XOS - Earnings call transcript Q4 2023

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Operator

Greetings, and welcome to Xos Inc. Fourth Quarter and Full Year 2023 Earnings Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I would like to turn the conference over to the General Counsel of Xos, Christen Romero. Thank you.

begin. may You

Christen Romero

Liana for release, me everyone, Chief today. the the quarter Financial Hosting Officer, Xos this Thank its call. we issued are joining will Chief with fourth Officer, Chief Acting today Sordoni; earnings Semler; Ahead Executive call of Giordano call, press you, XXXX and us Pogosyan. which Officer, Operating during Dakota reference

from making materially our forward-looking be or and on latest Exchange differ reports discussed statements based factors subject management the website in of our of at found section call, today's the are Commission. investors.xostrucks.com. can and expectations This earnings filings will in uncertainties. key our current with during any Relations Securities call assumptions our be statements on news and incorrect which conference could and this of On Investor Actual assumptions, forward-looking are because results risks to release if this

company's earnings for information measures put undue press reconciliations statements. quarter in These any at documents presentation references can forward-looking be measures definitional Participants do non-GAAP to fourth GAAP to of information statements. cautioned Please release historical financial comparable not to to contained non-GAAP to and and also the the any duty measures. not Today's includes the refer financial website forward-looking We investors.xostrucks.com. metrics. be update performance found on XXXX our should reliance undertake on

it over now our With turn that, Dakota. I to CEO,

Dakota Semler

delivered achieved margins generated the revenues and today's Thanks, during we from I $XX.X fourth highlights Christen, both review million, will XXXX us to Xos' best and you, call, in XXX year-to-date. positive On joining thank third everyone, and for which quarters. gross units of cover

and ElectraMeccanica the Gio and it financial of discuss for will off operational handing our outlook and XXXX. Before anticipated acquisition updates, for Liana I to

each of records third Last redesigned Stepvan and quarters new of release the delivered platform. the in year, quarter-over-quarter growth following delivery set fourth the we and

XX trucks our then vehicles vehicles their in build putting an fewer or initial ongoing the customers confidence decisions Xos. important vehicle Xos that vehicles return industry, a cost replacement vehicle most of use of total part Customers practice sizes involve driver differ paces in real larger is order traditional with Xos these schedule. with program, and world. charging starting of focus infrastructure The sales of order by of from making As common orders commercial make the case, our all in strategic a their process, about through training that robust sales the and initial ownership,

customer strong UPS to direct XXXX share. establish our delivery on X past customers in remain to new and Direct as tool built of significant comprised growing Post. our Loomis Canada customers, over of including the well XX% sales Our UniFirst and pipeline a years sales success and us critical like as sales volumes propelled with market

sale, support experience the rely service orders. heavily dealer directly delivering on that our we translates larger to Following customer high-quality Xos follow-on into vehicles a partners and

announced in relationships In our many grow and recognized first of Xos. including that vehicles fleets to the continue customers purchase with we our XXXX, established Loomis' sizes XXX quarter, globally order will expect we differentiate of saw with

legacy of gross deliver new directly that our requirements results, unit Xos EVs range the improved platform commercial many gross cited the scale Xos' margins to capital contributed Stepvan XX% to line margins new or by financial Stepvan and exceeding can margins of without The X% in exhibit Our also OEMs. showcasing the gross in massive attractive many.

a for new range will was combining and describe reliability. improved momentarily. these Stepvan with supply We improve which our also results forward step payloads to longer continue our expect the concerted chain teams efforts and will of engineering The Gio customers,

new Stepvan, vehicle products. alongside years, and platform to the year, the of for in prior a inventory. Over is population both half of small the plan second the Stepvan leverage powertrain units we generation the a hub our delivered customers that of and we many XXX It over market

difficult that company across of the with series instilled Those gross operating in propell to cost-cutting aggressive our a and cash next pursued of towards together the Xos we free in quarter rigor expenses XX% margins, goal, discipline XXXX from and financial efforts company. quarter, fourth fourth we the their changes, by peak improvements Operationally, positive reduced our flow. By XXXX.

