Worksport Ltd Q1 FY2025 earnings call

• Q1 2025 was transformative with the launch of the AL4 tonneau cover and expansion of the dealer network.
• Gross margin improved to nearly 18%, up from previous periods, due to the shift to higher-margin Worksport-branded products.
• Upcoming product launches include the HD3 hard folding tonneau cover, SOLIS solar integrated tonneau cover, and COR portable energy storage system.
• Terravis Energy's AetherLux heat pump with innovations like elimination of defrost cycle and ultra-low temperature operation generated global interest.
• Worksport holds over 170 approved, registered, and pending patents/trademarks and joined the LOT Network for IP protection.
• Made-in-USA advantage with tonneau covers sourced predominantly in the U.S. to mitigate tariffs.

For Q1 2025, Worksport's revenue reached $2.24 million, a 337% increase from Q1 of the previous year. Gross profit was $396,000 with a gross margin of nearly 18%, up from 7% in Q1 last year and 11% in Q4 2024. The AL4 product line's sales are contributing to Q2 revenues. The reseller network grew significantly, with 151 active U.S. dealers, a 64% increase from the end of last year. March 2025 business-to-business sales grew nearly 70% from February, driven by interest in the AL4 tonneau cover.

• Target full-year 2025 revenues in the range of $20 million to $25 million, driven by tonneau covers and new product introductions.
• Expect Q2 revenue to see further margin improvement and growth, especially from the AL4 launch.
• Target $2 million to $3 million in revenue from COR and SOLIS by year-end, but may adjust based on supply chain conditions.
• Aim for gross margin to reach 25% to 30% or higher by late 2025 as product mix shifts to higher-margin items and economies of scale are realized.
• Goal to achieve operational cash flow breakeven in Q4 2025 or early Q1 2026.

• Inherent uncertainties in forward-looking statements due to difficult-to-predict factors outside control.
• Geopolitical and supply chain risks, particularly affecting components for COR, SOLIS, and solar panels for SOLIS sourced from Asia.
• Potential impacts of tariffs on soft covers if not produced domestically.

Q: Have you made sales of the AL4 product this quarter?

A: Yes, AL4 is flying off the shelves, with low stock last week and strong uptake.

Q: What are the raw materials that are within the inventory budget?

A: Raw materials include aluminum products (domestically sourced for most products), packaging, plastic components, brackets, seals, weather stripping; SOLIS has additional solar technology imported.

Q: What do you have in place currently for distribution with COR and SOLIS?

A: Initial launches may be direct-to-consumer to gauge feedback and recoup expenditures, then released to existing distribution network later.

Q: Are SOLIS and COR included in the 2025 revenue guidance?

A: No, current guidance is strictly for traditional Made-in-America tonneau covers; SOLIS and COR projections will be updated when supply chain conditions settle.

Q: What's the plan for soft covers?

A: Shifting to Made-in-America, with existing equipment to produce soft covers, planning to restart the line after finalizing product design.