Workhorse Group Inc.
Q1 2022 Earnings Call Transcript

Published: 10 May 2022

[Operator:]

Ladies and gentlemen, greetings, and welcome to the Workhorse Group's First Quarter 2022 Investor Conference Call. As a reminder, this conference call 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.

[Stan March:]

Thank you, Doug. Good morning, and welcome to all of you joining us on today's first quarter 2022 results call. Before we begin, I'd like to note that we've posted our results for the first quarter ended March 31, 2022, as well as an accompanying press release and presentation in the Investor Relations section of our website. We've also released our 10-Q this morning. And will be tracking with the posted presentation during the call today, so please follow along either from the link in the press release or through our website directly. And with that, let's get started. Turning to Slide 2. Joining me on today's call are Rick Dauch, our CEO; and Bob Ginnan, our CFO. Moving to Slide 3. We have a straightforward agenda today. Following my brief opening remarks, I'll hand it over to Rick, who will give you an update on the progress we’ve made on our strategic and financial priorities for our first quarter of this year. Bob will then walk us through our financial results for the quarter and touch on our 2022 guidance. We'll then take your questions. Moving to some housekeeping items. On our disclaimer on Slide 4, some of the comments that will be made today are forward-looking and therefore, are subject to certain provisions and subject to the risks and uncertainties. You could find the full disclaimer statement in our Form 10-Q and other periodic filings with the SEC, as well as on today's press release. I'll now turn the call over to Rick Dauch. Rick?

[Rick Dauch:]

Thanks Stan, and good morning, everyone. We appreciate you taking the time to join us today. Turning to Slide 5. Our first quarter was exactly what we expected it would be, a lot of hard work. We put our heads down, execute on our plans and accomplished what we set out to do. Building a rock solid foundation based on our stabilized fixed and growth business model. In football terms, it was all about blocking and tackling. A key element of our progress is continuing to successfully find the right people to strengthen our organization. We further built out our highly experienced leadership team, as well as significantly enhanced our engineering resources and technical expertise. We consolidated and relocated our headquarters in Sharonville, Ohio. The transformation of Union City is tracking the plan. Operationally, we met every milestone on the new product development roadmap we laid out last quarter. We also strengthen our financial position. As a result, we are right on track and executing our revised strategic plan to deliver a family of Class 3 to 6 electric vehicle last-mile delivery products, both on the ground and in the air. Moving on to Slide 6, we continue to make progress in our initiatives across what we call our six Ps

[Bob Ginnan:]

Thanks, Rick. Let's turn to Slide 12. Our results illustrate the progress our team continues to make the strengthen our financial position and drive greater operating efficiencies, which will allow us to execute our product portfolio plans to deliver value for customers and shareholders. Sales, net of returns and allowances for the first quarter of 2022 were recorded a $14,000 compared to $521,000 in the first quarter of 2021. The decrease in sales was primarily to the decrease in volume of truck sales in connection with the previous recall of our C-1000 vehicle. Cost of sales decreased to $3.9 million from $6.2 million in the same period last year. The decrease in cost of sales was primarily due to the decrease in volume of truck sales and costs associated with the initial production of the C-Series vehicle platform. Selling, general and administrative expenses increased to $11.9 million from $6.9 million in the same period last year. The increase in SG&A expense was primarily driven by an increase of $2.9 million employee related expenses, including equity compensation from increased headcount and the appointments of our new executive leadership team. Additionally, there was $2.1 million increase in professional services related to legal expenses. The increases were partially offset by $1.4 million decrease in consulting fees due to the company's initiative to reduce reliance on external resources by hiring internal resources. R&D expenses were nearly unchanged at $4 million compared to $3.9 million same period last year. Net interest expense was $2.2 million compared to $14.9 million income in the same period last year. The decrease in interest expense, primarily driven by $0.4 million increase in fair value of our convertible notes in Q1 as compared to a $15.5 million decrease in the fair value prior year. Additionally, we recognized the gain on the forgiveness of our PPP Term Note during the three months ended March 31, 2021, which is non-recurring during the current period. Other loss decreased to no loss compared to $136 million of the same period last year, decrease in other loss was related to unfavorable changes in fair value of our prior investment in Lordstown Motors Corp, which was sold entirely in Q3 of 2021. Net loss was $22 million compared to a net loss of $120 million in the same period last year. Loss from operations in the first quarter was $19 million compared to $16 million in the same period last year. Turning to Slide 13. As of March 31, 2022, the company had approximately $160 million in cash and cash equivalents. On April 6, 2022, the company entered into an agreement with High Trail Capital to change outstanding 4% senior secured convertible notes for approximately 29.7 million of the company's common stock. This transaction eliminates the remaining debt and workforce balance sheet, and we're really excited about what we've accomplished on this front, strengthen our financial position has been a key priority. With the deleveraging complete, we now have additional time, flexibility and the ability to focus our full financial resources on key investments in our people and the business. So we can execute our plans. Our capital spending plans for 2022 remain unchanged at between $25 million and $35 million. Slide 14 covers our 2022 guidance, which we are reaffirming, as we continue our plan progressive ramp and manufacturing, assuming supply chain visibility remains unchanged. We continue to expect to manufacture and sell at least 250 vehicles and generate at least $25 million in revenue. Our guidance for the year is also backloaded, so we're still not expecting to produce any vehicles in the first half of 2022. I’ll now turn the call back to Rick to wrap up the call.

