Hyzon Motors Inc.

Good morning and welcome to Hyzon's third quarter 2024 earnings call. All participants are in a listen-only mode. After the speaker's remarks, we'll have a question and answer session. To ask a question, please press star followed by the number one on your telephone keypad. As a reminder, this conference call is being recorded. I would now like to turn the call over to Tom Cook, managing director at ICR. Thank you. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Hyzon's third 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 will turn the call over to our CEO, Parker Meeks. Parker? Good morning.

and thank you for joining our 2024 third quarter earnings call. I am pleased to be sharing significant updates from the quarter, which show continued commercial and technology advancement, including several major milestone achievements. At the beginning of the year, we laid out our core objectives for 2024 on the back of a successful 2023. Among those, we highlighted achieving startup production of both our leading Class 8 fuel cell electric truck and our 200-kilowatt single-stack fuel cell system technology, launching trial programs with major fleets on both our refuse and Class 8 truck platforms, and securing orders with some of those customers on the back of successful trials. I am proud to sit before you today on behalf of our tremendous Hyzon team to showcase their strong execution as we achieve these goals and more during the quarter and have importantly transitioned to the next phase of growth commercialization, and with it, another significant inflection point. We committed to significant milestones in 2023 and 2024, and Hyzon has done what we said we would do. Accomplishing all publicly stated milestones to date over the past two years, with confidence, we will complete the final two that remain in 2024 by year end, both being commercial in nature. Additionally, Hyzon's performance in the third quarter shows significant advancement in commercialization and maturation of both Hyzon and the customer and market landscape, evidenced in four key areas. First, Hyzon continues to deliver on our commitments across technical, commercial, and financial. Second, Hyzon's large fleet trial program has exceeded expectations, proving to our customers that the Class 8 tractor and refuse fuel cell electric trucks are ready to perform today with clear market leadership. Third, the hydrogen fuel supply market is improving significantly, and at levels that allow Hyzon's fuel cell electric trucks to be operating cost competitively now due to our fuel efficiency advantages. And fourth, our latest commercial agreement with GreenWaste, the first ever in North America for a fuel cell electric refuse truck, is a clear proof point. Beginning now with just that, our building momentum and commercialization. We recently announced our purchase agreement with GreenWaste, a leader in recycling and sustainability for North America's first hydrogen-powered refuse collection vehicles. This order for 12 fuel cell electric trucks followed successful trials throughout the Bay Area and Silicon Valley, where our vehicles demonstrated exceptional performance across critical refuse collection industry metrics, including payload capacity, can lifts, and range requirements, all essential elements for the demanding duty cycles of waste collection. What makes this partnership particularly compelling is Greenway's track record of leadership in sustainable innovation. Seven years ago, they made history by commercially operating the world's first full-size electric side-loading waste collection truck. Now, they are the first company in North America under contract to commercially deploy hydrogen-powered refuse vehicles. The refuse sector represents an ideal application for our high-performance fuel cell technology, where the demands for power, payload, and reliable operation align with the capabilities of our 200-kilowatt fuel cell system and powertrain to run a full day's shift without refueling or recharging. As you might recall, we are executing this program in partnership with New Way Trucks. a leading refuse truck body manufacturer, combining their deep industry expertise with our zero-emission technology. Together in August, we embarked on a North American trial program to prove real-world viability of the technology, proof which we believe is shown with the completion of each successful trial, and further evidence with the green waste purchase order representing the first commercial agreements on the back of a refuse truck trial. With delivery scheduled to begin as soon as Q4 2025, the Green Waste Agreement represents more than just a single order. It's a crucial validation of our technology and yet another demanding heavy duty application. It demonstrates the growing recognition that hydrogen fuel cells offer a compelling solution for hard to decarbonize sectors where battery electric alternatives face significant operational constraints. Moreover, It positions Hyzon at the forefront of innovation in the waste management industry, an industry that is showing substantial market opportunity for our technology, given its advantages combined with many California city and county end customers requiring zero emission trucks in their upcoming RFPs for refuse collection services. This milestone adds to our growing commercial momentum and showcases our ability to pioneer zero emission solutions in sectors that are essential to our economy, but historically difficult to decarbonize. We believe this first mover advantage in the refuse sector, combined with our proven technology and strong partnership approach, positions us well to capture additional opportunities as more waste management fleet operators look to transition to zero emission truck solutions. As announced on our second quarter call, we had 25 trials scheduled for both our class eight fuel cell electric truck and our refuse fuel cell electric truck. We have completed 10 of these trials in the first three months of the program, and all have been deemed a success based on the objectives set forth by the customers trialing them. As a reminder, the trial, typically two to three weeks in length, is most often the final step in our development process with fleets, after which we move into commercial negotiations and activation. Commercial negotiations can vary in duration to reach an agreement and order. given by factors including fuel pricing and availability, which is