Niu Technologies (NIU) Q4 2021 Earnings Report, Transcript and Summary

0:02 Good day and thank you for standing by. Welcome to Niu Technologies Fourth Quarter 2021 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions]. 0:33 And now, I’d like to turn the conference over to Ms. [Indiscernible] from Niu Technologies IR team. Thank you. Please go ahead.

0:43 Thank you, operator. Hello, everyone. Welcome to today’s conference call to discuss Niu Technologies results for the fourth quarter 2021. The earnings press release, corporate presentation and the financial spreadsheets have been posted on Niu's Investor Relations website. This call is being webcast from the company's IR website as well, and a replay of the call will be available soon. 1:11 Please note today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks, uncertainties, assumptions and other factors. The company's actual results may be materially different from those expressed today. Further information regarding the risk factors is included in the company's public filings with the Securities and Exchange Commission. The company does assume any obligation to update any forward-looking statements, except as required by law. Our earnings press release and this call include discussions of certain non-GAAP financial measures. The press release contains a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results. 2:06 On the call with me today are our CEO, Dr. Yan Li; and the CFO, Ms. Fion Zhou. Now, let me turn the call over to Yan.

2:17 Thanks Arena (ph) and thanks, everyone for joining us on the call today. So in the fourth quarter, we have seen a strong growth of both the China and Overseas Markets. Our total sales volume reached more than 238,000 vehicles, a 58.3% year-over-year increase. The sales volume in the China market alone was up 49.2% year-over-year, reaching 205,000 vehicles. The sales volume is in international market reached nearly a 33,000 vehicles, including over 18,000 units of mopeds, a 40% year-over-year increase and the nearly 15,000 kick-scooters a significant breakthrough in the Micromobility market. 3:09 Now with the strong performance in the fourth quarter, we have wrapped up our 2021 at milestone sales here, we're proud to announce that our global sales volume surpassed one million vehicles. This represents an increase of 72.5% compared to last year. The sales volume in the China market was more than 988,000 units, nearly breaking one million units, but 72.7% year-over-year increase. Where the volume in an international market with just shy of 50,000 units, including nearly a 35,000 units of mopeds, a 16% year-over-year increase an additional 15,000 kick-scooters. This is a milestone for us as a product company and global brand. From a product company standpoint, despite all the global supply chain issues and the COVID-19 situation, we grew our volume by 72% while also expanding into new product categories. 4:14 From a brand perspective, we're now the leading urban mobility company in more than 50 countries around the world with 4,000 plus retail and online shops. The strong growth in 2021 is a test for the implementation of our 2.0 growth strategy, which is leveraging our design technology to create electric urban mobility solutions, suitable for two regions and market segments and in return making you a global urban mobility breath. So for last year, we spoke the five key markets and events our product portfolio in those. The China electric bicycle market and the electric motorcycle market, the international electric motorcycle market, the kick-scooter market and also the e-bike market for Micromobility. 5:09 In 2021, we launched a total of five new products to the China electric bicycle market, the M.2 Q-Latch, the upgraded U and the F2, F0, and C0 of the Gova series. Priced between RMB3,099 to RMB7,999. Those five new product has been hit in each of their respective target markets accounted for 27% of our 2021 sales. Those five products enjoyed a handful upgrade to the smart connectivity and battery management system that combined with the new China national standard for electric bicycles. This allowed our customer to enjoy a more connected smart experience while benefiting from enhanced battery performance, providing extended ride range from 40 kilometers to 80 kilometers on a single charge. 6:03 Meeting multiple consumer segments mobility needs. This has been a key for us to tap into even larger total addressable market in China. Now for the electric motorcycle market in China, we have expanded upon the upgrade Gova G3 and Gova F4. The upgraded G3 now has a range of over 100 kilometers on a single charge. It has been well received by the market and accounts for close to 6% of our 2021 sales in just a few months a year. 6:39 For Europe and Americas market, motorcycle market, we introduced three new products, our first EVO product, the MQiGT-EVO, the most powerful electric 122cc shipped in 2021. The RQi electric quad motorcycle and our first 150cc hybrid moped, YQi both ship in 2022. Those three products represented our expansion into performance moped and motorcycles. All of those products reached top speed over 100 kilometer per hour and each has exciting of 0 to 60 kilometer per hour track time, even outstripping its gasoline power rivals. Those product offerings effectively triple our addressable motorcycle market overseas, expanding from 50cc equivalent to up to 125cc equivalents. 7:36 In December, along right after the MQiGT-EVO ready for ship, we have shipped [Technical Difficulty].

