China Automotive Systems Reports Record Annual Revenue, and a 81.2% Increase in Diluted Net Income Per Share to $1.25 in Fiscal Year 2023
- Significant increases in net sales, gross profit, operating income, and net income for Q4 2023 and FY 2023
- EPS sales increased by 24.6% in 2023, accounting for 33.8% of total net sales
- Strong growth in Brazil sales offset weakness in North America in 2023
- Positive outlook for 2024 with expected recovery in North America business and stabilization in the domestic China market
- None.
Insights
The substantial increase in sales for Electric Power Steering (EPS) products reported by China Automotive Systems, Inc. reflects a broader trend in the automotive industry towards more energy-efficient and technologically advanced components. The reported 24.6% year-over-year growth in EPS sales is significant given the context of a challenging economic environment indicated by weak GDP data from China.
EPS systems are favored for their contribution to fuel efficiency and lower emissions, aligning with global regulatory trends pushing for greener vehicles. This positions CAAS favorably in a market that is increasingly sensitive to environmental concerns. Moreover, the reported increase in gross profit and operating income suggests improved operational efficiency and cost management, which could be indicative of a stronger competitive position in the market.
The growth in Brazil, contrasted with a weaker performance in North America, suggests a strategic foothold in emerging markets, which could serve as a buffer against regional economic fluctuations. Additionally, the company's financial health, indicated by the increase in cash reserves and positive net cash flow from operating activities, provides them with a buffer to invest in further innovation or to weather potential market downturns.
The reported financial results from China Automotive Systems, Inc. show a robust performance with key financial indicators pointing towards a positive trajectory. A 153.5% increase in net income attributable to the parent company's common shareholders is particularly impressive and suggests a strong return on equity. The diluted net income per share increase of 81.2% is a critical metric that will likely catch the attention of investors and analysts, as it directly affects shareholder value.
From a financial perspective, the improved gross margin, now at 21.8%, is indicative of the company's ability to control costs or command higher prices for its products – both of which are positive signs for profitability. The operating income's leap from a loss to a substantial gain also highlights a turnaround in operational effectiveness. Investors should note the company's liquidity position, with a sizeable cash reserve, which may provide opportunities for strategic investments or to cushion against unforeseen expenses.
However, investors should be cautious and consider the broader economic context, including the potential for market volatility in China and the ongoing recovery in North America. While the company's optimism for 2024 is noted, it is essential to monitor external market conditions that could impact the company's performance.
The performance of China Automotive Systems, Inc. in the EPS market is a reflection of the industry's shift towards electric and autonomous vehicles. EPS is a critical component in modern vehicles, particularly as we move towards more advanced driver-assistance systems (ADAS) and autonomous driving technologies. The company's focus and success in this area are well-aligned with industry growth areas.
CAAS's growth in the EPS segment, which now accounts for a significant portion of its net sales, suggests that the company is effectively capitalizing on this trend. The diversification of their market base, with increased sales in Brazil, is a strategic move that may reduce reliance on any single market and mitigate risks associated with geopolitical tensions or trade disruptions.
While the company's optimism for the recovery of its North American business and stabilization of the domestic China market in 2024 is noteworthy, it is essential to monitor how the company adapts to the fast-paced changes in the automotive industry, such as the adoption of electric vehicles and the integration of new technologies into their product offerings.
