China Automotive Systems Reports 45.0% Net Sales Increase in the Second Quarter of 2021
China Automotive Systems, Inc. (NASDAQ: CAAS) reported a strong financial performance for Q2 2021, with net sales rising 45.0% to $120.6 million. Gross profit saw a remarkable increase of 102.6% to $15.8 million, resulting in a gross margin of 13.1%. The company shifted from an operational loss of $5.2 million in Q2 2020 to a small income of $0.1 million in Q2 2021. Net income was $3.2 million, recovering from a net loss of $4.1 million the previous year. For the first half of 2021, net sales grew 60.1% to $250.9 million, prompting management to raise its full-year revenue guidance to $495 million.
- Net sales increased by 45.0% to $120.6 million in Q2 2021.
- Gross profit rose by 102.6% to $15.8 million in Q2 2021.
- Net income of $3.2 million in Q2 2021 compared to a loss of $4.1 million in 2020.
- First six months of 2021 net sales grew by 60.1% to $250.9 million.
- Management raised full-year 2021 revenue guidance to $495 million from $485 million.
- Selling expenses rose by 46.7% to $4.4 million in Q2 2021.
- General and administrative expenses increased to $6.1 million in Q2 2021.
WUHAN, China, Aug. 12, 2021 /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 second quarter and six months ended June 30, 2021.
Second Quarter 2021 Highlights
- Net sales rose
45.0% to$120.6 million from$83.2 million in the second quarter of 2020; - Gross profit increased
102.6% to$15.8 million from$7.8 million in the second quarter of 2020; gross margin was13.1% compared with9.4% in the first quarter of 2020; - Income from operations was
$0.1 million , compare to a loss of$5.2 million in the second quarter of 2020; - Net income attributable to parent company's common shareholders was
$3.2 million , or diluted earnings per share of$0.10 , compared to a net loss attributable to parent company's common shareholders of$4.1 million in the second quarter of 2020.
First Six Months of 2021 Highlights
- Net sales grew by
60.1% to$250.9 million , compared to$156.7 million in the first six months of 2020; - Gross profit increased by
87.4% to$35.6 million , compared to$19.0 million in the first six months of 2020; gross margin increased to14.2% in the first six months of 2021, compared to12.1% in the first six months of 2020; - Income from operations was
$4.3 million compared with a loss from operations of$4.2 million in the first six months of 2020; - Net income attributable to parent company's common shareholders was
$6.4 million compared with a net loss of$4.1 million in the first six months of 2020; diluted earnings per share attributable to parent company's common shareholders was$0.21 , compared to diluted loss per share of$0.13 in the first six months of 2020; - Net cash provided by operating activities was
$5.5 million in the first six months of 2021; - Cash and cash equivalents, and pledged cash were
$117.3 million as of June 30, 2021.
Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Our second quarter 2021 sales continued to achieve robust growth of
"According to statistics from the China Association of Automobile Manufacturers, automobile sales in China rose by
"In the first half of 2021, we have taken actions to improve our strategic position. A new EPS product has been introduced based on proprietary CAAS technologies which connects with vehicle data allowing drivers to better adapt to different road conditions which enhances drivability. Mass production of this product has begun for new vehicle models for Chinese automaker, Great Wall Motors, with other OEMs testing the products for their models.
In addition, the board of directors has approved the plan to purchase a
"To faster penetrate the European market, we entered into the OTOP (Off Tool Off Process) phase of new steering development for the leading European auto brand, Alfa Romeo. This new steering system is for Alfa Romeo's first luxury plug-in-hybrid SUV model, 2021 Tonale. Among its features, the Tonale electric vehicle features Alfa Romeo's first plug-in-hybrid powertrain. Purchase orders approximating 100,000 annual units are anticipated. And our wholly owned subsidiary, Hubei Henglong, recently received the SGS TÜV ISO26262:2018 ASIL-D certification to meet all the requirements by the ISO26262:2018 standard. Receiving a D certification, the highest and most stringent safety standard of SGS, demonstrates our commitment to developing the highest quality and safety in our products, and distinguishes us from other steering companies."
