Q4 2024 Workhorse Group Inc Earnings Call
Operator: Greetings and welcome to the Workhorse Group's fourth quarter and full year 2024 earnings call. At this time, all participants will be in listen-only mode. After the question and answer session, we'll follow today's formal presentation. if anyone should require operator assistance. press star zero from your telephone keypad. As a reminder, this conference is being recorded.
Greetings and welcome to Workhorse group's fourth quarter and full year 2024 earnings call.
At this time, all participants will be in listen only mode.
A question and answer session will follow today's formal presentation.
If anyone should require operator assistance. Please press star zero from your telephone keypad.
A reminder, this conference is being recorded.
Stan March: At this time, I'll now turn the conference over to Stan March. Thank you very much. Thank you. Thank you, Rob.
Speaker Change: At this time I'll now turn the conference over to Stan March Mr.
Roberts: Mr. Roberts you may begin.
Mr. Roberts: Thank you Rob good morning, we'd like to welcome all of you to workhorses 'twenty 'twenty four results call.
Stan March: Good morning. We'd like to welcome all of you to Workhorse's 2024 results call. Before we begin, I'd like to note that we posted our results for the year ended December 31st, 2024 via press release. as well as filed our 2024-10-K with the SEC. You can find both of these documents and an accompanying presentation that will form the basis of today's conversation on this call in the investor relations section of our website. We'll be tracking along with the presentation during the call.
Mr. Roberts: Before we begin I'd like to note that we posted our results for the year ended December 31, 2024 by a press release as well as filed our 'twenty 'twenty four 10-K with the SEC. This morning.
Mr. Roberts: You can find both of these documents and an accompanying presentation that will form the basis of today's conversation on this call in the Investor Relations section of our website, we'll be tracking along with the presentation during the call.
Stan March: Joining me on the call today are Rick Dauch, our CEO, and Bob Ginnan, our CFO. Today's agenda, please turn to slide three. Following my opening remarks, I'll hand it over to Rick. We'll give you an update on our strategic and operational priorities throughout 2024. and Bob will then walk us through the financial results before discussing our continued actions to preserve cash and extend our financial run.
Speaker Change: Joining me on the call today are rigged out our CEO and Bob can add our CFO.
Speaker Change: For today's agenda. Please turn to slide three following my opening remarks, I'll hand, it over to Rick who will give you an update on our strategic and operational priorities throughout 2024.
Speaker Change: And Bob will then walk us through the financial results before discussing our continued actions to preserve cash and extend our financial runway then.
Stan March: Then Rick will wrap us up before we open the call to questions.
Speaker Change: And then Rick will wrap this up before we open the call to questions.
Stan March: Our disclaimer can be found on slide four. Some of the comments that will be made today are forward-looking and are subject to certain provisions. and are also subject to risks and uncertainties. You can find the full disclaimer in our 10-K, which again was filed this morning, as well as in today's press conference.
Speaker Change: Our disclaimer can be found on slide four some of the comments made today are forward looking and are subject to certain provisions.
Speaker Change: And are also subject to risks and uncertainties.
Speaker Change: Can find the full disclaimer in our 10-K, which again was filed this morning as well as in today's press release.
Richard Dauch: I'll now turn the call over to Rick Dauch. Thanks, Stan, and good morning, everyone. Thank you all for taking the time to join us today to discuss our 2024 results. Let's jump right into slide five. As we navigated 2024 and moved into 2025, it's clear that the landscape and pace of adoption for commercial EVs continues to shift. Recent regulatory pauses, like the State of California withdrawing its waiver request to the EPA. and a temporary freeze on federal fleet procurement have created tremendous uncertainty in the marketplace. Several fleets have paused or delayed their EV investment plans.
Speaker Change: I'll now turn the call over to Rick <unk> Rick.
Speaker Change: Thanks, Dan and good morning, everyone. Thank you all for taking the time to join US today to discuss our 2024 results, let's jump right into slide five.
Speaker Change: As we navigated 2024 moved into 2025, it's clear that the landscape and pace of adoption for commercial Evs continues to shift.
Speaker Change: Recent regulatory pauses like the state of California, withdrawing its waiver request to the P E and a 10.
Speaker Change: A freeze on federal fleet procurement have created tremendous uncertainty in the marketplace.
Speaker Change: Several fleets are paused or delayed their E b investment plans ports.
Richard Dauch: Fortunately, a few have not. And several states continue to move forward with their plans to electrify their state-funded fleets.
Speaker Change: Fortunately a few up not in several states continue to move forward with their plans to electrify their state funded fleets.
Richard Dauch: at Workforce. We did not build our business model around political cycles. We built it on designing, building, and selling great trucks with great people and with great business partners. What remains constant is that our vehicles, especially the W56 family of products, are proving their value in real-world operations in the last mile delivery space. Beyond the numbers, drivers and owners are noticing the difference. The W56 offers smooth ride and acceleration. quiet handling, and much better visibility. Factors that improve safety and reduce driver fatigue while also lowering operating costs. In the fourth quarter, based on direct customer feedback after multiple fleet demos, we launched the new W56 208-inch wheel-based truck in both strip chassis and step-band variant.
Speaker Change: Yeah it workforce.
Speaker Change: We did not build our business model around political cycle, we built it on designing building and selling great trucks with great people and a great business partners.
