Third Quarter 2006 Highlights: -- Total net sales for the period increased to US$22.7 million, reflecting a 54% year-over-year growth; -- Net sales from steering components for passenger and light-duty vehicles increased to US$13.6 million, reflecting a 49% year-over-year growth; -- Net sales from steering components for commercial vehicles increased to US$6.4 million, reflecting an 73% increase year-over-year; -- Operating income for the third quarter of 2006 increased to $3.4 million, reflecting a 22% year-over-year growth; -- Net income rose to $1.5 million, reflecting a 42% year-over-year growth; and -- Diluted earnings per share was US$0.07, an increase of 40% year-over- year.
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Total net sales for the third quarter of 2006 was $22.7 million, compared with $14.8 million reported in the same period of 2005 and $ 24.7 million for the second quarter of 2006, reflecting a 54% year-over-year growth and an 8% quarter-over-quarter decline respectively. Net income for the third quarter of 2006 was $1.5 million, or $0.07 per diluted share, compared with $1.1 million, or $0.05 per diluted share in the same period last year and $0.75 million, or $0.03 per diluted share, for the second quarter of 2006, reflecting a 40% year-over-year growth and a 104% quarter-over-quarter increase, respectively.
Net sales from steering products for passenger and light-duty vehicles for the third quarter of 2006 increased to $13.6 million, compared with $9.1 million reported in the same period of 2005 and $ 15.8 million for the second quarter of 2006, reflecting a 49% year-over-year growth and a 14% quarter- over-quarter decline respectively. Net sales from steering products for commercial vehicles for the third quarter of 2006 increased to $6.4 million as compared with $3.7 million reported in the same period of 2005 and $6.0 million for the second quarter of 2006, reflecting a 73% increase year-over- year and a 7% quarter-over-quarter increase, respectively.
"Third quarter is normally a slow season in Chinese passenger vehicle market due to the summer. However, we see little sign of slow-down in the sedan market. Our key customers, Chery Auto and Geely Auto continue to gain market share in China's domestic market with their economy cars. Due to the roll-out of consumption taxes, luxury and mid size sedan sector experienced further pricing pressure while the economy cars held in the third quarter. On the export front, we are excited to report that our products have been installed in Geely and Chery's exported vehicles. With the further economic development and growing export, the commercial vehicle sector is also experiencing further recovery. Our sales to commercial vehicle sector rose to 30% of our total revenue in this quarter." said Mr. Hanlin Chen, Chairman and Chief Executive Officer of China Automotive Systems.
Gross profit for the third quarter of 2006 increased to $8.2 million, compared with $5.7 million reported in the same period for 2005 and $9.3 million for the second quarter of 2006, reflecting a 45% increase year-over- year and a 12% quarter-over-quarter decline, respectively. Operating income for the third quarter of 2006 was $3.4 million, compared with $2.8 million reported in the same period of 2005 and $ 3.0 million for the second quarter of 2006, reflecting a 22% year-over-year growth and a 12% quarter-over-quarter growth respectively.
Total cash and cash equivalents as of September 30, 2006 totaled $18.4 million as compared to $12.4 million as of December 31, 2005. Stockholder's equity increased to $46.1 million as of September 30, 2006 from $36.9 million as of December 31, 2005.
Mr. Daming Hu, Chief Financial Officer stated, "During this quarter, we incurred higher Selling, General and Administrative expenses (SG&A) as compared to the same period last year. Our rapid sales growth and facility expansion triggered higher SG&A expenses including selling expenditure, doubtful debt provision and depreciation. We carefully measure the expenses in accordance with our top line growth. With the solid relationship with our customers, we are confident that we will be able to collect the payment. Meanwhile, as we increase technology investment, government raised subsidy to our interest payment to the local commercial banks. As a result, our non-operating income increased as compared to the same period last year."
About CAAS
Based in Hubei Province, People's Republic of China, China Automotive Systems, Inc. is a leading supplier of power steering components and systems to the Chinese automotive industry, operating through seven Sino-foreign joint ventures. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers 4 separate series of power steering and 307 models of power steering with an annual production capacity of 800,000 sets, steering columns, steering oil pumps and steering hoses. Its customer base is comprised of leading Chinese auto manufacturers such as China FAW Group, Corp., Donfeng Auto Group Co., Ltd., Brilliance China Automotive Holdings Ltd., Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. etc. For more information, please visit: http://www.caasauto.com .
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward- looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the Company's operations, financial performance and, condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, among others, the impact of competitive products, pricing and new technology; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, and other factors as those discussed in the Company's reports filed with the Securities and Exchange Commission from time to time.
