China Automotive Systems Reports 2018 Second Quarter Unaudited Financial Results

China Automotive Systems Reports 2018 Second Quarter Unaudited Financial Results

PR Newswire

WUHAN, China, Aug. 9, 2018 /PRNewswire/ -- China Automotive Systems, Inc. ("CAAS" or the "Company") CAAS, a leading power steering components and systems supplier in China, today announced its unaudited financial results for the second quarter and six months ended June 30, 2018.

Second Quarter 2018 Highlights

  • Net sales increased 6.9% to $125.8 million from $117.7 million in the second quarter of 2017;
  • Gross profit declined 29.3% to $17.0 million and the gross margin decreased to 13.5% from 20.4% in the second quarter of 2017;
  • Income from operations decreased to $0.6 million with an operating margin of 0.5% compared with 9.4% in the second quarter of 2017;
  • Net income attributable to parent company's common shareholders declined to $0.8 million, or diluted earnings per share of $0.03, compared to net income attributable to parent company's common shareholders of $8.9 million, or diluted earnings per share of $0.28, in the second quarter of 2017.

First Six Months of 2018 Highlights

  • Net sales grew 9.6% to $259.8 million, compared to $237.0 million in the first six months of 2017;
  • Gross profit decreased to $38.7 million, compared to $45.7 million in the first six months of 2017; gross margin decreased to 14.9% in the first six months of 2018, compared to 19.3% in the first six months of 2017;
  • Income from operations decreased to $5.2 million from $18.3 million with an operating margin of 2.0% compared with 7.7% in the second quarter of 2017;
  • Net income attributable to parent company's common shareholders was $5.2 million from $14.6 million in the first six months of 2017; diluted earnings per share attributable to parent company's common shareholders was $0.16, compared to diluted earnings per share attributable to parent company's common shareholders of $0.46 in the first six months of 2017;
  • Net cashflow used in operating activities was $5.4 million compared with net cashflow provided of $22.1 million in the first six months of 2017.

Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Our sales in the second quarter of 2018 reflect higher sales of our traditional steering products.  We continue to invest more resources to develop new generations of electric power steering ("EPS") products and other advanced steering products for future growth."

Mr. Jie Li, chief financial officer of CAAS, commented, "We continue to enhance our financial resources while we build advanced steering products to offer a broader line of steering products to meet the changing requirements of our customers."

Second Quarter of 2018

In the second quarter of 2018, net sales increased 6.9% to $125.8 million, compared to $117.7 million in the same quarter of 2017. Net sales of traditional steering products grew by 8.5% and the Company sold more products to its North American customers. Sales of electric power steering ("EPS") represented 21.4% of total net sales.

Gross profit decreased to $17.0 million in the second quarter of 2018, compared to $24.1 million in the second quarter of 2017. The gross margin was 13.5% in the second quarter of 2018, versus 20.4% in the second quarter of 2017. The gross margin decreased mainly due to a lower sales price, higher unit cost and the change in product mix. 

Gain on other sales was $1.0 million in the second quarter of 2018, compared to $4.6 million in the second quarter of 2017. The decrease was due to the fact that during the second quarter of 2017, the Company disposed of a building located in Jingzhou and recognized a gain of $2.2 million.

Selling expenses were $4.9 million in the second quarter of 2018, compared to $4.6 million in the second quarter of 2017. The increase was mainly due to higher logistics expenses related to increased sales during the quarter. Selling expenses represented 3.9% of net sales in the second quarter of 2018 and in the second quarter of 2017. 

General and administrative expenses ("G&A expenses") were $4.4 million in the second quarter of 2018 compared to $5.3 million in the second quarter of 2017. G&A expenses represented 3.5% of net sales in the second quarter of 2018 compared to 4.5% in the second quarter of 2017. The decrease was mainly due to a lower allowance for doubtful accounts. 

