Microvast Holdings, Inc. (NASDAQ:MVST) Q2 2023 Earnings Call Transcript

So they are not only dedicated to 21 ampere, but they are also moving toward 53.5. So it’s picking up in general. The technology plays a major role for us in the commercial vehicle application. But we have also the 48, which is the same standard, same LBC cell, which will also play a big role, especially on the fuel cell side, which we talked about. So this will be also a topic which will – where we will see more increasing demand on the commercial vehicle side.

Colin Rusch: I have some clarification on that, but I’ll take it off-line. Thanks so much, guys.

Sascha Kelterborn: Okay.

Operator: Our next question is from Amit Dayal with H.C. Wainwright. Please proceed.

Amit Dayal: Thank you. Good afternoon, everyone. With respect to sort of the margin outlook, it looks like some revenues have been pushed out from 3Q to 4Q. Will that impact margin performance next quarter for you guys, gross margins?

Craig Webster: Hi, Amit. It’s only going to be a little bit of revenue pushout next year. There’s a chance that we can recover it because what we don’t include in backlog is a lot of China revenues. And as you see from previous quarters, Q4 is always super strong for China. That could make up some of that. And whether it’s going to be for an energy storage or commercial vehicle customer, what we’re ramping up is 53.5 amp hour. So pushing a little bit out is not going to impact margins.

Amit Dayal: Okay. Thank you for that. I mean it’s good to see the execution on that front continue to come through. And then on the operating expense side, is this sort of where we will be for the rest of the year, Craig, in terms of total OpEx, what we saw for Q2?

Craig Webster: What will happen is, particularly on like sales side, I mean, as we – we’re probably going to get very close to doubling revenues from where we are today in Q4, so you can have some more sales expense around that. R&D expense is not going to increase significantly throughout the year. G&A is manageable. I think we’ve guided you before that where we’re trying to manage this year is around sort of 20 to 25 in cash OpEx, and it’s still the target. And I think we’ve got all of the infrastructure in place to like deliver these increasing revenue, so I just don’t see much impact. What we’ll be focused on, really, Q3, Q4 that’s going to impact margins is just improving yields. And as we improve yields, we’ll improve margin.

Amit Dayal: Okay. Thank you. Just one last one for me on the separator side maybe. Any updates with respect to how you are setting time line expectations for that offering?

Craig Webster: You just broke out right at the start, Amit. What was the first bit on?

Amit Dayal: For the separator product. Any update on the time line for commercialization. Post the developments last quarter, just wanted to see how the time line for bringing the product to market might have changed.

Yang Wu: This is Yang Wu. And separator right now, we are focusing on China, the 10 million square meter small production line. We want to make [indiscernible] in the sample cell first, and we are still planning to build a bigger factory in later years.

Amit Dayal: Okay. Thank you. That’s all.

Operator: Our next question is from Sean Milligan with Janney. Please proceed.

Sean Milligan: Hey, guys. Nice quarter and thanks for taking my questions. Craig, I was trying to kind of back in. You gave a total backlog of $676 million. You talked about China having $370 million contracted volumes, and then I think you said like 80% of backlogs, the 53.5 amp hour cells. Just like can you clarify like how much backlog you have for Clarksville at this point?