Xos, Inc.

And welcome to the Exos Inc. Third Quarter 2025 Earnings Call. All participants will be in 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 then two. Please note that today's event is being recorded. I would now like to send the conference over to David Zlaciu, General Counsel. Please go ahead.

Thank you, everyone, for joining us today. Hosting the call with me are EXOS's Chief Executive Officer, Dakota Semler, EXOS's Chief Operating Officer, Giordano Sordoni, and EXOS's Chief Financial Officer, Diana Pagosian. Today, after the close of regular trading, EXOS issued its third quarter 2025 earnings press release and filed its quarterly report on Form 10-Q for the periods ended September 30, 2025. As you listen to today's conference call, we encourage you to have our press release and quarterly report in front of you, including our financial results, as well as commentary on the quarter and nine months ended September 30, 2025. Management statements today reflect management's views as of today. November 13, 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 goals. 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, excesses ability to access capital when needed and continue as a going concern, excesses ability to implement business plans and identify and realize additional opportunities, and a potential supply chain disruption, 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. We undertake no obligation to update forward-looking statements except as required by law. You should not put undue reference, excuse me, you should not 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 historical 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 in the investor relations section of our website at www.exostrux.com slash investor hyphen overview. With that, I now turn it over to our CEO, Dakota.

Good afternoon, everyone. At Exos, we are building something that did not exist before and doing it under constraints that might break most companies. And yet, quarter after quarter, we've shown that discipline, when paired with conviction, scales. It creates momentum. It compounds. And in Q3 2020-25, that momentum was unmistakable. This quarter, we shipped 130 vehicles, generating $16.5 million in revenue. We actually shipped 140 vehicles, including 10 stripped chassis, already on their way to upfitters for a major customer program. That revenue will be recognized in the coming quarters. But the signal is clear. Demand is real, customers are returning, and scale is growing. Much of this volume went to UPS and FedEx ISPs. Organizations that do not forgive unreliability, that do not tolerate downtime, and that absolutely do not adopt new technologies unless they believe in your engineering and your ability to deliver at scale. Their confidence in us is earned, not inherited. We continued fulfilling the largest single order in our company's history, a 200-plus unit order program. We believe this is the shape of the future for Exos. Deeper relationships, larger programs, repeatable volumes. Our GAAP gross margin was 15.3%. This margin reflects a complex reality, a diverse mix of customers, long-term structured pricing with national accounts, and yes, tariffs that were not contemplated when some of these large programs were originally priced. These large fleet agreements may compress margins in the near term, but they're the foundation of a durable industrial business. They create the volume and the credibility needed to expand margins in the future. And while we shipped the highest units in our history, we also drove our lowest operating loss since the business went public, $7 million. That did not happen by accident. It happened because we questioned every expense, every process, and every outdated assumption about how vehicle OEMs should operate. This quarter represents the ninth consecutive quarter of positive non-gap gross margins. Many companies talk about this one. We have lived inside it, and it shows. We've also strengthened our liquidity while continuing to invest in the opportunities that are expanding around us. I want to personally acknowledge the Algema Automotive Company, whose support of Exos has been unwavering. They have seen our progress up close, and they've seen the technology, the execution, and the market shift towards reliability and total cost of ownership. Together, we amended the repayment structure of the convertible note, moving from a single August 2025 maturity to quarterly installments from November 2025 through February 2028. This is not just a restructuring, it's a strategic alignment. It allows us to operate from a position of focus rather than constraint. Interest accrued to the original maturity was paid in common stock in August 2025, making Algeme our largest shareholder, a strong signal of their conviction in our long-term trajectory. We will continue to pursue capital strategies, equity, debt, or hybrid structures that allow us to scale responsibly and capture the opportunity in front of us. Even as the step-in continues to drive substantial revenue, our strategy has never been limited to a single product. We are deliberately expanding into higher margin, lower concentration categories, including powertrains and energy infrastructure. This quarter, that strategy became real. We delivered 18 powertrain systems to Bluebird Corporation this quarter, and since quarter end, we've received nearly 80 additional powertrain orders. School districts are electrifying faster than anyone expected, and our technology, which is modular, reliable, and highly serviceable, is becoming the backbone they trust. And speaking of school districts, we are actively selling into that market right now. Gio and I are in Austin this week for the Bluebird annual dealer meeting. demonstrating firsthand why Exos powertrains outperform on reliability, serviceability, and total cost of ownership. Our presence here is already opening doors, and we expect this engagement to translate into significant commercial opportunities over the next one to three years as we expand our pipeline in the massive school bus market. And then there's the Exos hub. Grid constraints are not a theory. They are the single largest friction point in North American fleet electrification. The hub addresses this head on. It's not a prototype, it's deployed. It's working and its impact is expanding far beyond transportation. In Q3, deployments and demonstrations accelerated and interest in the hub broadened meaningfully. We also showcased the hub at RE+, the largest renewable energy conference in North America, where it drew significant attention from utilities energy developers, and industrial users looking for mobile power, resilience, and peak shaving solutions. The response confirmed what we already knew. The hub addresses a problem that almost no one else in the market is addressing effectively. We're now preparing the 2026 hub update, which will deliver greater power resilience, energy cost optimization, and advanced load balancing capabilities. This isn't just a charging product. It's a mobile energy platform capable of serving industrial users who require temporary power, peak shaving, and resilience in environments where grid infrastructure is either delayed or non-existent. This dramatically widens our total addressable market, and it positions Exos as an energy systems company, not just an electric truck company. All in, Q3 2025 was a milestone quarter. We achieved record deliveries, maintained revenue momentum, substantially improved operating performance, and further validated that our cost discipline and product strategy can not only maintain operations, but accelerate it. As we look ahead, the opportunities in front of us are expanding, not contracting. Order sizes are increasing as customers experience the real-world cost advantages of our trucks and our charging solutions. our product pipeline including the upgraded hub and our foray into power resiliency solutions aligns with secular markets that will grow regardless of political cycles incentives or noise i believe we are experiencing what durable industry companies go through in their formative years pressure discipline breakthroughs and the unmistakable feeling that the work is beginning to gain traction with that

