Q2 2024 Twin Vee Powercats Co Earnings Call

Speaker Change: Ladies and gentlemen, welcome to the Twin V PowerCats Company 2nd Quarter 2024 Investor Call.

Operator: Katz Company, 2nd Quarter 2024, Investacall. As a reminder, this call is being recorded, and all participants are in listen-only mode.

Speaker Change: As a reminder, this call is being recorded and all participants are in listen-only mode.

Speaker Change: Your speakers for today's program are Chairman and CEO Joseph Visconti and Chief Financial and Administrative Officer Michael P. Dickerson.

Operator: Your speakers for today's program are Chairman and CEO Joseph Visconti and Chief Financial and Administrative Officer Michael P. Dickerson. 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 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 beliefs, may, estimates, continue, anticipates, intends, should, plan, expects, predict, potential, or the negative of these terms or other similar expressions.

Speaker Change: 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.

Operator: The company has based these forward-looking statements largely on its 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, including those set forth in its filings with the Securities and Exchange Commission, which are available on the company's Investor Relations website at ir.winv.com. You should not rely upon 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.

Speaker Change: 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.

Operator: Finally, this conference call is being webcast. The webcast will be available at ir.twineve.com for at least 90 days. However, audiocast quality is subject to your equipment's available bandwidth and internet traffic.

Speaker Change: In some cases, forward-looking statements can be identified by terminologies such as beliefs, may, estimates, continue, and states, intents, should, plan, expects, predict, potential, or the negative of these terms or other similar expressions.

Speaker Change: The company has based these forward-looking statements largely on its 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.

Speaker Change: These forward-looking statements are subject to a number of risks and uncertainties and assumptions described, including those set forth in its filings.

Speaker Change: with the Securities and Exchange Commission, which are available on the company's investor relations website at ir.twinv.com.

Speaker Change: You should not rely upon forward-looking statements as predictions of future events.

Speaker Change: We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur.

Speaker Change: Finally, this conference call is being webcast. The webcast will be available at ir.twinv.com for at least 90 days.

Speaker Change: 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.

Operator: 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.

Speaker Change: 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.

Speaker Change: Those listening via webcast will be unable to submit questions.

Operator: 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 Visconti. Please go ahead, sir.

Speaker Change: If you would like to ask a question, you may signal by pressing star 1 on your telephone keypad.

Speaker Change: I will now turn the call over to Joseph Visconti.

Joseph Visconti: Thank you. Good afternoon, everyone. And thank you for joining our second quarter 2024 earnings call. I'm Joseph Visconti, chairman and CEO of Twin Vee Powercast. I'm here with our CFO, Mike Dickerson.

Speaker Change: Please go ahead, sir.

Speaker Change: Thank you, good afternoon everyone and thank you for joining our second quarter 2024 earnings call. I'm Joseph Visconti, Chairman and CEO of Twin Vee PowerCats. I'm here with our CFO Mike Dickerson.

Joseph Visconti: Twin Vee continues to navigate and adapt to a complex economic and environmental environment stifled by higher interest rates and shifting consumer confidence, especially within the recreation and marine industry. Despite these ongoing challenges, Twin Vee continues to realign its operations and capitalize on strategic and focused opportunities that will allow it to emerge from this downturn stronger and better equipped for success in the future. I will detail our short and long-term plans that include adding two exceptionally seasoned and experienced individuals to our leadership team, adding important factory infrastructure allowing production volumes to reach new levels of annual production output, and adding new models across both brands from smaller bay boats to larger offshore boats, all focused on building and creating a leading national boat manufacturer. We are also inhouseing a fully integrated tooling department with our new 46-foot 5-axis router.

Speaker Change: Twinview continues to navigate and adapt to a complex economic

Speaker Change: and environmentally stifled by higher interest rates and shifting consumer confidence.

Speaker Change: especially within the recreation and marine industry.

Speaker Change: Despite these ongoing challenges, TwinV continues to realign our operations and capitalize on strategic and focused opportunities.

Speaker Change: that will allow Twin V to emerge from this downturn stronger and better equipped for success.

Speaker Change: in the future.

Speaker Change: I will detail our short and long-term plans that include adding two exceptionally seasoned and experienced individuals to our leadership team.

Speaker Change: adding important factory infrastructure allowing production volumes to reach new levels of annual production output, adding new models across both brands from smaller bay boats to larger offshore boats,

Speaker Change: all focused on building and creating a leading national boat manufacturer. We are also in-housing a fully integrated tooling department with our new 46-foot 5-axis router.

Joseph Visconti: This big, high-tech robot will allow us to design new models faster, with less expense, and, finally, and most important, is to strengthen our balance sheet as a result of the Twin Vee Forza merger. So far this year, one of our key focuses has been on hiring the right management team to ensure our business operates as efficiently as possible. Last quarter, we hired our CFO, Mike Dickerson, who had already enhanced Twin Vee's financial controls and accountability throughout the business.

