Q3 2023 CBAK Energy Technology Inc Earnings Call
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Speaker 2: Good day, ladies and gentlemen. Thank you for standing by and welcome to CBAC Energy Technologies third quarter 2023 earnings conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I will turn the call over to Thierry Lee, CFO and Secretary of the Board. Mr. Lee, please proceed. Thank you.
Good day, ladies and gentlemen, thank you for standing by and welcome to feedback Energy technologies third quarter 2023 earnings Conference call. Currently all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.
A reminder, we are recording today's call. If you have any objections you may disconnect. At this time now I will turn the call over to theory, Lee CFO and Secretary of the Board Mr. Lee. Please proceed.
Thank you operator, and Hello, everyone welcome to sit back Energy's third quarter of 2023 earnings conference call. Joining us today are Mr can trading Chief Executive officer of CVR energy.
Speaker 3: Welcome to CBAC Energy's third quarter of 2023 earnings conference.
Speaker 3: Joining us today are Mr. Yunfeili, Chief Executive Officer of CPEC Energy, myself, Chief Financial Officer and Secretary of the Board, and Jennifer, our interpreter.
Self Chief Financial Officer, and Secretary of the Bowl and Jennifer our interpreter.
Speaker 3: Our General Engineer Mr. Xiu Juntian will join us for the Q&A.
General Engineering Mr children.
As for the Q&A section.
Speaker 3: We released our results earlier today. The press release is available on the company's IR website at ir.seabag.com.cn, as well as from Newswire Services.
We released early we released our results earlier today. The press release is available on the company's IR website at IR <unk> com to see it as well as from Newswire services.
Speaker 3: A relay of this call will also be available in a few hours on our IR website.
A replay of this call will also be available in a few hours on our IR website.
Speaker 3: Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Security and Litigation Reform Act of 1995.
Before we continue please.
Note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Speaker 3: forward-looking statements involved in hearing risks and certain
Looking statements involve inherent risks and uncertainties.
Speaker 3: As such, the Communist's actual results may be materially different from the expectations expressed today.
As such the company's actual results may be materially different.
Thanks, James expressed today.
Speaker 3: Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
Further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
Speaker 3: The company doesn't assume any obligations to update any forward-looking statements except as required under applicable law.
The company doesn't assume any obligations to update any forward looking statements, except as required under applicable laws.
Speaker 3: Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. storage.
Also please note that unless otherwise stated all figures mentioned during the conference call are in U S.
Speaker 3: With that, let me now turn the call over to our CEO , Mr. Yunfei Li. Mr. Li will speak in Chinese, and I will translate his comments into English. Go ahead, Mr. Li. Please only click one.
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With that let me now turn the call over to Alexey all mistaken.
Sally will speak in Chinese and I will translate his comments into English go ahead at steady pace on that one.
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Thank you Kelly.
Speaker 4: Hello everyone. Thank you for your participation today. Our call will be back.
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Speaker 3: Thank you, and for everyone. Thank you for joining our earnings conference course.
Thank you everyone.
Well, thank you for joining our earnings conference call today.
Speaker 4: We are very happy to see another significant growth in the battery industry. In the third quarter, our battery business revenue reached 4.433 million US dollars and increased by 71.51%. Compared to the same period last year,
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Speaker 4: This quarter, the operating profit reached $7.58 million and the net profit reached $77.7 million, which is 6.3 times the same as last year. In terms of product division, the battery income in the storage industry reached $4.281 trillion, which is 73.5% more than last year.
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Speaker 4: The battery income in the car industry has reached $400,000.
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Speaker 4: Compared to the same period last year, it has increased by 19.5%. The battery income in the light electric vehicle sector has reached $111 million, down by 2.8%. At the same time, the battery business revenue in the first nine months has increased by 44.43% to 9.9%.
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Speaker 4: The growth of our industry is mainly due to the strong customer base, especially high-end customers from Europe and the United States.
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Speaker 4: At present, the market is still facing a lot of external factors such as global economic growth and slowdown. We are very happy to be one of the few companies in China's battery industry that can maintain high-speed growth in this environment and achieve profit.
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Speaker 3: We are delighted to achieve another outstanding quarter of growth in our battery.
We are delighted to achieve another outstanding quarter of growth in our battery business in the third quarter of 2023, our Patriot business generated revenues of $44 33 million.
Speaker 3: In the third quarter of 2023, our base repination rated revenues of 44.33 million, sorry by 71.51% of the over.
<unk> by 70, 161% year over year.
Speaker 3: Compared to the operating loss recorded in the Samperate last year, during this quarter, we delivered an operating income of $7.58 million, and an net income of $7.77 million, which was 6.3 times that of the Samperate last year.
