2025 Q3 Earnings Call Contradictions: Market Strategy, Solar Tech, and Sales Channels in Disarray

Date of Call: November 13, 2025

Financials Results

• Revenue: $5.0M (Q3), up 61% YOY and up 22% sequentially; YTD sales $11.4M (vs $5.6M YTD 2024); company projects FY2025 revenue $17M–$21M
• Gross Margin: 31.3% in Q3 (vs 7.9% in Q3 2024 and 26.4% in Q2 2025); YTD gross margin 26.7% (vs 10.5% in 2024); targeting ~35% by year-end
• Operating Margin: Operating loss of $4.8M in Q3 (operating expenses $6.4M) compared with operating loss of $3.9M in Q3 2024 and $3.6M in Q2 2025

Guidance:

• FY2025 revenue projected to be $17M–$21M
• 2026 U.S. tonneau net sales targeted at $27M–$35M; SOLIS and COR could add 'tens of millions' in net sales
• Sustain gross margins ~35% by year-end 2025; targeting 35%–40%+ gross margins in 2026
• Target operating cash flow positive in H1 2026 and path to overall profitability in 2026
• OpEx growth to lag revenue growth; staged production and tight OpEx discipline to improve leverage

Business Commentary:

• Revenue Growth and Margin Improvement:
• Worksport Ltd reported net sales of $5 million for Q3 2025, representing a 61% year-over-year growth and 22% sequential growth from Q2.
• Gross margin expanded to 31.3% this quarter compared to 7.9% in Q3 of the previous year and 26.4% in Q2 of 2025.

• The growth was driven by operational efficiencies, a stronger product mix, and maturing sales channels.

• Production Scaling and Operational Efficiency:

• Production output increased significantly, with 2,499 tonneau covers produced in July 2025, more than double the March output.
• Production is expected to increase by another 50% in Q4 compared to Q3.
• This was due to improved manufacturing processes and quality control measures.

• Tonneau Cover Market and Demand:
• The tonneau cover market in the U.S. is still healthy and in the $3 billion plus range.
• Worksport is witnessing a shift in demand towards higher-profit applications.
• The market remains strong despite geopolitical issues, and Worksport benefits from domestic manufacturing.

• Product Launches and Sales Strategy:
• The launch of the HD3 tonneau cover and SOLIS and COR energy systems is expected to generate billions in revenue.
• The company plans to leverage its existing distribution channels for tonneau covers for direct-to-consumer sales of SOLIS and COR.
• The strategy aims to capitalize on brand recognition and market demand for these innovative products.

Sentiment Analysis:

Overall Tone: Positive

• Management emphasized accelerating revenue and margin trends: "Net sales reached $5 million, representing a 61% growth year-over-year," and "Gross margin continued to expand 31.3% this quarter compared to 7.9% in Q3 of last year." Company reiterated a clear path to cash flow positivity in 2026 and provided FY2025 revenue guidance of $17M–$21M.

Q&A:

• Question from Tate Sullivan (Maxim Group LLC): Can you talk about the market for tonneau covers in general in the United States? Are you seeing total demand growth in the market versus are you taking share to start, please.
  Response: Market remains healthy (~$3B+); Worksport is taking share and seeing a shift toward smaller trucks and higher‑margin SKUs, benefiting domestic manufacturing flexibility.

• Question from Tate Sullivan (Maxim Group LLC): Can you leverage your existing distribution, your sales channels for the tonneau covers for SOLIS and COR? Or will it be different type of distribution, maybe starting more online?
  Response: Will begin direct‑to‑consumer online to capture feedback, then selectively leverage dealer and existing distribution channels as rollout becomes accretive.

• Question from Scott Buck (H.C. Wainwright & Co, LLC): Can you give insight into your visibility on demand for SOLIS and COR? The language around the opportunity in '26 is pretty robust.
  Response: SOLIS demand looks stronger than initially expected given pricing (~$1,900); COR addresses a much larger, global market and could be highly accretive as modular energy platform.

• Question from Scott Buck (H.C. Wainwright & Co, LLC): On margins, what portion of improvement is volume driven versus manufacturing/process improvements?
  Response: Majority (approx. 60%–70%) of cost improvement is overhead absorption from higher volumes; remainder from purchasing leverage and process efficiency (labor hours/unit down from 4–6 to below 2).

• Question from Scott Buck (H.C. Wainwright & Co, LLC): Are we capped out around 35% on the current product mix or can you push toward 40%+ into '27?
  Response: Not capped at 35%; expect margins to improve via reduced discounting, higher brand recognition, operational efficiencies and pricing discipline—longer‑term targets exceed 50% in select scenarios.

• Question from Unknown Executive (Audience): If someone orders SOLIS and COR on the November 28 release date, when would they reasonably expect to receive the product?
  Response: SOLIS is made‑to‑order with expected lead time ~1–2 weeks plus delivery (white‑glove install); COR first batch of 1,000 units expected to ship mid‑to‑late December.

• Question from Unknown Executive (Audience): Are you looking at international markets such as EU or Middle East?
  Response: Primary near‑term focus on Latin America expansion; EU and Middle East targeted for COR products; Australia also under consideration for broader rollout.

