CBAK Energy Technology, Inc. Q1 FY2024 earnings call

• Strategic focus on energy storage sector, especially home and portable energy storage.
• Battery business revenue growth with energy storage revenues surging 66% Y/Y.
• Orders from high-quality clients like Jinpeng Group, PowerOAK, Viessmann Group, Anker Innovations.
• R&D efforts on larger synergical lithium-ion batteries, model 40140 in development, plan to launch mass production in Q1 2025.
• Interest in sodium-ion battery production and application, talks with investors for separate financing.
• Battery business net income for 2024 expected to be between $30.5M to $34.6M, Hitrans to break even or slight loss.

In the first quarter, the battery business recorded revenues of $44.84 million, a remarkable increase of 51.5% compared to the same period last year. Revenue from batteries used in electric vehicles declined to $0.48 million, down 73.6% year-over-year. Revenue from batteries used in light electric vehicles decreased by 23.3% to $1.51 million. Revenues from batteries used in energy storage applications grew tremendously to $42.85 million, an impressive increase of 66% year-over-year. The battery business achieved a historic high gross margin of 41.2%, an increase of 30.3 percentage points compared to the same period last year. Net income from the battery business reached $11.68 million in the first quarter.

• Expect battery business net income for 2024 to be RMB 220 million ($30.5M) to RMB 250 million ($34.6M).
• Hitrans, subsidiary supplying lithium battery materials, expected to break even or incur slight losses this year.
• Ongoing due diligence with institutional investors for private financing, aiming to complete this year.

• Forward-looking statements involve inherent risks and uncertainties; actual results may differ from expectations. Further risks detailed in company's SEC filings.

Q: Could you elaborate on the gross margin improvement, including factors like pricing from customers and cost input?

A: Two main reasons: product quality recognized by high-end European and US customers leading to good pricing, and decline in raw material costs like lithium carbonate.

Q: How does market demand for larger storage units impact you, and is there a trend of customers requiring more cells?

A: Observed increasing orders in household storage projects. Have strategic plans for larger batteries like 46140, with 40140 in B type sample stage, planning mass production in Q1 2025.

Q: About facility expansion and reaching 5 gigawatts production capacity by end of 2024?

A: Preparing additional 5-6 gigawatt hour capacity, first large factory in Nanjing Phase 2 project roofed, procuring equipment now, expected to be ready by end of year, mass production next Q1.