Q2 2024 China Automotive Systems Inc Earnings Call

August 13, 2024

Speaker Change: [music].

Good morning, everyone and welcome to the China Automotive systems incorporated second quarter earnings Conference call.

Operator: Good morning, everyone, and welcome to the China Automotive Systems Inc. 2nd quarter earnings conference call. At this time, all participants are in a listen-only mode, and we will open the line for questions following the presentation. If you would like to ask a question during the conference, please press star one on your phone. Confirmation Term will indicate that your line is in the key.

Operator: Good morning, everyone, and welcome to the China Automotive Systems Inc. 2nd quarter earnings conference. At this time, all participants are in a listen-only mode, and we will open for questions following the presentation. If you would like to ask a question during the conference, please press star one on your, Confirmation Term will indicate that you're lying.

Speaker Change: At this time all participants are in a listen only mode and we will open for questions. Following the presentation. If you would like to ask a question. During the conference. Please press star one on your phone keypad, a confirmation tone will indicate that Youll line isn't Nicky.

Operator: If anyone should require operator assistance during this conference, please press star zero on your phone. Please note, this conference is being recorded. I will now turn the conference over to your host, Kevin Theiss. Kevin, the floor is yours.

Operator: If anyone should require operator assistance during this conference, please press star zero on your, No, this conference has been... I will now turn the conference over to your host, Kevin Theiss. Kevin, the floor is yours.

If anyone should require operator assistance. During this conference. Please press star zero on your fit and keep that please note. This conference is being recorded I will now turn the conference over to your host Kevin ceased Kevin the floor is yours.

Kevin: Thank you and thank you everyone for joining us today, welcome to China automotive as well.

Kevin Theiss: Thank you and thank you everyone for joining us today. Welcome to China Automotive's 2024 second quarter conference call. Joining us today are Mr. Jie Li, Chief Financial Officer. He will be available to answer questions later in the conference with the assistance of translation, or we will begin.

Kevin: 24.

Kevin: Second quarter conference call.

Kevin: Joining us today are Mr Daly Chief Financial Officer.

Kevin: The system it will be available to answer questions later in the conference call with the assistance.

Kevin: Relation.

Or are we begin.

I will remind all listeners that throughout this call. We may make statements that may contain forward looking statements within the meaning of the private Securities Litigation Reform Act with 1995 forward looking statements represent the company's estimates and assumptions only as of the date of this call as a result the company.

Kevin Theiss: I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements represent the company's estimates and assumptions only as of the date of this call. As a result, the company, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., and then other documents filed by the company from time to time with the Securities and Exchange Commission.

Kevin Theiss: Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements represent the company's estimates and assumptions only as of the date of this call. As a result, the company Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., and then other documents filed by the company from time to time with the Securities and Exchange Commission.

Kevin: Our actual results could materially differ differ from those contained in these forward looking statements due to a number of factors, including those described under the heading risk factors and results of operations in the company's Form 10-K annual report.

Kevin: For the year ended December 31, 2023, that's filed with Securities Exchange Commission and then the other documents filed by the company from time to time with the Securities and Exchange Commission.

Kevin Theiss: Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainty in the regions where we conduct business, cause our business to suffer in ways that we cannot predict, and materially and adversely impact our business, financial condition, and results of operations.

Kevin: Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment caused uncertainty in the regions, where we conduct business caused our business to suffer in ways that we cannot predict and materially and adversely impact our business financial condition and result.

Kevin: A operations.

Kevin Theiss: A prolonged disruption or any unforeseen delay in our operations of the manufacturing, delivery, and assembly processes within any of our production facilities could result in delays in the shipment of products to our customers, increased cost, and reduced revenue. The company expressly disclaims any duty to provide updates to any forward-looking statements made in this call, whether it resolves new information, future events, or otherwise. On this call, I will provide a brief overview and summary of the second quarter for the period ending June 30, 2024.

Kevin: Hey, prolonged disruption or any unforeseen delay in our operations of the manufacturing delivery M Assembly processes within any of our production facilities.

Speaker Change: And delays in the shipment of products to our customers increased costs and reduced revenue. The company expressly disclaims any duty to provide updates to any forward looking statements made in this call whether result of new information future events or otherwise.

Speaker Change: Well this call I will provide a brief overview and summary of the second quarter or the period.

Kevin Theiss: Management will then conduct a question and answer session. The 2024 second quarter six months results are unaudited, and financial results are reported using US GAAP accounting. For the purposes of our call today, I'll review the financial results in U.S. dollars. We will begin with a review of some of the quarterly business highlights, recent dynamics in the Chinese economy and automobile industry, and our market position. Our net sales of steering products increased by 15.4% year-over-year and gross profit grew faster at a 29% year-over-year rate in the second quarter of 2024. Thanks to changes in product mix and effective cost control, sales of our traditional steering products grew by 7.5% year over year.

Speaker Change: June 32024.

Speaker Change: Well then conduct a question and answer session. The 'twenty 'twenty four second quarter and six months results are unaudited and financial results are reported using U S GAAP accounting.

Kevin Theiss: The 2024 second quarter of six months results are unaudited, and financial results are reported using US GAAP accounting. For the purposes of our call today, I'll review the financial results in U.S. dollars. We'll begin with a review of some of the quarterly business highlights, recent dynamics in the Chinese economy and automobile industry, and our market position. Our net sales of steering products increased by 15.4% year-over-year and gross profit grew faster at a 29% year-over-year rate in the second quarter of 2024. Thanks to changes in product mix and effective cost control, sales of our traditional steering products grew by 7.5% year over year, while sales of our electric power steering EPS products increased by 33.7% year over year.

Speaker Change: The purposes of our call today I'll review the financial results in U S dollar.

Speaker Change: Well begin with a review of some of the quarterly business highlights recent dynamics of the Chinese economy in the automobile industry and our market position.

Kevin Theiss: With our electric power steering EPS products, sales increased by 33.7% year over year. Our growth in the second quarter was led by the increase in EPS sales as well as higher sales to Cherry Auto's passenger vehicles and an almost 19% year-over-year sales increase by our Henlong subsidiary, the Chinese Passenger Vehicle OEM. In the Chinese commercial vehicle market, our sales declined by approximately $1 million to $18.7 million in this slower growth market internationally.

Kevin Theiss: Our growth in the second quarter was led by the increase in EPS sales as well as higher sales of Cherry Auto's passenger vehicles and an almost 19% year-over-year sales increase by our Henlong subsidiary, the Chinese Passenger Vehicle OEM. In the Chinese commercial vehicle market, our sales declined by approximately $1 million to $18.7 million in this slower growth market. Internationally

Speaker Change: Yeah.

Speaker Change: Our net sales of steering products increased by 15, 4% year over year and gross profit grew faster as a 29% year over year rate in the second quarter of 2024, thanks to changes in product mix and effective cost controls.

Speaker Change: This is our traditional steering products grew by seven 5% year over year with our electric power steering EPS products sales.

Speaker Change: Sales increased by 33, 7% year over year.

Speaker Change: Our growth in the second quarter was led by the increase in E. P. S sales as well as higher sales to Chery auto's passenger vehicles, and then almost 19% year over year sales increase by our headlong subsidiary the Chinese passenger vehicle Oems.

Speaker Change: And the Chinese commercial vehicle market, our sales declined by approximately $1 million to $18 $7 million in this slower growth market.

Speaker Change: Internationally.

Speaker Change: North America declined by $2 $1 million year over year, mostly from reduced demand by selling into the south American sales experiencing a slight decline.

Kevin Theiss: North America declined by $2.1 million year over year, mostly from reduced demand by Stellantis, with South American sales experiencing a slight decline. At the six-month end of June 30, 2024, Delanta's consolidated shipments in North America had declined by 18.1 percent year over year. For the macroeconomy, during the first half of the year, Chinese GDP grew by 5%, with total retail sales of consumer goods up by a modest 3.7% year over year. Investment in fixed incomes, excluding rural households, increased in the first half of 2024 by 3.9% year over year. However, some important market segments declined, with real estate development down by 10.1% year over year, and the sales of floor space of newly built commercial buildings decreased by 19% year over year.

For the six months ended June 32020 for the Atlanta consolidated shipments in North America had declined by 18, 1% year over year.

Speaker Change: Well the macro economy during the first half year Chinese G. D. P grew by 5% with total retail sales of consumer goods up by a modest 3.7% year over year.

Kevin Theiss: However, automotive sales posted a different performance. According to statistics from the China Association of Automobile Manufacturers, CAAM, the combined sale of passenger and commercial vehicles increased by 6.1 year over year in the first half of 2024. Sales of passenger vehicles rose by 6.3% year over year, and commercial vehicle sales grew by 4.9% year over year. Sales of new energy vehicles increased by 32% year-over-year, led by an 85.2% year-over-year rise in plug-in hybrid vehicles. In addition, automobile exports increased by 30.5% from the six-month period a year ago.

Speaker Change: Investment in fixed income excluding a rural households increased in the first half of 'twenty 'twenty four by three 9% year over year.

Speaker Change: However, some important market segments declined with real estate development down by standpoint, 1% year over year and the sales of Floorspace of newly built commercial buildings decreased by 19% year over year.

Speaker Change: However, automotive sales posted a different performance. According to statistics from the China Association of automobile manufacturer C. A N. The combined sale of passenger and commercial vehicles increased by $6 one year over year in the first half of 'twenty 'twenty four sales of passenger vehicles rose by six point.

Kevin Theiss: However, automotive sales posted a different performance. According to statistics from the China Association of Automobile Manufacturers, CAAM, the combined sale of passenger and commercial vehicles increased by 6.1 year over year in the first half of 2024. Sales of passenger vehicles rose by 6.3 percent year over year, and commercial vehicle sales grew by 4.9 percent year over year. Sales of new energy vehicles increased by 32% year-over-year, led by an 85.2% year-over-year rise in plug-in hybrid vehicles. In addition, automobile exports increased by 30.5% from the six-month period a year ago.

3% year over year and commercial vehicle sales grew by four 9% year over year.

Speaker Change: It was a new energy vehicles increased by 32% year over year led by an 85, 2% year over year rise in plug in hybrid vehicles.

Speaker Change: In addition, the automobile exports increased by 30 points.

Speaker Change: 5% on the six month period, a year ago.

Kevin Theiss: Purchased subsidies by the government and some auto OEMs, favorable trading policies, and better loan terms have all aided the automobile industry sales. The automobile industry is a critical industry, but the continued growth of the Chinese economy is expected to receive ongoing support from the Chinese government. Back to our business performance during the second quarter, our gross profit rose by 29% year-over-year, to 18.5%, up from 17.3% in the first quarter of 2024 and 16.5% in the second quarter of 2023.

Kevin Theiss: Purchase subsidies by the government and some auto OEMs, favorable trading policies, and better loan terms have all aided the automobile industry sales. The automobile industry is a critical industry, but the continued growth of the Chinese economy is expected to receive ongoing support from the Chinese government. Back to our business performance during the second quarter, our gross profit rose by 29% year-over-year, and our gross margin rose to 18.5%, up from 17.3% in the first quarter of 2024 and 16.5% in the second quarter of 2023.

Speaker Change: Purchase subsidies by the government and some auto Oems favorable trade in policy better loan terms, all eight of the automobile industry sales.

Speaker Change: The industry is a critical industry by the continued growth of the Chinese economy is expected to receive ongoing support from the Chinese government.

Speaker Change: Back to our business performance during the second quarter, our gross profit rose by 29% year over year.

Speaker Change: Yeah.

Speaker Change: 10.5% up from 17, 3% in the first quarter of 'twenty 'twenty, four and 16, 5% in the second quarter of 2020 three.

Yeah.

Speaker Change: Usually greater sales of our EPS products.

Kevin Theiss: Greater sales of our EPS products and improved economies of scale in EPS production and cost controls generated a higher gross margin. Our operating income climbed fast, at 38.7% year over year in the second quarter of 2024, despite higher research and development and SG&A expenses. The alluded net income per share was $0.24 in the 2024 second quarter and $0.51 for the six months. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Cash flow from operations was $9.1 million in the first six months of 2024 compared with cash used in the same six-month period last year.

