Q4 2024 Xos Inc Earnings Call
Operator: Good day and welcome to the Xos fourth quarter 2024 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good day and welcome to the XO fourth quarter 'twenty 'twenty four earnings conference call.
All participants will be in a listen only mode.
Do you need assistance. Please signal a conference specialist by person to Starkey followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. If you ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star and then 2 on your touch-tone phone. Please note that this event is being recorded.
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David Slottschuh: I would now like to turn the conference over to David Slottschuh, General Counsel. Please go ahead. Thank you, everyone, for joining us today.
Speaker Change: I would now like to turn the conference over to David What's your General Counsel. Please go ahead.
David What: Thank you everyone for joining us today.
David Slottschuh: Hosting the call with me are XOS's Chief Executive Officer, Dakota Semler, XOS's Chief Operating Officer, Giordano Sordoni, and XOS's Acting Chief Financial Officer, Liana Pogosyan. Today, after the close of regular trading, Xos issued its fourth quarter 2024 earnings press release. As you listen to today's conference call, we encourage you to have our press release in front of you, which includes our financial results as well as commentary on the quarter and year ended December 31, 2024.
Dakota similar: Hosting the call with me are excess of Chief Executive Officer Dakota similar.
Speaker Change: Access to Chief operating officer of Giordano Sordoni in excess as acting Chief Financial Officer Liana propulsion.
Speaker Change: Today after the close of regular trading extra issued its fourth quarter 2024 earnings press release.
Speaker Change: As you listen to today's conference call. We encourage you to have our press release in front of you, which includes our financial results as well as commentary on the quarter and year ended December 31 2024.
David Slottschuh: Management's statements today reflect management's views as of today, March 28, 2025 only. And we'll include forward looking statements, including statements regarding our fiscal year 2025, management's expectations for future financial and operational performance, and other statements regarding our plans, prospects, and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially from actual results. Additional information about important factors that could cause actual results to differ materially, including but not limited to, EXIS's ability to access capital when needed and continue as a going concern, and potential supply chain disruptions, including as a result of changes to or uncertainty around trade policies and tariffs, is included in today's press release and in our filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings.
Speaker Change: Management statements today reflect management's views as of today March 28 2025 only.
Speaker Change: I'll include forward looking statements, including statements regarding our fiscal year 2025, management's expectations for future financial and operational performance and other statements regarding our plans prospects and expectations. These statements are not promises or guarantees and are subject to risks and uncertainties, which could cause them to differ materially.
Speaker Change: From actual results.
Speaker Change: Additional information about important factors that could cause actual results to differ materially.
Speaker Change: But not limited to access to the ability to access capital when needed and continue as a going concern the potential supply chain disruption.
Speaker Change: As a result of changes to our uncertainty around trade policies and tariffs is included in today's press release and filings with the SEC, including our most recent annual report on Form 10-K and subsequent filings.
David Slottschuh: We undertake no obligation to update forward-looking statements, except as required by law. Participants are cautioned not to put undue reliance on forward-looking statements.
We undertake no obligation to update forward looking statements, except as required by law.
Speaker Change: Participants are cautioned not to put undue reliance on forward looking statements.
David Slottschuh: Further, today's presentation includes references to non-GAAP financial measures and performance metrics. Additional information about these non-GAAP measures, including reconciliations of non-GAAP measures to the comparable GAAP measures, is included in the press release we issued today. Our press release and SEC filings are available on the Investor Relations section of our website. at www.xostrucks.com slash investor hyphen over.
Speaker Change: Further today's presentation includes references to non-GAAP financial measures and performance metrics additional information about these non-GAAP measures, including reconciliations of non-GAAP measures to the comparable GAAP measures is included in the press release, we issued today.
Speaker Change: Our press release and SEC filings are available on the Investor Relations section of our website at www excess trucks Dotcom Flash Investor I said Oh, yeah.
Dakota Semler: With that, I now turn it over to our CEO, Dakota. Thanks, David. And thank you, everyone, for joining us.
Dakota similar: With that I now turn it over to our CEO Dakota.
Thanks, David and thank you to everyone for joining US Q4 marked the close of excess is strongest year, yet and it sets the stage for an even stronger 2025 over.
Dakota Semler: Q4 marked the close of XS's strongest year yet, and it sets the stage for an even stronger 2025. Over the last 12 months, we've demonstrated that we can not only grow revenue and diversify our customer base, but also improve profitability, cash flow management, and operational execution. As we look ahead, we expect that trend to continue, with top-line growth, margin expansion, and improved product diversity. This momentum positions Xos as the most efficient public commercial EV company in the market today. We're delivering more medium duty electric vehicles than any other company in our sector and we're doing it with the most efficient operational expense structure in the industry.
Dakota similar: Over the last 12 months, we've demonstrated that we can not only grow revenue and diversify our customer base, but also improved profitability cash flow management and operational execution.
Dakota similar: As we look ahead, we expect that trend to continue with topline growth margin expansion and improved product diversity there.
Dakota similar: This momentum positions excess has the most efficient public commercial EV company in the market today.
Dakota similar: We're delivering more medium duty electric vehicles than any other company in our sector and we're doing it with the most efficient operational expense structure in the industry.
Dakota Semler: Even as the economic environment continues to evolve and we see changes in administration, regulatory policies, and tariff structures, XOS remains resilient. While these changes have brought their own set of challenges, including potential cost impacts from new tariffs, we've been preparing for these shifts for over a year. We'll talk more about the steps we're taking to stay ahead of those changes in today's call.
Dakota similar: Even as the economic environment continues to evolve and we see changes in administration regulatory policies and tariff structures excess remains resilient.
Dakota similar: While these changes have brought their own set of challenges, including potential cost impacts from new tariffs, we've been preparing for these shifts for over a year.
Dakota similar: We'll talk more about the steps we're taking to stay ahead of those changes in today's call.
Dakota Semler: In Q4, we generated $11.5 million in revenue and delivered 51 units. Despite regular seasonal delays in the parcel delivery segment, where many of our customers experience peak volume during Q4 and Q1, delaying vehicle acceptance, we remain confident in our demand pipeline. While we fell short of our guided deliveries for the year, we still achieved significant year-over-year revenue growth in 2024. This reflects continued demand for our products, even at higher average selling prices than we've previously seen, which we view as a strong validation of our value proposition in the market. Importantly, Xos is also one of the very few electric vehicle manufacturers delivering double-digit gross margins on our products.
Dakota similar: In Q4, we generated $11 $5 million in revenue and delivered 51 units. Despite regular seasonal delays in the parcel delivery segment, where many of our customers experienced peak volume during Q4 and Q1 delaying vehicle acceptance, we remain confident in our demand pipeline.
Dakota similar: While we fell short of our guided deliveries for the year, we still achieved significant year over year revenue growth in 2020 for.
Dakota similar: This reflects continued demand for our products, even at higher average selling prices than we've previously seen which we view as a strong validation of our value proposition in the market.
Dakota similar: Importantly, <unk> is also one of the very few electric vehicle manufacturers delivering double digit gross margins on our products.
Dakota Semler: In addition to gross margin gains, we're continuing to drive improvements in liquidity, inventory turnover, and working capital management.
