Kandi Technologies Reports Third Quarter 2019 Financial Results

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Jinhua, China--(Newsfile Corp. - November 12, 2019) - Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the "Company," "we" or "Kandi"), today announced its financial results for the third quarter of 2019.

Third Quarter Financial Highlights

  • Total revenues were $31.7 million for the third quarter of 2019, a decrease of 16.6% from total revenues of $38.0 million for the same period in 2018.
  • Electric Vehicle ("EV") parts sales decreased by 19.4%, to $25.8 million for the third quarter of 2019, compared with EV parts sales of $32.1 million for the same period in 2018.
  • Revenues from sales of off-road vehicles decreased by 1.5%, to $5.8 million for the third quarter of 2019, compared with revenues from sales of off-road vehicles of $5.9 million for the same period in 2018.
  • Gross profit decreased 15.5% to $5.3 million, compared to $6.2 million for the same period last year. Gross margin increased to 16.7% compared to 16.4% for the same period of 2018.
  • GAAP net income for the third quarter of 2019 was $12.1 million, or earnings of $0.23 per fully diluted share compared with GAAP net loss of $6.5 million, or loss of $0.13 per fully diluted share for the same period in 2018.
  • Non-GAAP adjusted net income[1], which excludes stock award expenses and the change of the fair value of contingent consideration, was $12.1 million in the third quarter of 2019, compared with non-GAAP net loss of $4.9 million for the same period in 2018. Non-GAAP adjusted income per share1 was approximately $0.23 per fully diluted share for the third quarter of 2019, compared with Non-GAAP adjusted loss per share1 of $0.10 per fully diluted share for the same period in 2018.
  • Working capital was $80.4 million as of September 30, 2019. Cash, cash equivalents and restricted cash totaled $26.1 million as of September 30, 2019.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, "Kandi's financial performance in the first three quarters of 2019 were unsatisfying due to the negative impact stemming from the Affiliate Company's[2] equity adjustment and the corresponding changes to its business operations. However, over the past six months, the Company's efforts have led to new opportunities for its future development. These efforts include reorganizing and working with other business partners to facilitate the online ride-sharing service alliance project, which offers 300,000 government-accredited vehicles within five years. The Company's efforts also include improving the operation and production capacity of the Hainan facility, enhancing the Company's ability to supply the EV-part products, strengthening its relationship with DGL Group Inc. (USA) while simultaneously developing the business of the all-terrain vehicles. We are confident in the Company's ability to grow and prosper in 2020. In addition, Geely Technologies Group Co., Ltd. has conducted substantial work in connection with the improvement of the Affiliate Company and achieved significant results, details of which will be released by the Affiliate Company in December."

Revenues and Gross Profit

3Q19
3Q18
Y-o-Y%
Revenues (US$million)
$31.7
$38.0
-16.6%
Gross Profit (US$million)
$5.3
$6.2
-15.5%
Gross Margin
16.7%
16.4%
-

 

Revenues for the third quarter of 2019 decreased by 16.6% compared to the same period of last year. The decrease in revenues was mainly due to the decrease in EV parts sales during this quarter. The decrease in EV parts sales was primarily due to the Affiliate Company's temporary declining sales, which was caused by its product adjustments. The increase in the gross margin was mainly due to the increased selling price of the charging and exchanging equipment and the increased proportion of the high-margin battery processing business this year.

Operating Income (Loss)

3Q19
3Q18
Y-o-Y%
Operating Expenses (US$million)
$5.0
$8.7
-42.7%
Operating Income (Loss) (US$million)
$0.3
($2.4)
-113.1%
Operating Margin
1.0%
-6.4%
-

 

Total operating expenses in the third quarter of 2019 were $5.0 million, compared with $8.7 million in the same quarter of 2018. The decrease in total operating expenses was due to the decreased R&D expenses, which were $0.6 million in this quarter compared with $5.7 million in the same quarter last year.

The following table summarizes our non-GAAP net income for the three months ended September 30, 2019 and 2018:

3Q19
3Q18
Y-o-Y%
Net Income (Loss) (US$million)
$12.1
($6.5)
-285.4%
Earnings (Loss) per Weighted Average Common Share
$0.23
($0.13)
-
Earnings (Loss) per Weighted Average Diluted Share
$0.23
($0.13)
-
Stock Award Expenses (US$million)
$0.02
$0.03
-27.6 %
Change in the Fair Value of Contingent Consideration (US$million)
($0.06)
$1.6
-103.7%
Non-GAAP Net Income (Loss)(US$million)
$12.1
($5.0)
-344.2%

 

Net income was $12.1 million in the third quarter of 2019, compared with net loss of $6.5 million in the same quarter of 2018. The increase of net income for this quarter was primarily attributable to the gain from equity sale in the Affiliate Company and the decreased research and development expense.

