CINCINNATI, March 10, 2020 /PRNewswire/ -- Workhorse
Group Inc. (NASDAQ: WKHS) ("Workhorse" or
"the Company"), an American technology company focused on
providing sustainable and cost-effective electric vehicles to
the last mile delivery sector, today reported financial results for
the fourth quarter and full year ended December 31, 2019.
Release Updates and Highlights
- Sold non-core assets and intellectual property allowing full
strategic focus on last mile C-Series delivery vehicles and
patented HorseFly drone truck mounted technology.
- Started production and are obtaining certifications to allow
for delivery of vehicles to customers in April.
- Established a production and delivery target of 300-400
vehicles in 2020.
- Recorded non-cash license income of $12.2 million associated with the Lordstown
Motors Corporation (LMC) investment.
Management Commentary
"In the fourth quarter we were
able to complete transactions that allowed us to narrow our focus
on our unique business of providing an all-electric,
customer-focused design C-Series delivery vehicles and patented
vehicle-mounted drones that can meet the needs of an $18 billion market where 300,000 trucks are
replaced annually," said Workhorse CEO Duane Hughes.
"We also made meaningful progress in our transition from a
development-stage company to a production-focused enterprise. We
have now begun production and have obtained the needed
certifications that will allow us to deliver a limited number of
vehicles to our customers starting in April. While our intent had
been to deliver initial vehicles in the first quarter of 2020, we
were impeded by material supply disruptions related to the global
outbreak of the novel coronavirus. Despite these near-term
headwinds, we are setting a 2020 production target of 300-400
vehicles and are looking forward to delivering our state-of-the-art
truck to our customers."
Fourth Quarter 2019 and Recent Operational Highlights
- December 2019: Completed
an Asset Purchase Agreement with aerospace and defense company Moog
for the sale of the Company's SureFlyTM electric
helicopter for a cash purchase price of $4
million as well as formed a joint venture (JV) involving the
Company's HorseFlyTM last-mile drone delivery
system.
- December 2019: Closed
a $41 million financing from an
institutional lender, the proceeds of which were used for general
working capital as well as repayment of a pre-existing debt
agreement with Marathon Asset Management.
- November
2019: Entered into an agreement with EnerDel, a
leading supplier of advanced lithium-ion batteries and electric
systems solutions (ESS), to be one of the Company's key battery
suppliers for its next generation C-Series delivery vehicle.
- November 2019: Signed
Intellectual Property Licensing Agreement (IPLA) with Lordstown
Motors Corp. (LMC):
-
- Agreement finalized in connection with General Motors (GM)
Lordstown manufacturing facility
acquisition announced on November 7,
2019.
- Under the IPLA, Workhorse is granting LMC a three-year
exclusive license of certain IP relating to the Company's W-15
electric pickup truck in exchange for an initial equity stake of
10% in LMC, which will be anti-dilutive for two years.
- Workhorse is entitled to a license fee equal to 1% of the gross
sales price of each LMC truck sold, up to the first 200,000
units.
- LMC has agreed to pre-pay a portion of the license fee in an
amount equal to 1% of the aggregate debt and equity commitments LMC
intends to raise.
- Once the pre-payment has been amortized over actual sales, LMC
will pay on a per-unit-shipped basis up to the 200,000-unit
cap.
- Workhorse will also receive an additional 4% commission on the
gross sales price of trucks sold which fulfill the 6,000 existing
pre-orders for the W-15 transferred from the Company to LMC.
- October 2019: Partnered
with Unmanned Systems Operations Group, Inc. (USOG) to launch an
initial pilot drone delivery program in the San Diego area with the goal of pursuing
additional programs for healthcare providers, pharmacies, and
specialized medical courier services using Workhorse's
HorseFlyTM technology.
Full Year 2019 Highlights
- Successfully transitioned the CEO, COO and CFO roles to further
support the Company's evolution from R&D to production.
- Collectively obtained over $100
million in capital facilities to support 2019 working
capital needs and final design of the C-Series last mile delivery
truck product lineup.
- Formed strategic alliance with Duke Energy for infrastructure
support and battery leasing opportunities.
Fourth Quarter 2019 Financial Results
Sales for the
fourth quarter of 2019 were recorded at $3,000, which was down from $21,000 in the fourth quarter of 2018. The
decrease in sales was primarily due to lower volume.