Dakota similar: In addition to gross margin gains were continuing to drive improvements in liquidity inventory turnover and working capital management.
Dakota Semler: Beyond our financial accomplishments, we also achieved a number of operational milestones in 2024. We began delivery of our second generation hub, a product now in low volume series production. We expanded our powertrain business, completing FMDSS testing and securing production orders with both Bluebird and Winnebago. And we have delivered vehicles to some of the largest and most sophisticated fleets in the world, including FedEx Ground and UPS. Following the end of the year, we also secured several major commercial orders, just under 200 strip chassis to be delivered to UPS, 20 hub units to be delivered to Caltrans, and our first production order of 20 Bluebird powertrains.
Dakota similar: Beyond our financial accomplishments, we also achieved a number of operational milestones in 2024.
Dakota similar: We began delivery of our second generation hub a product now in low volume series production.
Dakota similar: We expanded our powertrain business completing F N B S S testing and securing production orders with both Bluebird and Winnebago.
Dakota similar: And we have delivered vehicles to some of the largest and most sophisticated fleets in the world, including Fedex ground and U P. S.
Dakota similar: Following the end of the year. We also secured several major commercial orders just under 200 strip chassis to be delivered to U. P. S 20 hub units to be delivered to Caltrans and our first production order of 20th Bluebird powertrains each.
Dakota Semler: Each of these orders represents the largest unit volume order we have received in the respective product categories, and we believe this momentum will only continue.
Dakota similar: Each of these orders represents the largest unit volume order, we have received in their respective product categories and we believe this momentum will only continue.
Dakota Semler: Additionally, we closed a significant transaction that added over $40 million in liquidity to our balance providing essential flexibility as we manage the timing of incentive program collection. In my remarks, I'll cover highlights from Q4 across our vehicle deliveries, hub product ramp up and broader market shifts.
Dakota similar: Additionally, we closed a significant transaction that added over $40 million in liquidity to our balance sheet, providing a central flexibility as we manage the timing of incentive program collections.
Dakota similar: In my remarks, I'll cover highlights from Q4 across our vehicle deliveries hub product ramp up and broader market shifts than Geo and Leo and I will walk through our operational and financial performance in more detail.
Dakota Semler: Then Gio and Liana will walk through our operational and financial performance in more detail. Of the 51 deliveries this quarter, we've seen growing momentum and customer diversification across sectors and applications. As mentioned earlier, we've experienced seasonal challenges from our parcel delivery customers who typically deprioritize vehicle intake during their peak season in Q4. This temporarily impacted unit deliveries and contributed to a 27.3% decline in top line revenue compared to Q3. In our step van business, we anticipate a positive shift towards strip chassis delivery. This operational pivot can reduce our inventory turnover period by two to three months, helping us accelerate cash collection in a working capital intensive environment.
Dakota similar: Of the 51 deliveries this quarter, we've seen growing momentum and customer diversification across sectors and applications.
Dakota similar: As mentioned earlier, we've experienced seasonal challenges from our parcel delivery customers, who typically do you prioritize vehicle intake during their peak season in Q4.
Dakota similar: This temporarily impacted unit deliveries and contributed to a 27.3% decline in topline revenue compared to Q3.
Dakota similar: In our step van business, we anticipate a positive shift towards strip chassis deliveries.
Dakota similar: This operational pivot can reduce our inventory turnover period like two to three months, helping us accelerate cash collection and a working capital intensive environment.
Dakota Semler: We plan to continue delivering completed vehicles as well, but we expect this makeshift to give us more flexibility and responsiveness across our order base.
Dakota similar: We plan to continue delivering completed vehicles as well, but we expect this mix shift to give us more flexibility and responsiveness across our order base.
Dakota Semler: We also made significant progress in our powertrain business. In Q4, we delivered our first power train product for use in a Bluebird electric school bus. The short wheelbase Type C school bus has already completed FMVSS testing, and we plan to begin commercial production deliveries in early 2025. We anticipate our Powered by XS segment will continue to grow through strategic partnerships with Bluebird and Winnebago. In 2024, we delivered one of Winnebago's specialty vehicles and completed FMVSS testing for that configuration. We also delivered the first production mobile medical vehicle to a Winnebago customer.
Dakota similar: We also made significant progress in our powertrain business in.
Dakota similar: In Q4, we delivered our first powertrain product for use in a blue Bird Electric school bus. The short wheelbase type C School bus has already completed F. N B S. S testing and we plan to begin commercial production deliveries in early 2025.
Dakota similar: We anticipate our powered by excess segment will continue to grow through strategic partnerships with Bluebird and Winnebago and.
Dakota similar: In 2024, we delivered one of Winnebago specialty vehicles and completed F. N B S S testing for that configuration.
Dakota similar: We also delivered the first production mobile medical vehicle to a winnebago customer.
Dakota Semler: This quarter marked a major milestone as we ramped into low-volume series production of the HUB, our mobile charging and energy storage solution. Hub customers now include Waymo, ABM, Loomis, Florida Power & Light, Tampa Electric, Duke Energy, and Caltrans, the California Department of Transportation, who is deploying hubs to support critical infrastructure across the state. The demand for HUB continues to expand across fleet and utility applications alike. In light of that success, we ramped up hub demonstrations in Q4 to showcase use cases across mobile fleet charging, large event charging, and disaster response. The response has been overwhelmingly positive and reinforces our belief in the long-term potential of the hub platform.
Dakota similar: This quarter marked a major milestone as we ramped into low volume series production of the hub, our mobile charging an energy storage solution.
Dakota similar: Hub customers now include Lameo, a b M Loomis, Florida power and light Tampa Electric Duke energy and Caltrans, The California Department of Transportation, who is deploying hubs to support critical infrastructure across the state that.
Dakota similar: The demand for hub continues to expand across fleet and utility applications alike.
Dakota similar: In light of that success, we ramped up hub demonstrations in Q4 to showcase use cases across mobile fleet charging large event charging and disaster response.
The response has been overwhelmingly positive and reinforces our belief in the long term potential of the hub platform.
Dakota Semler: Beyond our deliveries, we secured several million dollars in new incentives in 2024. We also anticipate additional funding opportunities opening up soon. The New Jersey Voucher Incentive Program is expected to resume, and Washington State has announced a new program with up to $80 million in available funding. Our incentives team is closely tracking these programs and is already in discussions with interested customers about leveraging them for future order. We're also excited to share that we secured nearly $10 million from the Texas Vehicle Emissions Reduction Program for vehicle deliveries scheduled in 2025. We're pleased with the momentum of that program and believe it will continue to be a growth driver for us.
Dakota similar: Beyond our deliveries we secured several million dollars in new incentives in 2024.
Dakota similar: We also anticipate additional funding opportunities opening up soon.
Dakota similar: The New Jersey voucher incentive program is expected to resume and Washington State has announced a new program with up to $80 million and available funding.
Dakota similar: Our incentives team is closely tracking these programs and is already in discussions with interested customers about leveraging them for future orders.
Dakota similar: We're also excited to share that we secured nearly $10 million from the Texas vehicle emissions reduction program for vehicle deliveries scheduled in 2025.
