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FX

Forza X1, Inc. (FRZA)·Q3 2023 Earnings Summary

Executive Summary

  • Q3 2023 marked Forza’s first reported net sales of $18,559 and a materially narrower net loss of $1.046M (-$0.07 EPS), improving sequentially from Q2 (-$1.484M, -$0.13 EPS) and year-over-year (-$1.043M, -$0.12 EPS) .
  • Management narrowed revenue timing to begin in early 2024 (vs. “late 2023 and early 2024” communicated in Q2), while highlighting small-batch production progress and facility construction now underway in North Carolina .
  • Operational catalysts include the OneWater Marine initial 100-boat order (~$12.0M expected revenue), California dealership demos planned in early 2024, and continued OEM electrification projects with Polaris .
  • Liquidity remains solid with cash, cash equivalents, and marketable securities of ~$15.335M as of 9/30/23 (cash burn ~$1.1M in Q3), supporting the transition from prototyping to early commercialization in 2024 .

What Went Well and What Went Wrong

What Went Well

  • Initial commercial traction: OneWater Marine’s order for 100 F22 boats represents ~$12.0M in expected revenue, enabling conventional dealer channel access and early 2024 demos in Southern California (“premier” dealership) .
  • Product readiness and performance: F22 reached speeds of up to 40 mph, with integrated 100 kWh batteries and proprietary outboard power; charging via off-the-shelf Level 2 or marina shore power underscores consumer-friendly usability .
  • Execution on manufacturing footprint: Full construction is underway at the North Carolina site with ~10-month timeline; the 60,000 sq. ft. facility targets 500 boats/year capacity and will serve as technology/fabrication center .

Management quotes:

  • “We intend to be among the first to develop and manufacture electric boats targeting the recreational market.”
  • “We are currently building 1 boat a month…we will ramp up to 2 per month as we officially begin production for retail use in early 2024.”
  • “The building will be capable of producing 500 boats annually or more and will serve as the technology and fabrication center for Forza X1.”

What Went Wrong

  • Revenue timing narrowed to early 2024 from “late 2023 and early 2024,” implying a modest delay versus prior expectations; commercialization remains ahead but still contingent on ramp and demand .
  • Minimal net sales in the quarter ($18,559) and continued operating losses reflect early-stage status and ongoing prototype/testing investment; Q3 gross loss labeling indicates limited margin visibility .
  • Battery technology remains under active experimentation (including LFP trials and stacked 300HP variants), raising near-term execution complexity and potential timeline variability .

Financial Results

MetricQ3 2022Q1 2023Q2 2023Q3 2023
Revenue (Net Sales, $USD)$0 $0 $0 $18,559
Cost of Sales ($USD)$66,543 $49,941 $40,796 $11,621
Gross Profit/Loss ($USD)$(66,543) $(49,941) $(40,796) $6,938
Operating Expenses ($USD)$979,585 $2,079,810 $1,578,723 $1,258,966
Loss from Operations ($USD)$(1,046,128) $(2,129,751) $(1,619,519) $(1,252,028)
Other Income (Expense) ($USD)$3,465 $124,619 $135,865 $205,714
Net Loss ($USD)$(1,042,663) $(2,005,132) $(1,483,654) $(1,046,314)
Diluted EPS ($USD)$(0.12) $(0.19) $(0.13) $(0.07)
Weighted Avg Shares (Basic/Diluted)8,837,470 10,450,000 11,446,391 15,784,000
Cash & Cash Equivalents ($USD)—$10,683,000 $16,516,320 $5,438,820
Cash, Equivalents & Marketable Securities ($USD)———$15,335,340
Working Capital ($USD)—$10,985,040 $16,790,215 $16,016,417

Notes:

  • Q3 2023 shows first net sales and best quarterly EPS since Q4 2022 comparisons provided; sequential improvements driven by lower OpEx and higher other income .

Segment breakdown:

  • No segment reporting disclosed in the quarter’s materials .

KPIs

KPIQ1 2023Q2 2023Q3 2023
F22 Top Speed—Nearly 40 mph Up to 40 mph
Battery Pack—~100 kWh 100 kWh; L2 and shore-power charging
Production Rate—Small-batch prototyping 1 boat/month; ramp to 2/month early 2024
Facility StatusClearing/rough grading, contractor selected Begin final grading/site construction before end of Q3 Full construction underway; ~10-month timeline
Plant Capacity Target——500 boats/year
OneWater Order—Initial 100 boats (~$12M) Reinforced; SoCal demos early 2024
Polaris OEM ProjectDesign phase; demos planned Two electrified pontoons; dealer meetings complete Godfrey enhancement; trial 300HP & LFP battery
Cash Burn—~$1.0M in Q2 ~$1.1M in Q3

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue commencementLate 2023 / Early 2024 Early 2024 Narrowed/Delayed to early 2024
Production for retail useQ1 2024 target Early 2024; ramp to 2 boats/month Maintained timing; specified near-term ramp
North Carolina facilityBegin final grading/site construction before end of Q3 2023 Full construction underway; ~10-month build Progressed as planned
California demos—2 boats at premier OneWater location in early 2024 New event commitment

No formal quantitative guidance on revenue ranges, margins, OpEx, OI&E, tax rate, or dividends was issued in Q3 materials .

