Workhorse Delivered 245 Vehicles In 2017, Reports Negative Margins

MAR 31 2018 BY MARK KANE 10

Workhorse Group reported 245 vehicles delivered during 2017, including 121 units in the fourth quarter of 2017 to the United Parcel Service (UPS).

The all-wheel-drive electric Workhorse N-Gen

The Cincinnati-based company noted huge sales acceleration, especially thanks to orders from UPS, who recently placed another order for 50 vans.

Separately, the company is developing the W-15 range-extended pick-up truck and states it that received more than 5,000 pre-orders.

However, expenses highly exceeded revenues both in the previous quarter and for the full year. During Q4, Workhorse Group’s revenues amounted to $5.5 million (up from $3.0 million year earlier), but net losses hit $12.5 million (up from $7.0 million).

For the year, revenues amounted to $10.8 million (up from $6.4 million), but net loss is $42.2 million (up from $19.6 million). Workhorse explains that losses increased due to higher volume growth in negative margin sales, which we understand as selling vehicles below cost.

Read Also – Workhorse W-15 Plug-In Electric Truck Test Drive Review

From the press release:

Workhorse W-15

Recent Operational Highlights

  • Built and delivered 245 units during the year ended December 31, 2017 which included the delivery of 121 units in the fourth quarter of 2017 to United Parcel Service (UPS) marking the successful completion of the fourth recurring order by UPS.
  • Secured a first-of-its-kind collaboration with UPS to design and deploy 50 plug-in electric N-GEN 1000 cu ft. delivery truck. Custom-built for UPS, these vehicles represent a major advance in full ground-up design, will produce zero tailpipe emissions and are comparable in acquisition cost to conventional-fueled trucks without any subsidies.
  • On track to launch the N-GEN 450 cu. Ft. delivery vehicle in a pilot program in early Q2, addressing the high-growth last mile package delivery segment.
  • Received notice of allowance for HorseFly™ truck launched drone package delivery system patent.
  • W-15 Pickup Truck received the Innovation Award at the NTEA in March 2018.
  • The W-15 Leadership Council, comprised of industry leading fleet representatives from utilities, municipalities, airlines, convened in Q4 and has provided valuable feedback toward ongoing W-15 development progress.
  • Appointed Kevin Vincent as Vice President of Government, Regulatory and Safety Affairs.
  • Revenue increased by $2.2 million over the prior quarter and increased $2.5 million compared to the same year-ago period.
  • Workhorse electric vehicles have now logged two million miles and are deployed with customers in 19 states.

Fourth Quarter 2017 Financial Results
Sales for the fourth quarter of 2017 increased 81% to $5.5 million from $3.0 million in the same period in 2016. The increase in sales was due primarily to an accelerated rate of fleet conversion to Workhorse vehicles by UPS and the company’s increased production capacity.

Selling, general and administrative expenses in the fourth quarter of 2017 increased 59% to $2.3 million from $1.4 million in the same period last year. The increase in selling, general and administrative expenses was due primarily to higher employee salaries and benefits, consulting and investor relations.

Research and development expenses in the fourth quarter of 2017 increased 104% to $3.9 million from $1.9 million in the same period last year. The increase in research and development expenses was due primarily to consulting and materials related to the start of the Next Generation Delivery Vehicles (NGDV) project and the SureFly™ Octocopter.

Total operating expenses for the fourth quarter increased 85% to $6.2 million from $3.4 million in the fourth quarter of last year. The increase in total operating expenses was due to increases in SG&A and R&D expenses.

Net loss in the fourth quarter of 2017 was $12.5 million, compared with a net loss of $7.0 million in the fourth quarter of 2016, due primarily to higher volume growth in negative margin sales.

As of December 31, 2017, the company had cash, cash equivalents and short-term investments of $4.1 million compared to $0.5 million as of December 31, 2016. The increase was primarily attributable to the closing of the company’s underwritten public offerings in February and September 2017.

Full Year 2017 Financial Results

SureFly & Workhorse W-15

Sales for the full year 2017 increased 69% to $10.8 million from $6.4 million in the same period in 2016. The increase in sales was due primarily to an accelerated rate of fleet conversion to Workhorse vehicles by UPS and the company’s increased production capacity.

Selling, general and administrative expenses for the full year 2017 increased 67% to $10.3 million from $6.2 million in the same period last year. The increase in selling, general and administrative expenses was due primarily to higher employee salaries and benefits, consulting and investor relations.

Research and development expenses for the full year 2017 increased 194% to $18.1 million from $6.1 million in the same period last year. The increase in research and development expenses was due primarily to consulting and materials related to the start of the NGDV’s project and the SureFly Octocopter.

