Earnings call transcript Q1 2023

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Operator

Greetings, and welcome to Xos Inc.'s First Quarter 2023 Earnings Call. [Operator Instructions] Please note that this conference is being recorded.

At this time, I would like to turn the conference over to General Counsel of Xos, Christen Romero. Thank you.

You may please go ahead.

Christen Romero

thank for and us operator, you, you, joining everyone, today. Thank Officer, are call Giordano Officer, Financial with the Chief Sordoni; Afemikhe. me Chief Officer, Hosting Operating today Executive Chief Dakota and Kingsley Semler;

release, found call, at Xos investor.xostrucks.com. our this first earnings reference Ahead of Investor which can Relations issued will be this we This website the quarter its XXXX press on call. of during section

forward-looking earnings risks website duty statements to which On latest documents do Commission. uncertainties. based today's incorrect or These any release, current filings key be this at discussed call, call not differ be undertake and assumptions, to management assumptions factors expectations conference forward-looking any could in reports on found investors.xostrucks.com. are results Exchange in making subject can our statements. We our statements our and will Actual and are during with news from update of of on this materially because and if the forward-looking any Securities our

presentation the GAAP non-GAAP should financial put refer reconciliations contained cautioned definitional historical includes and information and the XXXX to reliance the undue to performance Participants forward-looking metrics. in Please information Today's to first press on measures release references of earnings financial for to quarter measures. measures comparable company's non-GAAP be also not statements.

With over Dakota. that, it turn I'll to

Dakota Semler

for today our for us joining first earnings you, Thanks, Christen, call. XXXX everyone, thank and quarter

quarter. will delivering Kingsley up, Sordoni, the highlights provide gross quarterly begin wrap at cover Then will business CFO, On performance. an quarter our Giordano the I share infrastructure financial our Afemikhe, the end provide of units on positive path company's an our will today's deployments. first second the update call, and To our margin COO, update to on charging

tenets on maintaining midyear, the gross and and growing ample focus products, outlined access begin, to fourth the level of These call. by are and capital. deliveries unit on positive margins we our at demand quarter tenets three core our To our remains achieving liquidity

evidenced Regarding orders experience customer tenet, to engagement. vehicles additional by we our for the and first continue strong demand

first quarter, that multiple Deliveries postpone FedEx XX total in of customer installation deliveries. some delays to request as the ISPs. During a scheduled were to customers we impacted Alsco infrastructure such resulted delivered by and Ground units

While a infrastructure-related disruptions will with as likely to up the are and impact municipalities demand, catch on taking deliveries. factor utilities we our remain mitigate permitting customer actions

fill vehicle These new and charging customers excess reprioritizing Stepvan Though readiness, delivery enforcement on year, of every services the delivery to continue quarter include based for solutions will permanent infrastructure Kingsley terms, launching forward-looking their and charger maintain we first between expectations, as stricter guidance cover. the alongside gap fell Hub to installation. like our the of Xos quoting short deliveries our

is Xos. enabler In important for also driver infrastructure deliveries, being revenue to a charging Stepvan addition for critical an

We suite comprehensive for continue infrastructure Solutions see charging growing to Xos of and demand Energy or XES, our services.

importance We investing are purchases. realize vehicle charging alongside infrastructure more customers seeing in the of

UniFirst projects just chargers noted and customers Solutions such multiple multiple last our we in installation has Loomis, and ground the Energy new we As as delivered team to ISPs. FedEx works, quarter,

In week. last formally ACT or Transportation infrastructure Xos addition of our revealed Advanced Clean ahead charging we second-generation permanent Hub Expo projects, to the our

in interest was ACT the at hub Customer Expo. high

electrification. a charging accelerating current dozens that and belief like key fleet team of flexible of that in our Our methods hub with role the held meetings potential customers play solidified will

permanent of vehicles from the power The charging at to EVs same operators infrastructure. a capable ahead enabling five installing fleet is to of transition single connection, hub time

