XOS

Please note this event is being recorded. I would now like to send the conference over to David Zlotchew, General Counsel. Please go ahead.

Thank you everyone for joining us today. Hosting the call with me are Xos' Chief Executive Officer, Dakota Semler, Xos' Chief Operating Officer, Giordano Sordoni, and Xos' Chief Financial Officer, Liana Pogosyan. Today, after the close of regular trading, Xos issued its first quarter 2026 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 ended March 31, 2026. Management's statements today reflect management's views as of today, May 14, 2026 only, and will include forward-looking statements, including statements regarding our fiscal year 2026, 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 Xos' ability to access capital when needed and continue as a going concern, Xos' ability to implement business plans and identify and realize opportunities, potential supply chain disruptions and/or economic downturns as a result of trade policies and tariffs or war in Ukraine, and shortages of access to oil, energy, or other key industrial inputs is included in today's press release and in our filings with the SEC, including our most recently filed 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 reliance in 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 on the investor relations section of our website at www.xostrucks.com/investor-overview. With that, I'll now turn it over to our CEO, Dakota.

Thanks, David, and thank you everyone for joining us on the call. Q1 2026 was by many measures the strongest opening to a year in Xos' history and a clear signal of what this business is becoming. For a long time, we've described Xos as a commercial electric truck manufacturer. That description has become too narrow. Xos today is broader than that. We build trucks, we manufacture and operate mobile energy infrastructure with the Xos Hub, and we power vehicles for other OEMs through our Powered by Xos powertrain business. In Q1, two of those three product lines drove the majority of our deliveries, and the result was a quarter that looked different and performed differently than any we have reported before.

We delivered 95 units in the quarter, including 63 powertrain systems for Blue Bird, 10 stripped chassis supporting our partnership with UPS, alongside record volumes of Hub units shipped to customers across our commercial and municipal pipeline. Revenue came in at $11.2 million, nearly double the same quarter last year. Most importantly, gross margins reached the highest level in Xos' history. Liana will walk you through the financial picture in detail. The headline I want to give you is this. This is what the business looks like when execution, mix, and discipline come together. Several things drove the margin performance in the quarter, and a few of them are worth calling out from a strategic standpoint. First is mix. The quarter shifted heavily towards Hub deliveries and powertrain sales.

These are higher margin product categories than our truck business has historically been, and they're tied to the secular demand drivers, power, infrastructure, and electrification. As we continue to diversify away from being a single product company and into a broader power and infrastructure-driven business, we anticipate maintaining a higher overall margin profile across our product portfolio. Second is cost discipline. We've continued to rein in costs in every product we sell, and the structural improvements we've made over the last two years are now compounding. I want to be measured here. We do not expect margins to hold at this level quarter after quarter. Mix will move around. Some quarters will be heavier on trucks, some heavier on Hubs and powertrains. On a full year basis, we expect 2026 gross margins to be meaningfully better than 2025, and the structural drivers behind that improvement are durable.

Cash management remained a high priority focus across the company in Q1. We delivered a substantial number of units while continuing to bring inventory down and managing collections with the same discipline we have applied for several quarters. That work, combined with the mix shift, is what allows us to scale this business without scaling our cash needs. Let me turn to the Hub, because it was the story of the quarter. We've made the decision to invest more aggressively in Hub production capacity and Hub engineering, and we believe you will see that show up in our results over the coming quarters. We have new iterations of the Hub in development that meaningfully expand the product's capabilities, and we'll be sharing more on that roadmap over the next quarter or two. Customer demand has been strong enough that we are leaning into this product, not waiting on it.

Subsequent to quarter end, we've continued delivering hubs to a number of new customers, including a Q2 deployment with MacAllister Caterpillar. That hub will be deployed on a large data center construction project for a hyperscaler customer. Exactly the kind of application we built the hub for. Power-constrained sites, fast deployment, no permitting overhead, and customers who need uptime more than they need theory. We're also preparing to begin shipping hubs to Europe later this year and are actively standing up the service partnerships needed to meet customer SLAs as we expand internationally. I want to spend a moment on the demand environment because the noise in the regulatory landscape sometimes obscures what is happening on the ground. The federal climate has shifted.

The EPA's removal of California's CARB waiver and its challenge to the Endangerment Finding have softened the regulatory tailwinds that supported zero-emissions adoption over the past few years. We have not been counting on these tailwinds. What we are seeing instead is a renewal of interest driven by economics. The fuel and energy crisis has reset how fleets think about total cost of ownership. Diesel in California is averaging roughly $7.50/gal as of this week, and the average price of regular gasoline in California is now above $6/gal. Meanwhile, our heavy-duty hub and vehicle customers in California are paying between $0.15 and $0.35/kWh for electricity. A heavy-duty electric vehicle uses about 1.75 kWh/mi. A medium-duty vehicle uses about 1 kWh/mi. The math becomes very straightforward.

In heavy-duty applications, fleets are seeing per mile fuel cost savings of more than 60%. Those savings are real, they are robust, and they are what is driving renewed conversations across our pipeline, regardless of where federal policy lands. A related proof point in the quarter, we delivered our first units to customers redeeming CORE vouchers, the California Off-Road Equipment program that incentivizes the use of zero-emissions off-highway equipment, including hubs. We applied for the program last year, were awarded a number of allocations, and Q1 2026 marked the start of those deliveries. CORE opens up a meaningful new vertical for the hub, and we're seeing that vertical begin to hold momentum. The other significant shift this quarter, one that I want investors to internalize, is municipal and federal traction. Historically, Xos has been a private fleet business. The launch and growth of the hub has changed that.

Today, we are working with a growing set of municipal, state, and federal customers, and the product mix is a natural fit for their needs. Earlier this month, we announced that Xos was selected as one of only 17 finalists in the U.S. Air Force Global Strike Command Commercial Capabilities Showcase, where we are demonstrating the hub this week as a mobile deployable charging and power solution for the Air Force. In April, we participated in the ACT Expo in Las Vegas, where we engaged with powertrain customers, truck fleet customers, and a meaningful number of municipal accounts. In mid-April, we participated in TEVCON in San Diego, a defense-focused conference aligned with the Office of the Secretary of War, U.S. Army FUZE, the Defense Innovation Unit, and other defense and energy agencies focused on accelerating procurement for the modern battlefield. The last point deserves a comment.

One of the most significant operational shifts inside today's military is the electrification of the battlefield. This is not just about vehicles. It's about unmanned aerial systems, counter-UAS systems for drone tracking and mitigation, distributed computing at the forward operating bases, expanded telecommunications, and the broader load growth that all of that creates. Reliable, quiet, deployable power generation and storage are becoming as critical as the systems they support. The Hub is built exactly for that environment. As a reminder, the Xos Hub is already on the GSA schedule through our FedHarmony partnership, which provides federal agencies with a streamlined procurement pathway. Between the AFGSC Showcase, TEVCON, ACT Expo, and a ride and drive we conducted in San Diego with CALSTART, the demand signal coming out of the public sector is the strongest we have ever seen.

Stepping back, Q1 was a strong start to the year, but more importantly, it was a clear data point on where the business is going. We are diversifying away from being a single product company and into a broader commercial vehicle and power infrastructure manufacturer. The mix, the margins, and the customer set all moved in the right direction this quarter. We do not expect every quarter to look like Q1, but we do expect the trajectory to continue. With that, I'll turn it over to Gio to walk through the operational highlights of the quarter.

Thank you, Dakota, and good afternoon, everyone. Over the course of the first quarter, our teams continued to execute across all three of our core product lines, delivering trucks, mobile charging hubs, and powertrain systems to customers while maintaining a strong focus on operational efficiency and disciplined cost management. The work we've done over the past several quarters to streamline operations, improve manufacturing execution, and optimize our supply chain showed up clearly in our results this quarter as we achieved the highest GAAP gross margins in the company's history. Just as importantly, we remain focused on continuing to find ways to engineer, source, and build our products more efficiently as we scale. Within engineering, the team continues to make strong progress on the next generation of our hub platform.

