CCSC Technology International Holdings Limited Reports Financial Results for the First Six Months of Fiscal Year 2024
HONG KONG, Feb. 23, 2024 /PRNewswire/ -- CCSC Technology International Holdings Limited (the "Company" or "CCSC") (NASDAQ:CCTG), a Hong Kong-based company that engages in the sale, design and manufacturing of interconnect products, including connectors, cables and wire harnesses, today announced its unaudited financial results for the first six months of fiscal year 2024 ended September 30, 2023.
Mr. Kung Lok Chiu, Chief Executive Officer and Director of the Company, commented, "During the first six months of fiscal year 2024, amidst macroeconomic uncertainties and rising supply chain costs, our revenue and gross profit decreased from the same period of last year; however, our gross margin remained stable despite the challenging environment. Furthermore, in January 2024, we completed our initial public offering and listing on the Nasdaq Capital Market under the ticker symbol "CCTG", which we expect to enhance our competitiveness globally. Looking forward, we plan to strategically focus on growing industries, such as new energy, robotics, and medical. We also plan to keep investing in research and development and offering innovative and cost-effective products to our customers. We are committed to delivering high-quality products to our customers and generating long-term value for our shareholders."
First Six Months of Fiscal Year 2024 Financial Highlights
- Revenue was $7.5 million for the six months ended September 30, 2023, compared to $15.6 million for the same period of last year.
- Gross profit was $2.3 million for the six months ended September 30, 2023, compared to $5.4 million for the same period of last year.
- Loss from operations was $0.3 million for the six months ended September 30, 2023, compared to income from operations of $2.1 million for the same period of last year.
- Net income was $0.4 million for the six months ended September 30, 2023, compared to $2.8 million for the same period of last year.
- Basic and diluted earnings per share was $0.04 for the six months ended September 30, 2023, compared to $0.28 for the same period of last year.
First Six Months of Fiscal Year 2024 Financial Results
Revenue
Total revenue was $7.5 million for the six months ended September 30, 2023, which decreased by 52.0% from $15.6 million for the same period of last year.
The following table sets forth revenue by interconnect products:
For the Six Months Ended September 30, | Change | |||||||||||||||||||||||
($ millions) | 2023 | % | 2022 | % | Amount | % | ||||||||||||||||||
Cables and wire harnesses | 6.9 | 91.8 | % | 14.5 | 93.0 | % | (7.6) | (52.6) | % | |||||||||||||||
Connectors | 0.6 | 8.2 | % | 1.1 | 7.0 | % | (0.5) | (43.5) | % | |||||||||||||||
Total | 7.5 | 100.0 | % | 15.6 | 100.0 | % | (8.1) | (52.0) | % | |||||||||||||||
Revenue generated from cables and wire harnesses decreased by 52.6%, to $6.9 million for the six months ended September 30, 2023, from $14.5 million for the same period of last year. Revenue generated from connectors decreased by 43.5%, to $0.6 million for the six months ended September 30, 2023, from $1.1 million for the same period of last year.
The decrease in our revenue was primarily attributable to the decrease in sales volume. We experienced a contraction in demand, primarily because a number of our customers had purchased our products in advance in fiscal year 2022 and the first half of fiscal year 2023 in anticipation of higher supply chain costs. Customers also preferred reduced inventory, due to uncertainties about macroeconomic conditions.
The following table sets forth the disaggregation of revenue by regions:
For the Six Months Ended September 30, | Change | |||||||||||||||||||||||
($ millions) | 2023 | % | 2022 | % | Amount | % | ||||||||||||||||||
Europe | 4.3 | 57.8 | % | 9.8 | 62.8 | % | (5.5) | (55.8) | % | |||||||||||||||
Asia | 2.4 | 31.8 | % | 4.7 | 29.8 | % | (2.3) | (48.7) | % | |||||||||||||||
Americas | 0.8 | 10.4 | % | 1.2 | 7.4 | % | (0.4) | (32.9) | % | |||||||||||||||
Total | 7.5 | 100.0 | % | 15.6 | 100.0 | % | (8.1) | (52.0) | % | |||||||||||||||
Revenue generated from Europe decreased by 55.8%, to $4.3 million for the six months ended September 30, 2023, from $9.8 million for the same period of last year. The decrease was primarily due to the decrease of sales in Denmark, Hungary and Finland.
