Kandi Technologies Reports Second Quarter 2017 Financial Results

Jinhua, China–(Newsfile Corp. – August 9, 2017) – Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the “Company,” “we” or “Kandi”), today announced its financial results for the second quarter of 2017.

Second Quarter Highlights

  • Total revenues were $27.3 million for the second quarter of 2017, a decrease of 50.5% from total revenues of $55.2 million for the same period in 2016.
  • Electric Vehicle (“EV”) parts sales decreased by 51.3%, to $26.2 million for the second quarter of 2017, compared with EV parts sales of $53.8 million for the same period in 2016.
  • Revenues from sales of off-road vehicles decreased by 19.5%, to $1.1 million for the second quarter of 2017, compared with revenues from sales of off-road vehicles of $1.4 million for the same period in 2016.
  • GAAP net loss for the second quarter of 2017 was $11.6 million, or a loss of $0.24 per fully diluted share, compared with GAAP net income of $2.8 million, or income of $0.06 per fully diluted share for the same period in 2016. This decrease is largely due to JV Company losses and significantly increased research and development expenses of $5.1 million for this quarter.
  • Non-GAAP adjusted net loss1, which excludes stock award expenses, was $9.5 million in the second quarter of 2017, compared with non-GAAP net income of $10.5 million for the same period in 2016. Non-GAAP adjusted loss per share1 was approximately $0.20 per fully diluted share for the second quarter of 2017, compared with Non-GAAP adjusted earnings per share1 of $0.22 per fully diluted share for the same period in 2016.
  • Working capital surplus was $56.8 million as of June 30, 2017. Cash, cash equivalents and restricted cash totaled $30.1 million as of June 30, 2017.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “2017 has been a challenging year for Kandi. The confusion surrounding the subsidy heavily impacted the Company’s business last year and we have been trying to regain the momentum this year. The management team is working hard to explore better growth opportunities. Despite second-quarter losses, Kandi Vehicles’ estimated value has exceeded RMB four billion, the management team will actively seek strategic investors based upon the estimated value to increase its competitive advantages.  The efforts the Company has made will lay a solid foundation to achieve strong business results.”

Net Revenues and Gross Profit

  2Q17 2Q16 Y-o-Y%
Net Revenues (US$million) $27.3 $55.2 -50.5%
Gross Profit (US$million) $3.8 $8.5 -55.6%
Gross Margin 13.7% 15.3%

Net revenues for the second quarter of 2017 decreased by 50.5% compared to the same period last year. The decrease in net revenues was mainly due to a decrease in EV parts sales during this quarter. Selling prices of our products for the three months ended June 30, 2017, decreased on average from the same period last year. The decrease in revenues was primarily due to this decrease in sales volume.

Operating Income (Loss)

  2Q17 2Q16 Y-o-Y%
Operating Expenses (US$million) $7.1 $10.8 -34.5%
Operating Loss (US$million) ($3.3) ($2.4) -39.7%
Operating Margin -12.2% -4.3%
Operating (Loss) Income (US$million) (Non- GAAP) ($1.3) $5.9 -122.0%

Total operating expenses in the second quarter of 2017 were $7.1 million, compared with $10.8 million in the same quarter of 2016. The decrease in total operating expenses was due to decreased SG&A expenses, which were $2.0 million in this quarter compared with $10.4 million in the same quarter last year.

GAAP Net (Loss) Income

  2Q17 2Q16 Y-o-Y%
Net (Loss) Income (US$million) ($11.6) $2.8 -513.8%
(Loss) Earnings per Weighted Average Common Share ($0.24) $0.06
(Loss) Earnings per Weighted Average Diluted Share ($0.24) $0.06
Stock Award Expenses $2.0 $8.3 -75.6%
Change in the Fair Value of Financial Derivatives ($0.5)
Non-GAAP Net (Loss) Income from Continuing Operations ($9.5) $10.5 -190.6%

Net loss was $11.6 million in the second quarter, compared with net income of $2.8 million in the same quarter of 2016. The negative change was primarily attributable to JV Company losses and significantly increased research and development expenses of approximately $5.1 million.