• Question from Unknown Executive (Audience): When do you expect the heat pump (AetherLux) to go into production?
  Response: Prototypes under development in Nov–Dec; manufacturing to begin after tooling, testing and certifications—UL could take 3–6 months, timeline kept as tight as possible.

• Question from Unknown Executive (Audience): How much extra miles would the COR battery system provide to a truck low on energy?
  Response: Each COR battery ~1 kWh; up to 4 batteries = ~4 kWh total, which for a 50 kWh EV equates to roughly an 8%–11% range boost (~30–40 miles depending on vehicle efficiency).

Contradiction Point 1

Market Demand and Tonneau Cover Sales Strategy

It involves differing perspectives on market demand and sales strategy for tonneau covers, which are core products for the company, impacting revenue projections and market positioning.

What is the growth outlook for the U.S. tonneau cover market, and is the increase driven by overall demand or market share gains? - Tate Sullivan (Maxim Group LLC)

2025Q3: We're still seeing a healthy market with a slight shift to different SKUs. The market is in the $3 billion plus range. We're taking more profitable market share, benefiting from geopolitical shifts. The tonneau cover market is primed for strong growth in 2026. - Steven Rossi(CEO)

Has everything shifted to hard tonneau covers with soft tonneau covers approaching zero by year-end? - C. K. Poe Fratt (Alliance Global Partners)

2025Q1: Last year, we announced that we're shifting to a Made-in-America mandate and will discontinue sourcing soft covers from China. Now, we will produce soft covers domestically, with the necessary equipment already in place to restart this product line. - Steven Rossi(CEO)

Contradiction Point 2

Production and Sourcing of Solar Technology

It involves statements about the sourcing and production of solar technology, which is a key component for the company's new SOLIS product, impacting potential production timelines and costs.

When would customers expect delivery for SOLIS and COR ordered on November 28? - Unknown Executive

2025Q3: SOLIS is handmade and expected to ship within 2 weeks. - Steven Rossi(CEO)

What raw materials are in the inventory budget? - Tate Sullivan (Maxim Group)

2025Q1: For the SOLIS, the inventory will also include relatively expensive solar technology. - Steven Rossi(CEO)

Contradiction Point 3

Sales Channel Strategy for SOLIS and COR

It involves differing statements about the sales channel strategy for the SOLIS and COR products, which are crucial for their market penetration and customer acquisition.

Can you leverage your existing distribution channels for the tonneau covers for SOLIS and COR, or will it require a different distribution approach, possibly starting online? - Tate Sullivan (Maxim Group LLC)

2025Q3: We're launching SOLIS and COR online with direct-to-consumer sales, enhancing feedback loops. There's significant interest from dealers and distributors. We plan to leverage existing channels strategically for maximum impact. - Steven Rossi(CEO)

What distribution strategies are in place for COR and SOLIS? Will they use the same dealer network as covers? - Scott Buck (H.C. Wainwright & Co, LLC)

2025Q1: The distribution strategy for COR and SOLIS will initially be consumer direct sales to stabilize and capitalize on higher margins. Once this is established, the products will likely be released to the existing distribution network. - Steven Rossi(CEO)

Contradiction Point 4

Market Demand and Growth Projections

It involves differing expectations regarding market demand and growth opportunities for the company's core products, which directly impacts revenue forecasts and strategic planning.

What is the current state of the tonneau cover market in the U.S.? Is total demand growing, and are you gaining market share? - Tate Sullivan(Maxim Group LLC)

2025Q3: We're still seeing a healthy market with a slight shift to different SKUs. The market is in the $3 billion plus range. We're taking more profitable market share, benefiting from geopolitical shifts. The tonneau cover market is primed for strong growth in 2026. - Steven Rossi(CEO)

Are you planning to launch the redesigned product with the COR in mid-2025 or is the timing to be determined? - Tate Sullivan(Maxim Group)

2024Q4: We are estimating that we will potentially see a 10% to 15% increase in demand annually for tonneau covers over the next 7 years. And we're very excited about that. - Steven Rossi(CEO)

Contradiction Point 5

Launch Timeline and Market Strategy

It highlights potential inconsistencies in the company's launch strategy and market approach for its new product lines, which could affect customer perception and sales momentum.

Can you clarify whether the tonneau covers for COR and SOLIS will utilize existing distribution channels or require a different approach, such as online sales? - Tate Sullivan(Maxim Group LLC)

2025Q3: We're launching SOLIS and COR online with direct-to-consumer sales, enhancing feedback loops. There's significant interest from dealers and distributors. We plan to leverage existing channels strategically for maximum impact. - Steven Rossi(CEO)

With the solar cover and redesign, are you planning to launch it with the COR in mid-2025 or remain undetermined? - Tate Sullivan(Maxim Group)

2024Q4: We plan to offer three different paths: solar cover alone, a bundle of the solar cover, mounting hardware, and COR battery system, and the COR alone without a truck. The Go kit is expected to be the most popular, turning trucks into microgrids. COR is aimed at bigger power needs, focusing on larger power units rather than small power devices. - Steven Rossi(CEO)