Niu Technologies Announces First Quarter 2019 Financial Results


-- First Quarter Total volume of e-scooter sales up 75.7% year over year

-- First Quarter Revenues of RMB 355.2 million, up 105.5% year over year

-- First Quarter net income of RMB 12.0 million, up RMB 73.9 million year over year

BEIJING, May 13, 2019 (GLOBE NEWSWIRE) -- Niu Technologies (“Niu”, or “the Company”) (NASDAQ: NIU), the world’s leading provider of smart urban mobility solutions, today announced its financial results for the first quarter 2019.

First Quarter 2019 Financial Highlights

  • Revenues were RMB 355.2 million, an increase of 105.5% year over year
  • Gross margin was 21.3%, compared with 12.7% in the first quarter of 2018
  • Net income was RMB 12.0 million, compared with net loss of RMB 61.9 million in the first quarter of 2018
  • Adjusted net income (non-GAAP)1 was RMB 14.6 million, compared with adjusted net loss of RMB 12.5 million in the first quarter of 2018

First Quarter 2019 Operating Highlights

  • The number of e-scooters sold reached 66,284, up 75.7% year over year
  • Franchised stores in China reached 881, an increase of 121 or 16% since December 31, 2018
  • Overseas sales network expanded to 23 distributors covering 28 countries
  • NIU entered into a definitive Development Collaboration Agreement with Volkswagen Group in Germany regarding the joint development of Micro-mobility solutions

Dr. Yan Li, Chief Executive Officer of the Company, commented: “Our business momentum continued in the first quarter. Sales volume grew 76% and revenues grew 106%. Gross margin increased significantly to 21.3%, a result of cost reduction and favorable changes in product and revenue mix. We achieved net income of RMB 12 million, a milestone for the Company that demonstrates our ability to grow profitably.”

Dr. Li continued, “We are committed to providing high-quality products to our customers. In April, we launched two all-new e-scooter models, the U+ and US, together with our new lifestyle brand category, Niu Aero bicycles. Meanwhile, we are expanding our global presence. In March, we attended the Seoul Motor Show and saw the potential for robust demand in South Korea. In April, we made our first shipment of scooters to the U.S. We are excited by our business prospects and look forward to continued growth in the quarters ahead.”  

First Quarter 2019 Financial Results

Revenues were RMB 355.2 million, an increase of 105.5% year over year, due to increased sales volume of 75.7% and increased revenues per e-scooter of 17.0%.

  • E-scooter sales represented 87.5% of revenues, while accessories, spare parts sales and service revenues represented 12.5% of revenues.
  • Higher e-scooter sales volume was mainly driven by the expanded sales network and higher demand on certain products ahead of the implementation of the new national standards. After the new national standards for electric bicycles became effective on April 15, 2019, certain existing models could no longer be sold in the category of electric bicycles. We accommodated some demand for these models during the first quarter.
  • Increased revenues per e-scooter was mainly driven by higher sales price of NGT model, a larger proportion of high-end model sales in the N and M series, and higher sales volume in accessories and spare parts.
  • China represented 81.2% of total e-scooter revenue, while overseas markets represented 18.8% of total e-scooter revenue, compared with 18.5% in the first quarter of 2018.

Cost of revenues were RMB 279.5 million, an increase of 85.3% year over year, mainly due to higher e-scooter sales volume. The cost per e-scooter, defined as cost of revenues divided by the number of e-scooters sold in a specified period, was RMB 4,217, up 5.5% from RMB 3,998 in the first quarter 2018 as a result of product mix change.

Gross margin was 21.3%, up substantially from 12.7% in the same period of 2018, mainly due to lower raw material costs, higher retail prices, favorable changes in product mix and a greater proportion of revenue from accessories and spare parts.

Operating expenses were RMB 64.8 million, an increase of 35.0% from the same period of 2018. Operating expenses as a percentage of revenues was 18.2%, compared with 27.8% in the first quarter of 2018.

