Microvast Holdings, Inc.

Thank you for standing by and welcome to MicroVast fourth quarter 2023 and four year conference call. At this time, all participants are in a listen only mode and the conference is being recorded. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one again. I would now like to hand the call over to MicroVast Investor Relations. Please go ahead.

Thank you, operator, and thank you, everyone, for joining us today. With me on today's call are Mr. Yang Wu, founder, chairman, and CEO, and Mr. Craig Webster, chief financial officer. Mr. Wu will start off with a high-level overview of the quarter before providing some operational updates. Mr. Webster will then discuss our financials in more detail before handing it back to Mr. Wu to address our first quarter 2024 outlook and opening the call up to questions. Ahead of this call, MicroVast issued its fourth quarter and full year 2023 earnings press release, which can be found on the investor relations section of the company's website, ir.microvast.com. In addition, we have posted a slide presentation to the website to accompany management's prepared remarks. As a reminder, please note that statements made in this call are forward-looking and based on current expectations and assumptions. They should not be relied upon as representative of views for subsequent dates and we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements due to new information or future events. Actual results may differ materially from expectations due to a variety of risks and uncertainties. For more information on material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. We may also discuss non-GAAP financial measures during this call. These measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. These non-GAAP measures have been reconciled to their most comparable GAAP metrics in the tables included at the end of our press release. After the conclusion of this call, a webcast replay will be available on the Investor Relations section of MicroVAS's website. And now, I will turn the call over to Mr. Wu for opening remarks.

Thank you, and thank you all for joining us today. Please turn to slide three as I cover a few highlights from our four-year 2023 financial performance before turning to our key achievements in Q4. I'm pleased to say that we booked a record revenue of $306.6 million for the fall year 2023. This was driving primarily by substantial year-over-year revenue increases in our EMEA business, which grew revenue 434% compared to 2022. We also saw double-digit percentage growth in both APAC and China. The overall business saw a top line increase of 50% year over year, and we delivered this strong revenue performance at a high growth margin, which increased to 90% from a 4% in the prior year. I'm also very pleased with the results from our Huzhou 3.1 expansion that was completed during the year. Starting in the second half of 2023, we were delivering qualified products to our diverse customer base from our latest fully automated production line. This demonstrates that we can successfully industrialize our technology at scale. Please join me on slide five to go over our successes in the final quarter of the year. Along with some challenges that we also faced, we saw our highest revenue quarter of $104.6 million, jumping 61% year over year, and we achieved an adjusted gross margin of 23.5%. We saw major successes in our commercial vehicle business, expanding relationships with OEMs worldwide. We are working with new manufacturers on testing our products for additional contracts in 2025. And we have begun to gain meaningful traction in specialized and differentiated vehicle segments. However, the year also brought challenges. we saw a challenging financing environment and reduced energy storage contract through mutual resolution with the customer and an overall negative market sentiment in both the sector and for rapid growth companies like ours. Turning to slide six, we have made some exciting business developments in our commercial vehicle business. We received Many new orders are delivered to customers of a variety of products, showing the strength of our technology portfolio. This included leading OEMs such as Eversun, MVLGMG, and Yongxin New Energy. Please join me on slide seven to go over some updates around our APAC operations. As I mentioned in the opening, Our Huzhou phase 3.1 automated line has been successfully brought online, is producing qualified 53-point amp-hour cell, and the products are being delivered to customers. We do not expect significant additional KPACs associated with phase 3.1 going into 2024. The APAC business generated revenue of $219 million in full year 2023, increasing 18% year-over-year. We anticipate that the APAC business will generate regional profitability as operations are now mature, self-funding, and achieving sustainable growth margins. We also expect further revenue expansion year-over-year. Our expectations are driven by two major components. First is the market in China. where we bring in stable revenue from our established base of EVOS OEMs. But we are also seeing promising expansion opportunities in the electrified mining and earth-moving segments, where our high-power products offer performance advantages. The second major contributor is the Indian market, where the EVOS segment is growing rapidly and is supported by government incentives with some of our major partners expected to benefit. Turning to slide eight, we will go over some updates around our EMEA operations. We saw electrifying growth in 2023 with original revenues up more than 434% year over year. We have localized the production of our VBA modules and anticipated customer demand will lead to increasing volumes. We also expect additional revenue growth in the region of 2024. Having narrowed our losses in 2023, we also have our sights set on regional break-even for the coming year. In addition to a developing pipeline of the new and exciting commercial vehicle customers, We see several catalysts for continuing growth in 2024. One of those is higher expected volume from eBus and LCV platforms. As we are seeing continual expansion and a demand in the segment, we also are seeing segments demand and are working with the leading refuse truck OEM with the demo expected at IAA 2024. Finally, join me on slide 9 to go over some updates for our U.S. operations. The challenging financing environment means that for the time being, we have got a clock spell as far as we can on our own balance sheet. Because of this, regional growth and profitability in APAC and the EMEA will be the key drivers for our business in 2024. until the third-party financing needed to complete the Phase 1A facility has been secured. Accordingly, we are not currently anticipating material production volumes or revenues from our Crossrail facility. We are also not expecting IRA 45X credits in 2024. Once we are able to secure financing, our current estimate is that an additional six to eight months is needed to bring Clarksville Phase 1A to SOP. With the majority of this time allocated to equipment installation, in the interim, we will be slowing pay packs and OPAC spend in the U.S. This slowdown will allow us to better manage liquidity, evaluate financing opportunities, and build out our U.S. operations for substantial success in 2025. Once we reach SOP, we anticipate generating IRA credits and delivering qualified products to commercial vehicle and energy storage customers in the U.S. The lack of funding in the U.S. has contributed to our assessment. There is currently a substantial doubt that we can continue as a growing concern without raising additional capital. and we are engaged in financing and customer activities to address this urgently. However, we remain bullish on the U.S. and the opportunity it presents to our business. The energy storage market continues to be an area with exponential growth, and there is significant customer interest in our Crossrail capacity given the advantages in security, battery supply that meets domestic contents requirement. On the commercial vehicle side, OEMs are increasingly electrifying their vehicle line UPS. We see demand for our varied technology across a wide area of segments and have numerous projects underway that we anticipate well created demand for class field production in 2025. So, 2023 was not without challenges. It was also full of successes and we are proud of our achievements in the last year. We are looking forward to executing on the many opportunities ahead of us in 2024. I will now turn the call over to Craig Webster to discuss financials in more detail.