Compared to the operating loss recorded in the same period last year. During this quarter. We delivered operating income of $7 58 million and net income of $7 77 media, which was $6 three times that of the same period last year.
Speaker 3: of these revenues, $7.42.81 million came from batteries used in energy storage applications.
Of these revenues 70, 40 to 81 million Kemp from Baytree's used in energy storage applications.
Speaker 3: of 73.5% over here.
<unk> of 73, 5% year over year.
Speaker 3: While 0.4 million camphoron batteries use the intellectually vehicles, an increase of 19.5 times your oven.
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Speaker 3: Moreover, revenues from batteries used in light electric vehicles with 1.11 million down 2.8% yield.
Moreover, revenues from batteries used in light electric vehicles with one point.
Again.
Two 8% year over year.
Speaker 3: For the first nine months of 2023, our bait repissants generated revenues of $0.6.15 million, an increase of 44.43% yield.
For the first nine months of 2023, our bakery business generated revenues of $96 $16 million in.
An increase of $44, 43% year over year.
Speaker 3: while delivering an operating income of $6.15 million, along with an income of $6.75.
While delivering an operating income of $6 15 million.
With a net income of $6 75 million.
Speaker 3: The growth across our financial metrics was primarily attributed to our strong foundation of key kinds, particularly high value kinds.
The growth across our financial metrics was primarily attributed to our strong foundation of key clients, particularly high value clients from Europe and the U S.
Speaker 3: Orders from these clients have demonstrated exceptional stability and sustainability.
Orders from these clients have demonstrated exceptional stability and sustainability.
Speaker 3: We are confident in sustaining robust performance and profit growth in the upcoming reporting period.
We are confident in subs in sustaining robust performance and profit growth in the upcoming reporting periods.
Speaker 3: Today, the market still faces various external pressures and challenges, including the global economy slowdown. We are proud to stand out as one of the few Chinese-based women's factors achieving rapid growth and profitability amidst the current macroeconomic environment.
To date, the market still faces various external pressures and challenges, including the global economy slowdown we are proud to stand out as one of the few Chinese basically manufacturers, achieving rapid growth and profitability at Mr. Karam macro economy environment.
Speaker 3: Our remarkable performance has garnered substantial interest from private equity investors who have reached out to us regarding our latest developments.
A remarkable performance has gotten a substantial interest from private equity investors, who have reached out to us regarding our latest developments based.
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Let me share more detail update on our business initiatives during the third quarter with our increased visibility and enhanced our reputation worldwide.
Our order volume continued to rise.
As of November 1st at 2023, we have recorded approximately RMB $900 million in the combined value of orders, we have received but have yet to fulfil across our two main basically protection facilities basically got in energy.
Currently ordered for the Italian facility have been scared you toward the end of 2024, and our 19 facilities also overwhelmed.
Incoming orders from new clients will be subject to further schedule rate.
In other words, both our revenue and profitability were maintained robust growth momentum over an extended horizontal.
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Regarding hiring and initiatives already announced as of November the first of 2023, our collaboration with <unk>, the world's leading portable power station manufacturer and parent company of top rated portable power supply brand through GTI has provided us with mortgage totaling around <unk> 43.
$8 2 million. We also made great strides in our partnership with Ginkgo group, the largest manufacturer of scooters and electric price cycles worldwide generating orders amounting to roughly RMB 50, Sweet point 15 9 million.
In addition, I want to highlight our continued initiatives with <unk>, a leading European manufacturer of heating and cooling systems.
Productive collaboration has translated into orders totaling up to $116 5 million euros from the beginning of 2023 to November at first.
Another major partner of ours is anker innovations one of the largest third party accessory suppliers globally for Apple incorporate its products.
Following our starting in September we have received orders from Anker innovations amounting to RMB $68 $35 million.
It is understood that anker innovations will spur significant demand for our bakeries and it's expected to place monthly orders on a continual basis.
Furthermore, I want to highlight the fact that we have been in deep discussions regarding various corporations, including providing product samples with several major customers from Europe and the U S.
Keep our investors informed of any significant updates.
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With our focus on meeting client.
With scale up our investment in production capacity and R&D in the third quarter of 2023, both our Italian and 19 facilities have reached a production capacity of one gigawatt hour.
Our subsidiary <unk> power is currently engaged in the development of module 46115 and model one or six five to seven P. M Patriots.
<unk>, which are new to the market and larger than the current market favorite model for six to eight O.
With higher energy density and extent.
And then extended lifespan. This new model is ideal for large scale energy storage scenarios.
Our R&D team is diligently in driving these initiatives forward and would expect to have the capacity to mass produce that model for 6115 basis next year.
