Hyliion Holdings Corp.

Good day and thank you for sending by. Welcome to the Hylian Holdings Second Quarter Earnings Conference Call. At this time, all participants are in listen-only mode. After your remarks, there will be a question and answer session. I would now like to turn the conference over to Kellan Ferris, Hylian's Director of Investor Relations. Kellan, please go ahead.

Thank you and good morning, everyone. Welcome to Hylian Holdings' Second Quarter 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 note that during today's call, we will make certain 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. As such, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from forward-looking statements made on this call. For more information about factors that may cause the company's results to differ materially, From such forward-looking statements, please refer to our presentation and press release, as well as our filings with the Securities and Exchange Commission. 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.

Welcome to Hyliion's second quarter 2023 earnings call. During the second quarter, we hosted our first ever Investor Day on June 27th in Austin, Texas, at our headquarters. We had more than 60 in-person attendees and over 400 viewers on the webcast to tune in to learn more about Hyliion's go-forward strategy. We showcased the building of our first production HyperTruck ERX powertrain, as well as unveiled newly planned product offerings and what the go-forward market strategy will be for these products. To start today's call, I'd like to share an update on the market landscape and perspectives on some recent events that have taken place in the electrification space. As you may be aware, last Monday, another leader in the space filed for bankruptcy, and unfortunately, they are one of a number of companies in our industry that have faced financial and other issues in recent months. We've also seen some providers experience significant losses on their initial units as they seed the market with their products. Hyliion faces many challenges as well, and we are working diligently to avoid the same outcome and to grow shareholder value. Hyliion has been trading near or below our cash value over the last few quarters. However, one of the differences between Hyliion and others in the space is our cash position. In light of this, we continue to assess our business model and strategic priorities to ensure we utilize our capital as effectively as possible. We have seen significant shifts in the electrification space over the past few years that have impacted us and our peers, and we expect that these shifts will continue to impact Hyliion's business model. For example, we continue to see component price increases from our suppliers, have experienced supply chain constraints that have impacted our development timeline, and have seen both positive developments and potentially wavering on regulatory mandates. As a result, we see fleets adjusting their electrification strategies as they move further along the path to adoption. Going forward, we will continue to look for ways to optimize our business, conserve our cash position, bolster our product offering to help prevent decontenting by OEMs, and deliver solutions that meet fleets' needs. We've already executed on opportunities like our acquisition of the Carno generator technology and our development partnership with Hyzon to build a fuel cell powered vehicle. We will continue to look for ways to strengthen our business model and to optimize our business, conserve cash, and deliver products to customers. Shifting now to the HyperTruck ERX, I'd like to share an update on where we are with respect to launching the HyperTruck ERX powertrain later this year. As just mentioned, we have begun the installation of our first production truck, and we plan to ship 30 trucks by the end of the year. On our hyper truck ERX commercialization timeline that we unveiled seven quarters ago, we had planned to begin extended fleet trials in the second quarter of this year. Unfortunately, we have pushed the start of these trials out into the third quarter due to delays in receiving components needed to build our latest fleet of pre-production vehicles. However, we expect to start these trials in the coming weeks. We are presently working with fleets to confirm orders and delivery timing for their initial production trucks. We see extended fleet trials as the final stage for many fleets in their decision process of procuring our solution. We are presently completely booked through Q4 with trials with various fleets. With the discussions we have ongoing and the interest we've received from fleets, we are confident in our ability to deliver 30 trucks by the end of this year. As we get feedback from these fleet trials and initial adoption, we will assess our ramp-up plans for 2024 and come back with further clarity on our projected volume ramp. Even since last quarter when we shared that we'd be shifting our delivery ramp and restructuring our founders' agreements, we have seen further unexpected price increases from our supply base. This speaks to how the electrification market is still in its early stages, and manufacturing, supply base, and pricing are still being worked out. As we have previously shared, we are working to pass along some of these price increases onto fleets. which will allow us to sell the trucks while reducing the gross loss we expect to realize on the first units. Another milestone on our commercialization journey is to achieve or complete our CARB, EPA and NHTSA certifications relating to the powertrain. I am pleased to share