WUHAN, China, Aug. 13, 2024 /PRNewswire/ — China Automotive Systems, Inc. (NASDAQ: CAAS) (“CAAS” or the “Company”), a leading power steering components and systems supplier in China, today announced its unaudited financial results for the second quarter and six months ended June 30, 2024.

Second Quarter 2024 Highlights

  • Net sales rose 15.4% year-over-year to $158.6 million from $137.4 million in the second quarter of 2023.
  • Gross profit increased by 29.0% year-over-year to $29.3 million from $22.7 million in the second quarter of 2023; gross margin increased to 18.5% in the second quarter of 2024 from 16.5% in the second quarter of 2023
  • Income from operations increased by 38.7% year-over-year to $10.8 million, from income from operations of $7.8 million in the second quarter of 2023.
  • Net income attributable to parent company’s common shareholders was $7.1 million, or diluted earnings per share of $0.24.

First Six Months of 2024 Highlights

  • Net sales grew by 6.6% year-over-year to $298.0 million, compared to $279.7 million in the first six months of 2023.
  • Gross profit increased by 20.4% year-over-year to $53.4 million, compared to $44.3 million in the first six months of 2023; gross margin increased to 17.9% in the first six months of 2024 from 15.9% in the same period last year
  • Income from operations rose by 31.7% year-over-year to $20.5 million compared to income from operations of $15.5 million in the first six months of 2023.
  • Net income attributable to parent company’s common shareholders was $15.4 million.
  • Diluted earnings per share attributable to parent company’s common shareholders was $0.51.
  • Cash and cash equivalents, and pledged cash were $148.4 million, or approximately $4.92 per share, as of June 30, 2024.
  • A special cash dividend of $0.80 per common share has been declared for shareholders of record on July 30, 2024.

Mr. Qizhou Wu, Chief Executive Officer of CAAS, commented, “We are pleased to report strong top line growth and accelerating margin expansion. Sales growth was led by an increase of 33.7% in sales of Electric Power Steering (“EPS”) products in the second quarter of 2024, which now accounts for one-third of our total sales.”

“According to statistics from the China Association of Automobile Manufacturers, overall automobile sales in China increased by 6.1% year-over-year in the first six months of 2024 with passenger car sales up by 6.3% and commercial vehicle sales ahead by 4.9%. Sales of domestic cars rose by 1.4% and Chinese vehicle exports increased by 30.5% for the first six months of 2024.”

“Based on our recent financial performance, current financial condition, expected cash requirements and future free cash-flow generation, we rewarded our shareholders with a special cash dividend of $0.80 per common share. We are confident that our operational excellence and technology prowess will eventually be reflected in appropriate long-term shareholder value.”

Mr. Jie Li, Chief Financial Officer of CAAS, commented, “We maintained a strong balance sheet with cash and cash equivalents plus pledged cash of $148.4 million, working capital of $190.0 million and positive cash flow from operations in the first six months of 2024. In August 2024, we celebrate the 20th anniversary of our NASDAQ listing. Since our initial listing, we have grown from a small Chinese domestic auto parts company to a large global tier-1 supplier with customers in North America, South America, Europe and Asia. With our diversified customer base and best-in-class product offerings, we look forward to continuing long-term growth in China and the global markets.”

Second Quarter of 2024

Net sales increased by 15.4% year-over-year to $158.6 million in the second quarter of 2024, compared to $137.4 million in the second quarter of 2023. Net sales of traditional steering products and parts increased by 7.5% year-over-year to $103.0 million for the second quarter of 2024, compared to $95.8 million for the same quarter in 2023. Net sales of EPS products rose 33.7% year-over-year to $55.6 million from $41.6 million for the same period in 2023. EPS product sales grew to 35.1% of the total net sales for the second quarter of 2024, compared to 30.3% for the same period in 2023. Sales of Henglong’s passenger vehicle steering customers increased by 18.9% and sales to Chery Auto rose by 28.8% due to higher demand. Export sales to North American customers were consistent at $26.8 million in the second quarter of 2024, compared to $28.9 million in the second quarter of 2023. North American sales declined due to decreased demand from one customer. Sales in Brazil were $12.0 million in the second quarter of 2024, compared to $12.2 million in the second quarter of 2023.

Gross profit grew by 29.0% year-over-year to $29.3 million from $22.7 million in the second quarter of 2023. Gross margin increased to 18.5% in the second quarter of 2024 from 16.5% in the second quarter of 2023. The increase in gross margin was mainly due to the changes in the product mix and improved cost management.

Gain on other sales was $1.7 million in the second quarter of 2024, compared to $0.7 million in the second quarter of 2023.

