Q3 2025 Worksport Ltd Earnings Call
Speaker #1: You have joined the meeting as an attendee and will be muted throughout the meeting .
Speaker #2: morning Good everyone , and thank you for joining Worksport quarter three , 2025 Earnings I'm Steven Rossi , chief Officer and founder of Worksport Limited .
Speaker #2: With me today is our chief financial Executive officer , Michael Johnston . we'll walk Today through our financial performance operating progress , liquidity position and how these results align with our strategy to build a high margin , scalable platform in truck accessories and clean , tech enabled power solutions .
Speaker #2: We will be reviewing the financial results for the quarter ended 2025 , September 30th , which we filed earlier today in our form 10-q be accessed on our and can investors Relations website at investors Worksport .
Speaker #2: Reports . Once again , investors Worksport . Reports at the today's end of Both are prepared . Remarks in the accompanying presentation deck will be available for download as well .
Speaker #2: After these remarks , we will open for questions from attending the line that , let's analysts . begin . First , safe harbor statements .
Speaker #2: During this call , we will make forward looking including statements , statements regarding our financial the full year 25 and 26 . Our expectations regarding financial and business trends , impacts from the macroeconomic environment , our market outlook for position , opportunities go to market growth initiatives , strategy and business aspirations .
Speaker #2: initiatives and the expected benefits of such These statements are only predictions based on our current beliefs , that are and assumptions forward Because forward expectations relate to looking the looking .
Speaker #2: future , they are subject to inherent uncertainties , risks and based on initiatives . changes in circumstances that may be difficult to predict .
Speaker #2: many of which And outside of our are control . Actual results or events may materially . differ Therefore , you should not rely on any of these forward looking statements .
Speaker #2: These forward looking are statements subject to risk and other could affect our performance and financial results , which we discuss in filings detail in our factors that SEC , included in our annual Report on our form 10-K and reports on 10-q quarterly and other SEC The forward looking statements made in this filings .
Speaker #2: call are made of today's date . Worksport assumes obligation to Form update any forward looking no statements . We we may make today's webinar on .
Speaker #2: So here's today's agenda on today's call , we will cover Q3 , Q2 , performance 2025 key scaling , and outcomes , production , operational execution , tariff environment and management .
Speaker #2: Solace and core cost commercial roadmap R&D next steps deluxe including and capital strategy 2025 to 2026 outlook path to and positivity and key takeaways , as well as some .
Speaker #2: Solace and core cost commercial roadmap R&D next steps deluxe including and capital strategy 2025 to 2026 outlook path to and positivity and key takeaways , as well as some Q&A With that , into our let's move Mike will walk us through the Q3 2025 financial highlights .
Speaker #2: Thanks , Steve
Speaker #3: Q3
Speaker #3: solid step forward in journey , the growth Worksport third consecutive quarter of . . Net sales reached representing $5 million , a 61% growth year year in over 22% sequential growth from Q2's of $4.1 million .
Speaker #3: solid step forward in journey , the growth Worksport
Speaker #3: sales expand to 31.3% this quarter , compared to 7.9% in Q3 year and 26.4% of last Q2 of 2025 , demonstrating the impact of efficiencies and a stronger mix product net loss operational .
Speaker #3: an ongoing $4.9 million reflects expansion of offerings and product investing in scaling our commitment to ahead of numbers . commercialization While our revenues and margins are milestones .
Speaker #3: We ended the quarter with Our 3.8 million in cash and an additional available on our line of credit . Total working capital was Importantly , $6.3 million .
Speaker #3: We ended the quarter with Our 3.8 million in cash and an additional available on our line of credit . Total working capital was Importantly , 3.3 million indebtedness reduced to $2.9 million , down from year 5.3 million at end 2024 , a meaningful of our financial strengthening stability Q3 .
Speaker #3: demonstrates that our Overall , growth and margin expansion are structural , with future some facing expenditures in Q4 , our expenditure projected to profile is transitioning from begin investment mode toward profitability long term .
Speaker #3: led Worksport growth by rapid scale up of our US made cover production tonneau . Q3 net sales is being up $5 million , 3.1 million a year ago from .
