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Kandi Technologies Reports Strong Sales and Earnings Increase in Third Quarter 2012

Wednesday, November 14, 2012 10:03 AM


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JINHUA, CHINA -- (Marketwire) -- 11/14/12 -- Kandi Technologies, Corp. (the 'Company' or 'Kandi') (NASDAQ: KNDI), a leading Chinese manufacturer and developer of pure electric vehicles (EVs) and off-road vehicles, today announced its unaudited financial results for the third quarter ended September 30, 2012.

Q3 2012 Financial Highlights:

  • Revenue for the third quarter grew 23.8% year-over-year to $12.77 million from $10.31 million last year. ATV sales grew 66.0% to $1.73 million and EV sales grew 83.8% to $2.78 million as compared to the same period of 2011
  • Income from operations jumped by 164.5% in the quarter to $1.49 million as compared to $0.57 million in the same period of 2011
  • Gross margins reached to 25.3% in the 2012 third quarter, up from 22.6% in the prior year
  • GAAP net income in the third quarter jumped to $0.59 million, or $0.02 per diluted share, a 54.5% increase compared to a GAAP net income of $0.38 million, or $0.01 per diluted share, in the same period last year
  • Non-GAAP adjusted net income in the third quarter of 2012, excluding effects from convertible notes' interest expense, amortization of discount on convertible notes, stock awards expense and the change of the fair value of derivatives was $1.51 million, an increase of 111.5% compared with $0.72 million in the same period of 2011
  • The Company sold 471 electronic vehicles in Q3, all related to the previously announced 3,000 EV order from Jinhua City
  • A working capital surplus of $25.90 million was achieved at quarter-end, improved from a reported working capital surplus of $18.94 million as of September 30, 2011
  • Cash, cash equivalents and restricted cash totaled $21.44 million at quarter-end, a 140% increase from $8.93 million at the end of 2011

Mr. Xiaoming Hu, Chairman and Chief Executive Officer of Kandi Technologies, commented, "We are very pleased to report another successful quarter just before the initial launch of our largest EV project in China, Hangzhou's 20,000 EV leasing program. The third quarter demonstrated the balanced growth of both Kandi's legacy businesses, particularly the ATV and Go-cart segment, and the continued strength of our EV business offerings. During the quarter, we achieved robust year-over-year revenue and net income growth. We also have very strong EV sales in Jinhua City and sold 471 EVs in Q3. In coming months, by collaborating closely with State Grid Corporation of China (SGCC), China Aviation Lithium Battery Co., Ltd (CALB), and Hangzhou municipal government, we expect to launch the initial shipment of the first 5000 EVs to CALB for the currently largest pure EV commercialization launch in China -- the 20,000 pure EV leasing program in Hangzhou."

"There is a growing demand in China for clean energy products and solutions at both the national as well as municipal level. Our company is uniquely positioned to capitalize on this trend with our practical EV products and innovative business model which shall strengthen Kandi's market leadership in China."

Outlook
"The recent Letter of Intent we have entered with the government of Weifang Binhai Economic Development Zone of Shandong Province and Wanning city government of Hainan Province will help us effectively expand into new markets and build order backlog for the years to come. We are confident that our business model will be soon replicated in many other markets throughout China given our successful track record, favorable central government policy, support from regional government and our strong alliance with industry partners," concluded Mr. Hu.

*EXPLANATION OF NON-GAAP RESULTS

In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our future results. These non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for period to period comparisons in our budget, planning and evaluation processes, and to show the reader how our performance compares to other periods. Our non-GAAP financial measures reflect adjustments based on the following items, as well as the related income tax effects: Non-GAAP net income and losses, and related per share amounts as reported for Q1 2012 exclude the effects of all option related expenses, stock award expense, Convertible Note interest expense, effects caused by amortization of discounts, on Convertible Notes, and the change of the fair value of financial derivatives.

                          KANDI TECHNOLOGIES, CORP.
                              AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                     ASSETS
                                                 September 30,  December 31,
                                                      2012          2011
                                                 -------------  ------------
                                                  (Unaudited)
                                                 -------------  ------------
CURRENT ASSETS
Cash and cash equivalents                        $   1,546,006  $  2,294,352
Restricted cash                                     19,895,444     6,634,989
Accounts receivable                                 26,921,141    12,932,776
Inventories (net of reserve for slow moving
 inventory of $0 and $72,487 as of September
 30, 2012 and December 31, 2011 respectively)       14,385,086     6,674,467
Notes receivable                                    15,980,324    37,879,243
Other receivables                                    1,056,257     2,438,917
Prepayments and prepaid expenses                        92,349       185,037
Due from employees                                      57,624        79,857
Advances to suppliers                                4,105,847       852,638
                                                 -------------  ------------
Total Current Assets                                84,040,078    69,972,276
                                                 -------------  ------------
LONG-TERM ASSETS
Plant and equipment, net                            18,124,202    20,981,893
Land use rights, net                                14,383,669    10,992,769
Intangible assets                                      723,003             -
Construction in progress                            12,214,227    10,007,601
Deferred taxes                                          35,025        89,998
Investment in associated companies                     184,701       229,213
                                                 -------------  ------------
Goodwill                                               437,525             -
                                                 -------------  ------------
Total Long-Term Assets                              46,102,352    42,301,474
                                                 -------------  ------------
TOTAL ASSETS                                     $ 130,142,430  $112,273,750
                                                 =============  ============

