10-Q: Workhorse Group Q1 2026 Results: Revenue Up, Losses Widen Post-Merger

Workhorse Group Inc. reported a significant increase in revenue for the first quarter of 2026 following its merger with Motiv Power Systems, but also saw a widening net loss and continued concerns about its ability to operate as a going concern.

Summary

• Workhorse Group Inc. reported sales of $4.3 million for the first quarter ended March 31, 2026, a substantial increase from $1.1 million in the same period of 2025, driven by the delivery of 16 more vehicles, including 15 W56 models.
• However, the cost of sales also rose significantly to $11.8 million from $2.2 million, leading to a gross loss of $7.5 million, compared to a $1.1 million gross loss in Q1 2025.
• Operating expenses increased to $13.6 million from $8.0 million, largely due to merger-related costs, legal, consulting, and IT expenses, resulting in an operating loss of $21.1 million, up from $9.1 million in the prior year.
• The company reported a net loss of $19.9 million for the quarter, an increase from $12.7 million in Q1 2025.
• As of March 31, 2026, Workhorse had $0.6 million in cash and cash equivalents and $0.7 million in restricted cash, with management expressing substantial doubt about the company's ability to continue as a going concern within one year.
• The company's ability to continue operations is contingent on successfully executing plans to improve liquidity, including increasing vehicle sales, reducing expenses, realizing merger synergies, lowering material costs, obtaining proceeds from financing arrangements, and consummating a potential equity financing.
• The company has access to a $30 million Customer Order Credit Agreement and a $20 million Cash Flow Credit Agreement with MGMH, with $12.25 million and $20 million borrowed respectively as of April 2026, respectively.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this filing as negative due to the significant increase in net loss, widening gross loss, and the continued substantial doubt regarding the company's ability to continue as a going concern, despite revenue growth.

Positives

• Sales increased by 278% to $4.3 million in Q1 2026 compared to $1.1 million in Q1 2025, driven by higher vehicle deliveries.
• The company delivered 16 more vehicles in Q1 2026 compared to the prior year, including 15 Workhorse W56 vehicles.
• Synergies from the merger with Motiv Power Systems are expected, including potential savings from manufacturing Motiv products in the Workhorse facility.
• The company has access to credit facilities totaling $50 million ($30 million Customer Order Credit Agreement and $20 million Cash Flow Credit Agreement) to fund operations and working capital.
• The company entered into a settlement agreement to resolve the Coulomb Solutions Inc. litigation for $4.3 million, expected to be funded by borrowing under the Customer Order Credit Agreement.
• A purchase order for 100 W56 step vans was announced on April 30, 2026, from Gateway Fleets.

Negatives

• Gross loss widened to $7.5 million in Q1 2026 from $1.1 million in Q1 2025 due to higher cost of sales.
• Net loss increased to $19.9 million in Q1 2026 from $12.7 million in Q1 2025.
• Operating expenses increased by 70% to $13.6 million in Q1 2026, primarily due to merger-related costs.
• Cash and cash equivalents were only $0.6 million as of March 31, 2026, raising substantial doubt about the company's ability to continue as a going concern.
• The company's ability to continue as a going concern is highly dependent on obtaining additional financing, which is currently limited due to SEC regulations.
• The company incurred $1.5 million in higher warranty costs in Q1 2026 related to a retrofit campaign for certain Motiv trucks sold in Canada.
• A material weakness in internal control over financial reporting was identified due to insufficient accounting and finance personnel with appropriate experience.

Risks

• Substantial doubt exists regarding the company's ability to continue as a going concern within one year after the issuance date of the financial statements.
• The company's ability to continue as a going concern is contingent upon successful execution of plans to improve liquidity and working capital, including obtaining proceeds from financing arrangements and consummating a potential equity financing.
• If the company is unable to obtain sufficient proceeds from additional financings, it may need to adjust operations or seek protection under the Bankruptcy Code.
• The company faces risks related to slower-than-anticipated industry-wide electric truck adoption rates, lack of government subsidies, and delays in charging infrastructure rollout.
• Commodity prices remain volatile, with expectations of continued cost increases for key materials like lithium, cobalt, nickel, steel, and aluminum.
• Supply chain disruptions and tariff measures could impact production costs and pricing strategies.
• The company identified a material weakness in its internal controls over financial reporting due to a lack of sufficient experienced accounting and finance personnel.
• The company is subject to ongoing litigation, including the Coulomb Solutions Inc. dispute, although a settlement was reached in April 2026.

