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China Automotive Systems Reports 19.9% Increase in Net Sales in First Quarter of 2025

1. CAAS reported Q1 2025 sales growth of 19.9% year-over-year. 2. Electric power steering (EPS) product sales surged 54% year-over-year. 3. Income from operations declined by 10.5% to $8.6 million year-over-year. 4. Total cash and short-term investments stood at $89.9 million as of March 31, 2025. 5. Full-year revenue guidance for 2025 remains at $700 million.

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FAQ

Why Bullish?

Strong sales growth, especially in EPS products, indicates market strength. Declining operation income is a concern but is outweighed by overall revenue growth and strategic focus on EPS.

How important is it?

Given CAAS's prominent position in power steering components for both traditional and electric vehicles, strong EPS sales address current market trends favoring electric vehicles, signaling potential for future growth. However, the impact of declining operating income may cause some investors to tread cautiously.

Why Short Term?

The sales growth and shifts in product lines could drive immediate investor interest, but operational income decline may temper enthusiasm in the near-term.

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, /PRNewswire/ -- China Automotive Systems, Inc. (NASDAQ: CAAS) ("CAAS" or the "Company"), a leading power steering components and systems supplier in China, today announced its unaudited financial results for the first quarter ended March 31, 2025. First Quarter 2025 Highlights Net sales grew by 19.9% year-over-year to $167.1 million; sales of EPS products rose by 54.0% Gross profit increased by 18.8% year-over-year to $28.6 million with a gross margin of 17.1% compared with $24.1 million of gross profit and a 17.3% gross margin in the first quarter of 2024 Income from operations decreased to $8.6 million compared with $9.7 million in the first quarter of 2024 Diluted income per share was $0.24, compared to diluted income per share of $0.27 in the first quarter of 2024 Cash, cash equivalents, and short-term investments were $89.9 million as of March 31, 2025 Net cash provided by operating activities was $18.1 million in the first quarter of 2025 compared to $10.5 million in the first quarter of 2024. Mr. Qizhou Wu, chief executive officer of CAAS, commented, "The shift to our more advanced electric power steering ("EPS") products reached a pivotal stage in the first quarter of 2025 with sales growth of 54.0% year-over-year, and an increase of 2.3% year-over-year for our traditional hydraulic steering products. EPS product sales comprised 43.7% of total sales for the three months ended March 31, 2025. Hubei Henglong's sales registered a revenue decline of 10.3% year-over-year in the first quarter of 2025 mainly due to lower vehicles sales by Stellantis. This decline was possibly related to greater uncertainty in this market due to changing U.S. government policies. We are pleased our Brazilian operations maintained its growth momentum with 30.2% growth year-over-year in the first quarter of 2025. In addition, Shashi Jiulong's sales, which focus on steering systems to Chinese commercial vehicles, increased by 17.4% year-over-year due to higher volumes." Mr. Jie Li, chief financial officer of CAAS, commented, "We had total cash, cash equivalents, and short-term investments of $89.9 million and our current ratio was 1.4 to 1 as of March 31, 2025. Cash inflow from operating activities was $18.1 million in the first quarter of 2025, increased by 73.1% year-over-year. Payment for plant property and equipment increased to $10.3 million in the first quarter of 2025." First Quarter of 2025 Net sales increased by 19.9% to $167.1 million in the first quarter of 2025, compared to $139.4 million in the first quarter of 2024. Net sales of traditional steering products and parts increased by 2.3% to $94.1 million compared to $92.0 million for the first quarter of 2024. Net sales of electric power steering ("EPS") products and parts grew by 54.0% to $73.0 million for the three months ended March 31, 2025 compared with $47.4 million for the same period in 2024. EPS product sales for the first quarter of 2025 were approximately 43.7% of total sales compared with 34.0% of total net sales for the same period in 2024. Hubei Henglong's export sales were $27.2 million compared to $30.1 million in the first quarter of 2024, primarily due to lower demand for passenger vehicle products by Stellantis N.V. Shashi Jiulong's sales increased by 17.4% to $19.7 million from $16.8 million in the 2024 first quarter. Brazil Henglong's net product sales increased by 30.2% to $16.5 million in the first quarter of 2025 compared to $12.7 million for the same period in 2024 due to higher demand from Stellantis N.V. Wuhu's sales, which mainly provide steering systems to Chery Automobile Co., Ltd in China, increased by 13.5% year-over-year, and sales for other entities increased by 19.1% year-over-year to $34.6 million.  