Speaker Change: What remains constant is that our vehicles, especially the W. Five six family of products are proving that their value in a real world operations the last mile delivery space.
Speaker Change: Beyond the numbers drivers that owners are noticing the difference the W. Five six offer a smooth ride and acceleration.
Speaker Change: Quiet handling and much better visibility factor.
Speaker Change: Factors that improved safety and reduced driver fatigue, while also lowering operating costs.
Speaker Change: In the fourth quarter based on direct customer feedback after multiple fleet demos, we launched the new W. 562 hundred agents wheel based truck and both strip chassis and step band variance.
Richard Dauch: as a longer wheel-based version of the initial W56. We have seen positive customer response to this new vehicle and have already received a purchase order for 13 of the 280s wheel-based step bands, which we expect to begin delivering in the second quarter of this year. We also received approval for the sale of our W750 and W56 step band models in Canada last month, which is an important market that was not previously open to us with these step bands. We are scheduled to start demos of both vehicles with a large national fleet in Canada up in April and May.
Speaker Change: A longer wheelbase version of the initial W. Five six weeks.
Speaker Change: We have seen positive customer response to this new vehicle and have already received a purchase order for 30 of the 208 is wheelbase stepdance, which we expect to begin delivering in the second quarter of this year.
Speaker Change: We also received approval for the sale of our W. 750, and W. Five six step band models in Canada last month, which is an important market that was not previously opened to us with these step downs.
Speaker Change: We are scheduled to start demos of both vehicles with a large national fleet in Canada up in April and May.
Richard Dauch: While we work hard to sell more trucks, we have also worked to reduce our operating costs in order to extend our operating runway as a start-up EV company. We made significant reductions in headcount. and other spending activities across the board in 2024. These reductions were tough, but they were necessary. People, process, product, and partners have been the guiding principles of our mission from the start of our leadership tenure here at Workhorse. We've achieved a lot of what we set out to accomplish through rigorous process discipline and product innovation.
Speaker Change: While we worked hard to sell more trucks. We have also worked to reduce our operating costs in order to extend our operating runway as a startup company.
Speaker Change: We made significant reductions in head count.
Speaker Change: And the other spending activities across the board in 2024.
Speaker Change: These reductions were tough, but they were necessary.
Speaker Change: People process product and partners have been the guiding principles of our mission from the start of our leadership tenure here at workhorse we've.
Speaker Change: We've achieved a lot of what we set out to accomplish through rigorous process discipline and product innovation.
Richard Dauch: But I want to take a moment to talk about our people. Our team is the driving force behind everything we've accomplished that you see on this slide, and their dedication and time sacrifice have been nothing short of extraordinary. When challenges arose, our leadership team led by example by taking pay cuts or deferrals. Over the past year, every member of our workforce has stepped up, taking on increased workloads, foregoing pay raises, and reduced benefits, including the suspension of 401k contributions, and endured both an extended furlough and a 60% reduction in staffing. all with the shared goal of conserving every dollar to secure our future.
Speaker Change: But I wanted to take a moment to talk about our people.
Speaker Change: Our team our team is the driving force behind everything we've accomplished that you see on this slide and their dedication and at times sacrifice have been nothing short of extraordinary.
Speaker Change: When challenges arose our leadership team lead by example by taking pay cuts or deferrals.
Speaker Change: Over the past year every member of our workforce that stepped up taking on increased workloads foregoing pay raises and reduce benefits, including the suspension 401k contributions and observed both in extended furlough and a 60% reduction in staffing.
Speaker Change: All but the Shergold conserving every dollar to secure our future.
Richard Dauch: Our entire team is fully dedicated to our long-term success, even in the face of the uncertain and turbulent commercial EV market conditions we face today. Despite these challenges and EV market segment realities, our workforce attrition has been remarkably low. Rather than run for the exit, our team has leaned in, working harder than ever, finding ways to innovate, increase efficiency, reduce costs, and deliver exceptional products with fewer resources. This is a team that believes wholeheartedly in our vision, in our products, and our ability to succeed. Together we are weathering the storm, more united and more focused and poised to continue driving the company forward.
Speaker Change: Our entire team is fully dedicated to our long term success.
Speaker Change: Even in the face of the uncertain and turbulent commercial EV market conditions, we face today.
Speaker Change: Despite these challenges in EV market segment realities, our workforce attrition has been remarkably low.
Speaker Change: Rather than run for the exit our team has leaned in working harder than ever finding ways to innovate increase efficiency reduce cost and deliver exceptional products with fewer resources.
Speaker Change: This is a team that believes wholeheartedly and our vision and our products and our ability to succeed.
Speaker Change: Together, we are weathering, the storm more United and more focused and poised to continue driving the company forward.
Richard Dauch: We stay focused on what is in our control and to do our best to adapt to those market factors like changing government mandates, tariffs, and customer EV purchasing plans that are outside of our control.
Speaker Change: We stay focused on what is in our control and to do our best to adapt to these market factors like changing government mandates tariffs and customer 80 person class that are outside of our control.
Richard Dauch: You have heard me speak in the past about our financing arrangement with ATW, which provides us important support to execute on our product roadmap and manufacturing operations. ATW has been an excellent financial partner for us. We continue to look for effective and efficient ways to finance the company going forward. With minimal debt, over $40 million of inventory, and a 420,000 square foot plant that we own, which sits on over 100 acres of land, we still have financial levers to help us extend our runway here at Workhorse.
