Q1 2025 CBAK Energy Technology Inc Earnings Call
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Operator: Good day, ladies and gentlemen. Thank you for standing by and welcome to CBAK Energy Technology's first quarter of 2025 earnings conference call. Currently, all participants are in listen-only mode.
Good day, ladies and gentlemen, thank you for standing by and welcome to feedback and that your technology is first quarter of 2025 earnings conference call.
All participants are in listen only mode. Later, we'll conduct a question and answer session and instructions will follow at that time.
Operator: Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we're recording today's call. If you have any objections, you may disconnect at this time.
As a reminder, we are recording today's call. If you have any objections you may disconnect at this time.
Yakyan Tian: Now I will turn the call over to Yakyan Tian, IR Specialist of CBAK Energy. Ms. Tian, please proceed.
Now I will turn the call over to you can't young yeah, especially they still see bulk energy Ms. Cheng. Please proceed.
Unknown Executive: Ms. Jiang, please proceed.
MS. Cheng. Please proceed.
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Unknown Executive: Thank you, operator.
Zhiguang Hu: And hello, everyone. Welcome to CBAK Energy's earnings conference call for the first quarter of 2025.
Speaker Change: Thank you operator, and Hello, everyone welcome to sit that Enersys earnings conference call for the first quarter of 2025, joining our Sperry I missed her trip.
Zhiguang Hu: Joining us today are Mr. Zhiguang Hu, or Jason, Chief Executive Officer of CBAK Energy, Mr. Thierry Li, Chief Financial Officer and Company Secretary, and even who will help with our interpretation, will join us for the Q&A section.
Speaker Change: Jason Chief Executive Officer ups about energy, Mr. Terry D, Chief Financial Officer, and company Secretary, and even who will help with our interpretation.
Unknown Executive: We released our results earlier today. The press release is available on the company's website at ir.cbak.com.cn, as well as from Newswire Services. A relay of this call will also be available in a few hours on our IR website.
Speaker Change: Joining us for the Q&A session. We released our results earlier today. The press release is available on the company's IR website.
Speaker Change: As well as from Newswire services every day of this call will also be available in a few hours.
Speaker Change: On our website.
Unknown Executive: Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public firings with the SEC. The company doesn't assume any obligations to update any forward-looking statements except as required under applicable laws. Also, please note that unless otherwise stated, all figures mentioned during the conference call are US dollars.
Speaker Change: Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Speaker Change: Forward looking statements involve inherent risks and uncertainties.
Speaker Change: Such the company's actual results may be materially different from the expectations expressed today further information regarding these and other risks and uncertainties is included in the company's public filings with the SEC.
Speaker Change: It doesn't assume any obligations to update any forward looking statements, except as required under applicable laws.
Speaker Change: So please note that unless otherwise stated all figures mentioned during the conference call. Our U S stores with that let me now tender Colbert policy all Mr. Archer.
Zhiguang Hu: With that, let me now turn the call over to our CEO, Mr. Zhiguang Hu. Please go ahead, JC. Hello, everyone. Thank you for joining our earnings conference call for the first quarter of 2025. As expected, we were unable to sustain our previous growth momentum this quarter, reporting a year-over-year decline of 41% in net revenue to $34.9 million compared to the same period last year. Subversively, our battery business recorded net revenue of $20.36 million, representing a 54.6% decrease from $44.84 million dollars in the prior year, which is down by a segment. Our electric vehicle business achieved an 11.9% increase.
Jason: Go ahead Jason.
Speaker Change: Hello, everyone. Thank you for joining our earnings conference call for the fourth quarter of 25.
Speaker Change: As expected, where you weren't able to serve a sort of thing all previous girls.
Speaker Change: That term good quarter reporting.
Speaker Change: Year over year decline 41 person to eat in not revenues to two.
Speaker Change: 4.9 dollars compared to last year.
Speaker Change: They've been the color I'll bet for them in the right quality revenue declined 30.
Speaker Change: $36 million representing.
Speaker Change: 56% decrease from.
Speaker Change: 44, $184 million and put out prior.
Speaker Change: Okay.
Speaker Change: By segment, all electric vehicle being achieved.
Speaker Change: One night certainties in great well.
Zhiguang Hu: Well, our light electric vehicle segment is very significant.
Our light electric vehicles second bedroom.
Speaker Change: Government politically.
Zhiguang Hu: Girls of A, G, H, I, T, 1, 4, present. However, this gain was offset by a 60.4% decline in our whole energy storage building. As we have previously emphasized, this outcome was fully anticipated. Our Dalian facilities are currently undergoing a strategy product portfolio upgrade. Transitioning from the older model, 2016 FileZero, originally developed around 2006, and now considered somewhat outdated. to the model 4135, a highly promising product with strong market potential. We are in the process of establishing the manufacturing line for Model 4135 with construction expected to be completed in the second half of this year.