Gross profit increased by 18.8% to $28.6 million from $24.1 million in the first quarter of 2024. Gross margin in the first quarter of 2025 was 17.1%, which was consistent with 17.3% in the first quarter of 2024.  Selling expenses increased by 18.3% to $4.8 million from $4.1 million in the first quarter of 2024. This increase in selling expenses was primarily due to higher warehouse and logistical expenses due to higher revenues. Selling expenses represented 2.9% of net sales in the first quarter of 2025 and the first quarter of 2024. General and administrative expenses ("G&A expenses") increased by 36.4% to $7.6 million, compared with $5.5 million in the first quarter of 2024 mainly due to staff-related expenses, including a one-time severance cost of approximately $1.4 million at one subsidiary. G&A expenses represented 4.5% of net sales in the first quarter of 2025 compared with 4.0% of net sales in the first quarter of 2024.  Research and development expenses ("R&D expenses") increased by 64.0% to $8.7 million compared to $5.3 million in the first quarter of 2024, mainly due to higher R&D activities for new projects and products. R&D expenses represented 5.2% of net sales in the first quarter of 2025 compared to 3.8% in the first quarter of 2024.  Other income was $1.9 million for the first quarter of 2025, compared to $2.4 million for the first quarter of 2024. Income from operations declined by 10.5% to $8.6 million in the first quarter of 2025, compared to income from operations of $9.7 million in the first quarter of 2024. The decrease in 2025 first quarter income from operations was primarily due to a 41.3% increase in operating expenses.  Interest expense was $0.5 million in the first quarter of 2025, compared to $0.3 million in the first quarter of 2024. Financial income, net was $2.0 million in the first quarter of 2025, compared to financial expense, net of $0.01 million in the first quarter of 2024. This change was primarily due to an increase in the foreign exchange gains due to foreign exchange volatility. Income before income tax expenses and equity in earnings of affiliated companies was $12.1 million in the first quarter of 2025, compared to $11.8 million in the first quarter of 2024. Equity in losses of affiliated companies was $0.7 million in the first quarter of 2025, compared with equity in losses of affiliated companies of $0.8 million in the first quarter of 2024. Income tax expense was $2.9 million for the first quarter of 2025 as compared to $1.7 million for the first quarter of 2024. This higher tax was primarily due to higher income before income tax expenses as compared to the same period last year and a higher expected annual effective tax rate in 2025 based on the latest annual forecast as compared to 2024. Net income attributable to parent company's common shareholders was $7.1 million in the first quarter of 2025, compared to $8.3 million in the first quarter of 2024. Diluted income per share was $0.24 in the first quarter of 2025, compared to net income per share of $0.27 in the first quarter of 2024. The weighted average number of diluted common shares outstanding was 30,170,172 in the first quarter of 2025 compared to 30,185,702 in the first quarter of 2024. Balance Sheet As of March 31, 2025, total cash, cash equivalents, and short-term investments were $89.9 million, total accounts receivable including notes receivable were $323.6 million, accounts payable including notes payable were $282.6 million and short-term bank loans were $66.7 million. Working capital rose to $154.7 million as of March 31, 2025, compared to $146.2 million as of December 31, 2024. Total parent company stockholders' equity was $357.5 million as of March 31, 2025, compared to $349.6 million as of December 31, 2024.  