Q2 2024 Xos Inc Earnings Call

August 13, 2024

Speaker Change: Greetings, everyone, and welcome to EXOS, Inc.'s second quarter 2024 earnings call.

Operator: 2nd quarter, 2024 earnings call. At this time, all participant lines are in listen-only mode. For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared comments.

Operator: second quarter 2024. At this time, all participant lines are in a listen-only mode.

Speaker Change: At this time, all participant lines are in a listen-only mode. For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared comments.

Operator: For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared comments. Please note today's conference call is being recorded. At this time, I'd like to turn the floor over to the General Counsel of XOS, Christen Romero. Thank you.

Operator: Please note today's conference call is being recorded.

Speaker Change: Please note today's conference call is being recorded.

Christian Romero: At this time, I'd like to turn the floor over to the General Counsel of Xos, Christian Romero.

Speaker Change: At this time, I'd like to turn the floor over to the General Counsel of EXOS, Christen Romero. Thank you. You may begin.

Christian Romero: Thank you. You may begin. Thank you, everyone, for joining us today.

Christen Romero: Thank you, everyone, for joining us today. Hosting the call with me are Chief Executive Officer Dakota Semler, Chief Operating Officer Giordano Sordoni, and Acting Chief Financial Officer Liana Pogosyan. Ahead of this call, Xos issued its second quarter 2024 earnings press release, which we will reference during the call. This can be found on the Investor Relations section of our website at investors.exostrucks.com. On this call, management will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainty.

Christian Romero: Hosting the call with me, our Chief Executive Officer, Dakota Semler, Chief Operating Officer, Giordano Sordoni, and Acting Chief Financial Officer, Liana Pogosyan. Ahead of this call, Xos issued its 2nd quarter 2024 earnings press release, which we will reference during the call. This can be found on the Investor Relations section of our website at investors.xostrucks.com. 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 the 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.

Christen Romero: Thank you, everyone, for joining us today.

Speaker Change: Hosting the call with me are Chief Executive Officer Dakota Semler, Chief Operating Officer Giordano Sordoni, and Acting Chief Financial Officer Liana Pogosyan.

Speaker Change: Ahead of this call, Exos issued its second quarter 2024 earnings press release, which we will reference during the call. This can be found on the investor relations section of our website at investors.exostrucks.com.

Christen Romero: Actual results could differ materially from our forward-looking statements if any of our key assumptions is 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.xostrux.com. We do not undertake any duty to update any forward-looking statement.

Speaker Change: On this call, management will be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties.

Speaker Change: 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.

Christian Romero: These documents can be found on our website at investors.xostrucks.com. We do not undertake any duty to update any forward-looking statements.

Speaker Change: These documents can be found on our website at investors.exostrucks.com. We do not undertake any duty to update any forward-looking statements.

Christian Romero: Today's presentation also includes references to non-GAAP financial measures and performance metrics. Please refer to the information contained in the company's 2nd quarter 2024 earnings press release for definitional information and reconciliation of historical non-GAAP measures to the comparable GAAP financial measures. Participants should be cautioned not to put undue reliance on forward-looking statements.

Christen Romero: Today's presentation also includes references to non-GAAP financial measures and performance metrics. Please refer to the information contained in the company's second quarter 2024 earnings press release for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures. With that said, participants should be cautioned not to put undue reliance on forward-looking statements. Thanks, Christen, and thank you, everyone, for joining us.

Speaker Change: Today's presentation also includes references to non-GAAP financial measures and performance metrics.

Speaker Change: Please refer to the information contained in the company's second quarter 2024 earnings press release for definitional information and reconciliations of historical non-GAAP measures to the comparable GAAP financial measures.

Speaker Change: Participants should be cautioned not to put undue reliance on forward-looking statements.

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

Dakota Semler: On today's call, I will cover highlights from the second quarter of 2024, during which we generated $15.5 million in revenue, delivered 90 units, and achieved our fourth consecutive quarter of positive gross margin. Gio and Liana will then provide operational and financial updates, respectively. Starting with sales and deliveries, revenue is up 18% quarter over quarter and 227% year over year. The majority of our 90 units delivered were step vans for fleet customers, namely UPS and FedEx ground contractors.

Dakota Semler: Thanks, Christen, and thank you, everyone, for joining us.

Dakota Semler: Geo and Leona will then provide operational and financial updates, respectively. Starting with sales and deliveries, revenue is up 18% quarter-over-quarter and 227% year-over-year. The majority of our 90 units delivered were stepvans for fleet customers, namely UPS and FedEx ground contractors, supplemented by powertrain sales to Bluebird and HubSales to multiple new customers. We expect 2024 volumes to be meaningfully higher than 2023 and similarly weighted toward the second half of the year as customers respond to incentives and charging infrastructure comes online. The man for exos products remain robust throughout the year. In May, we attended the industry's largest conference, the Advanced Clean Transportation Expo, where potential customers demonstrated strong interest in both our vehicles and our latest generation hub.

Speaker Change: Gio and Liana will then provide operational and financial updates, respectively.

Gio: Starting with sales and deliveries, revenue is up 18% quarter over quarter and 227% year over year.

Speaker Change: The majority of our 90 units delivered were step vans for fleet customers, namely UPS and FedEx ground contractors.

Dakota Semler: Supplemented by powertrain sales to Bluebird and hub sales to multiple new customers, we expect 2024 volumes to be meaningfully higher than 2023 and similarly weighted towards the second half of the year as customers respond to incentives and charging infrastructure comes online. Demand for Xos products remained robust throughout the year.

Speaker Change: supplemented by powertrain sales to Bluebird and hub sales to multiple new customers.

Speaker Change: We expect 2024 volumes to be meaningfully higher than 2023 and similarly weighted towards the second half of the year as customers respond to incentives and charging infrastructure comes online.

Speaker Change: Demand for Excess Products remained robust throughout the year.

Dakota Semler: In May, we attended the industry's largest conference, the Advanced Clean Transportation Expo, where potential customers demonstrated strong interest in both our vehicles and our latest generation hubs. In addition to our own booth, Xos technology was also on display by Bluebird, one of the largest school bus OEMs and a leader of EVs in the sector. We announced our exciting new powertrain partnership with Bluebird during the quarter, and at the show, they displayed a pair of parcel delivery chassis built with Xos' powertrain. Bluebird's decision to partner with Xos and showcase our powertrain underscores our reputation as a leader in EV technology.

Speaker Change: In May, we attended the industry's largest conference, the Advanced Clean Transportation Expo, where potential customers demonstrated strong interest in both our vehicles and our latest generation hub.

Dakota Semler: In addition to our own booth, Xos' technology was also on display by Bluebird, one of the largest school bus co-EMs and a leader of EVs in the sector. We announced our exciting new powertrain partnership with Bluebird during the quarter and that the show they displayed a pair of parcel delivery chassis built with Xos power trains. Bluebird's decision to partner with Xos and showcase our powertrain underscores our reputation as a leader in EV technology. The partnership resulted in significant attention to Xos products. Over the course of the show and weeks that followed, the Bluebird partnership came up repeatedly with both fleet buyers and industry insiders as a vote of confidence in Xos' technical capabilities and the company's future.

Speaker Change: In addition to our own booth, Exos technology was also on display by Bluebird, one of the largest school bus OEMs and a leader of EVs in the sector.

Speaker Change: We announced our exciting new powertrain partnership with Bluebird during the quarter, and at the show, they displayed a pair of parcel delivery chassis built with Exos powertrains.

Speaker Change: Bluebird's decision to partner with Excess and showcase our powertrain underscores our reputation as a leader in EV technology.

Dakota Semler: The partnership resulted in significant attention for Xos products. Over the course of the show and weeks that followed, the Bluebird partnership came up repeatedly with both fleet buyers and industry insiders as a vote of confidence in Xos's technical capabilities and the company's future. Turning now to our charging products, where we are experiencing stronger-than-expected sales activity, the Hub, Xos's mobile energy storage and charging product, is filling gaps felt by customers. They recognize the value of pivoting their fleets and equipment away from fossil fuels, but they have to confront the realities of lagging permanent infrastructure installation timelines, limited charging options in remote locations, and the complexity of accessing grid power from worksites.

Speaker Change: The partnership resulted in significant attention to Exos products.

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

Dakota Semler: Turning now to our charging products, where we are experiencing stronger-than-expected sales activity, the hub, Xos' mobile energy storage and charging product is filling gaps felt by customers. They recognize the value of pivoting their fleets and equipment away from fossil fuels, but have to confront the realities of lagging permanent infrastructure installation timelines, limited charging options in remote locations, and the complexity of accessing grid power from work sites. This quarter, hub sales were particularly strong with firms outside our step-van customer base, including a large government fleet. Operators across the industries are demonstrating a clear need for more flexible charging solutions, and we expect that charging solutions will grow into a robust part of Xos' overall business.

Speaker Change: Turning now to our charging products where we are experiencing stronger than expected sales activity, the Hub, Excess's mobile energy storage and charging product, is filling gaps felt by customers.

