Kandi Technologies Reports First Quarter 2022 Financial Results

Rhea-AI Summary

Kandi Technologies Group reported a 55.8% increase in revenue for Q1 2022, reaching $24.9 million compared to $16.0 million in Q1 2021. Key drivers included off-road vehicles and lithium-ion cell sales. However, gross margin declined to 9.6% from 27.3% year-over-year, attributed to a shift towards lower-margin products. The net loss improved significantly to $1.6 million, or $0.02 per share, down from $6.4 million in the previous year. Cash reserves stood at $229.2 million as of March 31, 2022.

Positive

• Revenue increased by 55.8% year-over-year to $24.9 million.
• Net loss improved to $1.6 million from $6.4 million year-over-year.
• Operating expenses decreased by 70.3% to $8.1 million.

Negative

• Gross margin decreased to 9.6% from 27.3%, indicating pressure on profitability.
• Sales of EV parts dropped to $3.7 million from $6.4 million year-over-year.

- Revenue of $24.9 million, up nearly 56% year-over-year
- Off-road vehicles and lithium-ion cells were primary revenue contributors
- Quarter-end cash balance¹ of $229.2 million

JINHUA, China, May 09, 2022 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the first quarter of 2022.

First Quarter Highlights

• Total revenues increased by 55.8% to $24.9 million, from $16.0 million in the same period of 2021.
  
  
• EV parts sales were $3.7 million, compared to $6.4 million in the same period of 2021.
  
  
• EV products sales increased by 179.8% to $0.3 million, compared to $0.1 million in the same period of 2021.
  
  
• Off-road vehicles sales increased by 90.7% to $10.7 million, compared to $5.6 million in the same period of 2021.
  
  
• Electric Scooters, Electric Self-Balancing Scooters and associated parts sales were $2.1 million, compared with $3.9 million in the same period of 2021.
  
  
• Lithium-ion cells sales were $8.0 million. There were no comparable sales for the same period of 2021 since Jiangxi Huiyi New Energy CO., Ltd. (“Jiangxi Huiyi”), the entity that manufactures Lithium-ion cells, was acquired by the Company in October 2021.
  
  
• Gross margin was 9.6%, compared to 27.3% for the same period of 2021.
  
  
• Net loss was $1.6 million, or $0.02 loss per fully diluted share, compared to a net loss of $6.4 million, or $0.08 loss per fully diluted share for the same period of 2021.
  
  
• As of March 31, 2022, working capital was $276.4 million; cash, cash equivalents, restricted cash and certificate of deposit totaled $229.2 million.
  

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented, “We kicked off 2022 with solid revenue growth. One highlight was our all-electric off-road vehicles, which we developed last year in response to the growing demand we observed. Our team made substantial progress in the quarter. In February 2022, we established Hainan Kandi Holding New Energy Technology Co., Ltd. in Hainan province (“Hainan Kandi Holding”), which produces ‘crossover’ electric golf carts (“golf carts”). On February 22, 2022, SC Autosports and Coleman Powersports Inc. signed a memorandum of understanding (“MOU”) regarding the sales of $29 million (equivalent to 5,000 units) golf carts. In addition, on March 3, 2022, SC Autosports signed a sales MOU of $39 million (equivalent to 5,000 units) luxury golf carts with more than twenty dealers. Hainan Kandi Holding is already manufacturing the vehicles. By the end of April, a total of 778 units were shipped from Hainan province to SC Autosports. We are planning to deliver another 2,000 units in May this year.”

Hu continued, “Lithium-ion battery cells also contributed meaningfully to revenue. This is the principal product of Jiangxi Huiyi, the leading battery manufacturer that we acquired last fall. That acquisition is making an immediate revenue contribution from production of batteries, strengthening our battery business. Also, it boosts our capability of integrating the supply chain of battery-powered vehicle products, which can be leveraged to generate substantial growth in the electric off-road vehicles and other battery-powered vehicle products.”

Q1 2022 Financial Results

Net Revenues and Gross Profit (in USD millions)

	Q1 2022	Q1 2021	Y-o-Y%
Net Revenues	$24.9	$16.0	55.8%
Gross Profit	$2.4	$4.4	-45.2%
Gross Margin%	9.6%	27.3%	-

Net revenues of $24.9 million in the first quarter 2022 increased 55.8% from the same period of 2021. Revenue growth was primarily due to higher sales of off-road vehicles and the addition of lithium-ion cell sales, which were generated from the Jiangxi Huiyi acquisition in October 2021. Gross margin declined due to a mix shift to lower margin products such as the lithium-ion cells. Furthermore, margin was impacted by the introduction of the new off-road vehicles into the US market, where value pricing was used to promote sales.

