Hyliion Holdings Corp.

Good day and thank you for standing by. Welcome to the Hyliion Holdings fourth quarter and full year 2022 earnings conference call. At this time, all participants are in listen-only mode. After the management prepared remarks, there will be a question and answer session. I would now like to turn the conference over to Kellen Farris, Hyliion's Director of Investor Relations. Kellen, please go ahead.

Good morning, everyone. Welcome to Hyliion Holdings' fourth quarter and full year 2022 earnings conference call. On the call today are Thomas Healy, our Chief Executive Officer, and John Panzer, our Chief Financial Officer. A slide presentation accompanies this conference call and is available on Hyliion's investor relations website at investors.hylion.com. Please know that during today's call, we will make forward-looking statements regarding the company's business outlook. Forward-looking statements are predictions, projections, and other statements about anticipated events that are based on current expectations and assumptions, and as such, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from the forward-looking statements on this call. For more information about the factors that may cause the company's results to differ materially from such forward-looking statements, please refer to our earnings press release 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, and we undertake no duty to update this information unless required by applicable law. Now I will turn the call over to Thomas.

Good morning, everyone, and thank you for joining us today for our fourth quarter and full year 2022 earnings call. We have a lot of exciting news to share with you about the progress we've made over the past year and our plans for 2023. First, Let's review the key milestones that we achieved in the fourth quarter of 2022 and for the full year. We had another milestone on the path to commercialization of our hyper truck ERX powertrain by starting winter testing. We also completed the first full year of revenue generation and achieved our latest revenue guidance for the year. We added another 10 orders for initial hyper truck ERX production slots, bringing the total up to 210 units. In addition, We acquired the Carno generator technology, which will give us a competitive advantage by having a high-efficiency fuel-agnostic generator. We've increased our workforce by over 50 employees during the year, including our CFO, John Panzer, and our Chief Strategy Officer, Sherry Lance. We also added Jay Craig, the former CEO of Meritor, to our board of directors, and he recently took over the chairman role. We also expanded our relationships with both PACCAR Peterbilt and Cummins, which will help us scale our solutions and bring them to market more quickly. We made great progress on the regulatory front as well. Our technology will be included in the Inflation Reduction Act and is expected to qualify for CARB's Advanced Clean Truck and Advanced Clean Fleet mandates, which define clean truck production and adoption requirements for OEMs and fleets. These are all significant achievements, and we are proud with what we have accomplished. Shifting back to the HyperTruck ERX powertrain milestones, as a reminder, we initially shared this commercialization timeline back in 2021, and for five consecutive quarters, we have hit every milestone on schedule since then. During the quarter, we checked another box on our commercialization roadmap by initiating winter testing, which includes putting our powertrains through its paces in northern environments where most battery electric vehicles really struggle due to cold weather. Because our powertrain has a CNG range extender, it can operate more reliably and over greater distances than a pure plug-in vehicle. We've been pleased with the results thus far, and while we've encountered some opportunities to strengthen components, we do not expect anything we've experienced to date to adversely impact our plans to start commercial production of the powertrain later this year. Having completed summer testing and initiated winter testing, we are beginning to build the next generation of development vehicles that incorporate all past learnings. These new vehicles will continue to go through validation testing, but will also be used for expanded fleet trials throughout 2023. As we head towards the start of commercial production late in the year, I'm also pleased to share that we are on track for obtaining CARB, EPA, and NHTSA certifications in the second half of the year. which we expect to be our final milestones before delivering units to fleets. Late in 2022, we received an order from DSV for 10 hyper truck ERX units with an option to buy 10 more. DSV is one of the largest third-party logistics companies in the world and is focused on expanding its US business with these trucks deployed out of the Dallas region. DSV shared with us that they are seeing growing demand for their customers to offer emission reducing solutions such as Class 8 trucks with the HyperTruck ERX powertrain system. We are excited to work with DSV and to continue growing our customer base while we help them grow theirs. We've also continued to execute additional controlled fleet trials, recently completing one with Ruan, moving goods for one of their largest shippers. Ruan is not only a HyperTruck Innovation Council member, but they also place an order for 10 production slots. Ruan is committed to climate change initiatives and has a vision to transition to more sustainable movements of freight. As we go through additional fleet trials, we expect to continue to grow our backlog of orders for production slots. Various other fleets have told us they are interested in the Hypertruck ERX