Non-GAAP net income was $12.1 million in the third quarter of 2019, compared to Non-GAAP net loss of $5.0 million in the same quarter of 2018. The increase of net income (non-GAAP) was primarily attributable to the gain from equity sale in the Affiliate Company and the decreased research and development expense.

Third Quarter 2019 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its third quarter 2019 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 12, 2019. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Zhu Xiaoying, interim 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 Economic Development Zone, Zhejiang Province, is engaged in the research, development, manufacturing, and sales of various vehicular products. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. ("Kandi Vehicles") and its subsidiaries, SC Autosports, LLC, a wholly-owned subsidiary of Kandi in the United States and Kandi Electric Vehicles Group Co., Ltd. (the "Affiliate Company"). Kandi Vehicles has established itself as one of China's leading manufacturers of pure electric vehicle ("EV") parts and off-road vehicles.

In 2013, Kandi Vehicles and Geely Group, China's leading automaker, jointly invested in the establishment of the Affiliate Company in order to develop, manufacture and sell pure EV products. As of September 30, 2019, Geely Technologies Group Co., Ltd. (including its affiliate) and Kandi Vehicles respectively hold 78% and 22% of the equity interest in the Affiliate Company. The Affiliate Company has established itself as one of the driving forces in the development and the manufacturing of pure EV products in China.

More information about KNDI is available on 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

- Tables Below -

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

September 30,
2019

December 31,
2018

(UNAUDITED)

Current assets

Cash and cash equivalents

$

14,338,637

$

15,662,201

Restricted cash

11,713,004

6,690,870

Accounts receivable (net of allowance for doubtful accounts of $130,420 and $120,010 as of September 30, 2019 and December 31, 2018, respectively)

54,859,801

34,274,728

Inventories

35,447,383

21,997,868

Notes receivable

41,549,888

72,712

Notes receivable from the Affiliate Company and related party

-

3,861,032

Other receivables

12,859,304

1,264,323

Prepayments and prepaid expense

9,497,459

11,136,408

Due from employees

5,499

1,001

Advances to suppliers

4,474,104

4,705,183

Amount due from the Affiliate Company, net

25,335,894

67,683,462

Right - of - use asset

42,974

-

TOTAL CURRENT ASSETS

210,123,947

167,349,788

LONG-TERM ASSETS

Property, plant and equipment, net

74,491,204

82,045,923

Land use rights, net

11,084,717

11,749,728

Construction in progress

17,781

-

Deferred taxes assets

-

8,204

Investment in the Affiliate Company

53,837,011

128,929,893

Goodwill

27,762,120

28,552,215

Intangible assets

3,723,988

4,328,127

Other long term assets

4,803,349

5,865,386

TOTAL Long-Term Assets

175,720,170

261,479,476

TOTAL ASSETS

$

385,844,117

$

428,829,264

CURRENT LIABILITIES

Accounts payable

$

79,632,036

$

112,309,683

Other payables and accrued expenses

4,843,001

4,251,487

Short-term loans

30,969,731

30,539,236

Customer deposits

33,535

94,408

Notes payable

11,463,004

12,787,619

Income tax payable

1,519,699

3,471,366

Due to employees

7,105

28,473

Deferred income

1,237,556

1,340,605

Lease liability

44,121

-

Total Current Liabilities

129,749,788

164,822,877

LONG-TERM LIABILITIES

Long term bank loans

27,606,502

28,794,136

Deferred taxes liability

1,758,643

1,711,343

Contingent consideration liability

6,562,000

7,256,000

Other long-term liability

-

622,034

Total Long-Term Liabilities

35,927,145

38,383,513

TOTAL LIABILITIES

165,676,933

203,206,390

STOCKHOLDER'S EQUITY

Common stock, $0.001 par value; 100,000,000 shares authorized; 56,263,102 and 55,992,002 shares issued and 52,839,441 and 51,484,444 outstanding at September 30, 2019 and December 31, 2018, respectively

52,839

51,484

Less: Treasury stock (487,155 shares with average price of $5.09 and 0 shares at September 30, 2019 and December 31, 2018, respectively )

(2,477,965

)

-

Additional paid-in capital

259,691,370

254,989,657

Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at September 30, 2019 and December 31, 2018, respectively)

(9,135,198

)

(9,497,009

)

Accumulated other comprehensive loss

(27,963,862

)

(19,921,258

)

TOTAL STOCKHOLDERS' EQUITY

220,167,184

225,622,874

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

385,844,117

$

428,829,264


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,
2019

September 30,
2018

September 30,
2019

September 30,
2018

REVENUES FROM UNRELATED PARTY, NET

$

26,968,385

$

14,860,034

$

63,360,044

$

32,211,352

REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTY, NET

4,720,159

23,135,326

10,543,190

30,479,521

REVENUES, NET

31,688,544

37,995,360

73,903,234

62,690,873

COST OF GOODS SOLD

(26,412,129

)

