WUHAN, Hubei, China, May 14 CAAS-Q1-Earnings
WUHAN, Hubei, China, May 14 /Xinhua-PRNewswire/ -- China Automotive
Systems, Inc. (Nasdaq: CAAS), a leading power steering components and systems
supplier in China, today announced 2008 first quarter results for the period
ended March 31, 2008.
2008 First Quarter Highlights:
-- Net sales increased to US$41.5 million, reflecting 46.1% year-over-year
growth;
-- Net sales from steering components for passenger and light-duty
vehicles increased to US$30.2 million, reflecting a 44% year-over-year
growth;
-- Net sales from steering components for commercial vehicles increased to
US$11.3million, reflecting a 51.9% increase year-over-year;
-- Operating income rose to US$6.8 million, reflecting 30.8% year-over-
year growth;
-- Net income was US$4.4 million, reflecting 169.6% year-over-year growth;
and
-- Diluted earnings per share were US$0.18, reflecting 157.1% year-over-
year growth.
China Automotive reported net sales of US$41.5 million for the first
quarter ended March 31, 2008 compared with US$28.4 million in the same period
in 2007, and US$37.7 million for the fourth quarter of 2007, reflecting a
46.1% year-over-year growth and a 10.1% quarter-over-quarter growth,
respectively. Net income for the first quarter of 2008 was US$4.4 million, as
compared to US$1.6 million in the same period of 2007 and US$2.2 million in
the fourth quarter of 2007, reflecting a 169.6% year-over-year increase and
104.8% quarter-over-quarter increase, respectively. Fully diluted earnings
per share for the first quarter of 2008 were US$0.18 per diluted share, as
compared to US$0.07 for the same period a year ago and US$0.09 for the fourth
quarter of 2007.
First quarter net sales for 2008 from steering products for passenger and
light-duty vehicles increased to US$30.2 million as compared with US$21
million reported in the same period for 2007, reflecting a 44% year-over-year
growth. First quarter net sales from steering products for commercial
vehicles increased to US$11.3 million as compared with US$7.4 million reported
in the same quarter for 2007, reflecting a 51.9% year-over-year growth.
Mr. Qizhou Wu, Chief Executive Officer of China Automotive Systems,
commented, "We are excited to report a strong quarter witnessed by the high
sales volume growth in particular from the accelerating sales in the
commercial vehicle sector due to the forthcoming nationwide Euro III adoption.
We are equally pleased with our strong growth momentum in the passenger
vehicle sector, as our brand name, quality and service, and production
capacity have been widely recognized by leading sino-foreign joint venture
auto OEMs and Chinese national automakers in China. As global purchasing
trend is upgrading from low-cost-high-volume to high-quality-high-technology,
China Automotive Systems is well positioned for the broad market opportunities
in the global market.''
Gross profit for the first quarter of 2008 increased to US$12.2 million
compared with US$9.2 million in the same period for 2007, and US$12.7 million
for the fourth quarter of 2007, reflecting a 32.9% increase year-over-year and
a slight decline quarter-over- quarter growth, respectively. Gross margin
declined to 29.5% from 32.4% in the first quarter a year ago due to higher
material cost. The Company's research and development team is revising
production techniques to reduce material waste and improve production
efficiency, and price increase negotiations are underway. The annual gross
margin goal is to achieve not less than 30%.
Operating income for the first quarter of 2008 was US$6.8 million,
compared with US$5.2 million reported in the same period of 2007, and US$3.5
million for the fourth quarter of 2007, reflecting a 30.8% increase
year-over-year and a 114.2% increase quarter-over-quarter, respectively.
Operating margin for the first quarter of 2008 reached 16.4%.
Operating expenses in the first quarter of 2008 were US$5.6 million
compared with US$4.1 million in the same quarter in 2007 and US$9.4 million in
the fourth quarter of 2007. Selling expenses rose 55.3% to US$2.5 million
from US$1.6 million in the same quarter last year due to higher sales and the
related increase in warranty costs as well as higher transportation expenses.
