Twin Vee Powercats Co. Q1 2023 Earnings Call

And.

order 2023 investor call. As a reminder, this call is being recorded and all participants are in a listen only mode. Your speakers for today's program are Joseph Visconti, President and CEO of Twinbee Power Cats Company, Jim LeFou, President and CEO of Forza X1 Incorporated.

and Kerry Gunnarsson, CFO of Twin V Powercast 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 Security Solidification Reform Act of 1995. All statements on this call, other than statements of historical facts, including statements regarding the company's future operations.

intents, should, plan, expect, predict, prudential, or the negative of these terms or other similar expressions.

The company has based these four 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.twindee.com. You should not rely upon forward-looking statements as predictions of future events.

We cannot assure you that these events and circumstances reflected 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.twinb.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 a telephone dial-in option.

The 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 the webcast will be available to submit questions and must call in instead. If you would like to ask a question, you may signal by pressing star one on your telephone keypad.

I will now turn the call over to Joseph Gristani.

Hello, everyone. I'm Joseph Escanti, President and CEO of TwinBee Power Caps. I'm joined on the call with Kerry Gonnerson, TwinBee's CFO . And Jim LeFou is also joining us, the President and CEO of Forza X1, our electric boat company that TwinBee is the majority shareholder.

Good afternoon and thank you for joining our Q1 2023 financial call. TwinD Designs manufactures and sells the range of catamaran sport boats from our factory located in Fort Pierce, Florida. For nearly 30 years the TwinD brand has been synonymous with offshore catamaran boats and is considered by many to be

the best-ready boats on the water.

In Q1 2023, TwinV continued the momentum gained through 2022. We achieved our sales and production goals for the quarter, including the design, manufacturing, and launch of additional new models. We opened new dealers, launched a new monohull boat brand named LFG Marine.

with a 22-foot center console. And the initial launch of this product, we received a large initial order from Freedom Boat Club. We are now in production on the second LFG model, our 22-foot dual console. Both of these LFG models are now in production on the third LFG model.

Boats will now be built and branded as aqua sport boats, but we will discuss that later in the presentation.

We received site plan approval for our nearly 30,000 square foot expansion. We continue to move ahead on connecting the back building and the front building. We've transitioned our lamination department 100% to the infusion process for hulls and decks.

Infusion is a state-of-the-art lamination process that increases the quality of our build while refining the cost and controls. We have finalized OEM agreements with three leading outboard motor companies. TwinD can now offer Suzuki, Mercury, and Yamaha motors.

as we continue expanding our dealer footprint and target regions of the country where these motor companies have regional brand strength.

We are approximately a month away from another new model entering production, our 280GFX dual console. This 28-foot model is a new and exciting product for us. I believe it will expand our market share dramatically. Our biggest competitor does extremely well in the dual console cat market.

sales, we feel good that our new 20 AGFX DC will be a strong contender and begin to broaden our sales in the dual console cab ramp sector. Our biggest dealer One Water Marine who currently represents

seven of our dealer locations, mostly in Florida.

We're lucky to have OneWater. They're a great partner as they continue marketing and selling our boats. If you follow TWIN-V on social media you would have seen the two weeks ago OneWater and TWIN-V co-hosted an open house at our Fort Pierce factory.

We held an owner appreciation and sales event. Essentially we had a mini boat show with seven Twin V's being showcased from our 24-footer to our 400 GFX. We had approximately 200 guests throughout the day. We offered test rides at a local marina with a transport bringing guests back and forth.

We had barbecue food, music, raffles, factory tours. We showcased our lamination process. The weather was perfect. The event was a great success. One water sold four Twin Bees, possibly eight boats from that event. I'm highlighting this to shine a light on just some of the outreach that we are doing in the face of some of the financial headwinds.

We are very close to finalizing the implementation of our new comprehensive ERP system that will provide better controls, including ordering, stocking, tracking, inventory levels, detailed build materials, which in turn provides tighter costing for our boats.

Carrie Gunnarsson, our CFO , and our team have been working around the clock to bring the system online. I want to thank Carrie and the team.

