Twin Vee PowerCats Co.

Greetings, ladies and gentlemen. Welcome to the Twin V PowerCats Company third quarter 2021 earnings conference call. Joining me on today's call is Joseph Visconti, President and Chief Executive Officer, and Carrie Gunnarsson, Chief Financial Officer. As a reminder, this call is being recorded. All participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. I would like to remind everyone that various remarks about future expectations, plans, and prospects constitute... forward-looking statements for purpose of a safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Twin V cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated, including risks described in companies' filings with the SEC. Any forward-looking statements made on this conference can speak only as of today's date. Monday, November 15, 2021, and Twin V does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today. A replay of this conference will be available on Twin V's Investors Relations website at ir.twinv.com for at least 90 days. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. If you would like to ask a question on today's call, you may do so by pressing star one on your telephone keypad. Thank you. I will now turn the call over to TwinVee's President and CEO, Joseph Visconti. Please go ahead, Mr. Visconti. Joseph Visconti Thank you, Keith.

Good afternoon to everyone on the call today. Thank you for joining us and taking the time to participate in our 2021 Third Quarter Financial Results Call. So the previous quarter earnings call was weeks after our IPO. We were kind of just getting settled in as a NASDAQ listed company. I feel like we're off to a really good start working to accomplish many goals we set prior to our IPO capital raise. We will go over our Twin V third quarter financials in a moment, but let me take a minute to kind of give you an update of our business and our operations. So Twin V designs, manufactures, and markets recreational and commercial power catamaran boats. Our factory is located in Fort Pierce, Florida. We employ over 115 skilled men and women. Our twin hull catamaran designs offer consumers many reasons to choose our boats over a monohull boat. Catamaran running surface offers reduced drag, increased fuel efficiency, stability, and a superior ride quality due to our catamaran hull design. Since our IPO, we have introduced several new Twin V models. We've brought on four new dealers, and the demand for our product remains strong. We continue to focus on increasing production through new hires, additional equipment, and, of course, adding new models to our model lineup. We achieved a successful sea trial for our electric boat, the 280E. We launched Fix My Boat, which we'll talk about in a couple minutes. and we continue having an extremely busy year, but we love what we do. As of today, we have increased our model lineup to 11 gas-powered Twin V production boats, including our newest offering, which is our 340 GFX, which was just unveiled at the Fort Lauderdale International Boat Show. Our 12th Twin V model will be our 40-footer, our 400 GFX. The 40-foot Twin V is our largest and most expensive boat to date, We're working our way through the tooling process right now on the 40 footer. We believe that our 40 footer, our 400 GFX will be in production by Q2 of 2022. We're excited to announce the development of a brand new 26 footer, our 260 GFX. The design of this new boat has been finalized and we're now manufacturing the molds and gearing up so our 260 GFX can enter production in q2 of 2022 also we launched the 340 gfx only two weeks ago and we already have 15 orders for this boat incredible with our additional with the addition of our new 26-foot gfx model our gfx model lineup will include models ranging in size for our 24 28 20 I'm sorry, 24, 26, 28, 34, and our 40-footer coming early next year. Twin V's expanded GFX lineup offers the market a robust model lineup for expanding our market share. We've added these four new dealers. We added our distribution network, include RICO Marine, which is in Fort Myers, Florida. We added Old Salt Marine in Sarasota. This is along the west coast of Florida. Performance East in North Carolina, working up the eastern seaboard. And then Carefree Boat Club in Panama, which is the country. We now sell Twin V's through a network of 17 independent dealers in 20 locations across North America, Caribbean, and now South America. We have added to the infrastructure of our factory with the equipment required to increase our production and meet the demand being placed on our products. We have purchased approximately $800,000 in new equipment, including an industrial-grade air compressor, fans, ventilation system, new large resin tank, forklifts, gantry system, gel coat and chop guns, which are used in the lamination process. All this equipment supports getting us to the next level of production. We continue adding to our skilled workforce. We've grown in the past couple months from approximately 80 full-time employees to over 115 full-timers as of today. We are moving forward with new models, increased production. By the first of the year, our factory should be producing 3.5 boats per week with a goal of producing four boats a week or more by Q2 of 2022. Our backlog and dealer forecast orders are well over 200 plus boats. We have 100% of our production slots filled for 2022. If a dealer sends us additional orders right now, we're issuing production slots into 2023. Dealer inventory remains at record low numbers. We've typically had over 70 plus boats in dealer inventory, and that's with 14 dealers. Today we have less than 20 dealer inventory boats with 20 locations. We are producing larger, more expensive boats. So as these larger boats come online, we're going to see a benefit of higher revenue. It's also important to note that as we introduce and bring online the new GFX models, we will see our per boat production times reduced. As we discussed in the roadshow, the classic models, I mean, they're great boats. but they require longer build times and they have a higher labor per boat cost. So looking into the future with increased demand, expanded dealer network, introduction of new additional models, including possibly bay caps and dual consoles, we took the initiative and we signed an agreement and placed a 14-acre parcel of land under contract with the goal of building a larger factory. The new factory is obviously a two-year-plus endeavor. You've got site plans, approvals, planning, zoning, bids, et cetera, et cetera. There's a lot of work ahead of us on this project. We're very early in the process, but we're excited with all the possibilities that a new, larger, modern factory would offer. It's an exciting time to be in the boat building business. We will continue to manage our growth with all eyes on the prize, which for us is maintaining a profitable and consistent growth. Turning to other aspects of our company, several weeks ago we announced the launch of a new business venture named Fix My Boat. Fix My Boat is a 100% wholly owned subsidiary of Twin Vee. Fix My Boat will be the new on-demand mobile marine repair and service solution for boaters for an efficient and modern solution to repair boats. As we all know, a record number of boats are being sold and