Thank you for standing by. This is the conference operator. Welcome to the Microvast Second Quarter 2025 Earnings Call. The conference is being recorded. I would now like to turn the conference over to Microvast Investor Relations. Please go ahead.

Thank you, operator, and thank you, everyone, for joining our update today. This is Rodney Worthen, VP of Corporate Strategy and Interim CFO. And with me on today's call is Mr. Yang Wu, Founder, Chairman and CEO. Mr. Wu will start off with a high-level overview of the second quarter results before providing some operational and business updates. I will then discuss our financials in more detail before handing it back to Mr. Wu to wrap up with our outlook for the remainder of the year and closing remarks. Ahead of this call, Microvast issued its second quarter earnings press release, which can be found on the Investor Relations section of our website. We have also posted a slide presentation to accompany management's prepared remarks today. As a reminder, please note that this call may include forward-looking statements. These statements are based on the current expectations and assumptions and should not be relied upon as representative of views for subsequent dates. We undertake no obligation to revise or release the results of any revision to these forward-looking statements due to new information or future events. Actual results may differ materially from expectations due to a variety of risks and uncertainties. For more information on material risks and other important factors that could affect our financial results, please refer to our filings with the SEC. We may also discuss non-GAAP financial measures during this call. These measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. These non-GAAP measures have been reconciled to the most comparable GAAP metrics in the tables included at the end of our press release and slide presentation. After the conclusion of this call, a webcast replay will be available on the Investor Relations section of Microvast's website. Now I will turn the call over to Mr. Wu to kick things off.

Hello, everyone. Thank you for joining us today. To those of you who have been with us for years, and for those who are new to our story, I want to start by reminding you of our core mission. Founded in Texas in 2006, Microvast has grown into a global leader in advanced battery technology, with over 810 patents granted or pending and our electrified solutions successfully deployed worldwide. We are proud to be a driving force in the global energy transition, building a more sustainable future, one battery at a time. Over the past year, our commitment to innovation has delivered some major milestones. We launched the ME6, our pioneering overhaulable LFP-based energy storage system. We have also made great strides in our silicon-based cell technologies and are making significant progress in our development of all-solid-state batteries. These innovations are the engine of our growth, and we are excited to share some updates in the future. Please turn to Slide 4, and I will cover some key results. We posted a record second quarter revenue of $91.3 million, which is a solid 9.2% growth year-over-year. What makes this continued growth remarkable is that we attained it while improving our gross margin to 34.7%, a 2.2 percentage point improvement from the same period last year. This demonstrates not only our ability to grow, but also to achieve this growth efficiently. We continue to focus on improving both efficiency and profitability, and I am happy to say that we achieved operating profit in the second quarter of $16.2 million, with an adjusted net profit of $16.3 million and an adjusted EBITDA of $25.9 million. This isn't just a milestone for Microvast, it's a testament to both the long-term commitment required in the industry and the strength of our business model. This strength is also shown by looking back over the last several years, where our Q2 revenue has continuously grown. This growth illustrates the increasing market demand for our high-performance product, and our gross profit has also seen continuous improvement, which shows that we can commercialize our advanced technologies and operate at scale. Our rapid growth has given us invaluable experience, allowing us to successfully commercialize products across our diverse portfolio and refine our manufacturing processes. Moving forward, our focus remains on three things: continuous innovation, the execution of our strategic growth objectives, and expanding our capacity to meet the growing demand from our customers. We are well positioned for the future. Let's move to Slide 5, where I will highlight our consistent focus. At its core, Microvast is a vertically integrated battery technology innovator. Our primary engine for growth is a relentless commitment to technology and product development, fueling a promising pipeline of advanced solutions. We are actively expanding our revenue streams with a diverse portfolio of products and services, all designed to accelerate the global energy transformation. A key element of our strategy is our aggressive push to capture greater market share. We are making significant investments to commercialize both our current available and our highly anticipated future advanced products. We are staying disciplined with a dual focus on pioneering product innovation