Workhorse Group, Inc.

Ladies and gentlemen, greetings and welcome to Workhorse Group's second quarter 2023 investor call. As a reminder, this conference call is being recorded. It's 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, Kevin. Good morning and welcome to all of you joining us on today's second quarter 2023 results call. Before we begin, I'd like to note that we've posted our results for the second quarter, end of June 30th, 2023, via press release. You can also find this release, as well as the accompanying presentation, in the investor relations section of our website. We'll be tracking with that presentation during the call, so please follow along, either from the link in the press release or through the website directly. And with that, let's get started. Joining me on today's call are Rick Dowk, our CEO, and Bob Ganan, our CFO. The agenda for today can be found on slide three. Following my opening remarks, I'll hand the call over to Rick, who'll give you an update on the progress we've made in our strategic and operational priorities during the second quarter. Bob will then walk us through our financial results for the quarter and cover our revised 2023 guidance. Rick will then wrap up before we take your questions. Our disclaimer can be found on slide four. Some of the comments that we've made today are forward-looking and therefore are subject to certain provisions and are subject to risk and uncertainties. You can find the full disclaimer statement in our periodic filings with the SEC as well as in today's press release and in the presentation. And with that, I'll now turn the call over to Rick Dauk. Rick?

Thanks, Stan. Good morning, everyone. Thank you for taking the time to join us this morning. We're going to use this opportunity to provide an update on the progress we've made in executing our strategic and operational priorities during the second quarter. and the steps we are taking to position Workhorse for long-term profitable growth. Turning to slide five, our team is moving full speed ahead and is intently focused on execution, execution, and execution. We have taken decisive actions to build a strong foundation over the past two years here at Workhorse. I am confident we've established an organization, the product roadmaps, and business systems that position Workhorse for profitable growth and value creation for our shareholders and customers. During the second quarter, we increased production and delivery of our W4CC vehicles, launched production of the W750, and delivered our first W750 step van to an end customer. Our W56 program continued vehicle durability and systems testing ahead of the start of regular production in Q3. We also received our first orders for the W56, which we plan to deliver to customers in Q4. The W56 also was on full display for the first time outside of trade events at a CalSTART-sponsored event in Washington, D.C., and at select dealer shows on the West Coast where it received excellent reviews. We made solid progress expanding our dealer network, announcing new certified partnerships during the quarter with Burr, EVC Smyrna, and Western Truck Exchange. Each of these deals was targeted and selected for their specific regional location, reputations with customers, and ability to install custom bodies on cab chassis units. In addition, we shipped 53 Tropos vehicles as part of our three-year contract with the company that were assembled in our world-class manufacturing facilities in Union City, Indiana. And we expect volumes to grow in the second half of the year as Tropos continues to build a strong order book. On the other side of our business, we achieved a crucial milestone in our aerospace business by securing our first commercial drone purchase orders. This followed several successful demonstrations of our horsefly, including simultaneous package delivery by multiple drones at the same time. We conducted several horsefly and halo demonstration flights for the U.S. government at departments. We built on our success with the USDA and were awarded a new 900,000 field scanning grant in support of farmers in Mississippi. Our staples and solids initiative continues to serve us well, and we are well on our way to electrifying our FedEx ground fleet with five Class IV EV units now deployed in Lebanon, Ohio. We have expanded our delivery route assignments and are now picking up and delivering more volume than we were one year ago. We are continuing to apply our lessons learned from operating these routes daily to our future product development and marketing plans. Finally, we have been making the necessary facility and system improvements ahead of future production. These include the installation of final assembly and paint processing equipment in Union City in time for the W56 launch in Q3. Our Sharonville, Ohio prototype shop is now in full operation and the team there has done yeoman's work on early W750 and W56 program build units. Having completed our production line installation, we are now ready for drone assembly in our Mason, Ohio facility. Finally, We successfully completed phase one implementation of our new ERP system without issues, and we went live in early July. Again, the foundations for a high-tech manufacturing company are now in place after two years of hard work and the capital investments in production and test equipment, hardware, and software systems. Moving to slide six, I want to provide some additional details on the important progress we're making on our commercial vehicle product roadmaps. We are launching three new vehicles in less than 12 months. Easier said than done. We received firm orders for 62 vehicles across the portfolio and delivered 42 Class 4 vehicles, W4CC and W750s, to customers during the second quarter. Starting with the W4CC, we have stabilized production both at Union City and across our supply base, including Green Power. We have also secured body build slots for Q3 and Q4 to provide complete ready-to-use vehicles to our customers. We are now able to build and ship more than 300 W4CC units in 2023. Moving on to the W750 step van, we have started production at Union City. I will say candidly that it was a tough and challenging launch for our team, and we took away several lessons learned, which I will touch on shortly. The key point is that we now have five W750 vehicles in the field, one with a customer and another four at stables and stalls, and another five going through final prep ahead of shipments to customers in Q3. We also had the opportunity to showcase the versatility of the W750 during a full-day in-field demo with the City of Los Angeles. We have received supportive responses from our test drivers and are actively quoting several small fleet opportunities. We now have the capacity to build and ship about 50 W750 units in 2023. The W56, which is the first new workhorse fully designed and purpose-built chassis platform, remains on track to start production in September of this year. Importantly, we have already sold our first two vehicles to our dealer network even before