Q4 2024 Twin Vee Powercats Co Earnings Call
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Mike Dickerson: I will now turn the call over to Mike Dickerson.
Mike Dickerson: Thank you Rob and thank you to everyone. Joining me this morning.
Mike Dickerson: So it's not the buried the lead let me begin with 2025, starting off strong with growing backlog.
Mike Dickerson: <unk>, 50% increase in first quarter sales sequentially compared to the just completed fourth quarter of 2024.
Mike Dickerson: Since the beginning of the year, we have experienced a renewed interest in both our twin Bee line and Aqua support model haul line with a growing backlog new dealers seeking to be part of this expanding <unk> and Ocwen sports family.
Mike Dickerson: We remained disciplined with our discretionary spending as we did throughout 2024 slowly ramping up production managing field inventory and developing enhanced dealer programs. While at the same time continuing to invest in dealer and retail facing technologies to drive lead generation as the broker dealer community.
Mike Dickerson: And a better informed marketplace.
Mike Dickerson: We are cautiously optimistic that the worst is behind us.
Mike Dickerson: There is no doubt the 'twenty 'twenty four it was the most challenging year, we have experienced as a public company.
Mike Dickerson: Fourth quarter provided no relief with revenues falling into a multiyear corner low $1 9 million.
Mike Dickerson: Post COVID-19 slowdown in the marine and recreational vehicle markets.
Mike Dickerson: Coupled with persistently high interest rates and inflation weighed heavily on consumer demand.
Mike Dickerson: The industry faced an overhang of excess one water boats, which will be installed.
Mike Dickerson: Further intensifying market pressures.
Mike Dickerson: As a result.
Mike Dickerson: Revenues declined sequentially throughout the year following an $8 4 million revenue quarter in the fourth quarter of 2023, we began 2024 with a sequential decline.
Mike Dickerson: Ive point $3 million in the first quarter to $4 3 million in the second quarter and further declined in the back half of the year to $2 9 million in the third and finally bottoming out at $1 9 million in the fourth quarter.
Mike Dickerson: About 2024, we implemented aggressive cost cutting measures to align with lower revenue volumes, ensuring we remain financially disciplined with an eye towards cash conservation.
Mike Dickerson: At the same time, we made a strategic decision to curtail our research and development electric boats, while focusing on strengthening our business Foundation.
Mike Dickerson: A key milestone in this effort was our acquisition of the remaining 55% for the X. One we did not already out.
Mike Dickerson: This transaction was completed at the end of November and is enabling better operational efficiencies.
Mike Dickerson: Musicians.
Mike Dickerson: We ended the full year 2024, with net sales of $14 4 million or <unk>.
Mike Dickerson: Duction of $19 million or 57% from 2023.
Mike Dickerson: This reduction in accrued throughout the year, a result of the challenging end markets I've just described.
Mike Dickerson: With a change in focus beginning in late 'twenty three towards bigger higher priced boats sales are down less than the number of boats, while the average sale price was up 19%.
Mike Dickerson: Approximately 167000 in 2024.
Mike Dickerson: Turning to 140000 in 2023.
Mike Dickerson: Largely due to the increase in the average length of boats sold.
Mike Dickerson: At these relatively low sales levels, we generated a negative gross margin in 2024, all in the back half of the year and primarily in the fourth quarter as our aggressive cost cutting efforts throughout the year did not keep pace would be even more aggressive acceleration in the decline in sales.
Mike Dickerson: Yeah.
Mike Dickerson: Throughout 2024, the company was reducing expenses through reductions in head count research and development and discretionary spending partially offset by investments to improve quality and bring wire harness design and assembly in house.
Mike Dickerson: Overall operating expenses were down 1.454 million or <unk> 10 per cent compared to 2023.
Mike Dickerson: However, this comparison includes a $392000 increase in depreciation.
Mike Dickerson: $420000 increase in professional fees largely related to the merger of two N V enforce them.
Mike Dickerson: And a $1 million $674000 impairment charge on the North Carolina facility recorded in the second quarter of 'twenty four.
Mike Dickerson: Before the impact of these three items 2020 for operating expenses would have been down 3.940 million or 31% compared to the prior year.
Mike Dickerson: General and administrative expenses are down 639000, or 17% salaries and wages are down $2 million 567000 or 34%.
Mike Dickerson: Compared to 2023, while research and development expenses were down 857000, or 59% in 2024 compared to 2023 as.
Mike Dickerson: As we exited the year. These R&D costs were nearly zero.
Mike Dickerson: These reductions demonstrate management's commitment to cost reduction during this difficult period.
Mike Dickerson: In terms of liquidity, we ended the year with $7 7 million of cash and cash equivalents and this compares to $11 4 million at the end of the third quarter.
Mike Dickerson: Of the $3 7 million reduction during the fourth quarter $1 3 million was used primarily for building expansion projects and new product development, including the all new bank now available in the market.
Additionally, during the quarter, we incurred approximately 800000 in costs related to the merger affords it into it.
Mike Dickerson: Before the impact of these items, our operational cash, Brian there's a slight improvement compared to the third quarter of 2024.
Mike Dickerson: A sequential reduction in revenue of 35% from two point by $9 million in the third quarter to $1 9 million in the fourth.
Mike Dickerson: With the facility in North Carolina now for sale the facility expansion in Fort Pierce nearly complete and the CNC machines seem to be delivered I expect capital expenditures in 2025 to be significantly lower than they were in 2024.
Mike Dickerson: We are entering 2025 with optimism.
Mike Dickerson: Market conditions have improved and we are seeing increased demand for our boats and new dealers expanding our geographic presence.
Mike Dickerson: We are being cautious in our production ramp and bringing on additional labor slowly.
The training maintaining quality and all of our processes.
Mike Dickerson: We are encouraged by the clock progress, we're making as we position to be the longer term growth.
Mike Dickerson: Team remains focused on driving operational efficiency, strengthening our product offering and capitalizing on the improving industry environment.
Mike Dickerson: I want to thank all of our employees for their hard work our customers for their loyalty and our investors for their continued support with that I'll turn the call back over to the operator, who will take your questions.
Mike Dickerson: 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 one on your telephone keypad.
Mike Dickerson: From a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
Mike Dickerson: 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.
Mike Dickerson: Yeah.
Mike Dickerson: We have reached the end of the question and answer session and this concludes today's conference you may disconnect. Your lines at this time and we thank you for your participation.
Mike Dickerson: Yeah.
Mike Dickerson: Okay.