WKHS - Earnings call transcript Q2 2018

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Operator

Ladies and gentlemen, greetings, and welcome to Workhorse Group's Second Quarter 2018 Investor Conference Call.

As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Workhorse President and Chief Operating Officer, Mr. Duane Hughes. Thank you. Mr. begin. may you Hughes,

Duane Hughes

press turn and to XXXX. ended our of through for taking everyone. us update the our both the But for I our the CEO issued call provide online before our will on few operational from statements. call. to safe harbor Kevin our of Investor that The XX-Q your our CFO, of our our of of section begin, financial In with who Copies materially for on appreciate you safe an a to come update. attention milestones from results After results to our Burns is documents year-end for some results that, a we closed, a quarter. for and time the second will identifies forward-looking over walk market and our XX, the brief as good Web you, forward-looking harbor risk we I’m After moments, actual site Steve the touch filed We business Paul Gaitan, Form statements quarter and afternoon may the our Web highlights factors of to to and all the provision posted QX differ our want quarter. part release June going Relations on is Thank that cause content provision to our well are available call you site. provide in as overview, join

And that, Paul to call about further turn to to with and I the XXXX relating would Gaitan. on over provide with filings like business. factors risk XX-K file CFO, Form Our our the Paul? our detail other periodic the SEC

Paul Gaitan

being us call. our results discussed both as the as for operations XX-Q Thanks, quarter. thank afternoon, I the joining going And second which detail our issued quarter color to a who period materials for in financial reported the same release more our information recommend of today. filed discussed $XXX,XXX and SEC, to the the of XXXX. of you through to now from This which those well for XXXX. the press we today's get were $XXX,XXX, of quarter Duane. of form down are And was all the Sales on some from results

improvement diluted net in compared to XXXX $X.XX from and Our of of of of or million decrease comparison believe loss primarily due should year-over-year the improved our loss potential of net decrease We in or share $X.XX be business loss current and our a million capacity is a second a diluted representation vehicles. of the The loss interest in sales as and basic to in per $X.X trucks considered volume not meaningful XXXX share. quarter or and $X.X our to basic per QX the sold.

required we need the to ensure the short-term we've for on the multiple structure capital To types investment. meantime, pursuing grow, we necessary that end, been As recognize we that are terms. evolve. we the taking acceptable to of steps In available our have capital

sale with dovetails from $XX and a the over we million combination of XXXX. $X.X this SureFly, notes entered for Management, off were the million the heading. term with loan. few paid Arosa ours, a secured into of in example, raised of equity For Capital the agreement issued back, shareholder six December covenants we existing were a direction next weeks that This an we require an that The months

of as quarter, Workhorse operational XXXX. CEO as for overview to the and side call the highlights our with things Steve the Now to some financial outlook an of of behind us, over discuss to well remainder I the of want turn Steve? give Burns

Steve Burns

Thanks, Paul. Again, everyone. welcome to

since progress up last our five for our will your questions. major open We’re then and quite it recap I call initiatives by our and briefly excited

delivery generation to next about vans. our speak like I'd First, electric

vans N-GENs pay the goal price last versions, Our diesel this vehicles our the at us foot a cubic urban XXX, sheet being to electric a for year. which customers was of with of would and developed work same to revolutionary family able and clean sold XXX, The an XXX be van. mile cubic it These margin. and XXX, make design, positive N-GENs these represents for will X,XXX re-invent the versions of gross X,XXX material available vehicles in equivalent be foot truck, a with for clear the the delivery starting paper

testing our results real-world situations. most have in pilot demonstrated some performance solid initial N-GEN vehicles the XXX the challenging delivery of delivery continue We and our of

major a in efficiency. our had of we fuel First, achievement terms

miles some for cubic As equivalent foot know industry-standard may with up delivery average you gallon foot known XXX the improvement electric combustion compared XXX up basis, is function while XX gallon the vans. XXX% traditional a of the per proxy an our miles conventional to all equivalent, the per achieved cubic of gallon equivalent, metric per to as is comparable as representing engine. N-GEN On ease XX of version that our its vehicles, to miles internal way counterpart of to gas

in optimize contributing insights packages now provided van. us road to generation more next we've on real-world our Second, manufactured delivered have miles to than test our the These deliveries tremendous with XXX,XXX vehicles.