Dakota similar: We're pleased with the momentum of that program and believe it will continue to be a growth driver for us.
Dakota Semler: Given recent changes in federal policy, we anticipate some of our customers will lose access to tax credits and federal incentives. While the federal 45W tax credit does provide some benefit, the most impactful incentives are administered at the state level, in California, New York, Texas, and others, where point of sale or voucher style programs are critical to our customers' purchasing decision. While some of these programs may be impacted by shifts in federal policy, we believe that many states will maintain or even increase their support for these incentives. These programs are essential for our ability to grow our business and our largest regional markets all continue to have active incentive programs in place.
Dakota similar: Given the recent changes in federal policy, we anticipate some of our customers will lose access to tax credits and federal incentives.
Dakota similar: While the federal forty-five W tax credit does provide some benefit the most impactful incentives are administered at the state level in California, New York, Texas, and others, where point of sale for voucher style programs are critical to our customers' purchasing decisions.
Dakota similar: While some of these programs may be impacted by shifts in federal policy, we believe that many states will maintain or even increase their support for these incentives.
Dakota similar: These programs are central for our ability to grow our business and our largest regional markets. All continue to have active incentive programs in place.
Dakota Semler: On the operational side, we've also taken steps to improve inventory turnover. In Q4, we began working with several partners to help floor plan vehicles during the delivery process, improving our ability to manage working capital without needing to carry inventory on our books for extended periods.
Dakota similar: On the operational side, we've also taken steps to improve inventory turnover.
Dakota similar: In Q4, we began working with several partners to help floorplan vehicles during the delivery process, improving our ability to manage working capital without needing to carry inventory on our books for extended periods.
Dakota Semler: As the environment for zero-emissions vehicles continues to evolve, we know there will be challenges. However, we believe that with a focused team and a strong execution plan, we can overcome these obstacles.
Dakota similar: As the environment for zero emission vehicles continues to evolve we know there will be challenges. However, we believe that with a focused team and our strong execution plan. We can overcome these obstacles.
Dakota Semler: One of the major headwinds on the horizon is the proposed introduction of new tariffs on imported EV components and vehicles. Depending upon the configuration, these tariffs could add $5,000 to $20,000 per vehicle in cost. While these figures are not insignificant, we are proactively working with both our suppliers and our customers to minimize the impact. That includes reshoring critical components where feasible and exploring federal cost offset programs to reduce the burden of these tariffs. Our goal remains unchanged to provide customers with the most competitive total cost of ownership in the commercial EV space.
Dakota similar: One of the major headwinds on the Horizon is the proposed introduction of new tariffs on imported EV components and vehicles.
Dakota similar: Depending upon the configuration. These tariffs could add 5000 to $20000 per vehicle in costs.
Dakota similar: While these figures are not insignificant we are proactively working with both our suppliers and our customers to minimize the impact.
Dakota similar: That includes re shoring critical components, where feasible and exploring federal cost offset programs to reduce the burden of these tariffs.
Dakota similar: Our goal remains unchanged to provide customers with the most competitive total cost of ownership in the commercial EV space.
Dakota Semler: Just as we began 2024, we closed the year with a sharp focus on reducing operational expenses.
Dakota similar: Just as we began 2024, we closed the year with a sharp focus on reducing operational expenses.
Giordano Sordoni: GEO will speak more about the progress we've made, including reductions in operating facility costs and headcount, as we continue our push towards achieving positive free cash flow in the near term.
Geo: Geo will speak more about the progress we've made including reductions in operating facility costs and head count as we continue our push towards achieving positive free cash flow in the near term.
Giordano Sordoni: Thanks, Dakota, and good afternoon, everyone. Our manufacturing, supply chain, and engineering teams delivered a strong close to the year, improving efficiency while executing at our highest production rates yet. Despite operating with a significantly smaller team, we achieved our most efficient vehicle and hub production rates to date, demonstrating the strength of our streamlined operation. In addition to our regular chassis production, the team worked hard this quarter to prepare for the launch of a longer wheelbase variant of our set-van chassis platform. We are now producing this 208-inch wheelbase variant on our main chassis line. This longer wheelbase allows for a larger body and an additional 200 cubic feet of cargo capacity, a direct response to customer.
Geo: Thanks Dakota and good afternoon, everyone.
Geo: Our manufacturing supply chain and engineering teams delivered a strong close to the year improving efficiency, while executing at our highest production rates yet.
Geo: Despite operating with a significantly smaller team we achieved our most efficient vehicle and hub production rates to date, demonstrating the strength of our streamlined operations.
Geo: In addition to our regular chassis production. The team worked hard this quarter to prepare for the launch of our longer wheelbase variant of our set van chassis platform.
Geo: We are now producing this 208 inch wheelbase variance on our main chassis line.
Geo: This longer wheelbase allows for a larger body in an additional 200 cubic feet of cargo capacity, a direct response to customer requests.
Giordano Sordoni: A key highlight this quarter was our continued engineering work on chassis improvements for one of our largest customers.
Geo: A key highlight this quarter was our continued engineering work on chassis improvements for one of our largest customers.
Giordano Sordoni: to whom we are now making deliveries. Our focus on refining vehicle design and durability ensures we're meeting the evolving needs of our fleet customers while driving long-term cost-effectiveness. We steadily increase our hub production rates throughout the quarter, reaching approximately two hub units per week. The significant accomplishment positions us well to build and deliver additional hub units to meet customer demand in 2025. The engineering and supply chain teams remain dedicated to reducing bill of material costs through both vehicle design optimization and strategic supplier partnership. In the last 12 months, our team has implemented over $10 million in cost reduction.
Geo: To whom we are now making deliveries.
Geo: Our focus on refining vehicle design and durability insurers, we're meeting the evolving needs of our fleet customers, while driving long term cost efficiencies.
Geo: We steadily increase our hub production rates throughout the throughout the quarter, reaching approximately two hub units per week.
Geo: This significant accomplishment positions us well to build and deliver additional hub units to meet customer demand in 2025.
Geo: The engineering and supply chain teams remain dedicated to reducing the bill of material costs through both vehicle design optimization and strategic supplier partnerships in the last 12 months, our team has implemented over $10 million in cost reductions.
Giordano Sordoni: And we have additional reductions planned for the coming year. We are actively working to mitigate potential tariff impact. and related uncertainties by continuing to drive down direct material costs through engineering improvements and supplier partners. We remain focused on our strategy to invest more in Tennessee, which has become the foundation of our operation. Our Step Van Chassis and the Xos Hub are both built at our main plant in Birdstown, Tennessee. Recently, we secured a sublease for part of our Los Angeles facility and transferred possession to our new tenant. This move will reduce our operational expenses throughout the lease.
Geo: And we have additional reductions planned for the coming year.
Geo: We are actively working to mitigate potential tariff impacts and related uncertainties by continuing to drive down direct material cost through engineering improvements and supplier partnerships.
Geo: We remain focused on our strategy to invest more in Tennessee, which has become the foundation of our operations.
Geo: Our step van chassis any excess hub are both built at our main plants and birds town, Tennessee.
Geo: Recently, we said security sublease for part of our Los Angeles facility and transferred possession to our new tenant.