Speaker Change: You have heard me speak in the past about our financing arrangement with a T. W. Which provides is important support to execute on our product roadmap and manufacturing operations.
Speaker Change: T W. It's been an excellent financial partner for US we continue to look for effective and efficient ways to finance the company going forward.
Speaker Change: With minimal debt over $40 million of inventory and a 400 valve for a 20000 foot square foot plant that we own which sits on over 100 acres of land, we still have financial levers to help us extend our run last year at workhorse.
Richard Dauch: Moving to slide six, let me take a moment to discuss our continued product development work. Over the past three years, we've made moves to establish Workhorse as a leader in the medium-duty EV space, something many others in this industry can't claim. While others have stumbled and failed, we have stayed focused and executed on our strategy. We have built-in house manufacturing capabilities to produce complete step-vams, making us the only North American-based OEM capable of doing so. Every other EV chassis supplier is 100% reliant on Morgan Olson and Utilamaster for the installation of cabs and bodies based on 50-plus-year-old designs.
Speaker Change: Moving to slide six let me take a moment to discuss our continued product development work.
Speaker Change: Okay.
Speaker Change: Over the past three years, we've made moves to establish workhorse as a leader in the medium duty EV space something many others in this industry can't claim well.
Speaker Change: While others have stumbled in her fails, we have stayed focused and executed on our strategy.
Speaker Change: We have built in we have built in house manufacturing capabilities to produce complete step BAMS, making us the only north American based OEM capable of doing so.
Speaker Change: Every other EV chassis supplier is 100% reliant on Morgan Olson and utility master for the installation of cabs and bodies based on 50 plus year old designs.
Richard Dauch: We have achieved full market coverage in the class 4-6 commercial step band cycle. We've met both FMVSS and CMVSS certification requirements and successfully tested our vehicles, both on the test track and in engineering labs, and most importantly, in the real world with last mile fleets across the country and at our own FedEx ground routes here in the greater Cincinnati area. We've established the processes and systems to support long-term business growth, including a national dealer network, a capable service and parts supply network with trained service technicians and a customer support infrastructure. We have qualified for major state and federal incentive programs, including California's important H-5th and I-5th certification program.
Speaker Change: We have achieved full market coverage in the class four to six commercial step van segment.
Speaker Change: We've met both F N B S. S. N C. M D. S. S certification requirements and successfully tested our vehicles both on the test track and an engineering labs and most importantly in the real world with last mile fleets across the country and our and our own Fedex round routes here in the greater Cincinnati area.
Speaker Change: We've established the processes and systems to support long term business growth, including a national dealer network.
Speaker Change: Capable service in parts supply network with train service technicians, and a customer support infrastructure.
Speaker Change: We have qualified for major state and federal incentive programs, including California's important H fifth and ice have certification programs.
Richard Dauch: We have been awarded both federal and state government procurement contracts, including source wealth on GSA. We've achieved approval to import vehicles into Canada. We will start those new product demos in April and May. And we've completed successful demos with extremely positive feedback from several fleet operators. We have successfully passed every single customer demo that we've done over the past two years across the country. And we are continuing to push forward. Our W5628 wheel-based model recently received full regulatory approval, met all FMVSS and CMVSS certification requirements. and successfully completed 250,000 highway equivalent miles in the durability test.
Speaker Change: We have been awarded both federal and state government procurement contracts, including source well on GSA.
Speaker Change: We've achieved approval and import vehicles in Canada, we will start those new product demos in April and May.
Speaker Change: We've completed a successful demos with extremely positive feedback from several fleet operators.
Speaker Change: We have successfully passed every single customer demo that we've done over the past two years across the country.
Speaker Change: And we are continuing to push forward our W. Five six to wait with wheel based model recently received full regulatory approval.
Speaker Change: Met all F N B S. S N C M D S S certification requirements.
Speaker Change: And successfully completed 250000 highway equivalent miles in the durability testing.
Richard Dauch: As I've said earlier, we've already secured fleet orders for this model, which are scheduled to shift in April and May, proving that it's a viable, no-compromise commercial vehicle solution that fleet customers want. In addition, we're working on a reduced range 140-kilowatt W56, which remains on track for Q3 start of regular production. Again, this development was initiated specifically at the request of one of the largest last mile fleets in North America who is seeking a lower cost step van with a 100 mile range versus a 150 mile range. Across our product lineup, we now work with more than 30 certified upfit and body partners across the country to provide fleet-ready configurations with unlimited options.
Speaker Change: As I've said earlier, we've already secured fleet orders for this model, which are scheduled to ship in April and May.
Speaker Change: Proving that it is a viable no compromise commercial vehicle solution that fleet customers want.
Speaker Change: In addition, we're working on a reduced range 140 kilowatt W. Five six which remains on track for Q3 startup regular production.
Speaker Change: Again. This development was initially was initiated specifically at the request of one of the largest last mile fleets in North America, who is seeking a lower cost step van with a 100 mile range versus 150 mile range.
Speaker Change: Across our product lineup, we now work with more than 30 certified update and body partners across the country to provide fleet ready configurations with unlimited options.
Richard Dauch: Our recent awards from the City of Tacoma, Washington, through SourceWell, are an example of the importance of these up-bidder partnerships. One of our dealers in California also recently was awarded DGS contracts to sell both the W4CC and W56 vehicles to government-funded fleets in the state of California.