- Electric Power Steering ("EPS") Sales Increased by
Fourth Quarter 2023 Highlights
- Net sales increased by
23.6% year-over-year to$159.2 million - Gross profit increased by
38.8% to$34.7 million $25.0 million 21.8% from19.4% in the fourth quarter of 2022 - Operating income was
$13.6 million $2.6 million - Net income attributable to parent company's common shareholders increased by
153.5% to$10.9 million $0.36 $4.3 million $0.14
Fiscal Year 2023 Highlights
- Net sales increased by
8.8% to an annual record of$576.4 million $529.6 million - Gross profit increased by
24.5% to$103.8 million $83.4 million 18.0% from15.7% in 2022 - Operating income increased by
390.0% to$39.2 million $8.0 million - Diluted net income per share increased by
81.2% to$1.25 $0.69 - Total cash and cash equivalents, pledged cash and short-term investments were
$166.3 million - Net cash flow provided by operating activities was
$19.9 million
Mr. Qizhou Wu, Chief Executive Officer of CAAS, commented, "Despite weak GDP data from
"In the first two months of 2024, automobile sales in
Mr. Jie Li, Chief Financial Officer of CAAS, commented, "We entered 2023 with a modest goal but we overachieved it, by not only improving our product mix and controlling costs, but also regaining revenue growth. Our balance sheet remains strong with total cash and cash equivalents, pledged cash and short-term investments reaching
Fourth Quarter of 2023
In the fourth quarter of 2023, net sales increased by
Gross profit increased by
Selling expenses were
General and administrative expenses ("G&A expenses") were
Research and development expenses ("R&D expenses") were
Operating income was
Interest expense was
Financial income was
Income before income tax expenses and equity in earnings of affiliated companies was
Income tax expense was
Net income attributable to parent company's common shareholders rose by
The weighted average number of diluted common shares outstanding was 30,189,421 in the fourth quarter of 2023, compared with 30,229,987 in the fourth quarter of 2022.
Fiscal Year 2023
Net sales increased by
Gross profit in 2023 increased by
Net gain on other sales in 2023 increased to
Selling expenses declined by
G&A expenses decreased by
R&D expenses declined by
Operating income increased by
Interest expense was
Net financial income was
Income before income tax expenses and equity in earnings of affiliated companies rose by
Income tax expense was
Net income attributable to parent company's common shareholders was
The weighted average number of diluted common shares outstanding was 30,189,421 in 2023 compared with 30,641,274 in 2022.
Balance Sheet
As of December 31, 2023, total cash and cash equivalents, pledged cash and short-term investments were
Business Outlook
Management provides revenue guidance for the fiscal year 2024 of
Conference Call
Management will conduct a conference call on March 28, 2024 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 with pin 493763:
Phone Number: +1-888-506-0062 (
Phone Number: +1-973-528-0011 (International)
Mainland China Toll Free: +86-400-120-3199
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
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. 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 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2024, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. 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
+1-212-510-8922
Email: Kevin@awakenlab.com
-Tables Follow –
China Automotive Systems, Inc. and Subsidiaries | ||||||
Consolidated Balance Sheets | ||||||
(In thousands of USD, except share and per share amounts) | ||||||
December 31, | ||||||
2023 | 2022 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 114,660 | $ | 121,216 | ||
Pledged cash | 40,534 | 37,735 | ||||
Short-term investments | 11,084 | 12,861 | ||||
Accounts and notes receivable, net - unrelated parties (Allowance for credit losses of | 261,237 | 214,308 | ||||
Accounts and notes receivable, net - related parties (Allowance for credit losses of | 8,169 | 10,016 | ||||
