Q3 2025 Workhorse Group Inc Earnings Call
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As a reminder, this conference is being recorded its now my pleasure to turn the call over to Stan Marc. Please go ahead Stan.
Kevin. Thank you good morning, all of you and I would like to welcome you to one of course is 2025 third quarter results call before we begin I'd like to note that we posted our results for the third quarter, which ended on September 30 of 2025 by a press release and filed the associated 10-Q with the SEC last evening after.
The market closed this.
This morning, we posted the accompanying presentation. So you can find the release and the accompanying presentation in the Investor Relations section of our website, we'll be tracking along with the presentation. During this call.
Joining me on today's call are Rick dock, our CEO and Bob <unk> our CFO.
For today's agenda, you can find that on slide three in the presentation.
Following my brief opening remarks, I'll hand, it over to Rick Who'll give you an update on our Q3 performance of business operations as well as our proposed transaction with motive and <unk>.
Rob will then walk us through the financial results for the quarter and Rick will then follow wrapping it up.
Then go to questions.
On today's call you can find in our presentation. Our disclaimer found on page four and five some of the comments that are going to be made today are forward looking and are subject to various provisions risks and uncertainties and you can find that full disclaimer in our 10-Q and in today's press release you can on slide five you can also.
References about the proposed transaction with motive, where you can find additional information related to that proposed transaction now.
And with that brief introduction I'll now turn the call over to Rick Rick.
Thanks, Dan Hello, and thank you for joining us on the call. This morning, everyone.
We're excited to be here with you today to discuss our third quarter results and provide an update on our proposed strategic transaction with motive.
Let's start with our Q3 results on slide six during the quarter. We made good progress executing on our product roadmap scaling sales to targeted fleets with new orders and deployments and expanding our product portfolio.
We completed the sale of 15 trucks in a combination of class four and $5 six versions.
These results reflect the hard work and resilience of the workhorse team in a challenging commercial electric vehicle environment.
Reinforces our strong operating performance and positive customer feedback of our W. Five six platform in the field.
Growing customer demand for our W. Five six step and continues to advance our position as a segment leader and the EV classify six transition.
We're building a reliable safe and capable trucks proving the performance winning business and earning customer's Trust every day.
During the quarter. We also maintained our financial discipline, taking continue decisive actions to reduce both operating and overhead costs and strengthening our near term financial position.
Despite continued challenging market conditions, we continue to make meaningful progress here at workforce.
And our focus on finishing 2025% on strong footing.
We are actively engaging with logistics providers and service fleets to build additional order interest through our national dealer network.
We announced the availability of the utility Master Aero Master body.
On the all electric W. Five six strip chassis.
This new offering expands it brings new flexibility that W. 56 platform combining the trust the durability of the industry standard utility mass or step van body with with the benefits of workhorses proven electric chassis.
The Wi Fi six also remains fully eligible for the California hybrid and zero emission trucks and bus voucher incentive program or <unk> vouchers of 85000 per truck and higher for medium duty class six vehicles.
During the quarter, we also maintained our financial discipline. Taking continued. Decisive actions to reduce both operating and overhead costs and strengthening our near-term financial position.
Spike continued to challenge market conditions. We continue to make meaningful progress here at Workforce.
and our focus on finishing 2025 on strong footing,
At the same time, we maintained our ongoing financial discipline prioritizing cash conservation and expense reduction.
We are actively engaging with Logistics providers, and service leaders to build additional order interests through our national dealer Network.
In the third quarter, our operating expenses decreased $1 $2 million on a year over year basis through disciplined cost management with even more impressive results year to date.
We announced the availability of the util Master Arrowmaster body.
on our all-electric W56 strip chassis.
I'm also excited to share that we showcase our Wi Fi six step ban at the Fedex forward service provider summit in Orlando, Florida in September marketing Workhorses third year participating in the event.
This new offering expands and brings new flexibility to the W56 platform. Combining the trusted durability of the industry-standard Utility Master step van body with the benefits of Workhorse's proven electric chassis.
Our Wi Fi six step vans and service with Fedex Express.
Fedex Express independent service providers, that's collectively log tens of thousands of miles on daily deliveries.
