Workhorse (WKHS) 15 May 232023 Q1 Earnings call transcript

Ladies and gentlemen, greetings, and welcome to the Workhorse Group's First Quarter 2023 Investor Call.

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Workhorse Group's Vice President of Corporate Development and Communications, Stan March. Sir, you may begin.

Thank you, Darryl. to XXXX you results welcome today's us and quarter first call. morning, all joining of on Good

Before we March begin, posted press the I'd like to for release. first note the quarter ending XX, via results XXXX that we've

follow the can call, XX-Q an presentation either as press be this along of website. morning. in as our so filed to Section accompanying We’ve Relations We'll with also also the link find posted Investor that, first the You today’s in release, started. or our get release well please website presentation this during the And quarter directly. from tracking let's Form the through

found today's on Bob CFO. today’s me on Ginnan, Joining our be agenda Slide are CEO; X. Rick Dauch, our The and can call call

over during opening on questions. I'll will quarter. we'll XXXX your the my Rick, the update and cover take priorities call made then guidance. progress us for you our we've our We’ll Following operational the hand give then and to financial an results on through the Bob quarter walk strategic remarks, our brief

can disclaimer found Our X. on be Slide

as Some results will comments made provisions, today of and forward-looking therefore are to certain the uncertainties. and be subject are that a

full the You can in as other the XX-Q our SEC, well filings and statement find disclaimer on in periodic as with release. file today's press

Rick Rick. Dauch. now to I'll over that, call With the turn

join us morning, Thank taking everyone. time you today. Good Dan. to for Thanks all the

X into X moment services, markets Electric jump Workhorse to the our segment performance, a primary Class work Business, or North true Commercial, I Before the spend of Class American, trucks. Vehicle the want discussing QX I details two to that

paradigm The this and R&D, will to and competing it's true an every vehicle nearly is one. well-established start-ups charging for supplier construction. electric factory will engineering decades Commercial not or conversion from ICE power and infrastructure significant EV times generation, challenging transition and EV technology and factory company ICE a to segment, and over new Vehicles in shift generational both Powered easy investment component are The occur These transition require in tooling, OEMs.

those a of will EV segment, both all commercial competitors specifically levels. likely will make the and consolidation themselves pioneers supplier the the commercial Not OEM the in the one be the of is no to industry, in casualties it. way at Make in the mistake; in and space trying along segment. EV step There of establish van Workhorse

fund and We start-up are SPAC not a company.

are of engine EV not retrofits combustion internal vehicles. doing We

of EV a are heritage We company step the the and rich van space. in long

transition executable Workhorse ominous, industry sound as have at challenges here we emerge an winners. the While plan to

manufacturing leaders City assembled The automotive, production. ready First to service, roll who at in and mentality. experienced, operators can-do, We commercial brought get-it-done are capable and a it’s It has the spirit in and foremost, we and truck have upgraded been and and team. with right military now the armed Union expanded. from complex is

capable year We the to foundational storage battery a up and XXXX. XX,XXX vehicles plants, of facilities by have producing XXXX, warehouse

production operating that our can show an or startup Very few make facility. actually of you competitors claim

Ask visit if go them plant. can you their

Our defined. new roadmap fully is product

of We products industry Commercial leading the years, with three over have powered, Class family in being three Vehicles a X launched to alone X next XXXX. EV new

critical financially count proven, our selected strategically supply have needs. to chain component We stable can we supply on partners

in to have X EV the family have the to Class Class products we So or soon compete X market. emerging of necessary we will

I'm engineers the completely tested, them. and of proud The QX Internally than vehicles and really launched ground less vehicles years, with of less year tooled designed, WXX up. this from in in new launching family than are XX we technicians. are two

to coast-to-coast, as EV to the powered manufacturing commercial own transition necessary secure commercial licenses deals of family by fleets and make establish products. to We serve These a the are trucks. network are from excited moving their quickly WXX dealer they

wave well are EV for emerging momentum vehicles. positioned commercial the of market to capture We

OEM. we team a and at are fronts to are EV create all tell success. we like challenges that precipice boundaries pushing On they I’d here on the as Workhorse and that overcoming our the of true commercial successful real pioneers are we

Moving in in is rule shift the sell state's to illustrate pick Slide generational The a review must now focuses the companies The underway and mandates commercial is XXXX. California. EV on to state quick build X, in up OEMs ramping of that continues the underway powered efforts this the it way up to advanced percentage to zero by of truck OEMs. vehicles and and those speed, easiest vehicle two forecast regulatory the vehicles pronged clean emission specifically

truck guests the This Clean layer by clean fully at core won't clear XXXX. vehicle to ACT commercial our week at funding in Fleet last small the is the move aiming mandate They Advanced powered for fleet to the and owners targets with new have that California's EV a emission fleet large California regulatory common were in municipal you to The XXXX. It have mandate throughout state zero Anaheim. governments booth Show they and available both starting the surprise a mandate Rule. fleets

essentially to decades rules CARB the commercial next requirements demand and And we will need the X they the of generated EV follow. supply Segment. other states and two across have new the vehicles CARB These reset X over for state's types minimums where Class two leads,

version on in Slide X% which this January the graphical X XXXX X, On you kicks can vehicles. at regulation X X to in Class of see

our of OEM XX% As exactly see, targeted. you with XX% and the sales segment requirement the can products This to for by ramps where are requirement is a XXXX. percentage zero emission XXXX by

It with the States adopting California XX the following District definition This the other an that are of three the years. for regulations of EV industry pioneer. Slide On includes can is States the target-rich you the mandates. five more states and those X see a of ensuing in Columbia environment

on from quarter highlights the to Slide Turning X. now

manufacturing and We completed rebuilt a past following product progress stabilized, we complex, the building-out City XX roadmaps. made tangible fixed world-class our turnaround engineering, Union framework. experienced our and Transformed teams. leadership have administrative Over portfolio and months new facility or operations, growth Workhorse’s foundation, in into our

remained specifically the world-class In quarter. on laser-focused and We XXXX in trucks important on delivery all drones. fronts execution, and progress of the made first we production

