WKHS - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, greetings, and welcome to Workhorse Group's Second Quarter 2019 Investor Conference Call.

As a reminder, this conference call is being recorded. It's now my pleasure to introduce your host, Workhorse's Chief Operating Officer, Dr. Rob Willison. Thank you. Dr. And now may begin. you Willison,

Robert Willison

you, good you call. everyone. appreciate and taking Thank the our morning, for for time We us operator, to join

for the which of a advance filing copy August with which press today Friday, is second issued in Investor opened, of is Workforce of ended results on Relations is the section earnings quarter XXXX, for quarterly the website. Form Before release XX, June planned in market our XX-Q, we its X. our a releasing

we In moments, over going walk as the well turn as actual to to safe on on is results year. that, to our I differ our factors outlook and website come harbor the an remainder cause line will of our provision our that safe identifies may provide will materially for After for the risk to harbor your our through posted update a our who forward-looking forward-looking provision our begin, before to content statements that I'm business of year-end update. few Hughes, an for the CEO, the part attention the statements. quarter. our as to from CFO, The call Paul us results But want of Duane financial Gaitan, provide on call

detail Our XXXX risk the about factors further with Form related provide XX-K and our SEC other file periodic filings the to business. on

call to the like I over our with And would Gaitan. turn CFO, to that, Paul Paul?

Paul Gaitan

the our from to issued press for call. we today's and of a thank us operations you discusses which This Thanks, who all quarter. joining are Rob, the release morning, results

filing from was later in XXXX volume quarter get week. being due the of discussed just going second of down XXXX. our both results I or that want this the XX-Q our point quarter $XXX,XXX to today. second some decrease mentioned, of with financial Form decrease $X,XXX, as Sales for second in Rob trucks potential stress recorded information be our our were as materials capacity of to quarter. At the vehicles. I now The year-over-year And not which we the for primarily this on recommend through plan was of color current of more on to Additionally, representations a the business meaningful believe time, we sales delivered. in comparison interest should in the considered to in SEC

The as of $X general Selling, million employee-related quarter in XXXX expenses lower from related in areas spending decrease such to XXXX. to million the and administrative XX% the costs. $X in second primarily of quarter decreased and second marketing

in in The XXXX. Research from Total expenses the in mentioned. same XXXX operating due decreased in XXXX last quarter decreased and year. to decrease the to million SG&A period previously from $X.X development $X.X due in employee-related total and expenses product $X.X the lower to primarily XX% decrease expenses costs. design was XX% million operating R&D QX $X.X and lower million The and second expenses million was in to of quarter research the second development of

the $X.XX, was As The been liability. have the the debt-related quarter net $XX.X of loss in XXXX. $X.XX expense, be of QX loss would a loss less million from $X.X XXXX. quarter $X.X second in the QX the excluding net $X.X interest million price the noncash warrant than stock million in interest the in which is million million, liability warrant associated to Workhorse result second a with company's with To expense during compared quarter increase noncash recognized $XX.X of clear,

million compared XXXX. short-term investments cash, of had $XX.X of XX, June $X.X to of cash XX, As company as and million XXXX, December the equivalents

entitled the common announced acquired is company terms closed our of XX, to convertible, in the I'd X, of offering in provide with are company B million. the the to June, Under to backlog. holders like on production to on to financing and closing June N-GEN, The the over to with the agreements, research by turning million associated the on capital update before payable occurred the focus of resulting institutional preferred existing quarterly followed common an used warrants $XX balance the XXXX. a next-generation The of known gross a for investors proceeds purchase million dividends be will group stock. $XX stock. it shares and investors and to Duane, our commercial contracted that activities. the allowing to R&D private shares as call finalizing not company respect Now closed $XX general of May Series our vehicle preferred but of with proceeds stock the of stock The Series and XXXX, B In working development, delivery

which XXXX. Separately, June on in its Cowen had April Company, XX, offering since XXXX, also with place sales and Workhorse at-the-market been agreement terminated

will previous began in on of mentioned actively XXXX, later we've and Duane vertical as pursuing our we this on landing the calls, in SureFly, of expand sale business. a Finally, takeoff September electric call.

