Xos (XOS) Q2 FY26 earnings call: guidance and Q&A

Clarification on the 29 hubs produced in Q2 (whether delivered or not) and the current status and timeline for UL certification for the Power Hub.

Giordano Sordoni clarified that 29 hubs were produced, not all delivered, but some have been paid for. For UL certification, component-level approval is in place, and system-level testing is ongoing for different standards. One standard is expected to be approved in the next couple of weeks, while others might extend into next year, but this is not gating current customer deliveries.

“Yes, we have UL approval at the component level. As you mentioned, we're using UL approved components for the most part. We are doing system-level testing. There are a few different standards that we're going after, one of which we should have approval on in the next couple of weeks, and then we're pursuing another standard that will take a little bit longer.”

asked by Edward Jackson · answered by Giordano Sordoni

Was the unit shortfall in Q2 primarily due to delays on the chassis side, given more positive commentary on powertrains and hubs?

Dakota Semler confirmed that part of the shortfall was indeed due to powertrain delays and some smaller truck orders pushing back. However, he emphasized that all these deferred orders are still expected to be fulfilled within the next year, with some likely within the next couple of quarters.

“Yes. So part of the surprise was interest in powertrain delays. We had some orders that got delayed and slowed down on the powertrain side of the business. There were a few smaller truck orders that also pushed back.”

asked by Edward Jackson · answered by Dakota Semler

Are there any implications for Xos' relationship with Blue Bird following Blue Bird's acquisition of Ford's chassis operations, particularly as it relates to their EV powertrain collaboration?

Dakota Semler views the acquisition as a potential complementary piece and a significant growth opportunity. He noted that Ford currently lacks a zero-emissions offering in the commercial chassis space, for which Blue Bird relies on Xos' EV powertrain. The acquired facility's capacity of up to 20,000 units per year could lead to substantial volume opportunities for Xos as Blue Bird's EV powertrain supplier.

“So that's something we view as a potential opportunity in the future. And the capacity, we're very familiar with the Detroit chassis products facility that they bought. The capacity and throughput of that facility is incredible. I think they can produce upwards of 20,000 units a year.”

asked by Edward Jackson · answered by Dakota Semler

How does Xos' 3.1 MWh Power Hub differentiate from competitors like Ford's 5.5 MWh unit, especially regarding AC vs. DC output, and which cell suppliers are being used?

Dakota Semler explained that Xos' Power Hub is differentiated by directly outputting AC power, integrating the DC block, power conversion system (PCS), and energy controller into a single enclosure. This contrasts with traditional DC blocks that require separate, costly PCS and controller installations. This integration makes the Power Hub faster and cheaper to deploy, capable of direct connection to conventional gensets, and more efficient for volatile AI loads. Xos primarily uses Gotion cells, which are domestically produced in Illinois, meeting U.S. content requirements for defense customers.

“And essentially, what we're outputting is not just DC power, it's AC power. And that makes it really effective for a variety of different reasons. One is you're manufacturing the entire system, PCS and controller, all in one enclosure in one factory. So it brings the cost down considerably of the actual system as a combined system.”

asked by Craig Irwin · answered by Dakota Semler

What are the expectations for inventory liquidation and the associated cash release from the balance sheet, especially with an anticipated uptick in revenue?

Dakota Semler stated that the shift towards higher-margin hubs and powertrains, which do not involve a secondary manufacturing stage, naturally accelerates inventory turnover. The company aims for multiple inventory turns per year and has optimized its operations for build-to-order, reducing inventory held for demos and marketing. Domestic production of critical components like battery cells further supports this goal.

“Our focus is to get that and optimize it as much as possible. We hope for multiple inventory turns per year, and we're well on our way and significantly improved from what we've seen in the last 2 or 3 years.”

asked by Craig Irwin · answered by Dakota Semler

Were the Q2 reductions in SG&A and R&D expenses due to specific cost-out actions or variable expenses, and what is the outlook for these levels in the coming quarters?

Liana Pogosyan indicated that while some reductions were tied to revenue, many were a result of smaller purchases of R&D materials. She anticipates that SG&A and R&D expenses will likely remain at levels similar to those observed in Q1 FY26 for the upcoming quarters.

“As far as the cadence, there were some as a result of the functional of revenue, but a lot of the decreases were smaller purchases of R&D materials. And just as far as the cadence of it, I would say we should expect it to be at the level similar to what we had earlier this year in the first quarter.”

asked by Craig Irwin · answered by Liana Pogosyan