Speaker Change: Our recent awards from the city of Tacoma, Washington through source well are an example of the importance of these update or partnerships.
Speaker Change: One of our dealers in California also recently was awarded the D. G S contracts to sell both the W. For C C and W. Five six vehicles, the government funded fleets and the state of California.
Richard Dauch: We are confident our people, our products, our supplier and dealer partners, our engineering capabilities, our manufacturing processes, and our service and upfitting networks position us well to take advantage of near-term and long-term opportunities when fleets choose to start their transition to EV. Moving to slide seven.
Speaker Change: We are confident our people our products, our supplier and dealer partners, our engineering capabilities, our manufacturing processes and our servicing up any networks position us well to take advantage of near term and long term opportunities when fleets choose to start their transition to evs.
Speaker Change: Moving to slide seven.
Richard Dauch: Let me talk a bit more about our W5-6 step band and its proven performance in the field. Let me start by saying that Workhorse simply designs and makes great commercial work trucks. They just have to be commercial electric vehicle work trucks. The W56 was designed for the demands of last mile delivery fleets. with a range of 150 plus miles, a cargo capacity of up to 1,200 cubic feet. and expected 15 to 20 year estimated operating life based on durability testing results. It's engineered for the job. Fleet operators are seeing tangible savings. averaging 27 to 31 miles per gallon the equivalent compared to just 6 to 7 for typical ICE vehicles.
Speaker Change: Let me talk a bit more about R. W. Five six step Bam and its proven performance in the field.
Speaker Change: And he start by saying that workhorse simply designs and makes great commercial work trucks.
Speaker Change: I just had to be commercial electric vehicle work trucks.
Speaker Change: The W. Five six was designed for the demands of last mile delivery fleets.
Speaker Change: With a range of 150, plus miles a cargo capacity of up to 1200 cubic feet.
Speaker Change: And the expected 15 to 20 year estimated operating life based on durability testing results, it's engineered for the job.
Speaker Change: Fleet operators are seeing tangible savings.
Speaker Change: Averaging 27 to 31 miles per gallon equivalent compared to just six to seven for typical ice vehicles.
Richard Dauch: Even in states without incentives, EV operating costs are still 22% lower than equivalent gasoline or diesel fuel-powered trucks. When you factor in reduced maintenance and lower energy costs, the total cost of ownership delivers a payback in just four to five years without relying on any government subsidy. One of the strongest validations of our product comes from our work with FedEx and its independent FedEx Ground Service Provider. In 2024, we successfully demoed the W56 with Federal Express in Memphis. and with FedEx Ground and signed a three-year master framework agreement with FedEx and we delivered our first 15 trucks last year.
Speaker Change: Even in states without incentives EV operating costs are still 22% lower than equivalent gasoline or diesel fuel powered trucks.
Speaker Change: When you factor in reduced maintenance and lower energy costs. The total cost of ownership delivers a payback of just four to five years without relying on any government subsidies.
Speaker Change: One of the strongest validation of our product comes from our work with Fedex and independent Fedex ground service providers.
Speaker Change: In 2024, we successfully demo the W. Five six with Federal Express and Memphis.
Speaker Change: And with Fedex ground.
Speaker Change: Signed a three year Master framework agreement with Fedex and we delivered our first 15 trucks last year.
Richard Dauch: We expect an RFQ mid-year for 2025 orders and we're seeing increased demand from FedEx round-up contractors across the U.S. Take, for example, a FedEx ground contractor in the San Francisco Bay Area who purchased a W56 last year. After more than six months in service, he told us, and I quote, the W56 is the best EV step van we've driven. Nothing else comes close. That same sentiment is echoed by FedEx contractors in California, Minnesota, and Pennsylvania who are adding W56 to their fleet. When we recently visited FedEx terminals in the Bay Area, we saw rows of competitor EV steps sitting idle, waiting on spare parts, waiting on service, or waiting on answers.
Speaker Change: We expect an RFP mid year for 2025 orders and we're seeing increased demand from Fedex round Apple contractors across the U S.
Speaker Change: Take for example, a Fedex ground contractor in the San Francisco Bay area.
Speaker Change: Who purchase a W. Five six last year.
Speaker Change: After more than six months of service he told us and I quote the W. Five six is the best E D step bandwidth driven nothing else comes close.
Speaker Change: That same sentiment echoed by Fedex contractors in California, Minnesota, and Pennsylvania, who are adding W. Five six to their fleets.
Speaker Change: When we recently visited Fedex terminals in the Bay area, we saw Roes of competitor E. D steps sitting idle waiting on spare parts waiting on service for waiting on the answers some even had failed breaks.
Richard Dauch: Some even had failed breaks. Workhorse customers don't have that problem.
Speaker Change: Workhorse customers don't have that problem are well designed and well built trucks combined with our superior dealer support and service network is setting us apart from other startup EV Oems and even some of the traditional automotive trucks Oems in the commercial EV market.
Richard Dauch: Our well-designed and well-built trucks, combined with a superior dealer support and service network, is setting us apart from other startup EV OEMs, and even some of the traditional automotive truck OEMs in the commercial EV market. One of the most telling examples of W5-6 performance happened just a few weeks ago. A potential customer in California had concerns about whether our vehicles could reliably handle their long delivery routes, which could be up to 150 miles long. So we put it to the test. A driver picked up the W56 from our dealer in Southern California and drove it 165 miles to the customer's location.
