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Kandi Technologies Reports Second Quarter 2016 Financial Results

Q2 2016 revenue increased 15.1% YoY to $55.2 million
Q2 JV’s EV products sales exceed expectations by 20%, reaching 7,200, a 61.9% YoY increase
Q2 2016 Non-GAAP net income increased 114.8% YoY to $10.5 million, or $0.22 EPS

JINHUA, China, Aug. 09, 2016 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ:KNDI) today announced its financial results for the second quarter of 2016.

Second Quarter Highlights

  • Total revenues grew 15.1% to $55.2 million for the second quarter of 2016, compared with $48.0 million for the same period of 2015;
  • Electric Vehicle (“EV”) parts sales increased 15.4% to $53.8 million for the second quarter of 2016, compared with $46.6 million in the same period of 2015;
  • Kandi Electric Vehicles Group Co., Ltd. (the "JV Company"), sold 7,200 units of EV products, including 5,072 EV products to the Micro Public Transportation (MPT) program and 2,128 EV products to the direct sales program, a 61.9% increase compared to the same period last year;
  • GAAP net income for the second quarter of 2016 was $2.8 million, or $0.06 per fully‑diluted share, compared with $5.4 million, or $0.12 per fully‑diluted share in the same period of 2015;
  • Non-GAAP adjusted net income1, which excludes stock award expenses and changes in the fair value of financial derivatives, was $10.5 million in the second quarter of 2016, compared with $4.9 million of the same period of 2015. Non-GAAP adjusted earnings per share1 was approximately $0.22 per fully‑diluted share for the first quarter of 2016 compared with $0.10 per fully‑diluted share for the same quarter of 2015; and
  • Working capital surplus was $67.4 million as of June 30, 2016. Cash, cash equivalents and restricted cash totaled $34.1million as of June 30, 2016.

“After more than 3 months of waiting, the JV Company finally obtained the approval for a purchase tax exemption for its “Global Hawk” EV products and had a positive sales performance in May and June. The total number of EV products sold in the second quarter was 7,200, a 61.9% increase compared to the same period of 2015 and exceeded our guidance by 20%,” commented Mr. Hu Xiaoming, Chairman and Chief Executive Officer of Kandi. “Notably, Zhejiang Geely Holding Group, the parent company of Geely Automobile Holdings Ltd., is planning to purchase 50% of the equity of Shanghai Maple Guorun Automobile Co., Ltd. at a premium price (a purchase price exceeding the cash amount of the aggregate of the original investment and the shared profits over the years), which will support the future growth of the JV Company and also create better conditions for the JV Company to apply for its EV production license and pursue public listing in China. Recently Zhejiang Zuozhongyou Electric Vehicles Service Co., Ltd. (the “Service Company”) expanded its micro public transportation program into two new cities, Tianjin and Jiangyin. Pang Da Automobile Trade Co., Ltd. (“Pang Da”) has also signed a framework sales agreement pursuant to which Pang Da is to buy at least 60,000 EVs in the next four years from the JV Company for its Green Campus Drive Electric Campaign. We are excited to see progress and continued business growth in the future.”

“We have performed very well financially during the second quarter of 2016,” added Mr. Wang Cheng (Henry), Chief Financial Officer of Kandi. “Our margin improved compared to the same quarter last year, and our non-GAAP net income reached $10.5 million, a 114.8% increase compared to $4.9 million in the same period of 2015. We realized positive cash flow of $3.2 million in the first half of 2016, compared to negative cash flow of $17.0 million in the same period of 2015.”

Net Revenues and Gross Profit

  2Q16 1Q16 2Q15 Q-o-Q% Y-o-Y%
Net Revenues (US$mln) $ 55.2   $ 50.7   $ 48.0     9.0 %   15.1 %
Gross Profit (US$mln) $ 8.5   $ 6.7   $ 6.5     25.9 %   30.2 %
Gross Margin   15.3 %   13.3 %   13.5 %   -     -  


Net revenues for the second quarter of 2016 increased 15.1% compared to the same quarter last year. This increase in net revenues was mainly due to the growth in EV parts sales.  Gross margin was 15.3%, 1.8% higher compared to 13.5% for the same quarter of 2015, which was the result of cost reduction on batteries purchased.

