WKHS - Earnings call transcript Q4 2021

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Operator

Ladies and gentlemen, greetings, and welcome to Workhorse Group's Fourth Quarter and Full Year 2021 Investor Conference Call.

As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Workhorse Group's Vice President of Corporate Development and Communications, Stan March. Sir, you may begin.

Stan March

Thank you, Darryl. to and you call. full welcome today's us and quarter fourth year morning, all joining of on Good XXXX results

follow we presentation quarter to results like press our release, tracking December along our with Form begin, website. through your we've as via call, Investor XX-K Before our an with be Relations well posted the of released We'll accompanying the on posted XXst, also directly note We've so that, XXXX for website the full and morning. that please fourth either the as download started. year or during presentation in this let's via get ended And the I'd PC. section

to Turning X. Slide

our CFO, our me and CEO; Joining Rick Bob who us on new in January. today's call Dauch, joined Ginnan, is

to Moving X. Slide

We agenda have a today. straightforward

will my financial ahead, Rick, remarks, results with the questions. we'll portfolio our priorities, to full your for including year. Following our our update a the outlook who will Bob the has year the once take walk hand over Bob And product on I'll will you an up, strategic then opening and finished provide wrap new then us through it give quarter Rick for roadmap. and

to risks well X, forward-looking housekeeping and, as are you'll some Moving therefore, will provisions, disclaimer, on made uncertainties. Slide some as are today items. to of on that find our On be the comments and subject certain

out I'd turn release. over And Rick we find in press well with these Dauch. as our call Form details the as could XXXX XX-K, other You full make the of filings like that disclaimer the to in way, statement today's Rick? to the with SEC,

Richard Dauch

our to to as to for a team. taking welcome and Company both get time I'm your hands the you develop work welcome here Workhorse. morning, join call plan thrilled Bob we Stan. at viable and your us Good the patience, everyone. around Thanks, appreciate Workhorse, the and business first We and to you for earnings to today

been since now It's X. Company. X Slide joined to the I months Turning

we time, business significant on difficult I action to review deep commercial of believe dive both team we am strongly to and every the our and the ability that made During a confident transition decisions Company. the mission right aspect have to business, the of foundations completed vehicles. pioneer the strengthen taking and X of path in are

Let's plans our let's in Company. into review jump just -- then we priorities right for executed future our how and on the QX

new van and delivery offerings, that X lay engineering we out a truck the platforms Turning to developed majority we Slide XXXX built call, five, laid today's we little roadmap a on pleased executable strategic importantly, earnings stabilized We opened more new truck for fourth in clear technical our work two, out accomplished and chassis Michigan; technical power our product will we do finalized quarter. center includes Most and we objectives team; significantly four, to priorities a business enhanced to a X. our our three, we say our our budget. of we expertise; for in position; plans. I'm lot. out leadership portfolio presentation. On and and we which bit quarter's have and XXXX electric financial revised strengthened last executive XXXX the these with accomplished future developing we Wixom, One,

initiatives profitably processes, plan people, across P's, X. to we our of stabilize, X-year X in Moving on the grow part business on shareholder our politics executed are Each made Slide value here on progress and create Workhorse. products, and deliberate a at partners, to QX We of priorities several profits.

team people the our future foundation right for success. establishes the the on Given

veterans. industry open leadership critical and proven largely filling are complete We with capable and positions highly

value We build a of a believe comes business. successive taken steps continue following to that creation and to long-term deliberate series by

hard move avoid cannot the or process required work in to step across skip achieve each any You the success. level to

Here Company our a a start-up After I as with business and to full-blown roots, the all at commercial X our vehicle from are next the prototype can and the our objectives. technology taking journey transition historical costly necessary key we Workhorse, accomplish the steps will OEM. over CXXXX, expect is our of underway misstep into we years, we

will stay will systems them the from with we on journey way, nor core faint transition ICE focused tailwinds not customers for require long-term implement vehicles is technology, powered not Our lean common core It to our and to industry-leading make our the and of develop EV properly be is serve what grow the about what easy heart. strong us benefit and from industry the to driving should in and then sector. and business. Along fundamentals decisions

shareholders successfully and execution will that emerge value We the our relentless help across each successful survive in execute and vehicle will nascent focused will start-up Not stakeholders. Those shakeout commercial emerge winners. are as other the long-term sector. confident every for step the and create that who occur will Workhorse EV

As industry at both accomplished recently joined in RV VP Roraff joined most Brad dealer XX and He country. This finance as the RV said you'll CEO veterans. key Ginnan earlier, Hartzell as C-suite family as of senior in the early and years with completed held see and more CFO adding overhaul for fifth team on in and both of QX Bob CHRO, executive Workhorse's Services Slide as now the included appointments largely our Kerry than several CFO. served of leadership XXXX. Manufacturing brings experience largest we are Workhorse. Group, X, auto privately have leadership as I've Bob February,

as after a resiliency VP policy joined serving staff Government in professional member. as Defense Department as of energy leader Drake January Ben the of addition, Senate policy the Affairs In experienced energy and for

and the the team, XXXX planning these budget executives including XX-K new of We Bob's the processes. our already seen in have involvement positive XXXX joining deep impact Workhorse

breadth the with positions truck be CIO expertise and fill including Workhorse. the year, here experienced We feel capable want I an electric the of have built first industry. transportation remaining open few successful from capabilities at to leadership commercial a adding finances, team of that sales have half we industries related during automotive, and leadership across experienced, finding vehicles, to we an the

more days, we chain chassis, than industry Slide experienced moved X. opened last We technical the facility. Wixom, suspension, Turning our management. veterans design years engineering new and to to recently drivetrain, and the XX In and XXX expertise supply with experience expand testing design, hired cumulative center We've in of new staff our energy storage enhance have automotive capabilities. to Michigan in and aggressively

acquiring in transferring, vehicle and of We component be process and the installing there year. of to Wixom, operational full equipment testing this QX the fully in in are target

plan and product and engineering, technology purchasing, with relocate we XXXX, improve teamwork production team During engineering, Sharonville, Ohio. in us consolidate our together manufacturing, quality April our between help headquarters here efficiency This to planning. advanced and will

manufacturing and our transformation Union plant well for will call is this to Indiana. in production November, be. During is I of know ready underway, I QX mentioned be This a of and they hard last complex in the create our in our to City, year, start world-class plan staff working

