Xos, Inc. Q1 FY2024 earnings call

First Quarter Highlights - Generated $13.2M in revenue, delivered 62 units, and achieved a 21.2% gross margin. - Revenue increased 180% year-over-year compared to Q1 2023 but was lower quarter-over-quarter due to delivery delays. - Closed the acquisition of ElectraMeccanica, adding over $50 million in cash post-costs. ### Business Segments - StepVan: Strong sales activity driven by California's advanced clean fleets compliance, with aging fleets motivating transitions to EVs. - Powertrain: Made initial deliveries to new customers like a large on-highway bus OEM and Winnebago, seeing growth opportunities in this segment. - Xos Hub: Launched in January as a rapidly deployable charging unit to address charging infrastructure delays for StepVan customers, combining battery storage and chargers to reduce grid dependency. ### Cost and Capital Allocation - Committed to tight cost control and judicious capital allocation, aiming to become a self-sustaining cash-generating company through focus on core businesses like StepVan, Xos Hub, and Powertrain.

In the first quarter of 2024, Xos generated $13.2 million in revenue, delivered 62 units, and achieved a record gross margin of 21.2%. Compared to Q1 2023, revenue is up 180%. The StepVan business saw strong sales activity driven by California's advanced clean fleets compliance. The Powertrain business made initial deliveries to new customers such as a large on-highway bus OEM and Winnebago. The Xos Hub, a rapidly deployable charging unit announced in January, combines 280 kilowatt hours of battery storage with four chargers, supporting 8 or more StepVans and reducing utility upgrade timelines for customers.

Reaffirmed full-year 2024 guidance: revenue is expected to be in the range of $66.7 million to $100.4 million, non-GAAP operating loss between $43.7 million to $48.7 million, and 400 to 600 units delivered. Anticipates 2024 volumes to be back half weighted similar to 2023 but meaningfully higher than the prior year.

• Delays in customer infrastructure and at upfitter partners causing planned first quarter deliveries to spill into the second quarter. - Volatility in GAAP gross margins due to factors like reserves and changes in sales mix between different vehicle configurations. - Product mix variability impacting contribution margins, with different configurations (short-range vs. long-range vehicles) having varying gross margin ranges.

Q: About charging infrastructure causing delays and the upfitter part, and confidence in the full-year guidance.

A: Upfitter delays are not related to charging infrastructure; they stem from upfitter supply chain issues. Proactively planning with upfitters to improve production timelines. Confident in full-year guidance as some Q1 vehicles already delivered in Q2, and testing temporary charging tools to enhance predictability.

Q: On gross margin sustainability and operating expenses.

A: Confident gross margins will stabilize and grow further, with legacy inventory issues nearly resolved. Operating expenses cut, but onetime transaction costs related to the ElectraMeccanica acquisition have been normalized, and future operating expenses may see some increases but remain focused on cost control.

Q: On market demand and mix impact.

A: Strong market demand with sales orders Q2 tracking similar to Q1. Product mix varies by configuration, with short-range vehicles having lower gross margins and longer-range/specialty configured vehicles having higher margins.

Q: On Hub bundling and margins.

A: Hub deployment is nuanced by customer, depending on vehicle configuration and usage. Focused on deploying as many trucks as possible sustainably, with margins varying based on customer specific needs and configurations.