China Automotive Systems Reports 2014 First-Quarter Results - Hawaii News Now - KGMB and KHNL

China Automotive Systems Reports 2014 First-Quarter Results

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SOURCE China Automotive Systems, Inc.

WUHAN, China, May 14, 2014 /PRNewswire-FirstCall/ -- 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 first quarter ended March 31, 2014.

First Quarter 2014 Highlights

  • Net sales increased by 17.6% to a first-quarter record of $114.3 million, compared to $97.2 million in the first quarter of 2013.
  • Gross margin was 18.7%, compared to 19.9% in the first quarter of 2013 and 17.3% in the fourth quarter of 2013.
  • Operating margin was 8.5%, compared to 9.6% in the first quarter of 2013 and 6.6% in the fourth quarter of 2013.
  • Net income attributable to parent company's common shareholders was $6.8 million, or diluted earnings per share of $0.24, compared to net income attributable to parent company's common shareholders of $5.9 million, or diluted earnings per share of $0.21, in the first quarter of 2013.
  • Cash and cash equivalents and short-term investments were $78.9 million and $89.5 million as of March 31, 2014 and December 31, 2013, respectively.

Mr. Qizhou Wu, chief executive officer of CAAS, commented, "We are pleased to report that, for the first time, we have exceeded the $100 million sales mark in any first quarter in our history as we continued to capture market shares in China and North America.

"Sales to North America increased by 30.7% compared to the same period of last year as our key customer Chrysler reported its 48th consecutive month of year-over-year sales gains. The Jeep® brand reported that March 2014 was its best sales month with 47% growth above March 2013 sales. RAM® pickup truck sales were also up 26% in March compared with March 2013.

"Our products continue making inroads in the North American and South American vehicle markets. In China, we further consolidated our leading market position as we built a more diverse customer base of Sino-foreign joint ventures and increased shipments to our large customers."

Mr. Jie Li, chief financial officer of CAAS, commented, "We continued to maintain our strong financial condition as we planned for increased shipments in the seasonally strong second quarter. We have increased our electric power steering offerings to better meet our customers' needs and attract new customers as we are the leading producer of this steering technology in China. Our selling and general and administrative expenses are under control while we further deploy resources to enhance our research and development activities. We believe that we are financially strong with leading technology and a large market share, and we are well positioned for domestic and global growth."

First Quarter of 2014

In the first quarter of 2014, net sales increased by 17.6% to a first-quarter record of $114.3 million, compared to $97.2 million in the same quarter of 2013. The net sales increase was mainly due to higher market share in the Chinese passenger and commercial vehicle markets as well as higher sales to the North American market.

Gross profit increased by 10.2% to $21.3 million in the first quarter of 2014, compared to $19.4 million in the first quarter of 2013. The gross margin was 18.7% in the first quarter of 2014, versus 19.9% in the first quarter of 2013 and 17.3% in the fourth quarter of 2013.

Selling expenses decreased by 3.9% to $3.0 million in the first quarter of 2014, compared to $3.2 million in the first quarter of 2013. Selling expenses represented 2.7% of net sales in the first quarter of 2014, compared to 3.3% in the first quarter of 2013. The decrease was mainly due to lower personnel compensation.  

General and administrative expenses ("G&A expenses") decreased by 14.1% to $3.5 million in the first quarter of 2014, compared to $4.1 million in the same quarter of 2013. The decrease was mainly due to lower legal expenses. G&A expenses represented 3.1% of net sales in the first quarter of 2014 and 4.2% in the first quarter of 2013.

Research and development expenses ("R&D expenses") increased by 73.2% to $5.9 million in the first quarter of 2014, compared to $3.4 million in the first quarter of 2013. The increase in R&D expenses was mainly due to higher expenditures for the development of our electric power steering products, and included higher personnel-related expenses and mold improvement expenses. R&D expenses represented 5.2% of net sales in the first quarter of 2014, which was an increase from 3.5% in the first quarter of 2013.

Income from operations increased by 4.5% to $9.8 million in the first quarter of 2014, compared to $9.3 million in the same quarter of 2013. As a percentage of net sales, the operating margin was 8.5% in the first quarter of 2014, compared to 9.6% in the first quarter of 2013 and 6.6% in the fourth quarter of 2013.

Net financial expenses changed by $0.4 million in the first quarter of 2014, as higher time deposits generated $0.2 million in interest income, and financial expenses declined by $0.2 million due to lower interest expenses as bank debt declined, compared with the first quarter of 2013.