Mr. Jie Li, chief financial officer of CAAS, commented, "We maintained a strong cash position and financial strength in the first half of 2021 with working capital of
Second Quarter of 2021
Net sales increased by
Gross profit rose by
Gain on other sales was
Selling expenses increased by
General and administrative expenses ("G&A expenses") were
Research and development expenses ("R&D expenses") were
Other income, net was
Income from operations was
Interest expense was
Net financial income was
Income before income tax expenses and equity in earnings of affiliated companies was
Net income attributable to parent company's common shareholders was
The weighted average number of diluted common shares outstanding was 30,855,406 in the second quarter of 2021 compared to 31,174,045 in the second quarter of 2020.
First Six Months of 2021
Net sales increased
Net income attributable to parent company's common shareholders was
Balance Sheet
As of June 30, 2021, total cash and cash equivalents, and pledged cash were
Business Outlook
Management raises revenue guidance for the full year 2021 to
Conference Call
Management will conduct a conference call on August 12, 2021 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 relations section.
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 Fiat Chrysler Automobiles (FCA) 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 March 30, 2021, 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.
jieli@chl.com.cn
Kevin Theiss
Awaken Advisors
+1-212-521-4050
Kevin@awakenlab.com
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, | ||||||||
2021 | 2020 | |||||||
Net product sales ( | $ | 120,604 | $ | 83,184 | ||||
Cost of products sold ( | 104,775 | 75,353 | ||||||
Gross profit | 15,829 | 7,831 | ||||||
Gain on other sales | 725 | 838 | ||||||
Less: Operating expenses | ||||||||
Selling expenses | 4,446 | 2,977 | ||||||
General and administrative expenses | 6,063 | 4,759 | ||||||
Research and development expenses | 5,926 | 6,125 | ||||||
Total operating expenses | 16,435 | 13,861 | ||||||
Income from operations | 119 | (5,192) | ||||||
Other income, net | 1,506 | 1,257 | ||||||
Interest expense | (294) | (446) | ||||||
Financial income/(expense), net | 182 | (59) | ||||||
Income/(loss) before income tax expenses and equity in earnings of affiliated companies | 1,513 | (4,440) | ||||||
Less: Income taxes expense/(benefit) | 198 | (31) | ||||||
Add: Equity in earnings of affiliated companies | 1,613 | 169 | ||||||
Net income/(loss) | 2,928 | (4,240) | ||||||
Less: Net loss attributable to non-controlling interests | (279) | (142) | ||||||
Accretion to redemption value of redeemable non-controlling interests | (7) | - | ||||||
Net income/(loss) attributable to parent company's common shareholders | $ | 3,200 | $ | (4,098) | ||||
Comprehensive income: | ||||||||
Net income/(loss) | $ | 2,928 | $ | (4,240) | ||||
Other comprehensive income: | ||||||||
Foreign currency translation income, net of tax | 5,586 | 358 | ||||||
Comprehensive income/(loss) | 8,514 | (3,882) | ||||||
Comprehensive income/(loss) attributable to non-controlling interests | 80 | (86) | ||||||
Accretion to redemption value of redeemable non-controlling interests | (7) | - | ||||||
Comprehensive income/(loss) attributable to parent company | $ | 8,427 | $ | (3,796) | ||||
Net income/(loss) attributable to parent company's common shareholders per share - | ||||||||
Basic | $ | 0.10 | $ | (0.13) | ||||
Diluted | $ | 0.10 | $ | (0.13) | ||||
Weighted average number of common shares outstanding - | ||||||||
Basic | 30,851,776 | 31,174,045 | ||||||
Diluted | 30,855,406 | 31,174,045 | ||||||
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, | ||||||||||
2021 | 2020 | |||||||||
Net product sales ( | $ |
250,945 | $ | 156,739 | ||||||
Cost of products sold ( | 215,368 | 137,756 | ||||||||
