Kandi Technologies Reports Third Quarter 2018 Financial Results

- Q3 revenue increased 34.0% yoy to $38.0 million -
- Q3 gross profit increased 29.2% yoy to $6.2 million-

Jinhua, China--(Newsfile Corp. - November 9, 2018) -  Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the "Company," "we" or "Kandi"), today announced its financial results for the third quarter of 2018.

Third Quarter Financial Highlights

  • Total revenues were $38.0 million for the third quarter of 2018, an increase of 34.0% from total revenues of $28.4 million for the same period in 2017.
  • Electric Vehicle ("EV") parts sales increased by 18.7%, to $32.1 million for the third quarter of 2018, compared with EV parts sales of $27.0 million for the same period in 2017.
  • Gross profit increased by 29.2% to $6.2 million, compared to $4.8 million for the same period last year.
  • Kandi Electric Vehicles Group Co., Ltd. (the "JV Company") sold 1,502 units of EV products in the third quarter of 2018.
  • GAAP net loss for the third quarter of 2018 was $6.5 million, or loss of $0.13 per fully diluted share compared with GAAP net income of $1.9 million, or income of $0.04 per fully diluted share for the same period in 2017.
  • Non-GAAP adjusted net loss[1], which excludes stock award expenses and the change of the fair value of contingent consideration, was $5.0 million in the third quarter of 2018, compared with non-GAAP net income of $2.9 million for the same period in 2017. Non-GAAP adjusted loss per share1 was approximately $0.10 per fully diluted share for the third quarter of 2018, compared with Non-GAAP adjusted income per share1 of $0.06 per fully diluted share for the same period in 2017.
  • Working capital deficit was $12.2 million as of September 30, 2018. Cash, cash equivalents and restricted cash totaled $10.4 million as of September 30, 2018.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, "EV sales were impacted in the third quarter due to the JV Company's new EV models awaiting MIIT's approval to be included in the Directory of Recommended Models for Energy Saving and New Energy Vehicle Demonstration and Promotion, as well as approval of purchase tax exemption. Additionally, a large increase in the research and development expense caused a decline in net profits in the third quarter. However, we are happy to announce that the JV Company's new EV models obtained all required approvals from MIIT for both Directory of Recommended Models for New Energy Vehicles and the Tax Exemption on September 19, 2018, and are now available for sale on the market. With the launch of the new EV models, the Company's operations are forecasted to improve. The management team remains confident in enhancing Kandi's brand name and competitive edge through its consumer favored EV products."

Net Revenues and Gross Profit

3Q183Q17Y-o-Y%
Net Revenues (US$million)$38.0$28.434.0%
Gross Profit (US$million)$6.2$4.829.2%
Gross Margin16.4%17.0%-

 

Net revenues for the third quarter of 2018 increased by 34.0% compared to the same period of last year. The increase in revenue was mainly due to the increase in EV parts and off-road vehicles sales during this quarter. The selling prices of our products for the three months ended September 30, 2018 decreased on average from the same period last year. The increase in revenue was primarily due to the increase of sales volume.

Operating Income (Loss)

3Q183Q17Y-o-Y%
Operating Expenses (US$million)$8.7$3.1 182.1%
Operating (Loss) Income (US$million)($2.4)$1.8 -237.4%
Operating Margin-6.4%6.2%-

 

Total operating expenses in the third quarter of 2018 were $8.7 million, compared with $3.1 million in the same quarter of 2017. The increase in total operating expenses was due to the increased R&D expenses, which were $5.7 million in this quarter compared with $0.7 million in the same quarter last year.

GAAP Net Income (Loss)

3Q183Q17Y-o-Y%
Net (Loss) Income (US$million)($6.5)$1.9-440.0%
(Loss)Earnings per Weighted Average Common Share($0.13)$0.04 -
(Loss)Earnings per Weighted Average Diluted Share($0.13)$0.04 -
Stock Award Expenses (US$million)$0.03$1.0 -96.9 %
Change in the Fair Value of Contingent Consideration (US$million)$1.6 --
Non-GAAP Net (Loss) Income (US$million)($5.0)$2.9 -267.5%

 

Net loss was $6.5 million in the third quarter of 2018, compared with net income of $1.9 million in the same quarter of 2017. The decrease of net income for this quarter was primarily attributable to the loss from the JV Company and increased R&D expenses this period as compared to the same period of last year.