First, at W customers. we the which successfully programs. WXX our We commercial build advanced vehicle the was We of CC production the up WX well-received industry build completed ramped the by We pilot the events, WXXX-step-van. vehicles. unveiled vehicle multiple the of prospective of initial -

While our to targets, the WX WXXX delivery production CC, the behind feel year and for WXX getting in quarter. are track on of after look full forward third QX, we be we and

these vehicles a contract vehicles assembled in with also XX coming months. company, continuing wrap-up of the unique We and part ship as Tropos our to our shipments of three-year are

of make performed in Falcon strides number a and also quarter. large prospective HorseFly commercial drones. business, demonstrations We first government aerospace and our saw significant our the and customers We both with strong continued in flight interests during

production We factory, ready parts the initial to are have build orders. on-hand the and ramp to in

is sell Falcon in Force's thing. Air to Forks to small purchase Defense its Grand of Force supporting Qualifying States The to Dakota, of Base Spark systems. one suite North of finalize Laboratory, and no the United North our Air drones our at Air working is based Force

expect to the the our second end and & routes to execute fleet electrify our of Stables continue Stalls delivery quarter. package, for We by we FedEx's Ground

at possibly expansions options the a We Stalls incentive to and/or location. base are best continuing also in for site, second federal a & either look government-owned into an Stables state, at

line and design Ohio, production are we launch QX. Additionally engineering, to drone facility Union to track of in we in Mason, end-of-line and technical ahead complete paint facility the and improvements install City the at assembly are on WXX dynamometer,

want progress product Type are QX. chassis end upgrade fully to our heaters, on primarily quality as light road these components. provide in receiving covers longer additional expected production Green modify Workhorse Class maps, starting experienced few commercial offerings, upgrades and key WX handful up and tooling than After the of vehicle liners. back XXXX, and on some to worked delivery our Turning panel on took the of to through related to Slide issues specifically the work of units XX, bezels, we December ramp units the hard the a at I important Power Workhorse X the making to to These WXXX. parts, CC we details a and base centers meet with cab

parts were able we of XX issues, the to first only a As during these specific trucks deliver result quarter.

the trucks executed However, WX is we issues, currently purchase a these fully company shipping expeditiously resolved XX and order. to additional an fulfill CC

us, CC CC WX XXXX the WX meet and now track delivery targets full our chassis supply issues we remain year. to for behind the on delivery year With

bills initial complete. are As the mentioned earlier, pilot WXXX

second the vehicle, this and remains are start tooling production working in a to of on We design on supplier through but initial track handful changes quarter.

Slide chassis is new ‘XX. on design full purpose-built it platform, Turning QX Workhorse first of in to the WXX, to which track XX, remains and start production the

this quarter garnered from a van Importantly, Expo positive and session in Anaheim, in California the Truck fully Indianapolis, and unveiled had subscribed the week, significant new Show last vehicle of of ride at an prospective successfully ACT NTEA we step drive-chat both which Work customers. feedback

As Workhorse. blood I product have life mentioned in for is WXX the past, a the foundational

technology. longer generation the lightweight is improved accessible vehicle floor X Class and efficient experience frame, this vehicle on previous plan develop an handling, the project. Class vehicle, with and our combine Moving and safety advanced next term our WNext to We X systems, to low to ride

on XXXX. the will and in focus XXXX begin design, we WNext and of prototype test and We to XXXX in build production expect

Moving XX. to Slide

needs announced the dealer network customer end is during across As to certified a meet the US. Workhorse we developing first quarter,

identified shared completed positive. City with been prospective from onboarding the our slide, Service visiting we Field and you This in the being Warranty dealers process Feedback includes have teams. of dealers and can has these day already universally events blue have light the on meeting dealer As plant, begun and see Union or by states. trained the

to stocking As XX locations the and dealer dealers sign with up CC onboard orders multiple XXXX, for on initial WXXX. dealers part plan WX to of in many agreement new We across XX states. the eight process,

application us require states and few order multiple quite go had completed secure each cumbersome. some to in to A get licenses states fingerprinted in have are to these in is me, Several background different our to checks vehicles have order of officers, and manufacturing sell licenses. state's, have and including process and

vehicles of in As targeted of required sell our states. to licenses XX have now XX today, we manufacturing the

about infrastructure operators XX, routes fleets. powered package a Ground quarter. This fleet fleet our have our execute to last provides renewed with in throughout FedEx electrification recently first delivery last & services and our year. to to packages support initiative Stalls deliver continued initiative Stables We for words and Slide mile few Ohio launched On small EV charging contract the

two to the the the one of a incentive to are and exploring owned and/or additional We ‘XX in XX fleet an electrify sites to state QX Ohio opportunities federally by expect based of end location. currently establish

The is how & Stables smaller the model boost valuable initiative insights we owner-operator fleets. to especially advantage provide Stalls provide meaningful us can and into further expected for to a platforms, EV transition business the to

Slide agricultural acquisition the package delivery year. to Moving drones package multiple simultaneous on two off to potential a industry data clients and to very infrastructure aircraft We and advanced of target and demonstrations deliveries aerospace data our and had prospective HorseFly markets, conducted partner. and testing last-mile to by delivery two use. a start on our XX, business compelling development busy growing which the We

