Good day, ladies and gentlemen. Thank you for joining us, and we extend a warm welcome to everyone attending the Greenland Technologies Fourth Quarter and Full Year 2022 Earnings Conference Call. Currently, all participants are in listen-only mode. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I will hand the call over to Yujia Zhai, Managing Director of the Blueshirt Group. Mr. Zhai, please proceed.

Thank you, Operator, and hello, everyone. Welcome to Greenland Technologies fourth quarter and full year 2022 earnings conference call. Joining us today are Mr. Raymond Wang, Chief Executive Officer; and Mr. Jing Jin, Chief Financial Officer. We've released the results early today. The press release is available on the company's IR website at ir.gtec-tech.com, as well as on 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 provision 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. 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 statements, except as required by law. Also, please note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollars. With that, let me now turn the call over to our CEO, Mr. Raymond Wang. Please go ahead, Raymond.

Thank you. Good morning, everyone, and thank you for joining us today. We have a lot to go over. But before I get started, I want to begin by thanking my team for their persistence and dedication to delivering results for the company despite a challenging global environment. We continue to be impacted by lingering pandemic regulations, but still managed to deliver strong results for 2022 and maintain our market leadership in our industry. Starting with our core component business, we produced and delivered 129,686 drivetrain units in 2022, representing $90.8 million in revenue, of which 27,542 drivetrain units were in the fourth quarter, resulting in $19.1 million in revenue. Though lower than last year's results, I am proud of our performance that maintains our position as market leader in our industry. Market recovery has been slower than anticipated in the fourth quarter after China loosened their pandemic restrictions, which impacted our business. Furthermore, the weakened yuan had a material impact on our financial results, representing over half the negative performance of our revenue year-over-year growth. Given these challenges, I believe the worst has passed us. We have already seen a strengthening market in the beginning of 2023. China is pushing for economic recovery with new loans in January rising over 17% year-over-year to just under ¥5 trillion. This has driven purchasing in industries such as logistics and manufacturing, as they seek to satisfy the supply gap built up in 2022. In addition, 2023 forecasts indicate a stronger yuan by the end of the year, which will support our financials. These factors will result in a banner 2023 year for Greenland's component business, particularly in the third and fourth quarters. Now, 2022 illustrated the vulnerability of Greenland's dependency on the Chinese yuan. To address this foreign exchange risk, we are exploring strategies and opportunities to expand the core components business to other markets outside of China. We will share more details regarding this direction at a later date. Shifting to our HEVI electric industrial equipment division, I am proud of the progress we have made throughout the year. Our mission with HEVI is to be a pioneer in the introduction of clean and sustainable alternatives to the traditional industrial equipment industry. This year, we expanded our product line. First with our GEL-5000, an all-electric £39,683, five-ton rated load wheeled front loader that has quickly become the favorite machine during product demos. Second, we introduced a line of DC mobile chargers that provide clients with simple and easy charging solutions without breaking the bank. We have two models that are as small as carry-on luggage, supporting 220-volt or 480-volt power, which is readily available in commercial and industrial sites in the United States. With these mobile chargers, potential clients can integrate our electric equipment into their fleet and site operations without having to invest in a costly DC charging station. In addition to our mobile charging solutions, our electric equipment has completed or is scheduled for compatibility testing with the leading providers of DC fast charging stations in the United States, so our customers will always have charging options to best suit their needs. Companies such as Siemens, Blink Charging, ABB, EVgo, and Electrify America, just to name a few. We partnered with Cyngn, a California-based fleet technology developer, to incorporate their state-of-the-art GPS asset tracking system Infinitracker in our entire product line. Each HEVI equipment sold will come with Infinitracker and three years of service for free. This offers our clients security, safety, and easier incorporation of HEVI products into their fleet management system. Due to our focus on value, we have made significant progress towards the adoption of our electric HEVI equipment. As I have reiterated on past earnings calls, as a pioneer of new technology in our industry, we will overcome the challenge of adoption by securing a fleet deal with a brand name organization. And I am proud to announce that we currently have multiple active product demos and pilot programs with major organizations such as United Rentals, the world's largest equipment rental company. Our accomplishments will have a profound impact on the HEVI brand and product reputation, rapidly converting the hundreds of interested leads that we've been accumulating into product sales. We have been successful in generating interest in our products because they are designed to align with the needs of our clients. Our all-electric equipment is priced comparably to their diesel equivalents and offers a lower cost of ownership realized in the very first year with significantly lower power and maintenance costs. For example, our GEL-1800, priced at $135,000, electric front loader runs for nine hours on a single charge and comes with a default bucket battery and a base 220-volt DC mobile charger. This is comparable to the price of a diesel system sold in the mid-Atlantic region. However, the GEL-1800 will only use roughly $4 of electricity per hour of operation, compared to the standard six gallons of diesel per hour needed to run traditional equipment. This results in roughly $20,000 saved per year in fuel costs alone. Plus, our electric equipment has 40% to 60% lower maintenance costs than a diesel system, as there is no internal combustion engine or related parts to maintain. HEVI products offer a strong financial advantage to companies looking to switch to electric. And it is at this stage, after showcasing the financial benefits, that we can deliver the environmental and operational benefits that our electric equipment provides, such as zero operating emissions—which is perfect for indoor applications—and eliminates over 92 tons of CO2 emissions per machine per year, along with 60% less operating noise. This results in a safer worksite that does not disrupt the local community, which is particularly advantageous in sensitive environments or urban settings. All of these value propositions combined will allow HEVI to successfully penetrate and capture market share in the $200 billion industrial equipment industry. Our first U.S. assembly site, based in Baltimore, Maryland, is developing on schedule, and we anticipate the first finished product to roll off the assembly line in the second quarter of this year. This site illustrates the first step in Greenland's effort to expand and diversify our manufacturing capabilities around the world. Greenland is well-funded to support the development and growth of HEVI through our strong balance sheet and a $10 million fundraising completed last July. The update shared earlier evidenced these funds in use to grow the business, and we will continue to invest in this business to capture the significant opportunities present. In 2023, HEVI will continue its focus on market penetration and product adoption. We will establish a network of approved service providers through partnerships with existing businesses. HEVI will provide training and OEM parts sourcing so local equipment service centers can provide support for our products to our local clients. Further investments will also be made to improve HEVI's product offering technologies and overall value proposition. We will focus on recruiting the talent and leadership needed to successfully execute our strategy. Now there's a lot to be excited about for Greenland in 2023. We expect to see a rebound of our core component business, continued expansion of our manufacturing capabilities and infrastructure in the United States, securing the first deal of HEVI electric industrial equipment with a flagship company that will put the HEVI brand on the map, and the development of new products, technologies, and innovations that will lead Greenland toward an incredibly exciting future. Now let me turn the call over to our CFO Jing Jin to provide greater details into our financial performance. Go ahead, JJ.