Speaker Change: This big, high-tech robot will allow us to design new models faster, with less expense, and finally, the most important, is to strengthen our balance sheet as a result from the Twin Vee Forza merger.

Speaker Change: So far this year, one of our key focuses has been on hiring the right management team to ensure our business operates as efficiently as possible.

Speaker Change: Last quarter, we hired our CFO, Mike Dickerson, who had already enhanced Twin V's financial controls accountability throughout the business. During the second quarter, we took further steps to right-size our business.

Joseph Visconti: During the second quarter, we took further steps to right-size our business. Last month, we brought on Carl Zemmers, Twin Vee's new president. Carl's career spans nearly three decades, and his experience includes executive leadership roles in several different industries. He's grown businesses, maximized profitability, and promoted efficiency in every job he's had.

Speaker Change: Last month we brought on Karl Zimmer as Twin V's new president. Karl's career spans nearly three decades and his experience includes executive leadership roles in several different industries.

Speaker Change: He's grown businesses, maximized profitability, and promoted efficiency in every job he's had.

Joseph Visconti: As the company's president, Carl will oversee Twin Vee's day-to-day operations, ensuring we produce high-quality products with a focus on cost and efficiency. He will play a crucial role in supporting and executing our growth strategies going forward. Hiring Carl will allow me to focus on expanding and growing our business. I personally will focus on business development, sales, marketing, investor relations, identifying potential merger acquisitions, strategic partnership candidates, and stewarding the long-term vision of Twin Vee.

Speaker Change: as the company's president, Carville Oversey, Twin Vee's day-to-day operations, ensuring we produce high-quality products with a focus on cost and efficiency. He will play a crucial role in supporting and executing our growth strategies going forward.

Speaker Change: Hiring Carl will allow me to focus on expanding and growing our business.

Speaker Change: I personally will focus on business development, sales, marketing, investor relations, identifying potential merger acquisitions, strategic partnership candidates, and steer the long-term vision of Twin V.

Joseph Visconti: In terms of Twin Vee's products, innovation remains a cornerstone of our strategy. We believe delivering cutting-edge products is essential to growing our business and adding to the 8,000 previously designed Twin Vee boats delivered over the past 30 years. During the second quarter, we introduced Twin Vee's all new second generation GFX model line. The GFX2 model line features several designs, styling, and technological innovations that are far beyond what we've ever previously offered or produced.

Speaker Change: In terms of Twin Vee's products, innovation remains a cornerstone of our strategy.

Speaker Change: We believe delivering cutting-edge products is essential to growing our business and adding to the 8,000 previously designed Twin Vee boats delivered over the past 30 years.

Speaker Change: During the second quarter we introduced Twin Vee's all-new second-generation GFX model line.

Speaker Change: Our GFX2 model line features several designs, styling, and technological innovations that are far beyond what we've ever previously offered or produced.

Joseph Visconti: We have taken our products to a whole new level. Our GFX2 boats now feature an all-digital switching backbone and an updated electronic system, allowing customers to control their boats via a touchscreen on a 24-inch multifunction display.

Speaker Change: We have taken our products to a whole new level.

Speaker Change: Our GFX II boats now feature an all-digital switching backbone and an updated electronic system, allowing customers to control their boats via a touchscreen on a 24-inch multifunction display.

Joseph Visconti: The GFX-2 also benefits from a complete redesign with improved upholstery, all new ergonomics, updated color options, and streamlined console framing. Our engineers and boat designers really outdid themselves with our latest product line. At our annual dealer meeting this year, dealers were invited to participate in seed trials aboard our flagship 40-foot GFX2, our new 28-foot dual console GFX2, and our new 26-foot GFX2. We received incredible feedback from our dealers, and so please take the time to visit TwinVee.com and see for yourself.

Speaker Change: The GFX-2 also benefits from a complete redesign with improved upholstery, all new ergonomics,

Speaker Change: updated color options, and streamlined console framing, our engineers and boat designers really outdid themselves with our latest product line.

Speaker Change: At our annual dealer meeting this year, dealers were invited to participate in seed trials aboard our flagship 40-foot GFX2.

Speaker Change: our new 28-foot dual console GFX2 and our new 26-foot GFX2. We received incredible feedback from our dealers.

Speaker Change: And so, please take the time to visit TwinV.com and see for yourself. We are excited about the future of our brands and looking forward to your input.

Joseph Visconti: We are excited about the future of our brands and looking forward to your input. Beyond the GFX2, our product development pipeline is robust. We've launched over 10 new models across our portfolio over the past couple of years, and we have six more in various stages of development at this time. This diverse range of boat models allows us to appeal to a wide range of customer preferences, from the hardcore offshore fishermen to everyday boating enthusiasts to families simply looking for an afternoon on the water.

