Workhorse Group, Inc.

Hello, and welcome to the Workhorse Group Q1 2024 Earnings Conference Call. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may press star one at any time to be placed in the question queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Stan March, Vice President, Corporate Development and Communications. Please go ahead, Stan.

Thank you, Kevin, and good morning. I'd like to welcome all of you to our first quarter 2024 results call for Workhorse. Before we begin, I'd like to note that we posted our results for the first quarter and at March 31st, 2024 via press release earlier this week. You can find the release and a presentation which was released this morning in the investor relations section of our website. We'll be tracking along with the presentation during this call. Also joining me on today's call are Rick Douck, our CEO, and Bob Kanan, our CFO. For today's agenda, please turn to slide three of the presentation. Following my opening remarks, I'll hand it over to Rick, who will give you an update on the progress we've made recently on our strategic and operational actions. Bob will then walk us through our financial actions and results of the first quarter. Rick will then wrap up with our near-term objectives before we open the call to questions. On slide four, you can find our disclaimer, as some of the comments that will be made today are forward-looking and are therefore subject to certain provisions and are also subject to risks and uncertainties. You can find the full disclaimer statement in our periodic filings with the SEC, including the 10Q filed on May 20th, as well as the earnings press release also published that day. Now I'll turn the call over to Rick Dauk.

Thanks, Stan. Hello, everyone. Thank you all for taking the time to join us today. As Stan said, this is our call to review our first quarter earnings. But today we're going to focus most of our time talking about many of our achievements in April and May, which have been significant. We've made positive strides in advancing our product roadmap, executing our strategic plans, and strengthening our financial positions. These efforts are enabling Workhorse to remain a segment leader in the transition to commercial EVs, specifically in the last mile delivery step band and work truck spaces. Turning to slide five, let's talk about our achievements. We have received substantial orders for both our W56 and W4CC trucks. We continue to hold successful product demonstrations with dealers and fleet operators. And both groups are affirming the strong market potential of our commercial EV trucks, specifically the W56. Second, we are expanding our commercial network by adding new dealers, including two locations in New York City, a critical location for EV adoption and incentives in the near future. We've also added two locations in the Upper Midwest and Northwest regions. And we're on track to hit our target of 15 to 20 nationwide dealers by the end of 2024. Third, we have an encouraging path forward for the aero business. As we previously announced in February, our board of directors approved a plan to transition exclusively to operating as a less capital intensive drones as a service business. Accordingly, we have halted the production of our drone design and manufacturing business and mothball bed equipment. We are now close to completing an agreement to divest the aero business to a buyer that can invest in its future growth. This move will also provide us with additional financial flexibility here at Workhorse. Finally, over the last several months, we have taken several steps to strengthen and extend our financial runway, preparing Workhorse to emerge as a winner in the EV market as the industry transitions to that technology. That said, I want to acknowledge the Workhorse team and our supplier partners. A number of the difficult but necessary steps we have taken over the last several weeks have impacted our people and some of our stakeholders. We've reduced our headcount and had to temporary furlough our employees our Union City plan. We have incredible respect and admiration for our people, and we pride ourselves on being a local employer in our communities. As we navigate the near term and the transition to EVs, we're focused on returning our team to work when additional truck orders are received. I'm confident that we are making progress on the sales front. Moving to slide six and turning to our commercial vehicle programs. As I mentioned during the first part of the year, we have held a number of successful product demonstrations with last mile delivery companies and have been in constructive and meaningful discussions regarding purchase orders with these customers. They are thoughtfully working through their own capital expense plans in order to make the transition to zero emission vehicles, which will take multiple years to complete. Remember, it takes time to install the charging system infrastructure before they get the vehicle. So that's critical. We'll talk about that in a little bit. We have received orders for a total of 68 W56 step vans to date. We view this as a strong part to grow in the sales pipeline for this vitally important product line. We are also working on developing new W56 wheelbase variants, which will launch in 2024-26, including the new 208-inch wheelbase 1,200-cubic-foot van, which launches late this year. We also received the purchase order for 141 W4CC chassis from Kingsburg Truck Sales, our dealer of the year in 2023, for delivery over the coming quarters. This is a big milestone as it will essentially clear all of the Class IV finished goods inventory remaining at Union City. We believe the KTS order indicates the initial transition to EV commercial vehicles is slowly starting to take place in California, especially at small work truck fleets. As you will see on slide five, we now have expanded our dealer network and service footprint by adding Malia Truck Sales and the Ziegler Truck Group to our certified dealer network. We now have a total of 12 dealer partners strategically targeted in states adopting the CARB Clean Fleet standards over the next few years. At Stables, we continue to grow our EV fleet and expand our delivery routes with the FedEx ground here north of Cincinnati. We have deployed two W56 step vans in addition to our 10 W750 step vans. We expect the whole fleet to be fully electrified in 2024. And our initial data shows a significant improvement in operating cost savings using the EV powered trucks, which we shared with some of the large fleets in the last 90 days. This week, the annual ACT trade show was held in Las Vegas. And this is one of the reasons we pushed our earnings call to today. I want to share with you our observations from this four-day event, given the concentration of competitors, partners, suppliers, regulators, and customers who attended the event. First, significant R&D investments continue to be made in EV technology and vehicles by all major commercial truck OEMs and several remaining startups. Second, the first signs of orders, mostly in California, are starting to emerge across both small local and larger national fleets. Third, the adoption and enforcement of the new CARB mandates is causing some confusion, especially at smaller fleet customers. In the Class 4-6 segment, fleets in California must now register their entire fleet with the state and must target a 9% EV adoption rate by 12-31-24. This is causing some administrative challenges for some of the smaller fleets right now. I'm sorry, there are two or three OEMs targeting, there are only two or three OEMs targeting the Class 5-6 step-bam market. And Workhorse continues to be the only OEM that is capable of building both the chassis and full step-bam cab and body under one manufacturing route in North America. Our W4CC continues to be the only Class 4 cab and chassis EV offering in full production. Many talk about production, but they aren't in production. and it's capable of providing 5,000 pounds of payload in capacity and in the range of 150 miles. And finally, what I heard over and over from everybody is charging infrastructure and the availability of charging systems remains patient items across the industry as we make the transition to EVs. That's both at the small fleets I've talked to with our dealers and even the largest fleets here in North America. With that, let me turn the call over to Bob to discuss our financial results and the recent steps we have taken to strengthen our financial position.