<unk> nationwide and are operating at a 97% or greater uptime availability.
The W56 also remains fully eligible for the California Hybrid and Zero Mission Truck and Bus Voucher Incentive Program, where HV vouchers of $85,000 per truck and higher are available for medium-duty classic vehicles.
Lastly, we of course announced our proposed transaction with motive during the third quarter.
At the same time we maintained our ongoing Financial discipline prioritizing, cash conservation and expense reduction.
Now, let's turn to slide seven to touch on the proposed transaction.
In August we announced the definitive agreement to combine workhorse with motive electric trucks, bringing together two veteran EV innovators to create a stronger force in North America medium duty electric truck market.
In the third quarter, our operating expenses decreased 1.2 million on a year-over-year basis through discipline, cost management with even more impressive results year to date.
This combination positions us accelerate growth expand our product lineup and capture greater share of the commercial EV space.
I'm also excited to share that. We showcase our w56 step ban at the FedEx forward service provider Summit in Orlando, Florida in September marking, Workforce is 30 year participating in the event.
For our shareholders. It represents a chance to participate in the upside of a unified well capitalized company built for long term success.
In addition, we also completed two transactions with entities affiliated with motives controlling investor.
Our w5669 97% or greater uptime availability.
Including the sale leaseback transaction of our Union city facility for $20 million.
Lastly, we, of course, announced our proposed transaction with motive during the third quarter.
A secured convertible note financing for $5 million.
Now, let's turn to slide 7 to touch on the proposed transaction.
These transactions have strengthened our near term financial position and continuous support workhorses operations.
Looking ahead and as part of this transaction. The combined company is expected to be able to access up to $20 million of additional debt financing post close defend our two to fund our go forward strategic execution.
In August, we announced a definitive agreement to combine Workforce with motiv electric trucks. Bringing together 2 veteran EV innovators to create a stronger force in North, America's medium duty, electric truck Market,
This combination positions us to accelerate growth, expand our product lineup, and capture greater share of the commercial EV space.
The transaction is expected to close in the fourth quarter of 2025 subject to workhorse shareholder approval and other customary closing conditions, including the debt financing commitment.
For our shareholders, it represents a chance to participate in the upside of a unified. Well, capitalized company built for long-term success.
With our shareholders' approval at our annual meeting Tomorrow November 12, we will be positioned to drive sustainable growth and create long term shareholder value.
In addition, we also completed 2 transactions with entities affiliated with motives controlling investor.
And now I'll turn it over to Bob to discuss our financial results and recent steps, we have taken to strengthen our near and long term financial position Bob.
Including the sale leaseback transaction of our Union. City facility for 20 million,
And a secure convertible note, financing for 5 million.
Thanks, Rick.
These transactions have strengthened our near-term financial position and continues to support workforces operations.
Turning now to slide eight for highlights from the quarter.
As a reminder, our financial statements have been adjusted to reflect the March 2025, 1% to 12 and a half reverse stock split.
Sales net of returns and allowances for the three months ended September 32025, and 2024 were $2 4 million and $2 5 million respectively.
Looking ahead. And as part of this transaction, the combined company is expected to be able to access up to 20 million dollars in additional debt. Financing post close to defend, our to the fund. Our go forward, strategic execution.
The decrease in sales of $100000 was primarily due to lower sales of approximately $2 3 million related to delivery of fewer trucks in 2025% compared to the same period in 2024 offset by an increase of $2 $2 million related to the recognition of seven vehicles from deferred revenue.
The transaction is expected to close in the fourth quarter of 2025, subject to Workhorse shareholder approval and other customary closing conditions, including the debt financing commitment.
With our shareholders approval and our annual meeting tomorrow. November 12th, we will be positioned to drive sustainable growth and create long-term shareholder value.
Cost of sales for the three months ended September 32025% in 2024 were $10 1 million and $6 6 million respectively. The increase in cost of sales of $3 5 million was primarily result of an increase in inventory excess and obsolescence reserves of $3 3 million.
Our finance results and recent steps. We have taken to strengthen our near and long-term financial position Bob.
Thanks Rick.
