Kandi Technologies Reports First Quarter 2018 Financial Results

May 10, 2018 7:00 AM EDT | Source: Kandi Technologies, Corp.

Jinhua, China--(Newsfile Corp. - May 10, 2018) - -Q1 revenue increased 95.0% YoY to $8.3 million
-Q1 JV sold 3,295 EV products
- Q1 GAAP net income achieved $3.7 million, or $0.07 EPS compared to GAAP net loss of $24.2 million, or $0.51 loss per share

Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the "Company," "we" or "Kandi"), today announced its financial results for the first quarter of 2018.

First Quarter Highlights

  • Total revenues increased 95.0% to $8.3 million for the first quarter of 2018, from $4.3 million for the same period of 2017.
  • Electric Vehicle (“EV”) parts sales increased 139.1% to $6.4 million for the first quarter of 2018, compared with $2.7million in the same period of 2017.
  • Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”) sold 3,295 EV products in the first quarter of 2018, compared to no EV products sold in the same period in 2017.
  • Off-road vehicle revenues increased 22.0% to $2.0 million for the first quarter of 2018 compared with $1.6 million in the same period of 2017.
  • GAAP net income for the first quarter of 2018 was $3.7 million, or $0.07 per fully diluted share, compared with net loss of $24.2 million, or $0.51 loss per fully diluted share in the same period of 2017.
  • Non-GAAP adjusted net loss , which excludes stock compensation expenses of $1.0 million net of a reversal for forfeited stock option of $2.6 million and the change in fair value of contingent consideration which was a gain of $2.7 million, was $0.6 million in the first quarter of 2018, compared with non-GAAP net loss of $21.7 million for the same period of 2017. Non-GAAP adjusted loss per share1 was approximately $0.01 per fully diluted share for the first quarter of 2018 compared with Non-GAAP adjusted loss per share1 of $0.45 per fully diluted share for the same quarter of 2017.
  • Working capital surplus was $50.1 million as of March 31, 2018.Cash, cash equivalents and restricted cash totaled $8.5 million as of March 31, 2018.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, "We have taken strides to accelerate our EV sales and we are very pleased with our strong performance given the first quarter being a slow season. In March, the JV Company unveiled its first all-electric SUV model Geely Global HawkEX3, although it is not yet in production, there has already been overwhelming requests from interested dealers. At the end of March, Kandi Model K23 production was launched and sales are expected to be advanced in the second half of 2018. We are confident in these new EV products becoming a driving force that will fuel the growth of Kandi's EV business."

"In the first quarter, we completed the acquisition of Jinhua An Kao Power Technology Co., Ltd. and have consolidated its financial statements. An Kao's unique system of pure electric car battery replacement technology is a major step forward to our existing EV offering. The acquisition is expected to generate additional revenues and provide a considerably competitive advantage in product delivery and services that will lead to market share gain. Looking forward, we expect continued momentum of Kandi's EV business to a new phase of growth in 2018." Mr. Hu concluded.

Net Revenues and Gross Profit

　1Q181Q17Y-o-Y%
Net Revenues (US$mln)$8.3 $4.3 95.0%
Gross Profit (US$mln)$1.3$0.7 101.7%
Gross Margin16.1%15.6%-

 

Net revenues for the first quarter increased 95.0%compared to the same period last year. The increase in revenue was mainly due to the increase in EV parts sales during this quarter.

Operating Income (Loss)

　1Q181Q17Y-o-Y%
Operating Expenses (US$mln)$1.1$29.4(96.2%)
Operating Income (Loss) (US$mln)$0.2($28.8)(100.8%)
Operating Margin2.9%(673.3%)-

 

Total operating expenses in the first quarter were $1.1 million, compared with $29.4 million in the same quarter of 2017. The decrease in total operating expenses was primarily due to decreased research and development, which was$0.8 million in this quarter, compared with $20.8 million in the same quarter last year.