Thank you, Raymond. And thank you everyone for joining our call today. I will now go over our financial results for the year 2022 and the fourth quarter. For the full details of our financial results, please refer to our earnings press release. For the full year 2022, the total revenue was $90.8 million, down 8% from $98.8 million in 2021, primarily due to the lower sales volume as a result of the pandemic shutdowns in China, as well as the negative volume change impacts from a stronger dollar. We sold 129,686 units of transmission products compared with 141,431 units in 2021. All in RMB basis. Excluding the impact of the foreign exchange, total revenue decreased by about 3.7% year-over-year. Our cost of goods sold decreased 10% to $71 million in 2022, primarily due to low sales volume. Gross profit was $19.8 million, a slight increase of 1.2% from $19.6 million in 2021. Gross margin was 21.8%, up 200 basis points from 19.8% in 2021 as a result of the strategic shifts in Greenland's product mix towards higher value and more specialized products such as hydraulic transmission. Meanwhile, total operating expenses increased 22% year-over-year to $13.9 million as we continued to invest in HEVI infrastructure, talent, and technology as part of our expansion. Our income from operations was $6 million, compared with $8.3 million in 2021. Net income was $6.6 million compared with $7.3 million in 2021. We ended the year with a strong balance sheet with $16.3 million of cash on hand. Given our strong financials and significant growth potential, we believe Greenland's current market capitalization does not accurately reflect our true value. Next, I will briefly walk you through our financial results for the fourth quarter of 2022. The total revenue was $19.1 million, a decrease of 17% from $22.9 million in the same period of 2021, primarily due to the decrease in sales volume associated with pandemic lockdowns in China. On an RMB basis, total revenue fell about 6% from the fourth quarter of 2021. The number of transmission products sold was 27,542 units, compared with 31,349 units in the fourth quarter of 2021. Gross profit was $3.8 million compared with $3.7 million in the fourth quarter of 2021. Gross margin was 19.9%, up 380 basis points from 16.1% in the fourth quarter of 2021, as a result of deliberate improvements in our products. The total operating expenses were $5.5 million, compared with $3.8 million in the fourth quarter of 2021. We experienced a net loss of $0.8 million, compared with net income of $0.4 million in the same period of 2021. Looking forward, we are extremely optimistic about 2023. We are seeing a recovery in demand in our core component business following the end of the China zero COVID restrictions and look forward to updating you on the progress at our HEVI subsidiary in the United States. Thus concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.

