Hyliion Holdings Corp. Q2 FY2026 earnings call

Military Business Progress

• Awarded a $41.7 million contract with the U.S. Navy, the company's largest military contract to date, to scale the Carno power module into multi-megawatt systems. This contract alone meets the 2026 target of $40–50 million in new military contracts.
• Expects to close an additional ~$7 million military contract from a different service branch before the end of 2026, bringing total 2026 new military contract awards to approximately $50 million. Contract performance periods run 2–3 years.
• Added Abdul Sabani as a Strategic Advisor for Military Opportunities to expand relationships across U.S. military branches and grow the contract pipeline.
• Military engagements increased significantly in Q2, including participation in a high-profile defense innovation summit with senior administration and defense officials.

Commercial Product Development

• Completed design enhancements for early adopter Carno power modules, including airflow/cooling improvements, upgraded components, and software controls, to boost durability, performance, and power. The first upgraded customer unit is ready for deployment.
• Confirmed on track to complete approximately 10 total early adopter Carno cores in 2026, with the first customer site deployment starting in Q3 2026. The balance of early units are Navy assets, including the 800-kilowatt system for the USX-1 Defiant autonomous ship.
• Successfully demonstrated operation of multiple Carno power modules working together as a single scalable unit, meeting a 2026 milestone. On track to reach the 200 kilowatt power target by the end of 2026.
• Sequencing adjusted to move commercialization of the 200 kilowatt power module to 2027, prioritizing near-term military revenue and early data center test facility deployments to build long-term customer pipeline for multi-megawatt systems targeted for 2028 commercial launch.

Customer Demand

• Data centers are the largest commercial opportunity, driven by AI-related power demand. Non-binding letters of intent (LOIs) currently represent approximately 750 Carno cores, with most customer interest not yet reflected in LOIs.
• Data center customer interest spans small (low tens of megawatts), medium (~100 megawatts), and gigawatt-scale projects, with strong demand for the system's native 800-volt DC architecture aligned with modern data center design.
• Military demand spans autonomous vessels, base power, and forward operating installations, driven by fuel flexibility, mobility, and low maintenance requirements, with expected growth from R&D to full production system deliveries over time.

Additive Manufacturing and Scaling

• Identified process, software, and design improvements that can increase additive printing speed and throughput by up to three times, with initial validation already complete.
• Entered a beta machine collaboration agreement with Calibrium Additive (a GE Aerospace company), Hyliion's existing printer supplier, to develop next-generation additive manufacturing systems.
• Existing installed base of 30 printers can support up to 15 megawatts of annual Carno core production capacity after implementing speed improvements. New printer investment of ~$1.5 million supports 1 megawatt of annual production capacity, which translates to ~$2.5–$3 million in annual revenue at current pricing, creating attractive capital efficiency.
• Confidence in speed improvements allows accelerating planned new printer investment from 2028 to 2027.

Hyliion reports only consolidated financial results in this earnings call, with no separate product segment financial performance or revenue contribution percentages provided. All revenue in the quarter came from military research and development services contracts. Consolidated Q2 2026 results: Revenue of $4.9 million, compared to $1.5 million in Q2 2025 and $2.8 million in Q1 2026. Cost of revenue was $4.6 million, resulting in gross profit of $366,000. Operating expenses totaled $15.7 million, flat year-over-year. R&D spending was $9.5 million, down 6% year-over-year. SG&A expenses were $6.4 million, up 8% year-over-year. Net loss for Q2 2026 was $13.9 million, compared to a $13.4 million net loss in Q2 2025. Year-to-date (first half 2026) results: Total revenue of $7.8 million, up from $2 million in the first half of 2025. Gross profit of $576,000, up from $143,000 year-over-year. Operating expenses of $29.1 million, down 18% year-over-year. Net loss of $25.7 million, a 16% improvement from the $30.7 million net loss in the first half of 2025. At quarter end, Hyliion held $132.4 million in cash and investments.