I'll turn it over to Gio to walk through the operational highlights of the quarter. Thanks Dakota, and good afternoon everyone. Q3 was another quarter of steady execution, disciplined operations, and forward momentum as we continue to deliver for customers and position EXOs for sustained long-term growth. Our Tennessee plant remained the cornerstone of our success this quarter, running efficiently and producing at a consistent cadence for our major fleet customers. We continue delivering on our UPS order, demonstrating our ability to maintain quality at scale for one of the world's largest and most demanding fleet operators. With a small, highly capable production team, we achieve rates of three chassis per day, underscoring our ability to efficiently scale into higher volumes. Our engineering, supply chain, and production teams also responded quickly to customer requests during the quarter. designing and deploying product improvements that enhance reliability, serviceability, and customer satisfaction across our chassis line. Production of our innovative mobile charging system, the XS Hub, also continued in Q3. The Hub remains one of our most differentiated offerings in the market, providing fleets a fast, flexible, and cost-effective way to deploy electric vehicles without waiting for fixed infrastructure. The Hub allows these fleets to speed up the time it takes to deploy fast charging by skipping lengthy permitting, utility power upgrades, and construction processes. Customers are now using the hub across a broad range of segments and unique charging use cases, including electric trucks, school buses, light-duty electric vehicles, and even autonomous vehicle fleets. The hub engineering team has been hard at work developing new variants aimed at further expanding the product's addressable market and enabling new use cases. Q3 also marked the expansion of our powertrain production capabilities as we advanced new powertrain variants for the Bluebird school bus company. These efforts further validate the versatility and maturity of the Exos powertrain platform and strengthen our position as a trusted electrification partner for vehicle manufacturers seeking proven and road-tested solutions. As we close out the year, our focus has shifted towards setting the stage for 2026. Across our trucks, powertrains, and hubs, we're preparing for continued growth that we expect will bring higher volumes and a broader customer base. In Tennessee, we've begun expanding the hub and powertrain assembly areas within our factory in anticipation of 2026 demand. These improvements will allow us to scale efficiently without significant increases in capital expenditure while maintaining flexibility across product lines. Q3 reinforced what makes Exos unique, reliable execution, engineering innovation, and operational discipline. We continued delivering for our major customers like UPS, built new hubs, advanced powertrain programs with OEM partners, and invested in the foundation to support our next phase of growth. As we look ahead, our team is focused on finishing the year strong and carrying this momentum into 2026, where we see significant opportunities across all three pillars of our business. trucks, power trains, and charging infrastructure. With that, I'll hand it over to Liana for financial review.

