Kandi Technologies Reports Second Quarter 2022 Financial Results

Kandi Technologies Reports Second Quarter 2022 Financial Results

-  Off-road Vehicles Sales Are Steadily Growing
-  Quarter-end cash balance1 increased to $232.5 million

JINHUA, China, Aug. 08, 2022 (GLOBE NEWSWIRE) -- Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced its financial results for the second quarter of 2022.

Second Quarter Highlights

  • Total revenues of $20.8 million compared to $29.9 million in the same period of 2021.

  • Off-road vehicles sales increased by 84.4% to $10.1 million, compared to $5.5 million in the same period of 2021.

  • EV products sales increased by 307.1% to $2.5 million, compared to $0.6 million in the same period of 2021.

  • EV parts sales were $0.6 million, compared to $6.7 million in the same period of 2021.

  • Electric Scooters, Electric Self-Balancing Scooters and associated parts sales were $1.2 million, compared with $16.5 million in the same period of 2021.

  • Net loss was $1.9 million, or $0.02 loss per fully diluted share, compared to a net income of $40.9 million, or $0.54 income per fully diluted share for the same period of 2021. The decrease was primarily due to the second quarter 2021 gain from the disposal of long-lived assets of approximately $48.3 million, which was related to the relocation of our Jinhua factory. There was no similar gain in the second quarter of 2022.

  • Working capital of $264.2 million as of June 30, 2022

  • Cash, cash equivalents, restricted cash, and certificate of deposit of $232.5 million as of June 30, 2022

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented, “Kandi has continuously refined its business strategy to make our company more diversified and competitive. We saw the positive impact of this effort in the second quarter. Despite frequent lockdowns caused by COVID resurgences and severe supply chain disruptions, our business strategy adjustments enabled us to achieve relatively solid results. Notably, we are getting traction in a variety of newly launched off-road vehicles, such as golf karts, UTVs, ATVs, and beach dune buggy crossovers. For example, the monthly production of golf crossovers increased to 2,000 units in June, from just double digits in March. We intend to launch more new models as the year goes on to capture this market opportunity. We believe this product category could grow around 19%2 annually in compound growth rate, and eventually exceeding $2.2 billion by 2028. We are confident of sequential growth in off-road vehicles in the quarters ahead.”

Q2 2022 Financial Results

Net Revenues and Gross Profit (in USD millions)

 Q2 2022Q2 2021Y-o-Y%
Net Revenues$20.8$29.9-30.2%
Gross Profit$2.7$6.1-55.4%
Gross Margin%13.0%20.4%-

Net revenues of $20.8 million in the second quarter of 2022 decreased 30.2% from the same period of 2021. The revenue decline was primarily due to lower sales volumes of Electric Scooters, Electric Self-Balancing Scooters and associated parts and EV parts due to lower seasonal demand. The mix shift to more battery revenue caused the contraction in gross margin.

Operating Income/Loss (in USD millions)

 Q2 2022Q2 2021Y-o-Y%
Operating (Expenses) Income($9.0)$38.3-123.5%
(Loss) income from Operations($6.3)$44.4-114.2%
Operating Margin%-30.1%148.5%-

Operating expenses were $9.0 million, compared with operating income of $38.3 million for the same period of 2021. Second quarter 2021 operating income included the $48.3 million gain from the disposal of long-live assets related to our Jinhua facility relocation.

Net Income/Loss (in USD millions)

 Q2 2022Q2 2021Y-o-Y%
Net (loss) Income($1.9)$40.9-104.6%
Net (Loss) income per Share, Basic and Diluted($0.02)$0.54-

Net loss for the second quarter of 2022 was $1.9 million compared to net income of $40.9 million for the same period of 2021, reflecting the one-time facility relocation gain last year.

Second Quarter 2022 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 Monday, August 8, 2022. Management will deliver prepared remarks to be followed by a question-and-answer session.

The dial-in details for the conference call are as follows:
•        Toll-free dial-in number: +1-877-407-3982
•        International dial-in number: + 1-201-493-6780
•        Webcast and replay: https://viavid.webcasts.com/starthere.jsp?ei=1562753&tp_key=ef917a2508

The 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 Technologies Group Co., Ltd. (“Zhejiang Kandi Technologies”), formerly, Zhejiang Kandi Vehicles Co., Ltd. and its subsidiaries including Zhejiang Kandi Smart Battery Swap Technology Co., Ltd, and SC Autosports, LLC (d/b/a Kandi America), the wholly-owned subsidiary of Kandi in the United States, and its wholly-owned subsidiary, Kandi America Investment, LLC. Zhejiang Kandi Technologies has established itself as one of China's leading manufacturers of pure electric vehicle parts and off-road vehicles.