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Speaker Change: As we have previously.
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Speaker Change: Not fully anticipated.
Speaker Change: Our thought in fertility are currently.
Speaker Change: Undergoing a strategy product portfolio Abel great trends.
Speaker Change: The transitioning from the older model 26, it's algebra.
Speaker Change: Regionally, the Waller put oh wrong, Tucson fixed and now consider consider rate somewhat outdated.
Speaker Change: So the model 41, 35, or how do you prompt promising product with strong market potential.
Speaker Change: We are in the profile out establishing the manufacturing life or model 41, 30 file based construction a party to the to be completed in the second half of this year.
Zhiguang Hu: As announced last quarter. In the meantime, our existing and prospective customers are actively testing and validating samples of Model 4135. Early feedback has been very encouraging, reinforcing our confidence that we are well-positioned to regain growth momentum with the upcoming launch of this product.
Speaker Change: As announced last quarter.
Speaker Change: In the meantime, I'll, let <unk> add up proud pact deep customer are actively testing and validating samples model 41 35.
Speaker Change: Early feedback has been very encouraging reinforcing our confidence that we are well positioned to regain girls merman term freezer calming launch LTE the paradox.
Zhiguang Hu: While our Dalian facility are currently upgrading their manufacturing lines, our Nanjing operations continue to maintain strong growth momentum.
Speaker Change: Well, our Italian enforceability currently upgrading our manufacturing life our Nanjing.
Speaker Change: Operation can do to maintain strong girls more matter.
Zhiguang Hu: In contrast, to Dalian, where the prime primary products, Model 26.
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Speaker Change: Primary products model twenty-six its voucher had become outdated.
Zhiguang Hu: This voucher has become outdated. The Nanjing facility focused on producing this large cylindrical cell on model 3214. which remains highly competitive. and has embarked as our flagship product to meet Robust Market Demand, the Model 32140. production line in Nanjing are running at full capacity.
Speaker Change: So not an impossibility brokers song producing this large single cell model.
Speaker Change: T two 140.
Speaker Change: We remain highly compatible commodities.
Speaker Change: And the highest in worked as our flagship product.
Speaker Change: To meet.
Speaker Change: Robust market demand the model to 140 <unk>.
Speaker Change: Production line running at full capacity looking a hat.
Zhiguang Hu: looking ahead. once the production of Model 4135 is under way. The combined strength of these two product lines, Model 40-135 and Model 32-140, expected to drive a significant boost in our overall business performance.
Speaker Change: Once the production of model 41, 35 <unk> is underway.
Speaker Change: The combined scrapped all these two product lines model 41, 35, and a model certainly to 140.
Speaker Change: It's back to to drive a significant boost in our or raw business performance.
Zhiguang Hu: Regarding the current tariff challenge, as previously announced, we are actively evaluating the establishment of an overseas manufacturing facility in one of the Southeast Asian countries as an initial step. In parallel, we are also exploring the feasibility of expanding our production capacity to the United States. if the manufacturing costs are justified.
Speaker Change: Regarding the current tariff challenge.
Speaker Change: Pretty rapidly are not we are actively evaluating that your tablet.
Speaker Change: Of an overseas manufacture manufacturer, Inc. Firstly T.
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Speaker Change: So if the Asian countries as an initial step.
Speaker Change: In parallel we are also exploring so feeds our ability.
Speaker Change: Expanding our production capacity to the United States.
Speaker Change: If it's a matter of factory costs are tough to fight.
Zhiguang Hu: As disclosed last quarter, our decision to expand into Southeast Asia is entirely customer-driven. We have now reached an agreement in principle with the customer on key commercial terms. Specifically, they have committed to a four-year high-volume purchase agreement that includes substantial prepayment. We expect to finalize and sign the formal agreement in the near future, and we'll share further details once we have the customer consent.
Speaker Change: As disclosed last quarter, our decision to eats bent into salt Southeast Asia is entirety cottesmore or grabbing.
Speaker Change: We have now reached.
Speaker Change: Raymond in principle with the customer on key commercial terms.
Speaker Change: Super physically they have a permit to.
Speaker Change: A four year high volume purchase agreement that include.
Speaker Change: So saba substantial pre pre payments.
Speaker Change: We it's back to finalized and signed the formal agreement in the near future and real Sheriff for.
Speaker Change: Further details once we have the customer consent.
