Workhorse Group Inc. (NASDAQ:WKHS) Q3 2025 Earnings Call Transcript

Workhorse Group Inc. (NASDAQ:WKHS) Q3 2025 Earnings Call Transcript November 11, 2025

Operator: Greetings, and welcome to the Workhorse Group Q3 2025 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to turn the call over to Stan March. Please go ahead, Stan.

Stan March: Kevin, thank you. Good morning to all of you, and I’d like to welcome you to Workhorse’s 2025 Third Quarter Results Call. Before we begin, I’d like to note that we posted our results for the third quarter, which ended on September 30, 2025, via press release and filed the associated 10-Q with the SEC last evening after the market closed. This morning, we posted the accompanying presentation so you can find the release and the accompanying presentation in the Investor Relations section of our website. We’ll be tracking along with the presentation during this call. Joining me on today’s call are Rick Dauch, our CEO; and Bob Ginnan, our CFO. And for today’s agenda, you can find that on Slide 3 in the presentation. Following my brief opening remarks, I’ll hand it over to Rick, who’ll give you an update on our Q3 performance and business operations as well as our proposed transaction with Motiv.

Bob will then walk us through the financial results for the quarter, and Rick will then follow wrapping it up and then go to questions. On today’s call, you can find in our presentation, our disclaimers found on Page 4 and 5. Some of the comments that are going to be made today are forward-looking and are subject to various provisions, risks and uncertainties. And you can find that full disclaimer in our 10-Q and in today’s press release. You can — on Slide 5, you can also find references about the proposed transaction with Motiv where you can find additional information related to that proposed transaction. And with that brief introduction, I’ll now turn the call over to Rick. Rick?

Richard Dauch: Thanks, Stan. Hello, and thank you for joining us on the call this morning, everyone. We’re excited to be here with you today to discuss our third quarter results and provide an update on our proposed strategic transaction with Motiv. Let’s start with our Q3 results on Slide 6. During the quarter, we made good progress executing on our product road map, scaling sales to targeted fleets with new orders and deployments and expanding our product portfolio. We completed the sale of 15 trucks in a combination of Class 4 and 5/6 versions. These results reflect the hard work and resilience of the Workhorse team in a challenging commercial electric vehicle environment and reinforces a strong operating performance and positive customer feedback of our W56 platform in the field.

Growing customer demand for our W56 step van continues to advance our position as a segment leader in the EV Class 5/6 transition. We’re building reliable, safe and capable trucks, proving the performance of winning business and earning customers’ trust every day. During the quarter, we also maintained our financial discipline, taking continued decisive actions to reduce both operating and overhead costs and strengthening our near-term financial position. Despite continued challenging market conditions, we continue to make meaningful progress here at Workhorse and are focused on finishing 2025 on strong footing. We are actively engaging with logistics providers and service fleets to build additional order interest through our national dealer network.

We announced the availability of the Utilimaster Aeromaster body on our all-electric W56 strip chassis. This new offering expands and brings new flexibility to the W56 platform, combining the trusted durability of the industry-standard Utilimaster step van body with the benefits of Workhorse’s proven electric chassis. The W56 also remains fully eligible for the California hybrid and zero-emission truck and bus voucher incentive program, or HVIP vouchers, of $85,000 per truck and higher for medium-duty Class 6 vehicles. At the same time, we maintained our ongoing financial discipline, prioritizing cash conservation and expense reduction. In the third quarter, our operating expenses decreased $1.2 million on a year-over-year basis through disciplined cost management with even more impressive results year-to-date.

I’m also excited to share that we showcased our W56 step van at the FedEx Forward Service Provider Summit in Orlando, Florida in September, marking Workhorse’s third year participating in the event. Our W56 step vans and service with FedEx Express and FedEx Express independent service providers have collectively logged tens of thousands of miles on daily deliveries routes nationwide and are operating at a 97% or greater uptime availability. Lastly, we, of course, announced our proposed transaction with Motiv during the third quarter. Now let’s turn to Slide 7 to touch on the proposed transaction. In August, we announced a definitive agreement to combine Workhorse with Motiv Electric Trucks, bringing together 2 veteran EV innovators to create a stronger force in North America’s medium-duty electric truck market.

This combination positions us to accelerate growth, expand our product lineup and capture greater share in the commercial EV space. For our shareholders, it represents a chance to participate in the upside of a unified, well-capitalized company built for long-term success. In addition, we also completed 2 transactions with entities affiliated with Motiv’s controlling investor, including the sale-leaseback transaction of our Union City facility for $20 million and a secured convertible note financing for $5 million. These transactions have strengthened our near-term financial position and continue to support Workhorse’s operations. Looking ahead, and as part of this transaction, the combined company is expected to be able to access up to $20 million in additional debt financing post close to fund our go-forward strategic execution.