Thank you, Gio. Third quarter 2025 revenue was $16.5 million on 130 units down from $18.4 million on 135 units last quarter and 15.8 million on 94 units a year ago, reflecting strong execution of our delivery plan and major shipments to customers like UPS, Bluebird, and FedEx ISPs. While we recognize revenue for 130 units this quarter, as Dakota mentioned, we actually shipped a total of 140 units. For the first three quarters of 2025, revenue totaled 40.8 million on 294 units compared to 44.5 million on 246 units in the same period last year. We delivered more units year over year, reflecting strong demand, though the shift in product mix, driven largely by our strip chassis product and powertrains, resulted in a lower average selling price and a modest decline in total revenue. Gap gross margin was 15.3% in the third quarter, compared to 8.8% in the second quarter this year, and 18.1% in the third quarter of 2024. The sequential increase was mainly driven by changes in product mix discussed earlier, including more powertrain units sold, which generally have a higher margin than strip chassis and step-downs. In addition, we had a higher ASP from the sale of UPS strip chassis this quarter due to a negotiated rate to include the impact of tariffs. Non-GAAP gross margin was 16% this quarter, up from 1.4% in Q2, mainly because inventory-specific reserves, which increased this quarter, are added back in the non-GAAP number. This marks our ninth consecutive quarter of positive non-GAAP gross margin. For the first three quarters of 2025, non-GAAP gross margin was 9.3% compared to 16.6% in the same period last year. We remain confident in our ability to improve margins over time as we scale production and execute on cost reduction initiatives. Turning to expenses, operating expenses were 9.5 million in the third quarter, up 0.8 million, or 9%, from the second quarter this year, and down 3 million, or 24%, from the third quarter of 2024. For the first three quarters of 2025, operating expenses totaled 28.7 million, a 10.3 million or 26% improvement from 39 million in the same period last year. These sustained reductions demonstrate the structural impact of our prior cost-cutting actions and reinforce our disciplined approach to managing the business. Operating loss per quarter hit a record low since going public at 7 million. down from $7.1 million in the second quarter of this year and down from $9.7 million in the third quarter of 2024. Non-GAAP operating loss since the business went public also hit a record low at $4.8 million compared to $6.9 million in the second quarter of this year and $6.6 million in the third quarter of 2024. For the first three quarters of 2025, operating loss was $23.3 million improving from $31.3 million in the same period last year, while non-GAAP operating loss also improved to $19.7 million from $25.7 million in the period last year. Moving to the balance sheet, we ended the quarter with $14.1 million in cash and cash equivalents up from $8.8 million at the end of last quarter. Our improvement in liquidity this quarter was boosted by three main factors. First, successful launch of our ATM program, which generated $2.4 million in net cash proceeds this quarter. Second, strategic inventory management. Inventory declined to $25.2 million from $31 million last quarter, driven by strong unit sales outpacing production as we move more units from existing inventory, reflecting our ongoing inventory management to support upcoming deliveries. Accounts receivable came down to $15.4 million at the end of the quarter from $18.1 million at the end of June. We had very strong collections this quarter, about $18.7 million, from customers as well as state program administrators. While our UPS deliveries carry longer payment terms, which increase new receivables in the quarter, we feel well-positioned for continuous solid collections going into next quarter. Our focus this quarter has been on execution, financial discipline, and strengthening the foundation for sustained growth. During the quarter, we took strategic actions to strengthen our balance sheet and extend our financial runway. We amended our 20 million convertible note, extending principal payments quarterly starting in Q4 2025 through early 2028 to enhance liquidity and provide greater flexibility. We also reached an agreement to terminate our Mesa facility lease that we acquired as part of the EMV acquisition during the first quarter of 2024, which is expected to generate approximately $20.7 million in cash savings through 2033. Although we're no longer responsible for rent on the Mesa facility, the termination agreement does require us to make 18 monthly payments, totaling about $2.8 million. As part of the termination, we also recognize a $9.4 million gain in non-operating income along with other required gap adjustments such as the removal of the related operating lease liabilities. We continue to actively manage our liquidity position and are exploring additional opportunities to further enhance it. Together, these actions demonstrate our disciplined approach to capital management and our ongoing commitment to positioning EXOs for long-term stability and growth. Beyond the balance sheet actions, we continue to execute well operationally. We generated positive free cash flow of $3.1 million in the third quarter, marking the third time we've been free cash flow positive since going public. This is down slightly from $4.6 million in the second quarter, but is a major improvement from negative $11.7 million we reported a year ago. That progress reflects strong deliveries and continued discipline in managing working capital. Finally, turning to guidance, we are reaffirming our full year 2025 guidance for revenue and unit deliveries and previously revised non-GAAP operating loss guidance. Revenue between 50.2 million and 65.8 million. Non-GAAP operating loss between 24.4 to 26.9 million, and unit deliveries between 320 and 420 units. With that, I'll turn the call back over to Dakota.

