CBAK Energy Technology Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 19, 2025

There are 4 speakers on the call.

Operator

call. Currently, all participants are in listen only mode. 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.

Operator

Now I will turn the call over to Yakian Tian, IR specialist of Seabuck Energy. Miss Tian, please proceed.

Speaker 1

Let me do this section. Thank you, operator, and hello, everyone. Welcome to Seabuck Energy's earnings conference call for the first quarter of twenty twenty five. Joining us today are Mr. Chu Guang Hu or Jason, Chief Executive Officer of Seabuck Energy mister Terry Li, chief financial officer and company secretary, and Yuan, who will help with our interpretation, will join us for the q and a session.

Speaker 1

We released our results earlier today. The press release is available on the company's IR website at ir.cbac.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. Before we continue, please note that today's discussion will contain forward looking statements made under the safe harbor provisions of The U. S.

Speaker 1

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 filings with the SEC. The company doesn't assume any obligations to update any forward looking statements except as required under applicable laws.

Speaker 1

Also, please note that unless otherwise stated, all figures mentioned during the conference call are US dollars. With that, let me now turn the call over to our CEO, mister Chiguan Hu. Please go ahead, Jason.

Speaker 2

Hello, everyone. Thank you for joining our earning conference call for the first quarter of twenty twenty five. As is expected, we were unable to serve sustain our previous growth for midterm this quarter, reporting a year over year decline of 41 percentage in net revenues to $34,900,000 compared to the same period last year. Uh-huh. Specifically, our battery business recorded net revenue of $20,360,000, representing a 54.6 percentage decrease from $44,840,000 in the prior year.

Speaker 2

13 down by segment. Our electric vehicle business achieved 11.9 percentage increase, while our light electric vehicle segment is very significant growth of 88.4 percentage. However, this gain were offset by a 60.4 percentage decline in our home energy storage business. As we have previously emphasized, this outcome high was fully anticipated. Our Dalian facility are currently undergoing a strategy product portfolio upgrade, transitioning from the older model twenty six six five zero originally developed around 02/2006 and now consider considering somewhat outdated to the model 4135, a highly prom promising product with strong market potential.

Speaker 2

We are in the process of establishing the manufacturing line for model forty one thirty five with construction expected to the to be completed in the second half of this year as announced last quarter. In the meantime, our existing and prospective customer are actively testing and validating samples of model forty one thirty five. Early feedback has been very encouraging, reinforcing our confidence that we are well positioned to regain growth momentum with the upcoming launch of these products. While our Dalian facility are currently upgrading their manufacturing lines, our Nanjing operation continue to maintain strong growth momentum in contrast to DALLAN, where the prime primary products model 26,500 have become outdated. The Nanning facility focused on producing this large cylindrical cell of model 32,140, which remains highly competitive competitive and has emerged as our flagship product.

Speaker 2

To meet robust market demand, the model thirty two one forty production line in Nanjing are running at full capacity. Looking ahead, once the production of model forty one thirty five is underway, the combined strength of these two product lines, model forty one thirty five and model thirty two one forty, expected to drive a significant boost in our overall raw business performance. Regarding the current tariff challenge, as previously announced, we are actively evaluating the establishment of an overseas manufacturer manufacturing facility in one of the Southeast Asian country as an initial step. In parallel, we are also imploring the feasibility of expanding our production capacity to The United States. If the manufacturing cost are justified.

Speaker 2

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 a permit to a four year high volume purchase agreement that include sub substantial pre prepayments. We expect to finalize and sign the formal agreement in the near future, and we'll share for further details once we have the customer cons consent. Share all agreements be acute, and we proceed with Southeast Asia project.

Speaker 2

We anticipate the new facility will begin mice production by mid next year. The production line is thought that will be designed for flexible manufacturing capable of producing both model thirty two one forty and model forty one thirty five cells. Now let me turn the call to our CFO, JRVD.

Speaker 1

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 twenty six sixty to Model forty one thirty five, we also reported a net loss of $1,640,000 compared to net income of $9,800,000 in the same period last year. Specifically within our battery segment, net income declined a lot from 11,680,000 to $340,000 Despite the strong performance of our Nanjing facilities, which produce model thirty two one forty, our current flagship product prior to the launch of model forty one thirty five, we do not anticipate a full recovery until the Dalian facilities complete the upgrade and enable our sales team to begin delivering model forty one thirty five to the market. 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 Model32140 with a transaction to Model4135.