Operating Income/Loss (in USD millions)

	Q1 2022	Q1 2021	Y-o-Y%
Operating Expenses	($8.1)	($27.2)	-70.3%
Loss from Operations	($5.7)	($22.8)	-75.0%
Operating Margin%	-22.9%	-143.0%	-

Total operating expenses in the first quarter of 2022 were $8.1 million, compared with $27.2 million for the same period of 2021. The decrease was primarily due to lower R&D expense, as the Company’s R&D expenditure for new products was largely incurred in the first quarter of 2021.

Net Income/Loss (in USD millions)

	Q1 2022		Q1 2021		Y-o-Y%
Net Loss	($1.6)		($6.4)		-74.7%
Net Loss per Share, Basic and Diluted	($0.02)		($0.08)		-

Net loss of $1.6 million in the first quarter of 2022 compares to a net loss of $6.4 million for the same period of 2021, with the decrease primarily coming from lower R&D expense.

First Quarter 2022 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its financial results at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time) on Monday, May 9, 2022. Management will deliver prepared remarks to be followed by a question-and-answer session.

The dial-in details for the conference call are as follows:
• Toll-free dial-in number: +1-877-407-3982
• International dial-in number: + 1-201-493-6780
• Webcast and replay: https://event.choruscall.com/mediaframe/webcast.html?webcastid=sMgsHhtu

The live audio webcast of the call can also be accessed by visiting Kandi's Investor Relations page on the Company's website at http://www.kandivehicle.com. An archive of the webcast will be available on the Company's website following the live call.

About Kandi Technologies Group, Inc.

Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua Economic Development Zone, Zhejiang Province, is engaged in the research, development, manufacturing, and sales of various vehicular products. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Technologies Group Co., Ltd. (“Zhejiang Kandi Technologies”), formerly, Zhejiang Kandi Vehicles Co., Ltd. and its subsidiaries including Zhejiang Kandi Smart Battery Swap Technology Co., Ltd, and SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States, and its wholly-owned subsidiary, Kandi America Investment, LLC. Zhejiang Kandi Technologies has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.

Safe Harbor Statement

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

Contacts:

Kandi Technologies Group, Inc.
Ms. Kewa Luo
+1 (212) 551-3610
IR@kandigroup.com

The Blueshirt Group
Mr. Gary Dvorchak, CFA
gary@blueshirtgroup.com

- Tables Below -

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		March 31, 2022				December 31, 2021
		(Unaudited)
Current assets
Cash and cash equivalents		$	99,997,938			$	129,223,443
Restricted cash			58,222,796				39,452,564
Certificate of deposit			70,957,772				55,041,832
Accounts receivable (net of allowance for doubtful accounts of $3,065,854 and $3,053,277 as of March 31, 2022 and December 31, 2021, respectively)			40,262,353				52,896,305
Inventories			30,958,762				33,171,973
Notes receivable			837,302				323,128
Other receivables			8,798,534				8,901,109
Prepayments and prepaid expense			17,275,378				17,657,326
Advances to suppliers			4,998,703				5,940,456
TOTAL CURRENT ASSETS			332,309,538				342,608,136
NON-CURRENT ASSETS
Property, plant and equipment, net			110,004,425				111,577,411
Intangible assets, net			12,770,134				13,249,079
Land use rights, net			3,235,497				3,250,336
Construction in progress			326,641				79,317
Deferred tax assets			2,219,297				2,219,297
Long-term investment			157,684				157,262
Goodwill			36,109,089				36,027,425
Other long-term assets			11,898,416				10,992,009
TOTAL NON-CURRENT ASSETS			176,721,183				177,552,136
TOTAL ASSETS		$	509,030,721			$	520,160,272
CURRENT LIABILITIES
Accounts payable		$	27,966,224			$	36,677,802
Other payables and accrued expenses			7,747,034				9,676,973
Short-term loans			1,450,000				950,000
Notes payable			10,548,203				8,198,193
Income tax payable			1,512,342				1,620,827
Other current liabilities			6,726,257				7,038,895
TOTAL CURRENT LIABILITIES			55,950,060				64,162,690
NON-CURRENT LIABILITIES
Long-term loans			2,210,589				2,210,589
Deferred taxes liability			2,460,141				2,460,141
Contingent consideration liability			5,122,000				7,812,000
Other long-term liabilities			989,018				314,525
TOTAL NON-CURRENT LIABILITIES			10,781,748				12,797,255
TOTAL LIABILITIES			66,731,808				76,959,945
STOCKHOLDER’S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 77,410,130 and 77,385,130 shares issued and 76,271,345 and 76,705,381 outstanding at March 31,2022 and December 31,2021, respectively			77,410				77,385
Less: Treasury stock (1,138,785 shares with average price of $3.48 and 679,749 shares with average price of $3.52 at March 31,2022 and December 31,2021, respectively )			(3,962,527	)			(2,392,203	)
Additional paid-in capital			449,559,150				449,479,461
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at March 31,2022 and December 31,2021, respectively)			(5,832,158	)			(4,216,102	)
Accumulated other comprehensive loss			1,261,597				251,786
TOTAL KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS’ EQUITY			441,103,472				443,200,327
Non-controlling interests			1,195,441				-
TOTAL STOCKHOLDERS’ EQUITY			442,298,913				443,200,327
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	509,030,721			$	520,160,272

