China Automotive Systems Inc (CAAS) 2022 Q3 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the China Automotive Systems' Third Quarter 2022 Conference Call. (Operator Instructions)

女士們先生們，早上好，歡迎來到中國汽車系統公司 2022 年第三季度電話會議。 （操作員說明）

It is now my pleasure to turn the floor over to your host, Mr. Kevin Theiss, Investor Relations.

現在我很高興將發言權交給東道主投資者關係部的 Kevin Theiss 先生。

Kevin, the floor is yours.

凱文，地板是你的。

Thank you, everyone, for joining us today. Welcome to China Automotive Systems' 2022 Third Quarter Conference Call. Joining us today are Mr. Jie Li, Chief Financial Officer of China Automotive Systems. He will be available to answer questions later in the conference call with the assistance of translation.

謝謝大家今天加入我們。歡迎來到中國汽車系統 2022 年第三季度電話會議。今天加入我們的是中國汽車系統公司首席財務官李傑先生。在翻譯的幫助下，他將在電話會議的稍後時間回答問題。

Before we begin, I'll remind all listeners that throughout this call, we may make statements that may contain forward-looking statements. Forward-looking statements represent the company's estimates and assumptions only as of the date of this call. As a result, the company's actual results could differ materially from those contained in these forward-looking statements. due to a number of factors, including those described under the heading Risk Factors in the company's Form 10-K annual report for the year ended December 31, 2021, as filed with the Securities and Exchange Commission and in other documents filed by the company from time to time with the Securities and Exchange Commission.

在我們開始之前，我會提醒所有聽眾，在整個電話會議中，我們可能會發表可能包含前瞻性陳述的陳述。前瞻性陳述僅代表公司截至本次電話會議之日的估計和假設。因此，公司的實際結果可能與這些前瞻性陳述中包含的結果存在重大差異。由於多種因素，包括公司向美國證券交易委員會提交的截至 2021 年 12 月 31 日止年度的 10-K 表格年度報告中風險因素標題下所述的因素，以及公司從不時與證券交易委員會聯繫。

If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial conditions may be materially and adversely affected as a result of a deteriorating market outlook for automobile sales, the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial conditions and results of operations. A prolonged disruption or any further unforeseen delay in our operations of the manufacturing, delivery and assembly process within any of our production facilities could continue to result in delays in the shipment of products to our customers, increase cost and reduce revenues.

如果不能及時有效地控制 COVID-19 的爆發，我們的業務運營和財務狀況可能會因汽車銷售市場前景惡化、地區和國家經濟增長放緩、流動性減弱和我們客戶的財務狀況或我們無法預見的其他因素。任何這些因素和我們無法控制的其他因素都可能對整體商業環境產生不利影響，在我們開展業務的地區造成不確定性，導致我們的業務以我們無法預測的方式遭受損失，並對我們的業務產生重大不利影響，財務狀況和經營業績。我們任何生產設施內的製造、交付和組裝過程的長期中斷或任何進一步不可預見的延遲都可能繼續導致向我們的客戶運送產品的延遲，增加成本並減少收入。

The company expressly disclaims any duty to provide updates to any forward-looking statements made in this call, whether as a result of new information, future events or otherwise.

公司明確表示不承擔任何更新本次電話會議中所做的任何前瞻性陳述的義務，無論是由於新信息、未來事件還是其他原因。

On this call, I will provide a brief overview and summary of the third quarter and first 9 months results for the period ended September 30, 2022. Management will then conduct a Q&A session. The 2022 third quarter and first 9 months' financial results are unaudited and all results are reported using U.S. GAAP accounting. For the purposes of today's call, I'll review the financial results in U.S. dollars.

