Twin Vee PowerCats Co (VEEE) 2022 Q2 法說會逐字稿

Good day, and welcome to the Twin Vee PowerCats Co. second quarter of 2022 investor call. As a reminder, this call is being recorded and all participants are in a listen-only mode. Your speaker for today's program is Joseph Visconti, Chairman of the Board and CEO of Twin Vee PowerCats Co.; and Carrie Gunnerson, CFO of Twin Vee PowerCats Co.

Before I turn the call over to Joseph, please remember that certain statements made during this call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements on this call other than statements of historical facts, including statements regarding the company's future operations and financial position, business strategy and plans, and objectives of management for future operations are forward-looking statements.

In some cases, forward-looking statements can be identified by terminology such as believes, may, estimates, continue, anticipate, intend, should, plan, expect, predict, potential, or the negative of these terms or other similar expressions. The company has based these forward-looking statements largely on our current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy, and financial needs.

These forward looking statements are subject to a number of risks and uncertainties and assumptions described, including those set forth in our filings with the Securities and Exchange Commission, which are available on our website at www.twinvee.com. You should not rely on 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.

Finally, this conference is being webcast. The webcast will be available in the investor relations section of our website at ir.twinvee.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.

A question-and-answer session will follow the presentation. Please note that only those that have dialed in via the telephone may ask a question. Those listening via webcast will be able to submit questions and must call in instead. If you'd like to ask a question, you may signal by pressing star one on your telephone keypad. I will now turn the call over to Joseph Visconti. Please go ahead.

Thank you. Really quick, someone just texted me and said, they -- somebody was not answering the phone. They were trying to get into the call. They -- anyway, I'll start.

We do have lines ringing in, sir. But they're being answered by our operators now.

All right, thank you.

You're welcome.

Good afternoon, everybody. Thank you for taking the time to participate in Twin Vee PowerCats's Q2 2022 financial results. I will start off by providing several Q2 updates on our company's progress and discuss our plans moving forward. Carrie Gunnerson, our CFO, will then give a financial update on the company. And we'll conclude with some Q&A.

As you know, Twin Vee PowerCats designs, manufactures, and sells a line of catamaran sport boats from our factory here in Fort Pierce, Florida. Our model lineup for gas-powered boats range from 24 feet in length to our newest model, our 40-foot quad-engine 400 GFX. From Q1 2022, our dealer network has increased over 24 locations. And we currently employ around 160 employees.

The past couple of weeks have been exciting and filled with a lot of promising momentum for our company. Today, our electric division, Forza X1, will be brought public by our investment bank, ThinkEquity. As of today, Forza X1 will become its own independently trading, NASDAQ-listed, publicly trading company under the symbol of FRZA. Twin Vee will hold a 70% stake in Forza X1, and Twin Vee will continue to file a consolidated financial statement going forward based on our 70% ownership in Forza.

Now let's discuss Twin Vee's gas-powered boat operations. We are pleased to report a 158% increase in net revenue for the three months ended June 30, 2022, compared to the same quarter in 2021. And our adjusted net profit in Q2 2022 was $607,000. Again, this is for our Twin Vee gas-powered division.

This quarter was our gas-powered division's first profitable quarter since Twin Vee's IPO in July of 2021. This achievement is due in part to our company adding additional models to our lineup; expanding our dealer network; and our continued efforts to streamline the manufacturing process, including our push towards a lean manufacturing facility.

Lean manufacturing was first devised by Toyota and is now the gold standard in manufacturing around the world. Our unit throughput has increased to an average of 4.75 boats a week, up from approximately 3.25 boats per week in the fourth quarter of 2021. We are knocking on the door of one boat a day, which is exciting for us.

We are paying close attention to market conditions, dealer inventory levels, and economic indicators that might affect our business or the buying decisions of our customers. Our goal is to sustain our current production momentum, streamline inventory levels, and remain focused on hiring highly qualified production and administrative staff to further strengthen our business.

We feel confident that even with some slowdowns occurring in certain segments of the market, we have the ability to open new dealers and expand market share and continue our growth momentum. Catamarans are really gaining traction and popularity. And as we've spoken before, Twin Vee is the second largest multi-hull manufacturer in the country by unit count.

As we move forward into the second half of 2022, we anticipate our operating income will improve for our core gas [for both] divisions. It's important to note that as Twin Vee moves forward, focusing and building its gas-powered boat division, Forza X1, our electric boat division, will incur losses as Forza moves from R&D to prototyping its new FX1 models, then to testing and marketing these electric boats, and then to ramping up production in our new Forza X1 factory in Marion, North Carolina, over the next 12 to 18 months.