Speaker Change: Beyond the GFX2, our product development pipeline is robust. We've launched over 10 new models across our portfolio over the past couple of years, and we have six more in various stages of development at this time.

Speaker Change: This diverse range of offering boat models allows us to appeal to a wide range of customer preferences from the hardcore offshore fishermen, to everyday boating enthusiasts, to families simply looking for an afternoon on the water.

Joseph Visconti: In addition to ensuring that we design and build new and innovative products, we continue to invest in Twin Vee's infrastructure to reduce long-term costs and grow our manufacturing capacity. As we speak, construction continues on our 30,000 square foot expansion here in Fort Pierce. When completed, our modified factory will be almost 100,000 square feet of true linear manufacturing, allowing us to rapidly design and build up to 1,000 boats annually. Our new state-of-the-art CNC machine is scheduled to arrive in October.

Speaker Change: in addition to

Speaker Change: Ensuring we design and build new and innovative products, we continue to invest in Twin V's infrastructure to reduce long-term costs and grow our manufacturing capacity.

Speaker Change: As we speak, construction continues on our 30,000 square foot expansion here in Fort Pierce.

Speaker Change: When completed, our modified factory will be almost 100,000 square feet of true linear manufacturing, allowing us to rapidly design and build up to 1,000 boats annually.

Speaker Change: Our new state-of-the-art CNC machine is scheduled to arrive in October .

Joseph Visconti: This new 5-axis router will allow us to carry out in-house one of the most expensive and time-consuming functions in the building process, allowing us to control the manufacturing environment and significantly reduce our costs to develop and bring new models to the market. Before I turn the call over to Mike, I'm excited to discuss the merger agreement between Twin Vee and Forza, which was announced on Monday. After significant due diligence, extensive negotiations, and a thorough third-party review, the board of directors of both companies, Twin Vee and Forza, unanimously approved an all-stock transaction where Forza will merge with and into Twin Vee.

Speaker Change: This new 5-axis router will allow us to in-house one of the most expensive and time-consuming functions in the both building process, allowing us to control the manufacturing environment and significantly reduce our costs to develop and bring new models to the market.

Joseph Visconti: Each public holder of Forza stock will receive approximately 0.612 shares of Twin Vee Comma stock for each Forza share of stock they own on the effective date of the merger. The boards of both Twin Vee and Forza believe this merger will be transformative steps to create a stronger, more competitive brand poised for long-term profitable growth and enhanced shareholder value. By uniting Twin Vee and Forza, we're creating one company with a singular mission, building on Twin Vee's 30 year heritage of delivering high quality offshore fishing and recreational boats recognized for their fuel efficiency, ride quality, and performance.

Speaker Change: Before I turn the call over to Mike, I'm excited to discuss the merger agreement between Twin Vee and Forza, which was announced on Monday.

Speaker Change: after significant due diligence, extensive negotiations,

Joseph Visconti: The merger will strengthen both combined companies – the merger will strengthen both companies. At closing, we anticipate having about $1 per share in cash of the combined merged company and approximately $2 a share in net assets with no funded debt. This robust balance sheet will provide Twin Vee with a solid foundation for future investments, enabling us to pursue growth opportunities confidently. Also, by removing one of the public companies, we are able to reduce overhead costs.

Speaker Change: Thorough third-party review the board of directors of both companies Twin Vee and Forza unanimously approved an all-stock transaction where Forza will merge

Speaker Change: with and into Twin V. Each public holder of Forza's stock will receive approximately 0.612 shares of Twin V Comma Stock for each Forza's share of stock they own on the effective date of the merger.

Speaker Change: The boards of both Twin Vee and Forza believe this merger will be a transformative step to create a stronger, more competitive brand poised for long-term profitable growth and enhanced shareholder value.

Speaker Change: By uniting Twin Vee and Forza, we're creating one company with a singular mission, building on Twin Vee's 30-year heritage of delivering high-quality offshore fishing and recreational boats recognized for their fuel efficiency, ride quality and performance.

Speaker Change: The merger will strengthen both combined...

Speaker Change: The merger will strengthen both companies. At closing, we anticipate having about one dollar per share in cash of the combined merge company and approximately two dollars a share in net assets with no funded debt.

Speaker Change: This robust balance sheet will provide TwinVie with a solid foundation for future investments, enabling us to pursue growth opportunities confidently. Also by removing one of the public companies, we are able to reduce overhead costs.

Joseph Visconti: By merging, we are streamlining our operations, eliminating these redundancies, and allowing us to focus our resources on what matters most, designing, building, and selling innovative and best-in-class boats to appeal to a broad range of customers. We're confident that this merger represents the best path forward for both Twin Vee and Forza.

Speaker Change: By merging, we are streamlining our operations, eliminating these redundancies, and allowing us to focus our resources on what matters most—designing, building, and selling innovative and best-in-class boats to appeal to a broad range of customers.