hub We expect in production to scaling the the third quarter of begin year. this

reliability of and was actively our first has customers data. our for fleet charging usage parcel delivered one you fourth Relatedly, the from Xos been a to vehicles and where recall delivery as prototype may XXX call, Fortune quarter Hub collecting it real-world

first to getting to made margin unit progress, in second by significant Turning level the at positive gross tenet, evidenced improvement the by We gross good quarter. margins midyear. our

of improved by in selling inventory growth Our improvement to quarter XX% margins was the that This XXXX prices later in negative gross continued XXXX. better will XX% from management the and first driven cover in in fourth call. the quarter average Kingsley negative

excited more In consistent level. addition, continuing than provide and which we per positive on XXXX, and Stepvan labor a will unit and launch with margins material as Stepvan XXXX on. Gio encouraging are towards to step The by design savings of product XXXX reduce expected costs our road more the is next anticipated gross and further achieving trend $XX,XXX that the detail on for direct in the the new by progressing map

begin As the second to and in in reductions our previous deliver are the financials. to from become away Stepvan model we those evident Stepvans quarter, expected generation our cost XXXX transition

attention I our turn before I Finally, up, a like wrap to to would transition. management

like Our and and will to pursue finance last a Kingsley this and critical and personal several strong helped he'd the CFO, later to onboarded team the be finance Kingsley has for functions. us professional build came his years Afemikhe, few of leaving deep opportunities leaders month. over noted us organization some each

to our as past over been for few Pogosyan, great remain in transition Liana the to expect weeks, internal thank three role partner help while years. would Corporate CFO a of to we candidates. our evaluation external Board has him for acting service our management we his Kingsley over and Controller, we his He next and the team, like appoint ensure a and these will smooth complete

a meet the last grows as built Xos, Liana the contributions and accounting robust a function successful and the will time audit to career XX our years. functions to lead major and the finance and prior various team the has made Xos over needs organization strengthening evolves finance to of in during organization. joining She has finance had her of at it

now I like over who call an our that, turn operational Gio the Sordoni, With would to update. to share will COO,

Giordano Sordoni

Dakota. Thanks,

quarter. goal, taking operations at is reduce team and focused capacity. manufacturing steps we've end, achieve our deliver to beginning second Tennessee remains focus margin In to the during gross to better on positive leverage production costs streamlined the manufacturing facility. this that our units operational order our To and Xos'

facility provides leadership. capacity future, and expected to These Tennessee us us focus warehouse improvements chain foreseeable teams systems allowing efficiency and on-site supply meet The efforts manufacturing to include management to needs in improvements. quality the our the for senior on customers' our investing with with

work on ground over and experience Paul Quality Sivaswamy, Purcell, Tesla, VP many immense put the respectively. built Eric years their of at of Supply Tennessee VP Chain; and in into and are Caterpillar

include these We are the which actions, reduced accurate and charges pleased early from more results freight inventory with counts.

improve expected in for of cost Stepvans the reduce made design reduce are Stepvans, improvements, Compared the fleet the performance we've XXXX changes, to included further process manufacturing to costs addition In manufacturing. with operators. to generation changes designed and previous

our These updates battery phosphate and high-voltage cable reduces power examples chemistry, that which on made a or centralized switching cobalt. for are electronics runs, of expensive copper lithium saving Stepvan. iron well to nickel XXXX the LFP include These of costs the shorten as extensive to need as couple just

towards XXXX Looking forward, look the beyond improvements move into we've XXXX goals over identified margin flow. additional gross to that positive and cash generating and integrate Stepvan we as will in

quarter the vehicles motivated and makes business economy. the logistics of to we We're reducing and manufacturing have our summary, what without clean opportunity net fleet leaders and immense a by we benefit carbon in solutions, shift to for costs this expect a from all sector. and sacrificing scale secular zero their able what dedication engineering, teams to believe are margins. supply and to our we In very been We're during chain expand to positioned well the proud accomplish

the I'll quarter. now turn CFO, the Afemikhe, cover call over results will who financial to our for Kingsley our