GAAP Net Income

　1Q181Q17Y-o-Y%
Net Income (Loss) (US$mln)$3.7($24.2) (115.4%)
Earnings（loss） per Weighted Average Common Share Outstanding Basic$0.07($0.51)-
Earnings (loss) per Weighted Average Common Share Outstanding Diluted$0.07($0.51)-
Stock Compensation expenses($1.6)$2.5 -
Change in fair value of contingent consideration($2.7)--
Non-GAAP net loss($0.6)($21.7)(97.4%)

 

Net income was $3.7 million in the first quarter, compared with net loss of $24.2 million in the same quarter of 2017. The increase was primarily attributable to increased sales and gross profits, increased profits from the JV Company and significantly decreased R&D expenses this period.

Non-GAAP net loss was $0.6million, a 97.4% decreased loss in the first quarter of 2018 compared to net loss of $21.7 million in the same quarter of 2017. The decrease in Non-GAAP net loss was primarily attributable to increased sales and gross profits, increased profits from the JV Company and significantly decreased R&D expenses this period.

JV Company Financial Results

In the first quarter, the JV Company sold a total of 3,295 units of EV products, compared to no EV product sales in the same period of 2017.In this quarter, total revenue was $33.8 million as compared to $1.3 million for the quarter ended March 31, 2017.

The condensed financial income statement of the JV Company in the first quarter is as below:

　1Q181Q17Y-o-Y%
Net Revenues (US$mln)$33.8$1.32500.0%
Gross Profit (Loss) (US$mln)$5.6($0.3)(1966.7%)
Gross Margin16.5%(26.4%)-
Net Income (Loss)$1.0($10.6)(109.4%)
% of Net revenue3.0%(830.3%)-

 

Kandi's investments in the JV Company are accounted for under the equity method of accounting, as Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company's income for $0.5 million for this quarter. After eliminating intra-entity profits and losses, Kandi's share of the after tax profit of the JV Company was $0.8 million for the first quarter of 2018.

First Quarter of 2018 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 May 10, 2018. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Mei Bing, Chief Financial Officer of the Company, 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 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, Zhejiang Province, is engaged in the research and development, manufacturing and sales of various vehicle products. Kandi has established itself as one of China's leading manufacturers of pure electric vehicle ("EV") products (through its joint venture), EV parts and off-road vehicles. More information can be viewed at the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website.

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 securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group
Company Contact:

Ms. Kewa Luo
Kandi Technologies Group, Inc.
Phone: 1-212-551-3610
Email: IR@kandigroup.com

_______________
1 Non-GAAP measures, including the Non-GAAP net income (loss) and Non-GAAP EPS are defined as the financial measures excluding the change of the fair value of contingent consideration and the effects of the stock compensation expense. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measures should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with GAAP.

- Tables Below -


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

 
  March 31,
2018		   December 31,
2017		  
  (Unaudited)      
Current assets        
Cash and cash equivalents $ 1,041,781   $ 4,891,808  
Restricted cash   7,491,324     11,218,688  
Accounts receivable (net of allowance for doubtful accounts of $382,108 and $133,930 as of March 31, 2018 and December 31, 2017, respectively)   27,236,661     34,397,858  
Inventories (net of provision for slow moving inventory of $643,318 and $620,919 as of March 31, 2018 and December 31, 2017, respectively)   17,439,458     15,979,794  
Notes receivable from JV Company and related party   7,611,283     1,137,289  
Other receivables   2,356,811     2,650,668  
Prepayments and prepaid expense   6,744,641     6,536,839  
Due from employees   6,847     7,070  
Advances to suppliers   12,290,705     14,908,385  
Amount due from JV Company, net   141,716,559     146,422,440  
Amount due from related party   167,894     162,048  
TOTAL CURRENT ASSETS   224,103,964     238,312,887  
             
