Worksport Reports Q2 2026 Results: Full Earnings Call Transcript

Worksport (NASDAQ: WKSP ) reported second-quarter financial results on Tuesday. The transcript from the company's second-quarter earnings call has been provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

6 million, reflecting improved operating leverage. The company launched the Nexus tonneau cover, achieving $1 million in sales within 10 weeks, and expanded its distribution network with Meijer Distributing and Tri State Enterprises. Worksport is focusing on converting inventory into cash, targeting just-in-time production, and expanding its product line with innovations like the Solis solar tonneau cover and Aetherlux heat pump system. 2 million in cash and $12 million in inventory as of June 30, 2026, and aims to achieve cash flow positivity by the end of the year, while reducing reliance on external capital.

Management highlighted tariff-related cost pressures on aluminum but expressed confidence in their strategic initiatives and operational efficiencies to drive future growth. Full Transcript Steven Rossi, CEO & Founder Good afternoon, everyone, and thank you for joining Worksport’s second quarter 2026 earnings call. I’m Steve Rossi, Founder and Chief Executive Officer. With me is Jennifer Kardechek, our Chief Financial Officer.

Jennifer was appointed CFO effective May 1 following Michael Johnson’s resignation at the end of April. She had served as our Vice President of Finance since January and started working with the company in 2023, so this is a continuation rather than a transition. This is her second earnings call in the role, and I’m glad to have her here today with me. Our quarterly report on Form 10-Q for the period ended June 30, 2026, was filed today and will be available on the SEC’s website and on our Investor Relations website.

Along with these remarks and accompanying presentation, our remarks will follow the slides, and we will open the line for questions. Let me start with some safe harbor statements. During this call we’ll make forward-looking statements, including statements regarding our expectations for financial and business trends, our market position, our go-to-market growth initiatives, and our product programs and their expected benefits. These statements are predictions based on current beliefs, expectations, and assumptions.

Because they relate to the future, they are inherently subject to uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of our control. Actual results may differ materially, and you should not place undue reliance on them. These statements are subject to risks discussed in our SEC filings, including in our Annual Report Form 10-K and our quarterly reports on Form 10-Q. They speak only as of today’s date.

We assume no obligation to update them except as required by law. Any supplemental operating metrics discussed today should be considered together with, and not as a substitute for, the underlying GAAP results. With that, let’s kick off the agenda. Today we’re going to review our 2026 scorecard and this quarter, Q2, our Worksport platform, liquidity and capital resources, financial review, inventory strategy, commercial execution, and 2026 outlook and cash flow framework.

So a lot to go through. Stay buckled in. We’re going to go quick, and we’re going to take questions at the end. We are entering a phase where scale efficiencies are becoming evident.

In Q2 2026, quarter to date, revenue grew sequentially by 58% while total operating expenses declined by 17%, and cash used in operations also declined by 58%. Our results reflected improved operating leverage and a more efficient cost structure. We’re beginning to generate revenue more efficiently and with a greater proportion of sales converting to operating cash flow. The following Q2 2026 results support our positive scaling dynamics.

2 million for the quarter. This is the strongest quarterly result we’ve had in Worksport history, up 27% year over year and 58% sequentially. 6 million, up approximately 52% year over year and 93% sequentially, with gross margins expanding to approximately 32% from approximately 26% in Q1 of this year. 5 million, down approximately 17% from Q1 2026.

Operating expenses as a percentage of net sales declined from 128% to just 68% during the same time period. 2 million in Q1 of this year. The quarter also strengthened as it progressed. 1 million in sales, with monthly gross profit rising during the quarter to 35% in June.

And June is a strong indicator of our ability to scale the business as it continues to expand both in the consumer direct and commercial reseller sales channels. This quarter we focused on improving our operating cash burn, and we made good traction. Jennifer will provide more insights on factors contributing to our improvements. We will also speak to how we intend to convert our strong operational progress into sustainable operating cash flow breakeven.