Advance payments and others, net - unrelated parties (Allowance for credit losses of | 14,008 | 10,907 | ||||
Advance payments and others - related parties | 1,991 | 1,439 | ||||
Inventories | 112,392 | 112,236 | ||||
Total current assets | 564,075 | 520,718 | ||||
Non-current assets: | ||||||
Property, plant and equipment, net | 101,359 | 106,606 | ||||
Land use rights, net | 9,233 | 9,555 | ||||
Intangible assets, net | 3,865 | 1,273 | ||||
Operating lease assets | 278 | 477 | ||||
Long-term time deposits | 8,647 | — | ||||
Other receivables, net (Allowance for credit losses of | 598 | 46 | ||||
Advance payment for property, plant and equipment - unrelated parties | 3,554 | 6,331 | ||||
Advance payment for property, plant and equipment - related parties | 5,759 | 1,884 | ||||
Long-term investments | 60,173 | 59,810 | ||||
Deferred tax assets | 8,899 | 7,652 | ||||
Total assets | $ | 766,440 | $ | 714,352 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Short-term bank loans | $ | 48,005 | $ | 45,671 | ||
Accounts and notes payable - unrelated parties | 240,739 | 218,412 | ||||
Accounts and notes payable - related parties | 12,839 | 16,695 | ||||
Customer deposits | 8,633 | 5,654 | ||||
Accrued payroll and related costs | 11,282 | 11,628 | ||||
Accrued expenses and other payables | 44,771 | 48,311 | ||||
Taxes payable | 17,267 | 17,598 | ||||
Operating lease liabilities - current portion | 203 | 226 | ||||
Total current liabilities | 383,739 | 364,195 | ||||
Long-term liabilities: | ||||||
Advances payable | 282 | 2,144 | ||||
Operating lease liabilities - non-current portion | 52 | 255 | ||||
Long-term loans | 1,221 | 528 | ||||
Deferred tax liabilities | 3,943 | 4,010 | ||||
Long-term taxes payable | 8,781 | 15,805 | ||||
Total liabilities | 398,018 | 386,937 | ||||
Commitments and Contingencies | ||||||
Mezzanine equity: | ||||||
Redeemable non-controlling interests | 613 | 582 | ||||
Stockholders' Equity | ||||||
Common stock, | 3 | 3 | ||||
Additional paid-in capital | 63,731 | 63,731 | ||||
Retained earnings- | ||||||
Appropriated | 11,851 | 11,851 | ||||
Unappropriated | 284,832 | 247,174 | ||||
Accumulated other comprehensive income | (8,258) | (3,413) | ||||
Treasury stock – 2,152,600 and 2,152,600 shares at December 31, 2023 and 2022, respectively | (7,695) | (7,695) | ||||
Total parent company stockholders' equity | 344,464 | 311,651 | ||||
Non-controlling interests | 23,345 | 15,182 | ||||
Total stockholders' equity | 367,809 | 326,833 | ||||
Total liabilities, mezzanine equity and stockholders' equity | $ | 766,440 | $ | 714,352 | ||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Consolidated Statements of Income or Loss | ||||||
(In thousands of USD, except share and per share amounts) | ||||||
Year Ended December 31, | ||||||
2023 | 2022 | |||||
Net product sales ( | $ | 576,354 | $ | 529,551 | ||
Cost of products sold ( | 472,603 | 446,157 | ||||
Gross profit | 103,751 | 83,394 | ||||
Net gain on other sales | 5,788 | 3,696 | ||||
Operating expenses: | ||||||
Selling expenses | 15,610 | 16,910 | ||||
General and administrative expenses | 25,503 | 26,120 | ||||
Research and development expenses | 29,181 | 36,109 | ||||
Total operating expenses | 70,294 | 79,139 | ||||
Operating income | 39,245 | 7,951 | ||||
Other income, net | 5,345 | 5,782 | ||||
Interest expense | (1,021) | (1,450) | ||||
Financial income, net | 4,666 | 10,753 | ||||
Income before income tax expenses and equity in earnings of affiliated companies | 48,235 | 23,036 | ||||
Less: Income taxes | 5,137 | 3,082 | ||||
Add: Equity in (loss)/earnings of affiliated companies | (360) | 2,389 | ||||
Net income | 42,738 | 22,343 | ||||
Net income attributable to non-controlling interest | 5,050 | 1,132 | ||||
Accretion to redemption value of redeemable non-controlling interests | (30) | (30) | ||||
Net income attributable to parent company's common shareholders | 37,658 | 21,181 | ||||
Net income attributable to parent company's common shareholders per share - | ||||||
Basic | $ | 1.25 | $ | 0.69 | ||
Diluted | $ | 1.25 | $ | 0.69 | ||