Speaker #3: Year to date , are double the sales 11.4 million , ended $5.6 million for September 30th , 2024 . Our from strong came continued growth from strength this Al for hardcover launched Q1 of 2025 , expanded relationships with several national distributors national major .
Speaker #3: Continued growth dealer in late , jobber and e-commerce channels . Our performance this fiscal year and retail recurring and represents a diversified revenue base , not a single channel surge with new product and revenue entering the streams mix in the months ahead .
Speaker #3: Continued growth dealer in late , jobber and e-commerce channels . Our performance this fiscal year and retail recurring and represents a diversified revenue base , not a single channel surge with new product and revenue , which We believe Worksport is on toward profitability More on the upcoming product lines later a path .
Speaker #3: Gross auto launches clearest proof points of our strategy . Q3 gross profit was $1.6 million , 31.3% margin , up sharply a from 7.9% in Q4 .
Speaker #3: Q3 of 2024 and 26.4% in Q2 this year . Year to date , gross margin is 26.7% , compared 10.5% to Key in 2024 .
Speaker #3: of this include higher production throughput and fixed cost absorption in our US production facility , a higher higher volume or value product mix with maturing and emerging sales channels , and greater operational efficiency as processes mature .
Speaker #3: We are now operating solidly in the 30% plus margin range , setting the stage for future operating leverage . We expect to margins approach 35% by year end .
Speaker #3: improvement targeted Continued for 2026 . We remain committed to achieving near-term operational cash flow positivity in Q3 , operating expenses totaled $6.4 million , compared with $4.2 million in Q3 of 2024 and a $4.7 million in Q2 of 2025 .
Speaker #3: The increase mainly reflects growth and , investments costs tied to the marketing launch , and our regulation A offering we completed our offering in October 2025 .
Speaker #3: Operationally , we supported 60% revenue growth from Q3 of 2024 to Q3 of 2025 , while increasing G&A expenses This shows only 20% .
Speaker #3: scalability and cost discipline , and this path includes the following factors . Breakdown of the operating expenses for Q3 of 2025 . R&D spend was 300,000 lower year over year as we moved past core tonneau cover development .
Speaker #3: G&A was $3 million , which supporting which higher volumes , compliance and supported facilities sales and marketing was $2.4 million . The main our driver of growth spending and this was focused on activation , Ram channel marketing and investor awareness .
Speaker #3: Professional fees were 700,000 , included advisory , compliance and based compensation items stock . Our operating loss was $4.8 million , compared with 3.9 million in Q3 2024 and 3.6 million in This investment in Q3 will partly Q4 before reaching into the tail end of our Q2 2025 .
Speaker #3: investment phase . As we position the company stronger for leverage going forward . For the first nine months of our cash position reflects growth investment in financing activities used in 2025 , operations was disciplined 11.2 million , compared to period 8 million in the same last year .
Speaker #3: Our Q3 operating cash burn was approximately 4.3 million , slightly higher than Q2 . As we completed major marketing production and also incurred one time expense reggae related to the marketing efforts .
Speaker #3: Our investing cash outflow is represented mainly spending on tooling machinery , and intangible assets . Our financing 485,000 and is inflows 7.1 million .
Speaker #3: from warrant exercises issuance series C of preferred stock and warrants in are connection with the reggae units offering net repayments on revolving credit facility and the common stock with respect to long term debt , we continue to improve our leverage profile maintaining while managing our obligations .
Speaker #3: As of September 30th , 2025 , our total indebtedness current and long term , equal to 2.9 million , which is down from 4.8 million on December 31st , 2024 .
Speaker #3: Revolving credit facility had balance of 1.6 million , and our other debt had a term balance while of 1.3 million . Availability on revolving credit facility .
Speaker #3: got $3.3 million unused , which provides additional liquidity and flexibility to support our a strategic priorities . Our path to profitability is becoming clearer each supported by stronger unit economics and upcoming quarter , catalysts .
Speaker #3: Our gross margins now consistently 30% , up above from under 10% last year , showing true structural improvement and profitability generated from production activities .
