China Automotive Systems, Inc. (CAAS) on Q1 2021 Results - Earnings Call Transcript

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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Kevin Theiss, Investor Relations for China Automotive Systems. Thank you. You may begin. Kevin Theiss: Thank you, everyone, for joining us today. Welcome to China Automotive Systems 2021 First Quarter Conference Call. Joining us today are Mr. Qizhou Wu, Chief Executive Officer; and Mr. Jie Li, Chief Financial Officer of China Automotive Systems. They will be available to answer questions later in the conference call with the assistance of translation. Operator: Thank you. At this time, we'll be conducting a question-and-answer session. Unidentified Company Representative: Okay. Hi, operator. Hi, Melissa. So we have some questions from our analyst Bill Gregozeski, Greenridge Capital - Greenridge Global. He - due to the travel schedule, he is unable to attend the call. So he has emailed his questions. So he has the following five questions. First question, can you break out the revenue from Brazil in first quarter 2021 compared to first quarter 2020. And where did that large Stellantis order start? Qizhou Wu: Okay. The answer for the first question, the revenue from Brazil market in 2020 first quarter was about $2 million. But it quickly increased to $67 million in the first quarter 2021. That's representing more than 200% increase. And in terms of when the order started with Stellantis. That order started in the end of 2020, so in the fourth quarter of 2020, in December more specifically. Unidentified Company Representative: Then we have the second question. The sales of the EPS products seem to be accelerating, is this related more to the growth in the market or demand for your EPS product? Qizhou Wu: The growth of our EPS product sales is mainly driven by the demand - market demand for our EPS products. If you look at the overall passenger auto sales in China, in the first quarter, it's a phenomenal - we saw a phenomenon growth. The overall year-over-year growth for auto sales is over 70%. But if you look at our EPS product sales, we grew more than 200%. That clearly outpaced the overall market. And mainly attributable - these kind of growth mainly attributable to our large customers like Great Wall, Chilly, JAC and their order of EPS product. And these orders start to piling in the fourth quarter of 2020 already and we see its continuing accelerating in the first quarter of 2021. Unidentified Company Representative: Now, we'll switch to the G&A side. And the question three is the G&A expenses was lower than each of the last three quarters. What's the good range we should expect for this going forward? Qizhou Wu: Yes, in the first quarter of 2021 we are - we underwent a restructuring. So we have streamlined our operations especially in the managerial and administrative category and the non - especially the non-manufacturing staff. We have consolidated - we have done some consolidation and so our G&A expenses is about down 20% - G&A area we have managed to reduce by 20%. And going forward, you should see a similar trend continue in the following quarters. Unidentified Company Representative: Question four, the fourth question is, can you talk more about $1.4 million loss from affiliated companies I did not see a discussion on the course of that in the 10-Q? Qizhou Wu: Okay. The loss from affiliated company is mainly from our investment in a - in the investment fund. And we disclosed in the past we invested in a few venture capital fund mainly targeting in the automotive technology space. And some of our investment went public in the last 12 months. The market has been quite fluctuating in the last few quarters, especially in the first quarter of 2021. So this booking was mainly due to one of the investment, one of our portfolio company went public and their stock has suffered a decline in the first quarter. And so we have made the booking in the first quarter. Unidentified Company Representative: Now the last question, what are you budgeting for CapEx in 2021 and 2022 and what will be spent up? Qizhou Wu: Okay. The CapEx budgeting for 2020 was about $18 million. 2022 is about $20 million. The - most of those budget will go into the maintenance CapEx, but also a portion that will go into the new projects mostly in the EPS category as we will continue to invest in electric motor technologies. So that would be the most of the use of the CapEx. Unidentified Company Representative: With that operator, we can take questions from the queue if there is any. Operator: Thank you. There are no questions at this time. Thank you. This concludes today's question-and-answer session. I'll turn the floor back to Mr. Theiss for any final comments. Kevin Theiss: I want to thank you for your participation in today's conference call. Please be safe, and we look forward to speaking with you again. Thank you. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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