Speaker Change: We're confident that this merger represents the best path forward for both Twin Vee and Forza. By combining our resources and strengths, we're creating a company that is better positioned to achieve our long-term goals and deliver exceptional value to our shareholders.

Joseph Visconti: By combining our resources and strengths, we're creating a company that is better positioned to achieve our long-term goals and deliver exceptional value to our shareholders. We look forward to our shareholders receiving the S-IV and proxy statement when they are completed so they can read more about this transaction in depth. Now, let me turn it over to our CFO, Mike Dickerson, who will give more financial details about the second quarter. Thanks, Joseph, and good afternoon, everyone.

Speaker Change: We look forward to our shareholders receiving the S-IV and proxy statement when they are completed so they can read more about this transaction in depth.

Mike Dickerson: Now let me turn it over to our CFO , Mike Dickerson, who will give more financial details from the second quarter.

Michael Dickerson: I'd like to take a minute and walk through the Twin Vee Consolidated Financials and some discussion of our segment. On a consolidated basis, net sales were $4.3 million for the second quarter of 2024, a reduction of $3.8 million or 47% from the second quarter of 2023. This reduction is similar to the 41% experienced in the first quarter of 2024, a result of the challenging end markets that we described in our earnings release and Joseph described for you earlier. However, even at these depressed levels, we've been able to maintain a positive gross margin of close to 5% through regressive cost control and further right-sizing of our labor.

Mike Dickerson: Thanks, Joseph. Good afternoon, everyone.

Mike Dickerson: I'd like to take a minute and walk through the Twin Vee Consolidated Financials and some discussion of our segments.

Mike Dickerson: On a consolidated basis, net sales were $4.3 million for the second quarter of 2024, a reduction of $3.8 million or 47% from the second quarter of 2023.

Mike Dickerson: This reduction is similar to the 41% experienced in the first quarter of 2024, a result of the challenging end markets that we described in our earnings release and Joseph described for you earlier.

Speaker Change: Even at these depressed levels, we've been able to maintain a positive gross margin of close to 5% through regressive cost control and further right-sizing of our labor force.

Michael Dickerson: Throughout the second quarter, the company has been reducing operating expenses through reductions in headcount, research and development, and discretionary spending, partially offset by strategic upgrading of talent. Included in operating expenses for the consolidated entity is $1,674,000 related to a Forza acid impairment charge recognized in the second quarter of 2024 that I will speak more about in a minute. Excluding the impact of this charge for the second quarter, overall consolidated operating expenses were down $793,000, or 20%, compared to the second quarter of 2020.

Speaker Change: Throughout the second quarter, the company has been reducing operating expenses through reductions in headcount, research and development, and discretionary spending, partially offset by strategic upgrading of talent.

Speaker Change: Included in operating expenses for the consolidated entity is $1,674,000 related to a Forza asset impairment charge recognized in the second quarter of 2024 that I will speak more about in a minute.

Speaker Change: Excluding the impact of this charge for the second quarter, overall consolidated operating expenses are down $793,000 or 20% compared to the second quarter of 2023.

Michael Dickerson: General and administrative expenses are down $158,000, or 17%, and salaries and wages are down $903,000, or 43%, compared to the second quarter of 2023, respectively. These overall reductions were achieved in both the Forza segment, as well as the Gas Power or Twin Vee segment.

Speaker Change: General and administrative expenses are down $158,000 or 17%. Salaries and wages are down $903,000 or 43% compared to the second quarter of 2023 respectively.

Speaker Change: These overall reductions were achieved in both the Forza segment as well as the gas power or Twin V segment.

Michael Dickerson: Research and development expenses were up $150,000 in the second quarter of 2024 compared to the same period of 2023 due to an inventory valuation adjustment at Forza of $176,000 to reserve for the value of R&D electric motors, partially offset by a reduction in R&D spend activity at Forza. For the Twin Vee segment, throughout the second quarter, the company has also been reducing operating expenses through headcount reductions, discretionary spending partially offset by strategic upgrading of talent. For the second quarter, operating expenses were down 457,000, or 19% compared to the second quarter of 2000.

Speaker Change: Research and development expenses were up $150,000 in the second quarter of 2024 compared to the same period of 2023.

Speaker Change: Due to an inventory valuation adjustment at Forza of $176,000

Speaker Change: to reserve for the value of R&D electric motors partially offset by a reduction in R&D spend activity at Forza.

Speaker Change: For the Twin V segment, throughout the second quarter, the company has also been reducing operating expenses through headcount reductions, discretionary spending, partially offset by strategic upgrading of talent.

Speaker Change: For the second quarter operating expenses are down 457,000 or 19% compared to the second quarter of 2023.

