Q3 2022 Greenland Technologies Holding Corp Earnings Call
Yeah.
Good day, ladies and gentlemen, thank you for standing by and we warmly welcome you all to the Cleveland Technologies third quarter 2020 earnings Conference call. Currently all participants are in 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 I would like to turn the call over to Mr. Yue Sai I think you can factor of the Blue shirt group. Mr. <unk>. Please proceed.
Thank you operator, and Hello, everyone. Welcome to agreement Technologies third quarter 2020 earnings conference call. Joining us today are Mr. Raymond Huang Chief Executive Officer.
Mr J, J <unk> Chief Financial Officer.
We released the results earlier today.
The press release is available on the company's Investor Relations website as well.
Newswire services.
A replay of this call will also be available in a few hours on our IR website.
Before we continue please note that today's discussion will contain forward looking statements.
These statements involve inherent risks and uncertainties as such the company's actual results may differ.
May be materially different from the expectations expressed today.
Further information regarding these and other risks and uncertainties is included in the company's public filings with SEC.
<unk> does not assume any obligation to update any forward looking statements.
As required under applicable law also please note that unless otherwise stated all figures mentioned during the conference call are in U.
Dollars.
With that let me now turn the call over to CEO . Mr. Anyway. Please go ahead Ms. Wang.
Thank you very much and good morning, everyone and thank you for joining us today.
Before I recap the third quarter I wanted to thank my team for delivering solid results. Despite a continually challenging global environment.
Or is the third quarter, our components business is operating better than it has before and is only held back by lingering pandemic regulations, while our electric heavy equipment division is continuing to strengthen its infrastructure brand and value proposition and we are at the tipping point for adoption.
It will result in significant growth for the company and our shareholders now.
<unk> dot and first into our core components business, we produced and delivered 31303 drivetrain units, resulting in revenue of 21 8 billion million.
This is a new record for third quarter drivetrain deliveries by edging above our results last year Rev.
Revenue is slightly lower due to the foreign exchange rates shift in the third quarter between the Chinese RMB and the U S dollar.
We focused on fulfilling our backlog for clients impacted by pandemic shutdowns in the second quarter, but are now open and actively producing vehicles. Unfortunately as these territories opened new territories have been shut down due to China's zero Covid policy <unk>.
Looting districts surrounding the port of named Paul that have delayed product product demand and impacted deliveries to the global market.
As a result, we were not able to deliver Drivetrains tour full ability, especially outside of China and has continued to add to our backlog of product sales.
Can you to stand by my statement last quarter that these restrictions are a short term challenge and will not last forever, but caution that they will impact our component business why they exist and though we're not able to control what regions get locked down I want to emphasize that we have been operating <unk>.
<unk> in the areas that we can control production has never been stronger Greenland and we are staying ahead of supply chain challenges such as raw material procurement, which has led to increased operation efficiency and higher margins for the business. If it was not for the lockdowns than we would've dill.
<unk>, an even stronger quarter.
Shifting to our heavy electric industrial heavy equipment Division, we have officially opened our first U S based assembly sites outside of Baltimore, Maryland.
We have some great pictures in our presentation from our celebratory ribbon cutting event attended by shareholders local leaders and government officials, but I encourage you to look at and you can access the presentation on our website.
At <unk> Dot com.
We expect to rollout the first unit off the line at this facility in the first quarter of next year and will produce 500 units per year.
While creating four to five dozen green jobs in the local community once the site fully ramps up.
This site not only strengthens our production capability, but also serves as the first step for heavy to obtain the assembled in the USA label for our product line.
Our sales strategy is to secure a fleet deal with a brand name organization and we are making significant process along a number of leads in industries ranging from rental construction and governance as the first company to introduce electric industrial heavy equipment. It is.
Our responsibility to educate our audience on the technology and address any concerns to secure market share and ultimately establish the market as a whole.
We continue to receive strong interest in our product line and when we secure our first adopter by a recognizable brand I am confident that would lead to a rapid conversion of interest to sales and that is why our current efforts are laser focused on securing the first fleet deal.
Heavy continues to improve the value proposition of our electric product line for our prospective customers. We recently partnered with Syngenta to incorporate their state of the art GPS asset tracking system. The infineon tracker into our entire product line every piece of heavy equipment.
