Q4 2021 Xos Inc Earnings Call

Q&A. At this time, I'd like to turn the conference over to Exo's General Counsel, Kristen Romero. Thank you. You may begin.

This time I'd like to turn the conference over to excess General Counsel Kristen Romero. Thank you you may begin.

Thank you operator, and thank you everyone for joining us today hosting the call with me today are excesses, Chief Executive Officer Dakota, similar Chief operating Officer, Giordano, Sordoni, Chief Technology Officer, Rob Ferber.

Kristen Ramero: Thank you, operator, and thank you, everyone, for joining us today. Hosting the call with me today, our ex-hosts chief executive officer, Dakota Simlar, chief operating officer, Giordano Sardoni, chief technology officer, Rob Furber, and chief financial officer, Kingsley Affamiki.

And Chief Financial Officer, Kingsley F N B K.

Ahead of this call excess issued its fourth quarter 2021 earnings press release and presentation, which we will reference today. These can be found on the Investor Relations section of our website at investors that excess trucks dot com.

Kristen Ramero: ahead of this call, Exodus issued its fourth quarter, 2021 earnings press release, and presentation, which we will reference today. These can be found on the Investor Relations section of our website at investors.expresstrucks.com.

Kristen Ramero: On this call, management will be making forward-looking statements based on current expectations and assumptions, which are subject to risk and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect because the factors discussed in today's earnings news release during this conference call are in our latest reports and filings with the Securities and Exchange Commission.

On this call management will be making forward looking statements based on current expectations and assumptions, which are subject to risks and uncertainties actual results could differ materially from our forward looking statements. If any of our key assumptions are incorrect because of factors discussed in today's earnings news release during this conference call.

Or in our latest reports and filings with the Securities and Exchange Commission.

These documents can be found on our website at investors that excess Chuck's dot com we.

Kristen Ramero: These documents can be found on our website at investors.dexlistrucks.com

Kristen Ramero: We do not undertake any duty to update forward-looking statements.

We do not undertake any duty to update forward looking statements.

Today's presentation also includes references to non-GAAP financial measures and performance metrics you should refer to the information contained in the company's fourth quarter 2021 earnings press release for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures.

Kristen Ramero: Today's presentation also includes references to non- GAAP financial measures and performance metrics. You should refer to the information contained in the company's fourth quarter, 2021 earnings press release, for definitional information and reconciliation of historical non- GAAP measures to the comparable GAAP financial measures.

Kristen Ramero: Readers should be cautioned not to put undue reliance on forward-looking statements.

Readers should be caution not to put undue reliance on forward looking statements.

We will now begin with a brief video recap of key milestones in 2021, which will be followed by prepared remarks from the <unk> leadership team.

Kristen Ramero: We will now begin with a brief video recap of key milestones in 2021, which will be followed by prepared remarks from the Ex-Fo's leadership

Okay.

Kristen Ramero: We'll see you next time.

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Kristen Ramero: Thanks for watching!

Speaker Change: Thank you, everyone, for joining us. Since 2018, we've been transitioning fleets and targeted high growth markets from internal combustion engines to electric commercial vehicles with industry leading technology.

Thank you everyone for joining us since 2018, we've been transitioning fleets in targeted high growth markets from internal combustion engines to electric commercial vehicles with industry leading technology.

We are proud to be one of the few commercial EV manufacturers with vehicles and customer fleets across the country.

Speaker Change: We are proud to be one of the few commercial EV manufacturers with vehicles and customer fleets across the country.

<unk> continues to remain focused on scaling the business by centering on three primary areas.

Speaker Change: Exos continues to remain focused on scaling the business by centering on three primary areas.

Speaker Change: First, our commercial team is keenly focused on bolstering our distribution and service footprint by establishing partnerships with key customers and partners in high growth markets and providing service coverage in direct support territory.

First our commercial team is keenly focused on bolstering our distribution and service footprint by establishing partnerships with key customers and partners in high growth markets, and providing service coverage and direct support territories.

Second we have built and continue to assemble a high performance team with experience in scaling truck and electric vehicle manufacturing.

Speaker Change: Second, we have built and continue to assemble a high-performance team with experience in scaling truck and electric vehicle manufacturers.

Speaker Change: Third, our manufacturing and supply chain teams remain incredibly focused on ramping manufacturing capacity and establishing stronger ties with our supply base.

Third our manufacturing and supply chain teams remain incredibly focused on ramping manufacturing capacity and establishing stronger ties with our supply base.

Speaker Change: I'll start this call by reviewing Key Fourth Quarter Highlights, our accomplishments in 2021, and briefly discuss why we remain excited about exosys outweigh.

I'll start this call by reviewing key fourth quarter highlights our accomplishments in 2021 and briefly discuss why we remain excited about excesses outlook.

Speaker Change: Afterwards, GO will provide an operational update, including an overview of the supply chain environment, followed by Rob, who will provide an update on product development.

Afterwards, <unk> will provide an operational update including an overview of the supply chain environment, followed by Rob who will provide an update on product development and.

In Kingsley will conclude with a review of our fourth quarter results and outlook for the first quarter of 2022.

Speaker Change: Kingsley will conclude with a review of our fourth quarter results and outlook for the first quarter of 2022.

During 2021, and the first quarter of 2022, we achieved a number of milestones that underscore our commercial momentum in several high growth last mile markets.

Speaker Change: During 2021 and the first quarter of 2022, we achieved a number of milestones that underscore our commercial momentum in several high growth last mile market.

Speaker Change: We've expanded customer relationships, such as our partnership with merchant fleet, the nation's fastest growing fleet management company to grow their EV portfolio for last mile delivery.

We expanded customer relationships, such as our partnership with merchant fleet, the nation's fastest growing fleet management company to grow their EV portfolio for last mile delivery.

Speaker Change: Merchant has committed over two billion dollars towards fleet electrification with the intent to buy more than 40,000 electric vehicles

Merchant has committed over $2 billion towards fleet electrification with the intent to buy more than 40000 electric vehicles. We're excited to be supporting merchants goal of having 50% of its fleet electrified by 2025 and 50% of its clients fleet electrified by 2030.

Speaker Change: We're excited to be supporting merchant's goal of having 50% of its fleet electrified by 2025 and 50% of its client's fleet electrified by 2030.

We also secured a multimillion dollar truck order with route consultant, a premium broker and Fedex ground contractor to deliver 40 last mile commercial vehicles in 2022.

Speaker Change: We also secured a multi-million-dollar truck order with route consultant, a premium broker and FedEx ground contractor to deliver 40 last mile commercial vehicles in 2022.

We also secured a purchase order from southern Glazer as wine and spirits to purchase 10 first of their kind electric delivery trucks. These vehicles will be deployed at southern Glazer, Dallas Fort Worth distribution center and will be used as part of the Companys delivery fleet.

Speaker Change: We also secured a purchase order from Southern Glazers Wine and Spirits to purchase 10 first of their kind electric delivery trucks. These vehicles redeployed at Southern Glazers Dallas Sport Worth Distribution Center and will be used as part of the company's delivery fleet.

Speaker Change: This is the first major incorporation of electric vehicles into southern glaciers fleet.

This is the first major incorporation of electric vehicles into southern Glazer asleep.

Speaker Change: We are excited to work with a well-regarded leader in the high growth last mile food and beverage market.

We are excited to work with a well regarded leader in the high growth last mile food and beverage market.

Speaker Change: In addition to these exciting customer announcements, we've broadened our dealer distribution network. We recently announced our partnership with Murphy Hoffman Company, MHC, one of the largest commercial vehicle dealerships in the country.

In addition to these exciting customer announcements, we've broadened our dealer distribution network, we recently announced our partnership with Murphy Hoffman Company MHC, one of the largest commercial vehicle dealerships in the country.

Speaker Change: The MHC territory with exos covers seven locations across six states.

The MHC territory with excess cover seven locations across six states. This partnership will improve the <unk> customer ownership experience and offer enhanced support and MHC XO service areas with MHC service centers, keeping on hand, a full inventory of replacement parts to ensure.

Speaker Change: This partnership will improve the Exo's customer ownership experience and offer enhanced support in MHC Exo's service areas, with MHC service centers keeping on hand a full inventory of replacement parts to ensure customers keep their vehicles road ready and maximize uptime.

<unk> keep their vehicles road ready and maximize uptime.

Speaker Change: We also forge a strategic partnership with Yancey, the nation's oldest caterpillar and commercial vehicle dealer, to distribute exos vehicles across the entire state of Georgia.

We also forged a strategic partnership with Nancy the nations oldest caterpillar and commercial vehicle dealer to distribute excess vehicles across the entire state of Georgia.

Speaker Change: This strategic partnership will allow exos to leverage YANCE's existing infrastructure and facilities, including dedicated truck service centers and technicians across the state of Georgia.

This strategic partnership will allow <unk> to leverage <unk> existing infrastructure and facilities, including dedicated truck service centers and technicians across the state of Georgia.

The Yancey partnership bolsters, our existing dealership network in the South east through our relationship with Thomson truck centers.

Speaker Change: The Yancey partnership bolsters our existing dealership network in the southeast through our relationship with Thompson Trucks Center.

Speaker Change: We remain confident about the commercial traction and the breadth and depth of our consumer base.

We remain confident about the commercial traction and the breadth and depth of our consumer base.

Speaker Change: We are pleased to have made initial deliveries to name brand customers, including Unifers, FedEx, Ground Operators, Thompson Truck Senators, and MHC during 1st, 4th quarter 2021 and Year to Date 2022. That momentum has only continued to grow into 2022.

We are pleased to have made initial deliveries to name brand customers, including unit first Fedex ground operators Thompson truck centers and MHC during first fourth quarter 2021 and year to date 2022.

That momentum has only continued to grow into 2022.

Speaker Change: Along with our commercial traction, the team has achieved several additional operational milestones for Exos in 2021.

Along with our commercial traction the team has achieved several additional operational milestones for <unk> in 2021.

Speaker Change: First, we completed our business combination with next gen in the third quarter, adding capital to scale our deliveries and operations as well as an experienced new members to our board of directors.