This new version is being designed to expand the hub's opportunity set and broaden the range of customer segments and applications that we can address. We believe this evolution of the product will further strengthen the flexibility and competitiveness of our charging solutions, and we look forward to share more details in the future. In parallel, the engineering team also spent significant time during the quarter supporting the testing, validation, and certification of several new products and product configurations as we continue to expand our platform capabilities. On the supply chain side, our team remains highly engaged in managing sourcing strategy with an evolving tariff environment. We continue to work closely with our supplier base to identify opportunities for cost reduction, improve resiliency, and localize portions of the supply chain where it makes operational and economic sense.

Our focus remains on maintaining flexibility while driving continued improvements in product costs and supply stability. In manufacturing, the investments we made to expand the hub and powertrain production areas at our Byrdstown, Tennessee facility supported efficient production as volumes increased during the quarter. The production team also successfully launched a new higher capacity hub configuration with our standard hub platform now increasing from 280 kWh to 420 kWh. This expanded capability allows us to better serve a broader set of fleet and infrastructure applications. We also continue to benefit from the flexibility of our production organization. Most technicians within the plant are trained to work across multiple product lines, allowing us to operate efficiently with a lean team while dynamically adjusting production mix across trucks, hubs, and powertrain systems as customer demand evolves.

That flexibility continues to be an important operational advantage for us as we scale the business thoughtfully and efficiently. With those updates, I'll turn the call over to Liana for an in-depth look at our financial performance.

Thank you. For Q1 2026, our revenue was $11.2 million on 95 units, up from $5.9 million on 29 units in Q1 2025, and up sequentially from $5.2 million on 34 units in Q4 2025. This substantial increase in unit deliveries and total revenue is driven by our sales efforts and strategic shift to focus on powertrain and hub units. Revenue growth during the quarter was impacted by the lower average selling price associated with higher mix of powertrain unit sales.

This quarter, we achieved our highest GAAP gross margin in the company's history with a profit of $4.3 million or 38.6% compared to $1.2 million or 20.6% in Q1 2025, up sequentially from a loss of $2.6 million or -50.5% in Q4 2025. This was driven by our continued cost discipline, savings achieved through optimized inventory management and sourcing strategies, and favorable margin impact from our evolving commercialization strategy, including a greater mix of higher margin hub and powertrain unit deliveries during the quarter. As a reminder, GAAP gross margin last quarter was significantly impacted by discrete items, including additional inventory reserves and write-offs, due to a shift in the commercialization strategy and warranty reserve updates.

Non-GAAP gross profit during the quarter was approximately $4.2 million or 37.8% compared to $0.9 million or 15% in Q1 2025, and up sequentially from $0.3 million or 5.2% in the prior quarter. This quarter marks our 11th consecutive quarter of positive non-GAAP gross margin performance, reflecting our operational refinements and the sustained momentum driving our path towards profitability. Turning to expenses, our Q1 2026 operating expenses were $9 million compared to $10.5 million in Q1 2025, and up sequentially from $7.1 million in the prior quarter. The 14% drop from Q1 2025 reflects the impact of our strong operational discipline in managing our costs while continuing to invest in our multiple product offerings.

As a reminder, Q4 2025 expenses benefited from $1.7 million of non-recurring favorable adjustments related to the settlement of finance equipment leases and certain vendor payables. We delivered the lowest quarterly operating loss since going public, with operating loss improving to $4.7 million compared to $9.3 million in Q1 2025 and $9.7 million in Q4 2025. Non-GAAP operating loss for the quarter was $2.6 million, also our lowest since going public compared to $8.1 million in Q1 2025 and $4.6 million last quarter, reflecting continuing momentum towards profitability driven by improved operating efficiency and cost discipline.

Our quarterly EBITDA loss was cut by more than half, improving to a loss of $4.1 million from a loss of $8.8 million in Q1 2025 and from a loss of $8.5 million in Q4 2025. Adjusted EBITDA was a loss of $2 million this quarter, representing an improvement of over 70% compared to both Q1 2025 and Q4 2025. Turning to the balance sheet, we closed Q1 2026 with cash and cash equivalents totaling $9.8 million. Operating cash flow less CapEx, or free cash flow, was -$1.6 million this quarter, reflecting a significant year-over-year reduction in cash usage compared to -$4.8 million in Q1 2025.

Sequentially, free cash flow declined from positive $2.4 million in Q4 2025, primarily due to higher accounts receivable balances from customer deliveries late in the quarter, as well as the timing of payments related to accounts payable and other accrued liabilities. Inventory declined to $23.7 million at the end of Q1 2026 from $25 million at the end of Q4 2025 and $38 million at the end of Q1 2025, reflecting continued progress from our inventory management initiatives and broader operational discipline.

On May 8th, 2026, we amended the convertible note with our long-term investor, Aljomaih Automotive Company, reducing the conversion price from $71.451-$12 per share and adding a mandatory conversion feature that allows us to require conversion if our stock trades above $15 per share for 20 out of 30 consecutive trading days. Importantly, the amendment had no impact on our financial statements. More broadly, our results reflect structural improvements across sourcing, inventory management, and cost control, not one-time actions. As we look ahead, we remain focused on sustaining this momentum and scaling efficiently. We opened the year with a continued focus on active liquidity management, disciplined capital allocation, and continued improvement in accounts receivable collection, alongside our structural cost improvements and record-breaking gross margins.

Over the past several quarters, we have made meaningful progress strengthening collections from customers and organizations administering state grant programs, collecting $9.8 million during the quarter, following $14 million in Q4 2025 and $18.7 million in Q3 2025. This continued discipline remains a key pillar in our path toward building a more self-sustaining business with a stronger foundation for long-term stability. Turning to our outlook, we are reaffirming our full year 2026 guidance of revenue to fall within the range of $40 million-$50 million, unit deliveries to be within the range of 350 to 500 units, and non-GAAP operating loss to be in the range of $11.9 million-$13.3 million. With that, I'll turn the call back over to Dakota.

Thank you, Liana. As we close out Q1 and look at the rest of 2026, the picture is becoming clearer. The three pillars guiding us, growth, liquidity, and margins, are no longer just an aspiration. They're showing up in the results. We delivered our highest ever gross margin quarter, our lowest operating loss since going public, and meaningful progress on liquidity, all while shifting the product mix towards the higher margin secular categories that define the next chapter of this company. The work we have done over the past two years to reduce cost, simplify operations, and bring discipline to every part of the business is now compounding. The demand environment, despite all of the regulatory noise, is moving in our direction. Customers are choosing Xos because the economics work, the products work, and the team behind them shows up. We do not take any of this for granted.

The road ahead has its own set of challenges, tariffs, regulatory shifts, capital markets, and we will continue to navigate them with the same discipline that brought us here. Our confidence is only growing. We're building Xos to be a resilient, broadly capable commercial electric vehicle and power infrastructure company, and Q1 was another proof point that the work is gaining traction. With that, I'll hand it back over to the operator for questions.

Thank you. We will now begin the question and answer session. Our first question comes from Ted Jackson of Northland Securities. Please go ahead.

Thanks very much, Dakota, Gio, Liana. Congratulations on all the progress you made. I mean, it's impressive everything you've done in the last, you know, year or two, and, you know, you really showed it up in this quarter. Liana, also, I wanna thank you for, the timely release of the Q. I saw it came out while the call started, and, it'll certainly help with me getting things turned around. I appreciate that as well.

Yeah. Thank you.

My first question, just kinda jumping in, you know, the queue came, I haven't gone through and looked at it, but you commented, Dakota, that you had 63 powertrains, 10 strip chassis. By inference, would I does that mean that you had 22 hubs go out the door during the first quarter?

Yeah, approximately 22. I should be adding this up in my head as we speak, but it was around that many.

Well, I mean, that's very impressive. Secondly, is kinda taking that and spinning it forward. You know, you've got a pretty wide spread in terms of the unit guidance. You know, given the, I mean, the strength you're seeing in hub and powertrains, how would we think about the mix of your shipments, you know, for the remainder of the year? You know, and recognizing that you're seeing, you know, some renewed engagement, you know, outside of your typical I mean, outside of those channels because of the fuel costs and such.

Yeah. It's early to tell what the mix looks like for the rest of the year. The one thing I think we can reiterate is that with the various products, the hubs generally tend to have a higher ASP and higher margin profile, and the powertrains tend to have a lower ASP and a lower margin profile. The wide range of unit volumes is actually because we still are waiting on some of our pipeline to be firmed up for the second half of the year. With some of those lower ASP powertrain units, we still might have higher volumes, but the revenue contribution from them isn't as high as the hub. That's kind of what you're seeing in that broad range of unit guidance.