[Rick Dauch:]

Thanks, Bob. I wanted to briefly discuss our Q2 priorities on Slide 15. We intend to complete the critical executive level staffing here at Workhorse, focus on commercial, engineering, supply chain and IT systems, following the significant hires we made over the past nine months. We will execute on our product roadmap timelines. We will continue the expansion and the renovations at the Workhorse Ranch in order to launch products in Q3 of this year. The team will begin to both acquire, transfer and install test and validation equipment at both Michigan and Ohio technical centers. We also expect to complete the first phase of common system deployment, in terms of production, LEAN systems, ERP and HRM systems. And finally, we expect to secure customer order commitments for our new products, W750/W4CC and the limited number of C-1000 bands we expect to repair and build this year. Before we turn the call over to Q&A, I want to reemphasize three important points from our call today on Slide 16. First, we are doing exactly what we said we would do to build a rock solid foundation to the company. And that always starts with people and a strong balance sheet. We have hired experience, capable executives from critical positions, strengthen our operational, supply chain and technical capabilities. And we solidified our financial position by removing all debt from our balance sheet. Second, our strategic product roadmap plan is on track and we made important progress during the quarter. We will be the pioneers in the transition to zero emission commercial vehicles, targeting specific classes of vehicles in the Last Mile Delivery segment. And third, based on direct feedback, we remain confident in the opportunity to head to deliver electric vehicle. So our customers that they want and in turn we’ll deliver long term shareholder value. That concludes our prepared remarks. Thank you again for your time this morning. We look forward to continuing to update you on our progress. And we’re now ready to open the call to your questions. Doug, please provide the appropriate instructions. Operator, still there?

[Operator:]

Yes, I am. Sorry I was on mute. [Operator Instructions] Our first question comes from the line of Colin Rusch with Oppenheimer and Company. Please proceed with your question.

[Colin Rusch:]

Thanks so much guys. Could you talk a little bit about the customer dynamics now that you’ve got a broader portfolio of trucks, you’ve shown some evidence that you’re going to be able to deliver on these things. Just talk about how much leverage you’re gain with those customers and the depth of demand that you’re starting to see with those folks as you move forward with those relationships.

[Rick Dauch:]

Colin, you said about the customer dynamics.

[Colin Rusch:]

Yes. The customer dynamics. Yes, the relationships and how broadly they’re accepting the range of vehicles.

[Rick Dauch:]

We’ve had several means with our customers. Some of the original customers we had for the C1000, we were able to bring them into Union City as you remember to demonstrate the W4CC and they drove the vehicle. They gave us positive feedback that actually gave us direct input on how well we think we can sell the cab chassis version of the W750. So that gave us a very good confidence. We had a meeting with one of those customers as recently as last Thursday in the Midwest. They’re looking forward to buy several hundred of those vehicles, I’ll say. This week we have first – just the first time we’ve demonstrated a W750. We showed it to our Board of Directors last Tuesday in Ohio. We shipped it out to California and cleaned it up over the weekend, it’s on display. We had a lot of traffic already as we opened the show up last night at 4 o’clock. So we have – after the show ends this week, we have a plan four or five weeks where we’re going to take the vehicles around California and then to a couple other areas in the country to show the customers they can experience and drive them. So I think give me about 45 days, I’ll be able to tell you a lot more. But pretty much the feedback we have is that we’re focused in the right areas, Class 5, 6, Class 3, 4, last mile delivery. It’s a second. That’s not too crowded to be quite honest. And even though we have a setback on the C1000, we think we can still be one of the first to market in that segment.

