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Financial Data and Key Metrics Changes - Sales for Q3 2025 were $8.3 billion, a decrease of 2% compared to Q3 2024, primarily due to weaker North America heavy and medium-duty truck demand, with unit volumes declining 40% year-over-year [8][19] - EBITDA was $1.2 billion, or 14.3% of sales, compared to $1.4 billion, or 16.4% a year ago; excluding non-cash charges, EBITDA was $1.4 billion, or 17.2% of sales, an increase of 80 basis points from the previous year [9][20] - Operating cash flow was strong at $1.3 billion, compared to $640 million a year ago, indicating improved credit metrics and capital allocation flexibility [23] Business Line Data and Key Metrics Changes - Engine segment revenues were $2.6 billion, a decrease of 11% from a year ago, with EBITDA at 10%, down from 14.7% due to weaker North American truck volumes [24] - Component segment revenue decreased 15% to $2.3 billion, with EBITDA at 12.5%, down from 12.9% [24] - Distribution segment revenues increased 7% to a record $3.2 billion, with EBITDA also reaching a record 15.5% [24] - Power systems segment revenues were a record $2 billion, an increase of 18% from a year ago, with EBITDA dollars also at a record $457 million, increasing as a percent of sales from 19.4% to 22.9% [25] Market Data and Key Metrics Changes - North America revenues decreased 4% compared to 2024, while international revenues increased by 2% [19] - Revenues in China, including joint ventures, were $1.7 billion, up 16% from a weak quarter last year, driven by stronger unit demand [11] - Revenues in India, including joint ventures, were $713 million, an increase of 3% from a year ago, with power generation revenues increasing 41% [12] Company Strategy and Development Direction - The company announced a collaboration with Komatsu to develop hybrid powertrains for heavy mining equipment, aiming to support customers' sustainability efforts [5][6] - The company is undergoing a strategic review of its electrolyzer business due to significantly lower demand expectations, with potential further charges anticipated [16][50] - The company expects near-term weakness in North America on-highway truck markets to persist, with a projected 15% decline in unit shipments from Q3 levels [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the global trade and policy landscapes remain dynamic, presenting ongoing challenges, but they are well-positioned to support customers [15][27] - The company anticipates that demand for power generation equipment will remain strong beyond this year, despite challenges in shorter-cycle markets [14][27] - Management expressed cautious optimism about the North American on-highway markets nearing a bottom, with hopes to reinstate guidance in February 2026 [28] Other Important Information - The company faced $240 million in non-cash charges related to its electrolyzer business, reflecting lower demand expectations due to reduced U.S. government incentives [9][20] - The effective tax rate for the quarter was 32.7%, impacted by increased tax expenses related to recent U.S. tax legislation [22] Q&A Session Summary Question: Engine margins and tariff costs in Q4 - Management indicated that engine business margins are under pressure due to product changeovers and additional costs, but they are managing costs effectively [32][33] Question: Power systems production ramp-up and margin targets - Management confirmed strong performance in power systems and distribution, with ongoing investments for profitable growth, but cautioned against expecting continued margin improvement at the same rate [34][36] Question: Capacity investments for data centers - Management is actively assessing the need for additional capacity investments in response to strong demand for data center power generation [40][42] Question: Accelera segment performance and losses - Management acknowledged that the losses in the electrolyzer business are significant and are under review, while e-mobility is showing growth [58][61] Question: International data center opportunities - Management noted strong demand in both the U.S. and China for data centers, with local competition being more prevalent in China [78][80]

Financial Data and Key Metrics Changes - Sales for Q3 2025 were $8.3 billion, a decrease of 2% compared to Q3 2024, primarily due to weaker North America heavy and medium-duty truck demand, with unit volumes declining 40% year-over-year [8][19] - EBITDA was $1.2 billion, or 14.3% of sales, compared to $1.4 billion, or 16.4% a year ago; excluding non-cash charges, EBITDA was $1.4 billion, or 17.2% of sales, an increase of 80 basis points from the previous year [9][20] - Operating cash flow was strong at $1.3 billion, compared to $640 million a year ago [23] Business Line Data and Key Metrics Changes - Engine segment revenues were $2.6 billion, a decrease of 11% from a year ago, with EBITDA at 10%, down from 14.7% [24] - Component segment revenue was $2.3 billion, a decrease of 15% from a year ago, with EBITDA at 12.5% compared to 12.9% [24] - Distribution segment revenues increased 7% to a record $3.2 billion, with EBITDA at a record 15.5% [24] - Power systems segment revenues were a record $2 billion, an increase of 18% from a year ago, with EBITDA increasing from 19.4% to 22.9% [25] Market Data and Key Metrics Changes - North America revenues decreased 4% compared to 2024, while international revenues increased by 2% [19] - Revenues in China were $1.7 billion, up 16% from last year, driven by stronger unit demand [11] - Revenues in India were $713 million, an increase of 3% from a year ago, with power generation revenues increasing 41% [12] Company Strategy and Development Direction - The company announced a collaboration with Komatsu to develop hybrid powertrains for heavy mining equipment, aiming to support customers' sustainability efforts [5][6] - The company is undergoing a strategic review of its electrolyzer business due to significantly lower demand expectations [16][50] - The company expects near-term weakness in North America on-highway truck markets to persist, anticipating a 15% decline in unit shipments from Q3 levels [14] Management's Comments on Operating Environment and Future Outlook - Management noted that the global trade and policy landscapes remain dynamic, presenting ongoing challenges [14] - The company is hopeful for stabilization in global trade policy and clarity on EPA regulations, which will support plans to reinstate guidance for 2026 [17][28] - Management expressed cautious optimism about demand in North America on-highway markets nearing a bottom [28] Other Important Information - The company faced $240 million in non-cash charges related to its electrolyzer business, reflecting lower demand expectations [9][20] - Tariff costs increased in Q3, but the company managed to recover a greater proportion of these costs through pricing [19][26] Q&A Session Summary Question: Engine margins in the fourth quarter and power systems margin targets - Management indicated that engine business faces complexities with product changeover and additional costs, but they are managing costs effectively [32] - Power systems have shown strong performance, and management is committed to investing for profitable growth [36] Question: Capacity additions and future investments - Management confirmed that they are reaching the end of capacity expansion for large engines and are actively exploring additional capacity investments in response to strong demand [40][42] Question: Impact of Section 232 tariffs - Management stated that they need more details to quantify the headwind from tariffs and emphasized their strong manufacturing position in the U.S. [44][46] Question: Performance of Accelera segment - Management noted that most losses in the Accelera segment are from electrolyzers, and they are looking at actions to reduce these losses [48][50] Question: Natural gas engines and data center opportunities - Management highlighted their capability in natural gas engine development and the importance of high reliability for data centers [54]

Core Insights - China Yuchai International Limited has successfully delivered its first batch of natural gas-powered buses to Nuevo León, Mexico, marking a significant step in enhancing the local public transportation system [1] - The company currently has 1,400 natural gas buses in active service in Nuevo León, with projections to exceed 2,500 by the end of 2025 [2] - Yuchai has established a leading position in the Mexican natural gas bus engine market, recognized for its strong aftersales service and expanding service network [3] Company Overview - China Yuchai, through its subsidiary Guangxi Yuchai Machinery Company Limited, is a prominent powertrain solution provider in China, specializing in a wide range of engines for various applications [4] - The company offers a diverse portfolio of powertrain solutions, including diesel, natural gas, and new energy products, and has a strong distribution network for after-sales services [4] - In 2024, Yuchai sold 356,586 engines, reinforcing its status as a leading manufacturer and distributor in China [4]