- Q2 JV Company sold 4,446 EV products, an 8.1% increase year-over-year
JINHUA, CHINA--(Newsfile Corp. - August 10, 2015) - Kandi Technologies Group, Inc. (the "Company" or "Kandi") (NASDAQ GS: KNDI), today announced its financial results for the quarter ended June 30, 2015.
Second Quarter 2015 Highlights
- Total revenues grew 45.5% to $48.0 million for the second quarter of 2015 from $33.0 million for the second quarter of 2014;
- Electric Vehicle ("EV") parts sales increased 168.3% to $46.6 million for the second quarter of 2015 compared to $17.4 million in the same period of 2014;
- Kandi Electric Vehicles Group Co., Ltd. (the "JV Company"), sold 4,446 EV products, including 3,803 EV products to the Micro Public Transportation (MPT) program and 643 EV products to the direct sales program, an 8.1% increase compared to the same period last year;
- GAAP net income for the second quarter of 2015 was $5.4 million, or approximately $0.12 per fully diluted share, compared to $11.2 million, or approximately $0.27 per diluted share in the second quarter of 2014. The decrease was mainly due to changes in stock-based compensation expenses and financial derivatives during the period;
- Non-GAAP adjusted net income1, which excludes stock award expenses and changes in the fair value of financial derivatives, was $4.9 million, or approximately $0.10 per fully diluted share, a 52.1% increase from $3.2 million in the same quarter of 2014;
- Working capital surplus was $48.5 million as of June 30, 2015;
- Cash, cash equivalents and restricted cash totaled $32.5 million as of June 30, 2015.
"We are delighted to achieve excellent growth in EV parts and EV sales," Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented. "During the second quarter, we continued to focus on delivering strong operational results and pursuing one of our primary goals of improving environmental conditions, easing traffic congestion and energy crisis, and alleviating parking scarcity. By partnering with leading international telecom provider ZTE Corporation and Alibaba (China) Co., Ltd., a subsidiary of world’s largest E-commerce company Alibaba Group Holding, Ltd, we aim to enhance the penetration of our Micro Public Transportation program. The successful launch of our direct sales initiative this quarter and the new Kandi Cyclone (K17), which is available for sale in the third quarter, will enhance our strong revenue growth and profitability. We are confident in achieving our full year sales target, while continuing to expand our unique MPT program to additional cities."
"Our strong financial results in the second quarter were in line with our expectations," added Mr. Wang Cheng, Chief Financial Officer of the Company. "By early July of this year, the JV Company had received the remaining subsidies from the central government for 2014 and expects to obtain the 2015 subsidies in the coming months, which will contribute to the Company’s third quarter cash flow."
Second Quarter 2015 Financial Results:
Net Revenues and Gross Profit
| 2Q15 | 1Q15 | 2Q14 | Q-o-Q% | Y-o-Y% | |
| Net Revenues (US$mln) | $47.96 | $43.78 | $32.96 | 9.6% | 45.5% |
| Gross Profit (US$mln) | $6.49 | $6.37 | $7.22 | 1.9% | -10.1% |
| Gross Margin | 13.5% | 14.6% | 21.9% | - | - |
Net revenues increased 9.6% sequentially from the first quarter of 2015 due to the sales growth of EV cars from the JV Company. Gross margin declined 1.1% sequentially as a result of a slight decrease in battery sales prices to the JV Company. Gross margin decreased 8.4% year-over-year due to the sales of high margin EV products in the same quarter last year, which were completely transferred to the JV Company this year per the Joint Venture Agreement.
Operating Income (Loss)
| 2Q15 | 1Q15 | 2Q14 | Q-o-Q% | Y-o-Y% | |
| Operating Expenses (US$mln) | $4.49 | $4.47 | $4.58 | 0.6% | -1.9% |
| Operating Income (Loss) (US$mln) | $2.00 | $1.91 | $2.64 | 4.9% | -24.3% |
| Operating Margin | 4.2% | 4.4% | 8.0% | - | - |
Total operating expenses slightly increased 0.6% quarter-over-quarter, due to the $1.4 million increase in stock compensation expenses and general expense savings in the second quarter.
