Xos, Inc. (XOS) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Individual investors ...

Acquisition and Partnerships - Xos completed the acquisition of ElectraMeccanica, converting each share into 0.0143739 of a share of Common Stock, totaling 1,766,388 shares[30]. - The acquisition of ElectraMeccanica is expected to enhance capital position and provide growth opportunities, but realization of these benefits is uncertain[208]. - The company is actively pursuing partnerships with OEMs to supply powertrain kits for various commercial vehicles[51]. - The company has entered into MOUs with key manufacturers and suppliers to form strategic alliances, but there is no guarantee these will lead to successful relationships[125]. Product and Technology Development - The next-generation Xos Hub™ offers 280kWh of energy storage capacity and charging rates up to 320kW, allowing simultaneous charging of up to four electric vehicles[40]. - The X-Platform chassis is designed for medium-duty commercial vehicles, focusing on durability and reliability for last-mile applications[44]. - Xos utilizes lithium iron phosphate (LFP) battery packs, which are known for their long cycle life and reduced reliance on rare earth minerals[46]. - The company plans to release refreshed versions of its vehicles as battery technology evolves, which may affect the adoption of existing products[121]. Financial Performance and Risks - The company incurred an operating loss of $45.9 million for the year ended December 31, 2024[174]. - Negative cash flow from operating activities was $48.8 million for the year ended December 31, 2024[178]. - The company faces substantial doubt about its ability to continue as a going concern for the next 12 months due to uncertainties regarding capital access and operational funding[102][108]. - The company may face significant capital needs and may need to raise additional capital, which could dilute stockholders[180]. - The company is dependent on the adoption of electric vehicles by last-mile delivery fleets, and any failure in market development could materially impact its business[120]. Customer and Revenue Concentration - Three customers accounted for 34% of the Company's revenue during the year ended December 31, 2024, with individual contributions of 13%, 11%, and 10%[52]. - The company relies heavily on a small number of customers for revenue, and any loss or reduction in purchases from these customers could adversely affect financial performance[110]. Regulatory and Compliance Challenges - The company is subject to fluctuating raw material prices and potential supply chain risks, with key suppliers including CATL and Dana[60]. - The company is exposed to fluctuations in material costs, which could impact margins if not recouped through sales[146]. - The company faces regulatory risks related to U.S. trade policies and tariffs, which could adversely affect costs and demand for products[212][213]. - Compliance with substantial regulations is necessary for the company and its suppliers, and failure to comply could harm business operations[219]. Operational and Manufacturing Challenges - The company has experienced delays in battery production, resulting in a manufacturing backlog in the vehicle assembly line[128]. - The company has no experience in high-volume manufacturing, which raises concerns about meeting quality and production standards[133]. - The company relies on third-party suppliers for key components, and any delays from these suppliers could impact delivery timelines[128]. - Delays in providing sufficient charging solutions have resulted in postponed vehicle deliveries, impacting customer demand[151]. Workforce and Organizational Changes - The company has 109 full-time employees and 21 contractors as of December 31, 2024, down from 161 full-time employees and 25 contractors the previous year[96]. - The company initiated a workforce reduction of approximately 26% to cut future operating expenses and improve cash flows[172]. - The company has plans to strategically hire more personnel[159]. Intellectual Property and Innovation - As of December 31, 2024, Xos had eight awarded U.S. patents and 23 pending or approved U.S. trademark applications, reflecting its commitment to intellectual property protection[84]. Environmental and Market Considerations - Xos customers may be eligible for up to $40,000 in federal tax credits per vehicle under the Inflation Reduction Act, effective through 2032[66]. - The company is leveraging incentive programs from various states to encourage the installation of charging infrastructure for electric vehicles[69]. - The automotive industry typically experiences higher revenue in spring and summer months, with a peak season for commercial vehicle sales between Thanksgiving and Christmas[82]. Cybersecurity and IT Risks - Cybersecurity threats, including ransomware attacks, are increasingly prevalent and can lead to significant operational disruptions and reputational harm[226]. - The company relies on third-party service providers for critical business systems, and any security incidents with these providers could result in adverse consequences[229]. - The complexity of the company's IT systems and the need for periodic remote updates pose inherent risks, including potential software bugs and security vulnerabilities[231].

