ECD Automotive Design Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 21, 2025

Key Takeaways

  • Positive Sentiment: ECD delivered record Q2 revenue of $7 million, driven by bespoke demand and manufacturing efficiencies.
  • Negative Sentiment: Gross margin fell to 20% from 32% year-over-year due to higher tariffs, shipping, and customs costs.
  • Positive Sentiment: The launch of the Project Ghost Mustang earned a best-in-class award, expanding the product line and demonstrating scalable growth.
  • Negative Sentiment: Received a Nasdaq delisting notice for non-compliance, prompting an S-1 filing and debt conversion strategies to regain listing.
  • Neutral Sentiment: Secured a $500 million equity facility to accumulate Bitcoin as a reserve asset and support growth initiatives, including crypto payment promotions.
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Earnings Conference Call
ECD Automotive Design Q2 2025
00:00 / 00:00

There are 5 speakers on the call.

Operator

Greetings, and welcome to the ECD Auto Design Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Donovan, Investor Relations.

Operator

Thank you. You may begin.

Speaker 1

Thank you, operator, and good morning, everyone. Welcome to ECD Auto Design's Second Quarter twenty twenty five Earnings Conference Call. Today's date is 08/21/2025. And on the call today from ECD Auto Design are Scott Wallace, Co Founder, Chief Executive Officer and Chairman and Victoria Hay, Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward looking statements as they are defined under the Private Securities Litigation Reform Act of 1995.

Speaker 1

These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in forward looking statements. For a discussion of such risks and uncertainties, please see ECD Auto Design's most recent filings with the SEC. All forward looking statements made today reflect our current expectations only and we undertake no obligation to update any statements to reflect the events that occur after this call. Also during the course of today's call, the company will be discussing one or more non GAAP financial measures. Reconciliation of these non GAAP financial measures to the most directly comparable GAAP measures are included in the press release we issued yesterday morning.

Speaker 1

Copies of the press release are available on ECD's investor website, ecdautodesign.com. In addition, ECD Auto Design's Form 10 ks and 10 Qs are also available on the Investor Relations website. Now I'd like to turn the call over to Co Founder and Chief Executive Officer, Scott Wallace. Scott?

Speaker 2

Good morning, and thank you for joining us as we review ECD's second quarter results. I'm pleased to welcome our new Chief Financial Officer, Vicki Hay, to her first earnings call with ECD. While she recently assumed the role, Vicky and her team have already been key members of our finance team over the past several months. I'd also like to recognize Ben Pigott, who will continue with ECD in a new role as director of corporate development. In this position, Ben will focus on strategic initiatives, including m and a, investor engagement, and the company's evolving capital markets and Bitcoin treasury strategy.

Speaker 2

On behalf of the team, I want to thank him for his many contributions as CFO. ECD Automotive Design is a US based builder of fully bespoke restored luxury vehicles, combining classic automotive beauty with modern performance and customization. From a 100,000 square foot RoverDome headquarters in Kissimmee, Florida, our master certified craftsman hand build each vehicle. We also operate a logistics center in The UK that sources vintage vehicles and parts for transformation. Our five core offerings now include Land Rover Defenders, Range Rover Classics, Jaguar E types, Ford Mustangs, and Toyota FJs.

Speaker 2

Each vehicle is designed in partnership with a client through an immersive luxury design process that results in a one on one personalized vehicle. To date, we have completed 675 builds for customers who have come to expect only the finest results. With average selling prices between 300,000 and 400,000 US dollars and the recent contracts reaching as high as 620,000 US dollars, ECD delivers gross margins among the best in the luxury automotive sector. We participate in a 94,000,000,000 global classic car ecosystem and operate a capital light model with scalable manufacturing and multiple growth channels, including retail and licensing. Supported by strong brand reputation, ECD is the pricing power to consistently achieve high margins.

Speaker 2

Much like Ferrari, our business model enables us to command premium price points with customization and craftsmanship serving as the core drivers of value. Our second quarter performance demonstrated this advantage, delivering record revenue of 7,000,000 US dollars on the strength of bespoke demand and manufacturing efficiencies, including a right first time strategy designed to minimize errors, maximize efficiency, and every more complex builds with shorter shipping timelines and accelerating the revenue recognition. However, we did have to navigate the current macro environment, including higher costs associated with tariffs, shipping, and customs. A highlight of the second quarter for the delivery of EC's first custom Mustang, a natural extension of our lead ship in Land Rover and Jaguar restorations into the iconic world of American muscle cars. Project Ghost, the first Mustang built entirely in house BECD, was a 1967 fastback that embodies everything ECD stands for.

Speaker 2

One of one personalization, authentic heritage powertrains, and best in class craftsmanship. Powered by a Roush engineered 465 horsepower small block v eight and built in a modern RS spec chassis, Ghost delivers the balance of raw muscle and refined drivability that few in the market can replicate. Our exclusive partnership with Rausch allows us to preserve the Mustang's original identity while enhancing reliability, performance, and daily usability. The Mustang program demonstrates the scalability of our model, expanding our addressable market, diversifying revenue streams, and delivering high margins, all while leveraging our existing factory and customer journey without incremental CapEx. With multiple commissions already underway, inspired by America's most iconic Mustangs, the program has quickly begun generating excitement beyond their customer base.