GAAP Net Income
| 2Q15 | 1Q15 | 2Q14 | Q-o-Q% | Y-o-Y% | |
| Net Income (Loss) (US$mln) | $5.43 | $6.13 | $11.16 | -11.5% | -51.4% |
| Earnings per Weighted Average Common Share | $0.12 | $0.13 | $0.27 | - | - |
| Earnings per Weighted Average Diluted Share | $0.12 | $0.13 | $0.27 | - | - |
Non-GAAP Net Income
| 2Q15 | 1Q15 | 2Q14 | Q-o-Q% | Y-o-Y% | |
| GAAP net income (loss) from continuing operations | $5.43 | $6.13 | $11.16 | -11.5% | -51.4% |
| Stock award expenses | $3.48 | $2.05 | $1.01 | 69.9% | 245.2% |
| Gain (Loss) of the fair value of financial derivatives | $4.00 | $4.75 | $8.94 | -15.7% | -55.2% |
| Non-GAAP net income (loss) from continuing operations | $4.90 | $3.43 | $3.22 | 42.9% | 52.1% |
Net income decreased 11.5% sequentially compared to the first quarter of 2015, which included $0.75 million additional gains from financial derivatives. Net income decreased 51.4% compared to the second quarter of 2014, which included $4.9 million additional gains from financial derivatives and $2.5 million less stock compensation expenses.
JV Company Financial Results
In the second quarter, the JV Company sold 4,446 EV products, including 3,803 EV products to the Micro Public Transportation program and 643 EV products to the direct sales program, an 8.1% increase compared to the same period last year.
The condensed financial income statement is as below:
| 2Q15 | 1Q15 | 2Q14 | Q-o-Q% | Y-o-Y% | |
| Net Revenues (US$mln) | $68.95 | $30.56 | $45.14 | 125.6% | 52.8% |
| Gross Profit (US$mln) | $10.65 | $7.98 | $2.64 | 33.5% | 303.8% |
| Gross Margin | 15.4% | 26.1% | 5.8% | - | - |
| Net Income | $1.59 | $0.80 | $0.73 | 97.4% | 117.5% |
| % of Net revenue | 2.3% | 2.6% | 1.6% | - | - |
Gross margin in the second quarter of 2015 was 15.4%, compared with gross margin of 26.1% in the first quarter of 2015 and 5.8% in the second quarter of 2014. The sequential decrease is the result of a one-time adjustment in sales prices, which will remain stable for the remainderof the year. The year-over-year gross margin improvement is due to stability in production and cost reductions.
Outlook
For the third quarter 2015, Kandi expects net revenues to be in the range of $49.0 million to $51.0 million with gross margin in the range of 13.5% to 14.5% .
The Company also expects the JV Company to deliver 5,500 to 6,500 EV products in the third quarter and a total of 20,000-25,000 EV products in the full year of 2015.
Second Quarter 2015 Conference Call Details
The Company has scheduled a conference call and live webcast to discuss the financial results at 8:00 AM (U.S. EST) on August 10, 2015 (8:00 PM Beijing time on August 10, 2015). Mr. Hu Xiaoming, Chief Executive Officer and Mr. Wang Cheng (Henry), Chief Financial Officer, will deliver prepared remarks, followed by a question and answer session.
The dial-in details for the conference call are as follows:
- Toll-free dial-in number: +1 877-407-3982
- International dial-in number: +1 201-493-6780
- Conference ID: 13614670
- Webcast and replay: http://public.viavid.com/index.php?id=115420
The live audio webcast of the call can also be accessed by visiting Kandi's Investor Relations website at http://ir.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.
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.
Company Contact:
Ms. Kewa Luo
Kandi Technologies Group, Inc.
