Twin Vee PowerCats Co.

Welcome to the Twin V PowerCats Company second quarter 2023 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, President and CEO of Twin V PowerCats Company. 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, 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 terminology such as believes, may, estimates, continue, anticipates, intends, should, plan, expects, predicts, potentials, or the negative of these terms or 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 and 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 these events or 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 formal 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 call in instead. If you would like to ask a question, you may signal by pressing star 1 on your telephone keypad. I'll now turn the call over to Joseph Visconti.

Hello, everyone. My name is Joseph Visconti. I'm the president and CEO of Twinbee PowerCats. I'm joined on the call with Kerry Gunnarsson, Twinbee's CFO, and Jim LeFou, the president and CEO of Forza X1, our electric boat company. Jim is on the call due to his leadership role specifically for the opening and ramping of our aquasport plant in Tennessee. Good morning, and thank you for joining our second quarter 2023 investor call. Twin V designs, manufactures, and sells a range of catamaran sport boats from our factory located in Fort Pierce, Florida. For nearly 30 years, the Twin V brand has been synonymous with offshore catamaran boats and is considered by many to be one of the best riding boats on the water. We are pleased to report an 18% increase in top line revenue to $17 million for the six month ended June 30th, 2023. And compared to $14,400,000 in the same period, in the same period of 2022. If you break out our main production and our facility in Fort Pierce, Florida, where we manufacture 100% of all Twin V boats and our two new model of our AquaSport, our 22 footer, we had a net loss of 234,000 for the six months in 2023. This 234,000 loss is compared to a net loss of 554,000 for the same period in 2022. Twin V net of Forza X1 had cash and cash equivalents, restricted cash and marketable securities of approximately $11,434,000 as of June 30th, 2023. The reportable larger loss of the $2.5 million for the six months ended June 30th, 2023 is a direct reflection of Twin V's majority ownership in Forza X1, the electric boat company, which we own 44% percent of, and it's our Twin V's requirement according to GAAP accounting that we have to consolidate the financial savings. So if you take the 2.3 million loss on Forza plus the $234,000 loss on Twin V, that's where you get the bigger loss, the reportable loss of the 2.5 million for the six months. So the general economic landscape, including rising interest rates, continues to have a direct effect on consumer purchasing boats and recreational vehicles. While we have seen entry-level buyers affected by higher interest rates, we are also seeing cash buyers and boat clubs maintaining a healthy demand for our boats. Due to the changing environment and consumer demands, we continue to expand our product offerings, including our new 400 GFX, and our upcoming 280 GFX dual console. New products open new markets and expand our reach to consumers seeking various lengths and styles of our boats. Our acquisition of the iconic monohull brand Aquasport is off to a good start. While requiring cash outlays and startup expenses, the acquisition of Aquasport has allowed us to partner with over 10 new dealers in over 30 locations. We feel confident that Our Aquasport monohull boat brand will continue our ability to scale our overall business and grow our brands while appealing to a broader market. The monohull market is extremely competitive. As we know, highly competitive markets put downward pressure on gross margins, which we saw in the second quarter. The monohull boating market is one of the largest boat buying markets besides pontoons. And we believe that entering the monohull market with a superior brand like Aquasport will allow Twin V, the company, to increase market share and grow our top line revenue. As we continue to watch market conditions, dealer inventory levels, and economic indicators that might affect our business, we are being vigilant with managing inventory levels, labor and production costs, and of course, not to burn our cash. To the point of managing the balance between dealer inventory levels and production of our Twin V boats, we have strategically chosen to slow Twin V's production of the boats down to 2.5 units of Twin V's per week, while we have increased the production of our new Aquasport 22-footer in the Fort Pierce facility to 4 to 5 units per week. due to the brisk, upbeat demand for our new 22-foot center console and dual console. And this production is taking place, again, in our Fort Pierce facility. Our revenues in Fort Pierce are made up of 70% of twin V-boats and 30% of our 22-foot aquasport. So this revenue is only with this one 22-foot aquasport model, which is why we're excited about ramping up our Tennessee facility with seven additional Aquasport legacy models. So some of the highlights for our six months ended 2023 and some other takeaways is our net loss from operations. Again, our core business was only $234,000 for the six months ended June 30th, 2023. And Twin V's Net-A-Forza had cash and cash equivalents of 11,437,000 as of June 30th, 2023. Some additional items that we've discussed in the previous quarter call. We received site plan approval for our expansion, extension of our building here, 30,000 square feet in Fort Pierce. We are rolling ahead connecting the back building and the front building, which will give us a total of 100,000 square feet of manufacturing facility here in Fort Pierce. which at that point will be a true linear, ability to have true linear production with two lines. We've transitioned our lamination department 100% to the infusion process for hulls and decks. Infusion, as we discussed, is a state-of-the-art lamination process that increases quality of our boat builds while refining the costs and controls. We have finalized OEM agreements with three leading outboard motor companies, Twin V can now offer Suzuki, Mercury, and Yamaha motors as we continue expanding our dealer footprint and target regions of the country where these motors companies have regional brand strength. Our largest dealer, One Water Marine, who currently represents seven of our dealers, mostly in Florida, has placed a hundred boat order with model year 2024. This is two boats a week. And it's only for the one water locations. We still have another 20 locations outside of the one water locations. We've opened 10 new Aquasport dealers. These dealers have 30 locations. And again, this is in addition to our Twin V dealers. Aquasport forecasted orders are approximately 150 units over the next 12 months. Our current TwinVee forecasted orders is over 120 orders for the next 12 months. This includes six 400 GFXs. And we will begin to see revenue from our Aquasport Tennessee plant in Q3. While markets are a bit choppy, our continued business objective is not to burn cash, remain prudent with our balance sheet, and continue to grow our business and, of course, deliver value to our shareholders. At this time, I'd like to open it up for questions.

Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Joshua Horowitz with Palm Ventures. Please proceed with your question.

Hi, Joseph. Good morning. Good morning.

Great job on everything you said with scaling back and keeping an eye on the inventory and stuff. My question is, I guess, could use a little bit more color on how the reopening and ramping of the Aquasport production facility is coming.

Thank you. So Jim LeFue, our present CEO of Forza, is spending a couple days a week over in Tennessee. I'd like to bring Jim on to talk specifically about the opening and ramping of that facility.

Yeah, thanks, Joseph, and thanks for the question, Josh. A quick update on our aquasport facility. As many of you know, we have taken over the operations of the former Ebtide Holdings in White Bluff, Tennessee. It's a 150,000 square foot facility. facility, including the molds and the trademarks for the AquaSport brand. To date, we have hired approximately 35 people since June 1st. In June, we started the cleanup and rehabilitation of the factory and began actual production in July. We expect to be able to ship probably up to eight boats by the end of August from the White Bluff facility. We will settle into two boats per week for the remainder of the year, September through December. And then we will look to ramp up faster at the turn of the year in January. One of the biggest initiatives we have will be to develop a full line of boats, including bay boats, offshore center, and dual consoles, and possibly even flats boats. We have a really aggressive new product plan that will be implemented over the next five years. But so far, so good with the startup. We're excited about it. And we should ship our first set of units here shortly in the month of August.

Hope that answers your question.

Yeah, very good. Thank you so much.

