JINHUA, China, Nov. 12, 2019 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the third quarter of 2019.

Third Quarter Financial Highlights

  • Total revenues were $31.7 million for the third quarter of 2019, a decrease of 16.6% from total revenues of $38.0 million for the same period in 2018.
     
  • Electric Vehicle (“EV”) parts sales decreased by 19.4%, to $25.8 million for the third quarter of 2019, compared with EV parts sales of $32.1 million for the same period in 2018.
     
  • Revenues from sales of off-road vehicles decreased by 1.5%, to $5.8 million for the third quarter of 2019, compared with revenues from sales of off-road vehicles of $5.9 million for the same period in 2018.
     
  • Gross profit decreased 15.5% to $5.3 million, compared to $6.2 million for the same period last year. Gross margin increased to 16.7% compared to 16.4% for the same period of 2018.
  • GAAP net income for the third quarter of 2019 was $12.1 million, or earnings of $0.23 per fully diluted share compared with GAAP net loss of $6.5 million, or loss of $0.13 per fully diluted share for the same period in 2018.
  • Non-GAAP adjusted net income1, which excludes stock award expenses and the change of the fair value of contingent consideration, was $12.1 million in the third quarter of 2019, compared with non-GAAP net loss of $4.9 million for the same period in 2018. Non-GAAP adjusted income per share1 was approximately $0.23 per fully diluted share for the third quarter of 2019, compared with Non-GAAP adjusted loss per share1 of $0.10 per fully diluted share for the same period in 2018.
  • Working capital was $80.4 million as of September 30, 2019. Cash, cash equivalents and restricted cash totaled $26.1 million as of September 30, 2019.

Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, “Kandi’s financial performance in the first three quarters of 2019 were unsatisfying due to the negative impact stemming from the Affiliate Company’s2 equity adjustment and the corresponding changes to its business operations. However, over the past six months, the Company’s efforts have led to new opportunities for its future development. These efforts include reorganizing and working with other business partners to facilitate the online ride-sharing service alliance project, which offers 300,000 government-accredited vehicles within five years. The Company’s efforts also include improving the operation and production capacity of the Hainan facility, enhancing the Company’s ability to supply the EV-part products, strengthening its relationship with DGL Group Inc. (USA) while simultaneously developing the business of the all-terrain vehicles. We are confident in the Company's ability to grow and prosper in 2020. In addition, Geely Technologies Group Co., Ltd. has conducted substantial work in connection with the improvement of the Affiliate Company and achieved significant results, details of which will be released by the Affiliate Company in December.”

Revenues and Gross Profit

 3Q19 3Q18 Y-o-Y% 
Revenues (US$million)$31.7 $38.0 -16.6% 
Gross Profit (US$million)$5.3 $6.2 -15.5% 
Gross Margin 16.7%  16.4% - 

Revenues for the third quarter of 2019 decreased by 16.6% compared to the same period of last year. The decrease in revenues was mainly due to the decrease in EV parts sales during this quarter. The decrease in EV parts sales was primarily due to the Affiliate Company’s temporary declining sales, which was caused by its product adjustments. The increase in the gross margin was mainly due to the increased selling price of the charging and exchanging equipment and the increased proportion of the high-margin battery processing business this year.                      

Operating Income (Loss)

 3Q19 3Q18 Y-o-Y% 
Operating Expenses (US$million)$5.0 $8.7 42.7% 
Operating Income (Loss) (US$million)$0.3 ($2.4) -113.1% 
Operating Margin 1.0%  -6.4% - 

Total operating expenses in the third quarter of 2019 were $5.0 million, compared with $8.7 million in the same quarter of 2018. The decrease in total operating expenses was due to the decreased R&D expenses, which were $0.6 million in this quarter compared with $5.7 million in the same quarter last year.