Non-GAAP net loss was $9.5 million in the second quarter of 2017, a 190.6% decrease compared to Non-GAAP net income of $10.5 million in the same quarter of 2016. The decrease was primarily attributable to the JV Company’s net losses, and significantly increased research and development expenses made in an effort to prepare the Company for future business growth.

Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”) Financial Results

In the second quarter of 2017, the JV Company sold 365 units of EV products.

The condensed financial income statements of the JV Company in the first quarter are as set forth below:

  2Q17 2Q16 Y-o-Y%
Net Revenues (US$million) $18.7 $111.8 -83.3%
Gross (Loss)Income (US$million) ($1.5) $14.7 -110.2%
Gross Margin 13.1%
Net (Loss) Income ($14.6) $8.6 -269.8%
% of Net revenue 7.7%

Revenue for the JV Company was $18.7 million in the second quarter of 2017, a decrease of 83.3% compared to the same quarter of 2016. Net loss was $14.6 million, a 269.8% decrease compared to net income of $8.6 million in the same quarter of 2016.

Kandi’s investments in the JV Company are accounted for using the equity method of accounting because Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company’s losses of $7.3 million for this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after-tax loss of the JV Company was $8.7 million for the second quarter of 2017.

Second Quarter 2017 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its second quarter 2017 financial results at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time) on August 9, 2017. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Mei Bing, Chief Financial Officer of the Company, 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://ift.tt/2wrY1t7

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://ift.tt/1iTKaQ6. 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. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. (“Kandi Vehicles”), and the partially and wholly-owned subsidiaries of Kandi Vehicles.  More information can be viewed at the Company’s corporate website at http://ift.tt/1iTKaQ6. 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 securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group
Company Contact:

Ms. Kewa Luo
Kandi Technologies Group, Inc.
Phone: 1-212-551-3610
Email: IR@kandigroup.com

____________________________
1
Non-GAAP measures, including Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of fair value of financial derivatives and the effects of stock award expenses. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measure should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with GAAP.


– Tables Below –

KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET

(UNAUDITED)

    June 30,     December 31,  
    2017     2016  
             
Current assets            
Cash and cash equivalents $  7,407,032   $  12,235,921  
Restricted cash   22,708,654     12,957,377  
Short term investment       4,463,097  
Accounts receivable   34,964,666     32,394,613  
Inventories (net of provision for slow moving inventory of $465,096 and $415,797 as of June 30, 2017 and December 31, 2016, respectively   13,427,455     11,914,110  
Notes receivable from JV Company and related party       400,239  
Other receivables   1,185,804     66,064  
Prepayments and prepaid expense   4,319,890     4,317,855  
Due from employees   33,076     4,863  
Advances to suppliers   15,009,973     38,250,818  
Amount due from JV Company, net   138,908,557     136,536,159  
Amount due from related party   10,742,243     10,484,816  
TOTAL CURRENT ASSETS   248,707,350     264,025,932  
             
LONG-TERM ASSETS            
Property, Plant and equipment, net   13,533,421     15,194,442  
Land use rights, net   11,903,213     11,775,720  
Construction in progress   43,655,614     27,054,181  
Deferred taxes assets   4,394,192      
Long Term Investment   1,401,304     1,367,723  
Investment in JV Company   65,258,976     77,453,014  
Goodwill   322,591     322,591  
Intangible assets   372,163     413,211  
Advances to suppliers   29,972,701     33,819,419  
Other long term assets   7,880,223     8,271,952  
TOTAL Long-Term Assets   178,694,398     175,672,253  
             
