Welcome to the Twin Vee PowerCats Company Second Quarter 2023 Investor Call. This call is being recorded and all participants are in listen-only mode. Your speaker for today's program is Joseph Visconti, President and CEO of Twin Vee PowerCats Company. Before I turn the call over to Joseph, please keep in mind that certain statements made during this investor call are forward-looking as defined by the Private Securities Litigation Reform Act of 1995. All statements in this call, except those that are historical facts, including those regarding the company's future operations, financial position, business strategy, and management's plans and objectives for future operations, are considered forward-looking. These statements can often be identified by terms such as believe, may, estimate, continue, anticipate, intend, should, plan, expect, predict, potential, or variations of these terms. The company has based these forward-looking statements largely on our current expectations and projections regarding future events and financial trends that may impact our financial condition, operational results, business strategy, and financial needs. These forward-looking statements are subject to various risks, uncertainties, and assumptions outlined in our filings with the Securities and Exchange Commission, which can be found on our website at www.twinvee.com. You should not rely on these forward-looking statements as predictions of future events, as we cannot guarantee that the events or circumstances described will occur. Lastly, this conference is being webcast and will be accessible in the Investor Relations section of our website at ir.twinvee.com for at least 90 days. The quality of the audio may vary based on your equipment, bandwidth, and internet traffic. If you experience poor audio quality, please use the telephone dial-in option. A question-and-answer session will follow the formal presentation. I will now turn the call over to Joseph Visconti.