Depreciation rose by US$401,747 from US$ 0.9 million to US$1.3 million
primarily due to the increased equipment in operation. General and
administrative expenses in the 2008 first quarter were US$1.6 million, 7.1%
higher versus the same quarter last year primarily because of greater labor
insurance expenses.
Higher Other Income grew from increased government subsidies. There was
also a positive swing in financial income from a negative US$394,997 to a
positive US$20,693 due to changes in currency exchange and amortization for
the discount of the US$35 million convertible notes.
An income tax decrease of US$469,685 in the 2008 first quarter compared
with the same quarter in 2007, reflected an increase in deferred tax assets, a
5% reduced tax rate for one subsidiary, and refunds for equipment purchases.
First quarter net income in 2008 was US$4.4 million, or US$0.18 per
weighted average diluted share as compared with US$1.6 million, or US$0.07 per
diluted share in the same period a year ago, and compared with US$2.2 million,
or US$0.09 per diluted share, for the fourth quarter of 2007. The first
quarter net income represented 169.6% growth versus the same quarter in 2007
and a 104.8% rise over the 2007 fourth quarter. Weighted average number of
fully diluted shares outstanding were 25,936,500 for the 2008 first quarter
and 23,949,809 for the first quarter last year.
Total cash and cash equivalents as of March 31, 2008 totaled US$50 million
compared with US$19.5 million as of December 31, 2007. Working capital was
US$43 million. Stockholder's equity was US$48.5 million as of March 31, 2008
compared to US$67.2 million as of December 31, 2007. The reduction in
stockholder's equity is related to the acquisition of the 35.5% of Henglong
Automotive Parts Company during the 2008 first quarter.
Mr. Jie Li, Chief Financial Officer of China Automotive Systems, said,
''During the first quarter, we experienced high cost especially with our
steering products for commercial vehicles, mainly due to price appreciation in
our raw materials, particularly steel. We have successfully negotiated with
our customers to raise our average selling price accordingly in the second
quarter. We strive to maintain our high gross margin among our auto part
peers as we continue to position China Automotive Systems as a high-technology
and high-quality supplier to ensure safety measures for millions of vehicles
on the roads of China.''
''Our acquisition of Jingzhou Henglong Automotive Parts Co. was
successfully completed and financials were consolidated smoothly as we planned
in 2007. Our efforts in expense control and economies-of-scale management
continue to propel a stronger growth in the operating line. We are now fully
reflecting our robust top line growth in our bottom line,'' Mr. Li concluded.
Key Events in the 2008 First Quarter
In January, China Automotive Systems announced that its joint venture,
Wuhu Henglong Auto Steering Systems ("WHAS"), was named a Core Supplier by
Chery Automotive Co., Ltd. ("Chery Auto"). Under the joint venture agreement,
China Automotive Systems and Chery Auto own 77.3% and 22.7%, respectively, of
the joint venture. In December 2007, Chery Auto honored 30 of its Core
Suppliers at its Annual Suppliers Meeting. With its reliable quality, new
product development, and timely delivery, Wuhu Henglong Auto Steering Systems
was among the 30 Core Suppliers named for the year 2007. WHAS's CEO Yusheng
Han was present as an honored guest of Chery and he received the prize on
behalf of the Joint Venture.
In February, the Company closed a previously announced senior convertible
notes with warrants private placement transaction and received funding from
Lehman Brothers ("Lehman") for $30 million and from YA Global Investments,
L.P., which is managed by Yorkville Advisors, LLC, for $5 million. The
proceeds are planned to support the Company's acquisitions, capital
expenditures for expansion and working capital for future growth.
Also in February, China Automotive Systems announced that its subsidiary,
Jingzhou Henglong Automotive Parts Co. ("Henglong"), has passed Dongfeng
Peugeot Citroen Automobile Company Ltd ("DPCA") safety test and road test for
its power steering gears and started preparing its initial shipment of model
Dongfeng Peugeot 206 to DPCA. Since March 2005, Henglong has developed 3
power steering gears for DPCA: Dongfeng Peugeot 206, Dongfeng Citroen Elysee
and Dongfeng Citroen new Xsara Picasso. The power steering gears for the
Dongfeng Peugeot 206 have already passed the French UTAC safety test. The
volume shipment is expected to begin in June 2008. According to the China
Association of Automobile Manufacturers, Dongfeng Peugeot Citroen Automobile
Company Ltd. produced over 213,000 passenger cars and sold 207,000 passenger
cars in 2007. DPCA was consistently ranked as a top 10 passenger car producer
in China since 2005.