Income before income tax expenses and equity in earnings of affiliated companies was $10.2 million in the first quarter of 2014, compared to $9.2 million in the first quarter of 2013. The increase in income before income tax expenses and equity in earnings of affiliated companies of $1.0 million in the first quarter of 2014 was mainly due to an increase in operating income of $0.4 million, a decrease in financial expenses of $0.4 million, and an increase in other income of $0.2 million.

Net income attributable to parent company's common shareholders was $6.8 million in the first quarter of 2014, compared to net income attributable to parent company's common shareholders of $5.9 million in the corresponding quarter of 2013. Diluted earnings per share were $0.24 in the first quarter of 2014, compared to diluted earnings per share of $0.21 in the first quarter of 2013. The weighted average number of diluted common shares outstanding was 28,063,501 in the first quarter of 2014, compared to 28,050,937 in the first quarter of 2013.

As of March 31, 2014, total cash and cash equivalents and short-term investments were $78.9 million, compared to $89.5 million as of December 31, 2013. Working capital was $186.3 million as of March 31, 2014, compared to $179.3 million as of December 31, 2013.

Business Outlook

Management reiterates its revenue guidance of 15% year-over-year growth for the full year 2014. This target is based on the Company's current views on operating and market conditions, which are subject to change.

Conference Call

Management will conduct a conference call on May 14, 2014 at 8:00 A.M. EDT/8:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management's presentation. To participate, please call the following numbers 10 minutes before the call start time and ask to be connected to the "China Automotive Systems" conference call:

Phone Number:

+1-877-407-8031 (North America)

Phone Number:

+1-201-689-8031 (International)

A telephone replay of the call will be available after the conclusion of the conference call through 11:59 P.M. EDT on June 14, 2014. The dial-in details for the replay are:

U.S. Toll Free Number

+1-877-660-6853

International dial-in number

+1-201-612-7415

Use Conference ID "13581483" to access the replay.

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 4.0 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 N.A. 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 31, 2014, 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 Li
Chief Financial Officer
China Automotive Systems, Inc.
Email: jieli@chl.com.cn

Kevin Theiss
Investor Relations
Grayling
Tel: +1-646-284-9409
Email: kevin.theiss@grayling.com

 

(Tables Follow)  

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Balance Sheets

(In thousands of USD unless otherwise indicated)




March, 31, 2014


December 31, 2013








ASSETS







Current assets:







Cash and cash equivalents


$

42,955


$

53,979

Pledged cash deposits



32,435



33,963

Short-term investments



35,933



35,510

Accounts and notes receivable, net - unrelated parties



282,833



267,639

Accounts and notes receivable, net - related parties



21,811



17,194

Advance payments and others - unrelated parties



4,037



3,156

Advance payments and others - related parties



792



866

Inventories



55,849



51,392

Assets held for sale



917



925

Current deferred tax assets



5,441



5,783

Total current assets



483,003



470,407

Non-current assets:







Property, plant and equipment, net



79,225



80,018

Intangible assets, net



635



686

Other receivables, net - unrelated parties



335



252

Other receivables, net - related parties



63



108

Advance payment for property, plant and equipment - unrelated parties



3,611



3,488

Advance payment for property, plant and equipment - related parties



1,726



2,097

Long-term investments



4,039



4,023

Non-current deferred tax assets



4,539



4,528

Total assets


$

577,176


$

565,607








LIABILITIES AND STOCKHOLDERS' EQUITY







Current liabilities:







Bank and government loans


$

38,940


$

37,381

Accounts and notes payable - unrelated parties



201,318



198,419

Accounts and notes payable - related parties



4,508



4,634

Customer deposits



1,847



1,677

Accrued payroll and related costs



6,680



7,052

Accrued expenses and other payables



28,726



29,062

Accrued pension costs



4,787



4,626

Taxes payable



9,460



7,792

Amounts due to shareholders/directors



360



312

Deferred tax liabilities



126



117

Total current liabilities



296,752



291,072

Long-term liabilities:







Advances payable



2,739



2,764

Total liabilities


$

299,491


$

293,836








Commitments and Contingencies (Note 30)














Stockholders' equity:







Common stock, $0.0001 par value - Authorized -
80,000,000 shares; Issued- 28,260,302 and 28,260,302 shares
at March 31, 2014 and December 31, 2013, respectively


$

3


$

3

Additional paid-in capital



39,565



39,565

Retained earnings-







Appropriated



10,048



10,048

Unappropriated



152,797



146,023

Accumulated other comprehensive income



30,065



32,061

Treasury stock - 217,283 and 217,283 shares at March 31, 2014
and December 31, 2013, respectively