Thank you, Liana. Stepping into 2026, the momentum behind EXOS is unmistakable. Our priorities are clear. Accelerate growth, reinforce liquidity, and continue expanding margins with precision and discipline. Over the last 12 months, we've shown that a company can be both lean and innovative, that you can run efficiently without sacrificing the strength or competitiveness of your product portfolio. We've built a deep and diversified sales pipeline, even while navigating global supply chain disruptions that caught much of the industry off guard. Our ability to adapt quickly, to absorb unexpected shocks, And to keep delivering for customers is one of our defining capabilities. And customers notice. In a marketplace that changes by the week, resilience and reliability are currency. And they're becoming core reasons fleets are choosing Exos as a long-term partner. As we move toward what we expect to be our largest and most transformative year, our confidence is only growing. We believe we're positioned to confront challenges head-on and to continue building the most durable, dependable business in our sector. With that, I'll hand it back over to the operator for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from queue, please press star then 2. At this time, we'll pause momentarily to assemble our roster. And today's first question comes from Craig Irwin with Roth Capital. Please go ahead.

Hey guys, it's Andrew on for Craig. Congrats on the continued progress and thanks for taking my questions. First one for me is on the hub. I mean, the use case for fleets is pretty obvious, but I think we're seeing increased activity here in the autonomous vehicle space. And you guys have talked about increasing demand for uses such as backup power applications. So Kind of how should we think of the expanded opportunity for the hub platform now?

Yeah, Andrew, thanks for the question. With the hub opportunity, I think there will continue to be in the realm of double-digit growth in the next year for that EV charging segment, which is supported by a lot of our fleet customers, but also customers beyond the customers of excess trucks. So one of our larger customers that we've talked about is Waymo, the self-driving car company. They've been continuing to grow their purchases with us. We also have several utilities and state transportation agencies like Caltrans who bought quite a few units. So we continue to see that market growing at a very stable clip. But our power resiliency and backup power functions are going to be launched next year. And that's another exciting opportunity that we believe far exceeds the growth potential of the EV charging market. As you may know, the power cost in the US in the last five years have risen anywhere from 20 to 50%, depending upon where you are in the States and what utility you're in. And that incremental cost is borne by consumers and borne by businesses. And while a lot of that market has been addressed by, the consumer market has been addressed by residential energy storage, there hasn't been a large influx of commercial and industrial buildings adopting energy storage. And so we view significant opportunities in that market to participate in wholesale power markets, to do demand response programs, and to ultimately help businesses with reducing their total energy costs. So that's really where our focus on growth is going to be for the hub in the years to come. We haven't provided specific guidance around how we're quantifying that growth and volume, but we expect it will follow similar trajectories to the launch of the hub charging system and also continue to be a higher margin product that's really more of a unique product in a segment that hasn't been widely addressed by other suppliers in the space.