that we have successfully passed all required Federal Motor Vehicle Safety Standards, or FMVSS, to satisfy our NHTSA requirements. We also remain on track with CARB and believe we'll have this complete in Q3. Thus, we are confident in our readiness to begin shipping trucks in the fourth quarter. Also during Investor Day, we unveiled that the next variant of the HyperTruck ERX will be the powertrain in a day cab truck. When we initially selected the launch of the HyperTruck ERX on a sleeper truck, we believed that fleets would adopt plug-in electric trucks for day cab applications and range extender electric for sleeper truck applications. As fleets have begun adopting plug-in electric trucks, they are finding that the range is much more limited than they expected, and the charging infrastructure either doesn't exist or is difficult and costly to install. Thus, over the last couple of quarters, we have seen increasing interest from fleets in a hyper truck ERX powertrain on a day cab vehicle. We are therefore moving forward with initial development and are planning to have the powertrain ready in 2025. As we embark on this development, we also plan to incorporate design improvements to help with cost and weight. We've heard from fleets that the additional weight of the HyperTruck ERX sleeper variant will hinder its ability to operate in weight-out hauling applications. Thus, for the day cab, we are exploring ways to reduce battery and tank sizes to remove weight in addition to the savings of moving to a day cab. In Q2, CARB passed the Advanced Clean Fleet, or ACF, mandate, which will require fleets to start adopting vehicles that qualify for ZEV credits in 2027. I'm pleased to share that the HyperTruck ERX powertrain will qualify for the same level of credit as a battery electric or a fuel cell truck will qualify for under this mandate. ACF first regulates adoption of day cab vehicles and then later covers sleeper trucks starting in 2030. This is an additional reason why we plan to add a day cab variant of the HyperTruck ERX powertrain to our product portfolio. We also outlined our development plans around the integration of the Cummins 15-liter natural gas engine. We presently utilize the Cummins 12-liter natural gas engine, which is CARB and EPA certified for 2023, but the Cummins 12-liter engine will only be EPA certified in 2024, meaning it can't be sold in California. Thus, we'll work to integrate the new Cummins 15-liter natural gas engine into the HyperTruck ERX by late 2024, which is expected to be both CARB and EPA certified. Now, shifting to the Carno. We unveiled a representative model of what our planned 200-kilowatt stationary power Carno generator will look like, including approximate dimensions and its small footprint as depicted on this slide. We continue to see strong interest that's exceeding our expectations for a stationary Carnot solution that has the ability to solve various problems. We see it as a fit for prime power applications as we anticipate being able to produce electricity for less than the cost of grid power in most locations. It could also be used for peak shaving to help levelize power demand on the grid and be used to produce electricity in areas where the grid power is unavailable. The Carnot generator offers clean, low-cost electricity, has a smaller footprint than conventional generators, requires limited maintenance, and operates at very low noise levels. The Carno is also fuel-agnostic, able to run on conventional fuels like natural gas, propane, diesel, and even on zero-carbon emission fuels like hydrogen and ammonia. We also showcased how the Carno units can be stacked together to produce greater power levels while not compromising any of its benefits. For reference, the footprint of a 20-foot shipping container filled with Carno generators could produce more than 2 megawatts of power output. This footprint is half to one-third the size of conventional generators, and even a tenth the size of some new clean generator technologies coming on the market today. We see the path to the Carno stationary market as achievable over the next 12 to 18 months, and it broadens our ability to provide electrified solutions to the commercial vehicle market by powering EV charging units. In the slide presentation accompanying this call, you can see that we've showcased what the key milestones will be for both the hyper truck Carnot and the Carnot stationary generator over the next few years. We are planning to begin initial deployments of the Carnot stationary generator next year, and we expect that these will be revenue generating. We are already well underway in discussions with likely customers around their initial deployment of the generator. We are also continuing with the development to integrate the Carnot generator into the HyperTruck powertrain. As we work to integrate and validate the HyperTruck Carnot over the next few years, we plan to be ready for initial fleet trials starting in 2026. The third variant of our HyperTruck powertrain is a hydrogen fuel cell version. A couple of quarters ago, we announced a partnership with Hyzon where we kicked off the integration of Hyzon's latest 200 kilowatt fuel cell technology with Hyliion's HyperTruck powertrain technology on an initial development vehicle. We are pleased to share that this development has been going very well and this vehicle is up and running now and completed its initial test drives around a test track just a few weeks ago. This project remains on track and will be complete by the end of this year. I will now turn the call over to John to share more about the financials from this past quarter.