CINCINNATI, May 6, 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
first quarter ended March 31,
2020.
Release Updates and Highlights
- Continued production efforts as an "essential" business with
deliveries planned for second quarter of 2020.
- Reaffirmed previous production and delivery target of 300-400
vehicles in 2020.
- Receiving increased interest in patented delivery truck mounted
HorseFly™ drone capabilities from both
government and commercial customers.
Management Commentary
"In the first quarter we
completed several major roadmap objectives which have us
well-positioned to execute on our production timeline as well as
improve our long-term corporate governance and competitive
positioning," said Workhorse CEO Duane
Hughes. "Because we provide vital support and infrastructure
for the transportation and delivery sectors, we have been deemed an
essential service, allowing us to continue working throughout the
period. We will be delivering our C-Series vehicles to customers in
the second quarter, and we remain on schedule to achieve our target
of delivering 300 to 400 vehicles by the end of this year. To that
end, we are in the final stage of preparing a detailed
production plan of when we can deploy vehicles into Ryder
Systems' sales channel starting in 2020 and into 2021.
"Through our recent appointments of Jacqui Dedo and Pamela
Mader to our board of directors, we now have two automotive
industry veterans, respectively, with experiences at international
enterprises managing major vehicle production efforts. We expect
their guidance will be invaluable as we look to ramp up our
capacity during the second half of this year. We also further
strengthened our intellectual property portfolio and made
significant strides within our HorseFlyTM drone program
during the period, highlighted by our provisional patent
application and our recent collaborative testing efforts with
UPS and CIT, which have the potential to provide a
much-needed alternative delivery method to support our medical
workers and healthcare system during a truly tumultuous time."
First Quarter and Recent Operational Highlights
- May 2020: Appointed
automotive industry veterans Jacqueline Dedo and Pamela Mader to the Company's board of
directors, expanding its leadership team from six to eight,
including seven independent directors.
- April 2020: Partnered with
UPS and Virginia's Center for
Innovative Technology (CIT) in tests evaluating the commercial
drone industry's ability to provide and scale small unmanned aerial
systems to support various use cases to speed and assist the U.S.
healthcare system during the COVID-19 crisis.
- April 2020: Expanded the
Company's HorseFly™ patent portfolio by filing a provisional
application, which is intended to protect the Unmanned Aerial
System (UAS) and several of the UAS's key components and
capabilities, including the ground control station, winch
deliveries and aircraft structure.
- March 2020: Showcased the
Company's new C650 all-electric step van at the NTEA
Work Truck Show in Indianapolis.
- February 2020: Awarded ISO
9001:2015 certification for the Company's quality management
system and received a U.S. Environmental Protection Agency
(EPA) Certificate of Conformity for each C-Series all-electric
delivery truck, the latter providing Workhorse vehicles the right
and authority to operate on U.S. roads and highways.
First Quarter 2020 Financial Results
Sales for the
first quarter of 2020 were recorded at $84,000, compared with $364,000 in the first quarter of 2019. The
decrease in sales was primarily due to a decrease in the volume of
trucks shipped.
Cost of goods sold increased to $1.7
million from $1.4 million in
the first quarter of 2019. The increase was primarily driven by an
increase in tooling costs for the C-Series production.
Selling, general and administrative expenses increased to
$5.6 million from $2.1 million in the same period last year. The
increase in selling, general and administrative expenses was due
primarily to increases in consulting expense, higher employee
related costs, and a $1.0 million
payment related to ST Engineering Hackney, Inc.
Research and development expenses increased to $1.9 million from $1.4
million in the first quarter of 2019. The increase in
research and development expenses was primarily due to finalizing
the design of the C-Series.
Other income was $865,000 compared
to $0 in the first quarter of 2019
due to additional shares received for the LMC investment related to
the Company's anti-dilution provisions.
Interest (income) expense increased $14.8
million with $13.0 million in
income during the first quarter compared to an interest expense of
$1.8 million in the same period last
year. The significant increase in interest income was due to the
mark-to-market adjustment for warrants issued to lenders as well as
the change in fair value value of the Company's convertible note,
both of which were based upon a lower stock price at quarter end
compared to 2019 year end.
Net income was $4.8 million,
compared with a net loss of $6.3
million in the first quarter of 2019.
As of March 31, 2020, the company
had cash and cash equivalents of $16.8
million compared to $23.9
million as of December 31,
2019.
Conference Call
Workhorse management will hold a
conference call today (May 6, 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 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 May 13, 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
March 31,
|
|
2020
|
|
2019
|
|
|
|
|
Net sales
|
$
84,300
|
|
$
364,182
|
|
|
|
|
Cost of
sales
|
1,747,975
|
|
1,397,606
|
Gross loss
|
(1,663,675)
|
|
(1,033,424)
|
|
|
|
|
Operating
expenses
|
|
|
|
Selling, general and
administrative
|
5,565,787
|
|
2,090,890
|
Research and
development
|
1,902,236
|
|
1,362,275
|
Total operating
expenses
|
7,468,023
|
|
3,453,165
|
|
|
|
|
Other
income
|
864,900
|
|
-
|
|
|
|
|
Loss from
operations
|
(8,266,798)
|
|
(4,486,589)
|
|
|
|
|
Interest (income)
expense, net
|
(13,023,489)
|
|
1,777,583
|
|
|
|
|
Income (loss) before
provision for income taxes
|
4,756,691
|
|
(6,264,172)
|
Provision for income
taxes
|
-
|
|
-
|
|
|
|
|
Net income
(loss)
|
$
4,756,691
|
|
$
(6,264,172)
|
Workhorse Group
Inc.
Condensed
Consolidated Balance Sheets
(Unaudited)
|
|
|
March 31,
2020
|
|
December 31,
2019
|
|
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
16,824,627
|
|
$
23,868,416
|
Restricted cash held
in escrow
|
-
|
|
1,000,000
|
Accounts and lease
receivable, current
|
81,930
|
|
41,021
|
Inventory,
net
|
2,630,824
|
|
1,798,146
|
Prepaid expenses and
deposits
|
4,756,923
|
|
4,812,088
|
Total current
assets
|
24,294,304
|
|
31,519,671
|
|
|
|
|
Property, plant and
equipment, net
|
6,768,619
|
|
6,830,181
|
Investment in
LMC
|
13,059,700
|
|
12,194,800
|
Lease receivable,
long-term
|
123,661
|
|
129,177
|
|
|
|
|
Total
Assets
|
$
44,246,284
|
|
$
50,673,829
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
6,449,651
|
|
$
4,784,167
|
Warranty
liability
|
5,302,770
|
|
6,001,864
|
Warrant
liability
|
7,190,000
|
|
16,335,000
|
Customer
deposits
|
190,000
|
|
303,000
|
Current portion of
Convertible Note, at fair value
|
20,160,000
|
|
19,620,000
|
Total current
liabilities
|
39,292,421
|
|
47,044,031
|
|
|
|
|
Convertible Note, at
fair value
|
7,430,000
|
|
19,400,000
|
Mandatory redeemable
Series B preferred stock
|
19,520,491
|
|
19,142,908
|
|
|
|
|
Total stockholders'
deficit
|
(21,996,628)
|
|
(34,913,110)
|
|
|
|
|
Total Liabilities and
Stockholders' Deficit
|
$
44,246,284
|
|
$
50,673,829
|
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SOURCE Workhorse Group Inc.