What Q2 2026 established is that the cost base and the revenue line can move in opposite directions in the same quarter. Moving forward, we intend to continue targeting increased revenue with efficient cost bases. We continue to evolve into a diversified platform with multiple products serving multiple channels and generating multiple revenue streams. As we scale, we are mindful of prioritizing our organizational strengths.

Our core economic engine is the hard-folding tonneau covers we proudly make in our ISO 9001:2015 certified facility in West Seneca, New York. We launched our newest tonneau cover, Nexus, in Q2 of 2026. Our near-term growth levers include distribution onboarding, distribution reorders, expanding e-commerce, and conversion of inventory into working capital. We will continue making new product innovations for our products, and we’re going to continue to pursue larger partnerships on our energy products.

Our Solis solar tonneau cover and Core portable energy system are an emerging commercial option that extends the truck bed from a covered platform into a mobile power system. And, really excitingly, our Aetherlux heat pump system through our subsidiary Terravis Energy is a very exciting strategic opportunity that is expected to be certified within the second half of this year. We prioritize and emphasize operational excellence ahead of additional growth vectors. Our core business strategy must be executed with discipline, and our results in Q2 2026 support our commitment to the success of our platform.

I will address liquidity directly and then I will go through our recent business updates. 2 million in cash and cash equivalents. Separately, we had about $820,000 of remaining availability on a revolving line of credit, which is borrowing capacity, not cash. We reported an inventory balance of $12 million, which we expect to be a strong source for additional liquidity, and we’ll discuss this further below.

Our Q2 Form 10-Q continues to disclose substantial doubt about our ability to continue. While this disclosure reflects uncertainties associated with our current liquidity and capital resources, management has implemented a clear plan forward on revenue growth, margin expansion, disciplined cost management, and active analysis of additional financing opportunities. We remain focused on executing our strategy and strengthening our financial position. Our plan for closing the gap: in the same period we are executing operationally to convert inventory into sales and cash, grow gross profit faster than recurring cash costs, and improve marketing productivity.

Our objective during the first half of this year was to strategically support growth initiatives that we believe will create value over time. Our strategy included funding working capital and operations to support scaling, and we are now well positioned to convert inventory into working capital efficiently in the second half of this year. We continue to prioritize a reduction in our reliance on dilutive capital as our gross profit expands and operating cash flow improves. Our greatest source of liquidity—inventory—is being managed during the balance of this year.

We are strategically producing our products to function in a just-in-time environment such that we maximize our use of raw materials while minimizing our concentration risk of inventory buildup. More on the subject to come. To align my incentives further with the stock, I elected to receive previously accrued and unpaid bonus compensation of $125,000 in stock at the market’s closing prices. I continue to believe in the future of the company.

That reflects the strong values we continue to actively target cash flow positivity. With that, I will hand the call to Jennifer. Jennifer Kardechek (Chief Financial Officer) Thank you, Stephen. Good afternoon, everyone.

3 million in Q1 2026, growth of approximately 27% year over year and 58% sequentially. 5 million, or about 11,574 units. The shape of the most recently completed quarter matters as much as the total. 1 million in June, each month larger than the one before it.

June 2026 was the strongest revenue month in our company's history. That progression reflected stronger production output, broader product availability, and channel execution rather than any single order. 9 million of net sales, respectively. Our mix between sales channels was consistent between Q1 and Q2 2026.

The mix matters because B2B carries a lower gross margin but a materially lower marketing cost per unit, and the balance between the two is what determines both blended margin and cost efficiency. Having both channels gives us direct customer insight and wholesale reach. 1 million in Q2 2025 and approximately $850,000 in Q1 2026, an increase of approximately 52% year over year and approximately 93% sequentially. Gross margin was approximately 32% compared with 26% in Q2 2025 and approximately 26% in Q1 2026.

Gross margin rose from approximately 26% in March 2026 to 35% in June 2026. The improvement was driven by higher sales volume, efficiencies in overhead absorption, and product mix. These gains offset higher input and landed costs, including tariff pressure. That is worth emphasizing.

We expanded margin more than five points against a rising cost base. Sustaining gross margin at its current run rate as volume increases and sales mix shifts is a principal objective for the back half of 2026. On to operating expenses and our net loss. 5 million, up approximately 16% year over year.

