Q1 2022 Greenland Technologies Holding Corp Earnings Call

Good day, ladies and gentlemen, thank you for standing by and welcome to the Greenland Technologies' first quarter 2022 earnings Conference call. Currently all participants are in a listen only mode. Later, we 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 Chin managing director of the Blue shirt Group Asia Ms. Chen. Please proceed.

Thank you operator, and Hello, everyone welcome to Greenland technologies first quarter two.

22 earnings conference call joining us today are Mr. Raymond Huang Chief Executive Officer, and Mr. Jing Jing Chief Financial Officer.

We released our results earlier today. The press release is available on the company's IR website, and I Dodged E Tech.

Tech dotcom as well, it's wrong newswire services a replay of this call will also be a variable on the few hours on our IR website before we continue. Please note that today's discussion will contain forward looking statements made on the safe Harbor provision of the U S private insurance.

The litigation Reform Act of 1995.

We're looking in both hybrid and answer it.

As such the company's actual results may be materially different as well.

Hey, she expressed today further information regarding these and other risks and uncertainty is included in the company's public filings with the SEC. The company does not assume any obligation to update any forward looking statement, except as required under applicable law also please note unless otherwise.

The state all the figure mentioned during this conference call on the U S. Dollar with that let me now turn the call over to our CEO Mr. Raymond Huang. Please go ahead Mr. Wang.

Oh, Thank you very much Julia and good morning, everyone and thank you for joining us today, let.

Let me start the call by thanking my team at Greenland technologies for their hard work and contributions to another record quarter their commitment to delivering results in overcoming obstacles for the benefit of our company and our shareholders as the reason for a history of long term profitable growth now the first quarter.

Order was a very successful quarter for the company with record Q1 revenue generation of $29 8 million and in units delivered.

Despite significant global challenges such as Covid related shutdowns in China disrupted shipping and supply chain and high logistic and material costs. Our teams have continued meeting client demand and accomplish our best ever first quarter transmission deliveries of 21902 units.

Now the success of our component business this quarter and throughout last year has been a reflection of the effective execution of our strategies. However, this year continues to introduce new and unpredictable challenges that impact the overall global market that may impact our business in the immediate term.

It is COVID-19 related shutdowns supply constraints and the geopolitical instability in eastern Europe.

Our facilities have not been directly impacted COVID-19 related shutdowns may affect the ability of our suppliers and clients to operate their own facilities, resulting in an impact to production and sales. We will continue to do what we can to maintain full production capability and continue to dig.

Liver innovative solutions to our clients to help maintain their business during these challenging times.

Now the component business still accounts for a majority of our business revenue regarding our electric industrial heavy equipment business. We have sold nearly three dozen units of industrial equipment. Unfortunately, our electric industrial equipment deliveries have been impacted by supply interruptions and components.

<unk> did have lengthened the delivery wait times longer than we expected.

Fortunately, we remain on track with the establishment of our first Assembly site in Maryland. In fact, we recently announced that we have executed a lease for a site in Baltimore County, Maryland, and we were secured a location in mid June we expect this site to be operational in July .

It's going to take a few quarters to get the site running at full steam but when it does we expect the facility to produce over 500 heavy industrial units per year, and that's improving our equipment delivery times.

Our press our prospective clients have also been facing longer installation times for onsite charging stations to power electrical equipments such as ours.

This has added additional pressure to our sales process to close outstanding leads as a result, we have been actively exploring opportunities with both domestic and international charging solution Oems to improve local availability enhance education and to support a simpler process.

For onsite charging installations, we will have more to share shortly.

In the interim we have placed a greater emphasis on our sales team to secure paid equipment to reservations.

Despite these challenges interest in our equipment to remain strong as business continues to embrace the benefits of electrification of their industrial equipment, primarily driven by sustainable environmental awareness and advising fossil fuel costs. This demand will continue to grow as <unk>.

Additional legislation that's passed introducing a stricter environmental governance policy requirements.

I'm coming S. NASDAQ environmental reporting requirements and new consumer incentives such as Maryland's recently passed clean cars Act of 2022 that offers a state grant to subsidized 20% of the purchase price for electric industrial heavy equipments such as ours.

We applaud, Maryland, Governor Hogan Senate and house for their leadership and commitment for a cleaner healthier environment and economy and we expect other states to follow their example, and adopt similar programs and these policies will further strengthen our efforts to convert the industrial.

Market to a cleaner and more sustainable alternatives.

And we have recently launched a new brand for clean industrial heavy equipment Division heavy H E V I have it.

Heavy will replace Greenland machinery, and provide better clarity between our components and industrial EV business in.

In addition, heavy as a better reflection of our business philosophy mission and culture with an American bison emblem that embodies both the strength and power possessed by our equipment and a symbol of America's beauty nature and recovery of what was almost lost.

The launch of heavy initiate at marketing campaign that will raise brand awareness across online print and in person channels.

Our stock price has been depressed year to date, but I strongly believe it does not accurately reflect the value and growth potential of our business as illustrated in our results. Our fundamental business continues to grow despite a challenging environment and our electric industrial equipment business continues to progress.

On track and open new growth opportunities for the business.

Despite the volatility of recent markets and global constraints, Greenland is well positioned to continue delivering value to our clients and shareholders into the long term.

And with that let me turn the call over to our CFO Ching Ching to provide greater detail into our financial performance. The floor is yours Ajay.

Thank you Rami and thank you everyone for joining our call today I will now review financial highlights.

For 2022.

We are encouraged.

And what we call the again China.

The global headwinds impacting all aspects of our business.

