Workhorse Group Inc. (Nasdaq:
WKHS)
(“Workhorse” or “the
Company”), an American technology company with a vision to
pioneer the transition to zero emission commercial vehicles, today
reported financial results for the first quarter ended March 31,
2023.
Management Commentary
“Following our stabilize, fix, and grow turnaround framework, we
have rebuilt Workhorse’s foundation and are executing on our
product portfolio roadmap, including moving forward with production
and deliveries,” said Workhorse CEO Rick Dauch. “In the first
quarter, we continued to advance our commercial vehicle programs.
The W4 CC is now in regular production, we completed the W750 pilot
builds and expect to start production during Q2 2023. We are on
track to meet our annual sales targets based on firm and forecasted
customer orders.”
Mr. Dauch continued, “We also remain on schedule to begin
production of the all-new W56 step-van and strip chassis units in
the third quarter. We are encouraged by customer feedback we
received at recent industry conferences where we unveiled the W56,
held test drive sessions, and displayed a services upfitted version
of the W4 CC. Additionally, our Aerospace business continues to
hold flight demonstrations with prospective government and
commercial customers.”
Mr. Dauch concluded, “Looking ahead, our focus remains on
executing our growth strategy of delivering quality products to our
customers. We are making steady progress in expanding our CV dealer
network and plan to onboard 8-10 new dealers in 2023. Although we
recognize there is still significant work ahead of us, we are
confident that the actions we are taking today will establish a
platform to drive growth and create value for our shareholders,
customers, and communities.”
First Quarter 2023 and Recent Operational
Highlights
Since the start of the year, Workhorse made progress across its
strategic and operating priorities:
- Ramped up production of its W4 CC vehicles in its transformed
Union City, Indiana plant. The Company is currently producing 16
units/week and plans to ramp up to 25 units/week by Q3.
- The Company expects to begin production of the W750 in Q2
2023.
- Successfully unveiled the W56 production intent vehicle at the
NTEA Work Truck Show® in Indianapolis in March and featured a fully
subscribed ride-and-drive session at the Advanced Clean
Transportation Expo in Anaheim, California in May.
- Delivered 18 Tropos vehicles in Q1 2023, which were assembled
in Workhorse’s Union City plant. Volumes for final assembly in the
U.S. market are expected to reach about 2,000 units per year once
ramp-up is complete.
- Made strides in Aerospace, having successfully completed a
number of demonstrations for potential last-mile delivery
customers, industry partners and government agencies and
officials.
- Executed on Stables & Stalls package delivery routes for
FedEx Ground. The Company expects to complete the transition to
electrify the Lebanon fleet by the end of Q2 2023.
- Completed facility improvements at the Company’s drone
engineering, technical design and production facility in Mason,
Ohio and on track to install an end-of-line dynamometer and paint
line in Union City ahead of the W56 launch in Q3 2023.
Executing Strategic Commercial Vehicle Product
Roadmap
Workhorse is making progress on its strategic product roadmap
for its electric vehicle delivery offerings:
- W4 CC/W750: After receiving the GreenPower
chassis units at the end of December 2022, Workhorse worked to
modify and upgrade these base units to fully meet both internal and
commercial industry quality standards. This process took longer
than expected to work through a few component delivery issues,
specifically light bezels, cab heaters, back panel covers, and
liners. As a result, the Company delivered 10 trucks during Q1
2023.However, Workhorse expeditiously resolved the issues and is
currently delivering an additional 40 trucks from inventory to
fulfill a fully executed purchase order. The Company remains on
track to meet full year 2023 delivery targets for the year. The
initial W750 pilot builds are complete, design changes have been
made, and suppliers have been sourced. Production and shipment of
W750s to customers are expected to begin during Q2 2023.
- W56: The W56 program remains on track for
start of production in Q3 2023. The Company successfully unveiled
the new step-van vehicle at the NTEA Work Truck Show® in
Indianapolis and had a fully subscribed ride-and-drive session at
the ACT Expo in Anaheim, California last week. Both events garnered
significant positive feedback from potential customers.
