Hyliion Holdings Corp.

Good morning. Thank you for standing by. My name is Frilla and I will be your conference operator today. At this time, I would like to welcome everyone to the Hialeah & Holdings Third Quarter 2024 Earnings Release 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 the star followed by the number one on your telephone keypad. If you would like to withdraw your question, Simply press the star one again. Thank you. I would now like to hand the conference over to Greg Stanley. Please go ahead.

Thank you, and good morning, everyone. Welcome to Hyliion Holdings' third 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.halion.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, and I will now turn the call over to Thomas.

Hello, and thank you for joining us for Hyliion's third quarter 2024 earnings call. Today, I am joined by our CFO, John Panzer. Over the past quarter, we've made substantial strides on the road to commercialization of the Carnot generator and I'm excited to share key updates as we approach the start of early adopter customer deliveries in the coming weeks. Today, I'll cover our progress on development, early deployments, and our commercialization plans, the growing market interest we're seeing, especially from the data center sector, and additional details on our recent Office of Naval Research contract. To start, I'd like to provide an update on our product development progress. I'm pleased to announce that we've achieved the second to last milestone in our commercialization timeline, completing beta development work for the 200 kilowatt Carnot generator. With this phase finished, the beta generator and its components have now moved to the testing and validation stage as we prepare for early adopter customer deliveries. Over the past year of testing the Carnot generator, we've seen promising results that highlight its high efficiency, fuel flexibility, and low emissions. These qualities align closely with the needs of customers in our target market, and we believe they will differentiate the Carnot generator from other power generation solutions in the industry. In both our Cincinnati and Austin facilities, we're currently manufacturing components, running our additive manufacturing printers 24-7, and are receiving parts from vendors to kick off the assembly of the first generators. The key takeaway here is that while we still have further testing and validation steps to complete in the coming weeks, we plan to deliver a couple of customer units before the end of the year. Our plan is to produce about a dozen early adopter units. Initially, we had planned that all early adopter units would be deployed in the field at customer sites. However, some of these early units will initially be deployed at our facility to perform customer specific requirements testing, before being moved to their final location, while others will go directly to customer sites in 2025. As we've mentioned in previous calls, the goal of the early deployment unit is to integrate Carno generators into various customer use cases to showcase their performance. We will closely monitor the performance of these units, provide immediate operational support, and make any necessary adjustments to ensure the technology is ready to scale. As noted previously, Revenue recognition for units will occur once we've confirmed that the generators meet design specifications, including key performance criteria, in line with the terms of sale. Starting at the end of this year and going through the first half of next year, we'll deliver early adopter units and incorporate insights gained from their operation into design modifications and enhancements for future units. This iterative process is essential to ensuring we deliver the highest quality product to our customers. As we continue scaling production, we expect commercial deployments to begin around mid-2025. This approach allows us to incorporate any feedback and necessary fixes identified from early adopter deployments into the system before we officially commercialize the 200-kilowatt Carnot generator. and begin recognizing revenue on sales starting sometime around mid-2025. Shifting now to some significant recent accomplishments, I'm excited to highlight our contract win with the U.S. Office of Naval Research for up to $16 million announced earlier in the quarter. Through this collaboration, we'll be working with the Navy to explore the Carnot Generator's potential for use in naval vessels and stationary power applications. This contract includes the sale of up to seven Carnot generator systems, which the Navy will deploy in various environments to validate the generator's unique performance characteristics. Key attributes like fuel flexibility, low noise, and low maintenance align closely with the Navy's operational objectives, supporting their goal of identifying advanced power solutions for future vessels. I'm also pleased to share a new development in our business strategy, With the addition of the new Office of Naval Research contract, we will now begin recognizing revenue from R&D services as part of our core business services, along with the development and sale of Carno generators. Including this contract, along with two earlier government awarded agreements, we expect the total value of our R&D services and Carno generator sales with the