Speaker Change: One of the most telling examples of W. Five six performance happened just a few weeks ago.
Speaker Change: A potential customer in California had concerns about whether our vehicles could reliably handle their long delivery routes, which could be up to 150 miles long.
Speaker Change: So we put it to the test.
Speaker Change: Driver picked up the W. Five six from our dealer in southern California, and drove 165 miles to the customer's location.
Richard Dauch: This is all highway driving, 55 to 60 miles an hour through steep mountainous terrain. When they arrived, the truck had 12% state of charge remaining. The entire trip was logged via Geotab Telematics, recording 40.21 miles per gallon equivalent and used just 76% of the batteries charged. This was an unloaded vehicle, but the distance, highway speeds, and elevation changes made it a true test of capability, and the W56 delivered exceeded the stated range of 150 plus miles. In another tough test, we conducted a multi-quarter demo with a large industrial supplies and linen company. The W5-6 handled a 45-mile daily route, carrying between 5,000 to 8,000 pounds of payload every day for more than six months with only one downtime incident that was addressed by our engineering and service teams overnight.
Speaker Change: This was all highway driving 55 to 60 miles an hour through steep mountainous terrain.
Speaker Change: When they arrive the truck at 12% of the state of charge remaining the.
Speaker Change: The entire trip was locked via G. O tab telematics recording 40.21 miles per gallon equivalent and use just 76% of the batteries charge.
Speaker Change: This was an unloaded vehicle, but the distance highway speeds and elevation changes, maybe a true test of capability and the W. Five six delivered exceeding our stated range of 150 plus miles.
Speaker Change: And another tough tests, we conducted a multi quarter demo with a large industrial supplies and lending company.
Speaker Change: The W. Five six held at 45 miles daily route carrying between 5000 to 8000 pounds of payload every day for more than six months with only one downtime incident that was addressed by our engineering and service teams overnight.
Richard Dauch: These real-world demonstrations continue to validate the strength and capability of our W5-6 product family. As previously stated, from a product, production, and operating system standpoint, we have succeeded at much of what we set out to do. What we can't control is the market's readiness to buy commercial EV step-vans at scale. We are currently at the table with Fortune 500 national accounts, government entities, and last mile delivery fleets that have aggressive net zero goals. Publicly, they remain committed to electrification and meeting strict greenhouse gas emission standards. They need reliable, durable, and capable commercial vehicles that deliver real-world performance without operational trade-offs.
Speaker Change: These real world demonstrations continue to validate the strength and capability of our W. Five six product family.
Speaker Change: S truly stated from a product production and operating system standpoint, we have succeeded at much of what we set out to do.
Speaker Change: While we can't control is the market's readiness to buy commercial easy step vans at scale.
Speaker Change: We are currently at the table with Fortune 500 national accounts.
Speaker Change: Government entities and last mile delivery fleets that have aggressive net zero goals.
Speaker Change: Publicly they remain committed to electrification and meeting strict greenhouse gas emission standards.
Speaker Change: They need reliable durable and capable commercial vehicles that deliver real world performance without operational tradeoffs.
Richard Dauch: That's exactly what Workhorse and specifically our W5-6 provides, a no-compromise, zero-tailpipe emission solution that is built to work.
Speaker Change: That's exactly what workhorse and specifically our W. Five six provides a no compromise zero tail Pat did tail pipe emissions solution that is built to work.
Richard Dauch: As Scott Davidson, CEO of Revolve put it, and I quote, Workhorse has proven to be a standout. Partner in the transition to electric vehicles. We're excited to continue bringing workhorse vehicles into our ecosystem and helping more fleets operate efficiently and deploy next generation technology.
Speaker Change: As Scott Davidson C O revolve put it and I quote workhorse has proven to be a standout.
Speaker Change: Partner in the transition to electric vehicles, we're excited to continue bringing workhorse vehicles into our ecosystem and helping more fleets operate efficiently and deploy next generation technology.
Richard Dauch: Turning to slide 8, throughout 2024, we continue to electrify our own fleet of vehicles being used in our Stables by Workhorse initiative. We now have 13 electric vehicles in our fleet, including both W750 and W56 step van models. and we delivered 154,000 packages to FedEx customers during the 2024 peak holiday season.
Speaker Change: Turning to slide eight throughout 'twenty 'twenty four we continue to electrify our own fleet of vehicles being used in our staples by workhorse initiatives.
Speaker Change: We now have 13 electric vehicles in our fleet, including both W 750, and W. Five six step van models and.
Speaker Change: And we delivered 154000 packages to Fedex customers during the 'twenty 'twenty four peak holiday season.
Richard Dauch: Our electric fleet of stables provides first-hand data on the benefits and challenges of independent fleet operators' experiences while executing last-mile delivery operations. It also provides important insights into how fleet customers can plan for and manage their own transition to EV operations. and the real world data backs up that enthusiasm. During the peak holiday season in December, W5-6 is in service with contractors in northern and southern California, Minnesota, and our own operations in Ohio consistently achieved uptime of 93 to 97 percent on a daily basis. That's a critical differentiator versus competitor EV products and even with older ICE commercial products.
