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China Automotive Systems (CAAS)

Participants
Kevin Theiss Investor Relations
Qizhou Wu Chief Executive Officer
Call transcript
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Operator

Greetings, and welcome to the China Automotive Systems First Quarter 2021 Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. for Systems. Relations Investor Theiss, China Automotive Kevin Thank you.

may begin. You

Kevin Theiss

for us you, Call. to China Thank Welcome Conference Automotive joining Quarter today. everyone, First Systems XXXX

us the Systems. They Officer; be Chief translation. available Chief Qizhou questions are with will Officer Mr. later the answer in of Financial Automotive Jie Li, call Joining Executive China of to today conference Mr. and Wu, assistance

remind we contain begin, I'll all may forward-looking statements we throughout call, listeners Before this may make that statements. that

company's assumptions only the the estimates of this of represent date statements Forward-looking and as call.

and an delays the XXXX, economic in effect of and actual duty other these customers, cannot As and any facilities have the to our ways to products of national effectively The we to forward-looking continue to summary the within this in operations. could result, including foresee. our the our those on prolonged liquidity is factors of beyond condition our On then Form environment, quarter of our cause XX, financial revenue. heading deteriorating or materially or be a will the as from in a in If Any we operations will the of to business financial and as business and the and new COVID-XX controlled, predict US automobile shipment delivery Exchange provide session. in December increased impact annual XX, disruption our A ended to customers the and growth, and may result contained conduct filed information, financial of adversely for our The disclaims adverse weakened factors this suffer condition Commission company sales, overview the number in could time could these company's delay outlook in those statements and to our regions and and expressly of company control Management of production result and events operations regional of year using of the overall cannot reported due conduct documents condition future further business, provide result with results statements uncertainty materially affected market or a and that unseen for the of the made Factors any as following unaudited, differ we for whether cause and other call, factors results otherwise. manufacturing, costs timely other slowdown any the assembly in not business under processes any from Securities company's Risk that where business forward-looking brief a call Q&A first a quarter I first ended period materially in described GAAP and results XXXX Commission. outbreak factors, by results accounting. Exchange XXXX. updates filed the time Securities in are are the a financial with March XX-K reduced the report

today, dynamics recent and I review a the Automotive's automobile of financial the purposes economy, begin We'll of industry will market call dollars. For with the as the US in of position. our Chinese results review China

$XX.X climbed and of other the quarter by sales vehicle XXX% commercial sales generated vehicle year-over-year passenger were as segments were anti-overloading national Electric enforcement Chinese net of year-over-year, quarter the in export key comparison projects of increased year-over-year, impact China essentially XXXX, in growth This XXXX. infrastructure year-over-year, the up XX.X%. increased Chinese by to year-over-year. initiation Automobile is industrial sales and vehicle compared Chinese by partially reaching Improved first XXXX, each to numbers our combination fourth hydraulic Vehicle COVID-XX to The sales by year-over-year projects. sedans. to of and first with of from sale full XXX.X% by in over National of by year-over-year, the the sales of first the XXXX products in Sales We XX% quarter COVID-XX to China overall million vehicles XX.X% the XX.X% to emission of automobile the XX.X% XXXX passenger represented in commercial quarter total standards, due XXXX. The These XX% economy XX.X% rose year-over-year. of rose the stronger all our the the the XXXX. marker that year-over-year. in to of steering from move China. electric the a sales statistics by of growth of first outsell from According low the Chinese in were recovery by the report grew restrictions represented grew sales quarter the China quarter and are CAAS, pleased first XX% sales XX% production higher XX.X% Manufacturers, vehicle XX.X% sales quarter SUV in branded $XXX.X power in total million of quarter - CAAM, of XXXX. rose XX% exports sales a the imports partially automobile of and grew reflect In pandemic XX.X% first for generated VI of Association and sales first in grew of year-over-year, China. continued by automobiles the in grew GDP

year-to-year. and However, quarter alone, by strongly XX.X% first sales automobile the XXXX with ended March rising XX.X% by quarter-to-quarter

markets, the as vehicle through market, operating first rebounded well. Each our all strongly sales the OEM main export passenger of compared XXXX. quarter sales Chinese quarter and first in and generated the our of market last achieved Chinese growth the growth Sales commercial quarter the market, vehicle vehicle market the in Chinese units to profits Our OEM of passenger year. three same

number XXXX, have EPS for units our to in OEM the OEMs our begun approximately XXX,XXX Sales Beijing Auto, begun motors. X JAC we have Chinese Chery had commercial market market electric of the Tier in selling the of more quarter the vehicle America of as large American grew first our into end using Great the products to at EV Wall, of products, and our The both announced is previously North and supplied be XX.X% aftermarket. of in outlook EPS As customers a increased Auto XXXX in North including products XXXX. to year-over-year by vehicle Sales

