Worksport (NASDAQ:WKSP) reported record second-quarter 2026 revenue as sales growth, expanding gross margins and lower sequential operating expenses reduced the company’s operating cash use. Management said it is now focused on converting inventory into cash, expanding distributor activity and pursuing sustainable operating cash flow breakeven.
Net sales reached approximately $5.2 million in the quarter, up 27% from $4.1 million a year earlier and 58% from $3.3 million in the first quarter. June was the company’s strongest monthly sales period on record, generating about $2.1 million in revenue after sales of roughly $1.4 million in April and $1.7 million in May.
Margins Improve as Expenses Decline Sequentially
Gross profit was approximately $1.6 million, up 52% year over year and 93% sequentially. Gross margin expanded to about 32%, compared with 26% in both the prior-year quarter and the first quarter of 2026. Kartychak said monthly gross margin increased from about 26% in March to 35% in June, aided by higher volume, overhead absorption efficiencies and product mix.
The company said those gains occurred despite higher input and landed costs, including tariff-related pressure. During the investor question-and-answer session, Steven said rising aluminum costs have limited the company’s ability to offer deeper discounts and broader pricing programs. He said the company has experienced inflation in aluminum costs rather than directly paying tariffs on much of its aluminum supply.
Total operating expenses were approximately $5.5 million, down 17% from the first quarter but up 16% from the year-earlier period. General and administrative expenses declined about $690,000 sequentially to $3.5 million, while sales and marketing expense declined about $449,000 to $1.7 million. Research and development expense totaled $214,000, declining as the AL4 and NEXUS tonneau covers moved from development into production.
Net loss narrowed to $3.97 million from $5.83 million in the first quarter and $3.73 million a year earlier. Cash used in operating activities was approximately $3.4 million, an improvement from $8.2 million in the first quarter, though first-half operating cash use totaled $11.7 million, compared with $6.9 million in the prior-year period.
Liquidity and Inventory Conversion Remain Central Focus
At June 30, Worksport held approximately $1.2 million in cash and cash equivalents, along with about $820,000 of remaining borrowing availability under its revolving line of credit. The company’s quarterly filing continues to disclose substantial doubt about its ability to continue as a going concern.
Management said its plan to address liquidity includes revenue growth, margin expansion, cost discipline, inventory conversion and evaluation of additional financing opportunities. Steven said he elected to receive $125,000 of previously accrued and unpaid bonus compensation in stock at market closing prices.
Inventory totaled $12.1 million at quarter-end, including approximately $6.6 million of raw materials, $4.6 million of finished goods and $845,000 of work in progress. Kartychak said converting inventory into sales is the company’s largest internal source of working capital without external financing.
Worksport expects raw-material and finished-goods inventory to decline meaningfully during the third quarter as it shifts closer to a just-in-time production approach. In July, the company sold about 30% more covers than it produced, a pace it said it aims to maintain through the balance of the third quarter. Management also said it had success using limited direct-to-consumer promotions to reduce AL3 inventory.
NEXUS Launch and Distributor Expansion
Worksport’s NEXUS hard-folding tonneau cover entered commercial production on April 13 and generated approximately $1 million in cumulative sales across channels in about 10 weeks, according to management. Steven said NEXUS-related sales orders approached $1.5 million in July.
Kartychak said NEXUS has a moderately healthier margin profile than the AL4 product and has not, in her view, cannibalized AL4 demand. The company currently sells thousands of AL4 covers, Steven said, while positioning NEXUS as a differentiated product with single-sided operation.
Two distribution partners were added during the quarter. Meyer Distributing joined in June as Worksport’s first multinational distribution partner, while Tri-State Enterprises began carrying the company’s products across four states. Management said it is also in discussions with three additional major distributors, though no agreements have been announced.
- SOLIS and COR: The solar tonneau cover and portable energy system were not material contributors to second-quarter revenue. Management said certification work has largely been completed and the company is pursuing product-market fit, distributor opportunities and fleet- and OEM-oriented discussions.
- AetherLux: Worksport’s Terravis Energy subsidiary received a U.S. patent related to its ZeroFrost heat-pump architecture. AetherLux remains pre-commercial, with certification work expected to continue in the second half of 2026. Management said it does not rely on AetherLux revenue in its 2026 operating plan.
Cash Flow Framework
Management said it believes Worksport could reach “momentary” operating cash flow positivity during the third quarter, but it did not provide a specific target for sustained positive operating cash flow. The company continues to target sustainable operating cash flow breakeven in 2026.
Using a 35% gross margin and its recent $2.1 million monthly sales run rate, management said quarterly revenue of roughly $12 million to $12.9 million would cover its current pre-working-capital cost structure. It characterized those figures as sensitivity guideposts rather than revenue guidance.
Steven said the company expects to reduce its reliance on external capital as sales and inventory conversion improve. “We’re going to stand on our own two feet,” he said, while noting that Worksport would still explore financing opportunities if they arise.
About Worksport (NASDAQ:WKSP)
Worksport Ltd. is an Israeli-based designer, developer and global supplier of innovative automotive accessories, with a primary focus on pickup truck bed covers. The company’s core offerings include a range of hard and soft tonneau covers under brands such as ROLL, FLEXIT and SOLAR, engineered to provide truck owners with enhanced utility, security and weather protection. Worksport leverages advanced polymer materials and patented folding mechanisms to deliver lightweight, durable solutions that are easy to install and operate.
In recent years, Worksport has expanded its product portfolio to incorporate solar technology, introducing integrated solar tonneau covers capable of generating power for auxiliary truck systems or charging batteries for recreational and off-grid applications.