First we completed our business combination with Nextgen in third quarter, adding capital to scale, our deliveries and operations as well as an experienced new members to our board of directors.

Speaker Change: second, we significantly expanded production capacity at our two flex facilities and now have an annual capacity to produce 2,000 units between the location.

Second we significantly expanded production capacity at our two flex facilities and now have an annual capacity to produce 2000 units between the locations.

Speaker Change: Over time, as the business further scales, these facilities can each scale to produce 5,000 units annually.

Over time as the business further scales. These facilities can each scale to produce 5000 units annually.

Speaker Change: third, we made significant progress introducing new products and services to enhance the Exos ecosystem.

Third we made significant progress introducing new products and services to enhance the <unk> ecosystem.

Speaker Change: including the Exos hub announced in August is our standalone mobile energy storage and charging station offering. The hub is capable of charging five trucks at once with minimal infrastructure installation. It's part of our new business unit Exos Energy Solutions, which provides infrastructure services to small and large fleets to accelerate large-scale deployments of commercial electric vehicles.

Including the <unk> hub announced in August as our Standalone mobile energy storage and charging station offering the hub is capable of charging five trucks at once with minimal infrastructure installation, it's part of our new business unit excess energy solutions, which provides infrastructure services to small and large.

Fleets to accelerate large scale deployments of commercial electric vehicles.

Speaker Change: Also, in November , we unveiled our proprietary second generation Lyra series battery system, which represents a significant improvement in design, resulting in enhanced durability without sacrificing modularity and efficiency.

So in November we unveiled our proprietary second generation Lira series battery system, which represents a significant improvement in design, resulting in enhanced durability without sacrificing modularity inefficiency.

Speaker Change: Our Lyra series features a 52% system level improvement in gravimetric energy density and a 45% enhancement in volumetric energy density.

Our lira series features a 52% system level improvement in gravimetric energy density and a 45% enhancement and volumetric energy density.

Speaker Change: We also increased our unit deliveries to 32 units in Q4 ahead of our previous financial guidance for the quarter.

We also increased our unit deliveries to 32 units in Q4 ahead of our previous financial guidance for the quarter.

Speaker Change: Lastly, to support our growth, we continue to build a phenomenal team that combines experience and scaled automotive companies as well as EV startups. We've added key leaders in supply chain, program management, finance, and engineering.

Lastly to support our growth we continue to build a phenomenal team that combines experience and scaled automotive companies as well as EV startups. We've added key leaders in supply chain program management Finance and engineering.

Speaker Change: Exos is centered on these key areas of the market that we view as the most impactful for fleet electrification in the Class 5 through 8 last mile segment. Our team remains focused on execution and building on our growth as we expand our presence across several high growth last mile markets.

<unk> is centered on these key areas of the market, we view as the most impactful for fleet electrification in the class five through eight last mile segment. Our team remains focused on execution and building on our growth as we expand our presence across several high growth last mile markets. We expect.

Speaker Change: We expect to continue to benefit from secular tailwinds as the need for clean fleet and logistic solutions is gaining momentum in both public and private sector as they continue to move toward the net zero carbon economy.

To continue to benefit from secular tailwind as the need for clean fleet and logistics solutions is gaining momentum in both public and private sector as they continue to move towards a net zero carbon economy.

Speaker Change: Now, our COO, Gio Sordoni, will now share an operational update.

Now our COO G O Sordoni will now share an operational update.

Thanks Dakota well.

Soni: Thanks Dakota. While we were able to exceed our outlook for the fourth quarter, like our peers, we continue to experience supply chain headwinds that limit our production.

While we were able to exceed our outlook for the fourth quarter like our peers, we continue to experience supply chain headwinds that limit our production.

As the entire world has been experiencing theres tremendous disruption in the supply chain.

Soni: As the entire world has been experiencing, there's tremendous disruption in the supply chain. It makes it more difficult and more expensive for us to access the parts we need to build our vehicles.

Makes it more difficult and more expensive for us to access the parts, we need to build our vehicles.

We started to see some improvement in our ability to procure components, but I would describe the outlook as improved although uneven.

Soni: We started to see some improvement in our ability to procure components, but I've described the outlook as improved, although uneven.

We're doing everything we can to mitigate the effects of the supply chain crisis from bringing on additional talent to the supply chain team increasing safety stock of our critical components pivoting to new suppliers in some cases in domesticating supply from Asia to North America, redesigning components, and expediting logistics costs expert.

Soni: We're doing everything we can to mitigate the effects of the supply chain crisis, from bringing on additional talent to the supply chain team, increasing safety stock of our critical components, pivoting to new suppliers in some cases and domesticating supply from Asia to North America, redesigning components, and expediting logistics costs, expediting logistics when we absolutely need to.

Logistics, when we absolutely need to.

Soni: Some of these actions have led to increased costs, which Kingsley will address in his section.

Some of these actions have led to increased costs, which Kingsley will address in his section.

As we move through 2022, we expect the supply chain environment to remain a headwind to growth.

Soni: As we move through 2022, we expect the supply chain environment to remain a headwind to growth, where we are better prepared to effectively navigate these headwinds as we strengthen our supply chain and logistics.

We are better prepared to effectively navigate these headwinds and we strengthened our supply chain and logistics team.

Speaker Change: We recently announced the addition of Mike Chaffins to the team as our Vice President of Supply Chain.

We recently announced the addition of Mike Shaffer for the team as our vice President of supply chain.

Speaker Change: Mike is a tested industry veteran with 30 years of automotive experience at automakers like Toyota, Mercedes-Benz, and Nissan, along with tier one suppliers like Dana Incorporated.

Like is it tested industry veteran with 30 years of automotive experience at automakers like Toyota Mercedes Benz and Nissan along with tier one suppliers like Dana incorporated.

Speaker Change: With the addition of more automation in our battery assembly line, we expect overall quality and production yield to improve, a key part of our ability to scale production.

With the addition of more automation in our battery Assembly line, we expect overall quality and production yield to improve a key part of our ability to scale production.

Chassis assembly at our flex plants has outpaced battery production, we expect to increase battery production when we add an automated battery line to flex one in Tennessee later on in the year.

Speaker Change: Chassis assembly at our Flex plants has outpaced battery production. We expect to increase battery production when we add an automated battery line to Flex One in Tennessee later on in the year. This is in line with our existing production expansion plan.

This is in line with our existing production expansion plans.

Excess has and will continue to explore alternative battery suppliers form factors chemistries and system designs to mitigate the effects of a destructive global supply chain.

Speaker Change: Exos has and will continue to explore alternative battery suppliers, form factors, chemistries, and system designs to mitigate the effects of a destructive global supply chain.

Speaker Change: And in addition to Mike Chaffins, Exos continues to bolster our operational leadership with the hire of key leaders like Steve Iveson, who recently joined Exos as our head of program management.

And in addition to Mike Shaffer <unk> excess continues to bolster our operational leadership with the hire of key leaders like Steve <unk>, who recently joined excess at our head of program as our head of program management.

Speaker Change: Steve also brings decades of automotive experience to Exos, having worked in operations and leadership roles at companies like Tesla, Continental, and Rivian.

Steve also brings decades of automotive experienced excess having worked in operations and leadership roles at companies like Tesla Continental and Libyan.

Steve plays a crucial role in.

Speaker Change: C plays a crucial role in continuing to build on XS's product plan and building systems that scale as we increase production of our flagship X-platform product and introduce new models in the coming year.

And continuing to build that access is product plan and building systems that scale as we increased production of our flagship X platform product and introduce new models in the coming year.

Speaker Change: Importantly, as Dakota mentioned, we have significant production capacity to support these growth opportunities.

Importantly, as Dakota mentioned is significant production capacity to support these growth opportunities.

Speaker Change: Our flex manufacturing approach provides an advantage in speed, cost savings, and labor availability in a really tight labor market as we continue to scale production.

Our flex manufacturing approach provides an advantage and speed cost savings and labor availability in a really tight labor market as we continue to scale production.

As we look to the current year and our key objective you can expect to see continued ramp up in the X platform as well as the introduction of several new new vehicle products and software offerings.

Speaker Change: As we look to the current year and our key objectives, you can expect to see continued ramp up in the X platform, as well as the introduction of several new vehicle products and software offerings.

Speaker Change: We've been hard at work on these initiatives, and we're excited to share more on them at the upcoming Fleet Week event. I will now pass it over to our CTO, Rob Perber.

We've been hard at work on these initiatives and we're excited to share more on them at the upcoming fleet week event.

I'll now pass it over to our CTO Rob Herbert.

CPOB: We're very selective at Excess in terms of where we allocate engineering and resource and development resources.

We're very selective in excess in terms of where we allocate engineering and resource and development resources.

CPOB: We continually review our product road map and priorities to ensure alignment with our deep focus on purpose-built products that materially improve value and total cost of ownership for our customers in the last mile Class 5 through 8 segment.

We continually review our product road map and priorities to ensure alignment with our deep focus on purpose built products that materially improve value and total cost of ownership for our customers in the last mile class five through eight segment.

CPOB: 2021 saw a number of key engineering milestones, which align with our approach and provide significant improvements for our customers.

2021 saw a number of key engineering milestones, which align with our approach and provide significant improvements for our customers.

Notably we launched the Lira series, our second generation batteries with improved energy density and performance.

CPOB: Notably, we launched the Lyra series, our second generation batteries, with improved energy density and performance.

CPOB: Lighter batteries are critical to the commanding commercial vehicle use.

Later of batteries are critical to the commanding commercial vehicle use case and allow our customers to go further carrying more freight while maintaining the tcl advantage of their own vehicles provide.

CPOB: and allow our customers to go further carrying more freight while maintaining the TCO advantage that our vehicles provide.

CPOB: In addition to battery developments, Exos invests in targeted key technologies to improve quality of life and TCO for fleet operators.

In addition to battery developments excess invest in targeted key technologies to improve quality of life and Tcl and fleet operators.

CPOB: We've made significant progress in the development of our over-the-air update module, which will allow us to continually improve our vehicle's software backbone without causing any customer downtime. We've also...

We've made significant progress in the development of our over the air update module, which will allow us to continually improve our vehicles software backbone.