LONG-TERM ASSETS            
Property, Plant and equipment, net   14,091,019     12,000,971  
Land use rights, net   13,133,595     12,666,047  
Construction in progress   58,840,459     53,083,925  
Deferred taxes assets   3,607,478     4,383,425  
Long Term Investment   1,512,703     1,460,034  
Investment in JV Company   74,035,495     70,681,013  
Goodwill   25,344,151     322,591  
Intangible assets   5,224,868     331,116  
Advances to suppliers   22,371,860     21,592,918  
Other long term assets   7,549,153     7,590,734  
Amount due from JV Company, net   15,907,183     15,907,183  
TOTAL Long-Term Assets   241,617,964     200,019,957  
             
TOTAL ASSETS $ 465,721,928   $ 438,332,844  
             
CURRENT LIABILITIES            
Accounts payables $ 117,258,483   $ 111,595,540  
Other payables and accrued expenses   5,289,475     6,556,209  
Short-term loans   34,234,851     33,042,864  
Customer deposits   334,885     205,544  
Notes payable   10,466,183     28,075,945  
Income tax payable   2,421,168     2,902,699  
Due to employees   11,699     35,041  
Deferred income   3,960,698     2,191,143  
Total Current Liabilities   173,977,442     184,604,985  
             
LONG-TERM LIABILITIES            
Long term bank loans   31,846,373     30,737,547  
Contingent liability   6,032,817     -  
Other long-term liability   579,224     -  
Total Long-Term Liabilities   38,458,414     30,737,547  
             
TOTAL LIABILITIES   212,435,856     215,342,532  
             
STOCKHOLDER'S EQUITY            
Common stock, $0.001 par value; 100,000,000 shares authorized; 53,968,712 and 48,036,538 shares issued and 51,008,875 and 48,036,538 outstanding at March 31, 2018 and December 31, 2017, respectively   51,009     48,037  
Additional paid-in capital   252,154,904     233,055,348  
Retained earnings (the restricted portion is $4,422,033 and $4,422,033 at March 31, 2018 and December 31, 2017, respectively)  

(74,318

)		  

(3,802,310

)
Accumulated other comprehensive loss   1,154,477     (6,310,763 )
TOTAL STOCKHOLDERS' EQUITY   253,286,072     222,990,312  
             
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 465,721,928   $ 438,332,844  
 


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

 
    Three Months Ended  
    March 31,
2018		     March 31,
2017		  
             
REVENUES FROM UNRELATED PARTY, NET   $ 5,732,463     $ 2,962,931  
REVENUES FROM JV COMPANY AND RELATED PARTY, NET     2,603,444       1,311,642  
                 
REVENUES, NET     8,335,907       4,274,573  
                 
COST OF GOODS SOLD     (6,989,956 )     (3,607,241 )
                 
GROSS PROFIT     1,345,951       667,332  
                 
OPERATING EXPENSES:                
Research and development     (757,298 )     (20,769,732 )
Selling and marketing     (748,225 )     (358,309 )
General and administrative     398,171       (8,319,294 )
Total Operating Expenses     (1,107,352 )     (29,447,335 )
                 
INCOME (LOSS) FROM  OPERATIONS     238,599       (28,780,003 )
                 
OTHER INCOME (EXPENSE):                
Interest income     942,993       530,642  
Interest expense     (550,417 )     (614,453 )
Change in fair value of contingent consideration     2,680,179       -  
Government grants     95,255       5,067,474  
Share of income (loss) after tax of JV     795,055       (5,161,713 )
Other income, net     22,977       28,621  
Total other income (expense), net     3,986,042       (149,429 )
                 
INCOME (LOSS) BEFORE INCOME TAXES     4,224,641       (28,929,432 )
                 
INCOME TAX (EXPENSE) BENEFIT     (496,646 )     4,775,997  
                 
NET INCOME (LOSS)     3,727,995       (24,153,435 )
                 
OTHER COMPREHENSIVE INCOME (LOSS)                
Foreign currency translation     7,465,240       1,791,816  
                 
COMPREHENSIVE INCOME (LOSS)   $ 11,193,235     $ (22,361,619 )
                 
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC     50,643,423       47,732,388  
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED     50,643,423       47,732,388  
                 