[Colin Rusch:]

Okay. That’s super helpful. And then just in terms of the people investment that you’re making right now. Certainly what we’ve seen is an awful lot of leverage from software at the operating system level for the vehicles. I’m just curious, how much investment you’re making in software engineers? And how you’re approaching that challenge of getting the operating software for these vehicles really tuned up as you start to bring the market?

[Rick Dauch:]

That’s a great question. I mean, one of the secrets is not just the hardware on these vehicles. As an ex-Tesla driver, I understand how important that software is in that vehicle. We are lucky. One of the good things we had on both the EGEN and the C1000, we had the Metron system where we get feedback about every 10 seconds on every vehicle we have on the road. I think some of the EGENs on the road now for 2017, 2018, we still continue to get that feedback, pretty reliable system we have out there. So I think we’ve doubled our investment in software engineers since I got here. I know we have for sure on aerospace, I think we almost quadrupled on aerospace and we’ve almost doubled on the software side of the house as well. So we understand that’s an important, that’s one of our key areas where we have some open res. The battle and the fight for talent, especially in the software side of the house is really hard. And we got to go out and make sure we get our fair share of the good qualified people.

[Colin Rusch:]

Okay. Thanks so much guys.

[Rick Dauch:]

Thanks, Colin.

[Operator:]

Our next question comes from the line of Jeff Osborne with Cowen and Company. Please proceed with your question.

[Jeff Osborne:]

Yes. Good morning. Thanks for taking the questions. Just a couple on my end. I was wondering, how do we think about the financial ramifications of the remediation of the 161 trucks in the second half of the year? That in addition to what you intend to produce the 50 to 75, how should we think about modeling that?

[Bob Ginnan:]

Well, I think – this is Bob, Jeff. First of all, with the breakdown of inventory that we took in the fourth quarter, we basically any of those trucks that were built, we had to write down a fair value, which is basically when we look at sale price and fair value within the cost to fix. And then we’ve also said that we’ve got some costs to go ahead and fix those as we move through the quarters here. So I think modeling those is reality is the revenue will be there, but the cost will probably approximate the revenues on the C1000. I wouldn’t expect much contribution there from a P&L perspective. However, obviously from cash perspective, they’re very accretive. And that’s how we look at it.

[Jeff Osborne:]

And just to be clear, Bob, that’s the 161, not the 50 to 75.

[Bob Ginnan:]

Correct.

[Jeff Osborne:]

And then the 50 to 75, I assume those would be negative gross margin to start. And then as we move into 2023 and volumes ramp up the gross margins would turn neutral to positive. How do we think about the midterm trajectory on that front?

[Bob Ginnan:]

Well, I think the 50 to 75 C1000, you think it’s a very similar story. The parts on hand are obviously written down. We’ll have to spend some more, so it might be a little bit negative as you said. But it shouldn’t be dramatic.

[Jeff Osborne:]

I got it. And then you’ve had – go ahead.

[Rick Dauch:]

Jeff, the C1000 should be fully built out behind us by the end of the year. And as we transition here in the third quarter, we’ll start producing and shipping the W4CCs. And then in the fourth quarter, we’ll start shipping the W750s, since we’ve got to finalize. We’ve got the design finalized now with sourcing all done to the 750. We start that production in the early fourth quarter. So those are positive gross margin type vehicles for us.

[Jeff Osborne:]

That’s great to hear. Maybe just the last modeling question is on the OpEx front. You’ve certainly added a lot of people and had a lot of shuffling around. Would you, if this were a baseball game, are we in the seventh, eighth inning of that? And is the current sort of run rate with maybe some modest growth in the second half, how we should think about it? Or what’s the OpEx trajectory?

[Rick Dauch:]

Executive levels, the people will directly report to me, will I say we’re in eighth inning. We need a good sales commercial leader here. That person will then get to hire the regional team. You can take a look at the country. There needs to be someone on the West Coast up and down the high five quarter and there need to be someone in the New England region from New York City up and down the high-95 quarter. And then we’ll take a look at what we need in the Midwest or the Southeast, Southwest region, but that can come later. So executive rank eighth inning, I think in the engineering ranks we’re still probably in the third or fourth inning. We’ve got the SMEs on board now, first of all, we got the CTO, and our Head of Vehicle Design within 90 days in the joining the company they’ve gone out and found the SMEs. Several of them had been retired for some of the OEMs. We had to wait for them to get through the first quarter. They’re now on board and they’re out doing their recruiting for the next layer down. And then we got a pretty solid team, right? So, I think we’re early there. Supply chain team, we’ve got to continue to build that up as we continue to ramp up our production. And then we got some work to do in the back offices in the HR, IT and the finance team. We’re probably still early third or fourth inning in those areas.

