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Niu Technologies Announces First Quarter 2019 Financial Results

-- First Quarter Total volume of e-scooter sales up 75.7% year over year

-- First Quarter Revenues of RMB 355.2 million, up 105.5% year over year

-- First Quarter net income of RMB 12.0 million, up RMB 73.9 million year over year

BEIJING, May 13, 2019 (GLOBE NEWSWIRE) -- Niu Technologies (“Niu”, or “the Company”) (NIU), the world’s leading provider of smart urban mobility solutions, today announced its financial results for the first quarter 2019.

First Quarter 2019 Financial Highlights

  • Revenues were RMB 355.2 million, an increase of 105.5% year over year
  • Gross margin was 21.3%, compared with 12.7% in the first quarter of 2018
  • Net income was RMB 12.0 million, compared with net loss of RMB 61.9 million in the first quarter of 2018
  • Adjusted net income (non-GAAP)1 was RMB 14.6 million, compared with adjusted net loss of RMB 12.5 million in the first quarter of 2018

First Quarter 2019 Operating Highlights

  • The number of e-scooters sold reached 66,284, up 75.7% year over year
  • Franchised stores in China reached 881, an increase of 121 or 16% since December 31, 2018
  • Overseas sales network expanded to 23 distributors covering 28 countries
  • NIU entered into a definitive Development Collaboration Agreement with Volkswagen Group in Germany regarding the joint development of Micro-mobility solutions

Dr. Yan Li, Chief Executive Officer of the Company, commented: “Our business momentum continued in the first quarter. Sales volume grew 76% and revenues grew 106%. Gross margin increased significantly to 21.3%, a result of cost reduction and favorable changes in product and revenue mix. We achieved net income of RMB 12 million, a milestone for the Company that demonstrates our ability to grow profitably.”

Dr. Li continued, “We are committed to providing high-quality products to our customers. In April, we launched two all-new e-scooter models, the U+ and US, together with our new lifestyle brand category, Niu Aero bicycles. Meanwhile, we are expanding our global presence. In March, we attended the Seoul Motor Show and saw the potential for robust demand in South Korea. In April, we made our first shipment of scooters to the U.S. We are excited by our business prospects and look forward to continued growth in the quarters ahead.”  

First Quarter 2019 Financial Results

Revenues were RMB 355.2 million, an increase of 105.5% year over year, due to increased sales volume of 75.7% and increased revenues per e-scooter of 17.0%.

  • E-scooter sales represented 87.5% of revenues, while accessories, spare parts sales and service revenues represented 12.5% of revenues.
  • Higher e-scooter sales volume was mainly driven by the expanded sales network and higher demand on certain products ahead of the implementation of the new national standards. After the new national standards for electric bicycles became effective on April 15, 2019, certain existing models could no longer be sold in the category of electric bicycles. We accommodated some demand for these models during the first quarter.
  • Increased revenues per e-scooter was mainly driven by higher sales price of NGT model, a larger proportion of high-end model sales in the N and M series, and higher sales volume in accessories and spare parts.
  • China represented 81.2% of total e-scooter revenue, while overseas markets represented 18.8% of total e-scooter revenue, compared with 18.5% in the first quarter of 2018.

Cost of revenues were RMB 279.5 million, an increase of 85.3% 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 4,217, up 5.5% from RMB 3,998 in the first quarter 2018 as a result of product mix change.

Gross margin was 21.3%, up substantially from 12.7% in the same period of 2018, mainly due to lower raw material costs, higher retail prices, favorable changes in product mix and a greater proportion of revenue from accessories and spare parts.

Operating expenses were RMB 64.8 million, an increase of 35.0% from the same period of 2018. Operating expenses as a percentage of revenues was 18.2%, compared with 27.8% in the first quarter of 2018.

  • Selling and marketing expenses were RMB 29.8 million (including RMB 0.7 million of share-based compensation), an increase of 54.8% from RMB 19.3 million in the first quarter of 2018. The increase was mainly due to the increases in staff cost of RMB 4.0 million, depreciation and amortization expense of RMB 1.7 million, and advertising and promotion expense of RMB 1.4 million, which resulted from 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 8.4% compared with 11.1% in the first quarter of 2018.
  • Research and development expenses were RMB 14.3 million (including RMB 0.4 million of share-based compensation), an increase of 41.7% from RMB 10.1 million in the first quarter of 2018, mainly driven by the increases in staff cost of RMB 3.3 million and design expense of RMB 3.6 million, which was partially offset by the decrease of share-based compensation expenses of RMB 2.8 million. The share-based compensation was lower due to the full vesting of certain founders’ restricted ordinary shares in 2018. Research and development expenses as a percentage of revenues was 4.0%, compared with 5.9% in the first quarter of 2018.
  • General and administrative expenses were RMB 20.7 million (including RMB 1.5 million of share-based compensation), an increase of 10.9% from RMB 18.6 million in the first quarter of 2018, mainly due to increase in staff cost of RMB 5.4 million, professional fees of RMB 3.9 million, travelling and other expenses of RMB 2.4 million, as a result of increased number of staffs and engagement of professional firms to meet the regulatory requirements as a public company. The higher expenses were partially offset by decreases of share-based compensation expense of RMB 9.6 million due to the full vesting of certain founders’ restricted ordinary shares. General and administrative expenses as a percentage of revenues was 5.8%, compared with 10.8% in the first quarter of 2018.