Geo: This move will reduce our operational expenses throughout the lease term.
Giordano Sordoni: We're also actively working on subleasing two additional properties that we assumed through our acquisition of Electromechanica in Q1. There is interest in both properties, and we hope to provide more updates on these potential subleases. Our operational improvements and cost control measures are designed both to support short-term production and delivery needs and to keep us on track for our long-term goals.
Geo: We're also actively working on sub leasing two additional properties that we assumed through our acquisition of electromechanical in Q1.
Geo: There is interest in both properties and we hope to provide more updates on these potential sublease. It soon.
Geo: Our operational improvements and cost control measures are designed both to support short term production and delivery needs.
Geo: And keep us on track for our long term goals.
Giordano Sordoni: In light of the recent election results, we anticipate potential federal-level policy changes that could impact our industry and business, particularly possible increases in tariffs and imported components. We're closely monitoring this evolving situation with the help of Customs Advisors. Meanwhile, we're actively working with our supplier partners to pursue alternative sourcing strategies, including reshoring components to North America and expanding our investment in the U.S. supply chain. While these tariffs could be disruptive, we're confident they won't hinder our ability to source necessary components and continue delivering trucks profitably. Additionally, we anticipate offsetting much of the potential tariff impact through continued cost reductions in our goods, along with efficiencies from our engineering and supply chain initiatives.
In light of the recent election results, we anticipate potential federal level policy changes that could impact our industry and business, particularly possible.
Geo: Particularly possible increases in tariffs and imported components. We're closely monitoring this evolving situation with the help of customs advisors.
Geo: Meanwhile, we're actually working with our supplier partners to pursue alternative sourcing strategies, including reassuring components to North America, and expanding our investments in the U S supply chain.
Geo: While these tariffs could be disruptive we are confident they won't and our ability to source necessary components and continuing delivering trucks profitably.
Geo: Additionally, we anticipate offsetting much of the potential tariff impact through continued cost reductions in our goods along with efficiencies from our engineering and supply chain initiatives.
Giordano Sordoni: We're committed to American manufacturing, which is why we've invested significantly in our Tennessee facility. As we look ahead, we will continue to enhance our manufacturing and supply chain infrastructure to adapt to potential regulatory changes while maintaining our strong operational momentum.
Geo: We're committed to American manufacturing, which is why we've invested significantly in our Tennessee facility.
Geo: As we look ahead, we will continue to enhance our manufacturing and supply chain infrastructure to adapt to potential regulatory changes, while maintaining our strong operational momentum.
Liana Pogosyan: With that, I'll turn it over to Liana for an in-depth look at our financial performance. Thank you, Gio. This year, we continue to grow our revenues, delivered our first positive full year gap growth margin, and reduced total operating expenses. For the full year of 2024, our revenue was $56 million, up from $44.5 million compared to last year. Our cost of goods sold during the year increased to $52 million compared to $45.8 million in 2020. Gap gross margin during the year was a profit of $4 million or 7.1 percent compared to a loss of $1.3 million or negative 2.9 percent in 2020.
Geo: With that I'll turn it over to Liana for an in depth look at our financial performance.
Liana Propulsion: Thank you Jim.
Liana Propulsion: This year, we continue to grow our revenues delivered our first positive full year GAAP gross margin and hope it is total operating expenses.
Liana Propulsion: For the full year of 2024, our revenue was 56 million up from $44 5 million compared to last year.
Liana Propulsion: Our cost of goods sold during the year increased to 52 million compared to $45 8 million in 2019.
Speaker Change: GAAP gross margin during the year was a profit of $4 million or seven 1% compared to a loss of $1 3 million or negative two 9% in 'twenty My Anthony.
Liana Pogosyan: Non-GAAP gross margin during the year was a profit of $10 million or 18% compared to a loss of $2.3 million or negative 5.2% in 2023. Margin improvements were mainly driven by higher average selling price, continued focus on reducing labor and overhead costs, and improving our production process. The increase in average selling price was primarily due to selling our newer generation step-bans and hubs which have higher prices than our legacy products for the full year 2024 as compared to just a portion of the 2023 year.
Speaker Change: non-GAAP gross margin during the year it was a profit of $10 million or 18% compared to a loss of 2.3 million or negative five 2% in 2020.
Speaker Change: Margin improvements were mainly driven by higher average selling price continuing to focus on reducing labor and overhead costs and improving our production processes. The.
Speaker Change: The increase in average selling price was primarily due to selling our newer generation step and then perhaps.
Speaker Change: Higher prices than our legacy products for the full year 2024, as compared to just a portion of the 2023 yeah.
Liana Pogosyan: For the fourth quarter of 2024, our revenue was $11.5 million, down from $15.8 million in the third quarter this year. Our cost of goods sold during the quarter increased to $15.2 million compared to $12.9 million in the third quarter. Gap gross margin during the quarter was a loss of $3.7 million or negative 32.4% compared to a profit of $2.9 million or 18.1% in the third quarter. Gap gross margin was significantly impacted in the current quarter by changes in our inventory reserves and write-offs of inventory from our annual physical count, as well as obsolete parts. Write-offs of inventory mainly related to consolidation of two warehouses in 2024 into our main plan in Birdstown, as well as write-off of inventory related to previous versions of our product.
Speaker Change: Why not fourth quarter of 'twenty 'twenty four our revenue was $11 5 million down from $15 8 million in the third quarter. This year.
Speaker Change: Our cost of goods sold during the quarter increased to $15 2 million compared to $12 9 million in the third quarter.
Speaker Change: GAAP gross margin during the quarter was a loss of $3 7 million or a negative 32, 4% compared to a profit of $2 9 million or 18, 1% in the third quarter.
Azbell: GAAP gross margin was significantly impacted in the current quarter by changes in inventory reserves and write off of inventory from our annual physical count Azbell, that's absolutely right.
Azbell: Write offs of inventory well, mainly related to consolidation of two warehouses in 'twenty, two 'twenty 'twenty four and to our main plant in Bardstown.
Azbell: As well as the write off of inventory related to previous versions of our product.
Liana Pogosyan: Excluding these adjustments, non-GAAP gross margin during the quarter was a profit of $2.7 million or 23.2% compared to a profit of $3.7 million or 23.2% in the third quarter. This quarter marks our sixth consecutive quarter of positive non-gap growth margin performance.
Excluding these adjustments non-GAAP gross margin during the quarter was a profit of $2.7 million or 23, 2% compared to a profit of $3 7 million or 23.2% in the third quarter.
Azbell: This quarter marks our sixth consecutive quarter of positive non-GAAP gross margin performance.
Liana Pogosyan: Turning to expenses, our full year 2024 operating expenses were $49.8 million, compared to $63.7 million last year, as we remain disciplined in managing our costs while continuing to support key growth initiatives. Our operating profitability continued to follow a promising trajectory with a non-gap operating loss for 2024 of $32.1 million compared to a loss of $58.1 million in 2022. Our fourth quarter operating expenses were $10.9 million compared to $12.6 million last quarter. This was driven by several cost-cutting measures taken during the fourth quarter, which included a reduction in our total workforce in October and temporary salary reduction for certain of our senior executives.