[Jeff Osborne:]

Got it. And the last one I had was just on the competitive front. You mentioned that with the C1000, the Class 3, that you’re early, but there’s a lot of new entrance that you see on the show floor at ACT last night that are much better capitalized than new folks. And so there’s certainly a lot of people coming in 2023 and 2024. And so I’m just curious, how you view the competitive front as you ramp up?

[Rick Dauch:]

Yes, I’ve been here now just a little nine months. And I got to go to my first ACT show last year. And when I left that show last year, my thoughts were half the companies here are not real companies. They don’t know what it means to build a factory. They don’t know what it means to source parts, test and design vehicles. And I did a quick walk through the show last year. There’s some potential real strong players here who have deep pockets or big sponsors. They’re going to merge. They’re competing in lower space than we are now. They may come into our space down the road, but they still have their handful launching their Class 3 vehicles or Class 2 vehicles. There’s still several companies out here who are in what I’ll call the conversion mode, where they’re a 100% reliant on outside people for chassis. And as you know, in the industry now chassis supply is constrained as the big OEMs are using their valuable parts for more profitable vehicles, I’ll say. So, I feel very comfortable that if we execute on our plans and I’m confident we have the team now to do so that we can be still first to market in our segment. And we’ll see how the chips lay. All right. Talking about building a factory or building multiple factories in a short period versus actually having a factory and retrofiting is a huge differentiator for us here at Workhorse. In my career, I’ve probably built 12 plants or 14 plants. It doesn’t happen in six months, when you don’t build five plants or six plants in 18 months, you go to build plants, takes it minimally here in North America, 18 months to 24 months to buy the land, put the infrastructure in, and all by the way, you have to hire the people. One of our competitors, I know has a beautiful factory. They only have eight hourly people in that factory right now. How the hell are they going to launch in the fourth quarter this year? You tell me.

[Jeff Osborne:]

Thanks for the pointed response. I appreciate it. Thanks, Rick.

[Operator:]

Our next question comes from the line of Craig Irwin with ROTH Capital Partners. Please proceed with your question.

[Craig Irwin:]

All right. Good morning, and thank you for taking my questions. So Rick, the progress since we met last ACT Expo has really been impressive. And I would say the capital structure is the one thing that I would call out as the most visible progress that you’ve made so far. So, I just want to commend the progress that the company. So, as you talk to people yesterday, the first day of the show was there anything new that you were hearing from your customers? Anything people were saying specifically about the vehicle on the floor or the future offering that you’re presenting in collaboration with GreenPower? What can you share with us to help us with visibility on customer uptake?

[Rick Dauch:]

Good question. I was on the floor last night for only an hour and a half, two hours. One of the largest last mile delivery guys came by, we’re all over our vehicle said, this is exactly what we need. Can you also build a larger version? So the version we had in the floor today was 750. That customer said he definitely needs a 1,000 cubic feet and up to 1,200, that’s absolutely in our product roadmap for the W56. The big issue I think we heard right now is this a strong demand, a strong that we expected when we start this journey for the cab chassis version. There are people in this industry as you know in the commercial vehicle, there’s a lot of upfiters while we were originally focused on last mile delivery, it looks like we could sell some electrified cab chassis vehicles that can then go to upfiters and make, but whether they want to refront or a box or a flatbed. And I think we’re learning as we’ve come into this industry and just how complex the upfiting portion of the business is. Okay. That’s one. Two, I think one thing that’s common from last year to this year is the infrastructure has to be in place. And we saw the infrastructure bill that came out last year with about $15 billion towards infrastructure both for EV vehicles and also for buses. So we hope to participate in some of that. In recent, we’ve seen some of the initiatives by Department of Energy put forward investments and low cost loans for battery manufacturers here in North America. So I think the two risks for the industry are infrastructure and battery supply. I don't think battery costs are coming down as fast as people projected. I had one customer asked me why I can't get to a $100 kilowatt hours. And I offered him, I said, you go buy the batteries for me, and I'll give you $100 kilowatt hour batteries. And he couldn't do that right now. Only Tesla can do that right now, because they are building 1.2 million vehicles. So those are the two big linchpins I see. But the tailwinds based on everything, we see the demand by investors for ESG type companies and the commitments by some of the largest fleets in the world, especially here in North America to be carbon neutral by 2035 or 2040 are real. And so that means we got to be able to have the right vehicles and then we have to have the right infrastructure to do it. That's part of our reason to go work with ChargePoint. I got to go out there and toured their facilities out in California earlier in the quarter. Very impressive, good array, not just hardware, but software as well. And so fleets have to figure out how to make this transition too.