(31,753,311

)

(61,288,228

)

(53,044,861

)

GROSS PROFIT

5,276,415

6,242,049

12,615,006

9,646,012

OPERATING EXPENSES:

Research and development

(596,187

)

(5,691,649

)

(1,766,210

)

(7,091,836

)

Selling and marketing

(930,810

)

(898,896

)

(2,448,291

)

(1,875,294

)

General and administrative

(3,432,920

)

(2,070,947

)

(11,096,246

)

(5,534,039

)

Total Operating Expenses

(4,959,917

)

(8,661,492

)

(15,310,747

)

(14,501,169

)

INCOME (LOSS) FROM OPERATIONS

316,498

(2,419,443

)

(2,695,741

)

(4,855,157

)

OTHER INCOME (EXPENSE):

Interest income

209,736

52,745

559,954

1,452,522

Interest expense

(435,524

)

(483,376

)

(1,304,062

)

(1,505,409

)

Change in fair value of contingent consideration

57,000

(1,552,686

)

694,000

1,814,326

Government grants

502,146

607,008

725,189

717,821

Gain from equity dilution in the Affiliate Company

(49,285

)

-

4,291,974

-

Gain from equity sale in the Affiliate Company

20,574,217

-

20,574,217

-

Share of loss after tax of the Affiliate Company

(8,433,767

)

(3,247,343

)

(22,883,126

)

(79,592

)

Other income , net

57,833

15,735

357,626

666,294

Total other income (expense), net

12,482,356

(4,607,917

)

3,015,772

3,065,962

INCOME (LOSS) BEFORE INCOME TAXES

12,798,854

(7,027,360

)

320,031

(1,789,195

)

INCOME TAX (EXPENSE) BENEFIT

(709,413

)

505,961

41,780

370,316

NET INCOME (LOSS)

12,089,441

(6,521,399

)

361,811

(1,418,879

)

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation

(8,531,043

)

(8,108,270

)

(8,042,604

)

(13,230,652

)

COMPREHENSIVE INCOME (LOSS)

$

3,558,398

$

(14,629,669

)

$

(7,680,793

)

$

(14,649,531

)

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED

52,613,642

51,474,048

52,332,260

51,089,047

NET INCOME (LOSS) PER SHARE, BASIC AND DILUTED

$

0.23

$

(0.13

)

$

0.01

$

(0.03

)


KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)

Number of Outstanding Shares

Common Stock

Treasury Stock

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income

Total

Balance, December 31, 2018

51,484,444

51,484

-

254,989,657

(9,497,009

)

(19,921,258

)

225,622,874

Stock issuance and award

1,096,397

1,097

- 

3,387,379

- 

- 

3,388,476

Net income (loss)

-

-

-

-

(4,409,472

)

-

(4,409,472

)

Foreign currency translation

- 

- 

- 

- 

- 

5,404,028

5,404,028

Balance, March 31, 2019

52,580,841

52,581

-

258,377,036

(13,906,481

)

(14,517,230

)

230,005,906

Stock issuance and award

238,600

238

- 

1,259,569

- 

- 

1,259,807

Net income (loss)

-

-

-

-

(7,318,158

)

-

(7,318,158

)

Foreign currency translation

- 

- 

- 

- 

- 

(4,915,589

)

(4,915,589

)

Balance, June 30, 2019

52,819,441

52,819

-

259,636,605

(21,224,639

)

(19,432,819

)

219,031,966

Stock issuance and award

20,000

20

- 

69,380

- 

- 

69,400

Stock buyback

-

-

(2,477,965

)

-

-

-

(2,477,965

)

Commission in stock buyback

- 

- 

- 

(14,615

)

- 

- 

(14,615

)

Net income (loss)

-

-

-

-

12,089,441

-

12,089,441

Foreign currency translation

- 

- 

- 

- 

- 

(8,531,043

)

(8,531,043

)

Balance, September 30, 2019

52,839,441

52,839

(2,477,965

)

259,691,370

(9,135,198

)

(27,963,862

)

220,167,184

Number of Outstanding Shares

Common Stock

Treasury Stock

Additional Paid-in Capital

Accumulated Deficit

Accumulated Other Comprehensive Income

Total

Balance, December 31, 2017

48,036,538

48,037

-

233,055,348

(3,802,310

)

(6,310,763

)

222,990,312

Stock issuance and award

2,972,337

2,972

- 

19,099,556

- 

- 

19,102,528

Net income (loss)