Azbell: Turning to expenses, our full year 'twenty 'twenty four operating expenses were $49 8 million compared to $63 7 million last year as we remain disciplined in managing our costs, while continuing to support key growth initiatives.
Azbell: Our operating profitability continues to follow a promising trajectory with a non-GAAP operating loss for 2024 hour study 2.1 million compared to a loss of 58 1 million in 2023.
Azbell: Our fourth quarter operating expenses were $10 9 million compared to $12 6 million last quarter.
Azbell: This was driven by several cost cutting measures taken during the fourth quarter, which included a reduction in our total workforce in October and temporary salary reduction for certain of our senior executives.
Liana Pogosyan: This contributed to our non-GAAP operating loss for the fourth quarter of $6.4 million compared to $6.6 million in the third quarter.
Azbell: This contributed to our non-GAAP operating loss for the fourth quarter of $6 4 million compared to $6 6 million in the third quarter.
Liana Pogosyan: Turning to the balance sheet, we close the year with cash and cash equivalents totaling $11 million. Operating cash flow LEX-CAPX, or free cash flow, was negative $49.1 million for the year compared to a negative free cash flow of $40.7 million last year. Free cash flow was $3.3 million for the quarter compared to a negative free cash flow of $11.7 million last quarter. The favorable working capital changes, primarily in accounts receivable collections, contributed to achieving our first quarter ever of positive free cash flow. Inventory decreased to $36.6 million this year from $37.8 million at the end of 2023 and from $42.4 million last quarter.
Azbell: Turning to the balance sheet, we closed the year with cash and cash equivalents totaling 11 million.
Azbell: Operating cash flow less capex, our free cash flow was negative $49 1 million for the year compared to a negative free cash flow of 47.
Azbell: 7 million last year.
Azbell: Free cash flow was $3 3 million for the quarter compared to a negative free cash flow of 11 7 million last quarter.
Azbell: The favorable working capital changes primarily in accounts receivable collections contributor to achieving our first quarter ever of positive free cash flow.
Azbell: Inventory decreased to $36 6 million this year from 37.8 million at the end of 2023 and from 42.4 million last quarter.
Liana Pogosyan: Inventory dropped due to a combination of fast returns and our focus on strategic purchasing and inventory management. as well as changes in inventory reserves and write-ups as previously mentioned. We are actively managing our liquidity position and plan to improve our liquidity and working capital requirements, including preserving financial resources, improving accounts receivable collections, and exploring options for enhancing our liquidity.
Azbell: Inventory dropped due to a combination of faster turns and our focus on strategic purchasing and inventory management as.
Azbell: As well as changes in inventory reserves and write offs as previously mentioned.
Azbell: We are actively managing our liquidity position and plan to improve our liquidity and working capital requirements, including preserving financial resources.
Azbell: Improving accounts receivable collections and exploring options for enhancing our liquidity.
Liana Pogosyan: In the past quarter, we have made great progress in collecting receivables from customers and from organizations helping to administer state grant programs. We remain focused on our goal of earning positive growth margins by delivering innovative products that help our fleet customers achieve lower operating Now, turning to our outlook for 2025, we anticipate revenue to fall within the range of $50.2 to $65.8 million, unit deliveries to be within the range of 320 to 420 units, and non-GAAP operating loss to be in the range of $17.2 to $14 million.
Azbell: In the past quarter, we have made great progress in collecting receivables from customers and from organizations, helping to administrate state grant programs.
Azbell: We remain focused on our goal of earning positive gross margins by delivering innovative products that help our fleet customers achieve lower operating costs.
Azbell: Now turning to our outlook for 2025.
Azbell: We anticipate revenue to fall within the range of 52 to $65 8 million.
Azbell: Unit deliveries to be within the range of 322 420 units.
Azbell: non-GAAP operating loss to be in the range of $17.2 million to $14 million.
Dakota Semler: With that, I'll turn the call back over to Dakota. Thank you, Liana. As we look ahead to 2025, we remain focused on delivering growth, increasing liquidity and margins, and building products that stand the test of time. While the broader EV landscape continues to evolve, facing regulatory shifts, infrastructure bottlenecks, and cost pressures, we see these as opportunities to differentiate ourselves. Over the past year, we've expanded our product portfolio, deepened our customer partnerships, and proven that we can adapt quickly while maintaining discipline in execution and our high quality standards. The interest we're seeing across powertrains, strip chassis, and the XS hub reflects the strength of our company and the trust we've built with customers.
Dakota similar: With that I'll turn the call back over to the Dakota.
Dakota similar: Thank you Liana.
Dakota similar: As we look ahead to 2025, we remain focused on delivering growth, increasing liquidity and margins and building products that stand the test of time.
Dakota similar: While the broader EV landscape continues to evolve facing regulatory shifts infrastructure bottlenecks and cost pressures, we see these as opportunities to differentiate ourselves.
Dakota similar: Over the past year, we've expanded our product portfolio deepened our customer partnerships and proven that we can adapt quickly, while maintaining discipline and execution and our high quality standards.
Dakota similar: The interest we're seeing across powertrains strip chassis and the excess hub reflects the strength of our company and the trust we've built with customers.
Dakota Semler: With the foundational work of 2024 behind us, we believe we are entering the new year in one of the strongest positions in our company's history.
Dakota similar: With the foundational work of 2024 behind US. We believe we are entering the new year and one of the strongest positions in our company's history. We're excited for the road ahead, and we're just getting started with.
Dakota Semler: We're excited for the road ahead, and we're just getting started.
Operator: With that, I'll hand it back to the operator for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the key. If at any time your question has been addressed, and you would like to withdraw your question, please press star and then...
Dakota similar: With that I'll hand, it back to the operator for questions.
Dakota similar: Thank you.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: If at any time, you're your question has been addressed and you would like to withdraw your question. Please press Star and then two.
Operator: At this time, we will pause for just a moment to assemble our roster.
Speaker Change: At this time, we will pause for just a moment to assemble our roster.
Craig Irwin: And your first question today will come from Craig Irwin with Roth Capital Partners. Please go ahead. Good evening. Thank you for taking my question. So Dakota, to start from the top, your gross margin is 23% and a quarter on an adjusted basis. really surprised me. You know, really strong when we consider volume in the quarter of 51 units down 45% sequentially, but your margins are flat. So that kind of suggests that either you have a substantial improvement in variable production costs or production costs overall, or maybe a positive mix issue going on.
Speaker Change: And your first question today will come from Craig Irwin with Roth Capital Partners. Please go ahead.
Craig Irwin: Hi, Good evening, Thank you for taking my questions.
Speaker Change: So the Kodak to start from the top your gross margins, 23% in the quarter on an adjusted basis.
Craig Irwin: Really surprised me you know.
Craig Irwin: Really strong when we consider volume in the quarter of 51 units down 45% sequentially, but your your margins are flat should that kind of suggests that either you have a substantial improvement in variable production costs or production costs overall or maybe a positive mix issue.