Revenue generated from Asia decreased by 48.7%, to $2.4 million for the six months ended September 30, 2023, from $4.7 million for the same period of last year. The decrease was primarily due to sales decreases in China of $1.5 million, and sales decreases in the Association of Southeast Asian Nations, or ASEAN, of $0.8 million.
Revenue generated from the Americas decreased by 32.9%, to $0.8 million for the six months ended September 30, 2023, from $1.2 million for the same period of last year. The decrease was primarily due to sales decreases in Northern America of $0.4 million.
Cost of Revenue
Cost of revenue decreased by 48.7%, to $5.2 million for the six months ended September 30, 2023, from $10.2 million for the same period of last year, which was in line with the decrease of the total revenue.
Inventory costs amounted to $3.5 million for the six months ended September 30, 2023, compared to $7.9 million for the same period of last year. The decrease of inventory costs was primarily due to a 51.5% decrease in the total sales volume and an 8.5% decrease in the inventory cost per unit.
Labor costs amounted to $1.2 million for the six months ended September 30, 2023, compared to $1.7 million for the same period of last year. The decrease of labor costs was primarily due to the reduction in the number of our manufacturing employees.
Gross Profit and Gross Margin
Gross profit decreased by 58.1%, to $2.3 million for the six months ended September 30, 2023, from $5.4 million for the same period of last year.
Gross profit margin decreased by 4.4%, to 30.4% for the six months ended September 30, 2023, from 34.8% for the same period of last year. The gross profit margin was generally on par with the same period of 2022.
Operating Expenses
Operating expenses decreased by 23.2%, to $2.6 million for the six months ended September 30, 2023, from $3.3 million for the same period of last year. The expense reduction was mainly due to the decreases in the selling expenses, general and administrative expenses, and research and development expenses.
Other Income/(Expenses)
Other income decreased by 37.0%, to $0.6 million for the six months ended September 30, 2023, from $1.0 million for the same period of last year. The decrease included an increase in foreign exchange loss of $0.4 million.
Net Income
Net income decreased by 85.4%, to $0.4 million for the six months ended September 30, 2023, from $2.8 million for the same period of last year.
Basic and Diluted Earnings per Share
Basic and diluted earnings per share was $0.04 for the six months ended September 30, 2023, compared to $0.28 for the same period of last year.
Recent Development
On January 22, 2024, the Company completed its initial public offering (the "Offering") of 1,375,000 ordinary shares at a public price of $4.00 per share. On February 8, 2024, the underwriters of Offering exercised their over-allotment option in full to purchase an additional 206,250 ordinary shares of the Company at the public offering price of US$4.00 per share. The gross proceeds were $6.325 million from the Offering, before deducting underwriting discounts and commissions, and other expenses. The Company's ordinary shares began trading on the Nasdaq Capital Market on January 18, 2024, under the ticker symbol "CCTG."
About CCSC Technology International Holdings Limited
CCSC Technology International Holdings Limited, is a Hong Kong-based company that engages in the sale, design and manufacturing of interconnect products. The Company specializes in customized interconnect products, including connectors, cables and wire harnesses that are used for a range of applications in a diversified set of industries, including industrial, automotive, robotics, medical equipment, computer, network and telecommunication, and consumer products. The Company produces both OEM ("original equipment manufacturer") and ODM ("original design manufacture") interconnect products for manufacturing companies that produce end products, as well as electronic manufacturing services ("EMS") companies that procure and assemble products on behalf of such manufacturing companies. The Company has a diversified global customer base located in more than 25 countries throughout Asia, Europe and the Americas. For more information, please visit the Company's website: http://ir.ccsc-interconnect.com.
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements, including, but not limited to, the Company's proposed Offering. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company's current expectations and projections about future events that may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as "may," "will," "could," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "is/are likely to," "propose," "potential," "continue", or other similar expressions in this press release. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company's registration statement and other filings with the U.S. Securities and Exchange Commission.