在這次電話會議上，我將簡要概述和總結截至 2022 年 9 月 30 日的第三季度和前 9 個月的業績。管理層隨後將進行問答環節。 2022 年第三季度和前 9 個月的財務業績未經審計，所有業績均使用美國公認會計原則進行報告。出於今天電話會議的目的，我將回顧一下以美元計算的財務結果。

We will begin with a review of the recent dynamics of the Chinese economy, the automobile industry and China Automotive's market position. China's GDP growth of 3.9% year-over-year in the third quarter of 2022 was higher than a revised consensus projections of 3.4% growth and much higher than the 0.4% increase in the second quarter of 2022.

我們將首先回顧中國經濟、汽車行業和中國汽車的市場地位的近期動態。中國 2022 年第三季度 GDP 同比增長 3.9%，高於修正後的 3.4% 的普遍預期，也遠高於 2022 年第二季度 0.4% 的增幅。

Chinese industrial production trended upward at a 6.3% rate in September 2022, following a 4.3% rate in August and a 3.8% rate in July 2022. However, the Chinese real estate market remains in turmoil and the outlook for exports is uncertain given the foreign exchange volatility and the economic outlook for key trading partners.

繼 8 月和 2022 年 7 月分別為 4.3% 和 3.8% 之後，中國工業生產在 2022 年 9 月以 6.3% 的速度呈上升趨勢。然而，中國房地產市場仍處於動蕩之中，出口前景不確定，因為外國主要貿易夥伴的匯率波動和經濟前景。

Total vehicle sales in the third quarter of 2022 increased by 24.9% year-over-year with passenger vehicles up 36.6% year-over-year and commercial vehicles down 10.6% year-over-year according to data from the Chinese Association of Automobile Manufacturers, CAAM.

中國汽車工業協會數據顯示，2022年第三季度汽車總銷量同比增長24.9%，其中乘用車同比增長36.6%，商用車同比下降10.6% , 中國汽車工業協會。

Truck sales continued to be weak with a 10.8% year-over-year decline. These results were achieved despite Chinese supply chains continuing to be affected by COVID-19 lockdowns and travel restrictions affecting almost all provinces to some degree. Delays in raw material shipments and finished good deliveries, including for automobile, microchips and other components are still concerns for the automobile industry.

卡車銷量繼續疲軟，同比下降 10.8%。儘管中國供應鏈繼續受到 COVID-19 封鎖和旅行限制的影響，但仍取得了這些成果，幾乎所有省份都在一定程度上受到影響。原材料運輸和成品交貨延遲，包括汽車、微芯片和其他零部件，仍然是汽車行業關注的問題。

For the first 9 months ended September 30, 2022, CAAM reported automobile sales increased by 4.4% year-over-year. Passenger vehicle sales rose by 14.2% year-over-year with sedans 16.7% year-over-year higher and SUVs 15% higher year-over-year. However, on a year-over-year basis, MPV sales declined by 7.8% and cross vehicles were down by 14.6%, respectively.

截至 2022 年 9 月 30 日的前 9 個月，CAAM 報告汽車銷量同比增長 4.4%。乘用車銷量同比增長 14.2%，其中轎車同比增長 16.7%，SUV 同比增長 15%。然而，與去年同期相比，MPV 銷量下降 7.8%，跨界車銷量分別下降 14.6%。

For commercial vehicle sales, CAAM data showed that an overall sales decline of 34.2% year-over-year for the first 9 months of 2022. The truck market declined by 35.3% year-over-year and bus sales were down by 23.9% year-over-year. Despite the mixed results in the Chinese auto vehicle markets in 2022 third quarter, our net sales grew by 26.8% year-over-year. Sales of our traditional hydraulic products remained strong. Our Wuhu subsidiary sales, primarily the Chery Auto, were up 50.2% year-over-year and net sales into Brazil increased by 51.9% year-over-year.