Speaker Change: They recognize the value of pivoting their fleets and equipment away from fossil fuels, but have to confront the realities of lagging permanent infrastructure installation timelines, limited charging options in remote locations,

Speaker Change: and The Complexity of Accessing Grid Power from Work Sites.

Dakota Semler: This quarter, hub sales were particularly strong with firms outside our Step-Van customer base, including a large government fleet. Operators across the industries are demonstrating a clear need for more flexible charging solutions, and we expect that charging solutions will grow into a robust part of XS's overall business. The strength of the sector is evidenced by the attention it received at the ACT Expo this year, where more than a dozen firms showcased combined charging and energy storage products.

Speaker Change: This quarter, hub sales were particularly strong with firms outside our Step-Van customer base, including a large government fleet.

Speaker Change: Operators across the industries are demonstrating a clear need for more flexible charging solutions and we expect that charging solutions will grow into a robust part of XS's overall business.

Dakota Semler: The strength of the sector is evidenced by the attention it received at the ACT Expo this year, where more than a dozen firms showcase combined charging and energy storage products. We view the increased number of options as a healthy evolution of the EV market and ultimately beneficial for Xos. As a first mover in the space, the hub has a strong sales pipeline and is a mature and cost-competitive product. New market entrants are bringing more visibility to the product category, and Xos alone can generate and also provide alternate paths for customers to discover Xos and our products.

Speaker Change: The strength of the sector is evidenced by the attention it received at the ACT Expo this year.

Speaker Change: where more than a dozen firms showcase combined charging and energy storage products.

Dakota Semler: We view the increased number of options as a healthy evolution of the EV market and ultimately beneficial for Xos. As a first mover in the space, the hub has a strong sales pipeline and is a mature and cost-competitive product. New market entrants are bringing more visibility to the product category than Xos alone can generate and also provide alternate paths for customers to discover Xos and our products. Most importantly, the advancement of alternative charging options will support faster adoption of our vehicles and expand the EV market to include more fleets without access to traditional permanent chargers. For more detail on how we are fulfilling the strong demand for Xos products, I'll hand it over to our COO, Gio, for an operational update. Thank you, Dakota.

Speaker Change: We view the increased number of options as a healthy evolution of the EV market and ultimately beneficial for Exos.

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

Speaker Change: New market entrants are bringing more visibility to the product category than XSOS alone can generate, and also provide alternate paths for customers to discover XSOS and our products.

Dakota Semler: Most importantly, the advancement of alternative charging options will support faster adoption of our vehicles and expand the EV market to include more of the fleets without access to traditional permanent chargers.

Speaker Change: Most importantly, the advancement of alternative charging options will support faster adoption of our vehicles and expand the EV market to include more of the fleets without access to traditional permanent chargers.

Giordano Sordoni: For more detail on how we are fulfilling the strong demand for Xos products, I'll hand it over to our COO, Geo, for an operational update. Thank you, Dakota. Access is engineering, supply chain, and manufacturing teams remain focused on scaling production and delivering further margin improvements. Our engineers are developing a longer 208-inch wheelbase variation of the Xos Step-Man to support a wider range of bodies requested by our customers. In fact, we've already secured signed sales orders for this new variation. Some of the first units will be delivered to Mission Linen as part of the order that we announced in the first quarter.

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

Giordano Sordoni: XSYS's engineering, supply chain, and manufacturing teams remain focused on scaling production and delivering further margin improvement. Our engineers are developing a longer, 208-inch wheelbase variation of the EXO Stepman to support a wider range of bodies requested by our customers. In fact, we've already secured signed sales orders for this new variation, and some of the first units will be delivered to Mission Linen as part of the order that we announced in the first quarter. Lengthening the vehicle is a relatively simple change, with efforts primarily focused on changes to the frame rails, extensions to wiring harnesses, and durability testing of the updated chassis.

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

Gio: Our engineers are developing a longer 208-inch wheelbase variation of the EXO Stepman to support a wider range of bodies requested by our customers.

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

Gio: Some of the first units will be delivered to Mission Linen as part of the order that we announced in the first quarter.

Giordano Sordoni: Lightning in the vehicle is a relatively simple change, with efforts primarily focused on changes to the frame rails, extensions to wiring harnesses, and durability testing of the updated chassis. This means we're able to launch the new variant quickly and with minimal R&D investment. We expect a new, long wheel-based steppan, being customer hands by the first quarter of 2025. Also, within engineering, our software and controls team has made improvements to our connectivity platform that will translate into cost savings on both complete vehicles and power trains. As commercial vehicle customers begin to expect features like over-the-air updates and real-time telemetry, our in-house software capabilities have differentiated XOs as both a vehicle manufacturer and a technology partner to legacy OEMs. Furthermore, our teams continue to find opportunities to grow our margins by reducing direct costs.

Gio: Lengthening the vehicle is a relatively simple change, with efforts primarily focused on changes to the frame rails, extensions to wiring harnesses, and durability testing of the updated chassis.

Giordano Sordoni: This means we're able to launch the new variant quickly and with minimal R&D investment. We expect the new long wheelbase step van to be in customer hands by the first quarter of 2025. Also, within engineering, our software and controls team has made improvements to our connectivity platform that will translate into cost savings on both complete vehicles and powertrains. As commercial vehicle customers begin to expect features like over-the-air updates and real-time telemetry, our in-house software capabilities have differentiated Xos as both a vehicle manufacturer and a technology partner to legacy OEMs.

Gio: This means we're able to launch the new variant quickly and with minimal R&D investment.

Gio: We expect the new long-wheelbase step-van to be in customer hands by the first quarter of 2025.

Gio: Also, within engineering, our software and controls team has made improvements to our connectivity platform that will translate into cost savings on both complete vehicles and powertrains.

Gio: As commercial vehicle customers begin to expect features like over-the-air updates and real-time telemetry, our in-house software capabilities have differentiated EXOS as both a vehicle manufacturer and a technology partner to legacy OEMs.

Giordano Sordoni: Furthermore, our teams continue to find opportunities to grow our margins by reducing direct costs. This quarter, Xos brought a greater portion of logistics for completed chassis in-house, which translates to lower costs overall. Our manufacturing team is focused on scaling vehicle production efficiently, integrating hub and powertrain production on the factory floor. As I mentioned last quarter, we're preparing for production rates of up to eight hubs per month in 2024, alongside our step van and powertrain volumes to satisfy strong demand from existing and new XOS customers.

Gio: Furthermore, our teams continue to find opportunities to grow our margins by reducing direct costs. This quarter, EXOS brought a greater portion of logistics for completed chassis in-house, which translates to lower costs overall.

Giordano Sordoni: This quarter, XOs brought a greater portion of logistics or completed chassis in-house, which translates to lower cost overall. Our manufacturing team is focused on scaling vehicle production efficiently, integrating hub and powertrain production to the factory floor. As I mentioned last quarter, we're preparing for production rates of up to eight hubs per month in 2024 alongside our steppan and powertrain volumes to satisfy strong demand from existing and new XOs customers. As a final note, we're attracting the potential tariff changes that could impact our China source components. XOs is preparing for any such development by identifying alternative sources and exploring tariff mitigation strategies.

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

Gio: As I mentioned last quarter, we're preparing for production rates of up to 8 hubs per month in 2024, alongside our step van and powertrain volumes, to satisfy strong demand from existing and new EXOS customers.

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

Gio: As a final note, we are tracking the potential tariff changes that could impact our China source components.

Gio: EXOS is preparing for any such development by identifying alternative sources and exploring tariff mitigation strategies.

Giordano Sordoni: At this point, we do not anticipate significant tariff-related disruptions or impediments to our production schedule, but we will continue to monitor any developments in this space.

Gio: At this point, we do not anticipate significant tariff-related disruptions or impediments to our production schedule, but we will continue to monitor any developments in this space.

Liana Pogosyan: With that, I'll pass it to Leonor. Thank you, XO. For your second quarter, our revenue increased to 15.5 million from 13.2 million in the first quarter of 2024, primarily as a result of our increased deliveries. Our cost of goods sold during the quarter increased to 13.5 million compared to 10.4 million in the first quarter. Gap growth margin during the quarter was a profit of 2 million or 13.1 percent, compared to a profit of 2.8 million in the first quarter or 21.2 percent. The first quarter of Gap growth margins included beneficial adjustments related to our inventory reserves and inventory accuracy processes.

Gio: With that, I'll pass it to Liana.

Liana Pogosyan: Thank you, Gio. For the second quarter, our revenue increased to $15.5 million from $13.2 million in the first quarter of 2024, primarily as a result of our increased delivery. Our cost of goods sold during the quarter increased to $13.5 million compared to $10.4 million in the first quarter. Gap's gross margin during the quarter was a profit of $2 million, or 13.1%, compared to a profit of $2.8 million in the first quarter, or 21.2%.