[Craig Irwin:]

Thank you for that. So I was hoping you might be able to give us a little bit more color on the trucks you're making in partnership with GreenPower. I know you're the kind of guy that doesn't make announcement, doesn't make commitments like this lightly. And there is an understanding that there was a down payment made to GreenPower. Can you talk about your confidence in the customer demand? You obviously do see something you consider very, very real to put that cash down to make the vehicles. And then what are you learning about this partnership? I mean, how is this something that could potentially grow the capabilities of Workhorse longer term?

[Rick Dauch:]

Bob, do you want to comment about the down payment we ordered and I'll come back about the…

[Bob Ginnan:]

Yes. So when you look at our existing partners, there's a kind of one time down payment we made and then there's a deposit we make on each chassis order. And so that's one time occurred in the first quarter [indiscernible] in cash that we used, $6.4 million was for that down payment. And then that'll be recovered over time as we actually receive and pay for the chassis. So that was big – just big chunk of our cash flow for the quarter.

[Craig Irwin:]

Understood. Understood. And actually, since we're talk – we're talking about cash flow, it seems that SG&A had a fairly heavy contribution of non-cash items. Can you help us sort of unpack the $11.9 million down to a dense like cash number? I know stock comps a part of it, but…

[Rick Dauch:]

So, yes, we had $11.9 million SG&A of which about $2.3 million was non-cash stock comp. As we've been building out the management team and that hitting the P&L side, but obviously not the cash side. And then you got a little bit of appreciation there, but it's kind of a rounding error, but really it's the stock comp that gets us down to probably a more cash equivalent, even though it's on the P&L side of about $9.2 million.

[Craig Irwin:]

Excellent. Thank for taking my questions. I'll hop back in the queue.

[Rick Dauch:]

Hey Craig, let me just – I'll make a couple comments here. So in terms of GreenPower, I'm really happy with the progress we made. It took us most of the first quarter to iron out the agreement from a legal standpoint. We have like a 58 or 68 page legal agreement between us and GreenPower, pretty detailed. We initiate a weekly programming use at the presidential level that's happening. Then we do a monthly program review at my level. To give you an example on the W4CC, we're able to have some of the modifications we want for the North American market actually installed at GreenPower’s factory in Asia, which saves us some of them have transferred that. The box install for the W750 that's all been sourced to a local supplier here in North America. That's what we have here at the show, and we're working very closely to follow all those sourcing. I think they have got over 300 parts, they've got to source themselves. And then we're working with that supplier to make sure we build our manufacturing plant at Union City. We're starting to lay out the inventory flow of both the cab chassis that come from Asia through California, how much we're going to have on the ground Union City, what our production time is. We've already got the tack times there, and then how much we're going to have in our finished pool versus how much is going to go right to our customers. So we're doing a lot of detail work. It's what I'll call mind numbing [ph] engineering and mathematical work both from a supply chain and engineering standpoint, but we're confident we get there. And we we're at our price points we expect to sell in the marketplace on our customer feedback and the margins we think we're going to be in. Hopefully that gives you some color on the upcoming launch of the W750/W4CC.

[Operator:]

Our next question comes from the line of Greg Lewis with BTIG. Please proceed with your question.

[Greg Lewis:]

Yes, thank you, and good morning. Just one question for me. Rick, you kind of mentioned it in your prepared remarks about the potential to kind of expand around union and had contract manufacturing, realizing that, the focus now is on getting your trucks out the door over, I don't know, the next 12, 24 months. Could you talk a little bit how you see the potential move into contract manufacturing, playing out for Workhorse?

