Hyliion Holdings Corp.

Hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to the Hyliion Holdings Q2 2025 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 that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Greg Stanley, Chief Accounting Officer. Greg, please go ahead.

Thank you, and good morning, everyone. Welcome to Hyliion Holdings' second quarter 2025 earnings conference call. On today's call are Thomas Healy, our Chief Executive Officer, and John Panzer, our Chief Financial Officer. A slide presentation accompanied this call is available on Hyliion's investor relations website at investors.hyliion.com. Please note that during today's call, we will be making 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 place undue reliance on forward-looking statements, and we undertake no duty to update this information unless required by applicable law. With that, I will now turn the call over to Thomas.

Hello, and thank you for joining us for Hyliion's second quarter 2025 earnings call. I'm joined today by our CFO, John Panzer. We have a number of positive updates to share with you on today's call, including the resumption of deliveries as we resolve the key engineering and manufacturing challenges we highlighted earlier in the year. I'd like to begin by highlighting a major development this quarter that we believe underscores the value proposition of our Carno Power Module and will help drive customer adoption in the years ahead. As part of the newly enacted One Big Beautiful Bill Act, a 30% investment tax credit has been established for customers deploying linear generators or fuel cells. This tax credit will apply to projects that begin construction in 2026 or later and will remain in effect for the next 10 years. This credit will apply not only to the generator itself, but also to the supporting infrastructure required for its operation. We believe this credit is significant for both Hyliion and our customers as it affirms the value that fuel-agnostic linear generators like the Carnot power module offer in addressing the growing need for clean, distributed power generation in the U.S. Since the passage of this legislation, customer interest has increased as the credit will help offset the upfront cost of adopting our new Carno technology. Now shifting to our product development and deployment progress. During the past quarter, we delivered our second early adopter unit to the U.S. Navy. In the coming weeks, we expect to complete assembly of two additional Carnot power modules. The first will be used to complete UL certification of the Carnot system, which is an important milestone ahead of product commercialization. The second power module will be the third early adopter customer unit and the first one delivered to a commercial customer. The main takeaway here is that we believe we've overcome some of the key manufacturing challenges we were facing in the first half of this year, which will allow us to continue producing systems. On the manufacturing side, I'd like to provide an update on production of the linear electric motor, or LEM. Last quarter, we shared that we began parallel production of certain LEM components at our Austin facility in response to quality issues and delays with our contract manufacturer. Unfortunately, those issues persisted and we made the decision this quarter to fully transition LEM production in-house. I'm pleased to report that this transition is going well. We are now successfully assembling LEMs internally at a pace that gives us confidence in our ability to meet our ongoing production needs. Our plan is to continue scaling in-house LEM production capability to support larger volumes of Carno systems in 2026. While we continue to believe that this is a component that can eventually be outsourced for greater production efficiency, our current focus is on quality and execution to minimize the risk of further delays to LEM supply. We achieved another important technical milestone this quarter by confirming our ability to remove residual powder from the regen component of the Carno core. The regen is a 3D printed metal part featuring a complex mesh structure that is critical for achieving the Carnot system's power output and efficiency. Last quarter, we mentioned the development of an enhanced powder removal method. This quarter, we've been able to confirm the effectiveness of this process. This has enabled us to upgrade the regen with a more complex mesh design that we expect will address the performance shortfall caused by our earlier simplified design that we had implemented for easier powder removal. With this improved design, we believe we now have a solution capable of achieving the power and efficiency levels we are targeting for the Carnot power module. Bench testing of the redesigned regen has yielded encouraging heat transfer and performance results. We are now in the process of printing components needed to outfit a full Carnot core to validate expected performance during full power operation. As a reminder, the regen is easily retrofitted into existing Carnot cores, allowing us to continue production and testing with earlier versions of the regen. With the progress we have achieved so far this year, we continue to expect that we will deliver all 10 early adopter units in 2025. Based on our current development and build schedule, we now expect that additional Carno unit deliveries beyond the early adopter units and full product commercialization will shift into 2026. This schedule recognizes the time we need to properly learn from early deployments, including validating system performance, and incorporating customer feedback. Meanwhile, we continue to build an inventory of printed components for Carno power modules we plan to deliver in 2026 for product commercialization and afterwards. I'd also like to provide an update on our ongoing work with the U.S. Navy. We've been running the Navy Carno units through near-daily testing, and we continue to see strong system reliability of the production components. Importantly, the minor issues we've encountered have been primarily related to software optimization as we implement new features and from test equipment. Overall, the Carno Power Module production hardware has been performing well in testing against the Navy's specifications. On the commercial front, we've had many notable developments. This past quarter, we were awarded a Phase II Small Business Innovation Research Contract for up to $1.5 million that furthers our research and development work with the U.S. Navy for shipboard and stationary applications. Specifically, this contract focuses on the development of software required to manage and synchronize cores in a multi-megawatt Carno system. We're particularly excited about how our Navy partnership is progressing as near-term plans are underway to install multiple Carno cores on a prototype Navy vessel, and to deploy full Carno power modules at multiple testing sites. I'm also proud to share that Hyliion's Carno power module has been designated as an awardable technology by the U.S. Air Force and the Department of Defense's Chief Digital and Artificial Intelligence Office under the Military Multifuel Initiative. Achieving awardable status positions the Carnot technology to support the Air Force's needs for power technologies that can support critical operations during fuel supply disruptions. We expect that this designation will be beneficial for Hyliion as we seek other military applications for Carnot technology. This quarter, we signed a strategic MOU with Al-Qurayef Industries during the Saudi U.S. Investment Forum, outlining a potential $1 billion opportunity to deploy and localize Carno power modules in Saudi Arabia. This MOU is part of the $600 billion in commercial deals announced during President Trump's visit. It marks a major step toward international deployment with initial units expected in 2026. This quarter, we also signed an LOI with MMR group a global leader in custom electrical solutions serving commercial, industrial, and utility markets. MMR has over 5,000 employees and more than $6 billion in delivered projects. The LOI outlines plans for MMR to purchase three Carno power modules, totaling up to 600 kilowatts of stationary power, with deployments expected to begin in the second half of 2026. The previously mentioned MOU and LOI are non-binding in nature and subject to the execution of definitive agreements. To wrap up, we are very encouraged by the momentum we've built so far in 2025. We've tackled some of the toughest technical challenges in LEM production and regen depowdering and design. The introduction of a 30% tax credit through the One Big Beautiful Bill Act validates our belief that the Carno Power Module represents a significant advancement in the development of clean, efficient distributed power technologies and will serve as a catalyst for faster commercial deployment across a broad range of applications. We remain committed to delivering all 10 early adopter units this year and look forward to commercializing the Carno system and broadening deployments in 2026. With that, I will now turn the call over to John for the financial update.