Good morning, everyone. Welcome to China Automotive Systems First Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode, and we will be opening for questions following the presentation. If you would like to ask a question, you may press star one on your phone keypad to join the queue. If anyone should require operator assistance during this conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Kevin Theiss. Kevin, over to you. Thank you. Thank you everyone for joining us today. Welcome to China Automotive Systems 2024 First Quarter Conference Call. Joining us today are Mr. Hanlin Chen, Chairman, 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. Before we begin, I will remind all listeners that throughout this call, we may make statements that may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements represents the company's estimates and assumptions only as of the date of this call. As a result, the company's actual results may differ materially from those contained in these forward-looking statements due to a number of factors, including those described under the heading Risk Factors and Results of Operations in the company's Form 10-K Annual Report for the year ended December 31, 2023, 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. Any of these factors and other factors beyond our control could have an adverse effect on our overall business environment, cause uncertainties in the region where we conduct business, cause our business to suffer in ways that we cannot predict and materially affect our impact and seriously impact our business, financial condition and results of operations. A prolonged disruption of any unforeseen delay in operations of the manufacturing, delivery, and assembly processes within any of our production facilities could result in delays in the shipment of products to our customers, increased costs and reduced revenue. The company expressly disclaims any duty to provide updates to any forward-looking statements made in this call, whether the result of new information, future events or otherwise. On this call, I will provide a brief overview and summary of the first quarter for the period ended March 31, 2024. Management will then conduct a question and answer session. The 2024 first quarter results are unaudited and financial results are reported using U.S. GAAP accounting. For the purposes of our call today, I will review the financial results in U.S. dollars. We will begin with a review of some of the company's highlights, recent dynamics of the Chinese economy and automobile industry, and our market position. We had a solid performance in the first quarter of 2024. Gross profit grew by 11.6% year over year, with a higher gross margin of 17.3% in the first quarter of 2024. Income from operations was 26% higher, as cost controls limited operating expense growth to 2.8% versus the 11.6% increase in gross profit. Both selling and G&A expenses rose in the quarter. We returned to positive cash flow from operations of $10.5 million, and diluted income per share increased by 17.4% to $0.27 in the 2024 first quarter. Total cash, cash equivalents and short-term investments were $135.8 million, or approximately $4.50 per share at March 31, 2024. Net sales decreased by 2% to $139.4 million, as sales of traditional steering products declined by approximately $2.4 million due to lower sales of vehicles using these steering products. We experienced different results in two of our large international markets. Sales in Brazil continued to grow with a 17.6% year-over-year sales rise, due mostly to higher volume by Fiat. North American sales declined mainly due to temporary lower product sales, as Stellantis and Volvo reported total vehicle shipments declined in North America during the first quarter of 2024. Stellantis sales partially reflected this, transitioning toward more NEV models in the 2024 first quarter. Our electric power steering, EPS sales, were essentially even with last year. As a percentage of total sales, EPS remained consistent around 34% of total sales. Despite sales, slight sales decline in 2024, we remain confident in our sales growth in 2024. According to statistics from the China Association of Automobile Manufacturers, CAAM, sales of both passenger and commercial vehicles increased by approximately 10% in the first quarter of 2024. Sales of the new energy vehicles totaled approximately 30% of total vehicle sales in China. Part of this automobile growth is due to new purchase subsidies, the scrapping of down payments, and lower prices for certain vehicle models. In addition, automobile exports increased by 33.2% from a year ago.... Research and development expenditures were reduced even as we decreased new projects for our traditional steering products, while expanding our EPS portfolio of products. We closely coordinate our R&D with our OEM customers to ensure our new products meet their requirements and those of the end users. As we expand our EPS product line, we can supply our steering products to more vehicles of our current customers, as well as attract new customers. R&D activities continue to evolve our EPS products' performance and quality. We