In the long term plan, we were expanded production capacity for the series 46 bakeries to 15 gigawatt hours at Italian facility achieving further supply.
In the meantime, the construction of our 19 phase two project has been in full swing.
The factory rules has been completed which enabled six gigawatt hours of production capacity in the first stage.
I would expect this production capability.
Levered fully equipped and operational soon.
Hence I wish to highlight that we will have great til for more capacity next year to address the current overwhelming client demand.
Will elevate our production efficiency and further propel top line growth.
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Finally, and importantly, let me walk you through our mass production of Silicon wine bakeries.
Only company in China capable of mass producing sodium by bakeries, we have engaged in extensive discussions with multiple investors on building a sodium I'm bakery plant.
In the near future, we expect to finalize a substantial amount of private equity financing to expedite the development of our sodium <unk> bakery plant with a target production capacity of 10 kilowatt hours with.
With the accelerated industrial adoption of sodium ion batteries, we believe he will become a pivotal focus across various subsectors.
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Electric scooters low speed vehicles energy storage power stations and hospital energy storage solutions.
Looking ahead, the company will be empowered by a twin engine growth model.
Press six gigawatt hour production capacity of lithium batteries and the remarkable 10 gigawatt hour production capacity of sodium <unk>.
We look for water collaborating with our investors and partners to advance the evolution of the new energy sector and environmental protection technologies.
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Now, let me turn the call over to <unk> CFO, Mr. Li who will provide details on our financial performance.
Thank you Mr. Lee and thank you everyone for joining our call today I will now go over our chief financial results for the third quarter of 2023.
For the full details of our financial results. Please refer to our earnings press release.
As the bakery business returned to year over year growth in the third quarter. We also recorded ongoing improvements in gross margin and operating profit margin.
This was underpinned by a sharp increase in the contribution of our higher margin battery business and a reduction in the cost of revenues as we further leverage our technology to improve production efficiency.
Alongside the growing number of orders for our bakery products, we will continue to find the right balance between growth and profitability, while investing in R&D and production capacity expansion to enhance our subs.
Our sustainable long term competitiveness.
Turning to our financial performance, our net revenues in the third quarter was $63 4 million.
Sending an increase of nine 9% compared to $57 7 million in the same rate of 2022.
The increase was primarily attributable to the growth in the company's bakery business.
In addition, our net revenue from bakeries in the third quarter was $44 3 million, representing a strong growth of 71, 5% from the same period in 2022.
Our gross margin for the battery business in the third quarter was 26, 4% an increase of $17 seven percentage points from eight 7% in the same period of 2022.
The cost of revenues in the third quarter was $51 2 million.
Sensing a decrease of five 7% from $54 3 million in the same period of 2022.
Decrease in the cost of revenues corresponds to the company's higher gross profit from the bakery segment.
Gross profit in the third quarter with $12 2 million, representing an increase of 254% from $3 5 million in the same period of 2022.
Gross margin in the third quarter was 19, 3% compared to 6% in the same period of 2022.
Our total operating expenses in the third quarter rose by 48% and two 7 million.
Within that our research and development expenses increased by eight 1% to $2 6 million in the third quarter.
Sales and marketing expenses increased by.
33, 8% to $1 1 million in the third quarter General and administration expenses increased by 73, 7% to sweep to media.
Our operating income in the third quarter amounted to $5 3 million compared to an operating loss of one 5 million in the same period of 2022.
The change in the fair value of our warrants in the third quarter, whereas 0.0 2 million compare to $94 million in the same period of 2022 as.
As a result net income attributable to shareholders of CVR energy in the third quarter was $6 3 million compared to a net loss attributable to shareholders of CVR energy of 298% pure rate of 2022.
That concludes our prepared remarks, let's now open the call for questions. Operator. Please go ahead.
Thank you as a reminder to ask a question. Please press the star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
One moment for our questions.
Yeah.
Our first question comes from Brian <unk> with Zacks small cap research you May proceed.
Good afternoon gentlemen.
Really impressive performance in light of a challenging operating environment.
If I could drill down a little bit more on the power.
Alright.
On the interruptible power business.
Do you feel like that was principally in the third quarter driven by a new.
New customer wins or.
Higher volumes with your existing customer base.
And it sounds like going forward some of the new customers are going to contribute.
Larger portion of that growth.
I'll follow up with another question after that.
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Dan we have already passed the certification soda in June.
Actually we have started from a small lot production and gradually.
Bombed into a fixed shell mass production and we also believe that this will contribute to our sales growth and in the meantime, we are also expanding our production lines as well as our production capacity for debt to six theory and projections. So.
