Financial Data and Key Metrics Changes - The company reported diluted earnings per share of $1.85 in Q2 2025, down from $2.07 in the same period last year, reflecting a decline in earnings [7][23] - Despite the decline, the midpoint of the 2025 earnings guidance was increased to $6.26 from $5.88 due to better-than-expected performance in the Plastics segment [8][29] - The company maintains its original earnings guidance for all other segments, with an expected year-over-year growth of over 7% for the electric segment [30] Business Line Data and Key Metrics Changes - Electric segment earnings increased by $0.02 per share in Q2 2025, driven by timely recovery on capital investments and favorable weather conditions [23][24] - Manufacturing segment earnings decreased by $0.08 per share primarily due to lower product pricing and decreased sales volumes [25] - The Plastics segment experienced a decline in earnings of $0.18 per share, attributed to a 15% decrease in sales prices, although sales volumes increased by 11% [26][27] Market Data and Key Metrics Changes - The company continues to have some of the lowest electric rates in the nation, with 2024 rates being 30% below the national average and 16% below regional peers [18] - The construction and lawn and garden end markets are improving, while recreational vehicle and agricultural end markets are still facing challenges due to high inventory levels [19] Company Strategy and Development Direction - The company is focused on a significant capital investment plan totaling $1.4 billion over five years, aimed at benefiting customers and driving earnings growth [9][30] - The electric segment is projected to have a compounded annual growth rate of 9% through 2029, with a focus on customer-centric investments [12][31] - The company is also working on expanding its manufacturing capabilities, including the BTD Georgia facility and Vinyltech expansion [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the manufacturing segment despite current down cycles, emphasizing a strong track record of performance during market rebounds [25][31] - The company is monitoring legislative changes that may impact renewable energy projects but expects its current capital investment plan to remain intact [9][10] Other Important Information - The company filed a request with the South Dakota Public Utilities Commission to increase base electric rates for the first time since 2018, proposing to increase net revenues by approximately $5.7 million [11] - The company is finalizing a cost of service analysis in Minnesota and anticipates filing a rate case later this year [12] Q&A Session Summary Question: No questions were raised during the Q&A session - The operator noted that there were no questions in the queue and concluded the call [35][37]

Core Viewpoint - LG Energy Solution has secured a significant contract for lithium iron phosphate (LFP) battery supply worth 5.9442 trillion KRW (approximately 4.3 billion USD), which represents 23.2% of its projected sales for 2024 [2] Group 1: Contract Details - The contract was signed on July 29 and will be effective from August 1, lasting for three years, with the possibility of extension to seven years [2] - The specific client for this contract is reported to be Tesla, supplying LFP batteries for energy storage systems [2] Group 2: Financial Performance - In Q2 2025, LG Energy Solution reported consolidated revenue of 5.6 trillion KRW (approximately 29 billion RMB), a decrease of 11.2% quarter-on-quarter [3] - The company achieved an operating profit of 492.2 billion KRW (approximately 2.5 billion RMB), a 31.4% increase quarter-on-quarter, with an operating profit margin of 8.8% [3] - After accounting for 490.8 billion KRW in tax credits from the Inflation Reduction Act, the company returned to profitability after five consecutive quarters of losses [3] Group 3: Market Conditions - The decline in battery usage by LG Energy Solution is attributed to a 13.3% year-on-year decrease in the first five months of the year, particularly impacted by reduced sales from Tesla [3][4] - The company anticipates growth in the global energy storage market, driven by renewable energy projects and AI data centers [3] Group 4: Production Capacity and Market Share - LG Energy Solution aims to increase its annual production capacity for energy storage batteries to 17 GWh by the end of this year, with a target of over 30 GWh by the end of 2026 in North America [4] - The company is also set to begin mass production of mid-range battery products in Poland later this year and has signed a contract with Chery to supply 8 GWh of batteries for electric vehicles [4] - LG Energy Solution's market share has decreased from 13.5% in 2023 to 10.8% in 2024, with a further decline to 10% in the first five months of this year, a drop of 2.1 percentage points year-on-year [4]

Core Viewpoint - LG Energy Solution (LGES) reported a decline in revenue for Q2 2025, primarily due to fluctuations in raw material prices and policy impacts on North American energy storage batteries, despite stable EV battery sales [1][2]. Financial Performance - Revenue for Q2 2025 was 288.4 billion, a year-on-year decrease of 9.7% and a quarter-on-quarter decrease of 11.2%, with stable EV battery sales but a decline in North American energy storage revenue [1] - Gross margin improved to 18.8%, up 1.9 percentage points quarter-on-quarter; operating profit margin reached 8.8%, up 2.9 percentage points quarter-on-quarter, with Q3 benefiting from a US IRA subsidy of 25.4 billion (approximately 7.9 to 10.1 GWh of domestic production) [1] - Capital expenditure for Q2 was 140.8 billion, primarily for North American capacity expansion [1] 2025 Outlook - The company projects a revenue growth of 5% to 10% year-on-year for 2025, although the first half of 2025 saw a nearly 4% decline, indicating challenges ahead [2] - Demand for electric vehicles may slow in the short term, but advancements in autonomous driving technology and renewable energy projects are expected to drive long-term growth [3] - The PFE policy is increasing barriers to entry in the US market, enhancing the competitive advantage of companies with established local production and supply chains [3] Operational Developments - LGES is expanding energy storage battery capacity, with a new facility in Michigan officially starting production in Q2 2025, aiming to increase annual ESS battery capacity to 17 GWh by the end of the year and over 30 GWh by the end of 2026 in North America [4] - The company plans to begin mass production of mid-range battery products at its Poland factory in the second half of the year, including high-nickel and lithium iron phosphate (LFP) batteries [5] - LGES is enhancing its technological competitiveness by launching LFP batteries suitable for electric vehicles and energy storage, with plans to introduce batteries that can be charged in under 10 minutes by 2028 [6]