Kevin Theiss: Greater sales of our EPS products and improved economies of scale in EPS production and cost controls generated our higher gross margin. Our operating income climbed fast, at 38.7% year over year in the second quarter of 2024, despite higher research and development and SG&A expenses. The alluded net income per share was 24 cents in the 2024 second quarter and 51 cents for the six months. See you later.

Speaker Change: Improved economies of scale in E. P S production and cost control generated a higher gross margin.

Speaker Change: Our operating income climbed faster.

Speaker Change: That's a 38, 7% year over year in the second quarter of 2024, despite higher research and development and SG&A expenses.

Speaker Change: Diluted net income per share was 24 cents in the 'twenty 'twenty four second quarter and 51.

Six months.

Speaker Change: Pardon me.

Kevin Theiss: Cash flow from operations was $9.1 million in the first six months of 2024 compared with cash used in the same six-month period last year. One of our directors recently declared a special dividend of 80 cents per common share to be paid on or about August 22nd, 2024. The aggregate dividend amount should be approximately $25 million, which we pay using internal funds and cash flow. The cash dividend highlights our confidence in sustainable growth in cash generation to support and as a thank you to our long-term shareholders.

Speaker Change: Cash flow from operations was $9 $1 million in the first six months of 2024 compared with cash used in the same six month period last year.

Speaker Change: What are the directors recently declared a special dividend of <unk> 80 per common share to be paid on or about August 20 2024.

Kevin Theiss: One of our directors recently declared a special dividend of 80 cents per common share to be paid on or about August 22nd, 2024. The aggregate dividend amount should be approximately $25 million with repaid internal funds and cash flow. The cash dividend highlights our confidence in sustainable growth in cash generation to support and as a thank you to our long-term shareholders. We also celebrate the 20th anniversary of our NASDAQ listing later on August 24th, 2024.

Speaker Change: Yeah, I agree with your dividend amount should be approximately $25 million was repaid internal funds and cash flow.

Speaker Change: The cash.

Speaker Change: Cash.

Speaker Change: Food and highlights our confidence in our sustainable growth and cash generation to support.

Speaker Change: And as a thank you to our long term shareholders.

Speaker Change: Okay.

Speaker Change: We also celebrate the 20th anniversary of our NASDAQ listing later on August 24th of 2024.

Kevin Theiss: We will also celebrate the 20th anniversary of our NASDAQ listing later on August 24th, 2024. During these 20 years, we grew from a small Chinese domestic player to a large global one, becoming your supplier with operations and customers in North America, South America, Europe, India, and Asia, with highly successful customers such as BYD Auto. Zhenjie Jili Automobile, Cherry Automobile, Tengkuang Chang'an Automobile, SAIC Motor, and FAW Group domestically.

Speaker Change: During these 20 years, we grew from a small Chinese domestic player to a large global one tier supplier with operations and customers in North America, South America, Europe, India and Asia.

Kevin Theiss: During these 20 years, we grew from a small Chinese domestic player to a large global one, becoming your supplier with operations and customers in North America, South America, Europe, India, and Asia, with highly successful customers such as BYD Auto, Zhenjie Jili Automobile, Cary Automobile, Tengkuang Chang'an Automobile, SAIC Motor, and FAW Group, domestically. They also have global customers, such as Stellantis and Li in North and South America and Europe, Ford Motor Company in North America, and Mahindra and Mahindra in India.

Speaker Change: With a highly successful customers such as B Y E Y D auto.

Speaker Change: A N G E daily automobile Chery automobile tongue, Quinn Kangaroo automobile SAIC motor and N E. W group domestically.

You also have global customers such as the left Us N V and North and South America and Europe.

Kevin Theiss: We also have global customers such as Stellantis and Li in North and South America and Europe, Ford Motor Company in North America, and Mahindra and Mahindra in India. Sales have also grown from $58.2 million in 2004 to $576.4 million in 2023. We look forward to the further growth of our company's operations as our traditional steering product remains a solid contributor even as we expand our EPS. Our advanced driver assist, Qizhou Wu, China Automotive Systems Inc. Qizhou Wu, China Automotive Systems Inc. If we're diving into details of financials, we would like to remind all shareholders and interested investors that there are two concurrent technological transitions in the global automotive sector, from the Internal Combustion Engine to the Electric Powertrain and from Human Driving to Autonomous Driving.

Speaker Change: Ford Motor Company in North America, and Mahindra and Mahindra in India.

Speaker Change: She has also grown from $58 $2 million in 2004 to $576 $4 million into 'twenty two.

Kevin Theiss: Sales have also grown from $58.2 million in 2004 to $576.4 million in 2023. We look forward to the further growth of our company's operations as our traditional steering product remains a solid contributor even as we expand our EPS. Our advanced driver assist, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Before diving into details of financials, we would like to remind all shareholders and interested investors that there are two concurrent technological transitions in the global automotive sector, from the Internal Combustion Engine to the Electric Powertrain and from Human Driving to Autonomous Driving. Our well-diversified global customer base, award-winning product quality, large-scale manufacturing capacity, and best-in-class technology prepares us and positions us for global competition.

Speaker Change: 2023.

Speaker Change: We look forward to the further growth of our company's operations as our traditional steering products remain a solid contributor even as we expand our EPS.

Speaker Change: Our advanced driver assist.

Speaker Change: Systems with our center in a b operations and other products under development.

Speaker Change: Before diving into the details the financials, we would like to remind all shareholders and interested investors. There are two concurrent technological transitions in global automotive sector.

Speaker Change: From internal combustion engines to electric powertrain and from hearing human driving to automotive autonomous driving.

Kevin Theiss: Our well-diversified global customer base, award-winning product quality, large-scale manufacturing capacity, and best-in-class technology prepares us and positions us for global competition. Now, let me review the financial results for the second quarter of 2020. Net sales increased by 15.4% year over year to $158.6 million in the second quarter of 2024, compared to $137.4 million in the second quarter of 2023. Net sales of traditional steering products and parts increased by 7.5% year over year to $103 million in the second quarter of 2024, compared to $95.8 million for the same quarter in 2023.

Speaker Change: Our well diversified global customer base award winning product quality large scale manufacturing capacity and best in class technology.

Speaker Change: Offers prepares compares us and positions us with strong advantages, but global competition.

Speaker Change: Yeah.

Speaker Change: Now, let me review the financial results in the second quarter of 'twenty 'twenty four.

Kevin Theiss: Now, let me review the financial results for the second quarter of 2025. Net sales increased by 15.4% year over year to $158.6 million in the second quarter of 2024 compared to $137.4 million in the second quarter of 2023. Net sales of traditional steering products and parts increased by 7.5% year over year to $103 million for the second quarter of 2024, compared to $95.8 million for the same quarter in 2023. Net sales of EPS products rose 33.7% year-over-year to $55.6 million, around $41.6 million for the same period in 2023.

Kevin Theiss: Net sales of EPS products rose 33.7% year-over-year to $55.6 million, around $41.6 million for the same period in 2023. EPS product sales grew to 35.1% of the total net sales for the second quarter of 2024, compared to 30.3% for the same period in 2023. Dales and Henlong's passenger vehicle steering customers increased by 18.9% and sales to Cherry Auto rose by 28.8% due to higher demand; export sales to North American customers were consistent at $26.8 million in the second quarter 2024 compared to $28.9 million in the second quarter 2023. North American sales declined basically due to decreased demand from one customer.

Net sales increased by 15, 4% year over year to $158 six.

Kevin Theiss: EPS product sales grew to 35.1% of the total net sales for the second quarter 2024, compared to 30.3% for the same period in 2023. Dale Henlong's passenger vehicle steering customers increased by 18.9% and sales to Cherry Auto rose by 28.8% due to higher demand. Export sales to North American customers were consistent at $26.8 million in the second quarter 2024 compared to $28.9 million in the second quarter 2023 North American sales declined basically due to decreased demand from one customer.

Speaker Change: $6 million in the second quarter 2024, compared to $137.4 million in there.

Speaker Change: Second quarter 2023.

Speaker Change: Net sales of traditional steering products and parts increased by seven 5% year over year to $103 million for the second quarter 'twenty 'twenty four.

Speaker Change: Compared to a $95 $8 million for the same quarter in 2023.

Speaker Change: Net sales of EPS products Rose 33, 7% year over year.

Speaker Change: $55 6 million hours from $41 $6 million were the same period in 2023.

Speaker Change: P. P. S product sales grew to 35, 1% of the total net sales.

Speaker Change: Second quarter 2024, compared to 33% for the same period in 2023.

Speaker Change: They also headlong passenger vehicle steering customers increased by 18, 9% in sales too.

Jerry: Jerry Auto rose by 28, 8% due to higher demand extra.

Jerry: Export sales to North American customers were consistent at $26 $8 million in the second quarter 2024, compared to $28 9 million hours.

Jerry: Quarter of 2020 three.

Jerry: North American sales declined basically due to decreased demand from one customer.

Kevin Theiss: Sales in Brazil were $12 million in the second quarter of 2024, compared to 20, I'm sorry, to $12.2 million in the second quarter of 2023. Gross profit grew by 29% year over year to $29.3 million from $22.7 million in the second quarter of 2023. Gross margin. 16.5% in the second quarter of 2024 from 16.5% in the second quarter of 2023. Increasing risk margin was mainly due to changes in the product mix and improved cost management. Gain on other sales was $1.7 million in the second quarter of 2024 compared to $0.7 million in the second quarter of 2023.

Sales in Brazil were $12 million in the second quarter 2024 <unk> to.

Jerry: I'm, sorry to $12 $2 million in the second quarter 2023.

Jerry: Gross profit grew by 29%.

Jerry: Year over year to $29 $3 million from $22 $7 million.

Jerry: Second quarter 'twenty to 'twenty three gross margin.

Jerry: Two.

Jerry: 5% in the second quarter of 'twenty 'twenty four from 16, 5% in the second quarter of 2023.

Jerry: Increase in gross margin was mainly due to changes in the product mix and improved cost management.

Kevin Theiss: Increasing risk margin was mainly due to changes in the product mix and improved cost management; gain on other sales was $1.7 million in the second quarter of 2024 compared to $0.7 million in the second quarter of 2023. Dominant expenses increased by 21.6% year over year to $4.6 million, compared to $3.8 million in the second quarter of 2023. Dominant expenses represented 2.9% of net sales in the second quarter of 2024, compared to 2.8% in the second quarter of 2023. General Administrative Expenses, G&A, increased by 40.7% year-over-year to $7.4 million from $5.3 million in the second quarter of 2023, mainly due to a higher consulting fee, business tax, and surcharge.

Jerry: Gain on other sales was $1 $7 million in second quarter of 2024 compared to <unk> $7 million second quarter 2023.

Jerry: Selling expenses increased by 21, 6% year over year to $4 $6 million compared to $3.8 million in second quarter 2023.

Kevin Theiss: Dominant expenses increased by 21.6% year-over-year to $4.6 million compared to $3.8 million in the second quarter of 2023. They represented 2.9% of net sales in the second quarter of 2024 compared to 2.8% in the second quarter of 2023. General Administrative Expenses, G&A, increased by 40.7% year-over-year to $7.4 million from $5.3 million in the second quarter of 2023, mainly due to a higher consulting fee and business tax and surcharge.

Jerry: Selling expenses represented two 9% of net sales in.

Jerry: Second quarter 2024, compared to two 8% in the second quarter of 2023.

Jerry: General and administrative expenses G&A increased by 47% year over year to $7 $4 million from $5 $3 million in the second quarter of 2023, mainly due to higher consulting fees and tax business tax sensor surcharges G&A expenses.

Kevin Theiss: G&A expenses represented 4.7% of net sales in the second quarter of 2024 compared to 3.9% of net sales in the second quarter of 2023. Research and Development Expenses, R&D, increased by 23.9% year-over-year to $8.2 million, compared to $6.6 million in the second quarter of 2023. R&D expenses represented 5.2% of net sales in the second quarter of 2024, compared to 4.8% in the second quarter of 2023. Research and development programs include electric power and hydraulic steering systems, automotive intelligence and software technologies, automobile electronics, Earring Towels, High Polymer Materials, Automotive Parts, Manufacturing Technologies, and Automotive Parts, among other things.