- WNext: The Company has plans to develop a
next-generation vehicle with an accessible low floor frame,
improved ride and handling, efficient lightweight systems, and
advanced technology. Workhorse will focus on prototype design,
test, and build in 2023 and 2024 with production planned to begin
2025.
- Stables & Stalls: Workhorse’s Stables
& Stalls provides services and charging infrastructure to
support small fleet operators with EV powered fleets. The Company
recently renewed its contract to deliver last mile packages for
FedEx Ground in Ohio. Workhorse is continuing to review options to
open a second operational location in an incentive supported
state.
Progress in Aerospace Commercialization
Workhorse achieved important milestones in its Aerospace
business including:
- Nearing reception of U.S. government purchase order for a
FALCON drone system from the U.S. Air Force for use by the North
Spark Defense Laboratory, located at Grand Forks USAF Base in North
Dakota.
- Conducted demonstrations of simultaneous package deliveries by
multiple drone aircrafts to prospective last-mile delivery clients
and a potential industry partner.
- Successfully completed demonstrations for the U.S.
military.
- Completed scanning of land in Arkansas and Mississippi to
support U.S. Department of Agriculture’s (“USDA”) second grant to
support underserved farmers and ranchers.
- Actively exploring new opportunities for collaboration with
federal and state government agencies.
First Quarter 2023 Financial Results
Sales, net of returns and allowances, for the first quarter of
2023 increased to $1.7 million compared to $14.3 thousand in the
same period last year. The increase in net sales was primarily due
to sales volume of the W4 CC.
Cost of sales increased to $5.3 million from $3.9 million in the
same period last year, primarily due to a $0.9 million increase in
costs related to direct and indirect materials and a $1.1 million
increase in employee compensation and related expenses to support
vehicle sales during the period. The increase in cost of sales was
partially offset by a $0.4 million decrease in inventory reserve
expenses and a $0.2 million decrease in overhead related costs.
Selling, general and administrative (“SG&A”) expenses
increased to $14.7 million from $11.9 million in the same period
last year. The increase in SG&A expenses was primarily driven
by a $3.1 million increase in employee compensation and related
expenses primarily due to increased headcount and non-cash
stock-based compensation expense.
Research and development (“R&D”) expenses increased to $7.2
million compared to $4.0 million in the same period last year. The
increase in R&D expenses was primarily driven by a $1.7 million
increase in prototype expenses related to the continued development
of the Company’s expanding product roadmap including the HorseFly™,
Falcon, W56, WNext, and W750 vehicle programs, an increase of $0.7
million in employee compensation and related expenses as the
Company increased headcount, and a $0.3 million increase in
consulting expenses.
Net interest income (expense) was $0.6 million compared to ($2.2
million) in the same period last year. Net interest income in the
current period was driven by interest earned on cash in the
Company’s money market investment account. Net interest expense in
the prior period was primarily related to fair value adjustments,
contractual interest expense, and loss on conversion of the
Company’s former convertible notes due 2024. The entire outstanding
aggregate principal of these notes was exchanged for shares of the
Company’s common stock during 2021 and 2022.
Net loss was $25.0 million for the three months ended March 31,
2023 compared to $22.1 million in the same period last year.
As of March 31, 2023, the Company had $79.1 million in cash and
cash equivalents.
2023 Guidance
Workhorse is reaffirming its outlook and expects to generate
between $75-125 million in revenue in 2023.
“The Workhorse team is focused on execution and financial
discipline,” said Workhorse CFO Bob Ginnan. “We expect to ramp up
production and delivery throughout the rest of the year, which will
generate significant revenue growth in 2023. At the same time, we
are managing our cash burn well and enhancing our systems
internally to make us an even more efficient organization.”
Conference Call
Workhorse management will hold a conference call today (May 15,
2023) at 10:00 a.m. Eastern time (7:00 a.m. Pacific time) to
discuss these results and answer related questions.
U.S. dial-in: 877-407-8289International dial-in:
201-689-8341
Please call the conference telephone number 10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section
of Workhorse's website.
