Shares of Workhorse Group are down in after-hours trading Tuesday on news of a wait for the U.S. Postal Service that is long-awaited agreement.
Exactly what occurred: The USPS is delaying its contract decision regarding the USPS replacement vehicles, according to Trucks.com.
The USPS told vehicles it expects to create a decision within the 2nd quarter that is financial of. This choice is delayed times being numerous and today puts pressure on Workhorse, certainly one of three finalists for the contact.
This program schedule has been revised and a determination is currently planned for quarter 2 of fiscal year 2021, the USPS stated in a statement, Amid continuing Covid-19 concerns, and in order to present for money investment activities and needed approvals.
In 2019, the company decided to sell the preorders because of its pickup that is electric vehicle Lordstown engines for $4.75M upfront and a 4% revenue royalty if those sales are satisfied.
Lordstown has said they are targeting $52,500 as the price for the pickup. A 4% royalty translates to $2,100 per truck sold.
Presuming an extremely instance scenario that is best where all 6,000 orders are satisfied, this translates to revenue of $12.6M. Because this might be royalty revenue with no costs which can be direct we could assume this is 100% margin.
Conclusion: $12.6M of value in a scenario that is best-case
A 1% royalty in the product sales which are gross of the first 200,000 vehicles offered by Lordstown: A 1% royalty regarding the very first 200,000 cars offered minus the $4.75M upfront payment besides the present requests, Lordstown consented to pay Workhorse.
This translates to a royalty of $525 per truck with a sales cost of $52,500. Presuming an best-case that is absolute that Lordstown can sell 200,000 vehicles, this equals a total royalty repayment of $105M – $4.75M = $100.25M. That is revenue that is basically pure. Shares of Workhorse Group are down in after-hours trading Tuesday.