CINCINNATI, Nov. 9, 2020 /PRNewswire/ -- Workhorse Group
Inc. (Nasdaq: WKHS) ("Workhorse" or "the
Company"), an American technology company focused on providing
sustainable and cost-effective drone-integrated electric vehicles
to the last-mile delivery sector, today reported financial results
for the third quarter ended September 30,
2020.
Release Updates and Highlights
- Sets 2021 production volume target at 1,800 vehicles.
- Received a purchase order for 500 C-1000 trucks from Pritchard
Auto Company for its National Fleet Program, which is being
financed by Hitachi Capital America ("HCA").
- Through various financings, the Company improved its current
cash position to over $260
million.
- Workhorse strategic partner Lordstown Motor Corporation ("LMC")
completed its merger with DiamondPeak Holdings Corp. LMC's Class A
shares now trade on the Nasdaq Global Select market under the
ticker symbol "RIDE." Workhorse has maintained its 10% ownership
stake in the merged company. That stake is estimated at nearly
$285 million based on the
November 6th closing
price.
- Partnered with Hitachi and Hitachi Capital America to optimize
the Company's manufacturing, operational and supply chain
capabilities as well as to develop a national dealer network to
support Workhorse's sales with vehicle financing options for both
dealers and customers.
- Recorded additional new vehicle sales orders from Fluid Systems
and eTrucks LLC.
Management Commentary
"Our strategic partnership
approach to engaging with dealerships has paid off very quickly as
evidenced by our recent 500 truck order from Pritchard Auto Company
that will be financed by HCA," said Workhorse CEO Duane Hughes. "We believe this initial sale is
just the start of this channel's growth. We were also encouraged by
the results of a positive dealer survey administered by HCA that
looked favorably on the long-term prospects for the EV delivery
truck market and, in particular, Workhorse within that
ecosystem."
Hughes added, "Previously, we projected 300-400 vehicles to be
produced by the end of 2020, mostly in the fourth quarter. Although
we will still manufacture and deliver vehicles in Q4, it will be a
substantially lower amount than our previous guidance. We are
unable to give a specific estimate for the following reasons:
- The inability of our primary battery supplier to meet our
volumes due to capacity issues and COVID-related slowdowns;
- COVID-19: Having more than 36% of our production-related staff
currently out with the virus or quarantined awaiting results and
with daily increases in cases, we must protect our employees'
health. To do that, we have modified our assembly process, limited
production support from third party sources, and delayed planned
additions to our assembly staff.
"We view this as only a delay in our progress. We've introduced
several new battery supplier options into our supply chain and will
have supplemental volume additions in the first quarter of 2021.
While we cannot predict the full impact from COVID right now, let
alone in 2021, when conditions improve and the coronavirus is no
longer a business issue for us and our suppliers, then we would
anticipate producing approximately 1,800 units in 2021."
Third Quarter and Recent Operational Highlights
- October 2020: Received a
purchase order for 500 C-1000 trucks from Pritchard Auto Company
for its National Fleet Program, which is being financed by Hitachi
Capital America.
- October 2020: Submitted
formal "Type Certification" application to the Federal Aviation
Administration ("FAA") for the Company's HorseFlyTM
Unmanned Aerial System ("UAS").
- October 2020: Received
approval from the New York Truck Voucher Incentive Program
("NYTVIP") to offer monetary vouchers for C-Series all-electric
delivery vehicles in select New York
State counties.
- October 2020: Closed
$200 million convertible note
financing from institutional lenders and converted pre-existing
$70 million note into shares of the
Company's common stock, altogether providing Workhorse with over
$260 million in cash.
- September 2020: Achieved
an improved and industry-leading range of approximately 160 miles
per charge under urban situations for its 2020 model year C-1000
Extended Range.
- August 2020: Entered into
strategic agreement with Hitachi for an operational assessment of
Workhorse's manufacturing, operational and supply chain
capabilities, benchmark to best-in-class standards and provide
recommendations that support the Company's increased production
requirements; separate agreement with Hitachi Capital America to
assist in developing a national dealer network and support
Workhorse's sales with vehicle financing options for both dealers
and customers, including dealer floor-plan programs.
- August 2020: Workhorse
strategic partner Lordstown Motors Corp. ("LMC") entered into a
business combination agreement with DiamondPeak Holdings Corp.
("DPHC"), a special purpose acquisition company.
-
- October
2020: Shareholders of DPHC approved the agreement,
enabling LMC to become a publicly traded company. LMC's Class A
shares now trade on the Nasdaq Global Select market under the
ticker symbol "RIDE."
- July 2020: Awarded
Executive Order: A-445-0003 from the California Air Resources Board
("CARB"), designating multiple C-Series models as zero-emission
vehicles in the state of California in addition to the 13 other states
under Section 177 of the Clean Air Act.
-
- July 2020: Obtained HVIP
Eligibility from CARB, qualifying certain Workhorse C-Series models
for monetary vouchers of up to $50,000 per vehicle.
- October 2020: Awarded
Executive Order: A-445-0003-1 from CARB for the C-1000 Extended
Range, granting the same designations as noted above.
Third Quarter 2020 Financial Results
Sales for the
third quarter of 2020 were recorded at $565,000 compared to $4,000 in the third quarter of 2019.
Cost of goods sold increased to $2.8
million from $1.4 million in
the third quarter of 2019. The increase was primarily driven by
increases in labor and materials relating to costs for the C-Series
production.
Selling, general and administrative expenses increased to
$6.0 million from $2.6 million in the same period last year. The
increase is attributable to an increase in consulting expenses,
higher employee-related costs, and incentive stock expenses.