Business Outlook Management has reiterated revenue guidance for the full fiscal year 2025 of $700.0 million. This target is based on the Company's current views on operating and market conditions, which are subject to change. Conference Call Management will conduct a conference call on May 14, 2025, at 8:00 A.M. EDT/8:00 P.M. Beijing Time to discuss these results. A question and answer session will follow management's presentation. To participate, please see the dial-in information below, enter the call 10 minutes before the aforementioned start time and ask to be connected to the "China Automotive Systems" conference call with pin number 714212: Toll Free: 877-545-0523International: 973-528-0016China Toll Free: 86 400 120 3199Participant Access Code: 714212 A replay of the call will be available on the Company's website under the investor relations section.  About China Automotive Systems, Inc. Based in Hubei Province, the 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 its sixteen Sino-foreign joint ventures and wholly owned subsidiaries. The Company offers a full range of steering system parts for passenger automobiles and commercial vehicles. The Company currently offers four separate series of power steering with an annual production capacity of over 8 million sets of steering gears, columns and steering hoses. Its customer base is comprised of leading auto manufacturers, such as China FAW Group, Corp., Dongfeng Auto Group Co., Ltd., BYD Auto Company Limited, Beiqi Foton Motor Co., Ltd. and Chery Automobile Co., Ltd. in China, and Stellantis N.V. and Ford Motor Company in North America. For more information, please visit: http://www.caasauto.com. Forward-Looking Statements This press release contains statements that are "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent our estimates and assumptions only as of the date of this press release. Our actual results may differ materially from the results described in or anticipated by our forward-looking statements due to certain risks and uncertainties. As a result, the Company's actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading "Risk Factors" in the Company's Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 28, 2025, and in documents subsequently filed by the Company from time to time with the Securities and Exchange Commission. Any of these factors and other factors beyond our control, could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict, and materially and adversely impact our business, financial condition and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increased costs and reduced revenue. We expressly disclaim any duty to provide updates to any forward-looking statements made in this press release, whether as a result of new information, future events or otherwise. For further information, please contact: Jie LiChief Financial OfficerChina Automotive Systems, Inc.[email protected] Kevin TheissAwaken Advisors+1-212-510-8922[email protected]  -Tables Follow – China Automotive Systems, Inc. and Subsidiaries Condensed Unaudited Consolidated Statements of Operations and Comprehensive Income (In thousands of USD, except share and per share amounts) Three Months Ended March 31,  2025 2024 Net product sales ($11,493 and $11,360 sold to related parties for the three months ended March 31, 2025 and 2024) $ 167,094 $ 139,394 Cost of products sold ($7,775 and $6,968 purchased from related parties for the three months ended March 31, 2025 and 2024) 138,509 115,325 Gross profit 28,585 24,069 Gain on other sales 1,151 514 Less: Operating expenses Selling expenses 4,818 4,073 General and administrative expenses  7,565 5,547 Research and development expenses 8,713 5,312 Total operating expenses 21,096 14,932 Income from operations 8,640 9,651 Other income, net 1,941 2,403 Interest expense (483) (258) Financial income/(expense), net 1,978 (12) Income before income tax expenses and equity in losses of affiliated companies 12,076 11,784 Less: Income taxes 2,937 1,743 Add: Equity in losses of affiliated companies (684) (777) Net income 8,455 9,264 Less: Net income attributable to non-controlling interests 1,333 989 Accretion to redemption value of redeemable non-controlling interests — (8) Net income attributable to parent company's common shareholders $ 7,122 $ 8,267 Comprehensive income: Net income $ 8,455 $ 9,264 Other comprehensive income: Foreign currency translation gain/(loss), net of tax 920 (348) Comprehensive income 9,375 8,916 Less: Comprehensive income attributable to non-controlling interests 1,396 941 Accretion to redemption value of