CBAK Energy Reports Second Quarter and First Half 2023 Unaudited Financial Results

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PR Newswire

DALIAN, China, Aug. 9, 2023

DALIAN, China, Aug. 9, 2023 /PRNewswire/ -- CBAK Energy Technology, Inc. (NASDAQ: CBAT) ("CBAK Energy," or the "Company") a leading lithium-ion battery manufacturer and electric energy solution provider in China, today reported its unaudited financial results for the second quarter and first half of 2023 ended June 30, 2023.

First Half of 2023 Financial Highlights

Net revenues from sales of batteries were $51.8 million, an increase of 27.2% from $40.7 million in the same period of 2022.
Net revenues from batteries used in light electric vehicles were $3.1 million, an increase of 309.9% from $0.8 million in the same period of 2022.
Net revenues from batteries used in electric vehicles were $2.0 million, an increase of 6454.4 times from $303.0 in the same period of 2022.
Net revenues from uninterruptible supplies were $46.8 million, an increase of 17.0% from $40.0 million in the same period of 2022.
Gross margin for the battery business was 12.8%, an increase of 3.4 percentage points from 9.4% in the same period of 2022.

Yunfei Li, Chairman and Chief Executive Officer of the Company, commented, "During the first half of 2023, our battery business had strong revenue growth of 97% in the first quarter; however, during the second quarter, we began to experience a temporary slowdown in sales, as a result of the volatility of lithium carbonate prices, a crucial raw material. Despite this short-term challenge, we remain confident that our revenue growth will bounce back in the upcoming quarters as many of our clients will place new orders in the second half of the year when prices begin to stabilize. Moreover, we have successfully entered into a series of partnerships with Echom, HiNa Battery, Viessmann Group, and Hello Tech, which will help sustain our topline growth and further strengthen our lead in China's battery market."

Xiangyu Pei, Interim Chief Financial Officer, added, "We are pleased to report strong half year results marked by sustainable growth and increased profitability. Thanks to our product's strength and optimized operating efficiency, our gross margin rose to 15.4%, compared with 11.0% for the same period last year. Going forward, our top priorities are to accelerate sales growth and improve profitability. Our solid balance sheet gives us the flexibility to continue investing in our future by accelerating our research and development across product lines as well as expanding our technology and business initiatives to create value for both our users and our shareholders."

Second Quarter of 2023 Business Highlights & Recent Developments

In July, CBAK Energy announced that its subsidiary, Dalian CBAK, reached agreements with the Shangqiu Urban-Rural Integration Demonstration Zone and partnering entities, which will increase Dalian CBAK's capacity by approximately RMB300 million worth of the 26700 cylindrical batteries.
In July, CBAK Energy announced that its subsidiary, Nanjing CBAK, entered a 3-year strategic partnership for a RMB180 million lithium-ion battery order with Echom, a well-known industrial design group in China.
In June, CBAK Energy announced a strategic agreement with HiNa Battery, a unicorn and leading player in the sodium electricity industry, and Hello Tech, the parent company of Jackery, a premier global portable power supplier, respectively, during its first Corporate Open Day.
In June, CBAK Energy announced that it is the first company worldwide to achieve mass production of large cylindrical sodium batteries and full-scale commercialization along the entire value chain from upstream to downstream during the Corporate Open Day.
In June, CBAK Energy received an order worth EUR116.5 million (approximately USD124.5 million) of lithium-ion batteries from the Viessmann Group, a leading European heating, cooling, and renewable energy system provider, for 2024.
In June, CBAK Energy entered into a strategic agreement and secured RMB25 million in funding from Hello Tech, the parent company of Jackery, a leading global portable power supplier, for the sodium-ion battery R&D program.

Second Quarter of 2023 Financial Results

Net revenues were $42.4 million, representing a decline of 24.7% compared to $56.3 million in the same period of 2022. This decline was primarily attributable to a decrease in sales by the battery business and Hitrans, an indirect majority-owned subsidiary engaged in the production and sale of battery raw materials. The decline in battery sales was primarily driven by the price volatility of lithium carbonate, leading clients to hold off on placing new orders during the second quarter. However, we are optimistic that demand will rebound in subsequent quarters as prices stabilize.