Turning now, to slide 8 for the highlights from the quarter.
As a reminder, our financial statements have been adjusted to reflect the March 2025 1 to 12 and a half reverse stock split
Selling general and administrative expenses for the three months ended September 32025, and 2024 were seven 8% and $7 $7 million respectively. The increase in SG&A of $100000 was primarily driven by a $3 6 million increase in consulting and legal expenses due to the proposed motive merger offset by $2 9 million.
Sales net of returns and allowances for the 3 months, ended September 30th, 2025 and 2024 were 2.4 million and 2.5 million respectively.
Decrease in employee compensation related expenses decrease of $200000 in marketing and trade show related expenses.
The decrease in sales of 100,000 dollars was primarily due to lower sales of approximately 2.3 million related to delivery of fewer trucks in 2025 compared to the same period in 2024 offset by an increase of 2.2 million related to the recognition of 7 vehicles from deferred revenue.
<unk> a $300 in it related expenses.
Search and development expenses for three months ended September 32025, and 2020 for $1 1 million and $2 3 million respectively.
<unk> and R&D expense of $1 2 million was primarily driven by a $300.
Cost of sales for the 3 months. Ended September 30th 2025 and 2024 were 10.1 million and 6.6 million respectively. The increase in cost of sales of 3.5 million was primarily result of an increase in inventory excess and obsolescence reserve of 3.3 million.
The dollar decrease in employee compensation and related expenses due to a lower head count.
$500000 decrease in prototype part expense and a $300000 decrease in consulting and professional services expense.
During the third quarter, we took additional steps to reduce costs and conserve cash.
Which resulted in operating expenses decreased by $1 $2 million year over year compared to the same time last year, we reduced operating expenses by $17 5 million.
Selling General administrative. Expenses for the 3 months, ended September 30th 2025 and 2024 were 7.8 and 7.7 million respectively. The increase in sgna of $100,000 was primarily driven by a 3.6 million increase in Consulting and legal expenses. Due to the proposed mode of merger offset by 2.9 Million. Decrease in employee compensation related expenses, decrease of 200,000
Net interest expense for the third quarter of 2025 was $200000 compared to $3 million for the three months ended September 32024.
In marketing and trade, we show related expenses and a decrease of $300,000 in IT-related expenses.
Difference was primarily driven by higher financing fees related to the 2024 notes recognized in the prior year period compared to the current period.
Net loss was $7 8 million compared to $25 1 million in the same period last year.
I also want to point out during the third quarter. The company recognized a gain on the sale of assets of $13 8 million primarily related to the sale leaseback of our Union City, Indiana facility.
Research and development expenses for 3 months, ended September 30th 2025 and 2024 were 1.1 million and 2.3 million respectively. Decrease, in R&D expense of, 1.2 million was primarily driven by 300 000, decrease in employee compensation and related expense due to a lower. Headcap 00000 decrease in Prototype part expense and a $300,000 decrease in Consulting and Professional Services expense.
Additionally, we recognized the gain of $4 $8 million related to deferred revenue upon termination of the <unk> Assembly services agreement.
Slide nine balance sheet highlights.
Now turning to slide nine to discuss our balance sheet as of September 30 of 2025, the company had $38 $2 million in cash and cash equivalents as well as restricted strictly cash compared to $4 6 million in the same period last year primarily.
During the third quarter, we took additional steps to reduce costs and conserve cash which resulted in operating expenses that decrease by 1.2 million year-over-year compared to the same time. Last year we reduced, operate expenses by 17.5 million.
Net interest expense for a third quarter of 2025 was $200,000 compared to 3 million. For the 3 months, ended September 30th 2024
Primarily increased due to the benefits from funding totally approximately $25 million for motives controlling investor, including a $20 million sale leaseback transaction and a 5 million secured convertible note financing.
The difference was primarily driven by higher financing fees related to the 2024 notes, recognizing the prior year period compared to the current period.
Net loss was $7.8 million compared to $25.1 million in the same period last year.
Both of which were completed at the execution of the merger agreement.