Union include the battery our value We facilities to supply have an on to help safely environmentally acquired chain having or storage. campus facility us City stream additional leased to controlled streamline manage

quarter. event in the an host to Union planning are City in fourth analyst We

now the new be Ranch trucks. drive test we able generation to vans what you'll see and of So calling Workhorse and are firsthand electric our

most to organization Moving we our Slide strengthened complex turned to operational With attention months, our past few underway our QX. our in revival significant XX. and for the deliverable

of I family Class Our and exercise, to strategic deliver team the commercial our X product X across market-driven not shift has a are of call developed roadmap products. and a asking that vehicles Class electric markets It's some in customers revised the make for PowerPoint the achievable last-mile electrification, serve to vehicles we delivery segments. the types a realistic customer and plan to the portfolio segment, and technology it's through deliver the as we what

portfolio the CXXXXs includes existing new back repaired getting roadmap on and Our product road.

our limit I to decided decision have overall model, and moment. a CXXXX in the We of will production explain the

our in CXXXX bridge discuss this morning focusing on a production. limit further third in shortly joint product will team's in truck engineering XXXX, platforms decision partnering gap between while the efforts also new on the X a XXXX and to vehicle that I detail with release announced as to are We developing chassis GreenPower, our

Slide XX. to Moving

Let me for provide future plans our more details you on the CXXXX.

completed full Over to testing, the we identifying months, FMVSS several past X required have vehicle actions corrective certification. complete

the fully the the issues. design several rear test We took our safe, this and of These customers. a both supplier reliability durability capacity actions we suspension and E-powertrain on front vehicle enhance replace actions We CXXXX. identified to process, and the the opportunity and provide to CXXXX. the need to quality required necessary payload vehicle include suspension structural reliable During corrective the to addressing also

part E-powertrain quality on Our subsystems. supplier partners issues to need address

unsustainable As of bill will for that an with previously combination a We CXXXX volume result, inventory. here only XX we have capacity the This to will and Workhorse. we additional these as CXXXXs payload a build term, forward cost and CXXXX all determined and repairs, setback us we result, existing significant all economically by build will unviable on-hand have CXXXX. full Long we of limited purchase not XX a produced at year-end After materials we production. to in move XXXX. do repair need and using the firm orders completing will is the vehicles a repair costly for make

our painful in will to extensive service and generation from data of CXXXX still vehicles. take next lessons XXX-plus positive field and combining with the field EGEN vehicles apply our them We in experience, our the learned from

parts the both to of will, vehicles provide continue road today. for course, and EGEN customers and CXXXX to service on We

XX. Slide to Turning

classes and WXX, be of delivery serve chassis market decades a on to the of the hit The It market we and truck economically to introduce these QX segments. van approximately $X.X year. building XXXX. It will come path platform in estimate systems first me X to vehicles. the for our viable addresses wheelbase and Class platform. Let will Workhorse's tested Class per in BEV all-new experience X and builds design, shortest the be WXX sizes step which billion homegrown Workhorse The WXX of will a X chassis TAM, is

X proven commercial existing E-powertrain are designs, and Tier upon suppliers. available from Workhorse readily sourced parts use well-established vehicle we chassis We will building system and and

and energy am engineering expanded design with we will have I and finalize be prototype XXXX. critical priority suspension over of Designing, time drivetrain, past QX leading intent This QX ensure to will X.X design, the WXX program the testing start on work months full decisions a here basis this of testing for partners, at hard producing by at supplier this Workhorse, in #X chassis the vehicles in QX. allowing and WXX have monthly end design program. been on we storage, a and soon Our on position and right and teams personally for is in year of the cross-functional on views production sourcing

We forward. you of keep this progress will program apprised going every quarter our critical on

X on and regions the we be emission E-powertrain up builds addressable CXXXX a trucks mileage The coming per Next the for X key which just which effect EGEN commercial designs. low the market new to the the and on of several We to technologies will platform, means XXXX, segment is commercial be that feature year. systems the start vehicle standards accessible new vehicle for and expected Production and in in be take the lightweight system. WXX our about estimate WXX, TAM introduced proven country. is $XX.X chassis to will floor industry as Class efficient of billion this will first

City we partner. the step agreement, to CXXXX strategic Union Canada process will in miles beginning strategic Slide chassis product throughout and with XXXX GreenPower Class third to electric GreenPower, future vans and and the XXX States The payload and to agreement to GreenPower that which of vehicle that X,XXX up capabilities. plant serve with at the and take WXXX wireless fast certified, XXXX. of capacity vans is from as DC customers both and delivery CMVSS look production WXXX, complete Workhorse will the we bridge the turning year. Union optional Motor chassis FMVSS between a as a the to as deliver finished and United We to manufacturing standard XX-kilowatt City X,XXX value WXX provide from signed Under range, demonstrates cab as a the Lastly, platforms. collaborating and X of first pounds is both Company gap the XX-kilowatt charging in forward and all of the has WXX supplier quarter delivering XX, trucks of the is this charging and well later our up