our completed, With of Duane Duane? turn Workhorse for the now over call Hughes, to to operational the our and discuss remainder an outlook of CEO, provide I'll that updates business major XXXX. for some overview

Duane Hughes

us well this morning. and to Welcome joining Paul, done. Thanks, everyone

expected, our on update busy Duke the to relate we the and, our Energy you strategic likely We facility. are as opportunities, of asset been you on our eager working during including course, have the development SureFly Lordstown the they on market GM's alliance, as bring as been everyone anticipating, activities our to is discussions well monetizing focused second will call update engineering and We've and to our we quarter. on N-GEN on to efforts

but the widely the around beyond elephant what been Yes, the publicly to questions, have already the updates currently talking media provide know room on we I'm I'd understand many domain in of We provided updates this about a like process General Before coverage. the context I has well with But press. please as extensive and through the as been address in in begin the the to provide the to pretty reported press start that release has you beginning. I'll at Lordstown. some from business, are not position Motors what is public material what any in

well founder Workhorse, Lordstown Ohio. year, purchase proposed CEO, on and unallocated Burns, Lordstown, as General a this as Steve of in former discussions its GM's Earlier initial began Motors with manufacturing plant transaction

LMC. publicly call the a review for evaluation Under formed Lordstown the intends as into The weekend, purpose of Detroit terms Lordstown the purchasing on private Motors the a agreement new the process other for of Lordstown GM this newly license Following Complex. company a company, with enter entered and and Corporation for or X, acquire formed a with news May plant. credible Workhorse called the thorough to discussions technology. specific to proposed LMC separate offers, have they IP released entity Workhorse is announced of Workhorse discussions by the agreement, and

minority Motors. In interest went Lordstown in addition, we a on

LMC's relationship creation capabilities, stated technology. our the pickup Workhorse which and of battery to this is are an wins contracts further production having at we What's in monetize volume company excited to future. about it automotive electric substantially Workhorse with new affiliated a Workhorse truck about W-XX. event in enables are the larger Workhorse the could very excited as the be beneficial more, pursue goal We based on

with road, and with Workhorse positioned of unparalleled acknowledgment as Workhorse's both battery found hundreds structure, this especially appreciate expertise. manufacturing Workhorse Lordstown's backlog. start-ups part their substantial a benefits We that LMC satisfied by most to reasoning, EV the technology millions and our of than better on order blending and trucks of and technology GM's they miles electrics customers Under be

Perhaps production we expense us minimal W-XX ways. multiple to for in and on last no delivery importantly, licensing believe benefit of segment. Workhorse will and most the engineering focus the Workhorse shareholders mile entails The allows

from We the further expect allows equity in to shareholders from Lordstown success which the LMC, gain in of will us benefit share holding our that our Motors. value

me a for Let off go moment. script

of a operators. front have market. pickup purpose-built When commercial out stage We a we and learned couple tool would for because for fleet into the was ago, set we it the then entries clearly the years were valuable be new that created has electric trucks W-XX

valid truck In GM the more facility that with will an with historic Lordstown the Our truck pickup believe IP feasibility believe the early combining greatest technology. even end, all-electric Workhorse our provide of thoughts this pickup about will the win-win. We today. its proverbial benefit are we the monetizing in be

relationship this is Lordstown. to far is position have GM's keep they best production opportunity vehicle found by in the

advance with combined Duke our will electric alliance, the leadership Energy We vehicle role this community. in Workhorse's also arrangement, believe

we extent will that able, are possible. To as provide updates we the

interest all at and involved, that as towards given the well as a this the We appreciate patience time. agreeable dynamic your have this outcome. of we number I as process can mutually I shared work nature your of stakeholders However,