Selling expenses increased by 21.6% year-over-year to $4.6 million compared to $3.8 million in the second quarter of 2023. Selling expenses represented 2.9% of net sales in the second quarter of 2024, compared to 2.8% in the second quarter of 2023.

General and administrative expenses (“G&A expenses”) increased by 40.7% year-over-year to $7.4 million, compared to $5.3 million in the second quarter of 2023, primarily due to higher consulting fee and business tax and surcharges. G&A expenses represented 4.7% of net sales in the second quarter of 2024, compared to 3.9% of net sales in the second quarter of 2023. 

Research and development expenses (“R&D expenses”) increased by 23.9% year-over-year to $8.2 million compared to $6.6 million in the second quarter of 2023. R&D expenses represented 5.2% of net sales in the second quarter of 2024, compared to 4.8% in the second quarter of 2023. Research and development programs include electric power and hydraulic steering systems, automotive intelligence and software technologies, automobile electronics, steering columns, high polymer materials, automotive parts, manufacturing technologies, and automotive parts among other products.

Other income was $1.7 million for the second quarter of 2024, compared to $2.0 million for the three months ended June 30, 2023. The decrease was primarily due to lower government subsidies in the second quarter of 2024.

Income from operations rose 38.7% to $10.8 million in the second quarter of 2024, from $7.8 million in the second quarter of 2023. The increase was primarily due to higher sales and better margins. 

Interest expense was $0.2 million in the second quarter of 2024, compared to $0.3 million in the second quarter of 2023.

Net financial expense was $0.7 million in the second quarter of 2024, compared to net financial income of $4.0 million in the second quarter of 2023. The change in net financial expense/income was primarily due to foreign exchange volatility generating a loss in the second quarter of 2024 compared with income in last year’s same quarter. 

Income before income tax expenses and equity in earnings of affiliated companies was $11.7 million in the second quarter of 2024, compared to income before income tax expenses and equity in earnings of affiliated companies of $13.4 million in the second quarter of 2023. The change in income before income tax expenses and equity in earnings of affiliated companies was mainly due to foreign exchange volatility generating a loss in the second quarter of 2024 compared with income in last year’s same quarter.

Income tax expense was $2.1 million in the second quarter of 2024 compared to $1.5 million for the second quarter of 2023 primarily due to an increase in the Global Intangible Low-Taxed Income (“GILTI”) tax expenses.

Net income attributable to parent company’s common shareholders was $7.1 million in the second quarter of 2024, compared to net income attributable to parent company’s common shareholders of $10.5 million in the second quarter of 2023. Diluted earnings per share was $0.24 in the second quarter of 2024, compared to $0.35 per share in the second quarter of 2023.

The weighted average number of diluted common shares outstanding was 30,185,702 in the second quarter of 2024, compared to 30,189,537 in the second quarter of 2023.

First Six Months of 2024

Net sales increased by 6.6% year-over-year to $298.0 million in the first six months of 2024, compared to $279.7 million in the first six months of 2023 primarily due to increased sales of EPS systems. Six-month gross profit increased by 20.4% year-over-year to $53.4 million from $44.3 million in the corresponding period last year. Six-month gross margin was 17.9% compared with 15.9% in the first six months of 2023. Gain on other sales was $2.2 million in the first six months of 2024, compared to $1.4 million in the corresponding period last year. Income from operations increased by 31.7% year-over-year to $20.5 million in the first six months of 2024 from $15.5 million in the first six months of 2023. 

Net income attributable to parent company’s common shareholders was $15.4 million in the first six months of 2024, compared to net income attributable to parent company’s common shareholders of $17.3 million in the corresponding period in 2023. Diluted earnings per share in the first six months of 2024 were $0.51, compared to diluted earnings per share of $0.57 in the first six months of 2023.

Balance Sheet

As of June 30, 2024, total cash and cash equivalents, and pledged cash were $148.4 million, total accounts receivable including notes receivable were $288.1 million, accounts payable including notes payable, were $254.0 million and short-term loans were $46.6 million. Total parent company stockholders’ equity was $362.9 million as of June 30, 2024, compared to $344.5 million as of December 31, 2023.

Business Outlook

Management has reiterated its revenue guidance for the full year 2024 of $605.0 million. This target is based on the Company’s current views on operating and market conditions, which are subject to change.