As a reminder, at the closing of the merger all remaining indebtedness and other obligations to workhorse existing senior secured lender, including all warrants currently held by that lender will be repaid and or cancelled with only remaining secured indebtedness of the combined companies being the $5 million secured convertible note held by motives controlling investor which may convert to <unk>.
I also want to point out during the third quarter of the company recognized a gain on the sale of assets of 13.8 million, primarily related to the sale lease back of our Union City, Indiana facility.
Additionally, we recognize the gain of 4 million, 8 million related to deferred revenue upon termination of the tropos assembly. Services agreement,
By 9 balance sheet highlights.
In connection with the post closing financing.
We will continue to strengthen our financials financial position by generating additional purchase orders and revenue from customers as well as maintaining our financial discipline. Looking ahead. We are focused on executing on our product roadmap and completing our transaction with motive and we are confident in our ability to continue to deliver value to our shareholders with that let me turn it back over to Rick.
Thanks, Bob Let me take a moment to outline our near term priority is shown on slide 10.
Now turning to slide 9 to discuss our balance sheet as of September 30th 2025 the company had 38.2 million in cash and cash equivalents as well as restricted, strictly cash compared to 4.6 million in the same period last year, primarily increased due to the benefits from funding, totally approximately 25 million for Motors controlling investor, including a 20 million dollar sales lease back transactions. In a 5 million secured convertible note financing, both of which were completed at the execution of the merger agreement.
A top priority for workhorse as we emphasize on this call is completing the proposed transaction with motive.
Over the past few months both teams have been working diligently to plan for and ensure the combined company is positioned to grow and succeed.
The proposed transaction remains subject to shareholder approval.
As a reminder at the closing of the merger, all remaining in deadness and other obligations to Workforce, existing senior secured lender, including all warrants currently held by that lender will be repaid and or cancelled with only remaining secured in debt, inness of the combined companies, being the 5 million secured. Convertible note, held by Motors controlling investor which may convert to equity and connection with the post-closing financing.
In parallel we continue to focus on strengthening our financial position.
And driving greater operational efficiencies, including growing purchase orders and customer demand prioritizing cash conversion and reducing our operating costs.
We are also continuing to expand and enhance our product portfolio, including finalizing our plans for the Wi Fi six 140 kilowatt production launch in 2026.
We will continue to strengthen our fin financial position by generating an additional purchase orders and revenue from customers. As well as maintaining our financial discipline looking ahead, we are focused on executing on our product roadmap and completing our transaction with motive and we are confident in our ability to continue to deliver value to our shareholders with that. Let me turn it back over to Rick.
This new vehicle has a range of around 120 miles and has about a 10% lower acquisition price.
Thanks, Bob. Let me take a moment to outline our near-term priorities shown on slide 10.
Looking ahead, the combination of a motive will further broaden our product lineup and accelerate our shared product roadmap and we're currently developing the plans to integrate our portfolios in R&D technology to deliver even greater value and a broader portfolio of vehicles to our customers over the next two to three years.
A top priority for Workhorse as we emphasize on this. Call is completing the proposed transaction with motive.
Over the past few months, both teams have been working diligently to plan for and ensure the combined company is positioned to grow and succeed.
The proposed transaction remains subject to shareholder approval.
In parallel, we continue to focus on strengthening our financial position.
Before we wrap up we'd like to remind you that our 2025 annual general meeting shareholder meeting is Tomorrow November 12.
And driving greater operational efficiencies, including growing purchase orders and customer demand prioritizing cash conversion and reducing our operating costs.
In order for more about workhorse to complete the proposed transaction with motive and for our shareholders to participate in the potential upside of the combined companies, we need workhorse shareholders to vote for the transaction. In addition to the other eight proposals up for vote in connection with the meeting.
Including finalizing our plans for the w56. 140 kilowatt production launch in 2026.
We look forward to our future with motive and remain confident in our ability to deliver meaningful value to shareholders.
This new vehicle has a range of around. 120 miles and has about a 10%, lower acquisition price.
We hope you share our excitement for what lies ahead as we combine our strengths to capture new opportunities and lead in the commercial EV transition.
That said this call to discuss our earnings results for the third quarter. So we won't be taking questions on the motive transaction at this time.
