Kandi Technologies Reports Second Quarter 2016 Financial Results


Q2 2016 revenue increased 15.1% YoY to $55.2 million
Q2 JV’s EV products sales exceed expectations by 20%, reaching 7,200, a 61.9% YoY increase
Q2 2016 Non-GAAP net income increased 114.8% YoY to $10.5 million, or $0.22 EPS

JINHUA, China, Aug. 09, 2016 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ:KNDI) today announced its financial results for the second quarter of 2016.

Second Quarter Highlights

  • Total revenues grew 15.1% to $55.2 million for the second quarter of 2016, compared with $48.0 million for the same period of 2015;
  • Electric Vehicle (“EV”) parts sales increased 15.4% to $53.8 million for the second quarter of 2016, compared with $46.6 million in the same period of 2015;
  • Kandi Electric Vehicles Group Co., Ltd. (the "JV Company"), sold 7,200 units of EV products, including 5,072 EV products to the Micro Public Transportation (MPT) program and 2,128 EV products to the direct sales program, a 61.9% increase compared to the same period last year;
  • GAAP net income for the second quarter of 2016 was $2.8 million, or $0.06 per fully‑diluted share, compared with $5.4 million, or $0.12 per fully‑diluted share in the same period of 2015;
  • Non-GAAP adjusted net income1, which excludes stock award expenses and changes in the fair value of financial derivatives, was $10.5 million in the second quarter of 2016, compared with $4.9 million of the same period of 2015. Non-GAAP adjusted earnings per share1 was approximately $0.22 per fully‑diluted share for the first quarter of 2016 compared with $0.10 per fully‑diluted share for the same quarter of 2015; and
  • Working capital surplus was $67.4 million as of June 30, 2016. Cash, cash equivalents and restricted cash totaled $34.1million as of June 30, 2016.

“After more than 3 months of waiting, the JV Company finally obtained the approval for a purchase tax exemption for its “Global Hawk” EV products and had a positive sales performance in May and June. The total number of EV products sold in the second quarter was 7,200, a 61.9% increase compared to the same period of 2015 and exceeded our guidance by 20%,” commented Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi. “Notably, Zhejiang Geely Holding Group, the parent company of Geely Automobile Holdings Ltd., is planning to purchase 50% of the equity of Shanghai Maple Guorun Automobile Co., Ltd. at a premium price (a purchase price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years), which will support the future growth of the JV Company and also create better conditions for the JV Company to apply for its EV production license and pursue public listing in China. Recently Zhejiang Zuozhongyou Electric Vehicles Service Co., Ltd. (the “Service Company”) expanded its micro public transportation program into two new cities, Tianjin and Jiangyin. Pang Da Automobile Trade Co., Ltd. (“Pang Da”) has also signed a framework sales agreement pursuant to which Pang Da is to buy at least 60,000 EVs in the next four years from the JV Company for its Green Campus Drive Electric Campaign. We are excited to see progress and continued business growth in the future.”

“We have performed very well financially during the second quarter of 2016,” added Mr. Wang Cheng (Henry), Chief Financial Officer of Kandi. “Our margin improved compared to the same quarter last year, and our non-GAAP net income reached $10.5 million, a 114.8% increase compared to $4.9 million in the same period of 2015. We realized positive cash flow of $3.2 million in the first half of 2016, compared to negative cash flow of $17.0 million in the same period of 2015.”

Net Revenues and Gross Profit

 2Q161Q162Q15Q-o-Q%Y-o-Y%
Net Revenues (US$mln)$55.2 $50.7 $48.0  9.0% 15.1%
Gross Profit (US$mln)$8.5 $6.7 $6.5  25.9% 30.2%
Gross Margin 15.3% 13.3% 13.5% -  - 


Net revenues for the second quarter of 2016 increased 15.1% compared to the same quarter last year. This increase in net revenues was mainly due to the growth in EV parts sales.  Gross margin was 15.3%, 1.8% higher compared to 13.5% for the same quarter of 2015, which was the result of cost reduction on batteries purchased.