Thank you. Our first question comes from Graham Mattison at Water Tower Research. Please proceed; your line is open.

Hello, everyone. Thanks for taking my call. So it looks like 2022 played out much like you talked about on the call a year ago, where you said you would expect better margins and choppy revenue. If you look into 2023, what's going to be the bigger driver for you? Is it backlog that sort of accumulated over the course of the prior year, or is it a recovery in China in terms of the market?

Good morning, Graham. That’s a great question. I actually think that both are going to weigh significantly into the 2023 forecast. The reason being is because there is still a big gap in the demand that will have to be filled with the backlog. But because the funds have just begun to open up at the beginning of the year, it's going to cause a little bit of a timeline gap before it really starts hitting. So, I think that we'll really start seeing it ramp up in Q2 of 2023. And then it's just going to go gangbusters from there.

Thanks, great. And then can you get a little bit more color on the higher margins in terms of what was driving that, and your move towards higher quality products? As you look at it in 2023, is there room for the gross margin to improve further?

So from a product standpoint, we have integrated drive train units that are specifically catered towards the power of lithium product and electric forklifts. This is a product that has been a flagship development that we've been pushing across our clientele to meet the demand of OEMs to support the demand for lithium-powered forklifts on a global scale. Markets like China have been leading the world in it where the adoption rate is probably about three out of every four forklifts. But there's still a lot of opportunity across the globe, such as in the United States, where, though electric forklifts represent over 50% of those sold, a majority are still lead-acid. So there's significant opportunity across the globe due to OEMs trying to meet this demand. We've been getting a lot more adoption in demand for these integrated products, which is wonderful for us because this product integrates the speed reduction gearbox, the electric motor, and the driving axle into a single package. From our manufacturing standpoint, we have the highest margins for all of our components sold today through that product. So this is a significant driver, leading us to push for sales to meet this demand, and it's not an area that we see slowing down. This is definitely a big driver for improved margins from a product standpoint and in our core components business.

Great. And then one last question, then I'll jump back in queue. That's great news about the progress you're making in terms of the demos with the HEVI product. Can you talk about some of the customer feedback that you're hearing so far? If they were to place one of these flagship orders, how would that rollout occur, given that the first production is coming in Q2? Would that be typically over a year or months? How should investors think about that in terms of timing?

So initial feedback has been extremely positive. These demos and pilots are something that we drive and encourage because there's always a lot of concern and doubt regarding new technology on whether it's strong enough or whether the battery can provide enough life to get the job done. Our units are truly designed for that. There's no better way for us to prove it than to get it into the hands and behind the wheel of the equipment. And feedback has been overwhelmingly positive. So, we've been glad with what we are hearing and what that means for the overall business. Regarding the delivery and the next steps, for a company like United Rentals, the way we see it playing out is, after the initial demo phase, it will transition to a full-on pilot, where they would purchase between, say, 50 to 150 units of our particular product to conduct a full, 12-month pilot study on our product live in-market to understand profit margins, maintenance costs, and the specifics. If the pilot proves positive for their business overall, they would then proceed to nationwide or global distribution, which is definitely something we would favor. Our Baltimore site is prepared to complete the first finished product in Q2, within the next few weeks. However, it does not represent our only manufacturing capability. We still have our assembly sites overseas, where both the components and assembly are being done today. We would have the capability to support a larger order in the 50-unit and 100-unit scale from that site, and in combination with our Baltimore site, we could do about 200 units with a six-month turnaround time.

We'll now take our next question. This is from the line of Theodore O'Neill from Litchfield Hills Research. Please go ahead.

Thank you very much. Raymond, in your prepared remarks, you said you're going to train people to repair and maintain the machines. I'm talking about the HEVI subsidiary. For the early adopters of your machines, how do you address the service issue for them?

Yes. Today, it's all about empowering our clientele. Since we're doing a direct sales model, selling straight from OEM to the end consumer, we are not reliant upon catering to a dealership network. This provides us with the opportunity to promote clients to repair our equipment when they purchase it. This is truly disruptive and supportive, and a big advantage for the HEVI brand as we introduce it to various companies. From a servicing standpoint, this provides choice for the client. So, should a company have their own team of mechanics and the necessary equipment to perform a particular service need, maintenance, or repair, then they are able to do so with our full support. For example, if they needed to replace or remount a tire, instead of being dependent on working with a HEVI dealer and paying costs over $1,000 per tire, they can work with their local tire supplier. We will sell them our own OEM tire if they desire, allowing them to handle replacements with our information and guidance. Should that company not have the expertise or desire to conduct that service, this is where our approved service providers would come into play. We would offer a list of established shops that we've established a relationship with, and we’ve trained them on our equipment so they can provide that repair service. With our distributed assembly model, the reason HEVI is focused on the Mid-Atlantic area is to support that approved service provider model. We can provide parts to that shop, either same-day or within one business day. This way, it keeps the shop engaged and supplied to provide service to the client. And we can also provide direct support from our team of technicians, right from our distribution sites and assembly sites, including Baltimore, Maryland, and New Jersey.