Great. Well, it seems like an exciting opportunity, and thanks for the details. Second one for me here is on your chassis deliveries to Bluebird. They seem like they're accelerating. You guys said, I believe, 80 more orders following quarter end. You touched on it in the prior remarks, but can you just talk about customer feedback, what you're seeing, and what's kind of driving this accelerated growth?

Yeah, absolutely. It's been an exciting partnership with them and we've continued to build this over the last couple of years and it's finally starting to take hold. We've delivered those first 20 or so units and they're actually operating with a customer up in the Northeast right now. And one of the exciting things for us is that Bluebird has been selling electric vehicles for many years now, working with other powertrain providers And their powertrain options, I would say, are more limited than what we can provide. So one of the first projects we helped them bring to market was a shorter wheelbase powertrain configuration that hadn't been an option before for some of these short wheelbase school buses that are used in city environments. And so we packaged that first powertrain with them over a year ago, went through the full durability and validation process, And now that's in market with customers. And if there's anything we've learned this week from being at the Bluebird dealer meeting in Austin, it's that there's a lot of interest in that product beyond the initial launch customer. So we mentioned that we've got those additional follow-on orders subsequent to the quarter close. And we are actively working on additional variants with increased capacity and range. that will ultimately start marketing to the Bluebird dealer body as well as many of their national accounts. What's really exciting about that is there's a significant growth opportunity in school bus. We're still seeing high rates of electrification, Bluebird being the leading alternative powertrain provider in the school bus industry, and we are gonna be their first LFP battery option and powertrain option, which will, I think, significantly help with their customers and adopting these vehicles just because it's going to increase the reliability and the resiliency of these battery packs for school bus fleets, which obviously reliability and durability and longevity for their fleet is top of mind. It's probably one of the single most important evaluating criteria when they're making a determination of which partner they work with. So we expect that to continue to grow into 2026 pretty substantially. and hopefully we'll be able to talk about that more by next quarter and give a little bit more detail on those orders beyond the additional 80.

Great. Well, I appreciate the call. And the last one for me, if I may, you guys had another solid quarter of unit deliveries. I believe you're at 294 for the year. You reiterated your guide of 320 to 420 for the year. Can you just kind of talk about the puts and takes reaching kind of the high and low end of the guide there.

Yeah, as we've talked about in the past, we always have seasonal delays in delivering through Q4, and that's attributed to the industries that we serve. We work with the largest parcel delivery companies in the world, and many of them are operating during their peak season in Q4, meaning once the Thanksgiving holiday starts, Their network volumes can often double, and they're dealing with a lot of other additional growth and package volume than they normally do. So it's generally a lighter quarter from our key customers in Q4. So we expect a little bit of that impact to hit us in Q4. We still expect to remain within that guidance range, but there'll be other deliveries in Q4, such as powertrain deliveries and some other customers and hub deliveries that will continue to round out the year. And then we expect that to continue to grow back in Q1 and Q2 of next year. Great.

Well, appreciate the color and congrats on the strong results.

Thank you. Thank you. And once again, if you have a question, please press star then 1. Our next question comes from Ted Jackson at Northland Securities. Please go ahead.

Thank you very much. And I will echo congratulations on the quarter. It went well across the board.

Thanks, Tom.

Let's start with tariffs, Dakota. One of the comments that you made in your prepared remarks was that you were able to do some renegotiation with UPS with regards to tariffs. I guess the first question around tariffs is, have you been able to price adjust that across your... kind of your product offering at this point? Or is there still some impact that will come to bear as we roll through going forward?