Speaker Change: Our electric fleet of Staples provides first hand data on the benefits and challenges of independent fleet operators experiences, while executing last mile delivery operations.
Speaker Change: It also provides important insights into how fleet customers can plan for and manage their own transition to EV operations.
Speaker Change: And the real world data backstop that enthusiasm.
Speaker Change: During the peak holiday season in December W. Five six is in service with contractors in northern and Southern California.
Speaker Change: Minnesota, and our own operations in Ohio consistently achieved uptime of 93% to 97% on a daily basis.
Speaker Change: That's a critical differentiator versus competitor EV products, and even with older ice commercial products.
Richard Dauch: The bottom line is that our trucks work.
Speaker Change: The bottom line is that our trucks work with that I'll turn the call over to Bob to discuss our financial results.
Robert Ginnan: With that, I'll turn the call over to Bob to discuss our financial results. Thanks, Rick. Let's turn to slide nine to cover a full year result.
Bob: Thanks, Rick, let's turn to slide nine to cover our full year results.
Robert Ginnan: As a reminder, the 12-31-24 financial statements have been adjusted for the March 2025 one to twelve and a half reverse stock. Sales net of returns and allowances were $6.6 million for the full year 2024 compared to $13.1 million in 2020. The $6.5 million decrease in sales was primarily due to lower W4CC truck sales compared to the same period a year ago, which was offset by an increase in W56 truck sales, service revenue generated from operating the company's stable installs and workhorse routes, drones as a service before the aero divestiture, and other service revenue. Cost of sales for the full year 2024 was $28.2 million, a decrease of $9.5 million compared to $38.4 million in 2023.
Bob: As a reminder, the 12 31 24 financial statements have been adjusted for the March 2025, 1% to 12 and a half reverse stock split.
Bob: Sales net of returns and allowances were $6 6 million for the full year 2024, compared to $13 1 million in 2023.
Bob: $6 5 billion decrease in sales was primarily due to lower them before C. C truck sales compared to the same period, a year ago, which was offset by an increase in W. 56 truck sales service revenue generated from operating companies stable installs of workers routes.
Bob: Loan to the service before the Arrow divestiture and other service revenue.
Bob: Cost of sales for the full year 2024 was $28 2 million a decrease of $9 5 million compared to $38 4 million in 2023.
Robert Ginnan: The decrease in the cost of sales was primarily due to lower W4CC vehicle sales, partially offset by higher W56 vehicle sales and additional service revenue. The decrease was further driven by cost-saving initiatives, including reduced employee costs of $3 million, improved inventory management resulting in savings of $4.4 million, lower consulting expenses of $1.5 million, and lower freight expense of $1.4 million, partially offset by higher depreciation and amortization expenses.
Bob: The decrease in the cost of sales was primarily due to lower them before C. C vehicle sales, partially offset by higher W. 56 vehicles sales and additional service revenue.
Bob: The decrease was further driven by cost savings initiatives, including reduced employee cost of $3 million improved inventory management resulted in savings of $4 4 million lower consulting expenses of $1 5 million and lower freight expense of $1 4 million, partially offset by higher depreciation and amortization expenses of $3 1 million.
Robert Ginnan: SG&A expenses for the full year 2024 were $42.5 million, a decrease of $13.1 million compared to $55.3 million. Lower SG&A expenses were primarily driven by $8.2 million decrease in employee compensation related expenses due to lower headcount. Decrease of $2 million in consulting expenses, a decrease in legal and professional expenses of $1.7 million, a decrease of $1.2 million in marketing expense, a decrease in travel and entertainment expenses of $800,000, and lower corporate insurance of $600,000. partially offset by a 1.1 million increase in depreciation in IT related.
Bob: SG&A expenses for the full year, 2024, or $42 5 million, a decrease of $13 1 million compared to $55 6 million in 2023.
Bob: Lower SG&A expenses were primarily driven by $8 2 million decrease in employee compensation related expenses due to lower head count.
Bob: Decrease of $2 million in consulting expenses, a decrease in legal and professional expenses of $1 7 million a decrease of $1 2 million in marketing expense decrease in travel and entertainment expenses 800000, and lower corporate insurance of 600000.
Bob: Partially offset by $1 1 million increase in depreciation and it related expenses.
Robert Ginnan: R&D expenses for the full year 2024 were $9.1 million, a decrease of $15.3 million compared to $24.5 million in 2020. The decrease was primarily driven by a $6.9 million decrease in employee compensation and related expenses due to a lower head. a 4.1 million decrease in prototype expenses related to development expenses for the W56, which was launched in 2023. $3.4 million decrease in consulting expenses related to the W56-178 wheelbase model, offset by development of the W56-28 wheelbase model, and a reduction of other expenses by $9 million.
Bob: R&D expenses for the full year 2024 were $9 1 million a decrease of $15 3 million compared to $24 5 billion in 2023.
Bob: The decrease was primarily driven by a $6 9 million decrease in employee compensation and related expenses due to a lower head count.
Bob: A $4 1 million decrease in prototyping expenses related to development expenses for the W. 56, which was launched in 2023.
Bob: $3 4 million decrease in consulting expenses related to W. 56, 178 wheel based model offset by development of the W. 56, chewy wheel based model and a reduction of other expenses by 900000.