blue-chip excited N-GEN launch also to announce initial purchase who on I'm that signed this vehicles. quarter, of quantities to we Finally, customers have our have added

While news press you we coming at these the anymore about the time, this in customers in can't should disclose see weeks.

electric Next, our W-XX pickup truck.

to range supply million U.S. This the same presold built to N-GEN on is worth have us vehicle we fleets. our chassis our $XXX stated, as platform leverage and van truck allows previously have our of pickup we economies across extended electric As those nearly chain.

pilot of as receive on year, this vehicle in amount consumers. track We tremendous from we continue and well are this to at from of for end a the interest vehicles fleets as

the at Flat York Plaza. Iron pickup showcasing will to day welcome and check our Monday, Everyone's truck can more details you be event. of as stop for SureFly New the that we as W-XX Next the August City by website well all in XXth

The like aircraft. about talk SureFly our our and SureFly. vertical takeoff to would or electric I Next, EVTOL landing, is

We’re develop seeing EVTOL the very much age personal grasp the now the future. is of to all within as not-too-distant aircraft over in companies flight racing electric world

for have we We with test announced conducted the experimental pilot on type more the initiated than XXX during from an FAA month, FAA. our months. flights under Last last board certification the several for we certification application full have the

EVTOL to first Our FAA. goal aircraft from is the to full be certification the type receive

received XXX preorders. with perspective, for than are To downpayment taking sold thousand preorders $X,XXX we've this typically manufacturers U.S. into the helicopters put have started in We a from already combined. than there all annually a SureFly, less and more commercial

past currently way intend most by achieve viability the as on SureFly in mentioned plan the for the As the to as the year. the of this enterprise. we spinning of the meaningful we’ve SureFly best of feel out end is We well long-term calls, Workhorse, division return ensure still to

delivery onto HorseFly drone. Moving

Without to of commercial work rule number the obtain, months, reducing their only past the not permits the delivery well many of But city been program As electric designed mile have their FAA Trademark conditions. are of launch delivery recently but deliveries drone. HorseFly issued approval, packages working via as with feel a for expense and in truck the and Ohio, game moment come. in drones real-world over delivery system under way our this FAA we’ve certain United previously, making and on via the Loveland, to The visualize within Office. HorseFly from the mentioned been launched is drone for the delivered we’ve to app. delivery, confirm providing a patent which we as Patent a innovate changing the also system years the drone We States use a truck HorseFly conjunction of with airspace package U.S. truck is ability on last property pilot to XXX, consumer

the potential We pleased want for timeframe still delivery. that United to of recognize program that our Service the have rules We we note last from continues the testing opportunity States of and we the to everyone are in a initiative. end there under this to re-imagined ability significant specific us. believe in any USPS, performing our trucks limiting be process. And interest remind a that Postal guide amount we just year, mile brief with by the the how very remain is USPS, discuss calendar our for in decision current detail. We are on

the through evaluate to need All our that as needs highlighted evolution for able progress our capital has come the that's in a we we young Evolution Workhorse. and ongoing updates business. will fit and of our itself achieved said, great also months. that With side current to We will first In whether you to and our ways, future in look structure a financing closing, operations way cause as the our since updating feel this to efforts mind, call, quarter we've believe for number company in coming accomplishments of forward continue we look address we we've a do that with be of our provide to and long year manufacturing in I or through back point. is to on properly milestones outfit evolve to the the and our presented XXXX we so. are

questions. call Operator, please up now your provide We’re appropriate ready to the instructions. open for

Operator

[Operator session question-and-answer We’ll now conducting Instructions]. be a

question is from Riley coming today FBR. first Our B. from Drisscol Carter

Carson Sippel

is are is, reasonable $XX going Sippel you about Drisscol value? This valuing be you million My And how think the will Carter for first full a Carson on question valuation do for SureFly?