Causing any customer downtime.

We've also progressed the development of the hub.

CPOB: Exos' mobile charging unit, designed to help fleets electrify before traditional infrastructure can be installed.

Excesses mobile charging it designed to hopefully to electrify before traditional infrastructure can be installed.

All of these products will be integrated into our unified software platform.

CPOB: All of these products will be integrated into our unified software platform.

Excess here.

Initial customer feedback on the ex US there has been positive and we're looking forward to showcasing major updates and feature additions.

CPOB: Initial customer feedback on the Exosphere has been resoundingly positive and we're looking forward to showcasing major updates and feature additions to the Exosphere in our event in May.

Access here in our events.

CPOB: all of our products. Whether it's our flagship step van, our new vehicle programs, which we will be discussing in more detail in May.

All of our products, whether it's our flagship step then our new vehicle programs, which we will be discussing in more detail in may.

CPOB: The hub charging solution or software features like the exosphere, telematics and over there updates align with our targeted market focus in the last mile class five through eight segment and address key needs.

The hub charging solution our software features like the excess here telematics and over the air updates.

Aligned with our targeted market focus in the last mile class five through eight segment and address key needs within that space.

We believe in engineering for an advanced mobility ecosystem.

CPOB: We believe in engineering for an advanced mobility ecosystem as opposed to a pure.

As opposed to a pure product based approach.

CPOB: This allows us to drive adoption in our segment by building the tools for all aspects of a modern electric fleet.

This allows us to drive adoption in our segment by building the tools for all aspects of a modern electric fleet.

While our vehicles are the heart of these fleets.

Only a part of the puzzle.

Our other products each fed into a specific area of need for that ecosystem.

CPOB: Our other products each fit into a specific area of need for that ecosystem.

Energy solutions.

CPOB: including products like the hub, which can charge five trucks at once in any location, and our infrastructure services allow customers to use and charge our electric trucks right now.

Including products like the hub, which can charge five trucks at once.

<unk> and our infrastructure services allow customers to use and charge off.

Electric trucks right now anywhere.

CPOB: Exosphere, including telematics and over-the-air updates, allows us to continually improve the customer journey and experience.

Excess here.

Including telematics and over the air updates allows us to continually improve the customer journey and experience.

CPOB: and optimize our product without removing vehicles from service or negatively impacting fleet management.

And optimize our product without them isn't vehicles foodservice or negatively impacting fleet managers.

Optimizations to modules and components like the lira battery system.

CPOB: Optimizations to modules and components, like the Lyra battery system, chassis optimizations, or ongoing improvements to and development of additional Advanced Driver Assistance features, or ADAS, continue to make our product more competitive, safe, and effective.

ASE optimizations are ongoing improvements to and development of additional advanced driver assistance features are adolf's continue to make our product more competitive safe and effective.

This ecosystem approach is continually validated by the feedback we received from our new customers.

CPOB: This ecosystem approach is continually validated by the feedback we receive from our new customers.

CPOB: and the support in other areas is helping to build confidence in electrification with Exxos for our existing partners.

And the support in other areas is helping to build confidence in electrification less access for our existing partners.

CPOB: This confidence has resulted in additional orders and deliveries from key partners like Loomis and FedEx ISD.

This confidence has resulted in additional orders and deliveries from key partners like Louis and Fedex Isps.

CPOB: Now in addition to product development, optimizing and improving our manufacturing process and supply chain remain major focus areas.

Now in addition to product development, optimizing and improving our manufacturing process and supply chain remains a major focus areas.

Speaker Change: As Gio mentioned, in 2021, we significantly increased our supplier diversity and took myriad steps to mitigate supply chain risk factors.

As Joe mentioned in 2020 , one we significantly increased our supplier diversity and.

Myriad steps to mitigate supply chain risk factors.

Speaker Change: We also implemented a variety of programs to make our manufacturing process more cost-effective and efficient.

We also implemented a variety of programs to make our manufacturing process more cost effective and efficient.

Speaker Change: This includes ongoing run at rate assessments and investments in automation and robotics.

This includes ongoing run out rate assessments and investments in automation and robotics.

To support our continual drive for better products process and efficiency.

Speaker Change: to support our continual drive for better products, process, and efficiency.

Speaker Change: ETSOS continues to invest in building a world class engineering team.

<unk> continues to invest in building a world class engineering team.

Speaker Change: To that point, we recently elevated Scott Zion to head of engineering to help us execute in our ambitious plans and deliver new vehicle programs on time.

To that point, we recently elevated Scott Zions head of engineering to help us execute in our ambitious plans and deliver new vehicle programs on time.

Speaker Change: Scott brings decades of experience to the role with previous roles at automotive power players like Ford, Navistar, and Hino Motors.

Scott brings decades of experience to the role with previous roles at automotive power players like Ford Navistar and Hino Motors.

We're excited to share more about how we leverage our core technologies into products that furthers, our fleet customers and the overall last mile delivery ecosystem and our upcoming fleet week event on May 10th and long Beach, California, Please see us there.

Speaker Change: We're excited to share more about how we leverage our core technologies into products that further serve fleet customers and the overall last mile delivery ecosystem in our upcoming Fleet Week event on May 10th in Long Beach, California. Please see us there.

Speaker Change: Our CFO Kingsley will now provide an update on the 2021 financials. Thank.

Our CFO Kingsley will now provide an update on the 2021 financials.

Kingsley: Thanks Rob and good afternoon to you all. I will now review our financial performance over the fourth quarter, then turn to our balance sheet and conclude with our outlook.

Thanks, Rob and good off since you will.

I'll now review our financial performance over the fourth quarter, then turn to our balance sheet and conclude with our outlook.

Kingsley: Our revenue in the fourth quarter increased to $3.3 million from $0.9 million in the same period in the prior year, primarily driven by an increase

Our revenue in the fourth quarter increased to $3.3 million from point $9 million in the same period in the prior year.

Primarily driven by an increase in unit deliveries.

Kingsley: We delivered 32 units over the quarter compared to five units in the same period in the prior year.

We delivered 32 units over the quarter compared to five units in the same period in the prior year.

Kingsley: Our team worked diligently over the quarter to optimize production and deliver for our customers.

Our team worked diligently over the quarter to optimize production and deliver for our customers.

On average selling prices. It is important to note that underlying demand in the industry remains strong.

Kingsley: On average selling prices, it's important to note that underlying demand in the industry remains strong.

Kingsley: While you will likely see ASP variability quarter to quarter due to the mix of unit type, configurations of the units we produce, for instance the variation of battery capacity and channel mix, we expect ASP to smooth out over time and be higher in 2022.

While you will likely see ASP variability quarter to quarter due to the mix of unit type configurations of the units. We produce for instance, a variation of the Bachelor of capacity and channel mix, we expect asps to smooth out over time and be higher in 2022.

Yes.

Kingsley: Our cost of goods sold for the quarter was $5.7 million compared to $0.7 million in the same period in the prior year.

Our cost of goods sold for the quarter was $5 $7 million compared to $2.7 million in the same period in the prior year.

We experienced increased material costs and incremental logistics costs associated with expediting the shipping of key components.

Kingsley: We experience increased material costs and incremental logistics costs associated with exploiting the shipping of key components.

Kingsley: We expect our gross margin to improve as we ramp volumes and benefit from higher fixed cost absorption.

We expect our gross margin to improve as we ramp volumes and benefit from higher fixed cost absorption.

Kingsley: In addition, we anticipate the new, expanded, and automated battery line at our Tennessee facility will drive gains in manufacturing efficiency, improve quality control, increase production volumes, and reduce freight costs.

In addition, we anticipate the new expanded and also makes the battery life as our Tennessee facility will drive gangs and manufacturing efficiency improve quality control increased production volumes reduce freight costs.

Kingsley: We expect to incur additional costs, however, due to high material prices and uncertainty around supply chain logistics.

We expect to incur additional costs, however, due to higher material prices and uncertainty around supply chain logistics.

Kingsley: As such we are taking proactive steps with our enhanced supply chain team to source domestically where we can and are leveraging our engineering skills to design for cost optimization as well as path availability.

As such we are taking proactive steps with our enhanced supply chain team to source domestically, where we can and are leveraging our engineering skills to design for cost optimization as well as parts availability.

Turning now to expenses fourth quarter, GAAP operating expenses were $23 million compared to $5.3 million during the same period in the prior year.

Kingsley: Turning now to expenses, fourth quarter GAAP operating expenses were $23 million compared to $5.3 million during the same period in the prior year.

Kingsley: non-GAAP operating losses for the quarter were $23.8 million and this excludes $1.7 million of stock-based compensation expenses.

non-GAAP operating losses for the quarter were $23 $8 million and this excludes $1 $7 million of stock based compensation expense.

Kingsley: This is slightly higher than our fourth quarter guidance, primarily due to increases in cost of goods sold.

This is slightly higher than our fourth quarter guidance, primarily due to increases in cost of goods sold.

Kingsley: General and administrative expenses for the quarter were $8.5 million compared to $0.8 million in the same period in a prior year. And this change is due to planned headcount investments to support our growth as well as new public company costs.

General and administrative expenses for the quarter were $8 $5 million compared to a point to $8 million in the same period in the prior year and this change is due to planned head count investments to support our growth as well as new public company costs.

Kingsley: R&D expenses for the quarter were $13.2 million compared to $3 million in the same period last year.

R&D expenses for the quarter with $13 $2 million.

Compared to $3 million in the same period last year.

Kingsley: As Rob mentioned, we are making exciting progress in a range of new products such as our chassis cab, our exosphere fleet management platform, and we believe these developments will meaningfully and positively impact our results in the coming years. We will continue to increase.

As Rob mentioned, we are making exciting progress in a range of new products.

Such as our chassis cab or excuse me a fleet management platform and we believe these developments will meaningfully and positively impacts our results in the coming years.

We will continue to increase investments in R&D.

Kingsley: but we expect R&D expenses relative to revenue to fall over the course of the year.

While we expect R&D expenses relative to revenue to fall over the course of the year.

Turning now to the balance sheet.