by cash expected free of positive acquisition towards march flow bolstered ElectraMeccanica. our steady Our is

options the EV, of discontinuation best all address for and determine the opportunity excess an need offered long-term deploy unique options We with Xos their in a XXXX, In ElectraMeccanica multiple conducted we Solo their opportunity. to ElectraMeccanica explored of found following to growth working review capital. extensive capital

acquisition Xos' in position further of anticipated currently ElectraMeccanica leader unique transaction by of ElectraMeccanica Monday, as and Our Yesterday, electrification. the close March this was underscores both XX. upcoming to and we fleet a shareholders Xos anticipate approved

capital to base additional will expected provide secure many with $XX for over is that million Xos quarters. provide The deal financial in a

their come. of commercial second For between all of remains in quarterly our a the impact acquisition hard is I the range consumption in repayments Xos overstate. Xos the million reference, that The excluding of to EVs now million And years half leader positive in to XXXX, $X.X shareholders and completed support thank cash ElectraMeccanica for $X.X to ensuring for Yorkville.

the the influx short those next anticipate week Following gains in areas where capital allocations bottom continue in judicious resultant the make Xos of capital and and midterm line. close transaction we to will anticipated our to of Xos,

remain and will unlocks We for to outside funding customers opportunities it where open significant value shareholders. both

of for products. volumes not additional growing foresee do However, a core our capital need to deliver we

the believe into XXXX. that readiness with customer other point infrastructure market firmly parlay to ideal entry commercial commercial the further demand Stepvan's as will I EV believe for to Xos prospects and success sectors Stepvan now grows. Xos has our and Turning our selected the

We our is on attention and deliveries budgets, increased remain committed and acquisition. unchanged our our the key CapEx in believe to reaching which wholly continued R&D is products. concentrated related reflected we Stepvan now, goals. financial That remain For to market the Stepvan following the powertrain focus

First, by will delivery our anticipate XXXX, procurement Xos will part vehicle established cycles. continue make In sizes we our factors: routine order to volumes be customers their major their and a of increase X bolstered

to of second team, customers second see a gotten believe start to the the year will that continue first to to charging the stronger Relative We who've sales to to half and supported quarters. as weighted our deliveries we install race XXXX, substantially be expect infrastructure by strong year.

combined least pressure, states regulatory in EVs. available with motivate customers adopt continue to to incentives XX Second, existing will new and customer at

translating powertrain revised Stepvan the stronger into platform Lastly, is sales.

Winnebago school XXXX. for recognized manufacturer bus We have powertrain nationally a deliveries in planned and

a bolstered expectations serves product Hub. own the sales to as high have sales, Stepvan addition updated vehicle we for a In right. Xos its and as both for tool in The high-margin enablement hub

beginning surging sales We Energy, and are orders Duke and orders who and take seeing are from purchase a interest Energy signed of delivery. Xos range including to customers,

power electrical also our can infrastructure. infrastructure hub which entirely installation The leverages to one is be capabilities. a permanent cases, have infrastructure rescue unit vehicles on at locations charging mounted schedules. and Our delivery Each and DC can have time-consuming newly time storage charging By charging, already connection, low-cost sites charge many customer Stepvans In the fleets to can put existing and up site. into timelines service excess infrastructure customers can allowing complete. many single forego charging fleet a charging provide and power hub avoid mobile provide purchased to upgrades, users to vehicle uncertain expensive that to trailer before EV stopgap impacted power remote X from at

incentive additional delays believe project, And deliveries. the $XXX,XXX sales predictability incentives support California the the improve our for we per provide Board which up to charging-related Stepvan all, the while hub our certain unit customers, purchases. will from for Resources of for eliminate are it won't core hub recent hub Air meaningfully In

Gio, it I'll now COO, our operational over hand an for to update.

Giordano Sordoni

a vehicle ever was manufacturing for chain higher Stepvan banner sustained rates year a build than platform, gross We Thanks, before. positive supply teams. Dakota. margins and the and higher-performance engineering, Xos new launched delivered XXXX

our while long-range XX% margin higher platform of us range particular to updated gross Stepvan delivers The customers, targets. XXXX Our platform is our enabling approximately variants comprised and and to deliveries. payload simultaneously highlight achieve of performance a our

operations. without excess inventory future team production to XXX of the satisfy can Xos production capabilities quarters, and which in third rates chassis was our of and up with quickly agility demonstrate time, in-house, fabricating product able integrating build and we revamp demand year. to per investments. sustained more into ERP for factory demands buildup. unhealthy reflects to systems underscore manufacturing factory's fourth we the coupled our and capital on significant Tennessee both components scale our and factory platform customer system bringing development manufacturing match In with our significant team The of were the our risking rates redesign build were output By site, pivot periods without able

of to our all while this testament accomplished expenses over ability results capital deliver significantly operating in the a to the team constrained which environment. reducing is The year,

