CBAK Energy Technology, Inc. (NASDAQ:CBAT) Q3 2023 Earnings Call Transcript November 9, 2023

CBAK Energy Technology, Inc. beats earnings expectations. Reported EPS is $0.07046, expectations had been $-0.03.

Operator: Good day, girls and gents. Thank you for standing by. And welcome to CBAT Energy Technology’s Third Quarter 2023 Earnings Conference Call. Currently, all contributors are in a pay attention solely mode. Later we’ll conduct a question-and-answer session and directions will observe at the moment. As a reminder, we’re recording at the moment’s name. If you could have any objections, it’s possible you’ll disconnect right now. Now, I’ll flip the decision over to Thierry Li, CFO and Secretary of the Board. Mr. Li, please proceed.

Thierry Li: Thank you, operator. And hey, everybody. Welcome to CBAT Energy’s third quarter of 2023 earnings convention name. Joining us at the moment are Mr. Yunfei Li, Chief Executive Officer of CBAT Energy, myself, Chief Financial Officer and Secretary of the Board; and Jennifer, our interpreter. Our General Engineer, Mr. Xiujun Tian will be part of us for the Q&A bit. We launched our outcomes earlier at the moment. The press launch is accessible on the corporate’s IR web site at ir.cbat.com.cn, in addition to from newswire providers. A replay of this name will even be obtainable in just a few hours on our IR web site. Before we proceed, please word that at the moment’s dialogue will comprise forward-looking statements made beneath the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements contain inherent dangers and uncertainties as such, the corporate’s precise outcomes could also be materially totally different from the expectations expressed at the moment. Further data relating to these and different dangers and uncertainties is included within the firm’s public filings with the SEC. The firm does not assume any obligations to replace any forward-looking statements besides as required beneath relevant legal guidelines. Also, please word that, except in any other case said, all figures talked about throughout the convention name are in US {dollars}. With that, let me now flip the decision over to our CEO, Mr. Yunfei Li. Mr. Li will converse in Chinese and I’ll translate his feedback into English. Go forward, Mr. Li.

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Yunfei Li: [Foreign Language] Thank you. And hey, everybody. Thank you for becoming a member of our earnings convention name at the moment. [Foreign Language] We are delighted to realize one other excellent quarter of development in our battery enterprise. In the third quarter of 2023, our battery enterprise generated revenues of $44.33 million, hovering by 71.51% year-over-year. Compared to the working loss recorded in the identical interval final yr throughout this quarter, we delivered on working revenue of $7.58 million, a internet revenue of $7.77 million, which was 6.3 occasions that of the identical interval final yr. Of these revenues $42.81 million got here from batteries utilizing power storge purposes, a surge of 73.5% year-over-year , whereas $0.4 million got here from batteries utilized in electrical automobiles, a rise of 19.5 occasions year-over-year.

Moreover, revenues from batteries utilizing gentle electrical automobiles had been $1.11 million, down 2.8% year-over-year. For the primary 9 months of 2023, our battery enterprise generated revenues of $96.16 million, a rise of 44.43% year-over-year, whereas delivering an working revenue of $6.15 million, together with a internet revenue of $6.75 million. The development throughout our monetary metrics was primarily attributed to our sturdy basis of key purchasers, notably excessive worth purchasers from Europe and US. Orders from these purchasers have demonstrated distinctive stability and sustainability. We are assured in sustaining sturdy efficiency and revenue development within the upcoming reporting durations. Today, the market nonetheless faces numerous exterior pressures and challenges together with the worldwide financial system slowdown.

We are proud to face out as one of many few Chinese battery producers reaching file development and profitability amidst the present macro financial system surroundings. Our exceptional efficiency have garnered substantial curiosity from fairness buyers who’ve reached out to us relating to our newest developments. [Foreign Language] Let me share a extra detailed replace on our enterprise initiatives throughout the third quarter. With our elevated visibility and enhanced fame worldwide, our order quantity continued to rise. As of November 1, 2023, now we have recorded roughly RMB900 million within the mixed worth of orders now we have obtained however have but to meet throughout our two predominant battery manufacturing services based mostly in Dalian and Nanjing. Currently, orders for the Dalian facility have been scheduled towards the top of 2024 and our Nanjing facility can be overwhelmed.

Incoming orders from new purchasers might be topic to additional scheduling. In different phrases, each our income and profitability will keep sturdy development momentum over an prolonged horizon. [Foreign Language] Regarding shopper initiatives already introduced, as of November the first, 2023, our collaboration with PowerOak, the world’s main transportable energy station producer and mum or dad firm of high rated transportable energy provide model, BlueTTI, has supplied us greater than totaling round RMB43.2 million. We additionally made nice strides in our partnership with JinPeng Group, the most important producer of scooters and electrical tricycles worldwide producing orders amounting to roughly RMB63.59 million. In addition, I need to spotlight our continued initiatives with Viessmann Group, a number one European producer of heating and cooling methods.

Our productive collaborations has translated into orders totaling as much as EUR116.5 million from the start of 2023 to November the first. Another main accomplice of ours is Anker Innovations, one of many largest third-party accent suppliers globally for Apple Incorporated’s merchandise. Following our signing in September, now we have obtained orders from Anker Innovations amounting to RMB58.35 million. It is known that Anker Innovations will spur important demand for our batteries and is anticipated to position month-to-month orders on a continued foundation. Furthermore, I need to spotlight the truth that now we have been into discussions relating to numerous operations together with offering merchandise and posts with a number of main prospects from Europe and the US. We will preserve our buyers knowledgeable of any important updates.

