China Automotive Systems (CAAS) 13 Nov 242024 Q3 Earnings call transcript

Greetings. Welcome to the China Automotive Systems Third Quarter 2024 Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Kevin Theiss.

You may begin.

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

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

we will Litigation meaning the listeners of Private Securities remind Before Act that we of call, within this begin, forward-looking statements make statements I Reform XXXX. may that all throughout may contain the

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

costs to in a the and XX, annual of from factors Results and and impact company of cause the Securities our forward-looking time for report as to As result, could under documents XXXX, company's differ other ended with the XX-K filed Factors to number uncertainties business those statements Exchange filed of the provide the September X-month any actual are are in XXXX. expressly revenue. from year environment operations. GAAP for control our to we the A materially in on beyond result the factors our then predict by these Securities a processes our adverse cannot Management period the of Operations reduced future of of of could delays have a overall suffer factors, ended regions business, company conduct disruption financial a results within forward-looking and we to results brief operations described call, Risk statements On otherwise. and assembly the including unaudited result this The in time as events duty XX, those the cause the any contained the XXXX Commission I The in that reported disclaims the whether December materially of in heading conduct effect results Form with customers, to business third where delay in and an and Any our shipment information, new ways facilities and quarter quarter U.S. and due and the or condition made business, and provide Q&A a and accounting. session. Commission. our Exchange of could will other adversely in company's production updates increased products using overview call, any delivery and this financial summary will prolonged or third unforeseen results manufacturing, in any

results will today, position. economy Chinese U.S. industry of call dollars. purposes in recent dynamics with review our and We'll automobile and a financial business the our For the of the begin review of some I quarterly highlights, market of

of an the sales third year-over-year second in products over steering of the quarter XX.X% in growth net increase of year-over-year the increased Our XXXX, quarter by XXXX. XX.X%

Third grew our year-over-year EPS X.X% quarter steering, year-over-year. of sales our products with by surging electric traditional XX.X% sales steering by products power

in our primarily rebounded passenger decline the XX.X%. in our North KYB of by EPS double-digit by American XXXX. business a sales the demand our Internationally, rose vehicle were to Chery the America by and were reported quarter million. XX.X% XX.X%. from XX.X% which did markets, sales as Chinese million of Auto into $XX.X third Sales increases Stellantis, grow sales sales vehicles to $X.X by to domestic units All sales decline by year-over-year, North commercial to shipments up reduced our In higher headlong reported to units

XXXX X.X% in increase a Our the Brazilian experienced third operations quarter.

real economy third of weakness estate the The to with increased the aggregate economy, X.X% XXXX. in macro Chinese the For quarter Chinese with the in demand X.X% show year-over-year XXXX in second the in by third ongoing GDP compared of quarter quarter downturn. growth continues

the investment passenger China asset customers units increased the of price X.X% sales However, by monetary economic the from X.X fixed while relatively X.X% units, passenger Loan vehicle to stay combined million growth although year-over-year despite year-over-year, sensitive. by by retail risk-averse by somewhat September XX.X sales industrial of million year-over-year months year-over-year XXXX first by statistics has According increased year-over-year, to favorable activity grew declined policies. year-over-year XXXX. X.X% by January more vehicles demand to Association Of sales units. of increased Chinese of to commercial XX.X Automobile this sales rose X.X% Manufacturers, weak CAAM, the has X.X% for X million to and and stabilized X% as and during period remained commercial total, car

from terms benefited to vehicle by sales passenger sales a subsidies XX.X% up the aided energy the energy motor in month vehicles Exports China. by XX.X% older New share vehicles X sales. $X,XXX an XX.X% industry new in for more in market as loan electric September for car September the all trading subsidies the X.X trade-in grew Encouragingly, Passenger of gained automotive year-over-year units by year-over-year vehicle vehicles. sales increase X.X% Purchase vehicle increased and by OEMs, million to to favorable ended auto accelerated of auto better government and increased for per of XX, XX.X% some cars vehicle XXXX. of October. policies months has vehicle government and

