Market Overview

China Automotive Systems Reports 2020 First Quarter Results

Share:

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


 

 

Cision View original content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-2020-first-quarter-results-301081567.html

SOURCE China Automotive Systems, Inc.

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com