Earnings Call Themes & Trends

TopicQ1 2023 (Prior)Q2 2023 (Prior)Q3 2023 (Current)Trend
Production rampEngine and wire harness fabrication started; ~10 motors produced; stacking design up to 300HP Small-batch production; target begin producing end-user boats in Q1 2024 1 boat/month; ramp to 2/month early 2024 Improving toward commercialization
Battery techLiquid-cooled systems; heat exchanger improvements; telematics app (Forza Connect) 100+ kWh battery; 180HP peak outboard LFP trials; 300HP motor variant testing Advancing; broader experimentation
Partnerships (dealer/OEM)National OEM design phase; 2 demo units planned for summer dealer meetings OneWater 100-boat order (~$12M) SoCal OneWater demos early 2024; continued Polaris collaboration Strengthening ecosystem
Facility build-outClearing 100%; rough grading ~90%; design-build selected Start final grading/site construction before end of Q3 Full construction underway; ~10-month plan; 500 boats/year capacity On track
Revenue timingLate 2023 / early 2024 Late 2023 / early 2024 Early 2024 Slight delay/narrowing
Product performanceMulti-platform prototypes; UX/UI improvements Nearly 40 mph top speed Up to 40 mph; consumer-friendly charging Stable/validated

Management Commentary

  • Strategic vision: “We are focused on the creation and implementation of marine EV technology…utilizing our proprietary outboard electric motor.”
  • Product readiness: “We are currently building 1 boat a month…we will ramp up to 2 per month as we officially begin production for retail use in early 2024.”
  • Commercial channel: “OneWater…has placed an initial order for 100 units…This initial 100 boat order should generate approximately $12 million in revenue for our company.”
  • Manufacturing footprint: “Full construction is underway…expected to last for approximately ten months…capable of producing 500 boats annually or more.”

Q&A Highlights

  • 2024 deliveries: Management plans to start at 2 boats/month in early 2024 and targets exiting 2024 at 3–4 boats/week, contingent on demand and facility completion .
  • Battery progress: Active trials with multiple vendors under NDA; focus on safety, BMS improvements, power density, and cost structure with confidence in current trajectory .
  • Polaris/OEM sales opportunity: Continued prototyping with intention to trial a 300HP motor and lighter LFP battery; methodical approach to introduction; relationship remains strong .
  • Kit economics: Discussion referenced ~$50,000 per electrification unit as a scale-appropriate approximation; potential penetration of 5–10% within a 15,000-unit/year model highlights longer-term TAM, subject to OEM adoption .

Estimates Context

  • Wall Street consensus (S&P Global) for FRZA’s Q3 2023 EPS and revenue was unavailable via our SPGI integration at the time of analysis due to missing CIQ mapping. As a result, comparisons versus consensus could not be performed. Values retrieved from S&P Global were unavailable for this ticker.

Key Takeaways for Investors

  • Commercialization pivot: The move from prototyping to early production in 2024 with a dealer-backed order is a pivotal inflection; watch for execution on ramp from 2/month to higher exit rates in 2024 .
  • Channel validation: OneWater’s 100-boat commitment (~$12M) validates the product and provides near-term sell-through visibility via a conventional dealer model .
  • Liquidity supports ramp: ~$15.335M in cash/equivalents/marketable securities and ~$1.1M Q3 burn indicate capacity to fund the initial ramp and facility build-out without debt financing .
  • Facility milestone: Construction underway with ~10-month timeline; 500 boats/year capacity underpins medium-term scaling, a key driver for revenue trajectory .
  • Technology iteration: Battery strategy (including LFP) and 300HP outboard variant testing could enhance performance and broaden addressable market; monitor durability and OEM adoption .
  • Near-term catalysts: California dealership demos in early 2024, additional OEM collaborations (e.g., Polaris), and first revenue recognition from boat sales can drive sentiment and re-rating .
  • Risk checks: Execution on manufacturing ramp, cost curve for batteries, and consumer adoption relative to ICE alternatives remain central risks; the narrowed revenue timing (early 2024) slightly delays prior expectations .