Lordstown Motors Paid $12.2M for Workhorse Tech
LORDSTOWN, Ohio – Lordstown Motors Corp. paid Workhorse Group Inc. $12.2 million last year to license the Cincinnati-based electric truck manufacturer’s technology.
The noncash license income was part of the income Workhorse included in its fourth-quarter and 2019 full-year results Tuesday morning.
Under the agreement, which the two companies entered into in November, Workhorse will receive an initial 10% equity stake in Lordstown Motors, which will be antidilutive for two years, according to the earnings announcement.
Workhorse will receive a license fee equal to 1% of the gross sale price for each Lordstown Motors truck sold, up to the first 200,000 units. Lordstown Motors also agreed to prepay a portion of the license fee in an amount equal to 1% of the aggregate debt and equity commitments the company intends to raise. Once the prepayment has been amortized over actual sales, LMC will pay on a per-unit-shipped basis up to the cap.
Workhorse will also receive an additional 4% commission on the gross sales price of trucks sold to fulfill the 6,000 existing preorders for Workhorse’s W-15 electric truck that were transferred to Lordstown Motors.
In the earnings report, Workhorse reported net income for the quarter of $655,000, compared to a net loss of $17.7 million in the fourth quarter of 2018. For the year, the company reported a net loss of $37.2 million, compared with a net loss of $36.5 million in 2018.
The company reported sales of just $3,000 in Q4 2019, down from $21,000 a year earlier, a decrease the company attributed to lower volume. Sales volume for the full year were $377,000, down from $763,000 in 2018, which the company attributed to lower volume of delivery truck sales.
The company has begun production and is obtaining certifications for delivery of vehicles to customers in January, and has established a delivery target of between 300 and 400 vehicles this year. Material supply disruptions related to the global outbreak of the coronavirus prevented Workhorse from its goal of delivering initial vehicles during the first quarter of the year, Workhorse CEO Duane Hughes said.
“In the fourth quarter we were able to complete transactions that allowed us to narrow our focus on our unique business of providing an all-electric, customer-focused design C-Series delivery vehicles and patented vehicle-mounted drones that can meet the needs of an $18 billion market where 300,000 trucks are replaced annually,” Hughes said. “We also made meaningful progress in our transition from a development-stage company to a production-focused enterprise.”
Workhorse also reported it sold off noncore assets and intellectual property to allow its “full strategic focus” on product ion of its last-mile C-Series delivery vehicles and patented HorseFly drone truck mounted technology.
It obtained more than $100 million in capital facilities to support 2019 working capital needs and final design of the C-Series last-mile delivery truck product lineup.
Pictured: The Workhorse battery-powered delivery truck.
Copyright 2020 The Business Journal, Youngstown, Ohio.