China Automotive Systems Reports Third Quarter 2015 Results
WUHAN, China, Nov. 12, 2015 /PRNewswire/ -- China Automotive Systems, Inc. ("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, 2015.
Third Quarter 2015 Highlights
- Net sales were $90.8 million, compared to $101.7 million in the third quarter of 2014.
- Gross margin was 17.5%.
- Net income attributable to parent company's common shareholders was $4.3 million, or diluted earnings per share of $0.13, compared to net income attributable to parent company's common shareholders of $6.7 million, or diluted earnings per share of $0.24 in the third quarter of 2014.
First Nine Months of 2015 Highlights
- Net sales were $323.5 million, compared to $331.5 million in the first nine months of 2014.
- Gross margin was 18.4%.
- Operating margin was 7.0%.
- Diluted earnings per share attributable to parent company's common shareholders was $0.64.
- Cash and cash equivalents, pledged cash deposits and short-term investments were $132.5 million as of September 30, 2015.
- Net cash flow from operating activities was $24.1 million, compared to $8.1 million for the first nine months of 2014.
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "The third quarter was more challenging than usual for China's automobile sector due to the turbulence in the Chinese stock market, poor consumer confidence driven by the slowdown of the Chinese economy; and the depreciation of China's currency against the U.S. dollar. In September, passenger vehicle sales showed signs of recovery but the commercial vehicle market continued to suffer a decline. Fortunately, we were able to offset some of the impact of the market decline with 123% sales growth in our electronic power steering system (EPS) which accounted for 22.4% of our total sales in the third quarter. While we are encouraged by the growing adoption of EPS in China, our sales team is targeting many more OEMs with our EPS products. We expanded our production capacities in compliance with the US OEM standard, since we anticipate more contracts from the North American market in the foreseeable future. Our facility in Brazil is now undergoing final testing and we expect to enter into mass production in Brazil in 2016."
"In early October, the Chinese government announced an incentive plan that includes 50% purchase tax reductions that are intended to stimulate the passenger vehicle sector. We believe that this new policy will help revitalize the auto market in China after three consecutive weak quarters. As we are the main supplier to many OEMs in China, we are well positioned to benefit from this new policy," Mr. Wu concluded.
Mr. Jie Li, chief financial officer of CAAS, commented, "Due to our much improved operating cash flow, we continued to strengthen our balance sheet. More than half of our total receivables were represented by notes receivable and endorsed by large commercial banks at the end of third quarter, and we are confident about the full collection of our outstanding accounts receivable. As usual, we closely track our return on capital to maintain a solid return and increase shareholder value."
Third Quarter of 2015
In the third quarter of 2015, net sales were $90.8 million, compared to $101.7 million in the same quarter of 2014. The net sales decline was mainly due to the decreased auto sales in a weak economic environment.
Gross profit was $15.9 million in the third quarter of 2015, compared to $20.6 million in the third quarter of 2014. The gross margin was 17.5% in the third quarter of 2015, versus 20.2% in the third quarter of 2014. The decrease in gross margin was mainly due to weaker unit volume sales and lower average selling price adjustment.
Gain on other sales was $0.9 million, compared with $1.1 million in the third quarter of 2014.
Selling expenses were $3.3 million in the third quarter of 2015, compared to $3.7 million in the third quarter of 2014. Selling expenses represented 3.7% of net sales in the third quarter of 2015, compared to 3.7% in the third quarter of 2014.
General and administrative expenses ("G&A expenses") decreased by 17.5% to $3.1 million in the third quarter of 2015, compared to $3.7 million in the same quarter of 2014. G&A expenses represented 3.4% of net sales in the third quarter of 2015 and 3.7% in the third quarter of 2014. The Company continued to implement cost control measures.
Research and development expenses ("R&D expenses") were $5.4 million in the third quarter of 2015, flat from $5.4 million in the third quarter of 2014. R&D expenses represented 6.0% of net sales in the third quarter of 2015 compared with 5.3% in the third quarter of 2014. The higher R&D expenses as a percentage of revenue was mainly due to the lower revenue base in the third quarter of 2015. The Company continued to develop EPS products and improve in production equipment.