  • Selling and marketing expenses were RMB 29.8 million (including RMB 0.7 million of share-based compensation), an increase of 54.8% from RMB 19.3 million in the first quarter of 2018. The increase was mainly due to the increases in staff cost of RMB 4.0 million, depreciation and amortization expense of RMB 1.7 million, and advertising and promotion expense of RMB 1.4 million, which resulted from the growth in e-scooter sales volume, the opening of new franchised stores and an increased number of sales staffs. Selling and marketing expenses as a percentage of revenues was 8.4% compared with 11.1% in the first quarter of 2018.
  • Research and development expenses were RMB 14.3 million (including RMB 0.4 million of share-based compensation), an increase of 41.7% from RMB 10.1 million in the first quarter of 2018, mainly driven by the increases in staff cost of RMB 3.3 million and design expense of RMB 3.6 million, which was partially offset by the decrease of share-based compensation expenses of RMB 2.8 million. The share-based compensation was lower due to the full vesting of certain founders’ restricted ordinary shares in 2018. Research and development expenses as a percentage of revenues was 4.0%, compared with 5.9% in the first quarter of 2018.
  • General and administrative expenses were RMB 20.7 million (including RMB 1.5 million of share-based compensation), an increase of 10.9% from RMB 18.6 million in the first quarter of 2018, mainly due to increase in staff cost of RMB 5.4 million, professional fees of RMB 3.9 million, travelling and other expenses of RMB 2.4 million, as a result of increased number of staffs and engagement of professional firms to meet the regulatory requirements as a public company. The higher expenses were partially offset by decreases of share-based compensation expense of RMB 9.6 million due to the full vesting of certain founders’ restricted ordinary shares. General and administrative expenses as a percentage of revenues was 5.8%, compared with 10.8% in the first quarter of 2018.

Operating expenses excluding share-based compensation was RMB 62.2 million, increased by 87.5% year over year, and represented 17.5% of revenues, compared with 19.2% in the first quarter of 2018.

  • Selling and marketing expenses excluding share-based compensation were RMB 29.1 million, an increase of 55.1% year over year, and represented 8.2% of revenues, compared with 10.9% in the first quarter of 2018
  • Research and development expenses excluding share-based compensation were RMB 13.9 million, an increase of 103.2% year over year, and represented 3.9% of revenues, compared with 4.0% in the first quarter of 2018
  • General and administrative expenses excluding share-based compensation were RMB 19.2 million, an increase of 153.2% year over year, and represented 5.4% of revenues, compared with 4.4% in the first quarter of 2018

Change in fair value of a convertible loan was nil, compared to a loss of RMB 34.5 million associated with change in fair value of a convertible loan in the same period of 2018.

Share-based compensation was RMB 2.6 million, a decrease of RMB 12.3 million compared to RMB 14.9 million in the same period of last year mainly because certain founders’ restricted ordinary shares have been fully vested during 2018.

Net income was RMB 12.0 million, an improvement of RMB 73.9 million compared with a net loss of RMB 61.9 million in the first quarter of 2018.

Adjusted net income (non-GAAP) was RMB 14.6 million, compared with an adjusted net loss of RMB 12.5 million in the first quarter of 2018. The adjusted net income margin2 was 4.1%, compared with an adjusted net loss margin of 7.2% in the same period of 2018.

Basic and diluted net income per ADS were RMB 0.161 (US$ 0.024) and RMB 0.157 (US$ 0.023) respectively.

Balance Sheet
As of March 31, 2019, the Company had cash, term deposit and short-term investments of RMB 694.1 million in aggregate. The Company had restricted cash of RMB 205.1 million and short-term bank borrowings of RMB 208.5 million.

Business Outlook
Because certain distributors advanced their purchase in the first quarter ahead of the implementation of the new national standard in April, NIU expects revenues of second quarter to be in the range of RMB 580 million to RMB 660 million, representing a year-over-year increase of 50.9% to 71.8%. The revenue for the first half of 2019 will be in the range of RMB 935 million to RMB 1,015 million, representing a year-over-year increase of 67.9% to 82.2%.

The above outlook is based on information available as of the date of this press release and reflects the Company’s current and preliminary expectation, which is subject to change.

1 Adjusted net income/loss (non-GAAP) is defined as net income/loss excluding share-based compensation expenses and change in fair value of a convertible loan.