Kingsley Afemikhe

Gio, everyone. Thank and you, good afternoon,

we for solutions. to margin year. review now As for our first also products quarter the and to deliver I'll of noted, turn previously by on and demand remain while continue financial the track mid-XXXX, positive strong meet we our ensuring performance gross the units

million $X.X the covered call. of first our driven first in in by Dakota This decline $X that sequential million the quarter, in in XXXX. quarter For deliveries was earlier compared to the revenue revenue decrease the was

to in to quarter the quarter our came growth prices. prices were we XXXX, fourth than in lower of selling Relative average revenues a X%. by continued up While desired, average quarter-over-quarter were pleased selling see first

million the XXXX. was This the loss Gross to compared negative for goods of a to sold in improvement million $X.X $XX to cost quarter during a QX margin represents quarter million XXXX. $X.X Our the from million during of of compared XX%. first $X quarter negative net decreased significant to of loss XX%

this count accuracy the our pricing, improvement earlier, management reduced ability primarily to second units write-downs. drastically addition team give our positive margin These and In to in the processes, improved in end quarter. improvements deliver the the Gio investments gross by as inventory of confidence that came mentioned from

Turning now to expenses.

to XXXX, and the $X in an of by and quarter XXXX general of the for is during $XX.X compared decrease expenses, increase decreased sales These $XX.X administrative lower expenses operating and million the in million $X.X which the Non-GAAP compared from by in offset versus $X.X XXXX. first million in million. loss first first of $XX.X first million the development the Our quarter expenses quarter million operating million quarter partially in of in quarter and million quarter lower marketing to research driven was expenses million $XX.X $X.X $XX.X were quarter of were XXXX. and the to to expenses this first

we position more move and we'll a beyond Xos as details to to cash targets positive share and business, these quarter. efforts place expenses, efficiency Looking we next have operating put to all our in prepare in forward, gross plan a margin on drive flow as aim

and $XX We of cash, closed marketable for million. the available cash with equivalents debt quarter sale securities

in $X.X our cash with on related activities, used payments used activities, to in Advisors. addition primarily debentures Yorkville In to financing operating we convertible million

fourth On basis, the in of the of $XX.X declined end to the million first at million quarter. a $XX from XXXX inventories quarter-over-quarter quarter

at inventory also the level to expect second remain We growing sales. over roughly quarter same despite the

as positive progress have or cash CapEx build and cash for flow, continue less improved $XX.X last we free flow gross from we'll capital, million cash We margins, ample quarter. the maintain that to and options million delivery volumes, Operating liquidity. $XX.X to working quarter to towards raise we'll believe capital grow used additional

a up, outlook million between and units, reiterate we XX.X to expect revenue and of XXX XXX loss $XX.X $XX and wrap between continue to generate XXXX operating non-GAAP to to our million To . million in $XX deliver

XXXX. to As mentioned second of half the weighted expect we deliveries last quarter, towards be

CFO team career this our to a as will such last developed proud talented to my of organization. been have the like I team privilege quarterly leaders within of be work say I'm capable it a as call has assembled Xos, and committed closing, and Xos. of finance In would at with to my

I continued journey. the our and all Xos depart, the I team, very investors, in wish our best but customers As entire nothing

the to I'll now back turn call Dakota.

Dakota Semler

Thanks, Kingsley.

is Xos success. Though the remains track the rollout sector by for impacted charging that long-term infrastructure, EV we confident on of commercial remain

We are our actively deliver taking of steps positive units. charging unblock customers growth, difficulties the margin sustain our and to gross

achieve position products, superior customer supportive to electrifying regulatory and strong fleets. relationships us tailwinds our commercial of goal Our the well

to customers as our their I for stakeholders their ongoing and at of Finally, the thank continued as Xos company pursuit well support. in for want extremely our here committed talented our team vision efforts for valued and

With open like that, for now to line questions. we'd the

Operator

ahead. [Operator Mike comes from D.A. first Shlisky The question Instructions] go with Davidson. Please

I'm sorry.

from Markets. with comes Donovan Please go question first The ahead. Capital Northland Schafer