Dakota Semler: Can you help us understand what's going right in there to really deliver on margin results like that? Yeah, absolutely. And thanks for the question, Craig. It really comes down to a shifting product mix. And when we look at some of our specialty products that are unique in the market, such as the XS Hub and some of our Powertrain customers, those margins can be strong given the uniqueness of those products and the engineering investments that we make up front with our customers. So if we see quarters that reflect a higher mix of some of those products, we anticipate that that's going to be reflected in our adjusted gross margins for the quarter.
Speaker Change: On can you help us understand what's going right in there to really deliver on margin results like this.
Craig Irwin: Yeah, absolutely and thanks for the question Craig.
Speaker Change: It really comes down to a shifting product mix.
Speaker Change: When we look at some of our specialty products that are unique in the market such as the excess hub.
And some of our powertrain customers.
Speaker Change: Those margins can be strong given the uniqueness of those products and the engineering investments that we make upfront with our customers.
Speaker Change: So if we see quarters that reflect a higher mix of some of those products.
Speaker Change: We anticipate that that's going to be reflected in our our adjusted gross margins are further quarter and I think one other thing to note about that is we anticipate these will continue to improve assuming we can address the challenges with tariffs.
Dakota Semler: And I think one other thing to note about that is we anticipate these will continue to improve. Assuming we can address the challenges with tariffs. With increased scale across our supply chain, and increased scale in the production and manufacturing environment, those margins should be able to be improved. And several of those non-cash gap-associated expenses, such as capitalized freight and other items, can also continue to go down as we increase those volumes.
Speaker Change: With increased scale across our supply chain and increased scale in the production and manufacturing environment those margins should be able to be improved and several of those noncash GAAP associated expenses such as capitalized freight. Another other items can also continue to go down as we increase those.
Speaker Change: Volumes.
Craig Irwin: Excellent, excellent.
Speaker Change: Excellent excellent so that dovetails nicely to my second question, which is about your <unk>.
Dakota Semler: So that dovetails nicely to my second question, which is about your, your hug business outlook. You mentioned several customers in your prepared comments, Waymo, Duke, Caltrans, others. You also mentioned two units a week in production capacity. Do you expect to operate anywhere near production capacity in this business this year? You know, is there maybe anything that would have you consider increasing capacity, or is there potential for that based on, you know, this interesting list of customers? Yeah, absolutely. So we've set up the line to be able to support the market the way we understand it today.
Speaker Change: Your hub business outlook, you mentioned several several customers in your prepared comments Weibo, Duke Caltrans others.
Speaker Change: Also mentioned two units a week in production capacity.
Speaker Change: Do you expect to operate anywhere near our production capacity in this business. This year. You know is there maybe anything that would have you considered increasing capacity or is there a is there a potential for that based on our discussions youre, having with the with this interesting list of customers.
Yeah, absolutely. So we've set up the line to be able to support the market. The way we understand it today. It is still a incredibly unique product and that it's providing an infrastructure stocked up for many customers that experience charging infrastructure deployment delays.
Dakota Semler: It is still an incredibly unique product in that it's providing an infrastructure stopgap for many customers that experience charging infrastructure deployment delays from installing permanent infrastructure. And it's kind of an interesting process because generally when we talk to a customer, they're only interested in the product after they've dealt with the difficulty of deploying charging infrastructure. So it takes folks a first run at deploying infrastructure in a conventional manner to be able to really see the value in the hub. But one thing we are planning on doing this year is increasing the capabilities of the hub to be other power export capabilities and energy management capabilities that will service a broader market and potentially even be utilized in fixed infrastructure applications where it can still provide a similar unique product offering to customers kind of going through those same pain points.
Speaker Change: From installing permanent infrastructure.
Speaker Change: And it's kind of a an interesting process because generally when we talk to a customer they are only interested in the product after they've had dealt with the difficulty of deploying charging infrastructure.
Speaker Change: So it takes folks a first run at deploying infrastructure and in a conventional manner mannered manner to be able to really see the value in the hub.
Speaker Change: But one thing we are planning on doing this year is increasing the capabilities of the hub to be able to offer other power export capabilities and energy management capabilities that will service a broader market.
Speaker Change: And potentially even be utilized and fixed infrastructure applications, where it can still provide a similar unique product offering to customers kind of going through those same pain points. So we do anticipate the volume potential and the production capacity potential growing.
Dakota Semler: So we do anticipate the volume potential and the production capacity potential growing. But we're not going to expand that production capacity until we really can validate that market and make sure that we have a strong customer base and backlog behind it. Excellent.
Speaker Change: But we're not going to expand that production capacity until we really can validate that market and make sure that we have a strong customer base and backlog behind it.
Speaker Change: Excellent. So then moving on to the drivetrain business Bluebird and Winnebago, obviously customers that are both working for you things are going well there I assume there other customers in the pipeline.
Dakota Semler: So then moving on to the drivetrain business. Bluebird and Winnebago, obviously customers that are both working for you. Things are going well there. I assume there are other customers in the pipeline.
Dakota Semler: Can you maybe people understand what FMVSS certification means for the drivetrain delivered for Bluebird, you know, and the 20 units that they ordered for powertrains for this year, would you expect those to be in production vehicles? And, you know, any additional color on the powertrain business would be great. Thank you. Absolutely. So the powertrain business is a unique business in that it requires a deep partnership with our customers in collaborating with their respective engineering organizations to integrate the powertrain into their vehicle chassis. And so we do a lot of work up front with these customers in engineering validation and durability assessment and testing, as well as homologation.
Can you maybe.
Speaker Change: How people understand what F N B S certification means for the their drivetrain delivered for Bluebird, you know and the 20 units that they ordered for powertrains for this year.
Speaker Change: Would you expect those to be in production vehicles, and you know any additional color on the powertrain business would.
Speaker Change: It would be great. Thank you.
Speaker Change: Absolutely. So the powertrain business has a unique business in that it requires a deep partnership with our customers and collaborating with their respective engineering organizations to integrate the powertrain into their vehicle chassis and so we do a lot of work upfront with these.
Speaker Change: Customers.
Speaker Change: And engineering validation and durability assessment and testing as well as homologation and through that Homologation process. There are several steps that we have to comply with in order to satisfy the federal motor vehicle safety standards.
Dakota Semler: And through that homologation process, there are several steps that we have to comply with in order to satisfy the Federal Motor Vehicle Safety Standards. And those steps can take many months, in some cases years, to get through. So what that means when we complete those processes is that we can sell production units to end-user customers. So it's an exciting step. And the order that we received is expected to go to an end-user customer. So these are full production powertrains that we'll be shipping this year going to a school district.
Speaker Change: And those steps can take many months and in some cases years to get through them. So what that means when we complete those processes is that we can sell production units to end user customers. So it's an exciting step in the order that we received is expected to go to an end user customer. So these are full production power.
Speaker Change: Our trends that will be shipping this year.
Speaker Change: I'm going to a school district.
Craig Irwin: Okay, and then last question if I may, the balance sheet was another, you know, complete surprise, right? $3.3 million in free cash flow, you know, $2.5 million higher cash exiting your fourth quarter than in your third quarter, $15 million in cash out from receivables and inventory in the quarter. How much room is there to go to continue improving on working capital? You did give us the details around your makeshift towards strip chassis and how that helps a little bit. But, you know, can you continue to lean out inventory and receivables? And, you know, is there anything else we should know about the balance sheet that would help us understand cash needs over the next?
