Good day, ladies and gentlemen. Thank you for standing by, and we warmly welcome you all to the Greenland Technologies Fourth Quarter and Full Year 2022 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn 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 released the results earlier today. The press release is available on the company's IR website at ir.gtec-tech.com, as well as from Newswire Services. The replay of this call will also be available in a few hours on the 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 differ materially 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 by law. Also, please note that unless otherwise stated, all figures mentioned during the conference call are in U.S. dollars. With that, let me now turn the call over to CEO, Mr. Raymond Wang. Please go ahead, Raymond.
Hey, thank you, Yu. 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 continued to be impacted by lingering pandemic regulations, but still managed to deliver strong results for 2022 and maintained 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. 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 CNY 5 trillion . This has driven purchasing in industries we support, 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. 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 component business to other markets outside of China. We will share more details regarding this direction at a later date. Shifting to our heavy electric industrial heavy 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 heavy-emission products in the industrial heavy equipment industry.
This year, we expanded our product line, first with our GEL-5000, an all-electric 39,683-pound , 5-ton rated load wheeled front loader that has quickly become the favored machine when we're conducting product demos. Second, a line of DC mobile chargers that provide clients with simple and easy charging solutions for their site without breaking the bank. We have two models that are as small as a carry-on luggage that support 220 volt or 480 volt power, which is readily available on commercial and industrial sites in the United States. With these mobile chargers, a potential client can integrate our electric heavy 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 HEVI equipment have completed or scheduled compatibility testing with the market-leading providers of D.C. fast charging stations in the United States. 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, the Infinitracker, into our entire product line. Each HEVI equipment sold will come with the 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 earning 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. I am proud to announce that we currently have multiple active product demos and pilots with staple 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 that will rapidly convert 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 HEVI equipment is priced comparable to their diesel equivalent and offer a lower cost of ownership realized in the very first year with its significantly lower power and maintenance costs.
For example, our GEL-1800 and 11,000-pound electric front loader that runs for nine hours on a single charge only costs $135,000 with the default bucket, battery, and the 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 4-6 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 have 40%-60% less maintenance costs than a diesel system because there is no internal combustion engine or related parts to maintain.
HEVI products offer a strong financial advantage to a company looking to switch to electric. 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. With 60% less operating noise, this results in a safer work site that does not disrupt the local community, which is particularly an advantage in sensitive environments or in urban settings. All of these value propositions combined will lead HEVI to successfully penetrate and capture market share in the $200 billion heavy 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. Greenland is well funded to support the development and growth of HEVI through our strong balance sheet and a $10 million fundraise completed last July with Age of Capital. The updates shared earlier are evidence of these funds in use to grow the business. We will continue to invest into this business that capture the significant opportunities present. In 2023, HEVI will continue its focus on market penetration and product adoption. In addition, we will be establishing a network of approved service providers through partnership with existing businesses.
HEVI will provide training and OEM parts of sourcing, local equipment service centers can provide support for our products to our local clients. Further investment 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. 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 innovation that will lead Greenland towards an incredibly exciting future.
With that, 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. Thank you everyone for joining our call today. I will now go over our Financial Results for Full 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 foreign exchange impacts from a stronger dollar. We sold 129,686 units of transmission products compared with 141,431 units in 2021.
On an RMB basis, excluding the impact of the foreign exchange, total revenue decreased by about 3.7% from a year ago. 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 the 19.8% in 2021 as a result of the strategic shifts in Greenland's product mix towards higher value and more specific products such as hydraulic transmission. Total operating expenses increased 22% year-over-year to $13.9 million as we continue to invest in heavy 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 on the 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 the 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 the deliberating improvement in our product mix. The total operating expenses was $5.5 million compared with $3.8 million in the fourth quarter of 2021.
Net loss was $0.8 million, compared with the net income of $0.4 million in the same period of 2021. Looking forward, we are extremely optimized about 2023. We are seeing a recovery in demand in our drivetrain business following the end of the coronavirus COVID-19 restrictions . We look forward to updating you on the process as our HEVI subsidiary in the United States. That concludes our prepared remarks. Let's now open the call for questions. Operator, please go ahead.
Thank you. If you would like to ask a question, you'll need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. Thank you. We'll now take our first question. Please stand by. The first question is from the line of Graham Mattison from Water Tower Research. Please go ahead. Your line is open.