Union plans who we in product on all by test results. shared came test our customers, XXX our CXXXXs drive their our sell X and largest Based can to revised confident have the CXXXX of to our person with review we year-end. We portfolio feedback, are City

transitioning Our for orders demo customers proceed to vehicles. are WXX and their previous the WXXX make before future them the currently final can vehicle they and working orders in new assessing purchase how owe into order We decisions. WXX vehicles

Slide Turning XX. to

also We drone invest quarter. the achieved important continue and to our several during technologies in system milestones

expanding First, in and our invest our technical we team aerospace have capabilities skills. to both continued business by the

and have vehicle Federal has application and added the payload transfer here. submitted also drone certified the development type certification quadrupled we I'm our delivery we been have supply Administration in launch of HorseFly software We plus number the industry-leading capabilities. progress approval made quarters believe the final team. the pursue delivery year We the safety to The X tripled last the in team, FAA for extremely pilots and the Aviation to drones range teams to I've with and 'XX. the encouraged our to engineering chain for team received team, we experienced reached by veterans phase XXXX aerospace

to governments we Lastly, the segments. capabilities as progress, monitoring, across aerospace customers, direct provide data as to areas multiple We're and end base in waterway on edge we with expands customers. technology and Based multiple the agriculture, delivery to exploring continue results. medical I our our This and regards financial to Agriculture U.S. updating mapping. to to cutting contracts analytics, we both overall call potential federal look are aerial I that market state for of with business land Department awarded government addressable and that forward feedback and discuss package sensor to part both the procurement update demonstration over small I'll grants service management. convinced and with the drone our am a Bob turn from commercial systems completed, of upon technology. everyone on both develop With now projects and the our of our are additional market drone

Robert Ginnan

Thanks, Rick.

that, regarding financial and Slide the stand to amazing first turn call. to Before I to the begin, you with and pleased you be for excited assembled here. my welcoming thank I'm team work quarter. With earnings for let's have XX results

technology. year results Our business well reflect efficiently. are for strengthen the facilities and on operating our as steps our recall to fourth and investments the CXXXX and the as focused full financial quarter taken we financial and are important our making We've across people, position

and $XXX vehicle with from to including several last CXXXX. decrease for the $XX.X increase increase and carrying inventory prepaid impairment related period million and million our the Let to recorded were the and allowances adjust Cost $X net increase the in took we a in due of some and primarily non-cash in other the a provide me fourth an year the to million amount as negative reserve, XXXX. sales same assets fourth volume of on returns recall, the results. returns CXXXX to charges, XXXX $X.X to quarter a sales purchases $X the million in in Sales, of $XX.X vehicles. was in of allowances the increased a compared million at a million tooling reserve color decrease million of in The $X.X quarter in connection

from other an employee reduction and in related expense million million costs was in driven decrease in labor-related increased selling and legal R&D year. to $X.X to same in increase to to compared and of costs, last related same same slightly $XX primarily the last in $X.X was expense to from in fees, component to increase attributable and in was expense decrease increase in primarily year. expenses team. So The period $X in professional employee appointments The million is expense million interest consulting by reductions fees and to common SG&A was labor-related million $X.X $XXX.X related by to larger R&D in period The consulting our on headcount. same last in offset in new CXXXX. the increase nil headcount million in a expenses income The $X.X the year. $X.X Net a year. the stock. total $XX.X exchange loss to increased expenses last primarily of leadership million the impairment convertible Other notes also increase compared increase expenses million losses charges. a increase the $X million in a compared non-cash was the to interest and in million period SG&A decreased million from related of $XX.X executive prototype period Company's

prior The in of to the million in entirely was $XXX.X of loss was which to other Loss for last of changes in compared in attributable was income sold same net investment million to from XXXX. in primarily $XXX.X same Motors period operations the period the last million was the favorable compared Net the in period fair QX Corporation, $XX income fourth $XXX.X million year. Lordstown quarter value the year.

third of delivery reserve, impairment The inventory amount charge a returns XXXX. from prepaid due CXXXX Moving non-cash an million and increase Slide and returns vehicles sales new net platform increase to performance $X.X The reserve million decrease due transition of the low recall $X.X primarily which primarily from Company's increase The sales our and new and $XX the the with adjust increase negative decision the full truck just early tooling purchase vehicles, appointments of Sales, in to described and including primarily year-over-year recorded million to million decision based were connection on in C-Series volume million of carrying related assets in truck. to the a platform the allowances expenses to year the future. announced a extensive by Selling, for in the in allowances in at quarter. during leadership results several other $X.X the was to was employee near the to to year delivery the from electric was million CXXXX Cost testing in electric and in produce full the XX. The an all concluded expenses in driven compared due general of and on $XX.X increase increased to in and on to the headcount results sales charges, was CXXXX million million increased $XXX.X $XX.X labor-related in XXXX. million $XX.X increase XXXX. in to for XXXX $XX.X year primarily team of administrative XXXX. XXXX $XXX.X full million $X.X increased a executive the year. million increase Company's This