The following table summarizes our non-GAAP net income for the three months ended September 30, 2019 and 2018:

 3Q19 3Q18 Y-o-Y% 
Net Income (Loss) (US$million)$12.1 ($6.5) -285.4% 
Earnings (Loss) per Weighted Average Common Share$0.23 ($0.13) - 
Earnings (Loss) per Weighted Average Diluted Share$0.23 ($0.13) - 
Stock Award Expenses (US$million)$0.02 $0.03 -27.6% 
Change in the Fair Value of Contingent Consideration (US$million)($0.06) $1.6 -103.7% 
Non-GAAP Net Income (Loss) (US$million)$12.1 ($5.0) -344.2% 

Net income was $12.1 million in the third quarter of 2019, compared with net loss of $6.5 million in the same quarter of 2018. The increase of net income for this quarter was primarily attributable to the gain from equity sale in the Affiliate Company and the decreased research and development expense.

Non-GAAP net income was $12.1 million in the third quarter of 2019, compared to Non-GAAP net loss of $5.0 million in the same quarter of 2018. The increase of net income (non-GAAP) was primarily attributable to the gain from equity sale in the Affiliate Company and the decreased research and development expense.

Third Quarter 2019 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss its third quarter 2019 financial results at 8:00 A.M. Eastern Time (9:00 P.M. Beijing Time) on November 12, 2019. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Zhu Xiaoying, interim Chief Financial Officer of the Company, will deliver prepared remarks to be followed by a question and answer session.  

Dial-in details for the conference call are as follows:

A live audio webcast of the call can also be accessed by visiting Kandi's Investor Relations page on the Company’s website at http://www.kandivehicle.com. An archive of the webcast will be available on the Company’s website following the live call.

About Kandi Technologies Group, Inc.

Kandi Technologies Group, Inc. (KNDI), headquartered in Jinhua Economic Development Zone, Zhejiang Province, is engaged in the research, development, manufacturing, and sales of various vehicular products. Kandi conducts its primary business operations through its wholly-owned subsidiary, Zhejiang Kandi Vehicles Co., Ltd. ("Kandi Vehicles") and its subsidiaries, SC Autosports, LLC, a wholly-owned subsidiary of Kandi in the United States and Kandi Electric Vehicles Group Co., Ltd. (the “Affiliate Company”). Kandi Vehicles has established itself as one of China's leading manufacturers of pure electric vehicle (“EV”) parts and off-road vehicles.

In 2013, Kandi Vehicles and Geely Group, China's leading automaker, jointly invested in the establishment of the Affiliate Company in order to develop, manufacture and sell pure EV products. As of September 30, 2019, Geely Technologies Group Co., Ltd. (including its affiliate) and Kandi Vehicles respectively hold 78% and 22% of the equity interest in the Affiliate Company.  The Affiliate Company has established itself as one of the driving forces in the development and the manufacturing of pure EV products in China.

More information about KNDI is available on the Company's corporate website at http://www.kandivehicle.com. The Company routinely posts important information on its website.

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.

Follow us on Twitter: @ Kandi_Group
Company Contact:

Ms. Kewa Luo
Kandi Technologies Group, Inc.
Phone: 1-212-551-3610
Email: IR@kandigroup.com

________________________________

1Non-GAAP measures, including Non-GAAP net income and Non-GAAP EPS are defined as the financial measures excluding the change of fair value of contingent consideration and the effects of stock award expenses. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations. Any non-GAAP measure should not be considered as a substitute for, and should only be read in conjunction with, measures of financial performance prepared in accordance with GAAP.

2 Refers to Kandi Electric Vehicles Group Co., Ltd., formerly known as the “JV Company”.


- Tables Below -


KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
   

  September 30,
2019
  December 31,
2018
 
  (UNAUDITED)    
Current assets      
Cash and cash equivalents $14,338,637  $15,662,201 
Restricted cash  11,713,004   6,690,870 
Accounts receivable (net of allowance for doubtful accounts of $130,420 and $120,010 as of September 30, 2019 and December 31, 2018, respectively)  54,859,801   34,274,728 
Inventories  35,447,383   21,997,868 
Notes receivable  41,549,888   72,712 
Notes receivable from the Affiliate Company and related party  -   3,861,032 
Other receivables  12,859,304   1,264,323 
Prepayments and prepaid expense  9,497,459   11,136,408 
Due from employees  5,499   1,001 
Advances to suppliers  4,474,104   4,705,183 
Amount due from the Affiliate Company, net  25,335,894   67,683,462 
Right - of - use asset  42,974   - 
TOTAL CURRENT ASSETS  210,123,947   167,349,788 
         