                          KANDI TECHNOLOGIES, CORP.
                              AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                    LIABILITIES AND STOCKHOLDERS' EQUITY
                                                 September 30,  December 31,
                                                      2012          2011
                                                 -------------  ------------
                                                  (Unaudited)
                                                 -------------  ------------
CURRENT LIABILITIES
Accounts payable                                 $  10,968,071  $  5,061,069
Other payables and accrued expenses                  1,182,349     3,137,983
Short-term bank loans                               34,970,003    36,372,492
Customer deposits                                      131,557     1,025,357
Notes payable, net of discount of $0 and $71 as
 of September 30, 2012 and December 31, 2011
 respectively                                        9,630,565     5,847,552
Income tax payable                                     181,766       153,730
Due to employees                                       160,547         9,455
Due to related party                                   841,251       841,251
Deferred taxes                                          70,522        56,362
                                                 -------------  ------------
Financial derivate - liability                               -           213
                                                 -------------  ------------
  Total Current Liabilities                         58,136,631    52,505,464
                                                 -------------  ------------
LONG-TERM LIABILITIES
Financial derivatives - liability                    2,621,557     3,919,411
  Total Long-Term Liabilities                        2,621,557     3,919,411
                                                 -------------  ------------
TOTAL LIABILITIES                                   60,758,188    56,424,875
                                                 -------------  ------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 100,000,000
 shares authorized; 29,941,134and 27,445,600
 shares issued and outstanding at September 30,
 2012 and December 31, 2011, respectively               29,941        27,446
Additional paid-in capital                          38,614,210    31,533,378
Retained earnings (the restricted portion is
 $1,940,832 at September 30, 2012 and December
 31, 2011)                                          23,093,029    19,210,330
Accumulated other comprehensive income               7,647,062     5,077,721
                                                 -------------  ------------
TOTAL STOCKHOLDERS' EQUITY                          69,384,242    55,848,875
                                                 -------------  ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $ 130,142,430  $112,273,750
                                                 =============  ============

                          KANDI TECHNOLOGIES, CORP.
                              AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME
                                    (LOSS)
                                 (UNAUDITED)
                             Three Months Ended        Nine Months Ended
                         ------------------------- -------------------------
                           30-Sep-12    30-Sep-11    30-Sep-12    30-Sep-11
                         ------------ ------------ ------------ ------------
REVENUES, NET            $ 12,765,694 $ 10,310,558 $ 38,182,211 $ 28,789,766
COST OF GOODS SOLD         -9,541,687   -7,984,828  -29,829,097  -22,060,888
                         ------------ ------------ ------------ ------------
GROSS PROFIT                3,224,007    2,325,730    8,353,114    6,728,878
Research and development     -630,083     -608,463   -2,006,269   -1,695,003
Selling and marketing        -158,714      -85,239     -331,750     -234,854
General and
 administrative              -940,930   -1,067,021   -2,520,600   -2,568,417
                         ------------ ------------ ------------ ------------
INCOME FROM CONTINUING
 OPERATIONS                 1,494,280      565,007    3,494,495    2,230,604
Interest income
 (expense), net               -76,866      117,353     -133,806       95,549
Change in fair value of
 financial instruments       -882,731     -271,780    1,078,795    7,480,992
Government grants              20,634        9,235       45,942      289,962
Investment (loss) income      -18,259      -12,905      -45,670      -20,181
Other income, net             239,203       95,067      285,805      262,299
                         ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
 INCOME TAXES                 776,261      501,977    4,725,561   10,339,225
INCOME TAX EXPENSE           -181,743     -117,119     -842,863     -394,624
                         ------------ ------------ ------------ ------------
NET INCOME                    594,518      384,858    3,882,698    9,944,601
                         ============ ============ ============ ============
OTHER COMPREHENSIVE
 INCOME
Foreign currency
 translation                 -260,114      377,991    2,569,341    1,524,411