Gross profit | 35,577 | 18,983 | ||||||||
Gain on other sales | 2,041 | 1,438 | ||||||||
Less: Operating expenses | ||||||||||
Selling expenses | 10,055 | 5,095 | ||||||||
General and administrative expenses | 10,678 | 8,188 | ||||||||
Research and development expenses | 12,606 | 11,318 | ||||||||
Total operating expenses | 33,339 | 24,601 | ||||||||
Income/(loss) from operations | 4,279 | (4,180) | ||||||||
Other income, net | 3,229 | 1,374 | ||||||||
Interest expense | (637) | (811) | ||||||||
Financial expense, net | (57) | (590) | ||||||||
Income/(loss) before income tax expenses and equity in earnings of affiliated companies | 6,814 | (4,207) | ||||||||
Less: Income taxes expense | 839 | 483 | ||||||||
Add: Equity in earnings/(loss) of affiliated companies | 184 | (178) | ||||||||
Net income/(loss) | 6,159 | (4,868) | ||||||||
Less: Net loss attributable to non-controlling interests | (261) | (742) | ||||||||
Accretion to redemption value of redeemable non-controlling interests | (14) | - | ||||||||
Net income/(loss) attributable to parent company's common shareholders | $ | 6,406 | $ | (4,126) | ||||||
Comprehensive income: | ||||||||||
Net income/(loss) | $ | 6,159 | $ | (4,868) | ||||||
Other comprehensive income: | ||||||||||
Foreign currency translation income/(loss), net of tax | 3,315 | (4,603) | ||||||||
Comprehensive income/(loss) | 9,474 | (9,471) | ||||||||
Comprehensive loss attributable to non-controlling interests | (38) | (1,139) | ||||||||
Accretion to redemption value of redeemable non-controlling interests | (14) | - | ||||||||
Comprehensive income/(loss) attributable to parent company | $ | 9,498 | $ | (8,332) | ||||||
Net income/(loss) attributable to parent company's common shareholders per share - | ||||||||||
Basic | $ | 0.21 | $ | (0.13) | ||||||
Diluted | $ | 0.21 | $ | (0.13) | ||||||
Weighted average number of common shares outstanding - | ||||||||||
Basic | 30,851,776 | 31,174,045 | ||||||||
Diluted | 30,856,571 | 31,174,045 | ||||||||
Share-based compensation included in operating expense above is as follows: | ||||||||||
General and administrative expenses | 88 | - | ||||||||
China Automotive Systems, Inc. and Subsidiaries | ||||||||||
Condensed Unaudited Consolidated Balance Sheets | ||||||||||
(In thousands of USD unless otherwise indicated) | ||||||||||
June 30, | December 31, | |||||||||
ASSETS | ||||||||||
Current assets: | ||||||||||
Cash and cash equivalents | $ | 83,113 | $ | 97,248 | ||||||
Pledged cash | 34,204 | 30,813 | ||||||||
Accounts and notes receivable, net - unrelated parties | 204,782 | 216,519 | ||||||||
Accounts and notes receivable - related parties | 23,679 | 17,621 | ||||||||
Inventories | 95,971 | 88,325 | ||||||||
Other current assets | 34,008 | 25,132 | ||||||||
Total current assets | 475,757 | 475,658 | ||||||||
Non-current assets: | ||||||||||
Property, plant and equipment, net | 135,899 | 141,004 | ||||||||
Land use rights, net | 10,737 | 10,774 | ||||||||
Long-term investments | 45,629 | 49,766 | ||||||||
Other non-current assets | 27,523 | 30,358 | ||||||||
Total assets | $ | 695,545 | $ | 707,560 | ||||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | ||||||||||
Current liabilities: | ||||||||||
Short-term loans | $ | 36,415 | $ | 44,238 | ||||||
Accounts and notes payable-unrelated parties | 208,440 | 212,522 | ||||||||
Accounts and notes payable-related parties | 12,000 | 12,730 | ||||||||
Accrued expenses and other payables | 51,721 | 55,607 | ||||||||
Other current liabilities | 29,339 | 29,387 | ||||||||
Total current liabilities | 337,915 | 354,484 | ||||||||
Long-term liabilities: | ||||||||||
Other long-term payable | - | 1,126 | ||||||||
Long-term tax payable | 21,074 | 23,884 | ||||||||
Other non-current liabilities | 8,153 | 8,151 | ||||||||
Total liabilities | $ | 367,142 | $ | 387,645 | ||||||
Mezzanine equity: | ||||||||||
