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Kandi Technologies Reports Second Quarter 2023 Financial Results

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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 2023Q2 2022Y-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 2023Q2 2022Y-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 2023Q2 2022Y-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:

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 

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