Speaker Change: Okay, and then last question, if I made a balance sheet or another you know complete surprise right $3.3 million in free cash flow you know two and a half million dollars higher cash exiting your fourth quarter than in your third quarter $15 million in cash out from a receivables and an inventory in the <unk>.
Speaker Change: Quarter.
Speaker Change: How much room is there to go to continue improving on working capital you did give us the details around your your mix shift towards strip chassis, and how that helps a little bit but.
Speaker Change: No 10 can you continue to lean out inventory and receivables and you know it is there anything else. We should know about the <unk> the balance sheet that would help us understand cash needs over the next year.
Dakota Semler: Yeah, so first and foremost, our goal is to build a sustainable business and to improve working capital usage to the most efficient level it can possibly, you know, get to. For us, that means several things that we're doing. I talked a little bit about the shift in deliveries to strip chassis versus completed vehicles that shortens the cycle for delivery times to our customers. We're also working with our suppliers to help us with better terms to ensure that we're laying out cash for working capital and inventory in a more efficient manner. And lastly, I think what we've always said is we need to take a proactive stance on infrastructure to ensure that our customers don't experience infrastructure delays.
Speaker Change: Yeah, So first and foremost our goal is to build a sustainable business and to improve working capital usage to the most efficient level it can possibly get to.
Speaker Change: For us that means several things that we're doing I talked a little bit about the shift in deliveries to strip chassis versus completed vehicles.
Speaker Change: Short end of the cycle for delivery times to our customers.
Speaker Change: We're also working with our suppliers to help us with better terms.
Speaker Change: To ensure that we're laying out cash for working capital inventory.
Speaker Change: And a more efficient manner.
Speaker Change: And lastly, I think what we've always said is we need to take a proactive stance on infrastructure to ensure that our customers don't experience infrastructure delays I know that they are already having delays that we have a solution in place with the hub. So it's really a combination of several factors improving the kind of.
Dakota Semler: And if they are already having delays, that we have a solution in place with the hub. So, it's really a combination of several factors improving the kind of throughput of those vehicles getting to customers. Now, on the back end, you have the collection process, which as we've talked about at great length, the incentive collections can take many, many months. In order to mitigate the exposure to those incentives, we partnered with several dealers and partners to help floor plan some of these vehicles before the incentives are received and in the door. And what that means is for us, we can deliver the vehicle, recognize revenue, collect that receivable, and collect the incentive from the dealer, and allow them to help in that process of getting a truck delivered to a customer, shortening the cycle of inventory turnover and collections timeline.
Speaker Change: Throughput of those vehicles getting to customers now on the back end you have the collection process, which as we've talked about at great length. The incentive collections can take many many months.
Speaker Change: In order to mitigate the exposure to those incentives we've partnered with several dealers and partners to help floor plans. Some of these vehicles are.
Speaker Change: Before the incentives are received in in the door and what that means is for US we can deliver the vehicle recognize revenue collect that receivable and collect the incentive from the dealer and allow them to help in that process of getting a truck delivered to a customer shortening the cycle of inventory turnover and collections timelines.
Dakota Semler: So, that'll really dramatically improve our ability to collect cash quicker, hopefully should lean out receivables, and as we work to improve the efficiency of the manufacturing plant and our customer delivery schedule, we should also be able to continue to reduce inventory levels relative to top-line revenue.
Speaker Change: So that will really dramatically improve our ability to collect cash quicker hopefully should lean out receivables.
Speaker Change: And as we work to improve the efficiency of the manufacturing plant.
Speaker Change: And our customer delivery schedule, we should also be able to continue to reduce inventory levels retlin relative to top line revenue.
Craig Irwin: Great, well congratulations on a strong execution this quarter. I'll go ahead and hop back in the queue. Thanks, Craig.
Speaker Change: Great well congratulations on a strong execution this quarter I'll go ahead and hop back in the queue.
Speaker Change: Thanks, Greg.
Mike Shlisky: And your next question today will come from Mike Shlisky with D.A. Davidson. Yes, hi, good afternoon. Thanks for taking my question.
Speaker Change: And your next question today will come from Mike Slutsky with D. A Davidson. Please go ahead.
Mike Slutsky: Yeah, Hi, good afternoon, thanks for taking my questions.
Dakota Semler: Why don't we touch on the margin story for a second here, because you mentioned that mix can go up and down and change. I guess I'd like to confirm, do you still think you'll have positive growth margins throughout 2025 and then further, you know, could there be improvement upon the prior year, although it's already, again, quite strong. Thanks, Mike. Yeah, when we look at gross margins for 2025, we anticipate them continuing to stay strongly positive. And we do anticipate for the full year that we will see margin growth on an adjusted basis. You know, as we look at our business, there are several factors that influence gap gross margin.
Mike Slutsky: Wanted to touch on the margin story for a second because you mentioned that mix can go up and down and change.
Mike Slutsky: I guess I'd like to confirm do you still think you'll have.
Mike Slutsky: Positive gross margins throughout 2025, and then further no could there be.
Mike Slutsky: Improvement upon the prior year, although its jodi again.
Mike Slutsky: Quite quite strong.
Mike Slutsky: Thanks, Mike Yeah, when we look at gross margins for 2025, we anticipate them continuing to stay strongly positive and.
Mike Slutsky: And we do anticipate for the full year that we will see.
Mike Slutsky: Margin growth on an adjusted basis.
Mike Slutsky: As we look at our business. There are several factors that influence our GAAP gross margin and some of those factors are hard to forecast given the changes in dynamics in current climate in the economy right now.
Dakota Semler: And some of those factors are hard to forecast, given the changes and dynamics and current climate in the economy right now. But on an adjusted basis, we do anticipate that those non-gap gross margins will continue to grow year over year.
Mike Slutsky: But on an adjusted basis, we do anticipate that those those non-GAAP gross margins will continue to grow year over year.
Mike Shlisky: Okay, and then the other question was that, you know, there were certainly some question marks remaining around the tariff situation that could change by the end of the night. Who knows? But the range that you provided on top line and on operating losses for the year, Did the bottom end include like kind of worst case scenario tariffs? or could there be some... very declining situations that just are not happening right now.
Mike Slutsky: Okay and then the other question was that there were certainly some.
Mike Slutsky: Question marks remaining around the tariff situation that could change by the end of it.
Mike Slutsky: Who knows.
Mike Slutsky: But the range that you provided on top line and on an operating losses for the year.
Mike Slutsky: The bottom end include like kind of a worst case scenario tariffs.
Mike Slutsky: Or could there be some.
Mike Slutsky: Very good client situations that just youre not playing right now and what you are putting out there.
Dakota Semler: Yeah, it's a great question. And specifically talking in regards to tariffs, I think most of the exposure is something we're working to mitigate. That doesn't mean we're going to avoid paying tariffs. We obviously have already paid tariffs today on battery cells ranging in the kind of 10 to 15 percent range. But if there are ways in which we can reduce our exposure, such as bringing some of the components back to production in the U.S., we're absolutely going to entertain those kinds of options. And in some ways that may mean cost tradeoffs, slightly increased costs, but if those costs are still lower than the tariffs, then in many ways it still helps us to reduce our exposure.
