Workhorse Group, Inc.

Ladies and gentlemen, greetings, and welcome to the Workhorse Group's first quarter 2022 investor conference call. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Workhorse Group's vice president of corporate development and communications, Stan Mark. Sir, you may begin.

Thank you, Doug. Good morning, and welcome to all of you joining us on today's first quarter 2022 results call. Before we begin, I'd like to note that we have posted our results for the first quarter ending March 31st, 2022, as well as an accompanying press release and presentation in the investor relations section of our website. We've also released our 10Q this morning, and we'll be tracking with the posted presentation during the call today. So please follow along either from the link in the press release or through our website directly. And with that, let's get started. Turning to slide two, joining me on today's call are Rick Doubt, our CEO, and Bob Canan, our CFO. Moving to slide three, we have a straightforward agenda today. Following my brief opening remarks, I'll hand it over to Rick, who'll give you an update on the progress we've made in our strategic and financial priorities for our first quarter of this year. Bob will then walk us through our financial results for the quarter and touch on our 2022 guidance. We'll then take your questions. Moving to some housekeeping items and our disclaimer on slide four. Some of the comments that will be made today are forward-looking and therefore are subject to certain provisions and subject to risks and uncertainties. You can find the full disclaimer statement in our form 10Q and other periodic filings with the SEC as well as on today's press release. I'll now turn the call over to Rick Dowd.

Rick? Thanks, Dan, and good morning, everyone. We appreciate you taking the time to join us today. Turning to slide five. Our first quarter was exactly what we expected it would be, a lot of hard work. We put our heads down, executed on our plans, and accomplished what we set out to do, building a rock-solid foundation based on our stabilized, fix-and-grow business model. In football terms, it was all about blocking and tackling. A key element of our progress is continuing to successfully find the right people to strengthen our organization. We further built out our highly experienced leadership team as well as significantly enhanced our engineering resources and technical expertise. We consolidated and relocated our headquarters in Sharonville, Ohio. The transformation of Union City is tracking the plan. Operationally, we met every milestone on the new product development roadmap we laid out last quarter. We also strengthened our financial position. As a result, we are right on track in executing our revised strategic plan to deliver a family of Class 3 to 6 electric vehicle last-mile delivery products both on the ground and in the air. Moving on to slide six, we continue to make progress in our initiatives across what we call our six P's, people, products, processes, partners, politics, and profits. Investing in a balanced fashion in these areas is critical to establishing a strong foundation to achieve our vision to be a pioneer in the transition to zero-emission commercial vehicles. Our team is incredibly detail-oriented and is relentlessly focused day in and day out on strengthening the building blocks of our foundation. We are confident the plans we have laid out and the progress we are making on these initiatives will enable our transition from a technology startup into an efficient commercial vehicle OEM. We also believe, and all the industry trends support, that we will continue to benefit from strong industry fundamentals, and tailwinds driving the transition from ICE to EV-powered vehicles in our sector. Let me now give you some important details about the progress we made during the quarter. Turning to slide seven, let me go through the key steps we took in delivering on our strategic priorities and building the strong foundations of growth. First this quarter, we further built out our experienced and talented leadership team. We have hired a new CIO. We have more than 30 years of supply chain and IT leadership experience at both leading OEMs and Tier 1 suppliers. He has also led IT teams in the government sector as well. We have added a new attorney as corporate counsel who brings five-plus years of business and commercial law experience to the team. We also have a search well underway to hire a VP of sales and marketing with significant commercial vehicle and transportation industry experience. Operationally, we have hired a director of quality with more than 35 years of quality systems experience at large OEMs including the powertrain and final vehicle assembly and supplier quality development. Lastly, we have hired a director of production control logistics who has 20-plus years of supply chain and lean systems experience at major tier one automotive suppliers. Additionally, we have rounded out our principal engineering ranks. We call them subject matter experts and now have them in place for chassis, electronics, controls, and body design work. Look forward to benefit from each of their unique