9:03 Ladies and gentlemen your speaker is currently experiencing some technical difficulties with the line. Please stand by while we address the situation. Please continue speakers.

9:12 Hi, sorry, our signal just -- our phone got breakup. So, basically, let me just quickly talk about -- now with the three -- these new electric motorcycle offerings were enabled by our continued investment in R&D, such as the upgraded powertrain system to increase the top speed up to 160 kilometer power, the upgraded battery system to increase drive range by 30% plus and a smart 2.0 features to add additional technology flash in the traditional motorcycle market. 9:44 Now as we mentioned during the last earnings call, besides the scooter and motorcycle product, we have entered the Micromobility market with two new categories, the kick-scooter and e-bikes. In 2021, we introduced two new kick-scooters, the KQI3 and KQI2, a robust line up of kicks cooler product with price starting from USD549 to USD899. Those products are pursued by their respective target markets and we shipped more than 15,000 units between September to December 2021. The release of those models is only the beginning and we have a handful of new models to launch in 2022 to meet the budget demands of wide range of customers who are looking for affordable solutions for their urban commute. 10:34 Now for the e-bike market, we launched the BQi that has established urban minimal design and is capable of extended ride range of 100 kilometers, thanks to its two removable batteries. The BQi will start from USD1,500, making a most powerful and affordable commuter e-bike to hit the market in 2022. We expect to launch more e-bike products to enhance our offerings across the European and Americas market before the end of 2022. Supported by the new products and new category launched in the previous three quarters in 2021, we accelerated our sales network expansion in the fourth quarter in 2021. In Q4, we launched 422 Niu branded flagship stores across China, bringing our total store count to 3,108 stores by the end of 2021. For the entire year, we added nearly 1,500 more stores doubling our total store count in China. 11:33 In addition, we have expanded into 40 new cities, reaching a total coverage of nearly 240 cities in 2021. Those together with a wide range of product offerings drove our growth in 2021 and also serve as a strong base for 2022. For international market, in 2021, we have increased our market coverage to 50 countries with total 174 flagship and premium stores across the globe to form a dense sales network that bring better products and services to our customers. This is in addition to our more than 1,000 motorcycle and e-mobility dealers across five continents. 12:15 Now in addition to our offline store growth and thanks to launch of our Micromobility product, we successfully opened a new range of retail channels that obviously were not ideal for our electric moped, scooters, including not only the big box retail and electronic chains like Best Buy [Indiscernible] mart, but also online platform like Amazon. Those new channels will accelerate our sales while simultaneously expanding our brand recognition. 12:41 Now in order to support an enhanced Niu 2.0 strategy for product store expansion, we have also expanded our branding and marketing activities to penetrate even deeper into the new markets. For China market, we successfully wrapped the entire 2021 with the brand promotion station, we feel a bit proud or a bit new in the year of us. Starting back in February 2021, we kicked off the Chinese New Year by launching the year of new nationwide campaign, which generated more than 200 million views across multiple social platforms. 13:17 In October, we reached an important milestone becoming the first electric 2-wheeler brand to have our customers record a 10 billion kilometer riding distance. To celebrate such an event, we launched our 10 billion kilometer feel proud campaign, which will now to have an incredible reach, accumulating more than 1.4 billion views online and offline around the world for the entire Q4. More importantly, it helped to convey our brand value to our fans, riders and future customers. The message just position you not just as an electric scooter company, but more importantly as a lifestyle brand. 