CBAK Energy Technology, Inc. Aktie

Good day, ladies and gentlemen. Thank you for standing by, and welcome to CBAK Energy Technologies Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.

Now I will turn the call over to Irina Tian, IR specialist of CBAK Energy. Ms. Tian, please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAK Energy's Earnings Conference Call for the Fourth Quarter and the Full Year of 2025. And joining us today are Mr. Zhiguang Hu, Chief Executive Officer of CBAK Energy; Mr. Thierry Li, Chief Financial Officer and Company Secretary; and [ Yvonne ], who will help with our interpretation during the Q&A session.

We released our results earlier today. The press release is available on the company's IR website at ir.cbak.com.cn as well as from the Newswire Services. A replay 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. 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 does not assume any obligation to update any forward-looking statements, except as required under applicable law.

Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars.

With that, let me now turn the call over to our CEO, Mr. Zhiguang Hu. Please go ahead, Jason.

Hello, everyone. Thank you for joining our earnings conference call for the fourth quarter and the full year of 2025. The fiscal year 2025 was a definitive transitional period for CBAK Energy, characterized by our comprehensive structural upgrade of our product portfolio, aggressive capacity expansion and deliberate pivot toward next-generation form factors. Despite the short-term bottom-line pressure inherent to some massive capacity transitions, our top line growth demonstrated positive momentum. In the fourth quarter, our consolidated net revenue surged by 131.80% year-over-year to $58.80 million. For the full year, consolidated net revenue reached $195.19 million, representing an 11% increase over 2024.

Let me detail the structural transition driving our core business. At our Dalian facility, our customers are actively transitioning away from our legacy 26-series battery product line with over a decade of history and 1 gigawatt hour capacity to our newly introduced highly advanced Model 40135 cells. To support this paradigm shift, we successfully commissioned a new 40135 product line with 2.3 gigawatt hour capacity at the end of 2025. The market reception has been truly unprecedented. Demand for the 40135 cells currently far exceeds our available supply. Meaning, we are selling every single unit we can produce, and our order book heavily outpace our current ramp-up trajectory.

Similarly, at our Nanjing facility, to alleviate the severe supply shortage for our highly sought after model 32140 cells, we successfully added 2 new production lines at our Phase II facility at the end of 2025. This expansion adds 3.0 gigawatt hour of much needed capacity to complement the 1.5 gigawatt hour already operational in Phase I. And we expect these 2 new high-speed lines to reach full capacity by early 2027. Both our Dalian and Nanjing expansion are currently in an intensive capacity ramp-up phase.

While this initial phase carries higher unit cost that have temporarily suppressed our gross margin and the short-term profitability, we view this as a necessary and highly strategic investment as our customers complete their transition to the model 40135 and our Phase II facility complete its ramp up by early 2027. We anticipate a dramatic and sustained resurgency in our top line revenue.

Furthermore, to present the value chain, starting in 2025, our wholly-owned subsidiary, Nanjing BFD initiated dedicated battery pack integration operation by assembling individual cells into complete plug and play battery system, which bypass intermediate integrators to serve end user directly. Currently, these manufactured pack units are predominantly engineered for the light electric vehicle battery swapping infrastructure throughout the African market. In 2025, we officially forged a deep strategic partnership with SPIRO, 1 of Africa's largest 2-wheeler battery swapping enterprises. I'm thrilled to report that SPIRO has rapidly scaled to become 1 of our top 5 customers. We are incredibly proud that our advanced battery cell technology is providing the essential momentum for Africa's new energy transition.

To deepen this relationship, we are actually exploring further collaborative models, including the potential establishment of a dedicated corporate entity within the Africa region to directly assist and accelerate SPIRO's localized business expansion. This African success is mirrored across other key international markets, driving our explosive global growth where revenue from REV's skyrocket by 252% year-over-year to $36.36 million for the full year.

In India and broader global market, our institutional client base has expanded significantly. We have established deep collaborations with highly prestigious international blue-chip customers, including Anker Innovation, Scania, which became our direct ordering entity following its acquisition of Northvolt business unit that originally procured our products, now operating under [ Posida ] as well as Ather Energy, Schneider ACE Battery and Inverted Energy.

The endorsement from these global Tier 1 enterprises provide the strongest possible validation of our product reliability and safety. Similarly, in Vietnam, we have forged a tight knit partnership with a key client DAT as DAT business volume has skewed our shipment volume in the Vietnamese 2-wheeler sector has experienced exponential growth.