Phone: 1-212-551-3610
Email: IR@kandigroup.com
IR Contact:
The Piacente Group
Phone: 1-212-481-2050
Email: kandi@tpg-ir.com
____________________
1Non-GAAP measures, including the Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of the fair value of financial derivatives and the effects of the stock award 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 re ad in conjunction with, measures of financial performance prepared in accordance with GAAP.
- Tables to follow -
KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||
| ||||||||||||
REVENUES, NET | $ | 47,963,460 | $ | 32,960,055 | $ | 91,744,546 | $ | 73,131,359 | ||||
| ||||||||||||
COST OF GOODS SOLD | 41,471,997 | 25,738,967 | 78,882,350 | 61,049,862 | ||||||||
| ||||||||||||
GROSS PROFIT | 6,491,463 | 7,221,088 | 12,862,196 | 12,081,497 | ||||||||
| ||||||||||||
OPERATING EXPENSES: | ||||||||||||
Research and development | 571,621 | 971,673 | 1,142,641 | 2,143,930 | ||||||||
Selling and marketing | 75,516 | 435,894 | 189,411 | 507,151 | ||||||||
General and administrative | 3,845,013 | 3,173,178 | 7,625,661 | 9,643,944 | ||||||||
Total Operating Expenses | 4,492,150 | 4,580,745 | 8,957,713 | 12,295,025 | ||||||||
| ||||||||||||
INCOME FROM OPERATIONS | 1,999,313 | 2,640,343 | 3,904,483 | (213,528 | ) | |||||||
| ||||||||||||
OTHER INCOME(EXPENSE): | ||||||||||||
Interest income | 722,843 | 748,843 | 1,313,323 | 1,232,136 | ||||||||
Interest (expense) | (597,320 | ) | (963,838 | ) | (1,195,911 | ) | (1,918,311 | ) | ||||
Change in fair value of financial | ||||||||||||
| 4,003,044 | 8,941,569 | 8,753,344 | (3,372,602 | ) | |||||||
instruments | ||||||||||||
Government grants | 92,863 | 153,700 | 92,863 | 153,700 | ||||||||
Share of (loss) in associated companies | - | (77,187 | ) | - | (92,992 | ) | ||||||
Share of profit after tax of JV | 251,167 | (9,526 | ) | 720,523 | 1,718,830 | |||||||
Other income, net | 82,207 | 60,247 | 106,054 | 119,827 | ||||||||
Total other income(expense), net | 4,554,804 | 8,853,808 | 9,790,196 | (2,159,412 | ) | |||||||
| ||||||||||||
INCOME(LOSS) BEFORE INCOME | ||||||||||||
| 6,554,117 | 11,494,151 | 13,694,679 | (2,372,940 | ) | |||||||
TAXES | ||||||||||||
| ||||||||||||
INCOME TAX EXPENSE | (1,128,615 | ) | (337,066 | ) | (2,137,524 | ) | (556,135 | ) | ||||
NET INCOME (LOSS) | 5,425,502 | 11,157,085 | 11,557,155 | (2,929,075 | ) | |||||||
| ||||||||||||
OTHER COMPREHENSIVE INCOME | ||||||||||||
| ||||||||||||
Foreign currency translation | 448,032 | (717,476 | ) | 941,243 | (1,928,592 | ) | ||||||
| ||||||||||||
COMPREHENSIVE INCOME(LOSS) | $ | 5,873,534 | $ | 10,439,609 | $ | 12,498,398 | $ | (4,857,667 | ) | |||
| ||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC | 46,759,651 | 41,142,346 | 46,523,584 | 40,364,986 | ||||||||
| ||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED | 46,896,809 | 41,254,507 | 46,800,156 | 40,364,986 | ||||||||
| ||||||||||||
NET INCOME(LOSS) PER SHARE, BASIC | $ | 0.12 | $ | 0.27 | $ | 0.25 | $ | (0.07 | ) | |||
| ||||||||||||
NET INCOME(LOSS) PER SHARE, DILUTED | $ | 0.12 | $ | 0.27 | $ | 0.25 | $ | (0.07 | ) | |||
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
| June 30, 2015 | December 31, | ||||
| 2014 | |||||
| ||||||
Current assets | ||||||