Beyond battery fully the XX,XXX XXX-kilowatt with offers heads curb pound weight, overlapping our supply a hub. and the Tennessee By to in hubs the manufacturing to volumes. charger per to X leveraging Stepvan, and projected than hour Byrdstown, have existing up our up XXX-kilowatt sub capacity and our version. charge charge highly Stepvan to year build prior factory price our XX% chains, revamped efforts at team engineers' hub we addition at our now lower technology, our to speed, capacity Thanks XXX the all

Turning to XXXX.

will supply vehicle chain reductions teams engineering and continue and to Our on performance. improved cost focus

leader and dividends reputation and in the to supplier growing starting is a relationships. scale pay as Our industry

better have eluded opportunities result, with a to supply have long-term more that we new terms enter As agreements OEMs. into

margin vehicles. our are working to performance our further engineers improve Our and chain supply closely alongside team of

systems XXXX, growth. With R&D is variants and introducing top support for demand that, continue where by our The Stepvan deliveries. justify scaled new the I'll priority expect Xos to will resources. Hub addressable it and powertrain to expand production revenue by our expand empowered In Stepvan customer remain market to Xos Liana. pass and sufficient to XXXX, will But we

Liana Pogosyan

from to operating negative good full and presented gross the with progress by ElectraMeccanica our in positive Stepvan, capital from in me strong our 'XX, and will to improved to years. continue XX%, Launching and prepared we that unit Compared expected you, our by that a XX% dedication and via was results making and reduced of navigate, negative margins required acquisition margin provide aggressive coming challenges Xos accomplishments quarterly able year we our immense at securing X.X% XXXX deliver deliveries our Xos our Thank XX%. on entire expenses XXXX beyond. near grew confidence have deliver to These growing while gross Gio, all breakeven of annual meaningful team significant financially. everyone. afternoon, revenue targets

now mind, our I'll XXXX. financial for of performance in quarter that fourth With review the

million in $XX.X for third revenue quarter to quarter. to increased the $XX.X Our the fourth compared million

goods Our $X of sold compared to the to quarter of cost a million profit a to gross of quarter. million increased during million $XX.X the million in quarter margin compared prior $XX profit during the quarter. prior GAAP the change quarter deliveries deliveries in current revenues as was with The the goods during was to of of due Hub. the increased energy in in revenue primarily the an Xos in quarter. as Cost well quarter-over-quarter in sold including line unit increase increase $X.X products,

management in physical in prior changes of current of activity but inventory impacted the on was our to to resulted compared sold our inventory overhead in costs of margin improvement highlights absorption quarter, reserves, our Gross to continuous lower inventory This units our focus by the updates quarter and margins related count. processes. the slightly the results

in As of direct noted higher reserves inventory sales a for sales impacted that in introduced gross levels vehicle by last our the prior with is quarterly range mix dealer, changes combined and model volatility GAAP OEM quarter, results. of between margin

continue we release. to in can reason, gross that earnings share consistent margin this For today's you a non-GAAP find

by ElectraMeccanica expenses reduction in XXXX fourth $XX.X by across transactional-related the operations Full all year increase as lower million. the categories, down was moderately in workforce operating million driven quarter. wind to the expenses quarter, expenses. expenses acquisition the Our and non-GAAP primarily quarter to loss ElectraMeccanica Operating offset overall operating from through $XX.X $XX.X partially decreased following the prior October the million are for second expected fourth we quarter, $XX.X and remaining million

the We cash with end third at million quarter. ended and million $XX.X the equivalents of cash of compared the year with $XX.X

activities. in addition in full. convertible used with fourth debentures cash the related financing to been our primarily we In have now was repaid which used quarter Yorkville, activities, during million to $XX.X in This operating

in the will concluded results. As mentioned last these quarter, payments quarter not and fourth future impact