13:57 In the international market, we also continue to deepen our efforts in Q4, specifically with up our social media effort with close to one million interactions across Instagram, Facebook and YouTube. We also attended EICMA in Milan, Italy in November 2021 and the CES in Las Vegas United States in January 2022, launched five new products, received 10 million plus impressions with more than 100 articles published. This branding and marketing efforts have significantly increased our brand awareness. Our recent survey in China has shown that we are on top three in brand awareness, significantly higher than our market share position, which is currently at number 10. 14:43 As we wrapped up 2021, our most successful year so far, we feel very optimistic for 2022. For our addressable market in China, the continued implementation of China National Standard for electric bicycle is helping to push the 2-wheeler owners to convert to lithium battery powered electric bicycles even faster than our original projections. As a leader in the China smart lithium 2-wheeler industry, we are out ahead of our competitors in analysis and technology transformation. We continue to push our R&D and will roll out five new models and a handful of existing product upgrade with the majority of those products that build from April to September in 2022 this year. 15:29 In addition, we also observed a fast growth in the light of electric motorcycle market, fueled by our enhanced drive range battery and powertrain solution. We now have five new models in this sector, with the first model Gova G3 priced from RMB3,899 to RMB5,499 rolled-out in March and the rest was from April to September. Those new models will drive the main growth in the half season in Q2 and Q3. 16:00 Now for the overseas market, advancements in battery technology and powertrain technology last year has enabled the transformation from petrol to electric motorcycle for the mass commute market. i.e., the 125cc category. Our market-leading advances, coupled with our mature smart connectivity feature has allowed us to stand out as a leader in all of the 50-plus market we have penetrated so far. For example, we ranked number one electric moped in Europe. And as we expand our product range beyond the lower powered 50cc category into the 125cc categories, we instantly grow our total addressable market by 3x. Our upgraded MQiGT, our newly rolled out MQiGT EVO, the RQi and the YQi will be the main feature product for this year and we have additional two products in development. 16:57 Now at the same time, the COVID-19 pandemic has accelerated use of ownership of Micromobility e-bikes, kick-scooters for short trips in communities around the globe and especially in those markets where Niu has been established and the trusted brand since 2016. Our first batch of kick-scooter products, the K3 and K2 has been a hit last year and our BQi e-bike to be shipped in early Q2 2022, has also received very positive attention. And we are developing five new products in those categories in 2022 to seize the market growth across all segments and take advantage of our 1,000 plus point of sales across Europe and Americas. 17:42 Now supported by the suitable products and tech offerings, our sales network expansion will also continue to be accelerated. We plan to add additional more than 1,000 new branded stores in 2022. Now, starting Q4 last year and continued Q1 2022, we have observed the raw material price continue to increase, for example, with the lithium battery cost increased by 10% to 20%. We increased our product price by average 5% in March 2022 this year to cope with raw material price increase. Together with our R&D upfront cost reduction, we will maintain a healthy gross margin with this 5% price increase. For the international product, we also plan to increase price in April. So, all those price increases, the full impact on our gross margin will be fully reflected in Q2 this year. Now with all those efforts under the way, we are very optimistic with this year's growth targeting an annual sales volume between 1.5 million to 1.7 million vehicles for the entire year of 2022. Now I'll turn the call over to Fion to discuss our financial results. Fion?

