
|
|
214
|
|
Comprehensive
(loss)/income attributable to parent company
|
|
$
|
(4,552)
|
|
|
$
|
7,373
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to parent company's common shareholders per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic -
|
|
$
|
-
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
Diluted -
|
|
$
|
-
|
|
|
$
|
0.05
|
|
Weighted average
number of common shares outstanding
|
|
|
|
|
|
|
|
|
Basic
|
|
|
31,174,045
|
|
|
|
31,507,487
|
|
Diluted
|
|
|
31,174,119
|
|
|
|
31,513,297
|
|
China Automotive
Systems, Inc. and Subsidiaries
|
Condensed
Unaudited Consolidated Balance Sheets
|
(In thousands of
USD unless otherwise indicated)
|
|
|
|
March 31,
2020
|
|
|
December 31, 2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
108,171
|
|
|
$
|
76,708
|
|
Pledged
cash
|
|
|
24,398
|
|
|
|
29,688
|
|
Accounts and notes
receivable, net - unrelated parties
|
|
|
182,873
|
|
|
|
211,841
|
|
Accounts and notes
receivable - related parties
|
|
|
13,625
|
|
|
|
21,164
|
|
Inventories
|
|
|
71,158
|
|
|
|
82,931
|
|
Other current
assets
|
|
|
16,885
|
|
|
|
18,833
|
|
Total current
assets
|
|
|
417,110
|
|
|
|
441,165
|
|
Non-current
assets:
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
134,261
|
|
|
|
140,437
|
|
Land use rights,
net
|
|
|
10,121
|
|
|
|
10,346
|
|
Long-term
investments
|
|
|
40,790
|
|
|
|
39,642
|
|
Other non-current
assets
|
|
|
27,395
|
|
|
|
28,374
|
|
Total
assets
|
|
$
|
629,677
|
|
|
$
|
659,964
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Short-term
loans
|
|
$
|
44,057
|
|
|
$
|
46,636
|
|
Accounts and notes
payable - unrelated parties
|
|
|
157,376
|
|
|
|
180,175
|
|
Accounts and notes
payable - related parties
|
|
|
8,391
|
|
|
|
6,492
|
|
Accrued expenses and
other payables
|
|
|
47,547
|
|
|
|
45,337
|
|
Other current
liabilities
|
|
|
24,115
|
|
|
|
25,134
|
|
Total current
liabilities
|
|
|
281,486
|
|
|
|
303,774
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
|
Long-term government
loans
|
|
|
7,057
|
|
|
|
7,167
|
|
Other long-term
payable
|
|
|
3,938
|
|
|
|
4,948
|
|
Long-term tax
payable
|
|
|
26,693
|
|
|
|
26,693
|
|
Other non-current
liabilities
|
|
|
7,901
|
|
|
|
8,010
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
$
|
327,075
|
|
|
$
|
350,592
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.0001
par value - Authorized - 80,000,000 shares;
Issued - 32,338,302 and 32,338,302 shares as of March 31, 2020
and
December 31, 2019, respectively
|
|
$
|
3
|
|
|
$
|
3
|
|
Additional paid-in
capital
|
|
|
64,400
|
|
|
|
64,429
|
|
Retained
earnings-
|
|
|
|
|
|
|
|
|
Appropriated
|
|
|
11,265
|
|
|
|
11,265
|
|
Unappropriated
|
|
|
220,493
|
|
|
|
221,237
|
|
Accumulated other
comprehensive income
|
|
|
(8,059)
|
|
|
|
(3,462)
|
|
Treasury stock
–1,164,257 and 1,164,257 shares as of March 31, 2020
and December 31, 2019, respectively
|
|
|
(4,261)
|
|
|
|
(4,261)
|
|
Total parent company
stockholders' equity
|
|
|
283,841
|
|
|
|
289,211
|
|
Non-controlling
interests
|
|
|
18,761
|
|
|
|
20,161
|
|
Total stockholders'
equity
|
|
|
302,602
|
|
|
|