And as those first machines roll off the assembly line in Q2, how should we think about how much of it goes into the demo pool? How much goes into pilot sales, and how much goes into regular commercial sales?

Right now, we've been receiving so much demand and interest in our product that I've dedicated our entire inventory of electric HEVI equipment to support demos and pilots. We're actually fully booked all the way into May at this stage, which is a wonderful problem for us. What’s going to come out now will be a matter of timing because we're on the edge of crossing that first adopter phase. Our brand is gaining recognition, and we're establishing the confidence to convert these interests into direct product sales. Our production capabilities will meet the need for either the demos or products, depending on what comes first, from a timeline standpoint.

Okay. One more question, if you have strong demand for the machines, and you end up building some part of it in your plants in China and then bringing it here to assembly into a finished unit, is there any issue with tariffs in that transfer of part of the equipment?

At this stage, the tariffs would remain the same at roughly 25% for equipment. However, our Baltimore site is currently in the process of getting SEC designation, which will support the overall duty and tariff scenario for any products coming into that site for assembly.

We'll now take our next question. This is from the line of Rommel Dionisio from Aegis Capital. Please go ahead.

Yes, thank you, and good morning. I wonder if we can just ask a couple of points about the China business. Could you discuss pent-up demand? With these restrictions having been in place for so long, could you talk about how much potential pent-up demand there could be, as well as your market shares? It’s been a challenging market, but you seem to have held up relatively well, perhaps better than the rest of the market. Could you discuss those market shares in China as well?

Absolutely. From a market share standpoint, what we've seen in Q3 shows that we were expecting a much faster rebound to close the gap in the fourth quarter. However, some of the volatility we witnessed in the market—such as the slowdown of the Chinese community and supply side—after loosening their pandemic restrictions further delayed the drive back into business to fulfill this gap later in the fourth quarter. Additionally, it has taken longer for our clients, the forklift OEMs, to ramp their operations back up to speed again to meet demand. We were a little too optimistic expecting them to move fast enough in the fourth quarter. But this is something we see continuing to drive performance as they ramp up to fulfill that backlog, which has been pent up for so long in Q1 and for the remainder of 2023. Regarding market share, our balance sheet shows that we had our own challenges with market volatility and the restrictions. However, we had a majority of the raw materials and components ready, allowing us to deliver to clients as necessary. We anticipate it will take about another quarter to normalize and get back into our pipeline for both incoming raw materials and outgoing finished products, but we expect normalization by the end of Q1.

Just to follow up on that point regarding the supply chain. Are you also seeing the benefits of lower freight costs as the supply chain improves?

Yes, we absolutely are. Interestingly, in a prior earnings call, I had mentioned that our sales of drivetrain units started to shift into the global space. Thus, we noticed a slight decrease in our sales performed in China versus the global markets. We've observed that trend pull back, indicating that our sales to meet demand are rising back up in China while reducing globally. This indicates the challenges that the pandemic and supply chain issues have posed on a global scale, where countries moving away from globalization are struggling to ramp up manufacturing capabilities to satisfy their needs. Therefore, there's a significant return to the manufacturing strength in China. From Greenland's standpoint, it's important for us to further diversify the markets of our core components business. One purpose of HEVI was to diversify our entire business model, so it isn't solely dependent on the core component manufacturing in a single region. We need to pursue opportunities with our core component business as well.

Great. Thank you very much.

Thank you. Seeing no more questions in the queue, let me turn the call back to Mr. Wang for closing remarks.

Wonderful. I just wanted to thank everyone for all of your questions and support in our mission with Greenland. We have significant opportunity, growth potential, and value that is requiring patience as we pioneer the electrification of the industrial equipment sector. We have the right capabilities, infrastructure, and technology to capitalize on the first mover advantage in this space in the U.S. market. We are extremely optimistic that we will be successful in our mission to penetrate the market, capture share, and build value for both Greenland and our shareholders. With that, I just want to thank everyone for joining our call this morning, and I hope you have a wonderful day.

Thank you all again. This concludes the call. You may now disconnect.