Operating expenses excluding share-based compensation was RMB 62.2 million, increased by 87.5% year over year, and represented 17.5% of revenues, compared with 19.2% in the first quarter of 2018.

  • Selling and marketing expenses excluding share-based compensation were RMB 29.1 million, an increase of 55.1% year over year, and represented 8.2% of revenues, compared with 10.9% in the first quarter of 2018
  • Research and development expenses excluding share-based compensation were RMB 13.9 million, an increase of 103.2% year over year, and represented 3.9% of revenues, compared with 4.0% in the first quarter of 2018
  • General and administrative expenses excluding share-based compensation were RMB 19.2 million, an increase of 153.2% year over year, and represented 5.4% of revenues, compared with 4.4% in the first quarter of 2018

Change in fair value of a convertible loan was nil, compared to a loss of RMB 34.5 million associated with change in fair value of a convertible loan in the same period of 2018.

Share-based compensation was RMB 2.6 million, a decrease of RMB 12.3 million compared to RMB 14.9 million in the same period of last year mainly because certain founders’ restricted ordinary shares have been fully vested during 2018.

Net income was RMB 12.0 million, an improvement of RMB 73.9 million compared with a net loss of RMB 61.9 million in the first quarter of 2018.

Adjusted net income (non-GAAP) was RMB 14.6 million, compared with an adjusted net loss of RMB 12.5 million in the first quarter of 2018. The adjusted net income margin2 was 4.1%, compared with an adjusted net loss margin of 7.2% in the same period of 2018.

Basic and diluted net income per ADS were RMB 0.161 (US$ 0.024) and RMB 0.157 (US$ 0.023) respectively.

Balance Sheet
As of March 31, 2019, the Company had cash, term deposit and short-term investments of RMB 694.1 million in aggregate. The Company had restricted cash of RMB 205.1 million and short-term bank borrowings of RMB 208.5 million.

Business Outlook
Because certain distributors advanced their purchase in the first quarter ahead of the implementation of the new national standard in April, NIU expects revenues of second quarter to be in the range of RMB 580 million to RMB 660 million, representing a year-over-year increase of 50.9% to 71.8%. The revenue for the first half of 2019 will be in the range of RMB 935 million to RMB 1,015 million, representing a year-over-year increase of 67.9% to 82.2%.

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.

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.

Conference Call

The Company will host a conference call at 8:00 a.m. on May 13, 2019, Eastern Time (8:00 p.m. May 13, 2019 Beijing/Hong Kong time), to discuss its first 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
Hong Kong +852-800-906-601
Mainland China +86-400-620-8038
Other International +65-6713-5090
Conference ID 8141818

A replay will be accessible through May 21, 2019, by dialing the following numbers:

United States +1-855-452-5696
Hong Kong +852-800-963-117
Mainland China +86-400-602-2065
Other International +61-281-990-299
Replay Access Code 8141818

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

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, adjusted net income/loss margin and adjusted basic and diluted net income per ADS. 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 RMB6.7112 to US$1.00, the exchange rate in effect as of March 29, 2019, as set forth in the H.10 Statistical release of the Board of Governors of the Federal Reserve System. The Company makes no representation that the RMB or US$ 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
Investor Relations Manager
Jason Yang
E-mail: ir@niu.com

The Blueshirt Group
Gary Dvorchak, CFA
E-mail: gary@blueshirtgroup.com

 
NIU TECHNOLOGIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
  As of
December 31,
As of March 31,
  2018 2019
   RMB  RMB US$
ASSETS        
Current assets        
Cash 569,059,591     490,172,614   73,037,998  
Term deposit 27,452,663     134,669,636   20,066,402  
Restricted cash-current 179,262,714     205,071,000   30,556,532  
Short-term investments 120,241,425     69,213,580   10,313,145  
Accounts receivable, net 54,424,845     81,462,030   12,138,221  
Inventories 142,382,205     153,094,732   22,811,827  
Prepayments and other current assets 26,919,954     46,336,261   6,904,318  
Total current assets 1,119,743,397   1,180,019,853   175,828,443  
     