are making progress to include the technologies of our Sentient subsidiary to advance our ADAS products and develop prototypes for some current customers. Changes in our recent product sales mix start with our new products and have resulted in improved gross margins as greater economies of scale are gained. We believe the growing demand for hybrid and NEV passenger vehicles in North America is creating another growth opportunity for our EPS products, in addition to our current traditional product sale, sales sold there. Our customer, BYD, is one of the largest EV producers in China, and we have new products under development to enhance their vehicles' steering performance. We remain confident in the outlook for the Chinese automobile industry and its economic outlook. China's gross domestic product in the 2024 first quarter grew by 5.3% year-over-year. China's retail consumer goods sales grew by 4.7% year-over-year, and investment in fixed assets were up by 4.5% year-over-year in the first quarter of 2024. Automobile growth continues to look promising in China with the new promotional sales policies, more affordable cars being introduced, and automobile exports, a sensitive international issue, which should continue for the foreseeable future, even if some markets implement protective measures. A number of vehicle OEMs in North America have announced the retirements of their internal combustion engines driven passenger vehicles with more retirements planned. European vehicle OEMs are also scheduling the retirements of their internal combustion engine vehicles. China, being the world leader in NEV production and exports, with the largest portfolio of NEV products, will be a major beneficiary of this trend. Now, let me review the financial results in the first quarter of 2024. Net sales decreased by 2% to $139.4 million in the first quarter of 2024, compared to $142.2 million in the first quarter of 2023. Net sales of traditional steering products and parts were $92 million, compared to $94.4 million for the first quarter of 2023. Net sales of electric power steering, EPS products and parts, were $47.4 million for the three months ended March 31, 2024, compared with $47.8 million for the same period in 2023. EPS product sales for the first quarter of 2024 were approximately 34% of total net sales. North American net exports were $30.4 million, compared to $34.7 million in the first quarter of 2023, primarily due to lower demand of passenger vehicles by Stellantis and Jeep. Henglong Brazil net products increased by 17.6% to $12.7 million in the first quarter of 2023, compared to $10.8 million for the same period in 2023, due to higher sales to Fiat. Sales volumes to Chery Auto Limited also increased, and sales for other entities increased by 31.2% to $29 million, mainly due to higher sales by Wuhan Jielong and Wuhan Hy-Sino. Steering product sales to the commercial vehicle markets of $16.8 million were consistent with the sales in the 2023 first quarter. Gross profit increased by 11.6% to $24.1 million from $21.6 million in the first quarter of 2023. Gross margin in the first quarter of 2024 was 17.3%, compared with 15.2% gross margin in the first quarter of 2023, primarily due to changes in the product sales mix and a decrease in sales unit costs for the three months of March 31, 2024. Gain on other sales was $0.5 million, compared to $0.7 million in the first quarter of 2023. Selling expenses increased by 20.6% to $4.1 million from $3.4 million in the first quarter of 2023. This increase in selling expenses was primarily due to higher office expenses. Selling expenses represented 2.9% of net sales in the first quarter of 2024, compared to 2.4% in the first quarter of 2023. General and administrative expenses, G&A, increased to $5.5 million, compared with $4.8 million of the first quarter of 2023, mainly due to higher payroll-related expenses and maintenance expenses. G&A expenses represented 3.9% of net sales in the first quarter of 2024, compared with 3.4% of net sales in the first quarter of 2023. Research and development expenses, R&D, decreased by 17.2% to $5.3 million, compared to $6.4 million in the first quarter of 2023... mainly due to decreased R&D activities for new projects of the traditional products. R&D expenses represented 3.8% of net sales in the first quarter of 2024, compared to 4.5% in the first quarter of 2023. Other income was $2.4 million for the first quarter of 2023, compared to $1.5 million for the first quarter of 2023, mainly due to higher government subsidies in the first quarter of 2024. Income from operations was $9.7 million in the first quarter of 2024, compared to income from operations was $7.7 million in the first quarter in 2023. The 26% increase in 2024 first quarter income from operations was primarily due to higher gross profit, partially offset by a smaller increase in operating expenses. Interest expense was $0.3 million in the first quarter of 2024, compared to $0.2 million in the first quarter of 2023. Financial expense net was $0.01 million in the first quarter of 2024, compared to $0.4 million in the first quarter of 2023. This change was primarily due