Greenland Technologies Holding Corporation Q2 FY2023 earnings call

• Thanked the global team for their dedication in a volatile market. - Noted industry recovery with OEMs ramping up production. - Revenue up 14% y-o-y, sales volume up 32% y-o-y, gross margin improved by 590 basis points. - HEVI continues progress in electric heavy machinery, with product demos ongoing, demo times shortened. - Created new business unit HEVI Energy to address DC-powered electrified product needs. - Maryland facility ready for production, on track to deliver first assembled unit in early Q3 but production plans adjusted due to sales cycle.

In the second quarter, revenue was $23.6 million, up 14% from $20.6 million the previous year. The increase was driven by a 32% rise in sales volume, with 38,256 units of transmission products shipped compared to 28,939 in the same period last year. Gross margin improved by 590 basis points to 29.4%, a record high in the last three years. Net income was $2.9 million, up 24% year-over-year. Component sales in China represent over 98% of reported sales in the region. The component business's growth is not solely reliant on the Chinese economy but global demand as a whole. HEVI division is making progress in the electric heavy machinery market in the US.

• Anticipate strong demand for transmission products remaining in the remainder of 2023. - Aim to leverage industry leadership in transmission products business. - Continue to advance the first-mover advantage of the HEVI division in commercial all-electric, industrial heavy equipment vehicles.

• Global market volatility. - Challenges in supply chains and logistics with countries looking to nationalize supply chains. - Volatility in the Chinese market. - Negative foreign exchange impact from a stronger dollar.

Q: Could you give a range of higher-value products that helped margins in the quarter?

A: Over the past near five years, the company has simplified product offering from over 70 series to about 40 series, focusing on higher-margin products like integrated drivetrain and newer components.

Q: Update on HEVI division product demos, number of demos, length of demos and training customers?

A: Dedicated HEVI inventory to support demos, added 5 units recently, shortened demo time to 1 - 3 days max. Product demos driving up interest.

Q: Thoughts on expanding mobile DC chargers business, including more products and sales models?

A: Will sell new mobile DC chargers, doing product R&D for market - tailored chargers, made in USA with US IP.

Q: Characterization of market share gain in current volatile environment?

A: Have been expanding clientele and market share but closely monitoring how supply chain redefinitions shape out.

Q: Update on Maryland facility, lessons learned and unforeseen challenges?

A: Maryland site coming along well, ready for production, on track to deliver first assembled unit in early Q3 but production plans adjusted due to sales cycle underestimation.

Q: Pace of demos in second quarter vs prior, acceleration and post - demo conversations?

A: Demand growing, pace ramping significantly, with mobile DC chargers and incentives changing post - demo conversations positively.

Q: Update on authorized service centers and sales front?

A: Already signed about three companies for authorized service provider network, ranging from truck repair to heavy equipment rental.

Q: Update on United Rentals program and other large rental company demos?

A: United Rental pilot demo ongoing, new demo with smaller loader about to initiate, making progress with other national rental organizations in various sectors.