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Q3 2025- Earnings Call
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Welcome & Introduction Good morning, everyone, and thank you for joining Worksport's Quarter 3 2025 earnings call. I'm Steven Rossi, Chief Executive Officer of Worksport Ltd. With me today is our Chief Financial Officer, Michael Johnston. Today we'll walk through our financial performance, operating progress, liquidity position, and how these results align with our strategy to build a high-margin, scalable platform in truck accessories and clean-tech enabled power solutions. We will be reviewing the financial results for the quarter ended September 30th, 2025, which were filed earlier today in our Form 10-Q and can be accessed on our investor relations website at investors.worksport.com/#reports. At the end of today's call, both our prepared remarks and the accompanying presentation deck will be available for download as well. After these remarks, we will open the line for questions. Q3 2025- Earnings Call 1
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Safe Harbor Statement Forward-Looking Statements This presentation contains forward- looking statements based on management's current expectations and projections about future financial performance, market developments, and strategic initiatives. Inherent Uncertainties Actual results may materially differ from projected outcomes due to market volatility, competitive pressures, regulatory changes, and other factors beyond our reasonable control. No Obligation to Update The statements made today reflect our views as of this date only. Worksport expressly disclaims any obligation or undertaking to release publicly any updates or revisions to these forward-looking statements. Q3 2025- Earnings Call 2
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Today's Agenda 01 Q3 2025 Key Performance Outcomes 02 Production Scaling & Operational Execution 03 Tariff Environment & Cost Management 04 SOLIS & COR Commercial Launch Roadmap 05 R&D Next Steps, including AetherLux 06 Cash & Capital Strategy 07 202532026 Outlook & Path to Cash Flow Positivity 08 Key Takeaways & Q&A Q3 2025- Earnings Call 3
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Q3 2025 Key Performance Outcomes Q3 was another solid step forward in Worksport's growth journey4our third consecutive quarter of growth. $5.0M Net Sales 61% growth year-over-year and 22% sequential growth from Q2 31.3% Gross Margin Up from 7.9% in Q3 2024 and 26.4% in Q2 2025 $6.3M Working Capital In addition to a healthy current inventory balance $2.9M Total Indebtedness Down from $4.8M at year-end 2024 Our Q3 net loss of $4.9 million reflects strategic investments in product expansion, manufacturing scale, and brand awareness, positioning us for operational cash flow positivity and profitability in 2026. This period demonstrates structural revenue growth and margin expansion, with Q4 projected to transition our expenditure from investment mode towards long-term profitability. Q3 2025- Earnings Call 4
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Q3 2025 Revenue Growth Drivers Worksport's growth is being led by the rapid scale-up of our U.S.-made tonneau cover production. AL4 Hard Cover Growth Strong continued growth from the AL4 hard cover launched in late Q1 2025 Expanded Distribution Expanded relationships with several national distributors and a major national retail auto chain Multi-Channel Success Continued growth in our dealer, jobber, and e-commerce channels $0.00 $2,000,000.00 $4,000,000.00 $6,000,000.00 Q3 2024 Q1 2025 Q2 2025 Q3 2025 Year-to-date sales are $11.4 million, more than double the $5.6 million for the nine months ended September 30, 2024. Our performance this fiscal year represents a recurring and diversified revenue base, not a single-channel surge. With new product launches and revenue streams entering the mix in the months ahead, we believe Worksport is on a path toward profitability in 2026. Q3 2025- Earnings Call 5
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Q3 2025 Margin Expansion 0 12 24 36 Q3 2024 Q4 2024 Q1 2025 Q2 2025 Q3 2025 Gross margin is one of the clearest proof points of our strategy. Key Drivers Higher production throughput and fixed-cost absorption in our U.S. production facility A higher value product mix with maturing and emerging sales channels Greater operational efficiency as processes mature Future Outlook We are now operating solidly in the 30%+ margin range, setting the stage for future operating leverage. We expect margins to approach 35% by year-end, with continued improvement targeted for 2026. We remain committed to achieving near-term operational cash flow positivity. Q3 gross profit was $1.6 million, a 31.3% margin, up sharply from 7.9% in Q3 2024 and 26.4% in Q2 this year. Year-to-date gross margin is 26.7%, compared to 10.5% in 2024. Q3 2025- Earnings Call 6
