Greenland Technologies Reports Second Quarter and First Half 2022 Unaudited Financial Results

Greenland Technologies Holding Corporation (NASDAQ: GTEC) (“Greenland” or the “Company”), a technology developer and manufacturer of electric industrial vehicles and drivetrain systems for material handling machineries and vehicles, announced its unaudited financial results for the second quarter and first half ended June 30, 2022.

First Half 2022 Financial and Operating Highlights

• Total revenues were $49.9 million, compared with $52.8 million in the same period of 2021.
• Gross margin was 22.5%, an increase of 200 basis points year over year.
• Net income was $5.3 million, compared with $5.6 million in the same period of 2021.
• Number of transmission products sold was 70,841 units, compared with 79,032 units in the same period of 2021.

Second Quarter 2022 Financial and Operating Highlights

• Total revenues were $20.6 million, compared with $28.2 million in the same period of 2021.
• Gross margin was 23.5%, an increase of 330 basis points year over year.
• Net income was $2.4 million, compared with $3.2 million in the same period of 2021.
• Number of transmission products sold was 28,939 units, compared with 42,046 units in the same period of 2021.

Mr. Raymond Wang, Chief Executive Officer of Greenland Technologies Holding Corporation, commented, “We posted strong underlying results but we were adversely impacted by recent FX moves (USD vs CNY) and we were not immune to the supply chain and COVID-19 shutdowns that impacted the broader market. Despite the many macro challenges in 2Q 2022, our revenue for the first half of 2022 was only down 5.5%, as compared to the first half of 2021. In addition, COVID-19 shutdowns in China resulted in customer closures and the pushout of orders. As a result, we ended 2Q 2022 with a higher backlog than normal but have a high degree of confidence that the shifting of those orders will result in a stronger second half of 2022 than the first half of 2022.”

Mr. Wang added, “Overall, our underlying core business remains strong, our industry remains healthy and demand remains high. Greenland has been consistently outperforming over the last nine quarters and we remain focused on the continued execution of our long-term strategy. From an EV standpoint, we continue to hit all stated milestones. We launched our latest electric industrial vehicle in 2Q 2022, the GEL-5000 electric front loader, and we established our new Maryland facility. We plan to officially open our Maryland facility at the end of August, with our U.S. assembly space secure and live, and our longer-term capacity ramp underway.”

Mr. Jing Jin, Chief Financial Officer of Greenland, commented: “While China’s pandemic shutdowns and supply disruptions added pressure to our 2Q 2022 financial results, we were still able to drive a 330 basis point expansion in our gross margin to 23.5%. This reflects the strong fundamentals of our business and our success in developing higher-value products. Additionally, we further strengthened our balance sheet with $10 million in proceeds from registered direct and private placement offerings in July. This gives us the ability to support existing customer demand, our expanded product roadmap and revenue-generating efforts, as we build value for shareholders.”

Recent Developments and Strategic Highlights:

• Launch of Lithium Powered GEL-5000 Electric Front Loader: Greenland launched the latest electric industrial vehicle, the GEL-5000, under its new clean industrial heavy equipment brand, HEVI. The new GEL-5000 is a 5.0 ton rated load all-electric lithium wheeled front loader that boasts strong power, approximately 40,000 pounds operating weight and increased payload options, making it a clean, green industrial vehicle with a rapid 2 hour charge time and 9 hours of operational time per charge. It is perfect for on-site applications in industries ranging from agriculture, urban construction to waste management and property management.
• Closing of $10 Million Registered Direct and Private Placement Offerings: Greenland issued 1,250,000 ordinary shares and pre-funded warrants to purchase up to 398,974 ordinary shares at a purchase price of $4.17 per share in the registered direct offering. In the concurrent private placement, the Company has also issued and sold to the investor units to purchase pre-funded warrants to purchase up to 616,026 ordinary shares and common warrants to purchase 4,530,000 ordinary shares at an exercise price of $4.49 per share. The purchase price for each unit was $5.089, with an exercise price per pre-funded warrant of $0.001 per share.

First Half 2022 Financial Results

Total revenues were $49.9 million, a decrease of 6% from $52.8 million in the first half of 2021, primarily due to the decrease in sales volume resulting from China’s COVID-19 lockdowns. On an RMB basis, total revenues decreased by approximately 5% from the first half of 2021.The number of transmission products sold was 70,841 units, down 10% from 79,032 units in the first half of 2021.

Costs of goods sold were $38.7 million, a decrease of 8% from $42 million in the first half of 2021, primarily due to the decrease in sales volume.

Gross profit was $11.2 million, an increase of 4% from $10.8 million in the first half of 2021. Gross margin was 22.5%, an increase of 200 basis points from 20.5% in the first half of 2021, as a result of the Company’s strategic shift towards higher value, more sophisticated products such as hydraulic transmissions.

Total operating expenses were $5.6 million, up 25% from $4.5 million in the first half of 2021. Operating expenses as a percentage of total revenues was 11.3%, compared with 8.5% in the first half of 2021. The increase in operating expenses was primarily due to the Company’s investments in support of its growth strategy.

Income from operations was $5.6 million, a decrease of 12% from $6.3 million in the first half of 2021.

Net Income was $5.3 million, a decrease of 5% from $5.6 million in the first half of 2021.

Basic and diluted net income per ordinary share was $0.29, compared with $0.46 in the first half of 2021.

Second Quarter 2022 Financial Results

Total revenues were $20.6 million, a decrease of 27% from $28.2 million in the second quarter of 2021, primarily due to the decrease in sales volume resulting from China’s COVID-19 lockdowns. On an RMB basis, total revenues decreased by approximately 24% from the second quarter of 2021.The number of transmission products sold was 28,939 units, down 31% from 42,046 units in the second quarter of 2021.

Costs of goods sold were $15.8 million, a decrease of 30% from $22.5 million in the second quarter of 2021, primarily due to the decrease in sales volume.

Gross profit was $4.8 million, a decrease of 15% from $5.7 million in the second quarter of 2021. Gross margin was 23.5%, an increase of 330 basis points from 20.2% in the second quarter of 2021, as a result of the Company’s strategic shift towards higher value, more sophisticated products such as hydraulic transmissions.

Total operating expenses were $2.6 million, up 17% from $2.3 million in the second quarter of 2021. Operating expenses as a percentage of total revenues was 12.7%, compared with 8% in the second quarter of 2021. The increase in operating expenses was primarily due to the Company’s investments in support of its growth strategy.

Income from operations was $2.2 million, a decrease of 36% from $3.5 million in the second quarter of 2021.

Net Income was $2.4 million, a decrease of 25% from $3.2 million in the second quarter of 2021.

Basic and diluted net income per ordinary share was $0.13, compared with $0.26 in the second quarter of 2021.