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)

		Three Months Ended
		March 31, 2022				March 31, 2021
REVENUES FROM UNRELATED PARTIES, NET		$	24,891,404			$	15,976,170
REVENUES FROM THE FORMER AFFILIATE COMPANY AND RELATED PARTIES, NET			-				1,584
REVENUES, NET			24,891,404				15,977,754
COST OF GOODS SOLD			(22,504,241	)			(11,623,403	)
GROSS PROFIT			2,387,163				4,354,351
OPERATING INCOME (EXPENSE):
Research and development			(1,140,586	)			(21,624,597	)
Selling and marketing			(1,193,699	)			(1,146,866	)
General and administrative			(5,756,531	)			(4,430,123	)
TOTAL OPERATING EXPENSE			(8,090,816	)			(27,201,586	)
EXPENSE FROM OPERATIONS			(5,703,653	)			(22,847,235	)
OTHER INCOME (EXPENSE):
Interest income			1,222,304				528,592
Interest expense			(148,144	)			(126,348	)
Change in fair value of contingent consideration			2,690,000				357,000
Government grants			244,098				234,793
Gain from sale of equity in the Former Affiliate Company			-				17,700,260
Share of loss after tax of the Former Affiliate Company			-				(2,579,497	)
Other income, net			43,782				498,901
TOTAL OTHER INCOME , NET			4,052,040				16,613,701
LOSS BEFORE INCOME TAXES			(1,651,613	)			(6,233,534	)
INCOME TAX BENEFIT (EXPENSE)			32,600				(169,186	)
NET LOSS			(1,619,013	)			(6,402,720	)
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-CONTROLLING INTERESTS			2,957				-
NET LOSS ATTRIBUTABLE TO KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS			(1,616,056	)			(6,402,720	)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment			1,009,811				(1,176,013	)
COMPREHENSIVE INCOME (LOSS)		$	(609,202	)		$	(7,578,733	)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED			76,289,846				75,383,777
NET LOSS PER SHARE, BASIC AND DILUTED		$	(0.02	)		$	(0.08	)

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)

		Number of Outstanding Shares				Common Stock				Treasury Stock				Additional Paid-in Capital				Accumulated Deficit				Accumulated Other Comprehensive Loss				Non-controlling interests				Total
Balance, December 31, 2020			75,377,555			$	75,377			$	-			$	439,549,338			$	(27,079,900	)		$	(8,778,151	)		$	-			$	403,766,664
Stock issuance and award			10,000				10				-				22,290				-				-				-				22,300
Net loss			-				-				-				-				(6,402,720	)			-				-				(6,402,720	)
Foreign currency translation			-				-				-				-				-				(1,176,013	)			-				(1,176,013	)
Reversal of reduction in the Former Affiliate Company’s equity (net of tax effect of $491,400)			-				-				-				2,771,652				-				-				-				2,771,652
Balance, March 31, 2021			75,387,555			$	75,387			$	-			$	442,343,280			$	(33,482,620	)		$	(9,954,164	)		$	-			$	398,981,883

