Twin Vee Powercats Co. (NASDAQ:VEEE) Q4 2024 Earnings Call Transcript March 20, 2025
Operator: Welcome to the Twin Vee Powercats Company Year-End 2024 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 Chief Financial and Administrative Officer, Mike Dickerson. Before I turn the call over to Mike, please remember that certain statements made during this investor 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 terminologies such as believes, may, estimates, continue, anticipates, intends, should, plan, expects, predict, potential or the negative of these terms or other similar expressions. The company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operation, 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 on the company’s filings with the Securities and Exchange Commission, which are available on its website at ir.twinvee.com.
You should not rely upon 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 call is being webcast. The webcast will be available in the Investor Relations section of the company’s 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. [Operator Instructions] I will now turn the call over to Mike Dickerson.
Mike Dickerson: Thank you, Rob, and thank you to everyone joining me this morning. So as not to bury the lead, let me begin with 2025 is starting off strong with a growing backlog and an expected 50% increase in first quarter sales sequentially, compared to the just completed fourth quarter of 2024. Since the beginning of the year, we have experienced a renewed interest in both our Twin Vee line and AquaSport monohull line with a growing backlog, new dealers seeking to be part of this expanding Twin Vee and AquaSport family. We remain disciplined with our discretionary spending as we did throughout 2024, slowly ramping up production, managing field inventory and developing enhanced dealer programs, while at the same time, continuing to invest in dealer and retail-facing technologies to drive lead generation for our dealer community and a better-informed marketplace.
We are cautiously optimistic that the worst is behind us. There is no doubt that 2024 was the most challenging year we have experienced as a public company, and the fourth quarter provided no relief with revenues falling to a multiyear quarter low of $1.9 million. The post-COVID slowdown in the marine and recreational vehicle markets, coupled with persistently high interest rates and inflation, weighed heavily on consumer demand. Additionally, the industry faced an overhang of excess OneWater boats, which were being sold at deep discounts, further intensifying market pressures. As a result, our revenues declined sequentially throughout the year. Following an $8.4 million revenue quarter in the fourth quarter of 2023, we began 2024 with a sequential decline to $5.3 million in the first quarter to $4.3 million in the second quarter and further declined in the back half of the year to $2.9 million in the third and finally bottoming out at $1.9 million in the fourth quarter.
Q&A Session
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Throughout 2024, we implemented aggressive cost-cutting measures to align with lower revenue volumes, ensuring we remain financially disciplined with an eye towards cash conservation. At the same time, we made a strategic decision to curtail our research and development of electric boats, while focusing on strengthening our business foundation. A key milestone in this effort was our acquisition of the remaining 55% of Forza X1 that we did not already own. This transaction completed at the end of November and is enabling better operational efficiencies within our organization. We ended the full-year 2024 with net sales of $14.4 million, a reduction of $19 million or 57% from 2023. This reduction occurred throughout the year, a result of the challenging end markets I just described for you.
With a change in focus beginning in late ‘23 towards bigger, higher-priced boats, sales are down less than the number of boats, while the average sale price was up 19% to approximately $167,000 in 2024, compared to $140,000 in 2023, largely due to the increase in the average length of boats sold. At these relatively low sales levels, we generated a negative gross margin for 2024, all in the back half of the year and primarily in the fourth quarter as our aggressive cost-cutting efforts throughout the year could not keep pace with the even more aggressive acceleration in the decline in sales. Throughout 2024, the company was reducing expenses through reductions in headcount, research and development and discretionary spending, partially offset by investments to improve quality and bring wire harness design and assembly in-house.
Overall, operating expenses were down $1,454,000 or 10%, compared to 2023. However, this comparison includes a $392,000 increase in depreciation, a $420,000 increase in professional fees, largely related to the merger of Twin Vee and Forza and a $1,674,000 impairment charge on the North Carolina facility recorded in the second quarter of ‘24. Before the impact of these three items, 2024 operating expenses would have been down $3,940,000 or 31%, compared to the prior year. General and administrative expenses are down $639,000 or 17%. Salaries and wages are down $2,567,000 or 34%, compared to 2023, while research and development expenses are down $857,000 or 59% in 2024, compared to 2023. As we exited the year, these R&D costs were nearly 0.
These reductions demonstrate management’s commitment to cost reduction during this difficult period. In terms of liquidity, we ended the year with $7.7 million of cash and cash equivalents. This compares to $11.4 million at the end of the third quarter. Of the $3.7 million reduction during the fourth quarter, $1.3 million was used primarily for building expansion projects and new product development, including the all-new BayCat now available in the market. Additionally, during the quarter, we incurred approximately $800,000 in costs related to the merger of Forza and Twin Vee. Before the impact of these items, our operational cash burn was a slight improvement, compared to the third quarter of 2024, despite a sequential reduction in revenue of 35% from $2.9 million in the third quarter to $1.9 million in the fourth.
With the facility in North Carolina now up for sale, the facility expansion in Fort Pierce nearly complete and the CNC machine soon to be delivered, I expect capital expenditures in 2025 to be significantly lower than they were in 2024. We are entering 2025 with optimism. Market conditions have improved, and we are seeing increased demand for our boats and new dealers expanding our geographic presence. We are being cautious in our production ramp and bringing on additional labor slowly to ensure proper training and maintaining quality in all of our processes. We are encouraged by the progress we are making as we position Twin Vee for longer-term growth. Our team remains focused on driving operational efficiencies, strengthening our product offering and capitalizing on the improving industry environment.
I want to thank all of our employees for their hard work, our customers for their loyalty and our investors for their continued support. With that, I’ll turn the call back over to the operator, who will help take your questions.
Operator: Thank you. At this time we’ll conducting a question-and-answer session. [Operator Instructions] We have reached the end of the question-and-answer session. And this concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.
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