商用車銷量方面，中汽協數據顯示，2022年前9個月整體銷量同比下降34.2%。卡車市場同比下降35.3%，客車銷量同比下降23.9% -超過一年。儘管 2022 年第三季度中國汽車市場的業績喜憂參半，但我們的淨銷售額同比增長了 26.8%。我們傳統液壓產品的銷售依然強勁。我們的蕪湖子公司銷售額（主要是奇瑞汽車）同比增長 50.2%，巴西的淨銷售額同比增長 51.9%。

Additionally, sale of electric power steering, EPS, by our Henglong KYB operation rose by 93.7% year-over-year. However, our sales to our Tier 1 customers in North America were down slightly. And our commercial vehicle's steering sales were flat, actually a solid result given the decline in the commercial vehicle sales in the third quarter. Most of our business segments achieved sales growth. Our Commercial Vehicle Products Division reported lower sales, which reflected the weak overall sales in the commercial vehicle sector.

此外，恆隆 KYB 業務的電動助力轉向系統 EPS 的銷售額同比增長 93.7%。然而，我們對北美一級客戶的銷售額略有下降。我們商用車的轉向銷量持平，鑑於第三季度商用車銷量下降，這實際上是一個不錯的結果。我們的大部分業務板塊都實現了銷售增長。我們的商用車產品部報告銷售額下降，這反映了商用車領域的整體銷售疲軟。

Our gross profit grew by 24.4% year-over-year, but the gross margin declined slightly to 15.2% from 15.5% in the third quarter of 2021, mainly due to changes in the product mix.

我們的毛利潤同比增長 24.4%，但毛利率從 2021 年第三季度的 15.5% 小幅下降至 15.2%，這主要是由於產品結構的變化。

Research and development expenses, R&D, increased by 66.7% year-over-year to $9.5 million in the 2022 third quarter as we grew our investments in new product development and to further build our technology base. Higher gross profit, stricter cost controls and higher other income helped generate income from operations of $4.9 million in the third quarter of 2022 compared to $0.6 million in the third quarter of 2021.

隨著我們增加對新產品開發的投資並進一步建立我們的技術基礎，研發費用 R&D 在 2022 年第三季度同比增長 66.7% 至 950 萬美元。更高的毛利潤、更嚴格的成本控制和更高的其他收入幫助在 2022 年第三季度產生了 490 萬美元的運營收入，而 2021 年第三季度為 60 萬美元。

Our 2022 third quarter income per share was $0.24 versus a loss per share of $0.01 in the third quarter last year. For the 9-month period, our income per share was $0.55 compared with $0.20 a year ago. Net cash provided by operating activities was $31.7 million in the first 9 months of 2022 compared with net cash used in operating activities of $5.9 million in the first 9 months of 2021.

我們 2022 年第三季度的每股收益為 0.24 美元，而去年第三季度的每股虧損為 0.01 美元。在 9 個月期間，我們的每股收益為 0.55 美元，而一年前為 0.20 美元。 2022 年前 9 個月經營活動提供的現金淨額為 3170 萬美元，而 2021 年前 9 個月經營活動使用的現金淨額為 590 萬美元。

We continue to develop our ERCB systems with our advanced driver assistance systems L4 platform, known as the AP04, can execute Level 4 autonomous driving systems. ERCB is a fully electric intelligence steering system for light- and medium-duty trucks and heavy-duty commercial vehicles. We will add the technologies of our subsidiary in Sweden, Sentient AB, to improve our NEV steering technology for autonomous driving products, targeting passenger and commercial vehicles.

我們繼續使用我們的高級駕駛員輔助系統 L4 平台（稱為 AP04）開發我們的 ERCB 系統，該平台可以執行 4 級自動駕駛系統。 ERCB是一款適用於輕型、中型卡車和重型商用車的全電動智能轉向系統。我們將加入我們在瑞典的子公司 Sentient AB 的技術，以改進我們面向乘用車和商用車的自動駕駛產品的新能源汽車轉向技術。

As of September 30, 2022, we had cash and cash equivalents and pledged cash of $131.7 million and working capital of $153.4 million. For the third quarter of 2022, we repurchased 382,418 common shares under our repurchase buyback program at an average cost of $3.59. Our share repurchase program can use up to $5 million to buy outstanding common shares through March 30, 2023, at a price not to exceed $4 per share.

