Hyliion Holdings Corp.

Good morning. My name is Mike and I will be your conference operator today. Thank you for standing by and welcome to the Highland Holdings fourth quarter and full year earnings conference call. At this time, all participants are in a listening mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Greg Stanley, Vice President of Financial Planning and Analysis. Thank you. Please go ahead.

Greg Stanley, Vice President of Financial Planning and Analysis, Thank you, and good morning, everyone. Welcome to Hyliion Holdings' fourth quarter and full year 2020 earnings conference call. With me today is Thomas Healy, our Chief Executive Officer, and Sherry Baker, our Chief Financial Officer. During today's call, we will make certain forward-looking statements regarding our future business expectations, which involve risk and uncertainties. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risk and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements on this call. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the earnings press release we issued today as well as our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. You are cautioned not to put undue reliance on forward-looking statements. We undertake no duty to update this information unless required by law. With that, I now hand the call over to Thomas Healy.

Good morning, everyone, and welcome to Hyliion's fourth quarter and full year 2020 earnings call. During the quarter, we continue to make significant steps forward to advance our mission of bringing electrified powertrain solutions to the commercial vehicle space. I will start off today's call with an update on our key product and commercialization milestones and partnerships that we have been developing touch on some of the key executive hires in this quarter, and close with a discussion on our go-forward strategy. First, I'd like to acknowledge our outstanding team at Hyliion and thank our employees for all the progress that we have made while dealing with these challenges of the pandemic. 2020 brought unforeseeable disruption to the world, but I am grateful for our team's dedication as we work to revolutionizing the powertrain market. Turning to slide four, I would like to begin with our hybrid powertrain solution and the progress we have made in the fourth quarter. As a reminder, our hybrid powertrain can be installed on new trucks at the OEM or be retrofitted onto existing vehicles. Over the long term, we expect installations to be done at the OEM or mod center with new trucks coming equipped with our systems from the outset, and we are making headway in developing important relationships to further our commercialization strategy. Fleet utilization of our hybrid solution in the fourth quarter was strong, and I am pleased to report that we achieved our goal of installing 20 hybrid units on trucks in 2020, with seven of those units installed in the fourth quarter. We continue to target large fleets that are innovative thought leaders and look for us to help them enter the world of electrification. Response to our hybrid solution has been extremely encouraging, and right now we are focused on letting fleets experience our game-changing product and making sure we are partnering with early adopters that are strong candidates for conversions into larger customers over time. Turning to slide five, as we continue to evolve our hybrid offering, we recently announced our next generation battery module. This battery includes longer life, faster charging rates, and improved safety. Our battery pack integrates industry-leading LTO cells from Toshiba, which are known for their high quality and safety characteristics. As for longer life, testing has shown that we expect to achieve up to five times as much cycle life compared to other conventional EV batteries, which may allow the batteries to outlive the life of the truck in some instances. With regards to charging rate, our battery is able to recharge in only eight minutes, an unprecedented number compared to most other batteries, which will allow us to rethink asset utilization and uptime. The development of this next generation battery module represents key milestones in the hybrid commercialization process, further strengthening our overall technology platform as we innovate future solutions. While our initial focus for this battery is internal use, we anticipate that there are other marketable use cases for this battery technology, particularly in applications that don't have a lot of time to recharge. As an example of this, think of a yard tractor. Their goal is to utilize this asset 24-7. With our battery, you can recharge that unit while the operator is getting a cup of coffee. One additional advantage to our battery system is around utilizing smaller battery packs, which is important right now when the industry is being faced with an anticipated shortage of battery cells. Tyleon's focus is to utilize small battery packs that consistently get recharged as the vehicle is in operation, as opposed to having a large battery pack that gets recharged once a day and carries all that energy around in the battery. By leveraging this strategy and taking advantage of the battery characteristics mentioned above, our HyperTruck ERX solution utilizes a battery that is approximately 