As investor may be aware, the PRC government have initiated a phase out policy for export tax rebates, reducing the rate for lithium-ion battery from 13% to 9%, with further reductions to 6% by April 2026 and a complete elimination by January 2027. To proactively establish a dialectical hedge against this macroeconomic headwind and protect our international margins, we moved decisively to localize our global supply chains. We have already incorporated our Malaysian subsidiary on April 30, 2025, and are actively pushing forward with physical construction of manufacturing facility there within this year to offer diversified tariff-insulated sourcing option for our top-tier international clients.

We also anticipate signing and announcing additional contract with major international clients win, which we believe will serve as strong catalyst for our shareholders.

Our raw material segment, Hitrans, delivered a powerful turnaround, benefiting from an ongoing upward cycle in raw material price. Hitrans experienced a sharp operational rebound beginning in the third quarter of 2025. Full year revenue for this segment surged 123% year-over-year to $89.21 million. As the raw material pricing cycle continues its robust upward trajectory, we confidently anticipate Hitrans will reach new performance highs. To structurally capture this momentum, Hitrans is aggressively expanding its proprietary infrastructure, including the ongoing construction of new 10,000 metric ton cathode manufacturing plant slated for full operation in the first half of 2027, alongside a massive 37,000 metric ton precursor facility. This strategic capacity injection will decisively elevate Hitrans' revenue [ starting ] in 2026 and beyond.

Strategically, we are also advancing our corporate structure. Our stockholders have approved a redomicile merger to change our place of incorporation from Nevada to Cayman Islands. This move will allow us to streamline operational and administrative efficiency while similarly aligning our corporate structure with our aggressive international expansion strategy.

Driven by the insatiable demand for our new 40135 and the 32140 battery cell, the pending completion of our capacity ramp-ups, the continued strength of Hitrans and our expanding footprint across global LEV market, we project with absolute confidence that our consolidated sales will hit a record high in 2026, delivering explosive growth.

Now let me turn the call to our CFO, Thierry Li, for a deeper dive into our financials.

Thank you, Jason. 2025 demonstrated the resilient dialectical nature of our vertically integrated business model. While our Battery segment faced margin compression due to the aggressive ramp-up of our new production lines and rising raw material costs, our Hitrans raw materials segment capitalized on this exact macroeconomic environment.

Looking at our fourth quarter results. Consolidated net revenues reached $58.80 million, a 131.8% increase compared to Q4 2024. This hyper growth effectively decoupled from the temporary bottom line pressures caused by our ongoing capacity transactions. Within this, our Battery Business revenues were about $30.82 million, an increase of 35.8% year-over-year. Despite a 10.6% decrease in energy storage sector caused by the phaseout out of legacy Model 26650 cells at Dalian, we offset this decline through explosive growth in the LEV revenues, which skyrocketed by 524.2% to $12.92 million in the fourth quarter.

Our Hitrans segment generated $27.98 million in Q4 2025, a massive 944.1% surge from Q4 2024, directly reflecting the escalating upward cycle of raw material pricing and robust downstream order placements.

Our gross profit for Q4 2025 was about $4.28 million, representing a gross margin of 7.3% compared to 13.1% in Q4 2024. This sharp margin compression was fundamentally driven by the transactional friction costs, suboptimal yields and disproportionately high fixed cost absorption inherent to the initial ramp-up phase of the new Model 40135 in Dalian and Phase 2 Models 32140 lines in Nanjing.

Consequently, operating loss for the fourth quarter was about $8.01 million, and the net loss attributable to shareholders was $7.38 million.

For the full year 2025, net revenues were $195.19 million, up by about 11% year-over-year. Hitrans contributed $89.21 million, up by 123%, while the Battery Business contributed $105.98 million.

Gross profit for the year was about $18.42 million, representing a margin of 9.4%, down from 23.7% in 2024.

Operating expenses increased to $36.86 million, up 12% year-over-year, driven by a 21% increase in R&D to $15.8 million. This deliberate expansion directly funded our next-generation technology road map, specifically accelerating the development of our advanced large-format cylindrical models such as the 60115, 60135 and 60150 as well as highly specialized sodium-ion chemistries engineered for the extreme low temperature resilience and fast-charging capabilities.

We also increased by 16% in G&A to $16.20 million, reflecting increased headcount for our new production lines.