Kingsley: At the end of the fourth quarter, our cash and equivalents and investments amounted to $168.7 million. And this includes $3 million of restricted cash.

The end of the fourth quarter, our cash and equivalents and investments amounted to $168 $7 million and this includes $3 million of restricted cash.

Kingsley: Given the flexibility we have built into our operations, our existing cash reserves are sufficient to scale manufacturing, invest in R&D and build working capital.

Given the flexibility we have built into our operations our existing cash reserves are sufficient to scale manufacturing invest in R&D and build working capital.

Kingsley: As outlined in our financial release, we have entered into $125 million stand-by-equity purchase agreement with Yorkville Advisors, which provides us increased financial flexibility to scale the business.

As outlined in our financial release, we have entered into a $125 million standby equity purchase agreements with Yolked with advisors, which provides us increased financial flexibility to scale the business.

Kingsley: any funding activity under this facility will be undertaken opportunistically as market conditions warrant.

Any funding activity under this facility will be the taken opportunistically as market conditions warrant.

Kingsley: We continue to be selective in our investments and are evaluating additional financing options.

We continue to be selective in our investments and are evaluating additional financing options.

Inventories grew to $39 million about $11 $6 million of which wasn't working progress all finished goods.

Kingsley: Inventories grew to $30.9 million, about $11.6 million of which was in work-in-progress or finished goods as of 12-31.

12 31.

Kingsley: Our inventory position continues to reflect some of the steps we are taking to ensure sufficient supply of key components.

Our inventory position continues to reflect some of the steps were taken to ensure sufficient supply of key components.

Kingsley: Overall net cash used in operating activities and cash paid for capital expenditures total $37.3 million

Overall net cash used in operating activities and cash paid for capital expenditures totaled $37 $3 million.

Kingsley: Our business model remains capital light and we close the year with $7.4 million of property plant and equipment.

Our business model remains capital light and we closed the year with $7 $4 million of property plants and equipments.

We expect capital expenditure of between 30 and $40 million as we build out our flex facilities and invest in engineering.

Kingsley: We expect capital expenditure of between $30 and $40 million as we build out our FLEX facilities and invest in engineering.

Kingsley: Wrapping up with our business outlook, we expect sequential growth in revenue and deliveries over the year, with a greater weight in the second half of the year.

Wrapping up with our business outlook, we expect sequential growth in revenue and deliveries over the year with a greater weight to the second half of the.

Kingsley: Due to the uncertainty in the supply chain at this point, we're only providing guidance for the first quarter. As we gain more clarity on the supply chain, we'll expand our window.

Due to the uncertainty in the supply chain at this point, we're only providing guidance for the first quarter as we gain more clarity on the supply chain, we will expand our window.

Kingsley: We expect deliveries to be in the range of 40 to 50 units in Q1, revenues to be in the range of $4.5 to $6.3 million, and non-gap operating loss in the range of $20 to $25 million. And I hand you back to Dakota.

We expect deliveries to be in the range of 40 to 50 units in Q1 revenues to be in the range of $4 five to $6 3 million and non-GAAP operating loss in the range of $20 million to $25 million and I'll hand, you back to the Dakota.

Oh.

Yeah.

Great.

Thanks, Kimberly for going over our financial section before we dive into our Q&A, we want to share with everybody that we remain confident about Texas as deliveries for the end of the rest of this year.

Dakcoota: Thanks, Kingsley, for going over our financials section. Before we dive into our Q&A, we want to share with everybody that we remain confident about Texas's deliveries for the end of the rest of this year.

Dakcoota: We're excited about the factors that we can control in our business and about making quarter over quarter sequential improvements in our deliveries in the supply chain and in the manufacturing and servicing of our vehicles in the field. Now we'll take the opportunity to open it up for questions and address anything that may have come up during our previous presentation.

We're excited about the factors that we can control in our business and about making quarter over quarter sequential improvements in our deliveries in the supply chain and in the manufacturing and servicing of our vehicles in the field.

Now we will take the opportunity to open it up for questions and address anything that may have come up during our previous presentations.

Speaker Change: Thank you. And just a reminder, ladies and gentlemen, when I call on you by name, please be sure to unmute yourselves. I will invite you to unmute as we move through.

Thank you and just a reminder, ladies and gentlemen, when I call on you by name. Please be sure to on mute yourselves I will invite you to mute as we move through.

Speaker Change: so first up in our roster we have a question from daniel lives at what bush securities

So first step in our roster we have a question from Daniel Ives at Wedbush Securities.

And Daniel you May need to press Star six for your question to register.

Speaker Change: and Daniel, you may need to press star six for your question to register.

Speaker Change: All right, well, we'll move on now in the meantime to Michael Schliske at DA Davidson.

Alright, well, we will move on now in the meantime to Michael Slutsky at da Davidson.

Okay got it yes, yes.

Michael Slisky: Yeah, we can hear you. All right. Thank you so much. Just first touch on the, on the equity agreement with Yorkville. For a moment, based on what you had for cash at the end of 2021.

Yes, we can hear you.

Alright, thank you so much.

Just first touch on the on the equity.

Bill just for a moment.

Based on what you had for cash balances at the end of 2021.

Michael Slisky: It sounds like this is more of like a what's an emergency, but if things get out of hand type of scenario where you have to actually tap that you have a mean that the base case scenario for your outlook for the year does not anticipate using any of that. Does that make sense?

It sounds like this is more of like a.

Well, it's an emergency, but if things get out of hand.

Type of scenario, that's asking to tap that.

I mean, the base case scenario for your outlook for the year does not anticipate using any of that.

That makes sense.

Speaker Change: things that you want to take on? Yeah, absolutely. Thanks for the question. As you know, we have a lot of flexibility in our business model, and we've been improving our house with new products as we've been delivering over the quarter.

Thanks Liana.

Yeah, absolutely. Thanks.

Thanks for the question as you know we have a lots of flexibility in our business model, improving our house with new products since we've been delivering over the quarter.

Speaker Change: How we think about this is that this is an option that we assess as a managing team, which we would use very sparingly and only in a situation where we think that it would be value additive for the company for opportunities.

We think about is that this is an auction that we assessed as a management team, which we would use very sparingly and only in a situation, where we think it would be value additive for the company for our opportunities clearly as a management team. We strongly believe in our company and we think.

Speaker Change: Clearly as a management team we strongly believe in our company and we think equities and price level is where it should be and we like the extra flexibility.

<unk> equities, and perhaps that wasn't where it should be and we like the extra flexibility overall as you know we are capex light and we are assessing a range of financing options, which are available to us because we're a real company delivering real trucks, we have assets on the balance sheet that we can we can use for that.

Speaker Change: Overall, as you know, we are CapEx Lite and we are assessing a range of financing options.

Speaker Change: which are available to us because we're a real company delivering real trucks and we have access to the balance sheet that we can we can use for that stuff.

Okay.

Speaker Change: Okay, also I want to touch on the mix for a moment as well. In the fourth quarter, were there any of units that were sold to Wiggins or other kind of non-truck providers? And is there any part of that, is there any of that in the first quarter? I don't know if there's really anything 2022 in your, the EXOS powertrain.

Also wanted to touch on the mix from them as well in the fourth quarter.

Was there any.

The units that were sold two ligands or other kind of non truck providers.

Is any of that in the first quarter already.

Turning to Europe .

Powertrain visits.

Speaker Change: Yeah, I'll start with responding to your question and thanks Mike for that question. In fourth quarter we did have several deliveries that went to Powertrain customers including Wiggins which is one of our initial customers in that segment of the business.

I'll start with responding to your question and thanks, Mike for that question in fourth quarter. We did have several deliveries that went to powertrain customers, including Wiggins, which is one of our initial customers in that segment of the business, but we also deliver trucks in that quarter and that's actually what drove a little bit of the ISP is the asps.

Speaker Change: But we also delivered trucks in that quarter. And that's actually what drove a little bit of the ISPs or the ASPs that you saw towards the end of fourth quarter there. And we expect to continue making deliveries in the powertrain business throughout this year. That'll also be factored into to one as well as several other quarters throughout the year.

That you saw towards the end of fourth quarter, there and we expect to continue making deliveries in the powertrain business throughout this year that will also be factored into Q1 as well as several other quarters throughout the year.

Speaker Change: Okay, let me just throw up one more out there for you and you have some prior march is coming up.

Okay, and then just grow.

One more out there for you.

Yes.

Launches coming up.

I, probably don't want to give it away here on the call, but can you give us any thoughts.

Speaker Change: I don't want to give it away here on the call. Can you give us any thoughts as to how far afield will these be? Or are they in the class 5 through 8, which you've been talking about all along?

How far afield.

At the end of the class five through eight which you've been talking all along or.

Speaker Change: Is this going to be like a variant of your current product? Any kind of narrowing down, if you would, prior to May, we'd love to hear that you can share.

Or is this going to be like a very good your current product.

Narrowing down if it was prior to that we'd love to hear.

Yes sure.

Speaker Change: Absolutely. So our focus still remains on solving what we believe is the most interesting segment in the electrification landscape, which is classified through last mile and regional hall vehicles.

Absolutely. So our focus still remains on solving what we believe is the most interesting segment in the electrification landscape, which is classified as <unk> last mile and regional haul vehicles. So the new products that we're going to be launching are within those categories and not just supporting vehicles, our fleets with actual vehicles, but also with the technology.

Speaker Change: So the new products that we're going to be launching are within those categories and not just supporting vehicles or fleets with actual vehicles, but also with the technology that is going to help them deploy vehicles quickly and rapidly make that transition to a fully electric fleet.

<unk> that is going to help them deploy vehicles quickly and rapidly make that transition to a fully electric fleet. So we're excited to be launching that at our excess fleet week events, which is the week of May 10, and we're inviting all of our analysts as well as customers some of our suppliers and other partners that will be in longer.

Speaker Change: So we're excited to be launching that at our Exos Fleet Week event, which is the week of May 10th. And we're inviting all of our analysts, as well as customers, some of our suppliers, and other partners. That'll be in Long Beach, California, and it's going to be an exciting event to really see what we have to come for the rest of this year, as well as for several years to come with new products.

