Twin Vee PowerCats Co.

Good day and welcome to the Twin V PowerCatsCo second quarter 2022 investor call. As a reminder, this call is being recorded and all participants are in a listen-only mode. Your speaker for today's program is Joseph Piscani, Chairman of the Board and CEO of Twin V PowerCatsCo and Kerry Gunnarsson, CFO of Twin V PowerCatsCo. Before I turn the call over to Joseph, please remember that certain statements made during this investor's call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements on this call, other than statements of historical facts, including statements regarding the company's future operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements can be identified by terminologies such as believes, may, estimates, continue, anticipates, intends, should, plan, expects, predict, potential, or the negative of these terms or other similar expressions. The company has based these forward-looking statements largely on our current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties and assumptions described, including those set forth in our filings with the Securities and Exchange Commission, which are available on our website at www.twinb.com. You should not rely on forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Finally, this conference is being webcast. The webcast will be available in the investor relations section of our website at ir.twinv.com for at least 90 days. Audio cast quality is subject to your equipment, available bandwidth, and internet traffic. If you experience unsatisfactory audio quality, please use the telephone dial-in option. A question and answer session will follow the presentation. Please note that only those that have dialed in via the telephone may ask a question. Those listening via webcast will be unable to submit questions and must call in instead. If you would like to ask a question, you may signal by pressing star 1 on your telephone keypad. I will now turn the call over to Joseph Fiscani. Please go ahead.

Thank you. Really quick, someone just texted me and said somebody was not answering the phone. They were trying to get into the call. I'll start.

We do have... We do have clients ringing in, sir, but they're being answered by our operators now.

All right.

