Kandi Technologies Reports Second Quarter 2023 Financial Results

Strategic product transformation has borne fruitful outcomes, leading to a remarkable turnaround to profitability

JINHUA, China, Aug. 08, 2023 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company”, “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the second quarter of 2023.

Second Quarter Highlights

• Total revenues of $36.0 million increased by 72.5% year-over-year.
  
  
• Gross profit of $13.7 million and gross margin of 38.2%, compared to gross profit of $2.7 million and gross margin of 13.0% in the same period of 2022.
  
  
• Net income was $4.4 million, or $0.06 income per fully diluted share, compared to a net loss of $1.9 million, or $0.02 loss per fully diluted share for the same period of 2022.
  
  
• Cash and equivalents, restricted cash, and certificate of deposit totaled $232.5 million as of June 30, 2023.
  

Dr. Xueqin Dong, CEO of Kandi commented, “The Company's efforts invested in product transformation over the past few years have finally borne fruit this year, leading to a successful turnaround from losses to profits. Net income reached $4.4 million, demonstrating a significant recovery from the challenges we faced in the prior years. The continued growth of gross profit reflects our commitment to drive our product mix toward higher-profit and more rapidly growing categories. The success of our all-electric off-road vehicles is the driving force behind our sales recovery and return to profitability. We see immense potential in the US off-road vehicle market, and we are dedicated to expanding our product offerings to meet the evolving demands of our customers.”

Q2 2023 Financial Results

Net Revenues and Gross Profit (in USD millions)

	Q2 2023	Q2 2022	Y-o-Y%
Net Revenues	$36.0	$20.8	+72.5%
Gross Profit	$13.7	$2.7	+405.2%
Gross Margin%	38.2%	13.0%	-

Net revenues of $36.0 million increased by 72.5% from the same period of 2022. Kandi’s focus on innovation, production, and commercialization of electric off-road vehicles -- particularly crossover golf carts, go karts, and all-terrain vehicles or ATVs -- boosted sales of off-road vehicles and associated parts to achieve its largest proportion ever of quarterly sales. Gross margin grew versus the year-earlier period because of the greater profitability of off-road vehicles, with crossover golf carts being a significant contributor to this increase.

Operating Income/Loss (in USD millions)

	Q2 2023	Q2 2022	Y-o-Y%
Operating Expenses	($14.0)	($9.0)	+55.1%
Loss from Operations	($0.2)	($6.3)	-96.4%
Operating Margin%	-0.6%	-30.1%	-

Operating expenses rose to $14.0 million from $9.0 million in the same period of 2022. While operating expenses were up, significantly higher gross profits resulted in improvement in operating income. The rise in operating expenses can be attributed mainly to increased sales and marketing expenses associated with increasing number of electric off-road vehicles exported to the U.S. market, and higher general and administration expenses due to increased stock-based compensation.

Net Income/Loss (in USD millions)

	Q2 2023		Q2 2022		Y-o-Y%
Net Income (Loss)	$4.4		($1.9)		-333.9%
Net Income (Loss) per Share, Basic and Diluted	$0.06		($0.02)		-

Net income was $4.4 million, a noteworthy improvement compared to a net loss of $1.9 million during the same period in 2022. The primary factor for the swing to profit was the better gross margins.

Second Quarter 2023 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 Tuesday, Aug 8, 2023. 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://viavid.webcasts.com/starthere.jsp?ei=1627967&tp_key=83400af773
  

