XOS - Earnings call transcript Q2 2024

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Operator

Greetings, everyone, and welcome to Xos, Inc.'s Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, today's conference call is being recorded. At this time, I'd like to turn the floor over to the General Counsel of Xos, Christen Romero. Thank you.

You may begin.

Christen Romero

Thank you, everyone, for joining us today. Xos me Giordano Executive Financial which Sordoni; Pogosyan. Ahead this with Chief Dakota Officer, we call quarter of Officer, second the Operating and call, will the reference are press call. Officer, Chief Semler; Liana XXXX during Hosting earnings its release, issued Acting Chief are call, and the current making be forward-looking based on This on section our will Investor can be risks website management of and subject assumptions, which expectations Relations uncertainties. found at to investors.xostrucks.com. On this statements could of results our news statements in Actual filings call, materially differ forward-looking and the assumptions earnings reports conference with if from Commission. key our Securities or are any latest Exchange in release, today's factors of during this incorrect our because discussed and on be at website can documents investors.xostrucks.com. These found our undertake duty presentation and performance any forward-looking not references non-GAAP do update any financial statements. Today's to to metrics. measures includes also We historical release comparable earnings Please information and refer quarter second to XXXX of measures the company's information for definitional the financial measures. in non-GAAP to press contained reconciliations GAAP the Participants not over statements. With it undue I put Dakota. that, cautioned to reliance turn forward-looking our on now CEO, to be should

Dakota Semler

and and and Thanks, customers. to the will XX which up delivered call, FedEx and deliveries, quarter highlights UPS sales thank cover I by XXXX, On is The Liana operational from fourth consecutive delivered our and Christen, achieved with gross new us. XX% million over fleet today's Gio our updates, will financial then over you, multiple positive Blue everyone, sales sales to for supplemented for during contractors, in $XX.X margin. we and customers, were units, XXX% generated units of revenue year. Bird, revenue, second joining XX and powertrain quarter quarter of respectively. Starting quarter provide Hub majority Ground of StepVans namely and year

robust infrastructure Transportation the comes higher to We Hub. the year. online. Demand of May, we weighted our charging and products customers strong incentives In year the Advanced respond industry's as Clean where expect attended generation Xos be Expo, volumes customers similarly our both throughout demonstrated XXXX the the to second latest and XXXX and than meaningfully in remained potential towards half vehicles largest conference, for interest

powertrain Xos Blue our one booth, of also Blue on OEMs display with of and Blue delivery EVs products. addition sector. We the bus showcase and show, at our In technology technology. Xos reputation announced attention significant they as a The a with in largest with our school powertrain to leader new was leader own Xos a built displayed underscores Bird, chassis to exciting decision in Xos parcel by resulted Bird pair the and the to our partner partnership powertrains. Bird's in partnership the during EV quarter of

followed, up of a and confidence vote the that capabilities and course with company's industry fleet future. the and buyers weeks repeatedly of Bird the in technical show came partnership the both Over Blue insiders as Xos's

They but locations, remote away from options charging accessing sites. grid Hub, recognize storage products, Turning where product, is customers. of and limited the the realities of permanent and felt from gaps power have installation mobile fuels their are our timelines, filling stronger-than-expected charging Xos's the the lagging charging sales and activity, equipment now to fleets of energy fossil by in to complexity experiencing value pivoting we infrastructure confront work

as overall and charging StepVan government view ACT including of business. The attention combined demonstrating for the We evolution for large dozen of charging the robust where charging and storage of at beneficial firms received a sales by and EV ultimately firms Expo options outside our a Xos. fleet. Hub it year, the industries energy market that grow base, flexible strong evidenced showcased a expect particularly solutions, customer products. Operators more solutions the part healthy clear a is are across this the quarter, will more a we increased This sector need the were number of with Xos's than strength into

the is in strong As a has sales the cost-competitive the pipeline product. and and Hub space, mature a first mover

are the bringing more to access entrants of than to discover expand faster alone charging the for category to traditional products. Most paths provide more and product Xos also will market generate, market adoption advancement customers of New visibility EV and alternative vehicles our permanent fleets the options to without and include our Xos of alternate chargers. support the can importantly,

detail for fulfilling we Gio, over strong are more to operational I'll products, how it our on For update. an Xos COO, hand the demand for

Giordano Sordoni

scaling engineering, teams and Xos's Dakota. margin further delivering you, supply production manufacturing improvements. chain, on Thank and remain focused

Our engineers support a wheelbase of requested wider our StepVan variation are to developing customers. bodies a of Xos the range longer by XXX-inch

