Kandi Technologies Reports Strong Third Quarter 2017 Financial Results

– Q3 revenue increased 345.4% yoy to $28.4 million –
– Q3 JV Company sold 6,765 units of EV products, a 3576.6% increase yoy –
– Q3 GAAP net income of $1.9 million compared to net loss of $0.6 million in the same period last year –

Jinhua, China--(Newsfile Corp. - November 9, 2017) - Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the third quarter of 2017.

Third Quarter Highlights

  • Total revenues were $28.4 million for the third quarter of 2017, an increase of 345.4% from total revenues of $6.4 million for the same period in 2016.
  • Electric Vehicle (“EV”) parts sales increased by 473.2%, to $27.0 million for the third quarter of 2017, compared with EV parts sales of $4.7 million for the same period in 2016.
  • Kandi Electric Vehicles Group Co., Ltd. (the "JV Company") sold 6,765 units of EV products, including 2,747 units of model K17 and 4,018 of model K12 for the third quarter of 2017 compared to 184 units sold in the same period last year;
  • GAAP net income for the third quarter of 2017 was $1.9 million, or earnings of $0.04 per fully diluted share compared with GAAP net loss of $0.6 million, or loss of $0.01 per fully diluted share for the same period in 2016
  • Non-GAAP adjusted net income1, which excludes stock award expenses and the change of the fair value of financial derivatives, was $3.0 million in the third quarter of 2017, compared with non-GAAP net loss of $1.8 million for the same period in 2016. Non- GAAP adjusted income per share1 was approximately $0.06 per fully diluted share for the third quarter of 2017, compared with Non-GAAP adjusted loss per share1 of $0.04 per fully diluted share for the same period in 2016.
  • Working capital surplus was $45.3 million as of September 30, 2017. Cash, cash equivalents and restricted cash totaled $24.3 million as of September 30, 2017.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “We're pleased with our solid business performance in the third quarter. Our production and sales have increased significantly year over year as the JV Company has resumed normal production and sales of EV products. Due to confusion surrounding the reusable battery exchange model, our business had been heavily impacted since last year. We have been working diligently since then to overcome that difficult time in order to turn it into a great success. This quarter represents a turning point and an exciting time for Kandi as the Company continues preparing for the tremendous opportunities available in the renewable energy industry. We remain confident in our ability to continue to successfully execute our long-term business plan and regain our leading market position in the EV industry in the near future.”

Net Revenues and Gross Profit

    3Q17     3Q16     Y-o-Y%  
Net Revenues (US$million) $ 28.4   $ 6.4     345.4%  
Gross Profit (US$million) $ 4.8   $ 0.7     642.0%  
Gross Margin   17.0%     10.2%     -  

 

Net revenues for the third quarter of 2017 increased by 345.4% compared to the same period last year. The increase in net revenue was mainly due to the increase in EV parts sales during this quarter. The selling price of our products for the three months ended September 30, 2017 decreased on average from the same period last year. The increase in revenues was primarily due to the increase in sales volume.

Operating Income (Loss)

    3Q17     3Q16     Y-o-Y%  
Operating Expenses (US$million) $ 3.1   $ 1.3     141.7%  
Operating Income (Loss) (US$million) $ 1.8     ($0.6 )   384.4%  
Operating Margin   6.2%     (9.7% )   -  
Operating Income (Loss) (US$million) (Non- GAAP) $ 2.8     ($1.8 )   -
 

 

Total operating expenses in the third quarter of 2017 were $3.1 million, compared with $1.3 million in the same quarter of 2016. The increase in total operating expenses was due to increased G&A expenses, which were $2.2 million in this quarter compared with $0.4 million in the same quarter last year.