When you think about I mean, let's step away from 26. I mean, you know, the hub is, it's just a fabulous product, and it meets so many different needs. Would you see the hub, you know, over, you know, say the next two, three, I don't know, five years, whatever timeframe you wanna put forward, being, you know, more of a primary driver of growth for Xos vis-a-vis, you know, kinda your other products or?

If this quarter and the demand that we're seeing in our current pipeline is any indication, then your the answer to your question is absolutely. There's a tremendous amount of interest. The demand is not coming just from the existing vehicle fleets that we work with. It's coming from an entirely new segment of customers that we haven't serviced before. The DC charger hub that we've been delivering and shipping to customers. Entirely new set of customers.

We've got several new variations that we're really excited to talk about, in another quarter or two, which will expand that market even further, and it's gonna really address some of the major challenges that we're experiencing in the U.S. right now, which are grid resiliency, power reliability and getting power based upon all of the demands that are coming from so many different industries, including, you know, data centers. We expect that to continue to be the primary growth engine and growth driver. But we obviously still have a lot of work to do in terms of getting that pipeline established and getting the product out there in front of customers to be completely aware of it.

Okay. I mean, it's exciting. I actually have more questions. I wanna be polite. I'm gonna step out. I'll get back in queue if there aren't anyone else. You know, either to get in after other people ask questions or I just wanna make sure that I don't get disconnected. I have more questions in case no one else has any. I'm gonna step out of line to make sure there other people can ask them. Thanks.

Thanks, Ted.

Once again, if you have a question, please press star then one. Our next question comes from Craig Irwin of Roth Capital Partners. Please go ahead.

Hey, guys. It's Andrew on for Craig. Thanks for taking my questions and congrats on the strong results. First wanna touch on the real impressive gross margins here. I understand how mix can have an impact in the quarter. You touched on that earlier in the prepared remarks, but can you just kinda talk about the, you know, the structural cost changes you've made to allow you to set you up to post a quarter with gross margins this strong?

Hi, Andrew. Thanks for the question. Just couple of things. You know, in addition to, you know, as Dakota and I mentioned in our remarks with the mix of the products being more favorable, but that was also as a result of the last several quarters' various initiatives we've made to reduce our overall direct material and overhead and direct labor costs that are directly contributing to our gross margins. Additionally, over the past several quarters, we've also significantly improved our inventory management processes, which have reduced other GAAP reserves. All in all of those factors contributed to the impressive gross margin results this quarter.

Great. Appreciate the detail there. Just piggybacking off the questions on the Xos Hub, you guys, you know, now have over 1 GWh of energy charged across your units. Can you guys just kind of talk about what you've learned from the early deployments that have helped you know, develop these different variants and as you've prepared to launch these products, you know, and reaching out to different end markets?

Yeah, absolutely. We've had some very demanding initial customers with this product, including some autonomous vehicle companies that have charged, you know, almost up to 100 vehicles per day on a single Hub unit. We've had Hubs that have charged nearly 2 MWh in a 24-hour period. They're really being put through their paces, and this is in extreme cold weather environments, extreme heat, you know, in Phoenix in the middle of summer. We've had several other partners and one major OEM, off-highway OEM, test the product at their proving ground here in the U.S. and put it through its paces for off-highway use too. There's been a tremendous amount of learning that came from that. I think the product actually probably performed even better than we had anticipated or expected.

That's not to say that there aren't, you know, preventative maintenance items and wear and tear items like charge cables and trailer components that we don't intend to repair in the field or, you know, don't have parts to repair as our customers continue to use them aggressively. Overall, the core architecture of the system, the energy storage system, the DC fast chargers, the AC power conversion, the software and controls have performed incredibly well. I think now we've tested on over 50 different vehicles interoperability, so that ranges everything from a small Chevrolet Bolt all the way up to a fully electric Caterpillar front loader, and pretty much every type of vehicle in between.

We're getting a wide range of different use cases, and that's contributed to future iterations that we're working on and developing and we'll be able to bring to market pretty soon. I'll let Gio add some additional context too.

Yeah. The other thing I would say is that these mobile charging units and our energy platforms benefit from the years and years and hundreds and of vehicles that we have on the road with very similar systems. The architecture of the hub does share some power electronics software and some battery DNA with our trucks, which were designed for on-road use. The mobile charging hubs are designed with that same team that has extensive on-road vehicle experience as well. From a durability perspective, this is not just a stationary battery and a stationary charger slapped onto a trailer. This was a product that was very intentionally designed for this use case from the ground up, and that's why we're seeing it performing so well in so many different applications.

Great. Really appreciate the color. Last from me, congrats on, you said a triple, delivery of powertrains to Blue Bird versus last year. Can you just kind of talk about how you see how the relationship has really evolved, you know, in the past? Maybe talk to ways you might be able to deepen the relationship with Blue Bird. May it be, like, additional product lines or other vehicle configurations.

Absolutely. We've been very fortunate to have built a great partnership with Blue Bird. They're an incredible organization from their engineering team to their sourcing and supply chain team, all the way up to their leadership team. They're very disciplined in their execution and approach. That's the reason they've been around for over 100 years. They're also, I think it's important to call out, they're the leader in alternative fuel powertrains, delivering more propane and more alt-fuel, you know, electric buses than any other bus manufacturer in the U.S. For them to evaluate and select Xos as a part of their electric powertrains is a pretty big accomplishment for us, and I think a pretty big testament to our engineering team. We're excited.

The first buses we've delivered last year are on the road working customer fleets. We're delivering that next batch pretty soon. I think one of the things that's critically important for these customers is to see the reliability. When they're performing in the field, and they're going out day after day, not having maintenance issues, not having service issues, that gives Blue Bird the confidence to be able to continue to grow this partnership with us. I think the other thing, Gio pointed out with the hub, is that our years of selling, you know, thousands of electric vehicles to our customers and other powertrain customers has built a tremendous amount of supply chain synergies in.

A lot of those cost savings that accrue to our bottom line on truck sales and vehicle sales and Xos Hub sales now are benefiting our powertrain customers as we're buying in some of those larger volumes and have historical supply chain relationships with suppliers that have products that support the step van and our Powered by Xos division. We're very privileged and feel fortunate to have that opportunity, and I do anticipate that that opportunity will continue to grow over time. We're working right now on expanding that pipeline beyond just them and other off-highway OEM customers that we have, but also into other on-highway operators and OEMs that could potentially use our powertrain and don't have their own powertrain technology in-house.

Great. Really appreciate the detail, and, congrats on the continued progress.

Thank you.

Our next question comes from Ted Jackson of Northland Securities. Please go ahead.

Thanks. Dakota, my next question was on the MacAllister Caterpillar relationship. I wanted you to kind of walk through a little bit. I was taking notes, but I don't think I got it all down straight. Like exactly how the hub is being deployed. You said it was a data center hyperscaler. Are there more opportunities behind that? Is it being sold as a Caterpillar product, or is it going as an Xos product? When I say, let me step back. When I say more opportunities, you know, I mean, I would think there'd be two, and one would be maybe other opportunities with MacAllister Caterpillar. You know, I mean, all those guys know each other.

You know, most people when they see, you know, someone With having success with the product, they'll start selling it too. If you see that as an opportunity to provide a lead into other Caterpillar distributors.

Yeah.

That's my first round of questions. Thanks. I got another one.

Absolutely. The product is going to support some of their electric construction equipment that they're deploying at one of these big data center sites. It's all zero emissions equipment that they're gonna be charging with it. You know, when you start to look at these hyperscalers, they are concerned about their environmental footprint and the impact they're having on not just power generation, but also the construction of building all of these sites. They're deploying some zero emissions equipment, and the hub is what's being used to charge that equipment. I think the opportunity exists beyond just MacAllister.

There's several Caterpillar dealerships that have been investors in Xos since we were a private company, and we've been reigniting several of those relationships, and evaluating multiple opportunities right now, specifically addressed at the data center segment, and short-term and temporary power for data center ramp-up and construction, but also long-term buffering. You know, we touched on it briefly, but right now the demands on the grid are beyond anything we have ever seen before. The demand for reliable grid utility scale power, can be years out from traditional IOUs or municipal utilities. What you see happening is a lot of behind the meter installations with gas turbines, with reciprocating generators, and more conventional power generation, and small scale power generation solutions.