Looking ahead, the combination with Motive will further broaden our product lineup and accelerate our shared roof product roadmap. We are currently developing plans to integrate our portfolios and R&D technology to deliver even greater value in a broader portfolio of vehicles to our customers over the next 2 to 3 years.
You all for joining today's call now ill open it up for questions and Kevin I'll turn it back over to you.
Before we wrap up, we'd like to remind you that our 2025 Annual General Meeting, uh, shareholder meeting is tomorrow on November 12th.
I would now like conducting a question and answer session, if you'd like to be placed in the question queue. Please press star one at this time.
Information tone will indicate your line is in the question queue.
In order for more remote, work course to complete the proposed transaction with motive and for our shareholders to participate in the potential upside of the combined companies.
One moment, please while we poll for questions.
Our first question is coming from Ben Swinburne from BTG. Your line is now live.
We need Workhorse shareholders to vote for the transaction. In addition to the other 8, proposals up to vote in connection with the meeting.
Hey, John Good morning, and thank you for taking my question, so kind of on the on the W. 56 step van and kind of being eligible for those state level incentives in California kind of curious.
We look forward to our future with motive and remain confident in our ability to deliver a meaningful value to a shareholders.
Broader market outlook, how youre seeing state level incentives across the U S kind of panning out of different states and what do you think the opportunities arent beyond California for the step van Thank you.
We hope you share our excitement for what lies ahead as we combine our strengths to capture new opportunities and lead in the commercial EV transition.
That said, this call is to discuss our earnings results, for the third quarter. So we won't be taking questions on the mode of transaction at this time.
Great question. So we are we worked with the card group and a couple of other people in the EV space to make sure. The hbf vouchers are competitive out in California that was successful and we saw immediate pickup in orders from the Fedex ground guys out there right.
Thank you all for joining today's call, and I'll open it up for questions. Kevin, I'll turn it back over to you.
Right now.
Chuck We're building between now and then he has already got a purchase order in <unk> tied to it.
Certainly! Would I be conducting a question-and-answer session if you'd like to be placed into question? Can you please press star 1 at this time? A confirmation tone will indicate your line is in the question queue. One moment, please, while we pull for questions.
We are seeing some good movement in the state of Washington, and the state of New York in terms of vouchers and we have turned our efforts of those are two areas. Those two states for sure so and.
Our first question is coming from Ben Sommers from btig. Your line is now live.
And then I'd like to say to as we've talked about having archrock down the last three years at the Fedex conference for the ground operators, we have one site in California, now Thats operating more than 20 W. Five six step vans.
How's it going? Good morning and thank you for taking my questions. So kind of on the D on the W, 56 Step Van and kind of being eligible for those state level incentives in California, kind of curious. Just, you know, you know more broader Market Outlook how you're seeing state level incentives across the US kind of panning out a different state than what you think the opportunities are, you know, beyond California. Uh, for the Steppin. Thank you.
And once we get a truck in the hands of the round operator, and they see the reliability of our trucking averaging 90, 798% uptime, we are seeing repeat orders from multiple Fedex ground operators.
Awesome. Thank you for the color there and then just kind of curious on costs as we ramp closer towards production of this vehicle how should we be thinking about that trending you know in 'twenty as we get prepared for the production launch there.
Great question. So we are uh, we worked with the car group with a couple other people in the EV space, to make sure the hvip vouchers are competitive out in California. That was successful. And we saw immediate pickup in orders from the FedEx Ground guys out there. And right now we're about every every truck we're building between now. And then, the New Year's already got a purchase order in asip browser, tied to it.
I'll ask Bob to answer that question.
Okay.
So I think if you look at the costs from two elements. There, there's obviously the bill of material cost, which.
We continue to focus on bringing that down through engineering and.
In supply chain, but also as we as we as the production increases you will see an improvement in the labor cost as we as we get into a regular cadence on the lines. There. So we look to see improvements in both areas as we go forward.
We are seeing some good uh movement in the state of Washington and the state of New York in terms of vouchers. And we have, uh, turned our efforts of those, the 2 areas those 2 States, for sure. So and then I'd like to say too, is that we talked about having our truck down, the last 3 years at the FedEx conference for the ground operators. We have 1 site in California, now, that's operating more than 20 w56, step vans.