In both multiple HorseFly and for addition, of military we the the branches. U.S. successfully FALCON the drones completed demonstrations

a tackle uncrewed multipurpose, flight XX As a delivery all-electric, pounds time. and carry winch up It to a platform delivery safe, and reminder, conditions HorseFly aerial to for to reliable variety provide system, XX of an XX system in commercial our with last-mile precise a various applications. minutes designed miles uses is

designed conditions. has but payload it austere, a navigational gross Our so the propulsion can the carry be other and aircraft, difficult set a distance. Operations longer, internally across Humanitarian drone This and Falcon. weight, lower drone is capabilities training It the our we've system same a of or longer as to more called HALO HorseFly, is has in Logistics Aid which airframe, used

the government for orders for about this and We additional our new the are first secure order duty close landing are drone. from FALCON to U.S. tough purchase to

team our Our government the another next the U.S. Air has with Force. week with on and agencies U.S. large to build we success demo hope

grant land Government ranchers. Mississippi scanning of Department second underserved completed and of U.S. Arkansas support We Agricultural's in for the farmers in and

we exploring are actively both areas the owned agencies. the only data with additional changing larger across USDA we not detail In for their feedback The providing government are terms and farmland, collaboration words, state and are from the data the federally methods employed the We encouraging. collection game is very timeless in initial across federal of opportunities other but versus receiving current country. is

appeals pleased to are with grants announcing now or forward and look Overall, months. additional government our in progress coming the we

now I'll financial quarter. results to our the call that, Bob With discuss over the to turn for

Thanks, Rick.

Let's turn to quarter first financial results. to XX our Slide discuss

Our quarter focus results first execution team's operational and on demonstrate the discipline. financial

up that expect we production the and delivery the of the continue rest to vehicles, As throughout Rick are ramping stated, and of year.

this will back the our same are organization. burn XXXX. At significant we office enhancing growth well expect managing in our systems make We cash more to us even an efficient generate revenue and time,

primarily The now Turning sales last first of to quarter $XX,XXX is were returns of due million, XXXX volume CC. to WX year. in net the in same period $X.X to the sales and for results, of the sales compared allowances net increase

to the up getting on It QX. our impacted CC and suppliers throughput WX key in expected. required upgrade than longer components earlier, explained sales As Rick in launched took product tooled

to up across balance the those make of expect units XXXX. We

sales sales $X.X support of a in a increased cost to $XXX,XXX and the primarily other related The to in million the decrease $XXX,XXX in offset of million by vehicle compensation increase related increase inventory reserve $X.X employee costs. costs same last a overhead Cost period. partially during $X.X in million and in sales materials year, and was related direct the expenses from to due expenses to decrease $XXX,XXX in increase period

increase by increase increased expenses employee and $X.X million driven compensation in million million due to same stock SG&A general non-cash expenses, $XX.X year. last period in in expense. primarily from Selling, the in related expenses a primarily based increased headcount administrative $XX.X compensation to was The in

increased increased in increase expenses increase to expense An roadmap, of driven expenses. prototype development The increase and continued $X to the and related compared consulting in product expense and in expanded the $XXX,XXX company's was Research to increase a compensation million year. as company $X.X the $X.X headcount FALCON, of million programs. related a HorseFly, expenses primarily the $XXX,XXX period same WXXX employee R&D in WXX development by including last vehicle the million in

aggregate on money income Net income interest Net last million Net year. was the was investment expense conversion these for The XXXX. of expense in the by company's primarily and in a related the shares the on $X.X was account. the to principle current earned a notes contractual the adjustments, former stock driven of loss prior exchanged notes company's interest $XXX,XXX negative interest same of interest cash fair convertible interest period our value compared the due the during were entire market XXXX. in period outstanding period common to XXXX and in

Slide XX discuss to our sheet. to balance Turning

to we in free, We and approximately million March debt XX, XXXX and are cash as $XX.X operate continuing had cash equivalents. of

$XX.X we our we issued under In shares for in and at-the-market have the place, million addition, the XX.X proceeds during first quarter of ATM net program million.

shelf You registration SEC. $XXX might million recently that have filed statement the noticed we with

term shelf had was $XXX former on remaining renewal three-year it. shelf's million Just was normal The the expiring. approximately want a this out, to point of former

capital availability and appropriate, be opportunity will If funding conditions our projected will capital a of including existing in XXXX, raise are the support current XXXX. sufficient financing offering. our requirements resources to additional we and market through through and the arises at believe our continuance We market

year. Slide ramp Turning as the we the rest and to of guidance production delivery we XX, expect are throughout up our to reaffirming

five WXX launch to this shipping the now their units as on on and schedule end production is are production. quarter, in customers, up We QX, stabilize to QX. per WX component production Start is of begin is to CC by WXXX suppliers and the later of ramping vehicles track own to day

$XXX efficient quarters. critical us even remain well $XX supply new lead million our dealers XXXX, organization. time, more onboarding to current enhancing be two to continue expect success our to chain the our year is state to in We for we license Securing calendar an assuming the times cash systems next the unchanged. range burn make are over revenue the million of to manufacturing managing and At our and same internally

for are We generate are shareholders. us taking deliver actions confident our and value that the on we to our goals allow now

turn back I'll up call. wrap Rick now to to the

our Bob. are which on and advancing some – roadmaps briefly all want time of else, on Thanks Above quarter Slide and new on our product budget. keeping second XX. to key I discuss on we are priorities outlined product them focused

Specifically, QX. we delivery are in production continuing to and ramp WX in the deliver up and vehicles than of second CC quarter our more to significantly expect

