"According to statistics from the China Association of Automobile Manufacturers, overall automobile sales in China increased by 2.1% year-over-year in the first nine months of 2024 with passenger car sales up by 3.0% and commercial vehicle sales lower by 1.6%. Sales of new energy vehicles increased by 32.5% and Chinese vehicle exports rose by 27.3% for the first nine months of 2024."

"Given our recent financial performance and positive outlook, our shareholders were rewarded with a special cash dividend of $0.80 per common share in August of 2024. Also in August 2024, we celebrated the 20th anniversary of our NASDAQ listing," Mr. Wu concluded.

Mr. Jie Li, Chief Financial Officer of CAAS, commented, "We continued to maintain a strong balance sheet with cash and cash equivalents plus pledged cash of $138.8 million, despite spending $9.3 million on cash dividends to shareholders and investing $18.3 million in property, plant and equipment in the first nine months of 2024.  At September 30^th, working capital was $156.6 million and positive cash flow from operations increased by almost 54.0% year-over-year in the first nine months of 2024.  We remain well positioned in our markets for long-term growth."

Third Quarter of 2024

Net sales increased by 19.4% year-over-year to $164.2 million in the third quarter of 2024, compared to $137.5 million in the third quarter of 2023. Net sales of traditional steering products and parts increased by 7.4% year-over-year to $98.6 million for the third quarter of 2024, compared to $91.8 million for the same quarter in 2023. Net sales of EPS products rose 43.5% year-over-year to $65.6 million from $45.7 million for the same period in 2023. EPS product sales grew to 39.9% of the total net sales for the third quarter of 2024, compared to 33.2% for the same period in 2023. Sales of Henglong's passenger vehicle steering systems increased by 29.6% and sales to Chery Auto rose by 12.4% due to higher demand. Sales to the commercial vehicle markets increased by 10.5%. Export sales to North American customers decreased to $18.7 million in the third quarter of 2024, compared to $27.6 million in the third quarter of 2023. North American sales declined primarily due to decreased demand from one customer. Sales in Brazil were $14.3 million in the third quarter of 2024, compared to $13.3 million in the third quarter of 2023. Net product sales for other entities rose 23.4% to $35.2 million compared to $28.5 million for the third quarter in 2023.

Gross profit grew by 6.5% year-over-year to $26.4 million from $24.8 million in the third quarter of 2023. Gross margin was 16.0% in the third quarter of 2024 compared to 18.0% in the third quarter of 2023. The change in gross margin was mainly due to the changes in the product mix for the three months ended September 30, 2024.

Gain on other sales was $0.6 million in the third quarter of 2024, compared to $2.2 million in the third quarter of 2023.

Selling expenses increased by 14.6% year-over-year to $4.4 million compared to $3.8 million in the third quarter of 2023.  This expense increase was primarily due to higher warehouse and logistic costs related to the increased revenue. Selling expenses represented 2.7% of net sales in the third quarter of 2024, compared to 2.8% in the third quarter of 2023.

General and administrative expenses ("G&A expenses") decreased by 17.0% year-over-year to $5.1 million, compared to $6.1 million in the third quarter of 2023, primarily due to the reversal of bad debt provisions for receivables. G&A expenses represented 3.1% of net sales in the third quarter of 2024, compared to 4.4% of net sales in the third quarter of 2023.

Research and development expenses ("R&D expenses") decreased by 7.1% year-over-year to $6.4 million compared to $6.9 million in the third quarter of 2023. This decrease was related to lower R&D miscellaneous expenses caused by a reduction in R&D activities for new projects. R&D expenses represented 3.9% of net sales in the third quarter of 2024, compared to 5.0% in the third quarter of 2023.

Other income was $1.3 million for the third quarter of 2024, which is stable compared to $1.2 million for the three months ended September 30, 2023.

Income from operations was $11.1 million for the third quarter of 2024, a nearly 10.0% increase compared to $10.2 million for the three months ended September 30, 2023.

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

Net financial expense was $0.2 million in the third quarter of 2024, compared to net financial income of $0.2 million in the third quarter of 2023. The change in net financial expense/income primarily resulted from an increase in the foreign exchange losses due to the foreign exchange volatility.

Income before income tax expenses and equity in earnings of affiliated companies was $11.9 million in the third quarter of 2024, compared to income before income tax expenses and equity in earnings of affiliated companies of $11.2 million in the third quarter of 2023.

Income tax expense was $4.0 million in the third quarter of 2024 compared to $0.7 million for the third quarter of 2023, primarily due to a one-time income tax expense settlement for the subsidiaries in the PRC and an increase in the Global Intangible Low-Taxed Income ("GILTI") tax expenses.

Net income attributable to parent company's common shareholders was $5.5 million in the third quarter of 2024, compared to net income attributable to parent company's common shareholders of $9.5 million in the third quarter of 2023. Diluted earnings per share was $0.18 in the third quarter of 2024, compared to $0.31 per share in the third quarter of 2023.

The weighted average number of diluted common shares outstanding was 30,185,702 in the third quarter of 2024, compared to 30,189,363 in the third quarter of 2023.

First Nine Months of 2024

Net sales increased by 10.8% year-over-year to $462.2 million in the first nine months of 2024, compared to $417.2 million in the first nine months of 2023 primarily due to an increase in sales of both traditional steering and EPS products. Nine-month gross profit increased by 15.4% year-over-year to $79.7 million from $69.1 million in the corresponding period last year. Nine-month gross margin increased to 17.2% from 16.6% in the first nine months of 2023. Gain on other sales was $2.8 million in the first nine months of 2024, compared to $3.6 million in the corresponding period last year.  Income from operations increased by 22.9% year-over-year to $31.6 million in the first nine months of 2024 from $25.7 million in the first nine months of 2023.

Net income attributable to parent company's common shareholders was $20.9 million in the first nine months of 2024, compared to net income attributable to parent company's common shareholders of $26.8 million in the corresponding period in 2023. Diluted earnings per share in the first nine months of 2024 were $0.69, compared to diluted earnings per share of $0.89 in the first nine months of 2023.

Balance Sheet

As of September 30, 2024, total cash and cash equivalents, and pledged cash were $138.8 million, total accounts receivable including notes receivable were $314.2 million, accounts payable including notes payable were $271.8 million and short-term loans were $59.7 million. Total parent company stockholders' equity was $388.6 million as of September 30, 2024, compared to $367.8 million as of December 31, 2023.

Business Outlook

Management has raised its revenue guidance for the full year 2024 to $630.0 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 Wednesday, November 13, 2024 at 8:00 A.M. EST/9:00 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: 546311

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.