<unk> will come with the Infinity tracker and three years of service for free This offers security safety and easier incorporation of heavy products into our clients fleet management system.
In addition, heavy is undergoing a campaign to ensure that our products are compatible with every major EV.
EV provider in the United States.
We have successfully completed testing at Siemens E mobility Division. This testing ensures that heavy products are compatible with Siemens over 100000, EV charging station network across the United States. We will continue this campaign to ensure that our clients have option.
<unk> and peace of mind for the charging solutions when incorporating heavy products into their fleet.
<unk> is well funded to support the development and growth of the heavy business division through our strong balance sheet and the $10 million fund raise that we completed in July with aegis capital.
Updates shared thus far are evidence of these funds and use to grow the business and we will continue to invest into inventory supply chain marketing and talent to drive this business line and capture the significant opportunities present.
The third quarter has demonstrated that Greenland continues to deliver strong performance with a record drivetrain deliveries and with only short term pandemic restrictions holding us back with the forklift market growing at an 8% to 9% compound annual growth rates and our proven production capabilities.
<unk> is well situated to continue growing its core business and retain our position as market leader in our industry.
Furthermore, our electric heavy equipment division is developing as planned and will generate substantial growth for the agreement business. When we establish the market and pioneer electrification in the heavy equipment industry.
I stand by our unique offering that Greenland presents to our investors and shareholders with our strong balance sheet and vast growth opportunities and thank our loyal supporters, who share my vision and mission for the company and an incredibly exciting future.
And with that let me turn the call over to our CFO Ching Ching to provide greater details into our financial performance go ahead JJ.
Thank you Raymond and thank you everyone for joining our call today I will now go over our financial highlights for the third quarter 2022.
For the full details of our financial results. Please refer to our earning press release.
The headline for US this quarter is the 67% increase in net income we delivered we achieved this despite the long list of headwinds impacting the boarder industry, including shutdowns in China global inflation supply chain challenge and higher material cost.
We are making progress towards our long term targets, but we are not immune to the challenging impacting the economy.
We are starting to see signs of improvement and our folks are accelerating both our growth and the <unk>.
As we move into 2023.
In terms of Q3 2022 revenue was 21 8 million U S dollar the slight decrease from $23 one.
$1 million in the prior year was primarily due to the impact of yen depreciation.
Excluding foreign exchange impact our revenue in Chinese RMB actually increased by about 2% from the third quarter of 2021.
The number of transmission products rose, 1% to 31303 units during the period.
We generated gross profit of $4 8 million compared with one point, sorry, compared with $5 1 million in the third quarter of 2021, while maintaining gross margin at 22, 1% with our shift in product mix towards higher <unk>.
Value and more sophisticated products.
The total operating expense decreased 10% to $2 7 million, reflecting our improved operating efficiency by streamlining and simplifying our product lines.
Operating expenses as a percentage of total revenue was also down 60 basis points year over year to 12, 6% in the third quarter.
We generated $2 1 million in income from operations up 1% from the prior year.
Net income surged, 67% to $2 1 million driven by the combination of improved operating efficiency increase in grant income and a lower effective tax rate.
In summary, we are making progress towards our long term goal, we expanded to take another big step forward as we move into 2023 with our U S production facility and now online.
<unk> does that will serve as the carrier for our revenue growth along with execution on our product roadmap.
While we will continue to manage operating expenses closely as we shift our focus towards wrapping up heavy production.
Competitive and that the vitamin that competitive.
We remain excited about the high level of just ball market in front of the Greenland and look forward to capturing market share delivery improve.
Results.
And for the shareholders.
That four crews.
I'll now can now open for the call for questions. Okay. Thank you.
At this time you who'd like to ask question. Please press star one on your telephone and wait for a name to be announced.
There'll be a short silence what questions happy to collect it.
Our first question comes from the line of.
O'neill from Litchfield Hills Research. Please go ahead.
Yes.
Good morning, and congratulations on having a.
Quarter. This good despite the issues so I have I have.
Two questions one is about the deliveries and delays and the other one is about the heavy equipment.
You said in your prepared remarks that you were unable to make some deliveries because of.
Closures in China have those delivery has been made or will they be made in Q4 is.
