Worksport Ltd Q4 FY2024 earnings call

Key Achievements in 2024 - Revenue Growth: Substantial growth in net sales driven by the ramp-up of American-made hard folding tonneau cover products and expansion of sales channels, with online sales surging to 58% of total revenue in 2024 from 7% in 2023. - Product Expansion: Shifted towards higher-margin Worksport branded products. In Q4 2024, began entering government and fleet sectors, commenced production of the AL4 premium tunnel cover, developed the HD3 heavy-duty cover, and made progress on the SOLIS solar tunnel cover and COR mobile power system. - Innovation: Terravis Energy achieved a breakthrough with the AetherLux heat pump featuring ZeroFrost technology. The patent portfolio expanded by 25%, and the sales channel was strengthened with a 30% increase in the dealer network in the first two months of 2025.

Fiscal year 2024 was a transformative period for Worksport. Full-year net sales reached $8.48 million, a significant jump from $1.53 million in 2023, representing a 455% increase. The fourth quarter of 2024 contributed approximately $2.93 million to the total sales. Cost of sales for fiscal 2024 stood at $7.58 million, accounting for 89% of net sales. The gross profit for the full year was around $910,000, with a gross margin of about 11%. The operating loss in 2024 was $16.16 million. On a per-share basis, the loss improved from $8.44 in 2023 to $5.84 in 2024, a 31% improvement. As of December 31, 2024, cash and cash equivalents amounted to $4.88 million, working capital was $7.3 million, and inventory was $5.19 million.

2025 Outlook - Revenue: Targets full-year 2025 revenues in the range of $20 million to $34.5 million, driven by core products and new launches like SOLIS and COR. - Gross Margin: Anticipates gross margin to increase to the 25% to 30% range or higher by late 2025 as the product mix shifts to higher-margin items. - Cash Flow: Aims to move closer to cash flow breakeven and achieve cash flow positivity by late 2025 or early 2026, with capital expenditures expected to be relatively low due to existing infrastructure handling increased volume.

• Macro-economic Impact: Uncertainties from the macroeconomic environment. - Market Competition: Challenges from market competition. - Supply Chain: Issues related to the supply chain, including tariff impacts. - Intellectual Property: Risks associated with protecting intellectual property.

Q: On online sales, expectations for sales through own platform vs. marketplaces?

A: Worksport hopes for a 50-50 split between sales through its own online platform and through dealer and business-to-business units, focusing on driving traffic to its website and using dealer-only/exclusive products.

Q: Overview of online buyers?

A: Online buyers are strongly concentrated in the Southern Midwest, East corridor, and California. They include individual retail consumers, DIY enthusiasts, and businesses such as fleets and landscaping companies.

Q: Launch timeline for SOLIS and COR?

A: SOLIS and COR will be offered with different paths, including solar cover alone, a bundle with COR, and COR only.

Q: Manufacturing capacity and capital expenditures?

A: Current production lines are efficient, and while minor machinery investment may be needed, no major building expansion is planned.

Q: R&D expenses and 2025 outlook?

A: 2024 R&D expenses were heavy on COR prototyping, but 2025 R&D expenses are expected to be lower as most heavy lifting was done in 2024.

Q: Capital raising and cash burn?

A: A warrant inducement transaction raised capital, and Worksport is considering a Regulation A offering, focusing on non-dilutive or interest-bearing capital raising to manage cash burn.