Weighted average number of common shares outstanding - | ||||||
Basic | 30,185,702 | 30,639,102 | ||||
Diluted | 30,189,421 | 30,641,274 | ||||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Consolidated Statements of Comprehensive Income or Loss | ||||||
(In thousands of USD unless otherwise indicated) | ||||||
Year Ended December 31, | ||||||
2023 | 2022 | |||||
Net income | $ | 42,738 | $ | 22,343 | ||
Other comprehensive income: | ||||||
Foreign currency translation loss | (5,191) | (29,934) | ||||
Comprehensive income/(loss) | 37,547 | (7,591) | ||||
Comprehensive income/(loss) attributable to non-controlling interest | 4,704 | (672) | ||||
Accretion to redemption value of redeemable non-controlling interest | (30) | (30) | ||||
Comprehensive income/(loss) attributable to parent company | $ | 32,813 | $ | (6,949) | ||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Consolidated Statements of Changes in Stockholders' Equity | ||||||
(In thousands of USD, except share and per share amounts) | ||||||
2023 | 2022 | |||||
Common Stock | ||||||
Balance at January 1, 2023 and 2022 - 32,338,302 and 32,338,302 shares, respectively | $ | 3 | $ | 3 | ||
Balance at December 31, 2023 and 2022 - 32,338,302 and 32,338,302 shares, respectively | $ | 3 | $ | 3 | ||
Additional Paid-in Capital | ||||||
Balance at January 1 | $ | 63,731 | $ | 63,731 | ||
Balance at December 31 | $ | 63,731 | $ | 63,731 | ||
Retained Earnings - Appropriated | ||||||
Balance at January 1 | $ | 11,851 | $ | 11,481 | ||
Appropriation of retained earnings | — | 370 | ||||
Balance at December 31 | $ | 11,851 | $ | 11,851 | ||
Unappropriated | ||||||
Balance at January 1 | $ | 247,174 | $ | 226,363 | ||
Net income attributable to parent company | 37,688 | 21,211 | ||||
Accretion of redeemable non-controlling interests | (30) | (30) | ||||
Appropriation of retained earnings | — | (370) | ||||
Balance at December 31 | $ | 284,832 | $ | 247,174 | ||
Accumulated Other Comprehensive (Loss)/Income | ||||||
Balance at January 1 | $ | (3,413) | $ | 24,717 | ||
Net foreign currency translation adjustment attributable to parent company | (4,845) | (28,130) | ||||
Balance at December 31 | $ | (8,258) | $ | (3,413) | ||
Treasury Stock | ||||||
Balance at January 1, 2023 and 2022 –2,152,600 and 1,486,526 shares, respectively | $ | (7,695) | $ | (5,261) | ||
Repurchase of common stock in 2023 and 2022 –nil and 666,074 shares, respectively | — | (2,434) | ||||
Balance at December 31, 2023 and 2022 – 2,152,600 and 2,152,600 shares, respectively | $ | (7,695) | $ | (7,695) | ||
Total parent company stockholders' equity | $ | 344,464 | $ | 311,651 | ||
Non-controlling Interest | ||||||
Balance at January 1 | $ | 15,182 | $ | 15,854 | ||
Net foreign currency translation adjustment attributable to non-controlling interest | (346) | (1,804) | ||||
Net income attributable to non-controlling interest | 5,050 | 1,132 | ||||
Contribution by non-controlling shareholder of Wuhan Hyoseong | 3,459 | — | ||||
Balance at December 31 | $ | 23,345 | $ | 15,182 | ||
Total stockholders' equity | $ | 367,809 | $ | 326,833 | ||
China Automotive Systems, Inc. and Subsidiaries | ||||||
Consolidated Statements of Cash Flows | ||||||
(In thousands of USD unless otherwise indicated) | ||||||
Year Ended December 31, | ||||||
2023 | 2022 | |||||
Cash flows from operating activities: | ||||||
Net income | $ | 42,738 | $ | 22,343 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 18,708 | 25,173 | ||||
Deferred income taxes | (1,319) | 1,243 | ||||
Allowance for credit losses | 1,564 | 4,404 | ||||
Impairment loss on prepayment for investment in Hefei Senye | — | 2,676 | ||||
Equity in (loss)/earnings of affiliates | 360 | (2,389) | ||||
Impairment loss on property, plant and equipment | 794 | — | ||||
(Gain)/loss on disposal of fixed assets | (3) | 58 | ||||
(Increase)/decrease in: | ||||||
Accounts and notes receivable | (50,699) | (36,935) | ||||
Advance payments and others | (3,881) | (41) | ||||
Inventories | (1,654) | (5,368) | ||||
Other receivables | (556) | — | ||||
Increase/(decrease) in: | ||||||