18:55 Thank you, Yan. And hello everyone. Our press release contains all the figures and comparisons you need and we have also uploaded Excel format figures to our IR website for your easy reference. And I then review our financial performance and we are referring to the fourth quarter figures, unless I say otherwise and that all monetary figures are RMB unless otherwise noted. 19:21 I'll quickly go through the sales volume, which Dr. Li just mentioned. And our quarter four sales volume reached 238,000 units, representing a 58.3% year-over-year growth and China sales volume increased by 49%, primarily driven by the new product launches in the past three quarters and international business performed extremely well in quarter four and over 18,000 e-scooters and nearly 15,000 kick-scooters delivered in quarter 4. And international sales volume exceeds our initial expectation and the main reason, of course, is the ease of the international shipping gradually. With regards to the product mix, in China market, the proportion of N, M, U series rebounded from 24% to 47%. And correspondingly, Gova products accounted for the rest of 53%. Out of the 53% of Gova products, 24% was from the entry-level models, G0, F0 and C0 and the remaining 29% was from other Gova models with higher retail prices. 20:42 The overall product mix for China market improved this quarter. Since the premium models, here, I'm referring to both N, M, U series and all nonzero Gova models, took a heavier proportion of 76% compared to 58% in quarter 3. And for international market, we achieved around 33,000 deliveries in quarter four with e-motorcycles and e-mopeds accounting for 55% of them and kick-scooters accounting for 45%. 21:21 Total revenues in quarter four were RMB986 million, exceeding top line guidance provided in the third quarter and up by 46.7% year-over-year. This growth was attributable to increased sales volume across our domestic and international segments, particularly an increase of 156% for international deliveries I mentioned before. And revenue for international e-motorcycles and e-mopeds rebounded after quarter three 2021, rose by 2.7x to RMB156 million, 35% up year-over-year. And revenue from kick-scooters soared by over 29x compared to quarter 3, and revenue from China e-scooter sales remained strong and increased by 48% year-over-year. The accessory spare parts and services revenue also increased by more than 20% year-over-year, though partially offset by 7.3% decrease in overall revenue per scooters. For the year ended December 31, 2021, our total revenue increased 51.6% to RMB3.7 billion as compared to RMB2.4 billion in 2020. 22:54 Now let's look at our ASP. The overall ASP in quarter four declined by 7.3% year-over-year, but improved by 34% quarter-over-quarter. In China market, the e-scooter's ASP remains almost the same compared to quarter four 2020, with a slight decrease by 0.9% from 300 -- sorry, from RMB3,355 to RMB3,326 while improved 21% significantly quarter-over-quarter. And the e-scooters ASP from international markets decreased 36% year-over-year from RMB8,979 to RMB5,749. And the key reason for the decline was the change in the product mix nearly 15,000 units sold of the kick-scooters affected our international ASP to a large extent, whose sales price is lower than the e-motorcycles and e-mopeds price. 24:07 And if we take out the impact of kick-scooters, international ASP decrease was only around 3% year-over-year. And in terms of number RMB8,678. So in total, the ASP of e-scooters was only 4.6% decrease. And the ASP of accessories, spare parts and services was RMB479 per scooter, decreasing by 24% year-over-year, mainly because of acceleration in the expansion of sales volume. The gross margin in quarter four was 22.6%, 2.6 percentage points lower than the same period last year, while 2.6 percentage points higher than last quarter. And the decrease year-over-year was the consequence of higher raw material cost and changing product mix and raw material cost remain at the elevated level in the fourth quarter and we were still experiencing additional inflation in the international shipping. 25:22 And the cost of inflation has reduced our margin by around 1.9 percentage points, while product mix enlarged this impacted by 0.7 percentage points. To combat the cost inflation, we increased domestic scooter retail price from March 2022 and international scooters retail price from April 2022 and we continue to aggressively manage all aspects of our cost structure, including the advanced technology to the product body and purchase agreement to secure sustainable suppliers of the key component parts and other cost saving initiatives. 26:09 Our total operating expenses, excluding share-based compensation, were RMB176.2 million, increased by RMB66.5 million or 60.6% year-over-year. And the increase was caused by RMB17.3 million higher branding and advertisement in sales and marketing expenses and RMB13.2 million higher depreciation expenses of the new store openings and RMB9.7 million higher staff costs. Expressed as a percentage of revenue, our operating expenses exclude share-based compensation was 17.9%, 1.6 percentage points higher than quarter four last year, mainly caused by the retail sales network expansion and branding and marketing activities. 27:14 And we believe there was no better time for retail sales network expansion and brand marketing and now to gain more ground, extending the fast-growing lithium-ion battery powers two wheeler market segments. And a series of marketing activities were launched in fourth quarter as ramping up the branding like national wide (ph) campaign, 10 billion kilometers of riding, as Dr. Li just mentioned and CD promotions, which were targeted to those cities for us to implement the new national standards in 2022. 27:51 I would also like to add that although our operating expenses as a percentage of revenue in quarter four increased 1.6 percentage points, our annual non-GAAP operating expenses as a percentage of revenue maintained the same level as last year at 15.2%. Furthermore, our annual GAAP operating expenses as percentage of revenue decreased from 16.8% to 16.4%. And we are in the good position to leverage our brand awareness, retail sales network expansion and our total operating expenses at a healthy level. 28:38 Our GAAP net income was RMB47.6 million, and net margin was 4.8%. The adjusted net income was RMB60.2 million and the adjusted net margin was 6.1%, 4.1 percentage points lower year-over-year. As mentioned above, these were briefly due to 2.6 percentage point gross margin decline and 1.6 percentage points operating expenses increase. And for the year ended December 31, 2021, our net income was RMB225.8 million and the adjusted net income was RMB273 million, and our net margin was 6.1%, decreased slightly by 0.8 percentage points and our adjusted net margin was 7.4%, decreased by 1.1 percentage points and the decrease mainly came from the decline in the gross margin. 29:50 Turning to our balance sheet and cash flow. We ended the quarter with RMB1.1 billion in cash, term deposits and short-term investments, excluding the restricted cash, and our operating cash outflow was RMB340 million, mainly due to the reduction in payable of RMB214 million, an increase in receivables as a result of seasonality. On a full year basis, our operating cash flow was positive RMB334 million. Our quarter four CapEx was around RMB63 million, mostly related to capacity expansion of RMB27 million and new stores buildings of RMB36 million. 30:40 And now let's turn to guidance. We expect the fourth quarter revenue to be in the range of RMB647 million to RMB712 million, an increase of 20% to 30% year-over-year. And with that, now, let's open the call for the question that you may have for us. Operator, please go ahead.