Hi, everyone. Thanks for taking my call. It looks like 2022 played out much like you talked about on the call a year ago, where you said you expect better margins and choppy revenue. As you look into 2023, what's gonna 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 is a great question, and I actually think that both are going to weigh significantly into the 2023 forecast. The reason being is because there is still a big g ap in the demands that will have to be filled with the backlog. Because the money, the funds have just truly begun to open up at the beginning of the year, it's gonna cause a little bit of a timeline gap before it really starts hitting. I think that we'll really start seeing it ramp up in Q2 of 2023, and then it's just gonna go gangbusters from there.
All right, great. Can you give 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 out into 2023, is there room for the gross margin to improve further?
From a product standpoint, we have a integrated drivetrain unit that is actually 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 right now is probably about 3 out of every 4 forklifts. There's still a lot of opportunity across the globe, such as in the United States, where though electric forklifts are still representing over 50% of forklifts sold, still a majority are lead acid. There's a significant opportunity across the globe, OEMs that are trying to meet this.
We've been getting a lot more adoption and 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. We actually have the highest margins out of all of our components sold today through that product. This is a significant driver, the push from our standpoint for sales to meet this demand, and it's not an area that we see slowing down. That's definitely a big driver for improved margins from a product standpoint in the core components business.
I think that there's still opportunities for larger gains on the margin front for us to expand this particular product to cover a larger range of material handling vehicles, such as larger-scale outdoor forklifts or even greater applications in, let's say, the commercial electric EV industry as well. Things that we are actively exploring, but nothing to announce just yet in earnest.
All right, great. One last question, and 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 somebody were to place one of these flagship orders, how would that roll out if the first production's coming in 2Q? Would that be the order? T ypically, would these be over a year or managed? How should investors think about that in terms of timing?
Initial feedback has been extremely positive, extremely positive. These demos and pilots are something that we drive and encourage because there's always a lot of concern and doubt for 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, so there's no better way for us to prove it than to get it into the hands and to get people behind the wheel of the equipment. Feedback has been extremely overwhelmingly positive. We've been extremely glad at what we've been hearing and what that means for the overall business as well. For the delivery for the next steps, let's take a company like United Rentals, for example.
The way that we see it playing out is after the initial demo phase, then it'll transition to a full-on pilot, where UR will purchase between, let's say, 50-150 units of our particular product to do a full deep dive 12 months pilot study on our product live in market to get a better understanding of profit margins, maintenance costs, the whole shebang. If that pilot proves positive for their business overall, then they would proceed to nationwide or global distribution, which is definitely something that we would be in favor of. From a delivery standpoint, our Baltimore, Maryland site is prepared to complete the first finished product in Q2 within actually the next few weeks.
However, it does not represent our only manufacturing capability. We still have our assembly sites overseas, where our product right now, both the components and the assembly are being done today. We would have the capability to support a larger order in the 50 unit, hundreds, units, Scale, from that site and in combination with our Baltimore, Maryland, sites together. We can do, probably about 200 units, with a 6-month turnaround time.
Wow. All right. Great. Well, thank you very for the color, and I'll jump back in queue.
Thank you for the questions.
Thank you. We'll now take our next question. Please stand by. 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 in all these questions I have. For the early adopters of your machines, how do you address the service issue for them?
Yes. It's all about empowering our clientele. Since we're doing a direct sales model where we're selling straight from OEM to the end consumer, we are not reliant upon catering to a dealership network. What this provides us the opportunity to do is we're able to actually promote the client's right to repair our equipment when they purchase it. This has truly been 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. Should that company have their own team of mechanics, have the necessary equipment to perform a particular service need, maintenance need, or repair, then they are able to do so with our full support and blessing.
Let's take, for example, if they needed to replace or remount a tire. Instead of being dependent on working with a HEVI dealer and paying costs that can be upwards of over $1,000 per tire, they can actually work with their local tire supplier. We'll give them all the specs. If they so desired, we will sell them our own OEM tire, they can handle that replacement with our blessing and education. Should that company not have the equipment, expertise, or desire to conduct that service, this is where our approved service providers would come into play. We would be able to offer a list of established shops that we've established a relationship with, that we've trained them on our equipment, that they can get in contact with to perform that repair.
With our distributed assembly model, the reason why the HEVI business is focused on the Mid-Atlantic area is to support that approved service provider models. We can provide that part to that shop either same day or no more than one business day. This way it keeps the shop engaged, it keeps them supplied to be able to provide that service to that client. The third option is to be able to provide direct support from our team of technicians right out of our distribution sites and assembly sites, just like in Baltimore, Maryland, and in New Jersey
As those first machines roll off the assembly line in Q2, how should we think about how much of it goes into demo pool, how much goes into pilot sales, and how much goes into regular commercial sales?
