Hyzon Motors Inc.

Thank you for standing by. My name is Gail, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 2024 Huizen Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Tom Cook, Managing Director with ICR. You may begin.

Thank you, Operator, and good morning, everyone. Welcome to Hyzon's second quarter 2024 earnings call. With me on the call today are Parker Meeks, Chief Executive Officer, and Steve Weiland, Chief Financial Officer. As a reminder, you can find a press release detailing our financial results and the presentation accompanying today's call in the investor relations section of our website. Today's discussions include forward-looking statements regarding future plans and expectations. Actual results might differ materially from those stated. and factors that could cause actual results to differ are explained in the forward-looking statements at the end of the press release and page two of our earnings presentation. Forward-looking statements speak only as of the date on which they are made. You are cautioned not to put undue reliance on forward-looking statements. With that, I'll turn the call over to our CEO, Parker Meeks. Parker?

Good morning, and thank you for joining our 2024 second quarter earnings call. I look forward to sharing the commercial, technology, and organizational progress we have made, which we believe strengthen our first mover position in decarbonizing heavy mobility. On the technology side, these include continued advancements towards startup production of our leading 200 kilowatt fuel cell technology. On the commercial side, we are pleased to have launched our 200 kilowatt Class 8 fuel cell truck trial program with multiple large fleets in July. With positive initial customer feedback, which I will expand upon later. Steve Weiland will then review our financials in more detail. First, let me address the announcement we made last month to focus on our core North American Class 8 and refuse vehicle markets. After reviewing our strategic options, we decided to focus our operations on the market and applications with the highest immediate commercial potential, the Class 8 tractor and refuse truck markets in North America. After considering our options and completing a full assessment of challenging international market conditions and waning government support outside of North America, we decided to halt our operations in the Netherlands and Australia. In collaboration with our board of directors, this was deemed the best path to support the active commercial development of the North American business and our 200 kilowatt startup production, or SOP. This decision allows us to concentrate our financial resources and investments on our first-to-market single-stack 200-kilowatt fuel cell technology in our North American Class 8 and refuse truck platforms, which we have launched in large fleet travel programs in the U.S., supported by continued customer interest and advancing government subsidy programs. Steve will provide more color in a moment on the financial impact of this decision. This quarter, we are proud to have met our guidance and delivered a monthly average cash burn at the low end of that guidance. After halting operations in the international markets, based on how we are operating now, we estimate our average recurring monthly cash burn to be further reduced to approximately $6.5 million by year end. Additionally, given our strategic transition to a single region, we are no longer providing deployment guidance for the balance of 2024, as we narrow our focus to the opportunities in the North American Class 8 and Refuge markets. We plan to provide updated guidance on the North American market in the future as our customer trial programs advance. Alongside focusing our resources, we have continued our capital raise efforts, working with our financial advisor, PJT Partners, to evaluate potential strategic capital investment and strategic alternatives to support commercialization of our 200 kilowatt fuel cell technology. In late July, upon becoming shelf eligible, we raised $4.5 million in gross proceeds via a registered direct offering in a difficult market environment to increase our runway and improve the liquidity of our stock. This represents the first capital the company has raised since going public in July 2021. Since this raise, Hizal's average daily trading volume has increased approximately 22 times to 13 million shares per day when comparing the 30 days prior to the transaction to the 16 trading days post-transaction ending on August 9th. We believe that this capital raise and improved liquidity combined with continued commercialization of our proprietary fuel cell technology positions us to pursue additional financings later this year. We believe that successful trials of our leading fuel cell truck platforms converting to large fleet customer contracts, combined with the expected near-term SOP of our 200-kilowatt fuel cell system, will serve as important commercial, equity markets, and strategic investment catalysts. We recognize the capital markets for early-stage growth companies, particularly those operating in the hydrogen fuel cell and clean transportation sectors, have been in a prolonged period of upheaval. Once this challenging environment subsides, we expect to have broader access to less expensive capital, while strategic capital remains our primary focus in the near term. We continue to work with our strategic partners and customers to find ways to advance the commercialization of our technology, which includes recent proposals regarding fuel cell and fuel cell truck orders and potential investment into our company, proposals we hope will convert to definitive agreements in the near future. Now, let me turn to our commercial and technology progress, where we continue to make important strides, driving both near-term and long-term value. Turning first to our commercial activity, in the second quarter, we delivered one additional 110 kilowatt fuel cell truck to our customer performance food group, or PFG, for a total of five vehicles deployed with PFG in California. We continue to gather critical on-road experience through these trucks' commercial operations. We plan to continue working with PFG on an agreement for up to 15 200-kilowatt fuel cell trucks following a successful 200-kilowatt truck trial and a possible option to purchase an additional 30 fuel cell electric trucks, an example of the multi-year commercial order pattern we prioritize with large fleets. Additionally, Our 200-kilowatt Class A fuel cell truck large fleet customer trial program launched with multiple customers in July, and the initial operational performance and telematics data is both encouraging and exceeding our expectations. The truck has proven its ability to complete double shifts, ending the day with fuel to spare. Accomplishing full-day combustion engine operations, many other major OEMs battery electric trucks could not complete. One trial customer's experience underscores the outperformance we are seeing in a key metric, fuel efficiency. On a heavy haul, steep route, double shift day, where the customer's standard diesel truck averages four miles per gallon, Hyzon's fuel cell electric truck has averaged over six miles per gallon equivalent, roughly 50% better than diesel. This fuel efficiency is critical