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01/10 17:14
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals several challenges: no revenue guidance, regulatory uncertainties, competitive pressures, supply chain issues, and significant financial losses. Despite some cost reductions and product launches, the absence of revenue guidance and a reverse stock split signal financial instability. The market's uncertain readiness for EVs and the lack of significant positive catalysts suggest a negative sentiment, likely leading to a stock price decline.
Sales $6.6 million for the full year 2024, a decrease of $6.5 million (49.6%) compared to $13.1 million in 2023, primarily due to lower W4 CC truck sales, offset by an increase in W56 truck sales and service revenue.
Cost of Sales $28.2 million for the full year 2024, a decrease of $9.5 million (24.7%) compared to $38.4 million in 2023, primarily due to lower W4 CC vehicle sales, offset by higher W56 vehicle sales and cost-saving initiatives.
SG&A Expenses $42.5 million for the full year 2024, a decrease of $13.1 million (23.5%) compared to $55.6 million in 2023, driven by lower employee compensation, consulting, legal, marketing, travel, and insurance expenses.
R&D Expenses $9.1 million for the full year 2024, a decrease of $15.3 million (62.4%) compared to $24.5 million in 2023, primarily due to lower employee compensation and prototype expenses.
Interest Expense Net $22.2 million for the year ended December 31, 2024, an increase of $13.5 million (155.2%) compared to $8.7 million in 2023, primarily due to a loss on fair value of convertible notes and increased interest expense.
Net Loss $101.8 million for the full year 2024, a decrease of $22.1 million (17.8%) compared to a net loss of $123.9 million in 2023.
Working Capital $8.2 million as of December 31, 2024, including $4.6 million in cash and cash equivalents, indicating a need for continued focus on financial management.
Inventory $41.8 million as of December 31, 2024, net of reserves, reflecting the company's production and sales strategy.
New Product Launch: In Q4, Workhorse launched the new W56 208-inch wheelbase truck in both strip chassis and step van variants, receiving positive customer feedback and a purchase order for 13 units.
Product Development: Workhorse is developing a reduced range 140 kilowatt W56, set for Q3 production, responding to a request from a major last-mile fleet.
Fleet Performance: The W56 has demonstrated a range of 150+ miles and achieved 27-31 miles per gallon equivalent, with a payback period of 4-5 years without subsidies.
Market Expansion: Approval for the sale of W750 and W56 step van models in Canada, with demos scheduled for April and May.
Government Contracts: Workhorse has secured federal and state procurement contracts, including Sourcewell and GSA, enhancing market positioning.
Cost Reduction: Significant reductions in headcount and spending were made in 2024, including $3 million in employee costs and $4.4 million in inventory management.
Operational Efficiency: Monthly operating cash reduced to below $3 million, improving financial stability.
Strategic Focus: Workhorse aims to extend financial runway while advancing product roadmap and ramping up production, despite slower EV adoption.
Partnerships: Collaboration with over 30 certified upfit and body partners to provide fleet-ready configurations.
Regulatory Issues: Recent regulatory pauses, such as California withdrawing its waiver request to the EPA and a temporary freeze on federal fleet procurement, have created uncertainty in the marketplace, causing several fleets to pause or delay their EV investment plans.
Competitive Pressures: The EV market is experiencing significant competition, with many other companies struggling to establish themselves, which may impact Workhorse's market share and growth.
Supply Chain Challenges: The company faces challenges related to the supply chain, particularly in securing parts and components necessary for production, which could affect delivery timelines and operational efficiency.
Economic Factors: The overall economic environment and market readiness for commercial EVs are uncertain, which may hinder the pace of adoption and impact sales.
Financial Stability: The company has incurred significant losses, with a net loss of $101.8 million in 2024, and is focused on extending its financial runway through cost reductions and cash preservation.
Market Readiness: The market's readiness to buy commercial EV step vans at scale is uncertain, which poses a risk to achieving projected sales and growth targets.
Operational Challenges: The company has had to make tough decisions regarding headcount and spending to conserve cash, which may impact operational capacity and employee morale.
Product Development: Workhorse has established itself as a leader in the medium duty EV space, focusing on in-house manufacturing capabilities and building a national dealer network.
Market Expansion: Approval for the sale of W750 and W56 step van models in Canada, with demos scheduled for April and May.
Cost Reduction Initiatives: Significant reductions in headcount and operating costs to extend financial runway.
Fleet Partnerships: Successful demos with FedEx and positive customer feedback on W56 performance.
Product Launches: Launched the new W56 208-inch wheelbase truck with positive customer response and initial purchase orders.
Revenue Guidance: No specific annual revenue guidance provided due to uncertainty in the EV landscape.
Financial Runway: Focus on extending financial runway and reducing monthly operating cash to below $3 million.
Capital Expenditures: Expected capital expenditures to remain at 4.1% in 2025.
Market Conditions: Acknowledgment of slower EV adoption due to regulatory delays and market uncertainties.
Future Orders: Working to secure high volume orders with national fleets and smaller orders in states with effective incentive programs.
Reverse Stock Split: Executed a 1-for-12.5 reverse stock split to increase the market price of common stock and regain compliance with Nasdaq listing requirements.
Financial Runway: Reduced monthly operating cash to below $3 million, significantly lower than the previous year, to extend financial runway.
Cash Management: As of December 31, 2024, had $4.6 million in cash and cash equivalents, with total working capital of $8.2 million.
The earnings call highlights several challenges: decreased sales revenue, increased cost of sales, and dependence on incentives. Despite positive aspects like improved net loss and cash position, uncertainties around the Motiv merger and supply chain risks persist. Q&A insights show ongoing cost concerns and reliance on incentives. These factors, combined with the challenging market for electric vehicles, suggest a negative sentiment, likely leading to a stock price decrease of -2% to -8% over the next two weeks.
Workhorse shows positive momentum with increased revenue, reduced net loss, and strategic partnerships. Despite not providing specific revenue guidance, the expansion into Canada and partnership with Gateway Fleets are promising. The Q&A session highlighted growth opportunities, sufficient financing, and plans to enhance the product portfolio. The positive sentiment from analysts, coupled with improved financial metrics and strategic growth plans, suggests a positive stock price movement over the next two weeks.
The earnings call shows positive trends in financial performance and product development, with increased revenue, improved margins, and strong demand for the W56. However, the lack of specific revenue guidance and potential risks in market demand and execution balance these positives. The absence of a share repurchase program and ongoing uncertainties in the EV market further suggest a cautious outlook. The Q&A section did not reveal significant new insights to alter this assessment. Overall, these factors suggest a neutral stock price movement over the next two weeks.
The earnings call presents a mixed but overall negative outlook. The partnership with Gateway Fleets and expansion into Canada are positive, but the lack of revenue guidance and customer demand shifts pose significant risks. Financial discipline is evident, but declining sales and increased interest expenses are concerning. The reverse stock split and funding actions indicate financial instability. The Q&A section does not provide additional clarity. Overall, the negative factors outweigh the positives, leading to a likely stock price decline between -2% and -8% over the next two weeks.
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