Q3 2023 Workhorse Group Inc Earnings Call
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Ladies and gentlemen, greetings and welcome to Workhorse group's third quarter 2023 Investor call. As a reminder, this conference call is being recorded its now my pleasure to introduce your host for spirit.
Vice President of corporate development and communications stand much Sir you may begin.
Thank you Sherry good morning, and welcome to all of you joining us on todays third quarter 2023 results call before we begin I'd like to note that we have posted our results for the third quarter ended September 32023 via press release and have also filed our latest 10-Q and a separate 8-K you can find this release.
<unk> as well is this a comfort of the accompanying presentation as well as <unk> SEC filings and the Investor Relations section of our website.
Tracking with the posted presentation during the call. So please follow along either through the link in the press release or through the website directly.
Joining me on today's call are Rick now, our CEO and Bob <unk> our CFO.
The agenda for today can be found on slide three following my opening remarks, I'll hand, it over to Rick will give you an update on the success that we've had we've made on our strategic and operational priorities during the third quarter.
Bob will then walk us through our financial results for the quarter and our revised 2023 full year guidance. Rick will then wrap up before we open the call for questions.
Our disclaimer can be found on slide five some of the excuse me slide for some of the comments. We made today are forward looking and are therefore subject to certain provisions as well as the risks and uncertainties you can find the full disclaimer statement and our periodic filings with the U S E C as well as in today's press release.
I'll now turn the call over to Rick <unk>, Rick Thanks, Dan and good morning, everyone. Thank you all for taking the time to join US today and your continued support of workhorse.
Here to talk about our achievements and results for the third quarter and the actions we are taking the position workhorse for both near term and long term success.
Speaking about the third quarter, what we're talking about is a tale of two cities.
On the one hand, we made important steps forward across our product roadmap that will set the stage for us to drive significant significant profitable growth in 2024 and beyond in all areas within our control.
On the other hand, our results this quarter and our outlook for the remainder of 2023 were significantly impacted by our inability to secure H bip vouchers in the third quarter.
I'm pleased to report that we have recently resolved this voucher available to the issue with help from the Carb leadership team in just the past week.
I'm proud of our team's dedication and hard work here at workhorse and just over the two years since taking over the company.
Have.
Yeah, a final vehicle assembly up and running for not one, but three new product lines. The W. Four C cab chassis that W 750, and W. Five six step vans.
Anyone who understands the automotive industry realizes how tough and policy. This to design test and launch new products and it typically takes at least three to five years.
The workhorse team did it in less than 22 months at.
At the same time, we now have to sell drones in the market and are speaking to a greater number of perspective customers on the aero side of the business.
Of course is now poised to begin our growth phase and it's a testament to the incredibly talented and again dedicated team we have here today.
With that let's let me go into some of our key accomplishments for the quarter.
On slide five.
Our most significant update across our commercial vehicles in the third quarter was launching production after completing F. N B S. S durability and validation testing for the W. Five six our third product vehicle line of the year and the lifeblood of the company.
I won't be the first CEO of an E D. OEM to say this since Elon Musk has already made the observation, but manufacturing truly is somewhere between 100 to 1000 times harder than making a prototype or trade show vehicle.
Like Elon, we cannot emphasize enough how hard production is relative design and it worked for US we have now launched for manufacturing on the W. Five six from start to finish in 'twenty two months again.
We also increase our production rates to forward W. 750 step vans, a week and ship multiple configured demonstration W. For C C vehicles to potential customers.
We made continuous continued progress expanding our dealer network and commercial footprint signing up to new certified dealers, which include stocking orders to be filled over the next 12 months.
During Q3, we received the IRS approval as a qualified manufacturer for the commercial claim vehicle credit, which provides a workhorse customers eligibility to receive up to $40000 and federal tax credit for vehicle for deliveries of all workhorse vehicles in 2023 and beyond.
We added talented sales staff with experience in commercial fleet and governmental sales cause somebody building and upgrading experience as well as beefed up our regional depth out in California.
Corporate support 90 systems are working across all functions with the completion of our phase or phase one ERP project, a key back office enabler as we move from engineering and testing into production and sales are.
Our lean manufacturing practices at the plant had been reinforced and we are working across our extended supply chain.
The bottom line is that we now have the people products and processes support systems and business partners in place to grow into a viable commercial EV OEM.
At stables, we continued transition to grow the E D fleet and expand our customer delivery responsibilities.