delivered to busy professional people across the country, and the demand continues. So one of the few downsides of owning a boat is that boats require a consistent level of service and maintenance. Fix My Boat is the on-demand business solution that was born from our personal first-hand experience seeing boat owners not having the time or the patience to properly service and maintain their boats. You know, with the advent of this on-demand service for most aspects of our lives, we've all really become accustomed to like a mobile-based, easy, seamless buying products or scheduling a service. Fix My Boat will be the first nationally branded mobile marine service company offering on-demand mobile marine service dockside at your home or in your marina. Fix My Boat is a franchise model. We are initially testing two local vans in our geographic backyard, which is the Treasure Coast. Our initial launch of these two Fix My Boat mobile vans will allow our team to perfect the platform before we begin selling franchises. Our expansion and growth plans are to sell the franchises throughout the United States, starting mostly in Florida, where we can kind of control the growth and manage expectations. We have funded this venture with $250,000. The initial investment allowed us to acquire these two Dodge Ram high-top trucks. Both these trucks have been equipped with tool cribs. We're now supplying inventory and supplies. Both vehicles should be operational and generating revenue within 60 to 90 days. The $250,000 that we invested in the launch of FixMyBoat should be enough to launch the new business model. The goal with FixMyBoat is to maintain low overhead, grow the franchise model, grow revenues, maintain a backend scheduling, invoicing, third-party API so we can manage low overhead, and of course, a heavy emphasis on quality brand standard management. When you're dealing with service companies, it's really about the quality and expectation, customer-centric experience. So that's really important. As you may have read in our recent press releases, we continue pushing forward with the development and prototyping of our electric boats. And our engineering team has really been doing a phenomenal job with the integration and control systems required to operate our proprietary electric propulsion system. Our EV engineering team has successfully designed and installed an electric propulsion system into two of our Twin V models. We've proven that this proprietary propulsion system works and we're ready to jump to the next level. So due to a void in the marine EV space, we've taken this opportunity to pivot our marine electrification goals. Twin V incorporated a wholly owned company named Forza X1. We made a strategic decision to separate Twin V gas-powered boats and our electric technology in marine EV development and rename this new company Forza X1. Twin V PowerCats will continue its focus on gas-powered boats and growing its production with its gas boats. Our new company, Forza X1, will allow each company to focus its energy and resources on its individual strengths In hindsight, there was some investor confusion between the two companies, Twin V gas-powered boats and Twin V electric boats, so it made a lot of sense for us to bifurcate these two companies. Forza in Italian means force or strength. The X-1 part of the name is a nod to the Bell X-1 rocket engine powered by aircraft pilot Chuck Yeager. It was the first crewed aircraft to exceed the speed of sound. Forza X1 represents our mission to design and manufacture an electric boat on the leading edge of innovation like its namesake. So Forza X1 is a wholly owned company by Twin V. It will be a technology-enabled marine business. We believe it's the first of its kind to develop a commercially viable, affordable electric sport boat for mass appeal. Our initial Forza model will be named the FX1. This new boat is being designed and will be manufactured in both a 24-foot dual console and a 24-foot center console. It's a brand-new design, ground-up, whereas we were retrofitting our 24 and our 28. This is a brand-new design boat. We're engineering it with the least amount of parts, so as we go into mass production, it's going to be easily manufactured. The first Forza X1 model will include our proprietary outboard electric motor that we've been designing and working on for 18 months, which if you've been following us, is now past the design stage and we're now into the prototype stage. The FX1 will incorporate four key components, which is advanced high-powered liquid-cooled battery packs, our Forza-powered electronic module, our high-efficiency motor that we've been designing, and our control software integrated into a 22-inch Garmin master screen. We're trying to eliminate as many buttons on the boat as possible and integrating all controls into this 22-inch screen. We intend to operate the Forza X1 in a fundamentally different manner than the traditional boat manufacturer. Our goal for Forza is to design, build, and adopt a direct-to-consumer sales model, very similar to many EV automotive models that have come to realize that electric cars just require less maintenance, less service than traditional combustion engine cars. Therefore, these EV business models don't require the physical infrastructure of an old-school dealership and the service centers. We're trying to follow in those footsteps. Also, most people do not really want to negotiate with a salesperson for their car. So, you know, our engagement through the sales and delivery process will be through a web-based platform or an app. And due to the changing dynamics of the EV industry, we've begun to design phase to build a dedicated web-based platform for the sales, delivery, and service of this new FX1 boat. Forza X1 is pushing the turbo button on its development to leverage first mover advantages. Our first mover advantage should enable our company to establish strong brand recognition loyalty before competing companies enter the marketplace. I know there's a couple electric boats out there that are doing onesies, twosies, but everything that we're doing from ground up with our FX1 is to be in a mass production environment. Forza XS X1 will utilize all the design, engineering, testing, and prototype work that we've already completed with our Twin V240 electric, our Twin V280 electric models, but our Forza team is taking the design and systems integration to the next level. Forza's goal is to focus on a fully integrated electric boat assembled and shipped from an independent future Forza factory. Our goal is to expand the reach of the Forza brand to customers by offering both the center console and the dual console right from the start. So this will allow us the widest boat buying markets, including lake boating, freshwater, inland, and even international customers. By offering the dual console, dual consoles historically are more of a freshwater boat, and Twin V historically has been a saltwater boat manufacturer. So by offering both the center console and the dual console, I think it really widens the marketplace for us as we hit the market with our FX1. With that being said, I'd like to now turn it over to our CFO, Carrie Gunnarsson, who will now give a more detailed review of our financial results for our third quarter. Thank you.