Conference Call

Management will conduct a conference call on August 13, 2024 at 7:00 A.M. EDT/7:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management’s presentation. To participate, please see the dial-in information below, enter the call 10 minutes before the call start time and ask to be connected to the “China Automotive Systems” conference call:

Phone Number: +1-888-506-0062 (North America)
Phone Number: +1-973-528-0011 (International)
Mainland China Toll Free: +86-400-120-3199
Code: 748049

A replay of the call will be available on the Company’s website under the investor relations section.

About China Automotive Systems, Inc.

Based in Hubei Province, the 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 eight Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 8 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Stellantis N.V. and Ford Motor Company in North America. For more information, please visit: http://www.caasauto.com.

Forward-Looking Statements

This press release contains statements that are “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company’s actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2024, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Any of these factors and other factors beyond our control, could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increased costs and reduced revenue. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise.

For further information, please contact:

Jie Li
Chief Financial Officer
China Automotive Systems, Inc.
jieli@chl.com.cn

Kevin Theiss
Awaken Advisors
+1-212-521-4050
Kevin@awakenlab.com 

-Tables Follow –

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income

(In thousands of USD, except share and per share amounts)

Three Months Ended June 30,

2024

2023

Net product sales ($13,550 and $13,194 sold to related parties for the three
months ended June 30, 2024 and 2023)

$

158,608

$

137,410

Cost of products sold ($7,689 and $7,311 purchased from related parties for
the three months ended June 30, 2024 and 2023)

129,306

114,692

Gross profit

29,302

22,718

Gain on other sales

1,720

742

Less: Operating expenses

Selling expenses

4,614

3,794

General and administrative expenses

7,418

5,271

Research and development expenses

8,184

6,606

Total operating expenses

20,216

15,671

Income from operations

10,806

7,789

Other income, net

1,735

1,963

Interest expense

(183)

(276)

Financial (expense)/income, net

(690)

3,963

Income before income tax expenses and equity in earnings of affiliated companies

11,668

13,439

Less: Income taxes

2,108

1,487

Add: Equity in losses of affiliated companies

(805)

(484)

Net income

8,755

11,468

Less: Net income attributable to non-controlling interests

1,608

995

Accretion to redemption value of redeemable non-controlling interests

(7)

(7)

Net income attributable to parent company’s common shareholders

$

7,140

$

10,466

Comprehensive income:

Net income

$

8,755

$

11,468

Other comprehensive income:

Foreign currency translation loss, net of tax

(2,846)

(16,886)

Comprehensive income/(loss)

5,909

(5,418)

Less: Comprehensive income/(loss) attributable to non-controlling interests

1,431

(80)

Accretion to redemption value of redeemable non-controlling interests

(7)

(7)

Comprehensive income/(loss) attributable to parent company

$

4,471

$

(5,345)

Net income attributable to parent company’s common shareholders per share –

Basic

$

0.24

$

0.35

Diluted

$

0.24

$

0.35

Weighted average number of common shares outstanding –

Basic

30,185,702

30,185,702

Diluted

30,185,702

30,189,537

 

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income

(In thousands of USD, except share and per share amounts)

Six Months Ended June 30,

2024

2023

Net product sales ($24,910 and $26,770 sold to related parties for the six
months ended June 30, 2024 and 2023)

$

298,002

$

279,653

Cost of products sold ($14,657 and $14,326 purchased from related parties for
the six months ended June 30, 2024 and 2023)

244,631

235,317

Gross profit

53,371

44,336

Gain on other sales

2,234

1,395

Less: Operating expenses

Selling expenses

8,687

7,178

General and administrative expenses

12,965

10,024

Research and development expenses

13,496

12,996

Total operating expenses

35,148

30,198

Income from operations

20,457

15,533

Other income, net

4,138

3,465

Interest expense

(441)

(525)

Financial (expense)/income, net

(702)

3,541

Income before income tax expenses and equity in earnings of affiliated companies

23,452

22,014

Less: Income taxes

3,851

2,316

Add: Equity in losses of affiliated companies

(1,582)

(347)

Net income

18,019

19,351

Less: Net income attributable to non-controlling interests

2,597

2,050

Accretion to redemption value of redeemable non-controlling interests

(15)

(15)

Net income attributable to parent company’s common shareholders

$

15,407

$

17,286

Comprehensive income:

Net income

$

18,019

$

19,351

Other comprehensive income:

Foreign currency translation loss, net of tax

(3,194)

(12,332)

Comprehensive income

14,825

7,019

Less: Comprehensive income attributable to non-controlling interests

2,372

1,241

Accretion to redemption value of redeemable non-controlling interests

(15)

(15)