Peak season starts later this week on November 818th when we are ready to meet the surge in demand with a proven capable E V fleet, which are drivers find to be much more reliable and much more cost effective than the old isolate we acquired back in 2022.
The Aero business continues to generate revenue and has now sold years to both U P. S flight forward and Valkyrie.
Two more USDA grants were received in the quarter and just to put those grants a perspective that revenue impact is akin to selling more than 60 drones. So it's meaningful and important business for us here at Arrow.
We completed the administration of the class action lawsuit and received approval from the shareholder base for an increase in share authorization by 200 million shares at.
At Union City, we completed installation and placed into service and in house paint system, representing the lap major near term capital investment required for that facility until sometime in second half 'twenty four.
Finally, while there is strong demand for their vehicles. The team at Trop post ran some significant operational and financial had imagined during Q3 <unk>.
As a result, we are working with the management team their creditors and partners to find a successful path forwards recapitalization of the business, we expect <unk> to find a path forward during Q4.
Moving to slide six let me talk a bit more about each step.
Our ability to deliver W. Four C CS and W. Seven bid. These during 2023 was severely impacted by the lack of age with voucher availability in California.
This was especially impactful during Q3 and a large portion of Q4.
As I mentioned earlier I am happy to report that we have successfully resolve this issue and as of November eight harvest established a first of its kind program for intermediate vehicle manufacturers with workhorse.
As a result, we now have our own voucher pool here at workhorse, a huge enabler for commercial EV sales.
Our months of efforts with them and thanks to the problem solving the average of the Carb Air Resources Board team, we broke through a major regulatory obstacle workhorse was facing and the number one EV market in the United States called California.
As further evidence of the importance of this breakthrough we added a new certified dealer in California. During the last week was awaiting the car voucher decision.
This deal are committed to a stocking order and is working to secure a large fleet order using the family of workhorse vehicles, we can provide him.
Turning to slide seven let.
Let me provide a few updates on our class four vehicle programs for the <unk>.
W for C C and W. 750, we've seen several positive market signals.
First we have our first repeat orders from dealers in both New York, and California, which indicates increasing market demand for these products.
Importantly, we shipped multiple demonstration vehicles to potential customers, including both box and reefer trucks. In these two states. These are important opportunities for us out in the market.
We also completed a demonstration test with the city government agencies in California, and on 230 day delivery routes for a major office supply company on the East Coast.
All three demos were successful and we await customer decisions on future orders.
We have W forces he trucks with ox bodies out for further demonstration and testing with a previous workhorse customer with plans to convert 100% of the fleet E vehicles by 2025 to 2026.
We are now capable of producing one W. Some 50 per day or four per week out of the plant. In addition to the demos I mentioned and those in services and serves a stable we have several other demo and fleet opportunities. We are pursuing with large last mile parcel customers in both Q4 this year and early Q1 next year.
I also want to make clear that all of our vehicles across our commercial vehicle product roadmap are profitable at the contribution margin level.
Which stands in Stark contrast to the legacy workhorse vehicles as we continue to scale production and grow the sales of our trucks, we expect to do so profitably.
Moving to slide eight as I mentioned during the quarter. We began production of both the W. Five six strip chassis and stepped down.
After successfully completing all F N b S S durability, and validation testing as well as supplier part Pee Pap certification.
We anticipate final H blips certification through carb to be completed in Q4 2023 with a W. Five six.
Drilling down a bit we completed over 250000 miles on the Navistar test track, which I had mentioned previously is a real real hard tests.
Again, we have deep at all the individual parts on this vehicle.
What this means in practical terms is that we can now deliver automotive OEM level quality products to our customers something we think will differentiate us in the marketplace against other startups.
You can provide either a strip chassis or a complete step van vehicle, we can paint them on site.
We will be able to produce up to two step vans per day by the end of Q4 and ramp up the five to eight units per day in the first quarter of 2024.
Put another way our lead times for complete step Bam vehicles is basically a 120 days compared to nine to 12 months a source from other parties based on what we're hearing from fleets, we're calling on.
I believe that is a real competitive differentiator for workhorse in the step van segment, a huge paradigm shift from what has been traditionally a capacity restricted duopoly situation for more than three decades.
17 U S states move to adopt the new carb clean fleet mandates workhorse is well positioned to earn market share and the step van segment.
On slide nine I wanted to share a picture of one of our first production step vans out in the field.
We have initial production demonstration units are already operating in California with multiple partners and.
And we have received extremely positive feedback on the performance on real World Test last mile routes up to 125 miles.