Net financial income was $0.5 million in the third quarter of 2015 compared to net financial income of $1.1 million in the third quarter of 2014.
Income from operations was $5.0 million in the third quarter of 2015, compared to $8.8 million in the same quarter of 2014. The decrease was mainly due to the lower revenue in the 2015 third quarter compared with the same quarter of 2014.
Income before income tax expenses and equity in earnings of affiliated companies was $5.2 million in the third quarter of 2015, compared to $9.3 million in the third quarter of 2014. The decrease in income before income tax expenses and equity in earnings of affiliated companies was mainly due to lower operating income in the third quarter of 2015, compared with the third quarter of 2014.
Net income attributable to parent company's common shareholders was $4.3 million in the third quarter of 2015, compared to net income attributable to parent company's common shareholders of $6.7 million in the third quarter of 2014. Diluted earnings per share were $0.13 in the third quarter of 2015, compared to diluted earnings per share of $0.24 in the third quarter of 2014.
The weighted average number of diluted common shares outstanding was 32,134,839 in the third quarter of 2015, compared to 28,063,661 in the third quarter of 2014.
First Nine Months of 2015
Net sales for the first nine months of 2015 were $323.5 million, compared to $331.5 million in the first nine months of 2014. Nine-month gross profit was $59.4 million, compared to $63.5 million in the corresponding period last year. Nine-month gross margin was 18.4%, compared to 19.2% for the corresponding period in 2014. For the nine months ended September 30, 2015, gain on other sales amounted to $3.2 million, compared to $10.3 million for the corresponding period in 2014, which included a one-time gain of $7.5 million on sales of land use rights. Income from operations was $22.6 million compared to $35.1 million in the first nine months of 2014. Operating margin was 7.0%, compared to 10.6% for the corresponding period of 2014, or 8.3% after excluding the one-time gain of $7.5 million (non-GAAP measurement). Net income attributable to parent company's common shareholders was $20.5 million compared with $24.5 million in the corresponding period last year. Diluted earnings per share were $0.64 in the first nine months of 2015, compared to diluted earnings per share of $0.87 for the corresponding period in 2014. Excluding the one-time net income of $5.1 million on the sale of land use rights, net income attributable to parent company's common shareholders and diluted earnings per share would have been $19.4 million and $0.69 respectively for the first nine months of 2014(non-GAAP measurement).
Balance Sheet
As of September 30, 2015, total cash and cash equivalents, pledged cash deposits and short-term investments were $132.5 million, total accounts receivable including notes receivable were $273.9 million, accounts payable were $192.5 million and bank and government loans were $45.0 million. Total parent company stockholders' equity was $305.9 million as of September 30, 2015, compared to $298.2 million as of December 31, 2014. Net cash flow from operating activities was $24.1 million, compared to $8.1 million for the first nine months in 2014.