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
	June 30, 2023				December 31, 2022
	(Unaudited)
CURRENT ASSETS
Cash and cash equivalents	$	69,406,103			$	84,063,717
Restricted cash		54,238,569				66,976,554
Certificate of deposit		108,902,429				81,191,191
Accounts receivable (net of allowance for doubtful accounts of $2,679,598 and $2,285,386 as of June 30, 2023 and December 31, 2022, respectively)		23,137,337				38,150,876
Inventories		57,107,433				40,475,366
Notes receivable		256,276				434,461
Other receivables		9,813,439				11,912,615
Prepayments and prepaid expense		3,159,764				2,970,261
Advances to suppliers		2,073,612				3,147,932
TOTAL CURRENT ASSETS		328,094,962				329,322,973
NON-CURRENT ASSETS
Property, plant and equipment, net		89,909,721				97,168,753
Intangible assets, net		5,927,783				7,994,112
Land use rights, net		2,725,604				2,909,950
Construction in progress		36,854				199,837
Deferred tax assets		1,427,290				1,432,527
Long-term investment		137,851				144,984
Goodwill		31,335,036				33,178,229
Other long-term assets		9,911,534				10,630,911
TOTAL NON-CURRENT ASSETS		141,411,673				153,659,303
TOTAL ASSETS	$	469,506,635			$	482,982,276
CURRENT LIABILITIES
Accounts payable	$	36,693,759			$	35,321,262
Other payables and accrued expenses		11,736,250				14,131,414
Short-term loans		6,967,612				5,569,154
Notes payable		16,310,719				19,123,476
Income tax payable		1,011,755				1,270,617
Other current liabilities		5,476,994				6,089,925
TOTAL CURRENT LIABILITIES		78,197,089				81,505,848
NON-CURRENT LIABILITIES
Deferred taxes liability		1,172,820				1,378,372
Contingent consideration liability		–				1,803,000
Other long-term liabilities		465,784				602,085
TOTAL NON-CURRENT LIABILITIES		1,638,604				3,783,457
TOTAL LIABILITIES		79,835,693				85,289,305
STOCKHOLDER’S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 75,010,171 and 77,668,730 shares issued and 75,010,171 and 74,180,171 outstanding at June 30,2023 and December 31,2022, respectively		75,010				77,669
Less: Treasury stock (null shares and 3,488,559 shares with average price of $2.81 at June 30, 2023 and December 31, 2022 )		–				(9,807,820	)
Additional paid-in capital		446,260,170				451,373,645
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at June 30, 2023 and December 31, 2022, respectively)		(12,640,763	)			(16,339,765	)
Accumulated other comprehensive loss		(46,029,611	)			(28,333,239	)
TOTAL KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS’ EQUITY		387,664,806				396,970,490
Non-controlling interests		2,006,136				722,481
TOTAL STOCKHOLDERS’ EQUITY		389,670,942				397,692,971
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	469,506,635			$	482,982,276

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
	Three Months Ended								Six Months Ended
	June 30, 2023				June 30, 2022				June 30, 2023				June 30, 2022
REVENUES FROM UNRELATED PARTIES, NET	$	35,953,339			$	20,841,183			$	58,815,447			$	45,732,587
REVENUES FROM THE FORMER AFFILIATE COMPANY AND RELATED PARTIES, NET		–				–				–				–
REVENUES, NET		35,953,339				20,841,183				58,815,447				45,732,587
COST OF GOODS SOLD		(22,218,767	)			(18,122,316	)			(37,051,645	)			(40,626,557	)
GROSS PROFIT		13,734,572				2,718,867				21,763,802				5,106,030
OPERATING EXPENSE:
Research and development		(874,562	)			(1,253,843	)			(1,753,542	)			(2,394,429	)
Selling and marketing		(2,780,515	)			(1,172,528	)			(4,608,244	)			(2,366,227	)
General and administrative		(8,838,319	)			(6,574,079	)			(16,397,771	)			(12,330,610	)
Impairment of goodwill		(507,603	)			–				(507,603	)			–
Impairment of long-lived assets		(962,737	)			–				(962,737	)			–
TOTAL OPERATING EXPENSE		(13,963,736	)			(9,000,450	)			(24,229,897	)			(17,091,266	)
LOSS FROM OPERATIONS		(229,164	)			(6,281,583	)			(2,466,095	)			(11,985,236	)
OTHER INCOME (EXPENSE):
Interest income		1,954,563				1,378,774				4,054,906				2,601,078
Interest expense		(194,239	)			(138,433	)			(367,609	)			(286,577	)
Change in fair value of contingent consideration		2,164,000				(391,000	)			1,803,000				2,299,000
Government grants		189,948				463,219				810,352				707,317
Other income, net		807,315				2,373,528				1,073,780				2,417,310
TOTAL OTHER INCOME, NET		4,921,587				3,686,088				7,374,429				7,738,128
INCOME (LOSS) BEFORE INCOME TAXES		4,692,423				(2,595,495	)			4,908,334				(4,247,108	)
INCOME TAX (EXPENSE) BENEFIT		(305,223	)			719,843				74,323				752,443
NET INCOME (LOSS)		4,387,200				(1,875,652	)			4,982,657				(3,494,665	)
LESS: NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTERESTS		659,088				61,619				1,283,655				58,662
NET INCOME (LOSS) ATTRIBUTABLE TO KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS		3,728,112				(1,937,271	)			3,699,002				(3,553,327	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustment		(19,279,059	)			(19,966,230	)			(17,696,372	)			(18,956,419	)
COMPREHENSIVE LOSS	$	(14,891,859	)		$	(21,841,882	)		$	(12,713,715	)		$	(22,451,084	)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC		74,378,083				75,863,479				74,282,823				76,075,484
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED		76,315,953				75,863,479				75,786,201				76,075,484
NET INCOME (LOSS) PER SHARE, BASIC	$	0.06			$	(0.02	)		$	0.07			$	(0.05	)
NET INCOME (LOSS) PER SHARE, DILUTED	$	0.06			$	(0.02	)		$	0.07			$	(0.05	)