NET INCOME (LOSS) PER SHARE, BASIC   $ 0.07     $ (0.51 )
NET INCOME (LOSS) PER SHARE, DILUTED   $ 0.07     $ (0.51 )



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

    Three Months Ended  
    March 31,
2018		   March 31,
2017		  
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net income (loss)   $ 3,727,995   $ (24,153,435 )
Adjustments to reconcile net income to net cash provided by operating activities              
Depreciation and amortization     875,463     1,162,795  
Assets impairments     -     45,831  
Allowance for doubtful accounts     240,419     -  
Deferred taxes     (308,406 )   (4,775,997 )
Share of income after tax of JV Company     (795,055 )   5,161,713  
Change in fair value of contingent consideration     (2,680,179 )   -  
Stock compensation cost     (1,615,706 )   2,476,519  
               
Changes in operating assets and liabilities, net of effects of acquisition:              
(Increase) Decrease In:              
Accounts receivable     12,343,813     (1,399,372 )
Deferred taxes assets     (53,414 )   -  
Notes receivable from JV Company and related party     (5,015,238 )   3,704,957  
Inventories     265,800     (2,779,644 )
Other receivables and other assets     752,017     (210,503 )
Due from employee     (23,838 )   (46,692 )
Advances to supplier and prepayments and prepaid expenses     3,144,325     21,948,470  
Advances to suppliers-long term     (3,712,576 )   (5,682,460 )
Amount due from JV Company     (9,902,514 )   (15,542,072 )
Due from related party     -     (300,000 )
               
Increase (Decrease) In:              
Accounts payable     19,319,570     9,986,016  
Other payables and accrued liabilities     (2,503,830 )   (297,408 )
Notes payable     (16,117,038 )   (1,855,353 )
Customer deposits     120,458     127,216  
Income tax payable     (819,372 )   (789,661 )
Deferred income     1,670,173     (5,067,474 )
Loss contingency-litigation     -     4,622,066  
Net cash used in operating activities   $ (1,087,133 ) $ (13,664,488 )
               
CASH FLOWS FROM INVESTING ACTIVITIES:              
Purchases of property, plant and equipment, net     (109,160 )   (23,492 )
Purchases of land use rights and other intangible assets     (99,404 )   -  
Acquisition of Jinhua An Kao (net of cash received)     (3,699,801 )   -  
Purchases of construction in progress     (82,792 )   (1,488,409 )
Short term investment     -     4,418,065  
Net cash (used in) provided by investing activities   $ (3,991,157 ) $ 2,906,164  
               
CASH FLOWS FROM FINANCING ACTIVITIES:              
Proceeds from short-term bank loans     3,775,587     3,629,407  
Repayments of short-term bank loans     (3,775,587 )   (5,661,875 )
Proceeds from notes payable     25,539,803     3,669,853  
Repayment of notes payable     (28,607,869 )   -  
Net cash (used in) provided by financing activities   $ (3,068,066 ) $ 1,637,385  
               
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH     (8,146,356 )   (9,120,939 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash     568,965     194,084  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR     16,110,496     25,193,298  
               
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD     8,533,105     16,266,443  
               
SUPPLEMENTARY CASH FLOW INFORMATION              
Income taxes paid     1,466,761     786,172  
Interest paid     414,319     386,973  
               
SUPPLEMENTAL NON-CASH DISCLOSURES:              
Advances to suppliers-long term transferred to Construction in progress     3,712,576     8,023,030  
Purchase of construction in progress in accounts payable     -     980,292  
Settlement of due from JV Company and related parties with notes receivable     20,337,201     22,713,442  
Settlement of accounts receivables with notes receivable from unrelated parties     7,866     -  
Assignment of notes receivable from unrelated parties to supplier to settle accounts payable     7,866     -  
Assignment of notes receivable from JV Company and related parties to supplier to settle accounts payable     18,996,867     18,082,140  
Settlement of accounts payable with notes payables     786,581     2,032,468  
Deferred tax changed to other comprehensive income     42,528     -  
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