Our full year operating loss was about $18.44 million, and the net loss attributable to shareholders was about $9.38 million. However, analyzing the bottom line requires a dialectical view of our risk management framework. First, our other income surged to $8.27 million, fundamentally bolstered by a highly lucrative $5 million compensation payment we strictly enforced and successfully collected from a canceled customer order. This underscores the robust legal and contractual protections we secure in our commercial agreements.

Second, to proactively shield our margins from global volatility, 2025 marked our inaugural deployment of a substantiative financial hedging structure. We systematically executed foreign currency forward contracts, options, swaps and commodity contracts. While this proactive risk mitigation resulted in a calculated noncash derivative fair value loss of approximately $0.44 million, it effectively neutralized extreme macroeconomic fluctuations and provided essential cash flow predictability to -- for our supply chain.

Turning to our balance sheet and liquidity. Our financial foundation remains robust and highly liquid. As of December 31, 2025, we held cash and cash equivalents and restricted cash of $75.68 million, an increase from $60.79 million at the end of 2024. Notably, despite reported net loss, our net cash provided by operating activities was extremely strong at $48.55 million for the year compared to $39.70 million in 2024. This powerful cash generation was primarily attributable to disciplined working capital management, including a $63.66 million increase in trade and bills payable. We allocated $44.65 million to capital expenditures in 2025 to fund aggressive construction and equipping of our new production facilities across Dalian, Nanjing, Zhejiang and Anhui.

In summary, the temporary margin squeeze is calculated byproduct of scaling next-generation capacity with the Hitrans segment providing dialectical hedge in the raw material cost, our battery capacity ramp-up scheduled for the completion in early 2027, and our deeply integrated global expansion progressing rapidly, we are structurally positioned for massive operational turnaround and record-breaking sales.

Thank you, and we will open the floor for the Q&A session. Operator, please go ahead.

[Operator Instructions] We will now take the first question, question is from the line of Brian Lantier from Zacks Small-Cap Research.

Fantastic news to see Hitrans suddenly turning things around. I wonder if you could talk a little bit about where you see gross margins in the Battery Business? And when you think they might normalize as you ramp up capacity?

Thank you, Brian. Let me answer your question. So I think it was back in Q3 and Q4 when our Nanjing Phase 2 and our Dalian operations and new products kick in, our gross margin was affected severely. So right now, we are in a phase of ramping up capacity. And we believe that the Dalian facility ramp-up would be completed in the first half of this year, which we have already received way enough orders for these new products. And for Nanjing Phase 2 because it's much bigger, so our time line is for early 2027, but we have confidence to try our best to catch up the time line. So our target would be also the second half of 2026, but the reasonable timetable will be early 2027. So ideally, in the second half of this year, our gross margin will gradually revolve. And I believe in the full year of 2026, the gross margin number at least looks better than right now.

Great. And could you describe a little bit more about the cell packing business? And do you see that becoming a growth opportunity for the company, particularly in the LEV market?

I will answer the question first and then, Yvonne, please help with the interpretation for Jason, and Jason I think can add some points. So we have received a substantial order from one of our major African customers who actually originally from India, and starting early 2025, this substantial order kick in and they use most -- I think all the cells purchase were from Nanjing 32140. And in order to do that, we have already set up a battery pack assembly unit within our structure, and this unit is dedicated to purchase cells from our Nanjing factory and put the cells into a battery pack and sell it to the African customer. And this customer has already become 1 of our top 5 customers as of 2025. And we are also looking forward to a much deeper and more comprehensive collaboration with each other. Maybe in the future, our collaboration will extend beyond the area of LEV into energy storage sector. So I think this is what I want to add. Please Jason, see if anything you want to add?

[Foreign Language]

[Foreign Language]

There's only 1 thing that Jason would like to add, which is the advantage of our battery cell use in the LEV market. So this has already been demonstrated in the Southeast Asia market and Indian market. So our product, no matter our cell or battery pack, are -- performs really well in high temperature. This is very critical to this kind of application. So we think we may meet the same success as we already did in the Southeast and Indian market.

Great. That's really helpful. I guess 1 final question. Are you seeing anything on the energy storage front as it relates to grid storage best companies? And is that impacting your R&D plans for new cell formats that could come out at the end of the decade?

I think that's a question for Jason.

[Foreign Language]

[Foreign Language]

So currently, for the ESS market, I think we are only focusing on the home ESS, balcony ESS and also portable ESS, so which are all like smaller size. But in addition, we are also in research and development of our big prismatic cell, which can be used in what you just mentioned, the grid size energy storage system. So that will be like one of our like target product for this.