Operating Income (Loss)

  2Q16 1Q16 2Q15 Q-o-Q% Y-o-Y%
Operating Expenses (US$mln) $ 10.8   $ 8.3   $ 4.5     31.0 %   141.5 %
Operating Income (Loss) (US$mln) ($ 2.4 ) ($ 1.6 ) $ 2.0     -     -  
Operating Margin   -4.3 %   -3.1 %   4.2 %   -     -  
Operating Income (Loss) (US$mln) (Non-GAAP) $ 5.9   $ 5.3   $ 5.5     10.4 %   7.2 %


Total operating expenses in the second quarter of 2016 were $10.8 million, compared with $4.5 million in the same quarter of 2015. The increase in total operating expenses was due to an increase in stock compensation expenses, which were $8.3 million in this quarter, compared with $3.5 million in the same quarter last year. Excluding stock compensation expenses, operating expenses in the second quarter of 2016 were $2.6 million, compared with $1.0 million in the same quarter last year. This increase was mainly due to the maintenance expenses of batteries and a one-time expense reversal in the second quarter of 2015.

GAAP Net Income

  2Q16 1Q16 2Q15 Q-o-Q% Y-o-Y%
Net Income (Loss) (US$mln) $ 2.8   $ 0.1   $ 5.4     3059.0 %   -48.5 %
Earnings per Weighted Average Common Share $ 0.06   $ 0.00   $ 0.12     -     -  
Earnings per Weighted Average Diluted Share $ 0.06   $ 0.00   $ 0.12     -     -  
Stock award expenses $ 8.3   $ 6.9   $ 3.5     20.1 %   137.5 %
Change of the fair value of financial derivatives ($ 0.5 ) ($ 3.3 ) ($ 4.0 )   -     -  
Non-GAAP net income (loss) from continuing operations $ 10.5   $ 3.7   $ 4.9     185.5 %   114.8 %


Net income was $2.8 million in the second quarter of 2016, compared with $5.4 million in the same quarter of 2015.  Net income was affected by significant increases in stock option expense amortization, gain from the JV Company and change in the fair value of financial derivatives.

Non-GAAP net income was $10.5 million, a 114.8% increase in the second quarter of 2016 compared to $4.9 million in the same quarter of 2015. The increase in Non-GAAP net income was attributable to growth in revenue and gross profits, net profits from the JV company and government subsidy income.

Kandi Electric Vehicles Group Co., Ltd. (the “JV Company”)  Financial Results

In the second quarter of 2016, the JV Company sold 7,200 EV products, an increase of 61.9% compared to 4,446 EV products sold in the same quarter of 2015.

The condensed financial income statement of for JV Company for the second quarter of 2016 is below:

  2Q16 2Q15 Y-o-Y%
Net Revenues (US$mln) $ 111.8   $ 69.0     62.1 %
Gross Profit (US$mln) $ 14.7   $ 10.7     37.7 %
Gross Margin   13.1 %   15.4 %   -  
Net Income $ 8.6   $ 1.6     444.0 %
% of Net revenue   7.7 %   2.3 %   -  


Revenue for the JV Company was $111.8 million in the second quarter of 2016, an increase of 62.1% compared to the same quarter of 2015. Net income was $8.6 million, a 444.0% increase compared to the same quarter of 2015.

Kandi’s investments in the JV Company are accounted for using 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 income, $4.3 million, for this quarter. After eliminating intra-entity profits and losses, Kandi’s share of the after-tax income of the JV Company was $4.9 million for the second quarter of 2016.

Second Quarter of 2016 Conference Call Details

The Company has scheduled a conference call and live webcast to discuss the financial results at 8:00 AM (U.S. Eastern time) on August 9, 2016 (8:00 PM Beijing time on August 9, 2016). Mr. Hu Xiaoming, Chief Executive Officer, and Mr. Wang Cheng (Henry), Chief Financial Officer, will deliver prepared remarks followed by a question and answer session.

The dial-in details for the conference call are as follows:

The live audio webcast of the call can also be accessed by visiting Kandi's investor relations website at http://en.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.

Follow us on Twitter: @ Kandi_Group

1 Non-GAAP measures, including the Non-GAAP net income and Non-GAAP EPS, are defined as the financial measures excluding the change of the fair value of financial derivatives and the effects of stock award expense. We supply non-GAAP information because we believe it allows our investors to obtain a clearer understanding of our operations.  Any non-GAAP measures 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.