Research and development expenses ("R&D expenses") increased 5.2% to $8.1 million in the second quarter of 2018, compared to $7.7 million in the second quarter of 2017. R&D expenses continue to focus on the development of the Company's EPS and other new products. R&D expenses represented 6.4% of sales in the second quarter of 2018, compared with 6.6% in the 2017 second quarter.

Net financial income in the second quarter of 2018 was $0.9 million compared with $0.6 million in the second quarter of 2017.

Income from operations was $0.6 million in the second quarter of 2018, compared to $11.1 million in the same quarter of 2017. The decrease was primarily due to lower gross profit and lower gain on other sales. As a percentage of net sales, the operating margin was 0.5% in the second quarter of 2018, compared to 9.4% in the second quarter of 2017.

Income before income tax expenses and equity in earnings of affiliated companies was $1.3 million in the second quarter of 2018, compared to $11.1 million in the second quarter of 2017. 

Net income attributable to parent company's common shareholders was $0.8 million in the second quarter of 2018, compared to net income attributable to parent company's common shareholders of $8.9 million in the corresponding quarter of 2017. Diluted earnings per share were $0.03 in the second quarter of 2018, compared to diluted earnings per share of $0.28 in the second quarter of 2017. The weighted average number of diluted common shares outstanding was 31,647,305 in the second quarter of 2018, compared to 31,649,322 in the second quarter of 2017.

First Six Months of 2018

Net sales increased 9.6% to $259.8 million in the first six months of 2018, compared to $237.0 million in the first six months of 2017. Six-month gross profit was $38.7 million, compared to $45.7 million in the corresponding period last year. Six-month gross margin was 14.9% in the first six months of 2018 compared to 19.3% in the corresponding period in 2017. The gain on other sales was $2.5 million in the first six months of 2018 compared with $5.3 million in the corresponding period last year. Income from operations was $5.2 million in the first six months of 2018, compared to $18.3 million in the first six months of 2017. Operating margin was 2.0% in the first six months of 2018, compared to 7.7% in the corresponding period of 2017. 

Net income attributable to parent company's common shareholders was $5.2 million in the first six months of 2018, compared to $14.6 million in the corresponding period in 2017. Diluted earnings per share were $0.16 in the first six months of 2018, compared to diluted earnings per share of $0.46 in the corresponding period of 2017.

As of June 30, 2018, cash and equivalents, pledged cash and short-term investments were $112.4 million. Total accounts receivable including notes receivable were $283.6 million. Accounts payable were $219.4 million and short-term loans were $57.1 million. Total parent company stockholders' equity was $306.4 million as of June 30, 2018, compared to $306.1 million as of December 31, 2017.

Net cash used in operating activities was $5.4 million in the first six months of 2018 compared with net cash provided by operating activities of $22.1 million in the first six months of 2017. Payments to acquire property, plant and equipment were $17.3 million compared with $10.2 million in the first six months of 2017.

Business Outlook

Management reiterated its revenue guidance for the full year 2018 of US$520 million. This target is based on the Company's current views on operating and market conditions, which are subject to change.

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 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 29, 2018, 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

+1-212-521-4050

kevin.theiss@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 June 30,







2018





2017



Net product sales ($10,856 and $8,583 sold to related parties for the three months

ended June 30, 2018 and 2017)



$

125,782





$

117,660



Cost of products sold ($7,428 and $6,283 purchased from related parties for the

three months ended June 30, 2018 and 2017)





108,761







93,599



Gross profit





17,021







24,061



Gain on other sales





977







4,555



Less: Operating expenses

















Selling expenses





4,887







4,555



General and administrative expenses





4,442







5,283



Research and development expenses





8,085







7,707



Total operating expenses





17,414







17,545



Income from operations





584







11,071



Other income





600







152



Interest expense





(801)







(644)



Financial income, net





897







550



Income before income tax expenses and equity in earnings of affiliated companies





1,280







11,129



Less: Income taxes





202







2,186



Equity in losses of affiliated companies





(82)







(62)



Net income





996







8,881



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





149







(40)