Robert Ginnan: Other loss of $10 million for the year ended December 31, 2023, represents the impairment of the company's investment in tropes. Interest expense net for the year December ended December 31st, 2024 was $22.2 million compared to $8.7 million. The increase is primarily due to $11.9 million loss on fair value of our convertible notes and an increase of $2 million of interest expense compared to $1.5 million. prior year due to higher cash balance. During the year ended December 31st, 2024. The institutional investor converted 31.2 million of principal into common stock and the company recognized a $2.0 million fair value net loss on conversion.
Bob: Other loss of $10 million for the year ended December 31, 2023 represents the impairment of the company's investment in <unk>.
Bob: Interest expense net for the year December ended December 31, 2024 was $22 2 million compared to $8 7 million in 2023.
Bob: The increase was primarily due to $11 9 million loss on fair value of our convertible notes and an increase of $2 million of interest expense compared to $1 5 million of interest income in the prior year due to higher cash balances in the previous periods.
Bob: During the year ended December 31 2024.
Bob: The institutional investor converted $31 2 million of principal into common stock in the company recognized a two point million fair value net loss on conversion and net interest expense in the consolidated statements of operations.
Robert Ginnan: As of December 31st, 2024, the estimated fair value of outstanding warrants totaled $5.8 million.
Bob: As of December 31, 2020 for the estimated fair value of outstanding warrants totaled $5 8 million.
Robert Ginnan: During 2024, the company recorded 5.8 million fair value net loss to the consolidated statements of operations related to outstanding For the years ended December 31st, 2024 and 2023, the company incurred taxable losses and therefore no provision for income tax has been recorded. During both 2024 and 2023, the company received a $100,000 as refund from prior year tax. Net loss for the full year 2024 was $101.8 million, compared to a net loss of $123.9 million in 2020. Additionally, we executed a one-for-12-and-a-half reverse stock split two weeks. which was intended to increase the market price of our common stock and regain compliance with the minimum bid price requirements for continued listing on NASDAQ.
Bob: In 2024, the company recorded a $5 8 million fair value net loss to the consolidated statements of operations related to outstanding warrants.
Bob: For the years ended December 31, 2024, and 2023, the company incur taxable losses, and therefore, no provision for income taxes has been recorded.
Bob: During both 2024 and 2023 the company received a $100000 as refunds from prior year tax provisions.
Bob: Net loss for the full year 2024 was $101 8 million compared to a net loss of $123 9 million in 2023.
Bob: Additionally, we executed a one for 12 and a half reverse stock split two weeks ago, which was intended to increase the market price of our common stock can regain compliance with the minimum bid price requirement for continued listing on Nasdaq.
Robert Ginnan: Ensuring we remain listed on the National Exchange significantly benefits our shareholders and business enables a wider diversity of options.
Bob: We remain listed on the National exchange significantly benefits, our shareholders and businesses. This enables a wider diversity of options for us.
Robert Ginnan: On slide 10, you can find our balance. As of December 31, 2024, the company had a total working capital of $8.2 million, including $4.6 million in cash and cash equivalents, net accounts receivable of $500,000, and other receivables of $500,000, inventory net reserves of $41.8 million, and accounts payable of $11.5 million. During 2024, we spent $4.1 on capital expenditures and expect the same level of spending in 2025.
Bob: On slide 10, you can find our balance sheet as the summer 31 2024. The company had a total working capital of $8 2 million, including $4 6 million in cash and cash equivalents net accounts receivable of 500000 and other receivables of 500000 inventory net of reserves of $41 8 million.
Bob: <unk> payable of 11 5 million.
Bob: During 'twenty 'twenty four we spent 4.1 on capital expenditures and expect the same level of spending in 2025.
Robert Ginnan: Now let's turn to slide 11, discuss our financial run. We recognize the importance of strength in our balance sheet and took significant cost reductions throughout. We reduced monthly operating cash to below $3 million a month, which is materially lower than we were at a year ago. And you can really see the results in the.
Bob: Now, let's turn to slide 11 discuss our financial runway.
Bob: We recognize the importance of strengthen our balance sheet and significant cost reductions throughout 2024, we've.
Bob: We reduced monthly operating cash to below $3 million, a month, which is materially lower than we were at a year ago and you can really see the results in the income statement.
Robert Ginnan: As we look ahead, we will continue to focus on seeking additional opportunities to reduce cost, increase cash, ensure we have the financial runway to achieve our strategic goals. Like last year, given the level of uncertainty in the EV landscape right now, we tend to report on progress when it occurs.
Bob: As you look ahead, we will continue to focus on seeking additional opportunities to reduce costs increase cash and sure we have the financial runway to achieve our strategic goals.
Bob: Like last year, given the level of uncertainty in the EV landscape right now we tend to report on progress when it occurs as a result, we will not be providing specific annual revenue our guidance at this time.
Robert Ginnan: As a result, we will not be providing specific annual revenue or guidance at this time.
Richard Dauch: And with that, let me turn the call back over to Rick. Thanks, Bob. On slide 12, you can see our priorities, and our near-term priorities remain unchanged. We want to extend our financial runway while advancing our product roadmap and ramping up production while securing more orders for our commercial electric vehicles. We fully recognize that EV adoption in the commercial space is taking far longer than previously forecasted or expected by industry experts. External factors, regulatory delays, shifting incentives, the lack of adequate charging infrastructure, and unpredictable political genesis have created significant headwinds and slowed the pace of EV adoption in even the largest last mile fleets and at the federal government level.