Thank you. You're welcome. Good afternoon, everybody. Thank you for taking the time to participate in TwinZ PowerCat's Q2 2022 financial results. I will start off by providing several Q2 updates on our company's progress and discuss our plans moving forward. Carrie Gunnarsson, our CFO, will then give a financial update on the company, and we'll conclude with some Q&A. As you know, TwinVee PowerCats designs, manufactures, and sells a line of Catamaran sport boats from our factory here in Fort Pierce, Florida. Our model lineup for gas-powered boats range from 24 feet in length to our newest model, our 40-foot quad-engine 400GFX. From Q1 2022, our dealer network has increased to over 24 locations, and we currently employ around 160 employees. The past couple of weeks have been exciting and filled with a lot of promising momentum for our company. Today, our electric division, Forza X1, will be brought public by our investment bank, Think Equity. As of today, Forza X1 will become its own independently trading NASDAQ-listed publicly trading company under the symbol of FRZA. Twin V will hold a 70% stake in Forza X1 and Twin V will continue to file a consolidated financial statement going forward based on our 70% ownership in Forza. Now let's discuss Twin V's gas powered boat operations. We are pleased to report 158% increase in net revenue for the three months ended June 30, 2022 compared to the same quarter in 2021. And our adjusted net profit Q2 2022 was $607,000. Again, this is for our Twin V gas powered division. This quarter was our gas powered division's first profitable quarter since Twin V's IPO in July of 2021. This achievement is due in part to our company adding additional models to our lineup, expanding our dealer network, and our continued efforts to streamline the manufacturing process, including our push towards a lean manufacturing facility. Lean manufacturing was first devised by Toyota and is now the gold standard in manufacturing around the world. Our unit throughput has increased to an average of 4.75 boats a week, up from approximately 3.25 boats per week in the fourth quarter of 2021. We are knocking on the door of one boat a day, which is exciting for us. We are paying close attention to market conditions, dealer inventory levels, and economic indicators that might affect our business or the buying decisions of our customers. Our goal is to sustain our current production momentum, streamline inventory levels, and remain focused on hiring highly qualified production and administrative staff to further strengthen our business. We feel confident that even with some slowdowns occurring in certain segments of the market, we have the ability to open new dealers and expand market share and continue our growth momentum. Catamarans are really gaining traction and popularity, and as we've spoken before, Twin V is the second largest multi-hull manufacturer in the country by unit count. As we move forward into the second half of 2022, we anticipate our operating income will improve for our core gas-powered boat division. It's important to note that as Twin V moves forward, focusing on building its gas-powered boat division, Forza X1, our electric boat division, will incur losses as Forza moves from R&D to prototyping its new FX1 models, then to testing and marketing these electric boats, and then to ramping up production in our new Forza X1 factory in Marion, North Carolina over the next 12 to 18 months. The Forza X1 IPO post-IPO, which could happen any minute, will now fund the Forza operations and the new factory and the ramping up Forza's production. Based on the Forza IPO, Twin V will no longer be required to fund Forza operations after today. The removal of the cash infusions that Twin V was funding for Forza should strengthen Twin V's cash flow and strengthen Twin V's balance sheet. We are seeing some softening in the marine sport boat market. We also are seeing some field inventory levels grow. But the good news is that current dealer inventory levels are still not back to pre-COVID traditional levels. It's important to note that our sales team has reached out to every one of our Twin V dealers about their annual forecast. These forecasts are the number of boats that each dealer orders over the course of the year by model, and desired delivery dates, and not a single Twin V dealer has changed, modified, or reduced their forecasted boat orders with us. As a result, our current dealer forecast Twin V still has over a year of forecasted sales production on our books. Let's move to Forza X1. Now moving to our electric vehicle manufacturing subsidiary, Forza X1. We've spoken about this many times, but Forza's mission is to produce an affordable, fully integrated, all-electric recreational boat to inspire the adoption of sustainable recreational boating by producing stylish electric sport boats. We've made some major strides at Forza X1 as we work towards commencing sales to our customers of our FX1 boats in Q2 of 2023. In addition to the IPO, let me start with our most recent news. During a press conference in North Carolina about two weeks ago, Governor Roy Cooper, the governor of North Carolina, was announced that Forza X1 would obtain incentives from North Carolina Department of Commerce and the McDowell County local government to establish its 100,000 square foot dedicated fully electric boat manufacturing operation in McDowell County, North Carolina. Forza X1 CEO President Jim LeFou led these efforts with state and local entities. Jim did a phenomenal job. Thank you, Jim. In terms of the electric boat themselves, Forza X1's first model will be the 24-foot FX1 dual console. I'm happy to report that the tooling of the FX1 dual console has been finished and the hull and deck molds are expected to be complete in the coming weeks and within the next 30 days we will be assembling our first FX1 model. This is great progress on Forza's electric outboard motor as well. The motor currently consists of over 250 parts. This motor will be made in-house at Forza's new factory. We are starting to build small batch numbers of this motor and boat up to 20 units. Turning to the batteries that will power our boats. In January, we announced that Forza X1 entered into a five-year supply agreement with a Michigan-based company named American Battery Solutions, ABS, for production-grade 52-kilowatt high-powered lithium-ion liquid-cooled batteries. Forza has recently received the first battery shipment from ABS, which will be used to continue testing in our prototype boats, and subsequent battery shipments are expected to arrive here in the next couple of months for the use of our brand new FX1 dual console and center console boats. Overall, Forza X1 continues to make substantial progress towards its mission, and there's a lot of work to do. and we're looking forward to the coming weeks and months and letting you all know about those updates. I hope you enjoyed my presentation. Let me turn it over to our CFO, Carrie Gunnarsson, and then I'll give you a little bit more review and we'll go to Q&A. Thank you.

Thank you, Joseph. I'm going to begin with the income statement. Our revenue for the quarter was up 158%, or approximately 5,222,000, up to 8,520,000. Our gross profits for the quarter were up 162%, or approximately 2,131,000, to 3,447,000. As Joseph stated, we continue to monitor the costs of our raw materials and purchase components and adjusting our sales prices and our discount structures accordingly. Our dealer demand has remained strong, and we are monitoring our dealer inventory levels very closely. Additionally, we are working diligently to increase our dealer networks. Our operating expenses for the quarter increased by approximately $2,486,000 to $3,919,000. Our net loss for the quarter was approximately $539,000 compared to net income of $51,000 in 2021. However, in 2021, we did not have either of our subsidiaries. Forza's portion of our net loss was approximately $590,000, and net income from our business, gas-powered boats, was approximately $73,000. Further, when we look at our adjusted net income for the quarter, which excludes non-cash charges, Our adjusted net income for our core business, the gas-powered boats, was approximately $600,000. Our net loss is a reflection of the investment that the company has continued to make in our electric boat division for the month, as well as our efforts to increase the number of models we offer for our gas-powered division and its production line capacity. We continue to aggressively recruit highly experienced staff and are not only increasing our productivity, but also our efficiencies. Turning to the balance sheet, we had cash, cash equivalents, and marketable securities of approximately $9,860,000 as of June 30, 2020. Our inventory levels have increased by approximately $2,570,000 to $4,370,000. These inventory levels support our aggressive increases in production and the challenges that we've faced in the current supply chains. Our accounts payable have also increased by approximately $1,061,000 to $2,262,000. Again, the increase is to support our new production levels. With that, I'll turn the call back over to Joseph.

