Shares of Workhorse (NASDAQ:WKHS) stock are plunging lower by over 10% after the electric vehicle (EV) and drone manufacturer reported its fourth-quarter earnings, revealing a round of layoffs.
“As part of our cost-saving actions, we have made the decision to transition the Aero business to a less capital-intensive Drones-as-a-Service model,” said CEO Rick Dauch. “We are also reducing headcount significantly across the rest of our organization.”
Workhorse disclosed that it was currently in the process of enacting a reduction in force (RIF) that would affect 20% of its total workforce when excluding direct labor roles. The company will be reducing jobs in its Aero division as well.
The company believes that it will not incur significant costs for the RIF. As part of Workhorse’s cost-cutting initiative, the company’s executive officers have agreed to defer 20% of their cash compensation payment for at least three months.
Workhorse Layoffs: WKHS Announces 20% Reduction in Force
During the quarter, Workhorse generated sales net of returns and allowances of $4.4 million compared to $34 million a year ago. Stables by Workhorse, the company’s EV charging and maintenance stations, and vehicle deliveries drove the firm’s sales.
However, the company remains unprofitable, reporting a widening net loss of $45.3 million compared to $38.7 million year-over-year. This was mainly due to $10.2 million in net interest expenses that were incurred following a fair value adjustment of its convertible notes and warrants.
While sales increased, the cost of sales decreased to $18.1 million from $21.2 million. This was attributed to a reduction in disposal costs as a result of the company putting a halt on its C1000 program.
“Over the year, we will maintain our focus on operational excellence and cost reduction as we increase production and expand delivery of our commercial vehicles to meet our financial targets for 2024,” said CFO Bob Ginnan.
Workhorse’s Drones-As-A-Service Pivot
Meanwhile, Workhorse noted that it had suspended drone design and manufacturing in order to concentrate on its Drones-as-a-Service (DaaS) business. The company has received several grants to support this business.
Finally, Workhorse announced that it is in negotiations with a party to receive financing. The negotiations are expected to provide both short-term and long-term funding. The firm expects to have enough runway to fulfill its 2024 goals.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