California, and its going to be an exciting event to really see what we have to come for the rest of this year as well as for several years to come with new products.

Speaker Change: And, Mike, just to add to that, I'm sure you've noticed focus is extremely important to us. Everything we do is focused around the fleet customer in that class five through eight segment, and really with an aim at reducing their total cost of ownership so that they can grow the population of electric vehicles in their fleet as quickly as possible.

Mike just to add to that I'm sure you've noticed focus is extremely important to us everything we do is focused around the fleet customer in that class five through eight segments and really with an aim at reducing their total cost of ownership so that they can grow the.

The population of electric vehicles in their fleet as quickly as possible.

Okay.

Speaker Change: Okay, I look forward to your event in May. I'll leave it there. Thank you.

I'll leave it there thank you.

Hi.

Next up we have a question from Jerry Revich Goldman Sachs.

Speaker Change: Next up, we have a question from Jerry Revich at Goldman Sachs.

Hi, good afternoon, and good evening can you hear me.

Jerry Revbit: All right and nice to see you all. Thank you. I'm wondering if we can talk about the production ramp over the course of the quarter. You know, where did we exit rate from a production rate standpoint based on the activity that was going on behind you folks? Looks like that might have been a better number than we started the quarter with, but I'm wondering if you just comment on that if you don't mind.

Alright.

Thank you.

I'm wondering.

If we can talk about the production ramp over the course of the quarter.

Sure.

Exit rate from a production rate standpoint.

Based on the activity that was going on behind you pose it looks like that might have been.

Better number than we started the quarter with one.

If you just.

Comment on that if you don't mind.

Speaker Change: Yeah, thanks for the question, Jerry. It's definitely not as smooth as we'd like it to be. It's still lumpy because of the supply chain. From a capacity perspective, a team growth perspective, we're really proud of what we've been able to put in place, but the rate at which we produce vehicles changes a little bit depending on part availability. So, we're still managing through that supply chain crisis, which affects that production rate both on the chassis assembly side as well as the battery production side.

Yes.

Yes, thanks for the question Gerry.

Definitely not as smooth as we'd like it to be it's still lumpy because of the supply chain from a capacity perspective team growth perspective, we're really proud of what we've been able to put in place, but the rate at which we produce vehicles changes a little bit depending on parts availability. So we are still managing through that supply chain crisis, which affect.

That production rate both on the chassis assembly side as well as the battery production side.

Speaker Change: And in terms of the planned mix of products over the course of 22, I know we're not talking about number of units, but can we talk about how your expectations of vehicle type mix have evolved in this supply chain environment?

And in terms of the.

Planned mix of products over the course of 'twenty two I know, we're not talking about number of units, but can we talk about.

Your expectations of vehicle type makes it has evolved in this budget environment.

Speaker Change: Yeah, so the product that we're shipping and we shipped in Q4 and continue to deliver through Q1 is really our Step Van product. It's our primary category, and it's what we plan to support through most of this year. We will have some other vehicles in the mix there, including powertrains and some of what we're going to talk about in the upcoming Excess Fleet Week, but the majority of vehicles that we're delivering and we have backlog for is in the Step Van or medium duty parcel delivery and last mile delivery category.

Yes, so the product that we're shipping and we shipped in Q4 and continue to deliver through Q1 is really our step van product. It's our primary category and Thats, what we plan to support through most of this year, we will have some other vehicles in the mix there, including powertrains and some of what we're going to talk about the upcoming excess fleet week, but the majority of vehicles that we're delivering.

During and we have backlog or is in the step van or medium duty parcel delivery in last mile delivery category.

Speaker Change: Super. Okay. And Kingsley, can I just ask, on the CapEx plan for the year, can you just update us on what expected expenditures are? And, you know, as we look at the SG&A and R&D run rate that we had in the 1st quarter, is that the run rate we should be thinking about?

Super Okay.

Can I just ask on the Capex plan for the year can you just update us.

Expected expenditures are and as we look at the SG&A and R&D run rate that we had in the first quarter.

That the run rate, we should be thinking about.

Speaker Change: Yeah, absolutely. So the number we put out there for the poor years can be 30 between 30 to 40 million dollars, and that's going to be spending, as we mentioned, expanding the line in Tennessee, and as well as some other engineering investment. So, you know, business is very, very flexible as you know, and it's based around, you know, deliveries and working capital and growth into business.

Smoothing so.

The number we put out there for the full year <unk> between $30 million to $40 million and that's going to be spending as we mentioned in expanding the line in Tennessee as well as some other engineering investments.

Our business is very very flexible as you know.

And it's based around deliveries in working capital on the growth in the business.

Speaker Change: From a cash perspective, we're really comfortable where we are in investing in our business and the facility we've announced today gives us a bit of flexibility, but as I said earlier to Mike's question, you know, we feel comfortable where we are cash-wise and we like to have that option there to tap that if we need to. So yeah, we're in a good place.

From a cash perspective, we're really comfortable where we are.

<unk> in our business and the specifics of even that today it gives us better flexibility.

Ability, but as I said earlier to Mike's question, we feel comfortable where we are cash wise and we like to have that option.

Then you need to.

So yes, we're in a good place the only thing I would reiterate also to kingsley's plant is the majority.

Speaker Change: The only thing I would reiterate also to Kingsley's point is that a majority of our cash use is actually dedicated to building vehicles. We're putting products on the road every single quarter, getting them into customers' hands, and not just in vehicles, but also in our charging infrastructure solutions like the XS Hub.

Or any of our cash usage is actually dedicated to building vehicles, we're putting products on the road every single quarter getting them into customers' hands and not just in vehicles, but also in our targeting infrastructure solutions like the excess hub and Thats really unique in this space, we want to make sure that we continue to make sequential improvements every quarter and getting more and more vehicles on the road.

Speaker Change: and that's really unique in this space. We want to make sure that we continue to make sequential improvements every quarter in getting more and more vehicles on the road so that we can continue to support our growth and investments into future R&D and engineering.

So that we can continue to support our growth and investments into future R&D and engineering.

Speaker Change: And even within that R&D spend bucket, there's a lot of focus on costs in the vehicle and part availability.

And even within that R&D spending bucket, there's a lot of focus on cost and the vehicle and part availability. So an example of.

Speaker Change: So an example of an engineering project that we would undertake is how to re-engineer a certain part of the vehicle or allow us to procure a component from North America instead of from Asia to help manage around this really difficult supply chain environment, both from a product functionality perspective as well as a cost savings perspective and a logistics timing perspective.

Engineering project that we would undertake as how to reengineer a certain part of the vehicle or allow us to procure component from North America incentive from Asia to help manage around this.

Difficult supply chain environment.

Both from a product functionality perspective, as well as a cost savings perspective.

In our logistics timing perspective.

I appreciate the update.

We've got a question now from Steven Fox at Fox Advisors.

Speaker Change: We've got a question now from Stephen Fox at Fox Advice.

Stephen FOX: Hi, good afternoon. Two questions if I could, I was wondering if you could dive in a little bit more into the expansion that's taken place in Tennessee and yet to come in terms of how it what what exactly is is still to come relative to what you've done. And then also how it would flow into benefiting the financials. And then I had a follow up.

Hi, good afternoon, two questions. If I could I was wondering if you could dive in a little bit more into the expansion thats, taking place in Tennessee, and yet to come in terms of how it.

What exactly is still to come relative to what you've done and then also how it would flow into benefiting the financials and then I had a follow up.

Speaker Change: Yeah, I can take that one. Thank you for your question, Steve. Currently, the batteries that we produce are coming from our facility here at headquarters in Los Angeles.

Yes, I can take that one thank you for your question Steve.

Currently the batteries that we produce are coming from our facility here at headquarters in Los Angeles.

Speaker Change: The investments that we're making are to expand battery production into that selects one facility in Tennessee.

The investments that we're making are to expand battery production into that flex one facility in Tennessee that will actually be producing batteries. Later this year are lira battery series in the Tennessee plant. So currently what's happening in Tennessee is mostly chassis assembly, but will add battery.

Speaker Change: that will actually be producing batteries later this year, our Lyra battery series in the Tennessee plant.

Speaker Change: So, currently, what's happening in Tennessee is mostly chassis assembly, but we'll add battery production capability there as well. And that'll be an even more automated system than what we have in place here in headquarters in Los Angeles today.

Battery production capability, there as well and that'll be an even more automated system than what we have in place here in.

<unk> headquarters in Los Angeles today.

Speaker Change: Yeah, just to add on to that from a financial perspective, if you think about it, you know, from a gross margin perspective, we'll have reduced logistics costs, we'll have higher throughput, so, you know, absorption of costs over more units overall. And when you combine that with the work that we're doing with Robin Engineering and also supply chain and designing for optimization and also for price, that's what gives us the confidence in gross margin improvements over the course of the year.

Yes, just to add onto that from a financial perspective, if you think about it.

<unk> said, we will have reduced logistics costs will have higher throughput.

Absorption of the costs.

But more units overall and when you combine that with the work that we're doing with Robin engineering and also supply chain.

Designing for optimization and also for price, that's what gives us the confidence and gross margin improvements over the course of the year.

Speaker Change: Great. That's helpful. And then just as a follow-up, given everything that's going on in the supply chain and given current events of just the last month, and you guys called it out, that it's going to be difficult for a while, why not focus more on powertrains? It seems like that would be the path of least resistance to get, you know, more commercial credibility, grow revenues, leverage, you know, your costs, et cetera.

Great. That's helpful. And then just as a follow up given everything that's going on in the supply chain and given current events with just the last month.

And you guys quoted out there, it's going to be difficult for a while.

Why not.

Just more on powertrains, it seems like that would be the path of least resistance.

More kind of commercial credibility grow revenues leverage your costs et cetera.

Speaker Change: Yeah, so I'll start there and feel free to add in, but we've really been focused on continuing to deliver vehicles because the demand is still very, very strong.

Yes, so I'll start there and then feel free to add in but we've really been focused on continuing to deliver vehicles because the demand is still very very strong one of the things that we've seen even as recently as the geopolitical conflicts in Ukraine is the price of fuel and subsequently the price of diesel fuel has gone up significantly.

