Workhorse outlines $20M synergy target and strategic merger with Motiv to accelerate medium-duty EV growth

Earnings Call Insights: Workhorse Group Inc. (WKHS) Q2 2025

MANAGEMENT VIEW

* Richard F. Dauch, CEO, announced a strategic combination with Motiv and highlighted record second-quarter results, stating the company secured 36 purchase orders and shipped a record 32 W56 step vans. He indicated, “These record results are a testament to the hard work and dedication of the Workhorse team and were driven by the proven operating performance of our W56 line of vehicles and overwhelmingly positive customer feedback on these vehicles from the field.”
* Dauch emphasized ongoing product innovation, including final durability testing on a 140-kilowatt W56 model with 100-mile range, planned for production in early 2026, and the introduction of the Utilimaster Aeromaster walk-in van body for the W56 chassis. He noted, “We continue to operate efficiently, extending the company's financial runway…a decrease in operating expenses by $7 million year-over-year, while shipping a record number of vehicles in the quarter.”
* Dauch detailed a strategic merger agreement with Motiv, including an interim $25 million funding package through sale leaseback and convertible note financing, designed to bolster liquidity through the transaction close.
* Robert M. Ginnan, CFO, stated, “In the second quarter, Workhorse saw significant year-over-year improvement across almost every operating metric. In the second quarter of 2024, we shipped 1 truck compared to this year's second quarter when we shipped 32, an increase of 31 trucks during the year.”
* Ginnan added that sales, net of returns and allowances, were $5.7 million for the quarter, driven by higher W56 shipments. He also highlighted a $6.3 million decrease in SG&A expenses and a $700,000 decrease in R&D expenses year-over-year.
* Dauch further clarified that, at the closing of the Motiv merger, Motiv’s controlling investor will own approximately 62.5% of the combined company, Workhorse’s existing senior secured lender will have rights to about 11%, and Workhorse shareholders will own approximately 26.5%, with all stakes subject to adjustments.
* Scott W. Griffith, CEO of Motiv, stated, “The combination of Motiv's diverse product portfolio and top fleet relationships with Workhorse's proven vehicles, manufacturing capabilities and national dealer network creates a strong combined company.” He outlined an expected synergy opportunity of at least $20 million by the end of 2026.

OUTLOOK

* The merger is expected to close in Q4 2025, subject to shareholder approval and other customary conditions, including debt financing commitment. Dauch said, “Looking ahead, we intend to seek additional new financing to fuel go-forward plans.”
* Upon completion, the combined company expects access to up to $20 million in debt financing, including a $10 million revolving credit facility and a $10 million ABL facility to support manufacturing costs on confirmed purchase orders.
* Management stated plans to raise further capital to execute strategic initiatives in 2026 and beyond, with a focus on margin expansion and product development.

FINANCIAL RESULTS

* Shipments increased from 1 truck in Q2 2024 to 32 trucks in Q2 2025, with sales, net of returns and allowances, rising to $5.7 million, compared to $800,000 for the prior-year period.
* Cost of sales for Q2 2025 was $13.1 million, primarily due to higher sales volume and increased inventory reserves.
* Operating expenses, including SG&A and R&D, declined significantly year-over-year, reflecting ongoing cost discipline.
* Net loss for the six months ended June 30, 2025, improved to $35.4 million from $55.5 million in 2024. Excluding interest and fair value adjustments, net loss from operations improved from $44.2 million to $27.3 million.
* As of June 30, 2025, the company reported $2.2 million in cash and $22.5 million in restricted cash, with $32.8 million in inventory net of reserves.

Q&A

* Craig Irwin, ROTH Capital Partners: Asked about Motiv’s experience with Hudson County Motors and the New Jersey ZIP program, and whether Workhorse could leverage similar opportunities. Scott W. Griffith responded, “We have a fantastic relationship with Hudson County Motors. I think that's going to expand…using that as an example across the country is the way we see the future.”
* Irwin questioned the combined company’s ability to access federal and state support, and how the merger would impact growth and deliveries. Dauch replied that changes in incentives, like California’s CARB program, would be positive, and “this deal…gives us a stronger balance sheet with a strong financial backer.” Griffith emphasized the benefit of new financing to support rapid order fulfillment and a focus on achieving cost parity with internal combustion vehicles.
* Gregory Robert Lewis, BTIG: Inquired about the opportunity to grow the bus and shuttle business post-merger. Griffith answered, “It's school buses and it's also shuttles…we think on a cost basis, TCO basis, we're highly competitive against the ICE counterparts in that space.”
* Shareholder questions addressed merger terms, reverse split rationale, combined company valuation, product portfolio overlap, and future capital needs. Griffith and Dauch confirmed further details would be provided in the upcoming proxy and outlined plans for a unified sales approach targeting large fleets, with continued focus on growth in the bus, shuttle, and municipal segments.

SENTIMENT ANALYSIS

* Analysts expressed cautious optimism, focused on practical opportunities from state incentives and the ability to ramp up production and growth post-merger, while seeking clarity on execution and financial sustainability.
* Management maintained a confident and collaborative tone, highlighting operational improvements, strategic rationale for the merger, and the combined entity’s strengthened financial position. During discussions on capital needs, management was transparent about the need for future fundraising but stressed strategic alignment and operational readiness.
* Compared to the previous quarter, management’s tone shifted from emphasizing operational discipline and survival to forward-looking growth, integration, and market leadership. Analyst tone was more engaged and constructive, reflecting renewed interest in the company’s strategic direction.

QUARTER-OVER-QUARTER COMPARISON

* Guidance language evolved from cautious and survival-focused in Q1 to an assertive outlook centered on growth, synergy realization, and product expansion via the Motiv merger.
* Strategic focus shifted from operational cost reduction and securing smaller orders to scaling production, integrating portfolios, and accessing new markets through the merger.
* Analysts' focus moved from immediate financial runway and basic sales momentum to deeper questions about market access, incentive programs, and the strategic value of the merger.
* Management’s confidence was noticeably higher, with detailed plans for joint product development and sales, and an emphasis on building a market-leading medium-duty EV platform.

RISKS AND CONCERNS

* Management acknowledged ongoing challenges in EV fleet adoption rates, heavily influenced by external factors such as regulatory and incentive shifts. Dauch stated, “It's true that factors largely outside of our control, like a shifting political landscape and changing government regulations and incentives have led to delayed fleet customer adoption rates.”
* The need for continued capital raising was openly discussed, with future financing required to execute long-term plans.
* Analysts and shareholders raised concerns about product overlap, the sufficiency of transaction-related financing, and the complexity of integrating supply chains and product lines.
* Management described mitigation strategies, including leveraging new debt facilities, cost synergies, and a focus on building customer confidence through a stronger balance sheet and unified go-to-market strategy.

FINAL TAKEAWAY

Workhorse’s second quarter marked a pivotal moment with record W56 shipments, substantial cost reductions, and the announcement of a strategic merger with Motiv. The combined entity aims to leverage expanded product offerings, a strengthened balance sheet, and projected synergies of at least $20 million by the end of 2026 to become a leading medium-duty electric truck OEM. Management is focused on closing the merger in Q4 2025, accessing new financing, and driving growth through large fleet relationships and accelerated product innovation, while remaining transparent about ongoing risks and the need for further capital to support strategic execution.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/wkhs/earnings/transcripts]

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* Workhorse Group Inc. (WKHS) Q2 2025 Earnings Call Transcript [https://seekingalpha.com/article/4814919-workhorse-group-inc-wkhs-q2-2025-earnings-call-transcript]
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