Speaker #3: Our operating leverage while year to date revenue is up more than 60% and expenses have risen only about 20% , scalability signaling across our product offerings .
Speaker #3: On a revenue scale , applying our current annualized sales run rate approaching $20 million positions us meaningfully to closer break even our importantly , much of margins to an few years is now at the finish line with the three tonneau HD cover line launching in and Q4 the Solis and Core systems set for commercial orders in late 2025 .
Speaker #3: These cost centers anymore . They are next revenue are not engines , as these products enter production and sales channels , we sustained gross expect 35% plus range .
Speaker #3: Continued expense , efficiency and clear trajectory towards flow cash in 2026 . We positivity this profitability bridge step by , product product . We anticipate Worksport need for cash provided by financing activities to decrease in 2026 .
Speaker #3: Given our projected path of cash flow positivity . Now back to Steven insights for key business into operations
Speaker #3: .
Speaker #2: Thanks , Mike . In Q3 , we built a scalable ISO 9001 certified manufacturing base , Q3 31.3% gross margin is the
Speaker #2: Q4 , we expect to increase production by another Q3 , an increase in production will benefit our 50% compared to margins , and the selling demand .
Speaker #2: invested We have in creating the market over the last year . We achieved without proportional headcount increase , validating process efficiency Q3 , margins confirmed better utilization of in US production facility us of our , improved fixed cost absorption , continued focus on and throughput sufficient to support quality national distribution dealers .
Speaker #2: Let's talk a bit about our tonneau cover business . Our profit engine . After years of strategic investment , hard our tonneau cover division is now Worksport folding term economic engine .
Speaker #2: They're made in the USA with rising brand in multi-channel near . We have proven ability to increase with scale 35% plus gross margins at current volumes , with margins projected to grow even further as .
Speaker #2: scales , the tonneau . And recognition Our tonneau cover division can absorb a significant share of fixed cost overhead , reduce reliance on external capital , and generate cash to clean tech initiatives tonneau cover product offering the financial provide backbone on which core and .
Speaker #2: being built , giving Worksport a and fund for self-funded . Now , let's talk a little bit about tariffs and how we're managing them .
Speaker #2: all know this . While The tariffs remain a We manageable . headwind , there And in the tonneau cover market , increasingly service a competitive tailwind for Worksport manufacturing advantage .
Speaker #2: The majority of tonneau cover value is production US based , first US reducing compared import to our competitors heavy . Cost containment historical 5 to 10% material cost .
Speaker #2: The majority of tonneau cover value is production US based , first US reducing compared import to our competitors heavy . Cost containment historical 5 to 10% material cost exposure Cost pressure offset through has been efficiency gains driven .
Speaker #2: overhead Scale absorption and discipline . pricing This is through domestic pricing , inflation . Our competitive position , tariffs often impact competing products more severely , domestic , while our domestic footprint brand marketing and while product quality is a clear differentiator , imported especially if trade frictions continue Solus , Core and some While globally considerations .
Speaker #2: core and solus tariff exposures modeled into our pricing and margin forecasts , with flexibility to adjust and mix pricing needed . Further as further to the this , November 10th , 2025 tariff suspension provides additional near-term relief validates our .
Speaker #2: and Proactive planning . The been waiting thing for . Let's everyone's talk a little bit about solace and core from investment to revenue pipeline .
Speaker #2: As of October 2020 , October 21st , 2025 , the Worksport tonneau cover is now in production , with initial sales expected to begin to B2B HD3 sales to customers in online year November 2025 , followed customers later this wanted to talk .
Speaker #2: We're . Sorry , I talk about Core . talk about HD solace and which we going to just did Let's for a second .
Speaker #2: The HD three is a heavy duty tonneau cover designed for commercial and fleet applications . Building on the Al3 , it features upgraded materials , seals , and from latching maximum durability .
Speaker #2: While available through channels , all primary focus is driving our wholesale growth in and B2B channels , adding a new revenue stream and completing our US made tonneau cover lineup .
Speaker #2: So we're very , very about the excited HD do for our three and what it's going to B2B channels business . Innovation pipeline , our solace and core .