Some of the announcements we've got coming out are gonna be addressed specifically at that market opportunity that we believe will continue to grow at least for the next five years, but probably well beyond that. There's an immense opportunity that exists there that is currently pretty underserved. When you look at even doing behind the meter installations for something like a gas turbine plant, your lead times on equipment for a gas turbine plant is probably in the five-seven year range right now, depending if you're working with GE or Solar or other suppliers. Some of the quickest solutions to market are reciprocating generators, and those need battery energy storage systems to be able to manage these loads and not damage the equipment that they're powering.

There really is an immense opportunity that we're focused on attacking right now, and we think the Hub is incredibly well-positioned with the existing architecture that we've developed. It's not really a lot of new technology we have to develop. It's an opportunity that leverages our core power electronics into a much, much bigger market.

Sounds exciting. My next and kind of like last topic and question which ties into this is, you know, you're, you're seeing great uptake with the hub. You're seeing, you know, solid growth with the powertrains. I mean, there's a chance that, you know, we could see, you know, what's the word I'd be looking for? Like, you know, like, you know, renewed interest with regards to, you know, kind of the strip chassis in and of themselves. The company has, you know, hardly put any CapEx down in the last couple of years. You know, at what point, if the Like, for instance, the opportunity with the hub, which, you know, to me seems, you know, just tremendous and right in front of you.

If it really takes off, at what point do you need to spend to handle that? Like, how much capacity do you have to be able to produce? Is there, you know, spend that has to happen to, you know, to fully utilize the capacity that you have? You know, do you see anyone with all this? You know, kind of as things ramp, I mean, we'll stop at that right now. That'd be my next one. I wanted to kind of get into, like, how it all tie back to where you start generating some free cash flow, which you've proven you can do also.

Yeah, it's a fair question. You know, really the nice thing about all of our product segments is they are utilizing the core components and technology, the same core components and technology across all of those business units. When we pivot to a new vertical or a new segment with a new product like the hub, we're really leveraging a lot of the same supply chain, a lot of the same assembly tools. That's not to say that we can't improve the line efficiency and build, you know, better, more capacity with our existing line configuration. I do think there's gonna be some nominal CapEx, but low hundreds of thousands of dollars to low single-digit millions of dollars.

The reality is because we're using so much of that same architecture, we're not having to invest in novel manufacturing CapEx or tooling or, you know, lift systems or facilities to support the ramp-up of that product. Obviously, there is an upper limit, but we've demonstrated in previous quarters our run rate for vehicles can get up to 150 units per month. We could easily parlay that working staff and the team that works on the truck line and a lot of the tooling that's utilized for the truck line to be able to build Hubs at that same run rate. We think there's a pretty significant opportunity just with the existing infrastructure and equipment and CapEx investments that we've already made to date.

Okay. I think actually that does answer everything for me because obviously, if you don't need to make those kind of significant investments to grow and you can get, you know, you have that kind of demand to drive up there, the, kind of the cash generation will take care of itself. Okay. Thanks very much.

Thanks so much, Ted.

This concludes today's conference call and the Q&A session. You may disconnect your lines. Thank you for participating and have a pleasant day.

Good day, and welcome to the Xos, Inc. Fourth Quarter and Full Year 2025 Earnings Call. All participants will be in a listen-only mode. Please note this event is being recorded. I would now like to turn the call over to David M. Zlotchew, General Counsel. Please go ahead.

Thank you, everyone, for joining us today. Hosting the call with me are Xos, Inc.'s Chief Executive Officer, Dakota Semler, Xos, Inc.'s Chief Operating Officer, Giordano Sordoni, and Xos, Inc.'s Chief Financial Officer, Liana Pogosyan. Today, after the close of regular trading, Xos, Inc. issued its fourth quarter and full year 2025 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 12/31/2025. Management's statements today reflect management's views as of today, 03/26/2026 only, and will include forward-looking statements, including statements regarding our fiscal year 2026, 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, Xos, Inc.'s ability to access capital when needed, continue as a going concern, Xos, Inc.'s ability to implement business plans and identify and realize opportunities, potential supply chain disruptions and/or economic downturns as a result of trade policies and tariffs or war in Iran and shortages of access to oil, energy, and other key industrial inputs, is included in today's press release and in our filings with the SEC, including our most recently filed 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 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 on the Investor Relations section of our website at www.xostrucks.com/investor-overview. With that, I now turn it over to our CEO, Dakota Semler.

Good afternoon, everyone. 2025 was the year Xos, Inc. proved something that many doubted was possible: that a young electric vehicle company operating with discipline, under real constraints, and without the luxury of unlimited capital could deliver a full year of positive free cash flow, grow its customer base, diversify its product portfolio, and emerge stronger on the other side. That is exactly what happened, and it did not happen by accident. For the full year, Xos, Inc. generated $46 million in revenue on 328 units delivered, more units than any year in our history. Our GAAP gross margin was 5.9%, marking our second consecutive full year of positive GAAP and non-GAAP gross margins. Full year operating loss narrowed 28% to $33.1 million, the lowest since we went public, and our adjusted EBITDA loss improved 33% to $23.5 million. But the number that I am most proud of is this: we generated $5.4 million of positive free cash flow for the year, compared to negative $49.1 million in 2024. That is a $54 million swing. And in Q4, we delivered our third consecutive quarter of positive free cash flow, the fourth time we have achieved that milestone since going public. Those are not just numbers; they are proof that our model works. In Q4 specifically, we shipped strip chassis already on their way to upfitters for a major customer program. Revenue recognized in the quarter was $5.2 million on 34 units, with the balance to be recognized in coming quarters as vehicles are completed and delivered. The signal is clear: demand is real, customers are returning, and scale is growing. Let me step back and put this year in context, because I think the arc of 2025 tells the real story of where this company is headed. We entered 2025 with a clear mandate: grow the business, protect margins, and manage liquidity with discipline. Every quarter, we executed on that mandate, and every quarter, the results compounded. Even amidst a tumultuous environment with frequent tariff changes and complex macroeconomic factors, we prevailed. In Q1, we set the foundation. We continued growing hub production at our Tennessee plant. At the same time, we strengthened our balance sheet and sharpened our cost structure. Q2 was a breakthrough. Revenue hit $18.4 million, the highest quarterly revenue in our history. We delivered 135 units, secured the orders for the largest production program in company history at over 200 units, and proved that national fleets are not experimenting with Xos, Inc. anymore. They are committing to us at scale. Q3 sustained that momentum. Revenue held strong at $16.5 million on 130 units. Our operating loss dropped to $7 million, the lowest since the company went public, and we achieved our second consecutive quarter of positive free cash flow, demonstrating that this was not a one-time event but a structural shift in how the business operates. And Q4 capped the year with continued execution. While Q4 is seasonally our lightest quarter, the team kept delivering, fulfilling our 200+ unit program, scaling Blue Bird powertrain production, and preparing the hub platform for its next chapter. Each quarter built on the last. That is what momentum looks like when it is earned, not inherited. Much of our 2025 volume went to organizations like UPS and FedEx ISPs, fleets that do not forgive unreliability, that do not tolerate downtime, and that do not adopt new technology unless they have deep confidence in the engineering and provider's ability to deliver at scale. Their confidence in Xos, Inc. is earned. It is validated by millions of miles on the road, with several customers now exceeding 1,000,000 miles across their Xos, Inc. vehicles, and evidenced by repeat orders that have grown in size. Our 200+ unit program represents the shape of the future for Xos, Inc.: deeper relationships, larger programs, repeatable volume. These large fleet agreements may compress margins in the near term, but they are the foundation of a durable industrial business. They create the volume and the credibility needed to expand margins over time. I want to personally acknowledge the Aldermay Automotive Company, whose support of Xos, Inc. has been unwavering. Together, we amended the repayment structure of the convertible note, moving from a single August 2025 maturity to quarterly installments through February 2028. This is not just a restructuring; it is a change that allows us to operate from a position of focus rather than constraint. Aldermay is now our largest shareholder, a strong signal of their conviction in our long-term trajectory. Our collections execution was exceptional this year. Accounts receivable came down from $26.9 million to $6 million, driven by $14 million in Q4 collections alone, including the $9.9 million from UPS. Liana will walk you through the full liquidity picture, but the takeaway is this: we ended the year with $14 million in cash, up from $11 million, while simultaneously paying down obligations and investing in growth. Even as the step van continues to drive substantial revenue, our strategy has never been limited to a single product. In 2025, we deliberately expanded into higher margin, less competitive categories, and that strategy is now delivering real results. Our powertrain business had a breakout year. We delivered 15 powertrain systems to Blue Bird Corporation in Q4 alone, and since Q2, we have received nearly 100 additional orders. School districts are electrifying, and our technology—modular, reliable, and highly serviceable—is becoming the backbone they trust. Gio and I attended the Blue Bird Dealer Meeting last year, and the engagement from dealers and districts is exciting, and we believe it will translate to a robust pipeline that we expect to convert over the next one to three years. And finally, 2025 saw the emergence of our flagship Xos, Inc. Hub product line, which we are expanding in 2026. 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 is not a prototype. It is deployed. It is working, and its impact is expanding far beyond transportation. In 2025, we deployed hubs to utilities, fleet operators, and industrial users. We showcased the hub at RE+, the largest renewable energy conference in North America, where it drew significant attention from energy developers and utilities looking for mobile power, resilience, and peak-shaving solutions. The response confirmed what we already knew: the hub addresses a problem almost no one else in the market is addressing effectively. We are now preparing the 2026 hub update, offered in three size configurations ranging from 210 to 630 kilowatt-hours, delivering greater power resilience, energy cost optimization, and advanced load balancing capabilities. This is not just a charging product. It is a mobile energy platform capable of serving industrial users who require temporary power, peak shaving, and resilience where grid infrastructure is delayed or nonexistent. That dramatically widens our total addressable market and positions Xos, Inc. as an energy company, not just an electric vehicle company. As we look to 2026, the opportunities in front of us are expanding. Order sizes are increasing as customers experience the real-world cost advantages of our trucks and our charging solutions. Our product pipeline—the upgraded hub, our powertrain expansion with Blue Bird, and the continued growth of our step van business—align with secular markets that will grow regardless of political cycles, incentives, or noise. I believe 2025 was the year Xos, Inc. proved it could build a durable industrial business. 2026 will be the year we scale it. And while some may perceive a pullback in the U.S. EV market, Xos, Inc. keeps pulling forward. We are not just enabling cleaner delivery vans carrying packages. Xos, Inc. also provides cleaner and more efficient transportation of school children through Blue Bird’s powertrains, enables unloading of cargo vessels in ports with Wiggins, and charges fleets of autonomous rideshare vehicles. There is even a Xos, Inc. ice cream truck in Sacramento. The breadth and variety of our deployments underscore the foundational strength of our technology and the enormous opportunity that lies ahead. With that, I will turn it over to Gio to walk through the operational highlights of the quarter and the full year.