Rented for 7% of net sales in the second quarter of 2024 compared to three 9% of net sales in the second quarter of 2023.

Jerry: Research and development expenses R&D increased by 23, 9% year over year to $8 $2 million.

Jerry: Compared to $6 $6 million in second quarter of 2023.

Jerry: R&D expenses represented five 2% of net sales in the second quarter 2024, compared to four 8% in the second quarter of 2023.

Jerry: Research and development programs include electric power.

Jerry: And hydraulic steering systems automotive intelligence and software technology.

Jerry: The mobile electronics.

Speaker Change: Erie in college.

Speaker Change: Polymer materials automotive parts manufacturing technologies in the automotive parts.

Speaker Change: Among other things.

Speaker Change: Our other income was $1 $7 million for the second quarter 2024, compared to $2 million. Because it's ended June 32023. The decrease was primarily due to lower government subsidies in the second quarter.

Kevin Theiss: Other income was $1.7 million for the second quarter of 2024 compared to $2 million for the end of June 30, 2023. The decrease was primarily due to lower government subsidies in the second quarter of 2024. Income from operations rose 38.7% to $10.8 million in the second quarter of 2024 from $7.8 million in the second quarter of 2023. The increase was primarily due to higher sales and better margins. Interest expense was $0.2 million in the second quarter of 2024, compared to $0.3 million in the second quarter of 2023.

Speaker Change: 2020 for income from operations Rose 38, 7% to $10 $8 million in the second quarter of 2024 from.

Speaker Change: Seven $8 million in the second quarter 2023.

Speaker Change: The increase was primarily.

Speaker Change: And better margins interest expense was <unk> $2 million in the second quarter 2024.

Speaker Change: Very good point $3 million in the second quarter 2023.

Unknown Attendee: Unknown Attendee, Kevin Theiss Unknown Attendee, Kevin Theiss Unknown Attendee, Kevin Unknown Attendee, Kevin Good morning everyone and welcome to the China Automotive Systems Inc 2nd quarter earnings conference call. At this time all participants are in a listen only mode and we will open for questions following the presentation. If you would like to ask a question during the conference, please press star one on your phone, keypad. A confirmation term will indicate that your line is in the queue. If anyone should require operator assistance during this conference, please press star zero on your phone, keypad. Please note this conference is being recorded.

Kevin Theiss: Net financial expense was $.7 million in the second quarter of 2024 compared to net financial income of $4 million in the second quarter of 2023. The change in net financial, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. income before income tax expenses and equity and earnings of affiliated companies was $11.7 million in the second quarter of 2024 compared to income before income tax expenses and equity and earnings of affiliated companies of $13.4 million in the second quarter of 2023. The change in income before income tax expenses and equity in affiliated companies was mainly due to foreign exchange volatility generating a loss in the second quarter of 2024 compared with income in the same quarter last year.

Kevin Theiss: Net financial expense was $0.7 million in the second quarter of 2024 compared to net financial income of $4 million in the second quarter of 2023. The change in net financial, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. income before income tax expenses and equity and earnings of affiliated companies was $11.7 million in the second quarter of 2024 compared to income before income tax expenses and equity and earnings of affiliated companies of $13.4 million in the second quarter of 2023.

Speaker Change: Financial expense was $7 million in second quarter of 2024 compared to net financial income.

Speaker Change: $4 million in the second quarter of 2023.

Speaker Change: The change in net financial.

Speaker Change: Expense Slash income was primarily due to foreign exchange.

Speaker Change: Volatility generating a loss in the second quarter of 'twenty 'twenty four compared with income in last year's same pool.

Speaker Change: Income before income tax expenses and equity in earnings of affiliated companies.

Speaker Change: What is it $11.7 million in the second quarter of 2024.

Speaker Change: Paired to income before income tax expenses and equity in earnings of affiliated companies of $13 $4 million.

Speaker Change: In the second quarter 'twenty to 'twenty three the change anything from before.

Speaker Change: Income tax expenses and equity in them.

Speaker Change: Ciliated companies was mainly due to foreign exchange volatility generating the loss in the second quarter 2024.

Kevin Theiss: The change in income before income tax expenses and equity in affiliated companies was mainly due to foreign exchange volatility generating the loss in the second quarter of 2024 compared with income in the same quarter last year. Income tax expense was $2.1 million in the second quarter of 2024 compared to $1.5 million for the second quarter of 2023, primarily due to an increase in the global intangible low tax income g i l t i tax Net Income, The diluted earnings per share was $0.24 in the second quarter of 2024 compared to $0.35 in the second quarter of 2023. We did average the number of diluted common shares outstanding. 30,185,702 in the second quarter of 2024, compared to 30,189,537 in the second quarter of 2023. We've now reviewed for the first six months of 2024.

Speaker Change: Bear with income in last year's same quarter.

Kevin Theiss: Income tax expense was $2.1 million in the second quarter of 2024, compared to $1.5 million for the second quarter of 2023, primarily due to an increase in the global intangible low tax income, GILTI tax expense. Net Income, Attributable to common shareholders, was 7.1 million dollars in the second quarter of 2024 compared to net income attributable to parent companies' common shareholders of 10.5 million dollars in the second quarter of 2023. The diluted earnings per share was $0.24 in the second quarter of 2024 compared to $0.35 in the second quarter of 2023. However, we did average the number of diluted common shares outstanding.

Speaker Change: Income tax expense was $2 $1 million in the second quarter of 2024 compared to $1.5 million.

Speaker Change: For the second quarter of 2023.

Speaker Change: Primarily due to an increase in the global intangible low taxed income G. I L T I tax expenses.

Speaker Change: Net income.

Speaker Change: Attributable to.

Speaker Change: Common shareholders was $7 $1 million.

Speaker Change: In the second quarter of 2024 compared to net income attributable to parent company's common shareholders of $10 $5 million in the second quarter 2023.

Speaker Change: Earnings per share was 2024 cents.

Speaker Change: Second quarter of 2024 compared with 35.

Speaker Change: In the second quarter.

23.

Speaker Change: Weighted average number of diluted common shares outstanding was $30 million 185000 and 702.

Kevin Theiss: $30,185,702 in the second quarter of 2024, compared to $30,189,537 in the second quarter of 2023. We've now reviewed for the first six months of 2024. Net sales increased by 6.6% year over year to $298 million in the first six months of 2024 compared to $279.7 million in the first six months of 2023. Net sales of traditional steering products and parts increased by 2.5% to $195 million for the six months ended June 30, 2024 compared to $190.3 million for the same period in 2023. Net sales of EPS systems and parts increased by 15.2%.

Speaker Change: Quarter 2024.

Speaker Change: Third to $30 million 189537 in the second quarter of 2020 three.

Kevin Theiss: I will now turn the conference over to your host, Kevin Theiss, Kevin The Floor Is yours. Thank you and thank you everyone for joining us today. Welcome to China Automotive's 2024 2nd quarter conference call.

Speaker Change: Not really.

Speaker Change: For the first six months of 'twenty 'twenty four.

Speaker Change: Net sales increased by six 6% you'd probably year to $298 million in the first six months of 'twenty 'twenty four.

Kevin Theiss: Net sales increased by 6.6% year-over-year to $298 million in the first six months of 2024, compared to $279.7 million in the first six months of 2023. Net sales of traditional steering products and parts increased by 2.5% to $195 million for the six months ended June 30, 2024, compared to $190.3 million for the same period in 2023. Net sales of EPS systems and parts increased by 15.2%.

Kevin Theiss: Join us today, Mr. Jie Li, Chief Financial Officer, the Assistant. He will be available to answer questions later in the conference, followed with the assistance of translation.

Speaker Change: Paired with 279.

Point $7 million in the first six months of talking 'twenty three net sales of traditional steering products and parts increased by two 5% to $195 million, where the six months ended June 32024.

Kevin Theiss: Before we begin, I will remind all listeners that throughout this call we may make statements that may contain forward-looking statements within the meaning of the private securities that are engaged for reform act of 1995. Forward-looking statements represent the company's estimates and assumptions only as of the date of this call. As a result, the company... Actual results could materially differ from those contained in these forward look at statements due to a number of factors including those described under the heading risk factors and results of operations in the company's form 10k annual report or the year ended December 31, 2023.

Speaker Change: Turning to $193 million.

Speaker Change: At the same period in 2023.

Speaker Change: Net sales of EPS systems, and parts increased by 15, 2%.

Kevin Theiss: $103 million, but the six months ended June 30, 2024, compared to $89.4 million a year ago. There's a percentage of net sales, sales of EPS. 34.6% for the six months ended June 30, 2024, compared to 32% for the same period in 2023.

Kevin Theiss: $103 million, but for the six months ended June 30, 2024, compared to $89.4 million a year, as a percentage of net sales, EPS sales 34.6% for the six months ended June 30, 2024, compared to 32% for the same period in 2023. Six-month growth profit increased by 20.4% year-over-year to $53.4 million and $44.3 million in the corresponding last time. The six-month growth margin was 17.9% compared with 15.9% in the first six months of 2023, primarily due to a sales-products mix and lower unit costs. Gain on other sales was $2.2 million in the first six months of 2024 compared to $1.4 million in the corresponding period last year. Operating expenses rose by 16.4% year-over-year, led by a 29.3% increase in general and administrative expenses due to higher consulting fees and tax-related issues.

Speaker Change: $103 million for six months ended June 32024, compared to $89.4 million a year ago as a percentage of net sales.

Speaker Change: E P S.

Speaker Change: 34, 6% for the six months ended June 30 'twenty.

Speaker Change: <unk> 24 compared to 32% for the same.

Speaker Change: [laughter] periods in 2023.

Kevin Theiss: That's filed with the Security Exchange Commission and another documents filed by the company from time to time with the Security Exchange Commission. Any of these factors, another factors beyond our control could have an adverse effect on the overall business environment, cause uncertainty in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business financial condition and results of operations.

Speaker Change: Six month gross profit increased by 24% year over year to $53 $4 million of $44 $3 million and a corresponding latest time six months gross margin was 17, 9% compared with $15 nine.

Kevin Theiss: Six-month growth profit increased by 20.4% year-over-year to $53.4 million and $44.3 million in the corresponding last time. The six-month growth margin was 17.9% compared with 15.9% in the first six months of 2023, primarily due to a sales-products mix and lower unit costs. Gain on other sales was $2.2 million in the first six months of 2024, compared to $1.4 million in the corresponding period last year. Operating expenses rose by 16.4% year-over-year, led by a 29.3% increase in general and administrative expenses due to higher consulting fees and tax-related expenses. Income from operations increased by 31.7% year-over-year to $20.5 million in the first six months of 2024 from $15.5 million in the first six

Speaker Change: A percent in the first six months of 2023.

Speaker Change: Primarily due to the sales product mix and lower unit costs.

Speaker Change: Gain on other sales was $2.2 million in the first six months of 'twenty 'twenty four compared to $1 $4 million in the corresponding period last year operating expenses rose by 16, 4% year over year led by a 29, 3% increase in general and administrative expenses due to the high higher costs.

Kevin Theiss: A prolonged disruption or any unforeseen delay in our operations of the manufacturing delivery and assembly processes within any of our production facilities, but result in delays in the shipment of products to our customers, increased cost and reduced revenue. The company expressly disclaims any duty, divide updates to any forward looking statements made in this call, whether it results new information, future events or otherwise.

Speaker Change: Hoping to ease and tax related expenses.

Kevin Theiss: Income from operations increased by 31.7% year-over-year to $20.5 million in the first six months of 2024 from $15.5 million in the first six months of 2023. The increase in operating income is primarily due to a $9 million increase in gross profits compared with a nearly $5 million gain in operating expenses. Operating margin was 6.9% in the first six months of 2024, compared to 5.6 million in the first six months of 2023. Other income net increased to $4.1 million for the six months ended June 30, 2024, mainly due to an increase of $0.6 million in government subsidies compared with last year's period.

Speaker Change: Income from operations increased by 31, 7% year over year to $25 million first six months of 2024 about $15 $5 million in the first six months of 2023. The increase in operating income was primarily due to a $9 million increase.