309,372
|
|
Total liabilities and
stockholders' equity
|
|
$
|
629,677
|
|
|
$
|
659,964
|
|
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,
|
|
|
|
2020
|
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Net
(loss)/income
|
|
$
|
(488)
|
|
|
$
|
1,224
|
|
Adjustments to
reconcile net (loss)/income from operations to
net cash provided by/(used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
5,100
|
|
|
|
3,987
|
|
Reversal of provision
for doubtful accounts
|
|
|
(1)
|
|
|
|
(355)
|
|
Deferred income
taxes
|
|
|
(34)
|
|
|
|
(84)
|
|
Equity in
loss/(earnings) of affiliated companies
|
|
|
347
|
|
|
|
(211)
|
|
Government subsidy
reclassified from government loans
|
|
|
287
|
|
|
|
-
|
|
Loss on fixed assets
disposals
|
|
|
52
|
|
|
|
-
|
|
(Increase)/decrease
in:
|
|
|
|
|
|
|
|
|
Accounts and notes
receivable
|
|
|
33,303
|
|
|
|
(1,977)
|
|
Inventories
|
|
|
10,430
|
|
|
|
(121)
|
|
Other current
assets
|
|
|
(3,455)
|
|
|
|
2,387
|
|
Increase/(decrease)
in:
|
|
|
|
|
|
|
|
|
Accounts and notes
payable
|
|
|
(18,047)
|
|
|
|
(21,299)
|
|
Accrued expenses and
other payables
|
|
|
2,557
|
|
|
|
(2,208)
|
|
Other current
liabilities
|
|
|
(824)
|
|
|
|
443
|
|
Net cash provided
by/(used in) operating activities
|
|
|
29,227
|
|
|
|
(18,214)
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Increase in demand
loans and employee housing loans
included in other non-current assets
|
|
|
(212)
|
|
|
|
(249)
|
|
Cash received from
property, plant and equipment sales
|
|
|
242
|
|
|
|
834
|
|
Payments to acquire
property, plant and equipment (including
$242 and $760 paid to related parties for the three months
ended March 31, 2020 and 2019, respectively)
|
|
|
(1,976)
|
|
|
|
(8,777)
|
|
Payments to acquire
intangible assets
|
|
|
-
|
|
|
|
(1,194)
|
|
Investment under the
equity method
|
|
|
(2,579)
|
|
|
|
-
|
|
Purchase of
short-term investments
|
|
|
-
|
|
|
|
(15,563)
|
|
Proceeds from
maturities of short-term investments
|
|
|
5,781
|
|
|
|
14,901
|
|
Cash received from
long-term investment
|
|
|
448
|
|
|
|
-
|
|
Net cash provided
by/(used in) investing activities
|
|
|
1,704
|
|
|
|
(10,048)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from bank
loans
|
|
|
14,368
|
|
|
|
15,275
|
|
Repayments of bank
loans
|
|
|
(16,247)
|
|
|
|
(11,881)
|
|
Repayments of the
borrowing for sale and leaseback transaction
|
|
|
(1,028)
|
|
|
|
(1,063)
|
|
Repurchase of common
shares
|
|
|
-
|
|
|
|
(342)
|
|
Net cash (used
in)/provided by financing activities
|
|
|
(2,907)
|
|
|
|
1,989
|
|
Effects of exchange
rate on cash, cash equivalents and pledged
cash
|
|
|
(1,851)
|
|
|
|
1,980
|
|
Net
increase/(decrease) in cash, cash equivalents and pledged
cash
|
|
|
26,173
|
|
|
|
(24,293)
|
|
Cash, cash
equivalents and pledged cash at beginning of the
period
|
|
|
106,396
|
|
|
|
115,969
|
|
Cash, cash
equivalents and pledged cash at end of the period
|
|
$
|
132,569
|
|
|
$
|
91,676
|
|
View original
content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-2020-first-quarter-results-301081567.html
SOURCE China Automotive Systems, Inc.