Thank you, Joseph. Beginning with the income statement. Our revenues for the third quarter of 2021 increased 65% to approximately $4,118,000 compared to $2,498,000 in the third quarter of 2020. Our gross profit for the third quarter increased 130%, approximately $1,610,000 compared to just $700,000 in the third quarter of 2020. Our gross profit margin improved 11%, It was 39% in the third quarter of 2020 compared to just 28% in the third quarter of 2020. Our operating expenses for the third quarter of 2021 were approximately $1,933,000 compared to $947,000 in the third quarter of 2020. This increase was due primarily to the additional expenses associated with increasing our production to include increased production staff as well as adding mid-level managers. We have invested heavily in training these individuals and ensuring that they have the right tools for the job. We have also had high levels of overtime as we work to meet the demand of our product offering. Additionally, we are now incurring additional costs associated with being public, but we are well on our way to transforming our company. For the third quarter of 2021, our net loss was approximately $383,000 compared to a net loss of $201,000 in 2020. Again, the increased loss was primarily due to a one-time cost associated with our ramp-up process and the disruption of the IPO. We are very pleased with our top-line revenue increase and the dramatic changes that have taken place in our production facility over the quarter. Turning to the balance sheet, the company has cash, cash equivalents, and marketable securities of approximately $15,070,000 as of September 30, 2021, compared to $407,000 as of June 2021. At this time, we believe our cash, cash equivalents, along with cash from operations, will provide sufficient cash to finance our operations. Now I will turn our call back over to our operator, Keith, to start the Q&A.