Non-GAAP net loss was $5.0 million in the third quarter of 2018, compared to Non-GAAP net income of $2.9 million in the same quarter of 2017. The decrease of net income (non-GAAP) was primarily attributable to the loss from the JV Company and increased R&D expenses this period as compared to the same period of last year.

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

In the third quarter of 2018, the JV Company sold 1,502 units of EV products.

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

3Q183Q17Y-o-Y%
Net Revenues (US$million)$19.9$86.2-76.9%
Gross Income (US$million)$3.1$5.3-41.5%
Gross Margin15.8%6.1%-
Net loss (US$million)($5.9)($0.5)1080.0%

 

Revenue for the JV Company was $19.9 million in the third quarter of 2018, a decrease of 76.9% compared to the same quarter of 2017. Net loss was $5.9 million, a 1080.0% increase in the loss compared to the same quarter of 2017.

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 $2.9 million for this quarter. After eliminating intra-entity profits and losses, Kandi's share of the after-tax loss of the JV Company was $3.2 million for the third quarter of 2018.

Third Quarter 2018 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its third quarter 2018 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 9, 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.

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. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. ("Kandi Vehicles"), SC Autosports, LLC - previously Sportsman Country, LLC, and the partially and wholly-owned subsidiaries of Kandi Vehicles.

More information about Kandi can be viewed at the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website. http://www.kandiev.com.

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

- Tables Below -


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

(UNAUDITED)

September 30,
2018

December 31,
2017

(Unaudited)

Current assets

Cash and cash equivalents

$

1,342,085

$

4,891,808

Restricted cash

9,104,584

11,218,688

Accounts receivable (net of allowance for doubtful accounts of $319,421 and $133,930 as of September 30, 2018 and December 31, 2017, respectively)

40,111,173

34,397,858

Inventories (net of provision for slow moving inventory of $662,769 and $620,919 as of September 30, 2018 and December 31, 2017, respectively)

15,676,683

15,979,794

Notes receivable

72,817

-

Notes receivable from JV Company and related party

2,184,519

1,137,289

Other receivables

1,233,460

2,650,668

Prepayments and prepaid expense

6,662,684

6,536,839

Due from employees

6,668

7,070

Advances to suppliers

8,794,653

14,908,385

Amount due from JV Company, net

77,386,193

146,422,440

Amount due from related party

-

162,048

TOTAL CURRENT ASSETS

162,575,519

238,312,887

LONG-TERM ASSETS

Property, Plant and Equipment, net

83,664,992

12,000,971

Land use rights, net

11,848,966

12,666,047

Construction in progress

-

53,083,925

Deferred taxes assets

3,294,885

4,383,425

Long Term Investment

-

1,460,034

Investment in JV Company

146,272,731

70,681,013

Goodwill

28,583,528

322,591

Intangible assets

4,491,080

331,116

Advances to suppliers

-

21,592,918

Other long term assets

6,168,533

7,590,734

Amount due from JV Company, net

-

15,907,183

TOTAL Long-Term Assets

284,324,715

200,019,957

TOTAL ASSETS

$

446,900,234

$

438,332,844

CURRENT LIABILITIES

Accounts payables

$

111,376,786

$

111,595,540

Other payables and accrued expenses

6,065,379

6,556,209

Short-term loans

30,583,267

33,042,864

Customer deposits

214,079

205,544

Notes payable

24,663,846

28,075,945

Income tax payable

471,184

2,902,699

Due to employees

34,070

35,041

Deferred income

1,353,819

2,191,143

Total Current Liabilities

174,762,430

184,604,985

LONG-TERM LIABILITIES

Long term bank loans

28,981,286

30,737,547

Contingent liability

12,204,964

-

Other long-term liability

681,768

-

Total Long-Term Liabilities

41,868,018

30,737,547

TOTAL LIABILITIES

216,630,448

215,342,532

STOCKHOLDER'S EQUITY

Common stock, $0.001 par value; 100,000,000 shares authorized; 55,989,502 and 48,036,538 shares issued and 51,481,944 and 48,036,538 outstanding at September 30, 2018 and December 31,2017, respectively