powertrain, but would like to see us reach additional development milestones prior to participating in fleet trials or placing orders. We therefore believe that we will see more firm orders from customers as we approach our commercialization goal late in the year. I next want to provide an update on our Founders Program. As mentioned on our last call, we are calling our initial deployments of trucks our Founders Program. We'll provide white glove service and we'll have a launch facility in the Dallas region to support and service these trucks to ensure a positive customer experience. We are researching the best facility location for our needs in Dallas and will look to share more later in 2023 as we make progress. We also anticipate that the launch facility will be the location where we deliver new trucks to customers as they go through end-of-line certification at the Peterbilt plant in Denton, Texas. Shifting to a regulatory update, as a reminder, there are three main incentives or initiatives that we are pursuing. The Inflation Reduction Act, CARB Advanced Clean Trucks, and CARB Advanced Clean Fleets. The IRA provides a $40,000 tax credit per vehicle, and a truck with a HyperTruck ERX powertrain qualifies for the same incentive as a plug-in electric truck. ACT is a CARB mandate on OEMs to drive the production and sale of vehicles that qualify for zero-emission vehicle credits in the years ahead. According to this regulation, our hyper truck ERX system qualifies for 75% of the ZEV credit that a plug-in electric truck or fuel cell truck will qualify for. ACF is similar to ACT, but is a mandate on the fleets to purchase zero or near zero emission trucks. ACF is still in the drafting stage, but as it stands today, the hyper truck ERX product will qualify for 100% of a ZEV credit or the same value as a BEV or fuel cell truck. CARB has recently proposed some changes to ACF where fleets can seek exemptions to delay compliance with the policy if either clean trucks are not available for purchase or if there are documented delays associated with installation of on-site charging infrastructure. In a recent meeting, CARB confirmed that exemptions will not be offered to fleets if a near zero emission vehicle like a truck with the HyperTruck ERX powertrain, is available to be purchased. We are pleased with how ACF is shaping up, as we believe CARB's policy recognizes the value that our range-extending electric powertrain system plays in the transition to cleaner operating vehicles, electrification of trucking, and meeting broader sustainability goals. Shifting gears, as we kick off 2023, we are excited to announce that we are undertaking the development of a fuel cell truck under a collaboration agreement. As you know, we've showcased a three-stage development roadmap for our hyper truck powertrain that starts with a CNG engine as the range extender generator. We then replace the CNG generator with the more efficient Carno fuel agnostic generator. And finally, transition to a fuel cell powered truck. In 2022, we announced Cummins is our supplier for the CNG engine, and we also unveiled the Carno as our fuel-agnostic solution. We believe that our roadmap aligns with the need to transition to electric powertrain solutions in a manner that evolves over time, along with availability of clean fuel sources and charging infrastructure. It also leverages the ability to retain most of the same powertrain components across our vehicle platforms, including the axles, batteries, electric accessories, and most importantly, the software that controls the entire system. While we believe CNG will be the fuel most prominently used in the near term for range extender electric vehicles, we also see the market evolving towards greater electrification based on hydrogen as a fuel source. Initial adoption of hydrogen vehicles will likely occur in a regional fashion around new fueling locations designed to support trucks. As more stations are built out and the cost of hydrogen comes down, we expect to see adoption grow and applications shift from regional to include long haul. Therefore, we are pleased to announce that Hyzon Motors is our collaboration partner in the development of this fuel cell powered vehicle. Together, we will integrate the Hyliion electric powertrain system and the Hyzon fuel cell into a Peterbilt chassis. Hyzon is an industry leader in the production of fuel cells and Hyliion is an industry leader in developing electric powertrain solutions. We are excited to have our teams working together to develop a prototype hydrogen fuel cell powered vehicle that we expect to be the predecessor of a commercial version of a truck in the future years. We expect to complete the development of this truck later this year. By advancing our product portfolio with a fuel cell solution, we are positioning Hyliion to be ready for growth in the demand for hydrogen-powered trucks in the coming years as new sources of hydrogen fueling become available at lower cost in strategic markets. We are excited about this collaboration and the opportunity to work with the Hyzon team and its fuel cell technology. More to come later this year. Before handing it over to John, I'd like to take a moment to acknowledge the passing of our former chairman, Ed Okola, who was not only our chairman, but also an initial investor in Hyliion. He passed away on December 15th after a long-fought battle with leukemia. He was a mentor to our team, and his contributions to our success will always be remembered. I am extremely grateful for everything Ed did for me personally and for Hyliion. With his passing, Jay Craig has taken over as the chairman of the board, and we're excited to have him in this role. And with that, I will turn the call over to John.