1 20th the size of a conventional EV truck battery. allowing us to deploy many more units on the road while utilizing less batteries. Overall, I'm incredibly excited about our battery technology and what it can bring to the market. Now let's turn to slide six. On our last earnings call, we expressed that we'd be making some key additions to the Hyliion leadership team over this past quarter, and I am pleased to share that we have accomplished this with much success. I'm excited to have further expanded the Hyliion executive team with the hiring of Jose Oxholm, our Vice President, General Counsel, and Chief Compliance Officer, Bobby Cherian as Senior Vice President of Sales and Supply Chain, and Matt Lotz as Senior Vice President of Marketing. And lastly, I'm thrilled to introduce Sherry Baker as Chief Financial Officer, who joins me today on our call. Each of these executives brings decades of industry experience and will be critical to the success and growth of our commercialization strategy. I'd like to now transition to where we are in the commercialization of our core product lines. Let's start with the hybrid solution on slide eight. We are in a phase today where we are deploying low volumes of units of our current generation product with industry-leading fleets in order to seed the market and garner customer interest. In order to scale into production, we've decided to undertake some design changes and improvements of the system. We plan to launch a next generation of the hybrid solution that will include improved packaging for easier installation and manufacturing. It will feature our next generation battery modules. And we are improving the software and data analytics around this generation of the product as well. We have experienced some delays in the commercialization process of this system, but we are on track to be able to deploy units this calendar year. With the onset of this system, it will then allow us to begin to scale volumes of our hybrid systems deployed with customers and truly move into volume manufacturing. To assist with our timing plans and PMO strategy, we've engaged one of the industry leading consulting firms to work closely with us to ensure that we have a robust and achievable timing plans in place. We've also expanded the engineering team with a significant amount of talented team members who bring skills and past experiences of working in the automotive space. One key addition to highlight is that Carrie Gadskey will be joining us starting next month to assist with the commercialization efforts. Kerry is a former chief engineer for Daimler Freightliner and has brought numerous trucking solutions to market before. Now, let's shift to the commercialization of the HyperTruck ERX. Our team is progressing nicely with the commercialization efforts of this product, and we are pleased to share that we are receiving a significant amount of customer support and interest in the solution. As we've previously shared, we will be deploying initial customer demonstration units later this year to begin showcasing the benefits of this product. Over the past quarter, we have been working closely with fleets across the U.S., and we have selected our initial set of launch partners who will be taking delivery of these initial vehicles. We've selected these fleets not only based on the number of trucks that they operate, but also because of their focus on improving climate change and focus on being early adopters of electrification. We will begin showcasing some of these partner fleets in the near future. Once we begin to deploy these demo trucks later this year and going into next year, then we will look to begin commercialization of the product in 2022 for larger quantity deliveries to fleets. As for the engineering commercialization efforts that we have underway, we are not only utilizing our own team, but we have engaged outside consulting resources such as FEV and others to assist as well. We are currently in the process of building more vehicles for testing and validation and going through a selection of key suppliers who will enable us to be able to achieve volume commercialization. The next batch of trucks that we are currently building will start hitting the road towards the middle of this year. As we've been progressing through the commercialization process, we realized that one of the key factors of deploying our system is to be able to install it on brand new chassis that are made by today's truck OEMs. We are excited to announce that the initial HyperTruck ERX builds will be on Peterbilt chassis. We have been working closely with Peterbilt to establish the chassis specifications that are ideal for the HyperTruck ERX powertrain, and we have placed our initial order of trucks through Peterbilt. We will not only utilize these vehicles for our own testing and validation, but then also as we move into customer demonstrations. I'd now like to shift gears and discuss in more detail some of the roadmap that we have previously laid out for the hyper truck. We see the hyper truck powertrain as one that is applicable and realistic today, but also one that can evolve with ever-changing technology and infrastructure advancements, especially as we consider a hydrogen future. First, it's important for us to start off by discussing recharging and