Kandi Technologies Reports Third Quarter 2020 Financial Results
- Off-road vehicles sales increased 51.6% to $8.9 million
- Gross margin of 20.9% up versus 16.7% year-ago
JINHUA, CHINA, Nov. 09, 2020 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the third quarter of 2020.
During the third quarter, Kandi achieved:
- In September, established China Battery Exchange Technology Company, a wholly-owned subsidiary for its battery swapping services.
- On August 18, Kandi America held a successful virtual launch event to introduce its K23 and K27 EVs into the U.S. market.
- In August, delivered its fully automatic intelligent battery exchange system to the rideshare operator in Haikou City, Hainan.
- In July, the Affiliate Company Fengsheng Automotive launched sales of the Maple 30X, its first pure electric SUV.
- Fengsheng Automative’s Maple 60V all-electric multi-purpose vehicle) was approved for purchase subsidies by China’s Ministry of Industry and Information Technology.
More recently, Kandi also announced:
- A strategic cooperation agreement with the Zhejiang State Grid Electric Vehicle Service Company in the area of battery exchange for pure electric vehicles.
- The establishment of Zhejiang Ruiheng Technology Company, which intends to operate a ridesharing service across China.
- Initiated the IPO process for its wholly owned subsidiary, Zhejiang Kandi Smart Battery Swap Technology, to list on the Shanghai Stock Exchange STAR market.
- Kandi America, the U.S. subsidiary has received the required clearance from the United States Environmental Protection Agency (EPA) for its two electric vehicle models – the K23 and K27 – via Certificates of Conformity.
All figures refer to the third quarter of 2020 unless noted otherwise. All comparisons are with the third quarter of 2019, unless noted otherwise.
- Total revenues were down 40.9% to $18.7 million.
- Electric Vehicle (“EV”) parts sales decreased by 67.4% to $8.4 million.
- Off-road vehicle sales increased by 51.6% to $8.9 million.
- Gross margin of 20.9% increased 42 basis points versus the year-ago period.
- Net loss was $1.5 million, or $0.03 per fully diluted share. This compares to net income of $12.1 million, or $0.23 last year.
- As of September 30, 2020, working capital was $79.8 million. Cash, cash equivalents and restricted cash was $24.2 million.
Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “As we approach year-end, we are proud of our progress despite the challenges posed by COVID-19 around the world. We were productive in the third quarter. Most importantly, after a lengthy process of preparation, the ‘300,000 government-accredited pure EV within 5 years rideshare’ program—of which Kandi was a co-founder-- has begun its trial with the gradual delivery of 1,000 EVs to the city of Haikou in Hainan province and 2,500 EVs to the city of Shaoxing in Zhejiang province. All the EVs delivered for the program include our battery swap feature. We believe that this program can drive the production and sales of our EV parts and battery swap equipment, and we can thus restore growth in our pure EV business.”
Hu also discussed the plan to list Kandi’s Battery Swap Subsidiary on the Shanghai Stock Exchange’s STAR Board: “Based on feedback from three world-class advisors’ preliminary due diligence, we are confident about this proposed spin-off listing on the STAR market. By tapping China’s capital markets, listing on the STAR Board will accelerate the Company’s business growth and also enable Kandi to unlock and realize the value of this emerging business.”
Net Revenues and Gross Profit
|Net Revenues (US$million)||$||18.7||$||31.7||-40.9||%|
|Gross Profit (US$million)||$||3.9||$||5.3||-25.9||%|
The decline in revenue was due mainly to slower sales of EV parts, a result of reduced demand from our customers due to the economic effects of the COVID-19 pandemic.
|Operating Expenses (US$million)||$||6.3||$||5.0||26.8||%|
|Operating (Loss) Income (US$million)||($||2.4||)||$||0.3||-851.3||%|
Operating expenses increased due to higher sales and marketing expense related to the Company’s entry into the U.S. electric vehicle market.
Net Income (Loss)
|Net (Loss) Income (US$million)||($||1.5||)||$||12.1||-112.1||%|
|(Loss) Earnings per Weighted Average Common Share||($||0.03||)||$||0.23||-|
|(Loss) Earnings per Weighted Average Diluted Share||($||0.03||)||$||0.23||-|
Net loss was $1.5 million in the third quarter of 2020, compared with net income of $12.1 million in the same quarter of 2019. The decline was due to recognition in the third quarter of 2019 of a $20.6 million gain from the sale of equity in the Affiliate Company.
