China Automotive Systems Reports Almost 200% Increase in Net Income in the Second Quarter of 2022
China Automotive Systems, Inc. (NASDAQ: CAAS) reported a 5.5% increase in net sales, reaching $127.2 million in Q2 2022, up from $120.6 million in Q2 2021. Gross profit rose 43.7% to $22.7 million, with a gross margin of 17.9%. Net income attributable to common shareholders increased to $9.4 million or $0.31 per diluted share. For the first six months, net sales grew 5.1% to $263.6 million, and cash and equivalents totaled $143.8 million as of June 30, 2022. The company increased its full-year revenue guidance to $500 million.
- Net sales increased by 5.5% to $127.2 million in Q2 2022.
- Gross profit rose by 43.7% to $22.7 million.
- Net income attributable to common shareholders increased to $9.4 million, or $0.31 per diluted share.
- Cash and cash equivalents were $143.8 million as of June 30, 2022.
- Revenue guidance for full year 2022 raised to $500 million.
- Sales of traditional steering products decreased by 2.6% to $94.8 million in Q2 2022.
- Weak demand in the commercial vehicle sector impacted sales.
- Overall automobile sales in China declined by 13.3% in Q2 2022.
WUHAN, China, Aug. 12, 2022 /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, 2022.
Second Quarter 2022 Highlights
- Net sales rose
5.5% to$127.2 million from$120.6 million in the second quarter of 2021. - Gross profit increased
43.7% to$22.7 million from$15.8 million in the second quarter of 2021; gross margin was17.9% , compared with13.1% in the second quarter of 2021. - Income from operations was
$7.2 million , compared to income from operations of$0.1 million in the second quarter of 2021. - Net income attributable to parent company's common shareholders was
$9.4 million , or diluted earnings per share of$0.31 , compared to net income attributable to parent company's common shareholders of$3.2 million , or diluted earnings per share of$0.10 in the second quarter of 2021.
First Six Months of 2022 Highlights
- Net sales grew by
5.1% to$263.6 million , compared to$250.9 million in the first six months of 2021. - Gross profit increased by
5.1% to$37.4 million , compared to$35.6 million in the first six months of 2021; gross margin was14.2% in the first six months of 2022, which is consistent with14.2% in the first six months of 2021. - Income from operations was
$5.7 million compared with income from operations of$4.3 million in the first six months of 2021. - Net income attributable to parent company's common shareholders was
$9.4 million , compared to net income attributable to parent company's common shareholders of$6.4 million in the first six months of 2021; diluted earnings per share attributable to parent company's common shareholders was$0.30 , compared to diluted earnings per share attributable to parent company's common shareholders of$0.21 in the first six months of 2021. - Net cash provided by operating activities was
$14.5 million in the first six months of 2022. - Cash and cash equivalents, and pledged cash were
$143.8 million as of June 30, 2022.
Mr. Qizhou Wu, Chief Executive Officer of CAAS, commented, "Our second quarter 2022 sales grew a modest
"According to statistics from the China Association of Automobile Manufacturers, overall automobile sales in China declined by
"During the second quarter of 2022, we increased our investment in research and development by
Mr. Jie Li, Chief Financial Officer of CAAS, commented, "We maintained a strong balance sheet with cash and cash equivalents plus pledged cash of
Second Quarter of 2022
Net sales increased by
Gross profit rose by
Gain on other sales was
Selling expenses decreased by
General and administrative expenses ("G&A expenses") decreased by
Research and development expenses ("R&D expenses") increased by
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 30,849,009 in the second quarter of 2022 compared to 30,855,406 in the second quarter of 2021.