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Q3 2025 Operating Expenses In Q3, operating expenses totaled $6.4 million, compared with $4.2 million in Q3 2024 and $4.7 million in Q2 2025. The increase mainly reflects growth investments and marketing costs tied to the AL4 product launch and our Regulation A offering completed in October 2025. Operational Efficiency: We supported 60% revenue growth from Q3 2024 to Q3 2025 while increasing G&A only 20%, showing improved scalability and cost discipline. $0.00 $1,000,000.00 $2,000,000.00 $3,000,000.00 G&A Sales & Marketing Professional Fees R&D Our operating loss was $4.8 million, compared with $3.9 million in Q3 2024 and $3.6 million in Q2 2025. This investment in Q3 will partly carry into Q4 before reaching the tail end of our investment phase as we position the company for stronger leverage going forward. Q3 2025- Earnings Call 7
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Cash Flows & Liquidity For the first nine months of 2025, our cash position reflects disciplined investment and growth financing activities. Operating Cash Flow Net cash used in operations: $11.2 million, compared to $8.0 million in the same period last year Q3 operating cash burn: approximately $4.3 million, slightly higher than Q2 as we completed major production and marketing initiatives Investing Activities Cash outflow: $485 thousand for machinery, tooling, and intangibles Financing Inflows $7.1 million from warrant exercises, Series C preferred stock issuance, and common stock issuance We anticipate Worksport's need for cash provided by financing activities to decrease in 2026, given our projected path to cash-flow- positivity. Q3 2025- Earnings Call 8
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Strengthened Balance Sheet We continue to improve our leverage profile while managing our obligations. Total Indebtedness Reduction Dec 31, 2024 Sep 30, 2025 $0.00 $2,000,000.00 $4,000,000.00 $6,000,000.00 As of September 30, 2025 Total indebtedness: $2.9 million (down from $4.8M on December 31, 2024) Revolving credit facility: $1.6 million Other term debt: $1.3 million Availability on revolving credit facility: $3.3 million unused, providing additional liquidity and flexibility to support our strategic priorities. Q3 2025- Earnings Call 9
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Revenue, Margin, Expenses - Management9s Take Our path to profitability is becoming clearer each quarter, supported by stronger unit economics and upcoming revenue catalysts. Gross Margin Now consistently above 30%, up from under 10% last year, showing true structural improvement in profitability Operating Leverage Year-to-date revenue up 60%+ while G&A rose only 20%, signaling scalability Revenue Scale Annualized sales run-rate approaching $20M positions us closer to breakeven Importantly, much of R&D investment over the last few years is now at the finish line. With the HD3 tonneau cover line launching in Q4, and the SOLIS and COR systems set for commercial orders in late 2025, these are not cost centers anymore4they are our next revenue engines. As these products enter production and sales channels, we expect sustained gross margins in the 35%+ range, continued expense efficiency, and a clear trajectory toward cash flow positivity in 2026. We are building this profitability bridge4step by step, product by product. Q3 2025- Earnings Call 10
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Production Scaling & Operational Excellence In Q3, we've built a scalable, ISO 9001:2015-certified manufacturing base. Q3's 31.3% gross margin is the financial proof of that operational capability. 2,499 Tonneau Covers Produced In a 4-week stretch from early to late July 20254more than double our March 2025 total monthly output 50% Q4 Production Increase Expected increase compared to Q3, benefiting margins and meeting market demand Better Utilization Improved use of U.S. production facility capacity Fixed-Cost Absorption Enhanced efficiency in overhead allocation Quality Focus Maintained high standards while scaling Distribution Ready Throughput sufficient to support national distributors and dealers Achieved without proportional headcount increases, validating process efficiency. Q3 2025- Earnings Call 11
