China Automotive Systems, Inc.

Q2 2021 Earnings Conference Call

8/12/2021

spk_0: breeding and while comfort finer automotive the second quarter twenty twenty one earning up and of at the time albert been on a list and only mode a brief question and answer session will follow the formal presentation if anyone should require operators this is during today's pop and please five star zero on your telephone a pod i'd your mind your the pump of is being recorded i would knife which ended up and for with your host mr kevin thief investor relations thank you sir you may begin
spk_1: thank you everyone for joining us today work overtime automotive systems twenty twenty one second photograph and for joining us today or mr cuisine woo chief executive officer and mr jaitley chief financial officer of china automotive they will be available to answer questions later in the conference call with the assistance of translation before we begin our mine all listeners a throughout this call we may make state with that make a dream forward looking forward looking statements represent the copies estimate and function only a zelda called the albedo to call as a result the company's actual results could differ materially from those contained in the forward look estate was due to a number of factors including those described hundred agree that in risk factors in the company for ten k and report to the year ended december thirty one forty twenty as fire with securities and exchange commission and another documents filed by the company from time to time ago region exchange commission if the effort to go with nineteen is out affect the way in time the controller business operations and financial condition may be materially adversely affected as a result of the deteriorating market out there for automobile failed to slow down original national economic growth weekend liquidity and financial condition of our customers are other factors that week cannot foresee any of these factors and other factors beyond article could have an an adverse effect on the overall business environment cause uncertainties in the regions where we conduct business cause i deserve to tougher in a way that we cannot predict immature really adversely impact our business financial condition a result love reached a for long disruption or any further unforeseen delays in are operational the manufacturing delivery and assembly process look at any of our production facility good a continue to result in delayed and the ship and a product to our customers increased costs and reduced revenue to express disclaims any duty to light up based any for will have the same as leading this call whether as a result new information a few to events or otherwise one is called i will provide a brief overview and stuff and the second quarter of first different result of how the period ended june thirty twenty twenty one manager will conduct the question and answer session falling twenty twenty one second quarter and first six months financial daughter unaudited and are reported using us gap accounting for the purposes of a or call today our huge financial result in us dollars we'll begin with review of the recent dynamics of the chinese economy automobile industry and china automotive market position our your sales rose by forty five percent year over year and second quarter of twenty twenty one following a year over year seventy seven percent rise in the first quarter of twenty twenty one but the six months or twenty twenty one or two thousand feet by the key point one percent be earlier to do what it was fifty point nine million dollars or advanced i drug dealing forest and five to by forty three point nine percent year over year and a second quarter of twenty twenty one the ninety seven point four million dollars that the letter power steering each year increase almost fifty percent year over year to twenty three point two million dollars and represented making point is that the total sale the chinese economy continues to expand from the impact golden colored nineteen kinda like and twenty twenty gdp grew by seven point nine that you are we in a second photo to and twenty one down from the eating point three percent in the first twenty twenty one but still thousand economic group gdp for the first day for twenty twenty one was twelve point seven percent higher than a year ago according to statistics vagina association of a meal manufacturer see am chinese automobiles the own and fellow rose by a point to it percent year over year led by ten point eight percent increase in passenger the it may automobile sales decline by three point one percent with a twelve point four percent decrease in june but this less energy very twenty twenty one pm require that chinese already have failed good twenty five point six percent year over year with passenger vehicles they also plastic ten million units representing a twenty seven present game ahead of layer as as the day in sales increased twenty six point three percent empty you it feels were up twenty five point two percent and su he feels be by twenty eight point six percent to the first six months a twenty twenty one new energy leopold any the sales were packing a one point two million units representing a two hundred and one point five percent a year earlier from the sale on any passenger vehicles increased by two hundred and seventy point four percent the one point one million us and any v commercial vehicle you have dealt with it be six thousand even of sticky one point five percent in the first six months and twenty twenty one in the first six months on twenty twenty one the they also chinese domestic branded vehicle i mean markets increased by forty six point eight percent year over year to four point two million units taking a forty two percent market share of five