KNDI Kandi Technolgies Group Inc

Kandi Technologies Group, Inc. (the “Company,” “we” or “Kandi”) (NASDAQ GS: KNDI), today announced financial results for the second quarter of 2021.

Second Quarter Highlights

• Total revenues increased by 53.7% to $29.9 million, from $19.4 million in the same period of 2020.
• EV parts sales were $6.7 million, compared to $12.5 million in the same period of 2020.
• Off-road vehicles sales were $5.5 million, compared to $6.6 million in the same period of 2020.
• Electric Scooters, Electric Self-Balancing Scooters and associated parts sales were $16.5 million, compared to $0.4 million in the same period of 2020, This growth represents a successful strategic initiative to sell intelligent transportation products after the COVID-19 outbreak seriously impacted the EV market in 2020.
• Battery exchange equipment and battery exchange service sales were $0.6 million. As a new business, there was no such revenue in the same period of 2020.
• Gross margin was 20.4%, compared to 18.2% for the same period of 2020.
• Net income was $40.9 million, or $0.54 per fully diluted share primarily due to a gain on the disposal of a long-live asset recognized as part of our Jinhua facility relocation that was completed in the second quarter. This compares to a net income of $4.1 million, or $0.08 per fully diluted share for the same period of 2020.
• As of June 30, 2021, working capital was $297.3 million. Cash, cash equivalents, restricted cash, and certificate of deposit totaled $202.4 million.

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

Mr. Hu Xiaoming, Chairman and CEO of Kandi commented: “We are excited to see both strong revenue growth and profitability.  Last year, as the Covid-19 pandemic impacted our EV business, we undertook a strategic initiative to find new markets for our industry-leading technology.  This pivot to new markets is proved successful, as you can see by our strong growth in intelligent mobility sector and associated parts.  Furthermore, we are with our operating cash flow as robust because we received final payments for the Jinhua Facility relocation.  The vacated old factory property met the inspection authorities’ stipulated conditions, it was returned to the government, and we received the agreed payments. With this cash inflow, our balance sheet is even stronger for pursuing the multiple growth opportunities we see ahead of us.” 

Elaborating on Kandi’s commitment to R&D, Hu elaborated, “As we noted last quarter, there are significant growth opportunities in affordable short-distance EVs for the China market, and in UTVs for the U.S. market. In May, we unveiled the K32 premium UTV, which is produced at our factory in Hainan, China. The K32 features pure electric four-wheel-drive propulsion and a fully enclosed cockpit with air conditioning. We intend to sell the K32 in the U.S. by the end of this year.”

Turning to acquisitions, Hu commented, “Last month, we announced the acquisition of Jiangxi Huiyi, which pushes us further into the battery cell business. Jiangxi Huiyi is a leading battery cell producer with intelligent production lines that each day can manufacture approximately 250,000 units of 18650 lithium-ion rechargeable cells.  Today, the cells are implemented in various consumer applications. Equipped with this technology, Kandi will now focus on EV battery packs as well as other appropriate consumer products.” 

Q2 2021 Financial Results

Net Revenues and Gross Profit (in USD millions)

			2Q21				2Q20				Y/Y%
Net Revenue		$	29.9			$	19.4				53.7	%
Gross Profit		$	6.1			$	3.5				72.4	%
Gross Margin			20.4	%			18.2	%			-

Net revenues of $29.9 million increased 53.7% from the second quarter of 2020. The increase in revenue was primarily due to the growth in sales of Electric Scooters, Electric Self-Balancing Scooters and associated parts. This segment had a higher gross margin than other segments, resulting in 20.4% gross margin in the second quarter of 2021, higher than 18.2% for the same period of 2020. 

Operating Income/Loss (in USD millions)

			2Q21				2Q20				Y/Y%
Operating Income		$	38.3			$	8.1				373.3	%
Income from Operations		$	44.4			$	11.6				281.7	%
Operating Margin			148.5	%			59.8	%			-

Operating income was $38.3 million, compared with $8.1 million in the second quarter of 2020. The increase was primarily attributable to the gain on disposal of a long-lived asset related to the Jinhua facility relocation. 

Net Income (in USD millions) 

			2Q21				2Q20				Y/Y%
Net Income		$	40.9			$	4.1				909.3	%
Net Income per Weighted Average Common Share		$	0.54			$	0.08				-
Net Income per Weighted Average Diluted Share		$	0.54			$	0.08				-

Net income was $40.9 million, compared with a net income of $4.1 million in the same period of 2020.The greater income was primarily attributable to the gain on disposal of a long-lived asset recognized in the second quarter of 2021.

