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Kandi Technologies Group, Inc. (NASDAQ:KNDI) Q1 2024 Earnings Conference Call May 16, 2024 8:00 AM ET
Company Participants
- Kewa Luo – Investor Relations Manager
- Xueqin Dong – Chief Executive Officer
- Xiaoming Hu – Chairman of the Board
- Alan Lim – Chief Financial Officer
Conference Call Participants
- Michael Pfeffer – Oppenheimer & Company
- Steve Miller – Private Investor
- Terry McLemore – McLemore & Associates
- Arthur Porcari – Corporate Strategies
Operator: Greetings. Welcome to Kandi Technologies First Quarter 2024 Financial Results Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Kewa Luo, Investor Relations Manager. Thank you. You may begin.
Kewa Luo: Thank you, operator. Hello, everyone. Thank you for joining us on today’s conference call to discuss Kandi’s results for the first quarter 2024. Earlier today, we issued a press release covering the results. You can find a press release on the company’s website as well as from the newswire services. On the call with me today, are Mr. Xiaoming Hu, Chairman of the Board; Dr. Xueqin Dong, Chief Executive Officer; and Mr. Alan Lim, Chief Financial Officer. Dr. Dong will deliver prepared remarks in Chinese, which I will then translate. After that, we will have a Q&A session. Before we continue, please note that today’s discussion will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company’s actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company’s public filings with the SEC. The company does not assume any obligation to update any forward-looking statements, except as required under applicable law. Please note that unless otherwise stated, all figures mentioned during the conference call are in US dollars. With that, let me now turn the call over to our CEO, Xueqin Dong. Go ahead, Dr. Dong.
Xueqin Dong: [Foreign Language] Hello, everyone. I’m Xueqin Dong, the CEO of Kandi Technologies Group. Welcome to today’s conference call. We are pleased to report a solid start to the year, with total revenue for the first quarter, approximately $20.7 million and net income around $0.8 million. Despite some fluctuations in sales and overall income due to the adjustments in our sales strategy, our expansion in the North American market is progressing smoothly through collaboration with large nationwide chains. We have also been advances in the Southeast Asian and European markets, laying the groundwork for robust sales in upcoming peak season. It is with pride that we highlight our stable balance sheet and healthy financial addition. Additionally, we have repurchased 564,302 shares this quarter, reflecting our confidence in the company’s future growth. [Foreign Language] Currently, we are actively refining our product portfolio. Already in the first quarter, we have begun rolling out our rechargeable AA batteries to the market. Looking ahead, we are excited to introduce starter batteries and a more competitive lineup of all electric off-road vehicles and electric water sports products. We anticipate these new products will significantly drive our sales revenue upward. At the same time, we are gearing up to launch our limited edition golf cart collection. This unique series created in partnership with the National Football League and Lowe’s, will feature branding for all 32 NFL teams. This initiative is a clear indication of our confidence in our future growth and our steadfast commitment to delivering value to our shareholders. I am confident that our strategic adjustments will garner the outstanding and support of our shareholders. [Foreign Language] Now, we will move on to the Q&A session. Chairman Hu Xiaoming and I will answer your questions. And Ms. Kewa and Mr. Alan will provide translation for English questions. Please go ahead and ask your questions.
Question-and-Answer Session
Operator: [Operator Instructions] Our first question is from Michael Pfeffer with Oppenheimer & Company. Please proceed.
Michael Pfeffer: Hi. Thanks for taking my question. On the year-end 10-K press release, it was good to see the CEO for the first time mentioning Lowe’s and making what appears to be an attempt at a very positive comment for the balance of this year. However, I assume due to a translation error, which should have been a positive statement, ended up putting a negative spin on the stock that started the severe price decline. Management was immediately notified to the error, which should have been immediately corrected, but instead chose to ignore it. Here is an excerpt from the PR that contained the confusing error. Do you want to just translate that quickly?
Kewa Luo: Sure. [Foreign Language] Go ahead.
Michael Pfeffer: Thanks. Dr. Dong, CEO of Kandi commented, we acquired Northern Group to expand our sales channels. Moreover, we further strengthened our partnership with Lowe’s expanding to more than 10 supercenters in 2024 and thereby broadening our market coverage in North America. We’re proud to return to profitability in 2023, marking an important milestone in our development journey. Lowe’s refers to each of its 2,500 stores of supercenters in their advertising and promotions. The PR in question was the first time Kandi has even admitted in a PR that Kandi was stealthily doing business with Lowe’s since mid ’22. Without correcting that error in the PR, it gives an impression that Kandi is excited about Lowe’s adding another 10 of the supercenters, when in reality, Kandi at that time had long since opened up all of its 2,500 stores based on store managers’ discretion by last year’s end. Please translate that. Thank you.
Kewa Luo: [Foreign Language]
Michael Pfeffer: Also on the last conference call, Mr. Hu in response to questions stated. So for this year, on top of what we are working with the Lowe’s superstores, we have now added the corporation with more than a dozen or so of the retail change with different scales currently are working on child sales in those superstores. In addition, on top of the cooperation of the supermarket, we are working with the dealership with more than 300 partnerships during ’23. And in this upcoming 2024, we are trying to work with more than 1,000 dealerships in the US market. If you can just translate that and I’ll get to my questions quickly. Thank you.
Kewa Luo: [Foreign Language] Go ahead.
Michael Pfeffer: Okay. So the questions. Since Kandi products were already available in all Lowe’s supercenters at the time of the prior PR quote, what specifically was the CEO attempting to refer to with this partnership with Lowe’s expanding to more than 10 supercenters in the 2024 quote to broaden market coverage.
Kewa Luo: [Foreign Language]
Xueqin Dong: [Foreign Language] So first of all, in the last conference call, when we met about over 10 of the retail partners we are talking about, Lowe’s is one of the retail partners. And then speaking of Lowe’s, just want to clarify that we actually don’t have the access to all 2,500 of them that rather this portion of it is still expanding based on our negotiation and collaboration.
Xiaoming Hu: [Foreign Language] So and Mr. Hu would also like to add more color that, as I just mentioned just now, we don’t really have access to all the 2,500 of this retail stores of Lowe’s. And currently, we have roughly 500 stores, although maybe not every — those of the 500 stores we carry all of our products. It depends on the category of the products and type as well. And by the next few months, we hopefully will expand the retail stores working with Lowe’s up to like 600 or 900 maybe the end of the year. We expect the stores that will cover our products will be over 1,000. And of course, that’s our plan for now. So you’re going to be clear, the collaborating sale with them.
Michael Pfeffer: Okay. That’s give some clarity. Thank you. Regarding Mr. Hu’s comment on the last conference call was this dozen or so the retail change with different sales. Currently, child sales, like, confused with the CEO’s comments about the Lowe’s superstore sales in the year-end PR. So can you just kind of explain a little bit more about that comment? Was it related…
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