point seven percent when first six months or twenty twenty one commercial vehicle sales increased by twenty point nine percent year over year with both feels rising by thirty nine point seven percent and a much larger truck market for linking point four percent according going to be a and the traditional but market benefited from the phasing out though generous be subsidy and truck growth was partially generate device in this country by a national five english explain to people before the stricter national stick emission standards or national mandated in july twenty twenty one for diesel engine additionally just feels benefited by stronger entire reloading a fortunate and do if respect project these gross percentages partially is comparisons to the lower than normal fails and a face and twenty funny as by the only thing that the go with nineteen disruption in china and abroad each of our operating at a key double digit growth except their sale to the commercial vehicle market which has it's like downturn the second quarter twenty twenty one exports to or tier one customers in north america grew by one hundred and seventy nine point eight percent that the auto market bear rebounded and pandemic alert spc announced we have been selling more abs thought it into the electric vehicles including great wall carry out of beijing auto no and ghz motors the outlook continues for a partially two hundred thousand of our dps in the city supplied to the ie market alone in twenty twenty one a gross profit increased by one or two point six percent era leader the fifteen point eight billion dollars but the gross margin of thirteen point one percent higher than the forty nine point four percent reporter for second quarter of two twenty total operating expenses and fifty two point nine percent year earlier income from operations was one hundred making thousand dollars compared to a lot of five point two million dollars in the second quarter twenty one it a combination of that other income financially equity in the income of affiliated companies cup generate in town a clue parent companies common shareholder the three point two million dollars compared with the last four point one million dollars and second quarter of what twenty in first quarter of twenty twenty one we introduced a new proprietary tier system which integrating communicate with the league was mean data to create lane keeping us this automatic talking about it lane censoring and traffic jam as this function as part of the companies advanced driver assistance known as a yeah yet or more commonly referred to as autonomous driving to further our eighty a as capability in june twenty twenty one we also announced plans plan to purchase the forty percent interest in sent you a be a swedish automotive technology company bush allies in in software development and hardware design for advanced up in vehicle motion control panel time mr the you currently hold and patton and the software functions were stealing vehicle noting to throw an autonomous driving can be integrated with it's proprietary really design hardware solutions including powered fact that b s w e c you motor and housing and complete steering gear system and it's motion control technology has been tested in demonstrated what each year angle overlay systems to nearby wire and fully autonomous vehicles at at h d s a level three to five that is product have been in production says two thousand and thirteen to like drivers must appear your steering experience in july twenty twenty one we now have entered in be okay okay
spk_2: which is off to have process face for a new steering system developed for of a male a leading european brands
spk_1: this is yeah from his first electric contact plug in hybrid as you remodel the twenty twenty one to know which features the company's first plug in hybrid powertrain approximately one hundred thousand annual units are expected to be ordered where this news the a theorem the hilltop an alfa romeo with be a second project in europe and also the first project with a high end brands of the and his group of vehicle also we are proud that are wholly owned subsidiary you be headlong automated system is limited leave the iso to six to six to poland two oh one eight a a a a a style that the certification this is automotive safety and integrity level from sts t v last year to recognize that the world bachelor verification testing and certification company classifying though software and hardware components with different safety with or yourself you stick to stick to go to a one eight a or style features they for everything from a to be would be in the highest the most stringent safety standards our d certification distinguishes us for many other peer company a strong financial stress provide resources to support the development of new technologies to and future growth and shareholder value a total cash and cash equivalents and such flat cash was one hundred seventeen point three mil a million dollars alcohol june thirty twenty twenty one total power company stock photos actually rose if we're and twelve point two million dollars that you barely twenty twenty was the three o three point two million at the end of twenty twenty we financial strength a large customer base and a growing portfolio the the technology to to build a company a shareholder value now let review the financial results in the second quarter twenty twenty one the field increased by forty five percent to one one point six million dollars in the second quarter twenty twenty one compared to eighty three point two million dollars in the second quarter twenty twenty net sales of the dish or steering five and parking fees by forty three point nine percent to ninety seven point four million dollars a quarter twenty twenty one compared to sixty seven