A telephonic replay of the conference call will be available
after 1:00 p.m. Eastern time on the same day through May 22,
2023.
Toll-free replay number: 877-660-6853International replay
number: 201-612-7415Replay ID: 13738511
About Workhorse Group Inc.
Workhorse is a technology company focused on providing ground
and air-based electric vehicles to the last-mile delivery sector.
As an American original equipment manufacturer, we design and build
high performance, battery-electric trucks and drones. Workhorse
also develops cloud-based, real-time telematics performance
monitoring systems that are fully integrated with our vehicles and
enable fleet operators to optimize energy and route efficiency. All
Workhorse vehicles are designed to make the movement of people and
goods more efficient and less harmful to the environment. For
additional information visit workhorse.com.
Forward-Looking Statements
The discussions in this press release contain
forward-looking statements reflecting our current expectations that
involve risks and uncertainties. These statements are made under
the “safe harbor” provisions of the U.S. Private Securities
Litigation Reform Act of 1995. When used in this press release, the
words “anticipate,” “expect,” “plan,” “believe,” “seek,” “estimate”
and similar expressions are intended to identify forward-looking
statements. These are statements that relate to future periods and
include, but are not limited to, statements about the features,
benefits and performance of our products, our ability to introduce
new product offerings and increase revenue from existing products,
expected expenses including those related to selling and marketing,
product development and general and administrative, our beliefs
regarding the health and growth of the market for our products,
anticipated increase in our customer base, expansion of our
products functionalities, expected revenue levels and sources of
revenue, expected impact, if any, of legal proceedings, the
adequacy of liquidity and capital resources, and expected growth in
business. Forward-looking statements are statements that are not
historical facts. Such forward-looking statements are subject to
risks and uncertainties, which could cause actual results to differ
materially from the forward-looking statements contained in this
press release. Factors that could cause actual results to differ
materially include, but are not limited to: our ability to develop
and manufacture our new product portfolio, including the W4 CC,
W750, W56 and WNext platforms; our ability to attract and retain
customers for our existing and new products; risks associated with
obtaining orders and executing upon such orders; supply chain
disruptions, including constraints on steel, semiconductors and
other material inputs and resulting cost increases impacting our
company, our customers, our suppliers or the industry; our ability
to capitalize on opportunities to deliver products to meet customer
requirements; our limited operations and need to expand and enhance
elements of our production process to fulfill product orders; our
inability to raise additional capital to fund our operations and
business plan; our inability to maintain our listing of our
securities on the Nasdaq Capital Market; the ability to protect our
intellectual property; market acceptance for our products; our
ability to control our expenses; potential competition, including
without limitation shifts in technology; volatility in and
deterioration of national and international capital markets and
economic conditions; global and local business conditions; acts of
war (including without limitation the conflict in Ukraine) and/or
terrorism; the prices being charged by our competitors; our
inability to retain key members of our management team; our
inability to satisfy our customer warranty claims; the outcome of
any regulatory or legal proceedings; and other risks and
uncertainties and other factors discussed from time to time in our
filings with the Securities and Exchange Commission ("SEC"),
including under the “Risk Factors” section of our filings with the
SEC. Forward-looking statements speak only as of the date hereof.
We expressly disclaim any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in our expectations with
regard thereto or any change in events, conditions or circumstances
on which any such statement is based, except as required by
law.