As of September 30, 2020, the Company had cash and cash equivalents of $23.9 million, restricted cash of $0.25 million, and working capital of $79.8 million. This compares to $5.5 million, $11.0 million, $63.7 million as of December 31, 2019, respectively.
As of September 30, 2020, accounts receivable were $38.4 million, compared to $61.2 million as of December 31, 2019.
For the first three quarters of 2020, cash used in operating activities was $13.4 million, as compared to cash used in operating activities of $14.6 million for the same period last year.
Third Quarter 2020 Conference Call Details
The Company will conduct a conference call and live webcast to discuss its third quarter 2020 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 9, 2020. Management will deliver prepared remarks to be followed by a question and answer session.
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
- Webcast and replay: http://public.viavid.com/index.php?id=142327
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 including Zhejiang Kandi Smart Battery Swap Technology Co., Ltd, SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States and Fengsheng Automobile Technology Group Co., Ltd (formerly known as 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 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 electric vehicle ("EV") products. Geely Group (including its affiliate) and Kandi Vehicles currently holds 78% and 22% of the equity interests in the Affiliate Company, respectively. 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 applicable securities laws, the Company does not assume a duty to update these forward-looking statements.
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For More Information:
Kandi Technologies Group, Inc.
Ms. Kewa Luo
Phone: +1 (212) 551-3610
The Blueshirt Group
Mr. Gary Dvorchak
Ms. Susie Wang
- Tables Below -
KANDI TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|Cash and cash equivalents||$||23,909,159||$||5,490,557|
|Accounts receivable (net of allowance for doubtful accounts of $105,833 and $254,665 as of September 30, 2020 and December 31, 2019, respectively)||38,370,898||61,181,849|
|Prepayments and prepaid expense||10,980,473||10,615,063|
|Amount due from the Affiliate Company||20,869,315||31,330,763|
|Other current assets||4,262,285||688,364|
|TOTAL CURRENT ASSETS||183,776,581||195,572,436|
|Property, plant and equipment, net||71,132,470||74,407,858|
|Intangible assets, net||3,264,500||3,654,772|
|Land use rights, net||9,042,991||11,272,815|
|Investment in the Affiliate Company||39,442,126||47,228,614|
|Other long term assets||13,132,240||10,811,501|
|TOTAL NON-CURRENT ASSETS||164,806,358||175,645,960|
|Other payables and accrued expenses||5,857,897||6,078,041|
|Income tax payable||1,087,338||1,796,601|
|Long term loans - current portion||16,761,501||13,779,641|
|Other current liabilities||1,456,108||1,379,808|
|TOTAL CURRENT LIABILITIES||104,008,582||131,873,739|
|Long term loans||12,156,573||14,353,792|
|Deferred taxes liability||3,460,346||1,362,786|
|Contingent consideration liability||3,403,000||5,197,000|
|Other long-term liabilities||588,123||574,152|
|TOTAL NON-CURRENT LIABILITIES||19,608,042||21,487,730|
|Common stock, $0.001 par value; 100,000,000 shares authorized; 56,531,702 and 56,263,102 shares issued and 54,610,758 and 52,839,441 outstanding at September 30, 2020 and December 31, 2019, respectively||54,611||52,839|
|Less: Treasury stock (487,155 shares with average price of $5.09 at September 30, 2020 and December 31, 2019, respectively)||(2,477,965||)||(2,477,965||)|
|Additional paid-in capital||260,605,209||259,691,370|
|Accumulated other comprehensive loss||(17,551,938||)||(22,723,581||)|