截至 2022 年 9 月 30 日，我們擁有現金和現金等價物以及 1.317 億美元的質押現金和 1.534 億美元的營運資金。 2022 年第三季度，我們根據回購計劃以平均 3.59 美元的成本回購了 382,418 股普通股。我們的股票回購計劃最多可使用 500 萬美元購買截至 2023 年 3 月 30 日的已發行普通股，價格不超過每股 4 美元。

Free cash flow increased to $19.8 million compared with negative $11.7 million in the first 9 months of 2021. We are particularly encouraged by the September sales of vehicles in China. All categories of passenger commercial vehicles as well as new vehicles tracked by CAAM experienced a month-over-month increase in unit sales in September. These sales increases resulted from an improved supply chain of favorable government policies, including a 50% reduction in national purchase tax for some vehicles. Some of the favorable government programs may end at the end of 2022. So the remainder of 2022 maybe continued growth of automobile growth since purchasers take advantage of these incentives.

自由現金流從 2021 年前 9 個月的負 1170 萬美元增至 1980 萬美元。中國 9 月的汽車銷量尤其令我們感到鼓舞。中國汽車工業協會跟踪的所有類別的乘用車和新車在 9 月份的銷量都出現了環比增長。這些銷量增長得益於政府優惠政策改善供應鏈，包括部分車輛的國家購置稅降低 50%。一些有利的政府計劃可能會在 2022 年底結束。因此，由於購買者利用了這些激勵措施，因此 2022 年剩餘時間汽車增長可能會繼續增長。

Now let me review the financial results in the third quarter of 2022. Net sales increased by 26.8% to $137.2 million compared to $108 million in the same quarter of 2021. The increase in net product sales was due to a 17.3% gain in the company sales of hydraulic products and an increase of 52.4% in EPS net product sales. EPS net sales were $44.8 million or 32.7% of net sales compared with $29.4 million or 27.2% of net sales in the third quarter of 2021.

現在讓我回顧一下 2022 年第三季度的財務業績。淨銷售額增長 26.8% 至 1.372 億美元，而 2021 年同期為 1.08 億美元。產品淨銷售額的增長是由於公司 17.3% 的收益液壓產品銷售額和 EPS 產品淨銷售額增長 52.4%。每股收益淨銷售額為 4480 萬美元，占淨銷售額的 32.7%，而 2021 年第三季度為 2940 萬美元，占淨銷售額的 27.2%。

Net product sales in North America decreased by 4.8% to $29.5 million due primarily to changes in the product mix compared with $31 million for the same quarter in 2021. Net product sales in Brazil rose by 51.9% to $11.5 million due to higher demand. Gross profit was $20.9 million in the third quarter of 2022 compared to $16.8 million in the third quarter of 2021. Gross margin was 15.2% compared to 15.5% for the same period in 2021, mainly due to the change in product mix.

與 2021 年同期的 3100 萬美元相比，北美的產品淨銷售額下降 4.8% 至 2950 萬美元，主要原因是產品組合發生變化。由於需求增加，巴西的產品淨銷售額增長 51.9% 至 1150 萬美元。 2022 年第三季度的毛利潤為 2090 萬美元，而 2021 年第三季度為 1680 萬美元。毛利率為 15.2%，而 2021 年同期為 15.5%，這主要是由於產品結構的變化。

Selling expenses were $4 million in the third quarter of 2022 compared to $4.8 million in the third quarter of 2021. The lower selling expenses were mainly due to a decrease in transportation expenses. Selling expenses represented 2.9% of net sales in the third quarter of 2020 compared to 4.4% in the third quarter of 2021.