[Operator Instructions] We will now take the next question, this is from the line of [ Charles Nemec ], Individual shareholder.

Now I've reviewed the 40135 ramp-up data and the margin compression. And I have a structural and validated solution for the thermal wall and charging limitations impacting you daily in production. Now I submitted a brief to your executive inbox, and I sent one to your engineer as well, and I'm just wanting to confirm that you've received that. And if we could make a time to discuss those matters in a private forum?

Which engineer or which e-mail address you contacted through?

The e-mail I sent it to is -- let me find it here, [email protected].

Okay. There are just -- daily, there are thousands of e-mails coming in, so maybe in the junk box or maybe it just be in [ filtered ]. So can you just resend the e-mail and we'll make sure that related personnels would just look into it.

Okay. I can resend them all. I sent them on the 28th early in the morning, but I can resend them. There's one to the CEO, the second in command and your engineer, all of you got a copy through that e-mail and I tagged you call.

Okay. We will just review it.

Seeing no more questions in the queue, so let me turn the call back to Jason for 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. This concludes the call. You may now disconnect.

Good day, ladies and gentlemen. Thank you for standing by, and welcome to CBAK Energy Technology's Third Quarter of 2025 Earnings Conference Call. [Operator Instructions] Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time.

Now, I will turn the call over to [ Etian Tian ], IR specialist of CBAK Energy. Ms. Tian, please proceed.

Thank you, operator, and hello, everyone. Welcome to CBAK Energy's earnings conference call for the third quarter of 2025. And 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 [ Yvan ], who will help with our interpretation, will join us for the Q&A section.

We released our results earlier today. The press release is available on the company's IR website at ir.cbak.com.cn as well as from the Newswire Services. A replay 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. 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 does not assume any obligations to update any forward-looking statements, except as required under the applicable laws.

Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars.

With that, let me now turn the call over to our CEO. Please go ahead, Jason.

Hello, everyone. Thank you for joining our earnings conference call for the third quarter of 2025. Our consolidated revenue rose sharply this quarter, increasing 36.5 percentage year-over-year to $50.9 million compared with approximately $44.6 million in the same period last year. The strong growth was primarily driven by the recovery of Hitrans, our battery raw material segment.

Since acquiring Hitrans in 2021, the segment has been weighed down by industry-wide overcapacity and prolonged decline in raw material prices, resulting in several years of weak performance. Recently, however, we have been pleased to see clear signs of recovery. Raw material prices have rebounded steadily, driving a meaningful turnaround at Hitrans.

In the third quarter alone, Hitrans generated approximately $27.2 million in revenue, representing 143.7 percentage increase year-over-year. With the continued recovery in the raw material market, we are confident that Hitrans team will build on this positive momentum to further expand sales and narrow losses in the coming quarters.

Our Battery business also began to stabilize in the third quarter after a short-term volume decline caused by our ongoing product portfolio upgrade. Revenue in this segment grew 0.7 percentage year-over-year, effectively returning to the same level as the prior year quarter. This improvement was mainly driven by robust demand for our Model 32140 battery produced at Nanjing plant, where production capacity remains fully utilized and a significant backlog of orders persist. To address this supply shortage, we are activating the launch of Nanjing Phase II facility, although slightly delayed. We now expect mass production to begin in mid-November 2025.

Compared with the 13-gigawatt-hour capacity of Phase I, Phase II will add another 2 gigawatt-hour of capacity. Given the current supply-demand imbalance in the market, we anticipate this expansion will make a substantial contribution to next year's sales.

In October 2025, we officially commissioned a new product line in -- at our Dalian facility. Historically, this plant has focused on producing Model 26650 and 26700 battery model, product with nearly 2 decades of market presence. In response to evolving customer needs, we invested in a new line dedicated to manufacturing the larger, higher performance 40135 Model.

Over the past year, many of Dalian's customers have been conducting testing and certification process for the Model 40135, a necessary step that temporarily impacted shipment volume and contributed to a brief slowdown in the battery segment revenue growth. Early market feedback, however, has been very encouraging.

Previously, the Dalian plant had 1 gigawatt-hour of capacity for the Model 26 Series. The new line has an additional 2.3-gigawatt-hour capacity for the Model 40135, similar to the Nanjing expansion. This upgrade is expected to become a key growth driver for 2026.

Now, let me turn the call to our CFO, Thierry Li.