Additionally, professional full programs, The expanding of expenses headcount $X.X fees, and XXXX. the $XXX.X the there to was and of sale expenses product increase $X.X to also to a year unfavorable in in primarily development general million, services as from a Research in primarily value services an investments due in UAV. of current Company the million million litigation in of selling development due million unfavorably recognized to fair was investor the increase for XXXX and during LMC. employee HorseFly changed consulting an and roadmap XXXX million continuing fees. related the changes loss to attributable increase related labor-related loss to marketing Other relations and in support settlements, $XX.X and $X.X increased increase

million $XXX.X primarily to compared million LMC. XXst, XXXX. the notes. $XX.X the value million, to in year million The was on in of the related Company decreased expense of ended of changes to in to a $XXX.X fair fair of full XXXX interest and due year Company's attributable to XXXX, losses income also Net decrease primarily $XXX.X the for investment value the During convertible December conversion reduction adjustments recognized favorable

million of $XX.X million decrease on a to convertible issued million and to costs Series of exercise decrease recognized warrants there in related adjustments lenders, on $X.X losses related stock. was to notes, decrease $X.X the issuance of of in a the losses redemption mark-to-market B Additionally, preferred

was no per income expense of million losses XXXX, years the December compared XXXX primarily fully to $XXX.X or last operations. fully and year. a share ended tax loss -- XXst, diluted $X.XX $XX.X had due on loss Net we net federal to million $X.XX diluted per of the share For or diluted

Moving to Slide XX.

$XXX.X million cash XXst, to $XX.X for and The provides December cash for This XXXX, and in XXXX. and IT debt and CapEx value. million are at systems equivalents in USDXX and USDXX a of approximately Company's sufficient As Indiana, between facility million the in approximately principal Michigan. due Company XXXX cash Ohio face plans had million upgrades

or in establish equity coming an at-the-market which our in sell our program expect covers $XX reflects XXX guidance, shelf and We XXXX manufacturing, raise planned generate current least quarters. capital manufacture allow assuming also supply chain progressive utilizing to to to registration Slide and plan million to ramp ATM we unchanged, the opportunistically remains vehicles us our at XX visibility at revenue. in least

backloaded, any for our in first Importantly, the half to XXXX. the are vehicles produce year as of not expecting we guidance is

on Transitioning exactly vehicle business people, functional we into is areas start-up systems. and OEM we our what in enhanced and efficiently. all position significant processes, prototype products, As investment at and suppliers, requires are effectively business Workhorse. commercial operating ahead and today moving I Workhorse doing across with more a mentioned, a a a technology That are financial marketing focus Company from

the investments. to that, have financial up financial to flexibility wrap to with it We Rick I'll near-term back turn now And call. the make these

Richard Dauch

want a lot -- away getting from Bob. to Thanks, I there things and is and as that things call, committed few We work we exciting us for this a of at come are done. it This here do, important But an are to there's emphasize. recognize key time Workhorse. to we

the road First, we're building to on growth. a back getting new and foundation

We to we updating our on create forward. the and Thank structure And again on we're questions. team ready to vehicles new confident and execute time forward now please Second, morning. to plans, we you in the that your the executable place have provide going shareholders. and roadmap are have and deliver this finally, long-term Darryl, again, we progress you call for our instructions. look a appropriate for value our to your open right product clear

Operator

Instructions. Operator

is line first of the from Rusch coming Our Oppenheimer. Colin with question

Colin Rusch

with So the of planning in in us the second qualification that. chain the chain of and the adjustment supply the and give update you an in where at designs supply validation half? Can the of support terms on to you're full start here to you're designs that ramping

Richard Dauch

Okay. Great.

So gone ourselves, right X we're tested right? their vehicle in which working and we really that. working few have all certification, all We've for We parallel We've we've had pretty GreenPower. in about testing, documentation, their a path ways WXXX, now, feel their with through good and we're months. the

are van. modify vehicle the early it make to going We to of that that. We're a stages delivery step in

next the the of the and this to partner choose back for week We or week are box our cab. likely

in coming there from weeks. a also sense a chassis WXX, there. CXXXX, gone old stead So good back and WXX, EGEN WXX, others chassis, what will the we're got I standpoint good and and me to the be think and standpoint drivetrain from in a do also a from a we're next management the our The On we've standpoint. at going the and and the few pretty X guys of we've battery to looked

with source by to partners March supplier parts those XXth. expect our We

with out good component shape. the thing some what now. chain for on laid are the in think truck, space comfortable so. we've like we industry our know very year, we're And factored quarter every feel Colin. Those third next long long -- there there are now We've the I some supply in we're disruptions right for So doing lead kind the times float we're we launch any of right And in in overseas.

Colin Rusch

the $XXX to gain there, But balance, the to is an be cash million from to to a going I'm scenario? what here scale need loaded cash anticipated fully as then to is And Perfect. be. up operational cash great curious flow positive get place you

Robert Ginnan

This is Bob.

But cash, and longer now, launches the about that looking term. $XXX that feel So near obviously, over we next going be right term the burning raising these talked are years. of we working we at is we've the million are and sufficient go funding will couple through capital for and to capital occur of as we

the start talking we we once So we can get there. we about from go think to where then launches,

Richard Dauch

Colin, I'd one was we the didn't quarter in our get hands thing didn't -- around the got -- we done 'XX. get say we

out Company. factored we in the the plan. at hands mapping up up all units CXXXX. to parts. from the around built got together First, business a capital expenses design test going both to and We put these solid 'XX and ground up We have the We're the We in all the trucks working we're source needs.

us that. We 'XX that Board We have for do to and that for asked give May 'XX. the We until finish job to need to 'XX.

early second hear the this you So year. third probably some about quarter, quarter

Colin Rusch

Or just way I'm the last a Obviously, here And there in pretty That's you've augmented curious, incredibly you team year. do are plan? feel you're that the guys helpful. that carry point? advance other then this fill management substantial team the to roles going you like for is this forward to in key past execute, at trying me. the are one the and just

Richard Dauch

Yes.