(1,000)



(1,000)

Total parent company stockholders' equity



231,478



226,700

Non-controlling interests



46,207



45,071

Total stockholders' equity



277,685



271,771

Total liabilities and stockholders' equity


$

577,176


$

565,607

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income

(Unaudited, in thousands of USD, except share and per share amounts)




Three Months Ended March 31,



2014


2013

Net product sales, including $11,810 and $8,143 to related parties for three months ended March 31, 2014 and 2013


$

114,306


$

97,164

Cost of products sold, including $7,283 and $6,665 purchased
from related parties for three months ended March 31, 2014 and 2013



92,969



77,802

Gross profit



21,337



19,362

Gain on other sales



909



674

Less: Operating expenses







Selling expenses



3,042



3,164

General and administrative expenses



3,545



4,126

Research and development expenses



5,888



3,400

Total operating expenses



12,475



10,690

Income from operations



9,771



9,346

Other income, net



239



70

Financial income (expenses), net



213



(201)

Income before income tax expenses and equity in earnings of affiliated companies



10,223



9,215

Less: Income taxes



1975



1,747

Equity in earnings of affiliated companies



63



58

Net income



8,311



7,526

Net income attributable to non-controlling interests



1,537



1,586

Net income attributable to parent company's common shareholders


$

6,774


$

5,940

Comprehensive income:







Net income


$

8,311


$

7,526

Other comprehensive income (loss):







Foreign currency translation gain (loss), net of tax



(2,397)



612

Comprehensive income



5,914



8,138

Comprehensive income attributable to non-controlling interests



1,136



1,689

Comprehensive income attributable to parent company


$

4,778


$

6,449

Net income attributable to parent company's common shareholders per share














Basic -


$

0.24


$

0.21








Diluted-


$

0.24


$

0.21

Basic



28,043,019



28,043,019

Diluted



28,063,501



28,050,937

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Cash Flows

(Unaudited, in thousands of USD unless otherwise indicated)




Three Months Ended March 31,



2014


2013








Cash flows from operating activities:







Net income


$

8,311


$

7,526

Adjustments to reconcile net income from operations to net cash
provided by operating activities:







Depreciation and amortization



3,713



3,468

Increase (decrease) in allowance for doubtful accounts



2



(95)

Inventory write downs



1,080



224

Deferred income taxes



248



738

Equity in earnings of affiliated companies



(63)



(58)

Amortization of debt issue cost



-



38

Gain on fixed assets disposals



(35)



(165)

Changes in operating assets and liabilities:







(Increase) decrease in:







Pledged deposits



1,223



321

Accounts and notes receivable



(22,366)



(21,381)

Advance payments and others



(839)



(1,529)

Inventories



(5,992)



(1,839)

Increase (decrease) in:







Accounts and notes payable



4,594



9,985

Customer deposits



181



32

Accrued payroll and related costs



(312)



189

Accrued expenses and other payables



(56)



900

Accrued pension costs



202



(89)

Taxes payable



1,738



382

Advances payable



-



(16)

Net cash use in operating activities



(8,371)



(1,369)

Cash flows from investing activities:







Increase in other receivables



(46)



(122)

Cash received from property, plant and equipment sales



152



405

Payments to acquire property, plant and equipment



(3,501)



(2,843)

Payments to acquire intangible assets



(3)



(60)

Purchase of short-term investments



(13,002)



-

Proceeds from maturities of short-term investments



12,259



-

Dividends from investment under cost method



11



-

Net cash used in investing activities



(4,130)



(2,620)

Cash flows from financing activities:







Proceeds from government and bank loan



5,146



8,101

Repayments of bank loan



(3,251)



(1,595)

Decrease in amounts due to shareholders/directors



52



(40)

Net cash provided by financing activities



1,947



6,466

Effects of exchange rate on cash and cash equivalents



(470)



226

Net increase (decrease) in cash and cash equivalents



(11,024)



2,703

Cash and cash equivalents at beginning of period



53,979



87,649

Cash and cash equivalents at end of period


$

42,955


$

90,352


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:




Three Months Ended 
March 31,



2014


2013

Cash paid for interest


$

256


$

374

Cash paid for income taxes


$

1,204


$

1,263


SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:




Three Months Ended 
March 31,



2014


2013

Advance payments for acquiring property, plant and equipment


$

5,337


$

5,138

Dividends payable to non-controlling interests


$

34


$

163

 

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