perspectives and insights as we execute on our product roadmap. Moving to slide eight, I want to talk a bit about the readiness of our facilities. Last quarter, we opened our new vehicle design and testing technical center in Wixom, Michigan, to expand and enhance our design, engineering, and testing capabilities. This center has been a very fruitful investment for Workhorse. We have greatly expanded the breadth and depth of our engineering talent, which has already begun to enhance our designs, And we still have in the budget 15 open personal requisitions for engineers. Test equipment will be installed in Wixom by fourth quarter this year, bringing the site to a fully functional level by the end of the year. We continue to make significant progress in transforming and expanding our Union City Indiana plant into a world-class manufacturing complex. As you can see on slide 8 in the image in the middle of the left-hand side of the slide, the manufacturing plant is relit. Repairs and rehabilitation are on track. and near completion. The end-of-line dynamometer is expected to be installed and the facility will be 100% ready for production in Q3 of 2022. We are often asked how we can get to volume production with only a $15-20 million range invested at levels we have been discussing. The short answer is because we did not start with a blank piece of paper. We already have a well-built plant coupled with a rich history of manufacturing. We also reached an agreement in the quarter to take over two additional factories on our property, further expanding our manufacturing floor space and footprint. As an indication of how important these types of assets and capability are in the EV space, we have been approached by several firms to possibly undertake contract manufacturing for them at our Workhorse Ranch as early as this fall and in next year. We will carefully evaluate these opportunities and we'll update you when there's more information to share. As I mentioned on our call on March, we look forward to hosting many of you at our Investor and Analyst Day event in Union City in the fourth quarter. So you can see firsthand what we are now calling the Workhorse Ranch and also get a chance to drive our new generation of electric vans and trucks. We are also pleased that we completed the consolidation and relocation of our headquarters together with our advanced technology team in a new facility in Sharonville, Ohio. We are already realizing improved efficiencies and teamwork across the organization. The new prototype shop at that location is under construction, and we expect occupancy to begin in Q3 of this year. Finally, we're in the process of relocating our aerospace team into a larger space in Mason, Ohio, where we plan to start production in 2023. In summary, we have materially repositioned and significantly upgraded our infrastructure in the last nine months. Moving to slide nine, let me now provide an update on the progress on our revised product portfolio roadmap to deliver a family of electric-powered commercial vehicles across the Class III to Class VI segments. We accomplished exactly what we set out to do during the first quarter. As we previously communicated, our new product portfolio roadmap includes getting existing C1000s repaired and back on the road before building out and retiring them out. In parallel, we are focusing on our engineering team's efforts on developing two new truck chassis platforms in 2022-2024, while also partnering with Green Power on a third vehicle to bridge the product gap created by the decision to limit future C1000 production. I would also like to highlight that we have recently signed a referral agreement with ChargePoint to support our customers on their electrification journey as they transition to electric last-mile delivery vehicles. This partnership connects Workhorse customers with North America's largest charging network. Turning to slide 10, let me walk you through the current status of our major product platforms. Last quarter, we completed FMVSS testing for the C1000 and noted that several corrective actions were required to complete the full vehicle certification. We also fully tested the e-powertrain reliability, structural durability, and the payload capacity of the C1000 and identified several necessary corrective actions requiring a variety of safe, reliable vehicles for our customers. During the first quarter, we executed on these corrective actions and all FMDSS changes have been finalized and released by our engineering team. Front suspension design and vehicle bill of materials releases are now complete. Even with a bit of supply chain exposure in Shanghai, we are on track to return vehicles of service starting in August of this year and repair all 161 currently manufactured vehicles by year end. We plan to manufacture 50 to 75 additional C1000s by the end of the year from inventory currently on hand. We are working closely with a few customers to sell 100% of the vehicles in 2022. Of course, we will provide service and repair parts support after we retire the model later this year. Turning to the future and the W750 and W4CC, which will serve to bridge the gap between the C1000 product and