JINHUA, CHINA – May 16, 2011 – (Motor Sports Newswire) – Kandi Technologies, Corp. (Nasdaq: KNDI), a leading Chinese supplier of off-road vehicles and developer of pure electric vehicles (EV), today reported financial results for the first quarter ended March 31, 2011.
First Quarter 2011 Financial Highlights:
- Revenues increased modestly to $8.3 million from $8.2 million with continued growth in ATV and go-kart sales
- Operating income increased to $0.8 million, from breakeven operating results in the first quarter of 2010, while gross margin increased by 2.3%
- Net income totaled $5.9 million, or $0.20 per diluted share, compared to a net loss of $0.2 million, or $0.01 per diluted share in the same period last year. The non-GAAP adjusted net income (described below) grew by 9.9% as compared to first quarter 2010
- Working capital surplus of $20.2 million at quarter end, an improvement from a working capital deficit of $1.7 million at the end of the first quarter 2010
- Cash and cash equivalents (including restricted cash) totaled $34.5 million at quarter-end, which equates to $1.19 per fully diluted share, a significant increase from $25.2 million at the end of 2010
“We remain excited with the growth from our traditional off-road products as our legacy business continues to recover, and continue our optimism about achieving a leading role in China EV development,” said Mr. Xiaoming Hu, CEO and Chairman of the Board of Kandi Technologies. “Our pure electric vehicles continue to be a priority as we expand sales of our vehicles in China, and globally, to meet emerging demand. In the first quarter, we have showcased our EVs through the newly established showroom in Hangzhou and have started to execute our pilot ‘Express Change’ model in Jinhua.”
During the quarter, the Company spent $7.0 million of its sharply increased working capital on new fixed assets to build production capability, which will increase capacity and support EV demand.
“With respect to EV sales outside of China,” said Mr. Hu, “we remain focused on the European market, where we announced a strategic agreement and an initial order of 1,000 Kandi EVs in Italy during the quarter, and believe this will be a cornerstone to increasing sales in Europe.”
First Quarter 2011 Results
Revenues for the quarter increased by 1.1%, to $8.3 million, from $8.2 million in 2010. The modestly improved results reflected the continued recovery of the Company’s traditional off-road vehicle market, led by year-over-year increases of 41% in ATV sales and 31% in go-kart sales. Sales of super-mini vehicles experienced a 38.5% decline from the same period of 2010, due primarily to the shift of focus on EV development in China and build out of the “Express Change” infrastructure during the quarter, as the Company’s primary focus in the period was building a foundation for future sales in the China EV market.
Gross profit increased to $2.1 million in 2011, up from $1.9 million in the first quarter of 2010. Gross margin for the quarter increased by 230 basis points to 24.7 percent, from 22.4 percent in the prior year, as a result of increased operational efficiencies and successfully managed manufacturing costs. These carefully managed expenses allowed the Company’s operating income to increase to $0.8 million in 2011, compared to breakeven operating results in the first quarter of 2010.
Total interest and other income increased to $5.2 million in the first quarter of 2011, compared to total interest and other expense of $0.1 million in the prior year. The significant change in total interest and other income for the quarter primarily reflected the changes in fair value of warrants issued to investors and placement agents and the changes of fair value of conversion features embedded in convertible notes. The Company’s net income totaled $5.9 million for the quarter, or $0.20 per fully diluted share, as compared with a net loss of $0.2 million, or $0.01 per fully diluted share, for the same period of 2010. Without the convertible notes, warrant and option related charges, the non-GAAP adjusted net income totaled $0.7 million, as compared to $0.6 million in the same period 2010, an increase of 9.9%.
At the end of the quarter, the Company had a working capital surplus of $20.2 million, a significant improvement from a working capital deficit of $1.7 million at the same time last year. The increase in working capital was primarily due to the Company’s equity offering in December 2010. For the quarter ended March 31, 2011, cash used by operating activities totaled $9.4 million, compared with cash provided by operating activities of $1.0 million in 2010. The change in net operating cash flow was mainly due to increases in pre-payments and pre-paid expenses associated with manufacturing payments to suppliers.
First Quarter 2011 Operational Highlights:
- Announcement of super-mini electric vehicle “Test Drive Days” in Jinhua City
- New products and COCO electric vehicle showcased at the 2011 Dealernews International Dealer Expo®
- Italian order received for pure electric vehicles, with material progress made towards delivery
- New lithium-ion electric vehicle unveiled at Hangzhou’s First New Energy Vehicle Showroom, and is now available for sale
- Vice Governor of Zhejiang Province visited Kandi Technologies’ facilities
“Kandi continues to make great strides on EV development in China as we maintain a solid U.S. presence in go-karts and specialized EV products. The firstquarter is our transition quarter, and we expect to increase sales of our products in the latter part of the year. This year, Jinhua municipal city of Zhejiang Province has started a 3,000-car experimental program, which uses Kandi’s electric vehicles to promote household use of electric vehicles using the “Express Change” battery model. Each car sold will be eligible to receive a government rebate of just over 50% of the purchase price,” said Mr. Hu. “We have also made several important moves during the quarter to strengthen the independence of our Board and our overall business and financial reporting.”
About Kandi Technologies, Corp.
Kandi Technologies, Corp. (Nasdaq: 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. The Company’s products can be viewed at http://www.kandivehicle.com and its corporate website is http://www.chinakandi.com.
Information Regarding Forward-Looking Statements
The foregoing press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about the Company’s expectations, beliefs, intentions or strategies for the future, which the Company indicates by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “our company believes,” “management believes” and similar language. These forward-looking statements are based on the Company’s current expectations and are subject to certain risks, uncertainties and assumptions. The Company’s actual results may differ materially from results anticipated in these forward-looking statements. The Company bases its forward-looking statements on information currently available, and it assumes no obligation to update them. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements.
Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
|KANDI TECHNOLOGIES, CORP.|
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)|
|Three Months Ended|
|March 31, 2011||March 31, 2010|
|COST OF GOODS SOLD||(6,280,073)||(6,404,615)|
|Research and development||511,952||343,407|
|Selling and marketing||56,936||852,326|
|General and administrative||673,867||650,812|
|INCOME FROM CONTINUING OPERATIONS||818,678||3,464|
|Interest expense, net||(297,270)||(770,565)|
|Change in fair value of financial instruments||5,385,178||562,639|
|INCOME (LOSS) BEFORE INCOME TAXES||6,029,094||(127,569)|
|INCOME TAX EXPENSE||(90,694)||(50,326)|
|NET INCOME (LOSS)||5,938,400||(177,895)|
|ADJUSTED NET INCOME (NON-GAAP)||657,078||598,041|
|OTHER COMPREHENSIVE INCOME|
|Foreign currency translation||318,600||6,552|
|COMPREHENSIVE INCOME (LOSS)||$||6,257,000||$||(171,343)|
|WEIGHTED AVERAGE SHARES OUTSTANDING BASIC||27,422,823||19,972,117|
|WEIGHTED AVERAGE SHARES OUTSTANDING DILUTED||29,026,629||19,972,117|
|NET INCOME (LOSS) PER SHARE, BASIC||$||0.22||$||(0.01)|
|NET INCOME (LOSS) PER SHARE, DILUTED||$||0.20||$||(0.01)|