GAAP Net Income (Loss)

    3Q17     3Q16     Y-o-Y%  
Net Income (Loss) (US$million) $ 1.9     ($0.6 )   438.9%  
Earnings (Loss)per Weighted Average Common Share $ 0.04     ($0.01 )   -  
Earnings(Loss) per Weighted Average Diluted Share $ 0.04     ($0.01 )   -  
Stock Award Expenses (Reversal) (US$million) $ 1.0     ($1.2 )   185.5 %  
Change in the Fair Value of Financial Derivatives (US$million)   -     -     -  
Non-GAAP Net Income (Loss) from Continuing Operations (US$million) $ 2.9     ($1.8 )   265.6%  

 

Net income was $1.9 million in the third quarter, compared with net loss of $0.6 million in the same quarter of 2016. The net income for this quarter was primarily attributable to significantly increased revenue and gross profits this period as compared to the same period of last year.

Non-GAAP net income was $2.9 million in the third quarter of 2017, an increase of $4.7 million compared to Non-GAAP net loss of $1.8 million in the same quarter of 2016. The increase in net income (non-GAAP) was primarily attributable to the significantly increased revenue and gross profits in the third quarter of 2017.

Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”) Financial Results

In the third quarter of 2017, the JV Company sold 6,765 units of EV products.

The condensed financial income statements of the JV Company in the first quarter are as set forth below:

    3Q17     3Q16     Y-o-Y%  
Net Revenues (US$million) $ 86.2   $ 11.7     637.3%  
Gross Income (US$million) $ 5.3   $ 5.9     -11.1%  
Gross Margin   6.1%     50.8%     -  
Net loss (US$million)   ($0.5 )   ($0.4 )   -12.6%  
% of Net revenue   -     -     -  

Revenue for the JV Company was $86.2 million in the third quarter of 2017, an increase of 637.3% compared to the same quarter of 2016. Net loss was $0.5 million, a 12.6% decrease compared to the same quarter of 2016.

Kandi’s investments in the JV Company are accounted for using the equity method of accounting because Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company’s losses of $0.2 million for this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after-tax profit of the JV Company was $0.4 million for the third quarter of 2017.

Third Quarter 2017 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its second quarter 2017 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 9, 2017. 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.

Dial-in details for the conference call are as follows:

A 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, 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 informationcan 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

______________
1Non-GAAP measures, including Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of fair value of financial derivatives and the effects of stock award expenses. We supply non- GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measure 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
(UNAUDITED)

    September 30,     December 31,  
    2017     2016  

 

           

Current assets

           

Cash and cash equivalents

$  3,560,510   $  12,235,921  

Restricted cash

  20,735,921     12,957,377  

Short term investment

  -     4,463,097  

Accounts receivable

  41,774,453     32,394,613  

Inventories (net of provision for slow moving inventory of $574,165 and $415,797 as of September 30, 2017 and December 31, 2016, respectively


15,176,578

11,914,110

Notes receivable from JV Company and related party

  1,542,147     400,239  

Other receivables

  238,577     66,064  

Prepayments and prepaid expense

  5,471,257     4,317,855  

Due from employees

  25,901     4,863  

Advances to suppliers

  14,536,366     38,250,818  

Amount due from JV Company, net

  136,632,901     136,536,159  

Amount due from related party

  6,437,261     10,484,816  

TOTAL CURRENT ASSETS

  246,131,872     264,025,932  

 

           

LONG-TERM ASSETS

           

Property, Plant and equipment, net

  12,962,632     15,194,442  

Land use rights, net

  12,045,926     11,775,720  

Construction in progress

  47,676,068     27,054,181  

Deferred taxes assets

  4,555,018     -  

Long Term Investment

  1,427,798     1,367,723  

Investment in JV Company

  67,087,803     77,453,014  
Goodwill   322,591     322,591  
Intangible assets   351,640     413,211  
Advances to suppliers   27,695,209     33,819,419  
Other long term assets   7,726,179     8,271,952  
Amount due from JV Company, net   15,907,183     -  
TOTAL Long-Term Assets   197,758,047     175,672,253  
             
TOTAL ASSETS $  443,889,919   $  439,698,185  
             
CURRENT LIABILITIES            
Accounts payables $  131,047,418   $  115,870,051  
Other payables and accrued expenses   6,523,693     4,835,952  
Short-term loans   32,613,923     34,265,065  
Customer deposits   125,411     41,671  
Notes payable   26,212,569     14,797,325  
Income tax payable   2,282,514     1,364,235  
Due to employees   31,956     21,214  
Deferred taxes liabilities   -     118,643  
Deferred income   1,397,138     6,363,751  
Loss contingency-litigation   601,178     -  
Total Current Liabilities   200,835,800     177,677,907  

