Twin Vee PowerCats Co.

Q3 2022 Earnings Conference Call

11/8/2022

spk00: Welcome to the Twin V PowerCats Co third 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 Visconti, CEO and President of Twin V PowerCats Co and Kerry Gunderson, CFO of Twin V PowerCats Co. Before I turn the call over to Joseph, please remember that certain statements made during this investor 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 positions, 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 terminology such as beliefs, may estimates, continue, anticipates, intends, should, plan, expects, predict, potential, or the negative of these terms or other similar expressions. The company has 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 four different statements are a particular 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.twinv.com. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflect in the forward-looking statements will be achieved or occur. Finally, this conference call 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're experiencing 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 telephone may ask a question. Those listening via webcast will be unable to submit questions and must... Hello?
spk03: Joseph, I can hear you. I'm not sure what happened to our operator. I'm not sure either. Operator?
spk00: I will now turn the conference over to Joseph Visconti. Please go ahead, sir.
spk02: Thank you. Thank you and good afternoon. Thank you for taking the time to participate in our Q3 2022 financial results for Twin V PowerCats. My name is Joseph Visconti. I'm the CEO and president of Twin V. I'll start off by providing third quarter update on sales trends, revenue, product development, facility development, and the general health of our company. Kerry Gunderson, our CFO, will then update you on the company's financial health. And then we will conclude with Q&A. Twin D PowerCats designs, manufactures, and sells catamaran sport boats that are shipped from our factory here in Fort Pierce, Florida. Our current gas-powered model lineup ranges in length from 24 feet to our new 40-foot GFX. We employ over 170 employees. We are currently manufacturing six GFX models, and we are adding three additional models in the coming weeks under the name of STX. This is a sport tournament boat that we've come up with. The STX models will include a 24, 26, and 28 footer. From the day I bought Twin V in 2015, we set out to build a company where talented people were provided the opportunity to thrive and succeed with the focus of building an international business that designs, manufactures, and sells iconic products in multiple markets. From the beginning, we have done just that. Year over year, we have consistently designed new boat models, from conceptual designs to beautiful twin-V boats being shipped to our dealers throughout the United States and several island nations. The only time we've taken our foot off the gas was a three-month period when COVID arrived. After a brief pullback, our team hit the accelerator forward, bringing almost a dozen new models from conception to marketing, including a brand new 40-foot quad-engine power cab. We have a lot of new developments to share, new products in the pipeline, expansion plans to go over. But first, I'd like to take a moment and discuss the question that is on everybody's mind. And that question is, how is rising interest rates, consumer confidence, and the general uneasiness in the market affecting Twin V's day-to-day business? Well, over the past five months, we've seen dealer field inventory go from extremely unnatural low numbers of boats on dealer lots. Sometimes there is not a single boat available at certain dealers. And over the past five months, we've seen dealer inventories are climbing. Some of the dealer levels are back to pre-COVID numbers. And we have other dealers that don't sit and wait for the phone to ring. but take a proactive sales strategy. And these dealers are doing great. We have several A-plus dealers that continue to sell every boat they take possession of. Several weeks back, we were seeing some field inventory levels starting to reach high numbers. And the industry talk was Flibs, which is the Fort Lauderdale International Boat Show. It's one of the largest boat shows in the world, would be the kickoff for a renewed period of demand. Palm City Yachts, our dealer that represented four twin V models at Flibbs and Lauderdale for five days did very well. We saw a wave of fresh demand. We had four deals close at the show, and there's another eight deals that are pending. And these numbers are very good for a five-day period over a boat show. Obviously, today is a big day. I think today's election could have a positive impact on consumer confidence. Especially in Florida, we are seeing what appears to be a healthy economy. Housing is still relatively strong. The labor market remains strong. It appears that jobs are available for the people that want to work. And the supply chain is getting better, with a few items still remaining a challenge, which tells me that the overall demand of products remains greater than the supply. The bottom line is, at Twin V, we are building boats. We're working to increase our production, we're expanding our distribution, and we're implementing a several-pronged growth plan as we move forward. Our game plan is growth, growth by adding new models to our lineup, growth by increasing our distribution and opening new markets. New models accelerate growth and market opportunity. Some of the new models include the three STX4 tournament models I mentioned previously. And more specifically, we have four new, completely unique, special models that we've been designing that will be launching under a brand new name called LFG Marine Group. LFG Marine will be a twin V unit. The initial LFG models are geared towards the freshwater markets. which Twin V boats typically are saltwater boats, but the LFG boats can also be used and enjoyed in the saltwater environment. The goal is that LFG will help open new markets and increase our exposure. The LFG Marine Group brand will have its own website, its own marketing, but the boats will be designed, manufactured, and shipped from our Twin V factory in Fort Pierce. We intend to open new dealers and freshwater markets like Michigan, Ozarks, the thousand islands in New York, and the thousands of lakes throughout the country. Our initial LFG models will include a 25 foot multi-hull center console, a 25 foot dual console, a 25 foot deck boat, and a new 22 foot single engine monohull. All these models, are past the design stage, and the tooling is being completed as we speak. Actually, the first 25-foot LFG dual console is actually in our rigging department in Fort Pierce right now and should be in the water in the next two to three weeks. We feel confident that revenues from the LFG boat sales will begin in Q1 of 2023. Let me spotlight some additional points. As part of this kind of increased growth We've hired Zach Crane as our new director of national sales. Zach has extensive experience in dealer development management. He developed and managed over a hundred