Speaker 2

That momentum was reinforced in July when Project Ghost Mustang won the best of class at the Route sixty six Road Fest in Tulsa, and our Jaguar E type, Project the Wealthy Commission, earned first place at the Lars Anders and Autumn Museum's British Card Air. These national awards validate both the craftsmanship at the heart of ECD and the successful expansion into American Muscle, further strengthening our brand reputation among enthusiasts and collectors. As the summer winds down, we're encouraged by the strong performance of our retail locations. Our stores within a store concept at One Driver's Club in West Palm Beach and our pop up in Nantucket 10 Easy Street both proved that immersive community centered retail is a powerful complement to our digital sales channel. These locations give customers the opportunity to see, touch, and drive our vehicles firsthand while engaging with our design process in a way that online channels simply can't replicate.

Speaker 2

These stores have contributed to backlog growth, generated ready name sales, and accelerated the conversion of inventory into cash. Just as important, both locations have tested as hubs for community engagement that strengthened brand awareness and created new relationships within two of the wealthiest and most influential markets in The US. This early success reinforces our conviction that retail is scalable path to filling our factory and driving cash generation and can be financially justified with as few as two vehicle sales per month. Both the Mustang program and our expanded retail strategy highlight how ECD can drive higher average selling prices by elevating product mix without compromising on quality or the customer journey. I would now like to touch on two significant financial developments that occurred in June that we believe strengthen ECD's strategic position and long term growth trajectory.

Speaker 2

First, we announced a set of proactive initiatives to right size our cost structure and enhance operational efficiency. Following a comprehensive review of our capital allocation expense base, we've implemented targeted cost savings, refined inventory management practices to improve working capital velocity, and negotiated a twelve month grace period on debt service obligations with our lenders. These steps were intended to create a leaner, more agile operating model, one that supports disciplined growth, preserves cash, and positions us to execute on our long term strategy with greater resilience. By streamlining spend and unlocking resources, we are better equipped to invest in the parts of the business that drive revenue growth, margin expansion, and shareholder value. Second, we secured a 500,000,000 equity facility earmarked for the strategic accumulation of Bitcoin as our primary reserve asset, alongside funding for growth initiatives and general corporate purposes.

Speaker 2

This financing option gives us the flexibility to store capital at our discretion, aligning with our view that Bitcoin is a next generation store of value. Importantly, it also enables us to further engage the crypto native customer demographic, a community with significant purchasing power that increasingly seeks to diversify into real world luxury assets like our custom built vehicles. Building on our recent partnership with BitPay to accept cryptocurrency payments, we've launched a targeted promotion. The first 21 customers to purchase a new build using Bitcoin will receive a $21,000 credit towards upgrades. We see this as both a marketing catalyst and a brand differentiator that bridges digital wealth with a high touch real world productive experience.

Speaker 2

With that, I will now pass the call over to Vicky to review our financial results. Vicky.

Speaker 3

Thank you, Scott. It's a pleasure to be here. There are significant opportunities ahead for the company in the coming quarters, I'm excited to be part of that journey. I'd also like to thank Ben for his continued support during the transition, and I look forward to working closely with him in his new role. My immediate priorities are clear, for gaining and maintaining compliance with our NASDAQ listing, ensuring that the company remains appropriately funded for both current operations and future expansion, and focusing on timely SEC filings while strengthening our internal controls and processes.

Speaker 3

Coupled with the costuming initiatives already underway, these actions should have a positive impact both financially and from a regulatory perspective in the second half of the year. Now to discuss second quarter results. ECD reported second quarter revenue of $7,000,000, a 500,000.0 increase over q two twenty four driven by higher revenue build. This represents the highest quarterly revenue in the company's history. Gross profit for the quarter was 1,400,000.0, down 700,000.0 from q two twenty four.

Speaker 3

Gross margin was 20% compared to 32% in the prior year quarter. The decline was primarily due to higher shipping and custom fees. We are proactively engaging with vendors to identify efficiencies and potential savings in these areas going forward. Total operating expenses were $4,000,000, a 1,400,000.0 increase year over year, primarily driven by higher G and A expenses. G and A expenses were $3,700,000, up 1,400,000.0 from Q2 twenty four, largely due to higher non cash equity compensation expense.

Speaker 3

Loss from operations were $2,600,000, an increase of 2,100,000.0 from the prior year period. Net loss was $4,300,000 compared with $2,000,000 in q two twenty four. This increased loss was primarily driven by the increased operating loss and higher interest expense, partially offset by a gain on the fair value adjustments to warrant and conversion option liabilities and a naught 400,000.0 gain from debt converted into preferred stock. Loss per share was 11¢ compared to 6¢ in the prior year quarter. Regarding our balance sheet and liquidity position, as of 06/30/2025, cash and cash equivalents totaled 600,000 compared with $1,500,000 as of December.