LONG-TERM LIABILITIES

           

Long term bank loans

  30,058,915     28,794,172  

Deferred taxes liabilities

  -     878,639  

Total Long-Term Liabilities

  30,058,915     29,672,811  

 

           

TOTAL LIABILITIES

  230,894,715     207,350,718  

 

           

STOCKHOLDER’S EQUITY

           

Common stock, $0.001 par value; 100,000,000 shares authorized; 48,034,038 and 47,699,638 shares issued and outstanding at September 30,2017 and December 31,2016, respectively

  48,034     47,700  

Additional paid-in capital

  233,409,326     227,911,477  

Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at September 30,2017 and December 31,2016, respectively)

  (9,248,214 )   24,545,163  

Accumulated other comprehensive loss

  (11,213,942 )   (20,156,873 )

TOTAL STOCKHOLDERS’ EQUITY

  212,995,204     232,347,467  

 

           

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$  443,889,919   $  439,698,185  


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

    Three Months     Nine Months  
    Ended September 30,     Ended September 30,  
    2017     2016     2017     2016  
                         
REVENUES FROM UNRELATED PARTY, NET
6,604,109

5,211,201
$ 10,720,595
$ 46,165,105
REVENUES FROM JV COMPANY AND RELATED PARTY, NET
21,749,790

1,155,179

49,233,156

66,076,536
                         
                         
REVENUES, NET   28,353,899     6,366,380     59,953,751     112,241,641  
                         
COST OF GOODS SOLD
23,522,406

5,715,211

50,697,990

96,417,337
                         
GROSS PROFIT   4,831,493     651,169     9,255,761     15,824,304  
                         
OPERATING                        
EXPENSES:                        
Research and development
657,851

522,806

26,569,624

1,222,967
Selling and marketing
216,351

374,102

976,913

1,150,880
General and administrative
2,196,201

373,411

12,074,147

18,031,487
Total Operating Expenses
3,070,403

1,270,319

39,620,684

20,405,334
                         
INCOME (LOSS) FROM OPERATIONS
1,761,090

(619,150 )
(30,364,923 )
(4,581,030 )
                         
OTHER INCOME                        
(EXPENSE):                        
Interest income   619,923     832,031     1,709,990     2,397,364  
Interest expense   (598,523 )   (425,152 )   (1,761,786 )   (1,299,549 )
Change in fair value of financial instruments
-

10,692

-

3,823,590
Government grants   474,950     594,323     5,804,561     2,292,180  
Share of income                        
(loss) after tax of JV   444,181     (299,538 )   (13,455,786 )   (203,375 )
Other expense, net   (6,560 )   (106,299 )   143,617     202,878  
Total other income (expense), net   933,971     606,057     (7,559,404 )   7,213,088  
                         
INCOME (LOSS) BEFORE INCOME TAXES   2,695,061     (13,093 )   (37,924,327 )   2,632,058  
                         
INCOME TAX (EXPENSE) BENEFIT   (776,985 )   (552,848 )   4,130,951     (316,399 )
                         
NET INCOME (LOSS)   1,918,076     (565,941 )   (33,793,376 )   2,315,659  
                         
OTHER COMPREHENSIVE INCOME (LOSS)  
   
   
   
 
Foreign currency translation   4,032,652     (805,216 )   8,942,931     (6,433,480 )
                         
COMPREHENSIVE INCOME (LOSS) $  5,950,728   $  (1,371,157 ) $ (24,850,445 ) $ (4,117,821 )
                         
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC   48,028,467     47,695,290     47,913,028     47,436,418  
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED   48,028,467     47,695,290     47,913,028     47,436,418  
                         
NET INCOME (LOSS) PER SHARE, BASIC $  0.04   $  (0.01 )   (0.71 0.05  
NET INCOME (LOSS) PER SHARE, DILUTED $  0.04   $  (0.01 )   (0.71 0.05  