Financial Data and Key Metrics Changes - For the full year of 2024, revenue increased to $56 million from $44.5 million in 2023, while cost of goods sold rose to $52 million from $45.8 million [40] - GAAP gross margin for 2024 was a profit of $4 million or 7.1%, compared to a loss of $1.3 million or negative 2.9% in 2023 [40] - Non-GAAP gross margin for 2024 was a profit of $10 million or 18%, compared to a loss of $2.3 million or negative 5.2% in 2023 [40] - In Q4, revenue was $11.5 million, down from $15.8 million in Q3, with cost of goods sold increasing to $15.2 million from $12.9 million in Q3 [41][42] - Q4 GAAP gross margin was a loss of $3.7 million or negative 32.4%, significantly impacted by inventory reserves and write-offs [42] Business Line Data and Key Metrics Changes - In Q4, the company delivered 51 units, reflecting a 27.3% decline in top-line revenue compared to Q3 due to seasonal delays in the parcel delivery segment [11][16] - The step-van business is expected to shift positively towards strip chassis deliveries, which can reduce inventory turnover by two to three months [17] - The powertrain business made significant progress, with the first powertrain product delivered for a Bluebird electric school bus [18] Market Data and Key Metrics Changes - The company has secured major commercial orders, including nearly 200 strip chassis for UPS and 20 hub units for Caltrans, indicating strong demand across various sectors [14] - The hub product has seen increased demand, with customers including Waymo and Duke Energy, and production rates reached approximately two hub units per week [20][32] Company Strategy and Development Direction - The company aims to continue growing revenue, improving liquidity, and expanding margins while adapting to regulatory changes and infrastructure challenges in the EV market [50] - There is a focus on American manufacturing, with significant investments in the Tennessee facility to support operations [38] - The company is exploring alternative sourcing strategies to mitigate potential tariff impacts and enhance its supply chain [37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the demand pipeline despite challenges from seasonal delays and potential tariff impacts [11][10] - The outlook for 2025 anticipates revenue between $50.2 million and $65.8 million, with unit deliveries expected to range from 320 to 420 units [48] - Management remains focused on achieving positive gross margins and improving working capital efficiency [72] Other Important Information - The company closed a significant transaction that added over $40 million in liquidity to its balance sheet [15] - Inventory decreased to $36.6 million from $42.6 million last quarter, reflecting improved inventory management practices [47] Q&A Session Summary Question: Gross margin performance despite lower volume - Management attributed strong margins to a shifting product mix, particularly with specialty products like the XS Hub [56] Question: Hub business outlook and production capacity - Management indicated plans to increase hub capabilities and production capacity based on customer demand [60][62] Question: FMVSS certification for powertrain business - The powertrain business requires deep partnerships for engineering validation and testing, with production units expected to be shipped to end-user customers [68] Question: Balance sheet and working capital improvements - Management emphasized the goal of improving working capital usage and reducing inventory levels through strategic partnerships and delivery shifts [72][75] Question: Margin growth expectations for 2025 - Management anticipates continued positive gross margins and year-over-year growth on an adjusted basis [80] Question: Environmental credit revenue in Q4 - No environmental credit revenue was reported in Q4, contrasting with the previous quarter [89] Question: Unit mix and guidance for 2025 - An increased mix of hubs, which have higher average selling prices, was noted, with expectations for continued demand in 2025 [92] Question: CapEx expectations for 2025 - Management does not anticipate significant CapEx beyond maintenance and minor investments, given the current capacity of the Tennessee plant [94]

Company Performance - Xos, Inc. reported a quarterly loss of $2.36 per share, which was worse than the Zacks Consensus Estimate of a loss of $1.13, representing an earnings surprise of -108.85% [1] - The company posted revenues of $11.47 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 35.49%, and down from $18.38 million a year ago [2] - Over the last four quarters, Xos has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Stock Outlook - Xos shares have increased by approximately 9.9% since the beginning of the year, contrasting with the S&P 500's decline of -3.2% [3] - The current consensus EPS estimate for the upcoming quarter is -$1.14 on revenues of $17.8 million, and for the current fiscal year, it is -$4.18 on revenues of $102.46 million [7] Industry Context - The Automotive - Domestic industry, to which Xos belongs, is currently ranked in the bottom 18% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact Xos's stock performance [5]