We were able to put that truck together, including custom outfit packages literally in six weeks from the time, we discussed the concept to delivery with this potential California out in California.
We don't think we.
We don't think there's any other customer who can do such a job.
Importantly, we have strong customer interest and the W. Five six and we are confident in our ability to secure firm orders.
Purchase orders in the fourth quarter and beyond.
The W. Five six will be a major driver of our growth and success moving forward as we capitalize on the transition to commercial Evs.
As a reminder, we have the capacity to build up to 5000 W. Five six units per year at our Union City.
Plant on one shift, which would generate more than $1 billion of revenue.
On slide 10, we continue to successfully deliver last mile packages for Fedex ground and incrementally grow route assignments in our stables operations.
We electrified about 70% of the lab and Ohio based sleep and are continuing to review options to partner with operators and incentive based states.
We're also looking at several other approaches to get more trucks in the field.
We have plans to add to Wi Fi six vehicles to our Ohio base fleet in Q4 of 2023.
And we are in the first stages of data analysis on our ice to E V transition White paper.
I will say that through this initiative, we are gaining tremendous real world experience and more importantly credibility with our future customers to better serve independent contractor fleet operators as they make the transition to evs.
On slide 11, our aerospace team achieving notable milestones during the third quarter.
We began drone assembly in our Mason, Ohio facility and sold and delivered three additional drone aircraft to customers.
Workhouse also advance our efforts to receive FAA certificate certificate approval for the horse why we entered the FAA process.
On the horse live with on the EPS light forwards FAA part 135 drone airline certificates.
Our Aero business is working closely with the team at U S. U P. S flight forward and the FAA and Plaza have everything necessary to have the horse why approved for FAA part 135 operations by the end of third quarter end of 2023.
This is an important next step in bringing the horse wider market and reflects U P. S flight forwards recognition that our drones are safe reliable and capable.
We also received two additional USDA grants in the third quarter totally about $1.1 million and additional funding.
We are also exploring additional applications for both the horse lie and Falcon Jones with the U S D. A leadership team.
That being said as you likely saw in our press release. This morning in connection with our earnings announcement. The company has initiated a review of strategic alternatives for the Aero business.
We are proud of the advancements we've made across our business, we built and begun to operate our manufacturing facilities and our market, leading safe and reliable drones are drawing customer interest both commercially and through government agencies, both here in the United States and overseas.
With this foundation now in place we determined at the beginning this strategic view now is prudent to ensure we are unlocking the most value for workhorse shareholders, while best positioning our aero business to capture and fund future growth opportunities.
Looking ahead.
We will evaluate a broad range of options for the Aero business, including a potential sale of the business strategic partnerships, where they can see in the execution of our strategic plans for Aero within workforce. We are still in their very early stages of this review process and we will provide updates if and when we have news to share.
With that I'll now turn the call over to Bob to discuss our financial results for the quarter.
Thanks, Rick, let's turn to slide 12 to discuss our third quarter financial results.
Sales net of returns and allowances for the third quarter of 2023 recorded a $3 million compared to $1 5 million in the same period last year.
The increase in sales was primarily a result of the resource all the sales allowance in the current period related to the sale of <unk> before cc vehicles in the second quarter of 2023.
Cost of sales decreased to $6 6 million for the third quarter of 2023 compared to $9 5 million in the same period last year.
The decrease was primarily due to a $2 9 million reduction of inventory reserves and adjustments in the same period a year ago. As a result of the disposition of C series inventory.
Lower sales volume in the current period to reduce costs by $1 million, which was offset by $1 2 million increase in employee compensation and related expenses as the company continued to expand its union city, Indiana workforce to support future vehicle production.
Selling general and administrative expenses for the third quarter of 2023 decreased to $11 8 million compared to $34 8 million in the same period last year.
The decrease was primarily driven by a $23 9 million reduction in expenses associated with the settlement of securities and shareholder derivative litigation. This was $20 million in noncash stock settlement and about $3 9 million in legal fees.
<unk> compensation related expenses, including noncash stock based compensation expense decreased by <unk> 4 million compared to the prior period, which was offset by $1 8 million increase in professional services and other related expenses.
Yeah.
Research and development expenses for the third quarter of 2023 decreased to $5 8 million compared to $6 1 million in the same period last year.
Increase was driven by $1 9 million reduction in consulting expenses, partially offset by a <unk> 5 million increase in employee compensation related expenses as we move to production and the Dove 56.
