Workhorse Group, Inc.

Ladies and gentlemen, greetings and welcome to Workhorse Group's Third Quarter 2022 Investor 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 March. Sir, you may now begin.

Thank you, Rob. Good morning and welcome to all of you joining us for today's Third Quarter 2022 Resort Results Call. Before we begin, I'd like to note that we've posted our results for the third quarter ending September 30th, 2022 via press release. You can find this release as well as the accompanying presentation on the investor relations section of our website. We also filed our third quarter form 10Q this morning. We'll be tracking with the posted presentation during the call. So please follow along either from the link in the press release or through our website directly. And with that, let's get started. Joining me on today's call are Rick Doubt, our CEO, and Bob Ganan, our CFO. We have a straightforward agenda today, which is found on slide three. Following my opening remarks, I'll hand it over to Rick. We'll give you an update on the progress we've made on our strategic and operational priorities for the third quarter of this year. Bob will then walk us through our financial results for the quarter and cover our 2022 guidance. Then we'll take your questions. Our disclaimer can be found on slide four. Some of the comments that will be made today are forward-looking and therefore are subject to certain provisions and are subject to risks and uncertainties. You can find the full disclaimer statement in our Form 10-Q and other periodic filings filed with the SEC as well as in today's press release. I'll now turn the call over to Rick Douk.