point seven million dollars the the same period and twenty one the fails of electric power steering atheist particular is forty nine point seven percent to twenty three point two million dollars and fifteen point five million dollars was the imperial twenty twenty years particular one eighteen point percent of the don't wanna build for the second quarter twenty twenty one compare with eighteen point six percent when the same period and twenty twenty explore sales the north american customers raise one hundred and seventy nine point eight percent to thirty one point nine million in the second quarter of twenty twenty one compared with one hundred and fourteen point four million i'm sorry compared with eleven point four million dollars in the second quarter of twenty twenty gross profit ruled by one or two point six percent to fifteen point eight million dollars compared to seven point eight billion dollars the second quarter twenty twenty first margin in a second for a twenty twenty one was breaking point one percent compared with nine point four percent and the second quarter twenty twenty the increasing gross margin was mainly due to higher that sales increase gross profit in the companies who may have lung operation give another sales was point seven million dollars compared to point eight million dollars in the second quarter of what what doe expenses increased by forty six point seven percent to four point four million dollars compared to three million dollars the second quarter twenty one increase in salary spencer's was primarily due to higher personnel expensive delon expenses represent a three point six percent of net sales and the second quarter by twenty one also compared to three point six percent the second quarter twenty twenty yeah reminisced metrics or a administrative expenses genie for six point one million dollars compared to four point eight million dollars in the second border a expenses represented five point one percent of that fails and the spectacle or twenty twenty one as a five point eight percent of net sales in the second quarter twenty twenty research and development expenses are in the were by point nine million dollars were just exploit one may now you're the second quarter twenty one aren't expenses represented four point nine percent of the failed in effect but at twenty twenty one compared to seven point three percent in a second quarter twenty funny he is me are other income that for was one point five million dollars of a quarter twenty twenty one compared to one point three million dollars for the three months ended june thirty twenty twenty income from operations was point one million the second quarter twenty twenty one compared to a lot both by point two million dollars in the second color out what big one it's his response was point three million dollars a sec quarter twenty twenty two stanley consistent with point four million dollars in the second for twenty funny no financial went on was point three million dollars in the second quarter twenty twenty one compared to net financial expense of point zero six million in the second pillar of twenty twenty the change in that financial experts was primarily due to achieving a foreign exchange benefit and a second makoto twenty twenty one compared with a foreign change expense and the second quarter twenty twenty income before income tax expense and equity and or angel affiliated companies was one point five million dollars in the sequitur twenty twenty one compared to a lot before income tax expense and equity in the earnings affiliated companies have four point four million dollars in the second quarter twenty twenty their income attributable to parent company common shareholders was three point two million dollars in the second quarter or twenty twenty one compared to a net loss attributable to repair company's shareholders of four point one million dollars and a quarter twenty one eluded arrange for show was up in the sec for a twenty twenty one compared to the louis net loss for share of thirteen that in the second quarter of twenty twenty the weighted average number of diluted common shares outstanding was thirty million eight hundred and fifty five thousand for on takes the second quarter twenty twenty one compared to thirty one million one hundred seventy four thousand and forty five shares with put it on it but well as close to six months fine to highlight living can be sticky point one percent to two hundred fifty point nine million in the first six months or twenty twenty one prepared to one hundred fifty six point seven million dollars in the first six months or twenty one different gross profit was thirty five point six million dollars compared to nineteen million dollar was in the corresponding period last year it's not with marginalise fourteen point one percent to play with while point one percent in the first six months or twenty on it again another sales was two million dollars in the for six months a twenty twenty one compared to one point four million dollars and the corresponding period last year income from apparitions was four point three million dollars the first six months or twenty twenty one compare with the last an operation on for twenty million dollars into fists like between funny the income actually repair companies common shareholders was six point four million dollars and earth but the only twenty one preparing that last the cubicle power companies common shareholder of four point one million dollars in a corresponding period and twenty funny looted earnings per share was twenty one sense in the first expensive twenty twenty one compared to a with loss per share of thirteenth and and for six months or twenty twenty now we knew a few bow tonight as of june thirty twenty twenty one total cash and caterpillars and like as as one hundred and seventeen point three million dollars total accounts receivable to the notes with you bought two hundred twenty eight point nine million dollars accounts payable including those payable for two hundred and twenty point four million dollars a short term loans with thirty kids play for me not total fan companies a doctor's equity was three hundred and twelve point two million dollars as a gym three twenty twenty one prepared to me or to three point three million dollars as of december thirty one twenty twenty it is the sound of management has read revenue guys out there when he went to four hundred ninety five million from forty effect it's target is based on a company's current views on how free market conditions which are subject
