Press Releases

Niu Technologies Announces Second Quarter 2019 Financial Results

August 23, 2019 at 3:00 AM EDT

-- Second Quarter Total volume of e-scooter sales up 13.8% year over year

-- Second Quarter Revenues of RMB 530.5 million, up 38.1% year over year

-- Second Quarter net income of RMB 51.0 million, compared to net loss of RMB 253.0 million in the second quarter of last year

BEIJING, Aug. 23, 2019 (GLOBE NEWSWIRE) -- Niu Technologies (“NIU”, or “the Company”) (NASDAQ: NIU), the world’s leading provider of smart urban mobility solutions, today announced its financial results for the second quarter 2019.

Second Quarter 2019 Financial Highlights

  • Revenues were RMB 530.5 million, an increase of 38.1% year over year
  • Gross margin was 23.7%, compared with 15.1% in the second quarter of 2018
  • Net income was RMB 51.0 million, compared with net loss of RMB 253.0 million in the second quarter of 2018
  • Adjusted net income (non-GAAP)1 was RMB 54.1 million, compared with adjusted net loss of RMB 33.9 million in the second quarter of 2018

Second Quarter 2019 Operating Highlights

  • The number of e-scooters sold reached 99,365, up 13.8% year over year
  • Franchised stores in China reached 1,005, an increase of 124 since March 31, 2019
  • Overseas sales network expanded to 26 distributors covering 34 countries
  • NIU launched two new models, U+ and Us in April

Dr. Yan Li, Chief Executive Officer of the Company, commented: “We delivered a solid revenue growth amid the challenging market environment caused by trade wars, slowing-down of Chinese economy and the implementation of New National Standards in the Chinese e-scooter industry.  Our sales in China was affected by the lengthy certification and registration procedures during the implementation of this new regulation.  Our international sales, however, remained strong and our overseas sales volume for the second quarter was more than doubled year over year.”

Dr. Li continued, “Our gross margin improved to 23.7%, a result of further cost reduction and favorable changes in revenue mix.  We continued to be profitable in this quarter and achieved net income of RMB 51.0 million.  We are excited by our business prospects and are committed to expand our growth profitably in the quarters ahead. To cope with the increasing sales volume, we are currently building a new facility in Changzhou on a piece of land of which we acquired the land use rights in June.”

Second Quarter 2019 Financial Results

Revenues were RMB 530.5 million, an increase of 38.1% year over year, due to increased sales volume of 13.8% and increased revenues per e-scooter of 21.3%.

  • E-scooter sales represented 85.1% of total revenues, while accessories, spare parts sales and service revenues represented 14.9% of total revenues.
  • Higher e-scooter sales volume was mainly driven by strong demand from international markets.
  • Increased revenues per e-scooter was mainly driven by a larger proportion of international sales, and higher sales in accessories and spare parts.
  • China represented 73.0% of total e-scooter revenues, while overseas markets represented 27.0% of total e-scooter revenues, compared with 10.2% in the second quarter of 2018.

Cost of revenues were RMB 405.0 million, an increase of 24.1% year over year, mainly due to higher e-scooter sales volume. The cost per e-scooter, defined as cost of revenues divided by the number of e-scooters sold in a specified period, was RMB 4,076, up 9.0% from RMB 3,739 in the second quarter 2018 as a result of product mix change.

Gross margin was 23.7%, up substantially from 15.1% in the same period of 2018, mainly due to lower raw material costs, and a greater proportion of international sales and revenue from accessories and spare parts.

Operating expenses were RMB 82.9 million, a decrease of 73.4% from the same period of 2018. Operating expenses as a percentage of revenues was 15.6%, compared with 81.1% in the second quarter of 2018.

  • Selling and marketing expenses were RMB 47.0 million (including RMB 1.0 million of share-based compensation), a decrease of 7.7% from RMB 51.0 million in the second quarter of 2018. The decrease was mainly due to lower advertising and promotion expense of RMB 11.4 million, which was partially offset by the increase of staff cost, office and travelling expense of RMB 4.1 million, depreciation and amortization expense of RMB 2.0 million, as a result of the growth in e-scooter sales volume, the opening of new franchised stores and an increased number of sales staffs. Selling and marketing expenses as a percentage of revenues was 8.9% compared with 13.3% in the second quarter of 2018.
  • Research and development expenses were RMB 16.7 million (including RMB 0.4 million of share-based compensation), a decrease of 63.6% from RMB 45.9 million in the second quarter of 2018, mainly driven by the decrease of share-based compensation expenses of RMB 36.4 million. The lower expenses were partially offset by the increases in staff cost of RMB 5.0 million and design expense of RMB 1.2 million, which resulted from the Company’s continued efforts to enhance the research and development capability. Research and development expenses as a percentage of revenues was 3.1%, compared with 12.0% in the second quarter of 2018.
  • General and administrative expenses were RMB 19.2 million (including RMB 1.6 million of share-based compensation), a decrease of 91.1% from RMB 214.7 million in the second quarter of 2018, mainly due to decrease of share-based compensation expense of RMB 180.0 million and an RMB 22.3 million loss for a fire accident in April 2018. The lower expenses were partially offset by increase in staff cost of RMB 5.0 million, travelling and office expenses of RMB 1.5 million as a result of increased number of staffs. General and administrative expenses as a percentage of revenues was 3.6%, compared with 55.9% in the second quarter of 2018.