Donovan Schafer

want focus see or there And your on these though to of reiterate of you it's the infrastructure I So bottlenecks things. are guidance to some great challenges. even part guys

and so lines curious to on don't through that I've catch go because well, solar to you doing and time trying other the And utilities this of grows industry they thinking industry, trends almost could it go lot you kind might in still getting terms persist much, of up. like the if -- I as built in I'm could you bottleneck. of elaborate of even as could it itself like some -- where infrastructure places think as seen fast in if a if maybe a they're have So they

seeing shoots the you side trend up? what Loomis is on improving? mentioned, you infrastructure getting other the are it like is visibility to staff that chargers kind green customers? some of and gives So confidence delivered guidance? you're seeing there and what like other that Or things are Are things the them Maybe and you are the in -- the

Dakota Semler

provide can see right are experiencing that to address are on I we Donovan. and on touch undergoing really trends. we those and to three we're things more that the industry There's each things within Happy think absolutely. that we Yes, that, that think that now trends context -- of I'll do

the things right bottlenecks So in are and three now, permitting construction.

I'll the that being And then about talk one third the solutions, a really the one on second long-term The is tails mobile particularly planning, little the hub. and ACF of just passed. rule bit

what bottlenecks. chargers really vast and deploying or majority little bit access not So conflate the experience We first charging saw mean actual during of the folks I people That's that year, to foremost, of there anymore. charging enough the of the themselves. but construction that that us not we the by sometimes we chain get infrastructure chargers are lot think are available planning And in infrastructure we crunch can't actual ask a of case permitting, supply a phases that last projects. and delays physical

to deploy the this authorities the also do to utilities working power infrastructure. delivered it's on that is building This the and actually work infrastructure. of organizations install approvals construction support scheduling So to is contractors also chargers additional site charging working the with deploying. we're ultimately to and actual local charging of planning sizes to And regional actually the with get get

So the industry permitting planning demand bottleneck construction now, a that phases, due right processes. this the then those in phases and we're are there's to of But ultimately, seeing inherently the phases. just phases long the

Energy out so. procurement new some processes. We're the to to methods to internally And on a those isn't submissions getting But expect Solutions within trend better time. responding and we streamline to that We're I delays and that permit in continue or think bottlenecks. over our and improve will alleviate next year testing how this Xos

other in to regulatory some of by expect and Advanced have population the will XX of expect that rule, A XX% tailwinds continue. XXXX, We requiring is which Clean end rollouts. these we regulatory because Fleet states of of phased California vehicle in lot these trends the like of the their fleets electrify changes

it's So XX%, in believe XXXX, subsequent XXXX it's requirements. XX%; I in XXXX,

bottleneck. more be to planning the and going expect there's become organizations, deploy deploying infrastructure for lessening proficient groups to charging to construction we at So that demand next do But infrastructure decade.

I'll solutions. The is mobile about talk next charging area

model here and So we just before was California significant right ACT and our week, launched announced the actually and fanfare Expo Hub Southern it Xos a to of last second-generation launched in product. construction right and that product that And bottleneck temporary bottleneck manage for charging really they're help that to that now demand fleets phase. solution the in a what permitting delay is, is seeing amount

a permanent can a delivered be the charging a is gets customer line infrastructure at can to be then hub rolled manage the another we site, completed being a take off start hub installed and the So the we roll to a vehicles it truck location to up at used within five and day, site, time. ready deployed. and And to where between time it production when infrastructure permanent when

I So that's to make and charging that the to expected. of in bottlenecks. to -- And question the a quiver in really, to tools really you the I'm responding valuable our want there sure infrastructure respond way addressing pause tool

Donovan Schafer

Yes.

did. You

utilities full mean, with So just the just be I my hard super other year and one -- follow-up with the it's -- respect have do would I this to is like you know super guidance, stuff.

you like of like the it visibility supporting charging customers internally -- have like do going but with -- process. some sounds there through with so a the permitting more And you're kind

us I go are into get understand six route. guess where of maybe they months, guidance to time yes, future So to have certain hub the of at Xos a you've you from supposed the a turned see where sort to amount for that, service, and charges can are their three talked number you certain with be the to maybe go some prepared depots a standpoint? when in they they'll charge or those to to customers, decided going there's of customers is of or ability to ready how need okay, far lines on months