spk_0: without operator were ready to begin with you in it at this time will be conducting a question and answer session if you would like that big question please star one on your telephone keypad a confirmation so my indicate your line isn't a question few you might start to to remove your question from the q a victory for them using figure equipment and may be necessary for you to pick up your headset before passing the thirty one almond flour for for question
spk_3: i first i think some line of william butler that he was green red bull about you may proceed with your question
spk_1: he goes for a quarter out with thought that u p i failed jumping can we expect to see dps sales growth outperform traditional during products going forward
spk_4: ogre for whom he should bill or how the government issue a forget to can even get the people to it's been up for a soldier got her kind of a ps the crowds and dog had season but as tolerant issue well i will come from kabuki https the shows up with top what it thought about shows or could do to not would have gotten to the yeah yeah okay i figured you have a year found digital realm of the theater get out gas answer to as young young he did you do the under you the at been done about that that he can be cheap and be fundamentally different on the apart much and that sort of and ninety three as in an empty and on their up an interesting job get aren't going to teaching and some can i saw the finale character and ah sort of and yet of not come from people who you thought out some some know my sort of couples and i'm financially as your fucking picking up at the gym as off and the be don't have time and don't the cod i you know that that some enjoy the game nathan
spk_5: for one hundred
spk_4: air conditioner in terms of the growth rate as garden the dps was is now ourselves closer now than pacing at forty nine point seven percent it's clearly factor then hydraulic power steering systems the in terms of revenue gps still only counts for nothing point two percent total revenue while longer one the we do c e p s well a cause more revenue
spk_1: a bot cause for more revenue than the bad
spk_3: traditional a joint product or but it will take some time we see it probably the next within the next two years
spk_6: okay
spk_4: our on what was the reason for the commercial failed been down in of order tokyo and issue we semitic the sounds of the credit to go you to the to do totally grade charge churchill no begets where your you have the ability to violence or are due to the and the show down on a little shop are you tonight he argued with noise each in the our one of the hold up on that could get them for you and i for giving them to face on a trillion that the jews you have become the go numb
spk_1: belgium the a on opponents in gear as you don't i saw some for the showdown on their attention and on t de gallo on and such a good among the young and been in an effort to the evil name a place on you just chuck
spk_4: okay i'm a it comes to down to d
spk_1: the over year
spk_4: sales of the commercial vehicle on the second quarter twenty twenty
spk_1: coming off the pale of pod the recovery of fall called it
spk_4: the chinese government issue a number of stimulus package packages which shine patel a very robust
spk_7: sales than second quarter last year and that make a it out
spk_1: that don't a very high paid of was the second quarter this year to compile it
spk_4: so it's but i reason and in terms of sales units and they'll be a comparison it seems the i doubt a but still running out of their high rate but in terms of overall
spk_3: the commercial vehicle sales
spk_4: close as you know most of all commercial vehicle steering system starts selling in a domestic market so that's being out but the mayor we can be affected ok er et al are you guys thing any are having any issues are seeing concerns with bad the chip shortage
spk_1: but the several and he says demon your milk
spk_4: you meet to sink can subpoena to been the device in shock been in engineering shopping centers couple chief a hiatus about can kinda trudeau it's they'll one bigger yard it matches manchester yeah man i do community do to change and bunch of saudi
spk_8: utilized for google me as you can punch in on our many as that he was
spk_1: now i'm vows you can and a bunch of then she's awesome down on a gambling the or some other senses
spk_4: and hundred times on the former time them than janet yellen the hook consider annoyingly admission gentle bunch of an olympic athlete and too much two figured he two children as the and i have my math and she thought she meant agility from and and send you to their actions of on accurate than it is in the added on and never that and you do
spk_9: use of and you use obama and site or digital communication into you get them for hours at a faster than production of my guy real and of unless i'm from florida
spk_10: discontent
spk_4: for miss him as he should have and don't go on agito their don't know your booker girl with deceased well we do experienced some impact bunch of shortage
