Workhorse : Q1 2024 Earnings Conference Call Presentation

Q1 2024 Earnings Call

May 24, 2024

Today's Presenters

Rick Dauch

CEO

• 28 years of automotive industry experience
• 16 years of serving in CEO roles
• Multiple public/private board memberships

Bob Ginnan

CFO

• 23+ years of senior finance and leadership experience
• Refined capital structures for firms in multiple industries
• Executed multiple accounting and information technology ("IT") system installations

Stan March

Vice President, Corporate Development

• 27 years of executive experience across multiple industrial sectors
• Extensive M&A, public affairs, investor relations, and corporate communications experience

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Agenda

Introduction

Business Update

Q1 2024 Financials

Near-Term Priorities

Disclaimer

Cautionary Note Regarding Forward Looking Statements

The discussions in this presentation contain forward-looking statements reflecting our current expectations that involve risks and uncertainties. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. When used in this presentation, the words "anticipate," "expect," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements about the features, benefits and performance of our products, our ability to introduce new product offerings and increase revenue from existing products, expected expenses including those related to selling and marketing, product development and general and administrative, our beliefs regarding the health and growth of the market for our products, anticipated increase in our customer base, expansion of our products functionalities, expected revenue levels and sources of revenue, expected impact, if any, of legal proceedings, the adequacy of our liquidity and capital resources, the likelihood of us obtaining additional financing in the immediate future and the expected terms of such financing, and expected growth in business. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from the forward-looking statements contained in this press release. Factors that could cause actual results to differ materially include, but are not limited to: our ability to develop and manufacture our new product portfolio, including the W4 CC, W750, W56 and WNext platforms; our ability to attract and retain customers for our existing and new products; risks associated with obtaining orders and executing upon such orders; the unavailability, reduction, elimination or adverse application of government subsidies and incentives or any failure by the federal government, states or other government entities to adopt or enforce regulations such as the California Air Resource Board's Advanced Clean Fleet regulation; supply chain disruptions, including constraints on steel, semiconductors and other material inputs and resulting cost increases impacting our Company, our customers, our suppliers or the industry; our ability to capitalize on opportunities to deliver products to meet customer requirements; our limited operations and need to expand and enhance elements of our production process to fulfill product orders; our general inability to raise additional capital to fund our operations and business plan; our ability to obtain financing to meet our immediate liquidity needs and the potential costs, dilution and restrictions imposed by any such financing; our ability to regain compliance with the listing requirements of the Nasdaq Capital Market and otherwise maintain the listing of our securities thereon and the impact of any steps we take to regain such compliance, such as a reverse split of our common stock, on our operations, stock price and future access to liquidity; our ability to protect our intellectual property; market acceptance for our products; our ability to obtain sufficient liquidity from operations and financing activities to continue as a going concern and, our ability to control our expenses; the effectiveness of our cost control measures and impact such measures could have on our operations, including the effects of furloughing employees; potential competition, including without limitation shifts in technology; volatility in and deterioration of national and international capital markets and economic conditions; global and local business conditions; acts of war (including without limitation the conflicts in Ukraine and Israel) and/or terrorism; the prices being charged by our competitors; our inability to retain key members of our management team; our inability to satisfy our customer warranty claims; the outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc.; our ability to consummate the divestiture of our aero business; our ability to consummate and realize the benefits of a potential sale and leaseback transaction of our Union City Facility; and other risks and uncertainties and other factors discussed from time to time in

our filings with the Securities and Exchange Commission ("SEC"), including under the "Risk Factors" sections of our filings with the SEC, including our Annual Report on Form 10-K for the year

ended December 31, 2023. Forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

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Key Recent Accomplishments

Advancing Product Roadmap

• Received orders for 68 W56 step vans and 141 W4 CC cab chassis, with deliveries scheduled for the coming quarters
• Continued executing successful product demonstrations
• In constructive discussions with potential customers for large last-mile fleets

Divesting Aerospace Business

• The Company is working with a third party to complete the divestiture of the Aero business in the second quarter
• Workhorse expects the divestiture to provide monthly cost savings of approximately $375,000

Expanding Commercial Network

• New dealer agreements with Milea Truck Sales and Leasing and the Ziegler Truck Group
• Engaged in discussions with a number of potential customers and dealers
• Currently have 12 dealer partners strategically targeted in states adopting the California Air Resources Board ("CARB") "Clean Fleet" standards

Strengthened Financial Position

• Entered into agreement with institutional investor on terms of financing transactions that will deliver up to $139 million to Workhorse
• This financing to support continued execution of product roadmap and commercial EV business plan in 2024-25
• Completed implementation of reduction in force of ~20% of the total workforce, excluding direct labor
• Temporarily furloughed Union City plant workforce until we build larger backlog of truck orders. Have already begun limited recalls.
• Working on a sale leaseback transaction of Union City facility to further solidify financial foundation

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Advancing Our Product Roadmap

W4 CC

CL4, 7,000-lb. payload, 150-mile range

• Received purchase order for 141 W4 CCs
• Demos with commercial and government fleets
• Multiple end-customer sales in CA

