Xos, Inc. (NASDAQ:XOS) Q4 2025 Earnings Call Transcript

Xos, Inc. (NASDAQ:XOS) Q4 2025 Earnings Call Transcript March 26, 2026

Xos, Inc. misses on earnings expectations. Reported EPS is $-0.87295 EPS, expectations were $-0.73.

Operator: 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.

David M. Zlotchew: 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.

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.

Giordano Sordoni: 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.

Liana Pogosyan: 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.

Dakota Semler: 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.

Operator: 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.

Q&A Session

Andrew (for Craig Irwin): 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?

Dakota Semler: 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.

Andrew (for Craig Irwin): 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?

Dakota Semler: 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.

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

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

Liana Pogosyan: 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.

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

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

Ted Jackson: 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.

Liana Pogosyan: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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.

Dakota Semler: 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.

Ted Jackson: 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.

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: That is correct.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

Ted Jackson: 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?

Dakota Semler: 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.

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

Dakota Semler: Thanks, Ted. I appreciate all the questions.

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