5/10/2023
Good morning and welcome to the Candy Technologies first quarter 2023 financial results conference call. All participants will be in the listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Kiwa Luo, IR Director. Please go ahead.
Thank you, Operator.
Hello, everyone. Thank you for joining us on today's conference call to discuss CANDi's results for the first quarter 2023. Earlier today, we issued a press release covering the results. You can find the press release on the company's website as well as from Newswire Services. On the call with me today are Mr. Xiaoming Hu, Chairman of the Board, Dr. Xueqin Dong, Chief Executive Officer, and Mr. Alan Lin, Chief Financial Officer. Dr. Dong will deliver prepared remarks in Chinese which I will then translate. After that, we will have a Q&A session. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. But the information regarding these and other risks and uncertainties is included in the company's public filing with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Please note that unless otherwise stated, All figures mentioned during the call are in the U.S. dollars. With that, let me now turn the call over to our CEO, Xueqin Dong. Go ahead, Dr. Dong.
Hello, everyone. I'm the CEO of Candy Technologies.
My name is Dong Xueqing Dong. Welcome to today's conference call. Our first quarter revenue of $22.9 million was down slightly from one year ago due to the strategic shift in business focus. Over 90% of the revenue was attributed to steadily increasing sales of our off-road vehicles and associated parts. which nearly doubled year over year.
其高利润率对整个毛利率的提升起到了重要的作用。 由于强劲的毛利率,我们在这个季度实现了盈利, 这与去年同期亏损相比有了显著的进步。 The higher margins of off-road vehicles boosted overall growth margins. Thanks to the strong growth process, we achieved
positive net income for the quarter, a significant improvement from the loss experienced last year. Incorporating fully electric off-road vehicles into our product line not only aligns with our values of environmental sustainability and social responsibility, but also positions us as a leader in the industry. We are confident that our focus on this market will benefit us in the future. Our strong balance sheet and financial position put us in a unique position to capitalize on opportunities in this market, and we are excited about the potential for growth. Looking ahead, we are committed to delivering innovative and sustainable solutions to meet the involving needs of our customers and the market.
Now we will move on to the Q&A session. Jim and Hu and I will answer your questions, and Ms. Kewa and Mr. Allen will provide translation for English questions. Please go ahead and ask your questions.
If you have any questions in asking questions, feel free to ask the operator.
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question is from the line of Mark McLoughlin, private investor. Please go ahead.
Hi, good morning. I'm Mark McLoughlin. I run a family office in Jacksonville, Florida. A little bit of background. First, thank you, Mr. Hu, for finally offering at least a partial unit guidance for 2023 unit guidance covering golf carts alone of 20,000 to 25,000 units. While not reported in the preferred press release or announcement, you are at least on record saying that on the year-end 2022 conference call, to quote Mr. Hu, Quote, so for the fiscal year 2023, we expect the sales during this year roughly to be 20 to 25,000 pieces of golf carts to be sold in the U.S. market because we have more in-depth discussions and cooperation with Lowe's directly. Great statement. However, it does beg the question, why haven't we seen this in news or press releases? So, again, to unpack your quote, 20,000 to 25,000 units would mean a quadrupling of 2022's golf cart sales, which would generate revenues between $125 and $150 million. And reviewing Candy's data on import key software for Q1, it appears you've already shipped 6,500 units in Q1. and this is at the high end of your forecast according to your earlier disclosure. So question, do you have a further guidance update for Q2 and for the balance of the year? I have a few other questions as well, but if you would answer that.
Okay, thank you. in Florida, an investor. His question is, good morning, Mr. Hu and Mr. Guan. First of all, I would like to thank Mr. Hu for finally providing the market with a little bit of future, future, full-fledged information. Although this information was not announced in the news, but at the end of 2020, at the end of the press conference, Mr. Gu mentioned that in 2023, we expect to sell about 20,000 to 25,000 cars in the U.S. market. And this is based on our direct discussion and cooperation with Lowe's. This is very attractive information. But why don't we I didn't see it in the news in a more public way to enjoy this exciting news. If I can read and interpret this information, 20,000 to 25,000 cars will be four times as much as the high-speed car sales in 2020. The income may be between $1.25 to $1.5 billion. From the current public news, a considerable number of cars have already been shipped to the United States. I would like to know if Mr. Hu can provide the sales status of a golf car in the second quarter, as well as the sales status, and what the next half-year will be like. I still have a lot of questions, but this is my first question.
Thank you for your question. In the second quarter, we expect our golf cart sales to be around 6,000 units. In the second half of the year, it should be between 10,000 and 15,000 units. Around 10,000 units.