Net income attributable to parent company's common shareholders



$

847





$

8,921



Comprehensive income:

















Net income



$

996





$

8,881



Other comprehensive income:

















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





(17,467)







5,814



Comprehensive (loss)/income





(16,471)







14,695



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





(431)







155



Comprehensive (loss)/income attributable to parent company



$

(16,040)





$

14,540





















Net income attributable to parent company's common shareholders per share



































Basic –



$

0.03





$

0.28





















Diluted-



$

0.03





$

0.28



Weighted average number of common shares outstanding

















Basic





31,644,004







31,644,004



Diluted





31,647,305







31,649,322



 

 

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)







Six Months Ended June 30,







2018





2017



Net product sales ($21,702 and $18,121 sold to related parties for the six months

ended June 30, 2018 and 2017)



$

259,800





$

236,968



Cost of products sold ($15,677 and $13,646 purchased from related parties for the six

months ended June 30, 2018 and 2017)





221,140







191,278



Gross profit





38,660







45,690



Gain on other sales





2,490







5,343



Less: Operating expenses

















Selling expenses





10,714







8,623



General and administrative expenses





8,866







9,637



Research and development expenses





16,392







14,472



Total operating expenses





35,972







32,732



Income from operations





5,178







18,301



Other income/(expense), net





1,221







(102)



Interest expense





(1,216)







(875)



Financial income, net





132







882



Income before income tax expenses and equity in earnings of affiliated companies





5,315







18,206



Less: Income taxes





790







3,376



Equity in earnings/(losses) of affiliated companies





503







(11)



Net income





5,028







14,819



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





(131)







184



Net income attributable to parent company's common shareholders



$

5,159





$

14,635



Comprehensive income:

















Net income



$

5,028





$

14,819



Other comprehensive income:

















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





(4,225)







7,443



Comprehensive income





803







22,262



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





(195)







433



Comprehensive income attributable to parent company



$

998





$

21,829





















Net income attributable to parent company's common shareholders per share



































Basic –



$

0.16





$

0.46





















Diluted-



$

0.16





$

0.46



Weighted average number of common shares outstanding

















Basic





31,644,004







31,644,004



Diluted





31,645,655







31,649,615



 

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Balance Sheets

(In thousands of USD unless otherwise indicated)







June 30, 2018





December 31, 2017



ASSETS

















Current assets:

















Cash and cash equivalents



$

58,682





$

64,558



Pledged cash





26,803







31,535



Short-term investments





26,902







29,587



Accounts and notes receivable, net - unrelated parties





262,733







274,989



Accounts and notes receivable, net - related parties





20,826







19,086



Advance payments and others - unrelated parties





12,464







12,790



Advance payments and others - related parties





1,006







20,841



Inventories





90,594







79,217



Total current assets





500,010







532,603



Non-current assets:

















Property, plant and equipment, net





131,100







126,033



Intangible assets, net





549







661



Other receivables, net - unrelated parties





945







2,188



Advance payment for property, plant and equipment - unrelated parties





6,971







9,657



Advance payment for property, plant and equipment - related parties





6,672







5,264



Long-term investments





33,479







27,596



Deferred tax assets





13,270







13,367



Total assets



$

692,996





$

717,369





















LIABILITIES AND STOCKHOLDERS' EQUITY

















Current liabilities:

















Short-term loans



$

57,073





$

72,711



Accounts and notes payable - unrelated parties





212,436







233,048



Accounts and notes payable - related parties





6,913







7,168



Customer deposits





762







1,128



Accrued payroll and related costs





7,372







8,577



Accrued expenses and other payables





41,499







40,127



Accrued pension costs





3,876







4,051



Taxes payable





10,408







5,927



Amounts due to shareholders/directors





336







343



Advances payable (current portion)





378







383



Total current liabilities





341,053







373,463



Long-term liabilities:

















