Workhorse Group Inc. (WKHS) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights several challenges: decreased sales revenue, increased cost of sales, and dependence on incentives. Despite positive aspects like improved net loss and cash position, uncertainties around the Motiv merger and supply chain risks persist. Q&A insights show ongoing cost concerns and reliance on incentives. These factors, combined with the challenging market for electric vehicles, suggest a negative sentiment, likely leading to a stock price decrease of -2% to -8% over the next two weeks.
Key Financial Performance
Sales $2.4 million for Q3 2025, a decrease of $100,000 year-over-year. The decline 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 $10.1 million for Q3 2025, an increase of $3.5 million year-over-year. The rise was primarily due to an increase in inventory excess and obsolescence reserve of $3.3 million.
Selling, General and Administrative (SG&A) Expenses $7.8 million for Q3 2025, an increase of $100,000 year-over-year. This was 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 $200,000 decrease in marketing and trade show expenses, and a $300,000 decrease in IT-related expenses.
Research and Development (R&D) Expenses $1.1 million for Q3 2025, a decrease of $1.2 million year-over-year. The reduction was primarily due to a $300,000 decrease in employee compensation and related expenses due to a lower headcount, a $500,000 decrease in prototype part expenses, and a $300,000 decrease in consulting and professional services expenses.
Net Interest Expense $200,000 for Q3 2025, a decrease from $3 million in Q3 2024. The reduction was primarily driven by higher financing fees related to the 2024 notes recognized in the prior year period.
Net Loss $7.8 million for Q3 2025, a significant improvement from $25.1 million in Q3 2024. The improvement was due to gains on the sale of assets and deferred revenue recognition.
Gain on Sale of Assets $13.8 million for Q3 2025, primarily related to the sale-leaseback of the Union City, Indiana facility.
Gain on Deferred Revenue $4.8 million for Q3 2025, related to the termination of the Tropos Assembly Services Agreement.
Cash and Cash Equivalents $38.2 million as of September 30, 2025, compared to $4.6 million in the same period last year. The increase was primarily due to funding totaling approximately $25 million from Motiv's controlling investor, including a $20 million sale-leaseback transaction and a $5 million secured convertible note financing.
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Operating Highlights
W56 step van: Completed the sale of 15 trucks in Class 4 and 5/6 versions. Expanded product portfolio with the availability of the Utilimaster Aeromaster body on the W56 strip chassis. The W56 remains eligible for California HVIP vouchers of $85,000 per truck or higher for Class 6 vehicles.
W56 140-kilowatt production launch: Plans finalized for a 2026 launch. The vehicle will have a range of 120 miles and a 10% lower acquisition price.
FedEx collaboration: Showcased W56 step van at the FedEx Forward Service Provider Summit. Vehicles in service with FedEx Express have logged tens of thousands of miles with 97% uptime availability.
Motiv Electric Trucks merger: Announced a definitive agreement to merge with Motiv Electric Trucks to strengthen position in North America's medium-duty electric truck market. The merger is expected to close in Q4 2025, subject to shareholder approval.
Cost management: Reduced operating expenses by $1.2 million year-over-year in Q3 and $17.5 million year-to-date. Maintained financial discipline to conserve cash.
Financial transactions: Completed a $20 million sale-leaseback transaction and a $5 million secured convertible note financing to strengthen financial position.
Strategic merger with Motiv: Aims to accelerate growth, expand product lineup, and capture greater market share in the commercial EV space. The combined company is expected to access up to $20 million in additional debt financing post-close.
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Risk or Challenges
Challenging commercial electric vehicle environment: The company is operating in a difficult market for commercial electric vehicles, which could impact sales and growth.
Financial discipline and cost reduction: While the company has taken steps to reduce costs, the need for ongoing financial discipline highlights potential financial strain.
Proposed transaction with Motiv: The success of the merger with Motiv is contingent on shareholder approval and other conditions, creating uncertainty.
Increased cost of sales: Cost of sales increased by $3.5 million, driven by inventory excess and obsolescence reserves, which could impact profitability.
Decreased sales revenue: Sales revenue decreased by $100,000 compared to the previous year, reflecting challenges in generating consistent revenue.
Dependence on incentives: The company relies on incentives like the California HVIP vouchers, which may not be guaranteed in the future.
Supply chain and operational efficiency: The company is focused on operational efficiencies, but any disruptions could impact production and delivery timelines.
Integration risks with Motiv: The integration of Workhorse and Motiv could face challenges, potentially delaying strategic objectives.