TOTAL ASSETS $ 427,401,748   $  439,698,185  
             
CURRENT LIABILITIES            
Accounts payables $  111,356,483   $  115,870,051  
Other payables and accrued expenses   5,269,999     4,835,952  
Short-term loans   32,008,732     34,265,065  
Customer deposits   177,328     41,671  
Notes payable   37,289,011     14,797,325  
Income tax payable   1,435,646     1,364,235  
Due to employees   26,156     21,214  
Deferred taxes liabilities       118,643  
Deferred income   1,371,213     6,363,751  
Loss contingency-litigation   2,950,114      
Total Current Liabilities   191,884,682     177,677,907  
             
LONG-TERM LIABILITIES            
Long term bank loans   29,501,136     28,794,172  
Deferred taxes liabilities       878,639  
Total Long-Term Liabilities   29,501,136     29,672,811  
             
TOTAL LIABILITIES   221,385,818     207,350,718  
             
STOCKHOLDER’S EQUITY            
Common stock, $0.001 par value; 100,000,000 shares authorized; 48,021,538 and 47,699,638 shares issued and outstanding at June 30,2017 and December 31,2016, respectively   48,022     47,700  
Additional paid-in capital   232,380,792     227,911,477  
Retained earnings (the restricted portion is $4,217,753 and $4,219,808 at June 30,2017 and December 31, 2016, respectively)   (11,166,290 )   24,545,163  
Accumulated other comprehensive income (loss)   (15,246,594 )   (20,156,873 )
TOTAL STOCKHOLDERS’ EQUITY   206,015,930     232,347,467  
             
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 427,401,748   $  439,698,185  


KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

    Three Months Ended     Six Months Ended  
    June 30,     June 30,     June 30,     June 30,  
    2017     2016     2017     2016  
                         
REVENUES FROM UNRELATED PARTY, NET $  1,153,555   $  6,979,488   $  4,116,486   $  40,953,904  
REVENUES FROM JV COMPANY AND PARTY, NET RELATED   26,171,724     48,237,880     27,483,366     64,921,357  
                         
REVENUES, NET   27,325,279     55,217,368     31,599,852     105,875,261  
                         
COST OF GOODS SOLD   23,568,343     46,762,331     27,175,584     90,702,126  
                         
GROSS PROFIT   3,756,936     8,455,037     4,424,268     15,173,135  
                         
OPERATING EXPENSES:                
Research and development   5,142,041     494,193     25,911,773     700,161  
Selling and marketing   402,253     730,443     760,562     776,778  
General and administrative   1,558,652     9,625,194     9,877,946     17,658,076  
Total Operating Expenses   7,102,946     10,849,830     36,550,281     19,135,015  
                         
LOSS FROM OPERATIONS   (3,346,010 )   (2,394,793 )   (32,126,013 )   (3,961,880 )
                         
OTHER INCOME (EXPENSE):                
Interest income   559,425     785,152     1,090,067     1,565,333  
Interest expense   (548,810 )   (432,318 )   (1,163,263 )   (874,397 )
Change in fair value of financial instruments   0     526,558     0     3,812,898  
Government grants   262,137     1,503,384     5,329,611     1,697,857  
Share of (loss) profit after tax of JV   (8,738,254 )   4,918,633     (13,899,967 )   96,163  
Other income, net   121,556     286,790     150,177     309,177  
Total other (expense) income, net   (8,343,946 )   7,588,199     (8,493,375 )   6,607,031  
                         
(LOSS) INCOME BEFORE INCOME TAXES   (11,689,956 )   5,193,406     (40,619,388 )   2,645,151  
INCOME TAX BENEFIT (EXPENSE)   131,939     (2,400,226 )   4,907,936     236,449  
NET (LOSS) INCOME   (11,558,017 )   2,793,180     (35,711,452 )   2,881,600  
                         
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES                        
Foreign currency translation   3,118,462     (7,152,903 )   4,910,278     (5,628,264 )
                         
COMPREHENSIVE LOSS $ (8,439,555 ) $ (4,359,723 ) $ (30,801,174 ) $ (2,746,664 )
                         
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC   47,974,974     47,601,286     47,854,351     47,305,560  
WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED   47,974,974     47,601,286     47,854,351     47,311,584  
                         