Hello, everyone. My name is Joseph Visconti, I'm the President and CEO of Twin Vee PowerCats. I'm joined on the call with Carrie Gunnerson, Twin Vee's CFO; and Jim Leffew, the President and CEO of Forza X1, our electric boat company. Jim is on the call due to his leadership role, specifically for the opening and ramping of our Aquasport plant in Tennessee. Good morning, and thank you for joining our second quarter 2023 investor call. Twin Vee designs, manufactures and sells a range of catamaran sport boats from our factory located in Fort Pierce, Florida. For nearly 30 years, the Twin Vee brand has been synonymous with offshore catamaran boats and is considered by many to be one of the best riding boats on the water. We are pleased to report an 18% increase in top line revenue to $17 million for the six months ended June 30, 2023, compared to $14,400,000 in the same period of 2022. If you break out our main production in our facility in Fort Pierce, Florida where we manufacture 100% of all Twin Vee boats and our two new models of our Aquasport, our 22-footer, we had a net loss of $234,000 for the six months in 2023. This $234,000 loss is compared to a net loss of $554,000 for the same period in 2022. Twin Vee net of Forza X1 had cash and cash equivalents, restricted cash and marketable securities of approximately $11,434,000 as of June 30, 2023. The reportable larger loss of $2.5 million for the six months ended June 30, 2023, is a direct reflection of Twin Vee's majority ownership in Forza X1, the electric boat company, which we own 44% of—and it's our Twin Vee's requirement according to GAAP accounting that we have to consolidate the financial statements. So if you take the $2.3 million loss on Forza, plus the $234,000 loss on Twin Vee, that's where you get the bigger reportable loss of $2.5 million for the six months. The general economic landscape, including rising interest rates, continues to have a direct effect on consumer purchasing boats and recreational vehicles, while we have seen entry-level buyers affected by higher interest rates, we are also seeing cash buyers and boat clubs maintaining a healthy demand for our boats. Due to the changing environment and consumer demand, we continue to expand our product offerings, including our new 400 GFX and our upcoming 280 GFX dual console. New products open new markets and expand our reach to consumers seeking various lengths and styles of our boats. Our acquisition of the iconic monohull brand, Aquasport, is off to a good start, while requiring cash outlays and startup expenses. The acquisition of Aquasport has allowed us to partner with over 10 new dealers in over 30 locations. We feel confident that our Aquasport monohull boat brand will continue to enhance our ability to scale our overall business and grow our brands while appealing to a broader market. The monohull market is extremely competitive, and highly competitive markets put downward pressure on gross margins, which we saw in the second quarter. The monohull boating market is one of the largest boat buying markets besides pontoons, and we believe that entering the monohull market with a superior brand like Aquasport will allow Twin Vee, the company, to increase market share and grow our top line revenue. As we continue to watch market conditions, dealer inventory levels and economic indicators that might affect our business, we are being vigilant with managing inventory levels, labor and production costs and, of course, not to burn our cash. To the point of managing the balance between dealer inventory levels and the production of our Twin Vee boats, we have strategically chosen to slow Twin Vee's production down to 2.5 units of Twin Vee's per week, while we have increased the production of our new Aquasport 22-footer in the Fort Pierce facility to four to five units per week due to the brisk upbeat demand for our new 22-foot center console and dual console. This production is taking place in our Fort Pierce facility. Our revenues in Fort Pierce are made up of 70% of Twin Vee boats and 30% of our 22-foot Aquasport. This revenue is only with this one 22-foot Aquasport model, which is why we're excited about ramping up our Tennessee facility with seven additional Aquasport legacy models. Some of the highlights for our six months ended 2023 and some other takeaways are our net loss from operations, again, our core business was only $234,000 for the six months ended June 30, 2023, and Twin Vee net of Forza had cash and cash equivalents of $11,437,000 as of June 30, 2023. Some additional items that we've discussed in the previous quarter call include that we received site plan approval for our expansion—extension of our building here, 30,000 square feet in Fort Pierce. We are rolling ahead connecting the back building and the front building, which will give us a total of 100,000 square feet of manufacturing facility here in Fort Pierce, which at that point will provide us with the true linear capability to have true linear production with two lines. We've transitioned our lamination department 100% to the infusion process for hulls and decks. Infusion, as we discussed, is the state-of-the-art lamination process that increases the quality of our boat builds while refining the cost and controls. We have finalized OEM agreements with three leading outboard motor companies; Twin Vee can now offer Suzuki, Mercury and Yamaha motors as we continue expanding our dealer footprint and targeting regions of the country where these motor companies have regional brand strength. Our largest dealer, OneWater Marine, who currently represents seven of our dealers, mostly in Florida, has placed a 100 boat order with model year 2024. This is two boats a week and is only for the OneWater locations, and we still have another 20 locations outside of the OneWater locations. We've opened 10 new Aquasport dealers, which have 30 locations. This is in addition to our Twin Vee dealers. Aquasport forecasted orders of approximately 150 units over the next 12 months. Our current Twin Vee forecasted orders is over 120 orders for the next 12 months. This includes six 400 GFXs, and we will begin to see revenue from our Aquasport Tennessee plant in Q3. While markets are a bit choppy, our continued business objective is not to burn cash, remain prudent with our balance sheet and continue to grow our business and, of course, deliver value to our shareholders. At this time, I'd like to open it up for questions.

Hi, Joseph. Good morning.

Good morning.

Great job on everything you said with scaling back and keeping an eye on the inventory and stuff. My question is, I guess, could you give a little bit more color on how the reopening and ramping of the Aquasport production facility is coming?

Thank you. So Jim Leffew, our President and CEO of Forza is spending a couple of days a week over in Tennessee. I'd like to bring Jim on to talk specifically about the opening and ramping of that facility.

Yes. Thanks, Joseph, and thanks for the question, Josh. A quick update on our Aquasport facility. As many of you know, we have taken over the operations of the former Ebbtide Holdings in White Bluff, Tennessee. It's a 150,000 square foot facility, including the molds and the trademarks for the Aquasport brand. To date, we have hired approximately 35 people since June 1. In June, we started the cleanup and rehabilitation of the factory and began actual production in July. We expect to be able to ship probably up to eight boats by the end of August from the White Bluff facility. We will settle into two boats per week for the remainder of the year, September through December, and then we will look to ramp up faster at the turn of the year in January. One of the biggest initiatives we have will be to develop a full line of boats, including bay boats, offshore center and dual consoles and possibly even flat boats. We have a really aggressive new product plan that will be implemented over the next five years. But so far, so good with the start-up, we're excited about it, and we should ship our first set of units here shortly in the month of August. I hope that answers your question.