in $XX.X gross the change the per margin quarter third Cost in margin operating XXXX. profit controls XXXX in XX% income XXXX the resulting X.X%, of rose gross expenses quarter. compared mix of net $X.XX almost third the reduced quarter $XX.X of lower gross quarter of product was the quarter X.X% by in to Diluted XXXX. was $X.XX in and in with third the to contributed to compared XXXX. XX% the in third our third Our share million, year-over-year, an quarter compared third by income operating X% million improvement A

in the September For million the sales our XXXX. period X $XXX.X million to XX, XX.X% same period increased months $XXX.X first to XXXX, by ended compared in

cash the year-over-year to X of the operations XXXX compared XX.X% million in per by of of for XX.X% margin million X earnings Income gross months months $XX.X increased XXXX. operating XX.X% same in in cash This X-month of from last XXXX. approximately first million the X in XXXX was first $X.XX Our paid was of diluted cash provided August the million dividend of and with from period late from the share growth $XX.X increased same XX.X% by $X.XX were $XXX.X year. with our to compared plus to in common the Diluted in per Net activities XXXX our or of special funds increased $X.XX reflects months XXXX. share $XX.X cash to flow XXXX. X first per the by share and first were XXXX months earnings sales internal of per September period $X.XX cash share months of for dividend and paid generation. shareholders. first $XX.X million compared Cash pledged A equivalents confidence flow and in as to our X reward cash XX, sustainable

We & reach, with and can BYD, a America, also Tier Ford celebrated America, and as From the the a Mahindra South listing, include manufacturing Mahindra accomplish. small India. in XXth what Chinese anniversary we leaders and serving manufacturing NASDAQ of vehicle North company global highlighting domestic domestic small OEM established whose have market, operations our Chinese Stellantis, X such Asia Europe, Motor India serving companies

of EPS are Europe. are systems traditional advanced Sentient technologies our products expanding driver being rapidly Our assist with and products AB steering as even the operations continue enhanced our our to grow in

third year-over-year of to before before the XXXX due Selling the X by to increased stable from the North product the third higher XXXX. foreign in for foreign decrease expense expense of net the and to X.X% X.X% net to XXXX X.X% intangible third commercial of third on of changes million American to was $X.X in quarter mainly income for was settlement quarter million volatility. XX.X% X.X% global year-over-year in was steering million product by new companies million $X.X to the and The expense parent Now in losses third $XX.X million $XXX.X markets products compared Income demand the XXXX. the to sales quarter the Henglong's X.X% to which to third tax of to net September XXXX. Net income XX.X%. million tax rose in G&A, third third to in margin to in of the XX% million in in third X% income million parent income financial compared the million XXXX for of tax in was $X.X million third one expenses the quarter the of by third of XXXX. compared the customer. in rose and activities decreased to expense Research third in the increase was number sales Auto expense million passenger compared for to in was XXXX. income in third XXXX. affiliated the quarter of the expenses quarter primarily in million equity of other Net third of of other caused increased in quarter increased quarter in related XXXX company's third XXXX. quarter was third exchange XXXX. represented XXXX from XX.X% XX.X% months XX% increased compared operations sales XXXX. XXXX. year-over-year to the of XXXX to from XXXX was the XX.X% $X.X in quarter compared in third months earnings increase was tax for the increase G&A and of of of XX,XXX,XXX million XXXX in $X.X of by by ended $X.X for Net $X.X Sales Exports the $X.XX quarter Net quarter of projects. period in EPS onetime Gross American quarter of the bad products sales compared third million in third Net higher quarter development $X.X attributable exchange the million nearly million in the decreased expense $XX.X compared debt entities the General income $X.XX $XXX.X compared the X.X% the Other expense XX, income, This $XX.X let expenses, were the of XXXX. million of the earnings in to to XXXX in in primarily XXXX. low $X.X XXXX of $XX.X expense by of to was gross $XX.X net third third of Gain financial change in PRC to the in compared compared increased million from third XXXX net the XXXX. is was $X.X EPS Gross 'XX compared from for $X.X quarter million review income $X.X in sales total XXXX, $XX.X the third in quarter was compared million systems XXXX parts XX% North XXXX. of provisions $XX.X million and million of Interest mix third quarter the grew due expenses related administrative $X.X of quarter XX, and a net million resulted compared $X.X to in of represented year-over-year XX.X% of million XXXX. The to equity compared was and the million $XX.X quarter products the million me to Diluted miscellaneous GILTI X quarter to financial period to Brazil increased $X.X XXXX financial quarter the in XXXX. third by quarter of earnings quarter in by XXXX. million in third and X.X% million weighted in expenses per the results compared increase X.X% third million third September September to third for an to million average third of and the million XXXX. XXXX. of the of of $X.X quarter of the the for income shareholders Net R&D quarter the compared an XX.X% affiliated third to change compared quarter quarter for to of of The year-over-year quarter XXXX sales expenses, XX.X% Income of due Sales the $XX.X same in reversal receivables. logistic of $XX.X the of traditional third companies Chery in XX, year-over-year net due of share ended due $XX.X the million sales by of Sales XXXX. diluted to to $XX.X $XX.X customers to by the declined compared of common in ended months the XX.X% to revenue. to in quarter of XX,XXX,XXX of X million the quarter the expenses to third third a quarter to XX% the vehicle due and decreased in quarter XXXX, year-over-year quarter to of in demand. R&D, by subsidiaries lower $XX.X $X profit sales grew to expenses. net $X.X primarily decreased compared primarily of to of third for to XXXX, due for sales in The to for third XXXX. outstanding in compared attributable quarter represented the the in of XXXX company's of million to tax XXXX. sales of of quarter costs of tax in third shares common million Income same rose was sales third XXXX. the quarter income for quarter quarter XXXX. Selling to quarter compared of the the $XX.X third to R&D shareholders to sales reduction primarily compared $XX.X quarter in and steering the warehouse million vehicle same quarter XXXX XXXX. third of margin R&D XXXX,