Financial Performance - Xos achieved a record revenue of $56.0 million in 2024, representing a 25% increase from $44.5 million in 2023[4] - Revenues for Q4 2024 were $11,474,000, a decrease of 37.5% compared to $18,376,000 in Q4 2023[21] - Net loss for Q4 2024 was $(18,981,000), compared to a net loss of $(13,827,000) in Q4 2023, representing a 37.5% increase in losses[21] - The company reported a total comprehensive loss of $(18,981,000) for Q4 2024, compared to $(13,827,000) in Q4 2023[21] Unit Deliveries - The company delivered 297 units in 2024, up from 283 units in 2023[4] - Xos received its largest customer order in 2025 for 193 units from UPS, expected to be delivered in 2025[4] - The company launched the next-generation Xos Hub and received a significant order for 19 units sold to Caltrans[4] - Xos's outlook for 2025 projects revenue between $50.2 million and $65.8 million, with unit deliveries forecasted between 320 and 420 units[6] Gross Margins and Operating Expenses - GAAP gross margins improved from a negative 2.9% in 2023 to positive 7.1% in 2024, while non-GAAP gross margins increased from negative 5.2% to positive 18%[4] - Operating expenses were reduced by $13.8 million, or 21.7%, compared to 2023[4] - Total operating expenses for Q4 2024 were $10,855,000, down 17.5% from $13,155,000 in Q4 2023[21] - Research and development expenses for Q4 2024 were $1,936,000, down 53.4% from $4,143,000 in Q4 2023[21] Cash Flow and Liquidity - The company reported $3.3 million of net cash provided by operating activities and achieved its first quarter of positive Free Cash Flow of $3.3 million[1] - Free cash flow for Q4 2024 was $3,298,000, compared to $(852,000) in Q4 2023, indicating a significant improvement[22] - Cash and cash equivalents stood at $11.0 million as of December 31, 2024, compared to $11.6 million in 2023[20] Liabilities - The total liabilities increased to $64.7 million in 2024 from $48.5 million in 2023[20] Losses and Improvements - Gross loss for Q4 2024 was $(3,717,000), compared to a gross profit of $1,327,000 in Q4 2023[21] - Non-GAAP operating loss for Q4 2024 was $(6,365,000), an improvement from $(10,926,000) in Q4 2023[22] - Non-GAAP gross profit for Q4 2024 was $2,667,000, compared to $631,000 in Q4 2023, showing a positive trend[22] Shareholder Information - The weighted average shares outstanding increased to 8,034,000 in Q4 2024 from 5,933,000 in Q4 2023 due to a reverse stock split[21]

Core Insights - Xos, Inc. reported a significant financial performance for the year 2024, achieving $56.0 million in revenue, a 25% increase from $44.5 million in 2023 [4][6] - The company achieved its first positive Free Cash Flow of $3.3 million and positive gross margins of approximately 7% for GAAP and 18% for non-GAAP [1][6] - Xos expanded its customer base and product offerings, including partnerships with Blue Bird and UPS, marking a successful year of innovation and growth [3][6] Financial Highlights - For Q4 2024, revenues were $11.5 million, down from $15.8 million in Q3 2024, while the full year revenue was $56.0 million compared to $44.5 million in 2023 [4][6] - The company reported a net loss of $19.0 million for Q4 2024, an increase from a net loss of $10.5 million in Q3 2024, but a significant reduction from a net loss of $75.8 million in 2023 [4][6] - Non-GAAP gross profit for the full year was $10.0 million, compared to a loss of $2.3 million in 2023, indicating improved operational efficiency [4][6] Operational Achievements - Xos delivered 297 units in 2024, an increase from 283 units in 2023, reflecting growth in production capabilities [6] - The company successfully launched the next-generation Xos Hub and received a significant order for 19 units from Caltrans [6] - Xos has become a primary electric vehicle vendor for last-mile delivery fleets at UPS and FedEx Ground, showcasing its market penetration [3][6] 2025 Outlook - The company projects revenues between $50.2 million and $65.8 million for 2025, with expected unit deliveries ranging from 320 to 420 units [7][6] - Non-GAAP operating loss is anticipated to improve to between $17.2 million and $14.0 million [7] - Xos aims to continue its growth trajectory by leveraging its technological advancements and expanding its customer base [6]

Core Viewpoint - Xos, Inc. is set to release its fourth quarter 2024 operating results on March 28, 2025, followed by a conference call to discuss these results [1]. Group 1: Conference Call and Webcast Details - The conference call will take place on March 28, 2025, at 4:30 p.m. EDT / 1:30 p.m. PDT [2]. - Participants can access the call via a U.S. toll-free number or an international dial-in option, with a conference ID provided for access [2]. - An audio replay of the call will be available until midnight on March 28, 2025, with specific numbers provided for replay access [3]. Group 2: Company Overview - Xos, Inc. is a prominent technology company specializing in electric truck manufacturing and fleet services for battery-electric fleets [4]. - The company focuses on medium- and heavy-duty commercial vehicles designed for last-mile and back-to-base routes, utilizing proprietary technologies for cost efficiency [4]. - Xos vehicles are positioned as easier to maintain and more cost-effective on a total cost of ownership basis compared to traditional internal combustion engine vehicles [4].

