Xos, Inc. Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you all 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 second 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 June 30, 2026. Management statements today reflect management's views as of today, August 13, 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.

Please refer to today's press release and our filings with the SEC, including our most recently filed annual report on Form 10-K and subsequent filings for a more detailed discussion of important factors that could cause actual results to differ materially from these forward-looking statements. Such factors include, but are 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 resulting from trade policies, tariffs, international conflicts and tensions, and/or shortages of access to oil, energy, and other key industrial inputs. 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.

Thanks, David, and thank you everyone for joining us on the call. Every company has a handful of quarters that redraw the boundaries of what it can become. Q2 2026 was one of those quarters for us. in June, we launched the Power Hub, the newest and largest member of the Xos Hub family. With it, we stepped directly into one of the largest infrastructure build-outs in American history, the race to power data centers and the AI economy. The through line of the quarter was clear: Xos is becoming a power infrastructure company with the products, the customer base, and the manufacturing capability to grow in the markets far larger than the one we started in. On the headline numbers, we delivered 30 units in the quarter, generating $4.7 million in revenue, and posted our 12th consecutive quarter of positive non-GAAP gross margins.

Deliveries came in lighter than we planned. We anticipated delivering far more units in the quarter, but multiple orders shifted into subsequent quarters pending customer delays and customer acceptance. That is frustrating, and I will not pretend otherwise, but these are deferrals, and we anticipate fulfilling those orders over the next year. Even with the later deliveries, our margin trajectory through the first half remains strong. GAAP gross margin for the first half of 2026 was 31%, the strongest first half in Xos's history, and we are proud of that. Liana will take you through the full financial picture, including our updated full-year outlook, which reflects the timing of those shifted orders. What has not changed is the demand underneath this business. We anticipate a strong second half with multiple opportunities across our growing segments.

In June, we announced the launch of the Power Hub series, mobile containerized battery energy storage with our flagship 3.1 megawatt-hour unit delivering 1.5 megawatts of continuous power from a standard intermodal container form factor. Multiple units can be combined to power multi-megawatt sites without traditional engineering cycles. This is not just a bigger battery, it is a deployable power system. Here is why it matters. We believe one of the biggest constraints in the U.S. industry right now is the inability to deliver power where it is needed, when it is needed. Data centers and industrial facilities are waiting three to seven years for grid interconnection. The Power Hub lets them energize a site in days. We are not arriving in this market without a foothold. Xos has more than 250 megawatt hours of energy storage already deployed across North America.

Customers in this market do not buy promises, they buy proof, and our proof is our EV charger hubs that are working in the field today. That demand is already converting. The charger hub has already supported a large data center construction project for a hyperscaler customer, exactly the application this product was built for Power-constrained sites, fast deployment, no permitting overhead, and customers who need uptime more than they need theory. We expect to announce rental, leasing, and deployment partners for the Power Hub in the coming quarters. The same demand signal is coming from the public sector, and it grew louder throughout the quarter.

In May, Xos was selected as one of only 17 finalists from a nationwide pool of applicants at the U.S. Air Force Global Strike Command Commercial Capabilities Showcase, where our team ran a live demonstration of the Charger Hub, real-time DC fast charging of an electric vehicle, no grid connection, no setup crew. In June, we made an appearance at the Government Fleet Expo in Long Beach, putting our trucks, powertrains, and hubs in front of municipal, state, and federal fleet buyers. The electrification of the battlefield is one of the most significant operational shifts inside today's military. Unmanned aerial systems, counter-UAS platforms, distributed computing at the forward operating base, and expanded telecommunications are all creating load growth that only quiet, deployable power can serve. The Hub was built for exactly that environment, and the reception from defense customers this quarter confirmed it.

Our commercial business kept building as well. At ACT Expo in May, we showcased the complete Xos ecosystem, step vans powered by Xos powertrains, and the Charger Hub at one conference. The proof points behind that ecosystem kept stacking up. Over 100 powertrain orders since we launched the business with Blue Bird in the second quarter of last year, hubs operating with fleets like Caltrans, Duke Energy, Xcel Energy, and Waymo, vehicles in service with UPS and FedEx ISVs, and more than 1,000 Xos units in operation today. The economics underneath all of this continue to move in our favor. With diesel in California averaging north of $7 per gallon during the quarter, heavy-duty fleets running electric are seeing per mile fuel savings of more than 60%. Those savings are real, they are durable, and they do not depend on where federal policy lands.

The regulatory tailwind may have turned, but the economic tailwind has not. Underneath the growth story, the discipline that got us here has not changed. Gross margin will move with product mix from quarter to quarter, but the structural drivers, higher margin hub and powertrain revenue, lower product costs, and leaner operations are durable, and we continue to expect full year 2026 gross margins to be meaningfully better than 2025. We also strengthened the balance sheet during the quarter and closed with more cash than we started. Liana will cover both in detail. Stepping back, Q2 2026 was the quarter Xos' addressable market got bigger, a lot bigger. Trucks put us on the road, powertrains put us inside other OEM's vehicles. The Power Hub has put us in front of the defining infrastructure challenge of this decade. The second half of this year is about converting that position into deliveries.

With that, I'll turn it over to Gio to walk through the operational highlights of the quarter.

Thanks, Dakota. During the second quarter, our operations and engineering teams continued to execute across our commercial vehicle, powertrain, and energy storage product lines while making meaningful progress toward the launch of several new products and configurations. Across our manufacturing operations, we continue to build Xos trucks and powertrain systems alongside our Xos Hub energy storage products. One of the strengths of our operating model is that these products share much of the same underlying technology, supply chain, engineering resources, and manufacturing infrastructure, allowing us to support multiple product lines within a flexible production footprint. On the Xos Hub, Q2 was our highest production quarter to date, with 29 hubs produced during the quarter. This milestone reflects the work that our team has done to improve the Hub production process, increase throughput, and make the production line more flexible. Importantly, these improvements aren't just about producing more units.