Is it and is it possible youll have similar delays in Q4.
That's one and the other question about heavy as well what steps you're taking to educate the market about about heavy equipment and I'm thinking here of Tradeshows Your experience center.
Whether you've got a staff of people doing outreach about the product. If you could just give us some details on that would be helpful.
Sure I'll take that one and good morning. Thanks for your question.
Starting from a delivery standpoint, with the backlog that we generated in Q3 I am very confident that we will be able to compete.
Completes those deliveries for Q4.
The orders that we received are not orders to be cancelled in any way shape or form there just how it often delayed because we provided our clients with flexible terms to account for the volatility of the no code zero Covid policy right now.
Just like what we saw from Q2 to Q3.
Some of our larger clients that were shutdown in Q2, we added to our backlog for Q3, they opened up and then we're able to deliver.
With that said, it's very difficult right now to predict.
We.
Anticipation for what regions are going to be opened and what regions are going to be closed and their timelines. So there is a possibility that that will.
Have an impact on Q4, but as it stands right now anticipate that our Q3 orders are going to spend into Q4, and then we'll complete.
For the heavy business itself education is key and critical and we are focusing our efforts primarily on the mid Atlantic region for outreach. So we are attending the trade show circuit for the regional shows we're targeting the <unk>.
Largely popular shows in our target to region for key industries. For example, next week heavy will be exhibiting at the New Jersey municipalities.
<unk> Expo, which is the largest expo if youre looking to do any sales to the government sector.
And we.
We will continue to do shows in agriculture, and construction as well.
Yes.
In addition to that we've actually increased our sales force already doubled.
<unk> outreach to.
Our target markets and we've expanded our marketing team by about 50%.
To further establish our brand presence in this sector and that's our tasks right now to get the word out.
Okay. Thanks very much.
Thank you thank.
Thank you for the questions one moment for the next questions.
Our next question comes from the line off.
<unk> <unk> from <unk> capital. Please proceed.
Thank you and good morning.
In your prepared comments you discussed streamlining some of the cost expenses I Wonder if you could just provide us a little more granularity.
Despite the.
Slowdowns.
Covid shutdowns temporary ones and inflationary pressures and some streamlining youre still posting pretty positive year over year.
Units in.
<unk>.
Foreign currency denominated revenues. So it just is it more on the cost reduction front that you're streamlining or it doesn't seem like you are losing sales I guess is the point I'm trying to get at and I Wonder if you could just provide some.
Great and hilarity on that on your cost reduction efforts. Thank you yes.
Probably we can take that sure.
Yes.
Thank you Ron and good morning.
<unk> mentioned that before I think in our Chinese sites, especially projects that produce the transmission products, we have the leading age edge.
Such production cost and also a really strong supply chain.
Supply chain, Colorado, the partnership with our suppliers I think that's the one of the key we still can maintain good gross margin year over year and quarter by quarter.
As you mentioned like despite all of the heavy site waste you facing a little bit of a challenge, especially in reasons Chinese zero Colgate a policy that is maintained and the restricted our sales to the customer.
I think that's the one key that we mined facing faced some slowing down for.
For the coming quarters, but in general I think we still maintain a really good production line streamline especially for the few engine size to the electronic engine.
Engine, driven I think that's one of our <unk>.
Technology, and our production workers to keep the food efforts such such contribution.
So we are pretty confident in our cost production and also to deliver.
The relatively.
Competitive products to the customer, but still as I mentioned, we might face a little bit of headwinds, especially for the coming quarter, but in general we are still pretty confidence on that.
Yes. Thank you J J and also just to add to that and emphasize one additional point.
We've been going through a multiyear exercise to truly streamline our components product offering.
When we started out we were developing customized solutions to cater to the needs of our clientele.
But I'd say within the last four years, we've been going through an effort to standardize our products, which makes it.
Which drives efficiency in our assembly lines.
In 2019 for example, we were running over 50 different series of drivetrain components each with.
Between three to a dozen different models amongst them.
But now we've actually trim that down to about 36 about three dozen different series and a smaller number of models and then that just adds to greater efficiency. So there's less variability in our cost purchasing and faster.