Cost of goods sold decreased to $2.1
million from $11.1 million in
the fourth quarter of 2018. The decrease was driven by warranty
expense and inventory write-downs in the previous year's
quarter.
Selling, general and administrative expenses increased to
$3.6 million from $2.7 million in the same period last year. The
increase in selling, general and administrative expenses was due
primarily to executive stock compensation and legal and
professional fees related to this quarter's transactions offset by
less advertising expenses compared to last year.
Research and development expenses increased to $4.0 million from $1.7
million in the fourth quarter of 2018. The increase in
research and development expenses was primarily due to
non-recurring engineering fees associated with the
C1000-Series vehicles.
Other income was $15.8 million
compared to $0 in 2018 with
$12.2 million related to the
technology licensing income from the Lordstown Motor Corporation
investment and $3.6 million from the
net gain on the divestiture of SureFly.
Interest expense, net increased to $5.6
million compared to $2.2
million from the same period last year due to prepayment of
the Marathon debt facility offset by a mark-to-market adjustment on
the warrant liability.
Net income was $655,000, compared
with a net loss of $17.7 million in
the fourth quarter of 2018.
As of December 31, 2019, the
company had cash, cash equivalents and short-term investments of
$23.9 million compared to
$1.5 million as of December 31, 2018.
Full Year 2019 Financial Results
Sales for the
full year 2019 were $377,000,
compared to $763,000 in 2018. The
decrease in sales was primarily due to lower volume of delivery
truck sales.
Cost of goods sold for the full year decreased to $5.8 million from $15.9
million last year, which was driven by warranty expense and
inventory write-downs in the previous year.
Selling, general and administrative expenses for the full year
2019 decreased to $10.2 million from
$11.5 million in the same period last
year. The decrease in selling, general and administrative expenses
was due primarily to reduced advertising and lower employee
headcount offset by an increase in executive stock compensation and
higher professional and legal fees associated with 2019
transactions.
Research and development expenses for the full year 2019
increased to $8.2 million from
$7.4 million in 2018. The increase in
research and development expenses was due primarily to higher
engineering and design expenses related to our C-Series delivery
trucks.
Other income was $15.8 million
compared to $0 in 2018 with
$12.2 million related to the
technology licensing income of the Lordstown Motor Corporation
investment and $3.6 million from the
net gain on the Surefly transaction.
Interest expense, net increased to $29.1
million compared to $2.4
million from the same period last year due to prepayment of
the Marathon debt facility and by a mark-to-market adjustment on
the warrant liability and higher debt balances.
Net loss for the full year 2019 was $37.2
million, compared with a net loss of $36.5 million in 2018.
Conference Call
Workhorse management will hold a
conference call today (March 10,
2020) at 10:00 a.m. Eastern
time (7:00 a.m. Pacific time)
to discuss these results.
Workhorse management will host the presentation, followed by a
question and answer period.
U.S. dial-in: 877-407-8289
International dial-in: 201-689-8341
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section of Workhorse's
website.
A telephonic replay of the conference call will be available
after 4:00 p.m. Eastern time on the
same day through March 17, 2020.
Toll-free replay number: 877-660-6853
International replay number: 201-612-7415
Replay ID: 13699719
About Workhorse Group Inc.
Workhorse is a technology company focused on providing electric
vehicles to the last mile delivery sector. As an American original
equipment manufacturer, we design and build high performance
battery-electric vehicles including trucks and aircraft. Workhorse
also develops cloud-based, real-time telematics performance
monitoring systems that are fully integrated with our vehicles and
enable fleet operators to optimize energy and route efficiency. All
Workhorse vehicles are designed to make the movement of people and
goods more efficient and less harmful to the environment. For
additional information visit workhorse.com.