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 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
Stock issuance and award		238,600				239				–				584,331				–				–				–				584,570
Stock buyback		–				–				(1,974,490	)			(22,578	)			–				–				–				(1,997,068	)
Net income (loss)		–				–				–				–				(1,937,271	)			–				61,619				(1,875,652	)
Foreign currency translation		–				–				–				–				–				(19,966,230	)			(63,460	)			(20,029,690	)
Balance, June 30, 2022		77,648,730			$	77,649			$	(5,937,017	)		$	450,120,903			$	(7,769,429	)		$	(18,704,633	)			1,193,600			$	418,981,073

	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, 2022		77,668,730			$	77,669			$	(9,807,820	)		$	451,373,645			$	(16,339,765	)		$	(28,333,239	)		$	722,481			$	397,692,971
Stock issuance and award		10,000				10				–				22,290				–				–				–				22,300
Stock based compensation		–				–				–				980,893				–				–				–				980,893
Net income (loss)		–				–				–				–				(29,110	)			–				624,567				595,457
Foreign currency translation		–				–				–				–				–				1,582,687				–				1,582,687
Balance, March 31, 2023		77,678,730			$	77,679			$	(9,807,820	)		$	452,376,828			$	(16,368,875	)		$	(26,750,552	)		$	1,347,048			$	400,874,308
Stock issuance and award		820,000				820				–				2,706,780				–				–				–				2,707,600
Stock based compensation		–				–				–				980,893				–				–				–				980,893
Cancellation of the Treasury Stock		(3,488,559	)			(3,489	)			9,807,820				(9,804,331	)			–				–				–				–
Net income		–				–				–				–				3,728,112				–				659,088				4,387,200
Foreign currency translation		–				–				–				–				–				(19,279,059	)			–				(19,279,059	)
Balance, June 30, 2023		75,010,171			$	75,010			$	–			$	446,260,170			$	(12,640,763	)		$	(46,029,611	)		$	2,006,136			$	389,670,942

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
	Six Months Ended
	June 30, 2023				June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	4,982,657			$	(3,494,665	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities
Depreciation and amortization		6,044,494				6,447,548
Impairments		1,470,340				–
Provision of allowance for doubtful accounts		530,759				4,301
Deferred taxes		(200,316	)			(116,206	)
Change in fair value of contingent consideration		(1,803,000	)			(2,299,000	)
Stock award and stock based compensation expense		4,724,507				639,690
Changes in operating assets and liabilities:
Accounts receivable		6,424,500				(9,108,858	)
Notes receivable		588,417				1,925,896
Inventories		(17,938,859	)			(9,949,597	)
Other receivables and other assets		1,302,745				(2,806,192	)
Advances to supplier and prepayments and prepaid expenses		680,110				13,475,591
Increase (Decrease) In:
Accounts payable		20,729,603				32,751,997
Other payables and accrued liabilities		(1,071,220	)			4,198,349
Notes payable		(15,133,991	)			(7,788,622	)
Income tax payable		(70,636	)			(777,068	)
Net cash provided by operating activities	$	11,260,110			$	23,103,164
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net		(1,360,492	)			(1,491,918	)
Payment for construction in progress		(76,792	)			(308,304	)
Certificate of deposit		(33,214,435	)			(21,617,615	)
Net cash used in investing activities	$	(34,651,719	)		$	(23,417,837	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans		7,928,212				5,070,582
Repayments of short-term loans		(6,398,565	)			(4,570,582	)
Contribution from non-controlling shareholder		–				787,499
Purchase of treasury stock		–				(3,580,628	)
Net cash provided by (used in) financing activities	$	1,529,647			$	(2,293,129	)
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	$	(21,861,962	)		$	(2,607,802	)
Effect of exchange rate changes	$	(5,533,637	)		$	(6,734,387	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR	$	151,040,271			$	168,676,007
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	123,644,672			$	159,333,818
-CASH AND CASH EQUIVALENTS AT END OF PERIOD		69,406,103				87,098,779
-RESTRICTED CASH AT END OF PERIOD		54,238,569				72,235,039
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid	$	76,016			$	140,831
Interest paid	$	198,793			$	102,722
SUPPLEMENTAL NON-CASH DISCLOSURES:
Contribution from non-controlling shareholder by inventories, fixed assets and intangible assets	$	–			$	393,986