Speaker #2: After years of engineering , tooling , certifications and partnership investments , solace Core are now set to and released for orders later this month has been pure .
Speaker #2: operating and What capital expense is expected to become visible high margin revenue beginning in late stream Q4 2025 and scaling through to 2026 and beyond highlight some .
Speaker #2: of our most recent Let's announcements . First , the official launch date for the Solace Solar tonneau Core cover and Portable Power Energy System is now November 28th , 2025 .
Speaker #2: Customers will be able to place initial orders with expected delivery in late December or early January 2026 . starter The core kit is priced $949 , which at includes the core Inverter Hub , as well one core battery .
Speaker #2: Solar The System starting price is is at $1,999 and will go up as as high $2,499 , depending on the model size or bed size of your truck .
Speaker #2: And our initial rollout plan for the solar for for the core is 1000 . Core units plus 900 additional battery packs with a limited solace release representing a roughly $2.5 million in near-term revenue opportunity .
Speaker #2: With scaling significant scaling plan through 2026 . In terms of strategic positioning , solace , solace margin accretive , leveraging our tonneau cover to expertise enter into the premium solar tonneau Cover market .
Speaker #2: Channel core is a modular , portable energy system designed as a recurring revenue platform driving stable cash flow , positive sales across work , overlanding , emergency and industrial markets .
Speaker #2: Together , these two platforms transform Worksport from a single product channel manufacturer in a somewhat niche market into a multi market clean tech company with recurring scalable revenue potential .
Speaker #2: Let's talk a little bit about R&D in our next steps . In 2026 , we aim to transition R&D from heavy foundational build to commercial optimization and platform leverage .
Speaker #2: What this means is we're going to switch from all the operational expenses relating to heavy R&D and developing new products to perfecting those new products and being able to margin and increase efficiencies for Solus and Core.
Speaker #2: We're planning to finalize launch , finalize launch execution early customer and feedback loop , optimize bill of material and logistics for margin and enhancement post-launch .
Speaker #2: Explore rapid scale cost savings and expand integrations and form factors based on usage data . Expanding the core platform . For multiple product lines for tonneau covers , we're going to grow the HD3 product and launch HD for equivalent cover labeled as the internally Worksport D2 .
Speaker #2: We expect this B2 cover to be extremely well received in all markets . More details will come on this will come in later in 2026 .
Speaker #2: Incremental product improvements to maintain quality , compatibility and margin strength Arthur Lux going to , we're advance pilots and partnerships , including evaluations with leading institutions to validate performance and use cases , finalize and select manufacturing partners , and focus spend on projects with clear commercialization paths and potential for 2026 impacts and beyond .
Speaker #2: A little bit about operating leverage in the roadmap there. Bringing it together, our operational model priorities for 2025 and 2026 are as follows.
Speaker #2: First , we're going to obtain and sustain 35% gross margins . We're going to get this . We're going to get this by maintaining manufacturing efficiency and pricing discipline .
Speaker #2: We're going to slow our operational expense as a opex growth percentage of net sales , especially in sales and marketing . And we're going to treat Q3 elevated spending as a peak investment , not the new baseline .
Speaker #2: We're going to improve working capital turns by monetizing existing inventory and further align production scale with growing demand . And we're going to layer new products into our existing cost stabilized offerings .
Speaker #2: Solus Thanos Core , and we're going to share the infrastructure that we've built , and we're spending on and amplify our leverage , our priority support , our transition from capital funded mindset to operations funded growth .
Speaker #2: A little bit about risk management and mitigation . We are clear eyed about key risks net , ongoing loss and going concern language in our 10-q reflect reliance on external capital and execution risks , tariff and supply chain volatility , particularly for globally sourced components and launch risks that we see for Core and Solus timing adoption margin realizations , equity and warrant overhang impacting shareholder perception .
Speaker #2: This is how we're going to mitigate them . We're going to tighten our spend to initiatives with measurable ROI . We're going to maintain and selectively use diversified capital sources , and we're going to stage clean tech production and inventory to complement demand signals , communicate transparently about and capital deployment .
