Xos, Inc.

Good day, and welcome to the EXO's 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star and then two. Please note that this event is being recorded. I would now like to turn the conference over to David Slaciu, General Counsel. Please go ahead.

Thank you, everyone, for joining us today. Hosting the call with me are XS's Chief Executive Officer, Dakota Semler, XS's Chief Operating Officer, Giordano Sordoni, and XS's Acting Chief Financial Officer, Liana Pagosian. Today, after the close of regular trading, EXOS 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. Management statements today reflect management's views as of today, March 28, 2025 only, and will 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, X'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 our 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. 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. 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.exostrucks.com slash investor hyphen overview. With that, I now turn it over to our CEO, Dakota.

Thanks, David, and thank you everyone for joining us. Q4 marked the close of Exos' 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 Exos 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. Even as the economic environment continues to evolve and we see changes in administration, regulatory policies, and tariff structures, EXOS 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 these steps we're taking to stay ahead of those changes in today's call. 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. 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, Exos is also one of the very few electric vehicle manufacturers delivering double-digit gross margins on our products. In addition to gross margin gains, we're continuing to drive improvements in liquidity, inventory turnover, and working capital management. 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 FMVSS 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. 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. Additionally, we closed a significant transaction that added over $40 million in liquidity to our balance sheet, providing essential flexibility as we manage the timing of incentive program collections. In my remarks, I'll cover highlights from Q4 across our vehicle deliveries, hub product ramp up, and broader market shifts. 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 deliveries. 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. We plan to continue delivering completed vehicles as well, but we expect this mixed shift to give us more flexibility and responsiveness across our order base. We also made significant progress in our powertrain business. In Q4, We delivered our first powertrain product for use in a Bluebird electric school bus. The short-wheel-based 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. 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. 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 orders. 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. 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 decisions. 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. 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. 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. 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 costs. 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. Just as we began 2024, we closed the year with a sharp focus on reducing operational expenses. 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.