make the on progress towards In at rest company you the doing our continued second update vehicles production-focused long-term of quarter, scale. to electric business. considerable to a goal becoming delivering Now of and our we

mentioned come significant feel try specific the funding to I'll now to the customers. commencing electric last the the our we Paul states. provides in updates right our Willison, strategic on a enable many puzzle that We kind us updates. process which existing mile our vehicles chip N-GEN strides N-GEN during quarter to milestone which will of a moment for In this line who presentation, we announced our capital the to finish during the million As financing, was forward blue in being a a COO, $XX his the key leave respects, vision delivering June, business. of this structure have manufacturing to just production. are into to the the and of our in our to with year look We backlog, full-scale to leader on make and fourth delivery Dr. now concentrating rest of deliver significant Workhorse bridge will capital and more Rob piece in on

scale. the believe for both transaction, to allow EVs electric the important infrastructure that is with achieve managers of their charging to companies depot which needs, supports will reasons, Duke the industry-leading of in ability will partnership our provide to its deploy rather partnership next at for strengthens Energy. than Duke of chief vehicle them including it profitability. United fleet provide vehicles thousands electric infrastructure Workhorse buildings course, one was We is is combined support vehicles. kind, this and by will of hundreds, This Workhorse's all among for the a electric resources equipment utilities of energy first but infrastructure, the the alliance management, a to The whereby solution opportunity States, largest one-stop our many Moving

equipped point. options infrastructure solutions an at expertise, Duke provide equipment, price to management including the cash and outlay behind-the-meter is affordable

mission. core EVs and Duke Ultimately, our delivery solution enables while stakeholders. Duke to all of our to Duke's affordable their to the ability utilizing on customers partnership fleet turnkey electric further the trucks with Our Workhorse customers adopt deliver their our with maintaining allows alliance best-performing most at Energy benefit focus scale, and

We our continue battery further relationship. have with grow and Duke, customers our frequent suppliers to to conversation this key

We and have a to project begun series all-inclusive the to introduce work a customers. them plan meetings on with of to new existing

facilities mile deliveries where QX. San of will a be intent between beginning paid to part we excited the As be drone. technology area early chain Diego The in HorseFly health supplies our for about received supply for delivery are work platform, the last with of the and critical truck-launched a test our letter medical of delivery We drone HorseFly fleet opportunities logistics used in recently partner, delivery latest will test. a in

to next SureFly. Moving our

for mentioned, year-end. SureFly We means plan line. and we this in Paul terms We've what to is the to a to if on consummated. buyer transaction and due our late-stage provide As diligence close with when sale agreed a product are information by more expect

That covers the general update.

very Before Rob platform, our the the I vehicle regarding program. U.S. Service's the call a to brief to provide of turn next-generation to over delivery continued development Postal review want statement I N-GEN

a many of currently As Workhorse handful project. on finalists know, well you of this call is this among for

many stated other past, there on updates number and pleased process. post to sources like process updates strength program. to being have in remain time, media as we next the related are we would or have a of updates vehicles, made publicly We reported how we awaiting in outlets selection performed comment aware been on times confident are And prototype that permitted the are on quality to the progress not with our the the any to and we've that testing of the steps. the this during made on they I we a further from are At final decision. and reiterate that office

and other to Rob now on our N-GEN over to items. And with that, operational I'll the provide call turn platform updates