Yeah, I'm happy to start and I'll pass it over to Gio to follow on. But I think we're taking a multi-step approach to insulate ourselves from the volatility that we've experienced this year from tariff regime changes and uncertainty in that tariff environment. The first of which is focusing on reshoring or getting as much domestic content as possible to make sure that we don't face this kind of volatility in the years to come. The second is working with our suppliers and sharing in that cost and helping us to realize better cost improvements or accelerated cost down efforts that they understand obviously will help them grow their sales pipeline with us. But sharing in some of that exposure has been, I think, the second most impactful decision. And then the third and the last area is just, again, an effort to work with our customers, not to just increase prices to them, but to give them clarity around the tariff changes that have impacted us and then figure out how we share in that tariff exposure. And we want to build long-term partnerships durable relationships with our customers. These aren't fly-by-night customers. They're some of the most sophisticated fleets in the world. And so our efforts are not just to pass everything along to them, but to demonstrate to them that we're willing to work together to share in that cost exposure while still trying to reduce the acquisition costs of our vehicles for them so they can be competitive from a total cost of ownership standpoint and ultimately get these vehicles to near price parity with diesel vehicles. But I'll let Gio add a little bit more context to you.

Yeah, I think Dakota hit the nail on the head. It's really been... It's kept our supply chain team busy with tariff changes starting earlier in the year. We've seen some continued, you know, at least talk of changes. So we are keeping your options open, working with our supply base, establishing backup supply in critical parts where needed. And it's really on the cost front been... an open conversation and there's been willingness to share in some of the cost increases between ourselves, our suppliers, and our customers. And we're doing everything we can to make sure we can guarantee supply going forward without blowing up costs. Okay, next question. So you shipped 18 powertrains to Bluebird during the third quarter and then you had 80 orders since that time?

Yeah, approximately. I think it was closer to exactly 75 incremental orders. But yeah, we've had substantial follow-on since we made those other deliveries.

And then if you did 18 power trends, did you have any hubs going out during the quarter?

Liana, we have that I think in the

I don't look at the queue yet. It's more of a part of a question. That's where I'm going with it. If you don't have it in front of you, it's not that big of a deal.

We did have incremental hubs. While we don't disclose the breakouts between powertrains and hubs, we did have hub deliveries as well this quarter.

Usually, actually, you do break it out in the queue. Anyway, so then with the 75 new powertrains, both of those will ship in 2026? That's correct, yeah. So then when I think about that, like so Hub is growing fast. Powertrains is growing fast. You're bringing the cost of tariffs more in line. So if you go forward, you're going to have a mixed shift towards your higher margin products in 26, along with less of a drag on tariffs. What can we think about when we, I mean, it's more of a general concept, but what kind of margin improvement do you think you could get in 26, BCB 25 with all those tailwinds, if you would?

Yeah, well, we haven't provided specific guidance around next year. I think when we look at the margin profile of our core truck products, it's really variable depending upon our customer profile. And that can be, you know, as low as the low teens to kind of the mid 20% gross margin range based upon product configuration, specifications, customer pricing details, you know, bulk purchases, things of that nature. When we look at our other product lines, like the powertrain and the hub business, those are generally, I would say in the, kind of 15 to 35% range with the hub representing that higher end of that range and the powertrain configurations representing kind of the lower to the middle portion of that range. So you're right in assuming that the margin mix will shift towards the higher end of our margin spectrum and that's something that as we work with our partners and our customers um i think we can continue to mitigate and minimize the exposure and disruption from tariffs to further improve that in a way that benefits both of us and and hopefully improves margin on our powertrain kits as well as on their end user products that they're selling to their customers but i mean is it fair to just conceptually that you know the the chances are that you'll have you know um

a noticeable improvement with regards to your margins in 26 versus 25 because of how the mix of your business is changing?

Yeah, I think that's a very fair assumption.