Josh, I'd like to add, you know, we set out, we did the Aquasport deal and Then we had our dealer meeting in West Palm. And we, it was just absolutely amazing kind of, you know, the positive feedback we got. I mean, we've signed these dealers. I mean, this is in the face of a pretty tough market. And, you know, I mean, we're feeling it a little bit on the Twin V side. But AquaSport, there's a lot of dealers out there that are looking for a new opportunity. There's other larger boat brands that got caught up delivering very expensive premium boats, and nobody was really catering the value-based buyer anymore. The opportunity with Aquasport was a ready-made production facility. The previous owners did a fairly decent job with tooling. We talked about it in previous calls. There were seven legacy models ready to go. Nothing's easy. But Jim LeFue's background at Maverick Boat Group, he was the head of all of production for that facility for over 25 years, building 1,700 boats a year. So Jim's assembling a team of some of the old Aquasport employees have come back, leaders, managers, workers. So it's just a really great opportunity for us to you know, build, you know, a monohull brand and also as a public company, you know, continue to have kind of increased revenues and deliver margins. So, again, thank you for the question.

Sure. Thank you, guys.

Thank you. As a reminder, if you'd like to join the question, too, please press star 1 on your telephone keypad. We'll pause a moment to allow for any other questions. Thank you. Our next question comes from the line of Raj Mashwari with Charleston Capital. Please proceed with your question.

Hello. Good morning, Joseph. Good morning, Jim. Thank you for taking my question. I just wondered, as you look out to 24, is there any way to gauge what 24 looks like? Are things starting to bottom out on a macro point of view? And maybe some guidance as to the combined AquaSport and Twin V companies. Thank you.

You know, I could tell you that, you know, we currently are hitting numbers out of our Fort Pierce facility. That's with our Legas. Can you hear me okay?

Now I can.

With our... In our Fort Pierce facility, with our legacy twin V-boats plus our two additional AquaSport model, the 22 center console and dual console, we are hitting last year's revenue numbers, which are about $35 million on an annual run rate. And so as we kind of bring on AquaSport, You know, with Jim's numbers, like two boats a week, I think that kind of adds to, you know, where, so $35 million plus of this additional aquasport revenue, I think, is where we will finish out the year.

Which, you know, is good. It's higher than it was last year.

And that's in face of some pretty tough headwinds, higher interest rates. Some of the buyers, the plumber, the electrician that were buying a $100,000 boat and the payment was $500, that same payment is $1,000, $1,100 now. And that buyer, we're seeing him move to the boat clubs. you know, are coming up with an alternative summer strategy with their family.

Yeah, and if I can add a little bit to that for Raj, I think one of the questions was how do we view the macro and do we see any signs of bottoming? This is mostly anecdotal information, but we are getting feedback from some of our dealers that there's increased traffic on the showroom floors and people are starting to buy again. I think the They've gotten used to some of the higher rates and some people that don't need to finance are still buying. We are also hearing from our dealers and looking at the SSI data that one of the best performing segments in marine right now is the saltwater fishing boat segment. So some of the other segments of the market are down much more, but it seems like we're in a pocket of strength in saltwater fishing. So that's a good thing for us. Obviously, There's no way of knowing for sure, but some of the preliminary signs, I don't want to call them green shoots, look like they're getting a little bit better.

So have you started to plan for the 24 calendar year budget yet, or is it still too early?

Well, we've got our forecast. I went through. So we have a forecast number of 150 aquasport boats. That's been forecasted from our new aquasport dealer network. So we've got 150 boats there, and we've got a baseline of 120 twin V boats. A hundred of those are from one water, and we need to finish collecting. our forecasted numbers from our other Twin V dealers. As you know, the marine industry celebrates the model year change in July. So it's all happening right now when we're working with our dealers. We're getting our forecasted numbers and planning 2024. So, I mean, the numbers look good right now. I mean, I don't want to pinpoint an exact revenue number, but I think it's important that we get the Aquasport Tennessee plant online in addition to what's happening in Fort Pierce. I think we've got a bright future.

Excellent. Thank you, Joseph.

Thank you. Once again, if you'd like to join the question queue, it's star 1 on your telephone keypad. We'll pause for another moment. Mr. Visconti, I'm seeing no other questions in queue. I'll turn the floor back to you for any final comments.

I want to thank everyone for participating today, and we appreciate our stakeholders and shareholders and the confidence and support you've given us. So thank you, and everybody have a great day. Thank you.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.