Workhorse(WKHS) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2025, net sales were $2.4 million, a decrease of $100,000 from $2.5 million in Q3 2024, primarily due to lower truck deliveries offset by an increase in deferred revenue recognition [10][11] - Cost of sales increased to $10.1 million from $6.6 million year-over-year, primarily due to a $3.3 million increase in inventory excess and obsolescence reserve [10][11] - Net loss for Q3 2025 was $7.8 million, significantly improved from a loss of $25.1 million in the same period last year [12] - Cash and cash equivalents increased to $38.2 million from $4.6 million year-over-year, bolstered by $25 million in funding from Motiv's controlling investor [13][14] Business Line Data and Key Metrics Changes - The company sold 15 trucks in Q3 2025, reflecting progress in scaling sales and expanding the product portfolio [4][5] - The W56 step van continues to gain traction, with a 97% or greater uptime availability reported during operations with FedEx [8][21] Market Data and Key Metrics Changes - Customer demand for the W56 step van is increasing, particularly in California, Washington, and New York, with successful engagement leading to repeat orders from FedEx ground operators [20][21] Company Strategy and Development Direction - The proposed transaction with Motiv aims to create a stronger entity in the medium-duty electric truck market, enhancing growth potential and product offerings [8][9][15] - The company is focused on cash conservation, expense reduction, and operational efficiencies while preparing for the W56 140 kW production launch in 2026 [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenging market conditions and emphasized the importance of the Motiv transaction for long-term success [9][15][30] - The company is optimistic about the potential for cost reductions and operational efficiencies post-merger, which will enhance shareholder value [30] Other Important Information - The company recognized a gain of $13.8 million from the sale leaseback of its Union City facility and a $4.8 million gain related to deferred revenue [12][13] - The merger with Motiv is expected to close in Q4 2025, pending shareholder approval [9][14] Q&A Session Summary Question: Broader market outlook for state-level incentives beyond California - Management noted successful engagement in California leading to increased orders and mentioned positive developments in Washington and New York regarding incentives [20][21] Question: Cost trends as production ramps up for the W56 vehicle - Management indicated that both bill of material costs and labor costs are expected to improve as production increases, with ongoing efforts to reduce costs through engineering and supply chain management [22][23] Question: Total cost of operation reduction for the W56 - Management highlighted a projected 55-65% reduction in total cost of operation, emphasizing the benefits of no fuel costs and high uptime [26]