Worksport (NASDAQ:WKSP) Issues Earnings Results, Misses Expectations By $0.02 EPS

Worksport (NASDAQ:WKSP) announced its quarterly earnings results on Tuesday. The company reported ($0.26) earnings per share for the quarter, missing analysts’ consensus estimates of ($0.24) by ($0.02), Zacks reports. Worksport had a negative return on equity of 102.57% and a negative net margin of 114.49%. The business had revenue of $7.23 million for the quarter, compared to analysts’ expectations of $6.40 million.

Here are the key takeaways from Worksport’s conference call:

• Worksport reported a record $7.2 million in Q3 net sales, up 44% year over year and 38% sequentially. Gross profit increased 40% year over year, operating expenses fell 12%, and net loss narrowed to $3.6 million from $4.9 million.
• Sales growth was supported by both channels, while large distributor orders increased sevenfold and September sales reached a monthly record of $2.7 million. Estimated backlog rose to about $740,000 at quarter-end, and inventory declined 21% to $9.6 million.
• Q3 operating cash use fell to about $0.4 million, but management said favorable working-capital movements—particularly inventory conversion—accounted for much of the improvement and should not be treated as a run rate. Operating cash use totaled $12 million in the first nine months; the company ended Q3 with $2.5 million in cash after a $2.3 million warrant inducement and said it may continue to use its credit facility and capital markets.
• Gross margin was 30.3%, down from 31.5% in Q2, with management citing higher material and landed costs, tariffs, and a larger B2B sales mix. The company said aluminum-cost inflation has pressured margins, including on NEXUS, though it expects to maintain healthy margins.
• NEXUS generated about $4.8 million in Q3 sales, roughly two-thirds of revenue, while SOLIS sales reached about $96,000; management is still working to build repeatable demand for SOLIS and COR. Terravis Energy’s AetherLux certification and production remain conditional on testing and readiness, and a potential complementary-product acquisition is subject to due diligence and definitive agreements; management gave no new target for operating cash-flow positivity.

Worksport Stock Down 1.5%

NASDAQ WKSP traded down $0.00 during mid-day trading on Tuesday, reaching $0.29. 16,657,157 shares of the company’s stock traded hands, compared to its average volume of 2,887,979. Worksport has a 1-year low of $0.26 and a 1-year high of $3.13. The company has a fifty day simple moving average of $0.40 and a 200-day simple moving average of $0.87. The company has a current ratio of 3.79, a quick ratio of 0.72 and a debt-to-equity ratio of 0.26. The company has a market cap of $5.82 million, a price-to-earnings ratio of -0.12 and a beta of 0.54.

Analysts Set New Price Targets

Several equities research analysts recently commented on the company. Maxim Group downgraded Worksport from a “buy” rating to a “hold” rating in a report on Friday, October 30th. Weiss Ratings restated a “sell (e+)” rating on shares of Worksport in a report on Friday, October 2nd. Finally, Wall Street Zen cut Worksport from a “hold” rating to a “sell” rating in a report on Saturday, September 5th. One equities research analyst has rated the stock with a Hold rating and one has given a Sell rating to the company. According to MarketBeat.com, Worksport has an average rating of “Reduce” and an average target price of $2.00.

Worksport Company Profile

Worksport Ltd. (NASDAQ: WKSP) develops and manufactures tonneau covers and related products for pickup trucks. Its covers are designed to protect cargo, improve vehicle utility, and provide an alternative to conventional truck-bed coverings. The company serves the automotive aftermarket and targets owners of pickup trucks across North America. Worksport’s product portfolio includes hard and soft folding tonneau covers, including its COR line of hard-shell covers. The company is also developing SOLIS, a solar-integrated tonneau cover designed to generate electricity from sunlight, and COR battery-related products intended to store and supply portable power.