The Forza X1 IPO -- post-IPO, which could happen any minute, will now fund the Forza operations and the new factory and the ramping of Forza's production. Based on the Forza IPO, Twin Vee will no longer be required to fund for the operations after today. The removal of the cash infusions at Twin Vee with funding for Forza should strengthen Twin Vee's cash flow and strengthen Twin Vee's balance sheets.

We are seeing some softening in the marine sport boat market. We also are seeing some [field] inventory levels grow, but the good news is that current dealer inventory levels are still not back to pre-COVID traditional levels. It's important to note that our sales team has reached out to every one of our Twin Vee dealers about their annual forecast.

These forecasts are the number of boats that each dealer orders over the course of the year by model and desired delivery dates. And not a single Twin Vee dealer has changed, modified, or reduced their forecasted boat orders with us. As a result, our current dealer forecast, Twin Vee still has over a year of forecasted sales production on our books.

Let's move to Forza X1. Now moving to our electric vehicle manufacturing subsidiary, Forza X1, we've spoken about this many times, that Forza's mission is to produce an affordable, fully integrated, all-electric recreational boat to inspire the adoption of sustainable recreational boating by producing stylish electric sport boats. We've made some major strides at Forza X1 as we work towards commencing sales to our customers of our FX1 one boats in Q2 of 2023.

In addition to the IPO, let me start with our most recent news. During a press conference in North Carolina about two weeks ago, Governor Roy Cooper, the governor of North Carolina, would announce that Forza X1, would obtain incentives from North Carolina Department of Commerce and the McDowell County local government to establish its 100,000-square foot dedicated fully electric boat manufacturing operation in McDowell County, North Carolina. Forza X1's CEO, President, Jim Leffew, lead these efforts with state and local entities. Jim did a phenomenal job. Thank you, Jim.

In terms of the electric boat themselves, Forza X1's first model will be the 24-foot FX1 dual console. I'm happy to report that the tooling of the FX1 dual console had been finished and the hull and deck molds are expected to be complete in the coming weeks. And within the next 30 days, we will be assembling our first FX1 model. This is great progress on Forza's electric outboard motor as well. The motor currently consists of over 250 parts. This motor will be made in house in Forza's new factory. We are starting to build small batch numbers of this motor and build up to 20 units.

Turning to the batteries that will power our boats, in January, we announced that Forza X1 entered into a five-year supply agreement with a Michigan-based company named American Battery Solutions, ABS, for production-grade, 52-kilowatt, high-powered, lithium-ion, liquid-cooled batteries. Forza has recently received the first battery shipment from ABS, which will be used to continue testing in our prototype boat.

And subsequent battery shipments are expected to arrive here in the next couple of months for the use of our brand new FX1 dual-console and center-console boats. Overall, Forza X1 continues to make substantial progress towards its mission. And there's a lot of work to do, and we're looking forward to the coming weeks and months and letting you all know about those updates. I hope you enjoyed my presentation. Let me turn it over to our CFO, Carrie Gunnerson. And then I'll give you a little bit more review and we'll go to Q&A. Thank you.

Thank you, Joseph. I'm going to begin with the income statement. Our revenue for the quarter was up 158%, or approximately $5,222,000, up to $8,520,000. Our gross profit for the quarter were up 162%, or approximately $2,131,000, to $3,447,000. As Joseph stated, we continue to monitor the cost of our raw materials and purchase components and adjusting our sales prices and discount structures accordingly.

Our dealer demand has remained strong, and we are monitoring our dealer inventory levels very closely. Additionally, we are working diligently to increase our dealer networks. Our operating expenses for the quarter increased by approximately $2,486,000 to $3,919,000. Our net loss for the quarter was approximately $539,000 compared to net income of $51,000 in 2021.

However, in 2021, we did not have either of our subsidiaries. Forza's portion of our net loss was approximately $590,000. And net income from our business, gas-powered boats, was approximately $73,000. Further, when we look at our adjusted net income for the quarter, which excludes non-cash charges, our adjusted net income for our core business, the gas-powered boats, was approximately [$607,000].

Our net loss is a reflection of the investment that the company has continued to make in our electric boat division, [Forza X1], as well as our efforts to increase the number of models we offer for our gas-powered division and its production line (technical difficulty). We continue to aggressively recruit highly experienced staff that are not only increasing our productivity, but also our efficiency.