Dakota Semler

ready the that that's to visibility work are in an risk and lot ones in the of not know big to second that we a how it's guidance part of are the at plan. closely, for are still on year. is really have really to obviously a that those most book, revise for just that year. infrastructure There do order taking have update having place customer some our orders the going confidence and proactively monitoring reiterate we degree of being our And able that in production and for what expectation in delays the so that we're we're Yes, we we deliver of sites are a this half but we're

We're customers, ready as they X trucks make the is so and is long-term make don't I receive next over X trying charging to of so each third sure we're to years, our the -- we're mistakes infrastructure a vehicles infrastructure thing place procure we is that mention making to the with to having ready before sure in was same to together going plans there plan continue that that them. putting for

Donovan Schafer

sense. Makes perfect

Okay. Thanks there. for clarification take of the my offline. questions rest the I'll

Operator

Mike is question next go with ahead. from Please The D.A. Shlisky Davidson.

Mike Shlisky

And questions. the Yes, few last afternoon. my there, questions Follow hi. Good Dakota. thanks for taking up on

your had and that Are about hey, data you prepared You a more remarks, enforcing to mentioned enforcing Or this color you're saying, doing delivery What times. as to delivery some when you're say contract? hold-off you exactly? asking you're you mean times? in what folks just on we have think actually does

Dakota Semler

a question, it's Yes, Mike. good

align we're schedules things infrastructure. to the of the production of do deployment charging with One is trying

if final way up build do time truck a and per continue a unforeseen get continue on of the you we to of commissioning all our out to truck delays to However, day production even experience the schedule, the charger.

have is hold that finally commissioned. requested vehicles we cases, charger that some customers until In

customers our and And date. with and and our tried delivery really terms really so contracts have updated set we've our a conditions to to evolve

ready. if our even customers So their be that the comes as we're can the truck we vehicles deliver ensure deliver infrastructure that quickly truck ensure and to charging can as we line, to possible. with not success is going the when Ideally, the working off

for that trying But slated a part, to really, charging the to for particular so with most another might take to vehicle a be production we schedule sell don't infrastructure the ready. that's align we're it and have ever customer the that customer

Mike Shlisky

to to things I Okay. just that. I gross It Thanks about track. effort wanted get Then to on very making. just just XXXX margin your from guess positive right the for the of like to Stepvan, to Gio, Great. out essentially is I positive the are ask margin here. kind gross ask be it you'll that run one after want first sounds is

in So gross is is at margin point? be you're mainly to your once positive XQ, that XQ, that, math going whole mix

Dakota Semler

Yes. changes example, and that We're made amount really of to this the we of design XXXX a confident in we've high-voltage reduce an of have to the shorten vehicle. focus cable the on power as electronics the costs, high-voltage big that platform, new consolidating Stepvan was runs

different In terms vehicles each are from Different customers the battery and not of pricing, vehicles some will its first have whether positive cases, just be as those initial of say there into will hours ramps, line because off effort configurations. in we're gross will margin be of hard there those multiple the start, be there production vehicles. or course, to more those And getting different.

that a our performance of continue the reduce to to part is the new improve step-down deliver valuable But and product the focus idea, to and and cost is whole that's XXXX customers. the of the the

Mike Shlisky

That's do ask company-wide some to after you exciting. kind also there push Okay. of MDXT things making like initiatives it you rate Or running flow can kind you margin I'm help cash of unusual question about really curious, have on. point get -- sounds run about that it huge cash not But positive. And after that, guess that to just to you're go you I push a towards are truly with be is cost on maybe other wanted a the from a up positive. going volumes? HDXT thinking there basis. to I'm there or you'll gross would those flow positive and you the cuts to might do yes, And Great. be any have I volume