Operating Income (Loss)

 2Q161Q162Q15Q-o-Q%Y-o-Y%
Operating Expenses (US$mln)$10.8 $8.3 $4.5  31.0% 141.5%
Operating Income (Loss) (US$mln)($2.4)($1.6)$2.0  -  - 
Operating Margin -4.3% -3.1% 4.2% -  - 
Operating Income (Loss) (US$mln) (Non-GAAP)$5.9 $5.3 $5.5  10.4% 7.2%


Total operating expenses in the second quarter of 2016 were $10.8 million, compared with $4.5 million in the same quarter of 2015. The increase in total operating expenses was due to an increase in stock compensation expenses, which were $8.3 million in this quarter, compared with $3.5 million in the same quarter last year. Excluding stock compensation expenses, operating expenses in the second quarter of 2016 were $2.6 million, compared with $1.0 million in the same quarter last year. This increase was mainly due to the maintenance expenses of batteries and a one-time expense reversal in the second quarter of 2015.

GAAP Net Income

 2Q161Q162Q15Q-o-Q%Y-o-Y%
Net Income (Loss) (US$mln)$2.8 $0.1 $5.4  3059.0% -48.5%
Earnings per Weighted Average Common Share$0.06 $0.00 $0.12  -  - 
Earnings per Weighted Average Diluted Share$0.06 $0.00 $0.12  -  - 
Stock award expenses$8.3 $6.9 $3.5  20.1% 137.5%
Change of the fair value of financial derivatives($0.5)($3.3)($4.0) -  - 
Non-GAAP net income (loss) from continuing operations$10.5 $3.7 $4.9  185.5% 114.8%


Net income was $2.8 million in the second quarter of 2016, compared with $5.4 million in the same quarter of 2015.  Net income was affected by significant increases in stock option expense amortization, gain from the JV Company and change in the fair value of financial derivatives.

Non-GAAP net income was $10.5 million, a 114.8% increase in the second quarter of 2016 compared to $4.9 million in the same quarter of 2015. The increase in Non-GAAP net income was attributable to growth in revenue and gross profits, net profits from the JV company and government subsidy income.

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

In the second quarter of 2016, the JV Company sold 7,200 EV products, an increase of 61.9% compared to 4,446 EV products sold in the same quarter of 2015.

The condensed financial income statement of for JV Company for the second quarter of 2016 is below:

 2Q162Q15Y-o-Y%
Net Revenues (US$mln)$111.8 $69.0  62.1%
Gross Profit (US$mln)$14.7 $10.7  37.7%
Gross Margin 13.1% 15.4% - 
Net Income$8.6 $1.6  444.0%
% of Net revenue 7.7% 2.3% - 


Revenue for the JV Company was $111.8 million in the second quarter of 2016, an increase of 62.1% compared to the same quarter of 2015. Net income was $8.6 million, a 444.0% increase compared to the same quarter of 2015.

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 income, $4.3 million, for this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after-tax income of the JV Company was $4.9 million for the second quarter of 2016.

Second Quarter of 2016 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 August 9, 2016 (8:00 PM Beijing time on August 9, 2016). Mr. Hu Xiaoming, Chief Executive Officer, and Mr. Wang Cheng (Henry), 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:

The live audio webcast of the call can also be accessed by visiting Kandi's investor relations website at http://en.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, 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. More information can be viewed at 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 securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

1 Non-GAAP measures, including the Non-GAAP net income and Non-GAAP EPS, are defined as the financial measures excluding the change of the fair value of financial derivatives and the effects of stock award expense. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations.  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 GAAP.