Thanks, Dakota. 2025 was a year defined by focused execution, operational discipline, and continued progress towards scalable production. I will walk through our fourth quarter performance and then zoom out to highlight our full year operational achievements across manufacturing, engineering, and the supply chain. In the fourth quarter, we continued to demonstrate consistent production execution across our core product lines at the factory in Tennessee, while also executing on the launch of new powertrain kit variants for Blue Bird and preparing for the launch of new mobile charging hub variants. At our Birdstown, Tennessee facility, the team continued building and delivering against our over 200-unit UPS program, maintaining a steady production cadence and reinforcing our ability to execute on large fleet commitments. We expanded our manufacturing capabilities by adding a dedicated production line within our facility for Blue Bird kit development, which began producing kits in the second quarter of last year. This expansion of our kit production line marks an important step in scaling our powertrain systems business and supporting external OEM partners like Blue Bird. We also initiated the development of a more robust production line for the next generation of our mobile charging hub. We are now offering it in three size configurations, ranging from 210 kilowatt-hours all the way up to 630 kilowatt-hours. This new line layout allows for scaled production at higher volumes in 2026, while producing several variants on the same production line. From an engineering perspective, our team was focused on developing new powertrain variants for Blue Bird, as well as improved versions of our charging hubs and improvements on our chassis. At the same time, our supply chain organization remained focused on navigating tariff dynamics while continuing to drive direct material cost impacts where possible. We resourced some components, localized others, and negotiated with our supply base to share in the cost of the new tariff impacts that we saw in 2025. Stepping back to the full year, 2025 marked a meaningful step in building a more efficient, scalable, and margin-focused operating platform. Our engineering, supply chain, and manufacturing groups worked together to build and deliver over 328 units while reducing operational and direct material costs throughout the year. We also engineered and launched new product variants while improving on existing products, all the while contributing to reductions in overall operating expenses of 28% that Dakota mentioned. In 2025, the engineering team enhanced our vehicle product offering and introduced improvements like galvanized frame rails, which improve long-term corrosion resistance and durability for our fleet customers. These types of targeted upgrades reflect our focus on delivering higher quality, longer life vehicles. The engineering and supply chain groups collaborated to reduce the bill of materials cost of the strip chassis by making changes to our design and sourcing strategy. We expanded our engineering and product capabilities, including the development of five distinct powertrain kits to support Blue Bird’s school buses. This work further establishes Xos, Inc. as a flexible electrification partner for OEMs looking to benefit from battle-tested powertrains that have driven millions of real-world miles by our fleet customers. At the plant in Tennessee, our manufacturing team established a production line for powertrain kits and expanded our hub production line. The team built vehicles more efficiently than ever before, reducing the labor hours per vehicle, while building at a rate of three units per day at certain points throughout the year. Building at these volumes for UPS is evidence of Xos, Inc.'s ability to ramp up our supply chain and manufacturing capability to meet high volumes for large national fleet customers. We were also able to negotiate the termination of the Mesa, Arizona lease that we inherited from our merger with LeXoR Mechanica, which resulted in a total cash savings of $20.7 million. From a supply chain perspective, 2025 was defined by disciplined execution in a volatile environment. The team successfully navigated tariff uncertainty through a combination of strategic stockpiling, cost restructuring, and proactive planning, while also implementing shared-risk supplier agreements to help absorb tariff impacts and protect margins. At the same time, we strengthened our battery sourcing strategy by onboarding a top-tier global supplier for our hub programs and locking in pre-tariff pricing through 2026. This approach gives us both cost stability and supply continuity as we scale production. We also made meaningful progress in how we manage working capital and inventory. The team introduced a more robust annual procurement and inventory planning process, improving forecast accuracy and better aligning spend with our production needs without compromising supply reliability. In parallel, we advanced our supplier strategy by expanding dual sourcing and geographic diversification across critical components, reducing dependency risks while increasing supplier competitiveness and flexibility across the supply base. Importantly, these initiatives translated directly into financial performance. The supply chain team delivered meaningful direct material cost reductions across key components, contributing to the company achieving positive gross margins. During the year, we were able to maintain or reduce direct material costs despite headwinds from tariffs, and at the same time, we maintained strong supply continuity despite variability in schedules and ongoing supplier constraints, proactively managing lead times, inventory levels, and delivery commitments to keep production running smoothly. Overall, 2025 was a year where we improved our product, strengthened our cost structure, and laid the foundation for scalable growth across trucks, powertrains, and our hub platform. We maintained positive gross margins despite changes in product mix and reserves and write-downs in 2025. We achieved a 28% cost reduction in operating expenses. We improved our cash position with faster inventory turns. As we look ahead, our focus remains on continuing to drive cost discipline and seek margin expansion, scaling efficient production across our core multiple product lines, and preparing our operations to support increased demand in 2026 and beyond. With that, I will turn it over to Liana to walk through the financial results.