Accounts and notes payable | 22,024 | 27,271 | ||||
Customer deposits | 3,091 | 3,580 | ||||
Accrued payroll and related costs | 77 | 1,628 | ||||
Accrued expenses and other payables | (2,667) | 1,158 | ||||
Taxes payable | (6,835) | 2,925 | ||||
Advances payable | (1,836) | 297 | ||||
Net cash provided by operating activities | 19,906 | 48,023 | ||||
Cash flows from investing activities: | ||||||
Purchase of short-term investments and long-term time deposits | (68,550) | (80,244) | ||||
Proceeds from maturities of short-term investments | 63,240 | 75,144 | ||||
Decrease/(increase) in demand loans and employee housing loans included in other receivables | — | 292 | ||||
Loan to a related party | — | (146) | ||||
Cash received from property, plant and equipment sales | 2,790 | 1,514 | ||||
Cash paid to acquire property, plant and equipment and land use right (including | (18,235) | (20,296) | ||||
Cash paid to acquire intangible assets | (3,445) | (188) | ||||
Cash received from long-term investment | 3,292 | 3,986 | ||||
Investment under equity method | (7,729) | (12,802) | ||||
Net cash used in investing activities | (28,637) | (32,740) | ||||
Cash flows from financing activities: | ||||||
Proceeds from bank loans | 64,776 | 51,898 | ||||
Repayment of bank loans and government loans | (61,437) | (49,917) | ||||
Repurchase of common shares | — | (2,434) | ||||
Repayments of the borrowing under sale and leaseback transaction | — | (1,130) | ||||
Cash received from capital contributions by a non-controlling interest holder | 3,459 | — | ||||
Net cash provided by/(used in) financing activities | 6,798 | (1,583) | ||||
Cash and cash equivalents affected by foreign currency | (1,824) | (14,248) | ||||
Net decrease in cash and cash equivalents | (3,757) | (548) | ||||
Cash, cash equivalents and pledged cash at beginning of year | 158,951 | 159,499 | ||||
Cash, cash equivalents and pledged cash at end of year | $ | 155,194 | $ | 158,951 | ||
China Automotive Systems, Inc. and Subsidiaries | ||||||||
Consolidated Statements of Cash Flows (continued) | ||||||||
(In thousands of USD unless otherwise indicated) | ||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
Cash paid for interest | $ | 1,145 | $ | 1,492 | ||||
Cash paid for income taxes | $ | 7,965 | $ | 4,044 | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES: | ||||||||
Non-cash investing activities: | ||||||||
Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
Property, plant and equipment recorded during the year which previously were advance payments | $ | 2,699 | $ | 2,473 | ||||
Change in accounts payable for acquiring property, plant and equipment | $ | 960 | $ | 985 | ||||
Year Ended December 31, | ||||||||
2023 | 2022 | |||||||
Supplemental disclosure of acquisition of operating lease assets | $ | 278 | $ | 477 | ||||
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SOURCE China Automotive Systems, Inc.
FAQ
What was the percentage increase in net sales for China Automotive Systems, Inc. (CAAS) in Q4 2023?
What was the percentage increase in gross profit for CAAS in Q4 2023?
What was the percentage increase in operating income for CAAS in Q4 2023?
What was the percentage increase in net income attributable to parent company's common shareholders for CAAS in Q4 2023?
What was the percentage increase in net sales for CAAS in FY 2023?
What was the percentage increase in gross profit for CAAS in FY 2023?
What was the percentage increase in operating income for CAAS in FY 2023?
What was the percentage increase in diluted net income per share for CAAS in FY 2023?
What was the total cash and cash equivalents, pledged cash and short-term investments for CAAS at year end in FY 2023?
What was the net cash flow provided by operating activities for CAAS in FY 2023?
What percentage of total net sales did EPS products account for in 2023 for CAAS?
What was the percentage increase in EPS sales for CAAS in 2023?
Which market showed strong growth in sales for CAAS in 2023?
What are the expectations for CAAS in 2024 according to Mr. Qizhou Wu?
