CINCINNATI, Nov. 8, 2019 /PRNewswire/ -- Workhorse
Group Inc. (NASDAQ: WKHS) ("Workhorse" or
"the Company"), an American technology company focused on
providing sustainable and cost-effective electric-mobility
solutions to the transportation sector, today reported financial
results for the third quarter ended September 30, 2019.
Third Quarter and Recent Operational Highlights
- November 2019: Signed
Intellectual Property Licensing Agreement (IPLA) with Lordstown
Motors Corp. (LMC), a private corporate entity founded by former
Workhorse CEO Steve Burns.
-
- Agreement finalized in connection with General Motors (GM)
Lordstown manufacturing facility
acquisition announced on November 7,
2019.
- Under the IPLA, Workhorse is granting LMC a three-year
exclusive license of certain IP relating to the Company's W-15
electric pickup truck in exchange for an initial equity stake of
10% in LMC, which will be anti-dilutive for two years.
- Workhorse is entitled to a license fee equal to 1% of the gross
sales price of each LMC truck sold, up to the first 200,000
units.
- LMC has agreed to pre-pay a portion of the license fee in an
amount equal to 1% of the aggregate debt and equity commitments LMC
intends to raise.
- Once the pre-payment has been amortized over actual production,
LMC will pay on a per unit shipped basis up to the 200,000 unit
cap.
- Workhorse will also receive an additional 4% commission on the
gross sales price of trucks sold which fulfull the 6,000 existing
pre-orders for the W-15 transferred from the Company to LMC.
- October 2019: Partnered
with Unmanned Systems Operations Group, Inc. (USOG) to launch an
initial pilot drone delivery program in the San Diego area with the goal of pursuing
additional programs for healthcare providers, pharmacies, and
specialized medical courier services using Workhorse's HorseFly™
technology.
- October 2019: Entered into
an Asset Purchase Agreement with aerospace and defense company Moog
for the sale of the Company's SureFlyTM electric
helicopter for a cash purchase price of $4
million dollars as well as formed a joint venture (JV)
involving the Company's HorseFly last-mile drone delivery
system.
- June 2019: Secured
$25 million in financing from a
private group of institutional investors, the proceeds of which
will be used for general working capital and research and
development, allowing the company to focus on finalizing the
R&D associated with the N-GEN followed by production of its
existing contracted backlog.
- April 2019: Entered an
alliance with Duke Energy. The alliance will help reduce the
overall costs of fleet electrification and accelerate the adoption
of electric vehicles into commercial and government fleets. Through
the alliance, Duke plans to offer
eFleet solutions to existing and future Workhorse customers.
Potential offerings include single-point management and financing
of behind-the-meter infrastructure, which is necessary to support
depot-wide electrification; vehicle financing/battery management
programs; and solar and energy storage and other distributed energy
resources.
- February 2019:
Duane Hughes announced as Chief
Executive Officer to further support company's successful evolution
into full scale production. Previously, Mr. Hughes had served as
Workhorse President and Chief Operating Officer.
- February 2019:
Robert Willison, PhD, engineering
veteran and EV industry expert, appointed as Chief Operating
Officer to lead company's transition into manufacturing.
- December 2018: Secured
$35 million financing from Marathon
Asset Management.
Management Commentary
"In the third quarter we
continued to make considerable progress toward our goal of
achieving initial production with our CSeries last-mile
electric delivery vehicles," said Workhorse CEO Duane Hughes. "While we are laser-focused on
achieving that near-term goal, we are also taking definitive steps,
through strategic partnerships and licensing of our IP portfolio,
that have us positioned for long-term sustainability and
growth. More specifically, through our recently announced
IPLA with Lordstown Motors Corp., we have successfully acquired
non-dilutive equity with the added potential for meaningful
additional revenue streams through licensing, royalties, and
engineering services from LMC. Having an affiliated company in LMC,
with their level of automotive production capacity, affords
Workhorse a footprint unrivaled in commercial electric truck
manufacturing. Looking ahead, we remain confident in our ability to
begin initial production during the current calendar year with a
sequential ramp in production, and delivery, starting in 2020. Put
together, Workhorse occupies its strongest position to-date, both
operationally and financially."