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 9, 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:

• Toll-free dial-in number: +1-877-407-3982
• International dial-in number: + 1-201-493-6780
• Webcast and replay: http://public.viavid.com/index.php?id=146195

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) 551-3610IR@kandigroup.com

The Blueshirt GroupMr. Gary Dvorchak, CFAgary@blueshirtgroup.com

- Tables Below –

KANDI TECHNOLOGIES GROUP, INC.AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

		June 30, 2021				December 31, 2020
		(UNAUDITED)
Current assets
Cash and cash equivalents		$	132,071,957			$	142,078,190
Restricted cash			16,117,526				442,445
Certificate of deposit			54,222,374				-
Accounts receivable (net of allowance for doubtful accounts of $111,512 and $110,269 as of June 30, 2021 and December 31, 2020, respectively)			48,713,854				38,547,137
Inventories			23,232,234				19,697,383
Notes receivable			8,985,422				31,404,630
Other receivables			40,574,115				1,875,245
Prepayments and prepaid expense			16,791,928				13,708,149
Advances to suppliers			13,274,911				36,733,182
Amount due from the Affiliate Company			-				21,742,226
Amount due from related party			-				886,989
TOTAL CURRENT ASSETS			353,984,321				307,115,576
NON-CURRENT ASSETS
Property, plant and equipment, net			81,579,358				65,402,680
Intangible assets, net			2,936,697				3,232,753
Land use rights, net			3,248,223				3,257,760
Construction in progress			6,123,956				16,317,662
Deferred taxes assets			7,852,209				8,964,946
Long term investment			154,921				45,958
Investment in the Affiliate Company			-				28,892,638
Goodwill			29,970,415				29,712,383
Other long term assets			18,012,160				32,307,484
TOTAL NON-CURRENT ASSETS			149,877,939				188,134,264
TOTAL ASSETS		$	503,862,260			$	495,249,840
CURRENT LIABILITIES
Accounts payable		$	31,373,506			$	34,257,935
Other payables and accrued expenses			8,930,573				7,218,395
Short-term loans			250,000				-
Notes payable			232,382				92,445
Income tax payable			11,280,164				1,313,754
Advance receipts			-				38,229,242
Amount due to related party			500,000				500,000
Other current liabilities			4,067,928				2,185,654
TOTAL CURRENT LIABILITIES			56,634,553				83,797,425
NON-CURRENT LIABILITIES
Deferred taxes liability			602,435				3,483,171
Contingent consideration liability			-				3,743,000
Other long-term liabilities			464,763				459,580
TOTAL NON-CURRENT LIABILITIES			1,067,198				7,685,751
TOTAL LIABILITIES			57,701,751				91,483,176
STOCKHOLDER’S EQUITY
Common stock, $0.001 par value; 100,000,000 shares authorized; 77,547,099 and 77,298,499 shares issued and 75,626,155 and 75,377,555 outstanding at June 30,2021 and December 31,2020, respectively			75,626				75,377
Additional paid-in capital			443,717,378				439,549,338
Accumulated deficit (the restricted portion is $4,422,033 and $4,422,033 at June 30,2021 and December 31,2020, respectively)			7,446,854				(27,079,900	)
Accumulated other comprehensive loss			(5,079,349	)			(8,778,151	)
TOTAL STOCKHOLDERS’ EQUITY			446,160,509				403,766,664
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	503,862,260			$	495,249,840

 

KANDI TECHNOLOGIES GROUP, INC.AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ANDCOMPREHENSIVE INCOME (LOSS)(UNAUDITED)

		Three Months Ended								Six Months Ended
		June 30, 2021				June 30, 2020				June 30, 2021				June 30, 2020
REVENUES FROM UNRELATED PARTIES, NET		$	29,875,835			$	19,436,120			$	45,852,002			$	25,808,544
REVENUES FROM THE AFFILIATE COMPANY AND RELATED PARTIES, NET			-				956				1,587				956
REVENUES, NET			29,875,835				19,437,076				45,853,589				25,809,500
COST OF GOODS SOLD			(23,778,053	)			(15,900,298	)			(35,401,456	)			(21,105,463	)
GROSS PROFIT			6,097,782				3,536,778				10,452,133				4,704,037
OPERATING INCOME (EXPENSE):
Research and development			(3,564,905	)			(1,149,901	)			(25,189,502	)			(1,790,141	)
Selling and marketing			(1,057,517	)			(763,666	)			(2,204,383	)			(1,641,972	)
General and administrative			(5,359,572	)			(3,907,191	)			(9,789,695	)			(6,973,926	)
Gain on disposal of long-lived assets			48,253,667				13,907,574				48,253,667				13,907,574
TOTAL OPERATING INCOME			38,271,673				8,086,816				11,070,087				3,501,535
INCOME FROM OPERATIONS			44,369,455				11,623,594				21,522,220				8,205,572
OTHER INCOME (EXPENSE):
Interest income			974,105				221,792				1,502,697				560,736
Interest expense			(78,069	)			(1,123,056	)			(204,417	)			(2,105,990	)
Change in fair value of contingent consideration			(357,000	)			(929,000	)			-				2,863,000
Government grants			114,402				86,799				349,195				97,898
Gain from sale of equity in the Affiliate Company			33,651				-				17,733,911				-
Share of loss after tax of the Affiliate Company			(4,904	)			(2,978,529	)			(2,584,401	)			(4,081,299	)
Other income, net			3,827,089				1,043,335				4,325,990				1,062,985
TOTAL OTHER INCOME (EXPENSE), NET			4,509,274				(3,678,659	)			21,122,975				(1,602,670	)
INCOME BEFORE INCOME TAXES			48,878,729				7,944,935				42,645,195				6,602,902
INCOME TAX EXPENSE			(7,949,255	)			(3,889,889	)			(8,118,441	)			(4,122,502	)
NET INCOME			40,929,474				4,055,046				34,526,754				2,480,400
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment			4,874,815				477,734				3,698,802				(3,045,331	)
COMPREHENSIVE INCOME (LOSS)		$	45,804,289			$	4,532,780			$	38,225,556			$	(564,931	)
WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED			75,510,788				53,369,602				75,447,633				52,862,043
NET INCOME PER SHARE, BASIC AND DILUTED		$	0.54			$	0.08			$	0.46			$	0.05

