Hyliion Holdings Corp.

Good morning. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Hylian Holdings second quarter 2024 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, again, press the star one. At this time, I'd like to turn the conference over to Greg Stanley, Chief Accounting Officer. You may begin.

Thank you, and good morning, everyone. Welcome to Hyliion Holdings' second quarter 2024 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 risk and uncertainties. Many factors could cause actual results to differ materially from forward-looking statements made on this call. For more information on both 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. Thank you.

I will now turn the call over to Thomas. Hello, and thank you for joining us for Hyliion's second quarter 2024 earnings call. Today, I am joined by John Panzer, our CFO. Over the past quarter, we've continued to make great progress with the commercialization of the Carno generator and are continuing to build strong customer interest. This progress includes building a backlog for 2025 shipments, exploring applications in new target markets, and receiving positive customer feedback highlighting their growing need for more power. We believe the Carno generator can provide transformative power generation technology to address these ever-growing needs. I'd like to start the call off with an update around our planned deployments for the quarters ahead. We have signed letters of intent with customers for all of the units we plan to deploy this year. These early units will be deployed into various target markets and some with select Fortune 200 companies. As we look ahead at 2025, I am pleased to share that we already have letters of intent with customers for over 50% of the units that we plan to deploy next year. We plan to disperse these units across a diverse set of customers that operate in many of the markets that we are targeting. As we shared on our last earnings call, we anticipate these shipments to generate revenue in the low double-digit millions of dollars. Included in this growing backlog for next year are two customers that we recently announced, U.S. Energy and Flexnode. U.S. Energy, a division of U.S. Ventures Inc., is a leading provider of refined products, alternative fuels, and environmental credits. Within their portfolio of companies, They own and operate natural gas and RNG fueling stations across the U.S. The LOI that we executed outlines plans to deploy a Carnot generator at one of their fueling stations to provide electricity to operate the station and ancillary equipment such as pumps and compressors. We also executed an LOI with FlexNode, a digital infrastructure company that specializes in building cutting-edge, high-performance data centers that simplifies the design and deployment. FlexNode has created a scalable data center solution that can be deployed at existing facilities or leverage existing infrastructure. One of the challenges faced by their customers and the industry broadly is finding reliable sources of clean power for these megawatt-scale data center solutions. FlexNode plans to integrate up to 10 Carno generators starting next year to help solve this problem. By coupling a scalable data center with scalable power generation, we are enabling a solution that can be easily deployed and tailored to customers' needs. Please note that the letters of intent that have been executed with customers are non-binding, and these deployments are subject to the execution of definitive sales agreements. I'd now like to provide an update on the power generation market landscape. Over the past couple of quarters, We've had dozens of customer discussions and have continued to learn more about potential market opportunities for the Carnot generator. We have received overwhelmingly positive feedback from these potential customers. They see the Carnot generator as a revolutionary generator that is poised to overcome many of the conventional hurdles of onsite power generation. Key attributes include the Carnot generator's expected high efficiency, which equates to a low cost of electricity, low maintenance requirements, lower emissions footprint, and versatility of being able to operate on many fuels. Based on customer feedback, we've made a couple of updates to our target markets infographic that we shared a few months ago. The first is with regard to data centers. As we've met with numerous companies in this space, it has become apparent that this market can become a key focus vertical for us. We've heard strong feedback that the AI boom is demanding significantly more data centers, which in return requires significantly more power. Carnot generators with their expected fuel flexibility, high efficiency, and modularity can enable data center operators to generate their own power using pipeline natural gas or other low carbon fuels and then seamlessly switch to onsite fuel storage such as diesel or propane in case of emergency or pipeline failure. Such flexibility will enable these customers to use the Carnot generators for meeting both base load generation and resiliency needs at a facility. Another vertical we have added is waste heat utilization. Manufacturing operations for steel, aluminum, glass, and many other products generate a significant amount of heat that is released into the atmosphere as waste. We are presently in early discussions with a few manufacturers in these industries to explore the opportunity of utilizing their waste heat as a fuel source to power the Carnot generator. Unlike conventional generators that utilize fuels like natural gas or diesel to move the mechanical parts of the engine, The Carnot generator is powered by heat. In most applications, the Carnot generator will use fuels like hydrogen and natural gas to make the heat that will directly power the Carnot generator. However, if an application already generates heat, we are exploring redirecting that heat to power the Carnot generator. This would significantly reduce, if not eliminate, the need for conventional fuels like natural gas or hydrogen, which could dramatically lower operating costs. In another recent development, we have been awarded a small business innovation research grant from the U.S. government. We are excited about this opportunity to focus on the development of a multi-megawatt package Carnot generator for U.S. Navy applications. We'll plan to share more on this opportunity in the near future. I'd now like to shift and share some more updates on the progress we've been making on the development of the generator and our production capabilities. Over the past quarter, we've continued to test the alpha version of the generator and are preparing the beta version for customer deliveries later this year. Over the past quarter, we focused on testing many of the improvements that we are making in the beta generator to ensure it operates and performs as we expect. We've also continued to refine and improve the production of beta components on our additive manufacturing machines. Because of this ongoing work, we are not yet checking off the box indicating full completion of beta development in the first half of this year. but we do expect to complete the final two milestones by the end of the year. In Q2, we also focused on expanding our production capabilities in Austin. We now have additive manufacturing machines printing components around the clock. We also have more additive machines on order from General Electric that we are installing between now and early next year. These new machines will support the production ramp up anticipated for next year. In conclusion, we continue to make great progress towards and remain on track with our key objective of getting initial early adopter customer units deployed by end of this year. We are also excited by the discussions we are having with customers and believe that the Carno generator will address the key pain points they are facing as they search for additional sources of power generation. We believe this puts the company in a strong position for ramping up production as we head into 2025. I'd now like to hand the call over to John to cover some financial updates from the quarter.