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CE

CBAK Energy Technology, Inc. (CBAT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 net revenues fell 41% year over year to $34.94M as Dalian transitions customers from legacy 26650 cells to new 40135 format; consolidated gross margin compressed to 13.7% and EPS was a loss of $0.02 .
  • Versus Wall Street, revenue materially missed the S&P Global consensus ($34.94M actual vs $52.16M estimate; EPS -$0.02 vs $0.00), driven by the Dalian product portfolio upgrade and validation cycle; Nanjing’s 32140 line remained at full capacity but could not offset (*Values retrieved from S&P Global).
  • Management reiterated confidence in sequential recovery beginning in H2 2025 as the 40135 line completes construction and customers finish validation; a 4‑year high‑volume order with substantial prepayments is near finalization, with Southeast Asia manufacturing targeted to start mass production by mid‑next year .
  • Strategic actions and potential stock catalysts: $20M share repurchase program approved (to support bid-price compliance), continued 32140 market share traction (Q1 2025 shipments at 14.6% global share), and a U.S. JV with Kandi to localize pack assembly and longer-term cell manufacturing .

What Went Well and What Went Wrong

What Went Well

  • Nanjing’s 32140 flagship cells are at full capacity, with strong demand and profitability; management highlighted a healthy gross margin focus and potential significant recovery next year tied to the large 4‑year order .
  • Application mix: Light electric vehicles net revenues grew 88.4% YoY to $2.84M; EV batteries grew 11.9% YoY, partially offsetting residential energy storage weakness .
  • Strategic positioning: Q1 2025 32140 shipments captured 14.6% global share; progress on overseas manufacturing (Southeast Asia) to address tariff exposure, plus U.S. JV with Kandi for pack assembly and longer-term cell manufacturing .

What Went Wrong

  • Dalian’s product portfolio upgrade caused a pronounced residential energy storage revenue drop (-60.4% YoY) and consolidated gross margin contraction to 13.7%, driving an operating loss of $2.86M and EPS of -$0.02 .
  • Battery segment net revenues fell 54.6% YoY to $20.36M; battery segment net income dropped to $0.34M from $11.68M YoY due to the transition from 26650 to 40135 .
  • Sequentially, consolidated revenue slipped from Q3 2024’s $44.63M and EPS of $0.00 to Q1 2025’s $34.94M and EPS of -$0.02, reflecting transitional production and validation headwinds at Dalian and limited ability for Nanjing’s capacity to fully offset .

Financial Results

Consolidated YoY Comparison (Q1 2024 vs Q1 2025)

MetricQ1 2024Q1 2025
Net Revenues ($USD)$58.82M $34.94M
Gross Profit ($USD)$18.78M $4.80M
Gross Margin (%)31.9% 13.7%
Operating Income (Loss) ($USD)$10.26M -$2.86M
Net Income Attr. to Shareholders ($USD)$9.84M -$1.58M
EPS (Basic) ($)$0.11 -$0.02

Sequential Trend (Q3 2024 → Q1 2025)

MetricQ3 2024Q1 2025
Net Revenues ($USD)$44.63M $34.94M
Gross Profit ($USD)$6.95M $4.80M
Gross Margin (%)15.6% 13.7%
Operating Income (Loss) ($USD)-$0.83M -$2.86M
Net Income Attr. to Shareholders ($USD)$0.02M -$1.58M
EPS (Basic) ($)$0.00 -$0.02

Actual vs S&P Global Consensus (Q1 2025)

MetricConsensusActual
Revenue ($USD)$52.16M*$34.94M
EPS ($)$0.00*-$0.02

Values marked with * were retrieved from S&P Global.

Battery Segment KPI Summary (YoY, Q1)

Battery Business MetricQ1 2024Q1 2025
Net Revenues ($USD)$44.84M $20.36M
Gross Profit ($USD)$18.46M $4.72M
Gross Margin (%)41.2% 23.2%
Net Income ($USD)$11.68M $0.34M

Battery Segment Application Breakdown (YoY, Q1)

ApplicationQ1 2024 ($USD)Q1 2025 ($USD)YoY Growth
Electric Vehicles$0.48M $0.54M +11.9%
Light Electric Vehicles$1.51M $2.84M +88.4%
Residential Energy Supply & UPS$42.85M $16.98M -60.4%
Total Battery Net Revenues$44.84M $20.36M -54.6%

Balance Sheet Highlights (End of Period)

MetricDec 31, 2024Mar 31, 2025
Cash and Cash Equivalents ($USD)$6.72M $4.05M
Inventories ($USD)$22.85M $30.80M
Total Assets ($USD)$302.22M $311.46M
Total Liabilities ($USD)$182.15M $192.72M
Total Shareholders’ Equity ($USD)$121.67M $120.79M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dalian 40135 line capacity & timingH2 2025Introduce 2.3 GWh 40135 line by end-2025 (Q4 remarks) Construction completion by end of June; trial production in H2 2025 Raised timing specificity; accelerated near-term milestones
Nanjing capacity (Phase II)2025Add ~3 GWh (two 1.5 GWh lines) by end-2025 Reallocate 1.5 GWh to Southeast Asia; Nanjing incremental becomes 1.5 GWh Modified (partly shifted overseas)
Overseas manufacturing (Southeast Asia)Mid-2026 (prior)Exploring sites; supply from overseas by 2026 4‑year high‑volume order near finalization; mass production by mid‑next year; flexible lines (32140 & 40135) Pulled forward operational start; added order visibility
U.S. localization (Kandi JV)Multi‑yearNone previouslyJV to establish U.S. pack assembly near‑term; U.S. cell manufacturing longer‑term; CBAK 90% of cell JV New strategic initiative
Share RepurchaseMay 2025–May 2026NoneUp to $20M authorization to support bid-price compliance and return capital New capital allocation program

