CBAK Energy Technology, Inc.

Good day ladies and gentlemen. Thank you for standing by and welcome to CBAC Energy Technologies third quarter of 2025 earnings conference 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 are recording today's call. If you have any objections you may disconnect at this time. Now I will turn the call over to Yitian Tian, IR specialist of Seabank Energy. Ms. Tian, please proceed.

Thank you, operator, and hello, everyone. Welcome to Seabank Energy's earnings conference call for the third quarter of 2025. In joining us today are Mr. Zhiguang Hu, our Jason, Chief SQD Officer of Seabank Energy, Mr. Siri Li, Chief Financial Officer and Company Secretary, and Yvonne, 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 Newswell 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 Secretary's 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 exemptions expressed today. Further information regarding this and other risks and uncertainties is included in the company's public filing 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 US 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% year-over-year to $16.9 million, compared with approximately $44.6 million in the same period last year. The strong growth was primarily driven by the recovery of high-trans, our better raw material segment. Since acquiring HITRON 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 high trends. In the third quarter alone, high trends generate approximately $27.2 million in revenue, representing a 143.7% increase year-over-year. With the continued recovery in the raw material market We are confident that the HITRON 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 upgrades Revenue in this segment grew 0.7% 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 32-140 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 expediting the launch of Nanjing Phase 2 facility, although slightly delayed. We now expect mass production to begin in mid-November 2025. Compared with the 1.3 GWh capacity of Phase 1, Phase 2 will add another 2 GWh 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 at our Dalian facility. Historically, this plant has focused on producing model 26-600 and 26-700 battery model products with nearly two decades of market presence. In response to involving customer needs, we invested in a new line dedicated to manufacturing the larger, higher performance 4135 model. Over the past year, many of .NET's customers have been conducting testing and certification process for the model 4135, a necessary step that Temporarily impacted shipment volume and contribute to a brief slowdown in the battery segment revenue growth. Early market feedback, however, have been very encouraging. Previously, the Dalian plant had 1G watt-hour capacity for the model 26 series. The new line adds an additional 2.3 dBh capacity for the Model 4135, 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, Jiawei Li.

Thank you, Jason. As Jason mentioned, high trends deliver a very solid performance this quarter, with sales increasing significantly and net loss narrowing to $2.1 million, an 18.8% improvement from $2.6 million in the same period of 2024. If this momentum continues, we believe high trends 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 in 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 meaningful improvement in profitability, Our consolidated net income attributable to Seabag Energy shareholders reached $2.65 million, representing a 150-fold increase year-over-year. Looking ahead, we are confident that the new 4135 production line at our Dalian facility, together with the upcoming 3140 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 high-transit 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 US 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 a strong strategic alignment and commercial potential. However, we'd 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.

Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Please stand by while we compile the Q&A queue.

Our first question comes from the line of Brian Lantier from Sachs Small Cap Research. Please go ahead. Your line is open.

Good evening, gentlemen. Really impressive results from the LEV division. I was wondering if you could talk a little bit about 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.

Mr. Hu, please answer this question, especially about the market of our two-wheeled and three-wheeled vehicles.

I will ask you to answer it. Let me talk about it. Currently, our two-wheeled vehicles are mainly based in Southeast Asia. At present, we are in contact with the top 10 brands in India. Some of them have already completed the batch delivery. At the same time, we have also received the power exchange project from Africa. At present, we continue to supply the battery group to them every month. And our partners are all leading brands in the industry.

Thank you.

So actually for the LEV business, especially the two-wheelers and three-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 two-wheelers OEMs, and we have all in communication with them, and some of them we have already 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 high trans 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 um um Okay, Brian, let me take this question.

For Hytran, 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 Hytran's is exploring the market, but I don't think they're going to find some other new customers beyond the current area. So, what HydronSoup does is to keep improving the quality and 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 high trends in the coming quarters.

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

The next question is about some of the production next year. Because we will reach more than six projects at a certain stage next year, we expect this to be at the end or end of next year. At the same time, about this, For example, what is the progress on the supply of the equipment?

Mr. Hu, please answer.

At present, we have finished installing the equipment. We are currently in the process of adjustment. We expect that in November, Dalian and Nanjing will start production. In the first quarter of next year, we should be able to complete mass production. So currently, the status is all of the equipment has already been installed in the warehouse in both Dalian and Nanjing factory.

So we have already In Dalian, it's already trial production. And in Nanjing, it will start 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 six gigawatts hour will be achieved next year, which is in accordance with the order we have already received from the customers.

I would like to add another point. I think in mid-November, we're going to announce that our 19 expansion plan is 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.

Great. Thank you so much. It sounds really exciting. I'll open the queue up to anyone else.

Thank you. Once again, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Thank you.

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.