Worksport (WKSP) Q2 FY26 earnings call: guidance and Q&A

How will Worksport price its 6,800 finished goods covers to sell them, and will pricing improve quarter-over-quarter, especially for AL3/AL4 inventory?

Steven Rossi explained that most on-hand inventory is AL3/AL4. They found success with small promotions on AL3 via direct-to-consumer in June and will continue incentives across reseller and online channels. The goal is to liquidate this inventory before focusing on a just-in-time production model.

“June was a small trial run, on direct-to-consumer website sales, and we ran a small promo, and we liquidated a significant amount of inventory, which is great. So we're going to offer incentives on reseller channels and online channels that make sure we satisfy both sides of our business, reseller and direct-to-consumer.”

asked by Tate Sullivan · answered by Steven Rossi

Given Q2 sales and marketing expenses of $1.7 million, what is the future outlook for these expenses, especially with new distributors and SOLIS/COR initiatives?

Steven Rossi stated that they aim to keep sales and marketing expenses flat while sales increase, leveraging efficiency and brand recognition. However, they are prepared to invest more if it leads to significant revenue growth and accelerates the path to cash flow breakeven, despite volatility in advertising platforms like Meta and Google.

“So we think that sales and marketing will remain as much flat as possible while sales continues to increase because we're more efficient at how we market and we're becoming much more recognized as a brand. But on the other side, we're prepared to invest more in sales and marketing to continue to grow sales if that's what we need to do.”

asked by Tate Sullivan · answered by Steven Rossi

How are tariffs and aluminum raw prices currently impacting Worksport, especially given recent discussions about the legality of tariffs?

Steven Rossi explained that the primary impact is inflation on aluminum costs, which have doubled from $1.30/pound due to tariffs, rather than direct tariffs paid by Worksport. This has reduced target margins for NEXUS and AL4 from 40-50% to 35% and limited pricing flexibility for distributors. While some Section 301 tariffs paid on imports might be recoverable, the process is unclear and not immediate. He noted that the majority of their product materials are sourced in America.

“The cost of aluminum has risen from approximately $1.30 a pound to double over the past few years, directly correlated to the tariffs that have been imposed by the current administration... Making 35%, obviously, is to us still very healthy, but bronze metal. These products should be making us 45%, 55%.”

asked by Robert A. · answered by Steven Rossi

As Worksport sells down inventory for cash, does the company foresee any inventory shortfalls, or is this accounted for in the plan?

Jennifer Kartychak confirmed that the plan includes a reduction in finished goods inventory while moving towards a just-in-time model. She stated that the company is well-positioned to meet demand and distribute products as orders and commitments are received, implying no anticipated shortfalls.

“In terms of our plan, we are forecasting a reduction in our finished goods inventory while we move closer to a just-in-time format, if you will, for the balance of the year. So we are well positioned to be able to meet demand as well as distribute as we receive orders and we receive commitments from our customers.”

asked by Shane C. · answered by Jennifer Kartychak

Could Worksport provide more details on the NEXUS ramp-up, including ASP by channel, margin profile relative to AL4, number of active SKUs, July/August sell-through run rate, and whether it's cannibalizing AL4 demand?

Jennifer Kartychak stated that NEXUS margins are moderately healthier than AL4, and its $1 million sales in 10 weeks was the best ramp-up for any product. She believes NEXUS is not cannibalizing AL4 demand, as both products offer different opportunities. Steven Rossi added that ASPs are confidential but uniform across channels. NEXUS has 35 SKUs, with plans to add about six more for 8-foot bed applications this year, bringing the total to over 40. AL4 sales remain strong.

“So our margin is moderately more healthy on our NEXUS versus our AL4. And with the introduction of the NEXUS, we were able to achieve our first $1 million in sales on NEXUS within a single quarter.”

asked by Fred T. · answered by Jennifer Kartychak

Does Worksport foresee any need to raise new funds for the rest of the year, and what is the profile of potential funding needs?

Jennifer Kartychak stated that the company is challenging itself to achieve cash flow positivity without external funding for the remainder of the year, though they would explore opportunities if they arise. Steven Rossi added that their reliance on outside investor capital is significantly lower than last year, when they raised over $20 million, and it will continue to reduce.

“So in terms of our overall outlook for the remainder of the year, we are challenging ourselves, if you will, to see that we can see it through to cash flow positivity. So our plan is if there's opportunity out there, certainly, we will explore that with a potential investor. But for the balance of the year, we really would like to see ourselves stand on our own two feet.”

asked by Ramesh B. · answered by Jennifer Kartychak