Results

WUHAN, China, Nov. 12, 2020 /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 third quarter and nine months ended September 30, 2020.

 Third Quarter 2020 Highlights

• Net sales increased 13.8% to $114.4 million compared with $100.5 million in the third quarter of 2019;
• Gross profit decreased to $13.6 million and gross margin declined to 11.9% from 17.2% in the third quarter of 2019;
• Income from operations was $0.1 million compared to income from operations of $4.4 million in the third quarter of 2019;
• Net income attributable to parent company’s common shareholders was $2.4 million, or diluted earnings per share of $0.08, compared to net income attributable to parent company’s common shareholders of $4.3 million, or diluted earnings per share of $0.14, in the third quarter of 2019;
• Approximately 322,000 shares of common stock were repurchased.

First Nine Months of 2020 Highlights

• Net sales were $271.2 million compared to $315.5 million in the first nine months of 2019;
• Gross margin was 12.0% compared with 14.8% in the same period last year;
• Diluted loss per share attributable to parent company’s common shareholders was $0.06 compared to diluted earnings per share attributable to parent company’s common shareholders of $0.26 for the first nine months of 2019;
• Net cash flow from operating activities was $52.7 million compared with $4.1 million for the first nine months of 2019;
• Cash and cash equivalents and pledged cash deposits were $113.5 million as of September 30, 2020.

Mr. Qizhou Wu, the Chief Executive Officer of CAAS, commented, “Our sales regained growth momentum in the third quarter as the Chinese economy has quickly rebounded from the worst effects of the COVID-19 pandemic. According to statistics from the China Association of Automobile Manufacturers (“CAAM”), new passenger car sales rose by 8.5% year-over-year in the month of July, by 6.0% in August and by 8.0% in September.  As a leading supplier of steering products for Chinese-branded vehicles, I am pleased that our sales growth outpaced the overall market. We still have work to do but we are encouraged by the positive signs on our way to a strong recovery.”

“With the worst behind us in China, we believe the government will continue to promote policies to ensure continued economic growth and to introduce incentives for domestic consumption which will benefit the automobile industry,” Mr. Wu concluded.

Mr. Jie Li, the Chief Financial Officer of CAAS, commented, “Our operations continued to generate positive operating cash flow and we purchased less capital production equipment in the third quarter of 2020 as our capacity remains sufficient.  Maintaining our financial strength has been one of our highest priorities as we continue to strengthen our balance sheet by reducing bank borrowing and controlling inventory. During the 3^rd quarter, we also purchased approximately 322,000 shares of common stock in the open market that demonstrates our commitment to