Recent Developments
In April, China Automotive System announced it entered into the final
definitive agreement to acquire an additional 35.5% of Henglong Automotive
Parts Company ("Henglong") to increase its total ownership to 80%. This 35.5%
ownership of Henglong alone represented more than US$5 million of net earnings
in 2007. In 2007, Henglong posted net income of US$14 million. Henglong,
formerly 44.5% owned by China Automotive Systems prior to this acquisition, is
engaged in manufacturing power steering systems and components for China's
rapidly growing passenger vehicle market. Henglong's main customers are among
China's leading automobile manufacturers and include Chery Auto, Brilliance
Auto, BYD Auto, Geely Auto and FAW Volkswagen. The purchase price of the
acquisition will be approximately US$32.1 million. The payment will consist
of US$10 million in cash with the remaining value to be paid in 3,023,542
shares of China Automotive Systems common stock valued at US$7.3060 per share.
Conference Call
Management will conduct a conference call on at 8:00 a.m. Eastern Daylight
Time today to discuss these results. A question and answer session will follow
management's presentation.
To participate, please call the following numbers 10 minutes before the
call start time and ask to be connected to the China Automotive Systems
conference call:
Phone Number: +1-877-407-9205 (North America)
Phone Number: +1-201-689-8054 (International)
In addition, the conference call will be broadcast live over the Internet
at: http://www.caasauto.com or http://investor.shareholder.com/media/
Please go to the web site at least 15 minutes early to register, download
and install any necessary software.
A telephone replay of the call will be available after the conclusion of
the conference call through 11:59 PM Eastern Time on May 28, 2008. The
dial- in details for the replay are: U.S. Toll Free Number +1-877-660-6853,
International dial-in number +1-201-612-7415; using Account "286" and
Conference ID "284924" to access the replay. The internet audio stream will
also be available until 11:59 pm Eastern Time on Wednesday, May 28.
About CAAS
Based in Hubei Province, People's Republic of China, China Automotive
Systems, Inc. is a leading supplier of power steering components and systems
to the Chinese automotive industry, operating through seven Sino-foreign joint
ventures. The Company offers a full range of steering system parts for
passenger automobiles and commercial vehicles. The Company currently offers 4
separate series of power steering and 307 models of power steering with an
annual production capacity of 1.1 million sets, steering columns, steering oil
pumps and steering hoses. Its customer base is comprised of leading Chinese
auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co.,
Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd.
and Chery Automobile Co., Ltd., etc. For more information, please visit:
http://www.caasauto.com .
Safe Harbor Statement This news release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on current expectations or beliefs,
including, but not limited to, statements concerning the Company's operations,
financial performance and, condition and the impact of acquisitions on its
financial performance. For this purpose, statements that are not statements
of historical fact may be deemed to be forward-looking statements. The
Company cautions that these statements by their nature involve risks and
uncertainties, and actual results may differ materially depending on a variety
of important factors, including, among others, the impact of competitive
products, pricing and new technology; changes in demand for the Company's
products; changes in consumer preferences and tastes; and effectiveness of
marketing; changes in laws and regulations; fluctuations in costs of
production, delays and cost overruns related to developing and opening new
production facilities; and other factors as those discussed in the Company's
reports filed with the Securities and Exchange Commission from time to time.