Forward-Looking Statements
This press
release includes forward-looking statements. These statements are
made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These statements
may be identified by words such as "believes," "expects,"
"anticipates," "estimates," "projects," "intends," "should,"
"seeks," "future," "continue," or the negative of such terms, or
other comparable terminology. Forward-looking statements are
statements that are not historical facts. Such
forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from the
forward-looking statements contained herein. Factors that
could cause actual results to differ materially include, but are
not limited to: our limited operations and need to expand in the
near future to fulfill product orders; risks associated with
obtaining orders and executing upon such orders; the ability to
protect our intellectual property; the potential lack of market
acceptance of our products; potential competition; our inability to
retain key members of our management team; our inability to raise
additional capital to fund our operations and business plan; our
inability to satisfy covenants in our financing agreements; our
inability to maintain our listing of our securities on the Nasdaq
Capital Market; our inability to satisfy our customer warranty
claims; our ability to continue as a going concern; our liquidity
and other risks and uncertainties and other factors discussed from
time to time in our filings with the Securities and Exchange
Commission ("SEC"), including our annual report on Form 10-K filed
with the SEC. Workhorse expressly disclaims any obligation to
publicly update any forward-looking statements contained herein,
whether as a result of new information, future events or otherwise,
except as required by law.
Investor Relations Contact:
Matt Glover and Tom Colton
Gateway Investor Relations
949-574-3860
WKHS@gatewayir.com
Workhorse Group
Inc. Condensed Consolidated Statements of
Operations (Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended December
31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net sales
|
$
2,614
|
|
$
21,263
|
|
$
376,562
|
|
$
763,173
|
Cost of
sales
|
2,093,217
|
|
11,106,468
|
|
5,844,891
|
|
15,953,565
|
Gross loss
|
(2,090,603)
|
|
(11,085,205)
|
|
(5,468,329)
|
|
(15,190,392)
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
3,561,184
|
|
2,719,030
|
|
10,199,534
|
|
11,485,482
|
Research and
development
|
3,979,618
|
|
1,709,853
|
|
8,199,074
|
|
7,391,693
|
Total operating
expenses
|
7,540,802
|
|
4,428,883
|
|
18,398,608
|
|
18,877,175
|
|
|
|
|
|
|
|
|
Other
income
|
15,849,800
|
|
-
|
|
15,849,800
|
|
-
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
6,218,395
|
|
(15,514,088)
|
|
(8,017,137)
|
|
(34,067,567)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
5,563,263
|
|
2,175,572
|
|
29,145,690
|
|
2,434,749
|
|
|
|
|
|
|
|
|
Loss before provision
for income taxes
|
655,132
|
|
(17,689,660)
|
|
(37,162,827)
|
|
(36,502,316)
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
655,132
|
|
$
(17,689,660)
|
|
$
(37,162,827)
|
|
$
(36,502,316)
|
|
|
|
|
|
|
|
|
Workhorse Group
Inc.
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
December
31,
|
|
2019
|
|
2018
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
23,868,416
|
|
$
1,512,750
|
Restricted cash held
in escrow
|
1,000,000
|
|
-
|
Accounts and lease
receivable, current
|
41,021
|
|
48,271
|
Inventory,
net
|
1,798,146
|
|
2,533,616
|
Prepaid expenses and
deposits
|
4,812,088
|
|
2,274,595
|
Total current
assets
|
31,519,671
|
|
6,369,232
|
|
|
|
|
Property, plant and
equipment, net
|
6,830,181
|
|
5,237,451
|
Investment in
Lordstown Motors Corp.
|
12,194,800
|
|
-
|
Lease receivable,
long-term
|
129,177
|
|
198,090
|
|
|
|
|
Total
Assets
|
$
50,673,829
|
|
$
11,804,773
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued liabilities
|
4,784,167
|
|
8,286,849
|
Warranty
liability
|
6,001,864
|
|
7,058,769
|
Warrant
liability
|
16,335,000
|
|
1,822,819
|
Customer
deposits
|
303,000
|
|
406,000
|
Duke financing
obligation
|
-
|
|
1,340,700
|
Current portion of
Convertible Note, at fair value
|
9,852,000
|
|
-
|
Total current
liabilities
|
37,276,031
|
|
18,915,137
|
|
|
|
|
Long-term
debt
|
-
|
|
8,312,079
|
Convertible Note, at
fair value
|
29,168,000
|
|
-
|
Mandatory redeemable
Series B preferred stock
|
19,142,908
|
|
-
|
|
|
|
|
Total stockholders'
deficit
|
(34,913,110)
|
|
(15,422,443)
|
|
|
|
|
Total Liabilities and
Stockholders' Deficit
|
$
50,673,829
|
|
$
11,804,773
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/workhorse-group-reports-fourth-quarter-and-full-year-2019-results-301020466.html
SOURCE Workhorse Group Inc.