Speaker Change: One of the things that we've seen, even as recently as the geopolitical conflicts in Ukraine, is the price of fuel and subsequently the price of diesel fuel has gone up significantly. So in the wake of that, diesel fleets and commercial vehicle fleets have become even more likely to adopt electric vehicles because the TCO, or total cost of ownership savings, are even more advantaged as they make this switch.

So in the wake of that diesel fleets and commercial vehicle fleets have become even more likely to adopt electric vehicles, because the tcl. Our total cost of ownership savings are even more advantaged as they make this switch so we're seeing greater interest in demand in adoption still amongst our on highway vehicle customers.

Speaker Change: So we're seeing greater interest and demand and adoption still amongst our on highway vehicle customers, but it is still a growing segment within the business, the powertrain segment. And so I think as we are focused on building our core business and supporting fleets.

But it is still a growing segment within the business. The powertrain segment and so I think as we are focused on building our core business and supporting fleets, we want to make sure that we preserve all of our capital as well as our vehicle inventory and battery inventory for those core customers and then continue to support powertrain cuts.

Speaker Change: We want to make sure that we preserve all of our capital, as well as our vehicle inventory and battery inventory for those core customers, and then continue to support powertrain customers as that grows. And we can achieve more stability within the supply chain. Great, that's helpful. Thank you.

<unk> as that grows and we can make really more stupid.

Achieved more stability within the supply chain.

Great. That's helpful. Thank you.

Yeah.

Moving on now to a question from Mike Ward.

The benchmark company.

Speaker Change: benchmark company. Thanks. Good afternoon, everyone. Thanks for taking my question. First off, just on a strategic standpoint, it looks like you have

Afternoon, everyone.

Taking my question.

First off just on the strategic standpoint, it looks like you have.

Speaker Change: Distribution partnerships, and then you have other agreements like strategic partnerships with merchants and Yancey. How are you looking at it like as we go out over the next five to 10 years. It seems like most of them are going to be through your deliveries will be through a lot of these partnerships or distribution agreements, am I reading that correctly.

Distribution partnerships and then you have other.

Yeah.

Agreements strategic partnerships with merchants to EOG.

How are you looking at it as we go out over the next five to 10 years.

It seems like most of them are going to be through your deliveries will be through a lot of these partnerships or distribution agreements am I reading that correctly.

Yes, Thanks, Mike for the question so to answer a little bit about our distribution strategy, we take a hybrid approach in markets like California, where there is strong support from the local governments as well as we already have a strong existing service footprint from keeping vehicles on the road here for many years.

Speaker Change: Yeah. Thanks Mike for the question. So to answer a little bit about our distribution strategy, we take a hybrid approach in markets like California where there's strong support from the local governments as well as we already have a strong existing service footprint from keeping vehicles on the road here for many years.

Speaker Change: Uh, we really are planning and intending to go direct. So we'll continue to support those customers with the direct access services dealer where they can find their vehicle procurement needs met all of their vehicle servicing parts inventory as well as our access energy solutions where they can actually provide charging infrastructure for those customers.

We really are planning and intending to go direct so we'll continue to support those customers, but the direct excess services dealer, where they can find their vehicle procurement needs met all of their vehicle servicing parts inventory as well as our excess energy solutions, where they can actually provide charging infrastructure for those customers.

Speaker Change: Where the distribution partners have been incredibly strong is in some of those markets that we haven't already built an established foothold or brick and mortar presence.

Or the distribution partners have been incredibly strong as in some of those markets that we haven't already built and establish foothold or brick and mortar presence. So the announcements with EMC and the announcement with MHC are really to help bolster our existing customer relations and places like in the Midwest and in the southeast where we don't already have a lot of.

Speaker Change: So the announcements with Yancey and the announcements with MHC are really to help bolster our existing customer relations in places like in the Midwest and in the Southeast where we don't already have a lot of vehicles already on the road. And why we selected those partners is there's some of the strongest in their space.

<unk> already on the road and why we selected those partners as they're some of the strongest in their space MHC is the largest distributor of kenworth products in the country and through their network. They built out a network of about 120 vehicle locations, where they distribute vehicles from service vehicles and provide full service.

Speaker Change: MHC is the largest distributor of Kenworth products in the country and through their network, it built out a network of about 120 vehicle locations where they distribute vehicles from service vehicles and provide full service leasing solutions.

Leasing solutions, so as were supporting our existing large national account customers and as they are bringing to the table more regional and smaller and medium sized fleet customers. It becomes a great approach to support the market and to get vehicles distributed really across the country.

Speaker Change: So as we're supporting our existing large national account customers and if they're bringing to the table more regional and smaller and medium sized fleet customers, it becomes a great approach to support the market and to get vehicles distributed really across the country.

Speaker Change: The other reason why it's important is we need to have service and support coverage whenever we launch in a market. The customer needs to know that they have the peace of mind, their vehicles going to be maintained day in day out, regardless of what happens if there's a collision or anything that occurs to the vehicle, they won't have parts inventory on hand.

Other reason why it's important is we need to have service and support coverage whenever we launch in a market a customer needs to know that they have the peace of mind. Their vehicles is going to be maintained day in day out regardless of what happens if there is a collision or anything that occurs to the vehicle they won't have parts inventory on hand.

Speaker Change: So when we think about these distribution partners, they become a great place to have onsite parts inventory where they can support the existing vehicles in the field and even bring them up for charging if the charging infrastructure for those customers hasn't been deployed yet or if they don't want to have one of our hub solutions.

So when we think about these distribution partners they become a great place to have onsite parts inventory, where they can support the existing vehicles in the field and even bring them up for charging if the charging infrastructure for those customers hasnt been deployed yet or if they don't want to have one of our hub solutions. So we really have been able to scale deployments.

Speaker Change: So we really have been able to scale deployments and deliveries, as these partnerships are growing, we expect them to be a larger mix of the overall distribution spread, but we continue to anticipate some of our large direct national counts to be a significant source of volume for us over the near and long term horizon.

And deliveries.

As these partnerships are growing we expect them to be a larger mix of the overall distribution spread but we continue to anticipate some of our large direct national accounts to be a significant source of volume for us over the near and long term horizon and.

Speaker Change: And do they have exclusive agreements with you or can they bring in other suppliers?

And do they have exclusive agreements with you where can they bring in other suppliers.

Speaker Change: So most of these distributor partners are existing dealers, so the relationships are not exclusive. They sell existing diesel trucks, in the case of MHC. It's Kenworth and Yancey has with Bluebird, so they have several relationships that are already in place. But we're proud to say that we are one of, really the only options that are electric vehicles that they're distributing and carrying inventory for those customers.

So most of these distributor partners are existing dealers. So the relationships are not exclusive they sell existing diesel trucks in the case of MHC.

Kenworth and Yancey as with Bluebird. So they have several relationships that are already in place.

We're proud to say that we are one of really the only options that are there are electric vehicles that they are distributing and carrying inventory for those customers.

Perfect sense.

Speaker Change: On the CapEx side, I think the $30 to $40 million you've targeted this year, Kingsley, that's down from some of your previous assumptions. Is that a timing or an efficiency type change?

On the <unk>.

Yes.

I think the $30 million to $40 million, you've targeted this year things like that.

That's down from some of your previous assumptions is that a timing or efficiency.

Yes, so to make sure both with most of the efficiency, let me come to our Capex investments expenditures coming out lower than we forecasted in the past, which is great. We're able to achieve volumes at scale in both of our flex pumps and so looking through this year, we forecast continued efficiency and expenditure and really the ability to ramp up deliveries.

Speaker Change: Yeah, so it's a mixture of both, but it's mostly efficiency when it comes to our CapEx investments. Spenditure is coming out lower than we forecasted in the past, which is great. We're able to achieve volumes of scale at both of our flex plants.

Speaker Change: And so looking through it at year, we forecast continued efficiency and expenditure and really the ability to ramp up deliveries from from both of those plants. As Geo mentioned before, the real limiting factor for us right now is supply chain and isn't really that expansion in the capacity. And what we're doing is working to optimize the capacity to reduce the logistics cost as I mentioned, increase the efficiency by having the battery line in Tennessee, which is always in our plan.

From both of those pumps.

As Jim mentioned before the real limiting factor for US right now is supply chain isn't really about an expansion in the capacity.

Doing is working to optimize the capacity to reduce logistics costs as I mentioned, the increasing efficiency by having the battery life in Tennessee, which is always in our plan.

Speaker Change: Yeah, and that was always the plan with Flex manufacturing was to not have a massive facility that we're only using a small fraction of. We wanted to be able to roll out these facilities in a capital efficient way and add capacity as we grow. That's a really core part of the strategy and our Flex manufacturing partners have done a lot more than just provide a building.

And that was always the plan with flex manufacturing was to not have a massive facility that were only using a small fraction of we wanted to be able to rollout. These facilities in a capital efficient way and add capacity as we grow that's a really core part of the strategy and our flex manufacturing partners have done a lot more than just provide a building.

Speaker Change: They are key partners when it comes to setting up the manufacturing and working with our in-house manufacturing team to scale up production. They also provide labor availability in a really difficult and tight labor market, as I mentioned in my earlier comments.

They are key partners when it comes to setting up manufacturing and working with our in house manufacturing team to scale up production. They also provide labor availability and a really difficult in tight labor markets as I mentioned in my earlier comments, so they've been fantastic fruitful relationships for us on the manufacturing scale up side and.

Speaker Change: So they've been fantastic fruitful relationships for us on the manufacturing scale outside and also a great way for access control costs.

Also a great way for access control costs.

Speaker Change: Okay. And that efficiency should be ongoing. So as I look out the timeline of when you turn that corner, between cash positive, it's probably brought forward by several quarters, assuming the supply chain gets back up to a more normalized level.

The efficiencies should be ongoing so as I look at the timeline when you turn the corner being cash positive. It's probably brought forward several quarters, assuming the supply chain gets back up to more normalized level.

Speaker Change: Yeah there's a lot of factors that go into that. I think the supply chain is the greatest uncertainty which we can't control everything within. But if we start to see more normalization towards the end of this year and into 2023, we do expect that those efficiencies and CapEx will help us get to that point sooner. Excellent. Thank you. Really appreciate it.