Assembly processes overall forget the streamlines that and just like JJ said, we've also been that's efforts been also leading towards some of our developments and components for our integrated drivetrains, specifically cater towards electric material handling vehicles and applications and those have been high.
Margin products for us as well.
Okay, great. Thanks, so much for the color.
Thank you.
Thank you for the questions one moment for the next question.
Okay.
Our next question comes from July of <unk>, Sydney spec from Wells Fargo Advisors. Please proceed.
Yes, hi, guys congrats on continuing to maintain profitability in a tough market.
Thank you so much Greg.
Yes My question Ray is.
On the fleet deal in your opening comments.
Just like you get a little bit more color on that in terms of ideally what does that initial first fleet deal look like.
Mhm.
Yes, that's a great question and the answer it is of itself varies between the different industries that we target.
For example.
Let's say for the national rental industry.
Most likely the fleet deal itself would manifest as a pilot.
For adoption in select areas for the rental program.
For distribution out and ultimate testing.
Whereas for the construction industry.
We're primarily focused upon large deals in the urban environment for.
For incorporation of our products into the overall bid process.
As a perfect case in.
Our scenario.
The application of our vehicles to not just support the overall business is return on investment in operations, but also their ability to secure and win bids and contracts as part of their overall business.
Okay. Thanks.
Thank you for your question. Thank you seek no more questions in the queue. Let me turn the call back to Mr. Wang for closing remarks.
Thank you very much and again, thank you everyone for joining today's call and listening todays to today's broadcast.
This is a very challenging market.
For sure, but Greenland has been continuing to execute and produce results for our shareholders and for our loyal investors as well and I just want to reiterate my personal stance that I still honestly believe Greenland offers.
Unique position on the street that doesn't exist in many companies today and we are doing everything in our power to be able to reward our loyal shareholders.
The rest of the year is looking to be very strong pending the challenges that we have already.
Addressed earlier on this call and we are excited for what the future holds for the Greenland business and growth potential into the future. So with that I do want to thank everyone for both supporting the business staying tuned in and for all of our hard.
Working team.
Team members.
Working day in day out to make that happen and produce these results we wouldn't be here without without you. So thank you very much.
Thank you all again this concludes the call you may now disconnect.
[music].
[music].
[music].
Good day, ladies and gentlemen, thank you for standing by and we warmly welcome you all to the Queensland Technologies third quarter 2020 earnings Conference call. Currently all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.
We are recording today's call. If you have any objections you may disconnect at this time.
I would like to turn the call over to Mr. Yue Sai managing director of the Blue shirt group. Mr. <unk>. Please proceed.
Thank you operator, and Hello, everyone. Welcome to agreement Technologies third quarter 2020 earnings conference call. Joining us today are Mr. Raymond Huang Chief Executive Officer, and Mr. J, J <unk> Chief Financial Officer.
We released the results earlier today.
The press release is available on the company's Investor Relations website as well as <unk>.
These wire services a replay of this call will also be available in a few hours on our IR website.
Before we continue please note that today's discussion will contain forward looking statements forward looking statements involve inherent risks and uncertainties as such the company's actual results may be materially different from the expectations expressed today further information regarding these and other risks and uncertainties is included in the <unk>.
<unk> public filings with SEC.
<unk> does not assume any obligation to update any forward looking statements.
As required under applicable law also please note that unless otherwise stated all figures mentioned during the conference call are in U S dollars.
Let me now turn the call over to CEO . Mr. Anyway. Please go ahead Ms. Wang.
Thank you very much and good morning, everyone and thank you for joining us today.
Before I recap the third quarter I want to thank my team for delivering solid results. Despite a continually challenging global environment.
Summarizing the third quarter, our components business is operating better than it has before and is only held back by lingering pandemic regulations, while our electric heavy equipment division is continuing to strengthen its infrastructure brand and value proposition and we are at the tipping point for adoption.
It will result in significant growth for the company and our shareholders now.
<unk> dot and first into our core components business, we produced and delivered 31303 drivetrain units, resulting in revenue of 21 8 billion million.
This is a new record for third quarter drivetrain deliveries by edging above our results last year Rev.
Our revenue is slightly lower due to the foreign exchange rates shift in the third quarter between the Chinese RMB and the U S dollar.