51,482

48,037

Additional paid-in capital

254,980,909

233,055,348

Retained earnings (the restricted portion is $4,422,033 and $4,422,033 at September 30,2018 and December 31,2017, respectively)

(5,221,190

)

(3,802,310

)

Accumulated other comprehensive loss

(19,541,415

)

(6,310,763

)

TOTAL STOCKHOLDERS' EQUITY

230,269,786

222,990,312

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

446,900,234

$

438,332,844


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

Three Months Ended

Nine Months Ended

September 30,
2018

September 30,
2017

September 30,
2018

September 30,
2017

REVENUES FROM UNRELATED PARTY, NET

$

14,860,034

$

6,604,109

$

32,211,352

$

10,720,595

REVENUES FROM JV COMPANY AND RELATED PARTY, NET

23,135,326

21,749,790

30,479,521

49,233,156

REVENUES, NET

37,995,360

28,353,899

62,690,873

59,953,751

COST OF GOODS SOLD

(31,753,311

)

(23,522,406

)

(53,044,861

)

(50,697,990

)

GROSS PROFIT

6,242,049

4,831,493

9,646,012

9,255,761

OPERATING EXPENSES:

Research and development

(5,691,649

)

(657,851

)

(7,091,836

)

(26,569,624

)

Selling and marketing

(898,896

)

(216,351

)

(1,875,294

)

(976,913

)

General and administrative

(2,070,947

)

(2,196,201

)

(5,534,039

)

(12,074,147

)

Total Operating Expenses

(8,661,492

)

(3,070,403

)

(14,501,169

)

(39,620,684

)

(LOSS) INCOME FROM OPERATIONS

(2,419,443

)

1,761,090

(4,855,157

)

(30,364,923

)

OTHER INCOME (EXPENSE):

Interest income

52,745

619,923

1,452,522

1,709,990

Interest expense

(483,376

)

(598,523

)

(1,505,409

)

(1,761,786

)

Change in fair value of contingent consideration

(1,552,686

)

-

1,814,326

-

Government grants

607,008

474,950

717,821

5,804,561

Share of (loss) income after tax of JV

(3,247,343

)

444,181

(79,592

)

(13,455,786

)

Other income (expense), net

15,735

(6,560

)

666,294

143,617

Total other (expense) income, net

(4,607,917

)

933,971

3,065,962

(7,559,404

)

(LOSS) INCOME BEFORE INCOME TAXES

(7,027,360

)

2,695,061

(1,789,195

)

(37,924,327

)

INCOME TAX BENEFIT (EXPENSE)

505,961

(776,985

)

370,316

4,130,951

NET (LOSS) INCOME

(6,521,399

)

1,918,076

(1,418,879

)

(33,793,376

)

OTHER COMPREHENSIVE (LOSS) INCOME

Foreign currency translation

(8,108,270

)

4,032,652

(13,230,652

)

8,942,931

COMPREHENSIVE (LOSS) INCOME

$

(14,629,669

)

$

5,950,728

$

(14,649,531

)

$

(24,850,445

)

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC

51,474,048

48,028,467

51,089,047

47,913,028

WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED

51,474,048

48,028,467

51,089,047

47,913,028

NET (LOSS) INCOME PER SHARE, BASIC

$

(0.13

)

$

0.04

$

(0.03

)

$

(0.71

)

NET (LOSS) INCOME PER SHARE, DILUTED

$

(0.13

)

$

0.04

$

(0.03

)

$

(0.71

)


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

Nine Months Ended

September 30,
2018

September 30,
2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss)

$

(1,418,879

)

$

(33,793,376

)

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

Depreciation and amortization

2,271,599

3,556,661

Assets impairments

78,415

136,936

Allowance for doubtful accounts

(7,093

)

-

Deferred taxes

-

(5,596,103

)

Share of income after tax of JV Company

79,592

13,455,786

Reserve for fixed assets

(53,561

)

-

Change in fair value of contingent consideration

(1,814,326

)

-

Stock compensation cost

253,934

5,498,183

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

(Increase) Decrease In:

Accounts receivable

(52,845,923

)