Third Quarter 2019 Financial Results
Sales for the
third quarter of 2019 were recorded at $4,000, down from $11,000 in the third quarter of 2018. The
decrease in sales was primarily due to a decrease in volume of
trucks delivered partially offset by improved pricing in 2019.
Selling, general and administrative expenses decreased 24% to
$2.6 million from $3.4 million in the same period last year. The
decrease in selling, general and administrative expenses was
primarily due to decreased spending in areas such as marketing as
well as decreases in other employee-related costs.
Research and development expenses increased 13% to $1.6 million from $1.4
million in the third quarter of 2018. The increase in
research and development expenses was due primarily to increased
spending on prototype development, which was partially offset by
lower consulting costs.
Total operating expenses decreased 13% to $4.2 million from $4.8
million in the same period last year. The decrease in total
operating expenses was due to the lower SG&A spend previously
mentioned, which was offset by the higher R&D spend also just
mentioned.
Net loss in the third quarter was $11.5
million, compared with a net loss of $5.5 million in the third quarter of 2018. The
greater net loss was due to higher interest expense in the third
quarter of 2019 compared to the third quarter of 2018. Interest
expense in the current year period included a $4.0 million mark-to-market adjustment compared
to a $(1.5) million mark-to-market
adjustment in 2018 for warrants issued to lenders as well as a
higher debt load in Q3 2019.
As of September 30, 2019, the
company had cash, cash equivalents and short-term investments of
$9.3 million compared to $1.5 million as of December 31, 2018.
Conference Call
Workhorse management will hold a
conference call today (November 8,
2019) at 10:00 a.m. Eastern
time (7:00 a.m. Pacific time)
to discuss these results.
Workhorse management will host the presentation, followed by a
question and answer period.
U.S. dial-in: 877-407-8289
International dial-in: 201-689-8341
Please call the conference telephone number 5-10 minutes prior
to the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at
949-574-3860.
The conference call will be broadcast live and available for
replay here and via the Investor Relations section of Workhorse's
website.
A telephonic replay of the conference call will be available
after 4:00 p.m. Eastern time on the
same day through November 14,
2019.
Toll-free replay number: 877-660-6853
International replay number: 201-612-7415
Replay ID: 13696315
About Workhorse Group Inc.
Workhorse is a technology
company focused on providing electric mobility solutions to the
transportation sector. As an American original equipment
manufacturer, we design and build high performance battery-electric
vehicles including trucks and aircraft. Workhorse also develops
cloud-based, real-time telematics performance monitoring systems
that are fully integrated with our vehicles and enable fleet
operators to optimize energy and route efficiency. All Workhorse
vehicles are designed to make the movement of people and goods more
efficient and less harmful to the environment. For additional
information visit workhorse.com.
Forward-Looking Statements
This press
release includes forward-looking statements. These statements
are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These statements
may be identified by words such as "believes," "expects,"
"anticipates," "estimates," "projects," "intends," "should,"
"seeks," "future," "continue," or the negative of such terms, or
other comparable terminology. Forward-looking statements are
statements that are not historical facts. Such
forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from the
forward-looking statements contained herein. Factors that
could cause actual results to differ materially include, but are
not limited to: our limited operations and need to expand in the
near future to fulfill product orders; risks associated with
obtaining orders and executing upon such orders; the ability to
protect our intellectual property; the potential lack of market
acceptance of our products; potential competition; our inability to
retain key members of our management team; our inability to raise
additional capital to fund our operations and business plan; our
inability to satisfy covenants in our financing agreements; our
inability to maintain our listing of our securities on the Nasdaq
Capital Market; our inability to satisfy our customer warranty
claims; our ability to continue as a going concern; our liquidity
and other risks and uncertainties and other factors discussed from
time to time in our filings with the Securities and Exchange
Commission ("SEC"), including our annual report on Form 10-K filed
with the SEC. Workhorse expressly disclaims any obligation to
publicly update any forward-looking statements contained herein,
whether as a result of new information, future events or otherwise,
except as required by law.
Investor Relations Contact:
Matt Glover and Tom Colton
Gateway Investor Relations
949-574-3860
WKHS@gatewayir.com
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SOURCE Workhorse Group Inc.