refueling infrastructure, which is often the number one hurdle towards adopting electrified powertrains. We've previously discussed with the HyperTruck ERX powertrain that leveraging RNG and CNG infrastructure is actually working to our advantage. With over 700 stations already built out across North America and a robust amount of natural gas pipelines across the country, fleets are able to adopt a solution like this today and not have to worry about having places to fuel their trucks. As we look at hydrogen, North America is starting from nearly scratch when it comes to infrastructure. Currently, there are not hydrogen refueling stations for trucks in existence, pipelines and transport of hydrogen is not established, and there is not a significant amount of clean hydrogen made today. While we believe this market is evolving at an ever-increasing pace, we also believe that there are many years of development still ahead of us that need to happen before the industry shifts to volume adoption. With electric recharging, We do already have a robust electric grid established, but we'll need to improve transmission lines going into recharging locations as well as build out the stations themselves. While we believe that all three of these solutions will evolve in the years ahead, natural gas infrastructure is available and ready today, while the other two solutions will take time to establish and still need to achieve significant cost savings to become cost competitive. To give an example of this, It wasn't until a little over a year ago that the number of available Tesla supercharging locations for passenger cars surpassed the number of already existing natural gas refueling stations for trucks. On slide 13, we'd like to share what we believe will be the future of trucking as we shift towards electric. We believe that local delivery and final mile will be the first to adopt BEV trucks, and that will transition over time into the regional haul market. But as we start looking at mileage greater than this, the weight, the cost, and the size of the battery packs do not lend themselves to this type of application. Thus, we believe that an electric range extender vehicle, such as the ERX or a fuel cell truck, will be applicable. And going back to our previous slide, these vehicles start off by leveraging RNG and CNG as the fuel source to recharge the batteries, and then will evolve into hydrogen over time. So shifting to slide 14, what is very unique about the HyperTruck ERX solution is that it actually has the same vehicle architecture as a hydrogen fuel cell vehicle, but it just utilizes a different generator. So in Hyliion's case, as the market evolves and the infrastructure is built out, Hyliion will be able to keep most of its powertrain the same and just replace the natural gas generator with a hydrogen fuel cell and be able to compete in this market as well. We believe this is a key advantage and differentiator for Hyliion, as we will be able to begin shipping units, advancing the powertrain technology, and achieving revenue, while some of our competitors will be hindered by the lack of hydrogen infrastructure and the time it takes to build out. Lastly, I'd like to share with you the approach to the generator solution that Hyliion is pursuing. As technology continues to advance, We plan to progress our powertrain to having a fuel-agnostic generator that can run on both RNG and CNG, as well as on hydrogen. This solution will offer fleets benefits, as it will allow fleets to source the fuel that is most economical and advantageous for their use case. And lastly, we see that the long-term future has a hydrogen fuel cell solution, and with some technology advancements, it will be able to achieve the greatest performance efficiency. All of these solutions bring forward significant improvements around emissions compared to trucks that are on the road today. As we continue forward with these solutions, Hyliion will be collaborating with others as well as establishing our own technology in order to make sure that we are offering the strongest technology available. In summary, 2020 was a truly transformative year for Hyliion and in turn the EV trucking space. We delivered initial units to key customers, advanced our commercialization strategy, and scaled our organization to prepare for growth. We enter 2021 well-positioned with the resources, team, and strategy to advance our commercialization goals, and particularly our expected launch of the HyperTruck ERX later this year. Now I want to welcome Sherry to Hyliion for her first Hyliion earnings call. Sherry has nearly two decades of experience in finance and accounting leadership, as well as a strong understanding of investor relations, M&A, and manufacturing operations. Sherry served as CFO of PGT Innovations, a publicly traded company, and oversaw the company's finance function and strategy. Sherry has a proven track record of helping to drive profitable business growth and will play a critical role in Hyliion's success. I also want to thank Greg Vanderveer, our former CFO who recently retired, for his role in shaping our business and establishing a first-class team and strong foundation for Sherry moving forward. With that, I would like to turn it over to Sherry to run through the fourth quarter and full year numbers.