Speaker 3

For the first six months of twenty twenty five, operating activities used 4,200,000.0 of cash, including 1,200,000.0 to fund working capital. Financing activities provided $3,400,000 primarily from the proceeds of the January and June 2025 convertible notes and the April 2025 note payable. These were partially offset by repayments of the agile and floor loans. During the second quarter, we entered into an amendment and exchange agreement with an institutional investor, allowing the exchange of amounts outstanding under the convertible notes into convertible preferred stock. At closing, the holder converted the August 2024 convertible notes, including principal and accrued interest, into 4,000 shares of convertible preferred stock, thereby improving our shareholders' deficit position.

Speaker 3

I'd like to close by discussing some subsequent developments. Following the close of the quarter, on August 6, we received a delisting notice from Nasdaq as a result of noncompliance of continued listing requirements. Prior to receiving this notice, we had already engaged an advisory firm to help us navigate this process both efficiently and effectively. To regain and maintain compliance and support our broader growth initiatives, we have taken the following additional steps. In July, we filed an s one registration statement to register 300,000,000 shares in connection with our previously announced $500,000,000 equity line of credit.

Speaker 3

This facility also provides flexibility to diversify our treasury strategy, including the potential use of Bitcoin for both inbound and outbound transactions. We exchanged $12,000,000 of convertible debt into preferred stock against two separate transactions. And finally, we have raised an additional 1,700,000.0 of equity capital to fund the business and to also improve our shareholder deficit. These steps substantially deleverage our balance sheet, significantly reduce cash interest obligations, and will accelerate our path to positive cash flow. Taken together, these efforts will allow us to regain and maintain compliance with Nasdaq, strengthen our balance sheet, and combined with the continued g and a streamlining and planned margin improvements position us strongly as we enter the second half of the year.

Speaker 3

Our focus remains on executing our growth strategy and delivering long term value to our shareholders. This concludes our prepared remarks. I'll now hand back to the operator to open the line for questions. Thank you.

Operator

Ladies and gentlemen, the floor is now open for questions. If you would like to ask a question, please press Our first question this morning is coming from Theodore O'Neill of Litchfield Hills Research. Please go ahead.

Speaker 4

Oh, thanks very much. Scott, I wonder if you could give us some more details on Mustang rollout and what you see in pipeline deliveries for the next twelve months.

Speaker 2

Yeah. The Mustang has been a great learning experience for us as most new products always introduce them. The blend of introducing classic cars with modern customization and performance is not a challenge many people want to take on, but we kind of thrive in that. And we're fortunate to have 67 technicians that they kind of like doing this as a thing at the weekend. So this is fun to them.

Speaker 2

What we faced with some challenges was it was in terms of the part supply chain. At first when we did it, it didn't quite fit our production model in terms of the quality, specifically to fit and finish on alignment. So we had to kind of flip the model in real time and pivot quickly. And we changed the models going to a panel model that we fabricate with the technicians in house now. But yeah, I mean, once we got through it, it was a great product and we didn't honestly expect it.

Speaker 2

We didn't have anything to do with the award we received. The client took delivery of the car and took it to an event, it won first place. So we were really proud of that, and I'm pleased that the technicians have put the efforts in. And yeah, the backlog's building, know, we've got more in production now. They're in the production line as we speak.

Speaker 2

Pivoting and learning every time we do something to build the Mustang. And you know, it took us I'd say it comfortably took us, know, three or four years to get the Defender wedge. We really got that nailed down. The Mustang were much further ahead, because we're much more involved with the business, we're much more involved in skill base that's within the team. So yeah, I think by unit number two or three, we'll be turning that into like a fairly streamlined production model.

Speaker 4

Okay. And and on the the this is a financing question. On the on the Bitcoin, $500,000,000 financing, is that is that really more of a marketing tool or financing tool or some combination of the two?

Speaker 3

Thanks, Theo. It's it's a combination of the two. So, obviously, as Scott mentioned in his remarks, we do have a lot of people with with a lot of crypto and Bitcoin currencies, so it is something that we do wanna start getting payments in and then, obviously, building a reserve through this, equity line of credit that we have. The equity line of credit won't be used solely for for our crypto strategy. It'll also be used for expansion of the business, opening new retail units, opening further lines of production as well, so that we can expand the company as well.

Speaker 3

So it'll be a combination effort with the with the facility once it goes live.

Speaker 4

Okay. Thanks very much.

Operator

Thank you. At this time, I'd like to turn the floor back over to Mr. Wallace for closing comments.

Speaker 2

We appreciate everyone's time today and your continued interest in ECD. Please visit our website, ECD Auto Design, to stay up to date on our latest projects, and feel free to reach out to our IR site on the same website if you have any questions. Have a great day.

Operator

Ladies and gentlemen, this concludes today's event. You may disconnect your lines or lock off the webcast at this time and enjoy the rest of your day.

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