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Guidance & Outlook
Proposed Transaction with Motiv: Workhorse announced a definitive agreement to combine with Motiv Electric Trucks, aiming to create a stronger presence in North America's medium-duty electric truck market. The transaction is expected to close in Q4 2025, subject to shareholder approval and other conditions. The combined company is expected to access up to $20 million in additional debt financing post-close to fund strategic execution.
Financial Position and Cost Management: Workhorse plans to strengthen its financial position by generating additional purchase orders, maintaining financial discipline, and reducing operating costs. The company aims to prioritize cash conservation and expense reduction.
Product Roadmap and Expansion: Workhorse is finalizing plans for the W56 140-kilowatt production launch in 2026, which will feature a range of around 120 miles and a 10% lower acquisition price. The combination with Motiv is expected to broaden the product lineup and accelerate the shared product roadmap, with plans to integrate portfolios and R&D technology over the next 2-3 years.
Customer Demand and Market Position: The company is actively engaging with logistics providers and service fleets to build additional order interest through its national dealer network. Workhorse aims to expand its market presence and capture greater share in the commercial EV space.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How are state-level incentives across the U.S. panning out for the W56 step van, and what are the opportunities beyond California?
A:The company has worked with CAR group and others to ensure HVIP vouchers are competitive in California, leading to immediate order pickups from FedEx ground operators. They are also seeing good movement in Washington and New York and are focusing efforts there. A site in California operating more than 20 W56 step vans has shown 97%-98% uptime, leading to repeat orders from FedEx ground operators.
Q:How should costs trend as the company ramps closer to production of the W56 vehicle in 2026?
A:The company is focusing on reducing bill of material costs through engineering and supply chain improvements. As production increases, labor costs will improve due to regular production cadence. They have built 3-4 trucks perfectly without post-production touch-ups, and de-escalators in purchase contracts will lower costs at higher volumes. Achieving cost parity with ICE vehicles will take a few years and require higher volumes, especially for batteries. Current data shows a 55%-65% reduction in total cost of operation for the trucks in the field.
Q:Review of Unclear Management Responses
A:None of the questions were avoided or lacked clarity. All responses were detailed and addressed the questions directly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Agreement Slide
America duty
Assembly Services
California hybrid
City facility
Class transition
Class vehicle
Class version
Communications Results
Decrease RD
EV
FedEx Express
Slide balance
Union City
agreement
availability
benefit
closing
combination
debt financing
discipline
disclaimer
fleet order
gain
highlight
indebtedness
investor sale
lender
merger
month increase
note financing
platform
product road
road map
shareholder
term position
transaction result
update transaction
WKHS Transcript
Workhorse Group Inc. (WKHS) Q3 2025 Earnings Call Transcript
Unknown11-11
The earnings call highlights several challenges: decreased sales revenue, increased cost of sales, and dependence on incentives. Despite positive aspects like improved net loss and cash position, uncertainties around the Motiv merger and supply chain risks persist. Q&A insights show ongoing cost concerns and reliance on incentives. These factors, combined with the challenging market for electric vehicles, suggest a negative sentiment, likely leading to a stock price decrease of -2% to -8% over the next two weeks.
Workhorse Group Inc. (WKHS) Q2 2025 Earnings Call Transcript
Positive8-19
Workhorse shows positive momentum with increased revenue, reduced net loss, and strategic partnerships. Despite not providing specific revenue guidance, the expansion into Canada and partnership with Gateway Fleets are promising. The Q&A session highlighted growth opportunities, sufficient financing, and plans to enhance the product portfolio. The positive sentiment from analysts, coupled with improved financial metrics and strategic growth plans, suggests a positive stock price movement over the next two weeks.
Workhorse Group Inc. (NASDAQ:WKHS) Q1 2025 Earnings Call Transcript
Unknown5-16
The earnings call shows positive trends in financial performance and product development, with increased revenue, improved margins, and strong demand for the W56. However, the lack of specific revenue guidance and potential risks in market demand and execution balance these positives. The absence of a share repurchase program and ongoing uncertainties in the EV market further suggest a cautious outlook. The Q&A section did not reveal significant new insights to alter this assessment. Overall, these factors suggest a neutral stock price movement over the next two weeks.
Workhorse Group Inc. (WKHS) Q1 2025 Earnings Call Transcript
Unknown5-15
The earnings call presents a mixed but overall negative outlook. The partnership with Gateway Fleets and expansion into Canada are positive, but the lack of revenue guidance and customer demand shifts pose significant risks. Financial discipline is evident, but declining sales and increased interest expenses are concerning. The reverse stock split and funding actions indicate financial instability. The Q&A section does not provide additional clarity. Overall, the negative factors outweigh the positives, leading to a likely stock price decline between -2% and -8% over the next two weeks.
WKHS Report
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