how Just team, through areas and CIO see gone got at either or a a to go out, We thinking like X in that got have probably we to facing side. what to get in here, to an the to We start to sort space, you who's to a existing roster we going look customers. OEM take we're the market automotive you ERP have need good product now we a fill. sports need build need Tier the need it transition be and about plan, we your X

know, market. this an As is you interesting

them But also Accuride, them? are big And out through fleets XX% Service. the UPS, you delivery vehicles. less XX a of accounts days a cover at there's a got national through Do than how like Postal FedEx, You've that fleets team or lot From team. my independent do than here of you there. U.S. regional cover the guys know Amazon, I more

sorting that we're so out. And

world, the team, North parts So piece all X from of top we across are third here, we soon. coming sales go inventory And leadership and pretty CIO, get Those the Director as and for and have management priorities need into the the because going to at we're to us regional. QX chain key logistics America supply both here. the the of is the across

Operator

you. Thank

next Our with line of coming is the question Greg Lewis from BTIG.

Gregory Lewis

the around guess think first with a supply structures question Rick, or do on you beyond providers other that strategic little to more my opportunities bit wanted really, through type with similar there's agreements is, I think And GreenPower? to I do partnership GreenPower.

Richard Dauch

Look tip much. battery I City. facility by for our in we too up buying We've warehouse storage. a there expanded that off another up factory do Union question. buying factory and have a good that's hand can won't a we that But use

the and building We have There my very that to capable to talking in XX area. In There's world, the workforce I there. more are a today, in hire built experience, people months XX ability are who factory. around minimally EV XX about months. space about people a other factories the takes

out. the secure years ground got broken or haven't contractors So if the X they permits the or or steel are

and So who've a go production do to us reached we considering can are some for things from there people, about some out standpoint. them

he month on we GreenPower August, that them. gap and to job, we partnership. help? our And So I only GreenPower, our felt to I of September, it the it on production decision do CXXXX, bridges limited our we've the Does minimally and as cab that on ACT needed at discussions like, months consulting plugs -- met had revenue with was with this the to the we XX gap that those best as based WXXX said, the the based think the WXX. in hired we back and knew we EV assessment, chassis system to into from on When players as get and so. most standpoint. quick in basically hands fills led a could, that a in key early the of the and show I out This industry Josh Anderson, get chassis team

Gregory Lewis

realizing in change, Any was longer a throughput that say of throughput to want for medium could around out. XX,XXX previous of adjusting, you're term? I what facility of Workhorse, at City, you're version -- the believe that expanding, facility units, sense Union be around just I then you're kind you're that And or things building the

Richard Dauch

question. great and a be build I custom the wheels. to I far to used them for remember Workhorse axle chassis. a supplier as That's as I Yes. remember, that, that axles

warehouse, week, finalized that X you days the WXXX can we if look That's to a X.X haven't XX,XXX. days I'll a not so what need shifts math XX,XXX running the day, there. X We least a A at we use too, at -- plant know foot some square We additional let line shifts awarded we week, mill rough that will manufacturing. lot number. expanded X we're we and exactly WXX some second ourselves, an WXX. build there, what the if depend put contract do there, which a be just we'll could in both on We added there, to

available EV-powered already with down automotive So state the we Michigan actually and there alley met the the Tennessee, right in basically spot, government with that's we here about Mayor. think heart sweet grant talking systems. some money support, between government met the we're of getting factories over in we're We've Ohio, old federal to some that nice and of about for the to transitioning to the

the pretty about So the ranch. -- excited we're work

Operator

you. Thank

Our Osborne next coming line of question Jeff from is with Cowen. the

Jeff Rossetti

for This Jeff is Jeff Rossetti on Osborne.

around you and to able pricing the the be for just see and margins to wanted details you the Just if expect gross XXX, XX? might XX any provide might

Robert Ginnan

Yes.

them mapped We've our there right out now. hands not going competitors budget, It's tip we're those. built to but have our out. 'XX to our into We

profitable I say will So that? it be a this, is for us. How Jeff. vehicle though, can good question,

Jeff Rossetti

anything -- XX and that -- would arrangement the Any that XX? economics with GreenPower the on the versus the -- differ would

Richard Dauch

No, so. don't think I

think product, fourth product, and full with can van, competitors Solid vehicle. competitive benchmarked we've the yes, the And of space end year, their both we in -- van in by year we the you. of Thank we their chassis quarter so. have in what design what the out gone can we the cab be the on all what space this and is, is, range that and payload We've our this a is. step market very a cubic delivery

is Irwin coming question of Craig from next Capital Our Partners. the line with Roth

Craig Irwin

months. you orders than and you a progress that changes near we is contracts for to units important WXXX. a WXXX a this committed customers the on or whether wanted that It's in Congratulations truck, go not, you and the most delivery is given quarter. the there I materialize not higher in those the would specific if customers So last asking the start take in or of actually for to expect need X -- the to the -- the whether Can to deliveries to and for units actual number there. have units that Rick, to capture about lot are the talk require off truck now customer, about so-called very order of new out or right probably thing outlook. XXX this revenue whether not term. already X,XXX