We understand that the current state of the economy and steadily increasing interest rates have slowed demand for most recreational based products. However, our top line revenues for Q1 remained relatively strong due to restocking dealer inventory, stocking new dealers as they were brought online, and the launch of our LFG brand with the latest new technology.

the production of our 22 foot center console monohull.

We remain vigilant with field inventory levels while we continue to push and drive our top-line revenue growth.

Now let's discuss the big news. We entered into an agreement with Edtide Corporation to acquire Aquasport boats and their manufacturing facility. The acquisition will include the Aquasport trademarks.

150,000 square foot manufacturing facility situated on 18 and a half acres of land in White Bluff, Tennessee. All related tooling, equipment and molds to initially build five aqua sport models ranging in size from 21 to 25 feet.

Twinbee and Ebb Type Corporation signed a lease option where Twinbee funded $300,000 against the $3.1 million purchase price.

We have the option to pay $22,000 per month in lease payments for five years with $16,000 of the $22,000 going directly attributed to reducing the outspending balance of the purchase price. Or we can simply purchase the Aquasport assets out of the box.

before manufacturing was halted at that facility.

Aquasport boats is an iconic brand in the Monohull market. Aquasport has a rich history dating back to the 1960s. The brand was known for its high-quality, rugged, versatile, family-friendly boats. Monohull boats are popular with many boaters who prefer the traditional look and feel of a single hull design.

We saw this as a huge opportunity or win for our team. And led by Jim LeFou, they worked around the clock to make this happen.

With Jim's production background at Maverick Boat Group where he was producing 1,700 boats a year, Jim offered to step in and initially launch Aquasport.

Jim is on this call today for any related questions. There's also some synergies with Forza, specifically leveraging the size and location of this factory in Tennessee, and we discussed this on the Forza Q1 call a week ago.

As we transitioned the two LFG models, the 22 Center Console and our Just Entering Production, our 22 Dual Console, to Aquasport, we will relaunch Aquasport with seven models. We feel confident with less than $2 million we will have Aquasport up and running.

This will include staffing, inventory, marketing, production, materials. This happened a week ago, so we're just continuing to get our arms around the transaction.

We are excited about the opportunities with this OkraSport transaction. While markets are a bit choppy, our continued business objective is to not burn cash, remain prudent with our balance sheet, and continue to grow our business and of course deliver value to our shareholders.

I want to thank you and I'd like to turn it over to Kerry Gunnarsson, our CFO .

Thank you, Joseph. Good morning, everyone.

Our net revenue for the three months ended March 31, 2023, was up 51% to approximately 8,877,000. We are pleased with the consistent growth that we've been able to achieve and maintain over the last year.

Our gross profit for the three months ended March 31, 2023. We're up 32% to 3,222,000.

We continue to monitor the costs of our revenue and our purchase components along with the dealer inventory and adjust our sales prices and our discount structures accordingly. Our operating expenses for the three months ended March 31, 2023 increased approximately $2,109,000.

to 5,591,000.

Are operating expenses as a percent of sales for the year for the three months ended March 31st?

2023, we're 63% compared to 59% in the prior year.

However, when you look at just the gas-powered segment, our operating expenses as a percent of sales for the three months ended March 31, 2023 were 40 percent compared to 51 percent in the same period in 2022. So, we're pleased to see the improvement of 11 percent year-on-year for the first quarter.

Our net loss for the three months ended March 31, 2023, for approximately 1,828,000. Forza, our electric boat segment, portion of that loss was $2,005,000. Forza spent considerable resources in the first quarter putting electric motors on several different boat models.

compared to a loss of approximately 626,000 in the same period of 2022.

Further, when we look at our adjusted net income for the period, which excludes non-cash charges, our adjusted net income for our core business, the gas-powered boats, was approximately $265,000 and our EBITDA income was $364,000.

