Greenland Technologies : Transcript

Q4 2021 Earnings Conference Call

Prepared Remarks

Julia Qian - The Blueshirt Group

Thank you, operator, and hello, everyone. Welcome to Greenland Technologies fourth quarter and full year 2021 earnings conference call, joining us today are Mr. Raymond Wang,

Chief Executive Officer, and Mr. Jing Jin, Chief Financial Officer.

We released results earlier today. The press release is available on the Company's IR website athttps://ir.gtec-tech.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 discussion will contain forward-looking statements made under the Safe Harbor provisions of the US 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. Further information regarding these and other risks and uncertainties 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 that unless otherwise stated, all figures mentioned during the conference call are in US dollars.

With that, let me now turn the call over to our CEO, Mr. Raymond Wang. Go ahead Mr.

Wang.

Raymond Wang - CEO

Thank you Julia and good morning everyone. Thank you for joining us today.

As I have started every earnings call, I will begin by recognizing my team here at Greenland

for their hard work and dedication in delivering results for the company, our clients and our

shareholders. Their efforts have led Greenland Technologies to the best year in terms of

revenue and sales in the history of our company. I am proud of their efforts and the

leadership of our management team that have helped us navigate and overcome the many

challenges present in today's global environment.

Despite the challenges, we were able to meet and nearly surpassed the top line of my revenue

guidance with $98.8 million dollars and 141,431 transmission units delivered which

represents a tremendous 48% and 30% year over year growth respectively. This

demonstrates that the global material handling industry continues to grow and we, at

Greenland Technologies, have the capability to meet and capture this opportunity.

This growth has been motivated by the significant increase in global demand for forklift

trucks and material handling equipment as business sales model transition to ecommerce

platforms which require rapid expansion of logistical infrastructure. We would have

surpassed my top line guidance of $100 million dollars in revenue where it not for the

continuation of global supply chain constraints.

On the other hand, our earnings were lower than we expected due to two primary reasons.

First, despite global demand for forklift trucks increasing, the Chinese forklift market has

begun slowing down reflecting the 2022 forecasted GDP of roughly 5.5% for the country.

We will see improvement as more forklift OEMs expand their business to the global market.

Secondly, raw material and component costs have remained high longer than anticipated.

Material such as steel that peaked over 200% in 2021. We have implemented price increases to offset this trend and are optimistic as we have witnessed a correction of this material pricing in the fourth quarter which will serve as a headwind in the first half of 2022.

Another contributing factor is our increased investment in our new electric industrial heavy

equipment division and expansion into the US market. These expenses are in line with forecast and contributed to the overall increase in 2021 operating expenses.

Shifting to our electric industrial heavy equipment division, I am proud that we achieved all of our targeted milestones for 2021. We were able to launch our initial equipment product line in the United States which includes our GEF series lithium powered forklifts and the all-

electric lithium powered GEL-1800, a 1.8 t rated load wheeled front loader. As of November 2021, these vehicles are available for sale in the Mid-Atlantic region of the United States.

We have since followed up with the launch of our all-electric lithium powered GEX-8000 in

February, an 8.0 ton rated load wheeled excavator, and our upcoming GEL-5000, a 5.0 ton rated load wheeled front loader, arriving in the second quarter of this year.

As I stated prior, our goal is to shift assembly of our electric industrial equipment to the

United States to better serve the region. I have announced the selection of Maryland as the home for our first assembly site and on track to open the doors in the second or third quarter of this year. We selected Maryland for its impressive infrastructure to service the Mid

Atlantic region by road, rail, sea or air, their educated and trained workforce, commitment to sustainability and their willingness and support to do business. This initial site will beNASDAQ: GTEC modest in size at ~60,000 sq feet with the annual production of 500-750 vehicles when fully operational. We will deploy additional sites as we expand our target regions.

We are also developing Experience Centers that will provide education, sales and local service to our prospects and clientele. As we are pioneering new technology, these sites will be integral in expediting the sales process as interested users get an opportunity to get behind the wheel and operate the equipment first-hand. The target location for the first center will be

in New Jersey due to the abundant opportunity across the logistical, municipal, agriculture and construction industries. The design process is near complete, but due to limited site inventories in high traffic areas the launch date for our first center is delayed to the end of the year; potentially into next year should we have to build-to-suit our needs.

It is important to note that this delay does not prevent our ability to sell our equipment. We

have been attending in-person trade shows and have a growing sales team operating out of our office in New Jersey promoting our products. Interest has been very strong for our products, particularly in the Municipal and Agriculture industries, but we are discovering the sales process to be longer than anticipated. I am extremely optimistic that with patience and persistence, this product line will quickly bear fruit and add significant value to the company and our shareholders.

Part of our strategy to penetrate the US market is to establish partnerships with local companies that share our vision and commitment to sustainability. We have recently announced partnerships with great companies such as CYNGN to develop on-site autonomous solutions with our product and Princeton NuEnergy to adapt their innovative plasma-assisted lithium battery recycling process to further reduce the carbon footprint of ourNASDAQ: GTEC products. I will focus more on these partnerships during our Q1 2022 earnings call, but these collaborations help to illustrate our long-term strategy and vision for our product lines.

Now, lets discuss guidance. For 2022 I will not be issuing an annual guidance for revenue or earnings due to the volatile and unprecedented environment. But, let me share our outlook on the upcoming quarters. As I mentioned earlier, I anticipate the first quarter to deliver strong results with headwinds throughout the year that will contribute to modest growth of our core transmission and drivetrain business in 2022. Plus, we expect our price increases to offset

higher manufacturing and transportation costs that will preserve and slightly improve our margins.

With respect to our electric industrial equipment division, we have the products ready to go and are building out the infrastructure to drive sales and penetrate the market. For 2022, we expect to deliver between 100 and 150 electric vehicles. As our US assembly and experience

center network expands, we anticipate delivering between 1,750 to 2,000 electric vehicles by

2024. At that scale the EV division would rival our transmission and drivetrain business.

The demand is there as organizations are ready to embrace cleaner and more sustainable alternatives and we are the only available product in this industry in the United States. This demand will be further expanded as new legislation drives more sustainable business operations, greater expansion in the charging infrastructure, and the introduction of consumer

incentives that include adoption of electric industrial equipment.

Now let me turn the call over to our CFO Jing Jin, who will provide details on our financial performance.

Jing Jin - CFO