Forza X1, Inc. (FRZA)·Q2 2023 Earnings Summary

Executive Summary

• Pre-revenue quarter with continued R&D; net loss widened year over year as operating expenses ramped ahead of commercialization; EPS was $(0.13) versus $(0.09) in Q2 2022 and $(0.19) in Q1 2023 .
• Strategic win: OneWater Marine placed an initial 100‑boat order for the F‑22 (~$12.0M revenue potential), validating dealer-channel demand and providing a tangible commercialization pathway; targeted to begin deliveries after production start in Q1 2024 .
• Liquidity strengthened by June equity offering ($8.0M gross), lifting cash to ~$16.5M and working capital to ~$16.8M at quarter-end; cash burn was ~$1.0M in Q2 .
• Guidance timing adjusted: management now targets official F‑22 production in Q1 2024 (from “possibly late 2023” earlier), while revenue commencement remains “late 2023/early 2024” in press releases; site work for NC factory on track to begin final grading/site construction before end of Q3 2023 .
• Near-term stock catalysts: execution milestones on pilot production, additional OEM electrification projects, and dealer-channel progress around the OneWater order; risks include continued zero net sales and the push-out of production start .

What Went Well and What Went Wrong

What Went Well

• OneWater initial purchase order for 100 F‑22 units (~$12.0M) establishes early demand and dealer support for the launch; management called it a “significant achievement” .
• Robust prototype cadence and performance: multiple hulls built and iterated; F‑22 reached nearly 40 mph with ~100 kWh battery and 180‑hp peak outboard motor; liquid cooling improvements enhanced runtime/speed/range .
• Strengthened liquidity from public offering ($8.0M gross) and Q2-end cash/working capital positions ($16.5M/$16.8M); NC factory land clearing/rough grading completed; final grading/site construction expected before end of Q3 2023 .

What Went Wrong

• No revenue; gross loss increased due to cost of sales with zero net sales, and operating expenses rose to support development; net loss widened year over year .
• Production timing slipped to Q1 2024 vs earlier possibilities of late 2023, extending the pre-revenue phase and execution risk window .
• Continued reliance on capital markets (June raise) and parent/facility synergies amid ongoing burn (~$1.0M in Q2); commercialization milestones remain the critical de‑risking events .

Financial Results

Notes:

• No Wall Street consensus (S&P Global) available for FRZA; estimate comparisons not provided.

Segment breakdown: not applicable (pre-revenue; no reportable segments indicated) .

KPIs

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We aim to be among the first to develop and manufacture electric boats targeting the recreational market… fully integrated electric boats including the hull, outboard motor, and control system.” — Jim Leffew, CEO .
• “OneWater… indicating its intention to purchase 100 units, representing approximately $12,000,000 in revenue… a significant achievement for Forza X1.” — Jim Leffew .
• “We are in small batch production on [the F‑22] and will continue with extensive testing before we officially begin production… in our targeted Q1 2024 date.” — Joseph Visconti, Executive Chairman .
• “Our company has cash and cash equivalents of approximately $16,516,000 and our cash burn was $1 million for the quarter.” — Joseph Visconti .
• “The North Carolina factory plans are proceeding apace… clearing… 100% complete and rough grading 100% complete. We expect to begin final grading and site construction before the end of the third quarter of 2023.” — Jim Leffew .

Q&A Highlights

• The Q2 2023 call consisted primarily of prepared remarks and did not include published analyst Q&A in the transcript; management (CEO and CFO) were available for Q&A .
• Liquidity/burn details and production timing clarity were provided directly in remarks (cash ~$16.5M; burn ~$1.0M; Q1 2024 production target) .
• For broader investor context, earlier Q4 2022 Q&A addressed cash runway (~18 months) and price/value positioning targeting ~$120k per 22‑ft boat to achieve consumer acceptance .

Estimates Context

• Wall Street consensus (S&P Global) for revenue and EPS was unavailable for FRZA for Q2 2023 and prior quarters; as a result, beat/miss analysis versus consensus cannot be provided.
• Implication: Near-term estimate revisions are unlikely to be a catalyst; investor focus remains on commercialization milestones and order flow rather than quarterly consensus metrics.

Key Takeaways for Investors

• Execution is the primary de‑risking vector: hitting Q1 2024 production start for F‑22 and converting the OneWater order into deliveries are critical to transitioning out of the pre‑revenue phase .
• Liquidity is sufficient for near-term milestones after June’s $8.0M raise, with Q2 burn at ~$1.0M; watch burn trajectory as testing and pre‑production scale .
• OEM electrification services represent an additional monetization path and validation of propulsion tech; demo units for a nationally recognized manufacturer are a tangible next step .
• Product/tech roadmap is advancing (300‑hp stacked motor, cooling/lightweighting); sustained performance improvements support market positioning against ICE boats on price/value/runtime .
• Near-term catalysts: factory site construction kickoff (Q3 timeline), additional dealer/OEM commitments, and formalization of production scheduling; lack of consensus estimates shifts attention to operational PRs and 8‑Ks for stock moves .
• Risks: continued zero net sales, schedule slip risk (production pushed to Q1 2024), and dependence on capital markets if milestones slip; focus on converting pipeline to revenue .
• Trading lens: Headlines around production start, dealer deliveries, and OEM demos are likely to drive sentiment; absence of consensus coverage means the stock trades on narrative/milestones rather than quarterly beats/misses .