Liana Pogosyan: Thank you, Gio. For the second quarter, our revenue increased to $15.5 million from $13.2 million in the first quarter of 2024, primarily as a result of our increased deliveries.

Liana Pogosyan: Our cost of goods sold during the quarter increased to $13.5 million compared to $10.4 million in the first quarter.

Liana Pogosyan: Gap gross margin during the quarter was a profit of $2 million, or 13.1%, compared to a profit of $2.8 million in the first quarter, or 21.2%.

Liana Pogosyan: The first quarter's gap gross margins included beneficial adjustments related to our inventory reserves and inventory accuracy process. Gap gross margin during the second quarter was negatively impacted by lower average selling price due to product mix, write-off of excess materials, and adjustments to our reserves due to an overall higher inventory balance.

Liana Pogosyan: The first quarter's gap gross margins included beneficial adjustments related to our inventory reserves and inventory accuracy processes.

Liana Pogosyan: Gap growth margin during the second quarter was negatively impacted by lower average selling price due to product mix, right off of excess materials, and adjustments to our reserves due to overall higher inventory balances. We continue to see margin improvements in our step ends as we realize the efforts of our engineering, supply chain, and manufacturing teams. We have been able to work with our suppliers in reducing the cost of several critical components as we scale production, leading to lower direct material costs for each unit. Additionally, our engineering and production teams continue to gain efficiencies in the design and build of our step ends, reducing labor costs while increasing the durability and reliability of each unit produced.

Liana Pogosyan: Gap gross margin during the second quarter was negatively impacted by lower average selling price due to product mix, write-off of excess materials, and adjustments to our reserves due to overall higher inventory balances.

Liana Pogosyan: We continue to see margin improvements in our step-downs as we realize the efforts of our engineering, supply chain, and manufacturing teams. We have been able to work with our suppliers to reduce the cost of several critical components as we scale production, leading to lower direct material costs for each unit. Additionally, our engineering and production teams continue to gain efficiencies in the design and build of our step vans, reducing labor costs while increasing the durability and reliability of each unit produced.

Liana Pogosyan: We continue to see margin improvements in our step-downs as we realize the efforts of our engineering, supply chain, and manufacturing teams.

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

Liana Pogosyan: Additionally, our engineering and production teams continue to gain efficiencies in the design and build of our step-ends, reducing labor costs while increasing the durability and reliability of each unit produced.

Liana Pogosyan: It should be noted that gap growth margins for a vehicle OEM are impacted by a range of reserves that combine with changes in the sales mix between direct, dealer, and prior model inventory sales introduced higher levels of volatility and quarterly results. We continue to share a consistent non-GAAP growth margin that adjusts for inventory reserves and physical inventory and other related adjustments that you can find in today's earnings press release. Turning to expenses, our second quarter operating expenses of 13.4 million remain broadly in line with the first quarter's figure of 13 million. Non-GAAP operating loss for the second quarter was 9.7 million.

Liana Pogosyan: It should be noted that gap gross margins for a vehicle OEM are impacted by a range of reserves that, combined with changes in the sales mix between direct, dealer, and prior model inventory sales, introduced higher levels of volatility in quarterly reserves. We continue to share a consistent non-gap growth margin that adjusts for inventory reserves and physical inventory and other related adjustments that you can find in today's earnings press release. Turning to expenses, our second quarter operating expenses of $13.4 million remain broadly in line with the first quarter's figure of $13 million. Non-GAAP operating loss for the second quarter was $9.7 million.

Speaker Change: It should be noted that gap gross margins for a vehicle OEM are impacted by a range of reserves that, combined with changes in the sales mix between direct, dealer, and prior model inventory sales, introduce higher levels of volatility in quarterly results.

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

Speaker Change: Turning to expenses, our second quarter operating expenses of $13.4 million remain broadly in line with the first quarter's figure of $13 million.

Speaker Change: Non-GAP operating loss for the second quarter was $9.7 million. GAP operating loss was $11.4 million. Excitedly, our operating profitability is following a promising trajectory.

Liana Pogosyan: GAAP operating loss was $11.4 million. However, excitedly, our operating profitability is following a promising trajectory. Following last year's efforts to reduce spending on non-core projects and the release of the current step-down platform, our non-gap operating loss improved to negative 63% this quarter from negative 357% one year ago. We expect to see continued improvements in the coming quarters as our volumes grow and our operations teams continue to identify and implement cost-saving changes to our product.

Liana Pogosyan: Gap operating loss was $11.4 million. Accidentally, our operating profitability is following a promising trajectory. Following last year's efforts to reduce spending on non-core projects and the release of the current step-down platform, our non-GAAP operating loss improved to negative 63 percent this quarter from negative 357 percent one year ago.

Speaker Change: Following last year's efforts to reduce spending on non-core projects and the release of the current step-down platform, our non-gap operating loss improved to negative 63% this quarter from negative 357% one year ago.

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

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

Liana Pogosyan: Turning to the balance sheet, we close the quarter with cash and cash equivalents and restricted cash of 20.7 million compared to 47.3 million at the end of the first quarter. The reduction in cash above our historical trends was primarily the result of our elevated accounts receivable balance of 29.7 million at the end of the quarter compared to 20.3 million in the first quarter. This resulted from a concentration of deliveries made at the end of the quarter as well as a temporary build-up in government incentive receivables. The substantially higher deliveries we expect to make in the second half of the year also played a role as inventory increased to 41.4 million in the current quarter from 36.6 million in the first quarter to support higher production rates.

Liana Pogosyan: Turning to the balance sheet, we close the quarter with cash and cash equivalents and restricted cash of $20.7 million compared to $47.3 million at the end of the first quarter. The reduction in cash above our historical trends was primarily the result of our elevated accounts receivable balance of $29.7 million at the end of the quarter compared to $20.3 million in the first quarter.

Speaker Change: Turning to the balance sheet, we close the quarter with cash and cash equivalents and restricted cash of $20.7 million compared to $47.3 million at the end of the first quarter.

Speaker Change: The reduction in cash above our historical trends was primarily the result of our elevated accounts receivable balance of $29.7 million at the end of the quarter compared to $20.3 million in the first quarter.

Liana Pogosyan: This resulted from a concentration of deliveries made at the end of the quarter as well as a temporary buildup in government incentive receivables. The substantially higher deliveries we expect to make in the second half of the year also played a role, as inventory increased to $41.4 million in the current quarter from $36.6 million in the first quarter to support higher production. We have taken steps to improve our incentive collection processes and expect our accounts receivable and inventory balances to stabilize over the coming quarter.

Speaker Change: This resulted from a concentration of deliveries made at the end of the quarter, as well as a temporary buildup in government incentive receivables.

Speaker Change: The substantially higher deliveries we expect to make in the second half of the year also played a role, as inventory increased to $41.4 million in the current quarter from $36.6 million in the first quarter to support higher production rates.

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

Speaker Change: We have taken steps to improve our incentive collection processes and expect our accounts receivable and inventory balances to stabilize over the coming quarters. In addition, we are actively pursuing options for non-dilutive working capital to fund the growth of our business and preserve liquidity.

Liana Pogosyan: In addition, we are actively pursuing options for non-diluted working capital to fund the growth of our business and preserve liquidity. Relatedly, operating cash flow less capex or free cash flow of negative 26.1 million quarter quarter was a decrease from negative 14.6 million last quarter. Unfavorable changes in working capital driven by higher accounts receivable and inventory balances and lower margins this quarter contributed to the increase in negative free cash flow. Based on the initiatives we discussed, we expect to see more favorable changes in working capital in the coming quarters.

Liana Pogosyan: In addition, we are actively pursuing options for non-dilutive working capital to fund the growth of our business and preserve liquidity. Relatedly, operating cash flow less capex or free cash flow of negative $26.1 million for the quarter was a decrease from negative $14.6 million last quarter. Unfavorable changes in working capital driven by higher accounts receivable and inventory balances and lower margins this quarter contributed to the increase in negative free cash flow.

Speaker Change: Relatedly, operating cash flow less capex, or free cash flow, of negative $26.1 million for the quarter was a decrease from negative $14.6 million last quarter.

Speaker Change: Unfavorable changes in working capital driven by higher accounts receivable and inventory balances and lower margins this quarter contributed to the increase in negative free cash flow.

Liana Pogosyan: Based on the initiatives we discussed, we expect to see more favorable changes in working capital in the coming quarter. Finally, we are reaffirming our full year 2024 guidance of revenue in the range of 66.7 to 100.4 million, a non-GAAP operating loss of between 43.7 to 48.7 million, and 400 to 600 units delivered. I'll now turn the call back over to the coach. Thank you, Liana.

Speaker Change: Based on the initiatives we discussed, we expect to see more favorable changes in working capital in the coming quarters.

Liana Pogosyan: Finally, we are reaffirming our full year 2024 guidance of revenue in the range of 66.7 to 100.4 million, a non-GAAP operating loss of between 43.7 to 48.7 million, and 400 to 600 units delivered.