[ generation fewer on decreased decreased million during materials sale management. $XX.X from the well of goods purchasing to Expedia's balance to we and to contracted ] our quarter, prior Finished given of inventory third as draw in sale quarter as Raw focus and Stepvan. million $XX.X units Inventory receipts the of offset down the products. prior production generation energy due inventory pandemic [indiscernible] by result continue the the the a inventory as our strategic as Stepvan of

balances inventory stabilize to purchasing. moving deliberate forward expect with We sudden and

free CapEx improved in quarter. Operating as or million for as quarter $X.X Xos' $X.X made of XXXX less million cost and cash units. flow cash from to from reductions flow well positive margin the improved negative both This reflects gross structure last increased deliveries fourth negative

Wrapping up in $XX.X $XX.X operating generate to revenue, XXX non-GAAP for to million loss a to and XXXX, $XX.X deliver million of outlook million XXX with we expect achieve $XXX.X million to units.

by quarter supported of cash acquisition the Xos improved to we we in equivalents updated This receive that expect coming a deliver $XX of the million ElectraMeccanica the gross in will each of margin form positive liquidity growth to expect the Xos Stepvan As be in over XXXX. from cash in and weeks. redesigned Hub, of result and

will to used capital operation This fund working be our capital growing deliveries. to Stepvan needs and support ongoing Xos'

to form to sublease. liabilities, expected flows. the of assumption acquisition mainly real in our the do not that achievement ElectraMeccanica change expect or of acquisition of expenses Our estate of operating We includes delay leases cash anticipate of trajectory we X the Xos' positive term the meaningfully

I'll now call turn over the to back Dakota.

Dakota Semler

up, for set XXXX stage critical wrap that Xos for To a Liana. Thanks, was exciting year XXXX. an the

electrification, of their in record our leading Our growing XXXX. back-to-back quarters half customers clearly second for the demonstrated demand to

sole and now use are in X Stepvan majority by option remain the zero-emission America's Class of scale. delivered the large fleets North and Stepvan source vehicles for Our X at

release with gross Stepvan, demonstrated margin We our also Xos a economics. leader profitably the built positive positive can that commercial EV EVs be in of making

funding a These with of have rare the business. cash secured upcoming flow in EV milestones ElectraMeccanica, sustainable the remain the to commercial acquisition accomplishments build we Now positive needed industry.

in part electrification let's an continues that, outlier the industry vehicles. critical of Xos and questions. for a With line the be to commercial of the open

Operator

Schafer [Operator Northland Donovan with Capital Instructions] Our first question Markets. from comes

Donovan Schafer

on getting fellow to Congratulations That's the acquisition. for hear. great votes the

want So ask for I my gross question, margins. about to first

little a I there's dealer, with what sounds this a realize lumpiness, So -- said, based quarter. profit but it's are came they whether with like a it down to inherent And the do Liana there it on some reserves has bit seems some sales it or in for the treated -- report, lot are direct through channels, different gross a you of on it non-GAAP that. non-GAAP adjusts way

the something we kind if was the And you of if QX if in my kind curious gross that down I'm can can me an So just I'm come so, isolate through may QX. bit little have talk impact there just if kind wrong on a is there basis, Correct margins on that. what -- of of was impression to fourth what quarter? -- apples-to-apples if

Dakota Semler

Can you now, us hear Donovan?

Donovan Schafer

Yes.

Dakota Semler

Great.

GAAP little reserves considerations, we that figures, change. that largest going touched is look drive to there's the a at on So bit that. a be obviously when But of of model it's non-GAAP Liana that drive adjust single couple for you things When factor really the mix. to the

ultimately might of vehicles be components customers the longer some represent or going different liftgates configured shorter-range our And or to we range quarter-to-quarter other are to changes. that's different make as that deliveries margin have going margin various vehicle, vehicles drive or slightly profiles on different battery or and the that that performance demonstrate so to added to

across as And those deliveries in believe as XXXX continue of we've be through profile and QX we all previous margin north But calls, Stepvan, XX%. profile to vehicles our of of the the make in of will products we of the margin end we which of as increase. some said inventory, all should more older get and XXXX our should

to So come. it should continue to quarters improve in

Donovan Schafer

Okay. Great. And turning then XXXX... to

Liana Pogosyan

one add point to margins. Just the more on

of was the And change -- for as to And costs. well. was don't lower that we quarter of overhead that script, think reoccur. nature is estimate absorption methodology, the quarter evaluation that we primarily a I related in this mentioned margins our expect of this part was this recorded in quarter in driven onetime that we there the

Donovan Schafer

turning but then expenses somewhere I 'XX, a which revenue margin if I crude implication same take is things. of other a of of guidance. know I kind gross to constant And XXXX, it to take crude, of guidance, was midpoint OpEx as operating okay. is 'XX and XX%. there's if XXXX and But is very sort just loss very and the like the midpoint in And for the something in make Okay, that approach there the the of of the I sort in just the non-GAAP hold ballpark I --

that I'm any like to sort is think is framework? there cause color different give how just it going lower that -- that? expect gross is curious through and in takes grossly of from or if that a over to would And be you also then the year? going behave year, start puts scale like around you things of will that deviation that and us mislead to the can margin that kind -- would Are to if

Dakota Semler

Yes.