Rick: And with that let me turn the call back over to Rick.
Rick: Thanks, Bob on Slide 12, you can see our priorities and our near term priorities remain unchanged, we want to extend our financial runway, while advancing our product roadmap and ramping up production, while securing more orders for our commercial electric vehicles.
Rick: We recognize the EV adoption in the commercial space is taking far longer than previously forecasted or expected by industry experts.
Rick: External factors regulatory delays shifting incentives the lack of adequate charging infrastructure and unpredictable political genesis have created significant headwinds and slow the pace of adoption and even the largest last mile fleets and at the federal government level.
Richard Dauch: But the fundamentals and business logic to transition to EVs in the last mile delivery segment remain the same. Medium-duty commercial EVs make sense. They typically service customers across the 50-100 mile route and return to duty station every day, leaving plenty of time to be recharged. On a few of our fleet demos, customers were only having to charge our vehicles one to three times per week. Workhorse is delivering a no-compromise truck that drivers love, one that just happens to be electric. performs on the job, reduces total cost of ownership, provides a real return on investment, and it eliminates emissions.
Rick: But the fundamentals and business logic to transition to Evs and the last mile delivery segment remained the same.
Rick: Medium duty commercial Evs makes sense, they typically service customers across a 50 to 100 mile Route and returned to duty station everyday leaving plenty of time to be recharged.
Rick: On a few of our fleet demos customers, we're only having to charge our vehicles one to three times per week.
Rick: Workhorse is delivering a no compromise truck that drivers love when that just happens to be electric.
Rick: Reforms on the job reduces total cost of ownership provides a real sharp return on investment.
Rick: And it eliminates emissions.
Richard Dauch: We are fighting hard to secure breakthrough high-volume orders with national fleets, and we think we are close to doing so. Simultaneously, we are working on smaller orders with a high focus on the I-5 and I-95 corridors, where states like California, Washington, New York, and a few others have effective incentive programs or are mandating that their own state-owned fleets start to adopt EV vehicles. As we look ahead to the rest of the year, we will continue to execute on our product roadmap and work diligently to gain momentum on the revenue side of the risk. At the same time, we will make disciplined decisions, reduce costs, preserve our cash.
Rick: We have already and we are fighting hard to secure breakthrough high volume orders with national fleets and we think we are close to it so.
Rick: Simultaneously, we are working on smaller orders with a high focus along the I five and I 95 corridor, where states like California, Washington, New York and a few others have effective incentive programs for our mandate that their own state owned fleets start to adopt E vehicles.
Rick: As we look ahead to the rest of the year, we will continue to execute on our product roadmap and worked diligently to gain momentum on the revenue side of the business.
Rick: At the same time, we will make disciplined decisions reduce costs preserve our cash.
Richard Dauch: and extend our financial runway. We look forward to providing updates as we make progress. Again, we have proven products that meet the needs of the last mile fleets who have publicly committed to transition to zero emission vehicles. The question remains, are these fleets truly still committed to that transition? And when will they execute on their commitments in place?
Rick: And extend our financial runway.
Rick: We look forward to providing updates as we make progress.
Rick: Again, we have proven products that meet the needs of the last mile fleets, who have publicly committed to transition to zero emission vehicles.
Speaker Change: The question remains are these fleets truly still committed to that transition and when will they execute on their commitments and plants.
Richard Dauch: Once again, thank you for your continued support and patience.
Rick: Once again, thank you for your continued support and patience with that I'll open up the call for opt for questions Rob can take it over.
Stan March: With that, I'll open up the call for questions.
Operator: Rob, can you take it over? At this time, we'll be conducting a question and answer If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove yourself from the queue. Participants using speaker equipment, it may be necessary to pick up the handset before pressing the start key.
Speaker Change: Thank you.
Rick: At this time well be conducting a question and answer session.
Rick: If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Rick: Press Star two if he like to remove yourself from the queue.
Rick: For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.
Operator: Next time we ask that you please ask one question and one follow-up. One moment, please while we pull for... Once again, if you'd like to ask a question, you may press star one from your telephone keypad. We'll pause a moment.
Rick: And the interest of time, we ask you. Please ask one question and one follow up.
Rick: One moment, please while we poll for questions. Thank you.
Rick: Yeah.
Rick: Once again, if you'd like to ask a question you May press star one from your telephone keypad will pause a moment to assemble the queue.
Rick: Okay.
Rick: Thank you.
Richard Dauch: At this time, I'd like to hand the floor back to Mr. Dauch for closing. And that's it. I appreciate it. Those of you who are listening, hang in there with us. We're doing our best and we'll work hard or secure those orders that we need so we can build great trucks. start to transition to EVs. Thanks, and have a great day. Bye. Thank you.
Speaker Change: At this time I'd like to hand, the floor back to Mr. Zhao for closing remarks.
Speaker Change: No. That's it I appreciate it those you were listening hang in there with US we're doing our best and we will work hard to secure those orders that we need so we can build great trucks.
Speaker Change: And starting to transition to Evs, Thanks, and have a great day bye.
Speaker Change: Thank you. This does conclude today's teleconference. We thank you for your participation you may now disconnect your lines at this time.
Operator: This does conclude today's teleconference. We thank you for your participation. You may now disconnect your line.