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spk04: Good day, ladies and gentlemen. Thank you for standing by and welcome to the Greenland Technologies third quarter of 2021 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. Now, I will turn the call over to Julia Kiang. Managing Director of the Blue Shirt Group Asia. Xian, please go ahead.
spk00: Thank you, operator, and hello, everyone. Welcome to Greenland Tech Knowledge Circle of 2021 Endings Conference Call. Joining us today are Mr. Raymond Huan, Chief Executive Officer, and Mr. Jing Jing, Chief Financial Officer. We released the results early today. The press release is available on the company's IR website at ir.gtag-tag.com, as well as from 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 discussions were contentful looking statements made on the Safe Hub position of the U.S. Private Security Litigation Reform Act of 1995. forward-looking statement involves inherent risks and uncertainties. As such, the company's actual results may be materially different from expectations expressed today. Further information regarding these and other risks and uncertainties is included in the company's public filing with SEC. The company does not assume any obligation to update any forward-looking statement, except as required under federal law. All the figures mentioned today during the conference call are in the U.S. dollars. With that, let me now turn the call over to our CEO, Mr. Raymond Huang. Go ahead, Mr. Huang.
spk01: Thank you very much, Julia. 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, and logistics 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 generating $23.1 million in gross revenue, which represents a 39.7% year-over-year growth. By reaching this milestone, we've remained committed to our guidance of 90 to 100 million year-end gross revenue, which would set a brand new full-year company record here at Greenland. And we remain optimistic with the growth of our core business. However, we are witnessing a cool-down of the China market with 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 6.8% for full year 2021. 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 trend continue to decline sharply or should it spread to the global markets in the upcoming quarters. The expansion of our business to the global market with our 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 are in progress of developing experience centers to allow interested prospects to be able to learn, operate, and purchase our industrial vehicles. As an industry pioneer of electric industrial vehicles in 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 vehicles. 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 delay due to port congestion, The first batch of our GEF series lithium-powered forklifts have arrived on US soil as of last week and are available for commercial sale. And I am extremely happy to report that we've already placed forklift sales orders and have several leads 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 GEL1800, our all-electric lithium-powered 1.8-ton rated load wheeled front loader, has also arrived this week. It's currently undergoing our post-shipping Q&A process and will be available for demonstrations and industry events by next week, where we anticipate generating strong demand for the vehicle. As for our GEX8000, our all-electric lithium-powered eight-ton wheeled excavator. Our first unit is fully assembled past all QA checks and is simply awaiting a 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 to the beginning of January of 2022. As I predicted during the last earnings call, the import 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 availability continues to rise. This will improve our vehicle margins, delivery times, and supply chain efficiency as we develop our foothold in the US market. And I am 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 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. JJ, go ahead.
spk05: 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. For the full details of our financial results, please refer to our earnings press release and later the Form 10Q body on the SEC's website. GreenLine's robust performance in the third quarter of 2021 demonstrates our strong competitiveness in addressing the increasing demands for advanced transmission products and mitigates supply chain risk. The number of our transmission products sold increased 11.6% to 33,478 units from 29,985 units in the third quarter of 2020. Filled by our robust sales of transmission units, we generate revenue of $23.1 million during the quarter, representing a year-over-year growth of 39.7%. The increase was primarily due to the significant increase in our sales volume spotted by the ever-growing demand this year and the increase in supplies despite global supply chain challenge. Additionally, our shift in the product needs towards higher value products also proved to be a right move and contribute to the year-over-year increase in revenues. Costs of goods sold were $18 million, up to 37.1% from the 13.1 million in the third quarter of 2020. The increase was primarily due to the increase of volume of the transmission products sold and the increase in raw material prices. Compared to 39.7% of revenue growth, we are pleased to obtain a positive operation leverage of 2.6%, even the material shortage and the supply chain disruptions. Along with the higher sale volume and the effective cost management, we continue to witness improvement in our probability. Gross profit was $5.1 million, an increase of 50% from $3.4 million in the third quarter of 2020. Our gross margin contributes an upward trend and a reach 22.1 percent up to 150 business points from 20.6 percent year-over-year, which was the result of transmitting product leads towards products of higher value and certification such as such as hydronic transmissions. We were also delighted to manage material costs through a strategic partnership and our capability to capture long-term growing demand. The total operating expense was 3 million U.S. dollars, an increase of 162.2 percent from 1.2 million U.S. dollars in the third quarter of 2020. Our operating expense as a percentage of total revenue was 13.2 percent, up to 6.2 percent point, compared to in the third quarter of 2020, primarily due to the increasing sales, consultancy, and research and development expenses over the year. Those expenses were carefully spent to spur the sustained long-term business growth. Selling expenses in the third quarter was $0.5 million, an increase of $93.2 from this prior year. The general and administrative expense was $1.2 million, up to 255.1% from the so-called of the 2020, due to the general expense incurred from the new financing activity as they increased the legal and the consultant fees associated with business planning and the project as Greenland expanded operations. Furthermore, we will further invest in high-value and more sophisticated products, as well as electrified products, such as a commercial EV. Research and development expense rose 143.2% year-over-year to $1.4 million in the third quarter of 2020, which comes for 6% of the total revenue. Trimmed by rapid growth in revenue, our net income surged 172.2% year-over-year to 1.3 million in the third quarter. At the end of September, our cash, restricted cash, and the cash equivalent reached 15.7 million U.S. dollars, compared to 20.5 million as of the end of June. Based on our business situation and the market conditions, we maintain our revenue guidance range to between 19 million U.S. dollars and the $100 million, representing an increase of 35% to 49% year-over-year. With our sound financial position, we are confident to sabotage the development of electrifying commercial vehicles. So let's conduct our prepared remarks. So let's now open to the call for the questions. Operators, please go ahead.