Thank you. Ladies and gentlemen, if you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause a moment to give everyone an opportunity to signal for questions.

That's star one for questions or comments. Star one, please. Steve, I have a question that was sent in to me. Please go ahead.

This is Joseph Ascanti again. And so a question was sent in. What are some of the challenges that we have by increasing production? So, you know, we... You hear about the supply chain challenges, and it's a different world today. So where you might have had one vendor in the past, you now have three or four kind of as a backup. I would say, you know, motors during the IPO and post-IPO, we were challenged by getting Suzuki 150s. We now have over 60 Suzuki 150s in our warehouse, so we're good there. The new challenge is Suzuki 350s for our larger boats. Luckily, our new 340 can take 300s. You know, there will be customers that want the larger motors on the boat. So, you know, these are challenges. And everyone's dealing with it. So our big challenge was on the lithium batteries with, you know, boats as we retrofitted the 24 and the 28 twin Vs, trying to get access to production level lithium batteries. We believe we've negotiated an agreement with one of these strong industry players who's in the process of building up their own factory to meet the demand of this high-powered lithium ion batteries. Everything's looking good right now.

It's a different world, but we're doing the best we can. As a reminder, star 1 for questions or comments, star 1, please. I also had another question sent in, Keith. Please go ahead.

Another question, are there any other models planned other than the 260 GFX? So we've got, this year we had our 28 GFX models. We just brought into production our 340 GFX. I just went through our 26 GFX will be in production Q2 2022, our 400 GFX Q2. So that's a big year. Approximately two years, four new models. But we're starting to play around with some designs of a bay cat, 22 to 24-foot bay cat. And so, I mean, if we just hit the go button now, that still would not happen probably till late 2022. So we don't have any immediate other boats teed up other than our 26 and our 40 footer on the gas side. And then, of course, the FX1 that we just talked about for Forza X1.

We still have no questions in the queue. As a reminder, star one for questions. And ladies and gentlemen, this will conclude today's question and answer session.

At this time, I'd like to turn the conference back to your presenters for any additional or closing remarks.

Thank you. I feel this is Joseph Ascanti. I feel confident that our Q3 2021 is heading in the right direction. I always say that we've come a long way, but we still have a long way to go. Our IPO has given us the fuel that we needed to accomplish some very big goals. And as you can tell, we have a lot of big goals in front of us. As you can see from the continued product development, launching Fix My Boat, laying the groundwork for a future next-level factory, and the focus that we're placing on launching an affordable electric boat for mass appeal. We hope you understand how appreciative we all are for the opportunity that most of you have given us to build a great American company, building great products with American ingenuity and good old-fashioned hard work. I want to offer our employees gratitude for their continued hard work And I want to thank our stakeholders, our shareholders for all the support, and everyone on the call. So thank you, everyone, from Twin V PowerCats. Thank you. Ladies and gentlemen, this concludes today's conference.

We appreciate your participation. You may now disconnect.