2022 年第三季度的銷售費用為 400 萬美元，而 2021 年第三季度為 480 萬美元。銷售費用減少的主要原因是運輸費用減少。 2020 年第三季度銷售費用占淨銷售額的 2.9%，而 2021 年第三季度為 4.4%。

General and ministrative expenses were $4.9 million in the third quarter of 2022 compared to $6.3 million in the same quarter of 2021. The decrease was primarily due to a decline in provision of credit losses provided for accounts receivable. G&A expenses represented 3.6% of net sales in the third quarter of 2022 compared with 5.7% of net sales in the third quarter of 2021.

2022 年第三季度的一般和行政費用為 490 萬美元，而 2021 年同期為 630 萬美元。減少的主要原因是為應收賬款計提的信用損失準備金減少。 G&A 費用佔 2022 年第三季度淨銷售額的 3.6%，而 2021 年第三季度占淨銷售額的 5.7%。

Research and development, R&D, increased by 66.7% to $9.5 million in the third quarter of 2022 compared to $5.7 million in the third quarter of 2021. R&D expenses represented 6.9% of net sales in the third quarter of 2022 compared with 5.3% of net sales in the third quarter of 2021. Higher R&D expenses were primarily due to increased investment for new projects.

研發費用在 2022 年第三季度增長 66.7% 至 950 萬美元，而 2021 年第三季度為 570 萬美元。研發費用佔 2022 年第三季度淨銷售額的 6.9%，而淨銷售額為 5.3% 2021年第三季度銷售額。研發費用增加主要是由於新項目投資增加。

Income from operations was $4.9 million in the third quarter of 2022 compared to income from operations of $0.6 million in the same quarter of 2021. Higher income from operations was mainly due to increased gross profit, a higher gain on other sales and greater cost controls in the third quarter of 2022.

2022 年第三季度的運營收入為 490 萬美元，而 2021 年同一季度的運營收入為 60 萬美元。運營收入增加的主要原因是毛利潤增加、其他銷售收益增加以及成本控制力度加大2022 年第三季度。

Other income was $0.7 million in the third quarter of 2022 compared with $2.4 million in the third quarter of 2021, primarily due to lower government subsidies received in the third quarter of 2022. Net financial income was $4.8 million compared with net financial expense of $0.8 million in the third quarter of 2021, mainly due to the foreign exchange volatility of the U.S. dollar against the RMB and the Brazilian real.

2022 年第三季度其他收入為 70 萬美元，而 2021 年第三季度為 240 萬美元，這主要是由於 2022 年第三季度收到的政府補貼減少。淨財務收入為 480 萬美元，而淨財務費用為 80 萬美元2021年第三季度，主要受美元兌人民幣和巴西雷亞爾匯率波動影響。

Income before income tax expenses and equity in earnings of accelerated companies was $10 million in the third quarter of 2022 compared to income before income tax expenses and equity in earnings of affiliated companies of $1.9 million in the third quarter of 2021. The higher income before income tax expenses and equity in earnings of associated companies was mainly due to increased income from operations compared with the third quarter of 2021. Income tax expense was $0.9 million in the third quarter of 2022 compared to an income tax expense of $2.4 million for the third quarter of 2021, which was mainly due to the valuation allowance recognized in the third quarter of 2021.

2022 年第三季度，加速公司的所得稅費用和收益權益前收入為 1000 萬美元，而 2021 年第三季度關聯公司所得稅費用和收益權益前的收入為 190 萬美元。收入前的較高收入與 2021 年第三季度相比，營業收入增加主要是由於營業收入增加所致。2022 年第三季度的所得稅費用為 90 萬美元，而第三季度的所得稅費用為 240 萬美元2021年，這主要是由於2021年第三季度確認的估值準備。

Net income attributable to parent company's common shareholders was $7.5 million in the third quarter of 2022 compared to a net loss attributable to parent company's common shareholders of $0.3 million in the third quarter of 2021. Diluted income per share was $0.24 in the third quarter of 2022 compared with a diluted loss of $0.01 in the third quarter of 2021. The weighted average number of diluted common shares outstanding was 30,640,260 in the third quarter of 2022 compared to 30,851,776 in the third quarter of 2021.

