Hyliion Holdings Corp. Q4 FY2024 earnings call

• Delivered first early adopter customer unit shifted to 2025 due to supply chain and powder issues.
• Progressed with generator testing/validation, growing customer interest in Carno technology with over 100 Carno unit contracts/LOIs.
• Signed first LOI in data center sector for up to 70 MW of Carnot four-shaft systems deployments.
• Showcased Carno generator features like compact footprint, fuel agnostic capability, cellular connectivity for remote monitoring.
• Scaling manufacturing capacity with delivery of new additive printing machines, planning to scale production for 2026.
• Recognized $1.5 million in Q4 2024 revenue for R&D services related to Navy contracts.
• Wind-down of Powertrain mostly complete except for ongoing asset sales.

In 2024 Q4, Hyliion recorded revenue of $1.5 million for R&D services related to contracts with the Office of Naval Research. Cost of sales was $1.4 million, resulting in operating income of $100,000. For the full year 2024, operating expenses totaled $64.4 million compared to $136.3 million in 2023. Expenses in 2024 included $3 million of powertrain exit and termination costs net of asset sale gains. Revenue from R&D services in Q4 2024 was $1.5 million.

• Expect $10 million to $15 million in revenue in 2025 including R&D and Carnot system sales.
• Anticipate commercializing Carnot generator in second half of 2025, with revenue recognition subject to certification, permitting, and performance criteria.
• Reported gross margin for R&D services in 2025 expected to be positive, Carnot product sales may have positive gross margin due to expensed components.
• Capital expenditures in 2025 expected to be ~$25 million, plan to offset with ~$10 million equipment financing.
• Expect to end 2025 with ~$160 million in cash and investments, capital on hand sufficient for foreseeable future including Carnot commercialization.

• Supply chain sourcing and part processing challenges delayed initial customer deployment.
• Residual metal powder issue in generator parts required adjustments to cleaning processes.
• Forward-looking statements subject to risks and uncertainties causing actual results to differ materially from projections.

Q: Can you tell us more about this first early adopter unit and who is it going to and where is it located?

A: The first early adopter unit is going to the US Navy. It will initially stay in Ohio for further testing and validation as part of the Navy's outlined test protocols, with plans to be used in both ship and stationary applications.

Q: Sean Milligan asked about how Carnot fits in the competitive landscape against fuel cells in data centers and pricing comparison.

A: Carnot shines in data centers as it's compact, fuel flexible, has low emissions/maintenance. Pricing: conventional natural gas gensets ~$1,000-$1,500 per kW, fuel cells ~$3,000-$3,500 per kW, Carnot is in the middle, with better ROI due to superior efficiency and lower maintenance.

Q: Greg Standley asked about the LOI with Al Khouri and Middle East opportunity.

A: Al Khouri is a leading generator provider in the Middle East and agricultural sector. Initial gensets will be used in farm and other applications for prime power, leveraging fuel flexibility to meet regional goals.

Q: Sean Milligan asked about service contracts for Carnot and business model in data centers.

A: Initially, Hyliion will handle maintenance, but long-term aims to partner with established players in the space for maintenance to avoid brick-and-mortar setup globally.

Q: Question about supply chain issues and metal powder problem and how long early adopter systems operated at facilities before field deployment.

A: Linear electric motor production shifted to contract manufacturer caused delay, but production started. Residual metal powder issue was addressed by changing cleaning processes; early adopter units will be tested at facilities before field deployment with ongoing refinement of processes.