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Tonneau Business: The Profit Engine After years of strategic investment, our hard folding tonneau cover division is now Worksport's near-term economic engine. U.S. Manufacturing Advantage U.S.-made with rising brand recognition and multi-channel distribution Proven Margin Expansion 35%+ gross margins at current volumes, with margins projected to grow further as production scales Self-Funding Growth Absorbs significant share of fixed overhead, reduces reliance on external capital, generates cash to fund clean-tech initiatives "The tonneau cover product offerings provide the financial backbone on which COR, SOLIS, and AetherLux are being built, giving Worksport a strong and self-funded foundation for growth." Q3 2025- Earnings Call 12
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Tariff Impact & Competitive Advantage We continue to operate in a dynamic tariff and trade environment. While tariffs remain a headwind, they are manageable and, in the tonneau cover market, increasingly serve as a competitive tailwind for Worksport. U.S. Manufacturing Advantage The majority of tonneau production value is U.S.-based, reducing exposure compared to our import-heavy competitors Cost Containment Historical 5310% material cost pressure offset through efficiency gains, scale-driven overhead absorption, and pricing discipline Competitive Position Tariffs often impact imported competing products more severely. Our domestic footprint, brand marketing and product quality is a clear differentiator COR & SOLIS Consideration Tariff exposure is modeled into pricing and margin forecasts. The November 10, 2025 tariff suspension provides additional near-term relief Q3 2025- Earnings Call 13
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HD3 Launch: Expanding Our Tonneau Lineup As of October 21, 2025, the Worksport HD3 tonneau cover is now in production. With initial sales expected to begin to B2B customers in November 2025, followed by sales to online customers later this year. HD3 Heavy-Duty Tonneau Cover The HD3 is a heavy-duty tonneau cover designed for commercial and fleet applications. Building on the AL3, it features upgraded materials, seals, and latching for maximum durability. While available through all channels, its primary focus is driving growth in our wholesale and B2B channels, adding a new revenue stream and completing our U.S.-made tonneau cover lineup. Q3 2025- Earnings Call 14
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SOLIS & COR: From Investment to Revenue After years of engineering, tooling, certification, and partnership investment, SOLIS and COR are now set to be released for orders later this month. What has been pure operating and capital expense is expected to become a visible, high-margin revenue stream beginning in late Q4 2025 and scaling through 2026. Launch Date November 28, 2025 Customers will be able to place initial orders with expected delivery in late December 2025 and early January 2026 Pricing COR Starter Kit: $949 (includes COR HUB and one COR Battery) SOLIS System: $1,999 to $2,499 depending on model size Initial Rollout 1,000 COR units, 900 additional battery packs, with a limited SOLIS release Representing roughly $2.5 million in near- term initial revenue opportunity Q3 2025- Earnings Call 15
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SOLIS & COR Strategic Positioning SOLIS Solar Tonneau A margin-accretive product leveraging our tonneau expertise to enter the premium solar tonneau cover product channel. COR Portable Energy System A modular portable energy system designed as a recurring revenue platform, driving stable, cash flow3positive sales across work, overlanding, emergency, and industrial markets. Together, these two platforms transform Worksport from a single-product channel manufacturer into a multi-market clean-tech company with recurring, scalable revenue potential. Q3 2025- Earnings Call 16
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R&D Roadmap: 2026 & Beyond In 2026, we aim to transition R&D from heavy foundational build to commercial optimization and platform leverage. 1 SOLIS & COR Optimization Finalize launch execution and early customer feedback loop Optimize BOM and logistics for margin enhancement post-launch Expand integrations and form factors based on usage data Expand the COR platform for multiple product lines 2 Tonneau Cover Expansion Growing the HD3 product Launching "HD4" equivalent cover, labeled internally as "The Worksport B2" Incremental product improvements to maintain quality, compatibility, and margin strength 3 AetherLux Development Advance pilots and partnerships with leading institutions to validate performance and use-cases Finalize and select manufacturing partner Focus spend on projects with clear commercialization path and potential 2026+ impact Q3 2025- Earnings Call 17