Michael Dickerson: In terms of liquidity, at Forza, at the end of the first quarter, Joseph committed to reduce our burn rate considerably during the second quarter, and we've done just that. 4 at the end of the second quarter with 8.2 million in cash and cash equivalents. This compares to $9.95 million at the end of the first quarter. Of this $1.75 million reduction, $1.3 million was used for additions to the new building construction. In other words, the non-capital investment reduction in cash was approximately $445,000 for the quarter, or a burn rate of less than $150,000 a month.

Speaker Change: In terms of liquidity, at Forza at the end of the first quarter, Joseph committed to reduce our burn rate considerably during the second quarter and we've done just that.

Speaker Change: Forza ended the second quarter with 8.2 million of cash and cash equivalents.

Speaker Change: This compares to $9.95 million at the end of the first quarter.

Speaker Change: Of this $1.75 million reduction, $1.3 million was used for additions to the new building construction.

Speaker Change: In other words, the non-capital investment reduction in cash was approximately $445,000 for the quarter, or a burn rate of less than $150,000 a month.

Michael Dickerson: We have continued to drive this burn rate lower and expect that as we exit the third quarter, we will be closer to $100,000 a month or below. At Twin Vee, the company ended the second quarter with $6,945,000 of cash and cash equivalents. This compares to $7,428,000 at the end of the first year of this $483,000 reduction. 351,000 was used for capital addition. Partially for new boat model molds and for the 30,000 square foot building expansion project underway in Fort Pierce. In other words, the non-capital investment reduction in cash was only $132,000 for the entire company.

Speaker Change: We have continued to drive this burn rate lower and expect that as we exit the third quarter we will be closer to 100,000 a month or better.

Speaker Change: At Twin V, the company ended the second quarter with $6,945,000 of cash and cash equivalents.

Speaker Change: This compares to $7,428,000 at the end of the first quarter.

Speaker Change: Of this $483,000 reduction, $351,000 was used for capital additions.

Speaker Change: partially for new boat model molds and for the 30,000 square foot building expansion project underway in Fort Pierce, Florida.

Speaker Change: In other words, the non-capital investment reduction in cash was only $132,000 for the entire quarter.

Michael Dickerson: The last item I want to discuss with you is the impairment charge taken by Forza at the end of June, related to the recently announced merger between Forza and Twin Vee. The company obtained an appraisal for its partially completed building in Marion, North Carolina. The appraisal indicated that the carry-in value of the building at the end of June was higher than the market by $1,674,000, leading the company to record an impairment charge of a similar amount.

Speaker Change: The last item I want to discuss with you is the impairment charge taken by Forza at the end of June.

Speaker Change: Related to the recently announced merger between Forza and Twin V, the company obtained an appraisal for its partially completed building in Marion, North Carolina.

Speaker Change: The appraisal indicated that the carry-in value of the building at the end of June was higher than market by $1,674,000, leading the company to record an impairment charge of a similar amount.

Michael Dickerson: We are evaluating the best course of action to achieve and maximize shareholder value, which may be attempting to sell the building as is, finishing the building and marketing it for, finishing the building and holding for better market conditions, or finishing the shell of the building and delaying the completion. All of these possibilities are under consideration, viewed through the lens of maximizing shareholder value and conserving value. With that, I will turn the call back over to Joseph for some concluding remarks. Thank you, Mike. Twin Vee Powercaps and AquaSport boats have combined for over 90 years of brand recognition and customer loyalty.

Speaker Change: We are evaluating the best course of action to achieve and maximize shareholder value, which may be attempting to sell the building as is, finish the building, and market it for sale.

Speaker Change: Finish the building and hold for better market conditions.

Speaker Change: or finishing the shell of the building and delaying the completion of construction.

Speaker Change: All of these possibilities are under consideration, viewed through the lens of maximizing shareholder value and conserving capital.

Speaker Change: With that, let me turn the call back over to Joseph for some concluding remarks.

Speaker Change: Thank you, Mike.

Speaker Change: Twin V power caps and AquaSport boats have combined over 90 years of brand recognition and customer loyalty.

Joseph Visconti: So while the economic landscape presents challenges, we're confident that our commitment to these two incredible, storied, and scalable brands will allow us to offer various new and innovative products that will allow us to attract returning customers. And our focus on customer satisfaction will position us for continued growth and success. We believe that Twin Vee is well prepared to navigate the current market conditions, and when we start seeing the next market upswing, we will be ready.

Speaker Change: So while the economic landscape presents challenges, we're confident that our commitment to these two incredible, storied, and scalable brands allow us to offer various new and innovative products that will allow

Operator: Cats Company, 2nd quarter 2024 Investor Call As a reminder, this call is being recorded and all participants are in listen only mode.

Speaker Change: will allow us to attract returning customers and our focus on customer satisfaction will position us for continued growth and success.