Non-current assets        
Property and equipment, net 40,985,174     59,845,866   8,917,312  
Intangible assets, net 7,717,754     9,016,984   1,343,573  
Other non-current assets 16,805,474     14,708,292   2,191,604  
Total non-current assets 65,508,402   83,571,142   12,452,489  
     
Total assets 1,185,251,799   1,263,590,995   188,280,932  
LIABILITIES        
Current liabilities
Short-term bank borrowings 179,978,003     208,461,336   31,061,708  
Accounts payable 249,665,890     275,862,207   41,104,751  
Advance from customers 20,505,861     44,845,236   6,682,149  
Deferred revenue-current 12,666,330     13,629,057   2,030,793  
Accrued expenses and other current liabilities 134,184,026     130,829,930   19,494,268  
Total current liabilities   597,000,110     673,627,766     100,373,669  
     
Warranty-non current 17,609,842     16,173,789   2,409,970  
Deferred revenue-non current 234,801     383,181   57,096  
Total non-current liabilities   17,844,643     16,556,970     2,467,066  
     
Total liabilities   614,844,753     690,184,736     102,840,735  
     
SHAREHOLDERS’ EQUITY:        
Class A ordinary shares 83,120     83,120   12,385  
Class B ordinary shares 12,839     12,839   1,913  
Additional paid-in capital 1,717,483,548     1,720,122,258   256,306,213  
Accumulated other comprehensive loss (22,786,922 )   (34,408,629 ) (5,127,046 )
Accumulated deficit (1,124,385,539 )   (1,112,403,329 ) (165,753,268 )
Total shareholders’ equity   570,407,046     573,406,259     85,440,197  
     
Total liabilities and shareholders’ equity 1,185,251,799   1,263,590,995   188,280,932  
               


 
NIU TECHNOLOGIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME
 
  Three months ended March 31,
  2018 2019
  RMB  RMB US$
Revenues 172,822,924     355,219,700   52,929,387  
Cost of revenues(a) (150,847,182 )   (279,547,894 ) (41,653,936 )
Gross profit   21,975,742     75,671,806     11,275,451  
Operating expenses:        
Selling and marketing expenses(a) (19,260,806 )   (29,822,193 ) (4,443,645 )
Research and development expenses(a) (10,117,070 )   (14,332,580 ) (2,135,621 )
General and administrative expenses(a) (18,622,625 )   (20,658,720 ) (3,078,245 )
Operating (loss)/income   (26,024,759 )   10,858,313     1,617,940  
 
Changes in fair value of a convertible loan (34,499,858 )   -   -  
Interest expense (1,922,303 )   (2,407,633 ) (358,749 )
Interest income 371,620     4,125,349   614,696  
Investment income 476,150     517,836   77,160  
Foreign currency exchange losses (1,368,249 )   (2,365,616 ) (352,488 )
Government grants 1,084,400     1,247,000   185,809  
(Loss)/income before income taxes   (61,882,999 )   11,975,249     1,784,368  
Income tax benefit -     6,961   1,037  
Net (loss)/income   (61,882,999 )   11,982,210     1,785,405  
 
Other comprehensive income/(losses)        
Foreign currency translation adjustment 7,119,259     (11,586,902 ) (1,726,502 )
Unrealized/(reclassification) of gain on available for sale securities, net (144,665 )   (34,805 ) (5,186 )
Comprehensive (loss)/income   (54,908,405 )   360,503     53,717  
Net (loss)/income per share
—Basic (1.853 )   0.081   0.012  
—Diluted (1.853 )   0.078   0.012  
Net income per ADS
—Basic -     0.161   0.024  
—Diluted -     0.157   0.023  
       
Weighted average number of shares outstanding used in computing net (loss)/income per share        
—Basic 33,396,210     148,674,058   148,674,058  
—Diluted 33,396,210     153,094,498   153,094,498  
Weighted average number of ADS outstanding used in computing net income per ADS        
—Basic -     74,337,029   74,337,029  
—Diluted -     76,547,249   76,547,249  
 
Note:
(a) Includes share-based compensation expenses as follows:
  Three months ended March 31,
  2018 2019
  RMB  RMB US$
Cost of revenues 60,162     62,724   9,346  
Selling and marketing expenses 487,046     698,743   104,116  
Research and development expenses 3,273,007     424,915   63,314  
General and administrative expenses 11,038,621     1,452,328   216,404  
Total share-based compensation   14,858,836     2,638,710     393,180  
               
               
NIU TECHNOLOGIES  
RECONCILIATION OF GAAP AND NON-GAAP RESULTS  
   
  Three months ended March 31,  
  2018 2019  
  RMB  RMB US$  
Net (loss)/income (61,882,999 )   11,982,210 1,785,405  
Add:          
Share-based compensation 14,858,836     2,638,710 393,180  
Change in fair value of a convertible loan 34,499,858     - -  
Adjusted net (loss)/income   (12,524,305 )   14,620,920   2,178,585