Hyliion Holdings Corp. Q3 FY2025 earnings call

• KARNO Power Module Performance: The KARNO Power Module now meets or exceeds early customer performance targets. Power output improved with redesigned regen, achieving over 200 kW mechanical and north of 150 kW electrical power generation, with plans to reach 200 kW electrical by commercialization in 2026.
• Regulatory Milestones: Certified to meet California's strict air quality standards and not classified as an internal combustion engine, avoiding federal permitting.
• Reliability: One KARNO Power Module completed over 100 days of operational testing with no unplanned hardware downtime.
• Fuel Flexibility: Can switch between fuels like natural gas and propane without performance impact.
• UL Certification: Progressing well, with linear electric motor certified on first try; updates to high and low-voltage assemblies made to ensure compliance.
• Customer Deployments: Early adopter units being built, with some delayed to 2026 for Navy, and others used for demonstrations. Over 500 nonbinding LOIs for KARNO Cores.
• Military and Nuclear Engagement: Working with Navy on shipboard applications, and exploring KARNO with nuclear small modular reactors (SMRs).
• Data Center Alignment: Aligns with NVIDIA's 800-volt DC architecture for data centers.
• Production Capacity: Expanding additive manufacturing, with Darrell Preble as VP of Operations. Addressing supply chain challenges with magnets from China, working on alternatives.

In the third quarter, revenue from research and development services related to the KARNO Power Module was $800,000. Cost of sales was approximately the same, resulting in a small gross loss. Year-to-date, revenue from R&D services was nearly $2.8 million, with gross profit of $96,000.

• Full year 2025 revenue likely ~$4 million due to delayed deployments for Navy.
• KARNO commercialization expected in 2026, with revenue from system sales then.
• Cash and investments sufficient to carry through commercialization, but additional capital may be needed for production growth.

• Supply chain challenges with sourcing high-strength magnets from China, though inventories are sufficient for a few quarters.
• Uncertainty in equipment financing timing, which may shift to 2026 or be less than planned.

Q: Customer with shifted acceptance of initial KARNO units, A: Using some as demonstration units for data centers while meeting Navy's 2026 deployment.

Q: Ship for Navy, A: Unmanned ship with no personnel quarters, designed for weaponry and fuel storage, KARNOs to be installed in 2026.

Q: UL testing completion, A: Linear electric motor certified first try, battery and power module certification ongoing, expected in next few months.

Q: Regen rebuild and testing, A: New components in own assets and customer units, with plans to improve further for commercialization.

Q: Pipeline timing, A: LOIs with dozens of customers, 6-9 months for testing, demand growing in data centers, commercial, and military.

Q: Manufacturing scale up, A: Focus on optimizing additive machines, hiring VP of Ops, addressing past powdering issues, working on magnet sourcing.

Q: KARNO and nuclear, A: KARNO is heat-powered, can replace steam turbines in nuclear SMRs, early engagement in R&D.

Q: NVIDIA and data centers, A: KARNO's 800-volt DC aligns with NVIDIA's future data center architecture, avoiding conversion equipment.