So, thank you for your question. So, our estimated sales for the Q2 are roughly around 6,000 pieces of golf carts. And for the half year, 2023, we expect there will be a sales of roughly 10,000 pieces of the golf carts.
How many pieces were sold in Q1 according to your press release today?
So for the first quarter of this 2023, roughly around 3,000 pieces of the golf carts were sold.
Another key point that is
deserves a press release, was that Candy was able to close on a new contract directly with Lowe's and to bypass the middleman Coleman. A few questions. Looking at Lowe's website for a search of Candy products, some 16 items show up under golf carts in the Candy brand, which seem to be the two-seat utility golf cart with dump bed and winch and the six-passenger golf cart's which, by the way, are showing available at Lowe's with both the AGM lead acid for $12,999 and the lithium batteries for $1,000 more. The more conventional four-passenger candy carts still show up under Coleman on the Lowe's sites with the AGM lead acid batteries. Question, did management give more detail as to how candy was able to secure this deal direct, and where does this leave Candy's relationship with Coleman, and what is the likelihood Lowe's will pick up new Candy products other than golf carts?
Thank you for your question. 第二个问题是,他说从另外一个新闻稿中发现一个细节, 就说Candy现在不需要这个中介商Coleman, 就可以直接跟Lowe's签订新的合约了。 那关于这个声明的话呢, 我有一个初步的问题,就是说, But on the Lowe's website, you will still see some regular four-seater Convys with AGM battery. But this brand is not Convys, it is Coleman. So I want to ask if the management team can give us more details to explain this matter. And then explain how Convys did this, which is directly with Lowe's. And now, what is the relationship between Condi and Coleman? And in addition to the golf cart, will Lowe's choose more other Condi products to sell? Thank you for your question.
Currently, the Coleman brand is only on one of our golf carts, which is the four-seat twin-disc. So what they consider is mainly price and profit. But in the case of Roy's supermarket, he hopes to become a leader in the field of outdoor leisure electric vehicles. So Roy's hopes that we, Conti, can provide more diverse products to help them achieve this goal. It is precisely because of the diversification of our Conti products that we can customize the products for them according to the needs of different customers, so that the customer experience
So as for your concerning questions, at present, under the brand of common, there's only one golf cart available in the market, which is a four-seat lead-acid battery model. As for the consideration, primary is the price and the gross profit. However, to Lowe's, they hope to become a leader and occupy more market in the field of the outdoor recreational electric vehicles. So Lowe's hopes that we, Candy, can provide more diversified products to help them to achieve this goal. And because of the highly diversification of our products, we can customize the products for our customer comment according to their needs, and yet there's no conflict for us to supply our products to the loads. So in this year, it's likely that you will see more candy products at loads market.
Thank you for your answer. To that end, the Candy America website added a new $13,999 heavy-duty utility vehicle under the EV link called the Cowboy E10K, the Husky lithium-powered vehicle. It's a perfect offering for the Lowe's demographic, but nothing's been mentioned yet. Do you anticipate Lowe's picking up this cowboy line as well? And why aren't we telling the world how great we are?
谢谢你的回答 那接着就是问一下 在康迪美国网站的 EV 电动车链接下面呢 又看到增加了一款新的重型多功能车 叫 Cowboy E10K This car is priced at $13,990. This car looks like it's completely in line with the customer choice of Lowe's. But it hasn't been mentioned or promoted yet. Do you think Lowe's will also cooperate with Condi to launch this car?
So Lois is well aware of our new product development. So yes, they know about our new model, the Cowboy E10K.
And I believe that Lowe's is also considering this product. In the meantime, we have plans to promote this product to other retail and chain stores to increase our sales channels.
And what about more visibility from the company in terms of putting out press releases, introducing all this great news to the investing public, which I'm sure would be exceedingly interested in this great company.
So based on our development and our operations, we will release the news in a timely manner.
But we haven't released anything about Lowe's and the development of selling to them directly, correct? And will we soon so people can realize this development?
But we haven't seen any news about our cooperation with Loss yet. We don't know how our cooperation with them is going. Because we are now in the early stage of cooperation.
In the beginning, we were working through Common, which is a private company that uses quantum batteries. Now Loss is looking for us directly. So we still insist on our small talk and do more. When things are done well, everyone will know.
Well, actually, at the moment, we are in the early stage of the cooperation with Lowe's. It's not like we're not going to disclose the news. However, we'd like to consolidate and get our fundamentals done and wait until the cooperation becomes a more massive volume. Then we'll disclose accordingly. Our strategy is always get things done first, then we release the news accordingly. when it's fruitful and becomes more mature.
I appreciate that answer. In any meal, there's always an appetizer. And to that end, perhaps you could put something out there relatively soon.
Thank you for your suggestion. Very good.