As we turned to the balance sheet, we had cash, cash equivalents, restricted cash, and marketable securities of approximately $21,023,000 at March 31, 2023. Our inventory value at that date was approximately $4,797,000 compared to $3,200,000 in the prior year. Our increased product offerings have definitely put upward pressure on our inventory levels. However, we're going to work to unlock some of that value as we move forward, and we think that our ERP system will lead to that end. And we're also seeing...

and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we poll for your questions. Our first questions come from the line of Paul Johnston.

Yes, good morning, good afternoon. Can you remind us what percentage of Forza Twin V owns at this point?

Thank you, Paul. Twinbee owns approximately 69% of the outstanding shares of Forza, FRZA.

Okay, and I think in the Forza release you said that the cash burn is roughly $300,000 a month, so about $3.5 million annually. Is that roughly correct?

That is correct.

That is correct.

Jim, you're on the line or Carrie if you want to get into that in detail. So that's broken out with we've got kind of prototyping. That 300,000 plus is with prototyping and as we kind of like transition from prototyping to production that number will change. But I'm going to let.

Jim get into more detail on that

Can I just jump in before Jim says anything? Sure. So, we did... We did it.

you know, used over $2 million in cash for Forza in the first quarter. And that's because of the actual boats and the motors that we were producing. So it was a very heavy R&D quarter in the first quarter. So I think, you know, the message we want you to go away with is that we do not anticipate those expenses to be at that same level for the rest of the year.

Okay. Now I... Go ahead. I'm sorry. I was just going to say I agree with Kerry wholeheartedly there, and that's what I was going to add. I don't think we are at...

three and a half million on a annual basis on a burn rate to get back to your original question or assertion.

Right, well I guess what I was trying to understand is that Forza has a little over 10 million in cash so even if it were three and a half million a year which sounds like it won't be that's three years worth of cash I guess I'm just trying to understand what the disconnect is.

here is because I think I apologize I'm in the car right now but from memory there's about 10 million shares of Twin V outstanding and at the current price of roughly a buck fifty that's about 15 million market cap but there's 13 million of cash

just with TwinVnet counting Forza. So the enterprise value is like $2 million not even counting Forza. Am I missing something here?

You're 100% correct. We are doing non-deal road shows.

I think we're doing a great job getting the message out. We're doing press, really, you know, getting press out, updates, I mean, social media, marketing. I mean, I am like incredibly impressed with our team, what we accomplished over the past year speaking about Forza.

for a second, getting a boat, motor, propulsion, control up and operational, if you've seen the monohull. So yeah, if you took the components of Twin-V, the cash in the bank, 12 million plots.

you know, a $36 million a year profitable business plus a 69% ownership in fours, and you added those three components together, and Twinbee is trading at cash value. It does not make sense.

Well, right, or another way to look at it is that obviously, Forissa has a lot of promise ahead of it, but even if you completely didn't count that and took it away.

You've got Twin V doing whatever it is, 30 million in sales and the enterprise value is $2 million. I just want to make sure, why has someone not come in and bought a giant chunk of this? I don't get it.

I mean, I'll leave that up to the professionals that are stock pickers and we, you know, we're in a rough, choppy market. Um, a lot of the small stocks, you know, we see gets oversold. So you know, we are speaking to investors that are out there accumulating and buying our stock. You know, we're seeing that at the value.

every goal that we've set, we've accomplished or blasted through. During our IPO at Twinbee, everything we stated we accomplished, we brought every new model to the market. We opened dealers far exceeding what we stated we would do over a year. We're up to 30 plus dealers.

We grew the company over 100% in 2022. You know, again, in Q1, we grew 51%, you know, in a market that's a bit choppy. We have a tight management team. We're pushing forward, so, you know, the lower stock prices is simply just an opportunity for someone to get in.

No, I appreciate that and so just want to make sure there isn't anything we're missing. And just on TwinV, have you or have any analysts made any kind of rough projections as to what kind of earnings per share there might be for 2023 or 2024?

So, our bank, ThinkEquity, has a report out. I do not have it in front of me, so I don't want to state something that I don't have done.

Up in front of me at this time, but I'm sure you can go on Bloomberg and look at it Or I could send it to you if you want to give me your...