Operator: Your speakers for today's program are Chairman and CEO Joseph Visconti and Chief Financial and Administrative Officer Michael P.

Speaker Change: We believe that Twinvie is well prepared to navigate the current market conditions and when we start seeing the next market upswing, we will be ready.

Operator: Dickerson.

Joseph Visconti: We're excited about the opportunities that lie ahead, including our planned merger with Forza. We look forward to sharing our continued progress with you. And I want to thank our investors, stakeholders, and employees for their continued support. I also want to thank those of you on the call. I will now turn the call back over to the operator, who will assist in taking any questions. Thank you. Ladies and gentlemen, we will now be conducting our question and answer session.

Operator: 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's 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 beliefs, may, estimates, continue and spades, intents, should, plan, expects, predict, potential or the negative of these terms or other similar expressions.

Speaker Change: We're excited about the opportunities that lie ahead, including our planned merger with Forza. We look forward to sharing our continued progress with you. And I want to thank our investors, stakeholders, employees for their continued support.

Speaker Change: I also want to thank those of you on the call. I will now turn the call back over to the operator who will assist in taking any questions.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Joseph Visconti: If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two 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 key.

Speaker Change: You may press star and 2 if you would like to remove your question from the queue.

Operator: The company has based the forward-looking statements largely on its 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 risk and uncertainties and assumptions described including those set forth in its filings with the Securities and Exchange Commission which are available on the company's Investor Relations website at ir.winv.com. You should not rely upon 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.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Operator: Ladies and gentlemen, we will wait for a moment while we poll for questions. Once again, ladies and gentlemen, if you wish to ask a question, please press star and one. Ladies and gentlemen, if you wish to ask a question, please start with one.

Speaker Change: Ladies and gentlemen, we will wait for a moment while we poll for questions.

Speaker Change: Joseph Visconti, Twin Vee Powerca

Speaker Change: Once again, ladies and gentlemen, if you wish to ask a question, please press star and 1.

Speaker Change: Joseph Visconti, Twin Vee Powerca

Speaker Change: Joseph Visconti, Twin Vee Powerca

Speaker Change: Ladies and gentlemen, if you wish to ask a question, please press star and 1.

Joseph Visconti: As there are no questions in the queue, I will now hand the conference over to Joseph Visconti for his closing comments. I want to thank everyone for taking your time today, and we look forward to updating you with any further updates. Have a great day. Thank you. Thank you. The conference of Twin Vee PowerCats company has now concluded. Thank you for your participation. You may now disconnect your line. [inaudible]

Speaker Change: As there are no questions in the queue, I would now hand the conference over to Joseph Visconti for his closing comments.

Operator: Finally, this conference call is being webcast. The webcast will be available at ir.winv.com for at least 90 days. Audiocast quality is subject to your equipment available bandwidth and internet traffic. If you experience unsatisfactory audio quality, please use the telephone dial-in option.

Joseph Visconti: I want to thank you everyone for taking your time today and we look forward to updating you with any further updates. Have a great day. Thank you.

Joseph Visconti: Thank you. The conference of Twin Vee PowerCats Company has now concluded. Thank you for your participation. You may now disconnect your lines.

Operator: 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. If you would like to ask a question, you may signal by pressing star 1 on your telephone keypad.

Operator: I will now turn the call over to Joseph Visconti. Please go ahead sir. Thank you.

Joseph Visconti: Good afternoon everyone and thank you for joining our second quarter 2024 earnings call.

Joseph Visconti: I'm Joseph Visconti, Chairman and CEO of TwinV PowerCats. I'm here with our CFO Mike Dickerson. TwinV continues to navigate and adapt to a complex economic and environmentally stifled by higher interest rates and shifting consumer confidence. Science, especially within the recreation and marine industry.

Joseph Visconti: Despite these ongoing challenges, Twin Vee continues to realign our operations and capitalize on strategic and focus opportunities that will allow Twin Vee to emerge from this downturn, stronger and better equipped for success in the future. I will detail our short and long-term plans that include adding two exceptionally seasoned and experienced individuals to our leadership team, adding important factory infrastructure, allowing production volumes to reach new levels of annual production output, adding new models across both brands from smaller bayboats to larger offshore boats, all focused on building and creating a leading national boat manufacturer.

Joseph Visconti: We are also in housing a fully integrated tooling department with our new 46-foot 5-axis router. This big high-tech robot will allow us to design tool new models faster, with less expense, and finally the most important is the strength in our balance sheet as a result from the Twin Vee Forza merger.

Joseph Visconti: So far this year, one of our key focuses has been on hiring the right management team to ensure our business operates as efficiently as possible. Last quarter, we hired our CFO, Mike Dickerson, who had already enhanced Twin Vee's financial controls, accountability throughout the business. During the second quarter, we took further steps to right size our business.