		Number of Outstanding Shares				Common Stock				Treasury Stock				Additional Paid-in Capital				Accumulated Earning (Deficit)				Accumulated Other Comprehensive Income				Non-controlling interests				Total
Balance, December 31, 2021			77,385,130			$	77,385			$	(2,392,203	)		$	449,479,461			$	(4,216,102	)		$	251,786			$	-			$	443,200,327
Stock issuance and award			25,000				25				-				92,925				-				-				-				92,950
Stock buyback											(1,570,324	)			(13,236	)															(1,583,560	)
Capital contribution from shareholder			-				-				-				-				-				-				1,198,398				1,198,398
Net loss			-				-				-				-				(1,616,056	)			-				(2,957	)			(1,619,013	)
Foreign currency translation			-				-				-				-				-				1,009,811				-				1,009,811
Balance, March 31, 2022			77,410,130			$	77,410			$	(3,962,527	)		$	449,559,150			$	(5,832,158	)		$	1,261,597			$	1,195,441			$	442,298,913

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		Three Months Ended
		March 31, 2022				March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(1,619,013	)		$	(6,402,720	)
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			3,294,499				2,212,965
Provision (reversal) of allowance for doubtful accounts			4,389				-
Share of loss after tax of the Former Affiliate Company			-				2,579,497
Loss from equity sale in the Former Affiliate Company			-				(17,700,260	)
Change in fair value of contingent consideration			(2,690,000	)			(357,000	)
Stock based compensation expense			22,925				22,925
Changes in operating assets and liabilities:
Accounts receivable			5,197,268				8,916,548
Notes receivable			1,965,596				-
Inventories			2,498,914				(864,177	)
Other receivables and other assets			(790,486	)			(13,058,262	)
Advances to supplier and prepayments and prepaid expenses			1,425,684				18,807,547
Increase (Decrease) In:
Accounts payable			3,088,095				(340,133	)
Other payables and accrued liabilities			(1,688,414	)			107,011
Notes payable			(4,401,457	)			-
Income tax payable			(119,559	)			58,779
Net cash provided by (used in) operating activities		$	6,188,441			$	(6,017,280	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net			(709,881	)			(5,866,207	)
Payment for construction in progress			(246,971	)			(4,339,770	)
Repayment from (loan to) third party			-				13,113,237
Certificate of deposit			(15,759,448	)			(15,427,337	)
Proceeds from sales of equity in the Former Affiliate Company			-				23,758,099
Long-term Investment			-				(107,991	)
Net cash (used in) provided by investing activities		$	(16,716,300	)		$	11,130,031
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans			500,000				-
Contribution from non-controlling shareholder			803,732				-
Purchase of treasury stock			(1,583,561	)			-
Net cash used in financing activities		$	(279,829	)		$	-
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		$	(10,807,688	)		$	5,112,751
Effect of exchange rate changes		$	352,415			$	(438,313	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR		$	168,676,007			$	142,520,635
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	158,220,734			$	147,195,073
-CASH AND CASH EQUIVALENTS AT END OF PERIOD			99,997,938				146,714,469
-RESTRICTED CASH AT END OF PERIOD			58,222,796				480,604
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid		$	5,496				110,407
Interest paid		$	37,116				-
SUPPLEMENTAL NON-CASH DISCLOSURES:
Reversal of decrease in investment in the Former Affiliate Company due to change in its equity (net of tax effect of $491,400)			-				2,807,696
Increase of other receivable for equity transfer payment of the Former Affiliate Company			-				23,758,099
Contribution from non-controlling shareholder by inventories and fix assets			393,986				-

_______________________

¹ Includes cash, cash equivalents, restricted cash, and certificate of deposit.

FAQ

What were Kandi's Q1 2022 revenues and growth compared to Q1 2021?

Kandi reported revenues of $24.9 million for Q1 2022, a 55.8% increase from $16.0 million in Q1 2021.

How did Kandi's net loss change in Q1 2022?

Kandi's net loss for Q1 2022 improved to $1.6 million, or $0.02 per share, from a net loss of $6.4 million, or $0.08 per share, in Q1 2021.

What factors contributed to Kandi's revenue growth in Q1 2022?

Revenue growth was primarily driven by increased sales of off-road vehicles and lithium-ion cells following the acquisition of Jiangxi Huiyi.

What was Kandi's gross margin in Q1 2022?

Kandi's gross margin in Q1 2022 was 9.6%, down from 27.3% in the same quarter of 2021.

What are Kandi's future plans regarding new products?

Kandi has established Hainan Kandi Holding, focusing on the production of electric golf carts, with significant sales agreements already in place.