For more information, please contact:
CCSC Technology International Holdings Limited
Investor Relations Department
Email: [email protected]
Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: [email protected]
CCSC TECHNOLOGY INTERNATIONAL HOLDINGS LIMITED | ||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Amount in U.S. dollars, except for number of shares) | ||||||||
As of | As of | |||||||
Assets | (Unaudited) | |||||||
Current assets: | ||||||||
Cash | $ | 7,370,501 | $ | 7,708,310 | ||||
Restricted cash | 9,095 | 9,305 | ||||||
Accounts receivable | 2,295,302 | 2,260,222 | ||||||
Inventories, net | 1,854,088 | 2,187,518 | ||||||
Deferred initial public offering costs | 1,419,736 | 1,051,038 | ||||||
Prepaid expenses and other current assets | 1,407,266 | 1,242,054 | ||||||
Total current assets | 14,355,988 | 14,458,447 | ||||||
Non-current assets: | ||||||||
Property, plant and equipment, net | 179,169 | 211,949 | ||||||
Intangible asset, net | 66,787 | 88,319 | ||||||
Operating right-of-use assets, net | 1,754,977 | 2,121,070 | ||||||
Deferred tax assets, net | 115,989 | 41,015 | ||||||
Other non-current assets | 39,387 | 41,844 | ||||||
Total non-current assets | 2,156,309 | 2,504,197 | ||||||
TOTAL ASSETS | $ | 16,512,297 | $ | 16,962,644 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,009,560 | $ | 1,663,749 | ||||
Advance from customers | 125,218 | 186,874 | ||||||
Accrued expenses and other current liabilities | 1,537,312 | 1,648,970 | ||||||
Taxes payable | 361,035 | 365,851 | ||||||
Operating lease liabilities – current | 434,871 | 485,051 | ||||||
Long-term bank loan - current | — | 39,725 | ||||||
Total current liabilities | 4,467,996 | 4,390,220 | ||||||
Non-current liabilities: | ||||||||
Operating lease liabilities – non-current | 1,343,653 | 1,653,411 | ||||||
Total non – current liabilities | 1,343,653 | 1,653,411 | ||||||
TOTAL LIABILITIES | $ | 5,811,649 | $ | 6,043,631 | ||||
Commitments and Contingencies | — | — | ||||||
Shareholders' equity | ||||||||
Ordinary shares, par value of US$0.0005 per share; 100,000,000 shares authorized, | 5,000 | 5,000 | ||||||
Subscription receivable | — | (5,000) | ||||||
Additional paid-in capital | 1,236,773 | 1,236,773 | ||||||
Statutory reserve | 813,235 | 813,235 | ||||||
Retained earnings | 10,628,306 | 10,214,692 | ||||||
Accumulated other comprehensive loss | (1,982,666) | (1,345,687) | ||||||
Total shareholders' equity | 10,700,648 | 10,919,013 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 16,512,297 | $ | 16,962,644 | ||||
*The shares and per share information are presented on a retroactive basis to reflect the corporate subdivision and 1 to 2 share split.