Net interest income in the third quarter of 2023 was <unk> 4 million compared to zero interest expense at the same period last year.
Net interest income in the current period was driven by interest earned on cash and the company's money market investment account.
Other loss for the third quarter of 2023 was $10 million.
As compared to $13 4 million in other income for the same period last year other loss in the current period represents the impairment of the company's investment in <unk>, resulting from the economic conditions and uncertainties that are significantly affected <unk> performance and find out and financial position.
Other income in the prior period was recognized in connection with the sale of C series inventory that was formerly written down to zero cost through inventory reserves.
Net loss for the third quarter 2023 was $30 6 million compared to a net loss of $35 4 million in the same period last year.
Turning to slide 13 to discuss our balance sheet as of September 32023, we have approximately $38 9 million in cash or cash burn during the quarter was down quarter over quarter as we primarily decreased spending on inventory and we expect this trend to continue through Q4 and into 2024.
Importantly, we have taken major steps to strengthen our financial position and focus on reducing expenses to ensure we have the runway to execute our strategic plans.
We are in advanced discussions with third parties to obtain additional financing to support our growth plans. We are also evaluating other options to strengthen our liquidity position.
Our 10-Q as of September 32023 includes going concern language as a result of our slower than anticipated sales ramp and H fifth availability as I mentioned, we have a strong cash position of $38 9 million to fill our obligations and continue to operate we're taking steps to remedy the going concern, including efforts to drive revenue growth seen additional finding.
That liquidity.
We will continue to evaluate the best path forward and have several options to continue to fund the next phase of production and growth.
Turning to slide 14, we have provided an update to our 'twenty to 'twenty three guidance to reflect the <unk> voucher situation today.
So that really impacted our Q3's results in full year sales.
Now expect to generate between $10 million to $15 million revenue. This year. The resolution of the HP voucher is positive news and provides momentum for us as we work through the remainder of 2023.
I'll now turn the call back to Richard direct wrap up the call. Thanks, Bob Let me briefly discuss our Q4 priorities, which are outlined on slide 15.
I can easily summarizes very quickly our largest single Q fives Q4 priority is straightforward to build and sell trucks syndrome, that's it build and sell trucks and drones plain and simple.
Additionally, as Bob mentioned, we will focus on strengthening our financial position and reviewing options to enhance our liquidity position. So we can achieve our future growth plans.
Before opening the line of questions. Let me mention a few final thoughts.
Dean true pioneers in an industry going through a generational technology change is not easy it's tough it's hard and then sometimes it's thankless work.
No one in America could accurately forecast, how fast or how slow the transition to commercial evs will occur.
One thing I do know is that we now have the people the products the <unk>.
Manufacturing processes the qualified suppliers the experienced distribution partners in place to be ready when that transition does occur.
Every fleet customer that has visited Union city and driven Archrock has asked for a demo and every demo we have executed in the past 90 days has been successful.
The foundations are in place at workhorse for us to emerge as one of the survivors and winners in the commercial EV industry.
We're now ready to open the call for your questions. Operator, please provide the appropriate instructions.
Thank you.
To ask a question please press star one.
Phone keypad and confirmation tone will indicate your line is in the question queue. You May press star two if he would like.
A question from the queue for participants using speaker equipment, it may be necessary to pick up your handset before pressing the psyche.
Our first question is from Greg Lewis with <unk>.
Please proceed.
Yeah, Hi, Thank you and good morning, and thanks for taking my questions. Rick I wanted to touch a little bit more on HVAC clearly congratulations on getting those final approvals.
As we think about it I guess.
I guess looking at Q3, there were a handful of trucks sold how much of those were related to a trip.
You mean, the lack of sales Wow I mean, while you had 700000 that looks I mean, I'm thinking that's five to six or seven trucks.
Yeah, a couple of those trucks went out to some of the new dealers, we have as part of our stocking orders, we really are blocked in California, and as everybody knows right now the cost of an electric truck is much higher than ice struck.
Mostly by the batteries.
Government has put in place both at the state level now at the federal level, some significant incentives to help move the into the EV segment segment without those incentives you arent really going to sell so many trucks.
I think we will start where we are we are seeing some reason not resistance, but I'll say, there's there's some wariness.
On the.
Part of the fleets.
These EV trucks really going to be capable of handling the duty cycles and the payloads in the ranges that they require on a day to day basis.
I can tell you based on the demos arc our company has done.
Side by side against others, where we're convinced and so are some of the customers that our trucks can do the job.
I don't know if they can say that about some of the other guys.