the Now results primarily X to in the $XXX.X first to due from reviewing increase the months operations sales XXXX of the XXXX from attributable corresponding] was to the million million $X.XX the first diluted months X first X compared period XXXX the increased shareholders $XX.X million months to million $X.X Gain period. X to in XXXX. products. in months XXXX months Net per company's -- $XXX.X year. of months first first shareholders million $XX.X million Income in profit gross X attributable X compared period XXXX. margin sorry, of increased share months months months by to of Net to [ income in XXXX compared increased X XX.X% the in X of corresponding in first first for year-over-year XXXX, EPS gross of $XX.X first year-over-year an income to sales per I'm XX.X% the X from was in of compared $XX.X XXXX. both company's million XX.X% million year-over-year and million of first first the million in $X.X on XX.X% $XX.X million to $XX.X sales in the of of the net to traditional steering months months XXXX. parent in $X.XX increased $X.X common from in last Diluted X by -- X-month other share by of the the in were XXXX. in to X of earnings months XX.X% parent of corresponding earnings X

over Now I'll highlights. some sheets balance go financial and other

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

business Our current months plus $XXX.X was current the million was in company's based X.X with to compared X-month $XX.X operating months from approximately market XXXX. XXXX. plant $XXX full ratio XX, liabilities operating year Management to to acquire that's of XXXX. the X The change. equipment on Q&A subject of working XXXX has of September activities $XX.X capital, the was total million that, This is ready million which conditions, we current are were assets compared cash on provided raised first million With current XXXX the the $XX.X Net in first begin million revenue the now $XX.X for and target as total by million session. $XXX and million. first operator, are in the to guidance outlook. to X and Payments views period property, the

Instructions] is [ private Gary Nash first [Operator from investor. question a ] for Your today

clearly the me in me Can having on Can some clearly? was I everyone hear because hearing hear issues everyone side.

Yes.

