Xos, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Unaudited consolidated results include ElectraMeccanica only from its acquisition on March 26, 2024.
Business context and material developments
Xos designs and manufactures Class 5–8 electric commercial vehicles and provides charging infrastructure, powertrains, and fleet-management services. It delivered 60 vehicles and 2 powertrains in Q1 2024, compared with 30 vehicles and 1 powertrain in Q1 2023.
On March 26, Xos completed its acquisition of ElectraMeccanica, issuing 1,766,388 shares; former ElectraMeccanica shareholders held approximately 21% of Xos after closing. Xos accounted for the transaction as an asset acquisition. ElectraMeccanica contributed approximately $50.2 million of cash at closing, excluding severance costs. Xos recognized $2.0 million of acquisition-related severance expense in Q1.
Financial performance
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $13.2 million | $4.7 million |
| Gross profit (loss) | $2.8 million | $(0.9) million |
| Gross margin | 21.2% | (18.7)% |
| Operating expenses | $13.0 million | $19.2 million |
| Operating loss | $(10.2) million | $(20.0) million |
| Net loss | $(11.0) million | $(24.3) million |
| Net loss per share, basic and diluted | $(1.80) | $(4.32) |
| Cash used in operating activities | $(14.6) million | $(15.3) million |
Revenue rose 180%, primarily from higher vehicle volumes and average selling prices. Product and service revenue included $11.6 million from stepvans and vehicle incentives, $0.4 million from powertrains, and $0.6 million from Fleet-as-a-Service. Gross profit improved to positive territory. Operating expenses fell 32%, mainly reflecting lower headcount and other cost reductions; the decline was partly offset by $2.0 million in acquisition-related severance. Other expense declined to $0.6 million from $4.2 million, chiefly because the Yorkville convertible debentures had been repaid in December 2023 and prior-year expenses included asset impairment and redemption premiums.
Financial position and liquidity
At March 31, 2024, cash and cash equivalents were $46.2 million and restricted cash was $1.1 million, versus $11.6 million of cash and no restricted cash at December 31, 2023. Current assets were $112.8 million and current liabilities were $22.3 million. Total assets were $135.0 million, total liabilities $67.2 million, and stockholders’ equity $67.8 million.
Outstanding debt included a $20.0 million Aljomaih convertible note, due August 2025 and bearing 10% annual interest; the $35.0 million Yorkville debentures were fully repaid in December 2023. Other non-current liabilities were $24.3 million, including operating and finance lease liabilities. Operating cash outflow was $14.6 million; investing cash inflow of $51.3 million largely reflected cash acquired with ElectraMeccanica. Cash, cash equivalents, and restricted cash increased by $35.6 million during the quarter.
Management disclosed substantial doubt about the company’s ability to continue as a going concern because it continues to incur losses and needs additional capital. Management concluded that its plans—including the ElectraMeccanica acquisition proceeds, cash on hand, collections of receivables, and planned financing—are probable to provide sufficient liquidity for the next 12 months and alleviate that doubt. Access to the Yorkville Standby Equity Purchase Agreement (SEPA) was unavailable as of the filing date pending a post-effective amendment to its registration statement; access also depends on trading volume and share price. The SEPA had $119.5 million of stated remaining commitment, subject to conditions.
Outlook, risks, and notable disclosures
- Management expects G&A, R&D, and sales and marketing expenses to decrease in the foreseeable future, primarily due to lower headcount. It plans to increase production and expects production to absorb fixed and semi-fixed overhead; no quantified revenue, profit, or production guidance is provided.
- Supply-chain exposure remains, including sporadic shortages in power electronics and harnesses, and risks involving battery cells, semiconductors, vehicle bodies, aluminum, shipping costs, and delivery timing. Most suppliers are single-source.
- Customer concentration is significant: one customer represented 52% of Q1 2024 revenue. Two customers represented 36% and 10% of receivables at quarter-end.
- Disclosure controls were not effective at the reasonable-assurance level due to material weaknesses in inventory management and revenue-recognition controls. Management was implementing remediation and expected to remediate during 2024; effectiveness remains subject to testing.
- ElectraMeccanica’s assumed leases contributed approximately $17.2 million of lease liabilities. The acquired company had discontinued and recalled its SOLO vehicles following a loss-of-propulsion issue and had terminated related product-development projects.
- The filing reports no legal proceedings expected to have a material adverse effect and no defaults upon senior securities. It identifies inflation, uncertain capital access, commercialization, customer demand, and acquisition integration among relevant risks.
Important facts for investors to verify
- Whether Xos files the required registration amendment and can access the SEPA on usable terms, and whether additional capital will be needed.
- Whether operating cash burn, vehicle delivery growth, and gross margins improve sufficiently to support the going-concern outlook.
- Progress integrating ElectraMeccanica, including the use of acquired cash, assumed lease obligations, and any further integration or restructuring costs.
- Whether inventory and revenue-recognition control weaknesses are remediated and tested effectively within management’s stated timeframe.
- The sustainability of revenue growth given major-customer concentration and ongoing component-sourcing and production risks.