Comprehensive income attributable to parent company

$

12,438

$

5,763

Net income attributable to parent company’s common shareholders per share –

Basic

$

0.51

$

0.57

Diluted

$

0.51

$

0.57

Weighted average number of common shares outstanding –

Basic

30,185,702

30,185,702

Diluted

30,185,702

30,191,309

 

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Balance Sheets

(In thousands of USD unless otherwise indicated)

June 30, 2024

December 31, 2023

ASSETS

Current assets:

Cash and cash equivalents

$

107,094

$

114,660

Pledged cash

41,291

40,534

Accounts and notes receivable, net – unrelated parties

271,391

261,237

Accounts and notes receivable, net – related parties

16,738

8,169

Inventories

107,438

112,392

Other current assets

26,112

27,083

Total current assets

570,064

564,075

Non-current assets:

Property, plant and equipment, net

100,098

101,359

Land use rights, net

9,044

9,233

Long-term investments

57,360

60,173

Other non-current assets

48,427

31,600

Total assets

$

784,993

$

766,440

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’
EQUITY

Current liabilities:

Short-term loans

$

46,576

$

48,005

Accounts and notes payable-unrelated parties

241,183

240,739

Accounts and notes payable-related parties

12,821

12,839

Accrued expenses and other payables

46,237

44,771

Other current liabilities

33,221

37,385

Total current liabilities

380,038

383,739

Long-term liabilities:

Long-term tax payable

—

8,781

Other non-current liabilities

6,204

5,498

Total liabilities

$

386,242

$

398,018

Commitments and Contingencies

Mezzanine equity:

Redeemable non-controlling interests

628

613

Stockholders’ equity:

Common stock, $0.0001 par value — Authorized — 80,000,000 shares;
Issued – 32,338,302 and 32,338,302 shares as of June 30, 2024 and
December 31, 2023, respectively

$

3

$

3

Additional paid-in capital

69,722

63,731

Retained earnings-

Appropriated

12,174

11,851

Unappropriated

299,916

284,832

Accumulated other comprehensive income

(11,227)

(8,258)

Treasury stock – 2,152,600 and 2,152,600 shares as of June 30, 2024 and
December 31, 2023, respectively

(7,695)

(7,695)

Total parent company stockholders’ equity

362,893

344,464

Non-controlling interests

35,230

23,345

Total stockholders’ equity

398,123

367,809

Total liabilities, mezzanine equity and stockholders’ equity

$

784,993

$

766,440

 

 

China Automotive Systems, Inc. and Subsidiaries

Condensed Unaudited Consolidated Statements of Cash Flows

(In thousands of USD unless otherwise indicated)

Six months Ended June 30,

2024

2023

Cash flows from operating activities:

Net income

$

18,019

$

19,351

Adjustments to reconcile net income from operations to net cash provided
by operating activities:

Depreciation and amortization

9,868

9,528

Reversal of credit losses

9

(459)

Deferred income taxes

—

237

Equity in losses of affiliated companies

1,582

347

Loss on disposal of property, plant and equipment

773

15

(Increase)/decrease in:

Accounts and notes receivable

(20,451)

(18,323)

Inventories

4,271

8,355

Other current assets

3,654

(904)

Increase/(decrease) in:

Accounts and notes payable

1,994

(10,323)

Accrued expenses and other payables

1,134

(604)

Long-term taxes payable

(7,025)

(5,268)

Other current liabilities

(4,697)

(2,004)

Net cash provided by/(used in) operating activities

9,131

(52)

Cash flows from investing activities:

Increase in demand loans included in other non-current assets

—

(14)

Cash received from disposal of property, plant and equipment sales

607

582

Payments to acquire property, plant and equipment (including $2,839 and
$2,022 paid to related parties for the six months ended June 30, 2024 and 2023, respectively)

(10,016)

(5,438)

Payments to acquire intangible assets

(332)

(2,361)

Investments under the equity method

—

(7,729)

Purchase of short-term investments

(40,054)

(40,491)

Proceeds from maturities of short-term investments

20,626

30,822

Cash received from long-term investments

937

583

Net cash used in investing activities

(28,232)

(24,046)

Cash flows from financing activities:

Proceeds from bank loans

47,054

34,280

Repayments of bank loans

(48,384)

(39,836)

Cash received from capital contributions of a non-controlling interest

15,504

—

Net cash provided by/(used in) financing activities

14,174

(5,556)

Effects of exchange rate on cash, cash equivalents and pledged cash

(1,882)

(3,756)

Net decrease in cash, cash equivalents and pledged cash

(6,809)

(33,410)

Cash, cash equivalents and pledged cash at beginning of the period

155,194

158,951

Cash, cash equivalents and pledged cash at end of the period

$

148,385

$

125,541