Speaker Change: Finally, we are reaffirming our full year 2024 guidance of revenue in the range of $66.7

Speaker Change: 200.4 million, a non-GAAP operating loss of between 43.7 to 48.7 million, and 400 to 600 units delivered.

Dakota Semler: I'll now turn the call back over to Dakota. Thank you, Leona. To wrap up, Xos is positioned to win. We are growing deliveries, demonstrating our leadership in commercial EVs via partnerships with established OEMs, powering forward with a strong margin trajectory, and building a self-sustaining business. Diversifying our product portfolio by leveraging our Stepvan technology to satisfy unmet demand for power trains and hubs is adding to our strong backlog of Stepans. Our technology portfolio and highly competitive pricing has made us a partner of choice for OEMs like Bloomberg. Our relentless focus on capital efficiency and cost reductions translated into four consecutive quarters of positive growth margin this year and continued progress in the company's path to profitability.

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

Dakota Semler: To wrap up, Xos is positioned to win. We are growing deliveries, demonstrating our leadership in commercial EVs via partnerships with established OEMs, powering forward with a strong margin trajectory, and building a self-sustaining business. Diversifying our product portfolio by leveraging our Step Van technology to satisfy unmet demand for powertrains and hubs is adding to our strong backlog of Step Vans. Our technology portfolio and highly competitive pricing have made us a partner of choice for OEMs like Bluebird.

Dakota Semler: Thank you, Liana.

Dakota Semler: To wrap up, EXOS is positioned to win. We are growing deliveries, demonstrating our leadership in commercial EVs via partnerships with established OEMs,

Dakota Semler: Powering forward with a strong margin trajectory and building a self-sustaining business.

Speaker Change: Diversifying our product portfolio by leveraging our Step-Van technology to satisfy unmet demand for powertrains and hubs is adding to our strong backlog of Step-Vans.

Speaker Change: Our technology portfolio and highly competitive pricing has made us a partner of choice for OEMs like Bluebird.

Operator: Our relentless focus on capital efficiency and cost reductions translated into four consecutive quarters of positive gross margin this year and continued progress on the company's path to profitability. With that, let's open the line to questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press the star and then one on the touch-tone telephone. To withdraw your questions, you may press star and two. If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality.

Speaker Change: Our relentless focus on capital efficiency and cost reductions translated into four consecutive quarters of positive gross margin this year and continued progress in the company's path to profitability.

Operator: With that, let's open the line for questions.

Speaker Change: With that, let's open the line for questions.

Operator: Ladies and gentlemen, at this time, we'll begin the question-and-answer session. To ask a question, you may press star and then one. Using a touch tone telephone to withdraw your questions, you may press star and two. If you are using a speaker phone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality. Once again, that is star and then one to join the question to you. We'll pause momentarily to assemble the roster.

Speaker Change: Ladies and gentlemen, at this time we'll begin the question and answer session. To ask a question, you may press star and then one using the touch-tone telephone. To withdraw your questions, you may press star and two.

Speaker Change: If you are using a speakerphone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality.

Operator: 2nd quarter, 2024 earnings call. At this time, all participant lines are in listen only mode. For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared comments. Please note today's conference call is being recorded.

Operator: Once again, that is a star and then one to join the question. We'll pause momentarily to assemble the rest. And our first question today comes from... Mike Shlisky from B.A. Davidson. Please go ahead with your question. Good afternoon.

Speaker Change: Once again, that is star and then one to join the question queue.

Speaker Change: We'll pause momentarily to assemble the roster.

Speaker Change: John B.

Michael Shlisky: In our first question today, it comes from Mike Slisky from B.A. Davidson. Please go ahead with your question. Good afternoon. Thank you for taking my question. So folks, if I'm looking at this correctly, given the 9.7 million non-GAAP operating loss in 2Q, roughly what you saw in the first quarter, you still expect to have the 43 to 48 with 7 loss of a full year, but you've got revenue increasing in the back half. So kind of curious, what's driving on income in the back half here? You have sales increase and pretty good momentum in most areas.

Christian Romero: At this time, I'd like to turn the floor over to the general counsel of Xos, Christian Romero. Thank you. You may begin. Thank you everyone for joining us today. Hosting the call with me, our Chief Executive Officer, Dakota Semler, Chief Operating Officer, Giordano Sordoni, and Acting Chief Financial Officer, Liana Pogosyan. Ahead of this call, Xos issued its 2nd quarter, 2024 earnings press release, which we will reference during the call. This can be found on the Investor Relations section of our website at investors.xostrucks.com.

Speaker Change: And our first question today comes from Mike Schliske from BA Davidson. Please go ahead with your question.

Dakota Semler: Thanks for taking my question. Thank you. So folks, if I'm looking at this correctly, given the $9.7 million non-GAAP operating loss in Q2, roughly what you saw in the first quarter, you still expect to have the $43 to $48.7 million loss for a full year. But you've got revenue increasing in the back half. So I'm curious, what's dragging on income in the back half here? You have sales increases and pretty good momentum in most areas.

Mike Schliske: Good afternoon, thanks for taking my questions.

Speaker Change: So, folks, if I'm looking at this correctly, given the $9.7 million non-GAAP operating loss in 2Q, roughly what you saw in the first quarter, you still expect to have the 43 to 48.7 loss for the full year.

Speaker Change: but you've got revenue increasing in the back half. So kind of curious what's dragging on on income in the back half here? You have sales increase and pretty good momentum in most areas. What should we expect to be a challenge in the second half from a profitability perspective?

Dakota Semler: What should we expect to be a challenge in the second half from a profitability perspective?

Dakota Semler: What should we expect to be a challenge in the second half from a profitability perspective? Yeah, so we can start and I can address the first part of your question, Mike, which is, you know, why the high increase there in Q2. First, that was driven really by a ramp up in inventory spending because of the demand for orders that we're seeing in the second half of the year. The other component, as Liana touched on, is really that collection of those government incentives.

Christian Romero: 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 the 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.xostrucks.com.

Dakota Semler: Yeah, so we can start, and I can address your first part of your question, Mike, which is, you know, why the high increase there in Q2? First, that was driven really by a ramp up in inventory spending because of the demand for orders that we're seeing in the second half of the year. The other component, as Liana touched on, is really the collection of those collections of government incentives. The number of our customers get the benefit of state, local, or federal subsidies, some of which are paid out on longer terms might go beyond the traditional net 15 or net 30 terms that we have with our customers.

Speaker Change: Yeah, so we can start and I can address your first part of your question, Mike, which is, you know, why the high increase there in Q2?

Speaker Change: First, that was driven really by a ramp up in inventory spending because of the demand for orders that we're seeing in the second half of the year. The other component, as Liana touched on, is really that collection of those collections of government incentives.

Dakota Semler: So, a number of our customers get the benefit of state, local, or federal subsidies, some of which are paid out on longer terms, might go beyond the traditional net 15 or net 30 terms that we have with our customers.

Christian Romero: We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-gap financial measures and performance metrics. Please refer to the information contained in the company's 2nd quarter, 2024 earnings press release for definitional information and reconciliation of historical non-gap measures to the comparable gap financial measures. Participants should be cautioned not to put undue reliance on forward-looking statements.

Speaker Change: So a number of our customers get the benefit of state, local, or federal subsidies, some of which are paid out on longer terms, might go beyond the traditional net 15 or net 30 terms that we have with our customers.

Dakota Semler: And so some of those carry across into the second quarter or into the third and fourth quarter for vehicles delivered at the end of Q2. And a big part of that has just been our ability to collect against those receivables for those government incentives where they operate by a different set of terms than what our standard customer terms and conditions apply. When we're looking at our guidance for the rest of the year, we are very, very confident in staying within the realm of our guidance at the volume level or at the unit level. And that's where we're driving our operating loss assumptions and our gross margin assumptions for Q3 and Q4.

Dakota Semler: And so, some of those carry across into the second quarter or into the third and fourth quarter for vehicles delivered at the end of Q2. A big part of that has just been our ability to collect against those receivables for those government incentives where they operate by a different set of terms than what our standard customer terms and conditions apply. When we're looking at our guidance for the rest of the year, we are very, very confident in staying within the realm of our guidance at the volume level and at the unit level, and that's where we're driving our operating loss assumptions and our gross margin assumptions for Q3 and Q4.

Liana Pogosyan: And so some of those carry across into the second quarter, or into the third and fourth quarter for vehicles delivered at the end of Q2.

Liana Pogosyan: And a big part of that has just been our ability to collect against those receivables for those government incentives, where they operate by a different set of terms than what our standard customer terms and conditions apply.

Dakota Semler: With that, I now turn it over to our CEO, Dakota. Thanks, Kristen, and thank you everyone for joining us. On today's call, I will cover highlights from the 2nd quarter of 2024 during which we generated $15.5 million in revenue delivered 90 units and achieved our fourth consecutive quarter of positive gross margin. Geo and Leona will then provide operational and financial updates respectively. Starting with sales and deliveries, revenue is up 18% quarter-over-quarter and 227% year-over-year.