In sales fact, orders for new we've this secured variation. signed already

harnesses, R&D with extensions of Linen changes we wiring order relatively durability in updated that efforts launch vehicle first part chassis. will Some frame able means units the quickly the and delivered variant announced to first change, investment. the with on to to and of the be is minimal focused a new Mission This rails, the primarily to of we're as quarter. Lengthening simple testing the the

savings engineering, We the new powertrains. team have cost will that to quarter our vehicles improvements on our software XXXX. first in expect customer platform of and both wheelbase by Also, long hands be made and to StepVan complete into the translate connectivity within controls

vehicle costs. reducing updates have legacy partner margins manufacturer OEMs. Furthermore, technology customers opportunities to both commercial capabilities in-house a vehicle teams as As and a our our differentiated grow features continue find software Xos direct to our and expect by real-time begin over-the-air to telemetry, to like

This chassis costs for lower completed in-house, portion overall. quarter, our logistics to a translates of Xos which greater brought

production the team production Hub factory scaling and manufacturing floor. focused efficiently, is Our powertrain to integrating vehicle on

to XXXX Hubs alongside from As rates and powertrain I existing satisfy customers. new last to production our in strong volumes for preparing mentioned quarter, we're of per StepVan month up Xos and X demand

and strategies. development this developments At that, space. With components. significant China-sourced for point, is exploring could anticipate such disruptions final I'll our a to potential to to we tariff preparing our sources tracking pass mitigation tariff-related it As Xos impact production any note, the tariff do this alternative identifying but or impediments we're in that schedule, not changes Liana. monitor will continue by we any

Liana Pogosyan

Gio. you, Thank

For first quarter, primarily our to quarter of million revenue the in increased $XX.X increased million a result $XX.X XXXX, from the as second our deliveries. of

$X during sold Our to or costs profit the million $XX.X or quarter of in XX.X%. million compared quarter a increased $XX.X goods compared GAAP $X.X during the to profit was gross the first quarter. a of to XX.X%, quarter, first of million, million the in margin

and processes. GAAP second GAAP adjustments quarter's gross due was accuracy our adjustments due beneficial average gross related during inventory inventory excess negatively mix, the and to price first overall margin to included product margins The write-off reserves balances. materials, by quarter to of reserves higher lower to impacted our inventory selling

teams. continue efforts We and the of supply to manufacturing we margin realize engineering, see improvements our StepVans our chain, in as

We have to been to costs in direct for our as each unit. reducing material several able scale of suppliers production, work the leading cost components lower with we critical

of are combined sales in OEM and inventory impacted in the with Additionally, for model direct, dealer, design our continue gain the between a reliability and teams StepVans, noted higher volatility increasing that gross unit of mix vehicle changes of our GAAP by quarterly production sales, prior range each reserves results. be margins costs the engineering levels while produced. It should to labor efficiencies and of a and that, reducing durability introduced in build

gross release. share continue inventory adjusts We physical earnings to inventory find that a other margin and can and that consistent you press reserves non-GAAP adjustments for today's related in

expenses. to Turning

for broadly following trajectory. operating million in $XX.X second $X.X remains operating $XX second of the quarter's Excitedly, figure GAAP profitability promising is line operating operating expenses was our quarter loss of Non-GAAP loss Our was the first $XX.X million. a million. quarter with million.

XXX% on this the to X current spending Following the platform, reduce noncore efforts negative StepVan non-GAAP of from to and operating year quarter ago. last XX% loss projects year's our improved release negative

continued We products. coming and quarters as the to our operations our improvements expect our see grow and to identify teams volumes cost-saving changes to continue implement over

million end higher to resulted the a to support current of at increased temporary half of as This make second quarter, higher the first well also equivalents in the in the we quarter, end $XX.X the million balance quarter at and accounts the first production deliveries quarter buildup at was deliveries above role substantially We as $XX.X a the million to the to the in with quarter. trends million, elevated balance of million receivable our sheet. of the $XX.X $XX.X $XX.X end the the result historical played receivables. The restricted $XX.X inventory to quarter cash rates. in first made reduction from a cash concentration cash year Turning government compared of closed The million cash the to incentive in expect and as of primarily our compared quarter. of the of in from

incentive receivable stabilize our our taken processes improve and have We coming over the collection quarters. and steps expect inventory to to balances accounts

addition, a options in balances contributed working see quarters. margins $XX.X initiatives favorable operating to In higher this we flow on changes from are CapEx flow. negative of cash $XX.X our capital the preserve to to receivable and driven inventory lower discussed, accounts for working flow negative more we changes actively increase and nondilutive Based free free for we decrease working liquidity. Relatedly, million quarter quarter pursuing in growth cash capital coming or expect million the by the of cash in and business in fund Unfavorable less the capital the was last negative quarter.