- Tables Below -


KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 June 30, 2016 December 31, 2015
        
Current assets        
Cash and cash equivalents$19,533,856  $16,738,559 
Restricted cash 14,519,706   16,172,009 
Short term investment -   1,613,727 
Accounts receivable 40,422,951   8,136,421 
Inventories (net of provision for slow moving inventory of $474,683 and
$485,901 as of June 30, 2016 and December 31, 2015, respectively
 8,324,176   17,773,679 
Notes receivable 6,192,424   13,033,315 
Other receivables 473,667   332,922 
Prepayments and prepaid expense 275,522   181,534 
Due from employees 94,938   34,434 
Advances to suppliers 12,715,165   71,794 
Amount due from JV Company, net 122,807,165   76,172,471 
Amount due from related party 10,957,632   40,606,162 
Deferred taxes assets 928,660   - 
TOTAL CURRENT ASSETS  237,245,862   190,867,027 
        
LONG-TERM ASSETS        
Property, Plant and equipment, net 17,861,960   20,525,126 
Land use rights, net 12,471,618   12,935,121 
Construction in progress 54,448,198   54,368,753 
Long Term Investment 1,429,401   1,463,182 
Investment in JV Company 88,346,850   90,337,899 
Goodwill 322,591   322,591 
Intangible assets 454,258   495,306 
Other long term assets 9,251,729   154,019 
TOTAL Long-Term Assets  184,586,605   180,601,997 
        
TOTAL ASSETS $421,832,467  $371,469,024 
        
CURRENT LIABILITIES        
Accounts payables$110,049,815  $73,957,969 
Other payables and accrued expenses 15,080,603   9,544,909 
Short-term loans 35,810,260   36,656,553 
Customer deposits 243,500   94,026 
Notes payable 4,718,077   3,850,478 
Income tax payable 3,894,811   624,276 
Due to employees 14,439   9,423 
Deferred taxes liabilities -   2,374,924 
Financial derivate - liability 10,692   3,823,590 
Deferred income -   13,726 
Total Current Liabilities 169,822,197   130,949,874 
        
LONG-TERM LIABILITIES       
Deferred taxes liabilities 262,042   1,593,582 
Total Long-Term Liabilities 262,042   1,593,582 
        
TOTAL LIABILITIES 170,084,239   132,543,456 
        
STOCKHOLDER'S EQUITY       
Common stock, $0.001 par value; 100,000,000 shares authorized;
47,689,638 and 46,964,855 shares issued and outstanding at June
30,2016 and December 31,2015, respectively
 47,020   46,965 
Additional paid-in capital 228,133,604   212,564,334 
Retained earnings (the restricted portion is $4,172,324 and $4,172,324 at
June 30,2016 and December 31,2015, respectively)
 33,937,518   31,055,919 
Accumulated other comprehensive income(loss) (10,369,914)  (4,741,650)
TOTAL STOCKHOLDERS' EQUITY 251,748,228   238,925,568 
        
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$421,832,467  $371,469,024 
 

 

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND 
COMPREHENSIVE INCOME (LOSS) 
 
 Three Months Ended Six Months Ended
 June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
                
REVENUES, NET $55,217,368  $47,963,460  $105,875,261  $91,744,546 
                
COST OF GOODS SOLD 46,762,331   41,471,997   90,702,126   78,882,350 
                
GROSS PROFIT  8,455,037   6,491,463   15,173,135   12,862,196 
                
OPERATING EXPENSES:                
Research and development 494,193   571,621   700,161   1,142,641 
Selling and marketing 730,443   75,516   776,778   189,411 
General and administrative 9,625,194   3,845,013   17,658,076   7,625,661 
Total Operating Expenses  10,849,830   4,492,150   19,135,015   8,957,713 
                
INCOME(LOSS) FROM OPERATIONS  (2,394,793)  1,999,313   (3,961,880)  3,904,483 
                
OTHER INCOME(EXPENSE):                
Interest income 785,152   722,843   1,565,333   1,313,323 
Interest expense (432,318)  (597,320)  (874,397)  (1,195,911)
Change in fair value of financial instruments 526,558   4,003,044   3,812,898   8,753,344 
Government grants 1,503,384   92,863   1,697,857   92,863 
Share of profit after tax of JV 4,918,633   251,167   96,163   720,523 
Other income, net 286,790   82,207   309,177   106,054 
Total other income, net  7,588,199   4,554,804   6,607,031   9,790,196 
                