CCSC TECHNOLOGY INTERNATIONAL HOLDINGS LIMITED | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
AND COMPREHENSIVE (LOSS)/INCOME | ||||||||
(Amount in U.S. dollars, except for number of shares) | ||||||||
For the six months ended | ||||||||
2023 | 2022 | |||||||
Net revenue | $ | 7,503,520 | $ | 15,620,925 | ||||
Cost of revenue | (5,223,159) | (10,181,670) | ||||||
Gross profit | 2,280,361 | 5,439,255 | ||||||
Operating expenses: | ||||||||
Selling expenses | (473,636) | (566,879) | ||||||
General and administrative expenses | (1,753,179) | (2,202,153) | ||||||
Research and development expenses | (338,038) | (568,648) | ||||||
Total operating expenses | (2,564,853) | (3,337,680) | ||||||
Loss/(Income) from operations | (284,492) | 2,101,575 | ||||||
Other income/(expenses): | ||||||||
Other non-operating income, net | 51,628 | 16,221 | ||||||
Government subsidies | — | 59,079 | ||||||
Foreign currency exchange gains | 539,844 | 921,565 | ||||||
Financial and interest income/(expenses), net | 35,783 | (1,483) | ||||||
Total other income | 627,255 | 995,382 | ||||||
Income before income tax expense | 342,763 | 3,096,957 | ||||||
Income tax benefits/(expenses) | 70,851 | (256,607) | ||||||
Net income | 413,614 | 2,840,350 | ||||||
Other comprehensive (loss)/income | ||||||||
Foreign currency translation adjustment | (636,979) | (1,096,403) | ||||||
Total comprehensive (loss)/income | $ | (223,365) | $ | 1,743,947 | ||||
Earnings per share | ||||||||
Basic and Diluted | $ | 0.04 | $ | 0.28 | ||||
Weighted average number of ordinary shares | ||||||||
Basic and Diluted* | 10,000,000 | 10,000,000 | ||||||
* The shares and per share information are presented on a retroactive basis to reflect the corporate subdivision and 1 to 2 share split.
CCSC TECHNOLOGY INTERNATIONAL HOLDINGS LIMITED | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Amount in U.S. dollars, except for number of shares) | ||||||||
For the six months ended | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 413,614 | $ | 2,840,350 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Change in inventory reserve | 73,643 | (10,202) | ||||||
Depreciation and amortization | 114,208 | 172,174 | ||||||
Amortization of right-of-use asset | 251,865 | 276,485 | ||||||
Loss from disposal of fixed assets | 595 | 363 | ||||||
Deferred tax (expenses)/benefits | (79,198) | 1,450 | ||||||
Foreign currency exchange gains | (539,844) | (921,565) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (47,683) | (2,227,930) | ||||||
Inventories | 164,072 | 1,559,757 | ||||||
Amount due from related parties | — | 478,724 | ||||||
Prepaid expenses and other current assets | (223,354) | 39,894 | ||||||
Operating right-of-use assets | — | (2,281,448) | ||||||
Other non-current assets | — | 42,077 | ||||||
Accounts payable | 418,473 | (600,059) | ||||||
Advance from customers | (60,075) | (43,413) | ||||||
Taxes payable | (4,408) | 151,071 | ||||||
Accrued expenses and other current liabilities | (39,341) | (56,394) | ||||||
Operating lease liabilities | (244,763) | 1,987,398 | ||||||
Amount due to related parties | — | (215,163) | ||||||
Net cash provided by operating activities | 197,804 | 1,193,569 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (52,025) | (110,498) | ||||||
Proceed from disposal of property and equipment | — | 11 | ||||||
Purchase of intangible asset | (19,217) | (23,691) | ||||||
Net cash used in investing activities | (71,242) | (134,178) | ||||||
CASH FLOWS FORM FINANCING ACTIVITIES | ||||||||
Proceeds from short-term bank loans | — | 136,641 | ||||||
Repayments of long-term bank loans | (39,817) | (77,478) | ||||||
Payment for deferred initial public offering costs | (366,094) | (442,399) | ||||||
Capital contribution by shareholders | 5,000 | — | ||||||
Net cash used in financing activities | (400,911) | (383,236) | ||||||
Effect of exchange rate changes on cash and restricted cash | (63,670) | (60,781) | ||||||
Net change in cash and restricted cash | (338,019) | 615,374 | ||||||
Cash and restricted cash, beginning of the period | 7,717,615 | 5,285,940 | ||||||
Cash and restricted cash, end of the period | $ | 7,379,596 | $ | 5,901,314 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Cash paid for income tax | $ | (39,402) | $ | (39,113) | ||||
Cash paid for interest | $ | (228) | $ | (3,154) | ||||
Cash paid for operating lease | $ | (288,667) | $ | (309,679) | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Right-of-use assets obtained in exchange for operating lease obligations | $ | — | $ | 1,955,909 | ||||
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SOURCE CCSC Technology International Holdings Limited