Speaker #2: Given the continued growth in healthy margins in our tonneau cover business , we are very confident in our ability to manage tariff related costs inflation while advancing towards near-term cash flow maintaining our 2026 profitability positivity and target .
Speaker #2: I'm gonna pass it back to Mike with our updated fiscal year 2025 outlook and guidance .
Speaker #3: Thanks, Steve. So as far as our 2025 revenue framework is concerned, in Q3 of 2025, we had an IRR of $20.4 million, a substantive leap from $8.5 million in 2024.
Speaker #3: Q4 2025 is expected to benefit from benefit from continued tonal growth and channel expansion . Initial Solus and core orders commencing November 28th , 2025 , with early but measured contribution project year end revenues of 17 to $21 million , and that depends on when the revenue recognition for the core and Solis opens .
Speaker #3: Our 2026 revenue growth drivers , we believe the base case for our US tonal cover , net sales will be 27 to $35 million next year .
Speaker #3: Further , we believe Solis and core product lines can lead to an additional net sales in the tens of millions . We will update our shareholders on guidance after this product is rolled out later this year .
Speaker #3: In 2026 , we'll have the full year impact of the US made tonal platform cover sale with 35 to 40% target gross margins and first full year commercialization of the core portable power system and Solis Solar tonneau covers .
Speaker #3: Selected progress on Lux as a complementary clean tech platform aligned with defined technical and commercial milestones and our focused OpEx discipline. OpEx growth below revenue growth to unlock operating leverage.
Speaker #3: And now our path to cash flow positivity . Our target is at operating cash flow becomes positive during Q1 2026 . First half sorry , the first half of 2026 , driven by stable 35% gross margins .
Speaker #3: Increasing lead to sales will higher utilization of existing manufacturing and infrastructure , with no distribution major step fixed up in costs . Our tighter control of G&A sales and marketing professional fees , with the spend tied to measurable ROI and our launch of HD three , Solis and core product lines , our new margin sources .
Speaker #3: And now back to Steve with our concluding
Speaker #3: .
Speaker #2: Mike . Well , Thanks , a high margin we've built us manufacturing platform with rapid growth . We've revenue established national distribution , and that's growing .
Speaker #2: And we've positioned Solis Core and Arthur Lux on top of that foundation. Our focus now is precise, disciplined execution towards sustainable cash flow and profitability.
Speaker #2: We're seeing here on the charts . Worksport revenue growth Worksport margin growth and Worksport new products set to improve 2026 profitability .
Speaker #3: Thanks , everyone . This concludes our prepared remarks . Operator please open the line for questions .
Speaker #2: have your see you hand up , and Scott . Yeah , thanks for Tate , I joining us today . Both you guys are always great to to join in .
Speaker #2: And and I love your questions . So I'm going to start with you Tate and ahead . yeah go
Speaker #4: Thanks , to know for market the Thank Stephen . United about the States ? Are you covers in total seeing you . tonneau demand growth in the versus are taking market share you to please .
Speaker #4: Market share .
Speaker #2: So Yeah . seeing you know , we're still we're seeing we're still getting bits of information from the market . We're seeing that we're we're taking we're .
Speaker #2: The market's still very healthy . We're seeing a slight shift into smaller trucks different SKUs . So we're pivoting . And that's what's really good is that domestic because we manufacturer could literally make whatever selling the day that we need to sell it .
Speaker #2: For instance . So in terms of the market , usually when there's difficult times , things start to sell less . However , in our market , when we have geopolitical issues and other small issues that are that happening or are other issues happening within our economy , what we see is we just see a shift of what types of sold , not the trucks are amount of them .
Speaker #2: So we're still seeing the tonneau cover market in that 3 billion plus range , maybe a bit more . We're just seeing a shift to different applications that , with we make .
Speaker #2: And in fact , the different applications that are being sold more of are actually higher profit for us . So it's it's actually quite a benefit .
Speaker #2: So everything still is healthy as it was 2 or 3 years ago . And I feel that the market's primed for a strong 26 in terms of of growth economy in the within the US specifically .