For further information, please contact:
Jie Li
Chief Financial Officer
China Automotive Systems
Email: jieli@chl.com.cn
Kevin Theiss
Investor Relations
The Global Consulting Group
Tel: +1-646-284-9409
Email: ktheiss@hfgcg.com
(Tables to follow)
China Automotive Systems, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended March 31,
2008 2007
Net product sales, including $2,051,082 and
$902,584 to related parties at March 31,
2008 and 2007 $41,467,043 $28,383,392
Cost of product sold, including $1,952,390
and $1,051,480 purchased from related
parties at March 31, 2008 and 2007 29,254,673 19,191,486
Gross profit 12,212,3709,191,906
Add: Gain on other sales134,190 112,094
Less: Operating expenses-
Selling expenses 2,475,3411,593,646
General and administrative expenses 1,616,1501,509,027
R&D expenses175,678 119,465
Depreciation and amortization 1,294,727 893,251
Total Operating expenses 5,561,8964,115,389
Income from operations6,784,6645,188,611
Add: Other income, net 199,459 38,462
Financial income (expenses) net 20,693 (394,997)
Income before income taxes7,004,8164,832,076
Less: Income taxes 824,3951,294,080
Income before minority interests 6,180,4213,537,996
Less: Minority interests 1,750,2471,894,895
Net income $4,430,174 $1,643,101
Net income per common share-
Basic $0.18$0.07
Diluted $0.18$0.07
Weighted average number of common shares
outstanding -
Basic23,959,702 23,938,078
Diluted 25,936,500 23,949,809
China Automotive Systems, Inc.
Condensed Consolidated Balance Sheets
March 31, December 31,
20082007
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$32,462,022 $19,487,159
Pledged cash deposits 22,928,2614,645,644
Accounts and notes receivable, net, including
$2,943,990 and $1,869,480 from related parties
at March 31, 2008 and December 31, 2007, net
of an allowance for doubtful accounts of
$3,258,368 and $3,827,838 at March 31, 2008
and December 31, 200796,139,674 82,022,643
Advance payments and other, including $594,491
and $55,323 to related parties at March 31,
2008 and December 31, 20072,347,585 922,578
Inventories 22,676,585 20,193,286
Total current assets$176,554,127 $127,271,310
Long-term Assets:
Property, plant and equipment, net $47,087,219 $46,585,041
Intangible assets, net 653,871 589,713
Other receivables, net, including $770,156 and
$638,826 from related parties at March 31,
2008 and December 31, 2007, net of an
allowance for doubtful accounts of $769,224
and $652,484 at March 31, 2008 and December
31, 2007 1,260,335 888,697
Advance payments for property, plant and
equipment, including $2,329,206 and
$1,560,378 to related parties at March 31,
2008 and December 31, 20078,630,9916,260,443
Long-term investments 76,934 73,973
Deferred income taxes assets 1,477,4951,315,510
Total assets$235,740,972 $182,984,687
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $13,819,632 $13,972,603
Accounts and notes payable, including
$1,578,981and $1,134,817 to related parties
at March 31, 2008 and December 31, 2007 54,762,108 47,530,383
Customer deposits121,406 135,627
Accrued payroll and related costs 2,677,7692,664,464
Accrued expenses and other payables, including
$33,374,697 and $0 from related parties at
March 31, 2008 and December 31, 2007 48,189,248 14,938,055
Accrued pension costs 4,021,6563,622,729
Taxes payable 9,661,9889,080,493
Amounts due to shareholders/directors253,573 304,601
Total current liabilities $133,507,380 $92,248,955
Long-term liabilities:
Advances payable 347,995 334,600
Derivative liabilities 3,972,068
Convertible note payable, net 30,722,374 --
Total liabilities168,549,817 $92,583,555
Minority interests $18,650,147 $23,166,270
Related Party Translations
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value - Authorized -
20,000,000 shares Issued and outstanding - None $-- $--
Common stock, $0.0001 par value - Authorized -
80,000,000 Shares Issued and Outstanding -
23,959,702 shares and 23,959,702 shares at
March 31, 2008 and December 31, 2007,
respectively 2,3962,396
Additional paid-in capital 4,618,037 30,125,951
Retained earnings-
Appropriated 7,525,7777,525,777
Unappropriated28,021,449 23,591,275
Accumulated other comprehensive income 8,373,3495,989,463
Total stockholders' equity48,541,008 $67,234,862
Total liabilities and stockholders' equity $235,740,972 $182,984,687
SOURCE China Automotive Systems, Inc.