to a decrease in foreign exchange loss due to foreign exchange volatility. Income before income tax expenses and equity in earnings of affiliated companies increased by 37.2% to $11.8 million in the first quarter of 2024, compared to $8.6 million in the first quarter of 2023. The increase in income before income tax expense and equity in earnings of affiliated companies in the first quarter of 2024 was mainly due to higher income from operations and increased net other income. Equity and losses of affiliated company was $0.8 million in the first quarter of 2024, compared with equity and income of affiliated companies of $0.1 million in the first quarter of 2023. Income tax expense was $1.7 million for the first quarter of 2024, as compared to $0.8 million for the first quarter of 2023. This higher tax was primarily due to an increase in the global intangible low-taxed income tax expense. That's GILTI. Net income attributable to the parent company's common shareholders was $8.3 million in the first quarter of 2024, compared to $6.8 million in the first quarter of 2023. Diluted income per share was $0.27 in the first quarter of 2024, compared to net income per share of $0.23 in the first quarter of 2023. The weighted average number of diluted common shares outstanding was 30,185,702 in the first quarter of 2024, compared to 30,193,082 shares in the first quarter of 2023. Now we'll provide some balance sheet and other financial highlights. As of March 31, 2024, total cash, cash equivalents, and short-term investments was $135.8 million. Total accounts receivable, including notes receivable, was $266.7 million. Accounts payable, including notes payable, were $243 million, and short-term bank loans were $40.5 million. Working capital rose to $206.7 million as of March 31, 2024, compared to $180.3 million as of December 31, 2023. Total parent company stockholders' equity was $358.4 million as of March 31, 2024, compared to $344.5 million as of December 31, 2023. Our current ratio was approximately 1.6 to 1. Net cash provided by operating activities was $10.5 million in the 2024 first quarter, compared to net cash used in operating activities of $1.4 million in the first quarter of 2023. Payments to acquire property, plant, and equipment were $4.5 million, compared to $3.2 million in the first quarter of 2023. The business outlook. Management has reiterated revenue guidance for the full year 2024 of $605 million. This target is based on the company's current view on operating and market conditions, which are subject to change. With that, operator, we are ready to begin the Q&A session. Thank you very much. We are now opening the floor for questions. If you have any questions, please press star one on your phone keypad now. We ask that while you're posing your question, you please pick up your handset if you're listening on a speakerphone to provide optimum sound quality. Please pause a moment while we poll for any questions. Thank you. Your first question is coming from Jim Fallon of Azusa Holdings. Jim, your line is live. Hi, can you hear me? Yep. Yes. Could you please give us an update on the activities in Europe, especially with Sentient? Okay. Um, ... [Foreign language]那么，这个前沿技术的研发到应用呢，还是需要一点时间的。虽然我们现在在沃尔沃已经成功地用我们的这个，电液的，就是电机带动液压的这个系统呢，已经开始装车了。但是呢，未来的发展肯定是纯电的。所以呢，这种前瞻性的研究呢，现在的市场都正在爬坡，总体的感觉还不错啦，但是这个会扩大到多少呢？因为现在的，客观上说，现在的整个外部的，欧美的形势呢，并不是太好啊，所以呢，我也只能这么说而已，因为还不是太明朗，但是总体呢，还是在看好。 Okay, so, thank you for your question on Sentient. Our Swedish subsidiary. Sentient is specialized in driverless technology software. And that's the main reason we decided to make them a part of our company, do investment and continue to increase our involvement in many fronts. Sentient is at the frontier technology, and there are R&D initiatives mostly focusing on and solve the driverless to provide the driverless solution. We are working with Volvo, use the Sentient prototype product has been installed in Volvo vehicles, trucks, and mainly based on the electric motor type of solutions. And we believe it will take some time for this product to continue to go into mainstream. And given the uncertainty of the global market, we are cautiously optimistic. And overall, we are still very upbeat on the long-term prospects of Sentient and their technologies, and we're very proud this team is making very good progress. thank you very much. Just a reminder there, if you have any questions, you need to press star one on your phone keypad to join the queue. That's star one. Our next question is coming from Jonathan Yidis, who's a private investor. Jonathan, your line is live. Can everybody hear me? Yep, we can hear you fine. Okay, my question is: R&D spending went down in the first quarter of 2024. What is the outlook for R&D spending in the rest of 2024, and what are the key R&D projects in 2024? Okay, great. 这是另一个投资人的问题啊，他的问題是，我们的科研费用在第一季度，这个费用的，金额比去年同期是下降了。他想知道我们今年全年，第一个就是这个什么原因，第二个就是这个全--今年全年的大概是，多少的，这个科研的费用，我们会在哪些领域，做更多的科研项目。 OK，今年的这个季度的研发费用呢，跟去年同期比是有小幅下降，主要一个原因呢，是这个我们的从内部这一块，这个季度的话呢，有一些，客户委托的这些研发，我们把它重新列到成本上面去了。所以话说呢，这个真实的把这一块加进来还原的话呢，实际上还是，还是跟去年，略有增加的。这个从未来看的话呢，整个研发费用还是要维持在我们的收入的4%-5%这样一个水平。好，你先跟他说一下吧。 