First Six Months of 2022
Net sales increased
Net income attributable to parent company's common shareholders was
Balance Sheet
As of June 30, 2022, total cash and cash equivalents, and pledged cash were
Business Outlook
Management has increased its revenue guidance for the full year 2022 to
Conference Call
Management will conduct a conference call on August 12, 2022 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 see the dial-in information below, enter the call 10 minutes before the call start time and ask to be connected to the "China Automotive Systems" conference call:
US Toll Free: | +1-877-545-0523 |
International: | +1-973-528-0016 |
China (toll free): | + 86 400 120 3199 |
Code: | 149363 |
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, 2022, 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
-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, | ||||||||
2022 | 2021 | |||||||
Net product sales ($9,158 and $15,750 sold to related parties for the three months ended June 30, | $ | 127,161 | $ | 120,604 | ||||
Cost of products sold ($6,496 and $7,197 purchased from related parties for the three months | 104,450 | 104,775 | ||||||
Gross profit | 22,711 | 15,829 | ||||||
Gain on other sales | 2,105 | 725 | ||||||
Less: Operating expenses | ||||||||
Selling expenses | 4,068 | 4,446 | ||||||
General and administrative expenses | 5,662 | 6,063 | ||||||
Research and development expenses | 7,886 | 5,926 | ||||||
Total operating expenses | 17,616 | 16,435 | ||||||
Income from operations | 7,200 | 119 | ||||||
Other income, net | 2,804 | 1,506 | ||||||
Interest expense | (370) | (294) | ||||||
Financial income, net | 2,543 | 182 | ||||||
Income before income tax expenses and equity in earnings of affiliated companies | 12,177 | 1,513 | ||||||
Less: Income taxes | 3,156 | 198 | ||||||
Add: Equity in earnings of affiliated companies | 914 | 1,613 | ||||||
Net income | 9,935 | 2,928 | ||||||
Less: Net income/(loss) attributable to non-controlling interests | 500 | (279) | ||||||
Accretion to redemption value of redeemable non-controlling interests | (7) | (7) | ||||||
Net income attributable to parent company's common shareholders | $ | 9,428 | $ | 3,200 | ||||
Comprehensive income: | ||||||||
Net income | $ | 9,935 | $ | 2,928 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation (loss)/income, net of tax | (19,055) | 5,586 | ||||||
Comprehensive (loss)/income | (9,120) | 8,514 | ||||||
Less: Comprehensive (loss)/income attributable to non-controlling interests | (642) | 73 | ||||||
Accretion to redemption value of redeemable non-controlling interests | (7) | (7) | ||||||
Comprehensive (loss)/income attributable to parent company | $ | (8,485) | $ | 8,434 | ||||
Net income attributable to parent company's common shareholders per share - | ||||||||
Basic | $ | 0.31 | $ | 0.10 | ||||
Diluted | $ | 0.31 | $ | 0.10 | ||||
Weighted average number of common shares outstanding - | ||||||||
Basic | 30,847,706 | 30,851,776 | ||||||
Diluted | 30,849,009 | 30,855,406 | ||||||
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, | ||||||||||
2022 | 2021 | |||||||||
Net product sales ($20,162 and $32,325 sold to related parties for the six months ended June | $ | 263,557 | $ | 250,945 | ||||||
Cost of products sold ($14,036 and $15,411 purchased from related parties for the six months | 226,112 | 215,368 | ||||||||
Gross profit | 37,445 | 35,577 | ||||||||
Gain on other sales | 3,036 | 2,041 | ||||||||
Less: Operating expenses | ||||||||||
Selling expenses | 8,380 | 10,055 | ||||||||
General and administrative expenses | 10,416 | 10,678 | ||||||||
Research and development expenses | 16,023 | 12,606 | ||||||||
Total operating expenses | 34,819 | 33,339 | ||||||||
Income from operations | 5,662 | 4,279 | ||||||||
Other income, net | 6,323 | 3,229 | ||||||||
Interest expense | (772) | (637) | ||||||||
Financial income/(expense), net | 4,558 | (57) | ||||||||
Income before income tax expenses and equity in earnings of affiliated companies | 15,771 | 6,814 | ||||||||
Less: Income taxes expense | 4,114 | 839 | ||||||||
Add: Equity in (loss)/earnings of affiliated companies | (1,573) | 184 | ||||||||
Net income | 10,084 | 6,159 | ||||||||
Less: Net income/(loss) attributable to non-controlling interests | 700 | (261) | ||||||||
Accretion to redemption value of redeemable non-controlling interests | (15) | (14) | ||||||||
Net income attributable to parent company's common shareholders | $ | 9,369 | $ | 6,406 | ||||||
Comprehensive income: | ||||||||||
Net income | $ | 10,084 | $ | 6,159 | ||||||
Other comprehensive income: | ||||||||||
Foreign currency translation (loss)/income, net of tax | (17,618) | 3,315 | ||||||||
Comprehensive (loss)/income | (7,534) | 9,474 | ||||||||
Less: Comprehensive loss attributable to non-controlling interests | (353) | (52) | ||||||||
Accretion to redemption value of redeemable non-controlling interests | (15) | (14) | ||||||||
Comprehensive (loss)/income attributable to parent company | $ | (7,196) | $ | 9,512 | ||||||
Net income attributable to parent company's common shareholders per share - | ||||||||||
Basic | $ | 0.30 | $ | 0.21 | ||||||
Diluted | $ | 0.30 | $ | 0.21 | ||||||