2022 年第三季度歸屬於母公司普通股股東的淨利潤為 750 萬美元，而 2021 年第三季度歸屬於母公司普通股股東的淨虧損為 30 萬美元。2022 年第三季度攤薄後每股收益為 0.24 美元相比之下，2021 年第三季度攤薄虧損為 0.01 美元。2022 年第三季度攤薄後流通在外普通股的加權平均數為 30,640,260 股，而 2021 年第三季度為 30,851,776 股。

Now I will briefly go over the 9 months' financial highlights. Net sales for the first 9 months of 2022 increased by 11.6% to $400.8 million compared with $359.2 million in the first 9 months of 2021. Gross profit for the first 9 months of 2022 increased by 11.4% to $58.4 million compared to $52.4 million in the corresponding period last year. Gross margin for the first 9 months of 2022 was 14.6%, also compared to 14.6% for the corresponding period in 2021.

現在我將簡要回顧一下這 9 個月的財務亮點。 2022 年前 9 個月的淨銷售額增長 11.6% 至 4.008 億美元，而 2021 年前 9 個月為 3.592 億美元。2022 年前 9 個月的毛利潤增長 11.4% 至 5840 萬美元，而 2022 年前 9 個月的毛利潤為 5240 萬美元去年同期。 2022 年前 9 個月的毛利率為 14.6%，而 2021 年同期為 14.6%。

For the 9 months ended September 30, 2022, gain on other sales amounted to $5.3 million compared to $2.5 million for the corresponding period in 2021. Income from operations was $10.5 million compared to net income -- I'm sorry, compared to income from operations of $4.9 million in the first 9 months of 2021.

截至 2022 年 9 月 30 日的 9 個月，其他銷售收益為 530 萬美元，而 2021 年同期為 250 萬美元。運營收入與淨收入相比為 1050 萬美元——對不起，與收入相比2021 年前 9 個月的營業額為 490 萬美元。

Net income attributable to parent company's common shareholders was $16.8 million compared with net income attributable to parent company's common shareholders of $6.1 million in the corresponding period last year. Diluted income per share was $0.55 in the first 9 months of '22 compared to diluted income per share of $0.20 for the corresponding period in 2021.

歸屬於母公司普通股股東的淨利潤為1680萬美元，而去年同期歸屬於母公司普通股股東的淨利潤為610萬美元。 22 年前 9 個月的每股攤薄收益為 0.55 美元，而 2021 年同期的攤薄每股收益為 0.20 美元。

Now a review of few balance sheet items. As of September 30, 2022, total cash and cash equivalents and pledged cash deposits were $131.7 million. Total accounts receivable, including notes receivable, were $208.6 million. Accounts payable, including notes payable, were $210.2 million.

現在回顧幾個資產負債表項目。截至 2022 年 9 月 30 日，現金及現金等價物和已抵押現金存款總額為 1.317 億美元。包括應收票據在內的應收賬款總額為 2.086 億美元。包括應付票據在內的應付賬款為 2.102 億美元。

Total parent stockholders' equity was $303.2 million (sic) [$302.2 million] as of September 30, 2022, compared to $321 million as of December 31, 2021.

截至 2022 年 9 月 30 日，母公司股東權益總額為 3.032 億美元（原文如此）[3.022 億美元]，而截至 2021 年 12 月 31 日為 3.21 億美元。

Net cash provided by operating activities was $31.7 million in the first 9 months of 2022 compared with net cash used in operating activities of $5.9 million in the first 9 months of 2021. Payments to acquire property, plant and equipment were $11.8 million compared with $5.3 million in the first 9 months of 2021.