Core Insights - Xos, Inc. has successfully added its Xos Hub™ to the General Services Administration (GSA) Schedule, facilitating easier procurement for federal agencies [1][3] - The Xos Hub™ is designed to provide significant cost savings for federal agencies by reducing operational expenses associated with electric vehicles (EVs) [2] - The Hub is a mobile energy storage system and DC fast charger that can be operational within a day, bypassing common infrastructure deployment delays [2][4] Company Overview - Xos, Inc. specializes in fleet electrification and energy solutions, focusing on medium- and heavy-duty commercial vehicles [8] - The company leverages proprietary technologies to deliver sustainable transportation solutions that enhance total cost of ownership (TCO) and reduce maintenance needs [8] Product Features - The Xos Hub™ is a trailer-mounted, rapidly deployable EV charging unit that eliminates lengthy infrastructure and permitting requirements [4][5] - It is designed for various applications, including stopgap charging for EV fleets, remote charging, and backup power during outages [4] - The Hub ensures interoperability with a wide range of OEMs and vehicle models, making it a versatile mobile charging solution [5][6] Procurement Process - The Xos Hub™ is available for purchase on GSA Advantage, which streamlines the government procurement process with pre-established pricing and terms [3] - The procurement process is expedited for government buyers, allowing for quicker identification of needs and purchasing [3]

Core Insights - Xos, Inc. has received a purchase order from Crown Linen Service, Inc. for two fully electric 22' stepvans, highlighting a commitment to sustainability and reducing environmental impact [1] - The integration of electric vehicles into Crown Linen's fleet is part of their strategy to provide environmentally responsible services while maintaining efficiency and reliability [2] - Xos' electric vehicles are designed to deliver long-term total cost of ownership (TCO) savings, making them a cost-effective choice for businesses [2][3] Company Overview - Xos, Inc. is a technology company and electric truck manufacturer focused on battery-electric fleets, specifically for medium- and heavy-duty commercial vehicles [4] - The company utilizes proprietary technologies to offer battery-electric vehicles that are easier to maintain and more cost-efficient compared to internal combustion engine vehicles [4] Crown Linen Service, Inc. Overview - Founded in 1914, Crown Linen Service, Inc. specializes in linen and uniform rental services, serving various industries including healthcare and food and beverage [5] - The company has a strong reputation for excellence and has been family-owned and operated for over 100 years [5] Sustainability Initiatives - Crown Linen has implemented several sustainability initiatives, including waste reduction, recycling programs, and energy efficiency measures [6][8][9] - The company is transitioning to electric vehicles as part of its broader sustainability goals, which also include solar panel installations and upgraded lighting systems [10][9] Industry Trends - The uniform and linen industry is increasingly adopting electric vehicles to enhance sustainability efforts while improving operational efficiency [3]