Okay.

A lot of factors that go into that I think the supply chain is the greatest.

Which we can't control everything with them.

But if we start to see more normalization towards the end of this year and into 2023, we do expect that those efficiencies in Capex will help us get to that point sooner.

Thank you really appreciate it.

Sure Mike.

And moving on now to Donovan Schafer at Colliers Securities.

Speaker Change: And moving on now to Donovan Schaefer at Collier's Securities.

Hi, guys.

Donan Chaefer: Great, great quarter, cool to see things coming along. I mean, again, of course, the supply chain is challenging, but that's true for everyone. So it seems like you guys are making pretty good strides in spite of all that. I am curious.

Great great quarter.

To see things coming along I mean again of course, the supply chain is challenging but that's true for everyone.

You guys are making pretty good strides in spite of all of that.

I am curious.

Speaker Change: If you can give any kind of sense just for overall context, what kind of a build rate could you obtain if there were no supply? If the supply chain was just perfect, what kind of a build rate could you guys do?

So if you can give any kind of sense just for overall context, what what kind of a build rate could you Jane.

There were no supply.

The supply chain was just perfect.

What kind of a build rate could you guys do.

Speaker Change: Yeah, thanks for the question, Donovan. The capacity numbers that we have spoken about the task in reference to chassis assembly at our flex plants is a thousand each.

Yes. Thanks for the question Donovan the capacity numbers that we have spoken about in the past in reference to chassis assembly at our flex plants is 1000, each so 1000 chassis perplex plant, but as the supply chain sorts itself out.

Speaker Change: without any chassis for a flexible, but add the supply chain source itself out.

We're anticipating being ready to scale beyond that and doing everything that we can a lot of the measures that we're taking right now to mitigate the effects of the supply chain are not just diversifying suppliers. It's also re shoring or near shoring components to North America to save on <unk>.

Speaker Change: We're anticipating being ready to, you know, scale.

Speaker Change: beyond that and doing everything that we can. A lot of the measures that we're taking right now to mitigate the effects of the supply chain are not just diversifying suppliers. It's also reassuring or near-shoring components to North America to save on timing and cost. We're trying to avoid expediting components and air frating from other countries. A good example of that is in our wire harnesses.

<unk> cost were trying to avoid expediting components and air Freighting from other countries. A good example of that is in our wire harnesses.

Speaker Change: That's a component that we traditionally source from Asia, and it's tricky because we've had to get involved not only at the Tier 1 level, but also at the Tier 2 level, helping our Tier 1 source connectors, for example. So that's what we did in that situation is reach for that component to North America with our partners at Commercial Vehicle Group, CVG, and that's an example of one of, you know, dozens if not hundreds of changes that we're making to help get ourselves back on track. Thank you.

A component that we traditionally source from Asia, and it's tricky because we've had to get involved not only at the tier one level, but also at the tier two level, helping our tier one source connectors for example.

So what we did in that situation is reach for that component to North America with our partners that commercial vehicle group CPG.

An example of one of dozens if not hundreds of changes that we're making to help get ourselves back on track.

Okay.

Speaker Change: And then for ASPs, I was just curious if you can kind of give us, in my one way,

And then for as cheese I was just curious if you can kind of give us.

One way to kind of roughly bracket wrap our minds around things.

Speaker Change: Roughly bracket wrap our minds around things.

Speaker Change: If you're really focusing on the step bands right now, you can imagine a version of the step band where it's, you know, a 60, you know, maybe the lowest one anyone would buy it would be a 60 kilowatt hour module. But then some people might want the longer range and go up to 120 or maybe even more.

We're really focusing on the step vans right now you can imagine a version of this stuff than where it is.

<unk>, maybe the lowest one anyone would buy it would be a 60 kilowatt hour module, but then some people might want the longer range.

So up to 120 or maybe even more so what's the key range and maybe im sure every contract maybe different but just roughly is it.

Speaker Change: What's the ASP range? And maybe, you know, I'm sure every contract may be different, but just roughly is it, you know, for the shortest range?

For the shortest range.

Speaker Change: full, you know, non-power, not a powertrain sail, but a full vehicle sail. For the lowest range offerings, as I get to come in about 100k, and then the longest range ones come in, I don't know, 180, or I don't know, what?

Full non power not a powertrain sale, but a full vehicle sale for the lowest range offering and does that get to come in about 100, Jay and the longest range ones come in.

I don't know 180, or I don't know what.

Speaker Change: Yeah, I'll start really quickly just on ASP is when it comes to the vehicles and then Kingsley. I'm sure you have additional clarification, but.

Yes.

I'll start really quickly just on Asps when it comes to the vehicles rankings. They are sure yet additional clarification, but.

Speaker Change: Per ASP there's a lot of different factors and it's not just the battery system. It's also how the vehicle is configured. What box goes on it. What the powertrain is in it. If it has a lift gate. There's a variety of different factors. I think what we're trying to do as we go out into the market is build a vehicle that's going to be within 20 to 30% of a competitively priced diesel vehicle.

Per asp's there is a lot of different factors and it's not just the battery system. It's also how the vehicles configured what box goes on it what the powertrain is if it has lifted there is a variety of different factors I think what we're trying to do as we go out into the market is build a vehicle that's going to be within 20% to 30% of a competitive fleet.

Price diesel vehicle and what that allows us to really deliver on is a total cost of ownership savings that we can see within the first three to five years now fuel prices going up is actually helped that tcl calculation, but we also have been impacted by material surcharges in supply chain costs, so year over year we.

Speaker Change: and what that allows us to really deliver on is a total cost of ownership savings that the fleet can see within the first three to five years. Now, fuel prices going up have actually helped that TCO calculation, but we also have been impacted by material surcharges and supply chain costs.

Speaker Change: So year over year, we actually did take a price increase and we do have some material surcharges that we're passing on to our customers that we've received from our suppliers.

Actually did take a price increase and we do have some material surcharges that we're passing on to our customers that we've received from our suppliers. So we do expect to see some incremental growth in the asps.

Speaker Change: So we do expect to see some incremental growth in the ASPs just because of the environment we're in and the inflationary pressures on the supply chain.

Just because of the environment, we're in and the inflationary pressures on the supply chain, but asps do vary depending upon the product mix some of which is still to be determined for the rest of the year. It will be some of those shorter range vehicles and probably the base cases still a 100 mile range vehicle are 120 kilowatt hour step van.

Speaker Change: But ASPs do vary, and depending upon the product mix, some of which is still to be determined for the rest of the year, it will be some of those shorter-range vehicles, and probably the base case is still a 100-mile range vehicle or 120-kilowatt-hour step van and going up from there.

And going up from there.

Yes.

Yes, that's very helpful.

Speaker Change: that's very helpful. You know, we're always trying to read the

He is trying to read the.

Speaker Change: do some kind of, you know, reading, uh, reading animal entrails or something trying to interpret what

Do some kind of reading.

Reading animal entrails or something trying to interpret what.

Speaker Change: The ASD might tell us if the mix is moving this way or that way or whatever but I understand there's there a lot of moving parts there.

As you might tell us if the mix is moving that way or whatever but I understand there is there are a lot of moving parts. There. So last question I want to ask you about because this does.

Speaker Change: So last question I want to ask about because this definitely intrigues me, and I know it's not new for you guys. The back of this hub, you know, you didn't mention that, you know, Rob, you said that you guys have progressed to that product.

Intrigues me and I know, it's not new for you guys. The <unk> hub you did mention the.

Rob you said that you guys have progressed that product.

Speaker Change: and kind of making incremental changes there, emphasize some of its importance. And I think of, yeah, I also cover solar trackers in the solar space, and I've realized there that

And kind of making incremental changes their emphasized some of its importance and I think of.

So cover solar trackers in the solar space I realize there.

Successful companies are one's a demonstration sites they have to be able to get a customer to see.

Speaker Change: successful companies are ones with demonstration sites. They have to be able to get a customer to see how it installs. And, you know, it's kind of a different world there, but it's a real, it's a real,

How it installs and it's kind of a different world there, but it's a real.

That's a real.

It almost seems to define success or failure in that market and so I'm curious if you guys see the access hub.

Speaker Change: that kind of on that level for EV, for commercial electric vehicles? And just what are some of the particulars of what you've expanded? You know, the ease of deployment, number of vehicles, you know, what are you advancing there?

That kind of on that level for EV for commercial electric vehicles, and just what what are some of the particulars of what you've expanded that using deployment number of vehicles. What are you advancing there.

Speaker Change: Yeah, I'll start, and Rob, feel free to add more technical details. The reason for the hub was because we had customers that were experiencing the challenges of adopting large-scale electrification infrastructure, not just installing 5 to 10 or even 20 trucks, but how do we think about installing and deploying thousands of vehicles across a disparate network of different locations?

I'll start and Rob feel free to add more technical details. The reason for the hub was because we had customers that were experiencing the challenges of adopting large scale electrification infrastructure not just installing five to 10 or even 20 trucks, but how do we think about installing and deploying thousands of vehicles across a disparate net.

Network of different locations. So we developed the hub to be able to rapidly deploy vehicles and have charging infrastructure onsite when those vehicles get delivered even if permanent infrastructure can take anywhere from six to 12 months and that customer that we initially started working with has begun testing and evaluating the units.

Rob Ferber: So we developed the hub to be able to rapidly deploy vehicles and have charging infrastructure on site when those vehicles get delivered, even if permanent infrastructure can take anywhere from six to 12 months.

Rob Ferber: And that customer that we initially started working with has begun testing and evaluating the units that we built and ultimately has decided to really move forward with that. And we continue to see strong interest in the product to be able to rapidly support large deployments of vehicles in different locations.

That we built and ultimately has decided to really move forward with that and we continue to see strong interest in the product to be able to rapidly support larger deployments of vehicles in different locations. The benefit of the hub is not to utilize it as permanent infrastructure. It's a temporary solution to help make sure that trucks can get.

Rob Ferber: The benefit of the hub is not to utilize it as permanent infrastructure. It's a temporary solution to help make sure that trucks can get charged in the near term as their manufactured and come directly from the factory to a fleet depot or lead yard.

