Workhorse outlines strategic focus as EV market adoption slows

Earnings Call Insights: Workhorse Group (WKHS) Q4 2024

Management View

• CEO Rick Dauch highlighted the challenges in the commercial EV market due to regulatory pauses and shifting purchasing plans among fleets. Despite these hurdles, Workhorse launched the W56 208-inch wheelbase truck, which has already secured a purchase order for 13 units with deliveries expected in Q2 2025. Additionally, the W750 and W56 step vans received approval for sale in Canada, with demos scheduled in April and May.
• Management emphasized cost-saving measures, including significant headcount reductions and operational cuts. The company also noted its strong financial position with $40 million in inventory and a 420,000-square-foot owned facility.
• CFO Bob Ginnan reported that full-year 2024 net sales were $6.6 million, driven by W56 truck sales and service revenue. Operating expenses saw notable reductions, with SG&A decreasing by $13.1 million and R&D expenses by $15.3 million compared to 2023.

Outlook

• Management refrained from providing specific annual revenue or guidance due to market uncertainty but emphasized a focus on securing new orders, advancing the product roadmap, and ramping up production.
• CEO Rick Dauch indicated that orders for the W56 208-inch wheelbase truck are set to ship in April and May. A reduced range 140-kilowatt W56 model tailored for a major last-mile fleet is on track for Q3 production.
• The company is targeting near-term opportunities in regions with strong incentives, such as California and the I-5 and I-95 corridors.

Financial Results

• Full-year 2024 net sales reached $6.6 million, down from $13.1 million in 2023, primarily due to lower W4 CC truck sales offset by increases in W56 truck sales and service revenue. Cost of sales decreased to $28.2 million, reflecting improved inventory management and reduced employee costs.
• SG&A expenses were reduced to $42.5 million, while R&D expenses fell to $9.1 million, demonstrating the company’s commitment to cost efficiencies.
• The net loss for 2024 was $101.8 million, an improvement from the $123.9 million loss in 2023.

Q&A

• NOT_APPLICABLE as the transcript did not include any analyst questions or responses.

Sentiment Analysis

• Analysts' sentiment cannot be determined due to the absence of a Q&A session.
• Management’s tone during the prepared remarks was cautiously optimistic, with a focus on resilience despite market challenges. CEO Rick Dauch underscored the company’s long-term commitment to the EV market and highlighted achievements such as product launches and cost containment. Sentiment was consistent with previous quarters, maintaining a focus on operational discipline.

Quarter-over-Quarter Comparison

• The Q4 2024 call demonstrated continued focus on cost reductions and operational efficiency compared to Q3 2024, where similar measures were highlighted. Both quarters emphasized the strategic importance of the W56 product family and efforts to secure large fleet orders.
• Management’s tone remained steady, emphasizing resilience amid market uncertainties. However, the Q4 call provided updates on new purchase orders and market expansions, including the Canadian approval for step vans, reflecting incremental progress.

Risks and Concerns

• Challenges highlighted include regulatory uncertainties, delays in fleet EV adoption, and external market factors such as government incentive changes and tariff impacts.
• Management emphasized mitigation strategies, including cost reductions, leveraging owned assets, and targeting incentive-supported markets.

Final Takeaway

Workhorse is navigating a challenging commercial EV market with a focus on operational discipline, cost efficiency, and product innovation. The launch of the W56 208-inch wheelbase truck and its approval in Canada mark strategic milestones, while the company’s ability to reduce expenses and extend its financial runway underscores its commitment to long-term growth. Despite market uncertainties, Workhorse remains focused on converting fleet interest into tangible orders and leveraging its competitive advantages in the medium-duty EV space.

Read the full Earnings Call Transcript