Liana Pogosyan: when we're looking at our guidance for the rest of the year.

Liana Pogosyan: We are very, very confident in staying within the realm of our guidance at the volume level, at the unit level. And that's where we're driving our operating loss assumptions and our gross margin assumptions for Q3 and Q4.

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

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

Liana Pogosyan: So, ultimately, we do expect that we'll recover a lot of the cash that came from those incentives for vehicles delivered in the first half of the year. In the second half...

Dakota Semler: The majority of our 90 units delivered were stepvans for fleet customers, namely UPS and FedEx ground contractors, supplemented by powertrain sales to Bluebird and HubSales to multiple new customers. We expect 2024 volumes to be meaningfully higher than 2023 and similarly weighted toward the second half of the year as customers respond to incentives and charging infrastructure comes online. The man for exos products remain robust throughout the year. In May, we attended the industry's largest conference, the Advanced Clean Transportation Expo, where potential customers demonstrated strong interest in both our vehicles and our latest generation hub.

Liana Pogosyan: as well as convert that work in process or the dollars used to purchase inventory into finished goods and ultimately sell those vehicles to customers in the second half of the year.

Liana Pogosyan: It's a process that we've been continuing, trying to improve and hone, but ultimately something that I think will only get better in the quarters to come.

Dakota Semler: Let's hop on that one off line. If you mentioned much in the prior comment about sort of the sales pipeline and the backlog that you might have, or can you comment on a distant customer interest? New customer interest and where do you think things are headed into 2025 here? Yeah, absolutely. So even in the macroeconomic context right now, where we've seen a little bit of a slowdown in the broader EV sector, and a slowdown in growth, not a slowdown in overall sales, we continue to see strong interest, particularly from large national accounts. I would say sales closing the second quarter have skewed more towards our large national accounts than our smaller regional accounts.

Dakota Semler: You didn't mention much in the prior comment about sort of the sales pipeline and the backlog that you might have. Can you comment on... Distant Customer Interest, New Customer Interest, and, you know, Where do you think things are headed into 2025?

Speaker Change: Okay, okay. My thought on that one, offline. You didn't mention much in the prior comment about sort of the sales pipeline and the backlog that you might have. Can you comment on...

Speaker Change: A Distant Customer Interest, New Customer Interest, and, you know, where you think things are headed into 2025 here.

Dakota Semler: Yeah, absolutely. So even in the macroeconomic context right now, where we've seen a little bit of a slowdown in the broader EV sector and a slowdown in growth, not a slowdown in overall sales. We continue to see strong interest, particularly from large national accounts. I would say sales closed in the second quarter have skewed more towards our large national accounts than our smaller regional accounts. And there are several factors that are influencing that.

Speaker Change: Yeah, absolutely. So even in the macroeconomic context right now, where we've seen a little bit of a slowdown in the broader EV sector, and a slowdown in growth, not a slowdown in overall sales.

Speaker Change: We continue to see strong interest, particularly from large national accounts. I would say sales closed in the second quarter have skewed more towards our large national accounts than our smaller regional accounts.

Dakota Semler: And there are several factors that are influencing that. One is just the cost of capital right now for a lot of those smaller fleets. When they're looking at capital financing or lease financing of these vehicles, the interest rate market today is elevated, and that's driving some of the slower purchasing rates we've seen in the small and regional fleets. But on the national fleets side, we're still seeing strong demand, and many of the customers are trying to meet some of the implementation timelines for regulations such as the Advanced Clean Fleet Rule in California. So a lot of our customers, the big parcel delivery customers, we highlighted two of our largest groups of deliveries, which are UPS for Q2 and then all these FedEx Ground contractors, both of which are ramping up orders pretty significantly to comply with that ACF regulation.

Dakota Semler: One is just the cost of capital right now for a lot of those smaller fleets when they're looking at capital financing or lease financing of these vehicles. The interest rate market today is elevated, and that's driving some of the slower purchasing rates we've seen in small and regional fleets. But on the national fleet side, we're still seeing strong demand, and many customers are trying to meet some of the implementation timelines for regulations such as the advanced clean fleet rule in California.

Speaker Change: And there are several factors that are influencing that. One is just the cost of capital right now for a lot of those smaller fleets, when they're looking at capital financing or lease financing of these vehicles.

Dakota Semler: The partnership resulted in significant attention to Xos products. Over the course of the show and weeks that followed, the Bluebird partnership came up repeatedly with both fleet buyers and industry insiders as a vote of confidence in Xos' technical capabilities and the company's future. Turning now to our charging products, where we are experiencing stronger than expected sales activity, the hub, Xos' mobile energy storage and charging product is filling gaps felt by customers.

Speaker Change: The interest rate market today is elevated, and that's driving some of the slower purchasing rates we've seen in the small and regional fleets.

Speaker Change: But on the national fleet side, we're still seeing strong demand, and many of the customers are trying to meet some of the implementation timelines for regulations such as the Advanced Clean Fleet Rule in California.

Dakota Semler: A lot of our customers, the big parcel delivery customers, we highlighted two of our largest groups of deliveries, which is UPS for Q2 and then obviously FedEx Ground Contractors, both of which are ramping up orders pretty significantly to comply with that ACF regulation, and we expect that will continue to grow in the years to come as more states adopt some form of ACF locally or a combination of ACF or ACT regulations.

Speaker Change: A lot of our customers, the big parcel delivery customers, we highlighted two of our largest groups of deliveries, which is UPS for Q2 and then obviously FedEx ground contractors.

Dakota Semler: They recognize the value of pivoting their fleets and equipment away from fossil fuels but have to confront the realities of lagging permanent infrastructure installation timelines, limited charging options in remote locations, and the complexity of accessing grid power from work sites. This quarter, hub sales were particularly strong with firms outside our step-van customer base, including a large government fleet. Operators across the industries are demonstrating a clear need for more flexible charging solutions, and we expect that charging solutions will grow into a robust part of Xos' overall business.

Speaker Change: both of which are ramping up orders pretty significantly to comply with that ACF regulation. We expect that will continue to grow in the years to come.

Dakota Semler: And we expect that will continue to grow in the years to come as more states adopt done form of ACF locally or a combination of ACF or ACT regulations. So overall sales backlog continues to grow. And as we touched on, there's other products that are now coming into the fold like the Excess Hub and our powertrain business powered by Excess that are also starting to add into that backlog. And we expect those will continue to grow of the quarters to come as there's still strong, strong interest in electrifying those school bus industry and the school bus platform in the broader, broader commercial vehicle and specialty vehicle.

Speaker Change: as more states adopt some form of ACF locally or a combination of ACF or ACT regulations.

Dakota Semler: So overall, the sales backlog continues to grow, and as we touched on, there are other products that are now coming into the fold, like the Xos Hub and our powertrains business, powered by Xos, that are also starting to add to that backlog, and we expect those will continue to grow over the quarters to come, as there's still strong, strong interest in electrifying the school bus industry and the school bus platform, and All right, great. Maybe one last one for me to follow up on your Bluebird comment. Are there other potential power training partnerships that you're looking at beyond Bluebird and Winnebago?

Speaker Change: So overall, sales backlog continues to grow. And as we touched on, there are other products that are now coming into the fold like the XS Hub and our Powertrain business powered by XS.

Speaker Change: that are also starting to add into that backlog. And we expect those will continue to grow over the quarters to come as there's still strong, strong interest in electrifying those school bus industry and the school bus platform as a broader commercial vehicle and specialty vehicle space.

Dakota Semler: The strength of the sector is evidenced by the attention it received at the ACT Expo this year, where more than a dozen firms showcase combined charging and energy storage products. We view the increased number of options as a healthy evolution of the EV market and ultimately beneficial for Xos. As a first mover in the space, the hub has a strong sales pipeline and is a mature and cost competitive product. New market entrants are bringing more visibility to the product category and Xos alone can generate and also provide alternate paths for customers to discover Xos and our products.

Dakota Semler: Spice.

Dakota Semler: Great. Maybe one last one for me to fill up on on your Bluebird comments. Are there potential power training partnerships that you're looking at beyond Bluebird and Winnebago? And I guess I'm curious to see if, in Geo, you mentioned you made the longer wheelbase version in a relatively inexpensive way, just a bit of adaptation. The process you're looking at to go into further adaptation from here, or do you have anything kind of newer, radical, or even larger enough to meet up in the pipeline here? Yeah, the power train team is, yeah, the power train team has remained active, and the deals that we've announced with Winnebago and Bluebird definitely add some momentum there.

Speaker Change: Great. Maybe one last one for me to follow up on your Bluebird comments. Are there other potential power training partnerships that you're looking at beyond Bluebird and Winnebago? And I guess I'm curious to see if...

Dakota Semler: And I guess I'm curious to see if... And Gio, you mentioned you made the longer wheel-based version on a relatively inexpensive way; it's just a bit of an adaptation. Are the projects you're looking at going into further adaptation from here, or do you have anything kind of newer, radical, or newer, more radical, or even larger in the pipeline? Yeah, yeah, the power car team is.

