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01/10 17:12
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals significant challenges: a steep decline in sales, increased net loss, and a critical cash position. Despite cost-cutting and reduced cash burn, uncertainties in EV adoption, regulatory hurdles, and unclear management responses during the Q&A cast doubt on future performance. The reverse stock split and legal challenges further weigh on sentiment. Although there are some positives like reduced expenses and potential future orders, the overall outlook remains negative due to the financial struggles and market uncertainties.
Sales $800,000 (down from $4 million), a decrease of 80% year-over-year due to lower W4 CC vehicle sales, partially offset by increased service revenue.
Cost of Sales $7.3 million (down from $8.4 million), a decrease of 13.1% year-over-year due to lower sales volume and a decrease in consulting and employee compensation expenses.
SG&A Expenses $12.1 million (down from $14 million), a decrease of 13.6% year-over-year primarily due to lower employee compensation and marketing expenses.
R&D Expenses $2 million (down from $5.1 million), a decrease of 60.8% year-over-year driven by lower employee compensation and consulting expenses.
Net Interest $5.2 million (up from $500,000), a significant increase due to a $3 million fair value adjustment compared to no fair value adjustment in the prior year.
Net Loss $26.3 million (up from $23 million), an increase of 14.8% year-over-year.
Cash Position $5.3 million (down from $6.7 million), a decrease of 20.9% quarter-over-quarter and down from $35.8 million at the end of 2023.
Cash Burn Rate Reduced from $11 million per month to $4 million per month, a decrease of 63.6% due to cost-saving measures.
Capital Expenditures $3.8 million (down from $10.5 million), a decrease of 63.8% year-over-year.
New Product Development: Workhorse is developing two new variants of the W56, expected to enter early production by year-end 2024 or early 2025.
Product Launch: The W56 is proving to be reliable and capable, with positive customer feedback after multi-week demos.
New Product Introduction: A 200-inch wheel-based version of the W56 is being introduced, with initial production expected in Q4 2024.
Market Expansion: Entered a strategic collaboration with KTS to supply 141 W4CC cab chassis units in 2024 and 2025.
New Contracts: Awarded a Sourcewell contract for Class 4 to 8 chassis and cabs, expanding reach to government and non-profit sectors.
Dealer Partnerships: Added three new dealer partnerships in early EV adoption regions, specifically the Northwest and Northeast.
Operational Efficiency: Reduced cash burn rate from $11 million to $4 million per month through workforce reductions and cost-saving measures.
Cost Management: Divested the aerospace business, saving approximately $400,000 monthly.
Workforce Management: Reduced headcount by approximately 50% and furloughed 73 employees to conserve cash.
Strategic Shift: Focus on extending financial runway until EV adoption rates increase, with a commitment to securing new orders.
Long-term Strategy: Positioning Workhorse to capture future commercial fleet demand driven by increasing emission requirements.
Electric Vehicle Adoption Rates: Slower than anticipated industry-wide electric vehicle adoption rates due to lack of government policy enforcement and delays in funding incentives.
Charging Infrastructure: Slower rollouts of electric vehicle charging systems and infrastructure nationwide.
Regulatory Challenges: Government red tape in various states delaying approvals for electric vehicles.
Political Climate: Pending Presidential election influencing fleet owner decisions on EV investments.
Legal Challenges: Three legal actions underway challenging the implementation of California's Clean Truck and Advanced Clean Fleet mandates.
Market Demand: Pending demand for Class 4-6 trucks has not yet translated into meaningful vehicle orders.
Cash Burn Rate: Need to dramatically reduce cash burn rate to extend financial runway until EV adoption rates pick up.
Workforce Reduction: Significant workforce reduction (approximately 50%) and furloughs to conserve cash.
Cost of Sales: Decrease in sales and revenue due to lower vehicle sales and delays in voucher approval process.
Battery Costs and Infrastructure Investment: Affordability issues driven by battery costs and the need for multi-billion dollar investments in charging infrastructure.
Strategic Collaboration with KTS: Entered a strategic collaboration with KTS to supply 141 W4CC cab chassis units in 2024 and 2025.
Sourcewell Contract Award: Awarded a Sourcewell contract for Class 4 to 8 chassis and cabs, expanding commercial reach to government, education, and non-profit sectors.
New Dealer Partnerships: Added three new dealer partnerships in early EV adoption regions to increase commercial presence.
W56 Variants Development: Kicked off the design of two new variants of the W56 based on customer feedback.
Cost Reduction Actions: Divested the aerospace business, reduced headcount, and delayed future product programs to conserve cash.
EV Product Roadmap Progress: Continued progress on the EV product roadmap, including the introduction of a 200-inch wheel-based version of the W56.
Revenue Expectations: Expect to recognize most of the $2.2 million in deferred revenue related to W4CC trucks during the remainder of 2024.
Cash Burn Rate: Reduced cash burn rate from approximately $11 million per month to $4 million per month.
Future Orders: Confident in generating additional purchase orders and revenue from customers in 2024 and 2025.
Capex Investments: Expect significant CapEx investments from larger national fleets committed to EV plans in California and the I-5 corridor.
Financial Position: Currently have $112.7 million of remaining facility available for financing.
HVIP Voucher Program: Through HVIP vehicle purchase, participating dealers are eligible to apply for a base voucher of $85,000 per W56 purchase.
Cash Burn Rate Reduction: The company reduced its cash burn rate from approximately $11 million a month to $4 million per month.
Reverse Stock Split: Following stockholders' approval, a 1 for 20 reverse stock split was enacted to regain NASDAQ compliance.
Deferred Revenue: Workhorse expects to recognize most, if not all, the $2.2 million in deferred revenue related to the sale of W4CC trucks during the remainder of 2024.
Aero Business Divestiture: The divestiture of the Aero business provides the company with monthly cost savings of approximately $400,000.
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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