China Automotive Systems (CAAS) Tops Q1 EPS by 14c, Revenues Beat

June 23, 2020 6:03 AM EDT

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China Automotive Systems (NASDAQ: CAAS) reported Q1 EPS of $0.05, $0.14 better than the analyst estimate of ($0.09). Revenue for the quarter came in at $73.6 million versus the consensus estimate of $55.5 million.

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."

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.

For earnings history and earnings-related data on China Automotive Systems (CAAS) click here.



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