Thanks, Gio. Before getting into the details, I want to take a moment to highlight the meaningful progress we made in 2025. This was a year of execution and important milestones across the business, from achieving positive free cash flow for the full year and improving liquidity to driving substantial reductions in operating losses and expenses. At the same time, we took decisive actions to strengthen our balance sheet, optimize working capital, and position the company for more sustainable, long-term growth. For the full year of 2025, revenue totaled $46 million on 328 units, compared to $56 million on 297 units 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 decline in total revenues. For the fourth quarter 2025, revenue was $5.2 million on 34 units, down from $16.5 million on 130 units last quarter and $11.5 million on 51 units a year ago. Revenue is down as a result of our reduced deliveries during a slower time of the year as the company began shifting focus and allocating resources to powertrain and hub production. This quarter's deliveries were mainly driven by our hub and powertrain product lines, including 100 units between 2025 and 2026. Turning to gross margin, we continue to make meaningful progress in building a more sustainable and scalable business. For the full year, GAAP gross margin was $2.7 million, or 5.9%, compared to $4 million, or 7.1%, in 2024. Performance for the year reflects product mix, including a higher volume of low-margin strip chassis units under the UPS order, as well as certain inventory write-downs associated with our commercialization strategy. Tariffs reflected in cost of goods sold were a meaningful headwind to margins this year. Non-GAAP gross margin for the year was $4.1 million, or 8.8%, compared to $10 million, or 18%, in the prior year, driven by the same mix dynamics and normalization of inventory-related adjustments. Importantly, this marks our second consecutive full year of positive GAAP and non-GAAP gross margins, underscoring the structural progress we have made and our clear path towards margin expansion over time. For the fourth quarter, GAAP gross margin was a loss of $2.6 million, primarily driven by discrete items, including additional inventory reserves and write-offs due to a shift in the commercialization strategy and warranty reserve updates. Excluding these items, non-GAAP gross margin was a profit of $300,000, or 5.2%. While down sequentially, this marks our tenth consecutive quarter of positive non-GAAP gross margin, reinforcing the consistency of our underlying performance and the strength of our margin foundation as we continue to scale. Turning to expenses, our full year 2025 operating expenses were $35.8 million, down $14 million, or 28%, from $49.8 million last year. These sustained reductions reflect the structural impact of actions we have taken and underscore our disciplined approach to managing the business. Fourth quarter operating expenses were $7.1 million, representing a $2.4 million, or 25%, reduction from prior quarter and a $3.8 million, or 35%, decrease from the fourth quarter of last year. Fourth quarter operating expenses benefited from $1.7 million of nonrecurring favorable adjustments related to a settlement of finance equipment leases and certain vendor payables. Excluding these items, operating expenses would have been $8.8 million, reflecting continued sequential improvement from the third quarter and a more normalized run rate. We made strong progress on operating performance in 2025, with operating loss narrowing by approximately 28% to $33.1 million from $45.9 million last year. Non-GAAP operating loss improved by approximately 24% to $24.3 million, reflecting continued momentum towards profitability. Operating loss for the quarter was $9.7 million, higher than the third quarter mainly due to the discrete items mentioned, but significantly improved from $14.6 million in 2024. Non-GAAP operating loss improved to $4.6 million, compared to $4.8 million in the third quarter and $6.4 million in the fourth quarter of last year. Our full year EBITDA loss was cut by more than half, improving to a loss of $21 million from $42.2 million in 2024. Adjusted EBITDA improved to a loss of $23.5 million from $34.8 million, a 33% improvement, reflecting the compounding benefits of cost discipline and operational efficiency. As we have said, our focus this year has been on execution, financial discipline, and strengthening the foundation for sustained growth, and in 2025, we made meaningful progress across each of these areas. We took a series of strategic actions to strengthen our balance sheet and extend our financial runway, ending the year with $14 million in cash and cash equivalents, up from $11 million at the end of last year. This improvement in liquidity was driven by several key factors. First, accounts receivable declined significantly to $6 million at year end from $26.9 million last year. This was driven by another year of very strong collections—approximately $66 million of collections from customers and state grant program administrators. Second, we successfully launched our ATM program during 2025, generating $2.4 million in net cash proceeds during the year. Third, we continued to execute on strategic inventory management, with inventory declining to $25 million from $36.6 million last year. This reflects strong unit sales outpacing production, as we moved more units from existing inventory while positioning ourselves to support upcoming deliveries. Fourth, we amended our $20 million convertible loan note, extending principal payments to begin quarterly in Q4 2025 through Q1 2028, enhancing liquidity and providing greater financial flexibility. Lastly, in Q3 2025, we reached an agreement to terminate our Mesa facility lease we had assumed as part of the EMV acquisition. This action is expected to generate approximately $21 million in cash savings through 2026. While the agreement requires 18 monthly payments through March 2027 totaling about $2.8 million, it significantly reduces our long-term obligation. As part of the termination, we also recognized a $9.9 million gain in nonoperating income along with related GAAP adjustments, including the removal of the associated operating lease liabilities. We continue to actively manage our liquidity position throughout the fourth quarter while advancing additional opportunities to further strengthen it. Together, these actions reflect our disciplined approach to capital management and reinforce our commitment to enhancing financial flexibility and positioning Xos, Inc. for long-term stability and growth. Beyond the balance sheet, we continue to execute well. We generated positive free cash flow of $5.4 million for the year, a significant improvement from negative $49.1 million last year. Fourth quarter free cash flow was $2.4 million, compared to $3.1 million last quarter and $3.3 million in the same period last year. This marks our third consecutive quarter of positive free cash flow and the fourth time we have achieved positive free cash flow since going public. This consistent performance highlights the strength of our execution and the durability of our operating model. We are building a business that is increasingly self-sustaining, with disciplined capital deployment and a clear path to continued improvement in cash generation. Finally, turning to the guidance for 2026, we anticipate revenue to fall within the range of $40 to $50 million, unit deliveries to be within the range of 350 to 500, and non-GAAP operating loss to be in the range of $11.9 to $13.3 million. With that, I will turn the call back over to Dakota.

Thank you, Liana. To close, I want to step back to what 2025 really represented for Xos, Inc. A year ago, the question many had was whether a company like ours could sustain itself—whether we could grow, manage costs, and generate cash in a market that was still sorting itself out. The answer is in the results: positive free cash flow for the year, our lowest full year operating loss since going public, our second consecutive year of positive gross margins, a product portfolio that is broader, stronger, and more relevant than at any point in our history. None of this happened by accident. It happened because this team questioned assumptions, executed with discipline, and refused to accept that building an industrial company from scratch required cutting corners on quality, on service, or on the ambition of what Xos, Inc. can become. Stepping into 2026, our priorities remain clear: accelerate growth, reinforce liquidity, and continue expanding margins. The foundation is built. Now it is the time to scale. With that, I will hand it back over to the operator for questions.

We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. Please press star then 2. Our first question comes from Craig Irwin with ROTH Capital. Please go ahead.

Hey, guys. It is Andrew on for Craig. Congrats on the progress, and thanks for taking my questions. The first one for me is on the new hub products you guys announced you are starting to develop in 2026. Can you kind of talk about the opportunities, especially these larger products have with customers outside of the typical EV charging opportunity?

