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Niu Technologies Announces Second Quarter 2020 Financial Results

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Niu Technologies
·21 min read
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-- Second Quarter Total volume of e-scooter sales up 61.2% year over year

--Second Quarter Revenues of RMB 644.9 million, up 21.6% year over year

-- Second Quarter Net income of RMB 56.8 million, compared with RMB 51.0 million in the second quarter of last year

BEIJING, Aug. 17, 2020 (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 2020.

Second Quarter 2020 Financial Highlights

  • Revenues were RMB 644.9 million, an increase of 21.6% year over year

  • Gross margin was 23.0%, compared with 23.7% in the second quarter of last year

  • Net income was RMB 56.8 million, compared with RMB 51.0 million in the second quarter of last year

  • Adjusted net income (non-GAAP)1 was RMB 67.8 million, compared with RMB 54.1 million in the second quarter of last year

Second Quarter 2020 Operating Highlights

  • The number of e-scooters sold reached 160,138, up 61.2% year over year

  • The number of e-scooters sold in China reached 154,959, up 81.0% year over year

  • The number of e-scooters sold in the international markets reached 5,179, down 62.3% year over year

  • The number of franchised stores in China was 1,084, an increase of 51 since March 31, 2020

  • International sales network expanded to 35 distributors covering 45 countries

Dr. Yan Li, Chief Executive Officer of the Company, commented: “We are very pleased to see the strong recovery in China. Our China sales volume increased by 81% year over year driven by retail network expansion and new product launches. Our international sales decreased in the second quarter due to the continued impact from COVID-19. Since May, our overseas dealer shops gradually reopened and we expect to see recovery in the coming quarters. In light of the prospective volume growth, the Company made prepayment in May to acquire land use right of a new piece of land for future capacity expansion. Despite lower international sales and price discounts offered during new product launches, our gross margin reached 23% as a result of our continued cost optimization initiatives.”

Dr. Li continued, “In May and June, we launched two new models under Gova series, the G0 and G2. The Gova series is targeted at the mid-end e-scooter market, representing good value for money and high quality. The design language is differentiated in comparison to our main e-scooter lines. Both products were well received by the customers and we sold more than 26,000 units of these two products during the second quarter. In July, we launched MQiS, another new model under the MQi series. The MQiS inherits the design language of MQi series of being classic and fashionable. This model complies with the new national standard of electric bicycle in China. We are very excited about the enriched product portfolio and look forward to the continued growth of our business.”

Second Quarter 2020 Financial Results

Revenues were RMB 644.9 million, an increase of 21.6% year over year, due to higher sales volume of 61.2%, partially offset by decreased revenues per e-scooter of 24.6%.

Revenues
(in RMB million)

2020
Q2

2019
Q2

% change
YoY

E-scooter sales from China market

522.7

329.7

+58.5%

E-scooter sales from international markets

56.9

121.7

-53.2%

E-scooter sales, sub-total

579.6

451.4

+28.4%

Accessories, spare parts and services

65.3

79.1

-17.4%

Total

644.9

530.5

+21.6%


Revenues per e-scooter
(in RMB)

2020
Q2

2019
Q2

% change
YoY

E-scooter sales from China market2

3,373

3,851

-12.4%

E-scooter sales from international markets2

10,995

8,850

+24.2%

E-scooter sales

3,619

4,543

-20.3%

Accessories, spare parts and services3

408

796

-48.8%

Revenues per e-scooter

4,027

5,339

-24.6%

  • E-scooter sales revenues from China market were RMB 522.7 million, an increase of 58.5%, and represented 90.2% of total e-scooter revenues. The increase was mainly driven by retail network expansion and new product launches in China.

  • E-scooter sales revenues from international markets were RMB 56.9 million, a decrease of 53.2%, and represented 9.8% of total e-scooter revenues. The decrease was mainly driven by lower sales volumes in the international markets due to the adverse impact from COVID-19.

  • Accessories, spare parts sales and service revenues were RMB 65.3 million, a decrease of 17.4% and represented 10.1% of total revenues. The decrease was mainly due to lower spare parts sales from international markets.

  • Decreased revenues per e-scooter was mainly driven by lower proportion of revenues from international markets, the launch of new product G0 which has a lower sales price compared with other models, and price discounts offered during new product launches.

Cost of revenues was RMB 496.9 million, an increase of 22.7% 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 3,103, down 23.9% from RMB 4,076 in the second quarter 2019 mainly due to change in product mix and lower raw materials cost.

