8-K: Workhorse Secures Major Truck Order and Divests Aero Business to Sharpen EV Focus

Workhorse Group has announced a strategic partnership with Kingsburg Truck Sales, including a significant order for 141 electric trucks, and the completion of the divestiture of its Aero business.

Summary

• Workhorse has partnered with Kingsburg Truck Sales, a certified dealer in California, to drive adoption of zero-emission trucks.
• Kingsburg has committed to purchase 141 Workhorse W4 CC Class 4 battery-electric cab chassis trucks, with deliveries expected in 2024.
• This order is contingent on receiving California's Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project (HVIP) vouchers.
• The Workhorse W4 CC has a range of up to 150 miles and is compatible with Level 2 and Level 3 charging.
• Workhorse has completed the divestiture of its Aero business to an affiliate of ATW Partners LLC.
• The Aero divestiture is expected to provide monthly cost savings of approximately $375,000.
• Workhorse will receive a portion of the proceeds from the Aero business if it achieves certain revenue targets.
• The company is focusing on its core commercial EV truck business and expanding its dealer network.

Sentiment

Score: 7

Explanation: The news is positive with a large order and cost-saving divestiture, but risks remain regarding execution and funding.

Positives

• The large order from Kingsburg Truck Sales demonstrates confidence in Workhorse's electric truck technology.
• The divestiture of the Aero business will result in significant monthly cost savings.
• The focus on the core commercial EV business should allow for better resource allocation.
• The W4 CC truck is designed to meet California's Advanced Clean Fleet regulations.
• The availability of HVIP vouchers and other incentives will make the W4 CC more affordable for customers.

Negatives

• The order from Kingsburg is subject to significant terms and conditions, including the receipt of HVIP vouchers.
• The company is reliant on government incentives to drive sales.
• The company has a history of not being able to raise capital to fund operations.

Risks

• The company's ability to develop and manufacture its new product portfolio is a risk.
• Attracting and retaining customers for existing and new products is a risk.
• Obtaining orders and executing upon such orders is a risk.
• The unavailability or reduction of government subsidies and incentives is a risk.
• Supply chain disruptions and cost increases are a risk.
• The company's ability to raise additional capital to fund operations is a risk.
• The company's ability to regain compliance with Nasdaq listing requirements is a risk.
• Market acceptance for the company's products is a risk.
• The company's ability to obtain sufficient liquidity to continue as a going concern is a risk.
• Potential competition and shifts in technology are risks.
• The outcome of regulatory or legal proceedings is a risk.

Future Outlook

Workhorse aims to capture opportunities by delivering EV trucks to new customers, expanding its commercial dealer network, and driving value for stockholders. The company is focused on advancing its commercial EV product roadmap and executing its strategic plans.

Management Comments

• Jerry Smith, President of Kingsburg Truck Sales, stated, 'We believe in Workhorse and are impressed with their products and support.'
• Rick Dauch, Workhorse CEO, stated, 'Kingsburg Truck Sales has been an excellent partner and their commitment to purchase a large quantity of our W4 CC trucks underscores the quality and versatility of our electric work trucks.'
• Rick Dauch, Workhorse CEO, also stated, 'This divestiture narrows our focus and provides Workhorse with additional financial flexibility to advance our commercial EV product roadmap and execute our strategic plans.'

Industry Context

This announcement aligns with the growing trend of transitioning to zero-emission commercial vehicles, particularly in California due to stricter environmental regulations. The partnership with Kingsburg and the focus on the W4 CC truck position Workhorse to capitalize on the increasing demand for electric work trucks.

Comparison to Industry Standards

• The W4 CC truck competes with other Class 4 electric trucks from companies like Ford (E-Transit) and Rivian (EDV), though these are not cab chassis models.
• The 150-mile range of the W4 CC is comparable to other electric delivery vehicles in the market.
• The $60,000 HVIP incentive is a significant factor in making the W4 CC competitive in California.
• The divestiture of the Aero business is a strategic move similar to other companies streamlining operations to focus on core competencies.

Stakeholder Impact

• Shareholders should see this as a positive step towards focusing on the core business and improving financial stability.
• Employees in the commercial EV division should benefit from the increased focus and resources.
• Customers in California will have access to more zero-emission truck options.
• Suppliers of the W4 CC truck components should see increased demand.

Next Steps

• Workhorse will focus on delivering the 141 W4 CC trucks to Kingsburg in 2024.
• Workhorse will continue to expand its commercial dealer network.
• Workhorse will advance its commercial EV product roadmap.

Key Dates

Keywords

electric vehicles, commercial trucks, zero-emission, Workhorse, Kingsburg Truck Sales, W4 CC, Aero divestiture, HVIP, fleet, California