Kevin Theiss: On this call, I will provide a brief overview in summary of the second quarter for the period June 30, 2024. Management will then conduct a question and answer session. The 2024 second quarter and six months results are unordered and financial results are reported using US gap accounting, where the purposes of our call today are reviewed the financial results in US dollars.

Kevin Theiss: The increase in operating income is primarily due to a $9 million increase in gross profits compared with a nearly $5 million gain in operating expenses. Operating margin was 6.9% in the first six months of 2024, compared to 5.6 million in the first six months of 2023. Other income net increased to $4.1 million for the six months ended June 30, 2024, mainly due to an increase of $0.6 million in government subsidies compared with last year.

Speaker Change: And gross profits compared with the nearly $5 million game.

Speaker Change: And operating expenses.

Speaker Change: Operating margin was six 9% in the first six months of 2024 compared to $5 6 million in the first six months of 2023.

Kevin Theiss: We'll begin with the review of some of the quarterly business highlights, recent dynamics of the Chinese economy and automobile industry and our market position. Our net sales of steering products increased by 15.4% year over year in gross profit grew faster at the 29% year over year rate in the second quarter of 2024. Thanks to changes in product mix and effective cost controls. Sales of our traditional steering products grew by 7.5% year over year.

Speaker Change: Other income net increased to $4 $1 million for the six months ended June 32024, mainly due to an increase of $6 million in government subsidies compared with last year's period.

Speaker Change: Financial expense.

Kevin Theiss: Financial expense net was $0.7 million for the six months ended June 30, 2024, compared to financial income net of $3.5 million in the same six months period a year ago. This $4.2 million increase mostly resulted from an increase in foreign exchange losses due to foreign exchange volatility; income tax increased by almost 65% year-over-year to $3.9 million due to higher GIL DI tax; and equity and losses of affiliated companies increased by $1.2 million in the 2020 first six-month period compared with the corresponding period last year.

Kevin Theiss: Financial expense net was $0.7 million for the six months ended June 30, 2024, compared to financial income net of $3.5 million for the same six-month period a year ago. This $4.2 million increase mostly resulted from an increase in foreign exchange losses due to foreign exchange volatility; income tax increased by almost 65% year-over-year to $3.9 million due to higher GIL DI tax; and equity and losses of affiliated companies increased by $1.2 million in the 2020 first six-month period compared with the corresponding period last year.

Speaker Change: Net was <unk> $7 million for the six months ended June 32024, compared to financial income net of $3 $5 million similar six months period, a year ago. This $4 2 million dollar increase.

Kevin Theiss: With our electric power steering, EPS products, sales increased by 33.7% year over year. Our growth in the second quarter was led by the increase in EPS sales, as well as higher sales to cherry autos, passenger vehicles. And at almost 19% year over year sales increased by our headlong subsidiary to Chinese passenger vehicle OEMs. In the Chinese commercial vehicle market, our sales declined by approximately $1 million to $18.7 million in the slower growth market.

Speaker Change: Mostly resulted from an increase in foreign exchange loss due to foreign exchange volatility.

Speaker Change: Income tax increased by almost 65% year over year to $3 $9 million due to higher G. I L. T I tax expenses.

Speaker Change: The equity and losses of affiliated companies increased by $1 $2 million in the 'twenty 'twenty four first six months period compared with the corresponding period last year.

Kevin Theiss: Net income attributable to parent companies shareholders was $15.4 million in the first six months of 2024 compared to net income attributable to parent companies common shareholders of $17.3 million in the corresponding period of 2023. Diluted earnings per share for the first six months of 2024 were $0.51 compared to diluted earnings per share of $0.57 in the first six months of 2023.

Speaker Change: Net income attributable to parent company's shareholders was $15 $4 million in the first six months of 2024 compared to net income attributable to parent company's common shareholders of $17 $3 million in the corresponding period in 2023.

Kevin Theiss: Internationally, North America declined by $2.1 million year over year, mostly from reduced demand by Stellantis. With South American sales experiencing a slight decline. With a six months end of June 30, 2024, Stellantis and solidated shipments in North America had declined by 18.1% year over year. With a macro economy during the first half year, Chinese GDP grew by 5% with total retail sales of consumer goods up by a minus 3.7% year over year.

Speaker Change: Diluted earnings per share for the first six months of 'twenty 'twenty four.

Speaker Change: 51 cents compared to diluted earnings per share of <unk> 57 cents in the first six months of 2023.

Speaker Change: Uh huh.

Kevin Theiss: Now we'll give some balance sheet and other financial highlights. As of June 30, 2024, total cash and cash equivalents and pledged cash was $148.4 million. Total accounts receivable, including notes receivable, were $288.1 million.

Kevin Theiss: Total cash and cash equivalents and pledged cash was $148.4 million. Total accounts receivable, including notes receivable, were $288.1 million. Accounts payable, including notes payable, were $254 million. Short-term loans were $46.6 million.

Speaker Change: Now I will give some balance sheet and other financial highlights as of June 32024.

Speaker Change: Total cash and cash equivalents and pledged cash was $148 $4 million.

Kevin Theiss: Investment and Victim incomes, excluding rural households, increased in the first half of 2024 by 3.9% year-over-year. However, some important market segments declined with real-state development dam by 10.1% year-over-year in the sales of four space of newly built commercial buildings decreased by 19% year-over-year. However, all motor sales posted different forms. According to statistics from the China Association of Automobile Manufacturer, the AAM, the combined sale of passenger and commercial vehicles increased by 6.1 year-over-year in the first half of 2024.

Speaker Change: Total accounts receivable, including notes receivable were $288 $1 million.

Kevin Theiss: Accounts payable, including notes payable, were $254 million, and short-term loans were $46.6 million. Total Parent Stockholders' Equity was $362.9 million as of June 30, 2024, compared to $344.5 million as of December 31, 2023. Our current ratio is 1.5, and working capital, total current assets, so that's total current liabilities, was $190 million as of June 30, 2024. Net cash provided by operating activities was $9.1 million in the first six months compared to net cash used in operating expenses of $0.05 million in the first six months of 2023. Payments to acquire property, plant, and equipment were $10 million compared to $5.5 million in the first six months of 2023.

Speaker Change: Accounts payable, including notes payable were $254 million short term loans were $46 $6 million.

Speaker Change: Total parents stockholders' equity was $362 $9 million as of June 32024, compared to 344 or five hours as of December 31 2023.

Kevin Theiss: Total Parent Stockholders' Equity was $362.9 million as of June 30, 2024, compared to $344.5 million as of December 31, 2023. Our current ratio is 1.5, and working capital, total current assets, so that's total current liabilities, was $190 million as of June 30, 2024. Net cash provided by operating activities was $9.1 million in 2020 for the first six months compared to net cash used in operating expenses of 0.05 million in the first six months of 2020.

Speaker Change: Our current ratio was the 1.5 and working capital total current assets less total current liabilities.

Kevin Theiss: Sales of passenger vehicles rose by 6.3% year-over-year and commercial vehicle sales grew by 4.9% year-over-year. Sales of new energy vehicles increased by 32% year-over-year led by an 85.2% year-over-year rise in plug-in hybrid vehicles. In addition, automobile exporting increased by 30.5% from the 6-month period of the year-over-year. Purchased subsidies by the government and some auto OEMs, favorable trading and policies, better loan terms, all aided the automobile industry sales. The automotive industry is a critical industry, but the continued growth of the Chinese economy is expected to receive ongoing support from the Chinese government.

Speaker Change: $190 million as of June 32024.

Speaker Change: Cash provided by operating activities was $9 $1 million.

Speaker Change: 24, first six months compared to net cash used in operating expenses, a 0.0 5 million in the first six months of 2023.

Kevin Theiss: Payments to acquire property, plant, and equipment were $10 million compared to $5.5 million in the first six months of 2023. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., has reiterated revenue guidance for the full year 2024 of $605 million. This target is based on the company's current operating and market conditions, which are subject to change. Thank you.

Speaker Change: Payments to acquire property plant and equipment was $10 million.

Speaker Change: They are two $5.5 million in the first six months.

Speaker Change: 23.

Speaker Change: Management.

Operator: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. has reiterated revenue guidance for the full year 2024 of $605 million. This target is based on the company's experience operating in market conditions, which are subject to change. With that operator, we are ready to begin the Q&A. Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question, please press star 1 on your phone keypad.

Speaker Change: <unk> has reiterated our revenue guidance for the full year 2024 of $605 million. This target is based on the company's current.

Speaker Change: On operating and market conditions, which are subject to change.

Speaker Change: With that operator, we are ready to begin the Q&A.

Kevin Theiss: Back to our business performance, during the second quarter, our growth profit rose by 29% year-over-year. A growth of 18.5% up from 17.3% in the first quarter of 2024 and 16.5% in the second quarter of 2023. Greater sales of our EPS products improved economies of scale in EPS production and cost-controlled, generated our higher growth margin. Our operating income climbed faster at 38.7% year-over-year in the second quarter of 2024 despite higher research and development and FGNA expenses.

Speaker Change: Thank you very much we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your key patent now confirmation time would indicate that Youll Linus and Nicky you May press star two if you'd like to remove your question from Nicky.

Operator: Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question, please press star one on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before you press the Please wait a moment whilst we poll for questions. Thank you. Your first question is coming from Jonathan Niches, who's a private investor. Jonathan, your line is live.

Operator: Confirmation Tone would indicate that your line is busy. You may press star 2 if you would like to remove your question. For any participants using speaker equipment, it may be necessary to pick up your handset before, Please wait a moment while Thank you. Your first question is coming from Jonathan Nietzsche, who's a private. Jonathan, you're live.

Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the keys. Please wait a moment, whilst we poll for questions.

Speaker Change: Thank you. Your first question is coming from Jonathan niches Who's a private investor Jonathan Your line is live.

Jonathan niches: Hello My question is.

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Hello, my question is the gross margin has increased to 18.5% in the second quarter. What is the outlook for the gross margin going forward? Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Our horsepower has risen to 18.5% in the second quarter. Can you tell us what the future horsepower trend is? Okay. In this quarter, our product gross profit reached 18.5%, and in the first half of the year, it was 17.9%.

Jonathan niches: Gross margin has increased to 18, 5% in the second quarter, what is the outlook for the gross margin going forward.

Speaker Change: Uh huh.

Unknown Attendee: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Our horsepower has risen to 18.5% in the second quarter. Can you tell us about the future horsepower trend?

Jonathan niches:

Speaker Change: Well, the Mali DRC to Samsung.

Jonathan niches: <unk>.

Speaker Change: The 10 story shall we like Molly chooses or something else.

Speaker Change: Okay.

Unknown Executive: Okay. In this quarter, our product gross profit reached 18.5%, and in the first half of the year, it was 17.9%. This is about 2% higher than last year. This is mainly due to the scale effect of our ETS products' production increase. In addition, in the product combination, the ratio of high-added value products has also been improved.

Speaker Change: Hum.

Speaker Change: I don't know if I missed.

Speaker Change: Now hold somebody at NASS and the damages since you didn't you suddenly the other one that be Chilean punchy Ginger law you can go back Wendy I'm, sorry, you said you wanted to get Etfs assumption that Susan.

Speaker Change: Showing no weight or whatnot, that's something she gets a hormone.

Speaker Change: If we got so that's something that you guys are like Houston, instead alignment Guy So I'm not one and done some.

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Speaker Change: One change that I think you've answered yet.

Speaker Change: Uh huh.

Speaker Change: Hey, Bob I can just about filling the Sampson Susan.

Unknown Executive: This is about 2% more than last year. This is mainly due to the scale effect of our ETS product production increase. In addition, in the product combination, the ratio of high-added value products has also been improved. This has improved our gross profit. Looking ahead, we believe that our gross profit will remain at 18%. Thank you. Great, thank you for your question. Yes, our second quarter gross margin reached 18.5%. If you look at the whole first six months or first half of the year, our gross margin was 17.9%. Both the second quarter and first half of the year were two percentage points higher than the same period last year.

Speaker Change: Susan.

Speaker Change: Yeah.

Speaker Change: Great. Thank you for your question yes.