R&D expenses, the reason for first quarter 2024 our R&D expenses are going lower than last year same quarter, is mainly due to the reclassification of our R&D expenses, because some of the expenses are very long-term projects, so we reclassify them into the cost of goods sold. So, but if you use an apples-to-apples comparison with last year, the R&D expenses will still maintain at the total R&D costs and expenses still maintain a 4%-5%. So, in that sense, R&D spending has not—our spending on research and development has not decreased. This year, the main R&D projects to be carried out include the E-RCB project for European customers, then for North American customers, as well as IRCP projects for some domestic customers. ...以及比亚迪的REPS，吉利公司的这个EPS等等，对应的项目开发。 Okay. For this year, the rest of the year, our R&D expenses will go into a few different categories. First, we're going to the E-RCB project, we're working with the European clients. We also have the iBC product, which with the American client, and then and we're working with BYD on the R-EPS product, and also we have a project going on with Geely. So we have a number of projects going on with large client, and they all are looking to launch new models with us. Okay, thank you very much. Our next question is coming from Margaret Wilson of EYI Independent. Margaret, your line is live. Thank you. It's Miss Wilson. I'm just curious about what is the outlook for the gross margin for 2024, please? Okay. Thank you. 这是我们另外一个投资者，他的问题是说... 他的问题是，他想知道一下，我们2024年全年的毛利，呃，前景大概是什么一个情况？因为第一季度我们的毛利，表现得很好，比去年同期也增加了，然后去年四季的我们的毛利也有很好的，去年全年也很好的，提升。就想知道这个，这种，毛利的提升是不是可以持续，然后2024年全年的毛利水平大概是什么样的水平。今年的毛利改善呢，有几个，公司自身的，也有一些客观的原因在这个地方。具体来说的话呢，公司长期的降成本，以及这个产品组合的变化，及这个高单价，这个高毛利的占比提升，这是我们公司的主导的这一块的，这个主动的，降成本这一块导致的。另外，客观的原因呢，一个是我们这个原材料的，最近确实主要钢材啊，这块的成本下降。再就是这个汇率，这个，这个人民币汇率降低啊，对于出口这一块也降低了我们的成本。所以综合来说的话呢，我们认为这个，目前的毛利水平是可以保持的，全年应该在17%-18%这样一个水平。 Okay, great. And thank you for your question on the outlook. You're welcome. Gross margin for 2024. Yeah. And there are a few reasons. Some are our business efficiency improvement, some are market related- Mm-hmm. dynamics. So on the business front, Mm-hmm. We have been resilient on cost management and a very, very stringent cost management program is continuing to take effect. And on the product mix side, we also increase more a higher margin product in the revenue mix. So that helps with the margin. Oh, yes. On the market dynamics and the raw material, especially the steel price, has gone down, and which favors our margin. And also the depreciation of RMB against US dollars and pre- Mm-hmm. predominantly is also helping us with the export. So all things, all factors included, we believe we can continue to maintain our growth target at between 17%-18% for the balance of 2024. 17%-18%. Thank you so much. I appreciate that. Thank you. Thank you very much. Just a reminder there, if there are any remaining questions, you can press star one on your phone keypad to join the queue. Thank you. Okay, our next question is coming from Jay Yun of Yun Capital. Jay, your line is live. Okay. Thank you. I just have a question for management. I understand that this is obviously a very growth time for Chinese EVs in the international markets with the, you know, with the pricing being at an advantage. And there's so many models that I think are moving in Europe and South America. So how do you, as CAS, think that you will benefit from this growth trend? 这是我们的另一个投资者，他的问題是说，现在中国的这个电动车是一个非常喜人的状态，然后这个，它的价格也非常低，然后他想知道一下，我们作为一个这个供应商，转向系统的供应商，我们怎么在这个市场里面受益？因为越来越多的中国的电动车往世界市场出口，不管是在欧洲也好，我们看到的，还是在南美也好，就是说，他想知道一下... ...董事长跟李杰怎么，怎么看这个未来，啊，这个我们公司是在这个中国汽车行业出口这个大，大形势下怎么受益的，特别是电动车。 整个电动车的所有产品呢，当然中国的产品是具有比较好的竞争力。但是呢，由于欧洲和美国都在对电动车的未来的进，那个出口到这两个地区呢，可能会受到的一些政治上的影响吧。今天看起来情况还不错，但是在这个所谓的三年要调查这些，未来的发展呢，说实话，如果不是在现有的政策条件下，未来也不一定有，有... 有太好的利润呢。因为一旦进入了欧洲跟美国，如果对中国这个电动车有限制的话，可能对我们会有影响的。如果没有，那么今年的情况还是很不错的。 Okay. So, thank you for your question on EV. You are right, Chinese EVs are doing very well, and they have a very competitive pricing, and they have made a major advancement in the technology as well. This is the reason that driving the demand for more and more Chinese vehicles abroad, in particular in Europe and South America. And also we are hearing more and more of those potentials in North America, and particularly U.S. However, given the U.S.-China tension and the ongoing investigation and possible policies coming from the White House, we feel uncertain whether Chinese vehicles can make a strong presence in North America. But if the current business environment continues, I think some of the other markets will still sell well, just not in the U.S. So we are still waiting for the news and closely following the development. Okay, thank you very much. Just another reminder there, if you have any remaining questions in the audience, you can press star one on your phone keypad now to join the queue. Okay, we don't appear to have any further questions in the queue. I will now hand back over to the management for closing remarks. We want to thank everyone for participating today, and we look forward to speaking with you in the future. Thank you. Thank you very much. That 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.