QX. the vehicles track of on production in are We WXXX to begin

The as new hands put WXX Stalls mile the durability testing work future phase, safe, which purchase will electrify with We’ll track are the and with to component the we and ‘XX in are in and These trucks system demo trucks to complete, program, critical also under first reliable we program we & showcase Stables in beyond. customers When prospective our orders in fleet our ‘XX ahead of WXX our and to quarter, in vans well step-van complete last on large continue now and to is WXXX testing will the in production and timeframe. the delivery third fleets, remains then second starting for QX. June to quarter. and July the QX the vehicle secure expect vehicle continue the

build to orders, During more quarter grow our and CV earn second we out dealer intend network. further the customer our sales,

later to I'll the weeks, are XX. to dealer be eight this dealer We CV the network, up new third day we month around our XXXX. three two, progress and the country, City groups on have targeted next onboard fleets ten road steady May dealer our at myself dealers and with making with building on plans in Union out meeting set

of we'll U.S. Force, order continue with front, customers. On and testing on our having demonstration be from excited completing Air initial we to and are flight purchase the the cusp aerospace prospective the

to with additional expect significant QX. end We the earn USDA also work of

our will a system, ERP assistance as products. we including we will Finally, to executing plans which help quarter, new continue ramp second the our production transitioning of operational efficiencies up common in drive

in We this expect the transition year. ERP QX complete to

to we I want Before from to a call turn reemphasize today. important the Q&A, over few call takeaways our

notably exceptions, have rebuilding establishing with new ERP First, foundations system company. a dealer to our few the network, most nationwide we the transitioning and of completed

here talented We great with team business industry functional incredibly automotive, extensive Workforce. at have experts vehicle commercial team and experience, leaders an aviation and a of

manufacturing have to and Second, vehicles state-of-the-art our aerospace road in we facilities product for both commercial maps, and our which new equipment execute engineering and drones.

focused We and execution. are on execution execution,

We the trucks are to vehicles, phase, and produce and forward. expect vehicle delivering and margins testing to design up every for and our going reliable finishing customers. we Most drones, ramping and efficient contribution production ship generate profitable safe, importantly, we on vehicles

progressing We remain ahead market powered market our vehicles is customers, opportunities to and and significantly in value transition the deliver The support EV, to for confident to there our government industry make in is other work. EV and them shareholders UAVs, to stakeholders. demand and strong commercial infrastructure

And to go-forward resources access to have capital finally, cash our execute necessary and plans. the we on

will and investments position, future our support capital business financial to needs continue monitor We our to strategy.

journey. The ahead Workforce still to we highly us, meet the that on know EV ready work significant encounter and team will of is head-on challenges We we we experienced. our are have

current solid We from are in making, and encouraged the progress foundation place, and are the is our are positive partners. now receiving we feedback by prospective the we

almost and in vehicles, run of product Workforce our and on itself EV ground hard products. to of years establish the portfolio to a transition two in winner air. electric the as in commercial is the ready confident both After are We work,

you Thank again concludes time preparatory That this marks. morning. for all your our

open provide for now Darryl, please ready instructions. the questions. the appropriate We call are to your

Oppenheimer. questions. is question [Operator proceed Colin you. of Rusch first line with with the Please your Thank coming from Instructions] Our

guys. Thanks so much

trucks know you that had road? performing to out. bit out talk is on about on got congrats those You getting and them on much the the you've how Can vehicles now a you little how them operating got the you and software do rework before

Yeah, a couple things. of

power, with the green putting I the about were think XX we when process or initially trucks. parts XX started we on talking

and couple to out us to go some up of the now parts think on required suppliers. were up a I we're that trucks. parts XX tool and XX There

in the I think put out we last told in a few you call earnings that December. trucks we

then North done or design initial was change We some a quarter first in issue the up, tool both to that dealer it got up are We challenge in the the backs end had the tool first biggest our and big That for liners. the the a quarter. from We wanted towards the and up Carolina, different part, feedback, fitters out, supplier custom got we the us quarter. of bodies putting That they to get the in and back that customers had so. in prototypes, the that go was that's now production, the panel.

than on longer identified does in how from little thought, able time a had show six A say a go time dime to less while I the XX would early the issue the first of to for the I in March. sure, that's find disappointing it the than days. going guess that, middle fast trucks on months, we parts was on we we based us but turn to and team in solution January XX quarter, Not in days our

and supply to did cartwheels quarter. our thank the our and team. engineering in team So first our get They want chain CTO I to done that

of good. a We Operating don't so Union see up system, issues. done truck testing any of so at the We've far, City. lot

sense agriculture of particularly thinking How how close revenue you guys, the you Okay, on just that perfect. I'm revenue to company. for are should to the be And then side? trying about a get guys the opportunity material with drone, for we

place, I I we'll so in to pretty and on So grow, some continue see good we're and think on that like feel the there side, I that's agriculture think progressing have quickly programs track.

and that here latter of can now market bringing think we start has it's selling had obviously those half drone I the that longer market On market about distribution, hoped, in it building than a but year. tough it's been to and so the side, breakthroughs, have technological and network the we we the

Yeah, I'll too. color add some

mile to make with we FedEx and from of and last the warehouses. them commercial the really ground We stations, use bounced and through think part, trucks back I doing UPS forth from FAA, is the the want taking packages to these that off we others get the sure delivery it and got to got drones. to

demos have do to more second the going some here in we're We quarter, quarter.

I with a systems which is, also go we months decision We're can think Forest good the we the traction after XX use Natural camera LiDAR Department made USDA, over finding or – the our and ago systems. owns the Forest Resources.

a just So is of can needs hundreds there's now land opportunities, to are they and doing acres few there's right right. four way scan horses scanned. of that be lot in things hours. The literally a wheelers, with We

And there's there think we've out too. we opportunity taken branches, an multiple then the FALCON to DOD, and

So government side to faster. the we'll up commercial I the we going get on are we're than side think on faster grow ramped that hopefully and

Okay, perfect. guys. Thanks,

Thanks Colin.

