CBAK Energy Technology, Inc. Q2 FY2025 earnings call

• Dalian facility is transitioning from Model 26650 to 40135, causing a sharp decline in net revenues and gross profit.
• Nanjing facility faces supply constraints for Model 32140 cells, with Phase 2 expansion delayed to Q4 due to equipment supplier issues.
• Strategy involves targeting high-quality European/American customers for existing and upcoming cell models and expanding in India/portable power supply.
• Temporarily paused Malaysian project due to US tariffs, monitoring ongoing negotiations; long-term plan includes US production establishment.
• Hitrans showed improved results with higher net revenues and narrowed net losses due to new customers and raw material price decline.

The battery segment saw net revenue of $40.52 million, down 15% from $47.79 million in the same period of 2024, with a net loss attributable of $2.07 million. The raw materials production unit Hitrans had net revenues of approximately $19.43 million, up 59.36% from $12.9 million in the same period of 2024, and its net loss narrowed to $1.06 million from $1.56 million YOY. The battery segment's decline was due to transition from Model 26650 to 40135, while Hitrans benefited from new customers and a modest decline in raw material prices.

• Anticipate strong recovery in consolidated results by year-end as Model 40135 production and Nanjing Phase 2 come online.
• Expect Hitrans and battery segment to rebound with product portfolio upgrade, Nanjing Phase 2 completion, and raw material price recovery.
• Plan to focus on completing current expansion projects (40135 and 32140) before advancing to Series 46 mass production, dependent on capital and customer preferences.

• Delay in Nanjing expansion due to equipment supplier issues.
• Uncertainty around US tariffs and negotiations impacting overseas manufacturing plans.
• Intense competition from leading battery players with prismatic cells offering lower cost advantages.

Q: Talk about the competitive landscape and pricing pressures.

A: Discussed battery technology development, cost reduction via larger cells, and volume increase in consumer, 2-wheels/3-wheels, and electric vehicle markets.

Q: Development of 46 series cells.

A: R&D ongoing, target mass production end of next year, dependent on capital and customer preferences.

Q: Delay in Nanjing expansion.

A: Caused by equipment supplier issues, expected to complete by end of year.

Q: Stock buyback status.

A: Spent ~$1.3M to $1.5M, stock buyback program ongoing