$XX.X XXX Finally, revenue turn guidance of non-GAAP the between XXX $XXX.X and $XX.X Dakota. in million, to range to million back operating year units we over of of our reaffirming $XX.X delivered. I'll call to million, a now are to the XXXX full loss million

Dakota Semler

To positioned wrap is win. to Liana. you, Thank Xos up,

powering product for partnerships growing We satisfy and adding unmet and business. Diversifying StepVan strong is by of building EVs backlog commercial our to demonstrating a technology our portfolio forward leadership established a to are StepVans. demand with self-sustaining our with in OEMs, strong trajectory, leveraging margin via Hubs our powertrains deliveries,

has pricing Our OEMs technology us like competitive choice highly portfolio for Bird. partner a made Blue and of

cost continued the on this to quarters line profitability. With positive focus gross path Our of for questions. margin progress the in and relentless and let's into reductions X company's translated consecutive open efficiency that, capital year

Operator

Instructions] from from [Operator Mike first D.A. comes question And Shlisky today our Davidson.

Michael Shlisky

$XX.X to So operating loss increasing revenue full roughly you in to what the saw looking folks, back XQ, the million expect year. the for this loss you $XX still non-GAAP correctly, the million the But in in quarter, first I'm million got you've half. $X.X if at have given

on good What the You pretty profitability a back curious, challenge the half half expect to in have be in sales second increase income areas. So here? perspective? and momentum most we in what's dragging from a should

Dakota Semler

Yes.

your in QX. there first increase the So and question, can high Mike, which I address start, we your part can is why of

in the driven of a half year. the First, that for spending that of by seeing the was second because really in inventory we're demand orders ramp-up

The other of on, component, government incentives. as really is touched those collections Liana

So federal a our the go terms, might net paid of terms get out net or number XX our or with are traditional have subsidies, some customers longer that beyond the XX which local, of state, we benefit customers. on of

volume the apply. of within third where into terms we assumptions assumptions the very the receivables the of delivered we're for rest for driving some our operate a the very, the operating so When our margin they quarter looking realm and for of and customer conditions those different our part staying And the to and than by guidance loss at incentives, into has terms fourth And those government or end been our are QX. And quarter guidance level that's set at QX gross our second we're of just QX. level. big against of in year, for at standard carry those what unit across of where our at ability a confident that or the and collect vehicles

continuing half that So in process we'll year as that those ultimately, delivered in in I will incentives the ultimately trying or from goods to that better lot as well come. only sell to year. the think do customers the hone, the of improve work first in used a to finished for of vehicles the and we've that purchase of we expect convert came vehicles half cash second ultimately in half, to something process the been a but recover that get and the dollars into the quarters It's second those inventory

Michael Shlisky

offline. on Might Okay. that one follow-up

where about have. the customer comment didn't you might you sales interest, pipeline You and the much here? headed comment in XXXX backlog on prior things mention customer are that Can into existing new you and think interest, the

Dakota Semler

Yes, absolutely.

lot at looking and regional of side, as for the I overall in national meet the a Fleet a fleet a sales, the elevated, we seen slowdown financing interest now, rates slowdown of for capital we've more those particularly of the even on So One some in small have the to growth, slower the a we're context in sector the our than Rule strong and large closed now our fleets. Advanced quarter sales regional trying financing in of demand, macroeconomic right factors purchasing Clean skewed today fleets. But slowdown are of implementation see of many smaller these that right customers capital seeing the broader national where strong EV is driving the of there the some national are we've accounts lease market regulations little is several that's a seen still rate towards they're continue not in accounts. And large are interest, or in just bit from smaller When that. in the to timelines and second California. accounts. would influencing vehicles, and such say cost

that the So we of ACF of comply ACF to which obviously Ground regulation. which ramping combination our adopt or as are significantly customers, and locally delivery And is the of QX a a FedEx X in regulations. years will our parcel lot largest come that form continue both deliveries, ACT orders then up for to grow ACF of we to highlighted of or expect some pretty customers, big more of with contractors, UPS groups states

backlog. touched the into grow. bus like products are and powertrains add And the we space. the So still vehicle grow commercial those will as Hub those over we vehicle to on, in fold, strong, interest there's in sales that into that school expect platform bus Xos backlog the business, And overall, to Xos, starting by continues continue the our also powered coming to other electrifying are now quarters industry strong school come specialty and broader there's and to as that

