Workhorse Group Inc. (WKHS)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue surged to $5.67M on shipments of a record 32 W56 trucks; net loss per share improved to $(1.67), with year-over-year OpEx down sharply as cost actions took hold .
• Results materially beat the thin Wall Street consensus: revenue $5.67M vs $2.30M* and EPS $(1.67) vs $(3.98); however, gross loss remained significant due to inventory reserves and early-scale manufacturing inefficiencies .
• Strategic combination announced with Motiv Electric Trucks: $20M Union City sale-leaseback and a $5M secured convertible note closed at signing; at deal close, Motiv’s controlling investor to own ~62.5%, senior lender ~11%, existing WKHS shareholders ~26.5% subject to adjustments .
• Liquidity remains tight ($2.2M cash, $22.5M restricted) pending transaction close and new committed debt facilities; catalysts include shareholder vote, debt facility activation, and order conversions signaled by management and dealers .

What Went Well and What Went Wrong

• What Went Well

  • “We shipped a record 32 trucks in the second quarter,” driven by the W56 and positive field feedback; management cites >60 vehicles operating, 212,000+ miles, ~97% uptime across diverse conditions .
  • SG&A fell to $5.8M (down $6.3M YoY) and R&D to $1.2M (down $0.7M YoY) reflecting disciplined cost control and lower headcount; interest expense also fell YoY .
  • Merger with Motiv strengthens scale, product breadth (Class 4–6), and financing access; interim $25M funding closed and additional $20M debt expected at close .

• What Went Wrong

  • Gross loss of $(7.38)M persisted despite higher sales, reflecting inventory excess/obsolescence reserves (+$1.8M) and early-scale costs; cost of sales rose to $13.1M .
  • Cash remains constrained ($2.2M cash, $22.5M restricted), and convertible notes at fair value were $39.5M as of June 30, 2025, underscoring financing dependency until transaction close .
  • Balance sheet dilution risk: post-close ownership implies current shareholders at ~26.5% fully diluted, with further potential dilution from future financing plans .

Financial Results

Headline results vs consensus and prior quarters

Values marked with * are from S&P Global.

Operating line items (YoY and sequential context)

Balance sheet highlights

KPIs

Drivers of the quarter

• Revenue growth driven by higher W56 shipments; Q2 sales rose to $5.7M from $0.8M YoY .
• Gross loss impacted by $1.8M increase to inventory excess/obsolescence reserves, offset by lower production/labor costs .
• SG&A and R&D both lower YoY on headcount reductions and lower consulting/IT/insurance; net interest also lower YoY .

Guidance Changes

Management did not provide numeric revenue, margin, or EPS guidance; commentary focused on merger timing, interim funding, and financing access at close .

Earnings Call Themes & Trends

Management Commentary

• “We shipped a record 32 trucks in the second quarter, driven by the proven performance of our W56 step vans and positive customer feedback” — CEO Rick Dauch .
• “The recently completed $20 million sale leaseback and $5 million secured convertible note transactions will simplify Workhorse’s capital structure and provide us with the near-term liquidity to support our operations through the close of the transaction” — CFO Bob Ginnan .
• “At the close… Motiv’s controlling investor initially will own approx 62.5%… Workhorse’s existing senior secured lender… ~11%… and Workhorse shareholders… ~26.5%” — CEO Rick Dauch .
• “Together we believe we’ll be positioned for success as a leading North American medium duty electric truck OEM… significant synergies… stronger financial position” — Motiv CEO Scott Griffith .

Q&A Highlights

• Incentive programs and TCO: Management expects California and Northeast vouchers to support near-term orders, but the long-term objective is diesel cost parity via scale/BOM reductions and working capital facilities to shorten order-to-delivery cycles .
• Pipeline and customer confidence: Larger fleets signaled comfort with the combined entity’s capital structure; management expects this to unlock orders previously gated by balance sheet concerns .
• Go-to-market: New “team sell” model pairs Motiv’s direct sales with Workhorse’s 50-state dealer coverage to move customers from pilot to multi-depot rollouts .
• Adjacent markets: School bus/shuttle and municipal applications seen as attractive near-term opportunities given duty cycles and community support .
• Financing sufficiency: Interim funding expected to bridge to close; up to $20M debt at close; post-close capital raise likely for 2026+ plan .

Estimates Context

• Q2 2025 beat: Revenue $5.67M vs $2.30M*; EPS $(1.67) vs $(3.98); coverage remains thin (1 estimate) .
• Sequential context: Q1 2025 missed both revenue ($0.64M vs $2.00M*) and EPS ($(4.68) vs $(4.00)) .
• Prior quarter: Q4 2024 missed both revenue ($1.92M vs $3.07M*) and EPS ($(0.94) vs $(5.31)) but EPS “beat” mechanically vs very negative consensus is not indicative due to small base and non-linear items.
  Values marked with * are from S&P Global.

Key Takeaways for Investors

• Volume is inflecting: 32 shipments in Q2 and 36 POs demonstrate tangible demand for W56; watch for conversion of large-fleet pilots to multi-depot orders .
• Profitability still constrained: Q2 gross loss widened on reserves and scale; sustained margin improvement likely hinges on merger synergies, BOM reduction, and volume scale .
• Liquidity a near-term swing factor: Low cash and reliance on restricted cash elevate execution risk; interim funding closed, with additional debt expected at transaction close .
• Merger is the core catalyst: Ownership reallocation is meaningful, but combined product breadth, customer overlap, and financing access could accelerate adoption and reduce delivery cycles .
• Estimate revisions likely upward on revenue/EPS beats, but coverage remains thin; future quarters may see more normalized comparisons as scale builds*.
• Watch rails: shareholder vote timing, regulatory approvals, committed debt activation at close, and order announcements tied to voucher programs and dealer-direct “team sell” execution .