Speaker #2: And I think that we're going to be able to going we're capitalize on that .
Speaker #4: Thank you . And then I saw on your a mention about working with the on sales channel , but related to the core and solace to can you leverage your existing distribution , your sales channels for the tonneau covers for Solace and Core , or will it be different type of distribution , maybe starting more online , or can you comment on that ?
Speaker #2: Yeah , yeah . No . Great question . We're going to start online . We're going to start direct to consumer . That way .
Speaker #2: that We get that that feedback loop with with no you know no broken telephone . No other way to say it . So we started with our beta Those are testers .
Speaker #2: individuals that we work with . And now we're going to open it up to instead of individuals , the broad consumer And market .
Speaker #2: then we have a significant amount of interest on the dealer side . We just presented . We just had a booth at the Sema show in Las Vegas .
Speaker #2: Some of it's available on our socials , like Facebook and Instagram where Worksport posts . We Twitter and LinkedIn more for investor stuff , but anyone that goes follow us on Instagram and Facebook at Worksport and you'll see some videos .
Speaker #2: We had these booths powered by our our new energy products , and there was a significant amount of interest . So I think that we could leverage we're just going to be strategic in when we do so .
Speaker #2: So so that it's it's accretive to to the to the target .
Speaker #4: Okay . very Thank you much .
Speaker #2: Tate . Thanks , Scott . Good morning .
Speaker #5: Good morning guys . Thanks for taking my questions . Steven . I was hoping that you might be able to give us a little bit of insight into your visibility on demand for solace and core the language around the opportunity in 26 is pretty robust .
Speaker #5: So any kind of color you can give us there , I think would be very helpful .
Speaker #2: I , So I think that the demand for the solace is going to be bigger than what I had otherwise So believed . so you know , me as the the company , I leader of always have to be a blend of optimism and pessimism .
Speaker #2: with that So , so in mind , you know , that a new product I think that the likes of which has never existed is always a difficult path , and I believe that that's going to be true .
Speaker #2: I think that it's going to difficult and challenging to be market and to attract for the customers solace . I But also believe that the the what we've been able to launch of an in terms offering price at $1,900 is almost a no brainer .
Speaker #2: think that the average consumer , And I when they look at something as a , know , you two , 3 or 4% of the cost of the truck expense , while offering such measurable amounts of benefit , I think that it becomes a no brainer .
Speaker #2: think So I that the solace is poised to possibly become a trending item , something that that becomes a trend , almost like a fashion accessory for your truck .
Speaker #2: Like , look what my otherwise analog accessory can do . It could power battery our generator , the core , or any battery generator .
Speaker #2: it's only , you And when know , a little bit more than other tonneau covers , other tonneau covers in our other competing tonneau covers are $1,500 for an extra $400 , $499 , you get a solace .
Speaker #2: I think the So demand as we market it and we message what the the it does and how meaningful that is for individuals , I think that that's going to be very , very popular for us .
Speaker #2: core The is , is , is nebulous because the market is so big . been able We've to do with the core is tap in from , you got to think , Scott , that the the tonneau cover market is a subset of a subset of a subset .
Speaker #2: It's an individual that has a license that buys a truck that needs a tonneau cover, and then that wants ours. So it's a very, very niche market.
Speaker #2: And it's still we're seeing massive growth there . But the core is literally for anybody , anywhere , you know , any demographic on a global scale .
Speaker #2: I think that when you look at that, it becomes nebulous because now it's a much broader market to market to. So it could become expensive.
Speaker #2: There think But I that as we at explaining how look innovative core our is and integrating the core into other , other products that we plan on , on speaking more about next year , I think that it it we know that one of our competitors , was which a foreign company foreign produced , foreign owned company , did about $1 billion .
Speaker #2: think that So we even a percentage of that market without it , without the seeing , we're I category , think that the core market could be highly accretive to the sheet .
Speaker #2: And in balance fact , I think that our clean energy division , as of the business could become become could bigger than the tonneau cover business within time period of within a .