2022 年前 9 個月經營活動提供的現金淨額為 3170 萬美元，而 2021 年前 9 個月經營活動使用的現金淨額為 590 萬美元。購買不動產、廠房和設備的付款為 1180 萬美元，而 2021 年前 9 個月為 530 萬美元2021 年前 9 個月。

For the business outlook, management has increased its revenue guidance for the full year 2022 to $540 million. This target is based on the company's current views on operating and market conditions, which are subject to change.

對於業務前景，管理層已將 2022 年全年的收入指引上調至 5.4 億美元。這一目標是基於公司目前對運營和市場狀況的看法，這些看法可能會發生變化。

With that, operator, we're ready to begin the Q&A.

有了這個，接線員，我們就可以開始問答了。

(Operator Instructions) Your first question is coming from William Gregozeski from Greenridge Global.

（操作員說明）您的第一個問題來自 Greenridge Global 的 William Gregozeski。

Great quarter. I have a couple of questions. Sales to the U.S. were lowest in about 2 years. Is there any reason for that? And are we going to see that reverse coming up here?

偉大的季度。我有一些問題。對美國的銷售額是大約 2 年來最低的。有什麼理由嗎？我們會在這裡看到這種逆轉嗎？

Okay. (foreign language)

好的。 （外語）

[Interpreted] To change this quarter, the change of sales to the North America market is primarily due to the product mix change as we sell a wide range of steering product based on functions and different pricing, too. So in this particular quarter, we happen to sell more lower-priced product, and we believe this can change as well going forward.

[解讀]本季度的變化，北美市場銷售額的變化主要是由於產品組合的變化，因為我們銷售的轉向產品種類繁多，也基於功能和不同的定價。所以在這個特定的季度，我們恰好銷售了更多低價產品，我們相信這種情況也會在未來發生變化。

Now the other thing it's also been developing is we have been working on a few other new opportunities. So we're developing new customers in North America as well. So we'll give you a report where we have a major breakthrough.

現在它也在發展的另一件事是我們一直在努力尋找其他一些新機會。因此，我們也在北美開發新客戶。所以我們會給你一份我們有重大突破的報告。

Okay. Great. And then on the EPS side, obviously, huge growth in the quarter. What are you looking at from that in the fourth quarter and in '23?

好的。偉大的。然後在每股收益方面，很明顯，本季度出現了巨大的增長。你在第四季度和 23 年看到了什麼？

(foreign language)

（外語）

[Interpreted] Our EPS sales has experienced a pretty healthy and strong growth in the last 2 years. If you look at the first 9 months of 2022, we already booked USD 120 million in sales from the EPS, electric power steering products. And that representing 62.8% year-over-year growth. And we believe this -- we're going to continue to grow into the -- throughout the fourth quarter with a similar pace. And looking into 2023, we believe we can achieve another around 50% growth from -- on a year-over-year basis.

[解讀] 我們的 EPS 銷售額在過去 2 年中經歷了相當健康和強勁的增長。如果你看看 2022 年前 9 個月，我們已經從 EPS、電動助力轉向產品中獲得了 1.2 億美元的銷售額。這代表了 62.8% 的同比增長。我們相信這一點——我們將在整個第四季度以類似的速度繼續增長。展望 2023 年，我們相信我們可以再實現約 50% 的同比增長。

You said 5-0 percent?

你說 5-0%？

5-0.

5-0。

Okay. Okay. Great. And then are we going to see the margins expand as well because it really didn't in the third quarter? Are we going to see that get up in that upper teens next year?

好的。好的。偉大的。然後我們是否會看到利潤率也擴大，因為它在第三季度確實沒有擴大？我們會在明年看到那個十幾歲的人起床嗎？

(foreign language)

（外語）

Short answer is yes. (foreign language)

簡短的回答是肯定的。 （外語）

[Interpreted] Okay. So it's the -- as we grow -- as we continue to experience significant growth for our EPS, electric powering steering, product volume, as the volume continues to pick up, we will see the gross margin will start to go up as well. As you know, we'll continue to achieve better economy of scale. And when the EPS gross margin goes up, it's also going to benefit our blended gross margin, overall gross margin.