Earnings Call Themes & Trends

TopicQ3 2024 (Previous Mentions)Q4 2024 (Previous Mentions)Q1 2025 (Current)Trend
Product portfolio upgrade (26650 → 40135)Dalian 1‑month suspension to upgrade lines; tablet 26650 development 40135 capacity plan 2.3 GWh by end‑2025 40135 line construction finishing by end of June; H2 trial production Execution milestones tightening
32140 flagship performanceNanjing profitability; demand exceeds capacity 32140 at full capacity; 19% market share in 2024 32140 Q1 2025 shipments: 14.6% global share Sustained strong share; near‑term slight share normalization
Overseas capacity (tariffs mitigation)Exploring overseas due to client push; early stage Actively evaluating; aim to supply by 2026 Agreement in principle for 4‑year order; Southeast Asia mass production mid‑next year Visibility and timing improved
Regional demand (LEV in SE Asia)Strong LEV demand from India/Vietnam; import reliance Continued strong demand; capacity expansion planned LEV revenue +88% YoY; continued traction Positive momentum
Customer format preference (cylindrical vs prismatic)——Cylindrical preferred for high-voltage storage; design/space considerations Supports 32140/40135 strategy
Orders/backlogRMB 59.61M undelivered; large client orders discussed Orders as of Mar 10, 2025 total RMB 126.96M; key clients (PowerOAK, Viessmann, Anker) Near‑final 4‑year high‑volume order with prepayments Improving commercial visibility

Management Commentary

  • CEO: “As anticipated, we experienced a significant 41% year-over-year decline in net revenues… transitioning from Model 26650 to the more advanced Model 40135… we are confident… our revenues will begin to recover gradually” .
  • CFO: “Our Nanjing facilities continue to experience strong growth momentum… we are in the final stages of securing a long-term order… which we hope to finalize and share… in the near future” .
  • CEO on capacity: “The newly deployed manufacturing line for 40135 still has a capacity of 2.3 GWh… we anticipate construction… completed by the end of June… trial production in the second half of the year” .
  • CFO on overseas expansion: “We have now reached an agreement in principle… 4-year high volume purchase… substantial prepayments… new facility will begin mass production by mid next year… capable of producing both Model 32140 and model 40135 cells” .

Q&A Highlights

  • Capacity roadmap: Dalian 40135 line 2.3 GWh completing construction by end of June; Nanjing Phase II partially relocated (1.5 GWh) to Southeast Asia to address tariff risks and client needs .
  • Product format: Management emphasized cylindrical/large cylindrical advantages for high-voltage storage applications vs prismatic/pouch given space/design constraints .
  • Tariffs and demand timing: Customers aim to pull forward orders during tariff pauses and are pushing CBAK to relocate manufacturing; management indicated a deal was essentially closed, with final issues being resolved .
  • Sequential recovery path: Near‑term recovery dependent on 40135 validation and ramp; significant rebound expected with the large 4‑year order tied to Southeast Asia production .

Estimates Context

  • Revenue: Q1 2025 actual $34.94M vs S&P Global consensus $52.16M* — a significant miss, driven by Dalian’s product portfolio upgrade and validation cycle slowing residential energy demand (*Values retrieved from S&P Global).
  • EPS: Q1 2025 actual -$0.02 vs $0.00 consensus* — margin compression and operating loss during transition phase (*Values retrieved from S&P Global).
  • Estimate depth: Only one estimate was recorded for each of EPS and revenue for Q1 2025, limiting consensus robustness* (*Values retrieved from S&P Global).

Key Takeaways for Investors

  • Near-term headwinds but improving visibility: The 40135 line reaches construction completion by end of June with H2 trial production; customer validation underway suggests sequential improvement into H2 2025 .
  • Commercial catalyst: A 4‑year high‑volume purchase agreement with substantial prepayments is near finalization; Southeast Asia production targeted to start mass by mid‑next year, enabling meaningful revenue/earnings recovery in 2026 .
  • Product leadership: 32140 remains a flagship with strong global share (14.6% in Q1 2025), supporting mix and margin resilience as capacity ramps and order flow continues .
  • Strategic localization: U.S. JV with Kandi (near‑term pack assembly; longer‑term cell facility) and Southeast Asia lines mitigate tariff risks and align with IRA incentives, broadening market access .
  • Capital allocation: $20M buyback program provides technical support to the stock and signals management’s confidence in underlying fundamentals and margin profile .
  • Trading setup: Watch for announcements on the 4‑year order signing, 40135 line trial production commencement, and Southeast Asia facility progress — each could be step‑function catalysts for sentiment and estimate revisions .
  • Medium-term thesis: Margin recovery and growth depend on execution of 40135 ramp, 32140 capacity allocation, and tariff‑aligned localization; order visibility and prepayments reduce commercialization risk while the mix shifts to higher-demand formats .