Worksport Ltd. Q3 FY2025 earnings call

• Q3 2025 was a solid step forward with net sales growth of 61% year over year and 22% sequential growth. Gross margin expanded to 31.3%.
• Production of tonneau covers increased, with 2,499 units produced in a four-week stretch in July 2025, more than double March 2025 output. Q4 production is expected to increase by 50% compared to Q3.
• Tariffs are a manageable headwind, with US manufacturing advantage, cost containment through efficiency gains, and competitive positioning due to domestic production and brand differentiation.
• Solis and Core commercial launch roadmap: Solis (solar tonneau cover) and Core (portable power energy system) set for orders starting November 28, 2025, with initial deliveries in late December 2025/early January 2026.
• R&D next steps: Transition to commercial optimization for Solis and Core, grow tonneau cover products, advance AetherLux pilots and partnerships.

Worksport's growth is led by the rapid scale-up of its US-made tonneau cover production. In Q3 2025, net sales reached $5 million, up from $3.1 million a year ago. Year-to-date sales are $11.4 million, more than double the prior year's nine-month total. Gross margin was 31.3% in Q3 2025, a significant improvement from 7.9% in Q3 2024 and 26.4% in Q2 2025. The tonneau cover business is a key profit engine, with plans to scale production further and drive margin expansion.

• 2025 revenue projected to be $17 to $21 million, driven by tonneau growth and initial Solis and Core orders. 2026 revenue growth drivers include $27 to $35 million in US-made tonneau cover sales and significant net sales from Solis and Core.
• Target for operating cash flow positivity in Q1 2026, driven by 35%+ gross margins, increased sales utilization of infrastructure, and disciplined OpEx.
• Aim for 35% to 40% gross margins in 2026 with full commercialization of Core and Solis.

• Ongoing net loss and going concern language in filings reflecting reliance on external capital and execution risks.
• Tariff and supply chain volatility, particularly for globally sourced components in Core and Solis.
• Launch risks for Core and Solis in terms of timing, adoption, and margin realization.
• Equity and warrant overhang impacting shareholder perception.

Q: Can you talk about the tonneau market in the US and market share?

A: The tonneau cover market is still healthy, around $3 billion plus. There's a shift to different truck applications, and Worksport is pivoting to capitalize on these shifts. The market is primed for growth in 2026.

Q: How will Solis and Core be distributed?

A: They will start with online direct-to-consumer sales to get feedback, then move to dealer distribution.

Q: What's the breakdown of margin improvement between volume and manufacturing process?

A: About 60-70% of cost savings is from overhead absorption. Hours per unit to make a tonneau cover have decreased from 4-6 to below 2. Also, keen purchasing and leveraging demand contribute.

Q: What's the outlook for margins beyond 35%?

A: Margins could increase as brand recognition grows, discounts are reduced, and operational efficiencies continue. However, domestic inflation is a factor but expected to ease over time.

Q: When will Solis and Core products be delivered?

A: Solis is handmade with a 2-week lead time. Core starter kits are expected to ship in late December 2025/early January 2026.

Q: Are there plans for international markets?

A: Latin America will be focused first, then EU, Middle East for Core products. Australian market is also being considered.

Q: When will the heat pump (AetherLux) go into production?

A: Prototypes are being built, and manufacturing intent is there. UL certification and tooling are factors, but production will start as soon as possible after testing and certification.

Q: How much range boost does the four-battery system provide for an electric truck?

A: Each battery is about 1 kilowatt hour. Four batteries provide nearly an 11% range boost, depending on the truck's efficiency.