Charged in the near term as they're manufactured in come directly from the factory to our fleet depot or fleet Yahr. So we're planning to continue to ramp that and working with customers on different configurations to meet their needs based upon the size of their depots based upon the power and but coming off of the grid.

Rob Ferber: So, we're planning to continue to ramp that and working with customers on different configurations to meet their needs based upon the size of their depots, based upon the power input coming off of the grid, and exactly how many vehicles they're going to deploy across the country. But Rob, I'm sure you have more context to add to that. Yeah, two things in general. One,

And exactly how many vehicles are going to deploy across the country.

Rob I'm sure you have more contact can add to that.

Yes, two things in general one.

From a grid perspective, the hub decoupled, the timing of the charging of the trucks from the pricing and the timing of the power optimal availability on the grid.

Rob Ferber: The hub decouples the timing of the charging of the trucks from the pricing and the timing of the power optimal availability on the

Rob Ferber: That alone gives you enormous economic capabilities. And so while we intend these to be temporary, there are business cases and benefits to them in not just the vehicle space, but in some adjacent markets. In some of those adjacent markets, we had a meeting this morning, for example, where one of them popped up.

That alone gives you enormous economic capabilities until we intend this to be temporary there our business cases and benefits to them and not just the vehicles space, but in some adjacent markets and some of those adjacent markets. We had a meeting. This morning. For example, we're one of them popped up.

The World changes when you go from taking a glossy brochure to a customer.

Rob Ferber: The world changes when you go from taking a glossy brochure to a customer.

Rob Ferber: taking a product because then they start really seriously getting their heads around what they're going to do with

Our product because then they start really seriously getting our heads around what they are going to do with it.

Rob Ferber: And so one of the values of having even the earliest units is that when we put them in front of customers we get real feedback about oh well now that I see it now that I've got it here.

And so one of the values of having even the earliest units is that when we put them in front of customers, we get real feedback about Oh, well now that I see it now that I've got it here.

Rob Ferber: You know, actually need this little treat or that little treat or it's perfect, but until we get that in the customer's hands now do something.

Actually need this little tweak or that will be or it's perfect.

Until we get that in the customers' hands now do something with it.

Rob Ferber: we don't know which way the wind is blowing. So this is the most valuable forward looking information as an engineer that I can collect is what's the customer really willing to pay for. Not just what do they say in a questioner. What would you like? Does it levitate? Well, that would be nice.

We don't know, which way the wind is blowing and so this is the most valuable forward looking information as an engineer and I can collect is what's the customer really willing to pay for not just what are they saying in a questionnaire.

Would you like does it levitate that'd be nice.

Speaker Change: Yeah, well, would you pay $100 million for levitation? No. Oh, well, what would you pay for it?

Yeah, well would you pay $100 million solicitation no.

What would you pay for and.

Speaker Change: and having a real product in the customer's hands makes that a crystal clear country.

And having a real products in the customers' hands. It makes it a crystal clear conversation, yes, having that customer feedback has been really important for us on the hub as well as our other products. We've seen a lot of interest on the hub from unexpected places not just sleep looking to charge commercial electric vehicles. So that's been really interesting.

Speaker Change: Yeah, having that customer feedback has been really important for us on the hub, as well as our other products. We've seen a lot of interest on the hub from unexpected places, not just fleets looking to charge commercial electric vehicles. So that's been really interesting. And the other thing, Donovan, I think you asked about product development and some of the changes we're making.

And the other thing Dan I mean, I think you asked about.

Product development and some of the changes we're making.

It's important that the hub via connected products like our trucks. So thats one of the things that we're focused on is making sure that we can pull data from the hub and help fleet managers and our customers make more intelligent decisions on how to use.

Speaker Change: It's important that the hub be a connected product like our truck.

Speaker Change: So that's one of the things that we're focused on, is making sure that we can pull data from the hub and help fleet managers and our customers make more intelligent decisions on how to use their capital equipment. So whether it's a truck or a hub, that's really the core of what we're doing. We're more than just a hardware company. We're more than just a truck OEM. There's also a layer of software and services behind our hardware products that make them a lot more valuable.

Their capital equipment, so whether it's a truck or a hub.

That's really the core of what we're doing we're more than just a hardware company. We're more than just a truck OEM. There's also a layer of software and services behind our hardware products that make them a lot more valuable.

Speaker Change: Okay, great. Very helpful. Thank you, guys. I'll take the rest of my questions. I'll find. Thank you.

Okay, Great very helpful. Thank you guys I'll take I'll take the rest of my questions offline. Thank you.

Thanks Todd.

Speaker Change: Alright, we'll move on to a question now from Bank of America Global Research. This is Sharif El Sabi.

Alright, we will move on to a question now from Bank of America Global researches Sharif El Savi.

I just wanted to ask you about your dealership agreements. So we've discussed at length. The advantage of having a growing dealership network and discussed MHC and Nancy.

Speaker Change: So we've discussed at length the advantage of having a growing dealership network.

Speaker Change: looking at two sort of original anchor dealerships, Thompson and SDS.

Looking at to sort of the original anchor dealerships Thompson.

And SD loans, we've seen deliveries through our channel checks to Thompson.

Speaker Change: But just the purchase and district abuse and agreement with SB Lone Star still stand and are you delivering?

The purchase and distribution agreement with SB, Lonestar still stand and how you're delivering against it.

Speaker Change: Yeah, so we have delivered vehicles through low-star and their Texas locations, and we continue to make headway with them. As a customer, they've been really supportive and it helped facilitate a lot of good dialogues with end user fleet customers, but they are part of our fleet network as well.

Yes, so we have delivered vehicles through lone star and our Texas locations.

And we continue to make headway with them as a customer they have been really supportive and have helped facilitate a lot of good dialogues with end user fleet customers.

But they are they are a part of our fleet network as well.

Speaker Change: And on the R&D costs, you expect them to be a client right here. Can you give us a range of rates?

And on the R&D costs, you expect them to decline throughout the year can you give us a range of where you expect to run through the year.

Speaker Change: Yeah, so we have a number of exciting projects that we're working on, which we'll be excited to talk to you about when you come to Fleet Week in May. The guidance you said is that we will carry on investing in R&D, but when you look at R&D relative to revenue, it's going to decline over time. I think what's exciting about Exos is the impact that we're able to have with the capital we've deployed in our R&D, and as Rob mentioned, our R&D is super focused on a commercially used case and on near-term cash flow, near-term revenue. I will talk more about it in May.

Yes, so we have a number of exciting projects that we're working on which would be excited to talk to you about when it comes to the fleet week in May our guidance. We've said is that we will carry on investing in R&D. When you look at R&D relative to revenue its going to decline over time, I think what's exciting by accessing the impact they were able to have all the capital we've deployed.

At our R&D and as Rob mentioned, the R&D is super focused on our commercial use case and on near term cash burn DSM revenue I will talk more about that today.

Thank you.

Thanks, Larry.

Yes.

Speaker Change: Just doing a final check if any of our analysts have a brief follow-up question. Please just pick us again.

Just doing a final check if any of our analysts have a brief follow up question. Please just say once again.

Speaker Change: If we also want to go back to Dan Ives, I'm not sure if you was able to get audio working. I don't believe Dan.

If we also want to go back to Dan Ives I'm not sure. If he was able to get Saudi are working.

I don't believe Dan was able to rejoin.

Speaker Change: I will let you know that I haven't had any other signals for questions.

Great I will let you know that I haven't had any other ones any other signals for questions.

Speaker Change: Great. Well, thank you everybody again for joining our call this evening or this afternoon. We really appreciate the opportunity to share with you the exciting progress that excess continues to make in our manufacturing environment, as well as in our production environment, even amidst all of the supply chain disruptions that we've seen through 2021 and coming into 2022.

Great well. Thank you everybody again for joining our call. This evening or this afternoon, we really appreciate the opportunity to share with you the exciting progress that excess continues to make in our manufacturing environment as well as in our production environment, even amidst all of these supply chain disruptions that we've seen through 2021 and coming.

Into 2022.

Speaker Change: In summary, we remain incredibly confident in Exos' prospects moving forward. There is an incredible opportunity right now that we are at the center of in electrifying the medium and heavy-duty last-mile commercial vehicle space, and Exos is already delivering product to fleet operators and some of the largest customers within those segments.

In summary, we remain incredibly confident in excesses prospects moving forward.

There is an incredible opportunity right now that we are at the center of an electrifying the medium and heavy duty last mile commercial vehicle space and excess is already delivering product to fleet operators and some of the largest customers within those segments. We also continue to make progress on the manufacturing forefront and making quarter over quarter improvements in our delivery rates.

Speaker Change: We also continue to make progress on the manufacturing forefront and making quarter over quarter improvements in our delivery rates and our production rates within our facilities here in Los Angeles, as well as in Tennessee and Mexico.

And our production rates within our facilities here in Los Angeles, as well as in Tennessee in Mexico.

Speaker Change: And lastly, we've actually really focused on making sure we're delivering the solutions that help fleet scale their electric fleets more rapidly. So with products like our excess hub, excess energy solutions and the excess fear, which Rob talked a little bit about and will share more our excess fleet we got really have help fleets not only deploy electric trucks, but deploy them more smoothly and more rapidly, which is our end goal.

And lastly, we've actually really focused on making sure we're delivering the solutions that help fleet scale their electric fleets more rapidly so with products like our excess hub excess energy solutions, and the excess sphere, which Rob talked a little bit about and we'll share more at our excess fleet. We've got really have helped fleets not only.

Deploy electric trucks, but deploy them more smoothly and more rapidly which is our end goal here.

Speaker Change: Thank you everybody again for joining us and have a great rest of your day.

You everybody again for joining us and have a great rest of your day.

Yes.

Speaker Change: Thank you. Thank you, ladies and gentlemen, once more. Thanks so much for joining us. That will conclude today's webinar. Thank you for your participation, and once again, have a wonderful day.

Thank you, ladies and gentlemen, once more thanks, so much for joining us that will conclude today's webinar. Thank you for your participation and once again and have a wonderful day.