Yes, very good. Thank you so much.

Josh, I'd like to add we set out—we did the Aquasport deal. And then we had our dealer meeting in West Palm. It was just absolutely amazing the positive feedback we got. I mean we've signed these dealers. This is in the face of a pretty tough market. We're feeling it a little bit on the Twin Vee side. But Aquasport, there are many dealers out there that are looking for new opportunities. Other larger boat brands got caught up delivering very expensive premium boats, and nobody was really catering to the value-based buyer anymore. The opportunity with Aquasport was a ready-made production facility. The previous owners did a fairly decent job with tooling. We discussed it in previous calls; there were seven legacy models ready to go. Nothing is easy, but Jim Leffew's background at Maverick Boat Group—he was the head of production for that facility for over 25 years, building 1,700 boats a year. Jim is assembling a team of some of the old office boat employees who have come back—leaders, managers, workers. It's just a really great opportunity for us to build a monohull brand and also, as a public company, continue to increase revenues and deliver margins. So again, thank you for the question.

Thank you, guys.

Thank you. Our next question comes from Raj Maheshwari with Charleston Capital. Please proceed with your question.

Hello. Good morning, Joseph. Good morning, Jim. Thank you for taking my question. I just wondered, as you look out to '24, is there any way to gauge what 2024 looks like? Are things starting to bottom out from a macro point of view? And maybe some guidance as to the combined Aquasport and Twin Vee companies. Thank you.

I can tell you that we currently are hitting numbers out of our Fort Pierce facility. That's with our Twin or—can you hear me okay?

Now I can.

In our Fort Pierce facility with our legacy Twin Vee boats plus our two additional Aquasport models, the 22-center console and dual console, we are hitting last year's revenue numbers, which are about $35 million on an annual run rate. As we bring on Aquasport with Jim's numbers like two boats a week, I think that kind of adds to where—so $35 million plus this additional Aquasport revenue, I think is where we will finish out the year, which is good. It's higher than it was last year. And that's in the face of some pretty tough headwinds, higher interest rates. Some of the buyers—the plumber, the electrician that we're buying a $100,000 boat and the payment was $500, that same payment is $1,000, $1,100 now. We're seeing them move to the boat clubs or coming up with an alternative summer strategy with the family.

Yes. And if I can add a little bit to that for Raj, I think one of the questions was how do we view the macro and do we see any signs of bottoming? This is mostly anecdotal information. But we are getting feedback from some of our dealers that there's increased traffic on the showroom floors and people are starting to buy again. I think they've gotten used to some of the higher rates and some people that don't need to finance are still buying. We are also hearing from our dealers and looking at the SSI data that one of the best-performing segments in Marine right now is the saltwater fishing boat segment. Some of the other segments of the market are down much more, but it seems like we're in a pocket of strength in saltwater fishing. That's a good thing for us. Obviously, there's no way of knowing for sure, but some of the preliminary signs—I don't want to call them green shoots—look like they're getting a little bit better.

So have you started to plan for the 2023—for the 2024 calendar year budget yet? Or is it still too early?

Well, we've got our forecast. I went through—we have a forecast number of 150 Aquasport boats that has been forecasted from our new Aquasport dealer network. We've got 150 boats there. We've got a baseline of 120 Twin Vee boats. 100 of those are from OneWater, and we need to finish collecting our forecasted numbers from our other Twin Vee. As you know, the marine industry celebrates the model year change in July. So it's all happening right now when we're working with our dealers, we're getting our forecasted numbers and planning 2024. The numbers look good right now. I don’t want to pinpoint an exact revenue number, but I think it's important that we get the Aquasport Tennessee plant online, in addition to what's happening in Fort Pierce. I think we've got a bright future.

Excellent. Thank you, Joseph.

Thank you, Mr. Visconti. I see there are no other questions in the queue, so I will turn it back over to you for any final comments.

I want to thank everyone for participating today, and we appreciate our stakeholders and shareholders and the confidence and support you've given us. Thank you, and everybody have a great day.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.