Speaker Change: And Gio, you mentioned you made the longer wheelbase version.

Speaker Change: on a relatively inexpensive way. It's just a bit of an adaptation. Are the products you're looking at to go into further adaptation from here or do you have anything kind of newer, more radical, or even larger in the pipeline here?

Speaker Change: Yeah, the power charge team is...

Dakota Semler: Yeah, the Powertrain team remains active, and the deals that we've announced with Winnebago and Blooper definitely add some momentum there. So, there are other things we're working on that we can't quite share yet. And then while the variation to the Step Van, you know, whether we make the Step Van a bit longer or a bit shorter, that does tend to open up some new customer avenues both on a Step Van body platform and also to other Powertrain customers that might be more interested in some of those adaptations for their particular use.

Giordano Sordoni: For more detail on how we are fulfilling the strong demand for Xos products, I'll hand it over to our COO geo for an operational update. Thank you, Dakota. Access is engineering, supply chain, and manufacturing teams remain focused on scaling production and delivering further margin improvements. Our engineers are developing a longer 208-inch wheelbase variation of the Xos step-man to support a wider range of bodies requested by our customers. In fact, we've already secured signed sales orders for this new variation.

Speaker Change: Yeah, the Powertrain team remains active and the deals that we've announced with Winnebago and Blooper definitely add some momentum there.

Giordano Sordoni: So there are other things we're working on that we can't quite share yet. And then while the variation to the step van, you know, whether we make the step van a bit longer, a bit shorter, that does tend to open up some new customer avenues both on a step van body platform and also to other power train customers that might be more interested in some of those adaptations for their particular use case. Of course, in the past we had talked about medium duty and heavy duty trucks as well. Those are still things that we think make a lot of sense in certain environments, but right now our core focus is the electric chassis for delivery vans or power train unit, as well as the hubs.

Speaker Change: There are other things we're working on that we can't quite share yet.

Speaker Change: And then while the variations to the step van, you know, whether we make the step van a bit longer or a bit shorter, that does tend to open up some new customer avenues both on a step van body platform and also to other Powertrain customers that might be more interested in some of those.

Dakota Semler: Of course, in the past, we have talked about medium-duty and heavy-duty trucks as well. Those are still things that we think make a lot of sense in certain environments, but right now, our core focus is the electric chassis for delivery vans, our powertrain unit, as well as the... Great. Thanks for answering my questions.

Speaker Change: some of those adaptations for their particular use case.

Speaker Change: Of course, in the past we had talked about medium-duty and heavy-duty trucks as well. Those are still things that we think make a lot of sense in certain environments.

Giordano Sordoni: Some of the first units will be delivered to Mission Linen as part of the order that we announced in the first quarter. Lightning in the vehicle is a relatively simple change, with efforts primarily focused on changes to the frame rails, extensions to wiring harnesses, and durability testing of the updated chassis. This means we're able to launch the new variant quickly and with minimal R&D investment. We expect a new, long wheel-based steppan, being customer hands by the first quarter of 2025.

Speaker Change: but right now our core focus is the electric chassis for delivery vans, our powertrain unit, as well as the hubs.

Michael Shlisky: Great, thanks for answering my questions. I appreciate it.

Speaker Change: Great. Thanks for answering my questions. I appreciate it.

Operator: Once again, if you would like to ask a question, please start with one.

Operator: I appreciate it. Once again, if you would like to ask a question, please start... Our next question comes from Donovan Schafer from Northland Capital Markets. Please go ahead with your question.

Speaker Change: Once again, if you would like to ask a question, please star 1.

Donovan Schafer: Our next question is on a machine for a motorcycle and capital markets. Please go ahead with your question. Hey guys, first I want to just follow up on Mike's first question about kind of with the guidance, and I can imagine a lot of possibilities, but I think what he's getting at is not on a cash basis because, of course, on a cash basis, the changes in working capital could make Q2 a larger cash consuming quarter. But on a cruel accounting basis, since you're giving us for the outlook, you're giving revenue and a non-gap operating loss, which there's adjustments there, but it's still more cruel than a cash flow type number.

Speaker Change: Our next question comes from Donovan Schafer from North Atlantic Capital Markets. Please go ahead with your question.

Giordano Sordoni: Also, within engineering, our software and controls team has made improvements to our connectivity platform that will translate into cost savings on both complete vehicles and power trains. As commercial vehicle customers begin to expect features like over-the-air updates and real-time telemetry, our in-house software capabilities have differentiated XOs as both a vehicle manufacturer and a technology partner to legacy OEMs. Furthermore, our teams continue to find opportunities to grow our margins by reducing direct costs.

Donovan Schafer: Hey guys, first I want to just follow up on, Mike first question about kind of with the guidance and I can imagine a lot of possibilities but I think what he's getting at is like not on a cash basis because of course on a cash basis, The changes in working capital could make Q2, a larger cash-consuming quarter, but on an accrual accounting basis, you know, since you're giving us, for the outlook, you're giving revenue and a non-GAAP operating loss, which, you know, there's adjustments there, but it's still more accrual than a, you know, cash flow type number. So.

Donovan Schafer: Hey guys, first I want to just follow up on

Donovan Schafer: Mike?

Donovan Schafer: First question about kind of with the guidance and yeah, I can imagine a lot of Possibilities, but I think what he's getting at is like not on a not on a cash basis because of course on a cash basis

Donovan Schafer: The changes in working capital could make Q2

Donovan Schafer: a larger cash-consuming quarter, but on an accrual accounting basis.

Speaker Change: You know, since you're giving us...

Speaker Change: for the outlook you're giving revenue and a non-gap operating loss which you know there's adjustments there but it's still more cruel than a you know cash flow type number.

Liana Pogosyan: So if we sort of in order to square the revenue guidance and the operating loss guidance, it seems like either ASP's that have to come down or I guess maybe I'm thinking maybe gross margins, it seems like gross margins maybe would have to come down. So is there something like that that you see in Q3 and Q4 gross margin compression or operating expense increasing more materially? Is that something you've identified in seem, or is it more just from a conservatism or a consistency standpoint? You just have a desire to kind of stick with what you initially put out, just sort of reiterating as a way of being cautious or conservative.

Donovan Schafer: If we sort of, in order to square those, the revenue guidance and the operating, Flos, and guidance, it seems like either ASPs that have to come down or, you know, I guess maybe, I'm thinking maybe gross margins, it seems like gross margins maybe would have to come down. So is there something like that that you see in Q3 and Q4, gross margin compression or operating expense increasing more materially? Is that something you've identified and seen, or is it more just from a conservatism or a consistency standpoint, you just have a desire to kind of stick with what you initially put out, just sort of reiterating as a way of being cautious or conservative?

Speaker Change: So if we sort of in order to square those the the revenue guidance and the operating

Speaker Change: Loss Guidance

Speaker Change: It seems like either, you know, ASPs that have to come down or, you know, I guess maybe

Speaker Change: I'm thinking maybe gross margins, it seems like gross margins maybe would have to come down. So is there something like that that you see in Q3 and Q4, gross margin compression or operating expense?

Giordano Sordoni: XOs is preparing for any such development by identifying alternative sources and exploring tariff mitigation strategies. At this point, we do not anticipate significant tariff-related disruptions or impediments to our production schedule, but we will continue to monitor any developments in this space.

Speaker Change: increasing more materially. Is that something you've identified and seen or is it more just from a conservatism or a consistency standpoint you just have a desire to kind of stick with what you initially put out? Just sort of reiterating as a way of being cautious or conservative.

Liana Pogosyan: With that, I'll pass it to Leonor. Thank you, XO. For your second quarter, our revenue increased to 15.5 million from 13.2 million in the first quarter of 2024, primarily as a result of our increased deliveries. Our cost of goods sold during the quarter increased to 13.5 million compared to 10.4 million in the first quarter. Gap growth margin during the quarter was a profit of 2 million or 13.1 percent compared to a profit of 2.8 million in the first quarter or 21.2 percent.

Liana Pogosyan: Joseph. Thanks, Donovan. I would respect to the non-gap operating loss. I would say our overall guidance is on the conservative basis. You know, as you can see, you know, in the non-GAAP operating loss for the six months ended, we were at about 19 million. And we would expect that same or better trajectory for the second half of the year. Okay. I see. That's very helpful. Thank you. And then, as a second question, looking just, focusing just on the revenue piece of it, we've talked in the past that, you know, I think you've experienced the belief or expectation is that you hope to be able to have sequential revenue growth sort of each quarter.

Liana Pogosyan: Thanks, Donovan. With respect to the non-gap operating loss, I would say, you know, our overall guidance is on a conservative basis, you know, as you can see, in the non-gap operating loss for the six months ended, we were at about $19 million, and we would expect that same or better trajectory for the second half of the year. Okay, I see. That's very helpful, thank you.

