Q3 2021 Greenland Technologies Holding Corp Earnings Call
Good day, ladies and gentlemen, thank you for standing by and welcome to the Green line technologies third quarter of 2021 earnings conference call.
All participants are in listen only mode. You told me you will conduct a question and answer session and instructions will follow at that time as a reminder, we are recording today's call. If you have any objections you may disconnect. At this time now I will turn the call over to Julia Kim managing director of the <unk>.
Blue shirt Group Asia, Jim. Please go ahead.
Thank you operator, and Hello, everyone welcome to Greenland technology, they're caught up 2021 earnings conference call. Joining us today are Mr. Raymond Huang Chief Executive Officer, and Mr. Jay Chang Chief Financial Officer, We released the results earlier today. The press release is a very.
On the company's IR website at <unk> Dot GTECH Dash Tech dotcom as well as from Newswire services a replay of this call. We are also available.
On our IR website before we continue please note that today's discussion will contain forward looking statements made under safe Harbor provision of the U S. Private Securities Litigation Reform Act of 1995 forward looking statement, you can watch inherent risks and uncertainties as such the car.
Actual results may be materially different from its the teaching expressed today further information regarding these and other risks and uncertainties.
In the companies probably finding was that the company does not assume any obligation to update any forward looking statement, except as required under applicable law artificial mentioned today during the conference call on the U S. Dollar with that let me now turn the call over to our CEO Mr. Raymond One go ahead.
At this time.
Thank you very much Julia and good morning, everyone and thank you for joining us today.
Our global team continues to make great progress and I wish to start by thanking everyone at Greenland for their hard work delivering another great quarter. The third quarter is seasonally the slowest quarter for our business and this year, we faced additional challenges such as material shortages freight delays.
It just takes variability caused by continued impacts of the global pandemic yet. Despite these challenges we have once again set a new third quarter company record by record by generating $23 $1 million in gross revenue, which represents a 39, 7% year over year growth.
By reaching this milestone we remain committed to our guidance of 90 to 100 million year end gross revenue, which would set a brand new full year company record here agreement and we remain optimistic with the growth of our core business. However, we are witnessing a cool down of the China market.
If GDP falling from 18, 3% in the first quarter down to 4.9% by the third quarter with an expected full year GDP average of around six 8% for full year 2021 as.
As our results demonstrate this has not impacted our business as global warehousing and manufacturing growth and demand continues to remain strong but may impact the future performance of our core business should the GDP trends continued to decline sharply or should it spread to the global markets in the upcoming quarters.
Yeah.
The expansion of our business to the global market without a new line of electric industrial vehicles are an important step in our strategy to mitigate risk and develop growth and long term value for our shareholders. Our search for the location of our first assembly plant is still ongoing the decision is currently between the.
States of Maryland, Virginia, and New Jersey with quality discussions in motion as we settle on a location I wish to remind everyone that the timeline of our assembly site does not delay our product launches and timelines and we will continue to manufacture full vehicles in our existing facilities overseas.
And ship them to the United States for commercial sale.
In addition to the Assembly site, we arent progress of developing experience centers to allow interested prospects to be able to learn operate and purchase our industrial vehicles as.
As an industry pioneer of electric industrial vehicles, and a market dominated by heavy emission combustion equipment. It will be an important component in our sales strategy to offer firsthand experience for a buyer to truly understand and appreciate the capabilities power and benefits of our clean and sustainable.
Our first experience center will be located in New Jersey, where our forklifts will be well positioned to support the rapidly growing warehouse and manufacturing market, while also offering our loaders and excavators to the significant transportation and agriculture markets as well within the state.
We are currently working with interior designers and architects to offer an attractive and appealing site and we hope to break dirt on a location in the first quarter of next year.
As for our vehicles after a brief shipping delays due to port congestion. The first batch of our G. E. F series lithium powered forklifts have arrived on U S soil as of last week and are available for commercial sale and I'm extremely happy to report that we've already placed forklift sales org.
And have several needs in the sales process showcasing strong demand for this product line.
New units are already in production to continue to meet this demand as we begin to capture market share.