We also believe that this will bring in boy.
Sales volumes in the future.
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Yeah.
Great. Thank you so much for all of the and correct.
If I could just ask a question about the raw material business I know in the past there's been some interest from outside investors.
Is that something you are still exploring or.
I guess, just an overall general update on the raw material business and where that stands today.
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So a good Jason can you quantify that.
When do you when I say that like a whole what are the only one with adequate okay, Brian and I will respond to your questions.
As you can see it.
Industry raw material industry is experiencing a slowdown.
Almost all the raw material producers.
Spring declined in sales Forum, Sam is highest heightened our raw material units.
But heightened is actually has a very very decent and good client structure.
The arrays from Cata always also their clients. So we believe that.
Once the industry recovers hygienist will.
Improved financial performance Sharpie, and Moreover, with decent actually integrate hydro basis in chiasso basically basis.
We act on the assay financial investors.
Our team is completely independent from our team that's why in our Canada.
Our Form 10-Q and in our press release, we always separate.
Financial performance from high teens from.
Our batesville business, that's much more reasonable.
So as you can say as I would just say there are a lot of the investors getting interested in high teens and we believed at Westin industrial recovers they will be good. So we encourage a lot of the private equity investor. We will also refer a lot of the private equity investors to high teens.
For the purpose of funding them.
Spend their capacity and also to see we will be able to deal with those investors.
Great. Thank you so much.
Thank you and as a reminder to ask a question. Please press star one on your telephone one moment for questions.
Our next question comes from Frank <unk> with TPG you May proceed.
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Okay. Okay. So now.
Response to your first question well for sodium ion battery in June this year, we released the first sodium <unk> product and therefore, we can say that in China. We are the first company to realize the loss protection of sodium <unk>.
Although in the markets.
<unk> also announced that they are doing.
The the risks.
<unk> CH protection of DS sodium I'm battery products.
We are the company that really can realize a loss protection.
We also.
We also achieved D a.
Installation of the sodium <unk> in the vehicle and if that turns out to be really satisfactory and four hour but to report.
You can realize in 2002 or even more than 3001.
So we can say we have already have a stable product system in place and talking about the production line.
<unk> well, we can see our company and I apologize just a very popular in the market there with some of the competitors, but they are only at the very early stage. For example didn't really have a startup teams or they only have some samples.
For us for our company.
<unk> managed to come up with a product that was 0.5 gigawatt.
And the production capacity will be expanded.
The future.
So at present for a full at NAS has approached.
Approached H.
We are trying to single out one one place what we can say for local governments approach as a way of trying to select one place for the construction of the production line and we're trying to select the best from the school and then into next year.
There is then going to expand our production capacity to be as high as 10, Gigawatts and in that case, well it will put us in a better prediction to cater to the demand of our customers.
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Sure.
Uh huh.
We achieved all time with either.
All right.
Hum China omission answers.
So you've got Hampton.
Hi, Manav.
It's about that time injunctions that unit.
And then co corner similar assumptions they are not national.
Sure.
Sure.
Truecar.
Randall.
So you mentioned <unk>.
And our mines tend to Tampa.
Sure.
So well maintain key concern.
<unk>.
Bosch washed.
The National Convention mix.
Larry and I are conventionally.
Bosch Ryan harsh runs with Alabama.
Thanks, Sean.
That might occur.
Hmm.
Oh.
Oh sure one chroma, which was the engine.
Okay.
When you shop.
John could have on our children.
Sure.
200 <unk>.
<unk> continues to shine this quarter.
Uh huh.
And then b.
Okay.
Uh-huh.
So our president and COO has already finished D D.
The opening of more dose here with our factory.
And then two old per tax income.
We'll use our battery and actually they started their pilot production here and there.
We saw it come out to be great, but just why did it started to export to throw that to yogurt didn't states.
The state, Japan and India.
We already have an in depth.
Patients with alk talking about future cooperation.
And.
Talking about people now feature a cooperation and takes I'll start if we have a look at the exception for that order podium presence is above 500000 items.
With.
Oh, the value of about 20 million RMB only in the future it will be increased Q.
Thanks to the increased to 800000 to $1 2 million items and got just with games at a value of about 14 million RMB.
Thank you.
Seeing no more questions in the queue, let me turn the call back to Mr. Ian Bailey for closing remarks.
They don't care suite.
At this time.
Hi, Sean.
Okay.
Okay.
Okay.
Thank you operator, and thank you all for participating in today's call and for your support we appreciate your interest and look for water reporting to you again next quarter on our progress.
Thank you all again this concludes the call you may now disconnect.
Okay.
[music].
Okay.
[music].