Turning to the balance sheet, we had cash, cash equivalents, and marketable securities of approximately $9,860,000 million as of June 30, 2020 (sic - see press release, "June 30, 2022"). Our inventory levels have increased by approximately $2,570,000 to $4,370,000. These inventory levels support our aggressive increases in production and the challenges that we we've faced in the current supply chain.

Our accounts payable have also increased by approximately $1,061,000 to $2,262,000. Again, the increase is to support our new production levels. With that, I'll turn the call back over to Joseph.

Thank you, Carrie. So as you can see, we're growing. I think it's important to note that with our increased growing, we still have over $9 million cash in the bank. And soon, with Forza going public, we will no longer have that cash burn on Twin Vee's books. And so that's going to strengthen our balance sheet.

So I believe in Twin Vee's second quarter was extremely strong. We debuted a bunch of new boats: our 26, our 34, our brand new 40. If you go online at twinvee.com, you can see some amazing imagery of our brand new 40. It's very exciting, and we're receiving orders from our dealers. And we are starting to even work on additional new models.

So in addition, we have increased our unit throughput to an average 4.75 boats per week, as we discussed. And this, again, helped Twin Vee's gas-powered division record its first profitable quarter since Twin Vee's IPO in July 2021. We are really excited about the opportunities ahead of us.

Before I open it up to some Q&A, I would like to thank all of our employees for their continued teamwork, dedication, the passion they have of building our boats. I want to thank our shareholders for their support and everyone on the call today for their interest in Twin Vee PowerCats. With that, I'd like to turn it back to the operator for Q&A, and we can take our first question.

Thank you. (Operator Instructions) Mr. Visconti, it appears there are no questions at this time. I'd like to turn the conference back to you for any additional remarks. I apologize, sir. We just had a couple questions join our queue.

Okay.

[Guy Newman], private investor.

Hi, guys. Congratulations, brilliant quarter. Well done. Can you please explain to the shareholders how -- the correlation between Twin Vee PowerCats and Forza? Forza is now trading and open. Congratulations on that, too.

Twin Vee is a 70% shareholder in Forza X1. Forza will operate as an independent company. And that's it. So it was always a wholly owned subsidiary. And I didn't see the stock quote yet. But as it begins trading, Twin Vee -- I mean, I'm sorry, Forza has its own Board of Directors and officers and will operate as an independent company.

[Joe Zalano], private investor.

Hi. How are you?

Good, how are you doing?

Good. I'm a shareholder in both companies, Twin Vee, TVPC. And I'm trying to find out your situation with stock conversion here and what do you guys plan on doing with that.

Yes. So we did a press release. It's a little confusing, but there will be a merger between TVPC and VEEE. The merger will not -- there will be no money changing hands. There be no stock being issued. Essentially, we have to roll TVPC into VEEE. The net effect will be -- VEEE will end up with an NOL. And those shares will then -- all of the VEEE shares will be distributed on a pro-rata basis back to all the TVPC shareholders.

There's a document that's going to be filed, an S-3 registration over the next couple of weeks. And I apologize about the delay, but it's an extremely -- there is all types of tax issues. There is a fairness opinion, the required shareholder vote.

But the net effect is that all TVP shareholders -- there will be an X date, and TVP shareholders will receive VEEE registered shares probably over the next 60 to 90 days if you still own the stock at that point. But thank you for asking the question. And again, there'll be documents filed, which you can go online and start to read. And I apologize it took so long, but we're getting there.

(Operator Instructions) Joe Zalano.

Hello?

Yes.

Hello. So is it going to be one-to-one conversion or how are you guys handling?

So it's not one-to-one conversion. I can't get into the numbers. There's disclosure issues, Mr. Zalano. But if you -- we did a press release. If you go back and look at the press release, you can figure it out, like the shares that are outstanding in VEEE and then the shares that are issued and outstanding in TVPC. And you take those two numbers and divide it, that will be the distribution.

And both those numbers are fully disclosed. My personal shares are in TVPC, so I'm on the same page with you. And again, I apologize it took so long, but we're getting there. There's a lot of legal and accounting and tax work to get this completed.

(Operator Instructions) It appears there are no further questions. Mr. Visconti, I will turn the conference back to you.

I want to thank you, everybody, and -- for supporting us. And again, have a great day, and we'll talk to you soon. Thank you.

And this does conclude today's conference. Thank you all for your participation. You may now disconnect.