spk_9: during the second quarter
spk_1: we we are
spk_4: you know we we saw about twenty to thirty percent the shortage
spk_1: on the supply side
spk_4: an orchard fucking ourselves or otherwise our social oh well have been even faster and then the current will switch the on a yearly basis and many oh yeah and an auto makers are waiting for our dps product but
spk_9: bad because of this had a gap
spk_4: on the supply side go to this and chips supply
spk_1: and to shortage and we had you had to let them wait
spk_4: so fucked up getting ah somewhat fucking alipio cells
spk_1: and
spk_4: in the second quarter this year but starting july we see some of the lights on chip producers are
spk_1: have increased their production
spk_3: and so we we expected the in deputy and coupon coming up to the killed for
spk_4: the the pressure will be lessened and on ah we are still team overall probably would be temperature chip shortage dead and while we will have ah sold
spk_5: wow it could he be at father market so but overall it was the dps still is going to be very very strong that year
spk_11: okay new provider put up there on how things are going in brazil
spk_4: i've total package of color damage on that hundred bucks you can as the only able to do or party or finger or good or as the deadlock example for them and as you put on a budget within the us all that other eating gilbert as one eight hundred human condition on each i'm a user for the theory there
spk_12: with laugh and the and
spk_4: couple of minutes and the city number thought and if somebody a lot on advice by cbd just as you know it's a lot closer with of us to ensure me to are turning to shit off on a feel about twenty two illnesses two chilean my sort of ah know maybe she'd pass you medium the you won't be bad idea
spk_1: yes and they wanted to the last
spk_4: yeah hm so shouldn't consider on a copy of it she that with reception
spk_1: items you on deposited in the attic a bigger than going into the region of analysis
spk_13: a total touch with nature
spk_4: oh we're seeing a very strong close in brazil i'm in the second quarter of this year
spk_1: our ourselves from brazil market on was six point two minute compare a half million
spk_4: the u s dollars in the same quarter last year name it you to the an impact in the market
spk_3: and as in the spurs half of this year our total revenue from brazil is the exceed it has already exceeded ten minutes
spk_4: compare was two point five million us dollars last year and for that reason and our our overall or order book ah we expect four year twenty twenty or brazil sales will be allowed twenty three to twenty five million dollars
spk_1: that compares to to austin a million dollars and twenty twenty so that that major
spk_4: and that we all the expected a hike was but now week now we saw the closed his book bag ah our president our initial estimate i great that's great i was pushing is on sunday and they talk a little bit more about that ah and what your plans are for it over do what you wanted to see a woman that readers over the continental divorces in the jungle and the kids shouting that you are can they didn't it really bringing together for the one that continue to out as you're told to get as she said she did it again time jumped out and cause of the quite a leap to get cheaper that again at trying to jump jump jump at a gas get their photos i shall now what example to work on the bank the get go
spk_14: for that the movie and on that is into town of a title of it unless you know modify now or movies or life without her
spk_4: but figured they get a good decent and for the the advantages louis and you'll be on our side to get out of his office either joseph on the way as actually gone in general like jg auditors your on our one drink on him
spk_14: nintendo the engine out of influenza magic your homework to do a google paper to get out of the system
spk_4: in a while now on the everybody talked about under geoengineering consulate in utah that to get to them jobs of the l stine as the gb of a chance again
spk_15: on the jersey
spk_4: of them was a on an eye out that mrs off on the to complete one place or to carrying on t the against the lions eating a healthy dose of usually either
spk_1: it's on since i day an hour meeting was immature and i should eat and me to count on him shouldn't have the pages
spk_16: oh okay so as we earn
spk_4: as we discussed have that in the past centered
spk_1: his dog the company were acquired taste the software and hardware leader
spk_4: specialized ah
spk_1: steering functions and he had vehicle motion controls
spk_4: and and and it took it took an integral part of autonomous driving
spk_17: so we're very very excited about and on in terms of by the area as well we'll be working with
spk_18: have you done
spk_1: got up there to areas wondered in european market have how we're gonna work together outcome hardware perspective as the as well
spk_4: as spam hardware respect towards the supported the best in class our and and custom made for their software's
spk_1: and and so we our into the only thing will be are working closely with setting team to integrate and their software into our highways
spk_4: and help them to win more it all goes to help them to way more contract and and in the european market in china we are i'm just sit and stand tail has the l three out for
spk_19: i'm
spk_4: product suffer for his eyes and some the hardware solutions
spk_20: so will we are marketing
spk_1: this product to the chinese or yet
spk_0: it will aggressively marketing it so looking to expand it and the chinese market and now with this
spk_1: technology and out always see a cause the postseason interest from again so
spk_0: it's gonna be
Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-