We focused on fulfilling our backlog for clients impacted by pandemic shutdowns in the second quarter, but are now open and actively producing vehicles. Unfortunately as these territories opened new territories have been shut down due to China's zero carbon policy <unk>.
Adding districts surrounding the port of named Paul that have delayed product product demand and impacted deliveries to the global market.
As a result, we were not able to deliver Drivetrains tour full ability, especially outside of China and has continued to add to our backlog of product sales.
Continue to stand by my statement last quarter that these restrictions are a short term challenge and will not last forever, but caution that they will impact our component business why they exist and though we're not able to control what regions get locked down I want to emphasize that we have been operating.
Strongly in the areas that we can control production has never been stronger at Greenland, and we're staying our head of supply chain challenges such as raw material procurement, which has led to increased operation efficiency and higher margins for the business. If it was not for the lockdowns than we would've.
Delivered an even stronger quarter.
Shifting to a heavy electric industrial heavy equipment Division, we have officially opened our first U S. Based assembly sites outside of Baltimore, Maryland, We have some great pictures in our presentation from our celebratory ribbon cutting event attended by shareholders local leaders and government officials, but I encourage.
You to look at and you can access the presentation on our website at.
At <unk> Dot com we.
We expect to rollout the first unit off the line at this facility in the first quarter of next year and will produce 500 units per year.
While creating four to five dozen green jobs in the local community once the site fully ramps up.
This site not only strengthens our production capability, but also serves as the first step for heavy to obtain the assembled in the USA label for our product line.
Our sales strategy is to secure a fleet deal with a brand name organization and we are making significant process along a number of leads in industries ranging from rental construction and governance as the first company to introduce electric industrial heavy equipment. It is our.
Our responsibility to educate our audience on the technology and address any concerns to secure market share and ultimately establish the market as a whole.
We continue to receive strong interest in our product line and when we secure our first adopter by a recognizable brand.
Confident that would lead to a rapid conversion of interest to sales and that is why our current efforts are laser focused on securing the first fleet deal.
Heavy continues to improve the value proposition of our electric product line for our prospective customers. We recently partnered with Syngenta to incorporate their state of the art GPS asset tracking system, the infinity tracker into our entire product line.
Every piece of heavy equipment sold will come with the Infinity tracker and three years of service for free This offers security safety and easier incorporation of heavy products into our clients fleet management system.
In addition, heavy is undergoing a campaign to ensure that our products are compatible with every major EV.
EV provider in the United States.
We have successfully completed testing at Siemens E mobility Division.
This testing ensures that heavy products are compatible with Siemens over 100000, EV charging station network across the United States. We will continue this campaign to ensure that our clients have options and peace of mind for the charging solutions when incorporating heavy products into their fleet.
Greenland as well funded to support the development and growth of the heavy business division through our strong balance sheet and the $10 million fund raise that we completed in July with aegis capital.
Updates shared thus far are evidence of these funds and used to grow the business and we will continue to invest into inventory supply chain marketing and talent to drive this business line and capture the significant opportunities present.
The third quarter has demonstrated that Greenland continues to deliver strong performance with a record drive train deliveries and with only short term pandemic restrictions holding us back with the forklift market growing at an 8% to 9% compound annual growth rate and our proven production capabilities.
Greenland is well situated to continue growing its core business and retain our position as market leader in our industry.
Furthermore, our electric heavy equipment division is developing as planned and will generate substantial growth for the agreement business. When we establish the market and pioneer electrification in the heavy equipment industry.
Stand by our unique offering that Greenland presents to our investors and shareholders with our strong balance sheet and vast growth opportunities and thank our loyal supporters, who share my vision and mission for the company and an incredibly exciting future.
And with that let me turn the call over to our CFO Ching Ching to provide greater details into our financial performance go ahead JJ.
Thank you Raymond and thank you everyone for joining our call today I will now go over our financial highlights for the third quarter 2022 for the full details of our financial results. Please refer to our earning press release.
The headline for us this quarter.
67% increase in net income we delivered we achieved this despite the long list of headwinds impacting the boarder industry, including shutdowns in China global inflation supply chain challenge and higher material cost.
We are making progress towards our long term targets, but we are not immune to the challenging impacting the economy.
