Kandi Technologies Group, Inc. announced its financial results for the full year ended December 31, 2020.
Full Year 2020 Highlights
Mr. Hu Xiaoming, Chairman and CEO of Kandi commented: “The lock downs and closures of stores and facilities around the world, caused by the spread of COVID-19, challenged every corner of the economy in 2020. Although our operations in China fully resumed in early March of 2020, sales of EV parts, one of our primary revenue sources, were severely impacted by several waves of the pandemic. On the positive side, this challenge resulted in relentless effort and commitment from our management and employees to explore other market opportunities that leverage our expertise. We decided to pursue product innovation in Electric Scooters and Electric Self-Balancing Scooters, which have a global market of tens of millions of units sold each year. We pursued these opportunities by expanding production of intelligent transportation products that exploit our advantages in electric motors and battery packs. This resulted in revenue from Electric Scooters, Electric Self-Balancing Scooters and associated parts increasing by 160.5% in 2020, offsetting a 63.3% decline in revenue from EV parts.”
Hu continued, “During 2020 we achieved three major strategic milestones despite unfavorable market conditions.
First, we smoothly executed the real estate repurchase agreement with Jinhua Economic and Technological Development Zone, a key element of our Jinhua facility relocation. The local government agreed to pay us approximately RMB525 million, or $80 million, in three installments. We received the first two installments, totaling RMB 363 million, or $55 million. The final payment of RMB 162 million, or $25 million, will be received when we demolish all the current factory buildings on this land and move to our new facility. We are nearing the end of the relocation process and have almost completed the move into our new factory.
“Our second milestone was the successful trial of the ‘300,000 government-accredited ride-sharing vehicles within 5 years’ program initiated by us. Zhejiang Ruiheng Technology Co., Ltd plans to deliver over 3,000 government compliant EVs in 2021, and gradual delivery is underway. All those EVs feature our battery swapping technology, which is recognized by the central government as one of the three approved charging methods in China. Driven by the tailwinds of Chinese Government policy regarding battery exchange, in 2020 we moved forward in many ways. For example, we signed an agreement with the Zhejiang State Grid Electric Vehicle Service Company in October 2020 to strategically incorporate battery exchange into pure EVs. We believe this program can drive the production and sales of our EV parts and battery swap equipment, and therefore drive the growth in our pure EV business.”
Regarding the U.S. market, Hu commented, “In August 2020 we successfully held a virtual launch event to introduce our K23 and K27 EV models into the U.S. market, achieving our third milestone of the year. We have obtained clearance from the United States Environmental Protection Agency (EPA) for both models, so our focus now is working on some modifications to meet all Federal Motor Vehicle Safety Standards (FMVSS) requirements. We are also working on feature improvements to accommodate U.S. consumer tastes.”
Hu concluded, “Looking forward, we have multiple growth opportunities. We are dedicated to building our business in the U.S., and we are pursuing third and fourth-tier city government-accredited EV online ride-share service businesses. With capital from the real estate repurchase agreement and the $160 million direct placement, we are confident that we can fund the R&D necessary to develop sports cars, battery swapping technology, and the ride-sharing program. Furthermore, our recent exit from the Fengsheng affiliation through the transfer of the remaining equity interest eliminates the non-compete restrictions, thus enabling us to pursue the EV market more aggressively in China. We believe the years ahead hold a multitude of opportunities that can restart our growth.”
Full Year 2020 Financial Results
Net Revenues and Gross Profit
2020 | 2019 | Y-o-Y% | |
Net Revenues (US$mln) | $76.9 | $135.7 | -43.3% |
Gross Profit (US$mln) | $13.5 | $25.4 | -47.0% |
Gross Margin | 17.5% | 18.7% | – |
Net revenues of $76.9 million decreased 43.3% from 2019. The decrease was due primarily to reduced sales of EV parts, a result of production interruptions caused by the COVID-19 pandemic and the overall demand of EV parts from customers was significantly affected during 2020. Gross margin was 17.5%, compared with 18.7% in 2019. The decrease was due to less high-margin battery processing compared to 2019.
Operating Income (Loss)
2020 | 2019 | Y-o-Y% | |
Operating Expenses (US$mln) | $12.7 | $24.5 | -48.1% |
Operating Income (US$mln) | $0.75 | $0.91 | -17.1% |
Operating Margin | 1.0% | 0.7% | – |
Total operating expenses were $12.7 million, compared with $24.5 million in 2019. The decrease was due to lower general and administrative expenses, largely due to cost-cutting programs and tighter budget control. We also booked a $14.2 million gain on disposal of long-lived assets, which was related to the real estate repurchase agreement. In June 2020, 73,333 square meters of land use rights were transferred to the local government, and the related gain was recognized.
Net Loss
2020 | 2019 | Y-o-Y% | |
Net Loss (US$mln) | ($10.4) | ($7.2) | 44.6% |
Loss per Weighted Average Common Share | ($0.19) | ($0.14) | – |
Loss per Weighted Average Diluted Share | ($0.19) | ($0.14) | – |
Net loss was $10.4 million, compared with a net loss of $7.2 million in 2019. The greater net loss was primarily attributable to the absence of gains on the sales of equity that were present in 2019.
Full Year 2020 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 Tuesday, March 30, 2021. 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:
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 Vehicles Co., Ltd. (“Kandi Vehicles”) 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. Kandi Vehicles has established itself as one of China’s leading manufacturers of pure electric vehicle parts and off-road vehicles.
More information about KNDI is available on 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 applicable securities laws, the Company does not assume a duty to update these forward-looking statements.
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Contacts:
Kandi Technologies Group, Inc.
Ms. Kewa Luo
+1 (212) 551-3610
IR@kandigroup.com
The Blueshirt Group
Mr. Gary Dvorchak, CFA
gary@blueshirtgroup.com