because fuel comprises 50% of the total cost of ownership for a heavy-duty truck. Based on our calculations, with this level of fuel efficiency, total cost of ownership parity with diesel is achieved today, even with fuel that is 40% more expensive than diesel. We look forward to sharing more information from these trials as they progress. On the refuse collection vehicle front, customers, partners, and stakeholders across the industry are demonstrating commercial interest for our refuse collection truck. As a reminder, in May, we unveiled the first fuel cell electric refuse truck for the U.S. market with New Way Trucks, the largest private refuse equipment manufacturer in North America. Together, we are embarking on customer trials in the U.S. and Canada to prove the viability of the technology and showcase its performance. We expect to launch the first trial with San Francisco-based waste and recycling management company Recology this month. Across the two vehicle platforms, we remain oversubscribed for our trial program, with 25 large fleets in the schedule across the 200-kilowatt Class 8 and Refuse trucks through January 2025. These fleets represent many of the largest fleets in the North American Class 8 and Refuse truck markets, averaging more than 4,200 trucks per fleet, including 10 fleets with at least 5,000 trucks each. As discussed in previous quarters, we prioritize large fleets as they have strong motivation to purchase zero-emission vehicles because of government incentives, their customers' requirements, and in many cases, their own sustainability commitments. Subject to the success of these trials, we expect to enter into initial definitive commercial agreements in the second half of 2024, with commercial deliveries beginning in 2025. We are excited by the potential for our trial and commercial agreement program to provide a strong order pipeline and foundation for commercial growth for Hyzon. Any material success in converting these 25 large fleet trials to our targeted 50 to 100 truck multi-year commercial agreements per fleet would yield sizable year-end order backlog for the company. Beyond our vehicle platforms, we are also seeing increased commercial interest in our fuel cell technology from the stationary power market. including in such applications as backup and primary power for data centers. The combination of rapid data center storage demand growth, driven by AI and cloud computing, alongside data center owners and customers' significant ESG goals, is in turn driving demand for clean hydrogen fuel cell power in data center expansion projects. We are now in advanced customer discussions for near-term deployment. With these trends in mind, the stationary fuel cell power market, estimated at $3.5 billion in the U.S. by 2030, poses an attractive future application for Hyzon's heavy-duty fuel cell technology. Moving to our fuel cell technology, we're continuing to make progress with our sea sample development in our Bolingbrook, Illinois facility and remain on track for SOP in the second half of 2024. As a reminder, Hyzon's fuel cell system generates a net 200 kilowatts from a single fuel cell stack, which offers a 30% lighter, 30% smaller, more cost effective, and more fuel efficient option when compared to the conventional approach of combining two systems or stacks to reach equivalent power. In the second quarter, we built 16 sea samples for a total of 21 sea samples built in the first half of 2024. We also progressed our rigorous durability testing, supported by commissioning our eighth fuel cell test stand in Q2, which expands our capability for in-house, end-to-end fuel cell testing today and ongoing quality control once we begin production. Our remaining capex spend to achieve SOP is substantially complete, at which point we expect annual capacity to be 700, 200 kilowatt fuel cell systems on three shifts. We expect this to sustain our planned production rates for the next two years. In initial capacity testing, our team confirmed this production rate, along with our capital-efficient future capacity expansion plans in line with anticipated demand and customer scale-up programs. Finally, let me touch on the market environments. While government support has waned in international markets, we are seeing continued and growing strong support here in the U.S. This includes the $2.6 billion Environmental Protection Agency's Clean Ports Program, CARB's HVIP program in California, the Internal Revenue Code Section 45W $40,000 Commercial Clean Vehicle Tax Credit, and the Administration's Hydrogen Hub Program, which recently funded its first three regional hubs, including a $12.6 billion agreement for California's Hydrogen Hub application, Arches. We expect additional hydrogen hubs to be funded before the end of the year and potential first awards under the Clean Ports Program to be granted by year-end as well. Hyzon has supported several Clean Ports applications, the largest of which could yield an order of up to 100 fuel cell trucks if selected. Hyzon has also recently submitted an application under the Bipartisan Infrastructure Law's Advanced Energy Manufacturing and Recycling Grant Program. If selected, the grant could provide up to $19.9 million in a 50% match structure to help fund future expansions of our Bolingbrook fuel cell manufacturing facility to annual production of 2,800 fuel cell systems, well beyond our anticipated cash flow break-even production rate. Despite the potential for political changes in November, we remain bullish on the long-term prospects for our industry and our company, thanks to the support we see from states, such as California, which are committed to decarbonization, and the federal programs I mentioned before, which have shown continued momentum over the past several months. Before handing the call over to Steve, I would like to reiterate the two primary goals and anticipated milestones for 2024, which we discussed last quarter. First, SOP of our 200 kilowatt fuel cell system and Class 8 fuel cell truck platform. We expect to reach SOP for our single-stack 200-kilowatt fuel cell system and our 200-kilowatt Class 8 fuel cell truck platform in the second half of 2024. These will be major technology and commercial achievements, clearing the path for commercial scale-up of our leading fuel cell technology to large fleet customers. And second, large fleet commercial agreements. Subject to successful trials, we anticipate signing new large fleet multi-year commercial agreements in 2024 on the back of the 25 large fleet trials planned through January 2025. These trials launched on the 200 kilowatt Class A truck platform in July with positive results thus far and are expected to launch on the refuse truck platform with Recology this month. Additionally, we anticipate advancing fleets under existing commercial agreements to the second tranche of their multi-stage commercial agreements. As I stated previously, any material success in converting trials to new large fleet contracts would show significant progress in setting HyZone's commercial pipeline foundation alongside evidence of large fleet scale-up progression. Finally, we are focused on strengthening our balance sheet and securing additional capital to fund our business. With that, I'll hand it over to Steve to discuss our financial results in more detail. Steve?