and expanding our market presence. This is how we intend to achieve significant sustainable growth and optimize our operations with the ultimate goal of attaining sustained profitability. Turning to Slide 6. I am pleased to give you an update on our Huzhou Phase 3.2 expansion. The clean rooms are completed and the utility equipment installation is finished. We are now in the stage of installing and commissioning the production equipment. Our Phase 3.2 expansion is still anticipated to add about 2 gigawatt-hours of annual production capacity, which is strategically timed to meet the strong market demand for our solutions, both current and upcoming. This expansion leverages our existing infrastructure and deep industry expertise, and we anticipate the first qualified production from this new line to commence in the fourth quarter of 2025. This is an exciting step forward in our growth story into 2026 and beyond. Moving to Slide 7. I'd like to give an update on our all-solid-state battery milestones. Building on our update in Q1, our proprietary five-layer cell has stable cycling with a continued high Coulombic efficiency. It has achieved over 304 charge/discharge cycles at 1C, with steady capacity retention across the cycling window shown in figure 1. This indicates robust interfacial integrity with minimal losses during charge transfer, which is critical for battery longevity and performance. This result affirms our engineering approach and the structural stability of our all-solid-state architecture under long-term stress conditions. Additionally, our twelve-layer functional prototype achieved 48 volts from a single integrated stack. With the voltage capacity profile is seen in figure 2 and validates its performance. Figure 3 shows a cross-sectional image that confirms the uniformity and the series-connected architecture. This validates the feasibility of high-voltage solid-state cells with minimal packaging complexity. On Slide 8, we will continue the discussion of our all-solid-state battery achievements with a focus on advantages versus traditional battery and anticipated avenues for commercialization. The first key advantage is simplified system design, whereas traditional battery cells are constrained by liquid electrolyte decomposition at voltage between 4 to 5 volts. Our technology allows us to output tens to hundreds of volts. Additionally, the removal of liquid electrolytes present in traditional batteries also eliminates the need for complex and costly voltage conversion. This simplified architecture opens the door for new applications and end users. Our all-solid-state battery design also features inherent fault tolerance. Unlike conventional cells, our multilayered design localizes any potential defect and prevents single point of failure situations. This resiliency is crucial for mission-critical applications with high-voltage output capability and a simplified architecture. Fewer required connections and lower manufacturing costs means our design accelerates a path to potential commercial-scale production. And with the combination of all-solid-state safety, compact form factor and flexible voltage, this technology is ideally suited for emerging sectors like robotics, AI and aerospace applications. Now I will turn the call over to Rodney to discuss our financials for the second quarter and year-to-date.

Thank you, Mr. Wu. Please join me on Slide 10. We're proud to report another record-breaking second quarter, with revenue growing 9.2% year-over-year to $91.3 million from $83.7 million last year. Our year-to-date revenue represents a top-line growth of 25.9% to $208 million from $165 million in the prior year period, driven by an increase of approximately 300 megawatt hours in sales volume. Turning to profitability. Our gross profit for the second quarter was $31.7 million, a 17% improvement over the same period last year, driven by our relentless focus on operational execution, increased utilization and cost controls. Our gross margin improved by 2.2 percentage points to 34.7%, up from 32.5% in Q2 2024. Our year-to-date gross profit is now $74.7 million, a 68% increase over last year, with gross margin improving to 36%, a 9.1 percentage point improvement. Operating expenses decreased to $16.5 million for the quarter, compared to $126.7 million in Q2 2024, an 87% reduction year-over-year. This reduction across G&A, R&D, and sales and marketing was largely due to reduced share-based compensation and previously implemented cost control measures. There is also a significant decrease due to impairment costs incurred in the prior year period. For the same reasons, OpEx also decreased for the first half of the year to $42 million, down from $168 million in the prior year period. We reported a GAAP net loss of $106.1 million in the quarter. However, after adjusting for noncash expenses, such as share-based compensation of $0.8 million and fair value changes to our convertible loan and associated warrants of $121.5 million, we achieved an adjusted net profit of $16.3 million, a substantial improvement from an adjusted net loss of $87.9 million last year. For the 6-month period, GAAP net loss was $44.3 million compared to a net loss of $126.4 million in the prior year period. Non-GAAP adjusted net profit year-to-date was $35.6 million, a major improvement from an adjusted net loss of $100.9 million last year. Our