China Automotive Systems, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30,
2006 2005
Operating revenue:
Net product sales $ 22,399,673 $ 14,262,933
Net other sales 341,225 525,167
22,740,898 14,788,100
Operating cost:
Cost of product sales 14,266,514 8,754,017
Cost of other sales 284,991 373,010
14,551,505 9,127,027
Gross profit 8,189,393 5,661,073
Operating expenses:
Selling expenses 1,540,030 1,151,638
General and
administrative
expenses 2,139,440 846,238
R&D expenses 206,732 261,711
Depreciation and
amortization 904,622 607,392
4,790,824 2,866,979
Income from operations 3,398,569 2,794,094
Non-operating income 93,632 18,518
Financial (expenses) (295,121) (333,885)
Income before income
taxes 3,197,080 2,478,727
Income taxes 470,617 597,427
Income before minority
interests 2,726,463 1,881,300
Minority interests 1,194,340 804,388
Net income $ 1,532,123 $ 1,076,912
Basic $ 0.07 $ 0.05
Diluted $ 0.07 $ 0.05
Weighted average
number of common
shares outstanding -
Basic 23,287,049 22,574,542
Diluted 23,287,782 22,574,207
China Automotive Systems, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
Nine Months Ended September 30,
2006 2005
Operating revenue:
Net product sales $ 68,112,037 $ 45,002,692
Net other sales 1,154,242 1,248,758
69,266,279 46,251,450
Operating cost:
Cost of product sales 43,762,536 28,496,684
Cost of other sales 897,406 1,048,245
44,659,942 29,544,929
Gross profit 24,606,337 16,706,521
Operating expenses:
Selling expenses 5,419,420 3,818,669
General and administrative
expenses 6,529,130 4,010,754
R&D expenses 647,873 757,660
Depreciation and amortization 2,846,716 1,992,163
15,443,139 10,579,246
Income from operations 9,163,198 6,127,275
Non-operating income 94,257 27,183
Financial (expenses) (806,984) (941,486)
Income before income taxes 8,450,471 5,212,972
Income taxes 1,522,067 1,150,750
Income before minority
interests 6,928,404 4,062,222
Minority interests 3,550,247 1,617,073
Net income $ 3,378,157 $ 2,445,149
Basic $ 0.15 $ 0.11
Diluted $ 0.15 $ 0.11
Weighted average number of
common shares outstanding -
Basic 23,076,215 22,574,542
Diluted 23,084,675 22,585,732
China Automotive Systems, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
September 30, December 31,
2006 2005
ASSETS
Current assets:
Cash and cash equivalents $ 18,424,513 $ 12,374,944
Pledged cash deposits 3,533,732 1,185,660
Accounts and notes receivable, net 50,702,026 41,580,320
Advance payments and other 1,475,131 1,029,892
Inventories 17,514,260 12,385,833
Total current assets 91,649,662 68,556,649
Long-term Assets:
Property, plant and equipment, net 38,349,268 39,796,033
Intangible assets, net 3,111,854 3,503,217
Other receivables, net 5,104,002 6,503,629
Advance payment for property,
plant and equipment 3,040,858 1,096,121
Long-term investments 67,832 74,074
Total assets $ 141,323,476 $ 119,529,723
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $ 16,229,713 $ 14,814,815
Accounts and notes payable 35,103,991 31,375,599
Customer deposits 288,564 157,919
Accrued payroll and related
costs 1,504,462 1,418,093
Accrued expenses and other
payables 6,119,563 5,191,617
Accrued pension costs 2,900,333 2,653,064
Taxes payable 5,206,614 4,172,212
Amounts due to
shareholders/directors 259,525 766,642
Total current liabilities 67,612,765 60,549,961
Long-term liabilities:
Advances payable 301,552 301,614
Total liabilities $ 67,914,317 $ 60,851,575
Minority interests 27,343,634 21,751,043
Stockholders' equity:
Preferred stock, $0.0001 par
value-
Authorized - 20,000,000 shares
Issued and outstanding - None
Common stock, $0.0001 par
value-
Authorized - 80,000,000 shares
Issued and outstanding-
23,289,495 and 22,574,543
shares at September 30, 2006
and December 31, 2005,
respectively
Common stock, $0.0001 par
value- 2,329 2,257
Additional paid-in capital 23,305,514 18,146,721
Retained earnings-
Appropriated 5,078,584 4,923,262
Unappropriated 15,745,015 12,522,181
Accumulated other comprehensive
income 1,934,083 1,332,684
Total stockholders' equity 46,065,525 36,927,105
Total liabilities and
stockholders' equity $ 141,323,476 $ 119,529,723
For more information, please contact:
Mr. Jie Li
Investor Relations and Communications
China Automotive Systems, Inc.
Tel: +86-27-5981-8527
Email:
Email Contact
Christopher Chu
The Global Consulting Group
Tel: +1-646-284-9426
Email:
Email Contact
China Automotive Systems, Inc.
Web site:
http://www.chinaautomotivesystems.com/
http://www.caasauto.com/