QX represented improvement at our of number, the stabilized were full at within look higher-margin we we drive will QX. improvements it's to that in selling you we cash will while and that of provide a don't And the year some gross margins granular at probably if a OpEx XXXX so ahead. and substantial that to can saw So model that about a portion making free by mix significant if XX% to of a annualized which flow those reductions context will and OpEx it's guess, then or, operating number assumption, improved bit OpEx level, the margin that your great not the performance close configurations you ultimately of we informs look as little year guide question. flow OpEx, vehicle cash talked we continue I year I gross improve, lead the in think we kind since to anticipate and That end

it of comes down gets lot a quarter-to-quarter. what Obviously, delivered to

of continue So EMV some QX. better, the speaking, of there all generally profitability of for we'll OpEx of improve be is the this impacts as still year the in performance a will excluding I But the And inclusion variability. financials of deliver to little bit should vehicles the think, well.

Donovan Schafer

delivery. And Okay. the the get more -- in customers state compared current on getting place? kind for what if conversations of make they or know, sort of so in, infrastructure to, so, update -- your the engagement a squeeze can of limiting year of customers if with in the of I ago a just can sure an to or we to you're scheduled to one able will past, take state take EV things Kind where be delivery the that visibility have, doing that you of customers what ability charging was I

So great. can of that if be there, just update we would get an kind

Dakota Semler

happy OEMs infrastructure. improve We're hands into which with Absolutely. to biggest customers deliver Infrastructure general in experience that continues issue deliveries growing period-over-period. to the our that update. rate other to delivering with own we the and But we and working really we're provide Yes. taking be vehicles, a terms of

currently units, for to second-generation as fanfare, announced launch subsequent backlog trucks. our delivery the We building that been hub of EVs the other acquire of enable close a more QX. also second-generation will we've which help beginning significant And to trucks this well our much released of QX customers of recently as don't Xos was own those of hub in order

significant that's the believe today. with portion a that of solving we dealing problem So we're

say these solve here infrastructure we the that, deployment California have with customers delays, insight challenges. York. to of as infrastructure around all of of experience where in delays, permit building better other we projects deployed certainty I believe dates a time the is our utility large as projects in Texas slow can and into we infrastructure we -- have beyond hub will or that lot construction or is down. that some don't projects delays of But New our visibility key states being all better it that lines But mean going our of such doesn't in those tagging can

until that deployed. proactive can and more annual So hub a provide will to we're continuing products that that exercise. monitoring the about infrastructure continue into we planning then permanent supplement incorporating stopgap and And get to like be our solution

Operator

The Jerry from Goldman with next Revich question comes Sachs.

Unknown Analyst

consistent guide. for It the This end run Jerry today. on with at deliveries of sort is seems are low Adam you the like rate the of of

So that deliveries at and end What the just thinking at key rate end run would of the you and of the range? versus the in high puts keep low bottlenecks guidance? range this you're wondering takes how the and about that to the are embedded

Dakota Semler

Yes. Thanks Adam. for the question,

about point That start the reiterating increasing bottleneck would hurdle terms single of in I or to So previous off really by be deliveries. my biggest infrastructure. continues

the for are the to majority supply performance. parts obtaining reaching upfit So of time and of I the of vehicles. incremental component that obviously the are the other think infrastructure factors guide, into go the the that facility, delivery including or playing this, all end that There into from high chain will drive

impact Hub X as just factor range projects I the we've would -- that quite got first will is of Gen the be understanding we going and deploying. the with units, attributable But are them don't experienced fully of we will delays that significantly launched yet clear this customers that units deliveries they're is shipping the we out how with our that field hub. going One production haven't other that I although are into quarter, infrastructure And the to rolled in a think customers. that majority be change to to have delays say fully

that positive range. high for do us significant range within stay that to it a being of stay at end will that have impact we hopefully the able pretty anticipate So and

in hope of ramp So that, as and being QX, production up performance in to top hub we the continues that range. can the in our the end drive