commitment to sustainable profitability is evident as we report another consecutive quarter of positive adjusted EBITDA, reaching $25.9 million. This is a substantial turnaround from a negative adjusted EBITDA of $78.4 million in Q2 2024. Positive adjusted EBITDA for the 6-month period reached $54.4 million compared to a negative adjusted EBITDA of $82.1 million in the prior year period. The financial reconciliations of these non-GAAP metrics can be found in the tables at the end of our earnings press release and the slide presentation. On Slide 11, we show the geographic breakdown of our revenue mix compared to the prior year period. Our EMEA business accounted for 43% of our quarterly revenue. This is down slightly year-over-year due to customer platform launches being pushed into later quarters. However, growth over the 6-month period still saw an improvement of 31% compared to the prior year. The U.S. increased from 2% to 5% of revenue share, both for the quarter and year-to-date when compared to the prior year period as we continue to make inroads with domestic customers. The APAC region continues to do well, growing 34% in the quarter and 13% year-to-date compared to 2024 as we also successfully target higher-margin opportunities. Please turn to Slide 12, and we will briefly review our cash flow for the year. We are pleased to have generated positive operating cash flow of $44.3 million for the 6-month period. Net loss was primarily offset by a $7.1 million decrease in inventory and noncash adjustments of $16.5 million in D&A and $78.4 million from changes in fair value of warrant liability and convertible loan. This was partially decreased by a $14.5 million increase in net receivables and a $12.6 million decrease in net liabilities and accrued expenses. From investing activities, we had a net outflow of $5.1 million, primarily related to CapEx for our Huzhou operations, including our Phase 3.2 expansion. Financing cash flow resulted in a net outflow of $6.8 million. Overall, when combined with a negative adjustment from exchange rates of $3.2 million, we had an increase in cash of $29.2 million. This resulted in total cash, cash equivalents and restricted cash of $138.8 million at quarter's end. This financial strength is a testament to our disciplined approach to growth. On one last note, I would like to thank again our long-term investors. We recognize that our share price has been volatile at times, and we appreciate your continued support and recognition of the goals that we are striving for as a company. Our teams have been singularly focused on turning around our operations and delivering these results, and we are grateful for your patience. It's been a turbulent few years for the whole industry, and the turnaround in the past year for the company has been a great effort from the team. While we need to continue executing and strengthening our financial position, our performance confirms that we have established a profitable and resilient foundation, powered by strong market demand. We're not just improving; we're building momentum. Our unwavering focus on sustainable profitability, enhancing margins and boosting operational efficiencies is propelling us forward. We remain committed to our strategic vision and believe our continued progress will increasingly reveal the true value Microvast delivers as a leader across the electric energy markets.

Thank you, Rodney. Please turn to Slide 14, which provides a summary outlook for the rest of the year. For the remainder of 2025, our initial revenue guidance holds firm. We are targeting a year-over-year revenue increase of 18% to 25%, which puts our projected range between $450 million and $475 million. We are slightly updating our targeted full-year gross margin from 30% to 32% as we are focusing on stronger performing, higher-margin products. In our APAC operations, all eyes are on our Phase 3.2 expansion at the Huzhou facility, which we anticipate will come online later this year. This additional capacity of up to 2 gigawatt-hours annually is a direct response to the robust customer demand for our solutions. Our development teams are also making significant progress on the next wave of advanced products. Our high-growth EMEA business is expected to maintain its strong momentum, continuing to drive significant year-over-year revenue increases. We are actively pursuing new strategic partnerships to support both our current and upcoming product lines in the region. In the Americas, we anticipate continued revenue growth and are being proactive in customer acquisitions and accessing our financial needs to support strategic objectives. Despite navigating global dynamics and localized market pressures, our proactive cost management and strategic focus on high-demand sectors has positioned us for continued growth. We remain laser-focused on achieving our priorities for the remainder of this year which are achieving positive cash flow, sustaining our strong margins and expanding our market reach through relentless innovation and strategic collaboration. We are confident that we can continue to capitalize on electrification trends and deliver long-term value to our shareholders. Thank you, everyone, for joining us today to review another historical quarter for Microvast. We look forward to updating you again next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.