Speaker #5: I Great . appreciate all that added That was that was helpful . color , Steve . And then my just second question on margins , clearly you guys a ton have made of progress .
Speaker #5: there I'm curious what is just volume driven in that improvement versus actual improvements in the manufacturing and production process ?
Speaker #2: That's a good question . So we have the best well , Worksport is , is is around 100 people and everybody working at Worksport is , is is beneficial .
Speaker #2: Our engineering team shout out and our is a team , our leadership team in general has a lot to do with being able to find cost efficiencies without the phrase we use in the is market thinning the out , and product thinning means , using you know , thinner a or aluminum cheaper a cheaper corrugate .
Speaker #2: plastic or So we haven't we've in fact , increased the , the , the of our product , but we've been able to find efficiencies through keen purchasing , leveraging demand and volumes .
Speaker #2: But the biggest I would say 70 , 60 to 70% of the cost savings is just is overhead absorption . started making our tonneau When we covers , our hours per unit , how many man hours it took to make one unit ranged between four and six hours per unit yesterday , or on an average day today .
Speaker #2: We're we're we're kissing below two . And when you look at the cost of domestic labor in the 20 or $30 an hour range , you know that that's significant .
Speaker #2: And we think that get get we can that we can that , labor component that even more . And then but we're fighting what against , Scott , is domestic inflation .
Speaker #2: We're we're significantly us our our paint comes from the 48 states or our Everything aluminum . that in our what most of out of product is made is sourced domestically .
Speaker #2: And even though the tariffs are for products , foreign we've been seeing a lot of domestic inflation . And once that eases , which it will eventually , whether it's a month , a week , a year or decade from now , we're going to see even better bill of material cost savings .
Speaker #2: .
Speaker #5: are we And capped out kind of around 35% on the current product mix , or year from when a now , are we talking about 40% pushing into 27 ?
Speaker #2: It's going to there's be going to be two different , two different things that . So first off , we may reduce discounts brand as the becomes more popular .
Speaker #2: So you know right now we have a Black Friday sale . You know and that is sales just is just us our reducing margin .
Speaker #2: In essence that's what all sales are to sell more . we're So finding ways of to being able attract are customers who there's there's marketing costs are going to our decrease .
Speaker #2: branding increases , our brand While increases recognition operational efficiencies . And then as we become a more popular brand , well the faceted in marketplace , we could could we we'll be more selective on , on on sale price because I think that the value will be by the product's driven quality and our name brand to with .
Speaker #2: So all of aggregate , I think that we see higher than begin and in times , you know , our are targets could margin .
Speaker #2: But it's going it's going to take a hard work lot of .
Speaker #5: Great . Well I appreciate the color congratulations guys . And on all the progress .
Speaker #2: Thank you Scott .
Speaker #6: Thank you Scott . Steve . We have three more questions from the audience in the Q&A bubble . The first question is if to someone was order this core on the November 28th release date , when would they reasonably expect to receive the product ?
Speaker #2: Great question . the So solace , the soleus is made to order . It's made domestically here within our facilities in the US .
Speaker #2: It'll be . Yeah , mostly made to order . We may stock some . So it's all handmade white glove service . And we're thinking that it'll be 1 or 2 weeks for us to make the product , test the package it , and then the concierge with service respect to to delivered to you .
Speaker #2: So we're not just going to throw it on a , on a , on a USPS and truck , and wave it away where it's a concierge , white glove experience with solace the own dedicated team for .
Speaker #2: and You have your an install . And these types of even though it's support very the things , solace should be a couple of weeks depending on our availability for the photovoltaic panels that and supply chain .
Speaker #2: There we are, our first batch, our thousandth batch of core units is expected to arrive in... The reason why we're offering them for sale in late Q3 is just because we expect demand.
Speaker #2: significant we we want to make sure that we have a , you the know , everyone's name in hat that , the that that wants to to be a part of it .
Speaker #2: And the is interesting . Again , because it can buy you multiple batteries . It's the only of its kind that fully offers a system .
Speaker #2: modular So the solace to recap should be a two week lead time , handmade , and the core should be shipping sometime in late December mid to late December , depending on receipt of the products through our contract on on the manufacturer .
