Twin Vee PowerCats Co.

Welcome to the Twin V PowerCats Company third quarter 2023 investor call. As a reminder, this call is being recorded and all participants are on a listen-only mode. Your speakers for today's program are Joseph Visconti, President and CEO of Twin V PowerCats Company, and Carrie Gunnarsson, CFO 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 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 operation, 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.twinv.com. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected and 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 sections of our website at ir.twinv.com for at least 90 days. AutoCast 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'd like to ask a question, you may signal by pressing star 1 on your telephone keypad. I will now turn the call over to your host, Joseph Visconti.

Good morning, everyone. My name is Joseph Ascanti. I'm the president and CEO of Twin V PowerCats. I'm joined on the call with Kerry Gunnarsson, our CFO. Thank you for joining our third quarter 2023 investor call. As many of you know, Twin V designs, manufactures, and sells a range of catamaran sport boats here from our Fort Pierce, Florida factory. For nearly 30 years, Twin V has been synonymous with offshore catamaran boats and considered by many to be one of the best-riding boats on the water. The general economic landscape, including rising interest rates, continues to directly affect consumer purchasing on many recreational products. While we see entry-level buyers affected by higher interest rates, we are also seeing cash buyers with slightly better demand for larger boats. The kickoff for boat show season of Florida was two weeks ago when one of the largest and most respected boat shows named Slibs or the International Fort Lauderdale Boat Show was held two weeks ago in Lauderdale. And Twin V and One Water, our partner dealer, we had a fantastic display in the brand new Fort Lauderdale Convention Center. We had every Twin V model except our 400 being showcased in a large, well-positioned location in the show. And we had a decent amount of traffic. And after the dust settles, we feel confident that we will have sold between five and seven units at that show, including two 340 GFXs. And so based on current marketing conditions, I would call this a strong single or a double in terms of sales. Many brands at the show did not fare as well. There's no doubt that we are seeing the industry taper and face continued headwinds. This is a time where leadership, smart planning, and what I call right-sizing the business is now the priority. We will continue to monitor market conditions, dealer inventory levels, direct and indirect costs, with the goal of not burning cash from operations as we push forward. What does pushing forward look like? Well, for our TwinVee team, smartly pushing forward is focusing on product development and laying the groundwork with new models across all brands so when the market turns, and it will, We will be ready for the next upswing. It also means being operationally lean is our priority one focus. Let's talk about some of the opportunities. Last year, we designed and produced four 400 GFXs. This was our largest boat ever designed and produced in-house. We successfully sold the initial four boats to two of our dealers in Florida and Texas. The Gen 1 400 GFX was well-received. Three of the four units successfully retailed from the dealers to the customers, and one of our 400 GFX Texas customers won a big fishing tournament, as you might have seen on social media. Based on some of the feedback from our dealers, we chose to make some modifications to this now called Gen 2 400 GFX. The new version is faster. We've reached speeds of 75 miles an hour in a test. A couple weeks ago, the new 400 has more storage, more seating, and more tech, and all around it's a next level fishing machine. We have completed and shipped hull number one of this Gen 2 400 to our partner, One Water Marine, and we are currently finishing the number two boat, which we delivered to One Water the end of this month. As we move to larger production boats, this will help us reduce the number of total units we have to produce and also meet or exceed our revenue targets. We also have our upcoming 280 GFX console, our dual console, that has officially entered production, and our number one 280 should be delivered to our dealer network in January. We actually have a healthy number of orders for this new 280 DC or dual console. Now I try not to mention our competitors, but WorldCat is a competitor and we use what's called the SSI data, which is tracking of all boat registrations in the United States. And according to SSI data, the number one selling WorldCat boat is their 28 foot dual console. They sell over 75 units annually of this one particular model. So we are super excited to help WorldCat fulfill some of those orders. And new products open new markets. New products expand our reach to customers seeking various lengths and styles of our boats. Our mission to open new markets and expand our reach led us to acquire the well-known Aquasport brand. The monohull boating market is one of the largest boat buying markets next to pontoons, and we believe that our investment in the AquaSport brand will allow our company to increase market share and grow our top line revenue in the long run. When we acquired the AquaSport brand located in White Bluff, Tennessee, the plan was to initially produce their existing legacy line of AquaSport monohulls that were being produced in that facility. And if you remember from previous calls or press releases, we also were producing some aquasports in our factory here in Fort Pierce, the 22 center console and the 22 dual console. While there was some interest in the legacy models from White Bluff, Tennessee, we did not see enough demand to maintain a second over 100,000 square foot factory four states away. We decided to consolidate all Aquasport manufacturing into our Florida facility and sunset the Tennessee facility. We feel confident that this decision will reduce all overall cost and enhance the quality and speed of our boat production here in our Fort Pierce facility. The company remains dedicated to the Aquasport brand and we will continue designing and producing new models, including a new Aquasport 24 center console that should be in production within 30 days. We've also begun designing a brand new Aquasport 28 center console, which will be available over the next four to five months. Turning to some updates on items we've discussed in previous quarterly calls. Twin V's Fort Pierce factory is currently expanding its floor space. We've been working on this 30,000 square foot addition for quite some time. We finally did receive building approval, and we're in the final throes of negotiations with our GC, and we are going forward with that addition. That will result in 100,000 square feet of production space here in Fort Pierce. As we continue to grow, that will allow us to ramp up to over 700 units annually here and have management control and all the controls that you could imagine under one roof. This will allow us to build both Twin Vs and Aquasport boats simultaneously without workflow disruptions and paves the way for both brands to continue their growth and scaling efforts. Before we open up the call for questions, I'd like to report that despite the headwinds, we saw an 8% increase in net revenue for the nine months ended September 30th, 2023 at approximately $25 million compared to approximately $23 million in the same period of 2022. We did have a net loss of $1.6 million for our gas powered segment. for the nine months of 2023. This 1.6 is broken out to $500,000 for an operational loss on Twin V and a $1.1 million loss for Aqua Sports, which a majority of the 1.1 was really opening the factory, stock inventory, hiring, ramping up and bringing that facility online. The greater loss was dedicated to Forza, which we are not revenue positive yet, which is the $4.5 million for the nine months, ended September 30, 2023. So, again, the Forza loss is a direct reflection of Twin V's majority ownership in Forza X1, which we still own 44% of the company, and we're required to consolidate that financial statement in accordance to GAAP accounting. So, Twin V's net cash and restricted cash and marketable securities was approximately 8.5 million as of September 30. I will say that our inventory levels grew over the past two quarters to over $8 million. So we are going to work diligently over the next queue to reduce that inventory. I mean, we were dealing with all types of supply chain issues. But as of today, I would say 95% of all materials and goods are on a just-in-time delivery. Most all distributors and vendors have, you know, caught up. And, you know, with the slowing of the recreational market, we can buy as much or as many products and components as we need. So our focus now is to reduce down that inventory number we have and move that into the cash column. So the goal is that the next quarter we'll see that 8.5 in current cash increase. While markets are choppy and we are remaining prudent with our balance sheet and continuing to grow our business, As the market allows, as we push forward with new and exciting products and delivering value to our shareholders is our goal. So at this time, I'd like to open it up for questions.

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation to 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. One moment, please, while we poll for questions. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions.

There are no questions at this time.

I'd like to turn the call back over to Joseph Visconti for closing comments.

I just want to thank everybody, thank our employees for continuing to work hard, thank our investors for the confidence that they have in us, and everybody have a great day, and we'll talk to you soon. Thank you.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.