Workhorse Group Reports Third Quarter 2020 Results

CINCINNATI, Nov. 9, 2020 — (PRNewswire) — Workhorse Group Inc. (Nasdaq: WKHS) ("Workhorse" or "the Company"), an American technology company focused on providing sustainable and cost-effective drone-integrated electric vehicles to the last-mile delivery sector, today reported financial results for the third quarter ended September 30, 2020.

Release Updates and Highlights

  • Sets 2021 production volume target at 1,800 vehicles.
  • Received a purchase order for 500 C-1000 trucks from Pritchard Auto Company for its National Fleet Program, which is being financed by Hitachi Capital America ("HCA").
  • Through various financings, the Company improved its current cash position to over $260 million.
  • Workhorse strategic partner Lordstown Motor Corporation ("LMC") completed its merger with DiamondPeak Holdings Corp. LMC's Class A shares now trade on the Nasdaq Global Select market under the ticker symbol "RIDE." Workhorse has maintained its 10% ownership stake in the merged company. That stake is estimated at nearly $285 million based on the November 6th closing price.
  • Partnered with Hitachi and Hitachi Capital America to optimize the Company's manufacturing, operational and supply chain capabilities as well as to develop a national dealer network to support Workhorse's sales with vehicle financing options for both dealers and customers.
  • Recorded additional new vehicle sales orders from Fluid Systems and eTrucks LLC.

Management Commentary
"Our strategic partnership approach to engaging with dealerships has paid off very quickly as evidenced by our recent 500 truck order from Pritchard Auto Company that will be financed by HCA," said Workhorse CEO Duane Hughes. "We believe this initial sale is just the start of this channel's growth. We were also encouraged by the results of a positive dealer survey administered by HCA that looked favorably on the long-term prospects for the EV delivery truck market and, in particular, Workhorse within that ecosystem."

Hughes added, "Previously, we projected 300-400 vehicles to be produced by the end of 2020, mostly in the fourth quarter. Although we will still manufacture and deliver vehicles in Q4, it will be a substantially lower amount than our previous guidance. We are unable to give a specific estimate for the following reasons:

  • The inability of our primary battery supplier to meet our volumes due to capacity issues and COVID-related slowdowns;
  • COVID-19: Having more than 36% of our production-related staff currently out with the virus or quarantined awaiting results and with daily increases in cases, we must protect our employees' health. To do that, we have modified our assembly process, limited production support from third party sources, and delayed planned additions to our assembly staff.

"We view this as only a delay in our progress. We've introduced several new battery supplier options into our supply chain and will have supplemental volume additions in the first quarter of 2021. While we cannot predict the full impact from COVID right now, let alone in 2021, when conditions improve and the coronavirus is no longer a business issue for us and our suppliers, then we would anticipate producing approximately 1,800 units in 2021."

Third Quarter and Recent Operational Highlights

  • October 2020: Received a purchase order for 500 C-1000 trucks from Pritchard Auto Company for its National Fleet Program, which is being financed by Hitachi Capital America.
  • October 2020: Submitted formal "Type Certification" application to the Federal Aviation Administration ("FAA") for the Company's HorseFlyTM Unmanned Aerial System ("UAS").
  • October 2020: Received approval from the New York Truck Voucher Incentive Program ("NYTVIP") to offer monetary vouchers for C-Series all-electric delivery vehicles in select New York State counties.
  • October 2020: Closed $200 million convertible note financing from institutional lenders and converted pre-existing $70 million note into shares of the Company's common stock, altogether providing Workhorse with over $260 million in cash.
  • September 2020: Achieved an improved and industry-leading range of approximately 160 miles per charge under urban situations for its 2020 model year C-1000 Extended Range.
  • August 2020: Entered into strategic agreement with Hitachi for an operational assessment of Workhorse's manufacturing, operational and supply chain capabilities, benchmark to best-in-class standards and provide recommendations that support the Company's increased production requirements; separate agreement with Hitachi Capital America to assist in developing a national dealer network and support Workhorse's sales with vehicle financing options for both dealers and customers, including dealer floor-plan programs.
  • August 2020: Workhorse strategic partner Lordstown Motors Corp. ("LMC") entered into a business combination agreement with DiamondPeak Holdings Corp. ("DPHC"), a special purpose acquisition company.
    • October 2020: Shareholders of DPHC approved the agreement, enabling LMC to become a publicly traded company. LMC's Class A shares now trade on the Nasdaq Global Select market under the ticker symbol "RIDE."
  • July 2020: Awarded Executive Order: A-445-0003 from the California Air Resources Board ("CARB"), designating multiple C-Series models as zero-emission vehicles in the state of California in addition to the 13 other states under Section 177 of the Clean Air Act.
    • July 2020: Obtained HVIP Eligibility from CARB, qualifying certain Workhorse C-Series models for monetary vouchers of up to $50,000 per vehicle.
    • October 2020: Awarded Executive Order: A-445-0003-1 from CARB for the C-1000 Extended Range, granting the same designations as noted above.

Third Quarter 2020 Financial Results
Sales for the third quarter of 2020 were recorded at $565,000 compared to $4,000 in the third quarter of 2019.

Cost of goods sold increased to $2.8 million from $1.4 million in the third quarter of 2019. The increase was primarily driven by increases in labor and materials relating to costs for the C-Series production.

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