LONG-TERM ASSETS        
Property, plant and equipment, net  74,491,204   82,045,923 
Land use rights, net  11,084,717   11,749,728 
Construction in progress  17,781   - 
Deferred taxes assets  -   8,204 
Investment in the Affiliate Company  53,837,011   128,929,893 
Goodwill  27,762,120   28,552,215 
Intangible assets  3,723,988   4,328,127 
Other long term assets  4,803,349   5,865,386 
TOTAL Long-Term Assets  175,720,170   261,479,476 
         
TOTAL ASSETS $385,844,117  $428,829,264 
         
CURRENT LIABILITIES        
Accounts payable $79,632,036  $112,309,683 
Other payables and accrued expenses  4,843,001   4,251,487 
Short-term loans  30,969,731   30,539,236 
Customer deposits  33,535   94,408 
Notes payable  11,463,004   12,787,619 
Income tax payable  1,519,699   3,471,366 
Due to employees  7,105   28,473 
Deferred income  1,237,556   1,340,605 
Lease liability  44,121   - 
Total Current Liabilities  129,749,788   164,822,877 
         
LONG-TERM LIABILITIES        
Long term bank loans  27,606,502   28,794,136 
Deferred taxes liability  1,758,643   1,711,343 
Contingent consideration liability  6,562,000   7,256,000 
Other long-term liability  -   622,034 
Total Long-Term Liabilities  35,927,145   38,383,513 
         
TOTAL LIABILITIES  165,676,933   203,206,390 
         
STOCKHOLDER’S EQUITY        
Common stock, $0.001 par value; 100,000,000 shares authorized; 56,263,102 and 55,992,002 shares issued and 52,839,441 and 51,484,444 outstanding at September 30, 2019 and December 31, 2018, respectively  52,839   51,484 
Less: Treasury stock (487,155 shares with average price of $5.09 and 0 shares at September 30, 2019 and December 31, 2018, respectively )  (2,477,965)  - 
Additional paid-in capital  259,691,370   254,989,657 
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at September 30, 2019 and December 31, 2018, respectively)  (9,135,198)  (9,497,009)
Accumulated other comprehensive loss  (27,963,862)  (19,921,258)
TOTAL STOCKHOLDERS’ EQUITY  220,167,184   225,622,874 
         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $385,844,117  $428,829,264 

  
KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
  

  Three Months Ended  Nine Months Ended 
  September 30,
2019
  September 30,
2018
  September 30,
2019
  September 30,
2018
 
             
REVENUES FROM UNRELATED PARTY, NET $26,968,385  $14,860,034  $63,360,044  $32,211,352 
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTY, NET  4,720,159   23,135,326   10,543,190   30,479,521 
                 
REVENUES, NET  31,688,544   37,995,360   73,903,234   62,690,873 
                 
COST OF GOODS SOLD  (26,412,129)  (31,753,311)  (61,288,228)  (53,044,861)
                 
GROSS PROFIT  5,276,415   6,242,049   12,615,006   9,646,012 
                 
OPERATING EXPENSES:                
Research and development  (596,187)  (5,691,649)  (1,766,210)  (7,091,836)
Selling and marketing  (930,810)  (898,896)  (2,448,291)  (1,875,294)
General and administrative  (3,432,920)  (2,070,947)  (11,096,246)  (5,534,039)
Total Operating Expenses  (4,959,917)  (8,661,492)  (15,310,747)  (14,501,169)
                 
INCOME (LOSS) FROM OPERATIONS  316,498   (2,419,443)  (2,695,741)  (4,855,157)
                 
OTHER INCOME (EXPENSE):                
Interest income  209,736   52,745   559,954   1,452,522 
Interest expense  (435,524)  (483,376)  (1,304,062)  (1,505,409)
Change in fair value of contingent consideration  57,000   (1,552,686)  694,000   1,814,326 
Government grants  502,146   607,008   725,189   717,821 
Gain from equity dilution in the Affiliate Company  (49,285)  -   4,291,974   - 
Gain from equity sale in the Affiliate Company  20,574,217   -   20,574,217   - 
Share of loss after tax of the Affiliate Company  (8,433,767)  (3,247,343)  (22,883,126)  (79,592)
Other income , net  57,833   15,735   357,626   666,294 
Total other income (expense), net  12,482,356   (4,607,917)  3,015,772   3,065,962 
                 