Gross margin was 23.0%, compared with 23.7% in the same period of 2019. The decrease was mainly due to a lower proportion of e-scooter revenues from international markets and a lower proportion of revenues from accessories, spare parts and services, but partially offset by cost savings on raw materials and components.

Operating expenses were RMB 92.6 million, an increase of 13.9% from the same period of 2019. Operating expenses as a percentage of revenues was 14.4%, compared with 15.3% in the second quarter of 2019.

  • Selling and marketing expenses were RMB 45.6 million (including RMB 2.9 million of share-based compensation), a decrease of 3.1% from RMB 47.0 million in the second quarter of 2019. The decrease was mainly due to the decrease in advertising and promotion expense of RMB 3.9 million, staff cost of RMB 1.1 million and travelling and office expense of RMB 0.6 million. The lower expenses were partially offset by the increase of depreciation and amortization expense of RMB 2.4 million which was due to opening of new franchised stores, and by the increase in share-based compensation expenses of RMB 1.9 million. Selling and marketing expenses as a percentage of revenues was 7.1% compared with 8.9% in the second quarter of 2019.

  • Research and development expenses were RMB 24.0 million (including RMB 3.1 million of share-based compensation), an increase of 43.5% from RMB 16.7 million in the second quarter of 2019, mainly due to the increase in staff cost of RMB 3.0 million, the increase in share-based compensation expense of RMB 2.7 million and the increase in design expense of RMB 1.1 million due to increased new products development efforts. Research and development expenses as a percentage of revenues was 3.7%, compared with 3.1% in the second quarter of 2019.

  • General and administrative expenses were RMB 23.0 million (including RMB 4.7 million of share-based compensation), an increase of 31.0% from RMB 17.6 million in the second quarter of 2019, mainly due to the increase in share-based compensation expense of RMB 3.1 million and taxes and surcharges of RMB 2.4 million. General and administrative expenses as a percentage of revenues was 3.6%, compared with 3.3% in the second quarter of 2019.

Operating expenses excluding share-based compensation were RMB 81.9 million, increased by 4.6% year over year, and represented 12.7% of revenues, compared with 14.8% in the second quarter of 2019.

  • Selling and marketing expenses excluding share-based compensation were RMB 42.7 million, a decrease of 7.2% year over year, and represented 6.6% of revenues, compared with 8.7% in the second quarter of 2019.

  • Research and development expenses excluding share-based compensation were RMB 20.9 million, an increase of 28.4% year over year, and represented 3.2% of revenues, compared with 3.1% in the second quarter of 2019.

  • General and administrative expenses excluding share-based compensation were RMB 18.3 million, an increase of 14.6% year over year, and represented 2.8% of revenues, compared with 3.0% in the second quarter of 2019.

Government grants were RMB 0.8 million, decreased by RMB 1.7 million from the same period of 2019.

Share-based compensation was RMB 10.9 million, an increase of RMB 7.8 million from the same period of 2019.

Net income was RMB 56.8 million, compared with RMB 51.0 million in the second quarter of 2019. The net income margin was 8.8%, compared with 9.6% in the same period of 2019.

Adjusted net income (non-GAAP) was RMB 67.8 million, compared with RMB 54.1 million in the second quarter of 2019. The adjusted net income margin4 was 10.5%, compared with 10.2% in the same period of 2019.

Basic and diluted net income per ADS were RMB 0.76 (US$ 0.11) and RMB 0.73 (US$ 0.10) respectively.

Balance Sheet
As of June 30, 2020, the Company had cash and cash equivalents, term deposits and short-term investments of RMB 1,018.2 million in aggregate. The Company had restricted cash of RMB 176.8 million and short-term bank borrowings of RMB 180.0 million.

Recent Development
In July 2020, NIU sold 70,685 e-scooters, representing a 63.7% year-over-year growth. The number of e-scooters sold in China market reached 67,883, representing a 64.1% year-over-year growth, despite adverse weather conditions in certain parts of China. The number of e-scooters sold in the international markets reached 2,802, representing a 56.1% year-over-year growth.

Business Outlook
NIU expects revenues of the third quarter 2020 to be in the range of RMB 850 million to RMB 950 million, representing a year-over-year increase of 30% to 45%.

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 in light of uncertainties and situations related to how COVID-19 develops.

Conference Call

The Company will host an earnings conference call on Monday, August 17, 2020 at 8:00 AM U.S. Eastern Time (8:00 PM Beijing/Hong Kong Time) to discuss its second quarter 2020 financial and business results and provide a corporate update.

To join via phone, participants need to register in advance of the conference call using the link provided below. Upon registration, participants will receive dial-in numbers, an event passcode, and a unique registrant ID, which will be used to join the conference call.