XX.X% from of XXXX. by year-over-year, operations in stable first XXX.X% expenses operating margin. increased Our This with with the year-over-year. quarter gross profit increased resulted income climbing gross year-over-year a combination Total XX.X% compared

net net first our parent company's XXXX. to For common of income in of first income quarter or attributable of a XXXX, slight diluted million, share to was shareholders us the loss compared quarter per $X.XX, $X.X the basically

a commonly autonomous lane industry to milestone. assistance company's driving quarter assist, With and year-over-year, the investment data first advanced of in the system. development and the first and announced system proprietary parking by which technology XXXX. as is to traffic as of automobile vehicles' or keeping ADAS rate the functions a create in automatic driver our company jam more increased main quarter, the referred part change assist, XX.X% program during with centering assist EPS new communicates research We This the industry automobile rising of Chinese in integrates lane we system

drove to house Chinese For the entire the a domestic design from cycle producer product steering first development in testing. time

Wall, We OEMs received Chery developed purchase software. key Auto, the JAC, such and the been systems for Great also proprietary of control A this advanced as orders steering foreign steering algorithms number Chrysler have domestic CS Automobiles. for from

other products resources and We strength remains improve shareholder to to our will as growth provide in Building our enhance new value. the well provide the a support priority future customers. future introduce continue to to current advanced as top products products, financial

and company $XXX.X March pledge XXXX. million equivalents from Our was cash cash in cash XXXX. end XXXX to XX, as $XXX $XXX.X stockholders of total million March parent the equity XX, Total million at and of rose

We rate of in expect the There the XX.X% first economy than to XXXX. the grow Chinese experienced slower continue was quarter XXXX. will in

sale EPS products been have demand domestic international of advanced continues We products both markets. expand hydraulic greater advanced to our and and for and in driving the autonomous experiencing

less the costs $X.X financial and in in with the first first first XXXX. to the $X.X were and and the of - Research earnings quarter period $X.X million first increase were $X.X income to of in first income X.X% million of in XX% The first with for X.X% income quarter in million million primarily XXXX. the XX% million other increase in of equity quarter due the quarter foreign first gross to compared of XXXX net generally to year-over-year compared due affiliated expense in increased net was XXXX. quarter Export first million XXXX before due quarter million of Interest $X.X the sales the XXXX. period diluted first compared common the primarily Budget to first air represented R&D the in Net was let consistent quarter $XX.X $X of XX% XXXX. the with companies the was $XX.X same million the Other of compared This the share million to first in expenses the $X.X compared sales Income, $XX.X X.X% was million of compared of income. for in first economy the compared before growth for electric the operating power income net G&A in steering first the This the quarter of first in $XX.X million, product the net less loss the profit Net of increase in in Net the compared first to and compared $XX.X first weighted represented the first personnel XXXX. the a represented was $X.X Selling compared Net quarter in of XX,XXX,XXX equity due million net sales quarter in to million EPS in of quarter in to expense XXXX. mainly expenses XXXX the XXXX for first higher post to X.X% and The $X.X traditional steering was $XX.X margin net to compared $X.X XXXX the of the in compared first for quarter XXXX, million Chinese of net support and Chinese $X.X of of higher of the review XXXX million company's XXXX Gross primarily of in the quarter expenses. was Development loss. in first expenses, first product parent million of was ended of XXXX primarily $X.X R&D XXXX $X.X million sales of demand nil of profit to rose of X.X% net to first XXXX. to of first XXXX the higher million in of in in XXXX. number higher million XXXX. in were of million million XXXX to quarter million and in first in increase of Income of XXXX $X.X received Gain XXXX. quarter compared $X.X of the shareholders The compared rose by affiliated compared in share shares by to first and sales automobile XXXX. from first XXXX mainly of for shares of to $X.X quarter Net financial with XX.X% expenses of earnings compared Selling the quarter in subsidies of X.XX XXXX quarter G&A of first parts, expenses $X.XX mainly primarily freight G&A $X.X of XXXX. first quarter $X.X of of financial XXXX. selling due quarter loans. charges. the net XXXX. of XXXX. to to in the due a sales. the first was million XXXX. compared in compared net from The expense quarter quarter quarter in quarter to XXXX. of per million, first The $XXX.X first and was was XXXX income tax three $XX XX.X% sales the to million to sales administrative operations million first the company's total to was XXXX. common point operations sales quarter to XX.X% $X.X in to March of quarter million by quarter Gross same in of reduction XXXX. shareholders the Now, of million quarter million, XX, three quarter compared increased XXX.X% sales in the average XX,XXX,XXX same was of the first increase XX.X% government the sales in months XXXX. $X.X in to XXXX. quarter sales million months the expense million other expenses, in quarter common General income to first due the increase expenses X.X% on $X.X outstanding from was expenses to expenses in The due the of exchange increase and quarter attributable volumes for period $X.X attributable in $XX.X the first income first and higher to tax per in million quarter results was sales of XXXX quarter in of the companies first quarter in parent to compared million Diluted was to quarter XXXX sales increased were me XX.X% of was the to in sales of COVID-XX. XXXX. recovery products $XXX.X the increase rose