future production of the W56 and W34 platforms. Workhorse and Green Power finalized several enhancements to the base vehicle and production of the first units is already scheduled. I believe our strategy to fill supply chain early for these vehicles is paying off for us. We plan on taking delivery of up to 1,500 chassis from Green Power completing the manufacturing process and delivering both cab chassis, the W4CC, and finished step vans, the W750, to customers in the United States and Canada, beginning as early as the third quarter of 2022 and throughout 2023. We are currently here in California at the ACT Expo in Long Beach, where the workforce team is introducing the W750 step van and riding ride and drive with a fully loaded 5,000-pound W4 cab chassis vehicle. It will be the first time since our March 1st announcement that we will have demo vehicles for customers to ride in and review. We are already excited to have our first purchase orders for this vehicle failing, all of which have successfully achieved California HBIP approval. We expect to realize further sales activities now that customers can see, drive, and fully review the vehicle. If you happen to be out here at the show, please stop by the booth and take a look or take a ride. We look forward to continuing to collaborate with Green Power and delivering the first trucks from our Union City plant later this year. Turning to the W56, which we introduced last quarter as the first new Workforce fully designed chassis platform. The W56 will serve the Class 5 and 66 delivery step van and truck market segments, and it builds on Workforce's experience building chassis systems for these classes of vehicles. The W56 has our shortest path to a homegrown design, tested, and economically viable BEV platform. It will come in three wheelbase sizes, addressing a TAM we estimate to be approximately $1.7 billion per year. We continue to meet all timing requirements and milestones from the beginning of production to the vehicles in Q3 of 2023. Our engineering and design teams have made significant progress in W56 design, sourcing decisions and contract commitments with proven commercial Vehicle industry Tier 1 flyers are already in place for more than 50% of the platform bill of materials. We expect to finalize design intent with supplier partners, along with a critical electrical component, chassis, and suspension part sourcing decisions by the end of Q2. This will ensure we have a production intent vehicles ready for testing in Q4 of this year and be in a position to complete testing and start full production on time in Q3 of 2023. Designing, testing, and producing the W56 is the number one program priority here at Workhorse. I manage those program reviews myself on a monthly basis. We look forward to continuing to update you on our progress on this critical program every quarter. Now I'll turn to the W34, which, as we mentioned in our last call, is a new Class 3 and 4 chassis that builds on the key technologies introduced by the E-Gen and the C1000 vehicle design. This vehicle will feature accessible low floor platform with improved ride and handling, efficient lightweight systems, and advanced driver technology. We estimate the addressable TAM for this segment of the commercial vehicle industry to be about $10.4 billion per year. We continue to expect the beginning of the production in 2024, which means we'll benefit from industry tailwinds as new mileage standards and emission standards take effect for commercial trucks in several regions of the country. The bottom line is that we have kept all the programs on time and on budget, while adding skilled staff to ensure we continue to hit our aggressive milestones. Turning to slide 11, we are continuing to invest in our aerospace business and drone technologies. We achieved several important milestones that we reached during the quarter, and a very important year ahead of us in terms of product development. Last quarter, we announced that the Federal Aviation Administration provided us with approval to pursue tight certification for the Horsefly TM delivery drone in 2022-23. We continue to fly under Part 107 certification. We are in the final development and testing phase for our vehicle-launched drones with industry-leading payload, range, and safe delivery capabilities. Focusing on the success we had last quarter, obtaining several grants from the U.S. Department We are also pursuing additional contracts and grants with the USDA to provide monitoring, data procurement, and analytics as far as demonstration projects. Through our dedicated development effort, we also designed a market-leading package delivery winch and are continuing extensive field testing. We are currently flying to North Dakota and Mississippi to support government programs. On the staffing front, we continue to add engineers and pilots to the team to ensure we can deliver for our customers. We're excited about the potential for market expansion. We are experiencing our drone operations and are exploring additional projects with both federal and state governments, as well as larger retailers. With that, I'll now turn the call to Bob to discuss our financial results for the quarter.