Workhorse CFO Talks USPS Contract, Says Company Has 2-Year Lead On Competitors

Steve Schrader is the chief financial officer of Workhorse Group Inc WKHS and joined Benzinga’s PreMarket Prep on Tuesday to discuss the major developments with the company that has its stock up more than 430% year to date.

In June, Workhorse announced its two models of all-electric delivery vans have both passed federal safety testing, and the company has said it plans to sell between 300 and 400 vans by the end of 2020.

Last-Mile Delivery: On Tuesday, Schrader said last-mile delivery, which involves companies like United Parcel Service, Inc. UPS and FedEx Corporation FDX, is a major long-term opportunity for Workhorse.

“It’s an $18 billion market. Sometimes that market isn’t sexy enough for the big players, but it’s sexy enough for us, and a big market for us,” Schrader said on PreMarket Prep.

Schrader also provided an update on the $6 billion U.S. Postal Service contract for its next-generation mail trucks. Workhorse is one of four remaining participants bidding for the contract. Schraeder said he can’t discuss too much about the process at this point, but Workhorse is the only all-electric option.

“What I will say is our all-electric is probably the perfect vehicle for them. When you think about what the Post Office does, 70% of their trucks go about 17 to 18 miles a day and make 700 stops--mailbox, mailbox, mailbox. Ours runs more like a golf cart, so that’s really what you need. Right now they get five to six miles per gallon. Ours get more than 40 miles per gallon equivalent,” Schrader said.

In addition, he said Workhorse vehicles have half the maintenance costs of the current USPS fleet.

“I think it’s a great opportunity for us. Obviously, if we were to get the full award or a decent-sized award, that would be transforming for the company,” Schrader said.

Watch to the full interview with Steve Schrader in the clip below, or listen to the podcast here

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COVID-19 Impact: Schrader said the COVID-19 outbreak has significantly increased interest in touchless and drone delivery. Workhorse recently ran a demonstration of its autonomous touchless delivery in Virginia.

Schrader said any company that wants to launch a true drone delivery service that would rival a truck would need FAA certifications.

“They want safety first for sure, but from that standpoint, I think it’s a real opportunity and I think it’s more like two years away versus five years away,” he said.

First-Mover Advantage: In the meantime, Schrader said Workhorse doesn’t have a true competitor and has roughly a two to three-year head start on Rivian.

“I think what investors have done is looked at little Workhorse here and said look, not only are they making vehicles right now, they already have orders, and in addition to that they have a drone and they have an opportunity with the Post Office,” Schrader said.

In a best-case scenario, Schrader said Workhorse has a massive opportunity in the next two years with both vans and drones.

“In two years, best case, we get the Post Office contract, we also have a lot more orders and we’re producing to the tune of maybe 2,000 to 3,000 new vehicles per year in the C-Series,” he said.

PreMarket Prep is a daily trading show hosted by prop trader Dennis Dick and former floor trader Joel Elconin. You can watch PreMarket Prep live every day from 8-9 a.m. ET here. The replay can be found on Benzinga's YouTube channel, and the podcast is on iTunes, Google Play, Soundcloud, Stitcher and Tunein.

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