FREE

Strong 2Q Results as Transmission Business Accelerates; HEVI Division Momentum Building

Reported EPS of $0.18 on revenues of $3.6 million, up from $0.13 in 2Q22 and $0.11 in 1Q23. The performance was driven by increased traction in the recovering China/Asian market and higher-margin products contributing more to the overall revenue mix. Excluding the impact of FX headwinds, revenues would have been up 19% Y/Y. Another quarter of record gross margins as product mix evolution continues to take hold. Gross margins again hit record levels of 29.4%, up from 23.5% in 2Q22 and 25% in 1Q23, as the company continues to execute its move to higher value-added products such as hydraulic transmissions, which carry better margins. Since its founding, Greenland has consistently invested in R&D and shown its ability to move up to produce more complex and higher-value products. We see the HEVI division as the next stage of this growth. Launches HEVI Energy to address the industry’s DC charging needs. In response to customer feedback and demand for the company’s mobile DC charging units, HEVI will begin selling its charging units for both machinery and other electric applications. The products will be produced in the company’s Maryland facility and satisfy all US certifications. We expect to hear additional updates on the new business line in the coming months. Pace of HEVI demonstrations accelerating. The company has added another five demo units since 1Q and shortened the demo period to reach more potential customer sites. The United Rental pilot demo, signed in 1Q23, continues and has been expanded to include other HEVI products. The company is working to develop additional pilot programs with other national rental companies and major municipalities, which we expect will be a catalyst for the shares when announced. Infrastructure in place to support the growth of HEVI. The company’s assembly facility in Baltimore ,Maryland is now ready to produce EV equipment and is expanding into the production of mobile DC charging equipment. Further, HEVI has signed on a number of authorized service centers that will be able to support the product when it is in the field. The company’s direct-to-consumer model can offer customers cost savings and efficiency advantages versus the traditional dealer network model. Balance sheet remains strong. Greenland finished 2Q with $15.2 million in cash and cash equivalents in addition to $3.8 million in restricted cash and $5.6 million in short-term investments. We continue to see the balance sheet strength and the profitable transmission business as important attributes for GTEC shares as the HEVI business begins to establish itself in the US construction equipment market.