Financial Performance - Revenues for Q3 2024 were $15,790,000, a decrease of 5.4% compared to $16,696,000 in Q3 2023[19] - Gross profit for Q3 2024 was $2,864,000, compared to a gross profit of $1,985,000 in Q3 2023, indicating an improvement in profitability[19] - Total operating expenses decreased to $12,555,000 in Q3 2024 from $14,610,000 in Q3 2023, reflecting cost reduction efforts[19] - The net loss for Q3 2024 was $10,512,000, an improvement from a net loss of $14,107,000 in Q3 2023[19] - Total comprehensive loss for the three months ended September 30, 2023, was $(14,051) thousand, compared to $(10,512) thousand for the same period in 2024, indicating a decrease of 3,539 thousand[20] - Net loss per share (diluted) for the three months ended September 30, 2023, was $(2.40), while for the same period in 2024, it improved to $(1.32), reflecting a 45% reduction in loss per share[20] - The net and comprehensive loss for the three months ended September 30, 2024, was $(10,512) thousand, compared to $(14,051) thousand for the same period in 2023, indicating an improvement of 25%[23] - The total comprehensive loss for the nine months ended September 30, 2023, was $(61,277) thousand, while for the same period in 2024, it was $(31,178) thousand, reflecting a significant reduction of 49%[20] - The company reported a net loss of $(23,578) thousand for the six months ended June 30, 2023, which improved to $(9,663) thousand for the same period in 2024, indicating a 59% reduction in losses[23] - The net loss for the nine months ended September 30, 2024, was $31.2 million, compared to a net loss of $62.0 million for the same period in 2023, indicating a 49.7% improvement[25] Cash and Liquidity - Cash and cash equivalents decreased to $8,432,000 as of September 30, 2024, down from $11,640,000 at the end of 2023[18] - The company is focused on improving liquidity and working capital availability through operational cost reduction measures[6] - The company plans to continue raising capital through various strategies, including debt financing and equity financing, to support its operations and growth[40] - The company’s liquidity is critical as it continues to incur net losses and cash outflows while scaling operations to meet anticipated demand[37] - The company’s ability to access capital is uncertain, which raises substantial doubt about its ability to continue as a going concern[39] - As of September 30, 2024, the Company has substantial doubt about its ability to continue as a going concern for at least one year, unless it can collect on accounts receivable or obtain new capital[42] Assets and Liabilities - Accounts receivable increased significantly to $36,441,000 as of September 30, 2024, compared to $15,142,000 at the end of 2023, indicating potential growth in sales[18] - Inventories rose to $42,398,000 as of September 30, 2024, up from $37,843,000 at the end of 2023, suggesting increased production or stockpiling[18] - The company reported a total of $120,513,000 in assets as of September 30, 2024, compared to $93,684,000 at the end of 2023, reflecting overall growth[18] - The total stockholders' equity decreased from $57,560 thousand as of September 30, 2023, to $50,841 thousand by September 30, 2024, a decline of approximately 12%[23] - Other current liabilities increased to $21.31 million as of September 30, 2024, compared to $16.82 million as of December 31, 2023[73] - Other non-current liabilities rose to $18.94 million as of September 30, 2024, from $8.56 million as of December 31, 2023[74] Operational Performance - In Q3 2024, the company delivered 78 vehicles and 16 powertrains, a decrease from 104 vehicles and 1 powertrain in Q3 2023, representing a 25% decline in vehicle deliveries[171] - Revenue for Q3 2024 was $14.9 million, down from $16.0 million in Q3 2023, reflecting a 6.9% decrease, with 95% of revenue from vehicle and powertrain sales[171] - For the nine months ended September 30, 2024, the company delivered 216 vehicles and 30 powertrains, compared to 171 vehicles and 3 powertrains in the same period of 2023, marking a 26.4% increase in vehicle deliveries[173] - Revenue for the nine months ended September 30, 2024, was $41.5 million, up from $24.8 million in the same period of 2023, indicating a 67.9% increase, with 93% of revenue from vehicle and powertrain sales[173] Strategic Initiatives - Future growth strategies include the commercialization of new products and services, as well as potential market expansion and strategic partnerships[6] - The company acquired ElectraMeccanica on March 26, 2024, for a total consideration of 1,766,388 shares of Common Stock, supplemented by approximately $50.2 million in net cash[177] - The company implemented a reduction in workforce, terminating approximately 26% of its total workforce to improve liquidity and working capital[178] - Senior executives, including the CEO and COO, accepted temporary salary reductions of 20% to 50% effective October 28, 2024, as part of cost-cutting measures[179] Stock and Financing - The Company issued Convertible Debentures totaling $35.0 million, with $20.0 million sold on August 11, 2022, and an additional $15.0 million on September 21, 2022[83] - The Company entered into a note purchase agreement with Aljomaih Automotive Co. for a convertible promissory note of $20.0 million, maturing on August 11, 2025[41] - The Company recorded interest expense of $0 in relation to the Convertible Debentures during the three months ended September 30, 2024, compared to $0.2 million for the same period in 2023[96] - The Company recorded interest expense of $0.5 million related to the Note during the three months ended September 30, 2024, consistent with the same period in 2023[103] Market and Economic Conditions - Supply chain disruptions continue to impact the company, with ongoing shortages for specific components and increased shipping costs due to global economic conditions[183] - The stock price as of September 30, 2024, was $4.55, down from $7.98 on December 31, 2023, reflecting a decrease of 43.5%[162]