Dakota Semler

one it's at are good manufacturing, I taking Holland question, Tennessee. is the we're Yes, of and think things And a consolidating doing Mike. we

to That ability good battery there the a doing systems and there operations overhead as delivered. some vehicles work us each established Tennessee, really in are in things footprint our in we've trucks that like and customers, the saves of logistics, our installing building we've to delivering reduce and on Tennessee well. battery migrated well them as as overheads also battery vehicles personnel are and So the and associated of as freight on with

ability you the volume. generating charging mentioned that of that large to a free infrastructure our factor with flow. infrastructure. something our we cash readiness available Volume Obviously, to world like the customer is helps balance get to that's in and And us

The the step last thing is year. really focusing this on in

a portfolio But platforms profitable talked business about that continue HD the over very the grow volumes. in to time. to those As and platform, MD will allow and to we us going we're itself and believe product and improve we Stepvan lucrative is product margins

first savings as So introduce first and profitable we've new out changes continued year guidance this we we on. that expect in working indications the as the of but that been Stepvan the is vehicle technology some as in being platform XXXX XXXX of well to step, just come

us technology yield it's cash really we volumes, positive consolidating combination as that savings to So cost well can that additional start material to where manufacturing, will flows. that get direct that changes platform the as point generate of making to we're increasing a

Mike Shlisky

I'll you. Thanks the over Okay. there the for it luck information. information best Got and Thank for years, the thanks you. it. and all to Kingsley, leave of

Kingsley Afemikhe

much. you Thank so

Operator

from next Bank comes question go El-Sabbahy Sherif The [Operator Please America. with of Instructions] ahead.

Sherif El-Sabbahy

and wondering, the to you afternoon. are deliveries quarter I unit the a in was there that was good idea production variance give reported? given of Hi, between and an us able if just the deliveries, unit

Dakota Semler

those a to efficient production production our more units has consolidating reducing operations and Tennessee vehicles more lot tell going getting in guided total you Sherif, operations We're in the building ever but vehicles. the can the of of quarter, streamlined. into No, we at we hours haven't made

on to even is the the So improve new line. platform it we're as continuing making transitions to

Sherif El-Sabbahy

spoken introduction a about quite of cool you've liquid and packs. changes technology And few Understood.

of battery the a some looks now through filings, of it like looking packs. provider CATL's Just

my from So CATL are what products? is, would And it's like? are question cooled packs if liquid a or are these coming proprietary Xos be that new that mix looks they mix,

Dakota Semler

Yes.

So at customer or the a like. and that life multiple a well of the or really of an looking looking as come applications, lower some higher rate which charge NMC solutions, it primary the pack different like If When or include profile that the other sea LFP one we something more have some at applications of we'll what our tend from our battery at and intensity longer you're as requires both depends will density pack higher suppliers. to sea of battery solutions looking excess some looks rates, internal of solutions, powertrain some on modules solutions use Xos from tax. we're suppliers solution,

what using get Over they're on road, to is diversity we what customer going and vehicle more out that time, feedback really be of vehicles as I upon depending will we think the the there a packs have for.

Sherif El-Sabbahy

would new for versus Stepvan, us plans just internally are you many these of it's sourced shareholders? a how ability so the from And packs for as to far of give the your to CATL what sense be produce XXXX able

Dakota Semler

what's solutions. what's going on production of be X,XXX going any of any So be has up split don't solutions to the of what's than in-house, have the of vehicles a to Tennessee line worth producing facility systems. of NMC pack to our supplier our to be going capability We oriented the about

we that, between have over products a right data but have we'll those So on, don't a more guide split now. time, something that's to

Sherif El-Sabbahy

you battery to Understood. for And credit? production expect the Inflation Reduction Act do qualify

Dakota Semler

production content pack analysis systems. which upon there So those for our qualify of are the the the pack qualify battery an total it into what can domestic building, depending we're credit. And what building, It's that some based for we're IRA systems credit. upon goes will pack

Sherif El-Sabbahy

Thank Understood. you.

Dakota Semler

Thanks Sherif.

Operator

participation. questions there queue. you conclude your thank the does are teleconference. today's Ladies gentlemen, and time, This no this At other for in

your disconnect Have may day. a wonderful You lines.

Xos (XOS) 10 May 232023 Q1 Earnings call transcript