INCOME (LOSS) BEFORE INCOME TAXES  12,798,854   (7,027,360)  320,031   (1,789,195)
                 
INCOME TAX (EXPENSE) BENEFIT  (709,413)  505,961   41,780   370,316 
                 
NET INCOME (LOSS)  12,089,441   (6,521,399)  361,811   (1,418,879)
                 
OTHER COMPREHENSIVE INCOME (LOSS)                
Foreign currency translation  (8,531,043)  (8,108,270)  (8,042,604)  (13,230,652)
                 
COMPREHENSIVE INCOME (LOSS) $3,558,398  $(14,629,669) $(7,680,793) $(14,649,531)
                 
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED  52,613,642   51,474,048   52,332,260   51,089,047 
                 
NET INCOME (LOSS) PER SHARE, BASIC AND DILUTED $0.23  $(0.13) $0.01  $(0.03)


KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)

  Number of
Outstanding
Shares
  Common
Stock
  Treasury
Stock
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Income
  Total 
Balance, December 31, 2018  51,484,444   51,484   -   254,989,657   (9,497,009)  (19,921,258)  225,622,874 
Stock issuance and award  1,096,397   1,097   -   3,387,379   -   -   3,388,476 
Net income (loss)  -   -   -   -   (4,409,472)  -   (4,409,472)
Foreign currency translation  -   -   -   -   -   5,404,028   5,404,028 
                             
Balance, March 31, 2019  52,580,841   52,581   -   258,377,036   (13,906,481)  (14,517,230)  230,005,906 
Stock issuance and award  238,600   238   -   1,259,569   -   -   1,259,807 
Net income (loss)  -   -   -   -   (7,318,158)  -   (7,318,158)
Foreign currency translation  -   -   -   -   -   (4,915,589)  (4,915,589)
                             
Balance, June 30, 2019  52,819,441   52,819   -   259,636,605   (21,224,639)  (19,432,819)  219,031,966 
Stock issuance and award  20,000   20   -   69,380   -   -   69,400 
Stock buyback  -   -   (2,477,965)  -   -   -   (2,477,965)
Commission in stock buyback  -   -   -   (14,615)  -   -   (14,615)
Net income (loss)  -   -   -   -   12,089,441   -   12,089,441 
Foreign currency translation  -   -   -   -   -   (8,531,043)  (8,531,043)
                             
Balance, September 30, 2019  52,839,441   52,839   (2,477,965)  259,691,370   (9,135,198)  (27,963,862)  220,167,184 
                             
  Number of
Outstanding
Shares
  Common
Stock
  Treasury
Stock
  Additional
Paid-in
Capital
  Accumulated
Deficit
  Accumulated
Other
Comprehensive
Income
  Total 
Balance, December 31, 2017  48,036,538   48,037   -   233,055,348   (3,802,310)  (6,310,763)  222,990,312 
Stock issuance and award  2,972,337   2,972   -   19,099,556   -   -   19,102,528 
Net income (loss)  -   -   -   -   3,727,995   -   3,727,995 
Foreign currency translation  -   -   -   -   -   7,465,240   7,465,240 
                             
Balance, March 31, 2018  51,008,875   51,009   -   252,154,904   (74,315)  1,154,477   253,286,075 
Stock issuance and award  288,600   289   -   2,038,476   -   -   2,038,765 
Net income (loss)  -   -   -   -   1,374,525   -   1,374,525 
Foreign currency translation  -   -   -   -   -   (12,587,622)  (12,587,622)
                             
Balance, June 30, 2018  51,297,475   51,298   -   254,193,380   1,300,210   (11,433,145)  244,111,743 
Stock issuance and award  184,469   184   -   787,529   -   -   787,713 
Net income (loss)  -   -   -   -   (6,521,399)  -   (6,521,399)
Foreign currency translation  -   -   -   -   -   (8,108,271)  (8,108,271)
                             