X please, the would first income I if you for describe question the subsidiaries China? My have tax is, questions. expense settlement Okay. in please onetime

[Interpreted] Yes.

the totaled related It's China China, to a tax came It's profit outside USD on shareholders you the that's the dividend called pay they in So withholding China. dividend. X.XX quarter dividend to And This the government. time. process had Chinese shareholders. to tax the company, earn a tax will China It special distribute dividend we million. at years onetime the to and to one then your declared distribute have triggered to a to of and of over $X.X parent question related to subsidiary onetime Gary, the the XXXX, and from in third our we distribute CAAS's that

if taxes third why GILTI second you the in indulge my did increase XXXX? And question is, quarter of me, Okay. the

tax, in product [Interpreted] Since a a And Trump that's design U.S. for a tax. tax Gary, your from U.S. starting their such the tax This a tax subject Great. it's enacted on of question second XXXX. their tax. GILTI subsidiary -- product outside the by GILTI particular to back profit administration foreign XXXX. in reform is a company, earned

and to we And tax income, tax? that, was every or numbers. is we since income on million. detailed compliance, pretax do the how math this particular calculate pretax result paid accrued calculation year's This of okay? based XXXX, a some In So pretax XXXX, year. have $XX As profit in previous give you such

And we to calculate a million so for quarter, and accrue pay that then XXXX, and $XX million. base every will that use we as approximately amounted $X.X to and

business However, as significantly, our our already XXXX, shareholder, know, was so you has as a grown profit.

for Our of tax went million. going XXXX. to $X.X per a a is result to quarter we're And $XX for and the result that, million calculate that profit base that use XXXX. And GILTI as as to of the

this the tax there GILTI why is So QX of XXXX. reason item is see increase significant such in you a

Jonathan Your investor. a next question is from Navis, private

creates My on volatility losses. question the is company impact What income is reduce exchange doing exchange foreign quarterly volatility to profits? the or of sometimes foreign

in of of to deal we the business regions of this in we your we question footprint, different Brazil, with we ForEx business have pretty in these, the China, global and on world. have on we Because bigger have have different a earnings. [Interpreted] business do honest, a Regarding task have business to To we particular currencies. and area we do as potential have be have other United impact in the areas footprint, States,

mitigate the We the tools to to to experiment have ForEx financial impact. however, hasn't various the been we of and started satisfactory. or tools last result tried try some And very the year

result using next the we haven't is we tools seen stopped wanted. to step do the we we're so because those And going have

manage in forward, and tools of for financial there with going a have risk. discussion us institutions some can large global we ForEx to to a if us So are to see number better solutions help the

question private is Jessica investor. Your Instructions] [Operator a today next from Lin, for

segments contribute $XXX to the guidance was expected in wondering for increase to what business are XXXX? just to I million sales the

to we to color contributing to can or with April, growth. of our pricing actually pleased And business to question, it's our May overall on that segment strategy. you going as adjustment why of some healthy We has the area after particular So share. a the early because little very increase is no increase We're and and area assessment the targeted and the we're a of made our very [Interpreted] time, further of market shareholders. your also the period has on share and pricing give take to we every guidance. there's experienced that's But proactive market as is challenges, being opportunities decided goal

XX% you follow you a has As sales of our And auto stats, third such million, represents about growth industry the has booked a in the results, domestic well industry. market $XXX as hasn't so able in China. been third doing we quarter, see a whole register domestic result that and are been that, our market if is as know quarter about strategy growth Chinese China you year-over-year But the working. our to because

And market share. share in by reflected that's our growth, in BYD. are, traditional as customer, well. also, we is product power gaining product, hydraulic product. which flagship product, fact, EPS the our growth new in steering inside our our growing export And growing we're in our our largest And market that's also also we're electric So in witnessed market

are are right we and demand. with type of meet working producing we the customers, overall, the product to their So best

why the $XXX as we $XXX. we the guidance the result decided And are that, year low a million of to to quarter, that's so whole confident fourth and see increase more from to

[Audio the will session, Gap] We remarks. have Instructions] call end I the and turn now over Kevin to the for reached of closing [Operator question-and-answer

you speaking call. to Thank with on quarterly next attending call, we look and you, for the everybody, forward today's

you your participation. concludes for lines Thank disconnect at and your Thank conference, This time. today's this may you. you