Workhorse Group, Inc 2026 Q2 Earnings Call

Thank you, operator, and good afternoon, everyone. I would like to welcome all of you to Workhorse's second quarter 2026 earnings call. Please note that we have posted our results for the second quarter ended June 30, 2026, via press release and 8-K, and filed our associated quarterly report on Form 10-Q with the SEC. You can find the release and an accompanying presentation in the investor relations section of our website. We will be tracking along with the presentation during this call. Before we get to the quarter, one framing point. While Workhorse and Motiv came together in December 2025, what came out of the merger is, in practice, a different company than the one that many of you have followed for years. A new management team, new operating platform, and a new strategy.

We look forward to sharing more about the new Workhorse today, as well as reporting on our progress each quarter. Joining me on today's call are Scott Griffith, our Chief Executive Officer, and Jody Davis, our Chief Financial Officer, who joined Workhorse in July. For today's agenda, please turn to slide 3. Following my opening remarks, I will hand it over to Scott, who will provide an update on our operational and commercial progress and the strategic priorities we are focused on, including our recently announced planned entry into the mobile AI data center category. Jody will then walk us through our financial results for the quarter and our capital position. Scott will then make closing remarks before we open the call for questions. Our cautionary language can be found on slide 4.

The comments that will be made today include forward-looking statements, which are based on current expectations and projections about future events. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. Additional information regarding these risks and uncertainties can be found in today's press release and in our filings with the SEC, including our Form 10-K and Form 10-Q. Now, I will turn it over to Scott.

Thanks, John. Good afternoon, everyone, and thank you for joining us. As we complete the final stages of merger integration, Workhorse is transforming from a pure-play manufacturer of electric commercial vehicles into a new American industrial technology company built to serve critical commercial, government, defense, and infrastructure markets. At the heart of this transformation is our foundational expertise in the design, engineering, testing, validation, and manufacturing of industrial products. While traditionally, this expertise has been applied to the commercial vehicle market, we believe we are positioned to leverage it for broader industrial applications, opening up access to additional large, high-growth markets. We continue to innovate and deliver leading software-defined medium-duty commercial electric trucks that outperform incumbents on total cost of ownership. However, we are still in the early stages of market adoption, and broader commercial electric truck adoption will ultimately depend on delivering a clearly superior economic value proposition.

That is the key to capture a meaningful share of the $23 billion annual medium-duty truck market and realize our full potential. In a few minutes, I will provide you with an update and details about our overall progress to reduce costs, broaden our product portfolio, and build the backlog into 2027. In July, we announced an important step in advancing our new industrial technology vision with our planned entry into the emerging mobile data center market. We announced plans to develop a turnkey, compute-ready, containerized mobile AI data center designed to meet the localized mobile AI infrastructure needs of distributed deployment applications worldwide. This new market is still in its early stages, and we believe our engineering and manufacturing expertise position us well to compete as it develops. I will provide more detail on this development during our call today.

All of our products are designed, engineered, tested, and validated by our technology development team and will be manufactured at the Workhorse Manufacturing Center in Union City, Indiana. We believe our ability to compete and win in these markets will be driven by the complementary capabilities brought together by the Workhorse Motiv merger, our software, hardware, engineering, and product design capabilities, our commercial-scale facility and its lean manufacturing processes, our established customer base comprised of many blue-chip companies, the technology and manufacturing foundation built on approximately $800 million of historical investment across Workhorse and Motiv, and an experienced management team with strategic vision, agility, and a track record of execution. I couldn't be more excited by where we stand at Workhorse today. Let me explain why. First, we continue to deliver on our stated integration plan.

We have continued the process of integrating various enterprise technology systems and reducing redundancies across facilities and personnel. This is a complex process, and I am pleased with the progress we have made. Based on our progress, we continue to believe we are on track to achieve our previously communicated $20 million of annualized cost synergy run rate by the end of 2026. Jody will walk you through the numbers in more detail, but I will note that our operating expenses declined sequentially in the quarter even as production increased. We believe this trend is consistent with the operating leverage we expected to realize as we continue the integration. It is also important to recognize that these integration efforts extend beyond cost reduction. These efforts are also about optimizing the organization for growth.