Furthermore, our first G E. L 1800, our all electric lithium powered 1.8 ton rated load wheeled Front-loader has also arrived this week. It's currently undergoing our posts shipping Q&A process and will be available for demonstrations and industry events by next week where are we.
We anticipate generating strong demand for the vehicle.
As for our G E X 8000, our all electric lithium powered eight ton weird excavator. Our first unit is fully assembled passed all QA checks and is simply a weighting of vessel for shipment to the United States. So we're still on track and expected to arrive on U S soil by the end of this year.
Two the beginning January of 2022.
As I predicted during the last earnings call. The important challenges we have seen this year in the shipping and freight environments between China and the United States would begin to ease after October and we've already begun to see this improvement shipping costs are half of what they were a month ago and continue to fall while container.
Daily ability continues to rise this will improve our vehicle margins delivery times and supply chain efficiency as we develop our foothold in the U S market.
And I'm very proud of what the Greenland team has accomplished this quarter and throughout the year and I'm excited for the next phase of growth for the company as we launch our new product line of electric industrial vehicles, while expanding the business into new global markets. Despite the global challenges we continue to surpass.
Our milestones every quarter and demonstrate our capability to improve our financial health demonstrate operational excellence excellence as we grow the company and create value for our shareholders.
Now with that let me turn the call over to Mr. Jing to provide details into our third quarter financial performance Jay Jay go ahead.
Thank you Raymond and thank you everyone for joining our call today I will now go over our key financial results for the third quarter of 2021.
Full details of our financial results. Please refer to our earnings press release and later the Form 10-Q, a body on the web.
As these website green.
What remains robust.
Pro forma the phone calls are up 2021 demonstrates our strong compared with EBITDA in the addressing the increasing demands for events transmission products and it mitigates.
Supply chain risk.
Remember our transmission products sold increased 11, 6% to 33478 units from 29985 units in the third quarter of 2020.
Clearly by our robust sales of transmission units, we generate revenue of $23 1 million U S. Dollar during the quarter, representing a year over year growth of 39, 7%.
The increase was primarily due to the significant increase in unit sales.
<unk> bought it by the ever growing demand this year and the the increasing supply despite global supply chain challenge.
Let me shift in the product mix towards higher value products also proved to be a right move and to contribute to the year over year increase in revenues.
Cost of goods sold were $18 million up to seven.
Up to 37, 1% from the $13 1 million in the third.
Culture of 2020.
The increase was primarily due to the increased volume of the transmission products sold.
And then the increase in raw material prices.
Jim Bell June 39, 7% of the revenue growth. We are pleased to turn the property operation leverage of two 1%, even the material Savage and the supply chain disruptions.
Along with the higher sales volume and effective cost management, we continue to witness improvements in our profitability.
Gross profit was one 1 million U S. Dollar an increase of 50% from three 4 million U S. Dollar in the third quarter of 2020.
Our gross margin contributes an upward trend and the reach.
<unk> to one 1% up to 150 basis points from 21, 6% year over year, which was a result of drug product towards product of Ohio, biodiesel and justification.
That chance hygienic transmissions.
We will also.
To manage well.
Cereal Cogs through a strategic partnership and our.
Our capability to capture long term growing demand.
The total operating expense was 3 million U S dollar and inquiry.
162% from one to a 1.2 million.
S dollar in the so called her all 2020.
Operating expense as a percentage of total revenue was 13, 2% up to 612 percentage points compared to 7% in the third quarter of 2020, primarily due to the increasing consulting fee and the research and Wendelin expenses over there.
Yeah.
Those expenses were carefully expand that to a project and long term business growth.
Selling expenses in the third quarter was one 5 million an increase of $93 two from the prior year. The general and administrative expense was $1 2 million up to 255, 1% from the third quarter of up to 2020 due to the gym.
Any has incurred from the new financing activity and the increased legal and consulting fees associated with business planning and the project as Green as you expand the operation.
Furthermore, we will further invest in high value and a more sophisticated product, whereas electrified products such as eight commercial EV research and that your women's expense Rose 143, 22% year over year to one 4 million U S. Dollar in the third quarter of 2020, which Colin.