|TOTAL STOCKHOLDERS' EQUITY||224,966,315||217,856,927|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||348,582,939||$||371,218,396|
KANDI TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
|Three Months Ended||Nine Months Ended|
|REVENUES FROM UNRELATED PARTIES, NET||$||18,717,212||$||26,968,385||$||44,525,756||$||63,360,044|
|REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTIES, NET||6||4,720,159||962||10,543,190|
|COST OF GOODS SOLD||(14,806,322||)||(26,412,129||)||(35,911,785||)||(61,288,228||)|
|Research and development||(987,285||)||(596,187||)||(2,777,426||)||(1,766,210||)|
|Selling and marketing||(2,165,383||)||(930,810||)||(3,807,355||)||(2,448,291||)|
|General and administrative||(3,212,209||)||(3,432,920||)||(10,186,135||)||(11,096,246||)|
|Gain on disposal of long-lived assets||76,159||-||13,983,733||-|
|TOTAL OPERATING EXPENSES, NET||(6,288,718||)||(4,959,917||)||(2,787,183||)||(15,310,747||)|
|(LOSS) INCOME FROM OPERATIONS||(2,377,822||)||316,498||5,827,750||(2,695,741||)|
|OTHER INCOME (EXPENSE):|
|Change in fair value of contingent consideration||(1,069,000||)||57,000||1,794,000||694,000|
|Gain (loss) from equity dilution in the Affiliate Company||-||(49,285||)||-||4,291,974|
|Gain from sale of equity in the Affiliate Company||-||20,574,217||-||20,574,217|
|Share of loss after tax of the Affiliate Company||(1,550,568||)||(8,433,767||)||(5,631,867||)||(22,883,126||)|
|Other income, net||988,287||57,833||2,051,272||357,626|
|TOTAL OTHER (EXPENSE) INCOME, NET||(1,848,380||)||12,482,356||(3,451,050||)||3,015,772|
|(LOSS) INCOME BEFORE INCOME TAXES||(4,226,202||)||12,798,854||2,376,700||320,031|
|INCOME TAX BENEFIT (EXPENSE)||2,767,939||(709,413||)||(1,354,563||)||41,780|
|NET (LOSS) INCOME||(1,458,263||)||12,089,441||1,022,137||361,811|
|OTHER COMPREHENSIVE INCOME (LOSS)|
|Foreign currency translation adjustment||8,216,974||(8,531,043||)||5,171,643||(8,042,604||)|
|COMPREHENSIVE INCOME (LOSS)||$||6,758,711||$||3,558,398||$||6,193,780||$||(7,680,793||)|
|WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED||54,112,981||52,613,642||53,282,066||52,332,260|
|NET (LOSS) INCOME PER SHARE, BASIC AND DILUTED||$||(0.03||)||$||0.23||$||0.02||$||0.01|
KANDI TECHNOLOGIES GROUP, INC.
Condensed CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
|Balance, December 31, 2018||51,484,444||$||51,484||$||-||$||254,989,657||$||(9,497,009||)||$||(19,921,258||)||$||225,622,874|
|Stock issuance and awards||1,096,397||1,097||-||3,387,379||-||-||3,388,476|
|Foreign currency translation||-||-||-||-||-||5,404,028||5,404,028|
|Balance, March 31, 2019||52,580,841||$||52,581||$||-||$||258,377,036||$||(13,906,481||)||$||(14,517,230||)||$||230,005,906|
|Stock issuance and awards||238,600||238||-||1,259,569||-||-||1,259,807|
|Foreign currency translation||-||-||-||-||-||(4,915,589||)||(4,915,589||)|
|Balance, June 30, 2019||52,819,441||$||52,819||$||-||$||259,636,605||$||(21,224,639||)||$||(19,432,819||)||$||219,031,966|
|Stock issuance and awards||20,000||20||-||69,380||-||-||69,400|
|Commission in stock buyback||-||-||-||(14,615||)||-||-||(14,615||)|
|Foreign currency translation||-||-||-||-||-||(8,531,043||)||(8,531,043||)|
|Balance, September 30, 2019||52,839,441||$||52,839||$||(2,477,965||)||$||259,691,370||$||(9,135,198||)||$||(27,963,862||)||$||220,167,184|
|Balance, December 31, 2019||52,839,441||$||52,839||$||(2,477,965||)||$||259,691,370||$||(16,685,736||)||$||(22,723,581||)||$||217,856,927|
|Stock issuance and awards||10,000||10||-||22,290||-||-||22,300|
|Foreign currency translation||-||-||-||-||-||(3,523,065||)||(3,523,065||)|
|Balance, March 31, 2020||52,849,441||$||52,849||$||(2,477,965||)||$||259,713,660||$||(18,260,382||)||$||(26,246,646||)||$||212,781,516|