Now we few will balance review items. sheet a

to million $XXX.X of XX, pledged March XX, equity March equivalents notes and And including bank short-term of $XXX Total were cash of stockholders million. accounts million. As receivable as $XXX.X government were were total Accounts payable million. $XXX.X cash million XXXX, notes XXXX XX, parent $XXX.X were company Total and December $XX.X receivable was including compared loans million. as payable XXXX.

raised year operating $XXX target in or management Q&A. has operator, that This For are revenue market guidance the $XXX full begin ready million the for company's the the to With million. on views based business outlook to we're XXXX the subject from is to which conditions, change. current

Operator

be a question-and-answer this [Operator Thank time, conducting you. At we'll session. Instructions]

Unidentified Company Representative

Okay. Hi, operator. Melissa. Hi,

to from questions Global. Capital the attend the some is Bill call. analyst Greenridge have Gregozeski, we So our travel to - He Greenridge due - schedule, he unable

his emailed questions. So he has

So questions. following five he has the

did XXXX Brazil you compared from First quarter XXXX. break order large question, Stellantis revenue can out that the to first in first start? where And quarter

Qizhou Wu

than it question, [Interpreted] first $XX answer XXXX. was first million. Okay. The quarter revenue That with more the end of in for the the XXXX million specifically. But the fourth the started first terms of That's December order when more the from in increased to And XXX% in Stellantis. of Brazil quarter so in market $X in in quickly increase. about quarter order started representing XXXX, XXXX,

Unidentified Company Representative

market growth the have EPS be sales in more we of the The related the your to EPS product? question. second products this demand is or accelerating, to Then the seem for

Qizhou Wu

demand by The EPS market products. of our product driven mainly our demand growth - EPS the for is sales [Interpreted]

Wall, the kind passenger its and China, phenomenon these EPS EPS in start - mainly XXXX than JAC If at quarter - overall of accelerating in orders market. of we order piling is continuing XX%. growth. of auto more our like their attributable our overall attributable product. to growth quarter Chilly, the in And growth first XXXX. XXX%. outpaced we if for customers fourth overall grew And large auto of clearly quarter, in see the saw Great we already look to these mainly the the and year-over-year you it's first a look sales The sales That over sales, product a But you at phenomenal

Unidentified Company Representative

G&A switch question we for was than the to range we'll quarters. G&A last is Now, the the What's three of And the expenses three side. should good going forward? this lower each expect the

Qizhou Wu

quarter Yes, the we first [Interpreted] restructuring. we in XXXX underwent of - are a

administrative - category in non managerial staff. the So especially operations the the especially we streamlined our and non-manufacturing have and

consolidated forward, XX%. and by down reduce some We following quarters. - done expenses see XX% the we in similar managed going our have to trend And G&A area G&A a have consolidation we is continue - should you so about have

Unidentified Company Representative

more XX-Q? loss fourth the see million that the discussion is, question $X.X of a I talk from four, in about did affiliated Question not on can course companies you the

Qizhou Wu

capital is in affiliated [Interpreted] invested loss from company technology a in space. the the from Okay. a we investment - automotive And fund mainly targeting fund. disclosed investment The venture our in few we in in the mainly past

of some The XXXX. our quite first the in of the in been went last last XX And market in investment quarter fluctuating public quarters, the few has especially months.

one this decline stock our to portfolio booking in went has one of suffered due company So of public their was quarter. first the and the investment, mainly a

And have so first we the the in booking quarter. made

Unidentified Company Representative

you Now are budgeting what and XXXX for what XXXX spent the and question, up? CapEx last in be will

Qizhou Wu

[Interpreted] million. Okay. the but $XX portion as about was the into about a category - continue of those maintenance that into technologies. we CapEx, The The new will million. to CapEx also will budgeting in for the will XXXX XXXX go in is mostly invest budget most $XX EPS motor electric projects go

of CapEx. So the use be most the that the would of

Unidentified Company Representative

With there questions we that queue take if is any. can the from operator,

Operator

Theiss Thank I'll concludes This for floor final Instructions] today's Thank session. you. time. any questions you. turn this There comments. question-and-answer back no at [Operator the to are Mr.

Kevin Theiss

safe, Thank in forward want you. for look thank I to again. call. with we Please today's to speaking be you conference your and you participation

Operator

This Thank concludes you. today's conference.

your time. at lines disconnect participation. may for You Thank you this your