Richard Dauch

here, okay? question, UPS, Family had out I Pride, got we customers. So those customers, when Pritchard X,XXX great basically there. a and So with we It's had X We've met from okay? customers orders

requirements, here, was I when I I UPS talked to clear you our to think meet orders. said, you first fulfill with very I not can -- got you payload until those we're going when I

about, the CXXXX, they When about, that those build a the assess wait be had X we'll to even WXXXs, those to or we want capacity. want You out do we and into the making between orders we CXXXXs back other CXXX figure how vehicles. we've with whether payload we more we their with the We've They're all going market. those they think decision, for at few And the you orders up to Union talked see they and those on sell -- right the weeks to and some customers those a carry can the in asked talked mix for think truck built trucks. driven prices limited convert WXX. original the at they're have can do to orders given they WXX want City the that that apply met cost, and like they we target orders. We've to to have that real can payload a

days, we need work next so. hard in XX do our to that's the So

Craig Irwin

do that begin, products? deliveries where the say mean you I So pipeline a stand for these to when there's And you're right? deposit. you on very expect specific about you

assume deliveries, to this right frame to initial be around So can supply has GreenPower giving those, time given cash what now you're given But maybe facilitate number, very of for the the some like? is bunch to now? their I go? lined which and either and -- those chain. ready to us utilities I up running you're up pipeline probably some units where you what just ground looks sort is hitting the specific a mean, again, of X,XXX something, a really Or

Richard Dauch

that's Two got not things. okay, other It's It's approached Class customer Like, XXX customers, those in overseas give vehicle, very places, already miles. to have and today, in many of we've some of carries priority a up a can as it see you now those can -- have see okay? payload. first, the DC couple It's the vehicle, vehicle. is, X and the orders a It's a of and used, and when a convert out we the our being to one. X,XXX talk how that orders It's It publicly Two vehicle. were fast. current take to now have who've in fulfill pounds. we well. market X is the So capable we we we got range go Class announced us if with customers

of drive and materials We're we of show it's and how them show share we're all them test again, to built, they able all them give -- data. able vehicle. So with to feel a the the test of the bill

inherited it's there the So to where in talk -- and now, plans the making also customers, that little could on to before I the and I out pivot comfortable out sell a wasn't road I I confident I go that can right some but them decision feel we've so. So in to now of right? to be get bit investors a got matter road, that that talk both out and

Craig Irwin

actually delivery this And all sell-through. take on and X,XXX of actual function capacity of be just units a do XXX quarter? roughly deliveries a you really will the a success Or to is units, expect

Richard Dauch

up chassis. We've cab secured X,XXX vehicles. at to who the capacity supplier, We're builds that

our success and down market, We have do. to ability the up what that we're in adjust to based that's or on every quarter going

partner key to Both X they that the confident sources We're of come we with up, and get confident U.S. -- ones to suppliers can the I'm local are of here. going we've the key So got in lined and here are the us vehicles. in those

to how or will we why we And go us, sales off hold to convert So to been got out overseas those that's so. good. patient find they not want some first We're who supply orders disruptions now components people. need -- have customers, and of then, we and do or That's WXX it's the dealing very many the WXXX hire foremost, with out, the matter with and new going and chain for a vans. on some the figure customers,

Craig Irwin

if may. question, last So I

far the like in that conservative Workhorse But pretty most and past, a think goals, to of or has sort be hope share You're people sold 'XX? what as I can been on units that, Company some follow you certain that you willing see targets a right? in with line. guy, as mean, I would the for us time they'd like to share color achievable would

Richard Dauch

conservative, over tend okay? am Workhorse. people, little a space of lot our today, last who I a from been of XXX And with be to you're over make around There's X right, to I've revenue. surrounded million We going the That's right we the which EV some myself Yes. thing. $XX of combination said just not years me probably even years, and or sell a -- the CXXXX in to conservative is and be I generate and expect WXXXs, very conservative, sizzle X more vehicles

and somewhere You can go prices et some stock typically all cetera, at XX% look the between are SPACs, of XX%. down

a Putting drawing hard different up worlds. something you bad testing, don't you and the something you -- rendering Counsel the a that a your at actually doing summer doing work. factory, testing, of I parts, your say and testing, looking a there in a the X vehicle a of on design, word. it's and Chief doing almost So where it, me, a sourcing testing, age, homologate test PPAP had dynamometer vehicle, winter all that's crash is PowerPoint my

and front them. the testing, one a So map So what is just a maps line the easy hard we're doing thing that's sales Europe put over -- sell, boys in doing What what's to you and X paper doesn't lines to we've on in pass on are COOs, So last need different, has automotive I on the actually Eastern of is all Musk, the the draw right? time like hardcore from easy, realizing in are it on need right? Hard There's engineering, put now nothing on work their is the the used Take last team out built there, months, here I prototypes said, CEO, CFOs people deliver hard. to have is auto executing a across vehicle that in What that work track team who the the industry don't look operations. commitments. production of now. C-suite Elon because I supply if quote EV a at chain And in industry. a didn't industry. record departures proven

Operator

Thank you.

from Our B. next Souther Chris line question of with Riley. is the coming

Christopher Souther

dollar the dollar to standpoint? a where stands backlog on the today update a few related I are from value. Any believe there covenants

we I if just So clarity to there. see want get any can

on the You to have the of key X customers feedback good called out WXXX. seemed

of XXX of to the and sense of are process So orders the kind I in other the next-gen wanted from stuff. to get we CXXXX converting where a

Robert Ginnan

Bob. is This

process. to to to confident that the we of we are, those as converting to and here we're backlog, process and place you in able process. We're will the XXX the in CXXXX go the So through But a then everything meet be it's the covenants. get said, going

Christopher Souther

to aligned puts And to get then a which seems with use WXX standpoint. as and are a I'm XX the WXXX, class talked the about the to someone WXX. from with what particular, curious around probably your stop developing continuing with the else's versus in gap curious it to own and -- I'm takes more the you chassis

Richard Dauch

gap Yes. a stop It of we gap, right? but bridge I guess, it's Great. plugs It's a can is what you not revenue. use said, the stop had kind Good. in I gap

certified This Canada rail chassis right. tested. Class It's the steel already X in you're U.S. is So vehicle. and It's both for a a proven. It's