INCOME BEFORE INCOME TAXES  5,193,406   6,554,117   2,645,151   13,694,679 
                
INCOME TAX BENEFIT (EXPENSE) (2,400,226)  (1,128,615)  236,449   (2,137,524)
                
NET INCOME  2,793,180   5,425,502   2,881,600   11,557,155 
                
OTHER COMPREHENSIVE INCOME(LOSS)               
Foreign currency translation (7,152,903)  448,032   (5,628,264)  941,243 
                
COMPREHENSIVE INCOME(LOSS)$ (4,359,723) $ 5,873,534  $ (2,746,664) $ 12,498,398 
WEIGHTED AVERAGE SHARES
OUTSTANDING BASIC
 47,601,286   46,759,651   47,305,560   46,523,584 
WEIGHTED AVERAGE SHARES
OUTSTANDING DILUTED
 47,601,286   46,896,809   47,311,584   46,800,156 
                
NET INCOME PER SHARE, BASIC$ 0.06  $ 0.12  $ 0.06  $ 0.25 
NET INCOME PER SHARE, DILUTED$ 0.06  $ 0.12  $ 0.06  $ 0.25 
                

 

KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
  
  Six Months Ended 
 June 30, 2016 June 30, 2015
        
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income$2,881,600  $11,557,155 
Adjustments to reconcile net income to net cash provided by operating
activities
       
Depreciation and amortization 2,458,160   2,955,663 
Deferred taxes (4,645,415)  (153,916)
Change in fair value of financial instruments (3,812,898)  (8,753,344)
Share of profit after tax of JV Company (96,163)  (720,523)
Stock Compensation cost 15,134,658   5,482,808 
        
Changes in operating assets and liabilities, net of effects of acquisition:        
(Increase) Decrease In:        
Accounts receivable (33,014,640)  (14,077,317)
Inventories 9,189,542   (12,122,839)
Other receivables and other assets (9,424,711)  (58,055)
Due from employee (56,998)  (9,250)
Prepayments and prepaid expenses (12,953,797)  (143,163)
Amount due from JV Company (49,198,396)  (50,224,378)
        
Increase (Decrease) In:        
Accounts payable 38,423,919   54,732,723 
Other payables and accrued liabilities 6,009,203   (1,716,848)
Customer deposits 154,168   106,563 
Income Tax payable 3,363,489   506,321 
Due from related party 29,188,707   - 
Net cash used in operating activities $(6,399,572) $(12,638,400)
        
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of plant and equipment, net (37,554)  (291,895)
Disposal of land use rights and other intangible assets 13,775   - 
Purchases of construction in progress (1,356,866)  (39,361)
Issuance of notes receivable (42,626,834)  (5,588,283)
Repayment of notes receivable 49,275,627   4,145,502 
Short Term Investment 1,602,698   - 
Net cash provided by (used in) investing activities $6,870,846  $(1,774,037)
CASH FLOWS FROM FINANCING ACTIVITIES:       
Restricted cash 1,300,215   (9,937,929)
Proceeds from short-term bank loans -   19,061,273 
Repayments of short-term bank loans -   (15,965,853)
Proceeds from notes payable 4,796,570   9,937,929 
Repayment of notes payable (3,824,162)  (5,716,427)
Warrant exercise 434,666   - 
Net cash (used in) provided by financing activities$2,707,289  $(2,621,007)
        
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,178,563   (17,033,444)
Effect of exchange rate changes on cash (383,266)  117,975 
Cash and cash equivalents at beginning of year 16,738,559   26,379,460 
        
CASH AND CASH EQUIVALENTS AT END OF PERIOD 19,533,856   9,463,991 
        
SUPPLEMENTARY CASH FLOW INFORMATION       
Income taxes paid 1,051,032   1,310,173 
Interest paid 877,496   1,192,526 
        

            

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