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 20^th 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: https://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.
[email protected]

Kevin Theiss
Awaken Advisors
+1-212-521-4050
[email protected]

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SOURCE China Automotive Systems, Inc.