Business Outlook
Management has reiterated the revenue guidance for the full year 2015 to be even with 2014. 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, 2015 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: |
+1-800 894 5910 (North America) |
|
Phone Number: |
+1-785 424 1052 (International) |
A telephone replay of the call will be available after the conclusion of the conference call through 11:59 P.M. EST on December 12, 2015. The dial-in details for the replay are:
|
U.S. Toll Free Number |
+1-800 723 5792 |
|
International dial-in number |
+1-402 220 2664 |
|
Use Conference ID "CHINA" to access the replay. | |
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 5.0 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 26, 2015, 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: [email protected]
Investor Relations Email: [email protected]
|
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, | |||||||
|
2015 |
2014 | ||||||
|
Net product sales, including $8,137 and $11,890 to related parties for the three months ended September 30, 2015 and 2014 |
$ |
90,845 |
$ |
101,735 | |||
|
Cost of products sold, including $5,721 and $6,069 purchased from relatedparties for the three months ended September 30, 2015 and 2014 |
74,933 |
81,152 | |||||
|
Gross profit |
15,912 |
20,583 | |||||
|
Gain on other sales |
877 |
1,132 | |||||
|
Less: Operating expenses |
|||||||
|
Selling expenses |
3,319 |
3,734 | |||||
|
General and administrative expenses |
3,080 |
3,734 | |||||
|
Research and development expenses |
5,440 |
5,441 | |||||
|
Total operating expenses |
11,839 |
12,909 | |||||
|
Income from operations |
4,950 |
8,806 | |||||
|
Other income, net |
221 |
113 | |||||
|
Interest expense |
(501) |
(728) | |||||
|
Financial income, net |
556 |
1,140 | |||||
|
Income before income tax expenses and equity in earnings of affiliated companies |
5,226 |
9,331 | |||||
|
Less: Income taxes |
945 |
1,387 | |||||
|
Equity in earnings of affiliated companies |
100 |
82 | |||||
|
Net income |
4,381 |
8,026 | |||||
|
Net income attributable to non-controlling interests |
93 |
1,293 | |||||
|
Net income attributable to parent company's common shareholders |
$ |
4,288 |
$ |
6,733 | |||
|
Comprehensive income: |
|||||||
|
Net income |
$ |
4,381 |
$ |
8,026 | |||
|
Other comprehensive income: |
|||||||
|
Foreign currency translation (loss) gain, net of tax |
(12,477) |
9 | |||||
|
Comprehensive (loss) income |
(8,096) |
8,035 | |||||
|
Comprehensive (loss) income attributable to non-controlling interests |
(483) |
1,293 | |||||
|
Comprehensive (loss) income attributable to parent company |
$ |
(7,613) |
$ |
6,742 | |||
|
Net income attributable to parent company's common shareholders per share |
|||||||
|
Basic – |
$ |
0.13 |
$ |
0.24 | |||
|
Diluted- |
$ |
0.13 |
$ |
0.24 | |||
|
Weighted average number of common shares outstanding |
|||||||
|
Basic |
32,121,019 |
28,043,019 | |||||
|
Diluted |
32,134,839 |
28,063,661 | |||||
|
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, | |||||||
|
2015 |
2014 | ||||||
|
Net product sales, including $28,076 and $38,627 to related parties for the nine months ended September 30, 2015 and 2014 |
$ |
323,455 |
$ |
331,517 | |||
|
Cost of products sold, including $18,359 and $ 20,721 purchased from related parties for the nine months ended September 30, 2015 and 2014 |
264,080 |
268,013 | |||||
|
Gross profit |
59,375 |
63,504 | |||||
|
Gain on other sales |
3,248 |
10,267 | |||||
|
Less: Operating expenses |
|||||||
|
Selling expenses |
10,989 |
11,104 | |||||
|
General and administrative expenses |
11,316 |
11,056 | |||||
|
Research and development expenses |
17,746 |
16,509 | |||||
|
Total operating expenses |
40,051 |
38,669 | |||||
|
Income from operations |
22,572 |
35,102 | |||||