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

    September 30,   September 30,  
    2017     2016  

CASH FLOWS FROM OPERATING ACTIVITIES:

           

Net (loss) income

$  (33,793,376 )   $ 2,315,659  

Adjustments to reconcile net income to net cash provided by operating activities

           

Depreciation and amortization

  3,556,661     3,681,345  

Assets Impairments

  136,936     -  

Deferred taxes

  (5,596,103 )   (2,608,702 )

Change in fair value of financial instruments

  -     (3,823,590 )

Share of loss after tax of JV Company

  13,455,786     203,375  

Stock Compensation cost

  5,522,358     13,930,829  

Changes in operating assets and liabilities, net of effects of acquisition:

           

(Increase) Decrease In:

           

Accounts receivable

  (8,926,990 )   (48,534,492 )

Notes receivable

  -     918,018  

Notes receivable from JV Company and related party

  4,923,967     -  

Inventories

  (2,814,129 )   1,802,780  

Other receivables and other assets

  754,661     (11,868,318 )

Due from employee

  (10,766 )   17,718  

Advances to supplier and Prepayments and prepaid expenses

  23,878,150     (31,684,685 )

Advances to suppliers-Long term

  (4,804,200 )   -  

Amount due from JV Company

  (33,071,177 )   (87,973,693 )

Amount due from JV Company-Long-term

  (15,907,183 )   -  

Due from related party

  4,406,105     28,994,314  

Increase (Decrease) In:

           

Accounts payable

  53,078,541     106,924,655  

Other payables and accrued liabilities

  2,173,413     10,415,706  

Notes payable

  (3,933,839 )   (5,849,988 )

Customer deposits

  80,057     (13,598 )

Income Tax payable

  732,405     607,422  

Deferred income

  (5,127,455 )   -  

Loss contingency-litigation

  587,579     -  

Net cash used in operating activities

$  (698,599 )   $ (22,545,245 )

CASH FLOWS FROM INVESTING ACTIVITIES:

           

Purchases of plant and equipment, net

  (420,037 )   (39,250 )

Purchases of construction in progress

  (1,565,244 )   (4,236,301 )

Repayment of notes receivable

  -     10,436,303  

Restricted cash

  5,875,786     -  

Short Term Investment

  4,553,734     1,592,024  

Net cash provided by investing activities

$  8,444,239   $ 7,752,776  

CASH FLOWS FROM FINANCING ACTIVITIES:

           

Restricted cash

  (12,922,105 )   1,519,477  

Proceeds from short-term bank loans

  24,854,574     -  

Repayments of short-term bank loans

  (27,939,362 )   -  

Proceeds from notes payable

  13,367,413     -  

Repayment of notes payable

  (14,060,961 )   -  

Warrant exercise

  -     434,666  

Net cash (used) provided by financing activities

$  (16,700,441 $ 1,954,143  

 

           

NET DECREASE IN CASH AND CASH EQUIVALENTS

  (8,954,801 )   (12,838,326 )

Effect of exchange rate changes on cash

  279,390     (210,383 )

Cash and cash equivalents at beginning of year

  12,235,921     16,738,559  

 

           

CASH AND CASH EQUIVALENTS AT END OF PERIOD

  3,560,510     3,689,850  

 

           

SUPPLEMENTARY CASH FLOW INFORMATION

           

Income taxes paid

  1,072,082     2,322,747  

Interest paid

  1,164,774     1,283,843  

 

           

SUPPLEMENTAL NON-CASH DISCLOSURES:

           

Prepayment transferred to construction in progress

  12,241,736     -  

Purchase of construction in progress by accounts payable

  6,244,120     -  

Advances to suppliers-long term adjusted for other payable

  1,057,152     -  

Settlement of due from JV Company and related parties with notes receivable

  39,197,964     46,791,213  

Settlement of accounts receivables with notes receivable from unrelated parties

  1,150,038     15,198,694  

Assignment of notes receivable to supplier to settle accounts payable

  34,325,141     61,497,480  

Settlement of accounts payable with notes payables

  15,149,150     5,187,040  

Deferred tax change to other comprehensive income

  52,266     -  
info