By reducing redundancies across our teams, integrating various facilities into a smaller footprint, standardizing our enterprise planning and reporting tools around a clear set of priorities, and having the Workhorse team focused on the highest and best uses of their time, we believe we set ourselves up to win in both the commercial trucking space and the mobile data center space. Second, we are making continued progress on our bill of materials, or BOM, cost reduction program, as well as our next-generation commercial vehicle platform. Together, we believe these efforts will enable us to not only capture greater market share in our existing step van business, but also unlock a substantially larger slice of the $23 billion medium-duty truck market. First, let's talk about how our engineering and design teams are working to take cost out of the platform itself. Supply chain. We've begun discussions with new suppliers for key components that we expect will reduce the cost of our vehicles, and we're working with our existing suppliers to identify opportunities to reduce costs as well.

Design and systems architecture. We're consolidating various systems, including thermal management and power electronics, into comprehensive all-in-one systems. For example, we're consolidating previously distributed high-voltage modules into a new smart power electronics hub, aptly named Smart Hub, reducing cost, weight, and assembly complexity while also enabling us to utilize a single design across multiple truck classes. We believe these efforts, alongside several others, are expected to result in a substantial reduction in the overall BOM costs. This work matters because we believe the tipping point for fleet electrification arrives when the purchase price of an electric truck is more closely comparable with its ICE equivalent.

The total cost of ownership case, which we have already demonstrated as superior to ICE, does the rest. We believe these efforts will result in substantial reduction in the overall BOM costs, which we believe will be important in driving broader adoption, as China's recent history in commercial electric trucks shows. In China, a few years ago, as prices for commercial electric trucks trended toward parity with internal combustion trucks, EV sales volumes grew from under 5% of units sold to over 50% of new truck sales in a few short years. We believe the U.S. truck market is poised to reach a similar breakpoint, and our BOM cost-down strategy and accompanying price strategy can be a catalyst to bend the EV truck adoption curve similar to the adoption spike in China that began a few years ago.

While we are working diligently to reduce BOM costs to compete with ICE vehicles in the step van category, our announced modular chassis and cab chassis efforts position us to move beyond the step van segment and into a wider range of Class 5-6 truck types, including box trucks, enabling Workhorse to compete in a much larger percentage of the $23 billion medium-duty truck market. We're also making exciting progress on our product development initiatives. Our first two programs are focused on the development of the next-generation chassis and powertrain platform, as well as the launch of our first Class 5-6 cab chassis vehicle. Our new chassis is being designed around a scalable, shared modular architecture that will fundamentally transform how our commercial electric trucks are engineered, manufactured, and deployed.

The chassis will build upon proven foundation and operational learnings of the Motiv Gen6 and Workhorse W56 platforms and be guided by our strategic cost reduction engineering process. This next-generation architecture will incorporate highly flexible wheelbase configurations, advanced battery and axle technologies, next-generation software capabilities, and an integrated Smart Hub. We will also be introducing a new braking system that will be compatible with the latest ADAS features and prepare us for an autonomous vehicle future. Our new modular chassis will be integrated with our step van products, and we will also be pairing it with a technically advanced low-cost Class 5 6 cab to create a lightweight, high-performance cab chassis platform optimized for efficient upfitting by body builders. We believe our entry into the cab chassis segment will allow Workhorse to compete for a much larger percentage of the $23 billion medium-duty truck market.

The resulting products are expected to deliver increased payload capacity, accelerated time to market for vocational applications, and perhaps most important, a more competitive price point compared to gas and diesel alternatives for fleet customers across a wide range of use cases. We are expecting to build initial development prototypes of the modular chassis for the W56 in Q4 2026, enabling testing and validation activities to begin shortly thereafter for a planned start of production for the new chassis platform in late 2027. Third, we are optimizing for a rapid production ramp through year-end and into 2027. We continued to build efficiencies across our supply chain and manufacturing processes in preparation for significantly higher volumes in the third and fourth quarters.