million dollars in boat sales for Malibu Boat Group. Zach is located in New Jersey and will open new Twin V territories in the Northeast. Additionally, Zach will work with our current dealer base to increase sales and manage our brand quality control. Our current cash position, TwinVee, is $14.5 million of cash and cash equivalents. This cash allows the company the ability to sustain itself through any possible rough markets, but also to acquire assets that might come available in the near future. TwinVee has also begun infusing our boats. Infusion significantly changes the boat manufacturing process. This modern, efficient lamination build process creates a stronger, lighter structure. Infusion is just one part of the continued improvement processes that we are striving at the company to get to the next level of boat building. We also have recently added Mercury and Yamaha Motors as an OEM. This is a big deal. We've had Suzuki for almost 30 years. We've signed up Yamaha and Mercury. And Twin V and LFG Boats will have the opportunity to hang all three of these brands, Suzuki, Yamaha, Mercury, which will allow our brands to succeed in markets where motor brands have strong brand recognition. And sometimes those motor brands control that market share because of that. We also are moving to become a lean manufacturing organization, which focuses on minimizing waste and manufacturing systems while maximizing productivity. We've hired Steve Gunnarsson, an experienced and trained lean manager, to help train our employees and transition the factory to lean manufacturing. Welcome aboard, Steve, and this is a big deal for us. We continue to move forward on the design and construction of our 30-foot extension at the Twin V factory. The extension structure will connect the back building and the front building, giving us approximately 100,000 square feet of a linear manufacturing space. This will allow us to ramp from the current 220 units annually to production of approximately 600 units annually. We're about to launch a brand new TwinVee website in the coming weeks. This new site will enhance the customer experience and increase our online visibility. We are in the process of installing an ERO software program from SAP that will manage all builds of material, control inventory, connect all departments, tie in all financial reporting for each department and segment throughout our organization. For example, as boats are ordered from our dealers, the order will trigger a pick list of materials and relieve that inventory, adding to the efficiency of our financial reporting. Forza X1 continues to make substantial progress towards its mission of building electric boats for mass production. Our team continues its amazing work. On October 28th of this year, about a week and a half ago, the FX1 boat, our dual console, and all major components were tested successfully for several hours in the Indian Lagoon in Fort Pierce, Florida. This was the first true water test that included all major components. The performance of the boat exceeded our expectations. Forza X1 will continue to build prototype engines and prototype boats for the next six to nine months, and Jim LePue, our Forza's CEO and president, held an investor call for Forza yesterday, and for you of For those of you that missed it, you can find a copy of this call on Forza's website, forzax1.com, and you'll be able to listen to Jim's investor call. I hope you enjoyed my presentation. I'd now like to turn it over to our CFO, Carrie Gunnarsson, who will give a more detailed review of our financial results, and then we'll open it up for Q&A. Thank you.
spk01: Thank you, Joseph. I will begin with the income statement. Our net revenue for the quarter was up 114% to $8,520,000. Our revenue year to date was up 119% to $23,218,000. We are very pleased with our consistent growth over the nine months. Our gross profit for the quarter was up 107% to $3,334,000. We continue to monitor the cost of our raw materials, the purchase components, along with our dealer inventory, and are adjusting our sales prices and discount structures accordingly. As Joseph mentioned, increasing our dealer network is a high priority for us, especially outside of the Florida Territory. Our operating expenses for the quarter increased 117% to $4,191,000. When we look at our operating expenses as a percent of sales for the quarter, they were 48% compared to 47% in 2021. However, if we look at just the gas-powered segment, our operating expenses as a percent of sales for the quarter were 36% compared to 45% in 2021. We are very pleased with this improvement of 9%. Our net loss for the quarter was approximately $887,000 compared to $383,000 in 2021. However, in 2021, our subsidiaries, Fix My Boat and Forza, had very limited activity. Forza, our electric boat segment, their portion of our net loss was approximately $1,043,000. The net income from our core business, gas-powered boats, was approximately $160,000. 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 $577,000. Our consolidated net loss is a reflection of the investment that the company continues to make in the electric boat division, Forza X1. As we turn to the balance sheet, Our consolidated cash, cash equivalents, and marketable securities were approximately $23 million as of September 30, 2022. If we break that down by segment, TwinB was $9 million and Forza was $14 million. Our cash position in the quarter did increase significantly due to Forza's IPO. When we look at our current cash and marketable securities at TwinB, the gas power division, it did increase significantly from September 30th due to our shelf offering. And our current cash equivalents and marketable securities is at 14.5 million. We believe that we have sufficient cash in the books and from operations to provide for our ongoing operations. With that, I'll turn the call back over to Joseph. Thank you.
spk02: Thank you, Carrie. In conclusion, I believe Twin V's third quarter was extremely strong. We've debuted new boat models, we added dealer locations, and we continue to have a backlog of orders. We are excited for the opportunity ahead. We continue to grow our market share, expand operating margins with the goal of adding meaningful shareholder value. I'd like to thank our employees for their continued teamwork and execution. I want to thank our shareholders for their support. and everyone on the call today for their time and interest in TwinVee PowerCast. And with that, I'd like to turn it back to the operator and begin Q&A.
spk00: Thank you. 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, press star 1 to ask a question. We'll pause for just a brief moment to allow everyone an opportunity to signal for questions. And it does appear we have no questions. I'd like to turn the conference back over to your host, Joseph Viscondi, for any additional or closing remarks.
spk02: I just want to thank everybody, and we look forward to the next Q call, and everybody have a great day. Thank you.
spk00: Thank you, and that does conclude today's teleconference. We do appreciate your participation. You may now disconnect.
Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-