Speaker Change: Consent.
Zhiguang Hu: shareholder agreements be I could, and We proceed with Southeast Asia project. We anticipate the new facility will begin mass production by mid next year. The production line is thought to be designed for flexible manufacturing, capable of producing both Model 32140 and Model 4135 cells.
Speaker Change: Sure all agreements.
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Speaker Change: Mine production by mid year.
Speaker Change: Production line is caught there will be designed for flexible manufacturing capable out producing bowls model to 140, and a model 41 35 south.
Jiewei Li: Now let me turn the call to our CFO, Jiewei Li. Thank you, Jason. As highlighted in our recent published earnings release, following the decline in the net revenues due to the ongoing upgrade of our manufacturing lines, from Model 2660 to Model 4135, we also reported a net loss of $1.64 million, compared to net income of $9.8 million in the same period last year. Specifically, within our battery segment, net income declined a lot from $11.68 million to $0.34 million. Despite the strong performance of our Nanjing facilities, which produced Model 32140, our current flagship product prior to the launch of Model 4135, we do not anticipate a full recovery until the Dalian facilities complete the upgrade and enable our sales team to begin delivering Model 4135 to the market.
Speaker Change: Now, let me turn the call to all with the F O G IBD.
Jason: Thank you Jason.
Jason: As highlighted in our recent published earnings release following the decline in the net revenues due to the ongoing upgrade of our manufacturing lines for more than 26 exchange to model. A 41 35. We also reported a net loss of $1 $64 million compared to net income of $9 8 million.
Jason: In the same period last year.
Jason: Typically within our bakery segment net income declined a lot from $11 $68 million to $34 million.
Jason: By the strong performance of our 19 facilities, which produced models edge to 140 hour Taryn flagship product prior to the launch of model 41, 35, which do not anticipate a full recovery and chewed Italian facilities complete the upgrades and enable our sales team to begin delivering model 41 30.
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Jiewei Li: As Jason mentioned, we are close to finalizing an agreement with a major customer for a large-scale four-year order that could generate substantial revenues and profits. The order is expected to initially focus on Model 32140 with a transaction to Model 4135. A dedicated manufacturing line in Southeast Asia is planned to support this order, and the facility could start construction and begin full-scale operations once the agreement is executed. If everything proceeds as planned, we expect to see a significant recovery beginning next year. We will formally announce this development once the agreement is finalized. Even with this high volume order, we remain committed to maintaining a healthy growth margin to support the recovery of our net income.
Jason: As Jason mentioned mentioned, we are close to finalizing an agreement with a major customer for a large scale four year order that could generate substantial revenues and profits. The order is expected to initially focus on module 30 to $1 40 with a transaction to model 41 35.
Jason: A dedicated manufacturing line that southeast Asia is plan to support this order.
Jason: And the facility could start construction and begin full scale operations, whilst agreements executed if.
Jason: If everything proceeds as planned we expect to see a significant recovery beginning next year.
Jason: We will formally announce this development whilst the agreement is finalized.
Jason: Even with this high volume order, we remain committed to maintain to maintaining a healthy gross margin to support the recovery of our net income.
Jiewei Li: Upon completion of this strategy expansion, our global production footprint will include Model 26-650 and 41-35 at our Dalian facilities, Model 32-140 at our Nanjing facilities, and both Model 32-140 and 41-35 at our Southeast Asian operations. We appreciate your continued support and encourage you to stay tuned for further updates.
Jason: Point conviction of this strategy and expansion our global production footprint. We're in crude model 26, 650, and 41 five hour dining facilities models 32, and 40 on 19 facilities and both model 30 to 140, and 41 35, our southeast Asia operations.
Jason: We appreciate your continuous support and encourage you to stay tune for further update.
Unknown Executive: Thank you.
Operator: We will now open the floor for the Q&A section. Operator, please go ahead. Thank you so much, dear participants. As a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again. Please stand by while we compile the Q&A. This will take a few moments. Once again, if you would like to ask a question, please press star 111.
Jason: Thank you we will now open the floor for the Q&A section operator. Please go ahead.
Speaker Change: Thank you so much Jim participants as a reminder, if you wish to ask a question. Please press.
Speaker Change: One one on your telephone keypad and Lake planet name to be announced to withdraw. Your question. Please press star one again based on power compile the Q&A narrow studies will take a few moments.
Speaker Change: Okay.
Speaker Change: Again, if you would like to ask a question. Please press <unk> one one.