The transaction is expected to close in the fourth quarter of 2025, subject to Workhorse shareholder approval and other customary closing conditions, including the debt financing commitment. With our shareholders’ approval at our annual meeting tomorrow on November 12, we will be positioned to drive sustainable growth and create long-term shareholder value. And now I’ll turn it over to Bob to discuss our financial results and recent steps we have taken to strengthen our near- and long-term financial position. Bob?

Robert Ginnan: Thanks, Rick. Turning now to Slide 8 for the highlights from the quarter. As a reminder, our financial statements have been adjusted to reflect the March 2025, 1 to 12.5 reverse stock split. Sales, net of returns and allowances, for the 3 months ended September 30, 2025 and 2024, were $2.4 million and $2.5 million, respectively. The decrease in sales of $100,000 was primarily due to lower sales of approximately $2.3 million related to delivery of fewer trucks in 2025 compared to the same period in 2024, offset by an increase of $2.2 million related to the recognition of 7 vehicles from deferred revenue. Cost of sales for the 3 months ended September 30, 2025 and 2024, were $10.1 million and $6.6 million, respectively.

The increase in cost of sales of $3.5 million was primarily a result of an increase in inventory excess and obsolescence reserve of $3.3 million. Selling, general and administrative expenses for the 3 months ended September 30, 2025 and 2024, were $7.8 million and $7.7 million, respectively. The increase in SG&A of $100,000 was primarily driven by a $3.6 million increase in consulting and legal expenses due to the proposed Motiv merger, offset by a $2.9 million decrease in employee compensation and related expenses, a decrease of $200,000 in marketing and trade show related expenses and a decrease of $300,000 in IT-related expenses. Research and development expenses for 3 months ended September 30, 2025 and 2024, were $1.1 million and $2.3 million, respectively.

Decrease in R&D expense of $1.2 million was primarily driven by $300,000 decrease in employee compensation and related expenses due to a lower headcount, a $500,000 decrease in prototype part expense and a $300,000 decrease in consulting and professional services expense. During the third quarter, we took additional steps to reduce costs and conserve cash, which resulted in operating expenses that decreased by $1.2 million year-over-year compared to the same time last year. We reduced operating expenses by $17.5 million. Net interest expense for the third quarter of 2025 was $200,000 compared to $3 million for the 3 months ended September 30, 2024. Difference was primarily driven by higher financing fees related to the 2024 notes recognized in the prior year period compared to the current period.

Net loss was $7.8 million compared to $25.1 million in the same period last year. I also want to point out during the third quarter, the company recognized a gain on the sale of assets of $13.8 million, primarily related to the sale leaseback of our Union City, Indiana facility. Additionally, we recognized a gain of $4.8 million related to deferred revenue upon termination of the Tropos Assembly Services Agreement. Slide 9, balance sheet highlights. Now turning to Slide 9 to discuss our balance sheet. As of September 30, 2025, the company had $38.2 million in cash and cash equivalents as well as restricted cash compared to $4.6 million in the same period last year, primarily increased due to the benefits from funding totaling approximately $25 million for Motiv’s controlling investor, including a $20 million sale leaseback transaction and a $5 million secured convertible note financing, both of which were completed at the execution of the merger agreement.

As a reminder, at the closing of the merger, all remaining indebtedness and other obligations to Workhorse existing senior secured lender, including all warrants currently held by that lender, will be repaid and/or canceled with the only remaining secured indebtedness of the combined companies being the $5 million secured convertible note held by Motiv’s controlling investor, which may convert to equity in connection with the post-closing financing. We will continue to strengthen our financial position by generating additional purchase orders and revenue from customers as well as maintaining our financial discipline. Looking ahead, we are focused on executing on our product road map and completing our transaction with Motiv and we are confident in our ability to continue to deliver value to our shareholders.

With that, let me turn it back over to Rick.

Richard Dauch: Thanks, Bob. Let me take a moment to outline our near-term priorities shown on Slide 10. A top priority for Workhorse, as we’ve emphasized on this call, is completing the proposed transaction with Motiv. Over the past few months, both teams have been working diligently to plan for and ensure the combined company is positioned to grow and succeed. The proposed transaction remains subject to shareholder approval. In parallel, we continue to focus on strengthening our financial position and driving greater operational efficiencies, including growing purchase orders and customer demand, prioritizing cash conversion and reducing our operating costs. We are also continuing to expand and enhance our product portfolio, including finalizing our plans for the W56 140-kilowatt production launch in 2026.