And once we get a truck in the hands of a round operator and they see the reliability of our truck averaging 97.98% uptime, we're seeing repeat orders from multiple FedEx Ground operators.
Yes, we're starting to see obviously, we haven't had a lot of volume so far and so to get the manufacturing right. We built three or four trucks now perfectly well they had no postproduction touch.
Awesome. Thank you for the color there, then just kind of curious on cost as we ramp closer towards production, this vehicle. You know, how how should we be thinking about that trending, you know, in 26 as we get prepared for the production launch? Their
Touch ups and stuff like that so our guys are starting to get a handle on how the build the chassis more important in the cabin body, that's a pretty complex assembly operation there.
I'm going to ask about the answer to that question.
We also have the.
Escalators in our purchase contracts only hurts, we hit certain volumes.
The road, we're far from those volumes now, but they are built into the contracts and that will lower the bill of material costs. We know we have to move closer and closer to be almost on parity with ice that's going to take a couple of years and it will require us to get to certain levels of volumes, especially on batteries to lower the costs.
Okay, um, so I think if you look at the cost from 2 elements, there's there's obviously the the bill of material cost which uh, you know, we continue to focus on on bringing that down through engineering and uh and supply chain. But also as we as we as the production increases, you'll see an improvement in the uh labor cost as we uh as we get into a regular Cadence on the, on the lines there. So we look to see improvements in both areas as we go forward.
Awesome. Thank you guys for the color on that thanks for the update.
One thing I'd say too is that once we do get trucks in the field.
Based on the data, we're having right now both of Fedex and ground, we're seeing somewhere between a 55% to 65% total cost of operation reduction no fuel costs, obviously, new trucks very no spare parts and uptime again, 98%. So we think thats a good selling point when we're out there talking to get to fleets.
<unk>.
Great. Thank you guys for taking my questions.
Great questions.
Thank you we've reached end of our question and answer session I like to turn the floor back over to Rick for any further closing comments.
Appreciate your patience with us it's been a tough four years in the electric vehicle transition market. Those things we can control we're doing our best to do that and we think the merger with motive gives us even a bigger opportunity to lower the operating costs of the company expand the product portfolio.
Yeah, I'm just trying to see, you know, obviously we haven't had a lot of volume so far and so to to get the manufacturing right, we built 3 or 4 trucks now perfectly, they had no uh post production, you know, touch-ups and stuff like that. So our guys are starting to get a hand handle on how to build the chassis more importantly, the cabin body. That's a pretty complex assembly operation there. Uh, we also have uh, deescalate contracts, when we hurt, we hit certain volumes uh down the road. We're far from those volumes now but the built into the contracts and that'll lower the bill of material costs. We know we have to move closer and closer to be almost on par with ice. That's going to take a couple years and it's going to require us to get to certain levels of volumes especially on batteries to lower the cost.
Awesome. Thank you, guys, for the caller, and thanks for the update.
Give us a better opportunity to be successful long term, we think it's the right thing for shareholders. We appreciate your support and have a great day. Thank you.
Thank you that does conclude today's teleconference and webcast you may disconnect. Your line at this time and have a wonderful day. Thank you.
Costs obviously new trucks. Very no spare parts, and uptime again, 98%. So we think that's a good selling point when we're out there talking to, to fleets
For your participation today.
Thanks, Kevin Hey, Kevin.
Great. Thank you guys for taking my questions.
Great questions.
Thank you. We reached end of our question and answer session. I'd like to turn the floor back over to Rick for further closing comments.
We appreciate your patience with us. It's been a tough four years, especially in the electric vehicle transition market. There are things we can control, and we're doing our best to address those.
We think the merger with motives gives us even a bigger opportunity to lower the operating cost of the company. Expand the product portfolio. I I give us a better opportunity to be successful long term and we think it's the right thing for shareholders.
We appreciate your support and we have have a great day. Thank you.
Thank you, bye. Just conclude today's teleconference and webcast. Let me just connect your line at this time and have a wonderful day. We thank you for your participation today and thanks, Kevin. Take care, everyone.