8-K: Workhorse Group Reports Full Year 2024 Results: Focuses on Cost Reduction and Strategic Expansion

Workhorse Group reports a net loss for 2024 but highlights strategic advancements including Canadian market entry and new customer orders, alongside cost-saving measures.

Summary

• Workhorse Group reported its full year 2024 financial results on March 31, 2025.
• The company is focused on transitioning to zero-emission commercial vehicles.
• A key achievement was the approval to sell W4 CC and W56 models in Canada, with demo trucks expected to be deployed in April 2025.
• Workhorse launched the W56 extended 208-inch wheelbase model, boasting a 20% increase in cargo capacity.
• The company secured an order for 13 of these extended wheelbase trucks from a national uniform provider in partnership with Revolv, with deliveries expected in Q2 2025.
• Workhorse was awarded a General Services Administration (GSA) contract, facilitating sales to federal government agencies.
• The company continues to expand its dealer and service provider networks.
• Workhorse is focused on preserving cash and extending its financial runway through disciplined decisions.
• Sales for 2024 were $6.6 million, down from $13.1 million in 2023, primarily due to lower W4 CC truck sales.
• Cost of sales decreased to $28.2 million from $38.4 million in 2023 due to lower W4 CC sales and cost-saving initiatives.
• SG&A expenses decreased to $42.5 million from $55.6 million in 2023 due to lower employee compensation and consulting expenses.
• R&D expenses decreased to $9.1 million from $24.5 million in 2023 due to lower headcount and prototype expenses.
• Net loss for 2024 was $101.8 million, compared to a net loss of $123.9 million in 2023.
• As of December 31, 2024, the company had total working capital of $8.2 million, including $4.6 million in cash and cash equivalents.
• In February 2025, Workhorse issued a convertible note for $35.0 million, with net proceeds of $30.6 million held in a lockbox.
• On March 17, 2025, Workhorse undertook a 1-for-12.5 reverse stock split to regain compliance with Nasdaq listing requirements.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the company highlights strategic progress and cost-saving measures, the financial results show a decrease in sales and a significant net loss. The need for a reverse stock split and reliance on financing indicate ongoing challenges.

Positives

• Approval to sell vehicles in Canada expands the company's market reach.
• The launch of the W56 extended wheelbase model addresses customer needs for increased cargo capacity.
• Securing a GSA contract provides access to federal government procurement opportunities.
• Cost reduction initiatives led to lower cost of sales, SG&A, and R&D expenses.
• The net loss decreased compared to the previous year, indicating improved financial performance.
• The company secured a $35 million convertible note offering to improve liquidity.

Negatives

• Sales decreased significantly compared to the previous year.
• The company continues to experience a substantial net loss.
• The company's cash position remains low.
• The company had to undertake a reverse stock split to maintain Nasdaq compliance.

Risks

• The company's ability to regain and maintain compliance with Nasdaq listing requirements is uncertain.
• The company's ability to generate sufficient revenue and control expenses is critical for its long-term viability.
• The company's reliance on securing additional financing to fund operations poses a risk.
• Supply chain disruptions and material cost increases could impact the company's profitability.
• Competition in the electric vehicle market could impact the company's market share.

Future Outlook

Workhorse is focused on securing purchase orders, driving revenue, preserving cash, and executing its product roadmap to create long-term value for shareholders. The company is optimistic about the long-term market opportunity for EV technologies in the Class 4-6 work truck segment.

Management Comments

• Workhorse CEO Rick Dauch stated that the company continued to strengthen and expand its EV portfolio to meet evolving customer needs.
• Mr. Dauch highlighted the Transport Canada approval for W4 CC and W56 models as a significant step forward.
• Mr. Dauch noted positive customer responses to the new W56 extended wheelbase truck and a purchase order from a national provider of uniforms.
• Workhorse CFO Bob Ginnan stated that the company took significant cost reduction actions and executed a financing arrangement to provide near-term liquidity.
• Mr. Ginnan added that the company continues to focus on reducing costs and cash use to achieve its strategic goals.

Industry Context

Workhorse is operating in the competitive electric commercial vehicle market, facing challenges and opportunities related to the transition to zero-emission transportation. The company's focus on the Class 4-6 work truck segment positions it to capitalize on the growing demand for electric delivery vehicles. Government incentives and regulations, such as the California Air Resource Board's Advanced Clean Fleet regulation, are driving the adoption of electric vehicles in the commercial sector.

Comparison to Industry Standards

• Comparing Workhorse to industry peers like Rivian (RVIN) and Canoo (GOEV) reveals similar challenges in scaling production and achieving profitability.
• While companies like Ford (F) and General Motors (GM) are also investing heavily in electric commercial vehicles, Workhorse focuses on a niche market.
• Tesla (TSLA) has entered the electric semi-truck market, but Workhorse's focus remains on last-mile delivery and medium-duty operations.
• The GSA contract secured by Workhorse is similar to contracts pursued by other EV manufacturers to supply government fleets.
• Workhorse's cost reduction efforts align with industry trends as companies seek to improve efficiency and profitability in the EV sector.

Stakeholder Impact

• Shareholders face potential dilution from convertible notes and reverse stock splits.
• Employees may be affected by cost reduction measures, including potential headcount reductions.
• Customers benefit from expanded product offerings and improved service networks.
• Suppliers may be impacted by the company's cost control efforts.
• Creditors face risks associated with the company's financial performance and ability to repay debt.

Next Steps

• Workhorse expects to begin deploying demo trucks to Canada in April 2025.
• Deliveries of the 13 W56 208-inch wheelbase trucks to the national uniform provider are expected to begin in Q2 2025.
• The company will continue to showcase its EV trucks at work truck events and summits.
• Workhorse will continue to build out its dealer partner and service provider networks.
• The company will continue to focus on executing its product roadmap.

Key Dates

Keywords

Workhorse, Electric Vehicles, Financial Results, WKHS, Commercial Vehicles, Zero-Emission, Reverse Stock Split, Convertible Note, GSA Contract, W56, W4 CC