Brian Lantier: And now we will take our first question. And the question comes from the line of Brian Lantier from Zach Small Cap Research. Your line is open, please ask a question. Good afternoon, gentlemen. I was wondering if you could just confirm the expansion goals. I think the last time we talked about it, we were looking at 2.3 gigawatts at Dalian and 3 gigawatts at Nanjing. Is that still the target? And then I'll have some other follow-ups after that. Brian's question is that he wants us to confirm the goal of our expansion. Secondly, is the current 2.3Ghz expansion of Dalian and 3Ghz expansion of Nanjing still in progress?
Speaker Change: And now we'll take our first question.
Speaker Change: Okay.
Speaker Change: And the question comes from the line of Brian <unk> from Zacks small cap research. Your line is open. Please ask your question.
Speaker Change: Yes.
Speaker Change: Good afternoon, gentlemen, I was wondering if you could just confirm the expansion goals.
Speaker Change: I think the last time, we talked about it.
We were looking at two three gigawatts at Dalian and three Gigawatts at managing is that still the target.
Speaker Change: And then I'll have some other follow ups after that.
Brian: Go ahead, Brian the Winchester for several mature nature to them.
Brian: They took a quick analytical mobile cohorts usage of referral material Argo since you actually talked about a quarter out of a sense of your Washington, Idaho, Quadro Triple hydro tissue.
Zhiguang Hu: Brian, let me respond to your question directly in English. So our plan for our dial-in facilities didn't change. The newly deployed manufacturing line for 4135 still has a capacity of 2.3 gigawatt hour and we have just completed the construction of the manufacturing plant. So everything is going well as planned. So we anticipate the construction, the total construction project to be completed by the end of June and then we can start trial production in the second half of the year. For Nanjing, we have already made all the prepayments and for the 3 gigawatt hour equipment but now we have a new project in the Southeast Asian country.
Brian: Brian Let me respond to your questions directly to English.
Brian: So our plan with for.
Brian: For dining facilities didn't change.
Neil: Neil the newly deployed manufacturing level 41 five.
Speaker Change: Do you have a capacity of $2 three gigawatt hour and we have just completed the construction of the manufacturing touch so everything is going well as planned. So we anticipate construction to total construction project to be completed by the end of June.
Speaker Change: And then we can start trial production in the second half of the year.
Speaker Change: For 19.
Speaker Change: We have already made all the prepayments and a 46 gigawatt hour equipment.
Speaker Change: But now we have a new project in the southeast Asian country, we are not going to invest in new equipment at this moment, because we don't know how.
Zhiguang Hu: We are not going to invest in new equipment at this moment because we don't know how the tariffs will go. So we plan to relocate one of the assembly line from the newly deployed equipment in Nanjing to the Southeast Asian country.
Speaker Change: How the tariffs would go so we.
Speaker Change: We plan to relocate one of the.
Speaker Change: Assembly line from the newly deployed equipment in 19, two doses has an Asian country that means.
Zhiguang Hu: That means the capacity for the new Nanjing project will become 1.5 gigawatt hour and another 1.5 gigawatt hour for Southeast Asia.
Speaker Change: The capacity for the New 19 project will become one five gigawatt hour in another one.
Speaker Change: For cessation country.
Unknown Executive: Okay, great. That's helpful.
Speaker Change: Okay great.
Unknown Executive: I appreciate that.
Speaker Change: That's helpful. I appreciate that.
Brian Lantier: As your customers are testing the 4135 cells, are you confident that they're going to stick with cylindrical cells for storage?
Speaker Change: As your customers are testing the $41 35 cells.
Speaker Change: Are you confident that they're going to stick with cylindrical cells or storage or is there any concern that they might look at prismatic or pouch cells.
Brian Lantier: Or is there any concern that they might look at prismatic or pouch cells? The second question is, we are recommending to our existing customers to use 3135. Are we confident that our customers will continue to use the original one?
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Brian Lantier: Because now there are some better options, such as square and soft package.
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Speaker Change: Sure.
Speaker Change: Okay.
Zhiguang Hu: Okay, let me explain. Now, our main market is home energy storage market. Some application is high voltage, such as 100 voltage. So if the customer choose prismatic, I think the space is not enough. But if they choose cylindrical or big cylindrical cell, that will be easy to design for high voltage. So in this market, I think depends on the application requirement. that have voted and the size, I think, syndical and a lot of syndical have a half share in this market. And for e-scooter, as you know, for this market, 48-voltage is popular, is common model.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Let me.
Speaker Change: Explain now our main market at his home and introduced already to see their market.
Speaker Change: Market.
Speaker Change: Applications high voltage such as 100.
Speaker Change: 100 voltage so you the customer choose prismatic.
Speaker Change: The space is not enough, but if they choose cynical all bakes in nickel shell that will be easy.