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 applicable securities laws, the Company does not assume a duty to update these forward-looking statements.

Follow us on Twitter: @ Kandi_Group

Contacts:

Kandi Technologies Group, Inc.
Ms. Kewa Luo
+1 (212) 551-3610
[email protected]

The Blueshirt Group
Mr. Gary Dvorchak, CFA
[email protected]

- Tables Below -


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

 June 30, 2022  December 31, 2021 
 (Unaudited)    
Current assets     
Cash and cash equivalents$87,098,779  $129,223,443 
Restricted cash 72,235,039   39,452,564 
Certificate of deposit 73,173,646   55,041,832 
Accounts receivable (net of allowance for doubtful accounts of $2,903,505 and
   $3,053,277 as of June 30, 2022 and December 31, 2021, respectively)		 37,794,871   52,896,305 
Inventories 41,937,709   33,171,973 
Notes receivable 725,332   323,128 
Other receivables 8,491,785   8,901,109 
Prepayments and prepaid expense 2,516,142   17,657,326 
Advances to suppliers 6,978,469   5,940,456 
TOTAL CURRENT ASSETS 330,951,772   342,608,136 
        
NON-CURRENT ASSETS       
Property, plant and equipment, net 102,735,918   111,577,411 
Intangible assets, net 11,606,688   13,249,079 
Land use rights, net 3,041,861   3,250,336 
Construction in progress 373,484   79,317 
Deferred tax assets 2,171,889   2,219,297 
Long-term investment 149,334   157,262 
Goodwill 34,678,790   36,027,425 
Other long-term assets 11,166,861   10,992,009 
TOTAL NON-CURRENT ASSETS 165,924,825   177,552,136 
        
TOTAL ASSETS$496,876,597  $520,160,272 
        
CURRENT LIABILITIES       
Accounts payable$32,635,923  $36,677,802 
Other payables and accrued expenses 8,065,531   9,676,973 
Short-term loans 1,450,000   950,000 
Notes payable 17,933,221   8,198,193 
Income tax payable 629,642   1,620,827 
Other current liabilities 6,086,563   7,038,895 
TOTAL CURRENT LIABILITIES 66,800,880   64,162,690 
        
NON-CURRENT LIABILITIES       
Long-term loans 2,210,589   2,210,589 
Deferred taxes liability 2,490,130   2,460,141 
Contingent consideration liability 5,513,000   7,812,000 
Other long-term liabilities 880,925   314,525 
TOTAL NON-CURRENT LIABILITIES 11,094,644   12,797,255 
        
TOTAL LIABILITIES 77,895,524   76,959,945 
        
STOCKHOLDER'S EQUITY       
Common stock, $0.001 par value; 100,000,000 shares authorized; 77,648,730 and
   77,385,130 shares issued and 75,760,807 and 76,705,381 outstanding at June
   30,2022 and December 31,2021, respectively		 77,649   77,385 
Less: Treasury stock (1,887,923 shares with average price of $3.14 and 679,749
   shares with average price of $3.52 at June 30,2022 and December 31,2021,
   respectively )		 (5,937,017)  (2,392,203)
Additional paid-in capital 450,120,903   449,479,461 
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at June
   30,2022 and December 31,2021, respectively)		 (7,769,429)  (4,216,102)
Accumulated other comprehensive loss (18,704,633)  251,786 
TOTAL KANDI TECHNOLOGIES GROUP, INC. STOCKHOLDERS' EQUITY 417,787,473   443,200,327 
        
Non-controlling interests 1,193,600   - 
TOTAL STOCKHOLDERS' EQUITY 418,981,073   443,200,327 
        
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$496,876,597  $520,160,272 



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

 Three Months Ended  Six Months Ended 
 June 30,
2022		  June 30,
2021		  June 30,
2022		  June 30,
2021		 
            
REVENUES FROM UNRELATED PARTIES, NET$20,841,183  $29,875,835  $45,732,587  $45,852,002 
REVENUES FROM THE FORMER AFFILIATE COMPANY
   AND RELATED PARTIES, NET		 -   -   -   1,587 
                
REVENUES, NET 20,841,183   29,875,835   45,732,587   45,853,589 
                
COST OF GOODS SOLD (18,122,316)  (23,778,053)  (40,626,557)  (35,401,456)
                