We are starting to see signs of improvement and our books accelerating both our growth and productivity as we move into 2023.
In terms of Q3 2022 revenue was $21 8 million U S dollar the slight decrease from $23 one.
$1 million in the prior year was primarily due to the impact of yen depreciation.
Excluding foreign exchange impact revenue in Chinese RMB actually increased by about 2% from the third quarter of 2021.
The number of transmission products rose, 1% to 31303 units during the period.
We generated gross profit of $4 8 million compared with one point, sorry, compared with $5 1 million in the third quarter of 2021, while maintaining gross margin at 22, 1% with our shift in product mix towards the higher.
Value and the more sophisticated products.
The total operating expense decreased 10% to $2 7 million, reflecting our improved operating efficiency by streamlining and simplifying our product lines.
Operating expenses as a percentage of total revenue was also down 60 basis points year over year to 12, 6% in the third quarter.
We generate $2 1 million in income from operations up 1% from the prior year.
Net income surged, 67% to $2 1 million driven by the combination of improved operating efficiency increase in grant income and a lower effective tax rate.
In summary, we are making progress towards our long term goal, we expanded to take another big step forward as we move into 2023 with our U S production facility and now online.
<unk> does that will serve as the carrier for our revenue growth along with execution on our product roadmap. Meanwhile, we will continue to manage operating expenses closely as we shift our focus towards wrapping up heavy production.
Competitively and the divide among the competitive.
We remain excited about the high level of just ball market in front of the Greenland and look forward to capturing market share delivery improved.
And for the shareholders.
Does that four crews.
I'll now can now open for the call for questions. Thank you.
At this time you who'd like to ask a question. Please press star one on your telephone and wait for a name to be announced.
There'll be a short filings what questions happy collected.
Our first question comes from the line of <unk>.
O'neill from Litchfield Hills Research. Please go ahead.
Yes, good morning, and congratulations on having a.
Fourth quarter. This good despite the issues. So I have two questions. One is about the deliveries and delays in the other ones about the heavy equipment.
You said in your prepared remarks that you were unable to make some deliveries because of.
Closures in China have those delivery has been made or will they be made in Q4.
Is it and is it possible youll have similar delays in Q4.
That's one and the other question about heavy as well what steps you're taking to educate the market about about heavy equipment and I'm thinking here of like trade shows your experience center, where.
<unk> got a staff of people doing outreach about the product. If you could just give us some details on that would be helpful.
Sure I'll take that one.
Theo Thanks for your question.
Starting from a delivery standpoint.
With the backlog that we generated in Q3, I am very confident that we will be able to.
Those deliveries for Q4.
The orders that we received are not orders to be cancelled in any way shape or form there just how it often delayed because we provided our clients with flexible terms to account for the volatility of the no Coke zero Covid policy right now.
Just like what we saw from Q2 to Q3.
Some of our larger clients that were shut down in Q2.
We added to our backlog for Q3, they opened up and then we're able to deliver.
With that said, it's very difficult right now to predict.
The anticipation.
Anticipation for what regions are going to be opened and what regions are going to be closed and their timelines. So that there is a possibility that that will.
Have an impact on Q4, but as it stands right now anticipate that our Q3 orders are going to spend into Q4, and then we'll complete.
For the heavy business itself education is key and critical and we are focusing our efforts primarily on the mid Atlantic region for outreach. So we are attending the trade show circuit for the regional shows we're targeting the <unk>.
Largely popular shows in our target to region for key industries. For example, next week heavy will be exhibiting at the New Jersey municipalities.
<unk> Expo, which is the largest expo if youre looking to do any sales to the government sector.
And we.
We will continue to do shows in agriculture, and construction as well.
In addition.
<unk> to that we've actually increased our sales force already doubled doing outreach to.
Our target markets and we've expanded our marketing team by about 50%.
To further establish our brand presence in this sector and that's our task right now to get the word out.
Okay. Thanks very much.
Thank you thank.
Thank you for the questions one moment for the next questions.
Our next question comes from the lie off.
<unk> <unk> from <unk> capital. Please proceed.
Thank you and good morning.
Sure.
In your prepared comments you discussed streamlining the cost expenses I Wonder if you could just provide a little more granularity.
Despite.
The slowdowns.