Michael Shlisky

and follow up Blue to and one wheelbase Bird mentioned if Are at last Bird comments. you're one longer to And guess that there I a Winnebago? for looking powertrain you version relatively see curious Maybe you other made potential Gio, the me on inexpensive I'm on Blue your -- partnerships beyond way.

newer, larger of bit here? go looking radical, more here, an have the the or Are pipeline to So products it's a adaptation. or from further into even you're adaptation at in do you anything

Giordano Sordoni

some announced the active, with Yes. Blue Bird and there. The powertrain team remains momentum deals Winnebago and that adds definitely we've

the So use there open and to customer StepVan longer variations things avenues, that on shorter, we're quite powertrain in yet. on customers are does StepVan, other might working bit adaptations we we or the both to body their interested those some can't share a bit the make And that be a then, whether of StepVan a that to some also up new for other platform particular case. tend while more

make in for core powertrain a certain environments. electric had well Hubs. we the think we is right still in our delivery are that talked well. of focus the as about lot now, the past, our heavy-duty But course, and chassis as Those vans, Of trucks things as unit, medium-duty sense

Operator

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

Donovan Schafer

adjustments quarter. basis, which capital since giving QX But you're loss, and a still -- for number. cash on First, up non-GAAP the basis, on accounting than is, it's operating a guidance. I but lot could he's because, more to question think about in first cash course, us cash you're want flow-type revenue getting a Mike's can cash-consuming what a imagine giving on on make there, at larger a of an of I just changes but accrual the basis outlook, there's possibilities, working accrual follow not I a the

it revenue to margins like seems either guess down. and So to gross would the ASPs in I'm would maybe I guidance, operating or square the guidance order to loss down, -- seems have gross come margins like come it have maybe thinking

just a compression and it a Is and or gross more with cautious seen, or or something more So a QX, identified is way in conservative? reiterating initially QX see stick that standpoint, just being you've as put a desire there out, or something margin what expense you increasing from just have operating you you consistency that to conservatism like is of materially?

Liana Pogosyan

Donovan, basis. guidance our on conservative non-GAAP say, would to with I overall is respect loss, the the operating

As months the operating year. see for you X can ended, the or non-GAAP loss of $XX for in were would the expect half trajectory at the about we second that and we same million, better

Donovan Schafer

the sequential able is be quarter. expectation hope revenue of question, Okay. focusing the have it, I second to in or you past belief each talked on And revenue to just then that the a that piece think we've growth as

So in higher still there's and a August, QX the standpoint see would that than thinking now wanted will to if anticipated QX, be QX the higher double-check seasonal be will pattern, than if QX think quarter just QX? and the bigger still versus be that from if a QX that's or where we're that's you timing or anything

Liana Pogosyan

thinking is I correct. think how that, you're directionally,

You a should see in revenues. expect to increase sequential

of there only I not important powertrains revenue which as to think selling mix, the variability from Hubs product there some between also as is variability with expectation within period. that think of the an also within is price, and I to is that but one But the of things is should StepVan respect with to period well increase. be also one But our key sequentially, average is an product, respect quarter to there aspects quarter.

Donovan Schafer

I can about ramping half quarter, with to it ability the Hubs the Okay. squeeze for is in, talked just And the manufacture of second then one, last last we one if Hubs, year. the

believe, that. second wrong half. correct I X the goal me the on I think that was was the month, But if per for goal Hubs I'm

we're capability at, get run yes, general, now if -- or have hit right a of Just we what just rate where not. the X in per run And of you've you the capability on Hub? if that production curious then if specific month can or that update rate is of

Giordano Sordoni

Yes, we more Donovan, gone and appreciate question. Hubs line are the The building really well, setup has consistently. Hub

and really Our line. on so happy we're Hub the supply base caught is up, all progress with the

the We every but per to quite per getting to just about per week, not X there. -- be are aren't X month is up We're all week we X so single week. at hubs way

get we'll next So and be X. week, then often, it'll per X.X-plus week, the out

least less, here, So, by end that per more at or X and reach capacity. week be the at of we'll month the

Operator

and ladies time, I'm in and this your This today's teleconference. no gentlemen, at And queue. Ladies participation. gentlemen, showing for questions further thank the concludes you

You may now have disconnect your a day. lines and wonderful

Xos (XOS) 13 Aug 242024 Q2 Earnings call transcript