Cincinnati-based Workhorse, which is in a process of ramping-up production of all-electric delivery vehicles, announced its Q3 2020 results.
The company noted sales of just $565,000 during the period (although it's an improvement compared to $4,000 a year ago), while the operating income was a loss of $9.8 million compared to a loss of $5.6 million in the third quarter of 2019. Moreover, because of the increase in interest expense (net), the net loss was $84.1 million.
"Interest expense, net increased to $74.3 million compared to an interest expense, net of $5.9 million in the same period last year. The significant increase in interest expense was almost exclusively due to a change in fair value of the Company's convertible note, the loss on its conversion to stock and the loss on the redemption of Series B Preferred Stock. These GAAP adjustments are non-cash and were dependent on the underlying stock components of the financial instruments, respectively."
On the positive side, the company owns 10% ownership stake in Lordstown Motors (after the merger between Lordstown Motors Corporation with DiamondPeak Holdings Corporation), which was estimated at nearly $285 million based on the November 6th closing price.
2020 production target will not be achieved
Earlier this year Workhorse announced a production and delivery target of 300-400 vehicles in 2020 (mostly in Q4).
However, as of today, it's already clear to the management that the target will be missed "substantially" due to two reasons: battery supply constraints and COVID-19 related issues.
"...Previously, we projected 300-400 vehicles to be produced by the end of 2020, mostly in the fourth quarter. Although we will still manufacture and deliver vehicles in Q4, it will be a substantially lower amount than our previous guidance. We are unable to give a specific estimate for the following reasons:
- The inability of our primary battery supplier to meet our volumes due to capacity issues and COVID-related slowdowns;
- COVID-19: Having more than 36% of our production-related staff currently out with the virus or quarantined awaiting results and with daily increases in cases, we must protect our employees' health. To do that, we have modified our assembly process, limited production support from third party sources, and delayed planned additions to our assembly staff."
The company is seeking how to solve the battery supply issue and "introduced several new battery supplier options" into its supply chain, which should allow increasing volume in Q1 2021.
The new target for the 2021 year is roughly 1,800 electric vehicles.
Purchase order for 500 C-1000!
On the sales front, the major news is a purchase order for 500 Workhorse C1000 trucks from Pritchard Auto Company for its National Fleet Program.
Those vehicles to be distributed through Pritchard Companies' dealership locations across the country, while the inventory financing will be provided by Hitachi Capital America.