Research and development expenses were $1.6 million, which was flat compared to
$1.6 million reported in the third
quarter of 2019.
Interest expense, net increased to $74.3
million compared to an interest expense, net of $5.9 million in the same period last year. The
significant increase in interest expense was almost exclusively due
to a change in fair value of the Company's convertible note, the
loss on its conversion to stock and the loss on the redemption of
Series B Preferred Stock. These GAAP adjustments are non-cash and
were dependent on the underlying stock components of the financial
instruments, respectively.
Net loss was $84.1 million,
compared with a net loss of $11.5
million in the third quarter of 2019. The increased net
loss was due to the increase in interest expense (net) just noted.
With these considerations, the Company believes operating income
would be a better indication of operating and cash performance.
Operating income during the period was a loss of $9.8 million compared to a loss of $5.6 million in the third quarter of
2019.
As of September 30, 2020, the
Company had cash, cash equivalents and short-term investments of
$80.2 million compared to
$23.9 million as of December 31, 2019. Subsequent to the quarter end,
the Company entered into, and closed, a convertible note financing
with a group of institutional lenders for gross proceeds of
$200 million. In conjunction with
these efforts, Workhorse entered into a separate agreement with the
holder of its prior 4.5% convertible notes to exchange the full
$70.0 million outstanding principal
amount of those existing notes for shares of the Company's common
stock. Currently, the Company has a cash balance of over
$260 million.
Conference Call
Workhorse management will hold a
conference call today (November 9,
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 today
through November 16, 2020.
Toll-free replay number: 877-660-6853
International replay number: 201-612-7415
Replay ID: 13712406
About Workhorse Group Inc.
Workhorse is a technology
company focused on providing drone-integrated 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; negative impacts
stemming from the continuing COVID-19 pandemic; 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.
Media Contact:
Mike Dektas
Creative
Storm PR
513-266-3590
mike@creativestorm.com
Investor Relations Contact:
Matt Glover and Tom Colton
Gateway Investor
Relations
949-574-3860
WKHS@gatewayir.com
Workhorse Group
Inc.
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Net sales
|
$
564,707
|
|
$
4,258
|
|
$
740,949
|
|
$
373,948
|
|
|
|
|
|
|
|
|
Cost of
sales
|
2,815,242
|
|
1,423,904
|
|
6,074,577
|
|
3,751,674
|
Gross loss
|
(2,250,535)
|
|
(1,419,646)
|
|
(5,333,628)
|
|
(3,377,726)
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
5,950,058
|
|
2,551,406
|
|
15,464,926
|
|
6,638,350
|
Research and
development
|
1,614,485
|
|
1,640,454
|
|
5,133,325
|
|
4,219,456
|
Total operating
expenses
|
7,564,543
|
|
4,191,860
|
|
20,598,251
|
|
10,857,806
|
|
|
|
|
|
|
|
|
Other
income
|
-
|
|
-
|
|
864,900
|
|
-
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(9,815,078)
|
|
(5,611,506)
|
|
(25,066,979)
|
|
(14,235,532)
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
74,315,644
|
|
5,882,081
|
|
185,638,961
|
|
23,582,427
|
|
|
|
|
|
|
|
|
Loss before provision
for income taxes
|
(84,130,722)
|
|
(11,493,587)
|
|
(210,705,940)
|
|
(37,817,959)
|
Provision for income
taxes
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Net loss
|
(84,130,722)
|
|
(11,493,587)
|
|
(210,705,940)
|
|
(37,817,959)
|
|
|
|
|
|
|
|
|
Workhorse Group
Inc.
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
|
|
September 30,
2020
|
|
December 31,
2019
|
|
|
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
80,222,741
|
|
$
23,868,416
|
Restricted cash held
in escrow
|
-
|
|
1,000,000
|
Accounts and lease
receivable, current
|
560,896
|
|
41,021
|
Inventory,
net
|
5,965,710
|
|
1,798,146
|
Prepaid expenses and
deposits
|
12,959,268
|
|
4,812,088
|
Total current
assets
|
99,708,615
|
|
31,519,671
|
|
|
|
|
Property, plant and
equipment, net
|
7,545,291
|
|
6,830,181
|
Investment in
LMC
|
13,059,700
|
|
12,194,800
|
Lease receivable,
long-term
|
134,694
|
|
129,177
|
|
|
|
|
Total
Assets
|
$
120,448,300
|
|
$
50,673,829
|
|
|
|
|
Liabilities and
Stockholders' Deficit
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
$
5,763,531
|
|
$
4,784,167
|
Warranty
liability
|
3,565,942
|
|
6,001,864
|
Warrant
liability
|
-
|
|
16,335,000
|
Customer
deposits
|
77,000
|
|
303,000
|
Current portion of
PPP Term Note
|
862,278
|
|
-
|
Current portion of
Convertible Note, at fair value
|
121,817,001
|
|
19,620,000
|
Total current
liabilities
|
132,085,752
|
|
47,044,031
|
|
|
|
|
PPP Term
Note
|
548,722
|
|
-
|
Convertible Note, at
fair value
|
-
|
|
19,400,000
|
Mandatory redeemable
Series B preferred stock
|
-
|
|
19,142,908
|
|
|
|
|
Total stockholders'
deficit
|
(12,186,174)
|
|
(34,913,110)
|
|
|
|
|
Total Liabilities and
Stockholders' Deficit
|
$
120,448,300
|
|
$
50,673,829
|
|
|
|
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/workhorse-group-reports-third-quarter-2020-results-301168458.html
SOURCE Workhorse Group Inc.