Workhorse Group Inc. Q3 FY2024 earnings call

• Secured a three-year master framework agreement with FedEx in July, with an initial purchase order for 15 W56 step vans delivered in Q3.
• Selected as a presidential-level exhibitor at the 2024 FedEx Forward Service Provider Summit, leading to 75 new quote inquirers from FedEx ground contracts.
• Awarded a GSA contract after a successful site visit, streamlining federal government procurement for W56.
• Increased quoting activity in government-funded fleet opportunities, with five pending bids for over 300 Class 4 units and 21 city/county quotes for 44 truck orders.
• Successful vehicle demonstrations for two major last-mile fleets, one in industrial linen and one for package delivery outside the US.
• Continued expansion of product line driven by direct customer feedback from field demos, with responsive support to customers.
• On-time and on-budget product launches due to experienced team, great process discipline, and disciplined execution.

For the three months ended September 30, 2024, sales net of returns and allowances were $2.5 million, down from $3 million in the same period of 2023. The decrease was primarily due to the nonrecurrence of a $2.3 million sales allowance reversal and an increase in W4 CC and W56 truck sales by $1.8 million. Cost of sales were $6.6 million in Q3 2024 compared to the same period last year, with costs primarily flat as increased direct materials costs from higher truck sales were offset by lower inventory reserves and labor costs. Research and development expenses decreased to $2.3 million in Q3 2024 from $5.8 million in the same period last year, driven by lower headcount-related compensation and consulting expenses. Net loss was $25.1 million in Q3 2024, improved from $30.6 million in the same period of 2023.

• Confident in generating additional purchase orders and revenue from customers while strengthening financial position.
• Key near-term priorities include securing new orders, delivering world-class products/services, and advancing product roadmap.
• Expecting interest from larger national last-mile fleets, government-funded fleets in California, Pacific Northwest, and Northeast, and federal government agencies, with GSA registration aiding progress towards purchase orders.

• Political and economic landscape could impact EV adoption for commercial fleets.
• Changes in incentives could affect payback periods for EV adoption.
• Need to convert quote inquirers into firm purchase orders remains a challenge.