Four 6% of the total revenue.
Driven by rapid growth in revenue, our net income <unk> 170 to one 5% year over year to one three media in the third quarter.
At the end of the September.
Cash restricted cash and the cash equivalents reached $15 7 million.
I can tell to 'twenty.
One 5 million at the end of June.
Based on our business situation and market conditions, we maintained our revenue guidance range to between 19 million U S dollar and the 100 million U S dollar representing a increase of 35% to 49% year over year without with sound financial position, we are confident to see.
That was tied to the wetland electrifying commercial vehicles.
That conducts our prepare remarks, so let's now open the call for questions. Operator. Please go ahead.
Certainly.
Ladies and gentlemen, it is star followed by one on your telephone keypad. If you wish to ask a question. If you wish to cancel their request you can press the pound all husky once again it is star one glass sequencing as a reminder, management tasks that will limit to one question, but with analyst. The line will close once the question has been posted.
We have the first question is coming from the line of.
Rommel.
<unk> from Aegis capital. Please go ahead.
Hi, good morning, Thanks, very much for taking my question congratulations on the quarter.
You know you guys have.
Certainly appreciate your commentary about the moderating in the growth of the deceleration of growth in China market, but your volumes remain so strong and clearly that's coming from market share gains I Wonder if you could just give us an update in terms of whats really driving that obviously your strong products and move towards the premium end of the market is really you know.
The significant gains over the last several quarters, but I wonder if you could just give us an update on really the continued market share growth, which obviously you posted in the third quarter as well. Thank you.
Yeah.
Oh, sorry about that striking with the mute button there.
Yeah, absolutely glad too, so, especially with the global constraints in the environments with material shortages and a supply side challenges. This is definitely a theme throughout the year, that's impacting all businesses in all industries. However from a good reason and staff.
Endpoint it actually plays into the strength of our company, we have extremely robust manufacturing capabilities in a very established supply side with a fantastic team that has the tools and the capability and connections to be able to continue to me.
Meet the demands of our clients and be able to continue to provide our components of our core business at scale and because this is a position that our competitors cannot offer and maintained its actually helped contribute to our phenomenal quarterly sales performance.
And this also lends itself to our vehicle production and expansion efforts as we push into the United States market with this line.
It's by it.
Tactically playing on the strengths and advantages of our company that we've developed.
Throughout that time since 2006.
Thanks very much.
Thank you.
We have the next question is coming from the line of Jefferies.
From Alliance Global Please go ahead.
Good morning, Raymond and congratulations on the quarter.
Just wanted to ask as the.
Forklifts.
We're just starting to really.
Pick routes.
Have you designed the Greenland forklifts around a specific battery.
Or can the forklifts work with units designed by a variety of manufacturers.
Thank you Jeff for the question. So our forklift is designed around the battery that is currently utilizing in addition to our integrated drive train, which is a component that we produce specifically cater towards lithium powered forklifts that integrates the speed reduction gearbox driving acts.
So Andy electric motor into a single unified package. So this forklift is designed primarily around our components, including this drivetrain in the battery itself.
Thank you.
Yeah.
Okay.
Once again as a reminder, star followed by one on your telephone keypad, if you wish to ask a question.
Okay.
The next question comes from Jeffrey Campbell from Alliance Global. Please go ahead.
Yes.
Ramon I thought to ask how you're targeting the upcoming demonstrations of the G. L 18 Honda.
It seems like.
That's a new market, but it seems like the low hanging fruit would be places where work takes place in doors.
The charging would be zero.
Pollution from the Ics would be in there.
David.
Yep.
You're absolutely right, we are going to market D. G. O 1800 in industries that are well.
Suited to support its charging needs. So this does include indoor facilities are sensitive areas like urban settings.
Agriculture, or property management, and waste management centers or even transportation hubs.
Such as ports airports things of that nature. The key characteristic that all of these are industry share is the equipment.
Typically does not leave the property. So it would be simple for a business to install a charging a smart charging station to keep their vehicle is operating and that makes the logistics so much easier than having to procure in store diesel fuel.
And from a marketing standpoint, with these industries that we're targeting we will be utilizing the G 1800 to attend our trade shows for these specific sectors.
