Ladies and gentlemen, greetings and welcome to Workhorse Group’s Fourth Quarter 2023 Investor Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Workhorse Group’s Vice President of Corporate Development and Communications, Stan March. Sir, you may begin.

Thank you, Donna. Good afternoon, and thanks to all of you for joining us for the fourth quarter and full-year 2023 results call. Before we begin, I'd like to note that we have posted our results for the fourth quarter and full year ended December 30, 2023, via press release as well as filed our 2023 10-K. You can find both these documents, as well as the accompanying presentation that will form the basis of today's conversation in the Investor Relations section of the website. We track it along with the presentation during the call. Joining me on today's call are Rick Dauch, our CEO; and Bob Ginnan, our CFO. After my opening remarks on Slide 3, you'll see the agenda for today's call. I'll turn it over to Rick for an update on our strategic and operational priorities throughout 2023 and during the fourth quarter, and Bob will walk us through the financial results for the fourth quarter and full year and provide our outlook for 2024. Then we'll take any questions. On Slide 4, you'll see our forward-looking statement. As you know, some of the comments that we've made today are forward-looking and therefore are subject to certain provisions, and as a result are subject to risks and uncertainties. You can find the full disclaimer statement in our 10-K, which was filed today, as well as in today's press release. And with that, I'll now turn the call over to Rick.

Thanks, Stan. Good afternoon, everyone. We appreciate you taking the time to call in today and thank you for your continued support of Workhorse. Today we're going to discuss our fourth quarter and full-year 2023 results and also cover the actions we're taking to position the company for success. During the year, we rolled out our first W56 step vans, signed up our first W56 fleet customers and increased our production capabilities for our W4CC and W750 vehicles. We also expanded our commercial network, adding key dealers and partners in multiple states. At the same time, we've taken actions to strengthen our financial positions so that we can continue delivering on our commitment to advancing our commercial EV product roadmap, building, demand, and selling our trucks. As we disclosed today in our 10-K, we are in the process of completing negotiations on a financing transaction that along with our pending sale lease back transaction and aggressive cost cutting actions we are taking will position our business to have the financial runway necessary to execute on our business plans. As part of the cost saving actions, we are reducing head count across the organization, deferring executive compensation and suspending drone design and manufacturing in our aero business, which I'll discuss in more detail later in my comments. From a manufacturing and customer service demand perspective, we have built strong capabilities. We have had initial successes last year and this year and have had key demonstrations with several large last mile fleet operators, as well as state and municipal fleets, which are either already underway or plan to begin in early 2024. We'll talk about all of this in detail in a moment, but I want to pause and acknowledge that I'm extremely proud of the hard work and dedication of our…

Thanks, Rick. Let's turn to Slide 13, we will cover our full year results. For the year, sales increased $8.1 million to $13.1 million for the full-year 2023 compared to $5 million in 2022, primarily resulting from the increase in W4CC sales and volumes. The W750,W56 products, which launched in the second of 2023 as well as stables by Workhorse and our Drone as-a-service offering also contributed to the increase in revenue. . Cost of sales for the full-year 2023 increased $0.7 million to $38.4 million compared to $37.7 million in 2022. The increase was primarily due to increased production and overhead costs to support higher sales volumes related to the new vehicle platforms and an increase in employee compensation related expenses compared to 2022 levels. This increase was partially offset by a decrease in inventory reserves, adjustments and disposals, which were driven by the disposition of C Series inventory in 2022. SG&A expenses for the full-year 2023 were $55.6 million, a decrease of $17.6 million compared to $73.2 million in 2022. The decrease was driven by a $25.2 million reduction in legal expenses and expenses attributable to the securities and derivative litigation settlements recognized in the prior year. This decrease was partially offset by a $3 million increase in employee compensation-related expenses, including non-cash stock-based compensation expense, a $2.1 million increase in professional and other services expense and a $0.6 million increase in corporate insurance expenses. R&D expenses for the full-year 2023 were $24.5 million, an increase of $1.3 million compared to $23.2 million in 2022. The increase was primarily driven by an increase of $1.4 million in employee compensation-related expenses and a $0.8 million increase in development expenses for new products. These increases were partially offset by a $1.4 million decrease in consulting expense. Other loss for the…

Thanks, Bob. To wrap up the call, I want to discuss our key near-term priorities, which are on Slide 16. Our focus is on strengthening our financial position, while we continue advancing our product roadmaps and ramp-up production as we secure orders for our commercial EVs. In plain in simple terms, we want to make sure we have the financial runway to build and sell trucks and provide drone services to our customers. Achieving our goal of pioneering the transition to zero-emission commercial vehicle is no easy feat, and it's definitely not for the fainted heart. We believe we can. We believe we will emerge as a segment winner in this once-in-a-generation powertrain technology transition. The pace of the transition to EVs is unpredictable, and we cannot predict the speed at which the transition will occur. What we can control is to ensure we are 100% ready to meet the needs of our customers. We are prepared for the transition from every touch point of the delivery process. We have the people, products, processes, supplier and commercial business partners to meet the needs of the market when this EV transition hits its stride. We need our customers to start ramping up their own transition to EVpowered vehicles and believe that two or three of the largest fleets here in North America are ready to do so, hopefully soon. Our team's perseverance in the face of market and regulatory challenges is commendable, and we remain determined and optimistic. The groundwork is done, and the foundations are in place for us to be in the Class 4, 6 segment leader in the commercial EV segment. We expect to emerge a winner in the space, and we look forward to continuing to do the work to get ourselves there. Now we'll open the call for questions. Donna, I'll turn it back over to you.

[Operator Instructions] Today's first question is coming from Sherif Elmaghrabi of BTIG.

So first, I want to start with how do you prioritize orders between the W56, W750 and the W4CC this year? How are you managing that capacity?

We have two separate lines -- we actually have three separate lines. We have a dedicated chassis line for the W56, which has a corresponding cab and box line. So that's a separate line, and we can do about 5,000 vehicles a year there. We talk to our suppliers and they can ramp up at that level as well. We then have two separate lines. We have the W4CC line, which we were building at about 4 a week -- 4 a day, sorry, before we put it on pause. And that leads into a separate W750 line, which we can build 1 or 2 a day there, okay? So if you add our plant, you'd see very distinct assembly lines. And it still leaves about a third of the plant open for future products if we want to do something there.

That's helpful. And then on the CARB mandate, can you tell us what you're hearing regarding its enforcement or revision?

That's like the million dollar question. We've heard both sides of the equation in terms of the California Trucking Association taken exception with CARB. And CARB saying that they're very firm and they're going to put it in place this year. We just don't know the timing. I'd be guessing if I try to guess right now. So we hope sooner rather than later. And we've talked to many fleets. And many fleets in California, they have a very good handle on how many trucks they have in the state. They know what they have to do to meet the CARB mandate by the end of the year. And that gets kicked in. It's a significant demand. And we're not sure there's a whole lot of people left to fulfill that demand. We want to be one of them.

[Operator Instructions] At this time, I would like to turn it back over to Mr. Dauch for closing comments.

Well, it must be lunchtime on the East Coast, and we appreciate it. Hopefully, if you have any questions, reach out to Stan, and we’ll do that. And hopefully, we’ll be able to report some good news on our demos and turn into orders. We’ll get our plant working, staying busy. Thanks a lot for your interest in Workhorse. Thanks. Bye.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.