|Stock issuance and awards||1,502,717||1,503||-||3,164,925||-||-||3,166,428|
|Foreign currency translation||-||-||-||-||-||477,734||477,734|
|Balance, June 30, 2020||54,352,158||$||54,352||$||(2,477,965||)||$||262,878,585||$||(14,205,339||)||$||(25,768,912||)||$||220,480,721|
|Stock issuance and awards||258,600||259||-||870,837||-||-||871,096|
|Foreign currency translation||-||-||-||-||-||8,216,974||8,216,974|
|Reduction in the Affiliate Company’s equity||-||-||-||(3,144,213||)||-||-||(3,144,213||)|
|Balance, September 30, 2020||54,610,758||$||54,611||$||(2,477,965||)||$||260,605,209||$||(15,663,602||)||$||(17,551,938||)||$||224,966,315|
KANDI TECHNOLOGIES GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|Nine Months Ended|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net income to net cash provided by operating activities|
|Depreciation and amortization||6,078,070||6,443,422|
|(Reversal) provision of allowance for doubtful accounts||(150,756||)||15,366|
|Share of loss after tax of the Affiliate Company||5,631,867||22,883,126|
|Gain from equity dilution in the Affiliate Company||-||(4,291,974||)|
|Gain from sale of equity in the Affiliate Company||-||(20,574,217||)|
|Gain on disposal of long-lived assets||(13,983,733||)||-|
|Change in fair value of contingent consideration||(1,794,000||)||(694,000||)|
|Stock based compensation expense||870,471||1,337,333|
|Changes in operating assets and liabilities:|
|Notes receivable from the Affiliate Company and related party||-||437,203|
|Other receivables and other assets||(5,226,968||)||(7,746,801||)|
|Prepayments and prepaid expenses||(84,089||)||1,357,001|
|Amount due from the Affiliate Company||4,178,477||30,549,072|
|Increase (Decrease) In:|
|Other payables and accrued liabilities||2,675,156||8,934,397|
|Income tax payable||(804,238||)||(1,803,574||)|
|Net cash used in operating activities||$||(13,365,968||)||$||(14,610,587||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Purchases of property, plant and equipment, net||(383,568||)||(955,670||)|
|Payment for construction in progress||(1,604,427||)||(18,491||)|
|Proceeds from disposal of long-lived assets||51,872,829||-|
|Loan to third party||(45,958,247||)||(9,555,014||)|
|Cash received from sales of equity in the Affiliate Company||42,321,385||32,061,558|
|Net cash provided by investing activities||$||46,247,972||$||21,532,383|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Proceeds from short-term loans||24,163,223||27,864,409|
|Repayments of short-term loans||(50,042,178||)||(26,261,331||)|
|Repayments of long-term loans||(285,955||)||(145,734||)|
|Proceeds from long-term loans||394,116||-|
|Repayments of loan from third party||-||(1,259,551||)|
|Stock buyback with commission||-||(2,492,579||)|
|Net cash used in financing activities||$||(25,770,794||)||$||(2,294,786||)|
|NET INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH||7,111,210||4,627,010|
|Effect of exchange rate changes||535,314||(928,440||)|
|CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR||16,512,635||22,353,071|
|CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD||$||24,159,159||$||26,051,641|
|-CASH AND CASH EQUIVALENTS AT END OF PERIOD||23,909,159||14,338,637|
|-RESTRICTED CASH AT END OF PERIOD||250,000||11,713,004|
|SUPPLEMENTARY CASH FLOW INFORMATION|
|Income taxes paid||$||901,021||$||1,711,101|
|SUPPLEMENTAL NON-CASH DISCLOSURES:|
|Decrease in investment in the Affiliate Company due to change in its equity||$||3,057,540||$||-|
|Notes receivable from unrelated parties for equity transfer payment||$||-||$||43,137,369|
|Common stock issued for settlement of payables related to acquisitions (see Note 20)||$||3,166,427||$||3,357,425|
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