Kandi Technologies Group, Inc.

Greetings. Welcome to Candy Technology's full year 2025 financial results call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Kiwelo, IR Director. Thank you. You may begin.

Thank you. Hello, everyone. and welcome to Candy Technologies Group full year 2025 earnings conference call. As a reminder, today's call is being recorded. The financial and operational highlights were issued in a press release earlier today and available online. You can access the earnings press release and subscribe to the company's email alerts by visiting the investor relations section of our website at ir.candygroup.com. Joining us today are Mr. Feng Chen, Chief Executive Officer, and Mr. Alan Lin, Chief Financial Officer. Before we begin, 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 on the applicable laws. Unless otherwise noted, all financial figures discussed today are in U.S. dollars. I will now turn the call over to our CEO, Mr. Feng Chen, who will deliver his remarks in Chinese, followed immediately by English translation. Mr. Chen, please go ahead.

Good day, investors and analysts.

Welcome to Candy Technologies Earnings Conference Call for the full year 2025. Thank you for your continued interest in and support of us.

2025 is a very important year for Condi. In the past two years, the company has faced complex external market environments, geopolitical changes, trade policy changes, and middle-end demand fluctuations. The economy has undergone some pressure. We do not look back at the challenges of the middle-end, but what is more important is that in 2025, the company is in good shape. 2025 was a pivotal year for Candy.

The past two years have been defined by a challenging macro backdrop marked by involving geopolitical, shifting trade policies, and uneven demand across our ad markets, which weighed on our operating performance. We are clear-eyed about near-term revenue dynamics. At the same time, we are encouraged by what our team delivered beneath the surface, meaningful improvements in operating quality, a stronger cash flow profile, and a materially healthier balance sheet.

2020年公司毛利率由2024年的30.8% These results show that Condi pays attention to the efficiency of cash flow quality, cash flow quality and capital use efficiency.

In 2025, our gross margin improved to 42.6%, up from 30.8% in 2024. We generated 96.8 million in net cash from operating activities and ended with 211.9 million in cash on hand. These results reflect our commitment to high-quality earnings more sustainable cash flows, and stronger returns on invested capital.

过去18个月,作为公司CEO, 我和管理团队最重要的工作是重新梳理康迪的业务边界, 增长路径和长期战略。 在科技创新与产业升级带来的发展机遇面前, 我们更加强调清晰的业务聚焦, 严格的资本几率,

Over the past 18 months, one of my key priorities as CEO, together with the management team, has been to review and reassess Canada's business boundaries, growth trajectory, and long-term overall direction. Amid the opportunities presented by technological innovation and industrial upgrading, we are placing even greater emphasis on focused execution, disciplined capital allocation, and the consistent delivery of major milestones.

从26年开始,康迪将进入新的增长阶段, 我们的战略仍然围绕双引擎展开。 Beginning in 2026,

Candy is entering new phase of growth. Our strategy will be anchored around two core engines.

第一引擎是以北美市场为核心的非公路电动车业务, 包括UTV,高尔夫球车,电动越野产品等。 这是Candy的基本盘,也是我们现金流和渠道能力的基础。 In the first quarter of this year, the overall sales performance of the core business has been positive, and the progress of the channel expansion has continued. The number of business partners has continued to increase, and the performance of the single-store sales has also increased significantly. This has not only further enhanced our secondary ability and brand influence in the core market, but also established a good foundation for comprehensive business growth. 2026年,我们会围绕北美UTV业务进行重点升级,包括新车型设计,产品体验优化,渠道效率提升和供应链响应能力建设。我们已经致敬了明显高于过去水平的内部销量目标,并引入具备量产车型经验的外部汽车设计团队。参与下一代UTV产品设计,我们的目标不是简单多卖几台车,

Our first engine is off-road electric vehicle business, centered on the North American market and Spanish UTVs, golf carts, electric off-road products, and others. This business represents Candy's core franchise. underpinning stable cash flows and a well-established go-to-market distribution network. In the first quarter this year, the overall core business remained stable with continued progress in distribution channel expansion. Our dealer network continued to scale with a notable improvement in per-dealer sales performance, further broadening our market coverage and a brand presence in key markets and laying a solid foundation for full year growth. In addition, as we enter 2026, we are actively advancing our North American UTV business across four dimensions. Next generation model development, enhanced product experience, improved channel efficiency, and strengthened supply chain capabilities. We have set internal sales targets meaningfully above historical levels and have engaged an external automotive design team with proven mass production experience to help design our next-generation UTV products. Our ambition goes beyond simply selling more units. We are focused on boosting Candy's product competitiveness across the North American outdoor recreation and low-carbon mobility market.

