Worksport Ltd. Q1 FY2026 earnings call

• Executive & Leadership Updates: New CFO Jennifer Kardachak joined the company in January 2026, with a short-term focus on strengthening financial discipline, reporting processes, and internal controls as the company scales toward profitability. CEO Stephen Rossi recently purchased open market shares, reflecting his personal conviction in the company's long-term direction.

• Product Launch Milestones: Commercial shipping of the Solus solar-integrated tonneau cover and Core modular portable energy storage system began in January 2026. The Nexus premium hard tonneau cover was unveiled at the March 2026 Keystone Big Show, with commercial launch in April 2026, generating significant pre-order and distributor interest. Core received full UL and CSA safety certification for North American retail and commercial distribution in April 2026, enabling broader distribution access. TerraVis Energy's AetherLux Zero Plus Frost high-efficiency heat pump continues progressing toward 2026 third-party certification, with active government evaluation of the technology underway.

• Distribution & Channel Growth: Secured a major distribution partnership with Tri-State Enterprises, covering Arkansas, Missouri, Oklahoma, and Texas; Tri-State has placed initial purchase orders and reorders, with near-term seven-figure revenue potential and long-term multi-million dollar opportunity. The company ended Q1 2026 with over 500 active dealer locations, targeting 1,500+ locations by the end of 2026; it is in late-stage discussions for a nationwide distribution partnership covering all contiguous U.S. states. The West Seneca, U.S. manufacturing facility holds ISO 9001:2015 quality certification, removing barriers to larger dealer, distributor, fleet, and OEM partnerships.

• Financial Performance Highlights: Q1 2026 total net revenue grew 48% year-over-year to $3.3 million. Gross profit more than doubled year-over-year to $854,000, with gross margin expanding from 18% in Q1 2025 to 26% in Q1 2026. Total inventory stood at $11.6 million as of March 31, 2026, with $5.4 million in raw materials to support near-term production; no major additional raw material purchases are expected before Q3 2026.

• Strategic Business Structure: WorkSport operates three layered business lines: 1) Foundational core tonneau cover business, targeting the $4 billion U.S. aftermarket, with a long-term goal of $100 million+ profitable annual revenue from this segment alone; 2) Solus and Core clean energy portable power ecosystem, targeting the $13 billion global portable power market; 3) Long-term AetherLux high-efficiency HVAC opportunity through subsidiary TerraVis Energy, targeting the $150 billion global HVACR market.

WorkSport reports two core tonneau (tunnel) cover product segments for Q1 2026: 1) Hard tunnel covers: Generated $3.3 million in net sales, accounting for 99% of total Q1 2026 net sales, aligned with the company's strategic focus on higher-margin, U.S.-manufactured products. 2) Soft tunnel covers: Contributed $40,000 (0.04 million) in net sales, representing the remaining 1% of total Q1 net sales. By sales channel: Direct-to-consumer (B2C) online channel generated $1.8 million in net sales from ~1,700 units, while B2B (dealers, distributors, fleets) generated $1.5 million in net sales from ~2,300 units.

• Management reaffirms its prior full-year 2026 revenue guidance of $35 million to $42 million, representing substantial year-over-year growth from 2025's $16.1 million in net sales. The company maintains its target of achieving operational cash flow positivity for full-year 2026, driven primarily by the core tonneau cover business, with all other product lines acting as accretive upside.
• The company is shifting from quarterly guidance updates to annual guidance only, to prioritize long-term strategic resource allocation and shareholder value creation over short-term metric focus. No additional quarterly updates will be provided during 2026.
• Management expects significant revenue contribution from the new Nexus tonneau cover in 2026, and projects meaningful scale for Solus and Core revenue by the end of 2026 to early 2027, aligned with the 12-month traction timeline the company saw for its initial tonneau cover products. AetherLux revenue is not expected in 2026, with initial commercial opportunities projected within 12 months.

• The company's 2025 Form 10-K included a going concern explanatory disclosure; WorkSport's ability to continue as a going concern remains dependent on generating sufficient future operating cash flows and maintaining ongoing access to debt and equity capital markets.
• High domestic aluminum prices (which have doubled year-over-year) have pressured production costs and gross margins; the company notes aluminum price volatility is an industry-wide challenge impacting all manufacturers, including major automakers like Ford.
• Dilution risk remains if the company needs to raise additional equity capital to fund operations, though management emphasizes it is prioritizing reducing equity reliance as revenue scales, and will only pursue dilution when expected operational returns justify the impact to long-term shareholder value.
• The portable power and new product markets WorkSport is entering are untested for the company, and meaningful revenue traction for Solus and Core is expected to take at least one full year of market development.
• Sales of tonneau covers are seasonal, with Q1 historically the slowest quarter and Q4 (driven by holiday and Black Friday demand) typically the strongest, creating predictable quarterly revenue variability.

Q: How is the $11.6 million Q1 2026 inventory split between product lines, and will Solus and Core generate meaningful revenue in Q2 2026? / A: The majority of finished goods inventory is evenly split between existing tonneau covers (AL3, HD3, AL4) and Core portable storage units, which are produced in batches of 1,000. Nexus inventory is still primarily raw materials as it just entered full production at the end of Q1. Small nominal sales of Solus and Core occurred in Q1, but marketing and distribution channel onboarding are still in early stages; meaningful revenue is expected to build over the course of 2026, similar to the 12-month traction timeline for the company's original tonneau cover line.

Q: How does the company plan to fund near-term operations, and what level of dilution should shareholders expect? / A: Management, which is the company's largest shareholder, wants to avoid unnecessary dilution as much as possible. Over the past six months, the company has used the at-the-market offering sparingly ("sip, not gulp") to avoid large dilution, and raised only a small fraction of the $25 million raised in 2025. The company has significant financeable assets (with a book value near $30 million) and plans to prioritize cheaper debt financing over equity when possible. Once operational cash flow positivity is achieved, management expects to qualify for a sizable $10 to $30 million operating line of credit from regional banks.

Q: How significant is the Tri-State Enterprises distribution partnership, and is it likely to lead to additional major distributor partnerships? / A: Tri-State is a large regional distributor with 1 million square feet of warehouse space that already sells tens of millions of dollars of tonneau covers annually across Texas and the central U.S., a market WorkSport could not previously service at that speed itself. Management expects Tri-State to become a seven-figure, potentially eight-figure annual account for WorkSport. There are two other large national distributors in the U.S. (Myer and Keystone) that compete directly with Tri-State, so landing Tri-State makes it very likely WorkSport will secure partnerships with these two larger national players, which would exponentially expand the company's total distribution opportunity across North America.

Q: The company missed its 2025 revenue guidance; what caused that miss and how will future guidance work? / A: As a young, fast-growing company with multiple new product lines launching each year, guidance is an educated guess rather than a guarantee. In 2025, the company chose to prioritize profitability and margin discipline over hitting the top-line guidance number, choosing to balance growth with sustainable cost structures rather than overspend on customer acquisition to hit an arbitrary revenue target. The shift to annual-only guidance is designed to reduce pressure to hit short-term quarterly targets and allow management to focus on long-term profitable growth.