Are they projecting that you're going to make money or that you're going to lose money for 23 and 24? We are making money. Are you talking twin V? We're profitable. Right, on an annual basis, including the consolidation of the four sides.

through your ownership of Forza.

So, if you give me your email, I don't have that report in front of me, and I will...

I'll grab it after the call and then if we got other people that might want to answer questions I will shoot it over to you. What's your email?

I'll write you offline. It's fine. All right. I'm Joseph at Twinbee. If you want to just ping me, I'll grab the report and even follow up a call with you afterwards if that's okay. I appreciate it. Yep. Appreciate it.

Thank you. Our next question has come from the line of Mike Powell. Please proceed with your questions. Hey, thanks for taking the call. The prior caller asked some of the questions I was going to ask about the

Forza, but on the aqua sport transaction you just announced, can you, any financial economics you can disclose regarding what that means for TwinV in terms of revenue, EBITDA, incremental labor EBITDA, etc.

We don't have any projections on that. We just, you know.

completed a transaction about a week ago. We're just getting our arms around.

you know the assets it's a hundred and fifty thousand square foot facility you know there's probably upwards of a couple hundred molds inside of the facility I can have Jim elaborate and kind of a relaunch strategy if you'd like to hear that but we can't talk about any financial projections at this time or maybe what the business was doing prior to that sounds like a shutdown in November or something like

They were wrapped up with the Limestone Boat Company and also the Boca Bay brands.

So when we start back up, we will exclusively focus on the aqua sport brands.

and we have some internal targets for revenue to rebuild that brand over the next five years. And I can suggest those to you. It's a shutdown plant right now, so we have to go in there and hire from the ground up and start over. So there's

Those projections are simply not just projections, but I can give those to you if you'd like to hear. Yeah, that'd be great. We're targeting between 10 and 12 million in revenue after the first year of startup, and we expect to get started sometime in July of this year, so about two months.

We obviously will have to upgrade some of the tooling for Aquasport. As many of you may know, Aquasport is a legacy brand that's been around for 60 years, but it's had a bad decade or two and is indeed a facelift.

But the product is well received out there and we feel confident that we'll be able to rebuild the brand over the next several years. We're expecting to incrementally add about $10 to $12 million every year from now until the fifth year. That's what our target is.

Will the customer know that Twin V owns Aquasport? Is there any kind of synergy between the two companies or will it be viewed as two completely separate independent brands?

I think it'll be looked at as two separate brands. I think some of the operators of the Aquasport brand over the last 10 years or so have not done it justice. I think we are a known saltwater brand entity in Twinvee, and I think the market will view favorably.

with our acquisition of AquaSport and AquaSport brand. And we'll be able to rebuild that. It's a rightful place in the marketplace, given time.

And you said 10 to 12 million REVs per year increasing every year for five years? Is that I hear you right? You did hear me right?

10 to 12 million revs per year increasing every year for five years? Is that I hear you right? Okay. And then do you know? You did hear me right. Okay. Sounds pretty.

It sounds aggressive, but we feel like the brand can handle that and that will be our target and we've got a lot of boat building experience and we have a lot of good people behind us. It's just a matter of executing on our plans.

And what revenue level does it become profitable, roughly?

Yeah, I think...

We should look at a year and a half into it, 18 million or so. I think that is sort of the escape velocity point right there. And I think we'll be self-sufficient after that rate. And we should be able to really add to profitability of TwinBee after that.

Again, these are generalizations and we still have a lot of work to do to vet this out. I got your five minute intro on the forward looking statement so you're covered. Just kidding. But I appreciate you taking the time. Thank you. For your time.

Thank you. There are no further questions at this time. I would like to hand the call back over to Joseph Wisconsin for any closing remarks.

I want to thank everybody for joining the call today and we're excited about the future specifically with relaunching this Aquasport brand. Thank you for your support everyone. If you have any other questions, you can ping me at Joseph at twinv and we will follow up and get in touch with you. Thank you.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.