(8,926,990

)

Deferred taxes assets

(52,126

)

-

Notes receivable

491,272

-

Notes receivable from JV Company and related party

3,196,340

4,923,967

Inventories

1,555,993

(2,814,129

)

Other receivables and other assets

1,497,230

754,661

Due from employee

945

(10,766

)

Advances to supplier and prepayments and prepaid expenses

(4,590,404

)

23,878,150

Advances to suppliers-long term

-

(4,804,200

)

Amount due from JV Company

(81,549,214

)

(33,071,177

)

Amount due from JV Company-long-term

15,907,183

(15,907,183

)

Due from related party

161,874

4,406,105

Increase (Decrease) In:

Accounts payable

101,684,965

53,102,716

Other payables and accrued liabilities

29,845,307

2,173,413

Notes payable

(12,434,813

)

(3,933,839

)

Customer deposits

20,350

80,057

Income tax payable

(2,353,826

)

732,405

Deferred income

(761,643

)

(5,127,455

)

Loss contingency-litigation

-

587,579

Net cash used in operating activities

$

(836,809

)

$

(698,599

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment, net

$

(304,745

)

$

(420,037

)

Purchases of land use rights and other intangible assets

(105,480

)

-

Acquisition of Jinhua An Kao (net of cash received)

(3,610,846

)

-

Acquisition of SC Autosports (net of cash received)

486,954

-

Purchases of construction in progress

(425,241

)

(1,565,244

)

Reimbursement of capitalize interests for construction in progress

1,818,390

-

Long Term Investment

1,458,464

-

Short term investment

-

4,553,734

Net cash (used in) provided by investing activities

$

(682,504

)

$

2,568,453

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans

$

25,515,452

$

24,854,574

Repayments of short-term bank loans

(26,283,065

)

(27,939,362

)

Repayments of long-term bank loans

(153,523

)

-

Proceeds from notes payable

40,313,800

13,367,413

Repayment of notes payable

(43,024,633

)

(14,060,961

)

Net cash used in financing activities

$

(3,631,969

)

$

(3,778,336

)

NET (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

$

(5,151,282

)

$

(1,908,482

)

Effect of exchange rate changes on cash

$

(512,545

)

$

1,011,615

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR

$

16,110,496

$

25,193,298

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

$

10,446,669

$

24,296,431

SUPPLEMENTARY CASH FLOW INFORMATION

Income taxes paid

$

1,981,072

$

1,072,082

Interest paid

$

1,274,399

$

1,164,774

SUPPLEMENTAL NON-CASH DISCLOSURES:

Construction in progress transferred to property, plant and equipment

$

75,266,352

$

-

Long term and short term advances to suppliers transferred to construction in progress

$

31,786,196

$

12,241,736

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

$

62,549,758

$

39,197,964

Settlement of accounts receivables with notes receivable from unrelated parties

$

49,620,953

$

1,150,038

Settlement of other receivables with notes receivable from unrelated parties

$

930,347

$

-

Assignment of notes receivable from unrelated parties to supplier to settle accounts payable

$

20,126,196

$

1,150,038

Assignment of notes receivable from JV Company and related parties to supplier to settle accounts payable

$

57,956,363

$

33,175,103

Assignment of notes receivable from unrelated parties to supplier to settle other payable

$

29,857,070

$

-

Assignment of notes receivable from JV Company and related parties to supplier to settle other payable

$

230,284

$

-

Settlement of accounts payable with notes payables

$

23,846,161

$

15,149,150

Acquisition of Jinhua An Kao by stock

$

20,718,859

$

-

Acquisition of SC by stock

$

756,664

$

-

Cancellation of notes payables

$

10,746,580

$

-

Amount due from JV Company converted to investment in JV Company

$

83,669,804

$

-

Adjustment of construction in progress with accounts payable

$

8,153,573

$

-

Adjustment of advance to supplier with accounts payable

$

479,575

$

-

Deferred tax changed to other comprehensive income

$

-

$

52,266

Adjustment of Construction in progress

$

-

$

1,057,152

Purchase of construction in progress in accounts payable

$

-

$

6,244,120

__________________
[1]
Non-GAAP measures, including Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of fair value of contingent consideration 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.

info