Colin. Thanks

Thank you.

with your Please with of from line come proceed Cowen. TD questions Osborne Jeff next questions. the Our

is in place? and you push sort work confidence pocket potential the place. the do of to that infrastructure the Rick, morning. I between integrated one good infrastructure an the in Work was get have the and on couple when the the with What along Show Truck to both, that and themes with of trucking A Hey, of side. delivery in ability Show level Axe of air the dealers, expected of charging terms think being charging of The with with time questions to avoid challenges and my trucks of customers

these started The at are WX or that. where looking van, they they good question. charging the dealers using meeting have a rental of run they own fleets, where of at larger step systems in their the we're are putting specifically dealers Several already the their so some locations. areas CC and use with That's large

EV cities We've mention a multiple gone they program them the charging leasing now, and out in put United an expand to area. they the are name including LA right multiple Atlanta, one but New a etc. I to to in Houston, their trucks are they now, couple station and across LA that little Florida. States, fleets They've large won't purchase, interesting and York, locations, going they right company. got to

cutting out are on edge the there people say. some So I'll

the in chart van met Indianapolis a we need specifically. XXX I trucks, you step multiple exactly in locations. and of distribution who charge them? States charging, the with do your cold Canada we're He's week the the on path got last Can X me XXX the Stalls. in Class you availability? help. needs slow hot On above That's I how he at need basically XXX weather, charging batteries an on and XXX kind trucks & often has does United handle education weather? the He Class the backside, said, route help to in charging, trucks, and the EV? How X/X company fast What's what learning Stables

it fuel Stalls. to we're that have soon the We & them same fleet with going ice electrify data the to can them, repair give them, we old and EVs for run how Stables you what to of trucks, when lots costs of now year for a an data over staff

need So to we'll be make able to help those that the fleets conversion.

XXX was European least owned and a of do XX the at you he that tell that choice. a of this given is his to end convert to mandate it. to distribution the year and trucks He's go before that EV got also company I'll company, wasn't by year a

get Now with done do Shell, about ABB, right so with right we've systems work the some with some OEMs, we've questions a the charging and that. we ChargePoint, are the work we some done who right work lot some done he's good We've partners. information have got of find charging to about

But I do think it's going to right. take time,

And in the help programs there. doing it their put who the charges San infrastructure, put land Light, some and and the and grids with in then started cottage in Diego to in California put up, it popping west, own systems can Power people and money So there's the the and go there. a that's fleets are the the just there's And the Jeff well. tie federal as charging out secure industry specifically behind, of guys government's money they big into

for that's done, sure. be to work of lots So

it. quick here. And Got just then ones other two

roughly that affiliated line Tropos other with is The the you the else XX there XXX,XXX, broken out is item? of that revenue assembled moving that vehicles or majority of something

that the to the from of but & Now, is be & it Stalls. bit Stables revenue it Stables is Tropos, majority package of the delivery. most going of A Stalls, little

then concluding in that you Were objective? contribution And be just margins or forget remarks, every you you vehicle intending XQ it. forward; to would phrased it. positive the or forward Rick, say that's made your you I delivered how reference going with in going positive produced Got gross to margin

early. bit Go Bob? ahead, little a That's

level, No, a we start gross cost. factor volume are truck a will as fixed the be contribution I of to cover they but positive think at margin positive,

that no, the XQ. be in So not case will

designing them for Yeah. put of they into has company unique of some and trucks about This them. what half a history pretty selling

put out have design, puts an we cool to Say loss can a we profitability. out We're path here. a term, and trucks of EDIC we selling designing, at we're got a publicly you business test and traded build to make that company. our long and building money. So going Got so. trucks This towards

should X something think units annualized to spring an XXX? would delivered that that of hit of about assume that the you the in Is run you wouldn't ‘XX? get the rate there there. But CC that I or be

any overall together that haven't manufacturing on Yeah, are side but fixed say I we put the really relatively that, low. on guidance costs will our

margin. volume, that we fair to able a get positive of amount should gross be to with So

right. is to the out in couple those we're still good of in Jeff, a of of inning some very the who elasticity, edge, one a the are cutting is talked think price that EV early, in for things early ICE we calls of about still which us There's transition. this thing I

And all in the to on sure future, I'm so batteries. down ramp costs specifically we'll have

the now, Advanced next demand, That's mandates buys clean in based trucks every alone big on that's of of said, in so. X% last California the We I order right, ‘hey, me Clean the when bite for EV sell Fleet, now, the trucks, EV, regulatory one week But these they fleets, sat too.’ to the out there the dealer some big to ten one sell so. be laws X% ice out with market of buy for trucks got real in almost, of have the fleet, and to year,

That's I I Thank Absolutely! it. appreciate had. you, all

Great.

Thank you.

proceed of Our line next your the Please with B. Chris questions with Riley. questions. come Souther from

backlog. Hey on out then, this looking this those just are to of at year, visibility guys. to of be And as sense we for as XX How you're helpful expecting sales an of would just as the far Maybe pipeline or You kind kind XXX are a backlog up chassis WXXX called that. what the bit five early little of stage? on and either maybe folks? so building WX getting receive

the Yeah, backlog. really publish we don't now right

are think a kinds lot hell the errand. couple I all building up. last backlog, So fool's ground that's I've don't of are that yet with how so companies quoting the a the factory, they produce of we to they of years going it have seen in a from them?

our dealer sign orders. we of take agreements, as Part they to dealers, stocking up agree

dealer. typically ten that's So per

one another an dealer EV One has area. is sites. XX. target every has multiple location locations, have Not XX dealers Some

say and we of grow. that CC WXXXs the build up backlog you'll network, So our see our dealer I'd WX as

balance to it's a down locations terms know Power I a confident interest we WX demand. want tonight in of chassis going they I'm Down the of tomorrow. dealer CC, from But ordered strong are being around. how We and supply – so right we've delivered. and in kind Green many we're have with that jumping team, have the Southeast other the sales they to in see WXXX. region go only Chris, the real

over XXX and the year, We early we'll we year, chassis on end be now quarter, of now and the us. XXX right our have way and sell first between the to next first able quarter We think so. all in those their had on order into

it. Got

then Okay, side. that's maybe on real just And helpful. the drone

You about. asked

Yeah the XX as yeah, well, be thank good, you. will

WXX with meetings big of excellent Indianapolis the preliminary additional I'd We've exact had some say companies. with meetings is those companies. some early. same had in We

reviews everybody this from Now, Thursday. and on and it almost who drove It very strong drive they in actually the California time able ride Wednesday Tuesday, got to WXX.