Joseph Visconti: Last month, we brought on Karl Zimmer's Twin Vee's new president. Karl's career spans nearly three decades and his experience includes executive leadership roles in several different industries. He's grown businesses, maximized profitability and promoted efficiency in every job he's had. As the company's president, Karl will oversee Twin Vee's day-to-day operations, ensuring we produce high-quality products with a focus on cost and efficiency. He will play a crucial role in supporting and executing our growth strategies going forward.

Joseph Visconti: Hiring Karl will allow me to focus on expanding and growing our business. I personally will focus on business development, sales, marketing, investor relations, identifying potential merger acquisitions, strategic partnership candidates, and steer the long-term vision of Twin Vee. In terms of Twin Vee's products, innovation remains a cornerstone of our strategy. We believe delivering cutting-edge products is essential to growing our business and adding to the 8,000 previously, Twin Vee design Twin Vee boasts delivered over the past 30 years.

Joseph Visconti: During the second quarter, we introduced Twin Vee's all-new second-gen race and GFX model line. Our GFX2 model line features several designs, styling and technological innovations that are far beyond what we've ever previously offered or produced. We have taken our products to a whole new level. Our GFX2 boats now feature an all-digital switching backbone and an updated electronic system allowing customers to control their boats, the touchscreen and a 24-inch multi-function The GFX2 also benefits from a complete redesign with improve a poultry, all new ergonomics, updated color options, and streamlined console framing.

Joseph Visconti: Our engineers and boat designers really outdid themselves with our latest product line. At our annual dealer meeting this year, dealers were invited to participate in C-Trials aboard our flagship 40-foot GFX2, our new 28-foot dual console GFX2, and our new 26-foot GFX2. We received incredible feedback from our dealers, and so please take the time to visit TwinVee.com and see for yourself. We are excited about the future of our brands and looking forward to your input.

Joseph Visconti: Beyond the GFX2, our product development pipeline is robust. We've launched over 10 new models across our portfolio over the past couple of years, and we have six more in various stages of development at this time. This diverse range of offering boat models allows us to appeal to a wide range of customer preferences from the hardcore offshore fishermen to everyday boating enthusiasts to families simply looking for an afternoon on the water. In addition to ensuring we design and build new and innovative products, we continue to invest in TwinVee's infrastructure to reduce long-term costs and grow our manufacturing capacity.

Joseph Visconti: As we speak, construction continues on our 30,000-square-foot expansion here in Fort Pierce. When completed, our modified factory will be almost 100,000-square-feet of true linear manufacturing, allowing us to rapidly design and build up to 1,000 boats annually. Our new state-of-the-art CNC machine is scheduled to arrive in October. This new five-axis router will allow us to in-house one of the most expensive and time-consuming functions in the boat-building process, allowing us to control the manufacturing environment and significantly reduce our costs to develop and bring new models to the market.

Joseph Visconti: Before I turn the call over to Mike, I'm excited to discuss the merger agreement between TwinVee and Forza, which was announced on Monday. After significant due diligence, extensive negotiations, thorough third-party review, the board of directors of both companies, TwinVee and Forza, unanimously approved an all-stock transaction where Forza will merge with and into TwinVee. Each public holder of Forza's stock will receive approximately 0.612 shares of TwinVee comma stock for each Forza's share of stock they own on the effective data the merger.

Joseph Visconti: The boards of both TwinVee and Forza believe this merger will be transformative step to create a stronger, more competitive, brand-poise for long-term profitable growth and enhance your holder value. By uniting TwinVee and Forza, we're creating one company with a singular mission building on TwinVee's 30-year heritage of delivering high-quality offshore fishing and recreational boats recognized for their fuel efficiency, ride quality and performance. The merger will strengthen both combined. The merger will strengthen both companies.

Joseph Visconti: At closing, we anticipate having about $1 per share and cash of the combined merge company and approximately $2 a share and net assets with no funded debt. This robust balance sheet will provide Twin Vee with a solid foundation for future investments, enabling us to pursue growth opportunities confidently. Also by removing one of the public companies, we are able to reduce overhead costs by merging, we are streamlining our operations, eliminating these redundancies and allowing us to focus our resources on what matters most.

Joseph Visconti: Designing, building and selling innovative and best in-class boats to appeal to a broad range of customers. We are confident that this merger represents the best path forward for both Twin Vee and Forza. By combining our resources and strengths, we are creating a company that is better positioned to achieve our long-term goals and deliver exceptional value to our shareholders. We look forward to our shareholders receiving the S4 and proxy statement when they are completed so they can read more about this transaction in depth.

Michael Dickerson: Now, let me turn it over to our CFO, Mike Dickerson, who will give more financial details from the second quarter. Thanks, Joseph. Good afternoon, everyone. I'd like to take a minute and walk through the Twin Vee consolidated financials and some discussion of our segments. On a consolidated basis, net sales were 4.3 million for the second quarter of 2024, a reduction of 3.8 million or 47% from the second quarter of 2023. This reduction is similar to the 41% experience in the first quarter of 2024, a result of the challenging end markets that we described in our earnings release and Joseph described for you earlier.