- Tables Below -


KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
  June 30, 2016   December 31, 2015
               
Current assets               
Cash and cash equivalents $ 19,533,856     $ 16,738,559  
Restricted cash   14,519,706       16,172,009  
Short term investment   -       1,613,727  
Accounts receivable   40,422,951       8,136,421  
Inventories (net of provision for slow moving inventory of $474,683 and
$485,901 as of June 30, 2016 and December 31, 2015, respectively
  8,324,176       17,773,679  
Notes receivable   6,192,424       13,033,315  
Other receivables   473,667       332,922  
Prepayments and prepaid expense   275,522       181,534  
Due from employees   94,938       34,434  
Advances to suppliers   12,715,165       71,794  
Amount due from JV Company, net   122,807,165       76,172,471  
Amount due from related party   10,957,632       40,606,162  
Deferred taxes assets   928,660       -  
TOTAL CURRENT ASSETS    237,245,862       190,867,027  
               
LONG-TERM ASSETS               
Property, Plant and equipment, net   17,861,960       20,525,126  
Land use rights, net   12,471,618       12,935,121  
Construction in progress   54,448,198       54,368,753  
Long Term Investment   1,429,401       1,463,182  
Investment in JV Company   88,346,850       90,337,899  
Goodwill   322,591       322,591  
Intangible assets   454,258       495,306  
Other long term assets   9,251,729       154,019  
TOTAL Long-Term Assets    184,586,605       180,601,997  
               
TOTAL ASSETS  $ 421,832,467     $ 371,469,024  
               
CURRENT LIABILITIES               
Accounts payables $ 110,049,815     $ 73,957,969  
Other payables and accrued expenses   15,080,603       9,544,909  
Short-term loans   35,810,260       36,656,553  
Customer deposits   243,500       94,026  
Notes payable   4,718,077       3,850,478  
Income tax payable   3,894,811       624,276  
Due to employees   14,439       9,423  
Deferred taxes liabilities   -       2,374,924  
Financial derivate - liability   10,692       3,823,590  
Deferred income   -       13,726  
Total Current Liabilities   169,822,197       130,949,874  
               
LONG-TERM LIABILITIES              
Deferred taxes liabilities   262,042       1,593,582  
Total Long-Term Liabilities   262,042       1,593,582  
               
TOTAL LIABILITIES   170,084,239       132,543,456  
               
STOCKHOLDER'S EQUITY              
Common stock, $0.001 par value; 100,000,000 shares authorized;
47,689,638 and 46,964,855 shares issued and outstanding at June
30,2016 and December 31,2015, respectively
  47,020       46,965  
Additional paid-in capital   228,133,604       212,564,334  
Retained earnings (the restricted portion is $4,172,324 and $4,172,324 at
June 30,2016 and December 31,2015, respectively)
  33,937,518       31,055,919  
Accumulated other comprehensive income(loss)   (10,369,914 )     (4,741,650 )
TOTAL STOCKHOLDERS' EQUITY   251,748,228       238,925,568  
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 421,832,467     $ 371,469,024  
 

/EIN News/ --  

KANDI TECHNOLOGIES GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND 
COMPREHENSIVE INCOME (LOSS) 
 
  Three Months Ended   Six Months Ended
  June 30, 2016   June 30, 2015   June 30, 2016   June 30, 2015
                               
REVENUES, NET  $ 55,217,368     $ 47,963,460     $ 105,875,261     $ 91,744,546  
                               
COST OF GOODS SOLD   46,762,331       41,471,997       90,702,126       78,882,350  
                               
GROSS PROFIT    8,455,037       6,491,463       15,173,135       12,862,196  
                               
OPERATING EXPENSES:                               
Research and development   494,193       571,621       700,161       1,142,641  
Selling and marketing   730,443       75,516       776,778       189,411  
General and administrative   9,625,194       3,845,013       17,658,076       7,625,661  
Total Operating Expenses    10,849,830       4,492,150       19,135,015       8,957,713  
                               
INCOME(LOSS) FROM OPERATIONS    (2,394,793 )     1,999,313       (3,961,880 )     3,904,483  
                               
OTHER INCOME(EXPENSE):                               
Interest income   785,152       722,843       1,565,333       1,313,323  
Interest expense   (432,318 )     (597,320 )     (874,397 )     (1,195,911 )
Change in fair value of financial instruments   526,558       4,003,044       3,812,898       8,753,344  
Government grants   1,503,384       92,863       1,697,857       92,863  
Share of profit after tax of JV   4,918,633       251,167       96,163       720,523  
Other income, net   286,790       82,207       309,177       106,054  
Total other income, net    7,588,199       4,554,804       6,607,031       9,790,196  
                               