WXX truck photos chassis, measures four in our morning I Thursday, chassis, I of with I and early people and chassis. got. the taking little surprised, on show found surprised the much or attention came tape was we how bit were our our to one a strip on

So there's an there. interest

EV a to put chassis is it and kind If Olson basically want Olson in Morgan custom If all there, As of three currently on an you able to liner going it Utilimaster great, body, step-van to We're a on, Ford here. somebody. or that's to be great. engine either body, chassis for goes come build and either put in we'll sell in freight so. right. they it, space, the with they or body know, a put we Morgan a Utilimaster want a We're in to to and body areas chassis a chassis it, or the play our a can disruptor be to able

I would little a early. say it's

I us until their hands. they think demo reticent are to get orders they on give a

a customers We and one linen in the One with environments. weeks. linen target of have are six is interested we'll company one or see, it which big, back for are month, California and a wants wants either we truck multiple in special rich minimum companies of wants one companies those I'd for customer that its one who say in WXX wants and and months. those meetings it large two bakery for very And had a

year they convert in in are have alone One X,XXX they XX California to linen company trucks, X%. now mandate least over That's said one in XXXX. trucks their and at

so. more quarter, you give hopefully the clear think year we third I move in a the and through we'll here as picture So fourth

side. then pretty government that's seems forward path? are drone getting helpful. It bit of And super talk on the kind like here production side, close you Okay, customers a the the on to little moving the about can

capital guys and the of what you kind through? rates would incremental expect know any be able Just needs be kind hand are production targeting order, you of to to we should flow

lines year, to sure between there to somewhere XXX many assembly X,XXX. that build I'm we'll the we'll see. built not this in build We

they vehicles to the hands their their on customers cautious get sure very to paces. the them actually to put are make want being think I for the and drones

to three dozens we see testing I and birds we through get – POs two or maybe I quarter, in think of as all head year, expect so. like in well, be there'll the and get four third orders that, early we three I'd Once total. bigger can more or their the out some think say get you internal quarter, We

And I would add that the pretty capital requirements for are the production minimal. lines

their standard done modifications. bought own substations. built guys They've equipment, Actually some

built. substations the have We

minimum XX sure We final we or the right I on But very have make ready can shelf go. birds to have We've to XX built. there. think build assembly the now lightly staffed right some we like now, line

So worked our that through of we've and little stuff. builds kind pilot

Thanks the all for color. the in I’ll hop queue.

Great.

Thank you.

line BTIG. of from with the with Please Lewis come your questions questions. Greg next proceed Our

you Thank wondering a those you of something like we're Rick, take thought some fixed on color we're back know go I changes for now was have going that where knew guess afternoon, chassis, seems fix is all good I is, an everybody. more to to chassis. fixes what supplier the can have bit the these basis the and we cabin you have about. than morning. the where be for of just start and what ourselves? do Is stuff and delivery there'd from before upgrading that Good of and little it hoping we any around some getting ongoing you was really it to I'm to or the more

Great question, Greg.

Power our a already talked changes. make some friends say we've of their So One, Green and supplier to to things. permanent I'd couple at

we changes the they get on up pivot. lights. of and by Turns their is couldn't tooled out that had done so thought February could we until March. or out get suppliers the September, We go to One

okay. to to up you to a XX got up that XXX supplier to something month, different. to tooled that we XX and do in back starting was But handle bill had or We December, XX small a shipped when you're

of So out fill wise, engineering one worked that that's wise and with gaps supply and had chain both to financially we the Power. we've Green

up I it back the to keep that the haven't that was more no etc. have at a whether supplier think want that. build we'd nice we we'll to and to of yet. make think got had a we keep can pivot When started customer that something a us and with saying, the That's have come one panels in put see. in coming decision that China, in finalized from ‘no, with cab or we thought rates, vans, step We've more sell The chassis,’ I current here so we we we up came we'll

larger? going.’ customer with XX deliveries, the delivery Okay. of things that ‘hey, or that Was a highlighted kind And order getting total the that XX actually then mentioned was you we're

if Currently we you right. year, over talked – It’s That’s remember of PO XX. vehicles. reservation last a for it's a X,XXX part about

of some talking same of a into conversion reservations of monthly We're real a POs basis. customer purchase on that's a steady about order. So to a that those more pace

fleets reefer right. a and up slots large that some their custom versions, have On gone there they van, different own up right nickel, And they've and build say, working quote with activities I'll now flatbed. large specifically a at secured a on tooled some and dry are bodybuilders the for hundreds, in

successful are [inaudible]. they So

X truck say us, Class today. EV the only pure the As in to to they like you're market

great. Okay,

most last XXXX but last in to to If shows, the chassis, see of market shows I two introductions. of the A or to a the two lot come of lot you been go people's I've XXXX. them

ISUZU and of a couple right. people like Specifically other that,

Bob, existing side, spot. out think basis for the on on ongoing or Next. No, about realizing development I no, things we're at an no, then the the definitely least good as doing the think to R&D, drone us any rolling for some rest kind know, I in R&D And year. don't a of way of still in about portfolio the

lumpiness spend. spend. R&D our run to way easiest is, about WXX, our we'll as the big reallocate it on probably think roll out the spend. to see rate think don't And in I we move I captures that

continue it'll think pace. I on its

time. perfect. Okay, you for Thank the

thanks. Great,

you. Thank

come of with line has your questions. proceed Mike D.A. question next with from Shlisky the Our Please Davidson.

thanks question. taking and morning for Good my

here. Just of questions a follow-up couple

sense where on point of there your Tropos, Tropos, shows a you your – you at is up First, ramp a material there tell you some to XXXX is or questions to full might might point, the earlier as on that us when cadence can a of do that rate? of a numbers get that in kind when a way to deliveries up number some have

say I'd Yeah, right now.