Speaker 1

A dedicated manufacturing line in the 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 maintain to maintaining a healthy gross margin to support the recovery of our net income. Upon completion of this strategy expansion, our global production footprint will include model twenty six fifty and forty one thirty five at our Dalian facilities, model thirty two one forty at our Nanjing facilities, and both model thirty two one forty and forty one thirty five at our Southeast Asian operations.

Speaker 1

We appreciate your continued support and encourage you to stay tuned for further updates. Thank you. We will now open the floor for the q and a section. Operator, please go ahead.

Operator

Thank you so much, dear participants. And now we're going to take our first question. And the question comes from the line of Brian Lantier from Zacks Small Cap Research. Your line is open. Please ask your question.

Speaker 3

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 three gigawatts at Nanjing. Is that still the target? And then I'll have some other follow ups after that.

Speaker 1

Brian, let me respond to your question directly in English. So our plan with for our dialing facilities didn't change the new 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 construction the total construction project to be completed by the 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 three gigawatt hour equipment.

Speaker 1

But now we have a new project in Southeast Asian country. 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. That means the capacity for the new Nanjing project will become 1.5 gigawatt hour and another 1.5 gigawatt hour for Southeast Asian country.

Speaker 3

Okay. Great. That's that's helpful. I appreciate that. As your customers are testing the forty one thirty five cells, are you confident that they're going to stick with cylindrical cells for storage, or is there any concern that they might look at prismatic or pouch cells?

Speaker 1

Okay.

Speaker 2

Let me explain. Now our main market is home energy storage system system market. Some application is high voltage, such as 101 voltage. So if you the customer choose prismatic, I think the the space is not enough. But if they choose cylindrical or big cylindrical cell, that will be easy to design for high voltage.

Speaker 2

So in this market, I think depends on the the the application requirement, that are voted and the size. I think, cylindrical and large cylindrical have a half share on in this market. And for e scooter, as you know, for this market, 48 voltage is popular is common model. But if you choose prismatic or or port cell, I think, it it now it is not easy for design. And the syndrome will have a stable structure to protect the drop down or the other using condition.

Speaker 2

So this is my my my opinion. Thank you.

Speaker 3

Okay. Great. 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 this window as the tariffs have been paused during this ninety day period? You know, I'm thinking of a company like Jackery that sells primarily into The US market.

Speaker 1

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 as we always say in our remarks, our decision to move to Southeast Asian country is simply 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 I would say we have already closed the deal with them today, and we have certain tiny issues that we're going to talk about.

Speaker 1

Hopefully, we can bring some good news to the market sooner or later, I think, probably in this month or next month. So tires in this industry like Jackery, Anchor, and some other big names, they're all doing the same thing.

Speaker 3

K. I appreciate it. You're operating in a difficult environment, so, you know, good luck. Thanks.

Operator

Thank you. Dear speakers, there are no further questions for today. I would now like to hand the conference over to Jason Hu for any closing remarks.

Speaker 2

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.

Operator

Thank you all again. This concludes the call. You may now disconnect.

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Key Takeaways

  • Seabuck’s Q1 net revenue fell 41% year-over-year to $34.9 million, driven by a 54.6% drop in its battery business, while its electric vehicle and light electric vehicle segments grew 11.9% and 88.4% respectively, offset by a 60.4% decline in home energy storage.
  • The Dalian facility is upgrading from the older 26650 cell to the new 4135 model, with the production line construction set to finish in the second half of 2025 and early customer testing delivering very encouraging feedback.
  • The Nanjing plant’s flagship 32140 cylindrical cell is running at full capacity, sustaining strong growth, and is expected to combine with the 4135 launch to drive overall performance.
  • To mitigate U.S. tariff risks, Seabuck has reached an in-principle agreement on a four-year, high-volume purchase contract and plans a Southeast Asia facility—capable of producing both 32140 and 4135 cells by mid-next year—while also evaluating U.S. expansion.
  • The company reported a Q1 net loss of $1.64 million versus a $9.8 million profit last year but anticipates a significant recovery in net income once the Dalian upgrade is complete and the large-scale customer order kicks in.
A.I. generated. May contain errors.
Earnings Conference Call
CBAK Energy Technology Q1 2025
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