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Operating Leverage Roadmap Our operating model priorities for 2025 into 2026 support our transition from capital-funded mindset to operations-funded growth. Sustain 35%+ Gross Margins Maintain manufacturing efficiency and pricing discipline Slow OpEx Growth Especially in Sales & Marketing. Treat Q3's elevated spending as peak investment, not the new baseline Improve Working Capital Turns Monetize existing inventory and further align production scale with growing demand Layer New Products Tonneau, SOLIS, and COR share infrastructure, amplifying leverage onto existing cost-stabilized offerings Q3 2025- Earnings Call 18
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Risk Management & Mitigation We are clear-eyed about the key risks and have strategies in place to address them. Key Risks Ongoing net losses & going concern language in our 10-Q, reflecting reliance on external capital and execution risk Tariff and supply chain volatility, particularly for globally sourced components Launch risk for SOLIS & COR: timing, adoption, and margin realization Equity and warrant overhang impacting shareholder perception Mitigation Strategies Tighten spend to initiatives with measurable ROI Maintain and selectively use diversified capital sources (e.g., ATM, warrants, indebtedness) Stage clean-tech production and inventory to complement demand signals Communicate transparently about milestones and capital deployment Given the continued growth and healthy margins in our tonneau cover business, we are confident in our ability to manage tariff-related cost inflation while advancing toward near-term cash flow positivity and maintaining our 2026 profitability target. Q3 2025- Earnings Call 19
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202532026 Outlook 1 Q3 2025 ARR $20.4 million4a substantive leap from $8.5 million in 2024 2 Q4 2025 Expected Continued tonneau growth and channel expansion, plus initial SOLIS & COR orders commencing November 28, 2025 3 2025 Year-End Projection $17.0 to $21.0 million in revenues 4 2026 Growth Drivers U.S. Tonneau Cover net sales: $27.0 to $35.0 million. SOLIS and COR: additional meaningful contribution 2026 Full-Year Impact U.S.-Made Tonneau Platform Full-year scale with ~35-40%+ target gross margins COR & SOLIS Commercialization First full-year of COR portable power system and SOLIS solar tonneau covers AetherLux Progress Selective progress as a complementary clean-tech platform, aligned with defined technical and commercial milestones OpEx Discipline OpEx growth below revenue growth to unlock operating leverage Q3 2025- Earnings Call 20
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Path to Cash Flow Positivity 1H 2026 Projecting: Operating cash flow positivity during first half of 2026 Stable Margins Maintain 35%+ gross margins Infrastructure Leverage Increasing sales with higher utilization of existing manufacturing and distribution infrastructure Cost Control Tighter control of G&A, Sales & Marketing, and Professional Fees with spend tied to measurable ROI New Revenue Streams Launch of HD3, SOLIS, and COR as new margin sources Q3 2025- Earnings Call 21
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Key Takeaways High-Margin U.S. Manufacturing Built a scalable platform with rapid revenue growth and 30%+ margins Nationwide Distribution Established strong relationships with national distributors and retail chains Clean-Tech Platform Ready SOLIS, COR, and AetherLux positioned on top of our foundation Clear Path Forward Disciplined execution toward sustainable cash flow and profitability Financial Performance Highlights 61% Revenue Growth Q3 2025 vs Q3 2024 31.3% Gross Margin Up from 7.9% year-over-year 45% Debt Reduction Total indebtedness down since year-end 2024 Q3 2025- Earnings Call 22
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Question & Answer Session Worksport is now opening the floor for Q&A. We welcome live questions from the analysts attending the call. Investors attending the call are encouraged to email investors@worksport.com with their questions and we will get back to you. Q3 2025- Earnings Call 23