China Automotive Systems Reports 2018 Second Quarter Unaudited Financial Results

WUHAN, China, Aug. 9, 2018 /PRNewswire/ -- China Automotive Systems, Inc. ("CAAS" or the "Company") (NASDAQ: CAAS), 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, 2018.

Second Quarter 2018 Highlights

• Net sales increased 6.9% to $125.8 million from $117.7 million in the second quarter of 2017;
• Gross profit declined 29.3% to $17.0 million and the gross margin decreased to 13.5% from 20.4% in the second quarter of 2017;
• Income from operations decreased to $0.6 million with an operating margin of 0.5% compared with 9.4% in the second quarter of 2017;
• Net income attributable to parent company's common shareholders declined to $0.8 million, or diluted earnings per share of $0.03, compared to net income attributable to parent company's common shareholders of $8.9 million, or diluted earnings per share of $0.28, in the second quarter of 2017.

First Six Months of 2018 Highlights

• Net sales grew 9.6% to $259.8 million, compared to $237.0 million in the first six months of 2017;
• Gross profit decreased to $38.7 million, compared to $45.7 million in the first six months of 2017; gross margin decreased to 14.9% in the first six months of 2018, compared to 19.3% in the first six months of 2017;
• Income from operations decreased to $5.2 million from $18.3 million with an operating margin of 2.0% compared with 7.7% in the second quarter of 2017;
• Net income attributable to parent company's common shareholders was $5.2 million from $14.6 million in the first six months of 2017; diluted earnings per share attributable to parent company's common shareholders was $0.16, compared to diluted earnings per share attributable to parent company's common shareholders of $0.46 in the first six months of 2017;
• Net cashflow used in operating activities was $5.4 million compared with net cashflow provided of $22.1 million in the first six months of 2017.

Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Our sales in the second quarter of 2018 reflect higher sales of our traditional steering products.  We continue to invest more resources to develop new generations of electric power steering ("EPS") products and other advanced steering products for future growth."

Mr. Jie Li, chief financial officer of CAAS, commented, "We continue to enhance our financial resources while we build advanced steering products to offer a broader line of steering products to meet the changing requirements of our customers."

Second Quarter of 2018

In the second quarter of 2018, net sales increased 6.9% to $125.8 million, compared to $117.7 million in the same quarter of 2017. Net sales of traditional steering products grew by 8.5% and the Company sold more products to its North American customers. Sales of electric power steering ("EPS") represented 21.4% of total net sales.

Gross profit decreased to $17.0 million in the second quarter of 2018, compared to $24.1 million in the second quarter of 2017. The gross margin was 13.5% in the second quarter of 2018, versus 20.4% in the second quarter of 2017. The gross margin decreased mainly due to a lower sales price, higher unit cost and the change in product mix. 

Gain on other sales was $1.0 million in the second quarter of 2018, compared to $4.6 million in the second quarter of 2017. The decrease was due to the fact that during the second quarter of 2017, the Company disposed of a building located in Jingzhou and recognized a gain of $2.2 million.

Selling expenses were $4.9 million in the second quarter of 2018, compared to $4.6 million in the second quarter of 2017. The increase was mainly due to higher logistics expenses related to increased sales during the quarter. Selling expenses represented 3.9% of net sales in the second quarter of 2018 and in the second quarter of 2017. 

General and administrative expenses ("G&A expenses") were $4.4 million in the second quarter of 2018 compared to $5.3 million in the second quarter of 2017. G&A expenses represented 3.5% of net sales in the second quarter of 2018 compared to 4.5% in the second quarter of 2017. The decrease was mainly due to a lower allowance for doubtful accounts. 

Research and development expenses ("R&D expenses") increased 5.2% to $8.1 million in the second quarter of 2018, compared to $7.7 million in the second quarter of 2017. R&D expenses continue to focus on the development of the Company's EPS and other new products. R&D expenses represented 6.4% of sales in the second quarter of 2018, compared with 6.6% in the 2017 second quarter.

Net financial income in the second quarter of 2018 was $0.9 million compared with $0.6 million in the second quarter of 2017.

Income from operations was $0.6 million in the second quarter of 2018, compared to $11.1 million in the same quarter of 2017. The decrease was primarily due to lower gross profit and lower gain on other sales. As a percentage of net sales, the operating margin was 0.5% in the second quarter of 2018, compared to 9.4% in the second quarter of 2017.

Income before income tax expenses and equity in earnings of affiliated companies was $1.3 million in the second quarter of 2018, compared to $11.1 million in the second quarter of 2017. 

Net income attributable to parent company's common shareholders was $0.8 million in the second quarter of 2018, compared to net income attributable to parent company's common shareholders of $8.9 million in the corresponding quarter of 2017. Diluted earnings per share were $0.03 in the second quarter of 2018, compared to diluted earnings per share of $0.28 in the second quarter of 2017. The weighted average number of diluted common shares outstanding was 31,647,305 in the second quarter of 2018, compared to 31,649,322 in the second quarter of 2017.

First Six Months of 2018

Net sales increased 9.6% to $259.8 million in the first six months of 2018, compared to $237.0 million in the first six months of 2017. Six-month gross profit was $38.7 million, compared to $45.7 million in the corresponding period last year. Six-month gross margin was 14.9% in the first six months of 2018 compared to 19.3% in the corresponding period in 2017. The gain on other sales was $2.5 million in the first six months of 2018 compared with $5.3 million in the corresponding period last year. Income from operations was $5.2 million in the first six months of 2018, compared to $18.3 million in the first six months of 2017. Operating margin was 2.0% in the first six months of 2018, compared to 7.7% in the corresponding period of 2017. 

Net income attributable to parent company's common shareholders was $5.2 million in the first six months of 2018, compared to $14.6 million in the corresponding period in 2017. Diluted earnings per share were $0.16 in the first six months of 2018, compared to diluted earnings per share of $0.46 in the corresponding period of 2017.

As of June 30, 2018, cash and equivalents, pledged cash and short-term investments were $112.4 million. Total accounts receivable including notes receivable were $283.6 million. Accounts payable were $219.4 million and short-term loans were $57.1 million. Total parent company stockholders' equity was $306.4 million as of June 30, 2018, compared to $306.1 million as of December 31, 2017.

Net cash used in operating activities was $5.4 million in the first six months of 2018 compared with net cash provided by operating activities of $22.1 million in the first six months of 2017. Payments to acquire property, plant and equipment were $17.3 million compared with $10.2 million in the first six months of 2017.

Business Outlook

Management reiterated its revenue guidance for the full year 2018 of US$520 million. This target is based on the Company's current views on operating and market conditions, which are subject to change.

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 eight 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 Chrysler Group LLC 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 29, 2018, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. 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 LiChief Financial OfficerChina Automotive Systems, Inc.Email: [email protected]

Kevin Theiss+1-212-521-4050[email protected]

 

(Tables Follow)

 

 

 

 

 

 

 

 

 

 

 

View original content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-2018-second-quarter-unaudited-financial-results-300694539.html

SOURCE China Automotive Systems, Inc.