Thank you, Jason. As Jason mentioned, Hitrans delivered a very solid performance this quarter, with sales increasing significantly and net loss narrowing to $2.1 million, an 18.8 percentage improvement from $2.6 million in the same period of 2024. If this momentum continues, we believe Hitrans is on track to return to profitability in the coming quarters.

Meanwhile, although our Battery business reported flat year-over-year revenue, following a weaker performance last quarter, segment net income rebounded strongly, up 122.7% to $4.53 million compared with $2.04 million a year ago. This rebound was mainly driven, as Jason noted, by robust demand for our Model 32140 batteries, which are currently in short supply.

With both segments showing minimal improvement in profitability, our consolidated net income attributable to CBAK Energy shareholders reached $2.65 million, representing a 150-fold increase year-over-year.

Looking ahead, we are confident that the new 40135 production line at our Dalian facility, together with the upcoming 32140 production expansion at our Nanjing plant will further enhance our earnings performance. Combined with the ongoing recovery of our raw materials industry, which continues to strengthen Hitrans' results, we believe that our overall performance in the coming quarters and years will deliver sustainable value for our shareholders and investors.

Furthermore, we continue to pursue overseas manufacturing expansion, but progress remains contingent on updates to China's export control policies covering lithium battery materials and equipment. Until the Chinese authorities clarify or adjust these restrictions following the recent meeting between the Chinese and U.S. presidents in Busan, we are unable to advance specific overseas projects.

On the commercial side, we have signed a term sheet with one of Asia's largest publicly listed companies to jointly develop an overseas lithium battery production base. This reflects strong strategic alignment and commercial potential. However, we would like to remind investors that policy shifts could affect our overseas plans and timelines.

Should policy conditions permit, management of the company has reached a firm consensus that establishing a stable overseas production base outside China will significantly enhance our supply reliability and strengthen our position as a preferred supplier to major global customers.

Thank you. We will now open the floor for the Q&A section. Operator, please go ahead.

[Operator Instructions] Our first question comes from the line of Brian Lantier from Zacks Small-Cap Research.

Really impressive results from the LEV division. I was wondering if you could talk a little bit about the -- any particular customer concentration in that market. And how sustainable you see the light electric vehicle sales going in the coming quarters?

Thank you, Brian. [Foreign Language]

[Interpreted] So actually, for the LEV business, especially the 2-wheelers and 3-wheelers, so I think now we are developing pretty good, especially in the Southeast Asia countries. And for example, in India, for the top 10 2-wheelers OEM, and we are -- we have all in communication with them. And some of them we have already had mass supplied to them. And also, for example, in India, for the battery swapping business, we are also incorporating with one of the biggest battery swapping company in India as well. So in this industry, I think now we are developing pretty good.

Okay. Great. That's really helpful. Regarding Hitrans, what do you see overall in the market regarding potential oversupply? Has demand come up to meet the supply in the industry? And should we expect more balance in the market going forward?

Okay. Brian, let me take this question. For Hitrans, this product is always very clear. They're making NCM raw materials to a couple of the battery manufacturers. Some of them are not our competitors because we're making LFP cells. So Hitrans is exploring the market, but I don't think they're going to find some other new customers beyond the current area. So what Hitrans will do is to keep improving the quality and the performance of their current raw material products. And along with this recovery of the whole industry, I think we can expect or anticipate a much stronger performance of Hitrans in the coming quarters.

Okay. Great. And, I guess, just looking forward to 2026, it sounds like you could, at some point be -- have production capacity above 6 gigawatts. When do you expect that to be the case? Is it midyear, the end of 2026? And has it become any easier to secure the necessary production equipment to power these expansions?

[Interpreted] Yes. So currently, the status is all of the equipment has already been installed in the warehouse in both Dalian and Nanjing factories. So we have already -- well, in Dalian, it's already trial production. And in Nanjing, it will be start of trial production in this month. And we, hopefully, by Q1 next year, then we will achieve mass production for both factories. And also, in terms of all of the orders we have got, and then the 6 gigawatts-hour will be achieved next year, which is in accordance with the order we have already received from the customers.

And I would like to add another point, I think in mid-November, we're going to announce our Nanjing expansion plan, it's going to complete soon. And then, we are preparing a video showing the latest equipment we have and the new production line for the purpose that all our investors and shareholders can have a very, very clear picture of how our factory looks like.

[Operator Instructions] Seeing no more questions in the queue, let me turn the call back to Jason for closing remarks.

Thank you, operator. And thank you all for participating in today's call and for your support. We appreciate for your interest and look forward to reporting to you again next quarter on our progress.

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

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]