Cash on cash equivalents | $ | 9,463,991 | $ | 26,379,460 | ||
Restricted cash | 23,006,135 | 13,000,731 | ||||
Accounts receivable | 29,898,905 | 15,736,805 | ||||
Inventories (net of provision for slow moving inventory of 316,856 and 315,584 as of June 30, 2015 and December 31, 2014, respectively | 27,607,154 | 15,403,840 | ||||
Notes receivable | 10,541,927 | 9,060,441 | ||||
Other receivables | 311,086 | 238,567 | ||||
Prepayments and prepaid expense | 364,284 | 120,761 | ||||
Due from employees | 38,856 | 34,475 | ||||
Advances to suppliers | 6,829,462 | 6,901,505 | ||||
Amount due from JV Company, net | 101,958,555 | 51,450,612 | ||||
Deferred taxes assets | - | - | ||||
TOTAL CURRENT ASSETS | 210,020,355 | 138,327,197 | ||||
| ||||||
LONG-TERM ASSETS | ||||||
Plant and equipment, net | 23,889,831 | 26,215,356 | ||||
Land use rights, net | 15,516,697 | 15,649,152 | ||||
Construction in progress | 58,785,276 | 58,510,051 | ||||
Deferred taxes assets | - | - | ||||
Investment in associated company | - | - | ||||
Investment in JV Company | 84,366,460 | 83,309,095 | ||||
Goodwill | 322,591 | 322,591 | ||||
Intangible assets | 536,353 | 577,401 | ||||
Other long term assets | 163,164 | 162,509 | ||||
TOTAL Long-Term Assets | 183,580,372 | 184,746,155 | ||||
| ||||||
TOTAL ASSETS | $ | 393,600,727 | $ | 323,073,352 | ||
| ||||||
CURRENT LIABILITIES | ||||||
Accounts payables | $ | 100,772,098 | $ | 45,772,481 | ||
Other payables and accrued expenses | 3,377,791 | 5,101,740 | ||||
Short-term loans | 38,833,051 | 35,589,502 | ||||
Customer deposits | 2,748,050 | 2,630,723 | ||||
Notes payable | 9,953,009 | 5,702,121 | ||||
Income tax payable | 2,350,173 | 1,835,685 | ||||
Due to employees | 10,829 | 15,787 | ||||
Deferred taxes liabilities | 569,499 | 230,864 | ||||
Financial derivate - liability | 2,894,695 | 2,245,610 | ||||
Deferred income | 58,162 | - | ||||
Total Current Liabilities | 161,567,357 | 99,124,513 | ||||
| ||||||
LONG-TERM LIABILITIES | ||||||
Deferred taxes liabilities | 1,772,278 | 2,266,725 | ||||
Bond payable | - | - | ||||
Financial derivate - liability | 694,846 | 10,097,275 | ||||
Total Long-Term Liabilities | 2,467,124 | 12,364,000 | ||||
| ||||||
TOTAL LIABILITIES | 164,034,481 | 111,488,513 | ||||
| ||||||
STOCKHOLDER'S EQUITY | ||||||
| ||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 46,954,855 and 46,274,855 shares issued and outstanding at June 30,2015 and December 31,2014, respectively | 46,955 | 46,275 | ||||
Additional paid-in capital | 195,740,366 | 190,258,037 | ||||
| ||||||
Retained earnings (the restricted portion is $4,172,324 and $4,172,324 at June 30,2015 and December 31,2014, respectively) | 27,947,579 | 16,390,424 | ||||
Accumulated other comprehensive income(loss) | 5,831,346 | 4,890,103 | ||||
TOTAL STOCKHOLDERS' EQUITY | 229,566,246 | 211,584,839 | ||||
| ||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 393,600,727 | $ | 323,073,352 |
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six Months Ended | ||||||
| June 30, 2015 | June 30, 2014 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income(loss) | $ | 11,557,155 | $ | (2,929,075 | ) | |
Adjustments to reconcile net income to net cash | ||||||
provided by operating activities | ||||||