Rick? Thanks, Stan. Good morning, everyone, and thanks for taking the time to join us today. We had a very productive third quarter here at Workhorse. And here are some of the highlights on slide five. Let me start with a brief summary of our key hires during the quarter. Last quarter, I mentioned that hiring an experienced and capable commercial vehicle sales team was a critical focus area for us. And we did just that. And I will cover those details shortly. Additionally, we continue to strengthen our operating teams in both commercial vehicles and aerospace. Hiring a new plant manager at Union City and bringing on board two new vice presidents in aero, one in flight operations and technology, and another in manufacturing and supply chain. These individuals each bring more than 25 plus years of relevant industry and technical experience to their roles. We also made important additions to our finance, IT, and HR staffs, bringing on experienced professionals to improve our back office administration processes and systems. On the product portfolio front, I'm extremely pleased to report that we delivered our first W4CCs and made progress across our entire product roadmap. Getting safe, reliable vehicles in our customers' hands was an important milestone for the Workhorse team. Importantly, the W56 program remains on schedule and on budget. We also completed necessary preparations for executing the Tropos vehicle launch here in Q4. We did experience a setback in testing on the C-1000 vehicles, and I will provide details about this a bit later. We also made significant strides across several other major initiatives, including upgrading and transforming our facilities while expanding our engineering and testing capabilities. In aerospace, we were in the process of doing final flight testing for the horsefly, and we developed a new platform for humanitarian assistance and logistical operations, what we call HALO, in less than 120 days. We are executing on our government grants and are developing and acquiring the necessary equipment and skills to move into drone production in 2023. Today, we are introducing our Stables and Stalls initiative. We believe this effort is essential for Workhorse to better understand the challenges and needs of our fleet customers as they make the game-changing transition to electric vehicles. Finally, we continue to address legacy issues and remove overhang and uncertainty from the business, including the recent proposed settlement of a class action lawsuit, which was announced after the quarter end. This is a very important step for us here at Workhorse. Turning to slide six, throughout this past year, we have been focused on executing our stabilize, fix, and grow strategy, which starts with building a capable and experienced leadership team. We have hired nearly 100 associates across all areas of the organization, including sales, engineering, operations, and administrative functions. We believe having a cohesive team of hardworking, ethical people with relevant industry experience who are team-first players is absolutely critical to our transformation and long-term success as a company. To that end, during the third quarter, we hired our new vice president of commercial vehicle sales and marketing, Chris Amey. Simply put, Chris is a commercial truck sales professional. She spent the last 13 years with Volvo truck and responsible for both the Western region and for electromobility of sales across all of North America. She hit the ground running and has already hired three regional us sales leaders who bring a combined 50 plus years of commercial vehicle sales experience to workhorse. We also hired Renee Stevens. as our director of data analytics and field services who brings to us more than 30 years of OEM and data analytics industry experience. These positions were essential for us to fill as we continue to build up our team to become true pioneers in the transition to commercial EVs. I would say that for now, with the exception of a few specialized position requirements, such as warranty and parts services, we are finished with the hiring of senior level functional engineering and operational leaders here at Workhorse. Our focus now shifts to adding to the capable and motivated plant teams at our CV and aero factories located in Union City, Indiana and Mason, Ohio. Turning to slide seven, we continue to make excellent progress on our revised product roadmap plans. Starting with our class four offerings, the W750 and the W4CC. As a reminder, these vehicles serve to fill a critical gap between our limited production C1000 product and the future production of W56 and W34 platforms. The strong initial customer interest for these vehicles reinforces our belief that our products are differentiated in today's EV market. As I mentioned at the top, we delivered our first W4 CCs during the quarter and we are ramping up production and delivery throughout the remainder of 2022. We delivered 10 W4 CC vehicles during the third quarter and another 13 so far in the Q4. The W4CC's close cousin, the W75 package delivery van remains on track to complete initial pilot build production builds in Q4. Turning to the W56, which we introduced three quarters ago as the first new workhorse fully designed and purpose-built chassis platform. This vehicle will serve the Class 5 and 6 delivery step van and truck market segments. We are continuing to execute on our plans for the W56 program and are on track to begin production of the vehicles in Q3-23. About 90% of the platform bill of materials has already been sourced to proven Tier 1 suppliers, the vast majority located here in North America. Early mules were assembled in Wixom and Sharonville in Q3. We expect production attempt vehicles to be built in Union City in Q4, customer demo vehicles to be delivered in Q2, 23, and we will complete both FMVSS and durability testing in Q2 of 2023 as well. Moving to the C1000. Last quarter, we completed the redesign of the front suspension, which was intended to resolve the engineering problems on the platform. However, during fully loaded durability testing in the third quarter, a rear suspension component proved to be insufficiently designed. We are now in the process of procuring the redesigned part. As a result, we now expect to have durability testing completed during the fourth quarter. Based on testing results, we will then decide by the end of the year as to whether we prepare the existing vehicles and restart C1000 production or not. While this timing delay is frustrating, it's far more important for us to have safe and reliable vehicles on the road that our customers can rely on to do the job every single day. Moving to slide eight. I think that one of the most significant differentiators in our industry today is the ability to produce OEM-quality vehicles at scale from a full-size and modern plant. You have heard me speak about our Union City plant improvements for over a year now. Today, I'm announcing that the renovated and expanded Workhorse Ranch is ready to run. During the quarter, we completed the transformation of the Union City complex, upgrading the warehouse and completing the test track. As we've discussed, we've truly transformed the facility into a world-class operation with open, flexible manufacturing space and plenty of room to grow. The plant started initial production of Class IV vehicles in the corner. It's finalizing layouts for W56 production, scheduled to begin in Q4 of 2023. We are actively adding hourly staff each week to meet current and future build schedules. We are also on track to assemble vehicles in Union City for Tropos Technologies as part of a three-year contract manufacturing agreement beginning in Q4 of 2022. Volumes for final assembly of these Tropos vehicles for the U.S. market are expected to reach 2,000 units per year once production ramp up is complete. I hope that many of you are able to join us for our analyst day on December 7th, 2022 to see firsthand what the team has been able to do in reinvigorating our foundational asset, the Workhorse Ranch. We have also completed the upgrades to our design and technology center in Wixom, Michigan, and have recently moved into the new prototype and testing center here in Sharonville, Ohio. Moving to aerospace on slide nine. On last quarter's call, we provided an overview of the aerospace markets where we aim to compete for business, so I won't go into those details again today. I will reinforce, though, that we remain optimistic about our capabilities and opportunities in package delivery, as well as the mapping and sensor-based segments of the rapidly growing commercial market for drones. Our horse flight platform, which can deliver 10 pounds and 10 miles, a payload and range capability we believe is market leading, is nearing completion of final flight testing and has multiple last mile customer demonstration schedules during Q4. We continue to fly in support of the U.S. Department of Agriculture, providing field monitoring, data procurement, and analytics as part of projects in both Mississippi and Arkansas. We are also actively working in two additional states on different drone applications and expect to announce another new state-level grant later this month. Based on strong customer demand, we have also developed a new family of drones to meet emerging customer requirements for humanitarian assistance and logistical operations. This robust drone which can fly in automatic and manual controls, also in the final flight testing. We are in conversation with potential customers about building this product both here in North America and also in Europe. Moving on to a new initiative here at Workhorse on slide 10, which we're excited to announce this quarter. Today we are introducing Stables and Stalls, a fleet electrification platform that provides charging and services to EV fleets. Fleet electrification is a major unmet need in the last mile delivery industry. is extremely expensive and difficult for small fleet operators to transition to electric vehicles. Ensuring access to charging infrastructure is a must for them. So rather than joining the local crowd complaining about the lack of charging infrastructure, Workhorse has decided to take a more proactive approach and help with this unmet industry need. As part of this platform, we have leased our first stable, a maintenance location here in the greater Cincinnati area in Lebanon, Ohio. This week, we are installing 10 level two chargers, the stalls, for use in support of our own last mile delivery fleet. We believe Stables and Stalls will be an important growth opportunity for us that will support and complement the work underway across our other family of products. In connection with Stables and Stalls, we have purchased and began operating a FedEx ground delivery route in the greater Cincinnati area with the approval of FedEx. We are starting by serving the route with 10 company-owned internal combustion engine trucks. Our team has been delivering packages of all shapes and sizes to end customers since July. In the picture on the slide, you will see that we have already started to electrify the fleet. That is our first W750, which was just wrapped with a FedEx logo and colors and had its shelving installed last week. We expect to convert our entire fleet to 100% electric vehicles by the end of Q2 2023. This is an exciting opportunity for us. We have established key business partnerships that will enable us to capitalize on this opportunity and continue expanding in this market. One of our key deliverables from this effort will also be the data collection and field experience that will allow us to develop more efficient business model to enable small fleets to economically transition to EVs in the near future. With that, I'll now turn the call over to Bob to discuss our financial results.