proposed by Hizal's fuel partners in parallel, along with internal large fleet approval processes. Noting that conditions on both of these fronts have improved materially in the past three to four months, particularly fuel pricing and availability, providing what we hope is improved timing to contracts. Feedback from the trials has been overwhelmingly positive from drivers, fleet managers, and executives. Drivers have a full range of typically strong positive feedback, including the combination of the truck's quiet, low vibration, and odor-free operation, with its ability to perform all the work of combustion without compromise, even with added safety improvements, such as our truck's ability to drive at the speed of passenger car traffic when entering the freeway or when climbing steep grades with a full load, both high-risk situations for diesel trucks. Fleet managers have noted our refuse truck's fuel efficiency and potential for operating costs parity with diesel at fuel prices as high as $12 per kilogram, along with our Class 8 200-kilowatt truck's combination of power and lightweight as the lightest zero-emission Class 8 truck on the market with at least 250 miles range and up to 5,000 pounds lighter than some competitors. And fleet executives have noted the positive response from end customers. such as cities and counties, along with citizens and communities who experience our trucks in trial, a key component of their buying decision and the revenue-generating potential for fleets where zero-emission trucks are part of upcoming RFPs for refuse collection services. In that situation, Heisman is providing not only a zero-emission technology and truck, but also a potential source of competitive advantage, revenue, and market share for fleet. From a performance perspective, our latest generation fuel cell electric trucks have also been operating with near 100% uptime, with range, hill climb, and fuel efficiency performance that is far beyond our and our customers' expectations and experience in zero emission trucks. Our trucks have been executing well on a variety of different use cases and situations. Their strong uptime and performance is a result of over three years of technology and powertrain development, testing, and optimization, which now includes over 300,000 miles of on-road experience for the Hyzon Fuel Cell powertrain globally since 2021. For example, our refuse collection truck's stellar performance includes operating routes with significant inclines of up to 27%, picking up trash with high daily bin counts of over 1,300 or more bins per day through neighborhoods, along with heavy trash, which is akin to yard waste. holding well over 25 tons of trash in a single day without refueling. These results both match diesel's performance and go far beyond the range of any battery electric refuse truck on the market today, where most battery electric trucks can only perform 50 to 60 percent of the work our fuel cell electric refuse truck can perform in a day before needing to stop and recharge overnight. Our Hyzon refuse truck in some fleet operations has comparatively completed two full-day schedules without having to refuel, meaning fleets would need to buy 50% to 75% more battery electric refuse trucks to do the same work as a Hyzon fuel cell refuse truck. Reliability and range are paramount, and we have seen strong performance for our deployed trial vehicles. Our Class 8 200-kilowatt fuel cell electric truck has shown similarly impressive results in customer trials, including climbing 3,000-foot inclines with full customer loads, keeping up with diesel trucks, and in some cases, keeping up with passenger car traffic, a significant safety benefit, as mentioned before. The Class 8 200 kilowatt has been fully tested across a full range of challenging routes, operating days, and customer use cases, and has performed at least as well as diesel in all cases, including performing over 500-mile days and tackling routes that no other major OEM battery truck has been able, to complete. Additionally, fuel efficiency, a critical metric for total cost of ownership and economic viability of zero-emission trucks, has outperformed our expectations. Our refuse collection vehicle has shown fuel efficiency that is 2.3 to 3 times better than diesel, which means fluids can absorb a $10 to $12 per kilogram price of fuel, which is available today, and still be at the same operating cost as diesel Our Class 8 200-kilowatt trucks are also showing material benefits in fuel efficiency and operating costs, with 25% to 50% better fuel efficiency than diesel in customer trials to date. This performance in real customer operations provides our fleet customers confidence that the economics of our trucks can meet diesel and operating costs and total cost of ownership today with subsidies available and have a direct path to meeting cost parity with diesel as we scale manufacturing over the coming years. Moving to technology, we're thrilled to announce several significant milestones that underscore Hyzon's leadership in zero emission heavy duty transportation and fuel cell technology specifically. On October 8th, National Hydrogen and Fuel Cell Day, we announced the start of production or SOP for our revolutionary single stack 200 kilowatt fuel cell system at our Bolingbrook, Illinois facility. This achievement marks a pivotal moment in our journey, establishing one of the largest fully integrated fuel cell production facilities in the United States. Our proprietary technology, including the in-house design and production of our seven-layer membrane electrode assembly, or MEA, enables us to manufacture standardized fuel cell systems at volume, accelerating the decarbonization of heavy duty industries. We have worked tirelessly to bring this facility online, and completed 25 A and B sample units, 27 C sample and pre-production units, durability testing, and additional design and supply chain validation to finally reach this point. This milestone falls closely on the heels of another crucial development, start of production for our innovative Class 8 200 kilowatt fuel cell electric truck, announced on September 16th. Through our collaboration with Fontaine Modification in Charlotte, North Carolina, we've successfully transitioned from prototype to production. Our 200-kilowatt fuel cell system, which is 30% lighter and smaller and 25% more cost-efficient than two 110-kilowatt systems combined, allows for a compact yet powerful vehicle