Speaker Change: Two designed for high voltage so in this market I think depends on the.
Speaker Change: The application requirement.
Speaker Change: And the site I think Sandra coal and largely nickel.
Speaker Change: I will hop chair.
Speaker Change: In this market.
Speaker Change: And therefore is good or as you know for these market 48 volt. It is popular it's called Memorial Budd <unk>.
Zhiguang Hu: But if you choose prismatic or port cell, I think it is not easy for design. And the cylinder will have a stable structure to protect the drop-down or the other using condition. So this is my opinion.
Speaker Change: When you choose prismatic all or part fell I think is in.
Speaker Change: And now it is not easy for design and Sandoval, how stable our structure to protect.
Speaker Change: The dropdown on theater using condition.
Speaker Change: So that is a.
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Unknown Executive: Thank you.
Speaker Change: My.
Speaker Change: Thank you.
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Unknown Executive: Okay, great.
Brian Lantier: I guess the last question would be, have you heard, I guess, from some of your portable energy customers, are they looking to pull forward any demand and try to get orders fulfilled in this window, as the tariffs have been paused during this 90-day period? You know, I'm thinking of a company like Jackery that sells primarily into the US market. The next question is, do we have any plans from some of the existing customers to meet their needs during the 90-day tariff exemption period, such as Jackery, Huafeng, their largest market is the United States?
Speaker Change: Okay great.
Speaker Change: The last question would be have you heard I guess from some of your portable energy customers.
Speaker Change: Are they looking to pull forward any demand and try to get orders fulfilled in this lane.
Speaker Change: The window as the tariffs have been paused.
Speaker Change: During this 90 day period.
Speaker Change: I'm thinking of a company like Jacory itself.
Speaker Change: Primarily into the U S market.
Speaker Change: So you can once you sort of a total initial yau Tong sale that you see for the cohort.
Speaker Change: So if it's in Asia of course, I mean, if it's either start with Asia.
Speaker Change: One of the issues show some Google for a check with puzzle combat in Chicago.
Clifford Maple: Clifford Maple.
Speaker Change: Sure.
Jiewei Li: I'll answer the main questions, and then Mr. Hu, you can add something. So Brian, to answer your question, yes, they are all seeking solutions. And one of the solution is to get their suppliers like us to relocate their manufacturing lines overseas. As we always say in our remarks, our decision to move to Southeast Asian country is simply and purely client driven. So they are asking us and making a lot of the favorable terms for us so that we can make a decision to go outside of China. And luckily we have already, I would say we have already closed a deal with them today and we have certain tiny issues that we're going to talk about.
Speaker Change: What drove me top al was on April 27.
Brian: So Brian.
Brian: Answer your question, yes, there or sticking solutions.
Brian: One of the solution needs to get their suppliers like iris to relocate their manufacturing lines overseas ASP.
Brian: As we always say in our remarks.
Brian: Our decision to move to southeast Asian country is simply and purity Cayenne, driven so they're asking us and making a lot of the favorable terms for us. So that we can make a decision to go outside.
Brian: China.
Brian: Luckily we have already I would say, we have already closed a deal with them today.
Brian: And we have certain.
Brian: Tiny issue is that we're going to talk about hopefully we can bring.
Jiewei Li: Hopefully we can bring some good news to the market sooner or later, I think probably in this month or next month. So, players in this industry like Jackery, Anker, and some other big names, they are all doing the same thing. Okay, I appreciate it.
Brian: Some good news to the market sooner or later I think property and dismantle next months.
Brian: So.
Brian: Players in this industry like Jefferies anchor and some other big name in the state or doing the same thing.
Brian: Okay.
Brian: Okay I appreciate that you're operating in a difficult environment. So.
Unknown Executive: You're operating in a difficult environment. So, you know, good luck. Thank you.
Brian: Good luck thanks.
Brian: Thank you.
Brian: Okay.
Operator: Dear speakers, there are no further questions for today.
Speaker Change: Dear speakers there are no further questions for today I would now like to hand, the conference all box to Jason <unk> for any closing remarks.
Zhiguang Hu: I would now like to hand the conference over to Jason Hu for any closing remarks. Thank you, operator. And thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again next quarter on our progress. Thank you all again.
Speaker Change: Thank you operator, and thank you all for participating in today's call and for your support we appreciate your interest and local forward to reporting to you again next quarter on our Pearl Rice.
Speaker Change: Thank you.
Speaker Change: Yeah.
Operator: This concludes the call. You may now disconnect.
Speaker Change: Thank you all again this concludes the call you may now disconnect.
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