GROSS PROFIT 2,718,867   6,097,782   5,106,030   10,452,133 
                
OPERATING INCOME (EXPENSE):               
Research and development (1,253,843)  (3,564,905)  (2,394,429)  (25,189,502)
Selling and marketing (1,172,528)  (1,057,517)  (2,366,227)  (2,204,383)
General and administrative (6,574,079)  (5,359,572)  (12,330,610)  (9,789,695)
Gain on disposal of long-lived assets -   48,253,667   -   48,253,667 
TOTAL OPERATING (EXPENSE) INCOME (9,000,450)  38,271,673   (17,091,266)  11,070,087 
                
(LOSS) INCOME FROM OPERATIONS (6,281,583)  44,369,455   (11,985,236)  21,522,220 
                
OTHER INCOME (EXPENSE):               
Interest income 1,378,774   974,105   2,601,078   1,502,697 
Interest expense (138,433)  (78,069)  (286,577)  (204,417)
Change in fair value of contingent consideration (391,000)  (357,000)  2,299,000   - 
Government grants 463,219   114,402   707,317   349,195 
Gain from sale of equity in the Former Affiliate Company -   33,651   -   17,733,911 
Share of loss after tax of the Former Affiliate Company -   (4,904)  -   (2,584,401)
Other income, net 2,373,528   3,827,089   2,417,310   4,325,990 
TOTAL OTHER INCOME , NET 3,686,088   4,509,274   7,738,128   21,122,975 
                
(LOSS) INCOME BEFORE INCOME TAXES (2,595,495)  48,878,729   (4,247,108)  42,645,195 
                
INCOME TAX BENEFIT (EXPENSE) 719,843   (7,949,255)  752,443   (8,118,441)
                
NET (LOSS) INCOME (1,875,652)  40,929,474   (3,494,665)  34,526,754 
                
LESS: NET INCOME (LOSS) ATTRIBUTABLE TO NON-
   CONTROLLING INTERESTS		 61,619   -   58,662   - 
                
NET (LOSS) INCOME ATTRIBUTABLE TO KANDI
   TECHNOLOGIES GROUP, INC. STOCKHOLDERS		 (1,937,271)  40,929,474   (3,553,327)  34,526,754 
                
OTHER COMPREHENSIVE INCOME (LOSS)               
Foreign currency translation adjustment (19,966,230)  4,874,815   (18,956,419)  3,698,802 
                
COMPREHENSIVE (LOSS) INCOME$(21,841,882) $45,804,289  $(22,451,084) $38,225,556 
                
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED 75,863,479   75,510,788   76,075,484   75,447,633 
                
NET (LOSS) INCOME PER SHARE, BASIC AND DILUTED$(0.02) $0.54  $(0.05) $0.46 



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
Loss		 Non-controlling
interests		 Total 
Balance, December 31, 2020 75,377,555 $75,377 $- $439,549,338 $(27,079,900)$(8,778,151)$- $403,766,664 
Stock issuance and award 10,000  10  -  22,290  -  -  -  22,300 
Net loss -  -  -  -  (6,402,720) -  -  (6,402,720)
Foreign currency translation -  -  -  -  -  (1,176,013) -  (1,176,013)
Reversal of reduction in the Former Affiliate
   Company’s equity (net of tax effect of $491,400)		 -  -  -  2,771,652  -  -  -  2,771,652 
Balance, March 31, 2021 75,387,555 $75,387 $- $442,343,280 $(33,482,620)$(9,954,164)$- $398,981,883 
Stock issuance and award 238,600  239  -  1,374,098  -  -  -  1,374,337 
Net income -  -  -  -  40,929,474  -  -  40,929,474 
Foreign currency translation -  -  -  -  -  4,874,815  -  4,874,815 
                         
Balance, June 30, 2021 75,626,155 $75,626 $- $443,717,378 $7,446,854 $(5,079,349)$- $446,160,509 


 Number of
Outstanding
Shares		 Common
Stock		 Treasury
Stock		 Additional
Paid-in
Capital		 Accumulated
Earning
(Deficit)		 Accumulated
Other
Comprehensive
Income		 Non-controlling
interests		 Total 
Balance, December 31, 2021 77,385,130 $77,385 $(2,392,203)$449,479,461 $(4,216,102)$251,786 $- $443,200,327 
Stock issuance and award 25,000  25  -  92,925  -  -  -  92,950 
Stock buyback -  -  (1,570,324) (13,236) -  -  -  (1,583,560)
Capital contribution from shareholder -  -  -  -  -  -  1,198,398  1,198,398 
Net loss -  -  -  -  (1,616,056) -  (2,957) (1,619,013)
Foreign currency translation -  -  -  -  -  1,009,811  -  1,009,811 
                         