Unknown Executive: Great, thank you for your question. Yes, our second quarter gross margin reached 18.5%. If you look at the whole first six months or first half of the year, our gross margin was 17.9%. Both the second quarter and the first half of the year are two percentage points higher than the same period last year. The reason our gross margin improved is mainly due to EPS sales volume increase, and also the value; a higher priced or higher value added product is selling well, and due to the better economy of scale of those products, our gross margin Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., experiencing a very nice improvement. And looking into the future, I think for the rest of the year, we are very confident we can maintain at least 18% of the gross margin.

Speaker Change: Yes, our second quarter gross margin reached 18, 5%.

Speaker Change: If you look at the whole year.

Speaker Change: For six months or first half of the year, our gross margin was 17, 9%.

Speaker Change: Bose.

Quarter, and first half of the year or two percentage point higher than the same period of last year.

Unknown Executive: The reason our gross margin improved is mainly due to EPS sales volume increase, and also the value, higher priced or higher value added products are selling well, and due to the Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. experiencing a very nice improvement. And looking into the future, I think for the rest of the year, we are very confident we can maintain at least 18% of the gross market. Jonathan, if you finish, Yes, thank you. Thank you. Thank you very much.

Speaker Change: The reason our gross margin improve.

Speaker Change: Good.

Speaker Change: It's mainly due to our EPS sales volume increase.

Speaker Change: And also the value.

Speaker Change: Hi.

Speaker Change: Probably still have higher value added products.

Speaker Change: They are selling well.

Speaker Change: Due to the.

Speaker Change: The better economy of scale of those products.

Speaker Change: Gas margin.

Are they.

Speaker Change: We are experiencing.

Speaker Change: A very nice improvement.

Speaker Change: Looking into the future.

Speaker Change: For the rest of the year.

Speaker Change: We are very confident we can maintain.

Speaker Change: At least 18%.

Speaker Change: For the gross margin.

Unknown Attendee: Okay, Jonathan, if you finish your question.

Speaker Change: Okay, Jonathan if you finish your question.

Jonathan niches: Yes. Thank you.

Operator: Yes, thank you. Thank you. Thank you very much. Your next question is coming from Todd Gurlow, who is a private investor. Todd, your line is live.

Operator: Thank you. Thank you very much. Your next question is coming from Todd Gurlow, who is a private investor. Todd, your line is live.

Jonathan niches: Thank you very much your.

Unknown Executive: Your next question is coming from Todd Gurlow, who is a private. Unknown Attendee, Unknown Attendee, Elon Musk. Thank you. Um, my question is, how much are your capital expenditures in 2024? and in what product areas are these investments being made, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Our annual investment plan this year is US$25 million. In the first half of the year, we have invested nearly 10 million U.S. dollars.

Speaker Change: Your next question is coming from Todd who is a private investor Todd Your line is life.

Todd: Thank you.

Todd: My question is how much.

Todd: Capital expenditures in 2024.

Speaker Change: And in what product areas are these investments being made.

Kevin Theiss: The alluded net income per share was 24 cents in the 2024 second quarter and 51 cents for the six months. Finally, cash flow from operations was 9.1 million dollars in the first six months of 2024 compared with cash used in the same six-month period last year.

Speaker Change: Are you ready to talk to.

Unknown Attendee: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Thank you for watching.

Speaker Change: So as John says all we tell them, the supergene, who already I see it until the age old dog eyes Deutschland.

Kevin Theiss: One of the directors recently declared a special dividend of 80 cents per common share to be paid on or about August 22, 2024. The aggregate dividend amount should be approximately 25 million dollars which repay journal funds and cash flow. The cash dividend highlights our confidence in a sustainable growth and cash generation to support and as a thank you to our long-term shareholders.

Speaker Change: Our whole associated to the heme since without golf, which I initiated hunting Bollywood.

Speaker Change: Oh, great she builds.

Kevin Theiss: We also celebrate the 20th anniversary of our NASDAQ listing later on August 24 of 2024. During these 20 years we grew from a small Chinese domestic player to a large global one tier supplier with operations and customers in North America, South America, Europe, India, and Asia, with highly successful customers such as BYD Auto, Genjie Geely Automobile, Cherry Automobile, Tunkwing Changin Automobile, SAIC Motor, and FAW Group domestically. They also have global customers such as Stellantis Envy in North and South America, NY, Ford Motor Company in North America, and Mahindra in India.

Hunter: Thanks Hunter.

Speaker Change: Yeah.

Unknown Executive: In the second half of the year, we will invest another 15 million U.S. dollars. About 80% of the total US$25 million will be invested in EPS series products, including ERCB, IRCB, R-EPS, and some other EPS products. The remaining 20% will be used to upgrade the production equipment of traditional products.

Unknown Executive: Our annual investment plan this year is US$25 million. In the first half of the year, we have invested nearly 10 million U.S. dollars. In the second half of the year, we will invest another 15 million U.S. dollars. 2500, 80%, 2000, EPS, ERCB, IRCB, R-EPSEPS, The remaining 20% will be used to upgrade the production equipment of traditional

Speaker Change: Well, the engineering and the total jihad upon us.

Speaker Change: Well I'll, maybe somebody you can pencil out Jimmy Choo, I'm aging shelving and Knowhow My gentle words, you can't Labella Navy.

Speaker Change: So in good NGL zone.

Speaker Change: Changing your boss.

Speaker Change: So I'm aging quite told me about ETE.

Speaker Change: Sure.

Speaker Change: Oh cool.

Speaker Change: Yes, it would be I honestly B R E T S J.

Hey, you bet assumption.

Speaker Change: So you've got it I'm just hurt us about one where are you going to use it.

Speaker Change: So I mean does it sometimes it doesn't.

Speaker Change: Susan.

Speaker Change: Yeah.

Unknown Executive: Thank you. Our capital expenditure for 2024, a full year, is going to be $25 million. As you can see, in the first half of the year, we already spent $10 million on capex. We're going to continue to inject $15 million in the second half of the year. And out of our 25 million annual capex budget, 80%, or about $20 million, will go to EPS-related products. We have a number of exciting and innovative products, including ERPC, RCP, and IRCP products are coming into the market. The remaining 20% of our capex will go to other traditional products. Unknown Attendee Your next question. Andrew Pauberet to the private line: Andrew, your line is live.

Unknown Executive: Our capital expenditure for 2024 a full year is going to be $25 million. As you can see, in the first half of the year, we already spent $10 million on capital expenditure. We're going to continue to inject $15 million in the second half of the year, and out of our $25 million annual capex budget, 80%, or about $20 million, will go to EPS-related products. We have a number of exciting, innovative products, including ERPC, RCP, and IRCP, which are coming into the market. The remaining 20% of our capital expenditure will go to other traditional products.

Speaker Change: Our capital.

Speaker Change: Capital expenditure for.

Speaker Change: 2024.

Full year is going to be $25 million.

Speaker Change: As you use as you can see in the first half of the year, where you already spent $10 million and the Capex will going to continue to inch up $15 million.

Speaker Change: In the second half of the year.

Speaker Change: And all of our 25 million in annual Capex budget, 80%.

Speaker Change: About $20 million will go to E. P S related product.

Speaker Change: We have a number of.

Speaker Change: Exciting.

Speaker Change: And in a weekend.

Speaker Change: Product, including E P C.

Speaker Change: C P I RCP product, that's coming into the market.

Speaker Change: The remaining 20% Oh Capex will go to other traditional products.

Speaker Change: Okay.

Speaker Change: Okay. Thank you very much. Your next question is coming from Angie pulp grade Who's a private investor.

Unknown Attendee: Your next question is coming from Andrew Porberade, who is a private investor. Andrew, your line is, Unknown Executive, Unknown Attendee, Kevin Theiss, Jie Li Hello, congratulations on the results, especially the revenue increase.

Speaker Change: Your line is life.

Speaker Change: Hello, Congratulations for the results, especially better than your increase.

Unknown Attendee: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Operator: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Andrew, we couldn't hear the second half of your question. Andrew, I think your line got a bit distorted. Could you just try asking the question?

Speaker Change: Should we are you reiterated your guidance, but should we look at are always August is looking for or.

Speaker Change: First of all.

Speaker Change: Oh, okay.

Speaker Change: And how much should we expect some revenue.

Speaker Change: Robert.

Speaker Change: Yeah.

Unknown Attendee: Andrew, we couldn't hear the second half of your question.

Speaker Change: We couldn't hear the second half for your questions.

Speaker Change: Andrew I think kill your line got a bit distorted and could you just try asking the question yeah, sorry, yeah.

Unknown Attendee: Andrew, I think your line got a bit distorted. Could you just try asking the question?

Speaker Change: Okay.

Andrew: So should we expect in quarter three the same $158 million in revenue Oh, So congratulations for the results and yeah. How is the first month for July and August looking for revenue.

Operator: So should we expect in quarter three the same $158 million in revenue? Also, congratulations on your results. And yeah, how is the first month of July and a bit of August looking for revenue? Okay, great. Thank you.

Unknown Attendee: So should we expect in quarter three the same $158 million in revenue? Also, congratulations on your results. And yeah, how is the first month of July and a bit of August looking for revenue?

Unknown Executive: Okay, great. Thank you.

Speaker Change: Okay, great. Thank you.

Speaker Change: How do you see.

Speaker Change: So she had to hold them and take a tour that you don't see how it all of it yet.

Unknown Attendee: First of all, congratulations on achieving very good results in this quarter. I would like to ask if the 3rd quarter will continue to maintain the 1.5 billion sales volume. Because the 3rd quarter has already passed for about 45 days, I would like to know what the sales situation is like in July and August.

Unknown Executive: Thank you. First of all, congratulations on achieving very good results this quarter. I would like to ask if the 3rd quarter will continue to maintain this 1.5 billion, almost 1.5 billion, sales volume. Because the 3rd quarter has passed for about 45 days, I would like to know what the current situation is in July and August, the sales situation. Qizhou Wu, China Automotive Systems Inc., Unknown Attendee, Kevin Qizhou Wu, China Automotive Systems Inc., Unknown Attendee, Kevin, Unknown Speaker, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Yeah, thank you for your question.

Speaker Change: Oh gosh I wasn't sure.

Kevin Theiss: It has also grown from $58.2 million in 2004 to $576.4 million in 2023. We look forward to the further growth of our company's operations as our traditional steering product, remain a solid contributor even as we expand our EPS, our Advanced Driver Assist Systems with our sentient AB operations, and other products under development.

Speaker Change: <unk> decided to do something so highway tissues nimble wages.

Total that's a big deal.

Speaker Change: In the defense, either reaching caller, Doug I suppose what would tail off towards there's always have cheerful who are by yourself you can ship based system you can store shelves so that.

Speaker Change: Super Chip show so that's all.

Oh, you're talking about sort of wanting a woman a corny, but she said I'm sorry.

Kevin Theiss: Before diving into details of finance, we would like to remind all shareholders and interested investors, there are two concurrent technological transitions in global automotive sectors. From internal combustion engine to electric powertrain, and from human driving to autonomous driving, our well-diversified global customer base award-winning product quality, large-scale manufacturing capacity, and best-in-class technology prepares us and positions us with strong advantages for global competition.

Unknown Executive: Qizhou Wu, China Automotive Systems Inc, Unknown Attendee, Kevin Qizhou Wu, China Automotive Systems Inc, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Speaker Change: So I'm gonna, that's what she Jason but so cheap decided you do a kantar you end up on nice Seeger geographies out D here that you're going to get easier.

Speaker Change: Uh huh.

Speaker Change: And what time charter Hall nitrogen Zynga subregions, you're watching your data. That's what you saw and you can't come out some of the business with you and I called Nevada, and maybe a year maybe in their defense you don't cause any sort of synergies that were kin D hit a number of women take G. D. G. You've been buying it comes out I mean, yes, yes, absolutely.

Speaker Change: Okay that makes sense are you happy with the IGT Ibs D G.

Speaker Change: Sure.