Unknown Analyst

Xos Stepvans. the -- margin positive the see to gross new margins nice on And

to that you -- the project variability? unit What on drives in margins that expect product you And time? margins X% range trend over said product. on do that that to think on of where I XX% gross

Dakota Semler

Yes.

mix So by a and it configuration model lot deploy. the actually our that customer ultimately is customers driven

of longer-range or may the even higher power might power options profile, other liftgates export battery configuration. things add-ons, body our or drive margin and Some like feature a takeoff have that

on attributes well So go as as those to generally, deal vehicle discounts offer larger we and deliveries do our as customer-specific to the and features customer-specific some larger terms increase for we of purchases. volumes some bulk of customers, increase small

those buying the And actual COGS built generally most of depending that's drives upon vehicle or will that but model vehicle north what different final XXX less those -- variability. accrue is attributed is labor units to how those of vary than the are up, that to customers There the that allocation vehicles, more so spec. or obviously gets allocation

Unknown Analyst

That's for hub me. powertrains for of any products? split XXXX, versus it. versus one unit Got the color then deliveries helpful. can The And outlook last Stepvans provide between you

Dakota Semler

substantially. all guidance really that anticipate We the categories growing three that providing pretty of not we're are today. Yes,

be that are product and confidence in three within have that around segments these look terms so And customer, double there it's in but we pipeline year. just of different a we to a going they know XXXX, there's as whether delivery variables Stepvan inform powered a our Xos or by those that are customer, trucks, to take it's deliveries their customer to when depending upon that pretty digits really, of well stay good all range growing the of

Operator

Next Davidson. question Shlisky with D.A. comes Mike from

Michael Shlisky

in for to wanted entirely of in to you whole new it margin version? improvements here? have vehicles you -- new, the future there of I new gross new a legacy guess, near deliver XXXX? still round is Or be have version, top I further a that, And see on I guess somewhat will

Dakota Semler

Thanks to for to the have those With regard absolutely. XX Mike, the of question, units less and deliver. than in thanks QX, joining. units for Yes, we'll legacy

of the realizable having trail net us the XXXX. previous value already we to impact accruals P&L full year in hit most year, with So margin in the don't really expect our

model one year. on we customer improved remainder every of point improvements single-digit and the the both improvement product making our But question the or continue the benefits models, goods second to the sold. of other units will the So your for changes you And again, cost reliability. out, is, of engineering Stepvan, the experience, which and year of make pointed XXXX around durability for is side of around new those then efficiency effects as improved year our

some sold, of as our the but XXXX do performance still cost improvement within legacy in we an So year drastic from of incremental anticipate goods improvement margin not Stepvan, the because to our inventory some and of improvements and negotiated vendors particularly changes of supply to changes that our the the some chain those suppliers vehicle. of we've up with of engineering cost make because key that improvement and that

Michael Shlisky

network that guess And most the all be XXXX the was will it was think be mentioned of accounts? Great. equipment the of or would curious, more Okay. national sales anticipate of dealer you the then sales of the service had channel? you I to still Do direct in new Or I dealer almost your were through it. direct providing and of channel you piece mostly

Dakota Semler

a Yes, great question. it's

direct mentioned sales through our channel. of XX% to the quick direct continue I XX% will the and higher the as clarification up, just So actually go call, we service number sales we'll that came channel. of even our our on than believe go perspective. in And through see one

companies markets technicians our but with of employees, help Xos third-party which supplement dealer Most in by service and mobile and those to our Xos vehicles. not we do may maintenance work a service the done work mobile where maintenance concentrated we still population vendors have of traveling are team is

we deliver new anticipate And trucks, territories so do but we'll throughout States grow that continue where majority we the a do anticipate as of and other work service that locations the vehicles. vehicles we our will service across those Central to already continue also have on footprint United we to don't

Michael Shlisky

like this got? you ahead, that discuss guess just vehicles new Particularly of be curious a players for point of I bus what you've powertrains, maybe 'XX. an the able detail and be bringing what Could looking are a only at spoke prior you side, you can entirely sales thirdly, versus look some players out then the model? the the the provide [indiscernible] can some fourth powertrains it. just Got Or providing in I'd the school bus even breakdown EV on And will one then model that say might -- you you'd large 'XX? with these margins? And whether in non-Stepvan matters be school your to where of more quarter? few to in there's happened bus