Yeah. Thank you for that I'm, not going to I'm not going to name any of the competitors, but EV trucks that are out there some of the initial prototypes, especially from some of the startups are having some struggles is what I'd say.
Yeah. It makes it makes sense and then so as we think about you mentioned the.
The dealer in California.
Realizing we didn't disclose any sense for the size of that deal or as we think about you know their track record I mean, maybe.
In terms of size you know any kind of color you can give us around that dealer.
Yeah, I can give you a little color I won't give you the name I'll just tell you it's in southern California. It is a one brand commercial truck only dealer.
That current brand he carries will not have a viable EV product until 'twenty five or 26.
And he basically said to us I am dead in the water with regards to the Evs in California, and I really want to partner with you guys, but I can't do that if you're going to give me trucks without vouchers and so he weighted very smart I'd say on his part and now he's a signed up and we're going to get them. Some stocking orders yet this year and he's already working on a deal with more than 40 or 50 vehicles.
Perfect Super helpful. Thank you very much.
As a reminder, the star one on your telephone keypad, if he would like to ask a question. Our next question is from Chris Souther with B Riley Securities. Please proceed.
Hey, guys. Thanks.
Thanks for taking my question I was just curious on me.
A review of the aerospace.
Could you give us a sense of what the cash burn.
Thank you Matt.
Goodbye.
Just wanted to kind of frame.
Looking at like strategic alternative reviewing that looked like what what.
The impact on our financials.
Hey, Chris It's Bob.
Currently where we're spending about $700000 a month in Aero.
Hum down from.
Previously in the year, but that's kind of where we are right now.
Got it Okay, and then on the overall kind of Capex trajectory.
About.
Where we are as far as kind of running the plant for scaling is there kind of additional capex.
We really need to kind of focus on for the next.
A couple of quarters here.
Pretty set on that product.
Yeah, I think kind of split that into I think for the rest of this year. If you look at our Capex through the first three quarters will be down in the fourth quarter as we're through most of those projects and really from the plant perspective, we've got the capacity to scale without a lot of.
Capex will have the typical maintenance type things going into next year, but the.
Heavy lifting out of the way now.
With the Finalization of our paint line.
Yeah, I'll jump in there Chris So W. Four so you see in W. Some busy we have the assembly lines fully tooled up we're waiting just saw a couple of minor.
Uh huh.
Manufacturing the devices to put on the panels on the top of the W. Five six minimum money that'll be spent this year.
Five six we just got the a G v's and this week I'm sure. We all have last minute payment last payment to them once they run off and were just analyzing the paint shop run off so we have a little bit of payment. There isn't that were set 5000 W. Five six a year.
The W. For C C, probably 800 up to 1000 trucks a year depending on demand.
The only money, we already need for Capex will be supplier tool and as we go into what we call. The W. Four W. Five six cab chassis version, which will launch sometime next year. So the capital has been spent plants had been recondition test tracks in place warehouses has been refurbished paint shops in everything we have is in place to the $1 billion plus.
The OEM.
That's great and maybe just last one you talked about in prepared.
The business for profitable growth towards core can you.
Are we at a point here, you think where you have a sense as to kind of what that breakeven.
Revenue level would look like.
Timing around that.
Any kind of clarity you can provide at this stage would be thank you.
Sure well first of all you know where.
We're actually.
Just kind of getting into the budgeting process. So we don't really have answers there just yet.
As I said, you don't want to I think a previous call.
Our positive gross margin is around 300 trucks, a quarter 100 trucks a month.
We've not gotten into full cash flow, but.
But you can probably do some math from there, but we think 300 is a magical number for us to get the step one here that's positive gross margin.
Thanks, a lot.
Our next question is from Craig Irwin with Roth.
Please proceed.
Hi, good morning, and thanks for taking my questions.
So.
This past year as you were planning for sort of a higher a higher revenue run rate was a lot of work done.
Helping customers and supporting those customers in a procurement.
Procurement of each with vouchers.
Some of these vouchers out of New York, New Jersey.
Massachusetts.
You know it kind of means like some of the heavy lift for growth over the next year.
It's probably been addressed.
Can you maybe talk to us.
You know how you feel about the pipeline right now as far as deliveries once production is there and these trucks are fully certified.
To be.
Over customers.
I've been working to receive them.
And you know is there any detail that you can share with us on the on the vouchers or how you feel about the eligibility voucher system. So just final certifications come through.
Yeah, Let me let me our priorities are.