Robert Willison

and electric our Duane. quarter are to platform. of on N-GEN updates I to this plan on track, still step Thanks, In my the process remarks development respect in remains van, schedule customers our that to N-GEN today, begin to address year. With on our delivery of fourth we

on mules, on all testing our mentioned call, during production. drive is plan we model, specific first of cubic development as have I train we initial other previous to are as As the X,XXX based N-GEN been well out model foot the roll which which

production-intent allow These of fit harshness, vibration and mules ergonomics. driver refinement will the assembly noise and for techniques finish, and final

analysis propulsion use and an As tests underway, thermal the the these The Transportation with Liberty, our or test conducted system. while is pleased current in Center, were further variety and update, a data of testing Ohio, of to regeneration we completed results. TRC, are East in first conditions, mules taken the Research where for the we was runs acceleration,

mule are production-intent a that number a around already on components full a parts second final payload in has of We operating installed. also are a Detroit vehicle area. testbed the These that field the running is running with

mules breaking other calibration These be will additional used shape. for take well as at cold and to for test being are have hot TRC. testing, as fabricated Initial and curb We chamber buildup. parts regulatory strikes durability testing beginning

coming XXX-cubic-foot in is mule and begin the final on weeks. N-GEN fabrication Our our based will

with develop We the As release from partner, concept Prefix the platform. press you aware well the NGDV working previously N-GEN Corporation, have call, Prefix on may last we from been worked W-XX and be as as comments the USPS, our to with long-term vehicle. our the our

industry be This and cab will configuration developed by responsible advanced advantages vehicles final built is N-GEN a expect for A have will delivery. while vans over Workhorse, and production. note mile we technology latest building will developing, on the floor the Our supplying delivery low chassis current Prefix many lead to for an related body. last in and

pursuing certificate of for is We range requirements quality are certification. Attaining and of process ability to XXXX control recognized XXXX to our in meet ISO to certification. business. ISO ISO the an wide management top of the process management world's a most related the is standard system improve areas all The a

track. In I the turn summary, N-GEN development overall back on now program will Duane. to is over it

Duane Hughes

Rob. Thanks, update. Good

summary, shape process months. over course, Of to throughout our months. will schedules continues definitive lines as I'd more emphasize time take progress next provide six the we the the and few delivery final In last like to

our company is in cash First, healthiest position our in the history.

Second, W-XX monetizing we as are such quickly assets, truck. pickup the the SureFly and

what mile and are production Third, our on do moving it as N-GEN program. best, Postal continue mission you Service by all we to works. world updating on to U.S. perhaps our most we And relates finally, last to NGDV delivery position the the focusing platform. strengthen progress important, into as areas we our the these look of We in our further way changing we with forward

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

Operator

today [Operator Cowen. the coming of line with is Instructions]. And from our Jeff first Osborne question

Jeffrey Osborne

my of end. questions on A couple

year? does where the production two and a capital then that you've or if I side, and if wondering And On an is And now funding, Duke's now exiting units believe, capital backlog. question. needing part needed, update I million us had of N-GEN Duane, starts One, obviously working the the you million you $XX of relationship. $XX got about I last could as limited you stand is involved? the any, think additional Duke the or talked X,XXX update, here, around But is that what give backlog production Obviously, on so. but was this

Duane Hughes

$XX orders That of as the million delivering which the beginning QX. them. are represents my add again we that expanding I'll to appreciate in you we that currently if discussion. backlog But base, in hit and questions, wants general, the Jeff, but can. in roughly X,XXX the he line you over good will, to Rob will funnel ask and Very of in customer side, queue, you Great. sales to being just would in the is begin anything, on by if worth expect, sales we grow still -- is

But too jump have I'll in of purchase allows from We it. orders financial order. draw literally the up us revolver can build always to the borrow purchase and then Marathon we which with revolver then allows the and that if amount really here side, then to the can speak that he based down needs our to our and us, on to to, acquire parts, continue we deliver them, can trucks, replenish Paul

So a well facility what to perspective, as with we current from that our on us -- as backlog deliver we will provide need facility beyond.

precious as on that million wants end $XX round, the current elaborate, expenses to expect raised if far and in we operating of Again, that's the As through least Paul really get he year. at equity the the for we that us so to can.

cost make time battery we important the lessen will Duke will pack. which enables by the our path, components the say, spend to truck batteries sales from They really themselves. the right, of finally, I'm Does or continue about but so us alliance, the the Work put that to it's battery We'll We'll the Jeff? upfront. profitability price our the in keep -- by lot sorry, of And the to, a build revenue cost pack sense, on the to our I'd like talk could Duke reduce because truck, to that our it. amount by cost that BOM own of company, acquiring actually BOM I'll

Jeffrey Osborne

production starting of confirm, very No, does. the X,XXX you're XXX is not feet, the helpful. the the just bulk cubic And of just to backlog that's that It the mule?