This new vehicle has a range of around 120 miles and has about a 10% lower acquisition price. Looking ahead, the combination with Motiv will further broaden our product lineup and accelerate our shared product road map. And we’re currently developing the plans to integrate our portfolios and R&D technology to deliver even greater value and a broader portfolio of vehicles to our customers over the next 2 to 3 years. Before we wrap up, we’d like to remind you that our 2025 Annual General Meeting — Shareholder Meeting is tomorrow on November 12. In order for Workhorse to complete the proposed transaction with Motiv and for our shareholders to participate in the potential upside of the combined companies, we need Workhorse shareholders to vote for the transaction in addition to the other 8 proposals up to vote in connection with the meeting.

We look forward to our future with Motiv and remain confident in our ability to deliver meaningful value to our shareholders. We hope you share our excitement for what lies ahead as we combine our strengths to capture new opportunities and lead in the commercial EV transition. That said, this call is to discuss our earnings results for the third quarter, so we won’t be taking questions on the Motiv transaction at this time. Thank you all for joining today’s call. Now I’ll open it up for questions. And Kevin, I’ll turn it back over to you.

Q&A Session

Operator: [Operator Instructions] Our first question is coming from Ben Sommers from BTIG.

Benjamin Sommers: So kind of on the W56 step van and kind of being eligible for those state-level incentives in California, kind of curious just more broader market outlook. How you’re seeing state-level incentives across the U.S. kind of panning out in different states and what you think the opportunities are beyond California for the step van?

Richard Dauch: Great question. So we are — we worked with the CAR group and a couple of other people in the EV space to make sure the HVIP vouchers are competitive. Out in California, that was successful, and we saw immediate pickup in orders from the FedEx ground guys out there. And right now, we’re — but every truck we’re building between now and the year has already got a purchase order and HVIP voucher tied to it. We are seeing some good movement in the state of Washington and the State of New York in terms of vouchers, and we have turned our efforts to those 2 areas, those 2 states for sure. So — and then I’d like to say, too, is that we talked about having our truck down the last 3 years at the FedEx conference for the ground operators.

We have one site in California now that’s operating more than 20 W56 step vans. Once we get a truck in the hands of a ground operator and they see the reliability of our truck averaging 97%, 98% uptime, we’re seeing repeat orders from multiple FedEx ground operators.

Benjamin Sommers: Awesome. And then just kind of curious on costs as we ramp closer towards production of this vehicle, how should we be thinking about that trending in ’26 as we get prepared for the production launch there?

Richard Dauch: I’m going to ask Bob to answer that question.

Robert Ginnan: Okay. So I think if you look at the costs from 2 elements, there’s obviously the bill of material cost, which we continue to focus on bringing that down through engineering and supply chain. But also as we — as the production increases, you’ll see an improvement in the labor cost as we get into a regular cadence on the lines there. So we look to see improvements in both areas as we go forward.

Richard Dauch: Yes, and we’re starting to see — obviously, we haven’t had a lot of volume so far. And so to get the manufacturing right, we built 3 or 4 trucks now perfectly. We had no post-production touch-ups and some of that. So our guys are starting to get a handle on how to build the chassis and more importantly, the cabin body. That’s a pretty complex assembly operation there. We also have de-escalators in our purchase contracts when we hit certain volumes down the road. We’re far from those volumes now, but they’re built into the contracts, and that will lower the bill of material costs. We know we have to move closer and closer to be almost on parity with ICE. That’s going to take a couple of years, and it’s going to require us to get to certain levels of volume, especially on batteries to lower the cost.

Yes, one thing I’d say, too, is that once we do get trucks in the field, based on the data we’re having right now, both at FedEx and Ground, we’re seeing somewhere between a 55% to 65% total cost of operation reduction. No fuel costs, obviously, new trucks, very — no spare parts and uptime, again, 98%. So we think that’s a good selling point when we’re out there talking to fleets.

Operator: We reached the end of our question-and-answer session. I’d like to turn the floor back over to Rick for any further closing comments.

Richard Dauch: Appreciate your patience with us. It’s been a tough 4 years in the electric vehicle transition market. Those things we can control, we’re doing our best to do that. And we think the merger with Motiv gives us even a bigger opportunity to lower the operating cost of the company, expand the product portfolio, give us a better opportunity to be successful long term, and we think it’s the right thing for shareholders. We appreciate your support, and have a great day. Thank you.

Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.

Richard Dauch: Thanks, Kevin.

Operator: Take care, everyone.