Total operating expense for the full year 2017 increased 130% to $28.4 million from $12.3 million in 2016. The increase in total operating expenses was due to due to increases in SG&A and R&D expenses.

Net loss for the full year 2017 was $42.2 million, compared with a net loss in 2016 of $19.6 million, due primarily to higher volume growth in negative margin sales.

Workhorse CEO Steve Burns said:

“The fourth quarter was a solid finish to a transformational year for our company. Financially, we grew our topline by 81% for the quarter and nearly 70% for the year thanks to our increasing production capacity and continued demand from new and existing customers.  Additionally, we’ve grown our backlog to a record $12 million, putting us at a pace that already exceeds our total sales in 2017. Operationally, and most notably, we recently secured a new collaboration with UPS for our electric N-GEN delivery trucks, with an initial pilot of 50 vehicles. These ground-up designed zero-emission vehicles will incorporate advanced performance and safety features, and will be comparable in acquisition cost to conventional-fueled trucks without the need for incentives.

“Looking ahead, Workhorse is in an increasingly strong position to improve our topline and production capacity, both of which will have a positive effect on our margins,” continued Burns. “Led by the expected growth and production of our N-GEN and W-15 portfolio, we remain focused on achieving positive gross margins per vehicle by the end of the year and our aspirations are to generate orders for approximately 2,000 vehicles in total by the end of 2018 and to commence production by the end of 2018. As we begin deliveries of our limited production prototype W-15 electric pickup truck at the end of the year, our target remains on converting the existing pre-orders to purchase orders following the performance testing by commercial fleets of our prototypes.”

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10 Comments on "Workhorse Delivered 245 Vehicles In 2017, Reports Negative Margins"

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Good for them. Now if they can make some money, so much the better. Seems like these guys are beating Bob Lutz at his own game.

Making vehicles is tough. I hope they make it.

Ah… this will be the ” Workhorse W-15 Plug-In Electric Truck” that actually isn’t an EV at all but a plug-in hybrid truck with a stinky “three-cylinder range extender gasoline engine” in it, then?

You guys are bordering on publishing ‘fake news’ and I wish you would stop. Your continued editorial misrepresentation of hybrids as EVs stinks and brings the whole EV idea into disrepute (along with your journalistic credentials).

Ridiculous. When I drive my C-Max without using gas, using renewable energy I buy on Pennsylvania’s market, is that polluting, or not?

If it can practically operate without using fuel, it’s an EV.

This site uses the fairly common convention that EV is a category containing both BEVs and PHEVs.
Whether you like it or not, lots of people & EV coverage sites use the same convention, and it’s not going to change here. If you really can’t stand it, why keep on reading here?
Also, this article describes a vehicle with 80mi AER, which will likely not be used for long-range travel so 80%-90% of miles will be electric. It’s ridiculous getting annoyed at this article specifically, where I don’t see you comment on every article that describes a <20mi (or even <15mi) PHEV — virtually all PHEVs by European manufacturers.

Let alone, this truck isn't really a hybrid — its engine is a range-extender which is only a generator, like the BMW i3 REx. Does that i3 version not count as an EV with you?

Apparently, its range-extender engine isn’t merely like the BMW i3 REx’s engine, but it is this same engine. This engine isn’t a “stinky “three-cylinder range extender gasoline engine””; it is a 2-cylinder BMW scooter engine. It’s certainly not as stinky as a 2-stroke engine, but it does use gasoline as its fuel with the usual pollution controls.

Until battery cell energy density increases considerably, ensuring a range suitable for many commercial use cases requires a range extender of some sort. At this time, a small gasoline ICE seems to be the best choice.

.. so they have to sell the vehicles for over $200k each , just to break even.. ?
Hope this includes high start up costs, like tooling and so on. If not, they’re in trouble.

I hope Workhorse will be a success. Their product line of electric trucks and vans could have a profound impact in electrifying the transportation industry. I just hope they do not have too many irons in the fire with their efforts to bring too many products to market at the same time. My advice would be to drop the personal helicopter and delivery drone efforts and concentrate on getting electric trucks and vans into production. If they are successful with their various efforts they will have to increase production at least ten fold.

The Workhorse W-15 promises to be the most advanced electric truck to be coming on the market. As such, I’ve decided to put my money on Workhorse and placed a reservation.

Correction, production will have to increase by a least a hundred fold, not the fold.

Hoping a Bosch eAxle will enable me to EV a ProMaster or something later this decade . . .

(decade’s running out!)