Unknown Executive: Unknown Speaker, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Yeah, thank you for your question. Third quarter, due to the summer season, our seasonal sales are usually lower than the second quarter. And due to the high temperatures and heat waves during the summer season, a lot of OEMs tend to go in to adjust their production schedules. And also, they're going to spend some time maintaining or keeping their production line. And for that reason, and we'll see if Q3 is in line with prior year, Q3's seasonality. But overall, we maintain a very strong, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Speaker Change: <unk>.

Unknown Executive: Third quarter, due to the summer season, usually our seasonalally are lower than the second quarter. And a lot due to the high temperatures and heat waves during the summer season, a lot of OEMs tend to go in to adjust their production schedules.

Speaker Change: Yeah. Thank you for your question third quarter periods.

Speaker Change: Due to the summer season.

Speaker Change: Usually our seasonally are.

Speaker Change: Lower than.

Speaker Change: The second quarter.

Speaker Change: And a lot of.

Speaker Change: To the high temperature.

Speaker Change: And heat waves during.

Speaker Change: During the summer season, a lot of Oems.

Speaker Change: Went to court.

Speaker Change: To adjust our production schedules and also are they going to spend.

Unknown Executive: And also, they're going to spend some time maintaining and keeping their production line. And for that reason, and we'll see how Q3 is in line with the prior year, Q3's seasonality. But overall, we maintain a very strong, transcripts provided by Transcription Outsourcing, LLC.

Speaker Change: Spend some time on maintaining.

Speaker Change: Maintaining of keeping their production line.

Speaker Change: And so what's the reason.

Speaker Change: And that we'll see.

Speaker Change: The Q3 is in line with prior year.

Speaker Change: Q3's Ah seasonality.

Speaker Change: The overall.

Speaker Change: Maintain.

Speaker Change: Very strong.

Unknown Attendee: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc

Speaker Change: Our gross momentum.

Speaker Change: Okay.

Speaker Change: And if I could ask another question should we expect future dividends in the next year Oh, how what is the capital allocation going to be for shareholders buybacks also maybe on more.

Unknown Executive: And if I could ask another question, should we expect future dividends in the next year? What is the capital allocation going to be for shareholders? Buybacks also maybe are more, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Okay. He wants to know if there is a possibility of more dividends in the future? And is there a possibility of returning shares to shareholders to increase their shares

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., Okay. We are not excluding all these options.

Speaker Change: And for shareholders.

Speaker Change: Okay.

Unknown Attendee: Okay. He wants to know if there is a possibility of more dividends in the future, and is there a possibility of re-sharing stocks to increase shareholders' shares?

Speaker Change: There's always Uh huh.

Speaker Change: You will see.

Speaker Change: And I'm Gonna Chihuahua.

Speaker Change: Come to the whole the whole Iot email Clinton.

Speaker Change: We'll go to Nicole a causal ginger.

Speaker Change: Hello.

Speaker Change: Yeah.

Speaker Change: Oh, sorry.

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Capital Reward Program to shareholders are always based on our cash flow and need for capex. We believe the business is in strong momentum. We will make due announcement when we get to that stage of future plans, whether dividend or buyback. Again, we believe, you know, it's all based on our cash flow conditions and, and our overall business has been on a good track. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Okay, thank you very much.

Speaker Change: So the Apple pies wait closer country age are changing but that's one call it's going to be a degree of change either a decision that you won't see all that I think it'd be good to get quite a bit.

Speaker Change: Oh I'm, Mike M. G GTT demos aimed at Weibo hustle when she T mobile.

Unknown Executive: Okay. We are not excluding all these options. And it's all based on, as we disclosed in our recent dividend announcement. Our Capital Reward Program to shareholders, all always based on our cash flow and need for CAPEX. We believe the business is in strong momentum. We will make due announcement when we get to that stage on future plans, whether dividend or buyback. Again, we believe, you know, it's all based on our cash flow conditions and that our overall business has been on a good track.

Speaker Change: Okay.

Speaker Change: We're not excluding all of these options.

Speaker Change: And it's all based on as we disclosed in our announcement.

Speaker Change: All the recent dividend announcement.

Speaker Change: Our.

Kevin Theiss: Now let me review the financial result from the second quarter of 2024. Net sales increased by 15.4% euro a year to $158.6 million in the second quarter of 2024 compared to $137.4 million in the second quarter of 2023. Net sales of traditional steering products in parts increased by 7.5% euro a year to $103 million for the second quarter of 2024 compared to $95.8 million for the same quarter in 2023. Net sales of EPS products rose 33.7% euro a year to $55.6 million from $41.6 million for the same period in 2023.

Speaker Change:

Speaker Change: Capital reward program to shareholders, all always based all castle and a need for Capex. We believe the business is in its Joe.

Speaker Change: Maintenance.

Speaker Change: We will make announcement when we get to that stage of.

Speaker Change: Sure.

Speaker Change: Plans are what their dividend or buyback.

Speaker Change: Again.

Speaker Change: Globally.

Kevin Theiss: EPS products sales grew to 35.1% of the total net sales for the second quarter of 2024 compared to 30.3% for the same period in 2023. EPS sales of hand-long passenger vehicle steering customers increased by 18.9% and sales to Cherry Auto rose by 28.8% due to higher demand. Export sales to North American customers were consistent at $26.8 million in the second quarter of 2024 compared to $28.9 million second quarter of 2023. North American sales declined basically due to decreased demand from one customer.

Speaker Change: You know, it's all based on all our capsule conditions.

Speaker Change: And our overall business as being a good track.

Speaker Change: Okay. Thank you very much last question would be talking about cash flow a what do we expect free cash flow to be in 'twenty.

Unknown Executive: Unknown Speaker, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Okay, thank you very much.

Unknown Executive: Last question would be talking about cash flow. What do we expect free cash flow to be in 2024 for four years, considering capex is a bit larger net cash from operations will, will it be higher than last year compensating for the increased capex from 2023? What is free cash flow, approximately?

Speaker Change: <unk>. Thank you for for four year, considering Capex is a big larger net cash from operations when will it be higher than last year compensate them for doing christopoulos, opex, sometimes you're going to see.

Kevin Theiss: Sales in Brazil were $12 million in the second quarter of 2024 compared to $12.2 million Gross Profit grew by 29%, year over year to 29.3 million dollars from 22.7 million dollars in the second quarter of 2023. Gross margin, 5% in the second quarter of 2024, comes 16.5% in the second quarter of 2023. Increasing gross margin was mainly due to changes in the product mix and improved cost management. In on other sales was 1.7 million dollars in the second quarter of 2024 compared to 0.7 million dollars in the second quarter of 2023.

Speaker Change: What is free cash flow of approximately.

Speaker Change: Okay.

Unknown Executive: Okay, the last question he wants to ask is about this year's free cash flow. What is the status of free cash flow this year? Because free cash flow is basically a way to reduce capital expenditure.

Speaker Change: Talk about how you're going to tell you how long is that just a bad guy a genius.

Speaker Change: Free cash flow.

Unknown Attendee: Last question would be talking about cash flow. What do we expect free cash flow to be in 2024 for four years, considering capex is a bit larger net cash from operations will, will it be higher than last year compensating for the increased capex from 2023? What is free cash flow, approximately?

Speaker Change: Two changing.

Speaker Change: So as you know.

Divesting something it's all pointing me to send you alerts yourself she took a team.

Unknown Attendee: OK, the last question he wants to ask is about this year's free cash flow. What is the status of free cash flow this year? Because the free cash flow is basically cash flow to reduce capital expenditure, today's capital expenditure seems to be a little higher than last year. Does this mean that the operating cash flow will also increase? Will the overall free cash flow situation be stopped or increased by last year?

Speaker Change: <unk> changing neogen choose to go up.

Speaker Change: Yeah, So Julian it's sequencing since tool colloquy between you and call we did yes.

Unknown Executive: Today's capital expenditure seems to be a little higher than last year. Does this mean that the operating cash flow will also increase? Will the overall free cash flow situation be stopped or increased by last year? Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Speaker Change: So those two should see o'shea.

Speaker Change: Speaker, Jim King Tianjin meal.

Kevin Theiss: Dowing expenses increased by 21.6% year over year to 4.6 million dollars compared to 3.8 million dollars in the second quarter of 2023. Dowing expenses represented 2.9% on that sales in second quarter of 2024 compared to 2.8% in the second quarter of 2023. General administrative expenses, G&A, increased by 40.7% year over year to 7.4 million dollars from 5.3 million dollars in the second quarter of 2023. Mainly due to higher consulting fees and business tax surcharges.

Speaker Change: We take all that whole citizens 17th ago.

Speaker Change: So you were thinking they would pick which I'll call who've been chine Citibank logistical.

Kevin Theiss: G&A expenses represented 4.7% on that sales in the second quarter of 2024 compared to 3.9% on that sales in the second quarter of 2023. Research and development expenses R&D increased by 23.9% year over year to 8.2 million dollars compared to 6.6 million dollars in the second quarter of 2023. R&D expenses represented 5.2% on that sales in the second quarter of 2024 compared to 4.8% in the second quarter of 2023. Research and development programs include electric power and hydraulic steering systems, automotive intelligence software technology, automobile electronics, steering columns, high polymer materials, automotive parts, manufacturing technologies and automotive parts among other things.

Speaker Change: Oh, no you shouldn't you know quite a lot and sounds outlets Hudson's on your year.

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., Yes, so on cash flow. Our overall cash flow is doing very well. And as you know, as we grow revenue, as we continue to grow revenue, we're going to see some fluctuations in cash flow. As we, the bulk of our business is still in mainland China. The Chinese OEM tend to, the billing cycle and the payment cycle are usually four to five months.

Speaker Change: Yeah, let me.

Speaker Change: So you're quite up on like what are you putting into that call. It very quietly co who don't see Canada.

Unknown Executive: So the more we grow our top line in sales in China, the more we're going to experience accounts receivable collection cycles. So just bear in mind; we'll continue to work with OEM on collection, but at the same time, we believe cash flow is highly dependent on how fast we can collect from our customers. At the same time, based on our 605 million revenue guidance for 2024, we are confident we will continue to have a positive free cash flow for 2024. Okay, thank you very much. Yeah. Four to five months, you said, right?

Speaker Change: Like I said a year ago.

Kevin Theiss: Other income was 1.7 million dollars for the second quarter of 2024 compared to 2 million dollars for the end of June 30, 2023. The decrease was primarily due to lower government subsidies in the second quarter of 2024. Income from operations rose 38.7% to 10.8 million dollars in the second quarter of 2024 from 7.8 million dollars in the second quarter of 2023. The increase was primarily due to higher sales and better margins.

Speaker Change: Oh, well, yeah about nine months out.

Speaker Change: Yo Yo Yo.

Speaker Change: So as it turns out the partner.

Speaker Change: You guys said, you know what kind of a joke jeez and simulate what would your way.

Speaker Change: I just would like Boise.

Operator: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Just a reminder that if anyone has any remaining questions, you can press star one on your phone keypad now to join in. Our next question is coming from Jessica Lin, who's a private investor. Jessica, your line is open.

Speaker Change: Sundar kind of under our junior notes.

Speaker Change: <unk> D and Neil you can do that nobody everybody, who doesn't mean I'm Nikki Gary revenues, if I kind of like the one that you can guide you got all sorts of cash and you know, we don't want them as high Sciences.

Speaker Change: He hasn't been Swabbing.

Speaker Change: Got it and I know, who you were.

Oh cigarettes in Chile seems against which Oh.

Speaker Change: Okay, yes so.

Unknown Executive: Yes, so on cash flow. Our overall cash flow is doing very well. And as you know, as we grow revenue, as we continue to grow revenue, we're going to see some fluctuations in cash flow.

Kevin Theiss: Interest expense was 0.2 million dollars in the second quarter of 2024 compared to 0.3 million dollars in the second quarter of 2023. Net financial expense was 0.7 million dollars in the second quarter of 2024 compared to net financial income of 4 million dollars in the second quarter of 2023. The change in net financial expense slash income was primarily due to foreign exchange, volatility, generating a loss in the second quarter of 2024 compared with income in last year's same quarter.

Speaker Change: Hum.

Speaker Change: Cash flow overall cash flow.

Speaker Change: It's doing very well and.

Speaker Change: As you know.

Speaker Change: How do you think growth revenue.