Balance, March 31, 2022 77,410,130 $77,410 $(3,962,527)$449,559,150 $(5,832,158)$1,261,597 $1,195,441 $442,298,913 
Stock issuance and award 238,600  239  -  584,331  -  -  -  584,570 
Stock buyback -  -  (1,974,490) (22,578) -  -  -  (1,997,068)
Net income (loss) -  -  -  -  (1,937,271) -  61,619  (1,875,652)
Foreign currency translation -  -  -  -  -  (19,966,230) (63,460) (20,029,690)
                         
Balance, June 30, 2022 77,648,730 $77,649 $(5,937,017)$450,120,903 $(7,769,429)$(18,704,633) 1,193,600 $418,981,073 



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

 Six Months Ended 
 June 30,
2022		  June 30,
2021		 
      
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net (loss) income$(3,494,665) $34,526,754 
Adjustments to reconcile net income to net cash provided by operating activities       
Depreciation and amortization 6,447,548   4,443,218 
Provision (reversal) of allowance for doubtful accounts 4,301   - 
Deferred taxes (116,206)  (11,970)
Share of loss after tax of the Former Affiliate Company -   2,584,401 
Gain from equity sale in the Former Affiliate Company -   (17,733,911)
Gain on disposal of long-lived assets -   (48,253,667)
Change in fair value of contingent consideration (2,299,000)  - 
Stock based compensation expense 639,690   1,429,456 
        
Changes in operating assets and liabilities:       
        
Accounts receivable (9,108,858)  2,054,930 
Notes receivable 1,925,896   - 
Inventories (9,949,597)  (3,328,120)
Other receivables and other assets (2,806,192)  (14,040,619)
Advances to supplier and prepayments and prepaid expenses 13,475,591   20,596,182 
        
Increase (Decrease) In:       
Accounts payable 32,751,997   (1,044,040)
Other payables and accrued liabilities 4,198,349   (463,016)
Notes payable (7,788,622)  (93,273)
Income tax payable (777,068)  7,671,740 
Net cash provided by (used in) operating activities$23,103,164  $(11,661,935)
        
CASH FLOWS FROM INVESTING ACTIVITIES:       
Purchases of property, plant and equipment, net (1,491,918)  (6,565,755)
Payment for construction in progress (308,304)  (1,869,028)
Proceeds from disposal of long-lived assets -   23,234,680 
Repayment from (loan to) third party -   31,686,168 
Certificate of deposit (21,617,615)  (54,098,335)
Proceeds from sales of equity in the Former Affiliate Company -   23,803,268 
Long-term Investment -   (108,197)
Net cash (used in) provided by investing activities$(23,417,837) $16,082,801 
        
CASH FLOWS FROM FINANCING ACTIVITIES:       
Proceeds from short-term loans 5,070,582   250,000 
Repayments of short-term loans (4,570,582)  - 
Contribution from non-controlling shareholder 787,499   - 
Purchase of treasury stock (3,580,628)  - 
Net cash (used in) provided by financing activities$(2,293,129) $250,000 
        
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH$(2,607,802) $4,670,866 
Effect of exchange rate changes$(6,734,387) $997,982 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR$168,676,007  $142,520,635 
        
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD$159,333,818  $148,189,483 
-CASH AND CASH EQUIVALENTS AT END OF PERIOD 87,098,779   132,071,957 
-RESTRICTED CASH AT END OF PERIOD 72,235,039   16,117,526 
        
SUPPLEMENTARY CASH FLOW INFORMATION       
Income taxes paid$140,831   373,433 
Interest paid$102,722   - 
        
        
        
SUPPLEMENTAL NON-CASH DISCLOSURES:       
Reversal of decrease in investment in the Former Affiliate Company due to change
   in its equity (net of tax effect of $491,400)		 -   2,813,968 
Increase of other receivable for equity transfer payment of the Former Affiliate Company -   23,803,268 
Contribution from non-controlling shareholder by inventories and fix assets 393,986   - 


1 Includes cash, cash equivalents, restricted cash, and certificate of deposit.

2 Source: The Insight Partners, Electric Off-Road Vehicle Market Forecast to 2028 - COVID-19 Impact and Global Analysis By Vehicle (All-Terrain Vehicle (ATV), Special Service Vehicle/Utility Terrain Vehicle (SSV/UTV), and Off-Road Motorcycles), Application (Utility, Sports, Recreation, and Military), and Geography, July 13, 2022.