[解釋] 好的。因此，隨著我們的成長，隨著我們的每股收益、電動助力轉向、產品數量繼續顯著增長，隨著數量的不斷增加，我們將看到毛利率也將開始上升。如您所知，我們將繼續實現更好的規模經濟。當每股收益毛利率上升時，它也將有利於我們的混合毛利率，即整體毛利率。

So we are pretty optimistic for next year in terms of gross margin. Now this particular quarter, third quarter, our gross margin is slightly soft, is mainly due to the product mix and because we're selling a little higher proportion of low gross margin product. But looking forward, we believe with the continued growth of EPS product volume and the recovering -- ongoing recovery of the commercial vehicle market, we believe the margin will recover next year.

因此，我們對明年的毛利率非常樂觀。現在這個特定的季度，第三季度，我們的毛利率略微疲軟，主要是由於產品組合，因為我們銷售的低毛利率產品比例略高。但展望未來，我們相信隨著 EPS 產品數量的持續增長和商用車市場的持續復甦，我們相信明年的利潤率將會恢復。

Okay. Great. And then last question is, can you guys provide an update on how things are going with Sentient and your investment there?

好的。偉大的。最後一個問題是，你們能否提供有關 Sentient 的最新進展以及你們在那裡的投資情況？

(foreign language)

（外語）

[Interpreted] Okay. So Sentient, overall, we're very pleased with the progression. First, they signed a very sizable contract with [Mobil] recently, and we're very proud of them. And we are looking into -- in the mid-2023, we'll start mass production. And then it'd gradually ramp up to full production -- reaching the full production capacity somewhere in 2024. And we're also working together to provide a solution, a product to BYD. As you know, the largest electric vehicle producer in China is probably in a war right now.

[解釋] 好的。所以 Sentient，總的來說，我們對進展感到非常滿意。首先，他們最近與 [Mobil] 簽署了一份非常大的合同，我們為他們感到非常自豪。我們正在研究——在 2023 年年中，我們將開始量產。然後它會逐漸增加到滿負荷生產——在 2024 年的某個時候達到滿負荷生產能力。我們也在共同努力為比亞迪提供解決方案和產品。如你所知，中國最大的電動汽車生產商現在可能正處於戰爭之中。

The volume, our technical solution in both hardware and software solution, is going to be very meaningful. It's going to bring very meaningful revenue to us. And we're looking at about 200,000 units a year will be coming from this new business opportunity. So it's pretty exciting for us.

卷，我們在硬件和軟件解決方案方面的技術解決方案，將是非常有意義的。它將為我們帶來非常有意義的收入。我們預計每年約有 200,000 個單位將來自這個新的商機。所以這對我們來說非常令人興奮。

Great. And so is that BYD, is that a signed contract or just something you're working on and that's the potential value?

偉大的。比亞迪也是如此，這是一份已簽署的合同，還是您正在從事的工作，這就是潛在價值？

(foreign language)

（外語）

[Interpreted] We're in the development contract stage. Yes. After that, then we'll start to go into the full commercial contract.

[解讀]我們正處於開發合同階段。是的。之後，我們將開始簽訂完整的商業合同。

(Operator Instructions) Okay, we don't appear to have any further questions in the queue. I'm now going to hand back over to Kevin for any closing remarks.

（操作員說明）好的，隊列中似乎沒有任何其他問題。我現在要將任何結束語交還給凱文。

We thank you for your participation in today's conference call. Please be safe, and we look forward to speaking with you in the future.

我們感謝您參加今天的電話會議。請注意安全，我們期待將來與您交談。

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

謝謝你們，女士們，先生們。這確實結束了今天的電話會議。此時您可以斷開電話線，度過美好的一天。感謝您的參與。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[此記錄中標記為 [已翻譯] 的部分由現場通話中的口譯員說出。]