Shall I repeat the question?
Actually, I did. I was able to hear the question.
Just to restate my answer in response to it. Right now, we've been receiving so much demand and interest into our product that I've dedicated our entire inventory of electric heavy equipment to support demos and pilots. We are actually fully booked all the way into May at this stage, which is a wonderful problem for us to have. What is gonna come out is gonna be a matter of timing because we're right on that precipice of crossing that first adopter phase. Our brand is getting established to the comfortability that we are gonna be able to start converting these interests into direct product sales. Our production capabilities are going to meet either the need for both the demos or the products, whichever is coming first from a timeline standpoint.
One more question. If you have a strong demand for the machines and you end up building some part of it in your plants in China and then bringing it over here and assembling it into a finished unit, is there any issue with tariffs in that transfer part of the equipment?
At this stage, the tariffs would remain the same at roughly 25% for our equipment. However, our Baltimore, Maryland site, we're actually in process right now of getting its FTZ designated, which will help support the overall duty and tariff scenario for any product coming into that site for assembly.
Thank you very much.
Thank you. We'll now take our next question. Please stand by. This is from the line of Rommel Dionisio from Aegis Capital. Please go ahead.
Yes, thank you and good morning. I wonder if we could just, a couple of points about the ask about a couple of the things in the core China business. Could you discuss pent-up demand? O bviously, with these restrictions having been in place for so long, I wonder if you could just talk about how much pent-up demand there potentially could be, as well as your market shares. I t's obviously been a challenging market, but you seem to have held up relatively well, perhaps better than the rest of the market. I wonder if you could just discuss those market shares in China as well. Thank you.
Absolutely. From a market share standpoint, with what we've seen in Q3, I would actually admit that we were expecting a much faster rebound to close that gap in the fourth quarter of the year to even drive our performance even higher than what we've delivered. From a timing standpoint, some of the volatility that we've witnessed in the market, such as the drawback of the Chinese community and supply side after the lifting of their pandemic restrictions, further delayed the drive back into the business to capture the to fulfill with this gap into the later end of the fourth quarter.
In addition to that as well, because it's been so long under these pandemic restrictions, it's taking a bit longer for our clients, the forklift OEMs, to ramp their operations back up to speed again to meet it. We were a little too optimistic. We thought that they would be able to move fast enough for the fourth quarter. This is something that we're gonna see that's going to continue to drive performance as they ramp up to fulfill that gap that's been pent up for so long into the Q1 and the remainder of the year for 2023. Now for the market share standpoint, that's absolutely correct.
Our balance sheet will show that even from a supply standpoint, we've had our own challenges with the volatility in the market and these restrictions, but we were at an advantageous position where we had a majority of the raw material and components in our facilities on decks that we were able to deliver to the clients as necessary, and we are continuing to drive that forward. It's gonna take about another quarter to normalize, to get back into the flow with our pipeline for both the raw material coming in and our finished products going out, but we will anticipate normalization in the end of Q1.
Just to follow up on that point on the supply chain, are you also seeing any of the benefit of lower freight costs as well and perhaps components as the supply chain gets better? Thank you.
Yes, we are. We absolutely are. One thing that was also a little surprising on our end. In a prior earnings call, I was showcasing that our sales of drivetrain units were beginning to shift into the global space. We were starting to see just a slight decrease of our sales performed in China versus the global markets. Because of that, we were keeping a very close eye on freight charges going outside the country of China. However, we've started to see that actually claw itself back. Now, the sales performed to meet demand is continuing to rise back up into China and reduce down on the global side.
I think that this is just a evidence of the challenges that the pandemic and supply and logistics challenges have had on a global scale, where countries that were trying to move away from globalization are struggling to ramp up their manufacturing capabilities to satisfy their needs and all the other challenges we've addressed earlier on the call. They're starting to rely back on the manufacturing strength in China. With that said, from a Greenland standpoint, I think that it's important for us to further diversify the markets of our core component business. One of the purposes of HEVI was to further diversify our entire business model, so it's not entirely dependent upon the core component manufacturing in one specific region.
We need to be a little more aggressive and not just rely on HEVI to do that diversification, but also explore opportunities with our core component business as well.
Great. Thank you very much.
Thank you.
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 all of your 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 heavy equipment sector. We have all the right capabilities, infrastructure, and technology to be able to capitalize on the first-mover advantage in this space in the United States market. We are extremely optimistic that we will be successful in our mission to penetrate the market, capture market share, and to be able to deliver on building value for both Greenland and their 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.