We achieved 19% year over year revenue growth in the first quarter to $29 3 million U S dollar with 19% year over year net income growth.

This 30% increase our cash balance.

This brings us and the competency and the flexibility as we continue to prioritize Westland.

R&D innovation and the revenue generation.

The global highway will be met.

For the near term, but we believe longer term Greenland, we're on track for the market share gains and the electric electric industrial vehicle markets, while creating significant value for the shareholders.

Along with the increase in sales volume our cost of goods sold rose, 18% to 22 million.

U S. Dollar gross profit was 614 million U S. Dollar an increase of 25% from $5 1 million U S. Dollar in the first quarter of 2021.

Gross margin gained 100 basis points to 21.7% from 21, 7% in the prior year as the company executed a strategy shift towards higher value and more sophisticated.

Such as hijacked transmission products.

Operating expenses increased 33% to 3 million U S. Dollar as we continue our investment in pursuing higher revenue levels and the targets Ludington groups.

He's probably the increase we held.

Operating expense.

<unk>, 2% of total revenue.

It was only up one one percentage points from the previous year.

We think that salary expense increased nine percentage to their one 6 million U S. Dollar General and administration expense increased 40% to one 3 million and our research and that is one of many clients increased 13% to 1.1.

Sure.

We then generated income of $3 4 million U S dollars from operations.

18% from the first quarter of 2021.

Leveraging our strong sales and effective expense management.

Net income was 2.9% I'm, sorry, $2 9 million U S dollar and.

Increase of 19% from two 4 million U S dollar in the prior year looking.

Looking ahead, we remain committed to executing our long term business strategy to capture growth in the electronic industrial vehicles taxes and.

Higher revenue and a coffee levels.

That concludes our prepared remarks, operator, we can now open the call for questions.

Thank you.

As a reminder to ask a question you would need to press star one on your telephone to withdraw your question. Please press the pound or hash key.

Please stand by while we compile the Q&A roster.

Yes.

I show our first question comes from the line of rebel.

<unk> from <unk> capital. Please go ahead.

Hi, good morning, Thanks, very much for taking my question.

Despite all the challenges you guys are facing on a macro basis, I mean, 19% topline growth really stellar performance I Wonder if you could I know you touched on it in the prepared comments, but I wonder if you could just maybe a little more granularity on in terms of that you know the key drivers behind that growth I mean, you're getting market share I presume in China with effective supply chain management. What are you guys doing so much better.

The competition to gain market share.

To manage that supply chain. Despite all the headwinds you guys are facing.

Sure absolutely J J, let me take that one and then you can add on if necessary.

But good morning Rommel.

So from our position as a market leader in our components space. This is actually afforded us the luxury to have stronger more established relationships with our supply partners that our competitors are not able to just creates overnight and this has been very strong.

From our long term relationships working with our partners to navigate the obstacles that have presented themselves are thus far such as the global pandemic and working with them to be able to address pricing concerns and being able to source raw material and components and we work together hand in hand.

With our suppliers to be able to overcome these and we're extremely proud of that but this this from a macro standpoint. This has definitely been a very challenging year with very with many unexpected twists and turns along the way.

But that we will continue to work hand in hand, with our suppliers to ensure that we can meet the demands of our clients where we can.

Okay, maybe just a quick follow up if I could Maryland, it sounds like it's up and it's a very much on track to get up and running here in the next few weeks actually.

Just one question there are labor I wonder if he I know that's been fairly tight on a national basis could you just maybe a little commentary on <unk> on the labor situation. There. If you're if you guys are hiring is on pace to get to where you need to be here in the next few weeks and months.

Yeah.

Of course, one of the reasons why we selected Maryland was their strong support network and a talented workforce available in the Baltimore County area in particular that where they.

So we're setting our first fight it and we actually are working hand in hand, with the department of labor of Maryland to be able to staff our facility and meet the needs from a labor standpoint, we have had our initial talks on that front and has actually been very strong.

Well from a candidate standpoint, and what we've been seeing is the labor marketing 'twenty 'twenty. Two overall has been an improvement in.

In the U S compared to 2021.

Though labor costs are still at.

At a very high rate overall labor force looking to actually work is there and significantly improved so the costs are high we are getting a large number of applicants and through partnership with the department of labor of Maryland and.

As it happens the their networks through our various universities colleges technical schools and recruiting agencies.

We're very optimistic that we'll have no concern meeting our labor needs for Maryland.

Great Thanks, and congratulations on the quarter.

Thank you.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone.

So which are your question. Please press the pound or hash key.

Thank you.

No more questions in the queue, let me turn the call back to Mr. Wang for closing remarks.

Sure. Thank you very much and everyone I just want to thank everyone on the call for participating today and for your continued support I'm going to repeat some comments that JJ and I have made during this call, but inc. Closing I just want to emphasize that the first quarter of.

This year was a very strong quarter for us for Greenland with 19% year over year revenue growth at 19% increase in net income and a 30% increase in our cash balance and this growth demonstrates the capabilities and value we have your agreement.

And we have made significant process in our manufacturing strategy, new product introductions, our rebranding efforts and the build out to future revenue generating a teams and divisions, which demonstrates our commitment and our capability to stay.

On track for long term growth for the company and while the global headwinds are expected to remain challenging throughout this year. We are focused on these long term goals.

And Greenland is on track to become the market leader in electric industrial.

Industrial vehicle market and this is a massive growth opportunity for our company and for our shareholders. So we appreciate everyone's continued interest and look forward to continue to update you with our progress as we move forward into our next quarter.

But for that I, just want to say thank you very much for joining today's call.

Yeah.

Thank you all again this concludes the call you may now disconnect.

Yeah.

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