China Automotive Systems(CAAS) - 2024 Q4 - Annual Report

Financial Performance - Net product sales increased to $650.9 million for the year ended December 31, 2024, up 12.9$576.4 million in 2023, primarily driven by higher sales of electric power steering (EPS) products [173][174]. - The cost of products sold rose to $541.8 million in 2024, a 14.6$472.6 million in 2023, attributed to higher sales volume and increased unit costs [171][176]. - Gross margin decreased to 16.8% for the year ended December 31, 2024, down from 18.0% in 2023, mainly due to price cuts required by original equipment manufacturers (OEMs) [177]. - Net income attributable to parent company's common shareholders was $29.98 million in 2024, a decrease of 20.4$37.66 million in 2023 [171]. - Selling expenses increased to $17.9 million in 2024, up 14.4$15.6 million in 2023, primarily due to higher marketing and office expenses [179]. - Net sales of EPS reached $253.0 million in 2024, a 29.9$194.8 million in 2023, representing 38.9% of total net sales [174]. - The company reported a net gain on other sales of $4.3 million in 2024, down 25.7$5.8 million in 2023, mainly due to decreased sales of materials [178]. - The total segment net sales for 2024 were $925.5 million, an increase of 15.2$803.5 million in 2023 [172]. Expenses and Income - The company’s interest expense rose significantly to $1.81 million in 2024, a 77.6$1.02 million in 2023 [171]. - Research and development expenses decreased to $27.6 million in 2024, down 5.2$29.2 million in 2023 [171]. - General and administrative expenses increased to $27.7 million in 2024 from$25.5 million in 2023, representing an increase of $2.2 million or 8.7$5.8 million in 2024 compared to $5.3 million in 2023, an increase of$0.5 million [184]. - Interest expense increased to $1.8 million in 2024 from$1.0 million in 2023, an increase of $0.8 million [185]. - Financial expense, net was$0.09 million in 2024, a significant increase of $4.8 million compared to financial income of$4.7 million in 2023 [186]. - Income tax expense rose to $5.9 million in 2024 from$5.1 million in 2023, an increase of $0.8 million or 14.7$30.0 million in 2024 from $37.7 million in 2023, a decrease of$7.7 million [189]. Cash Flow and Investments - Cash and cash equivalents and short-term investments decreased to $84.5 million as of December 31, 2024, from$125.7 million in 2023, a decrease of $41.2 million [190]. - Working capital decreased to$146.2 million as of December 31, 2024, from $180.3 million in 2023, a decrease of$34.1 million or 18.9% [191]. - Net cash provided by operating activities for the year ended December 31, 2024 was $9.8 million, a decrease of$10.1 million compared to $19.9 million in 2023 [214]. - Net cash used in investing activities for the year ended December 31, 2024 was$77.9 million, an increase of $49.3 million from$28.6 million in 2023 [215]. - The decrease in net cash inflows was primarily due to a $4.8 million decrease in net income excluding non-cash items and a$27.0 million decrease in cash inflows from accounts and notes receivable [214]. - The company experienced an increase in cash outflows from movements of accounts and notes payable by $18.4 million [214]. - Cash outflows from movements of accrued expenses and other payables increased by$15.9 million [214]. - The company reported a $25.4 million increase in payments to acquire property, plant, and equipment [215]. - The company had a decrease in proceeds from maturities of short-term investments by$33.8 million [215]. - Net cash provided in financing activities increased to $17.3 million in 2024 from$6.8 million in 2023, a rise of $10.5 million, primarily due to an increase in bank loan proceeds by$18.6 million and cash received from capital contributions by $12.0 million [216]. Debt and Financing - The company had short-term loans of$72.6 million and long-term loans of $0.1 million as of December 31, 2024 [195]. - Land use rights and buildings valued at approximately$26.6 million are pledged as security for a credit facility with China CITIC Bank [202]. - Equipment valued at approximately $64.9 million is secured for a revolving credit facility with Hubei Bank [202]. - The company has short-term borrowings totaling approximately$4.2 million from the Bank of China at an interest rate of 2.58% [205]. - The company has a total of 12 short-term loans with varying amounts and interest rates, with the highest being $6,677,000 at an interest rate of 2.20$4,173,000 in working capital loans due by March 30, 2025, with an interest rate of 2.58% [205]. - The company has pledged land use rights and buildings valued at approximately $14.8 million for a revolving credit facility with Shanghai Pudong Development Bank [202]. - The Company had no outstanding indebtedness as of December 31, 2024, which mitigates exposure to interest rate fluctuations [231]. Market Risks and Compliance - The exchange rate of RMB against the U.S. dollar depreciated from RMB1.00 to$0.1412 in 2023 to RMB1.00 to $0.1391 in 2024, indicating a potential decrease in profits generated from overseas due to currency fluctuations [228]. - Two customers, Stellantis N.V. and BYD Auto Co., Ltd., accounted for 20.3% and 18.2% of the Company's consolidated revenues in 2024, respectively, highlighting a concentration of credit risk [230]. - The Company established a price negotiation mechanism with international customers to adjust prices if currency exchange rate fluctuations exceed 8% since the last negotiation [229]. - The Company is exposed to market risks from changes in interest rates and foreign currency exchange rates, which are analyzed using sensitivity analysis [226]. - The Company does not have any off-balance sheet arrangements as of December 31, 2024 and 2023 [217]. - The Chinese government's controls on bank credit and lending may slow economic growth, impacting the Company's profitability [219]. - The Company prepares its financial statements in accordance with U.S. generally accepted accounting principles, requiring estimates and assumptions that may affect reported amounts [223]. - The Company maintains an allowance for doubtful accounts to mitigate potential credit losses related to trade receivables [230].