Speaker Change: Thanks, Donovan. With respect to the non-gap operating loss, I would say, you know, our overall guidance is on the conservative basis, you know, as you can see, you know, in the non-gap operating loss for the six months ended, we were at about 19 million, and we would expect that same or better trajectory for the second half of the year.

Donovan Schafer: And then, as a second question, looking just focusing just on the revenue piece of it. We've talked in the past that yeah, I think you've The expectation is that you hope to be able to have sequential revenue growth sort of each quarter. So, you know, now that we're kind of in August, just wanted to double check and see if that's still the thinking that, you know, you still think Q3 will be higher than Q2 and Q4 will be higher than Q3 if that's the anticipated pattern or if there's anything sort of from a seasonal or a timing standpoint where Q3 would be the bigger quarter versus Q4.

Speaker Change: Okay, I see. That's very helpful. Thank you. And then as a second question...

Liana Pogosyan: The first quarter of Gap growth margins included beneficial adjustments related to our inventory reserves and inventory accuracy processes. Gap growth margin during the second quarter was negatively impacted by lower average selling price due to product mix right off of excess materials and adjustments to our reserves due to overall higher inventory balances. We continue to see margin improvements in our step ends as we realize the efforts of our engineering supply chain and manufacturing teams.

Speaker Change: looking just focusing just on the revenue piece of it we've talked in the past that you know I think you fix the

Donovan Schafer: Thank you. I think that, directionally, what you're thinking is correct. You should expect to see a sequential increase in revenues. I think one of the key aspects also with respect to revenue is the average selling price, for which there is some variability between quarter to quarter.

Speaker Change: The belief or expectation is that you hope to be able to have sequential revenue growth, sort of each quarter.

Liana Pogosyan: But one of the things that I think is also important is with respect to the product mix, not only within our step-down products but also within hubs as well as powertrains, there is that variability from period to period. But sequentially, there should be an expectation of an increase. Okay. Okay. And then one last one, if I can squeeze it in, is just, um... With the hubs, last quarter we talked about ramping up the ability to manufacture hubs for the second half of the year.

Liana Pogosyan: So, you know, now that we're kind of in August, just wanted to double check and see if that's still the thinking that, you know, you still think Q3 will be higher than Q2 and Q4 would be higher than Q3. If that's the anticipated pattern, or if there's anything sort of from a seasonal or a timing standpoint where Q3 would be the bigger quarter versus Q4. I think that you're directionally how you're thinking is correct. You should expect to see a sequential increase in revenue. I think one of the key aspects also with respect to revenue is average selling price, which there is some variability between quarter to quarter.

Speaker Change: So, you know, now that we're kind of in August, just wanted to double-check and see if that's still the thinking that...

Liana Pogosyan: We have been able to work with our suppliers in reducing the cost of several critical components as we scale production, leading to lower direct material costs for each unit. Additionally, our engineering and production teams continue to gain efficiencies in the design and build of our step ends, reducing labor costs while increasing the durability and reliability of each unit produced.

Speaker Change: You know, you still think Q3 will be higher than Q2 and Q4 will be higher than Q3 if that's the anticipated pattern, or if there's anything sort of from a seasonal or a timing standpoint where Q3 would be the bigger quarter versus Q4.

Speaker Change: I think that your directionally how you're thinking is correct. You should expect to see a sequential increase in revenues. I think one of the key aspects also with respect to revenue is average selling price, which there is some variability between quarter to quarter. But one of the things that I think is also important is, you know, with respect to the product mix, not only within our step-down products, but also within

Liana Pogosyan: It should be noted that gap growth margins for a vehicle OEM are impacted by a range of reserves that combine with changes in the sales mix between direct, dealer and prior model inventory sales introduced higher levels of volatility and quarterly results. We continue to share a consistent non-gap growth margin that adjusts for inventory reserves and physical inventory and other related adjustments that you can find in today's earnings press release. Turning to expenses, our second quarter operating expenses of 13.4 million remain broadly in line with the first quarter's figure of 13 million. Non-gap operating loss for the second quarter was 9.7 million. Gap operating loss was 11.4 million.

Liana Pogosyan: But one of the things that I think is also important is, you know, with respect to the product mix, not only within our Stefan products, but also within hubs and as well as powertrains. You know, there is that variability from period to period, but the sequentially there should be an expectation of an increase. Okay, okay. And then one last one, if I can squeeze it in, is just with the hub. Last quarter we talked about ramping the ability to manufacture hubs for the second half of the year. I think the goal was for hubs per month, I believe, correcting from wrong and that, but that was the goal sort of for the second half.

Speaker Change: within hubs as well as powertrains, you know, there is that variability.

Speaker Change: from period to period, but sequentially there should be an expectation of an increase.

Speaker Change: Okay, okay. And then one last one, if I can squeeze it in, is just...

Speaker Change: with the hub set, last quarter we talked about ramping.

Speaker Change: the ability to manufacture hubs for the second half of the year. I think the goal was four hubs per month, I believe.

Liana Pogosyan: I think the goal was four hubs per month. I believe, correct me if I'm wrong on that, but that was the goal sort of for the second half. Just curious if we can get a specific update on kind of where we're at, if you've hit that capability of four per month or not, and then, you know, if you have hit that capability or just, in general, what is the kind of run rate right now. Yeah, the run rate of production of the hub. Yeah, Donovan, I appreciate the question.

Liana Pogosyan: Accidentally, our operating profitability is following a promising trajectory, following last year's efforts to reduce spending on non-core projects and the release of the current step-down platform, our non-gap operating loss improved to negative 63 percent this quarter from negative 357 percent one year ago. We expect to see continued improvements over the coming quarters as our volumes grow and our operations teams continue to identify and implement cost saving changes to our products. Turning to the balance sheet, we close the quarter with cash and cash equivalents and restricted cash of 20.7 million compared to 47.3 million at the end of the first quarter.

Giordano Sordoni: Cheers if you can get a specific update on kind of where we're at, if you've hit that capability of for per month or not. And then, you know, if you have that capability or just in general, what is the kind of run rate right now? Yeah, run rate of production of the hub. Yeah, Donna, I'm going to appreciate the question. The hub line setup has gone really well, and we are building hubs more consistently. Our supply basis caught up. And so we're really happy with all the progress on the hub line. We aren't at, so eight hubs per month is two per week.

Speaker Change: correct me if I'm wrong on that, but that was the goal, sort of, for the second half.

Speaker Change: Just curious if we can get a specific update on kind of where we're at, if you've hit that capability of four per month or not. And then, you know, if you have hit that capability or just in general, what is the kind of run rate right now? Yeah, run rate of production of the hub.

Giordano Sordoni: The hub line setup has gone really well, and we are building hubs more consistently. Our supply base has caught up, and so we're really happy with all the progress on the hub line. We aren't at—so eight hubs per month is two per week. We're not quite getting all the way up to two per week every single week, but we are just about to be there. So often it'll be, you know, one and a half plus per week, and then the next week we'll get out two. More or less, at least by the end of the month here, we'll be at two per week and have reached that capacity.

Speaker Change: Yeah, Donovan, I appreciate the question. The hub line setup has gone really well, and we are building hubs more consistently. Our supply base has caught up, and so we're really happy with all the progress.

Speaker Change: on the hub line. We aren't at, so eight hubs per month is two per week. We're not quite getting all the way up to two per week every single week, but we are just about to be there, so often it'll be, you know, one and a half plus per week, and then the next week we'll get out to.

Giordano Sordoni: We're not quite getting all the way up to two per week every single week, but we are just about to be there. So often it'll be, you know, one and a half plus per week, and then the next week we'll get out to. So, you know, more or less, at least by the end of the month here, we'll be at two per week and have reached that capacity.

Liana Pogosyan: The reduction in cash above our historical trends was primarily the result of our elevated accounts receivable balance of 29.7 million at the end of the quarter compared to 20.3 million in the first quarter. This resulted from a concentration of deliveries made at the end of the quarter as well as a temporary build-up in government incentive receivables. The substantially higher deliveries we expect to make in the second half of the year also played a role as inventory increased to 41.4 million in the current quarter from 36.6 million in the first quarter to support higher production rates. We have taken steps to improve our incentive collection processes and expect our accounts receivable and inventory balances to stabilize over the coming quarters.

Speaker Change: So, you know, more or less, at least by the end of the month here, we'll be at two per week and have reached that capacity.

Giordano Sordoni: Fantastic. All right. Thanks, guys. I'll take the rest of my questions offline. Thanks, and there are no further questions in the queue. This concludes today's teleconference. You may now disconnect your lines and have a wonderful day.

Donovan Schafer: Fantastic. All right. Thanks, guys.

Operator: Let's take the rest of my questions off on. Thanks.

Speaker Change: Fantastic. All right. Thanks, guys. I'll take the rest of my questions offline.

Operator: and ladies and gentlemen, at this time, and showing no further questions in the queue, ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may now disconnect your lines and have a wonderful day.