Balance, September 30, 2018  51,481,944   51,482   -   254,980,909   (5,221,189)  (19,541,416)  230,269,786 


KANDI TECHNOLOGIES GROUP, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

   Nine Months Ended 
  September 30,
2019
  September 30,
2018
 
       
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income (loss) $361,811  $(1,418,879)
Adjustments to reconcile net income to net cash provided by operating activities        
Depreciation and amortization  6,443,422   2,271,599 
Impairments  44,544   24,854 
Allowance for doubtful accounts  15,366   (7,093)
Deferred taxes  50,693   - 
Share of loss after tax of the Affiliate Company  22,883,126   79,592 
Gain from equity dilution in the Affiliate Company  (4,291,974)  - 
Gain from equity sale in the Affiliate Company  (20,574,217)  - 
Change in fair value of contingent consideration  (694,000)  (1,814,326)
Stock compensation cost  1,337,333   253,934 
         
Changes in operating assets and liabilities:        
(Increase) Decrease In:        
Accounts receivable  (36,822,184)  (52,845,923)
Deferred taxes assets  -   (52,126)
Notes receivable  174,881   491,272.00 
Notes receivable from the Affiliate Company and related party  437,203   3,196,340 
Inventories  (14,813,147)  1,555,993 
Other receivables and other assets  (17,275,954)  1,497,230 
Due from employee  (25,861)  945 
Advances to supplier and prepayments and prepaid expenses  1,357,001   (4,590,404)
Amount due from the Affiliate Company  30,549,072   (81,549,214)
Amount due from Affiliate Company-Long term  -   15,907,183 
Due from related party  -   161,874 
         
Increase (Decrease) In:        
Accounts payable  11,383,411   101,684,965 
Other payables and accrued liabilities  7,791,028   29,845,307 
Notes payable  (11,836,950)  (12,434,813)
Customer deposits  (59,734)  20,350 
Income tax payable  (1,803,574)  (2,353,826)
Deferred income  (56,448)  (761,643)
Net cash used in operating activities $(25,425,152) $(836,809)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property, plant and equipment, net  (955,670)  (304,745)
Purchases of land use rights and other intangible assets  -   (105,480)
Acquisition of Jinhua An Kao (net of cash received)  -   (3,610,846)
Acquisition of SC Autosports  -   486,954 
Purchases of construction in progress  (18,491)  (425,241)
Reimbursement of capitalize interests for construction in progress  -   1,818,390 
Cash received from equity sale in the Affiliate Company  32,061,558   - 
Long Term Investment  -   1,458,464 
Net cash provided by (used in) investing activities $31,087,397  $(682,504)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from short-term bank loans  27,864,409   25,515,452 
Repayments of short-term bank loans  (26,261,331)  (26,283,065)
Repayments of long-term bank loans  (145,734)  (153,523)
Proceeds from notes payable  -   40,313,800 
Repayment of notes payable  -   (43,024,633)
Cash used for stock buyback  (2,492,579)  - 
Net cash used in financing activities $(1,035,235) $(3,631,969)
         
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH  4,627,010   (5,151,282)
Effect of exchange rate changes on cash  (928,440)  (512,545)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR  22,353,071   16,110,496 
         
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD  26,051,641   10,446,669 
-CASH AND CASH EQUIVALENTS AT END OF PERIOD  14,338,637   1,342,085 
-RESTRICTED CASH AT END OF PERIOD  11,713,004   9,104,584 
         
SUPPLEMENTARY CASH FLOW INFORMATION        
Income taxes paid  1,711,101   1,981,072 
Interest paid  1,304,062   1,274,399 
         
SUPPLEMENTAL NON-CASH DISCLOSURES:        
Acquisition of Jinhua An Kao by stock  -   20,718,859 
Acquisition of SC Autosports by stock  -   756,664 
Amount due from the Affiliate Company converted to investment in the Affiliate Company  -   83,669,804 
Notes receivable from unrelated parties for equity transfer payment  43,137,369   -