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Among these revenues, detailed revenues from our battery business are:

Battery Business	2022 Second Quarter	2023 Second Quarter	% Change YoY
Net Revenues ($)	25,715,415	22,232,003	-13.5
Gross Profits ($)	2,836,287	3,425,147	20.8
Gross Margin	11.0 %	15.4 %	-
Net Revenues from Battery Business on Applications ($)
Electric Vehicles	(6)	135,731	-
Light Electric Vehicles	671,444	1,147,902	71.0
Uninterruptable supplies	25,043,977	20,948,370	-16.4
Total	25,715,415	22,232,003	-13.5

Cost of revenues was $38.5 million, representing a decrease of 24.2% from $50.8 million in the same period of 2022. This decrease was primarily due to the decline in net revenues.

Gross profit was $3.9 million, representing a decrease of 29.8% from $5.5 million in the same period of 2022. Gross margin was 9.2%, compared to 9.8% in the same period of 2022.

Total operating expenses were $7.7 million, representing an increase of 42.1% from $5.4 million in the same period of 2022.

Research and development expenses were $3.0 million, an increase of 29.6% from $2.3 million in the same period of 2022.
Sales and marketing expenses were $1.0 million, an increase of 38.1% from $0.7 million in the same period of 2022.
General and administrative expenses were $3.6 million, an increase of 46.0% from $2.5 million in the same period of 2022.
Provision for doubtful accounts was $0.13 million, compared to a recovery of doubtful accounts of $0.06 million in the same period of 2022.

Operating loss amounted to $3.8 million, compared to an operating income of $0.1 million in the same period of 2022.

Finance income, net amounted to $0.3 million, compared to a finance expense of $0.6 million in the same period of 2022.

Change in fair value of warrants was $0.04 million, compared to $2.13 million in the same period of 2022. The change in fair value of the warrants liability is mainly due to the share price decline.

Net loss attributable to shareholders of CBAK Energy was $2.6 million, compared to a net income attributable to shareholders of CBAK Energy of $0.8 million in the same period of 2022.

Net loss attributable to shareholders of CBAK Energy (after deducting the change in fair value of warrants) was $2.7 million, compared to $1.3 million in the same period of 2022.

Basic and diluted loss per share were both $0.03, compared to nil in the same period of 2022.

First Half of 2023 Financial Results

Net revenues were $84.8 million, representing a decrease of 37.8% from $136.6 million in the same period of 2022. This decrease was primarily attributable to a decrease in sales by the battery business and Hitrans, an indirect majority-owned subsidiary engaged in the production and sale of battery raw materials.

Battery Business	2022 First Half	2023 First Half	% Change YoY
Net Revenues ($)	40,736,101	51,835,386	27.2
Gross Profits ($)	3,819,211	6,638,505	73.8
Gross Margin	9.4 %	12.8 %	-
Net Revenues from Battery Business on Applications ($)
Electric Vehicles	303	1,955,979	645,437.6
Light Electric Vehicles	760,208	3,115,959	309.9
Uninterruptable supplies	39,975,590	46,763,448	17.0
Total	40,736,101	51,835,386	27.2

Cost of revenues was $78.0 million, representing a decrease of 37.9% from $125.7 million in the same period of 2022. This decrease was primarily due to the decline in net revenues.

Gross profit was $6.8 million, representing a decrease of 37.4% from $10.9 million in the same period of 2022. Gross margin was 8.0%, compared to 7.9% in the same period of 2022.

Total operating expenses were $13.4 million, representing an increase of 11.4% from $12.0 million in the same period of 2022.

Research and development expenses were $5.4 million, a decrease of 3.1% from $5.6 million in the same period of 2022.
Sales and marketing expenses were $1.7 million, an increase of 10.3% from $1.5 million in the same period of 2022.
General and administrative expenses were $6.1 million, an increase of 29.2% from $4.7 million in the same period of 2022.
Provision for doubtful accounts was $0.26 million, compared to $0.21 million in the same period of 2022.

Operating loss was $6.7 million, compared to $1.2 million in the same period of 2022.

Finance income, net was $0.3 million, compared to a finance expense of $0.6 million in the same period of 2022.

Change in fair value of warrants was $0.12 million, compared to $3.76 million in the same period of 2022. The change in fair value of the warrants liability is mainly due to the share price decline.

Net loss attributable to shareholders of CBAK Energy was $4.0 million, compared to a net income attributable to shareholders of CBAK Energy of $1.2 million in the same period of 2022.

Net loss attributable to shareholders of CBAK Energy (after deducting the change in fair value of warrants) was $4.1 million, compared to $2.5 million in the same period of 2022.

Basic and diluted loss per share were both $0.05, compared to $0.01 for both basic and diluted income per share in the same period of 2022.

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