Jinhua, China - May 10, 2017 (Newsfile Corp.) (Investorideas.com Newswire) Kandi Technologies Group, Inc. (NASDAQ GS: KNDI) (the "Company," "we" or "Kandi"), today announced its financial results for the first quarter of 2017.
First Quarter Highlights
Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi, commented, "Due to extended delays in receiving government subsidy payments, as well as the government's recent revisions regarding the new technical standards to the MIIT directory of recommended new energy vehicle models, or the Directory, that required re-submission of applications of new energy vehicles to be included in the Directory, the JV Company was not able to have normal production in the first quarter. By April 4 of this year, all of the JV Company's five Geely Global Hawk EV models (SMA7000BEV05 (Kandi Model K12), SMA7000BEV06（Kandi Model K10D), SMA7000BEV07（Kandi Model K12A), SMA7001BEV25 (Kandi Model K17), and JL7001BEV18 (Kandi Model K11)) received MIIT approval and are included in the updated Directory."
"The significant drop in overall sales this quarter was a direct result of reduced EV product sales by the JV Company. However, now that we have begun receiving subsidy payments from the Chinese government and capital support from the supply chain finance program of the National Economic and Technological Development Zone of Rugao City, our normal production activities have resumed. We believe that we will regain our sales momentum and competitive edge in the second half of this year and consequently will achieve improved business operations."
"Additionally, we have made significant progress towards the JV Company's receiving EV manufacturing license approval. Our application was accepted by the National Development and Reform Commission, or the Commission on March 20, 2017, and from April 13, 2017 to April 15, 2017, the project evaluation and assessment team of experts made an on-site visit to conduct a comprehensive inspection and evaluation of the JV Company's research and development, trial production, and manufacturing capabilities. The JV Company received top marks from the evaluation and assessment team's experts. Pursuant to the application process, the evaluation and assessment team submitted its appraisal report to the Commission on May 4, 2017, and we expect we will receive feedback from the Commission in the near future. Lastly, we note that we are honored to welcome one of most influential experts in China's EV industry, Mr. Yi Lin, to be our independent board member. Mr. Lin has many years of experience in manufacturing, research and development, and management in the renewable energy automotive industry. He is a valuable asset to the Company and we believe that his involvement will improve the quality of our board and provide the professional guidance we need to maximize Kandi's potential. The efforts we have made this year will lay a solid foundation for the growth of our business and towards gaining our leading market position," Mr. Hu concluded.
Net Revenues and Gross Profit
Net revenues for the first quarter decreased by 91.6% compared to the same period last year. The decrease in net revenues was mainly due to a significant reduction in EV parts sales during this quarter. The selling prices of our products for the three months ended March 31, 2017 decreased slightly on average from the same period last year. The decrease in revenue was primarily due to the decrease in sales volume.
Operating Income (Loss)
Total operating expenses in the first quarter were $29.4 million, compared with $8.3 million in the same quarter of 2016. The increase in total operating expenses was due to increased research and development expenses relating to the development of a new EV model in an effort to prepare the Company for business growth in the coming years. Research and development expenses were $20.8 million in this quarter, compared with $0.2 million in the same quarter last year.
GAAP Net Income
Net loss was $24.2 million in the first quarter, compared with net income of $0.1 million in the same quarter of 2016. The negative change was primarily attributable to significantly decreased sales and gross profits, JV Company losses, and significantly increased research and development expenses of approximately $21 million.
Non-GAAP net loss was $21.7 million, a 687.4% decrease in the first quarter of 2017 compared to Non-GAAP net income of $3.7 million in the same quarter of 2016. The decrease was primarily attributable to decreased revenues and gross profits, the JV Company's net losses, and significantly increased research and development expenses undertaken to prepare the Company for future business growth.
JV Company Financial Results
As a result of revisions to the MIIT directory of recommended new energy vehicle models and because of the PRC government’s new subsidy policies, effective as of January 1, 2017, as well as extended delays in subsidy payments for EVs manufactured in previous years resulting from the PRC government’s industry-wide subsidy review in 2016, the JV Company had no EV product sales in the first quarter of 2017. The JV Company had no EV product sales in the same quarter of 2016. This quarter, total revenue was $1.3 million, an increase of $1.8 million over the same quarter of 2016.
The condensed financial income statements of the JV Company in the first quarter are as set forth below:
Kandi's investments in the JV Company are accounted for under the equity method of accounting, because Kandi has a 50% ownership interest in the JV Company. As a result, Kandi recorded 50% of the JV Company's loss for a total loss of $5.3 million for this quarter. After eliminating intra-entity profits and losses, Kandi's share of the JV Company's after-tax loss was $5.2 million for the first quarter of 2017.
First Quarter 2017 Conference Call Details
The Company has scheduled a conference call and live webcast to discuss its financial results at 8:00 A.M. Eastern Time (8:00 P.M. Beijing Time) on May 10, 2017. Mr. Hu Xiaoming, Chief Executive Officer of the Company, and Mr. Mei Bing, 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, Zhejiang Province, is engaged in the research and development, manufacturing and sales of various vehicle products. Kandi has established itself as one of China's leading manufacturers of pure electric vehicle ("EV") products (through its joint venture), EV parts and off-road vehicles. More information can be viewed at 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.
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Ms. Kewa Luo
Kandi Technologies Group, Inc.
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