Tuesday Humor: I want to highlight a huge company ($4B market cap) with which you are probably not well acquainted, and that is Workhorse Group Inc. (WKHS), based in Cincinnati, trading at a cool >22,000 EV/Sales(TTM). My man RexFinance the YouTuber (Sept 21, 2020) can probably explain it to you better than I can, or you can get it directly from the horse’s mouth (CEO Duane Hughes on CNBC Aug 6, 2020), but basically Workhorse is the company with “the most electric trucks on the road with more than 6m miles,” so it’s a big huge deal. Let’s just do the math: That could be as many as 60 last-generation trucks doing a sub-average 100k miles per year, cumulative over the entire 10+ year history as a public company. 60 trucks!!! Huge! Workhorse has a new “last mile” electric delivery truck it has been working on (pictured below), and they have already made 2 of those trucks (2!), will make >100 by year end, and have like 1,500 orders or something. But, the big big big huge deal is that Workhorse “might win” a (very large?) percentage of a USPS RFP for 180k vehicles (maybe electric) at $35k/vehicle (plus maintenance). In fact, since Workhorse is “the future” they will probably just win the whole USPS contract, because its only idiot “legacy companies” like Ford and Oshkosh and others bidding against them. Workhorse only has 81 employees and has basically been a job shop up until now, so you may be wondering where they plan to manufacture these trucks if they win the USPS contract? No worries there. You see, Workhorse owns 10% of a Lordstown Motors Corp. (also Cincinnati based), which is being acquired by a SPAC called Diamondpeak Holdings Corp. (ticker: DPHC --> soon to be RIDE), which now has a market cap of almost $1B, but will of course rise, because SPACS go up! Lordstown motor’s CEO Steve Burns (interviewed here by “Jack Spencer Investing” in front of Bacardi bottles on Sept 15, 2020) also founded Workhorse and says they have something called “square footage” since GM was trying to close its 6m sq.. ft. Lordstown, OH plant for years and has now paid a penalty to close it and offload it to Lordstown, including 2,000 robots that made some Chevy Cruzes. Lordstown would be happy to use that “square footage” to manufacture Workhorse’s trucks for them. Boom - problem solved. Also, you know Lordstown is legit and will be a huge homerun because here is a photo of the new Lordstown Endurance electric pick-up truck model (with its lights on) on behind a happy-looking President Trump on the Whitehouse driveway! This photo caused Workhorse’s stock to surge 16% yesterday. The appearance of a boom in Ohio Auto jobs is very important to the President in Sept 2020, for some reason (so maybe Workhorse actually will win some of that USPS contract?). Lordstown claims it already has 40k (non-binding) pre-orders for this truck. Everything is coming up Workhorse! Lastly, Workhorse also manufactures a drone called “Horsefly,” which could maybe deliver USPS packages, or something..
Workhorse Key Images: (1) Lordstown Endurance at Whitehouse, (2) Workhorse USPS Vehicle, (3) Very Professional & Uniform Exec Headshots!
Workhorse’s Slide Deck Link: http://workhorse.com/assets/doc/investor/WKHS%20Investor%20Presentation%208-26-20%20v3.pdf
Workhorse Group Inc. (WKHS):
Price = $26.9 (+800% YTD)
Market Cap = $4.00B
Enterprise Value = $4.05B
Revenue 2019 = 0.38mz (“three hundred and eighty thousand dollars”)
Revenue 2020E = 21m
EV/Sales’19 = 24,000x
EV/Sales’20 = 210x
Employees = 81
FactSet Description: Workhorse Group, Inc. engages in designing and build performance battery-electric vehicles and aircraft. It develops cloud-based, real-time telematics performance monitoring systems. The firm operates in two divisions, Automotive and Aviation. The Automotive division operates as a original equipment manufacturer of class 3-6 commercial-grade, medium-duty truck chassis, marketed under the Workhorse brand. The Aviation division offers delivery drones and SureFly multicopter. The company was founded by Stephen S. Burns on February 20, 2007 and is headquartered in Loveland, OH.
BTIG Description: BTIG ViewWKHS is a late stage technology company of electric vehicles (EVs) focused on last mile delivery that is in the process of shifting to an execution company with the delivery of its Series C truck and key customer already in place. The company also has an autonomous drone delivery solution which we expect to be a key driver of sales for the company’s EV solution. Near-term catalysts include: incremental truck orders, securing a revolving credit facility, an increase in unit production, and potential award of a portion of the USPS contract. While Frontline (FRO, Buy, $18 PT) remains positioned to benefit from any oil tanker rate recovery, oil inventory destocking will weigh on tanker demand. Bottom line: WKHS has multiple potential near-term catalysts in the back half of 2020.Valuation: Our $26 PT points to a ~35x EV/EBITDA multiple on 2024 estimated EBITDA. Our $26 PT points to $20/share for the core business, $4/share for the USPS contract, and $2/share for the 10% LMC equity stake and licensing revenue.
Trump tweeted about Workhorse in May 2019, when the stock was under $1.00 per share (vs. $27 today). Boy, can he pick them!