Dakota Semler

great question. a Yes, so it's

and when gross So have will of the XXXX the the customers powered to but and improved we the of margins ultimately lot further pipeline, by a margin XX% are on range, significantly costs Xos customer higher and about you circumstances. know, Stepvans talk in associated building engineering into model are XX% customer higher, out the generally because depends setup costs that profiles starting mix, seen even those sometimes the in improve as margin XXXX,

OEM. are The be in a don't because our powertrain or that recreational and to supplier a bus is the that manufacturer challenge a our we specific products always we launching component providing with an in control and new space would With customers technology. to that school that these powertrain vehicle they products, vehicle regard segment volume final deliveries are the

So not today. already that servicing and supporting incremental business currently they're

to volumes, a and percentage deliveries growing business be will our I mix, relatively there core of anticipate do overall relative is say, Stepvan minority still low. revenue. the It's overall We vehicle although would our

Michael Shlisky

buses be to states do make subsidies programs, will if you There's will just underway. from subsidies. and receive this sure know curious that it that of powered those Dakota, of to Xos for currently large bus will customer thought, I some able sure large the and make various types the be to EPA launching, eligible are I'm the be that pretty And

Dakota Semler

That's be a because in the will it's question. not do it believe great under yet. production We eligible program

We billion haven't gotten in a about final they early and know, million confirmation. $XXX pool expected But January, release as $X last the released EPA Mike, you funding. to in in subsidies was grant announced release our of

eligible for vehicle those incentive the to and be space, our lots will incentives that market in fast-growing demand a be other state-driven one it's of So powertrain our we and EPA potentially be that and programs. expect vehicles see continues to to of --

Operator

comes Ives with question next Daniel WedBush. from The

Steven Wahrhaftig

Daniel quick is This just Ives. had I Wahrhaftig for two on questions. Steven

'XX? You mentioned in expect had heard in was And going weighted. Should guys year throughout half to to then that how correctly. then $X.X for 'XX if the also, we that million, of you between mentioned should $X.X saw be that million the this if really not, call half first be that you Do XXXX? it the And back quarter and somewhere into cash I consumption continue what we the bit expect and a that this similar the back little on you deliveries more forward? would

Dakota Semler

and are thereby numbers delivered XXXX continue model burn we anticipate of of will we to improve, what second cash year those number. our continued reducing delivery Yes, And 'XX that in the our that profiles with half XXXX. margin vehicles,

also number We which to continue to deliver that reduce the anticipate that more units, to year also we in can will continue come.

turns sheet, balance older turns, working inventory larger we off to I build think inventory that at continue anticipate anticipate looking vehicles. of of will amount And capital getting a when to less the we're terms in necessitating inventory our

was question. what address for to just second first your that's then -- can you time the the me? more And clarify question So one

Steven Wahrhaftig

Yes.

deliveries bit coming mentioned should for to little you be weighted. little how out? XXXX? the a to be be we this in the more we saw Is a not, year half about to expect And if back it modeling going So similar would what

Dakota Semler

in industry in We more as factors of markets that customers. half do some anticipate weighted, They the there's it drive go of factors of generally, reason such a for them busiest back the and deliveries. their upwards of baseline being that delivery for the are parcel is obviously where can season lot And QX, seasonality volumes will QX don't volume. variety be that our of that XXX% take and a QX

be So slow then parcel very deliveries. see and delivery, QX, period for And which we is returns. QX that delivering of customers package to of shipment time to in represents a vehicle substantial overall QX volume carryover at from our deliveries and in those tend a returns portion that difficult. lot The

vocational they concentrate tax of do the half smaller the advantage the cycles. in acquiring to depreciation, or of which generally. QX, treatment some generally second uniform amongst budget rental the take QX And new or and our is as just equipment at of end some fleets of and some with of in of QX, which powertrain of years their of period for accelerated to -- has our Section the where such take XXX, fiscal their of timing the So then of summer in the either some and delivery customers, customers that's our they year, other during terms

what But have we does to mean back XXXX well. half as reaffirm do weighted a definitely

Operator

session. that And presentation. today's now conference for Thank The attending question-and-answer has concludes you concluded. our

disconnect. now may You

Xos (XOS) 21 Mar 242023 Q4 Earnings call transcript