Long-term loans





302







306



Advances payable





355







359



Other long-term payable





10,843







-



Long-term tax payable





29,874







32,719



Deferred tax liabilities





4,175







4,393



Total liabilities



$

386,602





$

411,240

























































Stockholders' equity:

















Common stock, $0.0001 par value - Authorized - 80,000,000 shares; Issued

– 32,338,302 and 32,338,302 shares as of June 30, 2018 and December 31,

2017, respectively



$

3





$

3



Additional paid-in capital





64,406







64,406



Retained earnings-

















Appropriated





10,830







10,707



Unappropriated





214,495







209,459



Accumulated other comprehensive income





13,619







17,780



Treasury stock – 694,298 and 694,298 shares as of June 30, 2018 and

December 31, 2017, respectively





(2,907)







(2,907)



Total parent company stockholders' equity





300,446







299,448



Non-controlling interests





5,948







6,681



Total stockholders' equity





306,394







306,129



Total liabilities and stockholders' equity



$

692,996





$

717,369



 

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Cash Flows

(In thousands of USD unless otherwise indicated)







Six Months Ended June 30,







2018





2017



Cash flows from operating activities:

















Net income



$

5,028





$

14,819



Adjustments to reconcile net income from operations to net cash provided by

operating activities:

















Depreciation and amortization





8,837







7,809



Increase in provision for doubtful accounts





242







1,008



Inventory write downs





3,456







2,101



Deferred income taxes





(231)







971



Equity in earnings/(losses) of affiliated companies





(503)







11



Loss/(gain) on fixed assets disposals





9







(2,202)



Changes in operating assets and liabilities

















(Increase)/decrease in:

















Accounts and notes receivable





6,644







6,570



Advance payments and others





(1,374)







1,241



Inventories





(16,062)







2,104



Increase/(decrease) in:

















Accounts and notes payable





(15,574)







(2,932)



Customer deposits





(345)







(7)



Accrued payroll and related costs





(1,153)







(2)



Accrued expenses and other payables





2,245







(3,028)



Accrued pension costs





(96)







(307)



Taxes payable





3,484







(6,069)



Net cash (used)/provided by operating activities





(5,393)







22,087



Cash flows from investing activities:

















Increase in other receivables





1,190







137



Cash received from property, plant and equipment sales





199







2,334



Payments to acquire property, plant and equipment (including $5,694 and $3,497

paid to related parties for the six months ended June 30, 2018 and 2017,

respectively)





(17,299)







(10,178)



Purchase of short-term investments





(18,502)







(8,069)



Purchase of long-term time deposit





-







(5,836)



Proceeds from maturities of short-term investments





21,687







11,923



Investment under equity method





(5,957)







(730)



Cash received for related party loan repayment





20,430







-



Loan to a related party





-







(29,044)



Net cash provided/(used) in investing activities





1,748







(39,463)



Cash flows from financing activities:

















Proceeds from bank loans





19,672







59,088



Repayments of bank loans





(35,664)







(34,128)



Proceeds from sale and leaseback transaction





11,758







-



Repayments of the borrowing for sale and leaseback transaction





(1,125)







-



Net cash (used)/provided by financing activities





(5,359)







24,960



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





(1,604)







1,466



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





(10,608)







9,050



Cash, cash equivalents and pledged cash at beginning of period





96,093







61,891



Cash, cash equivalents and pledged cash at end of period



$

85,485





$

70,941



 

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Cash Flows (continued)

(In thousands of USD unless otherwise indicated)



SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:







Six months Ended June 30,







2018





2017



Cash paid for interest



$

432





$

354



Cash paid for income taxes





637







4,172





SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:







Six months Ended June 30,







2018





2017



Property, plant and equipment recorded during the period which previously were

advance payments



$

5,419





$

10,310



Accounts payable for acquiring property, plant and equipment





107







709



Dividends payable to non-controlling interests





538







608



 

 

Cision View original content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-2018-second-quarter-unaudited-financial-results-300694539.html

SOURCE China Automotive Systems, Inc.

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