Yeah, thanks for the question, Andrew, and I appreciate you joining. I think there is a little bit of background noise coming from your line, so if it is possible, maybe just to mute, that would be helpful. But in regards to the question on the hub, we really have been focusing on listening to customers over the last year and a half to two years since we rolled out our first units. What we learned is that there are a variety of different use cases that people have been using them as. Some have been using them as a direct replacement for large DC charging infrastructure sites. Like our autonomous car fleet, they charge sometimes up to 80 vehicles a day with a single hub unit—so very high-throughput power discharge and charge application. Some folks have been using them for remote power. One of our utility customers, a big water utility in Southern California, utilizes it for when they do pipeline shutdowns. They will roll out a hub, and all of their EV equipment can charge out in the field when they have a few-day kind of pipeline shutdown. Then we have got other utilities using them for disaster preparedness. When hurricanes or storms come, they will roll one out into the field for customers, and it dramatically expands their existing DC charging infrastructure when people are looking to evacuate a specific zone within their territory. So a ton of different use cases, different sizes of vehicles being charged, and different kinds of applications. Some are remaining plugged into the grid, some are completely off-grid, some are using mobile gensets to power them. The next iteration was really designed to address those different use cases. The first element that we have incorporated is these new energy storage capacities. We started with a slightly smaller energy storage capacity for really light-duty Class 1, Class 2 pickup trucks—fleets that are not going to see a ton of throughput on a hub—to be able to offer a more competitive price point, and that product can really be used in lieu of traditional DC fast chargers. We have a lot of customers that are deploying them in fixed applications because it is much more cost effective than deploying conventional DC fast chargers with their energy storage systems. We have our new kind of mid-tier, what we are going to be calling our flagship variant, which is our 420 kilowatt-hour version, and that is going to replace the last version, which was 280 kilowatt-hours. Competitively priced in the same territory as our previous unit, but you are getting basically another 30–40% additional energy storage capacity on that unit, and you are still able to keep that unit sub-10,000 pounds, so you do not need a CDL to drive it around. It can be rapidly deployed with a pickup truck, just basically building better capabilities—more energy capacity for our customers—but doing it at the same price point. And then that third largest variant, the 630 kilowatt-hour configuration, is really designed for our larger battery capacity operators—customers that are running medium-duty or heavy-duty trucks that need rapid power deployment. That is really going to be for your medium-duty trucks—Class 5–6 trucks like ours—as well as getting into Class 7 and 8 electric zero-emission vehicles and off-highway products. We actually have a customer now building a large data center in Indiana, and they have inquired about some of their zero-emissions construction products utilizing this larger capacity unit. So it is a perfect application for both on-highway traditional applications that we have been serving for the last year and a half or so, but also a lot of new off-highway construction, agricultural-type applications too. That is just the first variant and first kind of product launch that we announced earlier this year. We have got several more announcements and several more upgrades to the hub product that are really exciting about the capabilities and configuration that we are going to be talking about probably in Q2 and Q3, the end user markets that these new versions will address, which are going to be potentially even larger than the markets that we are serving today.

Great. I appreciate the detail. I am looking forward to those announcements later in the year. Second one from me, kind of a similar question—you were talking about exploring new designs for your powertrain product. Can you kind of just talk about how that may expand the opportunity set as you ramp that business unit?

Yeah, and specifically in regards to the powertrain products? Talking about looking at new designs for the powertrain products. Yeah. One of the things we have been able to do over the years is take all the learnings from deploying thousands of our own vehicles on the road and apply that to our other segments, including the hub product and the powertrain product. We are not starting from scratch; we are building upon a foundation of engineering that we have invested in over the last ten years. Now those variations that we are selling are being sold into a wider variety of products. We talked a lot about our school bus partnership and relationship. We are developing several configurations there, addressing the traditional Type C school buses, which is the largest part of the market and represents anywhere from 70% to 85% of the market on an annual basis. But we are also developing a rear-engine configuration that we are in production with now for traditional Type D buses, which is in use in places like California and some other markets. We have really done a lot to focus on commonizing our platforms to drive reliability and service performance in the aftermarket. These buses and trucks are expected to run ten to fifteen years in most cases, but also driving cost competitiveness, and that is a key attribute that our customers are interested in. They do not want another premium product that is entirely dependent upon incentives. Everybody wants to be able to scale without being reliant on incentives, and so the focus is driving cost competitiveness to eventually achieve parity with diesel. By commonizing components, commonizing parts, and building supply chain synergies across our product portfolios, we are able to achieve scale even in segments that might be considered niche. A lot of work has been done by our engineering team to achieve that and particularly our supply chain team to realize those synergies. That work is continuing this year. We have got a couple new variants that we are working on that will hopefully ship into production by probably Q4.

Our next question comes from Ted Jackson with Northland Securities. Please go ahead.

Hey, thanks for taking my questions. First, just out of curiosity, are you going to file your K?

We are. Okay—good. Oh, sorry, not the K. We filed the 8-K. The 10-K is going to be filed likely on Monday.

Okay, so I will not have a cash flow statement from you until Monday, basically?

No—you will be able to reconcile it on Monday.

Okay. Then there is a bunch of data in there that typically is not available, but I want to maybe dance around it unless you want to tell me, because I wanted to bring it forth into 2026. So, you know, typically, you break out the revenue within, or units within, kind of step vans and powertrain and other. Can you talk with regards to what that mix was in the fourth quarter? And then when we think about that mix in 2026, how would we think about it? I would assume that there is going to be a shift to a greater number of units coming from powertrains and hubs, given what is going on with Blue Bird and all the effort you are making with hubs, but maybe a little discussion about how you see your unit mix evolving from what we have seen in the fourth quarter—really, I guess, 2025. That is my first question. Thanks.

Thanks for the question. The details of the unit mix will be disclosed in our 10-K that we are planning to file on Monday. But I would say directionally for 2025, the majority of the units were predominantly step vans, and hubs and powertrains made up the remainder of the mix for the full year. For the fourth quarter, powertrain and hubs drove the significant volume, with step vans being less significant.

And then when we think about 2026, whether it is the—given the focus of the company—we should expect to see a pronounced shift to more powertrains and hubs relative to that?

Appreciate the question, Ted. When we are talking about 2026, we do not guide to the ranges. However, the rate of growth that we are seeing in both the hub business and the powertrain business is high double digits and could easily exceed triple digits this year. The relative rate of growth is increasing significantly as compared to step vans. We still anticipate step vans will grow and sustain a lot of our core customers, but overall, we expect the other two to grow increasingly. We do not want to put too rough of a number on it, but there is a general consensus that we are seeing a lot of demand, particularly with the new variants of the hub that we have released, and then also a lot of demand with the school bus powertrains that we are building today.

And those are your higher margin products, and you did kind of a lead in terms of your discussion of that last quarter that you are making strides. You will—just to share some of the tariff costs with your customers—you know what I mean? On those higher margin products, it will not show up per se 100% through to you. But can you talk a little bit about how you would see—you know what I mean? Because if you look at gross margin this quarter, and I am going to talk GAAP because it is what I have in front of me—but your gross margin for the year was down. Would we see a pronounced improvement with regards to gross margin because of the mix? I mean, could you get yourself north of what you did in 2024, or is that too much?

Yeah, that is a great question. We did have some one-time impacts to gross margins that hit last year that we do not anticipate will be recurring. In regards to gross margins across the portfolio, I would say the hub is probably the strongest margin one. The powertrains are comparable to what we see in the step van realm. The reason for that is there is a lot of engineering effort and investment that goes into development for those new platforms. A lot of that gets amortized over the overall revenue that we generate from that segment. Comparable to step vans, for hubs, and powertrains and step vans, we do an annual pricing exercise where we try to realign pricing with all of the factors from the previous year taken into consideration. I do not want to communicate what is going to happen with tariff strategy or tariff policy in the next twelve months, but I think things have slowed down and have become a bit more stable in terms of tariff volatility and tariff changes. So we anticipate that our 2026 pricing, which factored in a lot of the tariff impacts that we were aware of from last year, will allow us to achieve those target margin ranges without having to go back to the customer and have them make concessions or share in any additional tariff exposure. The way we see it, we are very transparent with these customers around the tariff exposure and the tariff cost structure. It is not benefiting either of us. It is increasing your cost basis for the products that we are both building together. A high degree of transparency is shared with those customers, and I think that level of transparency creates appreciation for them in order to be able to share in some of that exposure and cost. But our 2026 pricing does have it factored in.

Shifting over to the UPS program. So the 200-unit program—you have been putting units out to it. Can you give us some kind of sense in terms of that program? How many units have you shipped and how many are left, and the time frame?

Yeah, the vast majority of them have shipped. There are only a few units that will hit this quarter that we will be recognizing revenue for, which have actually already been delivered, but we still need to meet all of the other revenue recognition criteria. Most of those units are on the road and operating every day delivering packages. You probably cannot tell that they are a Xos, Inc. truck. There are no markings or logos on them, but if it says “electric vehicle” on the side, there is a very high likelihood that it is a Xos, Inc. truck. They are running in California, Texas, Pennsylvania, New York, New Jersey—all over the place. It is very likely that if you are in one of those major states or cities, you will see them on the roads.

Well, that is exciting. I will not see them up here in Minnesota, but maybe someday. How about on powertrain? You shipped 15 to Blue Bird this quarter; I think it was 10 last quarter. You had orders of 100 since the second quarter. Is it fair to assume that three-quarters of the volume that you have gotten from Blue Bird is on the come, if you will?