Steve Burns

just clear. bring is We the percentage financing We sell have were be is what to SureFly to of well north worth we million all, $XX $XX that do believe million at the so a million. is on a SureFly. to $XX contractually that, want we it to Yes, in have don't of minimal. obligated Arosa but least maybe that

a on shift FAA at is XX we Worldwide, that worth flying some trying nobody million. the to comps. is looked we've trying north they but evaluate do are are get XX, to they if we had And XX, on know the Again, of paper, it, $XX It's have they process, feel companies regulated. that, well there go there. in this. we out they pretty comparables or there to doing its man out certification easy So based and wise

Carson Sippel

test possible next And what' would do fly know be? you

Steve Burns

Well, should of to downtime we day, go the But almost week it we weeks the again. every is we it not maintenance but down the it about event. New of XXth, we’re testing and testing York test start some be fly to the two of

Carson Sippel

switching engine equity you able any now then gears to prior engine. to produce raise? to the And the Are

Steve Burns

development, customers. is test than road in No, the on for out we the vehicles have other still two that

Carson Sippel

And then I have one more.

then units a an making see period, OEMs do of So so and order like UPS’s acquiring then evaluation initial follow-on? any you pattern other order small larger

Steve Burns

that there, we new a of during when them, small the first of for especially these all all, customers While is vehicle The they to referenced traditionally, of larger the vehicles prove intro them that course, able like it's two new be both subset are for to buying a enough buy. are. kind

typically that’s if So similar to deals. I other awaits can't doing is UPS done speak

Carson Sippel

And one from me. then last one

So delivery do mile last similar in tying other build where for that in any to competitors see vehicles you? general or you just are EV space

Steve Burns

we Yes, anybody are seeing But vehicles But changes super diesel or them low ago, don’t specifically. building for to were they make I electric years tight gas a we see building turning name seen slight we four the want have people that lightweight. we to anybody vehicles, building are radius or -- similar. not essentially the

about version. Our foot for least than are the diesel at conventional a vehicle cubic X,XXX size lighter the in vehicles pounds X,XXX same

we for Benz Mercedes not have we seen seen or electric company that like over So than here. Sprinter has called that but nothing something Europe, anywhere. have that, announced Other

Operator

Thank you.

Your Souther from from is Cowen. question today coming next Chris

line is live. now Your

Chris Souther

can wondering on Could to we get that an hoping update you Just a the comment ramp in second that are question on the a you quick if guys to bit? half. accomplish on see

Steve Burns

latter ramp the part of the year. most our of forecasted, we backend is into as So

bulk seven XX we’re be the much we’re the trying or but days its to the a six to. the that’s can't to of get you ramp few I that’s per see to fourth test quarter get trying week, -- quarter. we’re XX So get to won't a going speak trying next day. to or in whether five, And vehicles and to year, just before

Chris Souther

obstacles at as looking efforts. you the to Can cost sale? then potential opportunities of walk us some through began And and the reduction you

Steve Burns

So again, just to reiterate.

for vehicles, vehicles we’re coming in on out to For which several a let it years, perfect very accepted exchange we our to on new difficult our those customers us. vehicle. craft, making profit depend to with But make was start a

a that happen keep things; think And going boats we’ve how say enough two making So to of we the all have to margin. to two I in a and comes to ourselves, them course made things on floats of to get had in we don’t had material we A, to right, volume it are flavor business. loss volume this that

think And enough can I about the get tier that did release, today get X to start favorable backwater. we in so to And our o'clock we pricing. we talked suppliers in where one X,XXX work units to it with starts press very

then key The pounds the the maniacally make think we engineered the vehicle is And weighting. component, out batteries of And it. the we did are set using can focused other vehicles charging van less. on infrastructure out thing because most was light -- everybody that then is expensive we we can just conventional in a familiar if less batteries thing batteries X,XXX less so for take is customer so smaller the cost put really we I

So just mass end, in like the volume always wins. helps,

opportunity, if we a had the finalists just than the very can is think enabled X,XXX they've then discounts. I made. thing the make to XXX that for So that the they’ve in for us been that office And expressed so one reduce has its vans us post to ever enabled we And has is that large to and weight last tier attract being winner. lighter

almost got so as And we that's combined how there.