-

-

-

-

3,727,995

-

3,727,995

Foreign currency translation

- 

- 

- 

- 

- 

7,465,240

7,465,240

Balance, March 31, 2018

51,008,875

51,009

-

252,154,904

(74,315

)

1,154,477

253,286,075

Stock issuance and award

288,600

289

- 

2,038,476

- 

- 

2,038,765

Net income (loss)

-

-

-

-

1,374,525

-

1,374,525

Foreign currency translation

- 

- 

- 

- 

- 

(12,587,622

)

(12,587,622

)

Balance, June 30, 2018

51,297,475

51,298

-

254,193,380

1,300,210

(11,433,145

)

244,111,743

Stock issuance and award

184,469

184

- 

787,529

- 

- 

787,713

Net income (loss)

-

-

-

-

(6,521,399

)

-

(6,521,399

)

Foreign currency translation

- 

- 

- 

- 

- 

(8,108,271

)

(8,108,271

)

Balance, September 30, 2018

51,481,944

51,482

-

254,980,909

(5,221,189

)

(19,541,416

)

230,269,786

 

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

Nine Months Ended

September 30,
2019

September 30,
2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$

361,811

$

(1,418,879

)

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

Depreciation and amortization

6,443,422

2,271,599

Impairments

44,544

24,854

Allowance for doubtful accounts

15,366

(7,093

)

Deferred taxes

50,693

-

Share of loss after tax of the Affiliate Company

22,883,126

79,592

Gain from equity dilution in the Affiliate Company

(4,291,974

)

-

Gain from equity sale in the Affiliate Company

(20,574,217

)

-

Change in fair value of contingent consideration

(694,000

)

(1,814,326

)

Stock compensation cost

1,337,333

253,934

Changes in operating assets and liabilities:

(Increase) Decrease In:

Accounts receivable

(36,822,184

)

(52,845,923

)

Deferred taxes assets

-

(52,126

)

Notes receivable

174,881

491,272.00

Notes receivable from the Affiliate Company and related party

437,203

3,196,340

Inventories

(14,813,147

)

1,555,993

Other receivables and other assets

(17,275,954

)

1,497,230

Due from employee

(25,861

)

945

Advances to supplier and prepayments and prepaid expenses

1,357,001

(4,590,404

)

Amount due from the Affiliate Company

30,549,072

(81,549,214

)

Amount due from Affiliate Company-Long term

-

15,907,183

Due from related party

-

161,874

Increase (Decrease) In:

Accounts payable

11,383,411

101,684,965

Other payables and accrued liabilities

7,791,028

29,845,307

Notes payable

(11,836,950

)

(12,434,813

)

Customer deposits

(59,734

)

20,350

Income tax payable

(1,803,574

)

(2,353,826

)

Deferred income

(56,448

)

(761,643

)

Net cash used in operating activities

$

(25,425,152

)

$

(836,809

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment, net

(955,670

)

(304,745

)

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

-

486,954

Purchases of construction in progress

(18,491

)

(425,241

)

Reimbursement of capitalize interests for construction in progress

-

1,818,390

Cash received from equity sale in the Affiliate Company

32,061,558

-

Long Term Investment

-

1,458,464

Net cash provided by (used in) investing activities

$

31,087,397

$

(682,504

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short-term bank loans

27,864,409

25,515,452

Repayments of short-term bank loans

(26,261,331

)

(26,283,065

)

Repayments of long-term bank loans

(145,734

)

(153,523

)

Proceeds from notes payable

-

40,313,800

Repayment of notes payable

-

(43,024,633

)

Cash used for stock buyback

(2,492,579

)

-

Net cash used in financing activities

$

(1,035,235

)

$

(3,631,969

)

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

4,627,010

(5,151,282

)

Effect of exchange rate changes on cash

(928,440

)

(512,545

)

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR

22,353,071

16,110,496

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD

26,051,641

10,446,669

-CASH AND CASH EQUIVALENTS AT END OF PERIOD

14,338,637

1,342,085

-RESTRICTED CASH AT END OF PERIOD

11,713,004

9,104,584

SUPPLEMENTARY CASH FLOW INFORMATION

Income taxes paid

1,711,101

1,981,072

Interest paid

1,304,062

1,274,399

SUPPLEMENTAL NON-CASH DISCLOSURES:

Acquisition of Jinhua An Kao by stock

-

20,718,859

Acquisition of SC Autosports by stock

-

756,664

Amount due from the Affiliate Company converted to investment in the Affiliate Company

-

83,669,804

Notes receivable from unrelated parties for equity transfer payment

43,137,369

-


[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.

[2] Refers to Kandi Electric Vehicles Group Co., Ltd., formerly known as the "JV Company".

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/49638

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