Duane Hughes

different that platform certainly is outpace the cube X,XXX the particular but a who I use in because that bulk of expect base Yes. short uses the cube. currently will larger order the number than what vehicle do customers The X,XXX XXX is,

Robert Willison

design And the variations. taking one we're family cube, with of Jeff, engine is and powerful a I cube X,XXX and and flatbed add approach that the most products of this XXX other X,XXX that of cube, might a a at aspects spawns it

a single models it markets. morphed design, So with customers can various and be into different for

Jeffrey Osborne

Would it what helpful. the can W-XX? elaborate the the then say limited license? with be Lordstown. a made you're want as questions, on just I make That's I determined it. are what it with LMC you know last them? relates location that of can and yet-to-be the post I the relationship office would mechanics postal on just vehicle But on to to be hypothetically service and similar receive vehicle what would at about one as you sure to Got And those the understand relates the Motors your and relationship you programs

Duane Hughes

advantage question, great Yes, would facility to we a potential viewed I appreciate to we'll competitive answer beginning, to this. and access like the further From postal the it. enable call Lordstown what I as win the us as its because that primarily build to how and that mention, push Not to facility. service plant. on, on contract, they've years to just of so got vehicles through ability experience in of of vehicles size XX-plus out its

So right? a see we and it, to as a differentiator that strength

infrastructure, vehicles. Lordstown, our new postal built it couple our the ago service W-XX meals was work that of would six design born believe that prototype said, on most positive really office Because the we plan viewed this. I to post as underlying in vehicles I be But that is the be years a say allow they of -- done from would for W-XX of event. to the opportunity, same would I six but was can to be sorry, predicated prototype there's take With the importantly, that the same advantage say it and easily W-XX, a parts, in the comes also development there. because And market to We built which beyond -- believe I'm that still when build We type get Lordstown. would that that, exists. of to opportunity

wants potential do contract. what profitability. course, and plant game So terms Workhorse of the what for Lordstown be best we view pay that Postal of we'll the outcome changer But will Service attention the to in a as in U.S.

Jeffrey Osborne

helpful, continue different Got yourself you'll hypothetically as N-GEN -- Indiana made you align and depending in it. that the the on would Lordstown That's variant be well? just Duane. to body with clarify, transitioned a then also facility partners? But will to Or to be have the chassis

Duane Hughes

can anticipate X,XXX platform, the platform. fill facility N-GEN entire variants to that up facility and N-GEN at those of the talking in X,XXX City the We the Union Rob's We the about. building vehicle flatbed we for with that XXX believe

also version, be would the if We cube say XXX there's -- the course, N-GEN that you is also platform would, of post will, office. a that

what ways contract So profitability also them. in have build makes We're looking where we perspective win most sense us size. from for the a of a to and to options quality substantial what with and differentiates a

Operator

[Operator question-and-answer Instructions]. time, conclude you. the will At this session. Thank company's this

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

Duane Hughes

want you in our for joining We continued employees, partners, our continued investors our forward appreciate support. you call. interest updating our I today. to on thank our for especially look your on Thank Operator? Workhorse call next their us and much to

Operator

for Conference Thank XXXX joining today us Quarter Call. Second Group's you Earnings for Workhorse

You now time. this disconnect at may

Workhorse (WKHS) 6 Aug 192019 Q2 Earnings call transcript