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Kandi Technologies Reports Full Year 2018 Financial Results
2019-3-18 14:12:33  (Page Views:226)
JINHUA, CHINA-- (March 15, 2019) - Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), announced its financial results for the full year ended December 31, 2018 today. 

 

Full Year 2018 Highlights

• Total revenues were $112.4 million in 2018, an increase of 9.4% from total revenues of $102.8 million in 2017.

• EV parts sales increased by 1.8% to $99.1 million in 2018, compared with EV parts sales of $97.4 million in 2017.

• Off-road vehicles sales increased by 144.8% to $13.3 million in 2018, compared with off-road vehicles sales of $5.4 million in 2017.

• Gross margin for the year ended December 31, 2018 was 18.0%, compared to 14.0% for the year ended December 31, 2017.

• Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”) sold 10,259 EV products in 2018, compared to 11,437 EV products sold in 2017, a decrease of 10.3%.

• Income before income taxes in 2018 was $2.08 million, compared with loss before income taxes of $31.61 million in 2017.

• GAAP net loss in 2018 was $5.7 million, or $0.11 loss per fully diluted share, compared with GAAP net loss of $28.3 million, or $0.59 loss per fully diluted share in 2017.

• Non-GAAP adjusted net loss[footnoteRef:1] which excludes stock award expenses and gain of changes in the fair value of contingent consideration, was $8.8 million in 2018, compared with non-GAAP adjusted net loss of $23.2 million in 2017. Non-GAAP adjusted loss per share1 was approximately $0.17 per fully diluted share for the full year of 2018, compared with non-GAAP adjusted loss per share of $0.48 per fully diluted share for the full year of 2017.

• Working capital surplus was $2.5 million as of December 31, 2018. Cash, cash equivalents and restricted cash totaled $22.4 million as of December 31, 2018.


Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, comments, “Kandi has experienced challenges over the past few years due to the confusion surrounding the reusable battery exchange model. However, Kandi has been working diligently to overcome the downturn and obstacles to resolve these issues. Early on in 2018, we prepared a three-year plan for 2018 through 2020 based on our company’s and the industry’s situation. 2018 was to be the year of survival, 2019 of revival, and 2020 will be the year of prosperity. Through our hard work in 2018, we rebuilt and refined our practices, and as a result, we are very pleased with our financial performance. In 2018, our total revenue was up 9.4% to $112 million; while pre-tax income was $2.1 million compared to a loss of $31.6 million in 2017. In 2019, we plan to continue this upwards momentum, and further refine our business model and execution plan to forge new opportunities moving forward in the following ways.”

“First, the management team hopes the JV Company to achieve its projected goals of producing and selling 20,000 EVs in 2019. Second, the Company is expecting to obtain the approval of its application for a manufacturing license from the Ministry of Industry and Information Technology to become an official EV manufacturing enterprise with “dual production licenses”. Third, following the U.S. National Highway Traffic Safety Administration’s (NHTSA) approval of certain Kandi EV models for importation and registration in the U.S., Kandi EV models are now eligible for up to $7,500 in federal tax credits in 2019 and 2020. To capitalize on the opportunity presented by the NHTSA’s approval, we are in the process of preparing a strategic sales plan for the debut of Kandi EV models in the American market later this year. Fourth, the car share program (or Micro Public Transportation) has been upgraded to an online ride-hailing business model in China, which is expected to open up a broader market for Kandi electric vehicles. Finally, the Company is evaluating for the optimal time to restructure the JV Company’s equity in order to unlock the shareholder value of the JV Company. We are dedicated in taking full advantage of the milestones we have reached thus far, achieving stronger business results in 2019, as well as maximizing our long-term shareholders’ investments.” Mr. Hu concluded.

 

Full Year 2018 Financial Results

Net Revenues and Gross Profit

 

2018

2017

Y-o-Y%

Net Revenues (US$mln)

$112.4

$102.8

9.4%

Gross Profit (US$mln)

$20.2

$14.3

41.2%

Gross Margin

18.0%

14.0%

-

Net revenues for the full year 2018 increased 9.4% from 2017. The increase in net revenues was mainly due to an increase in sales of off-road vehicles in 2018. Gross margin for the full year 2018 increased to 18.0%, compared with 14.0% in 2017. The increase in the gross margin was mainly due to the higher gross margin from off-road vehicle sales of SC Autosports, a result of its effective procurement of inventories at discounted prices, as well as increased gross margin from sales of battery packs.

 

Operating Income (Loss)

 

2018

2017

Y-o-Y%

Operating Expenses (US$mln)

$21.9

$40.4

-45.9%

Operating Loss (US$mln)

($1.6)

($26.1)

-93.7%

Operating Margin

-1.5%

-25.4%

-

Total operating expenses in 2018 were $21.9 million, compared with $40.4 million in 2017. The decrease in total operating expenses was due to largely decreased research and development expenses in 2018.

GAAP Net Loss

 

2018

2017

Y-o-Y%

GAAP Net Loss (US$mln)

($5.7)

($28.3)

-79.9%

Loss per Weighted Average Common Share

($0.11)

($0.59)

-

Loss per Weighted Average Diluted Share

($0.11)

($0.59)

-

Non-GAAP Financial Measures

 

We make reference to certain non-GAAP financial measures, i.e., adjusted net income. Management believes that such adjusted financial results are useful for investors in evaluating our operating performance because they present a meaningful measure of corporate performance. See the non-GAAP reconciliation table below. Any non-GAAP measures should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with the GAAP.

Non-GAAP financial measure 

2018

2017

Y-o-Y%

GAAP Net Loss (US$mln)

($5.7)

($28.3)

-79.9%

Stock award expenses (US$mln)

$0.29

$5.2

-94.4%

Change of the fair value of contingent consideration

$(3.4)

-

-

Non-GAAP net Loss (US$mln)

($8.8)

($23.2)

-61.9%

Net loss in 2018 was $5.7 million, compared with net loss of $28.3 million in 2017. The decrease in net loss was primarily attributable to the increased gross profits, the decreased in R&D expenses and the increased government grand the Company received this year.

 

JV Company Financial Results

 

In the full year 2018, the JV Company sold 10,259 units of EV products in China.

The condensed financial income statement of the JV Company for the full year 2018 is as set forth below:

 

2018

2017

Y-o-Y%

Net Revenues (US$mln)

$122.5

$192.7

-36.5%

Gross (Loss) Profit (US$mln)

($17.7)

$3.6

-593.1%

Gross Margin

-14.5%

1.9%

-

Net Loss (US$mln)

($36.3)

($22.7)

60.1%

% of Net revenues

-29.7%

-11.8%

-

Kandi’s investments in the JV Company are accounted for under the equity method of accounting, as Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company’s loss for $18.2 million for the full year 2018. After eliminating intra-entity profits and losses, Kandi’s share of the after tax loss of the JV Company was $17.9 million for the full year 2018.

Full Year 2018 Conference Call Details
The Company has scheduled a conference call and live webcast to discuss the financial results at 8:00 AM (U.S. Eastern Time) on March 15, 2019 (8:00 PM Beijing Time on March 15, 2019). Mr. Hu Xiaoming, the Company’s Chief Executive Officer and Ms. Emily Zhu, the Company’s Interim 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: +1-888-394-8218
• International dial-in number: + 1-323-701-0225
• Webcast and replay: http://public.viavid.com/index.php?id=133596

A live audio webcast of the call may also be accessed by visiting Kandi's Investor Relations website at http://www.kandivehicle.com. An archive of the webcast will be available on the Company's website following the live call.
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