WUHAN, China, May 10, 2018 /PRNewswire/ -- China Automotive Systems, Inc. (NASDAQ: CAAS) ("CAAS" or the "Company"), a leading power steering components and systems supplier in China, today announced its unaudited financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Highlights

  • Net sales increased 12.3% to $134.0 million from $119.3 million in the first quarter of 2017
  • Net income attributable to parent company's common shareholders was $4.3 million, or diluted earnings per share of $0.14, compared to $5.7 million, or diluted earnings per share of $0.18 in the first quarter of 2017
  • Total cash and cash equivalents, pledged cash and short-term investments were $124.5 million

Mr. Qizhou Wu, chief executive officer of CAAS, commented, "Our sales continue to benefit from increased demand for our advanced products and exports. We are pleased to report that our sales to North America grew by 84.5% in the first quarter of 2018 compared with the same quarter last year.  As we continue to invest in our electric power steering and other advanced steering technologies to position the Company for the future, our broad portfolio of steering products provides solutions to meet our customers' needs across all automotive segments."

Mr. Jie Li, chief financial officer of CAAS, commented, "We continue to focus on building our financial strength to support our growing sales volume." 

First Quarter of 2018

In the first quarter of 2018, net sales were $134.0 million compared to $119.3 million in the same quarter of 2017, reflecting a 12.3% year-over-year growth. The increase in net sales was mainly due to increased sales volume, especially for legacy products for the North American and heavy-duty vehicle markets, and the effect of foreign currency exchange. The Company adopted ASC Topic 606 "Revenue from Contracts with Customer" as of January 1, 2018.  Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605 "Revenue Recognition". No significant impact to the consolidated financial statements as a result of the adoption.

Gross profit was $21.6 million in the first quarter of each 2018 and 2017. The gross margin was 16.1% in the first quarter of 2018 compared to 18.1% in the first quarter of 2017 due to changes in the product mix.

Gain on other sales was $1.5 million in the first quarter of 2018 compared to $0.8 million in the first quarter of 2017, reflecting higher scrap volume.

Selling expenses were $5.8 million in the first quarter of 2018, compared to $4.1 million in the first quarter of 2017. The increase was primarily due to higher logistics fees reflecting higher sales volume and increased marketing expenses. Selling expenses represented 4.3% of net sales in the first quarter of 2018 compared to 3.4% in the first quarter of 2017. 

General and administrative expenses ("G&A expenses") were $4.4 million in the first quarter of 2018, compared to $4.4 million in the same quarter of 2017. G&A expenses represented 3.3% of net sales in the first quarter of 2018 and 3.7% in the first quarter of 2017. 

Research and development expenses ("R&D expenses") were $8.3 million in the first quarter of 2018, compared to $6.8 million in the first quarter of 2017. R&D expenses represented 6.2% of net sales in the first quarter of 2018 compared to 5.7% in the first quarter of 2017. The increase in R&D expenses was due to increased investment in EPS product research and development such as brushless motor and Advanced Driver Assistance Systems (ADAS) related projects.

Income from operations was $4.6 million in the first quarter of 2018, compared to $7.2 million in the same quarter of 2017. The decrease was primarily due to lower gross margin and higher selling and research and development expenses.

Interest expense was $0.4 million in the first quarter of 2018 compared to $0.2 million, in the same quarter of 2017. The increase was due to new bank borrowings at higher interest rates.

Net financial expense was $0.8 million in the first quarter of 2018 compared to net financial income of $0.3 million in the first quarter of 2017. The increase of net financial expense was primarily due to an increase in foreign exchange rates related to higher export sales in the first quarter of 2018.

Income before income tax expenses and equity in earnings of affiliated companies was $4.0 million in the first quarter of 2018, compared to $7.1 million in the first quarter of 2017. The decrease in income before income tax expenses and equity in earnings of affiliated companies was mainly due to lower income from operations. 

Net income attributable to parent company's common shareholders was $4.3 million in the first quarter of 2018, compared to $5.7 million in the first quarter of 2017. Diluted earnings per share were $0.14 per share in the first quarter of 2018, compared to $0.18 in the first quarter of 2017.  

The weighted average number of diluted common shares outstanding was 31,644,004 in the first quarter of 2018, compared to 31,649,908 in the first quarter of 2017.

Balance Sheet

As of March 31, 2018, total cash and cash equivalents, pledged cash and short-term investments were $124.5 million, total accounts receivable including notes receivable were $304.7 million, accounts payable were $237.6 million and short-term bank and government loans were $63.2 million. Total parent company stockholders' equity was $316.5 million as of March 31, 2018, compared to $299.4 million as of December 31, 2017.   

Business Outlook

Management has raised its revenue guidance for the full year 2018 to 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 Li
Chief Financial Officer
China Automotive Systems, Inc.
Email: jieli@chl.com.cn

Kevin Theiss
Investor Relations
+1-212-521-4050
Email: Kevin.Theiss@awakenlab.com

- Tables Follow -

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income

(In thousands of USD, except share and per share amounts)






Three Months Ended March 31,




2018



2017


Net product sales ($10,846 and $9,538 sold to related parties for
the three months ended March 31, 2018 and 2017)


$

134,018



$

119,308


Cost of products sold ($8,249 and $7,363 purchased from
related parties for the three months ended March 31, 2018 and
2017)



112,379




97,679


Gross profit



21,639




21,629


Gain on other sales



1,513




788


Less: Operating expenses









Selling expenses



5,827




4,068


General and administrative expenses



4,424




4,354


Research and development expenses



8,307




6,765


Total operating expenses



18,558




15,187


Income from operations



4,594




7,230


Other income/(expense)



621




(254)


Interest expense



(415)