Operating expenses excluding share-based compensation was RMB 79.8 million, decreased by 13.8% year over year, and represented 15.0% of revenues, compared with 24.1% in the second quarter of 2018.

  • Selling and marketing expenses excluding share-based compensation were RMB 46.0 million, a decrease of 8.7% year over year, and represented 8.7% of revenues, compared with 13.1% in the second quarter of 2018.
  • Research and development expenses excluding share-based compensation were RMB 16.3 million, an increase of 78.8% year over year, and represented 3.1% of revenues, compared with 2.4% in the second quarter of 2018.
  • General and administrative expenses excluding share-based compensation were RMB 17.6 million, a decrease of 46.9% year over year, and represented 3.3% of revenues, compared with 8.6% in the second quarter of 2018.

Share-based compensation was RMB 3.1 million, a decrease of RMB 216.0 million compared to RMB 219.1 million in the same period of last year mainly because of the higher expenses that arose from the accelerated vesting of certain restricted ordinary shares during 2018 and the transfer of a number of ordinary shares from a shareholder to one of our vice presidents for nil consideration in June 2018.

Net income was RMB 51.0 million, an improvement of RMB 304.0 million compared with a net loss of RMB 253.0 million in the second quarter of 2018. The net income margin was 9.6%, compared with a net loss margin of 65.8% in the same period of 2018.

Adjusted net income (non-GAAP) was RMB 54.1 million, compared with an adjusted net loss of RMB 33.9 million in the second quarter of 2018. The adjusted net income margin2 was 10.2%, compared with an adjusted net loss margin of 8.8% in the same period of 2018.

Basic and diluted net income per ADS were RMB 0.685(US$ 0.100) and RMB 0.665(US$ 0.097) respectively.

Balance Sheet
As of June 30, 2019, the Company had cash, term deposit and short-term investments of RMB 667.4 million in aggregate. The Company had restricted cash of RMB 272.6 million and short-term bank borrowings of RMB 268.5 million.

Business Outlook
NIU expects revenues of third quarter to be in the range of RMB 600 million to RMB 700 million, representing a year-over-year increase of 22% to 42%.

The above outlook is based on information available as of the date of this press release and reflects the Company’s current and preliminary expectation, which is subject to change.

Conference Call

The Company will host a conference call at 8:00 AM on August 23, 2019 U.S. Eastern Time (8:00 PM on August 23, 2019 Beijing/Hong Kong time) to discuss its second quarter 2019 financial results and provide a corporate update.

Participants may access the call via below dial-in details.

United States +1-866-519-4004
International +65-6713-5090
Hong Kong 800-906-601
Mainland China 400-620-8038
Conference ID 5297867

A replay will be accessible through August 31, 2019 by dialing the following numbers:

United States +1-855-452-5696
International +61-281-990-299
Hong Kong 800-963-117
Mainland China 400-602-2065
Conference ID 5297867

Additionally, a live and archived webcast of the conference call will also be available through the Company’s investor relations website at https://ir.niu.com/.

About Niu Technologies

As the world’s leading provider of smart urban mobility solutions, NIU designs, manufactures and sells high-performance smart e-scooters. NIU has a streamlined product portfolio consisting of three series, N, M and U that address the needs of different segments of the modern urban resident, while being united through a common design language that emphasizes style, freedom and technology.  NIU has adopted an omnichannel retail model, integrating the offline and online channels, to sell its products and provide services. For more information, please visit www.niu.com.

Use of Non-GAAP Financial Measures

To supplement NIU’s consolidated financial results presented in accordance with the accounting principles generally accepted in the United States of America (“GAAP”), NIU uses the following non-GAAP financial measures: adjusted net income/loss, and adjusted net income/loss margin. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

NIU believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding certain items that may not be indicative of its operating results. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management’s internal comparisons to NIU’s historical performance. The Company believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP financial measures is that these non-GAAP measures exclude certain items that have been and will continue to be for the foreseeable future a significant component in the Company’s results of operations. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data.