Depreciation and amortization | 2,955,663 | 2,764,984 | ||||
Assets Impairments | - | - | ||||
Deferred taxes | (153,916 | ) | 924,449 | |||
Change in fair value of financial instruments | (8,753,344 | ) | 3,372,602 | |||
| ||||||
Loss (income) in investment in associated companies | - | 96,364 | ||||
Share of profit after tax of JV Company | (720,523 | ) | (1,718,830 | ) | ||
Decrease in reserve for fixed assets | - | - | ||||
Stock Compensation cost | 5,482,808 | - | ||||
| ||||||
Changes in operating assets and liabilities, net of effects of acquisition: | ||||||
(Increase) Decrease In: | ||||||
Accounts receivable | (14,077,317 | ) | 11,955,855 | |||
Inventories | (12,122,839 | ) | (8,544,033 | ) | ||
Other receivables | (58,055 | ) | (231,945 | ) | ||
Due from employee | (9,250 | ) | (2,390 | ) | ||
Prepayments and prepaid expenses | (143,163 | ) | (44,194,377 | ) | ||
Amount due from JV Company | (50,224,378 | ) | (31,680,191 | ) | ||
| ||||||
Increase (Decrease) In: | ||||||
Accounts payable | 54,732,723 | 31,083,370 | ||||
Other payables and accrued liabilities | (1,716,848 | ) | 2,344,763 | |||
Customer deposits | 106,563 | 107,199 | ||||
Income Tax payable | 506,321 | (533,133 | ) | |||
Due to related party | - | - | ||||
Net cash (used in ) provided by operating activities | $ | (12,638,400 | ) | $ | (37,184,388 | ) |
| ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
(Purchases)/Disposal of plant and equipment, net | (291,895 | ) | (308,838 | ) | ||
Purchases of land use rights | - | (1,669,648 | ) | |||
Purchases of construction in progress | (39,361 | ) | (23,046 | ) | ||
Deposit for acquisition | - | - | ||||
Asset acquisition, net of deposit | - | - | ||||
Issuance of notes receivable | (5,588,283 | ) | (21,468,326 | ) | ||
Repayment of notes receivable | 4,145,502 | 26,020,234 | ||||
Investment in JV Company | - | - | ||||
Cash acquired in acquisition | - | - | ||||
Net cash provided by (used in) investing activities | $ | (1,774,037 | ) | $ | 2,550,376 | |
| ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Restricted cash | (9,937,929 | ) | 1,628 | |||
Proceeds from short-term bank loans | 19,061,273 | 16,764,023 | ||||
Repayments of short-term bank loans | (15,965,853 | ) | (16,764,023 | ) | ||
Proceeds from notes payable | 9,937,929 | 13,020,600 | ||||
Repayment of notes payable | (5,716,427 | ) | (16,601,265 | ) | ||
Fund raising through issuing common stock and warrants | - | - | ||||
Option exercise-stock awards & other financing | - | 4,405,697 | ||||
Warrant exercise | - | 22,447,914 | ||||
Common stock issued for acquisition, net of cost of capital | - | 11,067,734 | ||||
Net cash (used in) provided by financing activities | $ | (2,621,007 | ) | $ | 34,342,308 | |
| ||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | (17,033,444 | ) | (291,704 | ) | ||
Effect of exchange rate changes on cash | 117,975 | (1,183,045 | ) | |||
Cash and cash equivalents at beginning of year | 26,379,460 | 12,762,369 | ||||
| ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 9,463,991 | 11,287,620 | ||||
| ||||||
SUPPLEMENTARY CASH FLOW INFORMATION | ||||||
Income taxes paid | 1,310,173 | 1,145,600 | ||||
| Interest paid | 1,192,526 | 1,170,556 | ||||