另外,2025年12月,公司签署协议收购美国高端电动越野摩托车品牌RAW. RAW并入后,我们的目标是在2026年把高端电动越野摩托车打造为北美产品组合中一个有实际贡献的新增长比例。 In December 2025, we signed an agreement to acquire Rural, a premium

U.S.-based electric off-road vehicle motorcycle brand, with Roar now part of the Candy family. Our goal is to establish premier electric off-road motorcycles of a meaningful new growth category within our North American product portfolio by 2026. We see strong synergies between Roar and Candy's existing North American distribution network. supply chain, and product lineup. As we advance the integration, our primary priorities will be brand alignment, channel coordination, supply chain optimization, and product development, aiming to ensure this acquisition translates into meaningful, measurable revenue contribution rather than a transaction of paper. Our second engine comprises emerging battery swapping equipment and intelligent robotics business.

能源换电装备将是2026年最重要的突破口。 2025年8月, We are sure that in 2026, we will be able to receive considerable revenue.

Battery swapping equipment represents our most important breakthrough opportunity in 2026. In August 2025, our subsidiary, China Battery Exchange, was qualified as a battery swap equipment supplier within CATL's supply chain, securing its first order for heavy truck battery swap stations equipment. In January 2026, China Battery Exchange entered into a three-year strategic cooperation agreement with CATL subsidiary, covering the mass production and delivery of heavy truck battery swap station equipment. Based on our current order visibility and the production schedule, we are confident in achieving meaningful revenue growth in 2026.

我们认为换件装备业务对康迪的意义不只是新增收入, 而是让公司从单一低碳出行产品进一步延伸到新能源基础设施装备领域。 下一阶段,我们会重点推动重卡换件站订单的交付, 小批量到规模化交付能力建设, 以及港口、矿山、干线物流等场景的商业化机会。

In our view, the battery swap equipment business represents more than an incremental revenue stream for Candy. It demonstrates a remarkable extension of our footprint from low-carbon mobility products into the broader new energy infrastructure sector. Looking ahead, our priorities are centered on execution on heavy truck battery swap station order deliveries ramping up our mass delivery capacity, and capturing emerging commercial opportunities across ports, mining operations, and long-haul freight applications.

在这本机器人方向,我们聚焦四组机器人在安防巡检和物流园区检查中的应用。 公司已经于 Outlook System signed a strategic cooperation agreement to jointly set up a joint venture company, KH Robotics, and through KH Robotics to advance localization testing and business deployment preparation in North America. We expect the first demo will be completed in June 2021, and plan to enter the product testing and手续试点部署阶段在下半年进入产品测试和手续试点部署阶段。

On the intelligent robotics business front, our focus is on the deployment of autonomous quadroped robots in security patrol and logistics parking environments. We have entered a strategic partnership agreement with Hawk Robo Systems LLC to form a joint venture, KH Robotics, through which we are developing localized testing, validation, and commercial operation capabilities in North America. We expect to complete the first functional demo by approximately June 2026. followed by field testing and initial pilot deployment in the second half of the year. This business remains at an early stage of deployment. Rather than providing near-term revenue guidance, we will evaluate and communicate progress through clearly defined product milestones and real-world use case validation.

Regarding supply chain capabilities,

We will continue to build out our global footprint, anchored by core R&D and manufacturing in mainland China, with flexible capacity in Taiwan, and local assembly and front-end distribution network in the United States. Architecture provides meaningful structural insulation against geopolitical uncertainty and trade volatility, while also enabling us to respond more quickly and effectively to involving demand in the North American market.

感望2026年我们会重点看四件事。 第一,北美UTV则低碳出行产品的销量恢复和产品升级。 第二,RAW收购后的整合和实际收入贡献。 第三,换电装备利用 In sum, looking ahead to 2026, we are focused on four clear priorities.