• Full year 2026 revenue guidance raised 50% from $10 million to approximately $15 million, driven by faster-than-expected ramp of existing Navy R&D services. 2026 full year revenue compares to $3.5 million in 2025.
• Q3 2026 revenue is expected to be roughly in line with Q2 2026, at just under $5 million. Most work under the new $41.7 million Navy contract will be performed in 2027 and 2028.
• Full year 2026 capital spending is expected to total approximately $4 million, a significant decrease from $24 million in 2025, as the company focused on optimizing existing printer capacity this year.
• End of 2026 cash and investments are projected to be between $115 million and $120 million, with net cash spending for 2026 (including the expected equipment financing) between $30 million and $35 million, an improvement from the prior projection of $50 million in net cash spending and $100 million end-of-year cash.
• The company expects to close an equipment financing arrangement (sale-leaseback or secured debt) for existing printer assets in 2026, generating $10 million to $15 million in cash proceeds.
• Printer acquisitions for production capacity expansion are now expected to restart in 2027, pulled forward from the prior plan of starting in 2028. Hyliion maintains that existing cash on hand is sufficient to reach commercialization of the Carno power module, with additional capital required to support future production growth.
• The company established an at-the-market equity program to raise capital opportunistically when market conditions are favorable, with disciplined use to balance capital needs and shareholder dilution.

• Forward-looking statements regarding product performance, manufacturing throughput improvements, contract awards, and production scaling are subject to inherent risks, and actual results may differ materially from projections due to many unforeseen factors.
• The up to three times improvement in additive manufacturing print speed is still being validated and requires additional testing, so full improvements may not be achieved as currently projected.
• Additional capital will ultimately be required to support full production growth beyond commercialization, which may not be available on favorable terms or at all.
• Demand for Carno power modules is currently reflected largely in non-binding LOIs, with no guarantee that these indications of interest will convert to definitive binding purchase agreements.
• Lead times for new additive printers and supply chain constraints could impact the company's ability to scale production capacity as quickly as currently planned to meet customer demand.

Q: The analyst asks for clarification on the annual production capacity of Hyliion's existing 30 printer fleet, and asks how data center customer pipeline will progress, whether new LOIs will be signed or the company will move directly to test orders. He also asks about additive printer supply chain constraints and how quickly the company can source additional printers to meet accelerating demand.

A: Management confirms the existing installed printer base can support up to 15 megawatts of annual Carno core production after the announced speed improvements. Management notes that current LOIs only represent a small fraction of total data center customer interest, with major hyperscalers already requesting plans for production scaling as high as 400 megawatts per year for a single customer. Management adds that the company's existing Austin facility has space for hundreds of additional printers, and printers are standard models produced by GE's Calibrium Additive for multiple industries, with expected lead times of months to a few quarters.

Q: The analyst asks to confirm the composition of the 10 early adopter units, whether the initial data center deployment is for 200 kilowatt systems, if that deployment will generate revenue, and if the remaining units are for validation with other data center customers. He also asks when 2027 capital spending plans will be finalized, following the decision to pull forward printer acquisitions.

A: Management confirms that all remaining 10 early adopter units besides the initial customer site deployment are Navy assets. The initial data center deployment uses 200 kilowatt systems (sharing the same core technology as the future multi-megawatt product) to let customers test the technology firsthand, with commercial 200 kilowatt deployments moving to 2027. Management notes that while 2027 capital spending is not finalized, the speed improvements allow pulling forward printer purchases, so capital spending will ramp up from the 2026 low level, with more details to come in future updates.

Q: The analyst clarifies the equipment financing projection, asking if the $30–$35 million net cash spending figure includes an additional $30–$35 million in equipment financing beyond the previously stated $10–$15 million. He also asks for confirmation that the $41.7 million Navy contract will be recognized across 2027 and 2028, and that the original older Navy contracts will be fully wound down by the end of 2026 with no revenue carrying into 2027.

A: Management clarifies that the $10–$15 million figure is the total expected proceeds from the 2026 equipment financing; the $30–$35 million figure is total 2026 net cash spending, which is $15–$20 million lower than prior projections due to higher revenue, lower capital spending, and the financing proceeds. Management confirms that older pre-existing Navy contracts will wind down by the end of Q3 2026, with the new $41.7 million contract and additional expected 2026 contracts ramping up starting in Q4 2026, with most revenue recognized in 2027 and 2028, creating a steady layered growth of military revenue over time.