[Rick Dauch:]

Well, Greg, I think we didn't – when I got here, I didn't think we planned on doing contract manufacturing, but the fact that a lot of the EV companies don't even have factories, a lot of them are doing install, build type situations. I think we are caught pleasantly surprised by the inquiries we have. We have multiple inquiries right now. The challenge we have is okay, can we handle everything we're doing ourselves, which is a hell of a lot between C1000, W750, W4CC, W56, W34. Can we not distract the organization by taking on contract manufacturing? The good news is we hired a VP of Manufacturing Services in late first quarter. He has the bandwidth right now to take on some of the quoting activity with our finance team. And so we have at least one quote out there right now, we'll find out whether, we're selected to be that contract manufacturer here in the next 90 days. And we are entertained another one right now, which is a, another electric vehicle, a different Class of vehicles. And so it goes back to our vision of being a pioneers in the transition to zero mission commercial vehicle. So I think we can do it. I think we have the floor space, we'll have to add for talent, specifically supply chain and program management, and we can get the hourly people for sure that Union City Hungary location where we're used to employ well over 800 people in the pay day. And now we're only doing about a 100, so the community wants us to be successful and we want to win up in Union City.

[Greg Lewis:]

Okay, great. Hey, thank you for that.

[Rick Dauch:]

Thanks, Chris. Great.

[Operator:]

Our next question comes from the line of Mike Shlisky with D.A. Davidson. Please proceed with your question.

[Mike Shlisky:]

Hi. Yes. Hello guys. Good morning. I wanted to maybe touch first briefly on the OpEx outlook and the OpEx in the last quarter here. I want to confirm it. It was a $2.1 million increase in professional services on legal. Was that one time in nature? And that's my first part of the question. And the other part was when you consolidated into Sharonville; did that result in any cost savings on overhead real estate, et cetera?

[Bob Ginnan:]

Sure. This is Bob. So the legal and professional, I would characterize as maybe not permanent, but I can't call it one time either. I think with, all the different things that we've got going on and trying to advance a business, I think will be in that run rate for a little while here. But it's probably not permanent, as far as the OpEx savings on the move. We did, we will save one facility, but I wouldn't, from a modeling perspective, I wouldn't factor in net savings. I think, it'll be a little bit more expensive actually, as we once we get done with everything, the other facility that we're consolidating out of, we actually owned. So I wouldn't build anything from a savings perspective in your model for that consolidation, but Mike, you can't model in, if you don't have enough parking spots for your people, you know, park being in the grass or the parking on the neighbor's parking loft, the facilities we had were I'd say, minor league at best. How's that? So the recruit people in now, we have a world class place, well lift, well equipped, not parking, big prototype area. We can actually fly drones indoors when we finish the prototype center, it's got high roofs. So I'm proud to be sitting there now versus before I used to be embarrassed to bring some people in to get interviewed here. How's that, can't put a number on that. And I would say, especially as the finance person, that it's hard to put any kind of numbers on this, but just having people in the same room, the collaboration's already improved just in the short time and can't value that, but it's definitely been powerful.

[Mike Shlisky:]

Sure. That makes sense. Can I turn to the orders for the 750 is that your first purchase order? Can you maybe share a little bit of detail there? Is it more for a previous C1000 customer? Someone told me new and can you share if it's the event or just the chassis cab?

[Rick Dauch:]

Actually, it's not with a previous customer it's with two different customers. We're not publishing; I don't think yet right now, who those customers are. We had dinner with one of those customers last night; they explained how big their fleet is at North America. The opportunity to move from ICE-powered vehicles to EV-powered vehicles is significant. Also in that meeting we had last night with was one of the largest commercial vehicle operators in all of North America. And they told us their plan between now and 2025 is converted 50% of their vehicles to EV-powered systems. And so we're pretty encouraged by those opportunities right now.

[Mike Shlisky:]

Great. I also want to ask about the split between the W750 and the chassis cab model. Are there any impacts differently, financially? I mean, if you're not doing the outfit yourself there, there's probably a C1000 EBITDA that you're not going to be getting, but from a margin perspective, is it similar if there's any time changes there between the two models?

[Bob Ginnan:]

Yes. So, as you pointed out, obviously the revenue, the margin's a little bit less on the shift, we've shifted quite a bit to the cab chassis. However, I would say that the EBITDA impact is not huge probably in the $1 million to $1.5 million range.

[Mike Shlisky:]

You mean overall?

[Bob Ginnan:]

Overall, yes.

[Mike Shlisky:]

And you say $1 million to $1.5 million. Okay. All right great.

[Rick Dauch:]

Yes. Thanks Mike.

[Mike Shlisky:]

Yes. Thanks so much guys. Appreciate it.

[Operator:]

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.