Weighted average number of common shares outstanding - | ||||||||||
Basic | 30,849,730 | 30,851,776 | ||||||||
Diluted | 30,850,859 | 30,856,571 | ||||||||
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, 2022 | December 31, 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 112,421 | $ | 131,695 | ||||
Pledged cash | 31,401 | 27,804 | ||||||
Accounts and notes receivable, net - unrelated parties | 192,894 | 195,729 | ||||||
Accounts and notes receivable, net - related parties | 10,597 | 14,607 | ||||||
Inventories | 109,787 | 116,493 | ||||||
Other current assets | 34,330 | 15,052 | ||||||
Total current assets | 491,430 | 501,380 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 113,271 | 127,721 | ||||||
Land use rights, net | 10,055 | 10,732 | ||||||
Long-term investments | 58,363 | 36,966 | ||||||
Other non-current assets | 20,717 | 39,963 | ||||||
Total assets | $ | 693,836 | $ | 716,762 | ||||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term loans | $ | 47,569 | $ | 47,592 | ||||
Accounts and notes payable-unrelated parties | 200,576 | 214,590 | ||||||
Accounts and notes payable-related parties | 10,123 | 13,464 | ||||||
Accrued expenses and other payables | 54,031 | 50,332 | ||||||
Other current liabilities | 29,046 | 25,838 | ||||||
Total current liabilities | 341,345 | 351,816 | ||||||
Long-term liabilities: | ||||||||
Long-term tax payable | 15,805 | 21,075 | ||||||
Long-term loans | 480 | - | ||||||
Other non-current liabilities | 6,495 | 6,430 | ||||||
Total liabilities | $ | 364,125 | $ | 379,321 | ||||
Commitments and Contingencies (See Note 22) | ||||||||
Mezzanine equity: | ||||||||
Redeemable non-controlling interests | 568 | 553 | ||||||
Stockholders' equity: | ||||||||
Common stock, | $ | 3 | $ | 3 | ||||
Additional paid-in capital | 63,731 | 63,731 | ||||||
Retained earnings- | ||||||||
Appropriated | 11,481 | 11,481 | ||||||
Unappropriated | 235,732 | 226,363 | ||||||
Accumulated other comprehensive income | 8,152 | 24,717 | ||||||
Treasury stock – 1,555,711 and 1,486,526 shares as of June 30, 2022 and December 31, 2021, | (5,457) | (5,261) | ||||||
Total parent company stockholders' equity | 313,642 | 321,034 | ||||||
Non-controlling interests | 15,501 | 15,854 | ||||||
Total stockholders' equity | 329,143 | 336,888 | ||||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 693,836 | $ | 716,762 | ||||
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, | ||||||||
2022 | 2021 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 10,084 | $ | 6,159 | ||||
Adjustments to reconcile net income from operations to net cash provided by operating | ||||||||
Share-based compensation | - | 88 | ||||||
Depreciation and amortization | 12,012 | 13,117 | ||||||
Provision of credit losses | 527 | 311 | ||||||
Deferred income taxes | 2,945 | 469 | ||||||
Equity in loss/(earnings) of affiliated companies | 1,573 | (184) | ||||||
Loss on fixed assets disposals | 46 | 9 | ||||||
(Increase)/decrease in: | ||||||||
Accounts and notes receivable | (4,333) | 6,887 | ||||||
Inventories | 896 | (7,036) | ||||||
Other current assets | (1,218) | (1,250) | ||||||
Increase/(decrease) in: | ||||||||
Accounts and notes payable | (6,156) | (6,291) | ||||||
Accrued expenses and other payables | (2,643) | (4,030) | ||||||
Long-term taxes payable | (2,809) | (2,809) | ||||||
Other current liabilities | 3,560 | 105 | ||||||
Net cash provided by operating activities | 14,484 | 5,545 | ||||||
Cash flows from investing activities: | ||||||||
Decrease/(increase) in demand loans included in other non-current assets | 291 | (137) | ||||||
Repayment of loan from a related party | - | 154 | ||||||
Cash received from property, plant and equipment sales | 572 | 206 | ||||||
Payments to acquire property, plant and equipment (including $ 2,143 and $330 paid to | (7,881) | (3,927) | ||||||
Payments to acquire intangible assets | (41) | (303) | ||||||
Investment under the equity method | (5,480) | - | ||||||
Purchase of short-term investments | (59,758) | (31,253) | ||||||
Proceeds from maturities of short-term investments | 45,150 | 23,806 | ||||||
Cash received from long-term investment | 2,704 | 4,785 | ||||||
Net cash used in investing activities | (24,443) | (6,669) | ||||||
Cash flows from financing activities: | ||||||||
Proceeds from bank loans | 35,852 | 34,990 | ||||||
Repayments of bank loans | (32,916) | (43,081) | ||||||
Repayments of the borrowing for sale and leaseback transaction | (1,130) | (2,217) | ||||||
Repurchase of common shares | (196) | - | ||||||
Acquisition of non-controlling interest | - | (538) | ||||||
Net cash provided by/(used in) financing activities | 1,610 | (10,846) | ||||||
Effects of exchange rate on cash, cash equivalents and pledged cash | (7,327) | 1,226 | ||||||
Net decrease in cash, cash equivalents and pledged cash | (15,676) | (10,744) | ||||||
Cash, cash equivalents and pledged cash at beginning of the period | 159,498 | 128,061 | ||||||
Cash, cash equivalents and pledged cash at end of the period | $ | 143,822 | $ | 117,317 | ||||
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SOURCE China Automotive Systems, Inc.
FAQ
What were the financial results for CAAS in Q2 2022?
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