Speaker Change: Yeah, It's a great question and specifically Youre talking in regards to tariffs I think most of the exposure.
Mike Slutsky: It is something we're working to mitigate.
Mike Slutsky: That doesn't mean, we're going to avoid paying tariffs. We obviously had already pay tariffs today on battery cells, ranging in the kind of 10% to 15% range.
Mike Slutsky: But if there are ways in which we can reduce our exposure such as bringing some of the components back to production in the U S are absolutely going to entertain those kinds of options.
Mike Slutsky: And then that some in some ways that may mean cost tradeoffs slightly increased costs, but if those costs are still lower than the tariffs that in many ways that it still helps us to reduce our exposure.
Dakota Semler: When we look at the bottom end of the guidance range, we really think the biggest factors that are influencing that and our delivery of units is not so much tariff factors, but rather charging infrastructure readiness. We have a backlog that already exceeds the current level of guided orders and that's because we have some customer orders that won't take delivery in 2025, but later after that. So we're not concerned about so much the demand or even the tariffs changing the cost structure of our vehicles as much as we are concerned about the readiness of charging infrastructure and the customers being able to accept delivery of those trucks and get them into service.
Mike Slutsky: When we look at the bottom end of the guidance range. We really think the biggest factors that are influencing that and our delivery of units is not so much tariff factors, but rather charging infrastructure readiness, we have a backlog that already exceeds the current level of.
Mike Slutsky: Guided orders and that's because we have some customer orders that won't take delivery in 2025, but later after that.
Mike Slutsky: So we're not concerned about so much the demand or even the tariffs changing the cost structure of our vehicles as much as we are concerned about the readiness of charging infrastructure and the customers being able to accept delivery of those trucks and get them into service.
Mike Shlisky: Got it. Okay. I appreciate it. I'll pass it along. Thank you.
Mike Slutsky: Got it okay I appreciate it I'll pass it along thank you.
Mike Slutsky: Thank you.
Ted Jackson: Your next question today will come from Ted Jackson with Northland Securities. Please go ahead. Thanks very much. So my first question is I'm just curious in the in the quarter, do you have any environmental credit revenue? In the fourth quarter, we did not have any credit revenue. We had credit revenue in third quarter of last year.
Speaker Change: Your next question today will come from Ted Jackson with Northland Securities. Please go ahead.
Mike Slutsky: Thanks very much.
Ted Jackson: So my first question is I'm just curious in the quarters do you have any environmental credit revenue.
Ted Jackson: In the fourth quarter, we did not have any credit revenue, we had credit revenue in third quarter of last year.
Ted Jackson: Okay.
Ted Jackson: When we if.
Dakota Semler: When we, if possible, with regards to fourth quarter, could you give some some kind of color with regards to, you know, the makeup of units, you know, hubs, chassis, things like that, and then the same with regards to the guidance for 25? Yeah, in terms of the mix of the quarter level, we haven't drilled that far into it. We can share that it was an increased mix of hubs, which are higher ASPs, you know, reflecting the lower unit mix there and also higher gross margins on that product. As we work throughout the year in 2025, we don't plan to specifically guide to the unit mix throughout the year, but we are seeing an increasing demand for that hub product, which obviously we only launched halfway through last year.
Ted Jackson: If possible with regards to the fourth quarter could you give some some kind of color with regards to you know the makeup of units you know hubs chassis things like that and then saying with regards to the guidance for 25.
Speaker Change: Yeah in terms of the the mix of the quarter level, we havent drilled that far into it we can share that it was an increased mix of hubs, which are our higher asps.
Speaker Change: Reflecting the lower unit mix, there and also higher gross margins.
Speaker Change: On that product.
Speaker Change: As we work throughout the year in 2025, we.
Speaker Change: We don't plan to specifically guide to the the unit mix throughout the year.
Speaker Change: But we are seeing an increasing demand for that hub product, which obviously, we only launched halfway through last year.
Dakota Semler: So, we didn't have that factored significantly into our unit mix or our revenue or gross margin mix for 2024. So, that should be positively, you know, accretive and hopefully continue to bolster up the margins.
Speaker Change: So we didn't have that factored significantly into our our unit mix or our revenue our gross margin mix for 2024, so that should be positively accretive and hopefully continue to bolster up the margins.
Ted Jackson: Okay, that's actually quite useful.
Speaker Change: Okay, that's actually quite useful.
Dakota Semler: Where do you think your CapEx will be in 2025? As a facility today, the Tennessee plant is actually incredibly well-equipped to accommodate volumes that are far larger than what we're delivering today, both on the vehicle side as well as on the hubs. We really don't anticipate much more CapEx other than preventative maintenance and, you know, incremental iterative investments as we work through the year, but I would say that the CapEx budgeted is relatively negligible in comparison to, you know, total top line and the way our balance sheet sits today.
Speaker Change: Where do you think your capex will be in 'twenty five.
Speaker Change: As a facility today, the Tennessee plant is actually incredibly well equipped to accommodate volumes that are far larger than what were delivering today, both on the vehicle side as well as on the hubs.
Speaker Change: We really don't anticipate much more capex other than preventative maintenance and you know incremental iterative investments.
Speaker Change: As we work through the year, but I would say the the Capex budgeted is relatively negligible negligible in comparison to total top line in and out of the way our balance sheet sits today.
Okay.
Ted Jackson: Do you know when you'll file your case? Planning on filing it on Monday.
Speaker Change: Do you know when you'll file your K.
Speaker Change: Okay.
Speaker Change: Planning on filing it on Monday.
Dakota Semler: Any chance that you could give us a cash flow statement and maybe your breakdown of... Revenue, you know, in terms of, you know, the stuff that's in there, you know, step bands, power training hubs, other ancillary. So, you know, I mean, I assume I'm not the only person that has their model built around some of that kind of stuff so that we would be able to get our models turned in. in front of your, you know, buildings. The full cash flow statement will be available once we file the 10-K on Monday. We do have, in the earnings release, we do have a tabular disclosure around net cash provided by use and operating activities.
Speaker Change: Any chance that you could give us the cash flow statement and maybe your breakdown of.
Speaker Change: Revenue in terms of you know the stuff. That's in there you are accepting in powertrain your hubs other ancillary so I assume I'm not the only person is there a model built around some of that kind of stuff. So that we would be able to get our models turn.
Speaker Change: In front of your.
Speaker Change: Beliefs.
Speaker Change: Oh, well that for cashless payment will be available once we file the 10-K on Monday, we do have in the earnings release, we do have a tabular disclosure around net cash provided by used in operating activities.
Ted Jackson: I saw that. And I agree. but the rest will be available on Monday.
Speaker Change: I felt like and I think.
Speaker Change: But the rest will be available on Monday.
Ted Jackson: Okay, well that's it for me. Thanks very much.
Speaker Change: Okay, well that's it for me thanks very much.
Ed: Thanks, Ed.
Operator: This will conclude our question and answer session, as well as conference call. Thank you for attending today's presentation. You may now disconnect your lines and have a great rest of your day.
Ed: This will conclude our question and answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect your lines and have a great rest of your day.
Ed: [noise].