Thank you, Carrie. So, as you can see, we're growing. I think it's important to note that with our increase growing, we still have over $9 million cash in the bank, and soon with Fours are going public. We will no longer have that cash burn on Twin V's books. And so that's going to strengthen our balance sheet. So I believe in Twin V's second quarter was extremely strong. We debuted a bunch of new boats, our 26, our 34, our brand new 40. If you go online at TwinV.com, you can see some amazing imagery of our brand new 40. It's very exciting. And we're receiving orders from our dealers. And we are starting to even work on additional new models. So in addition, we have increased our unit throughput to an average 4.75 boats per week as we discussed. And this, again, helped Twin V's gas power division record its first profitable quarter since Twin V's IPO in July 2021. We are really excited about the opportunities ahead of us. Before I open it up to some Q&A, I would like to thank all of our employees for the continued teamwork, dedication, the passion they have at building our boats. I want to thank our shareholders for their support and everyone on the call today for their interest in Twin V PowerCats. With that, I'd like to turn it back to the operator for Q&A, and we can take our first question.

Thank you. If you would like to ask a question, please signal by pressing star one 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, press star one to ask a question. And we'll pause for just a moment to allow everyone an opportunity to signal.

And once again, it's star one to ask a question.

And Mr. Visconti, it appears there are no questions at this time. I'd like to turn the conference back to you for any additional remarks. Well, I apologize, sir. We just had a couple questions. Join our queue. We'll go first to Guy Newman, private investor.

Hey, guys. Congratulations. Brilliant quarter. Well done. Can you please explain to the shareholders the correlation between TwinVee, PowerCats, and Forza? Forza is now trading and open. Congratulations on that, too.

TwinVee is a 70% shareholder in Forza X1. Forza will operate as an independent company. And that's it. So it was always a wholly owned subsidiary, and I didn't see the stock quote yet, but as it begins trading, Forza has its own board of directors, its own officers, and will operate as an independent company.

And our next question comes from Joe Zolano, private investor.

Hi, how are you?

Good, how are you doing? Good. I'm a shareholder in both companies, TwinZ, EVPC, and I'm trying to find out your situation with stock conversion and what you guys plan on doing with that.

We did a press release. It's a little confusing, but There will be a merger between TVPC and VEEE. The merger will not – there will be no money changing hands. There will be no stock being issued. Essentially, we have to roll TVPC into VEEE. The net effect will be VEEE will end up with an NOL, and those shares will then – all the VEEE, Triple E shares will be distributed on a pro-rata basis back to all the TVPT shareholders. There's a document that's going to be filed, an S3 registration, over the next couple of weeks. And I apologize about the delay, but it's an extremely, there was all types of tax issues. There was a fairness opinion, the required shareholder vote. But the net effect is that all TVP shareholders, there will be an X date, And TVP shareholders will receive VEEE registered shares probably over the next 60 to 90 days if you still own the stock at that point. But thank you for asking the question. And again, there'll be documents filed which you can go online and start to read. And I apologize it took so long, but we're getting there.

And once again, if you'd like to ask a question, you may signal by pressing star 1 at this time. And we'll pause for just another moment.

It seems we have a follow-up question from Joe Zolano.

Hello. Yes. Hello.

So is it going to be one-to-one conversion, or how are you guys handling, you know?

So it's not one-to-one conversion. You know, I can't get into the numbers. There's disclosure issues, Mr. Zolano, but if you, we did a press release. If you go back and look at the press release, you know, you can kind of figure it out, like the shares that are outstanding in VEEE and then the shares that are issued and outstanding in TVPC, and you take those two numbers and divide it, that will be the distribution. And both those numbers are fully disclosed. My personal shares are in TVPC, so I'm on the same page with you. Again, I apologize it took so long, but we're getting there. There's a lot of legal and accounting and tax work to get this completed.

Once again, if you'd like to ask a question, please signal by pressing star 1 at this time.

We'll pause for just a moment.

And it appears there are no further questions. Mr. Visconti, I will turn the conference back to you.

I want to thank you, everybody, for supporting us. And again, have a great day. We'll talk to you soon. Thank you.

This does conclude today's conference. Thank you all for your participation. You may now disconnect.