Okay, great. Thank you.
Okay.
The next question comes from the line of from Dr. <unk> from Aegis capital. Please go ahead.
Oh, yes, thanks for taking my follow up.
Ray you talked about.
And Jim you talked about some of the logistical challenges from a shipping standpoint I was just wondering are you seeing any.
Any challenges from a component sourcing standpoint, obviously as you get more into the electric.
Vehicle business, that's probably part of components I Wonder if you are just seeing any.
Any shortages or delays there on the supply chain for the components for those products. Thanks.
Yes.
Great question, So just like and just like the global environment is experiencing this year, yes, we are seeing material shortages, both from a raw material standpoint, but then even from a supply standpoint for.
Our suppliers as well for our component business and for our EV business. However, one of the things that.
We are extremely proud of is the success and adaptation of our supply side teams that continue to work with our suppliers to be able to acquire.
Acquire and procure the components that we need to be able to deliver and that's how we were able to.
To be able to generate over 30000 transmissions this year and be able to produce the electric vehicles that we have that have arrived in addition to the ones that we have in production.
Now with that said.
Of course, it is gonna be a continued challenge as the world continues to struggle with supply side constraints power.
However, we have been very well positioned.
To meet that challenge, thus far and we plan to.
Do so moving forward to.
Great. Thank you.
Yeah.
The next one comes from the line of Jeffrey Campbell from Alliance Global. Please go ahead.
Now this will be my last question and thanks for allowing the follow ups Raymond one thing I was curious.
Sure.
You're saying that the forklifts are always are already getting off to a good sales start.
Roll that having a built in charger and your forklifts.
Is playing in these early sales so it would seem like to me that particularly for our workplace and it's new to EV forklifts, not having to fool around with.
Separate Chargers.
Tremendous value at.
Mhm.
Yeah, so from the fork lift standpoint.
We've been graced with a number of various a.
When the power of the sales for the for the sale of forklifts. So I use the same where it twice.
What we've been seeing is that number one.
The concept of lithium power has already been demonstrated.
In various industries, such as in passenger cars with Tesla So already from our consumer end user standpoint, they already understand the capabilities of what lithium can do and because there's very few offerings of lithium powered forklifts currently in the United States.
That's been very supportive from a sales standpoint.
Secondly.
We are pushing and driving the a localized our service and parts.
Network here in New Jersey, and the East coast, starting off to be able to support our clients, which is very important because as the company maintaining the operation of your.
Shipment and fleet is critical and downtime can be a challenge so.
We are employing a strategy, where we are providing the right to repair our vehicles in the hands of our end consumers. So we're going to make it very simple for them to be able to acquire the parts they need and the education and knowledge to be able to repair their vehicles to keep them up and running.
Thirdly from a supply side standpoint, right now there's already a significant backlog for forklift sales, especially as warehousing and manufacturing continued to grow and.
So location switchover from retail to warehousing.
Demand for forklifts the power the backbone of that growth is in extremely high demand in the U S markets, that's already been causing a significant backlog. So the fact that we have our products ready to go has been playing to the success of our sales strategy.
And the last piece that I wish to offer as well.
Because of the supply constraints, we have been seeing in the competitive landscape price increases between tend to even 30% for both propane and lead acid forklifts to account for the challenges and supply side.
For us as we are looking to launch our products developed by our brand start to capture market share.
We are currently maintaining our advertised price, which range from 24000 to 34000, depending on the model.
Which is currently a fantastic deal compared to competitor products. So those four key elements are truly driving the success that we're seeing from a sales standpoint.
Thank you.
Seeing no more questions in the queue, let me turn the call back to Mr. Wang for closing remarks.
Great. Thank you very much operator and everyone. Thank you so much for participating in today's call and for all of your support we appreciate your interest and look forward to reporting on our next quarter's number and progress in.
In the upcoming months, but we have a lot going on here at Green Linda is that we're truly excited about and we can't wait to continue to share our progress.
Yeah.
Thank you Dave.
Ladies and gentlemen that concludes our conference call for today. Thank you all for your participation you may disconnect now.
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