Adjusted net income/loss is defined as net income/loss excluding share-based compensation expenses and change in fair value of a convertible loan. Adjusted net income/loss margin is defined as adjusted net income/loss as a percentage of the revenues.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliations of non-GAAP financial measures to the nearest comparable GAAP measures.”

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the readers. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB 6.8650 to US$ 1.00, the exchange rate in effect as of June 30, 2019, as set forth in the H.10 Statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to” and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as NIU’s strategic and operational plans, contain forward-looking statements. NIU may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about NIU’s beliefs, plans and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: NIU’s strategies; NIU’s future business development, financial condition and results of operations; NIU’s ability to maintain and enhance its “NIU” brand; its ability to innovate and successfully launch new products and services; its ability to maintain and expand its offline distribution network; its ability to satisfy the mandated safety standards relating to e-scooters; its ability to secure supply of components and raw materials used in e-scooters; its ability to manufacture, launch and sell smart e-scooters meeting customer expectations; its ability to grow collaboration with operation partners; its ability to control costs associated with its operations; general economic and business conditions in China and globally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in NIU’s filings with the Securities and Exchange Commission. All information provided in this press release is as of the date of this press release, and NIU does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

Investor Relations Contacts:

NIU
Jason Yang
Investor Relations Manager
E-mail: ir@niu.com

NIU TECHNOLOGIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
           
  As of
  December 31,   June 30,   June 30,
  2018    2019    2019 
   RMB    RMB   US$
ASSETS          
Current assets          
Cash 569,059,591     291,144,952     42,410,044  
Term deposit 27,452,663     137,493,629     20,028,205  
Restricted cash-current 179,262,714     272,581,397     39,705,957  
Short-term investments 120,241,425     238,780,044     34,782,235  
Accounts receivable, net 54,424,845     119,623,616     17,425,144  
Inventories 142,382,205     205,904,210     29,993,330  
Prepayments and other current assets 26,919,954     36,770,756     5,356,265  
Total current assets 1,119,743,397     1,302,298,604     189,701,180  
           
Non-current assets          
Property and equipment, net 40,985,174     87,549,117     12,752,967  
Intangible assets, net 7,717,754     8,506,343     1,239,089  
Land use rights, net -     34,703,551     5,055,142  
Other non-current assets 16,805,474     4,725,798     688,390  
Total non-current assets 65,508,402     135,484,809     19,735,588  
           
Total assets 1,185,251,799     1,437,783,413     209,436,768  
           
LIABILITIES          
Current liabilities          
Short-term bank borrowings 179,978,003     268,461,336     39,105,803  
Accounts payable 249,665,890     267,532,413     38,970,490  
Advance from customers 20,505,861     46,055,803     6,708,784  
Deferred revenue-current 12,666,330     20,164,726     2,937,324  
Accrued expenses and other current liabilities 134,184,026     178,013,692     25,930,618  
Total current liabilities 597,000,110     780,227,970     113,653,019  
           
Warranty-non current 17,609,842     16,615,204     2,420,277  
Deferred revenue-non current 234,801     1,373,147     200,021  
Total non-current liabilities 17,844,643     17,988,351     2,620,298  
           
Total liabilities 614,844,753     798,216,321     116,273,317  
           
SHAREHOLDERS’ EQUITY:          
Class A ordinary shares 83,120     83,218     12,122  
Class B ordinary shares 12,839     12,839     1,870  
Additional paid-in capital 1,717,483,548     1,723,456,696     251,049,774  
Accumulated other comprehensive loss (22,786,922 )   (22,563,727 )   (3,286,778 )
Accumulated deficit (1,124,385,539 )   (1,061,421,934 )   (154,613,537 )
Total shareholders’ equity 570,407,046     639,567,092     93,163,451  
           
Total liabilities and shareholders’ equity 1,185,251,799     1,437,783,413     209,436,768  
           


NIU TECHNOLOGIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
                   
  Three months ended June 30,   Six months ended June 30,
  2018    2019     2018    2019  
  RMB   RMB US$   RMB    RMB US$
Revenues 384,256,352     530,505,579   77,276,851     557,079,276     885,725,279   129,020,434  
Cost of revenues(a) (326,337,890 )   (405,017,981 ) (58,997,521 )   (477,185,072 )   (684,565,875 ) (99,718,263 )
Gross profit 57,918,462     125,487,598   18,279,330     79,894,204     201,159,404   29,302,171  
                   
