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Kandi Technologies Announces Second Quarter 2015 Financial Results

20:00 EDT 9 Aug 2015 | Globe Newswire

- Q2 EV parts sales increased 168.3% year-over-year to $46.6 million

- Q2 JV Company sold 4,446 EV products, an 8.1% increase year-over-year

JINHUA, China, Aug. 10, 2015 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the "Company" or "Kandi") (NASDAQ: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 remainder of 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. EDT) 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:

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.

1 Non-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 instruments   4,003,044  8,941,569  8,753,344  (3,372,602)
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 TAXES  6,554,117  11,494,151  13,694,679  (2,372,940)
         
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
CONTACT: 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
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