Covid shutdowns temporary ones and inflationary pressures and some streamlining youre still posting pretty positive year over year.
Units in.
And.
Foreign currency denominated revenues.
It just is it more on the cost reduction front that you're streamlining or it doesn't seem like you are losing sales I guess is the point I'm trying to get at and I Wonder if you could just provide some.
Granularity on that on your cost reduction efforts. Thank you yes.
Probably not going to take that sure.
Thank you Earl and good morning.
As we mentioned before I think in our Chinese sites, especially projects produced the transmission products, we have the leading age edge.
Such production cost and also a really strong supply chain.
Supply chain called <unk>.
Partnership with our suppliers I think that's the one of the key we still can maintain a good gross margin.
Over here on the call to buy call there.
As you mentioned like despite all of the heavy site waste you facing a little bit of a challenge, especially in regions.
Chinese zero Colgate a policy that is maintained and the restricted our sales to the customer I think that's the one key that we mined facing faced some slowing down.
For the coming quarters, but in general I think we still maintained a really good production line streamline, especially for the new engine size to the electronic engine.
Engine, driven I think thats one of our <unk>.
<unk> technology, and our production workers to keep the food efforts such such contribution.
So we are pretty confident in our cost production and also to deliver.
The relatively.
Competitive products to the customer by the steel as I mentioned, we might face a little bit of headwinds, especially for the coming quarter.
In general we are still pretty confident on that.
Yes. Thank you J J and also just to add to that and emphasize one additional point.
We've been going through a multiyear exercise to truly streamline our components our product offering.
When we started out we were developing customized solutions to cater to the needs of our clientele.
But I would say within the last four years, we've been going through an effort to standardize our products, which makes it.
Which drives efficiency in our assembly lines.
In 2019 for example, we were running over 50 different series of drivetrain components each with.
Between three to a dozen different models amongst them.
But now we've actually trim that down to about 36 about three dozen different series and a smaller number of models and then that just adds to greater efficiency. So there's less variability in our cost purchasing and faster.
Simply processes overall forget the streamlined that and just like J J said, we've also been that Effort's been also leading towards some of our developments and components for our integrated drivetrains, specifically cater towards electric material handling vehicles and applications and those have been higher margin products for us.
As well.
Okay, great. Thanks, so much for the color.
Thank you.
Thank you for the question one moment for the next questions.
Okay.
Our next question comes from the line of call rights Cydnus spec from Wells Fargo Advisors. Please proceed.
Yes, hi, guys congrats on continuing to maintain profitability in a tough market.
Thank you so much Greg.
Yes My question Ray is.
On the fleet deal in your opening comments and I'd, just like to get a little bit more color on that in terms of ideally what does that <unk>.
<unk> first fleet deal look like.
Hum.
Yes, that's a great question and the answer is of itself varies between the different industries that we target.
For example.
Let's say for the national rental industry.
Most likely the fleet deal itself would manifest as a pilot.
For adoption in select areas for the rental program.
For distribution out and ultimate testing.
Whereas for the construction industry, we are primarily focused upon large deals in the urban environment for.
For incorporation of our products into the overall bid process.
As a perfect case in.
Our scenario of the application of our vehicles to not just support the overall business is return on investment in operations, but also their ability to secure and win bids and contracts as part of their overall business.
Okay. Thanks.
Thank you for your question. Thank you seek no more questions in the queue. Let me turn the call back to Mr. Wang for closing remarks.
Thank you very much and again, thank you everyone for joining today's call and listening today to today's broadcast.
This is a very challenging market for sure, but Greenland has been continuing to execute and produce results for our shareholders and for our loyal investors as well and I just want to reiterate my personal stance.
Still honestly believe Greenland offers unique position on the street that doesn't exist in many companies today and we are doing everything in our power to be able to reward our loyal shareholders.
The rest of the year is looking to be very strong pending the challenges that we have already.
Addressed earlier on this call and we are excited for what the future holds for the Greenland business and growth potential into the future. So with that I do want to thank everyone for both supporting the business staying tuned in and for all of our hard.
Working team.
Team members.
Working day in day out to make that happen in produce.
Else, we wouldn't be here without without you. So thank you very much.
Thank you all again this concludes the call you may now disconnect.