Operating expenses:                  
Selling and marketing expenses(a) (50,968,566 )   (47,040,468 ) (6,852,217 )   (70,229,372 )   (76,862,661 ) (11,196,309 )
Research and development expenses(a) (45,937,014 )   (16,703,606 ) (2,433,155 )   (56,054,084 )   (31,036,186 ) (4,520,930 )
General and administrative expenses(a) (214,694,495 )   (19,157,409 ) (2,790,591 )   (233,317,120 )   (39,816,129 ) (5,799,873 )
Operating (loss)/income (253,681,613 )   42,586,115   6,203,367     (279,706,372 )   53,444,428   7,785,059  
                   
Changes in fair value of a convertible loan -     -   -     (34,499,858 )   -   -  
Interest expense (1,983,012 )   (2,596,692 ) (378,251 )   (3,905,315 )   (5,004,325 ) (728,962 )
Interest income 957,069     5,682,101   827,691     1,328,689     9,807,450   1,428,616  
Investment income 728,440     1,209,269   176,150     1,204,590     1,727,105   251,581  
Foreign currency exchange gain/(losses) 965,587     1,586,288   231,069     (402,662 )   (779,328 ) (113,522 )
Government grants 26,700     2,530,930   368,672     1,111,100     3,777,930   550,318  
(Loss)/income before income taxes (252,986,829 )   50,998,011   7,428,698     (314,869,828 )   62,973,260   9,173,090  
Income tax expense -     (16,616 ) (2,420 )   -     (9,655 ) (1,406 )
Net (loss)/income (252,986,829 )   50,981,395   7,426,278     (314,869,828 )   62,963,605   9,171,684  
                   
Other comprehensive income/(losses)                  
Foreign currency translation adjustment (13,967,724 )   11,761,823   1,713,303     (6,848,465 )   174,921   25,480  
Unrealized/(reclassification) of gain on available for sale securities, net 245,777     83,079   12,102     101,112     48,274   7,032  
Comprehensive (loss)/income (266,708,776 )   62,826,297   9,151,683     (321,617,181 )   63,186,800   9,204,196  
Net (loss)/income per share                  
—Basic (6.175 )   0.343   0.050     (8.456 )   0.423   0.062  
—Diluted (6.175 )   0.333   0.048     (8.456 )   0.411   0.060  
Net income per ADS                  
—Basic -     0.685   0.100     -     0.847   0.123  
—Diluted -     0.665   0.097     -     0.823   0.120  
                   
Weighted average number of shares outstanding used in computing net (loss)/income per share
—Basic 40,971,443     148,823,076   148,823,076     37,234,327     148,748,978   148,748,978  
—Diluted 40,971,443     153,302,652   153,302,652     37,234,327     153,016,518   153,016,518  
Weighted average number of ADS outstanding used in computing net income per ADS 
—Basic -     74,411,538   74,411,538     -     74,374,489   74,374,489  
—Diluted -     76,651,326   76,651,326     -     76,508,259   76,508,259  
                   
Note:                  
(a) Includes share-based compensation expenses as follows:                  
  Three months ended June 30,   Six months ended June 30,
  2018    2019     2018    2019  
  RMB   RMB US$   RMB    RMB US$
Cost of revenues 60,271     75,045   10,932     120,433     137,769   20,068  
Selling and marketing expenses 537,319     1,010,420   147,184     1,024,365     1,709,163   248,968  
Research and development expenses 36,844,965     447,013   65,115     40,117,972     871,928   127,011  
General and administrative expenses 181,645,512     1,605,466   233,862     192,684,133     3,057,794   445,418  
Total share-based compensation 219,088,067     3,137,944   457,093     233,946,903     5,776,654   841,465  
                   


NIU TECHNOLOGIES
RECONCILIATION OF GAAP AND NON-GAAP RESULTS
                   
  Three months ended June 30,   Six months ended June 30,
  2018    2019   2018    2019
  RMB    RMB US$   RMB    RMB US$
Net (loss)/income (252,986,829 )   50,981,395 7,426,278   (314,869,828 )   62,963,605 9,171,684
Add:                  
Share-based compensation 219,088,067     3,137,944 457,093   233,946,903     5,776,654 841,465
Change in fair value of a convertible loan -     - -   34,499,858     - -
Adjusted net (loss)/income (33,898,762 )   54,119,339 7,883,371   (46,423,067 )   68,740,259 10,013,149
                   

____________________________

1 Adjusted net income/loss (non-GAAP) is defined as net income/loss excluding share-based compensation expenses and change in fair value of a convertible loan.
2 Adjusted net income/loss margin is defined as adjusted net income/loss as a percentage of the revenues.

Source: Niu Technologies