So One one similar it's talked WXX that and right? the EGEN. year us That's some of to to to things past -- going is of years. wait for want gives we've little try the us what a we rather specs, really at all to something the then customer CXXXXs, those give the in forward. had do work, of step in is chassis we to standpoint. kind on sure X we take than The and a terms The learned, some on can build more, we've of go learned to WXX the challenges in sourcing we've production this the what lessons CXXXX about, the make customers the the bit specs. they marketing work got built It's

were realistic have any got to make that's unrealistic. is the working the them price build triple specs to of the a double a bill if double customer you if of business are cost the the or great vehicle, And and some what model. that doesn't vehicle a And the were costs those right? not actually -- good the of wants, good Some you've It you do truck money. can prototype of of sales materials

$XX,XXX, they balancing So between A vehicle through fleets, but if $XX,XXX. burns end -- What $XX,XXX the do the Class customers need, and cost both to and it X want, typical ICE also small X, doesn't not balls fuel, just sell $XX,XXX trucks ICE-powered, the there. all the the somewhere guys. we're Class truck, X big to the customer it's

batteries got You on the there.

on axles there. electric got You've

You've got inverters there. on

an chassis. ICE transmissions. triple double wheels a system different cost material cost. have of and batteries actual axles We The you hell you But can have than Yes, suspension. That's differences. Yes, engines and what or side the do a some a more have cost straightforward. got you bill You've tires. and the pretty Yes, a lot components. side of tell say of normal by

So purposely for right? X grindstone, here, that is or no quietly those last of things the we've we've been the months, working are doing So kind dishwater to very work, nose one been on months quiet, so. X is the the drinking grunt

Christopher Souther

quarter for which Maybe CapEx kind last can I year, throughout target would you give this should and should for And be ticked think, on of helpful. OpEx where Anything just the of year. of -- provide down kind R&D, last me. one trend the you kind

Richard Dauch

factory plant CapEx sense design we This for products doesn't is speed. to in to make heavy not a a up the been couple for decades. invested Yes. that's world-class out build year as of It of a us get and

and we're So tools to the making is make with right that It's right to this plant sure there protect a safety investments showcase features the our workforce. heavy year.

X. highly now consultants CapEx down got products both are here, in-house custom real spending from some goes of manufacturing a what you a don't I relying say -- thought one We're adding next down up the on designs. XXX the OEM costly We're highly, we I test our to was at and mentioned self-sufficient us. think bring and is had to We I other in Wixom. from I'd have on good at Workhorse, transitioning to depending this we with for high-level outside I've R&D. want our talent. we when our right in We-- chassis now that consultants our Company quality. right design, available here to That's quality. bring a that XX outside forward, comes own resources. year years be manufacturing helping experience hiring a number in

special testing can site pick part up on so. a partial Wixom dynos, the is, we testing is area, purposes, -- we As a Metro centers Detroit of chassis put reason needed in greater dynos full vehicles the there one for of lot chassis or our

Operator

Thank you.

from Our Mike next Davidson. of Shlisky question line with is the coming D.A.

Michael Shlisky

misinterpreted touch costs had I did something, year I said and a may the over first true. have I selling -- maybe $X.X you to have increase Is guess might prior million wanted correct? that's that you I in miss Bob,

Robert Ginnan

That to us is correct. a care forward get behind and that settlement That took we to was us. primarily of move contractual the future long-standing it

revenue that what logical. doesn't selling negative was But expense that for. So that's seem yes,

Michael Shlisky

to you Yes. in wasn't during the I kind what ask out much was selling quarter of road. were going there you the

more some in give that, the as with be So to line us year maybe the or prior you excluding color was prior going what quarter? rate Can normalized more it the might forward? run

Robert Ginnan

Yes. That amount. was the that total predominant of

So that. of pretty outside it's normal

Michael Shlisky

to a X wanted how the there be. I'd several Class little that other that ask providers be came are and others with Class as there. how curious I be might you with the agreement to And then own the yourself. developed X today mean, opposed to GreenPower their also company out relationship in I a market about also [indiscernible] few EVs bit they

Richard Dauch

Yes. Great, great question.

early August the joined ACT who timing I the was standpoint, later. Company month in a then in Long So fortunate out a show and Beach quite from was about

start the a would He with powertrain down got the he Once sat had team. company, Josh familiar through I'm we we we also join time and CXXXX, the years the of there, I use. I to so resume in patents. XX-plus with industry, we Chief XX in commercial Anderson, handshake Trade could Officer. team went that's from mine, and to the we all the worked get right? by him right. partners and of with period, to out who interviewed vehicle we the a different for Board, SEA some then on So my identified He's with Technology I've whether Remember, electric and our Show, agreement who I about was need it. everybody my where almost X-day had able XX friend the personal and here our kind left gave A at of competitors, -- back me systems questions L.A., another was we team in about early potential Electric, that came Bollinger, knowing that the years of test, I introduce all me Workhorse

our So great. if to can pivot can we That's chassis, than we thought. a we hey, little own build where take going quickly longer

and So forged subsequent vehicles, get? looked President their over gave in who in. months then came into CEO, on went go GreenPower and X last we Their He their We can presentation and Ohio us a meeting we at the here deal had we their a portfolio. brought with product a basically.

loading Greater leadership all Ohio that around included vehicle, taking included looking So all myself documentation. driving fully my loading and it, around the of it, it the for team

our they both get They and market 'XX, it, We we forged diligence. that. so. are of to done think the chassis. partner. the think get can cab not some get we've in we do got in So to We an here for We 'XX sales. beneficial That's agreement okay? good payments. We get kind in be the companies. And market that's down They the