 

KANDI TECHNOLOGIES GROUP, INC.AND SUBSIDIARIESCONDENSED 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				Total
Balance, December 31, 2019			52,839,441			$	52,839			$	(2,477,965	)		$	259,691,370			$	(16,685,736	)		$	(22,723,581	)		$	217,856,927
Stock issuance and award			10,000				10				-				22,290				-				-				22,300
Net loss			-				-				-				-				(1,574,646	)			-				(1,574,646	)
Foreign currency translation			-				-				-				-				-				(3,523,065	)			(3,523,065	)
Balance, March 31, 2020			52,849,441			$	52,849			$	(2,477,965	)		$	259,713,660			$	(18,260,382	)		$	(26,246,646	)		$	212,781,516
Stock issuance and award			1,502,717				1,503								3,164,925												3,166,428
Net income																			4,055,043								4,055,043
Foreign currency translation																							477,734				477,734
Balance, June 30, 2020			54,352,158			$	54,352			$	(2,477,965	)		$	262,878,585			$	(14,205,339	)		$	(25,768,912	)		$	220,480,721
			Number of Outstanding Shares				Common Stock				Treasury Stock				Additional Paid-in Capital				Accumulated Earning (Deficit)				Accumulated Other Comprehensive Income				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 Affiliate Company’s equity (net off 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

 

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

		Six Months Ended
		June 30, 2021				June 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	34,526,754			$	2,480,400
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization			4,443,218				4,022,676
Impairments			-				(148,054	)
Deferred taxes			(11,970	)			2,089,505
Share of loss after tax of the Affiliate Company			2,584,401				4,081,299
Gain from equity sale in the Affiliate Company			(17,733,911	)			-
Gain on disposal of long-live assets			(48,253,667	)			(13,907,574	)
Change in fair value of contingent consideration			-				(2,863,000	)
Stock based compensation expense			1,429,456				847,546
Changes in operating assets and liabilities:
Accounts receivable			2,054,930				(1,431,388	)
Inventories			(3,328,120	)			(743,483	)
Other receivables and other assets			(14,040,619	)			(11,248,701	)
Advances to supplier and prepayments and prepaid expenses			20,596,182				(12,586,777	)
Amount due from the Affiliate Company			-				4,129,516
Increase (Decrease) In:
Accounts payable			(1,044,040	)			(282,560	)
Other payables and accrued liabilities			(463,016	)			736,715
Notes payable			(93,273	)			(10,664,922	)
Income tax payable			7,671,740				1,161,312
Net cash used in operating activities		$	(11,661,935	)		$	(34,327,490	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net			(6,565,755	)			(59,670	)
Payment for construction in progress			(1,869,028	)			-
Proceeds from disposal of long-lived assets			23,234,680				34,696,547
Repayments of loan to third party			31,686,168				-
Certificate of deposit			(54,098,335	)			-
Cash received from sales of equity in the Affiliate Company			23,803,268				15,641,886
Long Term Investment			(108,197	)			-
Net cash provided by investing activities		$	16,082,801			$	50,278,763
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans			250,000				24,031,625
Repayments of short-term loans			-				(49,769,638	)
Repayments of long-term loans			-				(284,398	)
Proceeds from long-term loans			-				394,116
Net cash provided by (used in) financing activities		$	250,000			$	(25,628,295	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		$	4,670,866			$	(9,677,022	)
Effect of exchange rate changes		$	997,982			$	(157,062	)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR		$	142,520,635			$	16,512,635
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	148,189,483			$	6,678,551
-CASH AND CASH EQUIVALENTS AT END OF PERIOD			132,071,957				3,457,498
-RESTRICTED CASH AT END OF PERIOD			16,117,526				3,221,053
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid		$	373,433				870,082
Interest paid		$	-				641,213
SUPPLEMENTAL NON-CASH DISCLOSURES:
Reversal of decrease in investment in the Affiliate Company due to change in its equity (net off tax effect of $491,400)		$	2,813,968				-
Increase of other receivable for equity transfer payment of the Affiliate Company		$	23,803,268				-