Speaker Change: Thanks.

Speaker Change: And ladies and gentlemen, at this time, ensuring no further questions in the queue, ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may now disconnect your lines and have a wonderful day.

Liana Pogosyan: Finally, we are reaffirming our full year 2024 guidance of revenue in the range of 66.7 to 100.4 million, a non-gap operating loss of between 43.7 to 48.7 million, and 400 to 600 units delivered.

Dakota Semler: I'll now turn the call back over to Dakota. Thank you, Leona.

Dakota Semler: To wrap up, Xos is position to win. We are growing deliveries, demonstrating our leadership in commercial EVs via partnerships with established OEMs, powering forward with a strong margin trajectory and building a self-sustaining business. Diversifying our product portfolio by leveraging our Stepvan technology to satisfy unmet demand for power trains and hubs is adding to our strong backlog of Stepans. Our technology portfolio and highly competitive pricing has made us a partner of choice for OEMs like Bloomberg. Our relentless focus on capital efficiency and cost reductions translated into four consecutive quarters of positive growth margin this year and continued progress in the company's path to profitability.

Operator: With that, let's open the line for questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one using a touch tone telephone to withdraw your questions, you may press star and two. If you are using a speaker phone, we do ask that you please pick up the handset prior to pressing the numbers to ensure the best sound quality. Once again, that is star and then one to join the question to you. We'll pause momentarily to assemble the roster.

Mike Slisky: In our first question today, it comes from Mike Slisky from B.A. Davidson. Please go ahead with your question.

Dakota Semler: Good afternoon. Thank you for taking my question. So folks, if I'm looking at this correctly, given the 9.7 million non-gap operating loss in 2Q, roughly what you saw in the first quarter, you still expect to have the 43 to 48 with 7 loss of a full year, but you've got revenue increasing in the back half. So kind of curious, what's driving on income in the back half here? You have sales increase and pretty good momentum in most areas. What should we expect to be a challenge in the second half from a profitability perspective?

Dakota Semler: Yeah, so we can start and I can address your first part of your question, Mike, which is, you know, why the high increase there in Q2? First, that was driven really by a ramp up in inventory spending because of the demand for orders that we're seeing in the second half of the year. The other component as Liana touched on is really the collection of those collections of government incentives. The number of our customers get the benefit of state, local, or federal subsidies, some of which are paid out on longer terms might go beyond the traditional net 15 or net 30 terms that we have with our customers.

Dakota Semler: And so some of those carry across into the second quarter or into the third and fourth quarter for vehicles delivered at the end of Q2. And a big part of that has just been our our ability to collect against those receivables for those government incentives where they operate by a different set of terms than what our standard customer terms and conditions apply. When we're looking at our guidance for the rest of the year, we are very, very confident and staying within the realm of our guidance at the volume level or at the unit level.

Dakota Semler: And that's where we're driving our operating loss assumptions and our gross margin assumptions for Q3 and Q4. So ultimately, we do expect that we'll recover a lot of the cash that came from those incentives for vehicles delivered in the first half of the year in the second half, as well as convert that work and process or the dollars used to purchase inventory into finish goods and ultimately sell those vehicles to customers in the second half of the year.

Mike Slisky: It's a process that we've been continuing trying to improve and hone, but ultimately, something that I think will only get better in the quarters to come. Okay, okay. Let's hop on that one off line.

Mike Slisky: If you mentioned much in the prior comment about sort of the sales pipeline and the backlog that you might have, or can you comment on a distant customer interest?

Dakota Semler: New customer interest and where do you think things are headed into 2025 here? Yeah, absolutely. So even in the macroeconomic context right now, where we've seen a little bit of a slowdown in the broader EV sector, and a slowdown in growth, not a slowdown in overall sales, we continue to see strong interest, particularly from large national accounts. I would say sales closing the second quarter have skewed more towards our large national accounts than our smaller regional accounts.

Dakota Semler: So a lot of our customers, the big parcel delivery customers, we highlighted two of our largest groups of deliveries, which is UPS for Q2 and then all these FedEx ground contractors, both of which are ramping up orders pretty significantly to comply with that ACF regulation. And we expect that will continue to grow in the years to come as more states adopt done form of ACF locally or a combination of ACF or ACT regulations.

Dakota Semler: So overall sales backlog continues to grow. And as we touched on, there's other products that are now coming into the fold like the excess hub and our powertrain business powered by excess that are also starting to add into that backlog. And we expect those will continue to grow of the quarters to come as they're still strong, strong interest in electrifying those school bus industry and the school bus platform in the broader broader commercial vehicle and specialty vehicle. Spice.

Mike Slisky: Great.

Mike Slisky: Maybe one last one for me to fill up on on your Bluebird comments.

Dakota Semler: Are there potential power training partnerships that you're looking at beyond Bluebird and Winnebago? And I guess I'm curious to see if in Geo you mentioned you made the longer wheelbase version on a relatively inexpensive way, just a bit of adaptation. The process you're looking at to go into further adaptation from here, or do you have anything kind of newer radical or even larger enough to meet up in the pipeline here? Yeah, the power train team is, yeah, the power train team is remained active and the deals that we've announced with Winnebago and Bluebird definitely add some momentum there.

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

Dakota Semler: Of course, in the past we had talked about medium duty and heavy duty trucks as well. Those are still things that we think make a lot of sense in certain environments, but right now our core focus is the electric chassis for delivery vans or power train unit as well as the hubs.

Mike Slisky: Great, thanks for answering my questions. I appreciate it.

Operator: Once again, if you would like to ask a question, please start with one.

Donovan Schafer: Our next question question is on a machine for a motorcycle and capital markets. Please go ahead with your question. Hey guys, first I want to just follow up on Mike's first question about kind of with the guidance and I can imagine a lot of possibilities, but I think what he's getting at is not on a cash basis because of course on a cash basis, the changes in working capital could make Q2 a larger cash consuming quarter, but on a cruel accounting basis, since you're giving us for the outlook, you're giving revenue and a non-gap operating loss, which there's adjustments there, but it's still more cruel than a cash flow type number.

Donovan Schafer: So if we sort of in order to square the revenue guidance and the operating loss guidance, it seems like either ASP's that have to come down or I guess maybe I'm thinking maybe gross margins, it seems like gross margins maybe would have to come down. So is there something like that that you see in Q3 and Q4 gross margin compression or operating expense increasing more materially? Is that something you've identified in seem or is it more just from a conservatism or a consistency standpoint? You just have a desire to kind of stick with what you initially put out, just sort of reiterating as a way of being cautious or conservative.

Liana Pogosyan: Joseph. Thanks, Donovan. I would respect to the non-gap operating loss. I would say our overall guidance is on the conservative basis. You know, as you can see, you know, in the non-gap operating loss for the six months ended, we were at about 19 million. And we would expect that same or better trajectory for the second half of the year. Okay. I see. That's very helpful. Thank you. And then as a second question, looking just, focusing just on the revenue piece of it, we've talked in the past that, you know, I think you've experienced the belief or expectation is that you hope to be able to have sequential revenue growth sort of each quarter.

Liana Pogosyan: So, you know, now that we're kind of in the August, just wanted to double check and see if that's still the thinking that, you know, you still think Q3 will be higher than Q2 and Q4 would be higher than Q3. If that's the anticipated pattern, or if there's anything sort of from a seasonal or a timing standpoint where Q3 would be the bigger quarter versus Q4. I think that you're directionally how you're thinking is correct.

Liana Pogosyan: You should expect to see a sequential increase in revenue. I think one of the key aspects also with respect to revenue is average selling price, which there is some variability between quarter to quarter. But one of the things that I think is also important is, you know, with respect to the product mix, not only within our Stefan products, but also within within hubs and as well as powertrains, you know, there is that variability from period to period, but the sequentially there should be an expectation of an increase. Okay, okay.

Giordano Sordoni: And then one last one, if I can squeeze it in, is just with the hub, last quarter we talked about ramping the ability to manufacture hubs for the second half of the year. I think the goal was for hubs per month, I believe, correcting from wrong and that, but that was the goal sort of for the second half. Cheers if you can get a specific update on kind of where we're at, if you've hit that capability of for per month or not.

Giordano Sordoni: And then, you know, if you have that capability or just in general, what is the kind of run rate right now? Yeah, run rate of production of the hub. Yeah, Donna, I'm going to appreciate the question. The hub line setup has gone really well and we are building hubs more consistently, our supply basis caught up. And so we're really happy with all the progress on the hub line. We aren't at, so eight hubs per month is two per week.

Giordano Sordoni: We're not quite getting all the way up to two per week every single week, but we are just about to be there. So often it'll be, you know, one and a half plus per week and then the next week we'll get out to. So, you know, more or less, at least by the end of the month here, we'll be at two per week and have reached that capacity.

Donovan Schafer: Fantastic. All right. Thanks guys. Let's take the rest of my questions off on. Thanks.

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

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

Q2 2024 Xos Inc Earnings Call

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