Operator
Welcome to the Twin Vee Powercats Company First Quarter 2024 Investor Call. This call is being recorded and all participants are in a listen-only mode. Your speaker for today's program is Joseph Visconti, President and CEO of Twin Vee Powercats Company. Before I hand over the call to Joseph, please note that some of the statements made during this investor call are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any statements on this call that are not historical facts, including those concerning the company's future operations, financial position, business strategy, and management's plans and objectives are considered forward-looking. You can typically identify these statements through terms such as believes, may, estimates, continue, anticipates, intends, should, plan, expects, predict, potential, or similar expressions. The company has formed these forward-looking statements based on its current expectations and projections regarding future events and financial trends that it believes may impact its financial condition, operating results, business strategy, and financial needs. These forward-looking statements carry various risks, uncertainties, and assumptions as delineated in our filings with the Securities and Exchange Commission, which can be found on the company's Investor Relations website. You should not depend on these forward-looking statements as accurate predictions for future events. We cannot guarantee that the events and situations described in the forward-looking statements will actually occur. Lastly, this conference call is being webcast and will be available at ir.twinvee.com for at least 90 days. I will now turn the call over to Joseph Visconti.
Thank you, Rob. Good afternoon to everybody on the call today, and thank you for joining and taking the time to participate in Twin Vee's first quarter 2024 financial results. My name is Joseph Visconti, I am the CEO and President of Twin Vee Powercats Co. And joining me today is also our new CFO, Mike Dickerson, welcome, Mike. Q1 was an important quarter in terms of dealing with the slowing economy, challenging demand for recreational products and shifting our business by rightsizing the company's economics, while simultaneously laying the groundwork for the many exciting developments Twin Vee is aiming to accomplish in 2024 for the rest of the year. Interest rates remain stubbornly high and elevated and for industries like ours where major purchases often rely on financing, higher interest rates increased customer costs, which caused downward pressure on demand across our industry lower demand is not isolated to our company, but a trend across this entire industry. While these headwinds have presented challenges for Twin Vee since mid-2022, we've taken some proactive measures to mitigate these economic challenges and the impact of the slowing demand for our products. Q1 was not easy, but we faced the quarter head on not only with defensive downsizing and equalizing production output to meet or equalizing the demand for products from our dealers and customers, but also, we closely monitored field inventory not to exceed an outsized liability or exposure. These challenges continue. We cannot predict with 100% certainty what the future holds. While we work through these challenges, our focus is on the many opportunities we have developed over the past 2 quarters. Twin Vee is now operating leaner. It's important to note that our dollar production revenue per employee is higher. Our new CFO, Mike Dickerson, has settled into his role, and we are already seeing some positive financial controls and accountability take shape. Our ERP financial system is continuously rolled out and developed in departments from production, procurement, work order, finance, warranty, inventory management. And now we are utilizing our financial platform to reduce inventory, which has been reduced over 20% for the quarter, and we will continue to tighten controls and try to get inventory even lower moving forward. We are now integrating back with our national dealer network that built this company over a 30-year period. We have refocused our amazing team of engineers to redesign, reimagine, and retool our popular GFX line of Powercats to our brand-new tech forward, all digital GFX Powercats. I recommend that you go to our website, twinvee.com and really learn about these brand-new models that we're bringing to the market. These newly designed GFX 2 models will make their debut at our dealer meeting this coming Monday in front of our national dealer network. Our 400 GFX2 has already sold 10 units so far. We are now building #11. When last year, we were only projecting 6 units for this 40-foot Powercat. Our team is now designed to produce over 15 new boat models with 6 additional new models in the pipeline. Our 30,000 square foot addition here in Fort Pierce has begun construction. And by December of the end of this year, we will have over 100,000 square feet of linear production for our two iconic brands that represent over 90 years of industry brand recognition. The 100,000 square feet should bring our capacity production upwards of 700 units annually when we begin to see the market rebound. Twin Vee and AquaSport boats will all be designed and assembled right here in our new 100,000 square foot plant in Fort Pierce, Florida. Financial performance. Let's look at the financial performance for Q1. As I mentioned earlier, Twin Vee experienced a decline in demand for its products for the quarter. Despite our revenue drop from $8.8 million to $5.2 million in Q1, Twin Vee grew revenue per direct labor by 40%. That means that per employee in production now has more of a 40% increase in dollar revenue. Our consolidated net loss for 3 months ended March 31 was $2.335 million, which approximately half was attributed to Forza and half, which was $1,164,000 for Twin Vee. If you remove the non-cash expenses from the Twin Vee loss of $1,164,000 Twin Vee's Gas-Powered boat segment adjusted loss for the quarter was $669,500. On March 31, 2024, Twin Vee's consolidated holdings of cash, cash equivalents, restricted cash and marketable securities totaled $17,381,000, a decrease from $21,218,000 that was on December 31, 2023. The decrease in cash reserves was primarily due to Forza X1's R&D, Forza's plant construction and costs allocated for new product development, such as the 400 GFX, Twin Vee's 280 GFX2, AquaSports 24 center console and AquaSports brand-new 280 Superboat, in addition to operational cash losses from reduced revenue in the first quarter of 2024. Twin Vee's Gas-Powered segment has working capital, including inventory of nearly $9 million. Additionally, we have $3 million invested in property, plant, and equipment. Twin Vee has a strong balance sheet with over $7 million in cash and only a small COVID-era stimulus loan of $500,000. We currently have no bank debt. During the first quarter, we took further steps to rightsize the labor force while also tightly controlling operating costs. Despite the current economic challenges, Twin Vee is investing in exciting new models like our Gen 2 GFX boats, our brand-new AquaSport 280 Superboat, our larger offshore boats, we're beginning a brand-new 44-foot Twin Vee. These boats have much higher margins. And additionally, we are committed to reducing cash burn while making smart investments to our infrastructure. When we do start seeing the next market upswing, we will be ready. Twin Vee Powercats and AquaSport has over 90 years of brand recognition and customer loyalty. These two incredible, storied scalable brands offer a variety of new and innovative products to a growing and more diverse dealer network, we are excited about the future. And I want to thank our investors, stakeholders, and employees for their continued support. And now I'd like to open it up for questions.
