China Automotive Systems, Inc Financial Results First Quarter ended March 31, 2011 : China Automotive Systems, Inc. ("CAAS" or the "Company"), (NASDAQ: CAAS), a leading power steering components and systems supplier in China, today announced financial results for the first quarter ended March 31, 2011.
* Net sales rose 8.1% to $91.0 million, compared to $84.2 million in the first quarter of 2010;
* Gross profit was $20.0 million, compared to $22.5 million for the comparative quarter in prior year; Gross margin was 22.0% in the 2011 first quarter;
* Research and development expenses rose approximately $1.0 million to $2.3 million;
* Net income attributable to the parent company's common shareholders was $17.2 million, or diluted earnings per share of $0.23, versus a loss of $4.1 million, or $0.15 loss per share, in the 2010 first quarter; and
* Cash and cash equivalents were $40.6 million at March 31, 2011.
Net sales were $91.0 million for the three months ended March 31, 2011, compared with $84.2 million for the first quarter ended March 31, 2010, an increase of $6.8 million, or 8.1%. Sales rose because of increased sales of the Company's new Electronic Power Steering ("EPS") system, an increase in export sales and the appreciation of the RMB against the U.S. dollar.
In the first quarter of 2011, the Company's gross profit was $20.0 million, compared to $22.5 million in the first quarter of 2010. The first quarter 2011 gross margin was 22.0%, versus 26.8% in the same quarter in 2010, mainly due to sales price declines exceeding unit cost reductions. Gross margin in the fourth quarter of 2010 was 20%.
Selling expenses in the first quarter of 2011 increased $0.5 million to $2.4 million, from $1.9 million in the first quarter of 2010. Higher warehouse rental expenses related to an increase in the rented area, due to the need to accommodate higher sales volumes, and greater transportation expenses, which reflected both an increase in oil prices as well as a greater number of units being sold. As a percentage of sales, selling expenses were 2.7% in the first quarter of 2011, compared to 2.2% in the first quarter of 2010.
General and administrative expenses were flat at $3.9 million in both the 2011 and 2010 first quarters.
Research and development expenses rose by approximately $1.0 million to $2.3 million in the first quarter of 2011, compared to $1.3 million for the three months ended March 31, 2010. Demand for EPS is rising and to market EPS more quickly, CAAS added senior technicians and advanced manufacturing and testing equipment to the research and development program. As a percentage of sales, R&D expenses rose to 2.5% from 1.5% in the first quarter of last year.
Income from operations was $11.7 million for the three months ended March 31, 2011, versus $15.9 million in the first quarter of 2010. The decline of $4.2 million resulted primarily from lower gross profit and higher operating expenses compared to the first quarter of 2010. As a result, operating margin was 13% in the first quarter of 2011, as compared to 19% in the same period last year, but higher than the 12% in the fourth quarter of 2010.
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