Future Outlook

The company's ability to continue as a going concern is contingent upon successful execution of its plan to improve liquidity and working capital over the next twelve months. This includes generating revenue by increasing vehicle sales, reducing expenses, realizing merger synergies, lowering material costs, obtaining proceeds from current financing arrangements, and consummating a potential equity or equity-linked financing. The company anticipates continued electrification of the commercial truck market, particularly in the last-mile delivery sector, and plans to develop new vehicle variants and programs.

Management Comments

• Management determined that substantial doubt exists regarding the Company's ability to continue as a going concern within one year after the issuance date of the accompanying Condensed Consolidated Financial Statements.
• Our ability to continue as a going concern is contingent upon successful execution of managements intended plan over the next twelve months to improve our liquidity and working capital.
• It is essential that we have access to capital as we bring our existing line of vehicles to market, scale up production and sales of such vehicles and continue to develop additional variations of our existing vehicles and our next generation of vehicles.
• Because of the foregoing, our ability to obtain additional proceeds from financing is extremely limited under current conditions, and if we are unable to obtain such proceeds, we may need to further adjust our operations and seek protection by filing a voluntary petition for relief under the Bankruptcy Code.
• Management believes the actions taken to remediate the material weakness in internal controls, when fully implemented and operating effectively, will remediate the material weakness.

Industry Context

StockSavvy.ai notes that Workhorse Group's Q1 2026 results reflect the ongoing challenges and opportunities within the electric commercial vehicle sector. The significant revenue increase post-merger highlights the potential for growth, but the widening losses and going concern issues underscore the capital-intensive nature of scaling EV manufacturing and the competitive pressures, including slower-than-anticipated adoption rates and evolving regulatory landscapes.

Comparison to Industry Standards

• The company's revenue growth of 278% in Q1 2026 is a strong indicator of market penetration, though it is from a low base and follows a significant merger.
• The gross loss of $7.5 million indicates that the cost of goods sold is currently outpacing revenue, a common challenge for early-stage EV manufacturers scaling production.
• The net loss of $19.9 million reflects substantial investment in R&D, SG&A, and integration costs post-merger, which is typical for companies in this growth phase.
• The going concern warning is a critical factor, as it highlights the company's reliance on external financing, a common theme among many EV startups and manufacturers facing high capital demands and market uncertainties.
• Competitors like Rivian and Nikola have also faced significant financial challenges and capital-raising needs despite strong product offerings and market potential.

Legal Proceedings

• Coulomb Solutions Inc. (CSI) filed a complaint for breach of contract and unjust enrichment, seeking over $4.0 million. A settlement agreement was reached in April 2026 for $4.3 million, to be paid by May 28, 2026.
• CMD Global Partners (USA), LLC filed a complaint seeking success fees for investment banking services. A settlement agreement was reached in April 2026 for $0.6 million, payable in two installments.

Related Party Transactions

• The company has a Customer Order Credit Agreement with MGMH, a related party, with $5.0 million outstanding and $35.0 million in availability as of March 31, 2026.
• The company has a Cash Flow Credit Agreement with MGMH, a related party, with $10.0 million outstanding and no remaining availability as of March 31, 2026.
• The company has a Convertible Note with an affiliate of MGMH, with $5.0 million in principal outstanding as of March 31, 2026.
• The company leases its Union City, Indiana manufacturing facility from an affiliate of MGMH, a related party.

Stakeholder Impact

• Shareholders: Potential for significant dilution if equity financing is pursued; continued uncertainty regarding the company's going concern status.
• Creditors: Uncertainty of recovery if the company files for bankruptcy.
• Employees: Potential impact on operations and job security due to the going concern issues and cost-saving measures.
• Suppliers: Potential for extended payment terms or disruptions if liquidity issues persist, though a settlement was reached with CSI.
• Customers: Continued availability of products and services depends on the company's financial stability.

Next Steps

• Continue efforts to lower the total bill of material cost of vehicles.
• Realize synergies from the Merger, including savings from reducing contract manufacturers.
• Continue to evaluate financing alternatives, including potential equity or equity-linked financings.
• Implement measures to remediate the material weakness in internal controls over financial reporting.
• Continue to develop new truck programs and variants, including a proprietary Class 5/6 cab chassis.
• Electrify the fleet of trucks used in the Stables by Workhorse initiative.

Key Dates

Recommendation

The company shows strong revenue growth post-merger and has secured credit lines, indicating operational progress. However, the significant increase in net loss, the ongoing going concern warning, and the reliance on future financing introduce substantial risk. A 'hold' recommendation reflects a balance between the potential for recovery and the significant financial headwinds.

Keywords

Workhorse Group, electric vehicles, medium-duty trucks, Form 10-Q, Q1 2026, Merger, Motiv Power Systems, financial statements, going concern, liquidity, financing, revenue, net loss, W56, commercial vehicles