31:05 Thank you. [Operator Instructions] First question comes from the line of Bin Wang from Credit Suisse. Please ask your question?

31:34 Thank you management. I actually got two questions. Number one is about -- can you share about the first two months sales performance because we are already in the beginning of March, what's the growth and roughly volume? And second is that about a full year volume, can we have a roughly breakdown, how much came from M, N, and Gova? Thank you.

31:56 Okay. I'll answer this question. For the first two months in this year, we already got the sales order around -- above RMB100,000 in total, including domestic and international sales orders. And the sales volume we delivered in the first two quarters is RMB78,000, including the kick-scooters around RMB12,000 and the other e-motorcycles and e-mopeds globally, including domestic and international markets. 32:34 And for the guidance in 2022, we expected around 1.3 to 1.4 sales units in the China market. And we expected around 300,000 -- sorry, 200,000 to 300,000 units in the international markets. And as to the product mix, we expected the N, M, U compares to the Gova series in around three versus seven. And within the Gova series, actually, we expected the majority of the Gova series are the global premium products other than the entry level one. Hope I addressed the questions for you.

33:29 Great, thank you.

33:30 Thank you. Our next question comes from Jing Chang from CICC. Please ask a question.

33:40 Hi, hello, Yan. Hello, Fion. Thanks for your detailed illustration for the results. So I have major two questions. The first is about a further question you about the product structure. So we can see that the proportion of Gova 0 Series in last year fluctuated greatly, so from 20% to 40%. And you just mentioned your -- maybe satisfying product structure, we expect this year. We can see that customers are still very price sensitive. So if we want to achieve a stable relatively high proportion of mid- to high-end products, how we can achieve a much stronger product differentiation for our maybe higher-priced products? This is my first question. And second is about the expense. We have seen that SG&A expense ratio costs have high in the fourth quarter. Looking at the ratio selling expense ratio increased a lot, mainly comes from increasing advertising and promotion expense and also the increase in amortization of store expansion. So, how can we expect overall expense ratio or the amount this year and can it reflect a stronger scale effect? That means rather we can see the expense ratio to go down this year. This is my two questions. Thank you.

35:23 Yeah. So both are great questions. So let me address the first one and I'll let Fion to talk about the expense part. So, I think the great observation on the 0 series for the entry level. So in the last year, 2021, we do see the fluctuation because we actually -- we announced the S0, we rolled out the C0 product. So it's actually coupled with the new product rollout of the 0 series along with some of the promotions. So, looking at 2022, so far, we have only one 0 entry product to be rolled-out, that was the P0, which is actually closer -- effective roll out end of March. Then the rest of Gova products more on the 2 series, the B2 also on the six Series, which is not showing there the G6 and also the C3 and C6, so most are more towards the high end and the entry level. 36:25 The -- keep it in mind that, a lot of those entry-level models they are priced low because they have a relatively shorter drive range. So from -- actually from users perspective, actually the users prefer what are called the mid-price level basically somewhere around RMB4,000 but give a good drive range. For example, our G3C actually represent alone is our last year [Indiscernible] four months, actually already represents 6% of sales, and that product has a drive range of 100 kilometers. So I just want to make a point that we don't really -- it's not like, hey, the cheaper the better. It's actually -- you always have to look at the price versus the drive range. I think this year, the focus on the Gova products is more on the extended drive range product. And also, I think this year, we have about three or four new models for the N, M, U series to be rolled out for China that will help to continue to drive the increase for the higher -- basically, our premium, premium brand. So I'll let Fion to about the expense part?

37:39 We appreciate it.