However, operating expense as a percentage of sales decreased 9 percentage points year over year. 1 million, or 17%, from Q1 2026. Research and development expense was $214,000. AL4 and Nexus have moved out of development and into production, which is why this expense caption fell $91,000, or approximately 30% year over year.

Spend converted into product we are now selling. 5 million, up approximately 15% year over year. As a percentage of net sales, G&A decreased by approximately 7 percentage points year over year. Further, this expense caption declined by approximately $690,000, or 16%, from Q1 2026.

7 million, up approximately 31% year over year. However, sales and marketing expense as a percentage of net sales only increased 1% compared with net sales increase of 27%. Further, this expense caption decreased approximately $449,000, or 21%, from Q1 2026, the first evidence of a marketing discipline we committed to during our Q1 2026 earnings call. 83 million in Q1 2026; that is a 32% sequential improvement and a 6% reduction in net loss year over year.

71 for the prior-year quarter. This year-over-year comparison is the one that keeps our attention. Revenue growth alone has not yet outrun our recurring cost base. The sequential comparison is the one that shows the mechanism working.

Our objective for the second half is straightforward: focus on gross margin expanding at a faster rate than operating cash requirements, creating a path to positive operating cash flow. 1 million in Q2 2025, a 58% sequential reduction. 9 million in the prior-year period, an increase of approximately 68%. The Q2 2026 bridge is straightforward.

97 million. 74 million. 6 million consumed in Q1 2026 and the clearest sign that the balance sheet build phase is believed to be behind us. 9 million at December 31, 2025.

On to inventory. Inventory consists of raw materials that have already been purchased, work in progress, and finished goods. Converting this inventory into sales represents the largest internal source of working capital available to the company without the need to raise external financing. 5 million from year-end.

6 million of finished goods, and $845,000 of work in progress. We are actively optimizing new production against growing sales channels and expect our materials and finished-goods components to meaningfully reduce during Q3 2026. We are optimizing our inventory in the following initiatives. Number one, procurement: we are actively managing procurement requirements for our raw materials against our forecasted projections.

1 million was front-loaded to support production requirements for expanding sales channels, with approximately $1 million of those purchases still in accounts payable at June 30, 2026. That spend, including the amounts outstanding at the end of Q2 2026, is now behind us. Number two, production: the process to manufacture our hard tonneau covers is managed against demonstrated sell-through and distribution reorder cadence rather than launch forecasts. 6 million, or 6,800 covers, is the balance most directly convertible in the near term.

We manage fulfillment by product, family, and sales channel with the goal to sell more than what is produced in a given month. Working-capital conversion is the measure we will report against for insight. In July, we sold about 30% more covers than we made, and that continues to be the goal for the balance of Q3. We are prepared to take questions on inventory aging and the split between inventory supporting confirmed orders versus forecasted demand.

Back to you, Steven. Steven Rossi, CEO & Founder Thank you, Jennifer. Nexus entered commercial production on April 13, 2026, with sales shortly thereafter, making Q2 2026 its first quarter in our product portfolio. Its proprietary single-sided operation allows a person to secure and release the Nexus tonneau cover without making laps around the pickup truck.

Practical solution to a real complaint, the real-world utility of Nexus creates a differentiated premium product for our customers. The product launch followed the shape you want to see. Following its introduction, Nexus achieved $1 million in cumulative sales across all sales channels in just about 10 weeks. Margin contribution increased across both sales channels during Q2 2026, so a product went from its first unit to contributing meaningful margin inside of a single quarter.

The focus is now to maximize margin capture through manufacturing efficiencies and channel expansion, including established sales cadence into July. 5 million. Two distribution partners were added in Q2 of this year, one at the end of April and the other in June. Both distribution partners had orders fulfilled during the quarter.

Meijer Distributing joined in June 2026 as our first multinational distribution partner, bringing a substantially larger North American wholesale network serving dealers, installers, and aftermarket resellers. That is the widest wholesale access the company has ever had. S. states.