2 Adjusted net income/loss margin is defined as adjusted net income/loss as a percentage of the revenues.

Conference Call

The Company will host a conference call at 8:00 a.m. on May 13, 2019, Eastern Time (8:00 p.m. May 13, 2019 Beijing/Hong Kong time), to discuss its first quarter 2019 financial results and provide a corporate update.

Participants may access the call via below dial-in details:

United States+1-866-519-4004
Hong Kong+852-800-906-601
Mainland China+86-400-620-8038
Other International+65-6713-5090
Conference ID8141818

A replay will be accessible through May 21, 2019, by dialing the following numbers:

United States+1-855-452-5696
Hong Kong+852-800-963-117
Mainland China+86-400-602-2065
Other International+61-281-990-299
Replay Access Code8141818

Additionally, a live and archived webcast of the conference call will also be available through the Company’s investor relations website at https://ir.niu.com/.

About NIU

As the world’s leading provider of smart urban mobility solutions, NIU designs, manufactures and sells high-performance smart e-scooters. NIU has a streamlined product portfolio consisting of three series, N, M and U that address the needs of different segments of the modern urban resident, while being united through a common design language that emphasizes style, freedom and technology.  NIU has adopted an omnichannel retail model, integrating the offline and online channels, to sell its products and provide services. For more information, please visit www.niu.com.

Use of Non-GAAP Financial Measures

To supplement NIU’s consolidated financial results presented in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), NIU uses the following non-GAAP financial measures: adjusted net income/loss, adjusted net income/loss margin and adjusted basic and diluted net income per ADS. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

NIU believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its operating results. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to NIU’s historical performance. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company’s results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data.

Adjusted net income/loss is defined as net income/loss excluding share-based compensation expenses and change in fair value of a convertible loan. Adjusted net income/loss margin is defined as adjusted net income/loss as a percentage of the revenues.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures.”

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the readers. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.7112 to US$1.00, the exchange rate in effect as of March 29, 2019, as set forth in the H.10 Statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as NIU’s strategic and operational plans, contain forward-looking statements. NIU may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about NIU’s beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: NIU’s strategies; NIU’s future business development, financial condition and results of operations; NIU’s ability to maintain and enhance its “NIU” brand; its ability to innovate and successfully launch new products and services; its ability to maintain and expand its offline distribution network; its ability to satisfy the mandated safety standards relating to e-scooters; its ability to secure supply of components and raw materials used in e-scooters; its ability to manufacture, launch and sell smart e-scooters meeting customer expectations; its ability to grow collaboration with operation partners; its ability to control costs associated with its operations; general economic and business conditions in China and globally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in NIU’s filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and NIU does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contacts:

NIU
Investor Relations Manager
Jason Yang
E-mail: ir@niu.com

The Blueshirt Group
Gary Dvorchak, CFA
E-mail: gary@blueshirtgroup.com

 
NIU TECHNOLOGIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
     
 As of
December 31,
 As of March 31,
 2018 2019
  RMB   RMB US$
ASSETS    
Current assets    
Cash569,059,591  490,172,614 73,037,998 
Term deposit27,452,663  134,669,636 20,066,402 
Restricted cash-current179,262,714  205,071,000 30,556,532 
Short-term investments120,241,425  69,213,580 10,313,145 
Accounts receivable, net54,424,845  81,462,030 12,138,221 
Inventories142,382,205  153,094,732 22,811,827 
Prepayments and other current assets26,919,954  46,336,261 6,904,318 
Total current assets1,119,743,397  1,180,019,853 175,828,443 
     
Non-current assets    
Property and equipment, net40,985,174  59,845,866 8,917,312 
Intangible assets, net7,717,754  9,016,984 1,343,573 
Other non-current assets16,805,474  14,708,292 2,191,604 
Total non-current assets65,508,402  83,571,142 12,452,489 
     
Total assets1,185,251,799  1,263,590,995 188,280,932 
     
LIABILITIES    
Current liabilities    
Short-term bank borrowings179,978,003  208,461,336 31,061,708 
Accounts payable249,665,890  275,862,207 41,104,751 
Advance from customers20,505,861  44,845,236 6,682,149 
Deferred revenue-current12,666,330  13,629,057 2,030,793 
Accrued expenses and other current liabilities134,184,026  130,829,930 19,494,268 
Total current liabilities  597,000,110     673,627,766    100,373,669  
     