Event:

Niu Technologies Second Quarter 2020 Earnings Conference Call

Registration Link:

http://apac.directeventreg.com/registration/event/8748747

Conference ID:

8748747

A live and archived webcast of the conference call will be available on the investor relations website at https://ir.niu.com/news-and-events/webcasts-and-presentations.

A replay of the conference call can be accessed by phone two hours later at the following numbers until August 25, 2020.

United States

+1-855-452-5696

International

+61-281-990-299

Hong Kong

800-963-117

Mainland China

400-602-2065

Conference ID

8748747

About NIU

As the world’s leading provider of smart urban mobility solutions, NIU designs, manufactures and sells high-performance electric bicycles and motorcycles. NIU has a product portfolio consisting of seven series, four e-scooter series, including NQi, MQi and UQi with smart functions and Gova, two urban commuter electric motorcycles series RQi and TQi, and a performance bicycle series, NIU Aero. Different series of products address the needs of different segments of modern urban residents and resolve the demands of different scenarios of urban travel, 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 offer the products and 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 and adjusted net income 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 is defined as net income excluding share-based compensation expenses. Adjusted net income margin is defined as adjusted net income as a percentage of the revenues.

For more information on non-GAAP financial measures, please see the tables captioned “Reconciliation of GAAP and Non-GAAP Results.”

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 7.0651 to US$ 1.00, the exchange rate in effect as of June 30, 2020, 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 Contact:

Niu Technologies
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,

2019

2020

2020

RMB

RMB

US$

ASSETS

Current assets

Cash and cash equivalents

279,945,942

378,127,199

53,520,431

Term deposits

174,404,554

202,036,836

28,596,458

Restricted cash

221,656,071

176,788,936

25,022,850

Short-term investments

310,439,321

437,993,549

61,993,963

Accounts receivable, net

115,228,700

53,941,334

7,634,900

Inventories

178,633,299

160,754,011

22,753,253

Prepayments and other current assets

30,982,131

25,771,874

3,647,772

Total current assets

1,311,290,018

1,435,413,739

203,169,627

Non-current assets

Property and equipment, net

150,891,344

161,417,580

22,847,176

Intangible assets, net

7,779,749

6,857,864

970,668

Land use right, net

34,355,936

34,008,321

4,813,565

Deferred income tax assets

-

5,771,569

816,913

Other non-current assets

6,522,561

44,390,771

6,283,106

Total non-current assets

199,549,590

252,446,105

35,731,428

Total assets

1,510,839,608

1,687,859,844

238,901,055

LIABILITIES

Current liabilities

Short-term bank borrowings

217,394,132

180,000,000

25,477,346

Accounts payable

258,988,264

376,597,654

53,303,938

Income taxes payable

3,013,805

14,184,776

2,007,725

Advance from customers

7,478,309

35,899,780

5,081,284

Deferred revenue-current

31,105,700

23,411,691

3,313,710

Accrued expenses and other current liabilities

175,533,397

181,933,914

25,751,074

Total current liabilities

693,513,607

812,027,815

114,935,077

Deferred revenue-non-current

2,171,033

2,956,485

418,463

Deferred income tax liability

1,265,780

-

-

Other non-current liabilities

22,358,968

23,037,487

3,260,746

Total non-current liabilities

25,795,781

25,993,972

3,679,209

Total liabilities

719,309,388

838,021,787

118,614,286

SHAREHOLDERS’ EQUITY:

Class A ordinary shares

84,494

85,397

12,087

Class B ordinary shares

11,977

11,977

1,695

Additional paid-in capital

1,738,102,741

1,758,246,174

248,863,593

Accumulated other comprehensive loss

(12,368,224

)

(4,655,646

)

(658,964

)

Accumulated deficit

(934,300,768

)

(903,849,845

)

(127,931,642

)

Total shareholders’ equity

791,530,220

849,838,057

120,286,769

Total liabilities and shareholders’ equity

1,510,839,608

1,687,859,844

238,901,055


NIU TECHNOLOGIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended June 30,

Six months ended June 30,

2019

2020

2019

2020

RMB

RMB

US$

RMB

RMB

US$

Revenues

530,505,579

644,934,410

91,284,541

885,725,279

877,874,918

124,255,130

Cost of revenues(a)

(405,017,981

)

(496,852,342

)

(70,324,885

)

(684,565,875

)

(674,875,349

)

(95,522,406

)

Gross profit

125,487,598

148,082,068

20,959,656

201,159,404

202,999,569

28,732,724

Operating expenses:

Selling and marketing expenses(a)

(47,040,468

)

(45,603,755

)

(6,454,793

)

(76,862,661

)

(89,776,365

)

(12,707,020

)

Research and development expenses(a)

(16,703,606

)

(23,976,687

)

(3,393,680

)

(31,036,186

)

(46,712,272

)

(6,611,693

)

General and administrative expenses(a)

(17,571,121

)

(23,010,638

)

(3,256,944

)

(40,595,457

)

(47,259,880

)

(6,689,202

)

Total operating expenses

(81,315,195

)

(92,591,080

)

(13,105,417

)

(148,494,304

)

(183,748,517

)

(26,007,915

)

Government grants

2,530,930

826,367

116,965

3,777,930

8,092,250

1,145,384

Operating income

46,703,333

56,317,355

7,971,204

56,443,030

27,343,302

3,870,193

Interest expense

(2,596,692

)

(1,576,485

)

(223,137

)

(5,004,325

)

(3,748,959

)

(530,631

)

Interest income

5,682,101

2,378,442

336,647

9,807,450

5,367,879

759,774

Investment income

1,209,269

2,303,195

325,996

1,727,105

3,896,250

551,478

Income before income taxes

50,998,011

59,422,507

8,410,710

62,973,260

32,858,472

4,650,814

Income tax expense

(16,616

)

(2,595,658

)

(367,392

)

(9,655

)

(2,407,549

)

(340,766

)

Net income

50,981,395

56,826,849

8,043,318

62,963,605

30,450,923

4,310,048

Other comprehensive income

Foreign currency translation adjustment

11,761,823

59,950

8,485

174,921

6,546,907

926,655

Unrealized gain on available for sale securities, net

83,079

641,975

90,866

48,274

1,165,671

164,990

Comprehensive income

62,826,297

57,528,774

8,142,669

63,186,800

38,163,501

5,401,693

Net income per ordinary share

—Basic

0.34

0.38

0.05

0.42

0.20

0.03

—Diluted

0.33

0.37

0.05

0.41

0.20

0.03

Net income per ADS

—Basic

0.69

0.76

0.11

0.85

0.41

0.06

—Diluted

0.67

0.73

0.10

0.82

0.40

0.06

Weighted average number of ordinary shares and ordinary shares equivalents outstanding used in co

—Basic

148,823,076

150,301,999

150,301,999

148,748,978

150,001,842

150,001,842

—Diluted

153,302,652

155,175,644

155,175,644

153,016,518

154,098,590

154,098,590

Weighted average number of ADS outstanding used in computing net income per ADS

—Basic

74,411,538

75,151,000

75,151,000

74,374,489

75,000,921

75,000,921

—Diluted

76,651,326

77,587,822

77,587,822

76,508,259

77,049,295

77,049,295

Note:

(a) Includes share-based compensation expense as follows:

Three months ended June 30,

Six months ended June 30,

2019

2020

2019

2020

RMB

RMB

US$

RMB

RMB

US$

Cost of revenues

75,045

210,882

29,848

137,769

287,504

40,694

Selling and marketing expenses

1,010,420

2,888,358

408,821

1,709,163

4,491,000

635,660

Research and development expenses

447,013

3,109,286

440,091

871,928

5,081,977

719,307

General and administrative expenses

1,605,466

4,717,555

667,727

3,057,794

8,801,777

1,245,811

Total share-based compensation expense

3,137,944

10,926,081

1,546,487

5,776,654

18,662,258

2,641,472


NIU TECHNOLOGIES

RECONCILIATION OF GAAP AND NON-GAAP RESULTS

Three months ended June 30,

Six months ended June 30,

2019

2020

2019

2020

RMB

RMB

US$

RMB

RMB

US$

Net income

50,981,395

56,826,849

8,043,318

62,963,605

30,450,923

4,310,048

Add:

Share-based compensation expense

3,137,944

10,926,081

1,546,487

5,776,654

18,662,258

2,641,472

Adjusted net income

54,119,339

67,752,930

9,589,805

68,740,259

49,113,181

6,951,520

_________________________

1 Adjusted net income (non-GAAP) is defined as net income excluding share-based compensation expense.
2 Revenues per e-scooter on e-scooter sales from China or international markets is defined as e-scooter sales revenues from China or international markets divided by the number of e-scooters sold in China or international market in a specific period
3 Revenues per e-scooter on accessories, spare parts and services is defined as accessories, spare parts and services revenues divided by the total number of e-scooters sold in a specific period
4 Adjusted net income margin is defined as adjusted net income (non-GAAP) as a percentage of the revenues.