An in depth up picture of a technician altering a battery cell in a lithium-based battery.

[Foreign Language] With a concentrate on assembly prime purchasers with scale about funding in manufacturing capability and R&D, within the third quarter of 2023, each our Dalian and Nanjing services have reached a manufacturing capability of 1 gigawatt hour. Our subsidiary Dalian CBAK energy is at the moment engaged within the improvement of mannequin 46115 and mannequin 46157 lithium batteries, that are new to the market and bigger than the present market favourite mannequin 46800 with increased power density and an prolonged lifespan, these new fashions are perfect for large-scale power storage situations. Our R&D crew is diligently driving these initiatives ahead and we anticipate to have the capability to mass produce the mannequin 46115 batteries subsequent yr. In the long-term plans, we’ll develop the manufacturing capability for the collection 46 batteries to fifteen gigawatt hours on the Dalian facility, reaching additional provide ramp up.

In the meantime, the development of our Nanjing Phase 2 venture has been in full swing. The manufacturing unit rule has been accomplished which permits six gigawatt hours of manufacturing capability within the first stage. And we anticipate this manufacturing to have means to be delivered absolutely outfitted and operational quickly. Hence I want to spotlight that we’ll have nice to supply lengthy capability subsequent yr to deal with the present overwhelming present demand. We will elevate our manufacturing expectancy and additional propel high line development. [Foreign Language] Finally, and importantly, let me stroll you thru our mass manufacturing of sodium ion batteries. As the one firm in China able to mass producing sodium ion batteries, now we have engaged in in depth discussions with a number of buyers on constructing a sodium ion battery plant.

In the close to future, we anticipate to finalize a considerable quantity of personal fairness financing to experience the event of our sodium ion battery plant with the goal manufacturing capability of 10 gigawatt hours with the accelerated industrial adoption of sodium ion batteries, we imagine it should turn out to be a pivotal focus throughout numerous sub-sectors comparable to electrical scooters, low pace automobiles, power storage energy stations and family power storage options. Looking forward, the corporate might be empowered by a twin engine development mannequin, a formidable 36 gigawatt hour manufacturing capability of lithium batteries and a exceptional 10 gigawatt hour manufacturing capability of sodium ion batteries matrix. We stay up for collaborating with our buyers and companions to advance the evolution of the brand new power construction and environmental safety applied sciences.

[Foreign Language] Now, let me flip the decision over to our CFO, Thierry Li who will present particulars on our monetary efficiency.

Thierry Li: Thank you, Mr. Li and thanks everybody for becoming a member of our name at the moment. I’ll now go over our key monetary outcomes for the third quarter of 2023. For the total particulars of our monetary outcomes, please confer with our earnings press launch. As the battery enterprise returned to year-over-year development within the third quarter, we additionally recorded ongoing enhancements in gross margin and working revenue margin. This was underpinned by a pointy enhance within the contribution of our increased margin battery enterprise and a discount in the price of revenues as we additional leveraged our know-how to enhance manufacturing effectivity. Alongside rising variety of orders for our battery merchandise, we’ll proceed to seek out the fitting steadiness between development and profitability, whereas investing in R&D and manufacturing capability growth to boost our sustainable long-term competitiveness.

Turning to our monetary efficiency. Our internet income for the third quarter was $63.4 million, representing a rise of 9.9%, in comparison with $57.7 million in the identical interval of 2022. This enhance was primarily attributable to the expansion within the firm’s battery enterprise. In addition, our internet income from batteries within the third quarter was $44.3 million, representing a powerful development of 71.5% from the identical interval in 2022. Our gross margin for the battery enterprise within the third quarter was 26.4%, a rise of 17.7 share factors from 8.7% in the identical interval of 2022. The price of revenues within the third quarter was $51.2 million, representing a lower of 5.7% from $54.3 million in the identical interval of 2022. The lower in the price of revenues corresponds to the corporate’s increased gross revenue from the battery section.

Gross revenue within the third quarter was $12.2 million, representing a rise of 264% from $3.5 million in the identical interval of 2022. Gross margin within the third quarter was 19.3%, in comparison with 6% in the identical interval of 2022. Our complete working bills within the third quarter rose by 40.8% to $7 million. Within that, our analysis and improvement bills elevated by 8.1% to $2.6 million within the third quarter. Sales and advertising bills elevated by 33.8% to $1.1 million within the third quarter. General and administration bills elevated by 73.7% to $3.2 million. Our working revenue within the third quarter amounted to $5.3 million, in comparison with an working lack of $1.5 million in the identical interval of 2022. The change within the honest worth of our warrants within the third quarter had been $0.02 million, in comparison with $0.94 million in the identical interval of 2022.

As a end result, internet revenue attributable to shareholders of CBAK Energy within the third quarter was $6.3 million, in comparison with internet loss attributable to shareholders of CBAK Energy of $290 million for a similar interval of 2022. That concludes our ready remarks. Let’s now open the decision for questions. Operator, please go forward.

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