Warranty-non current17,609,842  16,173,789 2,409,970 
Deferred revenue-non current234,801  383,181 57,096 
Total non-current liabilities  17,844,643     16,556,970    2,467,066  
     
Total liabilities  614,844,753     690,184,736    102,840,735  
     
SHAREHOLDERS’ EQUITY:    
Class A ordinary shares83,120  83,120 12,385 
Class B ordinary shares12,839  12,839 1,913 
Additional paid-in capital1,717,483,548  1,720,122,258 256,306,213 
Accumulated other comprehensive loss(22,786,922) (34,408,629)(5,127,046)
Accumulated deficit(1,124,385,539) (1,112,403,329)(165,753,268)
Total shareholders’ equity  570,407,046     573,406,259    85,440,197  
     
Total liabilities and shareholders’ equity1,185,251,799  1,263,590,995 188,280,932 
        


 
NIU TECHNOLOGIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
     
 Three months ended March 31,
 2018 2019
 RMB  RMB US$
Revenues172,822,924  355,219,700 52,929,387 
Cost of revenues(a)(150,847,182) (279,547,894)(41,653,936)
Gross profit  21,975,742     75,671,806    11,275,451  
     
Operating expenses:    
Selling and marketing expenses(a)(19,260,806) (29,822,193)(4,443,645)
Research and development expenses(a)(10,117,070) (14,332,580)(2,135,621)
General and administrative expenses(a)(18,622,625) (20,658,720)(3,078,245)
Operating (loss)/income  (26,024,759)   10,858,313    1,617,940  
     
Changes in fair value of a convertible loan(34,499,858) - - 
Interest expense(1,922,303) (2,407,633)(358,749)
Interest income371,620  4,125,349 614,696 
Investment income476,150  517,836 77,160 
Foreign currency exchange losses(1,368,249) (2,365,616)(352,488)
Government grants1,084,400  1,247,000 185,809 
(Loss)/income before income taxes  (61,882,999)   11,975,249    1,784,368  
Income tax benefit-  6,961 1,037 
Net (loss)/income  (61,882,999)   11,982,210    1,785,405  
     
Other comprehensive income/(losses)    
Foreign currency translation adjustment7,119,259  (11,586,902)(1,726,502)
Unrealized/(reclassification) of gain on available for sale securities, net(144,665) (34,805)(5,186)
Comprehensive (loss)/income  (54,908,405)   360,503    53,717  
Net (loss)/income per share    
—Basic(1.853) 0.081 0.012 
—Diluted(1.853) 0.078 0.012 
Net income per ADS    
—Basic-  0.161 0.024 
—Diluted-  0.157 0.023 
     
Weighted average number of shares outstanding used in computing net (loss)/income per share    
—Basic33,396,210  148,674,058 148,674,058 
—Diluted33,396,210  153,094,498 153,094,498 
Weighted average number of ADS outstanding used in computing net income per ADS    
—Basic-  74,337,029 74,337,029 
—Diluted-  76,547,249 76,547,249 
     
Note:    
(a) Includes share-based compensation expenses as follows:    
 Three months ended March 31,
 2018 2019
 RMB  RMB US$
Cost of revenues60,162  62,724 9,346 
Selling and marketing expenses487,046  698,743 104,116 
Research and development expenses3,273,007  424,915 63,314 
General and administrative expenses11,038,621  1,452,328 216,404 
Total share-based compensation  14,858,836     2,638,710    393,180  
        
        
NIU TECHNOLOGIES 
RECONCILIATION OF GAAP AND NON-GAAP RESULTS 
      
 Three months ended March 31, 
 2018 2019 
 RMB  RMB US$ 
Net (loss)/income(61,882,999) 11,982,2101,785,405 
Add:     
Share-based compensation14,858,836  2,638,710393,180 
Change in fair value of a convertible loan34,499,858  -- 
Adjusted net (loss)/income  (12,524,305)   14,620,920   2,178,585