Speaker Change: As we continue to grow revenue.

Kevin Theiss: Income before income tax expenses and equity and earnings of affiliated companies was $11.7 million in the second quarter of 2024 compared to income before income tax expenses and equity and earnings of affiliated companies of $13.4 million in the second quarter of 2023. The change in income before income tax expenses and equity and affiliated companies was mainly due to foreign exchange volatility generating the loss in the second quarter of 2024 compared with income in the last year's same quarter.

Speaker Change: We're going to see some fluctuation on the cash flow.

Unknown Executive: As we, the bulk of our business is still in mainland China. The Chinese OEM tend to, the billing cycle and the payment cycle are usually four to five months. So the more we grow our top line in sales in China, the more we're going to experience accounts receivable collection cycles. So just bear in mind; we'll continue to work with OEM on collection, but at the same time, we believe cash flow highly depends on how fast we can collect from our customers. At the same time, based on our 605 million revenue guidance for 2024, we are confident we will continue to have a positive free cash flow for 2024.

Speaker Change: As we.

Kevin Theiss: Income tax expense was $2.1 million in the second quarter of 2024 compared to $1.5 million where the second quarter of 2023 primarily due to an increase in the global intangible low tax income GI LTI tax expenses net income was attributable to common sharehorses was $7.1 million in the second quarter of 2024 compared to net income attributable to pair of companies common sharehorses are $10.5 million in the second quarter of 2023. The alluded earnings per share was 24 cents in the second quarter of 2024 compared to 35 cents in the second quarter of 2023. We did average a number of alluded common shares outstanding was $30.185.702 in the second quarter of 2024 compared to $30.189.537 in the second quarter of 2023.

Speaker Change: Our bulk of our business is still in.

Speaker Change: Mainland China.

Speaker Change:

Speaker Change: The Chinese OEM tend to.

Speaker Change: The billing cycle and the payment cycle usually are.

Kevin Theiss: We have not reviewed for the first six months of 2024. Net sales increased by 6.6% per year to $298 million in the first six months of 2024 compared to $279.7 million in the first six months of 2023. Net sales of traditional steering products and parts increased by 2.5% to $195 million for the six months end of June 30, 2024 compared to $190.3 million with the same period in 2023. Net sales of EPS systems and parts increased by 15.2% to $103 million but six months end of June 30, 2024 compared to $89.4 million a year ago as a percentage of net sales sales of EPS 34.6% with the six months end of June 30, 2024 compared to 32% with the same period in 2023.

Speaker Change: Four to five months so.

Speaker Change: The more we grow our top line.

Speaker Change: Sales in China, the more we're going to experience.

Kevin Theiss: Six months growth profit increased by 20.4% a year earlier to $53.4 million and $44.3 million in the corresponding period of time. The six months growth margin was 17.9% compared with 15.9% in the first six months of 2023. Primarily do the sales products mix and lower unicorns. The gain on other sales was 2.2 million dollars in the first six months of 2024 compared to 1.4 million dollars in the corresponding period last year.

Speaker Change: Accounts receivable collection cycles, so just bear in mind.

Speaker Change: We will continue to work with the Oems on the collection, but at the same time, we believe are.

Speaker Change: Are they.

Speaker Change: Cash flow is highly depends all.

Kevin Theiss: Operating expenses rose by 16.4% yearly year, led by a 29.3% increase in general and there's a straight of expenses due to a higher cost-alpine fees and tax-related expenses. Income from operations increased by 31.7% yearly year to 20.5 million dollars first six months of 2024 from 15.5 million dollars in the first six months of 2023. The increase in operating income is primarily due to a 9 million dollar increase in gross profits compared with a nearly five million dollar gain in operating expenses.

Speaker Change: How fast we can collect from Oh customers.

Speaker Change: Same time.

Speaker Change:

Speaker Change: Based on our $605 million revenue guidance for 2024.

Kevin Theiss: Operating margin was 6.9% in the first six months of 2024 compared to 5.6 million in the first six months of 2023. Other income net increased due to 4.1 million dollars for the six months end of June 30, 2024 mainly due to an increase of 0.6 million dollars in government subsidies compared with last year's period. Financial expense net was 0.7 million dollars for the six months end of June 30, 2024 compared to financial income net of 3.5 million dollars similar six months period a year ago.

Speaker Change: We are confident we will continue to play.

Kevin Theiss: This 4.2 million dollar increase mostly resulted from an increase in foreign exchange loss due to foreign exchange volatility. Income tax increased by almost 65% yearly year to 3.9 million dollars due to higher GIL DI tax expenses. The equity and losses of affiliated companies increased by 1.2 million dollars in the 2024 first six months period compared with the corresponding period last year. Net income distributed with apparent shareholders was 15.4 million dollars in the first six months of 2024 compared to net income attributable to parent companies, common shareholders of 17.3 million dollars in the corresponding period in 2023. Deluted earnings per share for the first six months of 2024 were 51 cents compared to deluded earnings per share of 57 cents in the first six months of 2023.

Speaker Change: A positive free cash flow for 'twenty 'twenty four.

Kevin Theiss: Now we'll give some balance sheet and other financial highlights. As of June 30, 2024 total cash equivalence and pledge cash was 148.4 million dollars. Total cash receivable including notes receivable were 288.1 million dollars. Accounts payable including notes payable were 254 million dollars. Short term loans were 46.6 million dollars. Total parent stockholders equity was 362.9 million dollars as of June 30, 2024 compared to 344.5 million dollars as of December 31, 2023. Our current ratio is 1.5 and working capital.

Speaker Change: Okay. Thank you very much.

Speaker Change: Yes.

Speaker Change: Four to five months, if that's right.

Unknown Attendee: Okay, thank you very much. Yeah. Four to five months, you said, right? Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Okay, okay. Thank you very much, sir.

Speaker Change: I don't know.

Speaker Change: That's four to five months yet.

Speaker Change: Okay I guess, thank you very much sir.

Speaker Change: A wonderful year congratulations. Thank you. Thank you.

Unknown Attendee: Congratulations. Thank you. Thank you.

Operator: Thank you very much. Just a reminder, if anyone has any remaining questions, you can press star 1 on your phone keypad now to join the queue. Thank you. Our next question is coming from Jessica Lin, who's a private investor. Jessica, your line is live.

Speaker Change: Thank you very much just to remind you that if anyone has any remaining questions. You can press star one on your phone keep up now to join Nikki.

Speaker Change: Okay.

Speaker Change #100: Our next question is coming from Jessica Lin Who's a private investor Jessica Your line is life.

Kevin Theiss: Total current assets of less total current liabilities was 190 million dollars as of June 30, 2024. Netcash provided by operating activities with 9.1 million dollars in the 2024 first six months compared to netcash used in operating expenses of 0.05 million in the first six months of 2023. Famous to acquire property plant and equipment was 10 million dollars compared to 5.5 million dollars in the first six months of 2023.

Good morning, My question I'm, just wondering if you could go over what percent of your R&D spend on the traditional products and then what percent of the R&D like that on EPS.

Unknown Executive: Good morning. My question, I'm just wondering if you could go over what percent of your R&D was spent on traditional products. And then what percent of the R&D was spent on EPS products? Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. We are about half way through. Although our ETS products only account for 35% of the market share, ETS represents the future. The smartization and electrification of our products are a trend.

Speaker Change #101: Okay. Thank you.

Unknown Attendee: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Speaker Change #101: The title one T shirt.

Speaker Change #103: And then just to the Greenfield.

Speaker Change #104: Okay boss I'll seal died a.

Speaker Change #104: Chantal.

Speaker Change #105: People attempting to EPS.

Yeah.

Speaker Change #104: Okay.

Kevin Theiss: Management has reiterated revenue guidance for the full year 2024 of $605 million. This target to pay for the company's current operating market conditions was just to change.

Unknown Executive: We are about half way through. Although our EPS products only account for 35% of the market share, EPS represents the future. The smartization and electrification of our products is a trend. Therefore, our investment in this area is more than half of the market share. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Speaker Change #104: Oh.

Speaker Change #106: You're buying you bombard C. I saw what may seem like you'd have some timing and that's M. D zero Oh with Angus action. That's what all I know you didn't ask me since we put out there.

Kevin Theiss: With that operator, we are ready to begin the Q&A. Thank you very much.

Speaker Change #106: So that's why I didn't know why I was I guess it could shift into the one that well not so I'd say you're quite up on the totally they'll find that some people are just that yeah, yeah, yeah, yeah, so apologies instead.

Unknown Executive: Therefore, we have to invest a lot of money in this area. Although our revenue has not yet reached 50%, our R&D costs have already reached 50%. The short answer to your question is, It's about half-half, 50% of R&D expenses going to traditional steering products, and 50% goes to EPS products. Although at the moment, EPS revenue only accounts for 35% of total revenue, however, given the importance of the electric power steering EPS product, it's a key technology going to be fully integrated into the future of the automotive industry, whether it's Unknown Speaker, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc.

Operator: We will now be conducting our question and answer session. If you would like to ask a question, please press star one on your phone keypad now. A confirmation tone would indicate that your line is in the queue. You may press star two if you would like to remove your question from the queue. For any participants using speaker equipment, it may be necessary to pick up your handset before you press the keys. Please wait a moment whilst we pull for question. Thank you.

Speaker Change #107: He says that sounds like a there's so little to say about some D. A I mean, it all depends on what I'm thinking about the untold, where you can download that happens almost oh.

Speaker Change #107: Yeah.

Unknown Executive: The short answer to your question is It's about half-half; 50% of R&D expenses go to traditional steering products, and 50% goes to EPS products. Although at the moment, EPS revenue only accounts for 35% of total revenue, however, given the importance of the electric power steering EPS product, it's a key technology going to be fully integrated into the future of the automotive industry. Whether it's the Smart Vehicle or further electrification, all need strong electric power steering to help execute their mission.

Yeah.

Speaker Change #108: The short answer to your question is.

Speaker Change #109: It's about half half, 50% of R&D expenses going to traditional steering product, 50% goes to EPS product.

Jonathan niches: Your first question is coming from Jonathan niches, who's a private investor? Jonathan, your line is live. Hello. My question is, growth market has increased to 18.5% in the second quarter. What is the outlook for the growth margin going forward? There is a question. Our margin has increased to 18.5% in the second quarter. What is the outlook for the future margin going forward?

Speaker Change #109: Although at the moment E. P. S revenue only accounts for 35% of total revenue.

Speaker Change #109: However, given the importance of electric power steering EPS products.

Speaker Change #109: It's a.

Speaker Change #110: Pete technology going to be.

Speaker Change #109: Fully.

Speaker Change #109: Integrated in the future of automotive industry.

Speaker Change #109: Whether it's.

Unknown Executive: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. That being said, we will continue to invest in the technology for the future. For that reason, we're investing, you know, spending about 50% of the expenses on EPS products.

Speaker Change #109: Smart vehicle.

Further electric electric vacation.

Speaker Change #109: All need strong electric power steering to help execute their.

Speaker Change #109: Missions so.

Speaker Change #109: That being said.

Speaker Change #111: Well, we will continue to increase.

Speaker Change #111: And the technology for the future for that.

Speaker Change #112: Uh huh.

Speaker Change #113: Interesting you know is spending about 50% of our the expense into EPS product.

Speaker Change #113: Thank you.

Speaker Change #113: Thank you. Thank you.

Speaker Change #114: Thanks, very much just another reminder, that or if there is anyone still wanting to ask a question you May press star one on your phone keypad now.

Operator: Thanks very much. Just another reminder, if there is anyone still wanting to ask a question, you may press star one on your phone keypad now. Okay, we appear to have reached the end of our questions. Oh, apologies, somebody's just jumped into the queue. We have another question in from Andrew Pobberade, who's a private investor. Andrew, your line is live.

Kevin Theiss: Thank you for the question. Yes, our second quarter growth margin reached 18.5%. If you look at the first six months or first half of the year, our growth margin was 17.9%. Both second quarter and first half of the year are two percentage points higher than the same period of last year. The reason our growth margin improved is mainly due to EPS sense volume increase, and also the value higher price or higher value added product are selling well.