NET (LOSS) INCOME PER SHARE, BASIC $ (0.24 ) $ 0.06   $ (0.75 ) $ 0.06  
NET (LOSS) INCOME PER SHARE, DILUTED $ (0.24 ) $ 0.06   $ (0.75 ) $ 0.06  


KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

    Six months Ended  
    June 30,     June 30,  
    2017     2016  
             
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net (loss) income $ (35,711,452 ) $  2,881,600  
Adjustments to reconcile net income to net cash provided by operating activities            
Depreciation and amortization   2,334,776     2,458,160  
Assets Impairments   38,548      
Deferred taxes   (5,415,959 )   (4,645,415 )
Change in fair value of financial instruments       (3,812,898 )
Share of loss after tax of JV Company   13,899,967     (96,163 )
Stock Compensation cost   4,493,187     15,134,658  
             
Changes in operating assets and liabilities, net of effects of acquisition:            
(Increase) Decrease In:            
Accounts receivable   (2,826,433 )   (45,728,877 )
Notes receivable       229,449  
Notes receivable from JV Company and related party   4,875,795      
Inventories   (1,242,422 )   9,189,542  
Other receivables and other assets   (498,376 )   (9,424,711 )
Due from employee   (23,344 )   (56,998 )
Advances to supplier and Prepayments and prepaid expenses   23,946,781     (12,953,797 )
Advances to suppliers-Long term   (4,099,879 )    
Amount due from JV Company   (21,853,571 )   (84,064,780 )
Due from related party       29,188,707  
             
Increase (Decrease) In:            
Accounts payable   25,017,146     92,266,667  
Other payables and accrued liabilities   127,252     6,009,203  
Notes payable   (2,731,692 )   (3,824,162 )
Customer deposits   132,765     154,168  
Income Tax payable   (31,314 )   3,363,489  
Deferred income   (5,077,291 )    
Loss contingency-litigation   2,909,151      
Net cash used in operating activities $  (1,736,365 ) $  (3,732,158 )
             
CASH FLOWS FROM INVESTING ACTIVITIES:            
Purchases of plant and equipment, net   (128,509 )   (37,554 )
Disposal of land use rights and other intangible assets       13,775  
Purchases of construction in progress   (1,029,516 )   (1,356,866 )
Repayment of notes receivable       4,953,787  
Short Term Investment   4,509,183     1,602,698  
Net cash provided by investing activities $  3,351,158   $  5,175,840  
             
CASH FLOWS FROM FINANCING ACTIVITIES:            
Restricted cash   (9,302,161 )   1,300,215  
Proceeds from short-term bank loans   13,963,923      
Repayments of short-term bank loans   (17,018,531 )    
Proceeds from notes payable   5,713,368      
Warrant exercise       434,666  
Net cash (used in) provided by financing activities $  (6,643,401 ) $  1,734,881  
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (5,028,608 )   3,178,563  
Effect of exchange rate changes on cash   199,530     (383,266 )
Cash and cash equivalents at beginning of year   12,235,921     16,738,559  
             
CASH AND CASH EQUIVALENTS AT END OF PERIOD   7,406,843     19,533,856  
             
SUPPLEMENTARY CASH FLOW INFORMATION            
Income taxes paid   1,001,501     1,051,032  
Interest paid   742,958     877,496  
             
SUPPLEMENTAL NON-CASH DISCLOSURES:            
Prepayment transferred to Construction in progress   8,712,000      
Acquisition of Construction in progress by Accounts Payable   5,974,383      
Settlement of due from JV Company and related parties with notes receivable   22,819,847     34,866,384  
Settlement of accounts receivables with notes receivable from unrelated parties   1,076,386     12,714,237  
Assignment of notes receivable to supplier to settle accounts payable   19,424,810     49,046,178  
Settlement of accounts payable with notes payables   18,839,444     4,796,570  
Deferred tax change to other comprehensive income   24,486      

from Newsfile Corp News Releases http://ift.tt/2wsUwTT

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