Okay. And then can I touch over on the lease? So you have $2.8 million that you're going to be paying over the next 18 months. Is that what you said? That's correct. Yeah. So then, so, so basically then it's like, what is it like, you know, 450 a quarter, 470 a quarter, and then you'll be done in, you know, like, you know, you know, as you exit 26 for the most part, you know, into 27 and then, you know, and then, um, with regards to, um, working capital, you've made tremendous progress with regards to your working capital in the last couple of quarters. Can we expect to see continued improvement on that as we go into the fourth quarter and then beyond?

Yeah, that's a deliberate part of our focus. I have to beg GEO to make any payments and to release any payments that are going out to our vendors. But no, in all honesty, I think it's a team effort across the company to focus on how we can manage cash flow, how we can improve receivables collection. And we've had some very supportive customers that have been willing to work with us on the terms that we offer them and ensuring that they're adhering to those terms and paying in a more timely manner. And one of the most significant drivers of this is that increased product mix away from trucks and direct sales of trucks will reflect lower proportion of those sales being driven by

incentives and so the that'll shorten our receivables time dramatically if we don't have to collect from those incentive agencies or government agencies and so so then we so we we should expect to see uh you know you know just generally speaking as we go forward and improvement and dsos and i mean i tend to look at inventory on a day's basis too but in a continued improvement there it's relative to you know the you mean the progress that you've made and The second and the third quarter, we'll see even more improvement as we march forward over the next several quarters. Definitely. And then my last one is kind of a question and kind of more just asking for some commentary. I just saw it in the journal today, so the timing was just kind of perfect. But one of your peers, Harbinger, did a raise of $5. like $150, $160 million with FedEx as the lead. And, you know, and then FedEx is, like they say that, you know, FedEx is basically going to take a lot of their product and they're spewing it out that they're going to ship 3,000 units next year. I mean, you know, like how do you think about that? Does that give you any kind of pause as it relates to your relationship with FedEx? Or, you know, you also could look at it, the fact that they're able to raise that kind of money. But, you know, it says it's also, obviously, you don't say, yeah, yeah, yeah. a vote, if you would, of confidence in your end markets and the opportunity that you yourself face? I mean, having a little discussion about that.

Yeah. I think from, I'll kind of segment the question, but I think from a capital markets standpoint, it's an incredible validation and proof point that there's still interest from investors in investing into the transportation business and into commercial electric vehicles, which we see as a very positive indicator of because in the last couple of years, it has been different in what we saw from the fundraising environment in the preceding few years. And so I think that's a great indicator for our industry as a whole and for our ongoing access to capital. Secondly, I think pertaining to the commercial opportunity that exists, we view FedEx as a critical customer of ours and a key customer, and we want to continue to work with them. We've built an incredible relationship with the Express team in Memphis and also the former ground team in Pittsburgh. It is now a part of FedEx Corporate. And I think that relationship will continue to extend to actually message them and congratulate them this morning on the announcement. And I think we see them as a strategic partner. And one thing I'll mention, which I think is really important and relevant, is these large parcel delivery companies and large fleets, they don't sole source. With any of their products and any of their technology in their fleets, they're always going to have generally two to three, sometimes even four primary suppliers they work with to maintain some competitive tension, to make sure they don't have too much exposure to a single company. And we see another company in this space as a validation that the industry is still growing, there's still opportunity, and there's still really strong customers that are willing to make investments and grow in this segment. I think for us, FedEx is one of many customers that we have, but we're still very excited about working with them and continuing to work with them. And to this point, it's not referred to as FedEx Ground anymore, but for their contractor business, we are the largest electric vehicle vendor with more electric vehicles than anybody deployed across their network. And so I think we expect that trend to continue, and we'll keep working with the contractors as well as with – their fleet management, their centralized fleet management for their corporate-owned fleet. So I think it actually bodes well for the industry and for us as a company.

Great. So, again, correct, it's on the quarter. I mean, literally, you just moved the ball. As my wife says, you moved the chains, and you did it on every front in your business. So congrats.

Thank you. Thanks, Ted. Appreciate you calling in.

Thank you. And that concludes our question and answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.