Speaker Change #115: Okay. We appear to have reached the end of our question apologies somebody's just jumped in Turkey. We have another question from Andrew Paul Wright, Who's a private investor.

Operator: Thank you. Thank you. Thank you. Just another reminder, if there is anyone still wanting to ask a question, you may press star one on your phone. Okay, we appear to have reached the end of our question. Oh, apologies, somebody's just jumped into the queue. We have another question in from Andrew Pomerade, who's a Transcript by Transcription Outsourcing, LLC. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc., wondering if they improved in Q3. A bit.

Speaker Change #115: Mine is nice.

Unknown Attendee: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Yeah, sorry, I didn't really understand the cash flow from operations if it's looking better in the first month of July and August. Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. Q3, a bit, or what the guidance for that is. Thank you. I understood that the billing cycle is four or five months but, as you grow revenue, cash flow will increase more cash flow from operations, but I'm curious in July and August if cash flow operation is better a bit.

Operator: Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. I understood that the billing cycle is four or five months but and as you grow revenue cash flow will increase more cash flow from operations but I'm curious in July and August if, cash flow operation is better a bit. Okay. Unknown Speaker, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc. ????????????????????????????????, Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc Okay, so, Andrew, the short answer to your question is, As we mentioned earlier, July-August is the slowest season, due to the summer seasonality, the nature of slow season for our collection is actually Unknown Attendee, Kevin Theiss, Jie Li, Qizhou Wu, China Automotive Systems Inc, So, our collection is in full gear and and so our cash flow is better in the month of July and all.

Speaker Change #117: Yeah, sorry, I didn't really understand the cash flow from operations, it's looking better in the first months of July August.

Operator: Unknown Attendee Okay, I understand. Thank you very much. Thank you very much. Well, we appear to have reached the end of our question and answer session. So I will now hand back over to Kevin for any questions. Qizhou Wu, China Automotive Systems Inc. Thank you for your participation in today's conference call. Please be safe, and we look forward to speaking with you in the future. Thank you very much. This does conclude today's program. You may now disconnect your phone line at this time.

Speaker Change #117: Cash flow from operations.

Speaker Change #119: But they improved in the.

Speaker Change #120: Q3 will be.

Speaker Change #121: Or what's the guidance for that in Q4.

Speaker Change #122: I understood that the billing cycle is four or five months, but as you grow revenue cash flow will increase for cash flow from operations, but I'm curious in July and August.

Kevin Theiss: Due to the better economy of scale of those products, our growth margin are.., experiencing a very nice improvement. And looking into the future, I think for the rest of the year, we are very confident we can maintain at least 18% for the gross margin.

Speaker Change #123: Cash from operations better that'd be.

Speaker Change #122: Okay.

Unknown Attendee: The question about the cash flow just now, he was asking in the video, he wants to know about the situation in July and August. What will the cash flow be like? Because you just mentioned that July and August are months.

Speaker Change #124: Yeah It doesn't.

Speaker Change #125: And it shouldn't change you knew the warranty.

Speaker Change #125: So wage I'd, just as Ted said always just Emilia cheer for biotelemetry.

Speaker Change #126: Same thing real quick so you got some joke about graduations, we call it.

Speaker Change #127: Seatbelts you buy your clothes, she got LNG.

Speaker Change #128: Cause I'm jealous all mitigated I send you know yeah, yeah, yeah it'd be once he does I'll, yes, I'll break in Boise had gone home the only way.

Unknown Executive: ???????????????????????????????? ?????????

Speaker Change #128: We've been doing and can do issue.

Speaker Change #128: Hmm, Okay. So.

Speaker Change #128: Andrew.

Unknown Executive: Okay, so Andrew, the short answer to your question is, As you mentioned, July, as we mentioned earlier, July, and August, it is a slower season due to the summer seasonality. The nature of the slow season for our collection is actually better because we're not shipping as many products as our high season. So, our collection is in full gear, and so our cash flow is better in the month of July and all that.

Andrew: So answer to your question is.

Unknown Attendee: Thank you. Thank you very much.

Todd Gerlow: Your next question is coming from Todd Gerlow, who is a private investor? Todd, your line is life. Thank you. My question is how much are your capital expenditures in 2024 and in what product areas are these investments being made? The other investment is that we want to know how much our capital expenditure is in 2024. And how much are these capital expenditure in which products are being made? There will be some investment in this area.

Andrew: As you mentioned July as we mentioned earlier July August is slow season.

Andrew: <unk>.

Andrew: Due to the summer seasonality.

Speaker Change #129: The nature of slow season for all collections actually.

Better because.

Speaker Change #130: Because we're not shipping.

Speaker Change #130: Many product that's all well high season, so our collection.

Speaker Change #130: Is in full gear.

Speaker Change #130: And.

Speaker Change #130: And so our cash flow is better than the months of July and August.

Speaker Change #130: Yeah.

Speaker Change #131: Oh, Okay I understood.

Unknown Attendee: Okay, understood. Thank you. Thank you very much.

Speaker Change #132: Thank you very much.

Speaker Change #132: Thank you. Thank you very much well we appear to have reached the end of our question and answer session I will now hand back over to Kevin for any closing remarks.

Operator: Well, we appear to have reached the end of our question and answer session, so I will now hand back over to Kevin for any closing remarks. Kevin, is your line live?

Unknown Attendee: Thank you. Thank you very much.

Todd Gerlow: Thank you very much. Our investment plan today is 2,500,000 yuan per year. In the next year, we will invest in 1,500,000 yuan per year. In total, 2,500,000 yuan per year. In the future, we will invest in 1,500,000 yuan per year.

Speaker Change #132: Kevin is your line life.

Speaker Change #132: Yep.

Kevin Theiss: Thank you for your participation in today's conference call. Please be safe, and we look forward to speaking with you in the future.

Kevin: Thank you for your participation in today's conference call.

Speaker Change #133: Please be safe and we look forward to speaking with you in the future.

Speaker Change #134: Thank you very much. This does conclude today's conference you may now disconnect. Your phone line at this time and have a wonderful day. Thank you for your participation.

Operator: Thank you very much. This does conclude today's conference. You may now disconnect your phone line at this time and have a wonderful day. Thank you for your participation.

Kevin Theiss: Our capital expenditure for 2024 is going to be $25 million. As you can see, in the first half of the year, we already spent 10 million in the capital, and we are going to continue to invest in 15 million in the second half of the year. And out of our 25 million annual capital budget, 80% of about $20 million will go to EPS related products. We have a number of exciting innovative products, including the RCP, the remaining 20% of our capital will go to other traditional products.

Speaker Change #134: No.

Speaker Change #134: Okay.

Unknown Attendee: Okay, thank you very much.

Andrew Pauberade: Your next question is coming from Andrew Pauberade, who is a private investor? Andrew, your line is live. Hello, congratulations for the results, especially the level of your increase. Should we, you rated your guidance, but should we look at how is August looking for, or the first month of part of the year? How is the looking of Pauberade? And how much should we expect this to wrap a new quantity of data about this team for the team?

Andrew Pauberade: Andrew, we couldn't hear the second half of your questions. Andrew, I think your line got a bit distorted. Could you just try asking the question? Yeah, sorry. That's better. So should we expect in quarter free the same $158 million in revenue? Also, congratulations for your results. And yeah, how is the first month of July and a bit of August looking for revenue? Okay, great. Thank you. [inaudible] uh, uh, uh, yeah, thank you for your question.

Kevin Theiss: Um, third quarter, uh, due to the summer season, uh, usually are seasonally are, uh, lower than the second quarter. Um, and a lot of, uh, uh, due to the high temperature and, uh, heat waves, uh, during the summer season, a lot of OEMs, um, tend to, uh, to adjust their production schedules. And also, uh, they're going to spend some time, um, maintaining, of keeping their production line. And so, that reason, um, and, and that we'll see, uh, the Q-3, is in line with prior year, uh, Q-3 seasonality. Um, but overall, um, we maintain, uh, a very strong, uh, close momentum. Okay.

Andrew Pauberade: Uh, and if I could ask another question, um, should we expect future dividends in the, next year, or what is the capital allocation going to be for shareholders? Buybacks also, maybe, are more, accretive for shareholders. Okay. I have to tell you, uh, you know, um, um, um, um, um, um, um, um, um, Uh, we're not excluding all these options. Um, Um, and it's all based on as we disclosing our announcement on the recent dividend announcement.

Andrew Pauberade: Um, Um, our, uh, capital reward program to shareholders, uh, all, always based on our cash flow, um, and, uh, need for, uh, cat packs will believe the business is in a strong momentum. Um, we will make due announcement when we get to that stage, um, future, um, plant, uh, whether dividend, I'll buy back. Um, again, um, we'll believe, um, you know, it's all based on our cash flow conditions and, uh, and our overall business has been on good track. Okay.

Unknown Attendee: Thank you very much.

Unknown Attendee: Last question would be talking about cash flow. Uh, what do we expect free cash flow to be in, um, 2024, 44, 4, 4 year considering cat packs is a big larger net cash from operations will, will it be higher than last year, compensating for the increased catapults from 2022? What is free cash flow approximately? Okay. Uh, Uh, Yes, so on cash flow, all overall cash flow is doing very well. And as you know, as we grow revenue, as we continue to grow revenue, we're going to see some fluctuation on the cash flow.

Unknown Attendee: As we are bulk of our business still in mainland China, the Chinese OEM tend to the billing cycle and the payments cycle usually are 4 to 5 months. So the more we grow our top line in sales in China, the more we grow, just bearing that bearing my will continue to work with OEM on the collection. But at the same time, we believe the cash flow is highly depends on how fast we can collect from our customers.

Kevin Theiss: At the same time, based on our 600 and 5 million revenue guidance for 2024, we are confident we'll continue to have a positive recast flow for 2024.

Operator: Thank you very much. Just a reminder there. If anyone has any remaining questions, you can press star one on your phone. Keep up now to join the key.

Operator: Thank you.

Jessica Lynn: Our next question is coming from Jessica Lynn, who's a private investor. Jessica, your line is live. Good morning.

Kevin Theiss: My question, I'm just wondering if you could go over what percent of your R&D was spent on the traditional products and then what percent of the R&D was sent on EPS products. Yeah, thank you. Thank you. The short answer to your question is it's about half half 50% of R in the expenses going to traditional steering product 50% goes to EPS product. Although at the moment EPS revenue only accounts for 35% of total revenue.

Kevin Theiss: However, given the importance of electric power steering EPS products, it's a peak technology going to be fully integrated in the future of automotive industry whether it's a smart vehicle or further electrification, all needs a strong electric power steering to help execute their missions. So that being said, we will continue to increase in the technology for the future. For that reason, we're investing, you know, Thank you. Thank you. Thanks very much. Just another reminder there if there is anyone still wanting to ask a question, you may press star one on your phone, keep at now. Okay, we appear to have reached the end of our question.

Unknown Attendee: Oh, apologies, some of these just jumped into key. We have another question in from Andrew Poverade, who's a private investor. And Julia Linus.

Andrew Pauberade: Yeah, sorry, I didn't really understand the cash flow from operations. If it's looking better in the first month of July, August, cash flow from operations, if they improved in Q3 a bit or what the guidance for that. Thank you for. I understood that the building cycle is four or five months, but as you grow revenue, cash flow will increase more, cash flow from operations, but I'm curious in July and August, if cash flow operations is better.

Andrew Pauberade: Okay. Okay, so Andrew, the sure answer to your question is, as you mentioned July, as we mentioned earlier July, August is slow season due to the summer seasonality. The nature of slow season for our collections is actually better because we're not shipping as many products as our high season. So our collection is in full gear. And so our cash flow is better than the months of July and August. Okay, I understand. Thank you very much.

Operator: Well, we appear to have reached the end of our question and answer session.

Kevin Theiss: So I will now hand back over to Kevin for any closing remarks. Kevin is your line lives. Thank you for your participation in today's conference call.

Kevin Theiss: Please be safe and we look forward to speaking with you in the future. Thank you very much.

Operator: This does conclude today's conference. You may now disconnect your phone line at this time and have a wonderful day.

Operator: Thank you.

Q2 2024 China Automotive Systems Inc Earnings Call

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