(231)


Financial (expense)/income, net



(765)




332


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



4,035




7,077


Less: Income taxes



588




1,190


Equity in earnings of affiliated companies



585




51


Net income



4,032




5,938


Net (loss)/income attributable to non-controlling interests



(280)




224


Net income attributable to parent company's common
shareholders


$

4,312



$

5,714


Comprehensive income:









Net income


$

4,032



$

5,938


Other comprehensive income:









Foreign currency translation gain, net of tax



13,242




1,629


Comprehensive income



17,274




7,567


Comprehensive income attributable to non-controlling interests



236




278


Comprehensive income attributable to parent company


$

17,038



$

7,289











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


















Basic -


$

0.14



$

0.18











Diluted -


$

0.14



$

0.18


Weighted average number of common shares outstanding









Basic



31,644,004




31,644,004


Diluted



31,644,004




31,649,908











 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Balance Sheets

(In thousands of USD unless otherwise indicated)






March 31, 2018



December 31, 2017




ASSETS









Current assets:









Cash and cash equivalents


$

78,729



$

64,558


Pledged cash



32,697




31,535


Short-term investments



13,040




29,587


Accounts and notes receivable, net - unrelated parties



282,072




274,989


Accounts and notes receivable, net - related parties



22,661




19,086


Advance payments and others - unrelated parties



12,208




12,790


Advance payments and others - related parties



1,068




20,841


Inventories



87,370




79,217


Total current assets



529,845




532,603


Non-current assets:









Property, plant and equipment, net



132,899




126,033


Intangible assets, net



632




661


Other receivables, net - unrelated parties



1,624




2,188


Advance payment for property, plant and equipment - unrelated
parties



8,406




9,657


Advance payment for property, plant and equipment - related
parties



9,244




5,264


Long-term investments



29,268




27,596


Deferred tax assets



13,800




13,367


Total assets


$

725,718



$

717,369











LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Bank and government loans


$

63,176



$

72,711


Accounts and notes payable - unrelated parties



230,036




233,048


Accounts and notes payable - related parties



7,544




7,168


Customer deposits



1,398




1,128


Accrued payroll and related costs



7,841




8,577


Accrued expenses and other payables



38,952




40,127


Accrued pension costs



4,786




4,051


Taxes payable



9,902




5,927


Amounts due to shareholders/directors



364




343


Advances payable (current portion)



398




383


Total current liabilities



364,397




373,463


Long-term liabilities:









Long-term government loan



318




306


Advances payable



373




359


Long-term taxes payable



32,719




32,719


Deferred tax liabilities



4,508




4,393


Total liabilities


$

402,315



$

411,240











Stockholders' equity:









Common stock, $0.0001 par value - Authorized - 80,000,000
shares; Issued - 32,338,302 and 32,338,302 shares as of March 31,
2018 and December 31, 2017, respectively


$

3



$

3


Additional paid-in capital



64,406




64,406


Retained earnings-









Appropriated



10,707




10,707


Unappropriated



213,771




209,459


Accumulated other comprehensive income



30,506




17,780


Treasury stock –694,298 and 694,298 shares as of March 31, 2018
and December 31, 2017, respectively



(2,907)




(2,907)


Total parent company stockholders' equity



316,486




299,448


Non-controlling interests



6,917




6,681


Total stockholders' equity



323,403




306,129


Total liabilities and stockholders' equity


$

725,718



$

717,369


 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Cash Flows

(In thousands of USD unless otherwise indicated)






Three Months Ended March 31,




2018



2017


Cash flows from operating activities:









Net income


$

4,032



$

5,938


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









Depreciation and amortization



4,342




4,189


Accrual/(reversal) of provision for doubtful accounts



275




(19)


Inventory write downs



1,543




813


Deferred income taxes



33




(63)


Equity in earnings of affiliated companies



(585)




(51)


Gain on fixed assets disposals



12




17


Changes in operating assets and liabilities









(Increase)/decrease in:









Pledged cash



72




(2,618)


Accounts and notes receivable



559




2,480


Advance payments and others



(128)




52


Inventories



(6,592)




(1,444)


Increase/(decrease) in:









Accounts and notes payable



(11,950)




(1,592)


Customer deposits



246




123


Accrued payroll and related costs



(1,064)




(431)


Accrued expenses and other payables



(4,031)




(1,467)


Accrued pension costs



576




(247)


Taxes payable



5,230




(3,318)


Net cash (used in)/provided by operating activities



(7,430)




2,362


Cash flows from investing activities:









Increase in other receivables



647




20


Cash received from property, plant and equipment sales



26




26


Payments to acquire property, plant and equipment (including $5,224
and $493 paid to related parties for the three months ended March 31,
2018 and 2017, respectively)



(8,192)




(3,245)


Purchase of short-term investments



(1,414)




-


Proceeds from maturities of short-term investments



19,108




2,433


Loan to a related party



-




(29,044)


Cash received from repayment of the loan to a related party



20,430




-


Net cash provided by/(used in) investing activities



30,605




(29,810)


Cash flows from financing activities:









Proceeds from bank loans



19,672




27,754


Repayments of bank loans



(31,037)




(245)


Net cash (used in)/provided by financing activities



(11,365)




27,509


Effects of exchange rate on cash and cash equivalents



2,361




150


Net (decrease)/increase in cash and cash equivalents



14,171




211


Cash and cash equivalents at beginning of period



64,558




31,092


Cash and cash equivalents at end of period


$

78,729



$

31,303


Cision View original content:http://www.prnewswire.com/news-releases/china-automotive-systems-reports-2018-first-quarter-results-300646022.html

SOURCE China Automotive Systems, Inc.

Copyright 2018 PR Newswire

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