INCOME BEFORE INCOME TAXES    5,193,406       6,554,117       2,645,151       13,694,679  
                               
INCOME TAX BENEFIT (EXPENSE)   (2,400,226 )     (1,128,615 )     236,449       (2,137,524 )
                               
NET INCOME    2,793,180       5,425,502       2,881,600       11,557,155  
                               
OTHER COMPREHENSIVE INCOME(LOSS)                              
Foreign currency translation   (7,152,903 )     448,032       (5,628,264 )     941,243  
                               
COMPREHENSIVE INCOME(LOSS) $  (4,359,723 )   $  5,873,534     $  (2,746,664 )   $  12,498,398  
WEIGHTED AVERAGE SHARES
OUTSTANDING BASIC
  47,601,286       46,759,651       47,305,560       46,523,584  
WEIGHTED AVERAGE SHARES
OUTSTANDING DILUTED
  47,601,286       46,896,809       47,311,584       46,800,156  
                               
NET INCOME PER SHARE, BASIC $  0.06     $  0.12     $  0.06     $  0.25  
NET INCOME PER SHARE, DILUTED $  0.06     $  0.12     $  0.06     $  0.25  
                               

 

KANDI TECHNOLOGIES GROUP, INC. 
AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
   
    Six Months Ended  
  June 30, 2016   June 30, 2015
               
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net income $ 2,881,600     $ 11,557,155  
Adjustments to reconcile net income to net cash provided by operating
activities
             
Depreciation and amortization   2,458,160       2,955,663  
Deferred taxes   (4,645,415 )     (153,916 )
Change in fair value of financial instruments   (3,812,898 )     (8,753,344 )
Share of profit after tax of JV Company   (96,163 )     (720,523 )
Stock Compensation cost   15,134,658       5,482,808  
               
Changes in operating assets and liabilities, net of effects of acquisition:               
(Increase) Decrease In:               
Accounts receivable   (33,014,640 )     (14,077,317 )
Inventories   9,189,542       (12,122,839 )
Other receivables and other assets   (9,424,711 )     (58,055 )
Due from employee   (56,998 )     (9,250 )
Prepayments and prepaid expenses   (12,953,797 )     (143,163 )
Amount due from JV Company   (49,198,396 )     (50,224,378 )
               
Increase (Decrease) In:               
Accounts payable   38,423,919       54,732,723  
Other payables and accrued liabilities   6,009,203       (1,716,848 )
Customer deposits   154,168       106,563  
Income Tax payable   3,363,489       506,321  
Due from related party   29,188,707       -  
Net cash used in operating activities  $ (6,399,572 )   $ (12,638,400 )
               
CASH FLOWS FROM INVESTING ACTIVITIES:               
Purchases of plant and equipment, net   (37,554 )     (291,895 )
Disposal of land use rights and other intangible assets   13,775       -  
Purchases of construction in progress   (1,356,866 )     (39,361 )
Issuance of notes receivable   (42,626,834 )     (5,588,283 )
Repayment of notes receivable   49,275,627       4,145,502  
Short Term Investment   1,602,698       -  
Net cash provided by (used in) investing activities  $ 6,870,846     $ (1,774,037 )
CASH FLOWS FROM FINANCING ACTIVITIES:              
Restricted cash   1,300,215       (9,937,929 )
Proceeds from short-term bank loans   -       19,061,273  
Repayments of short-term bank loans   -       (15,965,853 )
Proceeds from notes payable   4,796,570       9,937,929  
Repayment of notes payable   (3,824,162 )     (5,716,427 )
Warrant exercise   434,666       -  
Net cash (used in) provided by financing activities $ 2,707,289     $ (2,621,007 )
               
NET INCREASE IN CASH AND CASH EQUIVALENTS   3,178,563       (17,033,444 )
Effect of exchange rate changes on cash   (383,266 )     117,975  
Cash and cash equivalents at beginning of year   16,738,559       26,379,460  
               
CASH AND CASH EQUIVALENTS AT END OF PERIOD   19,533,856       9,463,991  
               
SUPPLEMENTARY CASH FLOW INFORMATION              
Income taxes paid   1,051,032       1,310,173  
Interest paid   877,496       1,192,526  
               
Company Contact:

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

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