W750 Step Van	W56 Stripped Chassis
CL4, 5000-lb. payload,	CL5-6,13,500-lb. payload
150-mile range	at 23,000 lbs. GVW
▪	Continued advanced	▪ Successful vehicle demos in process
	discussions with a number of	at multiple fleets
	last-mile delivery companies
▪	Expanding FedEx Ground
	routes

W56 Step Van

CL5-6,10,000-lb. payload,

150- to 170-mile range at GVW

• To date, Workhorse has received orders for 68 W56 step vans
• Executed successful product demonstrations with multiple large last- mile fleets
• Target Q4 '24 launch of 208" wheelbase,
  1200 ft3 step van

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Expanding Dealer Network

Strategic Relationships with Commercial Vehicle Dealers Across the U.S.

• Workhorse has established a strong, nationwide certified dealer network with service and support, targeting dealer locations in key commercial EV markets, including states adopting CARB "Clean Fleet" and "Clean Truck" mandates in 2024-2028
• Workhorse has experienced strong fleet and dealer interest in its W4 CC and W56 vehicles, most recently adding key dealers and partners in New York as well as the upper Midwest and Northwest regions
• Workhorse now has 12 dealer partners with 17 locations across nine states
• The Company recently announced new dealer agreements with Milea Truck Sales and the Ziegler Truck Group

Representative Dealers

Ability to deliver Workhorse trucks to all 50 states,

© Copyright 2024 Workhorse. Confidential & Proprietary | 7	current dealer coverage in 30 states

Thoughtful Dealer Selection Criteria

• Select locations along critical logistics corridors (i.e., major interstates)
• Select locations within Section 177 states with incentives - CA, NY, NJ,
  and NY (with a priority on CA)
• Strength of the dealer go-to-market plan for the electric vehicle presented
• Ability for the dealer to service electric vehicles (i.e., infrastructure, equipment, technical staff, etc.)
• Ability to upfit vehicles, either through its own capacity or through partnerships

Continuing to actively expand dealer network with a target of 15-20 dealers by the end of 2024

ACT Expo

Key Observations

• Conversations have shifted from strategic to operational with increased inquiries about availability, upfitting options, battery capacity, and payload, particularly from California-based fleets
• New consulting services and platforms are emerging to specialize in incentive programs and regulatory requirements, assisting fleets in navigating state and federal bureaucracy
• HVIP awards and access to charging system infrastructure continue to be pacing factors in the adoption of commercial EVs. We are starting to see positive signs of progress in CA.

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Strengthened Financial Position

Actions Taken to Preserve Cash and Extend Financial Runway

• Entered into an agreement on the terms of financing transactions that will deliver up to $139 million to Workhorse, providing liquidity in both the short term and over time
• This financing to support continued execution of products roadmap and commercial EV business plan in 2024-2025
• Completed reduction in force of approximately 20% of the total workforce, excluding direct labor
• Temporarily furloughed Union City plant workforce until the Company builds larger backlog of truck orders. Limited recalls already begun.
• Also working on a sale leaseback transaction of Union City facility to further solidify financial foundation

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Financial Summary Highlights

First Quarter 2024 Unaudited Results

	Three Months Ended March 31
($ millions, except EPS and shares)	2024	2023
Sales, net of returns and allowances	$1.3	$1.7
Cost of sales	7.4	5.3
Gross loss	(6.1)	(3.6)
Operating expenses
Selling, general and administrative	14.1	14.7
Research and development	3.5	7.2
Total operating expenses	17.6	21.9
Loss from Operations	(23.7)	(25.5)
Interest income (expense), net	(5.5)	0.5
Net loss	$(29.2)	$(25.0)
Net loss per share of common stock
Diluted	$(0.10)	$(0.15)
Weighted average shares used in computing net loss per share of common stock
Diluted	302,607,192	167,144,351

Revenue

Sales, net of returns and allowances, for the first quarter of 2024 were $1.3 million compared to $1.7 million in the same period last year. The decrease was primarily due to lower W4 CC vehicle sales compared with the same period a year ago, which was partially offset by an increase in other service revenue generated from operating our Stables by Workhorse route, Drones as a Service, and other service revenue.

Cost of Sales

Cost of sales increased to $7.4 million from $5.3 million in the same period last year. The increase was primarily due to a $2.2 million increase in inventory reserve expenses, a $1.0 million increase in depreciation expenses, and a $0.6 million increase in employee compensation and related expenses to support vehicle production during the period. The increase in cost of sales was partially offset by a $1.2 million decrease in costs related to direct materials and a $1.4 million reversal of warranty expenses previously accrued.

Operating Expenses

Selling, general and administrative ("SG&A") expenses decreased to $14.1 million from $14.7 million in the same period last year. The decrease in SG&A expenses was primarily driven by a decrease in employee compensation and related expenses primarily due to decreased headcount.

Research and development ("R&D") expenses decreased to $3.5

million compared to $7.2 million in the same period last year. The decrease in R&D expenses was primarily due to reduced consulting and prototype expenses as the Company continued production of the W4 CC, W750, and W56 vehicles.

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