spk04: Certainly. As a reminder, ladies and gentlemen, it is star followed by one on your telephone keypads if you wish to ask a question. If you wish to cancel the request, you can press the pound or hash key. Once again, it is star one to ask a question. As a reminder, management asks that we limit to one question for the analyst. The line will close once the question has been posted. We have the first question. This is coming from the line of Rommel. Dion Sion from Aegis Capital. Please go ahead.
spk03: Good morning. Thanks very much for taking my question. Congratulations on the quarter. You know, you guys have, I certainly appreciate your comments, Ray, about the moderating in the growth, the deceleration 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, you know, what's really driving that, obviously, your strong new products and move towards the premium end of the market and have really driven significant gains here over the last several quarters. But I wonder if you could just give us an update and really that continued market share growth, which obviously you posted in third quarter as well. Thank you.
spk01: Oh, sorry about that. Struggling with the mute button there. Yeah, absolutely glad to. So, especially with the global constraints in the environment with material shortages and supply side challenges. This is definitely a theme throughout the year that's impacting all businesses and all industries. However, from a Greenland standpoint, it actually plays into the strength of our company. We have extremely robust manufacturing capabilities and a very established supply side with a fantastic team of that has the tools and the capability and connections to be able to continue to meet the demands of our clients and be able to continue to provide our components, our core business at scale. And because this is a position that our competitors cannot offer and maintain, it's 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 tactically playing on the strengths and advantages of our company that we've developed throughout our time since 2006. Thanks very much.
spk04: Thank you. We have the next question. This is coming from from Alliance Global. Please go ahead.
spk02: Good morning, Raymond, and congratulations on the quarter. I just wanted to ask, as the forklift effort is starting to really take root, have you designed the Greenland forklifts around a specific battery, or can the forklifts work with units designed by a variety of manufacturers?
spk01: Thank you, Jeff, for the question. So our forklift is designed around the battery that it's currently utilizing in addition to our integrated drivetrain, which is a component that we produce specifically catered towards lithium-powered forklifts that integrates the speed reduction gearbox, the driving axle, and the electric motor into a single unified package. So this forklift is designed primarily around our components, including this drivetrain and the battery itself.
spk02: Thank you.
spk04: Once again, as a reminder, it is star followed by one on your telephone keypads if you wish to ask a question. The next question comes from Jeffrey Campbell from Alliance Global. Please go ahead.
spk02: Raymond, I thought to ask how you're targeting the upcoming demonstrations of the GEL1800. It seems like it's a new market, but it seems like the low-hanging fruit would be places where work takes place indoors. It seemed like the charging would be easier and pollution from the ICEs would be negated.
spk01: Yep. You're absolutely right. We are going to market the GEL1800 in industries that are well suited to support its charging needs. So this does include indoor facilities, 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 industries 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 vehicles operating and that makes the logistics so much easier than having to procure and store diesel fuel. And from a marketing standpoint with these industries that we're targeting, we will be utilizing the GEL1800 to attend trade shows for these specific sectors.
spk02: Okay, great. Thank you.
spk04: The next question comes from the line of Romul Dionzio from Aegis Capital. Please go ahead.
spk03: Yes, thanks for taking my follow-up. You know, Ray, you talked about some of the logistical challenges from a shipping standpoint. I just wondered, are you seeing any – Any challenges from a component sourcing standpoint? Obviously, as you get more into the electric vehicle business, that's probably higher tech components. I wonder if you're just seeing any shortages or delays there on the supply chain for the components for those products. Thanks.
spk01: Great question. So just like the global environment is experiencing this year, yes, we are seeing material shortages here. 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 and procure products the components that we need to be able to deliver. And that's how we were able to be able to generate over 30,000 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 going to be a continued challenge as the world continues to struggle with supply-side constraints. However, we've been very well positioned to meet that challenge thus far, and we plan to do so moving forward, too.
spk03: Great. Thank you.
spk04: The next one comes from the line of Jeffrey Campbell from Alliance Global. Please go ahead.
spk02: This would be my last question, and thanks for allowing the follow-up, Sreeman. One thing I was curious about is you're saying that the forklifts are always already getting off to a good sales start. Is the role that having a built-in charger in your forklifts is playing in these early sales? It would seem like to me that particularly for a workplace that's new to EV forklifts, not having to fool around with separate charges would be a tremendous value add.
spk01: From the forklift standpoint, we've been graced with a number of various wind that power the sails for the sale of our forklifts. Sorry, I used the same word twice. What we've been seeing is that number one, the concept of lithium power has already been demonstrated in various industries such as passenger cars with Tesla so already from a consumer and 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 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 a company, maintaining the operation of your equipment 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 continue to grow and locations switch over from retail to warehousing, the demand for forklifts to 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 10 to even 30% for both propane and lead acid forklifts to account for the challenges in supply side. For us, as we are looking to launch our products, develop our brand, and start to capture market share, we are currently maintaining our advertised price which range from $24,000 to $34,000 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.
spk04: Thank you. Seeing no more questions in the queue, Let me turn the call back to Mr. Wang for closing remarks.
spk01: 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 the upcoming months. But we have a lot going on here at Greenland that we're truly excited about, and we can't wait to continue to share our progress.
spk04: Thank you. Ladies and gentlemen that concludes our conference call for today. Thank you all for your participation. You may disconnect now.
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