Workhorse Group Reports Significant Financial Challenges, Decline in Revenue and Net Loss

Workhorse Group Inc. reported significant financial challenges in its latest 10-Q filing for the quarter ending September 30, 2024. The company experienced a notable decline in revenue, with sales for the three months amounting to $2.5 million, down from $3.0 million in the same period of 2023. For the nine months ended September 30, 2024, total sales were $4.7 million, compared to $8.7 million in the prior year. This decrease is attributed to slower adoption rates of electric trucks and a lack of government incentives, despite an increase in sales of the W56 truck model.

The company's gross loss for the third quarter was $(4.1 million), worsening from $(3.5 million) in the same quarter of the previous year. For the nine-month period, the gross loss expanded to $(16.7 million) from $(11.6 million) year-over-year. Operating expenses also decreased, with total operating expenses for the third quarter at $10.0 million, down from $17.5 million in 2023, primarily due to reduced selling, general, and administrative expenses.

Workhorse reported a net loss of $(25.1 million) for the third quarter, an improvement from $(30.6 million) in the same quarter of 2023. The net loss per share for the quarter was $(0.98), compared to $(2.84) in the prior year. For the nine months, the net loss was $(80.6 million), slightly higher than $(78.7 million) in the same period of 2023.

As of September 30, 2024, the company’s cash and cash equivalents plummeted to $3.2 million from $25.8 million at the end of 2023. Total current assets also decreased significantly to $57.5 million from $93.8 million. The company’s total liabilities were reported at $49.6 million, down from $53.3 million at the end of 2023, while total stockholders’ equity fell to $47.3 million from $83.1 million.

Strategically, Workhorse has taken steps to improve liquidity, including a reduction in workforce by approximately 20% and deferring executive compensation. The company also entered into a 2024 Securities Purchase Agreement to raise up to $139 million through senior secured convertible notes. However, substantial doubt exists regarding its ability to continue as a going concern, particularly following a notice from Nasdaq for non-compliance with the $1.00 minimum bid price requirement.

Additionally, the company has ceased production of its drone business and transitioned to a Drones as a Service model, which is expected to yield monthly cost savings. Workhorse is also exploring the sale of its Union City manufacturing facility for approximately $34.5 million, with plans to lease it back. The company continues to face challenges in attracting and retaining accounting personnel, impacting its internal controls and financial reporting.