We did this we did all of the chart the brand new truck in less than 22 months. So we're still working through stabilizing suppliers.
<unk> stabilizing our own assembly processes and launching the painful right. So we have some work to do still to go.
Towards the run rates to start picking up the pace I'd almost say.
Greg we're priming the pump right now.
That's internal right and we think we have that under control pretty well.
When it comes to pipeline, we're seeing various feedback from the marketplace. Obviously the car mandates for clean fleets takes effect.
January one 2024 in California.
And we're seeing a flurry of RFP activity out in California, primarily through government funded or.
The organization, so you're talking at the state level the city level, a county level all the municipalities right.
So that's an opportunity for us that's why it was so important for us to get these eight slip credits and vouchers out in California. Okay. I'll give you we were at we did two demos with fleets. One fleet is talking about buying 40 to 50 Evs.
One is talking about 30 or 40, evs, but only if the car mandates stays in place on January one.
You tell me I don't know.
Theres, a theres a legal appeal against the California mandate by the California Trucking Association that should be heard in the next 30 or 60 days.
My experience growing up in the auto industry for almost 50 years now I've seen car blues battles, but ive never seen carb lose the long war. Okay. So I think theres a theres a move going forward, we've talked to some of the biggest fleet operators in California, you name it.
Ex U P S Ryder Penske, others, Cintas and guess, what they're all trying to figure out how fast they need to move to EV at.
What pace right.
Similar stories over in New York City, I think we're seeing strong interest in New York City, New Jersey area of the Metro New York City area I'll call. It that's where we're doing our reefer demos.
We have a refer out there and we worked with Arctic chill that put a refund of back of the W. For C. C. It's outrunning US route right now at <unk>.
Out as 20 to 30 miles only.
But it makes over 100 stops a day at each restaurant as it delivers food dairy products et cetera.
So we think that's an opportunity one of the customers that I inherited when we got here, which we ended up buying the trucks back right away. It's all five trucks failed has told US they are 100% committed to go to Evs and.
In 'twenty four 'twenty five 'twenty six.
<unk> class four trucks that can carry a 5000 pounds that's exactly what the W. 750, MW for C. C can do and so we have those trucks out there being tested I'm confident that we'll finish those demos like every other debt most successfully and we hope to win those orders.
But I don't can't tell you if that's going to be 100 truck order for 10 trucks a quarter, that's kind of the wildcard right now here as we fight our way into this transition does that help.
That's very helpful. I definitely appreciate that.
Key part of the value proposition to all of these customers to reduce maintenance and previously the company was saying there was about a 65% reduction in maintenance and operating costs for these trucks from the workhorse trucks.
Your your designs have evolved I'm going to guess you probably got more efficient more reliable, but can you can you maybe quantify for US you know what the customers are looking at is it still roughly two.
Two thirds reduction in maintenance and <unk>.
And operating costs and you know how does how does this resonate with this customer group.
Yeah. It's a great question I think we'll have better hard factual data at the end of this peak season here in the fourth quarter there'll be able to share with you guys on our end of the year earnings call early next year.
I can tell you right now at stables installs and a fleet of about 10 vehicles, we spent close to $30000 a month in fuel.
70% of our trucks are now electric and so we're not spending nearly that much on fuel.
We've had zero repairs of any of our W. 700, fifty's for any meaningful powertrain parts. We have had some damages on the side or on the bumpers. When our drivers had things in that kind of stuff like that so I do think the numbers are going to be somewhere in north of 60 or 70% in terms of Tcl savings. So.
That's our estimate today will be it will be able will be able to actual documented and I want to reiterate when we talk to these customers out like we were out in California.
When we can tell them, we have our own fleet of trucks, and we're making the conversion from ice to Ev's there.
Light light up.
One fleet I was at the average age of the truck is 15, they keep their trucks 15 to 20 years. The average age of around seven we talked we had to lap over a cup of coffee about failed transmissions brake jobs.
Drive shafts axle repairs engine. So all of those kinds of things like that all of that goes away with the Emmys right. So.
Understood well congrats on the progress and thanks again for taking my questions.
Great. Thanks, Greg.
We have reached the end of our question and answer session I would like to turn the call back over to management for closing comments.
I appreciate your support it's not easy this transition, it's a little bit Harry sometimes as Bob says were well poised from an operational standpoint, we need to go sell trucks and drones and we got to look at opportunities to improve the length of our runway. So we can land the ship successful here at workhorse. We appreciate it look forward to seeing out in the room.
Have a great day.
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
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