                         ------------ ------------ ------------ ------------
COMPREHENSIVE INCOME
 (LOSS)                  $    334,404 $    762,849 $  6,452,039   11,469,012
                         ============ ============ ============ ============
WEIGHTED AVERAGE SHARES
 OUTSTANDING BASIC         29,909,130   27,445,600   29,068,208   27,436,434
WEIGHTED AVERAGE SHARES
 OUTSTANDING DILUTED       31,464,257   28,617,870   30,413,267   28,740,204
NET INCOME PER SHARE,
 BASIC                   $       0.02 $       0.01 $       0.13         0.36
NET INCOME PER SHARE,
 DILUTED                 $       0.02 $       0.01 $       0.13         0.35

                          KANDI TECHNOLOGIES, CORP.
                              AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)
                                              Nine Months Ended September 30
                                              ------------------------------
                                                   2012            2011
                                              --------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                             $    3,882,698  $    9,944,601
Adjustments to reconcile net (loss) income
 to net cash (used in) provided by operating
 activities:
Depreciation and amortization                      3,694,917       3,501,765
Deferred taxes                                        72,004         236,939
Option and warrant expense                            19,053         195,474
Change of derivative instrument's fair value      -1,297,854      -7,480,992
Loss in investment in associated company              45,670          29,786
Changes in operating assets and liabilities:
(Increase) Decrease In:
Accounts receivable                              -13,939,987       8,118,796
Inventories                                       -7,686,157      -2,554,537
Other receivables and prepaid expenses             1,395,899        -880,750
Due from employees                                   173,844          10,376
Prepayments and prepaid expenses                  -3,158,733      -3,290,026
  Marketable equity securities (trading)                   -         305,564
Increase (Decrease) In:
Accounts payable                                   5,888,514      -1,431,210
Other payables and accrued liabilities            -1,957,184        -156,970
Customer deposits                                   -899,693         -24,783
Income tax payable                                    27,318         -14,090
                                              --------------  --------------
Net cash (used in) provided by operating
 activities                                   $  -13,739,691  $    6,509,943
                                              --------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Acquired in Acquisition                         112,551               -
  Purchases of plant and equipment                  -472,696        -240,954
  Purchase of construction in progress            -2,160,338      -6,019,101
  Issuance of notes receivable                    -1,010,596      -2,751,302
  Repayments of notes receivable                  23,115,794       7,810,463
                                              --------------  --------------
Net cash provided by (used in) investing
 activities                                   $   19,584,715  $   -1,200,894
                                              --------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Restricted cash                               $  -13,241,885  $   -8,255,977
Proceeds from short-term bank loans               31,023,311      25,607,093
Repayments of short-term bank loans              -32,603,714     -22,748,197
Proceeds from notes payable                       18,316,871      33,309,509
Repayments of notes payable                      -14,558,408     -39,023,610
Option exercise & other financing                    116,903          65,544
Common Stock Issued, net of Cost of Capital        3,741,790               -
Warrant exercise                                     219,059
                                              --------------  --------------
Net cash provided by financing activities         -6,986,073     -11,045,638
                                              --------------  --------------
NET INCREASE (DECREASE) IN CASH AND CASH
 EQUIVALENTS                                      -1,141,049      -5,736,589
  Effect of exchange rate changes on cash            392,703        -136,100
  Cash and cash equivalents at beginning of
   period                                          2,294,352       7,754,166
                                              --------------  --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD    $    1,546,006  $    1,881,477
                                              ==============  ==============
SUPPLEMENTARY CASH FLOW INFORMATION
  Income taxes paid                           $      688,668  $      408,714
  Interest paid                               $    2,062,306  $    1,776,835
Issuance of Common Stock for Acquisition      $    8,616,416               -

About Kandi Technologies, Corp.

Kandi Technologies, Corp. (KNDI) is a manufacturer and exporter of a variety of vehicles in China, making it a world leader in the production of popular off-road vehicles (ORVs). It also ranks among the leading manufacturers in China of all-terrain vehicles (ATVs), specialized utility vehicles (UTVs), and a recently introduced second-generation high mileage, two-seat three-wheeled motorcycle. Another major company focus has been on the manufacture and sale of the COCO electric vehicle (EV), a highly economical, beautifully designed, all-electric super mini-car for neighborhood driving and commuting. The convertible and hardtop models of the COCO EV are available in the United States and other countries, while the Chinese government has approved the sale of Kandi EVs in China since 2010. More information can be viewed at its corporate website is http://www.kandivehicle.com.

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.

Company Contact:
Email: IR@kandigroup.com
Phone: 86-579-82239856
U.S.A.
Email: IR@kandigroup.com
Phone: 1-212-551-3610

(Source: Market Wire )
(Source: Quotemedia)

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