Kandi Technologies Reports Second Quarter 2011 Financial Results - ResearchInChina

Date:2011-08-16     Source:chengyeqingchengyeqing  Text Size:

JINHUA, CHINA, Aug 15, 2011 (MARKETWIRE via COMTEX) -- Kandi Technologies, Corp. RCode:KNDI/quotes/zigman/107702/quotes/nls/kndi KNDI -11.33% , a leading Chinese supplier of off-road vehicles and developer of pure electric vehicles (EV), today reported improved financial results for the second quarter and six months ended June 30, 2011, highlighted by double-digit growth in operating income and adjusted net income (described below) on modest revenue growth.

Second quarter 2011 financial highlights:

       
        --  Revenues increased 2.3%, to $10.1 million, from $9.9 million a year
            earlier, reflecting continued strong growth in go-kart sales.
            Sequentially, sales were up 22% compared to the first quarter of 2011
        --  Operating income increased to $0.8 million, up 18.4% from $0.7 million
            in the second quarter of 2010
        --  Net income more than tripled to $3.6 million, or $0.13 per diluted
            share, compared to net income of $1.2 million, or $0.05 per diluted
            share in the same period last year. The non-GAAP adjusted net income
            (described below) grew by 24.6% as compared to the second quarter of
            2010
        --  Working capital surplus of $23.0 million at quarter-end, improved from
            working capital surplus of $18.5 million at the end of 2010
        --  Cash, cash equivalents and restricted cash totaled $36.1 million at
            quarter-end, which equates to $1.26 per fully diluted share, a 43.7%
            increase from $25.2 million at the end of 2010
       
       

"While our primary focus in the second quarter continued to be building a strong base for future EV sales in China, we benefitted from strong sales in our legacy go-kart business, as well as stronger ATV sales through the first six months," said Mr. Xiaoming Hu, CEO and Chairman of the Board of Kandi Technologies. "Net income and sales in the period advanced strongly on a sequential basis and, in the case of net income, on a year-over-year basis as well. While unit volume remained low, we also realized higher per unit revenue in our super mini-car business. Our successful financing last year greatly strengthened our balance sheet and cash position, which will permit us to grow our EV business in China as the pace of infrastructure development advances. Over the past few months, we have greatly solidified our positions in Jinhua and Hangzhou, where we made significant progress in strengthening our relationship with State Grid to create the infrastructure needed to foster widespread adoption and use of EVs in China. We continue to believe the anticipated success in these cities will serve as models for many other cities and regions in China. We are committed to our technology and continue to invest in developing the products that will provide efficient, low-cost new energy transportation to the growing Chinese market."

To support its ongoing development efforts, Kandi continued to invest in research and development to improve existing products and foster new products. During the quarter, the Company invested $0.6 million in research and development, an increase of 43.5% from the second quarter of 2010. Over the first six months, research and development increased 46.1%, to nearly $1.1 million when compared to the comparable period of 2010.

"With respect to EV sales globally, we are taking a long-term view of our markets, establishing the infrastructure needed to meet current and future demand," said Mr. Hu. "With this in mind, we have invested in our production facilities to increase overall capacity"

Second Quarter 2011 Results

The modest increase in second-quarter revenues reflected significant increases in sales of go-karts, which nearly doubled to $6.2 million. The second quarter gross profit was $2.3 million in 2011, as compared to $2.4 million in the second quarter of 2010, while gross margin decreased to 23.1%, from 23.7% in the prior year, primarily as a result of a shift in product mix during the quarter. The Company's operating income was $0.8 million in 2011, compared to $0.7 million in the second quarter of 2010. Year-to-date operating income more than doubled to $1.7 million from $0.7 million in the prior year first half.

The Company's net income totaled $3.6 million for the quarter, or $0.13 per fully diluted share, as compared with net income of $1.2 million, or $0.05 per fully diluted share, for the same period of 2010. Without the convertible notes, warrant and option-related charges, non-GAAP adjusted net income increased 24.6% to $1.3 million, compared to $1.1 million in the same period of 2010. In the first six months of 2011, reported net income including changes in fair value was $9.6 million or $0.33 per diluted share. Excluding these items, non-GAAP adjusted net income was $2.0 million or $0.07 per share on 28.8 million fully diluted shares

Building the Foundation for EV Leadership

As previously reported, in the second quarter of 2011 the Company made significant additional progress in building the foundation for future EV sales. Of note, the Company:

 

       
        --  Received formal provincial government approval of RMB 15 million ($2.3
            million U.S.) annual subsidy on the Company's application for a new
            energy vehicle pilot program in Jinhua City. Together with the Jinhua
            city government subsidy, a total of RMB 30 million ($4.6 million U.S.)
            per year in government subsidies to residents is available for the
            purchase Kandi clean energy vehicles through 2012
        --  Hosted a visit from Mr. Liang Nie, general manager of Dayou Technology
            Development Company, the State Grid subsidiary responsible for the
            development and operation of battery charging and changing facilities
            in the city of Hangzhou
        --  Displayed a variety of EVs at the 13th Zhejiang Investment and Trade
            Fair and the 10th China International Consumer Goods Fair, which were
            held in Ningbo
        --  Signed a strategic cooperation agreement with State Grid affiliate
            Hangzhou Electric Vehicle Service Co., Ltd., for the launch of a
            20,000 pure EV pilot program for Hangzhou residents through the end of
            2012
       
       

 

In addition, the Company took steps to strengthen corporate governance and build shareholder value by:

 

       
        --  Improving the quality and independence of the Company's Board of
            Directors and improving internal control with the naming of a new
            independent board member and engaging a "big four" professional firm
        --  Obtaining Board approval of a $5 million share repurchase program over
            the following 18 months
       
       

 

Stronger Second Half EV Sales

"Kandi continues its progress toward becoming a leader in the pure EV market in China," said Mr. Hu. "Given our strategic relationships and investments, we believe Kandi is well positioned to anticipate growing demand for EVs. That said, we recognize that the organic development of markets for these emerging technologies will take time. As a result, we expect sales to grow modestly over the near term."

About Kandi Technologies, Corp. Kandi Technologies, Corp. /quotes/zigman/107702/quotes/nls/kndi KNDI -11.33% 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 IR website is http://www.kanditechnology.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.

 

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