|
Other income, net |
587 |
491 | |||||
|
Interest expense |
(1,040) |
(1,552) | |||||
|
Financial income, net |
2,018 |
2,150 | |||||
|
Income before income tax expenses and equity in earnings of affiliated companies |
24,137 |
36,191 | |||||
|
Less: Income taxes |
4,001 |
6,488 | |||||
|
Equity in earnings of affiliated companies |
264 |
220 | |||||
|
Net income |
20,400 |
29,923 | |||||
|
Net (loss) income attributable to non-controlling interests |
(56) |
5,409 | |||||
|
Net income attributable to parent company's common shareholders |
$ |
20,456 |
$ |
24,514 | |||
|
Comprehensive income: |
|||||||
|
Net income |
$ |
20,400 |
$ |
29,923 | |||
|
Other comprehensive income: |
|||||||
|
Foreign currency translation loss, net of tax |
(12,316) |
(2,413) | |||||
|
Comprehensive income |
8,084 |
27,510 | |||||
|
Comprehensive (loss) income attributable to non-controlling interests |
(649) |
5,006 | |||||
|
Comprehensive income attributable to parent company |
$ |
8,733 |
$ |
22,504 | |||
|
Net income attributable to parent company's common shareholders per share |
|||||||
|
Basic – |
$ |
0.64 |
$ |
0.87 | |||
|
Diluted- |
$ |
0.64 |
$ |
0.87 | |||
|
Weighted average number of common shares outstanding |
|||||||
|
Basic |
32,121,019 |
28,043,019 | |||||
|
Diluted |
32,136,003 |
28,063,846 | |||||
|
China Automotive Systems, Inc. and Subsidiaries | |||||||
|
Condensed Unaudited Consolidated Balance Sheets | |||||||
|
(In thousands of USD unless otherwise indicated) | |||||||
|
September 30, 2015 |
December 31, 2014 | ||||||
|
ASSETS |
|||||||
|
Current assets: |
|||||||
|
Cash and cash equivalents |
$ |
76,064 |
$ |
68,505 | |||
|
Pledged cash deposits |
29,675 |
33,633 | |||||
|
Short-term investments |
26,801 |
41,017 | |||||
|
Accounts and notes receivable, net - unrelated parties |
242,510 |
282,348 | |||||
|
Accounts and notes receivable, net - related parties |
31,423 |
22,760 | |||||
|
Advance payments and others - unrelated parties |
3,673 |
2,124 | |||||
|
Advance payments and others - related parties |
812 |
741 | |||||
|
Inventories |
67,067 |
64,419 | |||||
|
Current deferred tax assets |
7,244 |
7,078 | |||||
|
Total current assets |
485,269 |
522,625 | |||||
|
Non-current assets: |
|||||||
|
Property, plant and equipment, net |
76,012 |
82,466 | |||||
|
Intangible assets, net |
2,973 |
3,419 | |||||
|
Other receivables, net - unrelated parties |
3,585 |
1,619 | |||||
|
Other receivables, net - related parties |
3 |
76 | |||||
|
Advance payment for property, plant and equipment - unrelated parties |
13,658 |
6,755 | |||||
|
Advance payment for property, plant and equipment - related parties |
6,185 |
2,085 | |||||
|
Long-term investments |
6,203 |
4,575 | |||||
|
Goodwill |
621 |
645 | |||||
|
Non-current deferred tax assets |
5,388 |
4,896 | |||||
|
Total assets |
$ |
599,897 |
$ |
629,161 | |||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
|
Current liabilities: |
|||||||
|
Bank and government loans |
$ |
44,982 |
$ |
43,988 | |||
|
Accounts and notes payable - unrelated parties |
186,286 |
213,090 | |||||
|
Accounts and notes payable - related parties |
6,233 |
4,857 | |||||
|
Customer deposits |
1,477 |
1,885 | |||||
|
Accrued payroll and related costs |
6,259 |
7,554 | |||||
|
Accrued expenses and other payables |
33,835 |
35,429 | |||||
|
Accrued pension costs |
4,535 |
5,586 | |||||
|
Taxes payable |
7,580 |
11,557 | |||||
|
Amounts due to shareholders/directors |
358 |
380 | |||||
|
Current deferred tax liabilities |
177 |
189 | |||||
|
Total current liabilities |
291,722 |
324,515 | |||||
|
Long-term liabilities: |
|||||||
|
Advances payable |
1,960 |
6,156 | |||||
|
Non-current deferred tax liabilities |
280 |
321 | |||||
|
Total liabilities |
$ |
293,962 |
$ |
330,992 | |||
|
Commitments and Contingencies |