We our other issues. some we chain kits supply companies, with We some got were kits parts issues flow We and the think starting Unfortunately, guys weeks. supplier, and in have to do think for that. and of their incomplete called here. investment They're we initial got in. parts there. we're their of like I or a asked get Sevic, five the place or at quality kind act pause – right production to put a of kits I now go had to like some company making those six Just They came to Tropos in we've so together. delivery the a took XX committed

box we get can truck. can get a out, we to a build So full

I'd question. answer your

coast having commercially a us to success some the run companies, quarter, I quarter get that quarter think there. the we balance get take trucks, bigger should chain rate systems especially in to fourth specifically. to the supply probably going under name the with it's education selling on second late withy of They third control, good some west are right,

for market I truck build that a prepared and to them. there's think So there we're

Great. on moment. talking that. ask some also wanted with dealerships about Thanks up And I the details to you've the got more signed for or at

to want add units. inventories the they mentioned to guys demo You

for You said for have ten each facility sale. something that or you available a number them will modest like think

dealership necessarily kind also rates also I of point? had point, term the like kind do take team things for some [ph] are how were they that Workhorse your Obviously guaranteed there and structured – remember weren't dealership thousands agreements at this at signed guidelines your up old they dealerships minimum this but units Is rates? were and new agreements commitments, long there. that. they Did have of management several of take

customers. three out of of I'd different we border okay. here, Pritchard XXXX X,XXX say I I Canada, XXXX and from slightly the north Group different. orders the from in Iowa, When some think XXX got had up from UPS,

the that C-XXXX of back order. ruled and the said, the only told them XXXX hey, UPS that When and helped than cost When credit or family pounds, I CC of on a ruled us us old for the They guys on a WX can and lot guide of WXXX. a us. more all gave those hell was that went the sticking first XX,XXX C-XXXX. we lot we They XX,XXX of out feedback they to give guy, out Canadian with the Pritchard the carry helped, lot a

and X,XXX us ones they so gave us stuck they are who And the with reservations.

can dealers know EV areas. that To programs at EV. handful to trucks specific We space, come are There in We south in toes situation. an don't to looking states. putting so what serve the want their we the of the it in their in a so get with don't the allocation every incentive are Ford want water the their become dealer. these that right, learning dealers, too we an dealers very, how takes on They type all they say some and are are and I'd commercial

New incentives Texas, there's $XXX,XXX great for Class and truck. Jersey, a X like York, New nada. to X where Class up Places

stuff in they've as the state, You are South a ports. would there's electrify there, government as coming EV borders got lot a need the that of from where but down the and and a think money Florida an of lot like to Carolina, There's ports down friendly ports federal the of along well. Charleston, that the there,

on one about, demo dealers. going or of in talked WX has I California. our next around And one at the take we shows now one can field week demos least different WXXX So there's sales trade they team the CC each have with

about was I last mile the of those We're demos. talking biggest of five were in put space. delivery WXX the going in the ones hands the to The companies

trucks watched ones split previous three it They among member leasing companies. companies, You know three trucks in before of a who a of companies, they or buy company. a board initials it right. right. are a X,XXX big linen as I've year. couple places. at They the thousands bakery letter players, buy big two year, They a Big are will

to big through guys somehow. sold, will where get right. the that's WXX So dealer That'll a be those direct

right now. that's where to got work So out we

a that they'd right, sell to they of want to ridden upwards to it's on hard truck them $XXX,XXX on sure spend never make But real. before, and so convince

of things Most field. one we in almost our the we the so And behind those good They with stand out million E-Gen’s there They run XXXX. miles since its here still out we UPS are X pretty products products is it. good. XXX those know have of on have and

UPS. with that So can people like we build on

are quite me.’ So to when got you said to ‘if pounds, UPS talking us. can’t they carry I now taking here, And XXXX

Maybe I’ve kind Got for this few is me it, of & one Stables, it. one a got color. so here. Stalls great on and got That’s last

of [inaudible] some and to if country, I'm You in – the know, up you either consequences privately What plan are to to fleet. available? that's compared when publicly them. once electrified are contrast open and having curious with the or and partially it in at their appears that we've do is already things be whether any All these, notes you've elsewhere running with EVs least they theirs, there you compared to were yours also

Stan's the where there out that, some I putting had FedEx discussions drop you West team in and some they've other We're vehicles constant at Coast some West working the would tell bright Coast, in success and with locations. the in closely.

at well, our Stables & learning and vehicles and and compare there get can we are to they anxious then we're are of different some in We as contrast, Stalls.