Chris Souther

Can UPS. us give sense those any these on the congrats the of other beyond timing then progress of some customers you with of And deliveries? prior

Steve Burns

this They’re year.

But latter our the for the customers, can't say deliveries crazy be against I the the of it shooting part again, most -- right be most we’re end where -- so think But there. is of So gets year. I up of won't year will pretty of for. October Christmas

Chris Souther

there you what are the on the to is any Fedex steps there? is How hybrid meaningful the update And more then next program. program orders need hit securing toward going and that guys

Steve Burns

let going one. to am I Duane that to speak

Duane Hughes

the got the if already on requirements. of specifications road of vehicles indicators all given their through They good you us and a working sales they've it. today the still experienced FedEx, number their We're process, our they’ve will. performance on for have where

So number opportunities we there. have a of

that’s as they eye fuel they’re keeping look route say cell range in power vehicle extended in Now to that, as York, addition well we electric. opportunities also with plug FedEx to as New have the that and fleet evolve hydrogen I'll close as to on on all want well a their electrification. They

have -- So forward. continuing different to power plug of versions, the number of our couple which they couple move including discussions we’re a a a vehicles with have

Operator

from Our Long next Instructions] from [Operator Stephens. Justin question is

Your line live. is now

Justin Long

with I Ryder. first So your ask wanted partnership to about

of their playing update Just curious how an the on provide of had if terms and that channel? could product level have you been things front, success through retail your in out marketing you’ve

Duane Hughes

ago, out months to the of larger their vehicles of customers, Mason one of delivered called few the read a probably W.B. we set Northeast. You first

are a viable on to all for launch perspective our perspective them W-XX. work Ryder speed, step as our just So from but maintenance that and on bring candidates. our our gets customers We a generation which closely fleets up and platforms, from identifying next with category into not potential across of just beyond vehicles vans very we

good roughly, group, XX,XXX just So they ground to those on I'd helps ground a to vans contractors, mind; hurdle most from look Ryder their FedEx represent at X,XXX that have partner those progress. Perhaps two units in FedEx represents fleet; Ryder perspective, which which you of independent the W-XX say, FedEx channel things come delivery thousand ground X,XXX several is is say or pre-order, Out Justin I'll under our the orders. all of us importantly tremendously, catch. about

you if player, Class expect extend in relationship truck significant that even are X they space we or further. So will, to the that pickup

Justin Long

financial strategic think I back could was if back Dana for we could earnings the to And then wondering your you‘ve in announced creates before about I opportunity just you And call. your partnership the opportunity. was and that secondly business? speak May, that maybe prior circle it

Steve Burns

as really boils really a as and the recipe then consistently. And chain this a get, supply end you in good to building then business down quality

chain everything. super company Dana, supply small so are a us like Panasonic to important is and And that like partners

use different to So we from several makes -- axels, now. motors Dana electric everything differentials, to

going so pickup them as and be vehicles, over And our parts partner. moving engine they happy are to really And so W-XX are their they supplying towards are truck. our of parts have for electrification -- and to a all

Operator

Thank you.

Driscoll B. is Our FBR. Carter Riley next from question from coming

now live. is line Your

Steve Burns

I already Kevin. think we had him

Duane Hughes

the was for on was Carter. that was he Carson it Kevin, first, but

Operator

Instructions] this [Operator Company's this session. the At question-and-answer concludes time,

If may Investor call to Burns wkhs@liolios.com. closing contact you your his like Relations question for back was team not the now Workhorse's I’d turn to over Mr. taken, at remarks.

Steve Burns

to that’s like I’d you like stuff interest updating call. our just thank I’d next look Workhorse for all appreciate this to continued in joining. worked And happen. hard your to you our everyone make so and to again thank on forward team

Operator

Thank you. That today's teleconference. conclude does

this You your at disconnect time. may line

Workhorse (WKHS) 6 Aug 182018 Q2 Earnings call transcript