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Kandi Technologies Reports First Quarter 2019 Financial Results
2019-5-13 11:15:00  (Page Views:267)
-Q1 revenue increased 116.8% YoY to $18.1 million
- Q1 off-road vehicles sales increased 169.8% YoY to $5.3 million
-Q1 gross margin increased to 17.4% compared to 16.1%

 

JINHUA, CHINA--(May 10, 2019) - Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the first quarter of 2019.
 
First Quarter Highlights

 Total revenues increased 116.8% to $18.1 million for the first quarter of 2019, from $8.3 million for the same period in 2018.
 Electric Vehicle (“EV”) parts sales increased 100.4% to $12.8 million for the first quarter of 2019, compared with $6.4 million in the same period in 2018.
 Off-road vehicle revenues increased 169.8% to $5.3 million for the first quarter of 2019 compared with $2.0 million in the same period in 2018.
 GAAP net loss for the first quarter of 2019 was $4.4 million, or $0.09 loss per fully-diluted share, compared with net income of $3.7 million, or $0.07 income per fully-diluted share in the same period in 2018.
 Non-GAAP adjusted net loss[footnoteRef:1], which excludes stock compensation expenses of $0.03 million and changes in the fair value of contingent consideration, which was a gain of $0.09 million, was $4.5 million in the first quarter of 2019, compared with non-GAAP net loss of $0.6 million for the same period of 2018. Non-GAAP adjusted loss per share1 was approximately $0.09 loss per fully diluted share for the first quarter of 2019 compared with Non-GAAP adjusted loss per share1 of $0.01 per fully diluted share for the same quarter in 2018.
 The Company’s working capital surplus was $8.5 million as of March 31, 2019. Cash, cash equivalents and restricted cash totaled $8.4 million as of March 31, 2019.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “Total revenues in the first quarter increased 116.8%, which represents an incredible year-over-year growth. However, the Chinese government’s national subsidy policy adjustment during the first quarter coupled with the JV Company’s pending restructuring, which is taking place in order to maximize the JV Company’s ability to grow into a prominent company, has resulted in our modifying the JV Company’s business development plan with respect to its integration into Geely under Geely’s management as a primary shareholder. This transition period has directly impacted production and sales, causing a loss for the JV Company. Despite this transitional period, the JV Company has made many meaningful advances in the first quarter. In the beginning of the year, Kandi Jiangsu received an approval notice from Jiangsu Development and Reform Commission with respect to Kandi Jiangsu’s application to an annual capacity of 50,000 pure electric vehicles project. This approval gives Kandi Jiangsu a license to build the factory for EV manufacturing. In April, a team of EV industry experts from the Ministry of Industry and Information Technology and we are currently anticipating approval.”

“Additionally, Kandi has taken advantage of every available opportunity to get into the online ride-hailing market by signing cooperative agreements with several major industry players such as Zhejiang Ruibo, Caocao Zhuan Che, China Resources (Zhejiang), and Didi Chuxing to provide government-accredited EVs. We strongly believe that car-sharing is a promising area with significant room for growth, and that the Company’s continued efforts in laying the foundations for supplying government-accredited EVs to drive sales growth will allow us to regain our position as the leading electric vehicle products manufacturer in the market. Furthermore, the JV Company will be able to achieve faster growth with Geely’s corporate resources and branding profile. While the restructuring reduces Kandi’s equity stake in the JV company to 22%, we believe that the value of Kandi’s 22% equity ownership in the JV Company, following the restructuring, will far exceed Kandi’s original 50% equity in the future.” Mr. Hu concluded.

Net Revenues and Gross Profit

 

1Q19

1Q18

Y-o-Y%

Net Revenues (US$mln)

$18.1

$8.3

116.8%

Gross Profit (US$mln)

$3.1

$1.3

113.6%

Gross Margin

17.4%

16.1%

-

 
Net revenues for the first quarter increased 116.8% compared to the same period last year. The increase in revenue was mainly due to the increase in EV parts sales during this quarter. The increase in EV parts sales was primarily due to the increased sales volume of battery packs.
 
Operating Income (Loss)

 

1Q19

1Q18

Y-o-Y%

Operating Expenses (US$mln)

$3.2

$1.1

188.5%

Operating (Loss) Income (US$mln)

($0.06)

$0.2

(124.5%)

Operating Margin

(0.3%)

2.9%

-

 

Total operating expenses in the first quarter were $3.2 million, compared with $1.1 million in the same quarter of 2018. The increase in total operating expenses was primarily due to increased general and administrative, which was $2.1 million in this quarter, compared with $0.4 million in the same quarter last year.


GAAP Net Income

 

1Q19

1Q18

Y-o-Y%

Net (Loss) Income (US$mln)

($4.4)

$3.7

(218.3%)

Lossearnings per Weighted Average Common Share Outstanding Basic

($0.09)

$0.07

-

(Loss) earnings per Weighted Average Common Share Outstanding Diluted

($0.09)

$0.07

-

Stock Compensation expenses

$0.03

($1.6)

-

Change in fair value of contingent consideration

($0.09)

($2.7)

-

Non-GAAP net Loss

($4.5)

($0.6)

686.6%

 

Net loss was $4.4 million in the first quarter, compared with net income of $3.7 million in the same quarter of 2018. The decrease was primarily attributable to the increased share of loss of the JV Company compared to the same period of last year.

Non-GAAP net loss was $4.5 million, a 686.6% increase in loss in the first quarter of 2019 compared to net loss of $0.6 million in the same quarter of 2018. The increase in Non-GAAP net loss was primarily attributable to an increased share of loss of the JV Company from the JV Company compared to the same period of last year.

JV Company Financial Results
 
In this quarter, total revenue was $1.3 million as compared to $33.8 million for the quarter ended March 31, 2018.
The condensed financial income statement of the JV Company in the first quarter is as below:

 

1Q19

1Q18

Y-o-Y%

Net Revenues (US$mln)

$1.3

$33.8

(96.3%)

Gross (Loss)Profit (US$mln)

($0.02)

$5.6

(100.4%)

Gross Margin

(1.7%)

16.5%

-

Net (Loss) Income

($20.2)

$1.0

(2076.4%)

% of Net revenue

(1606.5%)

3.0%

-

 

Kandi’s investments in the JV Company are accounted for under the equity method of accounting. Since loan to equity conversion in the JV Company resulting Kandi a 43.47% ownership was completed at end of this quarter and the transfer of 21.47% equity interests in the JV Company to a Geely affiliate has not been completed as of March 31, 2019, Kandi recorded 50% of the JV Company’s loss of $10.1 million for this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after tax loss of the JV Company was $9.9 million for the first quarter of 2019.
 
First Quarter of 2019 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its financial results at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time) on May 10, 2019. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Ms. Zhu Xiaoying, interim Chief Financial Officer of the Company, will deliver prepared remarks to be 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

The live audio webcast 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.
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