Office of Naval Research in the future periods will be up to $17.2 million. This will enable us to begin recognizing revenue from these and future R&D contracts starting in Q4. We're enthusiastic about this partnership with the Office of Naval Research and believe we have considerable potential for similar contracts in the future, both within the military and across other sectors that stand to benefit from our technology. We also recently announced a successful demonstration of the Carnot generator operating seamlessly on multiple fuel sources. The test began with natural gas, then shifted to a nitrogen-rich syngas, and finally transitioned through various mixtures of hydrogen and natural gas. This demonstration highlights the generator's unique capability to adapt to different fuel sources mid-operation, offering unmatched flexibility. This adaptability is particularly beneficial for customers in sectors like renewable fuels and oil and gas, where fuel composition may vary during operation. Now turning to some exciting market updates, I'm pleased to report that we have secured letters of intent that exceed the number of units we plan to ship in 2025. We expect to deliver several dozen units over the course of the year aligning with our previously shared guidance of achieving low double-digit millions in revenue next year. This early interest highlights the strong demand and market confidence in the Carno generator's potential to transform power generation across multiple industries. Please note that these letters of intent are non-binding and subject to the execution of definitive sales agreements. A few weeks ago, we also signed an LOI with ANA Incorporated. a leader in mobile industrial equipment, to pilot the deployment of up to six Carnot generators in mobile power rental applications. We expect that this partnership will provide us with a strategic entry into the rental power generation market, allowing us to accelerate adoption with an established industry leader. ANA plans to start their initial deployment of the Carnot generator in 2025 after the parties execute a definitive agreement. In recent quarters, we've seen increased interest in the Carnot generator from the data center sector. The rapid growth of cloud computing, artificial intelligence, and data analytics is driving demand for more data centers, each requiring substantial power. The Carnot generator aligns well with the industry needs, offering a dispatchable power generation solution that delivers high reliability while meeting strict emission standards. Our generator can serve as both a primary and backup power source, ensuring uninterrupted operation, a critical requirement for data centers. Power demands at data centers in development usually range from 20 megawatts for smaller facilities to over 100 megawatts for large-scale centers, equivalent to deploying 100 200-kilowatt Carnot generators on the low end and more than 500 for larger sites. This scale is like customers to request an accelerated timeline for our two megawatt Carnot generator system. We plan to begin development of this system early next year with the first units expected to be available in 2026. One major advantage of the Carnot generator is its modular design. Each two megawatt system contains 10 200 kilowatt four shaft arrays integrated into a single operating unit. to achieve higher power levels. These generators can operate together or independently, providing flexible power output to meet diverse demand. Lastly, we announced this past quarter that the Carnot generator now qualifies under California's renewable portfolio standard. This qualification is a major milestone as it opens new opportunities within California, a leader in renewable energy adoption and emissions reduction. The RPS legislation requires utilities to source a portion of their electricity from renewable sources, and the Carnot Generator's capability to operate on renewable fuels like hydrogen and biofuels make it an attractive option for utilities and other organizations aiming to meet these requirements. To meet demand, we've been rapidly expanding our additive manufacturing capabilities in Austin. Over the past six months, we've grown our fleet of additive print machines with additional units scheduled for delivery through the second half of next year. In the coming weeks, we expect to take delivery of our first M-Line production printers from Calibrium Additive, a GE Aerospace company. These advanced printers, specifically designed for volume manufacturing, will significantly support our scale-up by providing more lasers, a larger print area, and enhanced production capacity. In parallel, we're working to improve the throughput of our existing machine, consolidating prints for greater efficiency, and reducing the number of additive parts by transitioning select, less complex components to conventional manufacturing. Together, these efforts aim to increase production capacity while also reducing system costs. In conclusion, we continue to make excellent progress on multiple fronts, product development, market engagement, and strategic growth initiatives. All of this culminates with initial deliveries beginning in the coming weeks, followed by a commercial launch and production ramp up in 2025. With that, I'll now hand the call over to John to cover our financial results and outlook.