|||||||
|
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, 2015 and December 31, 2014, respectively |
$ |
3 |
$ |
3 | |||
|
Additional paid-in capital |
64,522 |
64,522 | |||||
|
Retained earnings- |
|||||||
|
Appropriated |
10,349 |
10,178 | |||||
|
Unappropriated |
199,720 |
179,435 | |||||
|
Accumulated other comprehensive income |
24,396 |
36,119 | |||||
|
Treasury stock – 217,283 and 217,283 shares as of September 30, 2015 and December 31, 2014, respectively |
(1,000) |
(1,000) | |||||
|
Total parent company stockholders' equity |
297,990 |
289,257 | |||||
|
Non-controlling interests |
7,945 |
8,912 | |||||
|
Total stockholders' equity |
305,935 |
298,169 | |||||
|
Total liabilities and stockholders' equity |
$ |
599,897 |
$ |
629,161 | |||
|
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, | ||||||
|
2015 |
2014 | |||||
|
Cash flows from operating activities: |
||||||
|
Net income |
$ |
20,400 |
$ |
29,923 | ||
|
Adjustments to reconcile net income from operations to net cash provided by operating activities: |
||||||
|
Stock-based compensation |
- |
193 | ||||
|
Depreciation and amortization |
11,509 |
11,592 | ||||
|
Increase (decrease) in allowance for doubtful accounts |
(124) |
177 | ||||
|
Inventory write downs |
1,522 |
2,531 | ||||
|
Deferred income taxes |
(1,180) |
(907) | ||||
|
Equity in earnings of affiliated companies |
(236) |
(182) | ||||
|
Loss (gain) on fixed assets disposals |
2 |
(7,500) | ||||
|
Changes in operating assets and liabilities: |
||||||
|
(Increase) decrease in: |
||||||
|
Pledged deposits |
2,696 |
1,953 | ||||
|
Accounts and notes receivable |
19,801 |
(19,173) | ||||
|
Advance payments and others |
(1,741) |
328 | ||||
|
Inventories |
(6,723) |
(17,449) | ||||
|
Increase (decrease) in: |
||||||
|
Accounts and notes payable |
(17,021) |
2,363 | ||||
|
Customer deposits |
(381) |
1,313 | ||||
|
Accrued payroll and related costs |
(1,068) |
(423) | ||||
|
Accrued expenses and other payables |
1,109 |
597 | ||||
|
Accrued pension costs |
(842) |
1,460 | ||||
|
Taxes payable |
(3,671) |
1,257 | ||||
|
Advances payable |
- |
8 | ||||
|
Net cash provided by operating activities |
24,052 |
8,061 | ||||
|
Cash flows from investing activities: |
||||||
|
Increase in other receivables |
(1,965) |
(347) | ||||
|
Cash received from property, plant and equipment sales |
573 |
6,994 | ||||
|
Payments to acquire property, plant and equipment |
(24,077) |
(11,317) | ||||
|
Payments to acquire intangible assets |
(947) |
(252) | ||||
|
Purchase of short-term investments |
(12,264) |
(46,192) | ||||
|
Proceeds from maturities of short-term investments |
25,038 |
38,115 | ||||
|
Acquisition of Fujian Qiaolong, net of cash acquired |
- |
(2,976) | ||||
|
Investment under cost method |
(1,636) |
- | ||||
|
Net cash used in investing activities |
(15,278) |
(15,975) | ||||
|
Cash flows from financing activities: |
||||||
|
Proceeds from government and bank loan |
11,420 |
15,836 | ||||
|
Repayments of bank loan |
(8,685) |
(9,590) | ||||
|
Dividends paid to the non-controlling interest holders |
(1,121) |
(6,048) | ||||
|
Dividends paid to the holders of the Company's common stock |
- |
(4,291) | ||||
|
Increase (decrease) in amounts due to shareholders/directors |
(252) |
69 | ||||
|
Net cash provided by (used in) financing activities |
1,362 |
(4,024) | ||||
|
Effects of exchange rates on cash and cash equivalents |
(2,577) |
(472) | ||||
|
Net increase (decrease) in cash and cash equivalents |
7,559 |
(12,410) | ||||
|
Cash and cash equivalents at beginning of period |
68,505 |
53,979 | ||||
|
Cash and cash equivalents at end of period |
$ |
76,064 |
$ |
41,569 | ||
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-third-quarter-2015-results-300177483.html
SOURCE China Automotive Systems, Inc.