Media Contact:Aaron Palash / Greg KlassenJoele
Frank, Wilkinson Brimmer Katcher212-355-4449
Investor Relations Contact:Matt Glover and Tom
ColtonGateway Investor
Relations949-574-3860WKHS@gatewayir.com
Workhorse Group Inc.Condensed
Consolidated Statements of Operations(Unaudited)
|
Three Months EndedMarch 31, |
|
|
2023 |
|
|
|
2022 |
|
Sales, net of returns and
allowances |
$ |
1,693,415 |
|
|
$ |
14,299 |
|
Cost of sales |
|
5,328,119 |
|
|
|
3,923,351 |
|
Gross loss |
|
(3,634,704 |
) |
|
|
(3,909,052 |
) |
Operating expenses |
|
|
|
Selling, general and administrative |
|
14,689,843 |
|
|
|
11,910,259 |
|
Research and development |
|
7,224,849 |
|
|
|
4,011,934 |
|
Total operating expenses |
|
21,914,692 |
|
|
|
15,922,193 |
|
Loss from operations |
|
(25,549,396 |
) |
|
|
(19,831,245 |
) |
Interest income (expense),
net |
|
550,359 |
|
|
|
(2,223,290 |
) |
Loss before benefit for income
taxes |
|
(24,999,037 |
) |
|
|
(22,054,535 |
) |
Benefit for income taxes |
|
— |
|
|
|
— |
|
Net loss |
$ |
(24,999,037 |
) |
|
$ |
(22,054,535 |
) |
|
|
|
|
Net loss per share of common
stock |
|
|
|
Basic and Diluted |
$ |
(0.15 |
) |
|
$ |
(0.15 |
) |
|
|
|
|
Weighted average shares used
in computing net loss per share of common stock |
|
|
|
Basic and Diluted |
|
167,144,351 |
|
|
|
151,939,491 |
|
Workhorse Group Inc.Condensed
Consolidated Balance Sheets(Unaudited)
|
March 31,2023 |
|
December 31,2022 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
79,110,576 |
|
|
$ |
99,276,301 |
|
Accounts receivable, less allowance for credit losses of $46,259
and zero as of March 31, 2023 and December 31, 2022,
respectively |
|
1,815,320 |
|
|
|
2,079,343 |
|
Other receivable |
|
15,000,000 |
|
|
|
15,000,000 |
|
Inventory, net |
|
21,937,725 |
|
|
|
8,850,142 |
|
Prepaid expenses and other current assets |
|
14,984,887 |
|
|
|
14,152,481 |
|
Total current assets |
|
132,848,508 |
|
|
|
139,358,267 |
|
Property, plant and equipment,
net |
|
26,924,853 |
|
|
|
21,501,095 |
|
Investment in Tropos |
|
10,000,000 |
|
|
|
10,000,000 |
|
Lease right-of-use assets |
|
11,434,325 |
|
|
|
11,706,803 |
|
Other assets |
|
176,310 |
|
|
|
176,310 |
|
Total Assets |
$ |
181,383,996 |
|
|
$ |
182,742,475 |
|
Liabilities |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
14,458,894 |
|
|
$ |
10,235,345 |
|
Accrued and other current liabilities |
|
45,035,950 |
|
|
|
46,207,431 |
|
Deferred revenue, current |
|
2,207,250 |
|
|
|
3,375,000 |
|
Warranty liability |
|
2,066,588 |
|
|
|
2,207,674 |
|
Current portion of lease liabilities |
|
1,390,135 |
|
|
|
1,285,032 |
|
Total current liabilities |
|
65,158,817 |
|
|
|
63,310,482 |
|
Deferred revenue,
long-term |
|
2,940,749 |
|
|
|
2,005,000 |
|
Lease liabilities,
long-term |
|
8,463,882 |
|
|
|
8,840,062 |
|
Total Liabilities |
|
76,563,448 |
|
|
|
74,155,544 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
Equity: |
|
|
|
Series A preferred stock, par value $0.001 per share, 75,000,000
shares authorized, zero shares issued and outstanding as of
March 31, 2023 and December 31, 2022 |
|
— |
|
|
|
— |
|
Common stock, par value $0.001 per share, 250,000,000 shares
authorized, 180,580,804 shares issued and outstanding as of
March 31, 2023 and 165,605,355 shares issued and outstanding
as of December 31, 2022 |
|
180,580 |
|
|
|
165,605 |
|
Additional paid-in capital |
|
757,288,067 |
|
|
|
736,070,388 |
|
Accumulated deficit |
|
(652,648,099 |
) |
|
|
(627,649,062 |
) |
Total stockholders’ equity |
|
104,820,548 |
|
|
|
108,586,931 |
|
Total Liabilities and Stockholders’ Equity |
$ |
181,383,996 |
|
|
$ |
182,742,475 |
|
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