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Workhorse reported its third quarter results, record loss
Workhorse reports $81M loss, plans to redesign C-1000 electric cargo van

An Electric Vehicle company, Workhorse Group has reported its third-quarter earnings on Tuesday, 9 November 2021. It includes negative sales and the shares fell a little in premarket trading because the stock already has been badly beaten up.

The revenue from sales, for the third quarter of 2021 is around in loss of $0.6 million, which was $0.6 million for the last prior quarter of 2020. Wall Street was looking for sales of about $900,000, but it’s very far from the expectations. The decrease in sales was primarily related to a $1.1 million refund liability recorded during the third quarter of 2021 related to the recall of the Company’s C-1000 vehicles.

The increment of cost of sales is $11.5 million compared to the last third quarter of 2020, which was $2.8 million. The surge in cost of sales was primarily due to inventory on hand that has a higher cost than its net value, an increase in warranty reserves due to recalling of the company’s C-100 vans.

In September, however, Workhorse recalled 41 vans in its C-1000 line and suspended deliveries, which sent the stock plummeting. In a regulatory filing on Monday, the company said new leadership “determined that additional testing and modifications to existing vehicles are required to bring the C-1000 vehicles into full compliance with Federal Motor Vehicle Safety Standards.”

Workhorse CEO Rick Dauch admitted on Tuesday that, aside from federal safety issues, the C-1000 just might not be up to the task of heavy-duty deliveries. The company is performing additional testing of the current truck design, which Dauch said is present “not robust nor is it profitable.”

Selling, general, and administrative (“SG&A”) expenses were also higher by over 60 per cent. They are $10.6 million compared to last prior quarter $6 million. The increase in SG&A expenses was primarily driven by higher compensation-related costs due to stock-based compensation, legal costs, and insurance costs.

Research and Development (“R&D”) expenses also increased by around 55 percent from $1.6 million to $2.8 million in the same respective quarter for 2020 and 2021.

The Loss of operations is more than doubled. It increases from a loss of $9.8 million to  $25 million in this third quarter of 2020 and 2021 respectively.

Net interest income was $18.6 million compared to $74.3 million in interest expense in the same period last year. The decrease in interest expense was primarily driven by an $88.5 million decrease in expense related to fair value adjustments and losses on conversion of the Company’s convertible notes and a $4.7 million decrease in losses recognized on redemption of Series B Preferred Stock, offset by a $0.8 million increase in contractual interest expense related to the Company’s convertible notes.

Net loss was $81.1 million, compared to a net loss of $84.1 million in the same period last year. Loss from operations for the third quarter was $25.5 million compared to $9.8 million in the same period last year.

As of September 30, the Company had approximately $230.4 million in cash and cash equivalents.

 

Financial Statement:

 

Workhorse Group Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Sales, net of returns and allowances $ (576,602 ) $ 564,707 $ 1,147,334 $ 740,949
Cost of sales 11,549,187 2,815,242 32,570,616 6,074,577
Gross loss (12,125,789 ) (2,250,535 ) (31,423,282 ) (5,333,628 )
Operating expenses
Selling, general and administrative 10,579,586 5,950,058 24,470,953 15,464,926
Research and development 2,801,394 1,614,485 8,788,969 5,133,325
Total operating expenses 13,380,980 7,564,543 33,259,922 20,598,251
Loss from operations (25,506,769 ) (9,815,078 ) (64,683,204 ) (25,931,879 )
Interest (income) expense, net (18,599,130 ) 74,315,644 (23,040,886 ) 185,638,961
Other loss (income) 77,127,266 225,432,884 (864,900 )
Loss before benefit for income taxes (84,034,905 ) (84,130,722 ) (267,075,202 ) (210,705,940 )
Benefit for income taxes (2,919,491 ) (21,833,930 )
Net loss $ (81,115,414 ) $ (84,130,722 ) $ (245,241,272 ) $ (210,705,940 )

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