Redeemable non-controlling interests | 537 | 523 | ||||||||
Stockholders' equity: | ||||||||||
Common stock, | $ | 3 | $ | 3 | ||||||
Additional paid-in capital | 63,731 | 64,273 | ||||||||
Retained earnings- | ||||||||||
Appropriated | 11,303 | 11,303 | ||||||||
Unappropriated | 221,897 | 215,491 | ||||||||
Accumulated other comprehensive income | 20,519 | 17,413 | ||||||||
Treasury stock - 1,486,526 and 1,486,526 shares as of June 30, 2021 and December 31, 2020, | (5,261) | (5,261) | ||||||||
Total parent company stockholders' equity | 312,192 | 303,222 | ||||||||
Non-controlling interests | 15,674 | 16,170 | ||||||||
Total stockholders' equity | 327,866 | 319,392 | ||||||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 695,545 | $ | 707,560 | ||||||
China Automotive Systems, Inc. and Subsidiaries | ||||||||
Condensed Unaudited Consolidated Statements of Cash Flows | ||||||||
(In thousands of USD unless otherwise indicated) | ||||||||
Six Months Ended June | ||||||||
2021 | 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net income/(loss) | $ | 6,159 | $ | (4,868) | ||||
Adjustments to reconcile net income from operations to net cash (used in)/provided by | ||||||||
Share-based compensation | 88 | - | ||||||
Depreciation and amortization | 13,117 | 10,562 | ||||||
Provision/(reversal) of credit losses | 311 | (239) | ||||||
Deferred income taxes | 469 | 21 | ||||||
Equity in gain/(loss) of affiliated companies | (184) | 178 | ||||||
Government subsidy reclassified from government loans | - | 287 | ||||||
Loss on fixed assets disposals | 9 | 42 | ||||||
(Increase)/decrease in: | ||||||||
Accounts and notes receivable | 6,887 | 41,917 | ||||||
Inventories | (7,036) | (1,281) | ||||||
Other current assets | (1,250) | (1,355) | ||||||
Increase/(decrease) in: | ||||||||
Accounts and notes payable | (6,291) | (11,924) | ||||||
Accrued expenses and other payables | (4,030) | 2,683 | ||||||
Long-term taxes payable | (2,809) | (2,809) | ||||||
Other current liabilities | 105 | (1,835) | ||||||
Net cash provided by operating activities | 5,545 | 31,379 | ||||||
Cash flows from investing activities: | ||||||||
Increase in demand loans included in other non-current assets | (137) | (3) | ||||||
Repayment of loan from a related party | 154 | - | ||||||
Cash received from property, plant and equipment sales | 206 | 586 | ||||||
Payments to acquire property, plant and equipment (including | (3,927) | (4,525) | ||||||
Payments to acquire intangible assets | (303) | (390) | ||||||
Investment under the equity method | - | (5,360) | ||||||
Purchase of short-term investments | (31,253) | (27,128) | ||||||
Proceeds from maturities of short-term investments | 23,806 | 5,781 | ||||||
Cash received from long-term investment | 4,785 | 448 | ||||||
Net cash used in by investing activities | (6,669) | (30,591) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from bank loans | 34,990 | 36,135 | ||||||
Repayments of bank loans | (43,081) | (33,890) | ||||||
Repayments of the borrowing for sale and leaseback transaction | (2,217) | (2,041) | ||||||
Cash received from capital contributions by non-controlling interest holder | - | 212 | ||||||
Deemed distribution to shareholders | - | (88) | ||||||
Acquisition of non-controlling interest | (538) | (81) | ||||||
Net cash (used in)/provided by financing activities | (10,846) | 247 | ||||||
Effects of exchange rate on cash, cash equivalents and pledged cash | 1,226 | (1,558) | ||||||
Net decrease in cash, cash equivalents and pledged cash | (10,744) | (523) | ||||||
Cash, cash equivalents and pledged cash at beginning of the period | 128,061 | 106,403 | ||||||
Cash, cash equivalents and pledged cash at end of the period | $ | 117,317 | $ | 105,880 | ||||
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SOURCE China Automotive Systems, Inc.
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