First, restoring sales momentum and advancing product upgrades. across our UTV and low carbon mobility lineup in North America. Second, successfully integrating rural and translating the acquisition into tangible revenue contribution. Third, advancing the battery swap equipment business from initial order delivery to large scale deliveries. And fourth, advancing our intelligent robotics business through the completion of functional demo, followed by field testing and initial pilot deployment.

同时,我们会坚持审慎的资本配置原则。 公司现金储备不是盲目扩张的理由, 而是让我们在不确定环境中保持战略选择权。 At the same time, we will maintain a disciplined approach to capital allocation.

Our cash positions are not a justification for infringing indiscriminate expansion, but rather it means to preserve flexibility in an uncertain environment. Any future investments in new business initiatives, acquisitions, or capacity expansion must be guided by long-term shareholder returns and will be rigorously evaluated against clear benchmarks, including commercial progress cash payback cycles, and risk-adjusted returns.

今天的康迪拥有清晰的控股平台架构, 聚焦的双引擎战略, 韧性的全球供应链, 以及充裕的现金储备。 我坚信,凭借这些核心能力与战略布局, 我们将把制造乐趣驱动未来, 这一愿景转化为股东确实感受到的长期价值。

Today, Candy has a clear platform structure, a focused dual-engine strategy, a resilient global supply chain, and a solid cash position. I firmly believe that with these core competencies and strategic positioning in place, we are well equipped to translate our vision of manufacturing joy driving the future into tangible long-term value for shareholders.

接下来,我把时间交给我们的首席财务官, Alan Lin, 为大家详细介绍公司2025年全年的业绩表现。 谢谢大家。 Now, let me turn the call over to our CFO, Alan Lin, who will provide details

on our full year 2025 financial performance. Thank you.

Thank you, Mr. Chen, and thank you everyone for joining us today. I will go over our financial results for 2025. The net revenues were 87.4 million, a decrease of 31.5% from 127.6 million for 2024. primarily due to reduced demand for EV products in the PLC market and fewer sales of crossover golf carts and other vehicle models. Ongoing trade uncertainties, including the potential tariffs and trade restrictions, together with persistent inflation and elevated interest rates, adversely affected consumer demand for higher-priced recreational vehicles. which in turn impacted sales to the Candies major retail customers and distributors. The cost of goods sold was $50.1 million, a decrease of 43.2% from $88.3 million for 2024. The decrease was primarily due to the corresponding decrease in sales. The gross profit was $37.3 million, compared with 39.3 million for 2024. Gross margin was 42.6% up from 30.8% for 2024. The improvement in gross margin was primarily driven by increased sales of the previously invested inventory. The total operating expenses were 91.5 million. a decrease of 12.6% from 108.1 million for 2004. The factors including the research and development expenses were 7.6 million, up 52.6% from 5.8 million for 2004, mainly due to the completion of research and development projects during the current period. Secondly, the selling and market expenses were $16.7 million, a decrease of 21.5% from $21.2 million for 2024. The decrease was mainly due to the decreases in freight expenses and commission expenses in line with the decrease in revenue. The general and administrative expenses were for $54.4 million, a decrease of 5.7% from $57.7 million for 2024. The decrease was mainly due to the decreased depreciation and amortization in the current period following the material impairment of losses asset provision in 2024. The loss from operations was $57.2 million compared with $68.8 million for 2024. The net loss for the current year was 95.6 million, compared with 51.0 million for 2024. The decrease in net loss was primarily attributed to the higher ad expenses, resulting from the anti-dumping duty expenses and increased litigation courses compared to the prior year. The basic and diluted net loss attributable to the company's shareholders per share was $1.12. compared with basic and diluted net loss per share of $0.59 for 2024. Turning to our balance sheets, our financial position remains healthy and stable. As of December 31, 2025, the company had cash and cash equivalents, the residual cash, and certificates of deposit totaling $211.9 million. compared with $126.3 million as of December 31, 2024. That concludes my remarks. I will now hand the call back to Kiwa for any final comments. Thank you.

Thank you once again for joining us today. If you have any further questions, please reach out using the contact information provided on our website. We appreciate your time and interest in Candy Technologies. This concludes today's conference call. You may now disconnect.