Yeah, it is a good question. We do a lot of close work with their production planning team and coordinating and organizing to ensure that we are meeting their demand forecast. But they are also selling a number of other buses and their other fuel powertrains, so it does vary and fluctuate quarter to quarter, and it really comes down to their build schedule. We do anticipate that business will grow, as I was saying before, probably double digits, if not triple digits in terms of percentage this year. We have already started to see that demand come in with that order of 100 units since our last quarter. The great thing about that business is there is still very, very strong interest in that market. School buses are an ideal application to go electric. They do very short routes, generally driving twice a day. Even for some of the longer-range vehicles, they are doing field trips and other activities. They are not long-range vehicles. We also announced in Q1 an accomplishment that the newer vehicles will actually have V2G capability on them, which is becoming critical for obtaining funding and public incentive funding for procuring or acquiring these vehicles for school districts. Really, for us, we see that application continuing to grow over time. We have been very fortunate to have such an incredible partner like Blue Bird that has invested in us, continued to grow with us, and continues to share in several of these opportunities, because I think they see the reliability and durability that our platform has brought to them, and they see the cost competitiveness versus some of the other solutions that are out there in the market.

So you provided a good segue into my next question, which is on the two-way charging capabilities that you announced in the quarter. Given that a battery system has so many cycles of charge and discharge, when you put something like that in place, does it change the lifespan of that infrastructure? Is there much of an impact for that? And is there any kind of resistance because of it?

Yeah, that is a great question. Any use of the battery or any component in the powertrain is going to have an impact on the overall lifespan. In the context of V2G, the discharge rate for most V2G chargers and V2G vehicles is not nearly the most intense use of the battery pack. The most intense use is often fast charging. If you are doing 1C charging on the vehicle—that is 1C or 2C charging depending upon the battery system. When you are doing V2G charging, for instance, a typical bus battery for us might be around 200 kilowatt-hours. A typical V2G power connection is usually only about 60 kilowatts, so it is equivalent to like a 0.3C charge rate. Without getting too much into the technical specifics, it is a much lower charge demand. It still does create some degradation and it is utilizing the pack, but it is not a very intense use case like you have with fast charging. All of that is factored into our long-term warranty. We warrant on usage as well as on duration of when the vehicle is deployed. So we have warranty programs depending upon what the customer wants and what our suppliers want, that will extend that. We have done a ton of work in qualifying the batteries and characterizing them to make sure that we can hit those warranty periods. That is largely in part due to the newer battery chemistry that we have been using for the past four years or so, which is our lithium iron phosphate battery pack that enables us to achieve those higher extended life cycles.

Is there an ability for you to retrofit any of your installed base with that capability? I would imagine you would be interested if you could.

Yeah, for some of our later-generation vehicles that we have recently delivered, we have explored the potential to install the V2G capability. It is a pretty simple hardware change and a software change. We have not determined whether it is enough opportunity to pursue and commercialize and offer it to customers, but from a technical feasibility standpoint, it is something that we have evaluated and feel that we could do.

Let me ask one more, and then I will get out of line. I am going to cycle back in if there is time. Going back to Blue Bird and the hub—you have a really strategic opportunity there. Are they interested in the hub? Is there any chance that you have them as a distribution partner for you for the hub? Or do they bring you in for sales and such? It seems like a logical place for the hub to go.

Yeah, it is a great question. Blue Bird itself has obviously been very interested in the product, but they have an incredibly robust dealer network that they partner with, which is crucial in their distribution of their products. We have actually already started building relationships with several of their dealers who have been delivering the buses with Xos, Inc. powertrains in them. Those folks have been a great touch point to socialize the product for the end school district fleets, so we have already had several of those conversations. We do think there is a tremendous opportunity in those school bus fleets. Oftentimes, they do not have the adequate power in their yards because they have not had EVs in their fleet before, just like most of our customers. The hub is a perfect application. Generally, a lot of these sales—the average sale of a school bus transaction—is very low volume; it can be single-digit units. The hub really is a perfect product to be able to support those smaller deployments that do not currently have infrastructure in place. We are looking to expand that distribution segment with our existing hubs commercial team.

And so you would be going into that distribution network with the blessing of Blue Bird. Blue Bird would not be, like, OEM reselling your product into it themselves?

That is correct.

I have a couple more questions. On the new hubs, you said they would start becoming available in April, which is next month. Is that still on track?

Yeah, actually the first 420 kilowatt-hour variant shipped this quarter. We have a couple units that are going out, and everything after this will be all of the new options.

Well, that is exciting. Thanks. This is a working capital question. The improvement in working capital that you guys have done in 2025 is unbelievable—amazing. But if I look at the balance sheet in the fourth quarter and I see your receivables and everything, I am hard-pressed to see that there is much more improvement that you can get. When you think about 2026 and your ability to generate cash, is there more cash you think you can get off the balance sheet, or is it going to be more based on access of the ATM and revenue growth and margin improvement?

It is a great question. The first thing I would start with is on the working capital utilization standpoint. We still have about $25 million in inventory, and not all of that—only a very small portion of that—is finished goods, but that usable inventory is the primary means of generating more cash for working capital in the year. We are continuing to focus on the longest segments of our inventory conversion process to optimize and cut those down to make sure that we can turn that inventory. We want to be really, really lean. We want to get to multiple inventory cycles per year, which we still have yet to do. The first thing we are working on is optimizing that inventory, turning it over quicker, building to order, delivering products faster, delivering more strip chassis as opposed to step vans, and delivering more hubs, which is a complete assembly that we build. Same with powertrains—it is a completed assembly, so we recognize revenue as soon as it is delivered. So the product mix will favor that and help that, as well as just our improved processes internally to order, spec, and get vehicles delivered. We do hope to be able to utilize the ATM in the year ahead. We are going to figure out when there is an optimal time to be able to do that. That is why we have that facility outstanding. We are going to be selective about it, and we do not want to overly dilute the cap table and impact investors, particularly where the stock is today. I think there are other things that we can continue to do and improve. We have taken a pretty hard look at OpEx, and we do not believe OpEx is going to be restructured that heavily in 2026, but there are some expenses that will continue to reduce and burn down through the year, which will be favorable for working capital. Lastly, growth in new segments—having products such as the hub and the powertrains that we do not ever have to deliver as a partially assembled vehicle, where it is sitting in somebody else's hands, which could be for months on end—will dramatically enable us to reduce that inventory count and value over time and speed up our inventory turns.

That is a good point. Then jumping back over to the hub, last quarter you talked about going into some new avenues with the hub—power and resiliency—and you mentioned that you would be able to provide some more color. Can you maybe give a little update on what is going on with regards to your efforts to position the hub for that and penetrate?

Yeah, it is actually a big area of focus for the engineering team as well as our sales and business development team right now. We think that there is a niche that is not being serviced right now in the power reliability and power resiliency markets, not just for mobile applications but also for fixed applications. I can talk about it at a high level, but with the influx of data center demand creating huge demands on the grid for power, every industrial power user is now competing with the likes of those customers, which are willing to pay premiums for power delivery and they are willing to pay premiums for power reliability and resiliency. Now folks that operate a 3PL warehouse or a cold storage facility or any other kind of industrial power consumer are going to be competing with the likes of Google and Facebook and many of these other larger companies that are incredibly well capitalized, looking to buy power or even establish behind-the-meter infrastructure. Our focus is on solving the niche segment, which is going to be power reliability, power resiliency, and being able to provide those industrial power users that are focused on keeping their operations going and continuing to grow. Data centers are one application, but we believe that is one segment of many that will need power reliability in this current industrial grid environment that we are in today.

Okay. And then my last one, just more for clarity. When we talk about powertrains, it is kind of almost interchangeable—powertrain business and Blue Bird. You talked last quarter about 10 of shipments to Blue Bird, this quarter 15. Is there other customers other than Blue Bird that are taking powertrains, or is Blue Bird right now kind of the only thing and something you want to build off of?

There are a few other customers. The customer diversity is not nearly what it is in the vehicles business, but it is something that we are working on—diversifying and building up new customers there. I think with our latest powertrain platforms that we have been developing, we should have a lot more interest coming from some other off-highway customers and other segments that we have not really gotten the best penetration in previous years.

Okay. Alright. That is it for me. Thanks for all the time. I appreciate it.

Thanks, Ted. I appreciate all the questions.

This concludes our question and answer session. Thank you for attending today's presentation. You may now disconnect.