we've begun initial production. We expect to have production quality demo units delivered to major fleets at early Q4. As I mentioned earlier, we also showcased our W56 vehicle, the only Class V or VI vehicle permitted to attend at the Driving Future in an electric vehicle event on June 7th in Washington, D.C. This EV showcase and the interactive event allowed members of Congress to learn more about the market readiness and advanced technology now ready and available to accelerate the transition to commercial EVs. I want to touch on the launch experience as we have worked through the last couple of quarters. since they are reminders of why creating a new vehicle OEM is easy on PowerPoint slide, but executing the real world is simply hard, grinding, tough work. We have assembled an incredibly talented team of experienced automotive professionals across several functions. As a team, they have worked to ensure that engineering change management discipline and documentation is complete and accurate. They have put in countless hours to ensure multiple software programs Both ours and our suppliers are compatible and fail safe, absolutely critical in electric vehicles. The final bill of materials must be frozen as early as possible, and supplier selection and sourcing must be completed on time to ensure part readiness for both pilot and full production builds. Our team gets these tasks. If the engineers get behind or do not properly document design changes, it throws the supply chain and manufacturing teams for a loop. We have also experienced this as well. These ingredients are really put to the test when the first production vehicle moves down the line. We learned and we grew a lot as a team and successfully got the W750 into production while launching a new ERP system, but it was a tough, challenging learning process. The good news is that we have developed muscle memory through the W750 launch process and we'll be better positioned when we start W56 production next month. Not to belabor the point, but designing Testing, sourcing parts, and then assembling and launching a new vehicle is incredibly hard work for the engineering, supply chain, and manufacturing teams. And it takes automotive industry experience, which we have in depth here at Workhorse, to get a new vehicle launched on time and on budget. I'm extremely grateful and proud of our team's hard work and dedication over the past 18 months in bringing not one, but three vehicles to market. A final thought on this subject. I personally went to the durability test track in South Bend, Indiana, to ride in both our W750 and W56 step vans while on the test. I will tell you that this is a tough, and I mean really tough, bone-rattling, balance-challenging vehicle test. When a truck successfully completes this rigor, it is ready for service in the field for 15 to 20 years. Both our W750 and W56 receive high praise from the third-party test vehicle drivers as best in class amongst the other EV vehicles going through the test cycle up in northern Indiana. Turning to slide seven, as we have mentioned in the past, Workhorse is developing a certified dealer network to meet end customer needs across the United States, targeting those areas where CARB standards will take effect in 2024 to 2030. I have spoken about our need to get manufacturing license secured in several states, and we are now licensed in and or authorized to ship to 23 states. the most important recent addition being California. We also expanded our certified dealer network, as I mentioned earlier, by adding Bird Truck and Trailer Sales, our first distribution service partner in the state of New York, and the initial workhorse dealership in the Northeast. EVC Smyrna Truck is our first certified EV dealer and bodybuilder in Georgia. And just last week, we announced our expanded California presence, adding Western Truck Exchange as a certified workhorse dealer. Adding Western Truck allows us to grow our dealer network through a trusted operator in the critical Southern California end market, which has some of the most favorable government incentives in the country. The map on the slide shows where we are planning to move forward with our plan to onboard six to eight new dealers in 2023. Most crucial is our expansion along the I-5 corridor out west, I-95 along the eastern seaboard, as well as the southeast and southwest regions of the United States. Finally, we have strong customer interest in the W56 and look forward to getting production-level quality trucks in our hands for field demonstrations and trials in Q3 and Q4. Several large last-mile delivery companies in the packaged goods, baking, industrial supply, and food service industries are requesting field W56 demonstrations. Our intent is to perform those demos and then secure firm POs for Q4 23 and 24 to 26 by year-end. Moving on to slide 8, we continue to execute on our stables by workhorse package delivery routes for FedEx ground. Based on our field performance, we have expanded our route assignments by about 20%. We now have five class IV EV units in the delivery fleet, four W750s, and a W4CC box truck. This represents about half of our operating fleet. We are on track to add W5C56 vehicles to the fleet in the fourth quarter. With these additional EVs in service, we will gain valuable insight for our white paper on small fleet EV transition. We are also continuing to review options for a second stables operation location in an incentive-supported state. In summary, we are gaining tremendous real-world experience to better serve independent contractor fleets as they make the transition to EVs. On slide nine, our aerospace team has been very active since the beginning of the year. As a result of the technical progress, operational capabilities, and the quality of our products, we have been able to earn our first commercial drone purchase orders for our industry-leading horsefly product. These purchase orders validate the nearly five years of developmental work and investments we have made in this product and a testament to the technical prowess of our aerospace team. We have completed multiple flights in support of our initial USDA grants in Arkansas and Mississippi to support underserved farmers and ranchers in those areas. Due to the success of these efforts, we have received a new $900,000 grant in Mississippi with scanning operations commencing in the third quarter this year. Our humanitarian aid and logistics operations, or HALO aircraft, which was developed in 142 days, performed multiple demonstrations with the U.S. military and other U.S. government entities. We have also successfully field tested the HALO internationally and are working hard to secure our initial orders for the HALO aircraft this year. We are very excited about the advances we've made in our aerospace business and believe we're well positioned to capture many of the opportunities in front of us in the market and create shareholder value with this business unit. With that, I'll now turn the call over to Bob to discuss our financial results. Thanks, Rick.