37:41 Okay. Regarding to the sales and marketing expenses in quarter 4, and actually, I already explained the nature of those sales and marketing expenses. The majority part are the branding and marketing activities and the rest are the depreciation and amortization expenses related to the new stores opening. And if you look at the absolute figure, it's around RMB100 million sales and marketing expenses in quarter 4, almost one-third of the total whole year's sales and marketing expenses. Actually, this is the -- this caused by the new stores opening during the whole year and you will see the full effect in quarter four because we opened more than 15,000 new stores this year, almost double compared to the year-end in 2020 and that -- that is the that is the main reason. 38:45 And regarding to the -- actually, regarding to the operating expenses ratio, especially the sales expenses ratio for this year, since we already got the scale of economy in the G&A and almost in the R&D considering the different new models and we are about to deliver for the next two to three years. Actually, we think the R&D expenses and G&A expenses as a percentage of revenue will lower around 0.2 percentage points. And this for the selling and marketing expenses, we will remain to 8% to 9% as a percentage of revenue for this year. So, in total, we may remain -- the operating expenses ratio around 15% to 16% for this year because we are still in the process of growing the China sales marketing channel for the offline sales volume this year. And as - Niu as always, we are the premium brand in China and in the international markets. We will take this window to improve the brand awareness globally, but we may keep the expenses at a healthy level.

40:23 Okay. Got it. Very clear. And that's all my questions. Yeah.

40:29 Okay. Thank you.

40:31 Thank you. Our next question comes from Wei Shen from UBS. Please ask your question.

40:37 Hi, Li. Hi Fion. My question is about the gross margin. We understand that battery prices, the lithium battery price has been running in recent weeks. I'm wondering what's your strategy towards it? Will you further increase the mix of the lead acid battery in 2022? And I also understand that you have raised price by RMB200. Well, at covered the battery cost, inflate cost and where you consider another round of price hike? Thanks.

41:22 Yes. So I think let me address that. So, we actually are seeing -- last quarter, we see the lithium battery price increase a bit, but then actually really ending starting January this year, we started lithium better to really shoot up. So, we have seen some cases, the lithium battery price increased by almost like 20% and also the RFP battery price also increased by 15%. So keeping in mind, the battery cost is roughly about 30% of our revenue to that extent. So, now, we increased our price by 5%. But really, in order to maintain -- still maintain the same margin, we have also done some cost reductions in terms of the chassis to able to manage -- to maintain the same healthy margin at the same time not increase the price too much. So I think that's one. 42:20 So, We actually look at the market, so in [Indiscernible] market, we have observed that our competitors in the industry, people increased the lithium scooters or moped price by up to -- from anywhere between 8% to 10%. So actually, even significantly higher than what we have done. So, that means, one, we do have additional room to increase the price if we have to, to really to observe the future value price increases. 42:52 And the second, we're also exploring and looking at some of the further electric bicycle solutions is difficult to do the last set, but also for the light electric motorcycle solutions in China in some of the Tier 2 and Tier 3 cities, we also look at the graphite, what we call the graphite lead acid battery solutions as a viable solution for those light motorcycles. And so we will have more -- a few products in that range to really to come back with the lithium battery increases -- price increases.

43:32 Can I confirm with you that as you raise price by RMB200, which only covered the price hike today from the end of 2021 until now, but the gross margin will remain if everything is -- the other items are flat, the gross margin in the first quarter will be at a similar level of the fourth quarter of last year, which is still lower than the third quarter?

44:09 So I think the gross margin question is also related to the product mix as well. So, let's say, even to keep the same product mix, it's similar. It's actually – the gross margin has also slightly increased. So, let me put it this way. The gross margin post price increase versus gross margin before the price increase, the gross margin actually will improve by almost 1 percentage point if we keep the product mix same. The product mix, mainly I talked about the international sales versus China sales, also kick-scooter sales versus other stuff. But for the – I think we talked about – for the entire year, we're still very optimistic that we're able to get to gross -- on average get a gross margin somewhere between around 22%.

45:05 Okay, thank you.

45:08 Thank you. [Operator Instructions]. No further question. I'll turn the call back to management team for closing remarks.

45:53 Okay. Thank you, operator and thank you all for participating on today's call and for your support. We appreciate your interest. I look forward to reporting to you again next quarter on progress. Back to your operator.

46:05 Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.