Michael Shlisky

be even it's the here additions Or any intellectual just this world. do about kind your already Are by last of what can medical use the cases year one that mapping been, talking this of and property? make ag, land patented for it's uses any of to those talking potentially are the they of little in more you I I backed anyway? cases, you're on can those the a come other there can product very back to take off that, -- a and and environment is last On competitively X space? feel business, efficient. And vehicle, call, that -- in in for in then -- And med the a always for some ag base back what a help get I use look bit aerospace especially delivery a of heavy question from crew more side. driver And or a about

Richard Dauch

and got have the The is the are phenomenal. team big I've old CAGRs this back And we and of come data, growth year. UAV and the we some out Graber economic of military, some entire updated career this John in forecast I, and segment off UAVs for banks. went they being in obviously. the Great. never seen projected Yes. market primarily, my by by that, the dusted

about reefers that. and and printers like drones stuff read and You

and all that Now there for we through sheet and then controls robust on that, very of technology Explosion this part here, like the we're data, break under met go not kind hey, a and apply they're photography of for that the transition, a and If bringing commercial we and discussion, forward. our space. drone the drone. some third stability. on stuff drone. engineering the as specific of use that in us working still ones where small in our And have can So space, have read that we're vehicle pages and as I okay? we're was else almost how technology, we the to lead, It's a told drones taking of track given can we our we logic, they're only the or got now so, first growth fourth the They X that cameras those specifications this quarter going the design month We of that. sometime launch testing commercial actually year. We're technology quarter think we to us customer with by and specifications. feel like in

that differentiate XX I XX-pound us we weighs tether so it deliver tether XX-pound we right? is we that's think now, of -- think can carry pounds, right it up. opportunity it down So put package for we now, And doing so and an nobody less that a ourselves. than to right and back else on a Not can package. know a

we systems very what? do of after want some LiDAR and And from were to nice government. So test underneath grants our got first we've from gone systems have and The out the thrown done more. some They and and positive. work feedback a camera couple some guess the the customer drones

second So now. we've got a grant

that's There's need So a good. out there.

with think systems, look you take about ground. farmers ATV on they the national type or go a If ranches, an miles parks, can the now radar type you check with things large do hour XXX a XxX -- at at drone where agricultural have areas, to things, detection waterways, to a can horse

it's So us. for -- a opportunity that real

Operator

Thank you.

of is line the Lafferty. question with Perez from next Jaime Our coming R.F.

Jaime Perez

Just for a clarification.

-- summer see chassis? What You about WX are and the WXX mentioned body the steel aluminum -- aluminum that that last chassis, chassis to is vehicles steel. the quarter going I is have steel the WXX,

Richard Dauch

and chassis. will is WXXX learned bad rail WXX a the TBD. steel The We about lessons definitely WXX a rail and on be steel great chassis is the some good aluminum, CXXXX. both

going team So addressable but bigger steel or to a even through you use steel, and -- as design aluminum, much of both. though if want out you our the much looking put aluminum little it pushed it's We're a -- to chassis. our that's we pin why whether If We yet we're where right? WXX down weighs TAM. bit, go not too is at

is about how it's So how built, that So do okay? batteries the we and chassis. along protect the chassis really

If you of look cars, passenger other. at the all go out the built lot batteries each you in around are and see the chassis and

same to truck side, so. about the the here on got think So thing we've

Jaime Perez

motors, any the battery heavier inverter I'm you performance to are additional handle how or Now capacity, curious? the through just the or torque with going load change, with

Richard Dauch

X confident. drivetrain them. I'll through a you're of gone of or Omnitech, we're we're -- we'll manage identified of we've Linamar, of to to call people with, down Dana, Tier talking or very We've electric so bunch Axle, -- like who BorgWarner, choose what the negotiating that one X the major the assessment X people, the and Xs, and We're

on fact, EGENs, data summer in now. have the our some our axles right In original of back we converted sitting were for E-powertrain that warehouse

a years years here last had of this lot building in X over on the X this, we've to So experience so. do how or

Jaime Perez

any XXXX. vehicles XXX question. half mentioned to you the not half you first units, Last build had in and quarter, And of of one final going you're inventory

You out be inventory the inventory color production -- does for means new the enough would Any second -- imply and have so that for a half acquire -- that and you have appreciated. maybe get go XXXX?

Richard Dauch

have a about quarter. XXX, deeper CXXXX the and inventory we the don't part quarter, last of XXX. through this that's that's we get so We've and said reserve design what took we into When gone revisions, done we you Yes. different think dive.

We have enough inventory.

we're That's And today, build XX% think a few of got somewhere more we very a go XX buy CXXXXs. we have numbers is XX confident. As part between we to parts. that going we and it. probably But additional we're said to to inventory few

we the that's other not today, -- out the So issues good I on So CXXXX we exposed supply issue. not We're exposed that so of a chain speak there to are customers, as any with see today. okay?

Operator

further questions at the to are management turn any for closing over Thank you. There no call to would comments. like time. this I back

Richard Dauch

finish get your Darryl. to day. We We're workhorse. No, a in We to a interest All committed your across horse patience. your investment a appreciate appreciate line. and Thanks. thanks, Workhorse. Have right. this appreciate from plough the Go Company questions. We great

Operator

you. does your This appreciate conclude participation. today's Thank We teleconference.

You your at time. disconnect your may lines day. the of Enjoy rest this

Workhorse (WKHS) 1 Mar 222021 Q4 Earnings call transcript