redeemable non-controlling interests — (8) Comprehensive income attributable to parent company $ 7,979 $ 7,967 Net income attributable to parent company's common shareholders per share - Basic $ 0.24 $ 0.27 Diluted $ 0.24 $ 0.27 Weighted average number of common shares outstanding - Basic 30,170,702 30,185,702 Diluted 30,170,702 30,185,702 China Automotive Systems, Inc. and Subsidiaries Condensed Unaudited Consolidated Balance Sheets (In thousands of USD unless otherwise indicated) March 31, 2025 December 31, 2024 ASSETS Current assets: Cash and cash equivalents $ 65,237 $ 56,961 Pledged cash 46,030 44,863 Accounts and notes receivable, net - unrelated parties 305,968 329,275 Accounts and notes receivable, net - related parties 17,586 14,224 Inventories 122,440 112,558 Other current assets 39,527 44,757 Total current assets 596,788 602,638 Non-current assets: Property, plant and equipment, net 108,079 103,820 Land use rights, net 9,276 8,835 Long-term investments 63,492 64,332 Other non-current assets 67,717 70,954 Total assets $ 845,352 $ 850,579 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS'EQUITY Current liabilities: Short-term loans  $ 66,724 $ 72,566 Accounts and notes payable-unrelated parties 269,741 281,065 Accounts and notes payable-related parties 12,858 11,743 Accrued expenses and other payables 60,326 59,238 Other current liabilities 32,392 31,870 Total current liabilities 442,041 456,482 Long-term liabilities: Other non-current liabilities 4,147 4,308 Total liabilities $ 446,188 $ 460,790 Stockholders' equity: Common stock, $0.0001 par value – Authorized – 80,000,000 shares; Issued – 32,338,302 and 32,338,302 shares as of March 31, 2025 and December 31, 2024, respectively, including treasury stock $ 3 $ 3 Additional paid-in capital 69,656 69,656 Retained earnings- Appropriated 13,668 12,180 Unappropriated 295,907 290,273 Accumulated other comprehensive income (13,923) (14,780) Treasury stock – 2,167,600 and 2,167,600 shares as of March 31, 2025 and December 31, 2024, respectively (7,763) (7,763) Total parent company stockholders' equity 357,548 349,569 Non-controlling interests 41,616 40,220 Total stockholders' equity 399,164 389,789 Total liabilities and stockholders' equity $ 845,352 $ 850,579 China Automotive Systems, Inc. and Subsidiaries Condensed Unaudited Consolidated Statements of Cash Flows (In thousands of USD unless otherwise indicated) Three months Ended March 31, 2025 2024 Cash flows from operating activities: Net income $ 8,455 $ 9,264 Adjustments to reconcile net income from operations to net cash provided by operating activities: Depreciation and amortization 4,644 5,114 Addition/(reversal) of credit losses 222 (114) Deferred income taxes — 136 Equity in losses of affiliated companies 684 777 Impairment loss on property, plant and equipment 657 — Loss on property, plant and equipment disposals 484 670 (Increase)/decrease in: Accounts and notes receivable 20,412 2,335 Inventories (9,729) 3,109 Other current assets and other non-current assets 1,406 1,091 Increase/(decrease) in: Accounts and notes payable (10,628) (10,157) Accrued expenses and other payables 954 96 Other current liabilities 529 (1,870) Net cash provided by operating activities 18,090 10,451 Cash flows from investing activities: Cash received from property, plant and equipment sales 393 108 Payments to acquire property, plant and equipment (including $2,572 and $1,615 paid to related parties for the three months endedMarch 31, 2025 and 2024, respectively) (10,302) (4,493) Payments to acquire intangible assets — (18) Purchase of short-term investments and long-term time deposits (8,733) (14,534) Proceeds from maturities of short-term investments 15,244 2,370 Cash received from long-term investments 176 84 Net cash used in investing activities (3,222) (16,483) Cash flows from financing activities: Proceeds from bank loans 35,464 34,347 Repayments of bank loans (41,471) (41,866) Cash received from capital contributions of a non-controllinginterest — 15,504 Net cash (used in)/provided by financing activities (6,007) 7,985 Effects of exchange rate on cash, cash equivalents and pledged cash 582 (562) Net increase in cash, cash equivalents and pledged cash 9,443 1,391 Cash, cash equivalents and pledged cash at beginning of the period 101,824 155,194 Cash, cash equivalents and pledged cash at end of the period $ 111,267 $ 156,585 SOURCE China Automotive Systems, Inc. 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