that meets the demanding operational requirements of heavy-duty road transport while adding the significant fuel efficiency advantages previously mentioned. Underpinning all of this, we're proud to report that our commitment to quality and excellence has been recognized with ISO 9001-2015 certification for our fuel cell manufacturing, design, and research and development activities. This certification validates that our development and production processes meet the highest international standards for quality. It reflects our dedication to delivering cutting-edge hydrogen fuel cell solutions that are safe, reliable, and of the highest quality that our customers expect. Additionally, it positions Hyzon well on our primary strategic path in the future to supply fuel cell systems to truck OEM partners and stationary power projects at the level of quality those partners require. These achievements collectively represent a new chapter for Hyzon and for the decarbonization of heavy-duty industries. Our Bloomberg facility is now capable of producing 700 fuel cell systems per year over a three-shift operation, all passing through rigorous quality gates and end-of-line tests. As we scale up production, we're not just manufacturing products. We're setting new standards for zero-emission technology in the United States. These milestones reinforce our position as a leader in high-performance zero-emission solutions and underscore our commitment to building a cleaner, more sustainable future for heavy-duty transportation. Before wrapping up with what we expect for the balance of the year and beyond, I'd like to spend a minute on the broader market. We continue to see a U.S. market that remains supportive of clean energy initiatives, with several significant programs in place. These include the EPA's $2.6 billion Clean Ports Program, which just awarded over $475 million to hydrogen projects across six ports including hydrogen-powered drayage trucks and fueling, California's HVIP program, and the $40,000 commercial clean vehicle tax credits under IRA Section 45W. The DOE's Hydrogen Hub Program has begun funding the seven awarded regional hubs, with a notable $12.6 billion agreement, including the up to $1.2 billion in federal funding for California's Arches project, among the landmark hydrogen ecosystem funding agreements that are now being reached. ISM has been actively engaging with these opportunities, supporting clean ports applications that could lead to substantial orders, and supporting fleets and several other subsidy and grant programs. Additionally, we are seeing strengthening demand for fuel cell electric trucks from large fleets, particularly in the refuse industry, driven by their end customers, the cities, counties, and other entities who contract refuse collection services. Many of those entities have a strong commitment to decarbonization and are including either requirements for zero emission refuse collection and or Class 8 trucks in future contracts or scoring bidder responses higher if zero emission trucks are included. Given Hyzon's fuel cell electric trucks are materially outperforming battery electric trucks and that Hyzon's refuse collection truck is the only fuel cell electric refuse truck in the market today, several customers see Hyzon's trucks and fuel cell technology as a market share and revenue enabler, not just a decarbonization enabler. Finally, a brief update on a critical enabler for our commercial pathway, fuel availability and economics. Hydrogen fuel has been a significant challenge, which we have commented on over the past year. We have seen very positive progress in both fuel availability and pricing, and our fleet customers are seeing the same as we work with them to finalize potential hydrogen fuel cell truck contracts alongside fuel agreements with our hydrogen fueling partners. While available fuel pricing spiked to about $40 per kilogram as recently as six months ago, we are now seeing fuel pricing quotations for 2025 dispense supply that is in some cases as low as $10 per kilogram dispense, which enables cost structures that many foods can't absorb today while looking forward to further price declines as additional lower cost supply comes online. Before handing the call over to Steve, I'd like to provide some thoughts on the balance of the year and into 2025. We expect to make continued progress on the commercial front as we seek to turn trial success into firm commercial orders. On the commercial front, we expect to continue executing more than 20 remaining Class 8 and refuse truck trials, serving the total of 30-plus trial opportunities to commercial negotiations on the back of those trials, each providing an opportunity for major commercial agreements and backlog building. As a reminder, we target 50-plus truck multi-year agreements with large fleets, so even a 40% success rate in converting trials to contracts of that scale could lead to a 500-plus truck potential order book in Q1 of 2025. On the technology side, in the fourth quarter, we will continue advancing our ongoing durability testing and continuous improvement activities for the fuel cell system and powertrain. including incorporation of results and learnings from our expanding customer trial programs. Activities will continue into the first half of 2025. We plan to provide updates on our durability, cost, and design optimizations for our next generation 200-kilowatt fuel cell system next year. From a product perspective, in the fourth quarter, we will drive manufacturing planning and execution for the Class 8 200-kilowatt truck with Fontaine. Additionally, we have launched development of our next generation 200 kilowatt fuel cell electric refuse truck, which will be the production intent of the refuse truck platform at its SOP. The refuse collection truck is already achieving tremendous performance results in line with combustion and fuel efficiencies that are up to three times better than diesel with a 110 kilowatt fuel cell system. And we expect to see even better performance, including materially better fuel efficiency and range from the production intent 200 kilowatt fuel cell refuse truck once it achieves its SOP. As always, we are going to continue to remain laser-focused in positioning this business to be an attractive investment for shareholders and manage our cash resources appropriately to ensure our longevity. With that, I'll hand it over to Steve to discuss our financial results in more detail. Steve?