the they're trucks fleets, Some new Interesting own some have through. payload. are some X, so lot that of big have UPS packages them, DHL. Then as there's dynamics better don't a trucks, certain drivers X, step-vans. just that routes, to to have unionized, size their model same different, work we're own and their for not, some totally a working some trucks, are the FedEx own they trucks some model the different Class Different we for segment the bigger is lawnmowers. deliver, three, appliances, tires, have me, class delivering houses. Those X we We're are small being to

can we'll carry What X,XXX to a brown say, truck want we that want is to do and a brown pounds. be want order truck agnostic we able to you you to build be if

a have X,XXX zero is, have truck so emissions being XXXX to carry purple, theme only pounds, it convert can with green they Paris common well. by of fleets. these or label orange on white that all the label the committed to can to do have they we want that or a meet a and You X,XXX Accord as But

huge, and goods here one trucks for tens North are well. Europe. XXX,XXX, in have fleets XXX,XXX, These as Other baked trucks XX,XXX thousands of their delivery companies has America bakery of

opportunities to going of there's be for So us. plenty

need As to, X,XXX number ‘XX we’ll $XXX,XXX, be a XX,XXX to year, right, if we said, shifts we're to factory. that's trucks, Eventually probably ramping go a up this year that's and per trucks two and our $XXX,XXX real XX,XXX rate that'll we'll get right, run per then a by truck, big so. a company, shift, we

the much, so Thanks Great. color. appreciate I

Thanks Mike.

Thank you.

from of proceed Craig the Our your Irwin MKM. is line next with coming ROTH question correct Please with questions.

my questions. Good thanks morning. And for taking

and new delivered move that you early how on just start-up benefits in the tiny on bit in a suppliers quarter. solutions to would expenses questions the dig And impact give So pretty into current some far but set-up as you and of color vehicles answered, Can these thoroughly hoping margins? actually vehicle guess expect most expense I having side of maybe been my integrating could just as we engineering we you identifying these have a got the expenses, in and that on quarter. us the as was you material out and those to the you maybe the XX XX one-time I and

on don't think margins. Craig, I expect I material a overall impact them to have

next know, I of comment just Don't on the think, applies previous side that of R&D kind my there you building into think it's the substantial. the move those we'll vehicles.

we our at as biggest for what year, in I to trying issue is, last maintained talk we've think you're workforce get the plant. our

and with And those be ramp so the volume, to direct got we other the as on up volume, production obviously they'll reallocated working – we've vehicles. stuff, smaller everyone's

the kind ramp trying think become as I fully that's issue to probably is, Workhorse, you productive to when at getting up look So that's volume. get what more you're we at they'll the of biggest

production the workers, very I right. a skilled see we There's decision keep should when mistake, had Yeah, want to right. and we they better. so We down going labor market, they a conscious a a our we that punished? said to moved had we now our Wixom, headquarters. to to up make right not good, get we pretty a tight shut and they’ll control locations. we In made Aerospace. had it on workers. layoff Bob's opened reins production up got can do have there. We didn't pretty handle. hourly be move you on expense to tight some We Why we we before, as the make tight moved We sure have

So keeps and the tight. purse nice

I window direct think into good first quarter’s pretty infrastructure.

to It's hear Excellent. strong got Bob’s good that grip.

of complete. you bit, just of as of built the if the so quarter, So you of could disclosed It’s pivot this XX to guys call. guess little a as maybe I WXX, the the programs that. end eight clarify not are that’s

Are expect? What we we and the a you And look couple there. production programs, build then with starting a bit one week? about we would maybe Are four starting a remaining should what initial little talk like could a if more weeks? with

questions. great Yeah,

So us, us get vehicles. the plus came years out wanted quietly XX trucks how in He to many built. unique for experience Dave laid Burkey very to industry he building

just, build was together, one right. let’s come it, let's Number

really online it we building not sometimes right a and engineers, at the we’re learning at We're together. trucks. manufacturing, build proud we we're City shops, parts So Union I'm the factory at sitting a in putting suppliers prototype the lot. the and as had supply the right chain, team them the are doing

issues, of over. bolt that, stuff crossing get that means that like can't wires torque, So that you fit up to and touched have kind

we So build first I are build going just right. sure the into take we're chassis getting now the make vehicle. in we chassis? the the to Then could started full four think What's the to to chassis, we basically it stage,

a for time in built NTEA one have Show. We

anywhere tests full think at and I weeks from in two in thermal XX testing. one work testing, test; take three one one have days, at now out XX testing, days. Those we vehicles durability brake to

a start truck in then week, a of half You you load, XXX% the basically in testing, you without and a the the it put end put load. towards then about load, it

So WXX payload. can pounds carry XX,XXX of

basically, that you So of up know we'll thing already. big totes. learned We've water, a load lot XX,XXX pounds in with

that So it's software we've a configurations of learned lot we've a lot and done.

that, go right then we in doing we're and So now.

ones big two next The are manufacturing. we slow do actually walk

build we XX the bodies all We'll around three build ramp. make charts have the So And we send we the sure our should chassis, and we're work instructions, process the our we'll start done and August. be customers. stations to last of going out get across those actually chassis build start coming towards means to and a Dyno the That July. the then or to the four and trucks in whole go then July. customer in We'll the early ones the the They done have end we'll of build June Then aligned, probably Dyno. hands turn control will the back. we'll slow chassis be

well. for XX think have the stations I bodies we’ll as

rate. got and probably a the while daily make It's the out worked week until defined bugs and haven't are we we'll build for just sure So exactly suppliers the we there gradually one ramp all all all build we'll how we year But in up. chassis. have to build want sell many budget it we we those trucks this know able and we expectations our and have to be like and

to Well, the progress. Excellent. questions. much very my you take on Congrats thank

Greg. Thanks

questions no like further time. for the are remarks. back to management you. to hand I Thank closing over There now would call any this at

to a some interest and in going and build Workhorse grindstone lot questions some the quarter ready go and Well, get the and sell and second kick ass and back, have appreciate your I day! your we're great to Thanks the and in a drones. put nose trucks our in

conclude appreciate your does We This you. teleconference. participation. Thank today’s

at may rest time. your the Enjoy You disconnect lines your this day. of