Speaker #6: Steve . Thanks , And then we have another question about sales to the international market . Are we looking at international markets such EU or as Middle East ?
Speaker #2: We we had recently at the Sema show in Las Vegas , the biggest automotive show in North America . We had an unprecedented amount of sales from Latin interest in sales in Latin America , which we didn't expect .
Speaker #2: We knew that the strong . We didn't know it market was strong . So it looks like we're going to to to to growth geocentric .
Speaker #2: What that means is closer to home than further . So I think that we're going looking to start at at the , Latin American like Puerto Rican and Central and the South markets first , that that should be relatively easy , but not American because we know need to everyone we know there to set up distribution .
Speaker #2: And then we're going to look at European Union and the Middle East for mostly the core products . We feel that portable energy systems and home power systems are going to small be very , very strong there .
Speaker #2: And we've we've been over the looking at past years , the Australian market , which is big for for both all of the product lines we sell inclusive of unit of the heat pump .
Speaker #6: you . Thank Another question on the heat pump specifically , when do we expect it to go into production ?
Speaker #2: So I want to underline the amount of excitement that we all have internally . About the aether Lux , because it's so revolutionary and it's and it's revolutionary such a large and market .
Speaker #2: growing mean , I there's really like a , a trident of of of amazing things that are happening here . It's revolutionary . The market is exhaustingly large , and it's also growing massively for heat pumps .
Speaker #2: So we're very excited about that . So we have production intent or pre-production intent prototypes working . We're building additional prototypes for additional testing .
Speaker #2: So that's what November and December looks like . And then we're we're working with contract manufacturers to start looking at that manufacturing the product .
Speaker #2: I , I broaden my in my wording because I obviously we can't disclose non-public information . But our to begin manufacturing the product as quickly as possible once we've once we've tooled it , tested and certified it it , and we the company want exactly what the want , shareholder which is that date to be as close to possible .
Speaker #2: today as So the answer to the question is , is as fast as possible , you know , we want the same things as every shareholder .
Speaker #2: And investor does . But but there's the UL certification alone could be 3 to 6 months . Tooling and supply chain could be significant .
Speaker #2: drags . Time But significantly we're much smarter than we than today , than we were ago . Having a year now , executed on on similar initiatives like the core so we're going so as tight as to keep it possible .
Speaker #6: Thanks , Steve . And I think it's important to mention that we'll continue to deliver transparent to updates investors as we better alignment on the timeline .
Speaker #6: Thanks , Steve . And I think it's important to mention that we'll continue to deliver transparent to updates investors as we better alignment on the get And and the progression on So stay tuned for that .
Speaker #6: Thanks , Steve . And I think it's important to mention that we'll continue to deliver transparent to updates investors as we better alignment on the get And and the progression on So stay tuned for certification .
Speaker #6: We have one other question regarding the for battery system . How much extra miles it would a enable truck to be charged , say the truck is out of electric the truck is out of energy .
Speaker #6: I can take that question , Steve . And I think the answer to that question is , is just mathematical calculation . So each battery is about one kilowatt hours of energy , and you can have easily about four batteries in your truck system .
Speaker #6: So if you're , let's say electric truck 50kW , that is would provide out of four 50 , almost an 11% range boost could be 30 miles , 40 miles , depending on on the efficiency of your truck .
Speaker #6: So the answer is four kilowatt hours .
Speaker #2: want to be we also clear to state Yeah , that the the solace itself is not presently configured to or recharge directly integrate into an electric truck .
Speaker #2: So the solace will charge battery battery systems can be systems and the used for level one charging of the trucks , which is relatively slow , but get you it'll enough power to get out of out of a of a difficult situation where you might be out of energy on the side of the road .
Speaker #2: For instance , we have not yet integrated the solace directly with an EV manufacturer , although that is some a cog in the wheel for us .
Speaker #6: Thank you, Steve. There are no other questions apparent in the Q&A box. If any other investors would like to ask questions regarding our queue or future progress, please feel free to email us or call our line.
Speaker #6: We thank you very much for attending this call .