Michael Dickerson: Even at these depressed levels, we've been able to maintain a positive growth margin of close to 5% to a aggressive cost control and further right sizing of our labor force. Throughout the second quarter, the company has been reducing operating expenses through reductions in headcount, research and development and discretionary spending, partially offset by strategic upgrade of talent. Included in operating expenses for the consolidated entity is 1,674,000 related to a 4% acid impairment charge recognized in the second quarter of 2024, then I will speak more about in a minute.

Michael Dickerson: Excluding the impact of this charge for the second quarter, overall consolidated operating expenses are down 793,000 or 20% compared to the second quarter of 2023. General and administrative expenses are down 158,000 or 17%, salaries and wages are down 903,000 or 43%, compared to the second quarter of 2023, respectively. These overall reductions were achieved in both the fours of segments, as well as the gas power Research and development expenses were up 150,000 in the second quarter of 2024, compared to the same period of 2023.

Michael Dickerson: Due to an inventory valuation adjustment at Forza of 176,000, to reserve for the value of R&D electric motors, partially offset by a reduction in R&D spend activity at Forza. For the Twin Vee segment, throughout the second quarter, the company has also been reducing operating expenses through headcount reductions, discretionary spending, partially offset by strategic upgrading of talent. For the second quarter, operating expenses are down 457,000 or 19%, compared to the second quarter of 2023.

Michael Dickerson: In terms of liquidity at Forza at the end of the first quarter, Joseph committed to reduce our burn rate considerably during the second quarter, and we've done just that. Forza ended the second quarter with 8.2 million of cash and cash equivalents. This compares the 9.95 million at the end of the first quarter. Of this 1.75 million reduction, 1.3 million was used for additions to the new building construction. In other words, the non-capital investment reduction in cash was approximately 445,000 for the quarter, or a burn rate of less than 150,000 a month.

Michael Dickerson: We have continued to drive this burn rate lower, and expect that as we exit the third quarter, we will be closer to 100,000 a month or better. At Twin Vee, the company ended the second quarter with 6,945,000 of cash and cash equivalents. This compares the 7,428,000 at the end of the first quarter. Of this $483,000 reduction, 351,000 was used for capital additions, partially for new vote model molds, and for the 30,000 square foot building expansion projects underway in Fort Pierce, Florida.

Michael Dickerson: In other words, the non-capital investment reduction in cash was only 132,000 for the entire quarter. The last item I wanted to discuss with you is the impairment charge taken by Forza at the end of June. Related to the recently announced merger between Forza and Twin Vee, the company obtained an appraisal for its partially completed building in Marion, North Carolina, the appraisal indicated that the carrying value of the building at the end of June was higher than market by 1,674,000, leading the company to record an impairment charge of a summer amount.

Michael Dickerson: We are evaluating the best course of action to achieve and maximize shareholder value, which may be attempting to sell the building as is, finish the building and market it for sale, finish the building and hold for better market conditions, or finishing the shell of the building and delaying the completion of construction.

Michael Dickerson: All of these possibilities are under consideration, viewed through the lens of maximizing shareholder value and conserving capital.

Joseph Visconti: With that, let me turn the call back over to Joseph for some concluding remarks. Thank you, Mike. Twin Vee powercats and aquasport boats have combined over 90 years of brand recognition and customer loyalty.

Joseph Visconti: Foundation. So, while the economic landscape presents challenges, we're confident that our commitment to these two incredible, storied, and scalable brands allow us to offer various new and innovative products that will allow us to attract returning customers. And our focus on customer satisfaction will position us for continued growth and success. We believe that Twin Vee is well prepared to navigate the current market conditions. And when we start seeing the next market upswing, we will be ready.

Joseph Visconti: We're excited about the opportunities that lie ahead, including our planned merger with Forza. We look forward to sharing our continued progress with you. And I want to thank our investors, stakeholders, employees for their continued support. I also want to thank those of you on the call.

Operator: I will now turn the call back over to the operator who will assist in taking any questions. Thank you.

Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. Our confirmation tone will indicate your line is in the question queue. You may press star and two 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.

Operator: Ladies and gentlemen, we will wait for a moment while we poll for questions. Once again, ladies and gentlemen, if you wish to ask a question, please press star and one. Ladies and gentlemen, if you wish to ask a question, please press star and one.

Joseph Visconti: As there are no questions in the queue, I would now hand the conference over to Joseph Visconti for his closing comments. I want to thank you, everyone, for taking your time today and we look forward to updating you with any further updates.

Operator: Have a great day. Thank you.

Operator: The conference of Quinn V. PowerCats Company has now concluded.

Operator: Thank you for your