Hyliion Holdings Corp. (NYSE: HYLN) (“Hyliion”), a developer of
sustainable electricity-producing technology, today reported its
fourth-quarter and full-year 2023 financial results.
Key Business Highlights
- Announced today, the KARNOTM generator is expected to qualify
for up to a 40% tax credit under the Inflation Reduction Act’s
Infrastructure Tax Credit (ITC)
- Announced today, Detmar Logistics executed a letter of intent
for an initial KARNO unit to be deployed in the Permian Basin to
operate on waste flare gas
- Executed a letter of intent to provide KARNO generators to GTL
Leasing
- Confirmed plans to deliver initial KARNO generator units to
customers in late 2024
- Began printing production-intent design components of the KARNO
generator
- Successfully tested KARNO reactor technology on unprocessed
Permian Basin gas; results surpassed emissions standards by 98% for
CO and 76% for NOx
- Appointed Govindaraj Ramasamy as Chief Commercial Officer
- Announced $20 million Stock Repurchase Program
- Ended the year with $291 million of total cash and
investments
- Guidance of $40 to $50 million cash expenditures for KARNO
development in 2024
Executive Commentary
“I’m pleased to report that the company’s strategic shift to
wind down powertrain operations and focus on our KARNO generator is
on track, with significant achievements made in advancing our
generator technology and engaging prospective customers during the
quarter,” said Hyliion’s Founder and CEO, Thomas Healy. “We expect
to deliver the initial KARNO generator deployment units with
customers late in 2024 followed by a ramp-up in production and
additional deliveries in 2025.”
KARNO Commercial Updates
Today, the company announced that, under the Inflation Reduction
Act, the KARNO generator is expected to be characterized the same
as a fuel cell, enabling customers to qualify for up to a 40% tax
credit under the current ITC.
Hyliion is addressing the commercial power market first with a
locally-deployable 200kW generating system which it intends to
deliver to initial deployment customers in late 2024. To lead these
efforts, Hyliion recently hired former Cummins powergen executive,
Govi Ramasamy, as Chief Commercial Officer.
Hyliion also announced today that Detmar Logistics has executed
a non-binding letter of intent for a KARNO generator and to be part
of Hyliion’s early adopter program. Detmar, who supplied Hyliion
with test gas from the Permian Basin, intends to operate their unit
on waste flare gas to produce electricity at oil & gas sites,
without the need for pre-treating the gas.
In addition to Detmar, Hyliion also announced a non-binding
letter of intent with GTL Leasing to deliver two KARNO generators
for their portable electric vehicle recharging business. Other
customers’ letters of intent are in place or being finalized to
represent the remaining planned deployments in 2024 and initial
deliveries in 2025. Hyliion plans for initial deployments to
represent a broad range of applications, including vehicle
charging, waste gas fuel sourcing, and prime power generation.
KARNO Generator Development
Hyliion is developing a revolutionary new electrical generator
powered by a linear heat motor that is expected to deliver
step-change improvements in performance characteristics compared to
conventional generating systems, including efficiency, emissions,
maintenance requirements, noise levels and fuel flexibility. The
KARNO generator is enabled by the latest advances in additive
manufacturing technology. Hyliion hosted a Technology Fireside Chat
in December 2023 during which Thomas Healy and Josh Mook, Chief
Technology Officer, explained the capabilities and advantages of
the generator.
Recent technological advancements include beginning to print
production-intent design parts of the BETA design of the KARNO
generator. The BETA generator design will go through validation
throughout 2024 and then is expected to be ready for customer
deployments later this year.
The company also tested unprocessed flare gas that was collected
from the Permian Basin and confirmed the ability for the KARNO
reactor to operate on this fuel, showcasing the fuel agnostic
characteristics of the generator. Recent test results on this fuel
highlight that the KARNO’s flameless oxidation process is expected
to surpass current EPA Tier 4 emissions standards by 98% for CO and
76% for NOx with no additional aftertreatment or catalyst
needed.
Powertrain Wind-Down
In November 2023, Hyliion announced that it was winding down its
powertrain business segment to maintain the company’s strong cash
position as it furthers development of the KARNO generator
technology. The company intends to retain the powertrain
technology, enabling it to explore future use or sale of the
technology and tangible assets. Most wind-down activities are
expected to be completed in the first quarter of 2024 while efforts
to monetize powertrain assets and technology continue.
Financial Highlights and Guidance
Fourth quarter operating expenses totaled $32.6 million,
compared to $31.6 million in the prior-year quarter as the company
initiated powertrain wind-down actions. Fourth quarter expenses
include $11.5 million of charges directly related to the wind-down,
including employee severance, contract cancellation costs, and
accelerated depreciation of assets.
Full-year expenses totaled $136.3 million, compared to $152.4
million for the full year in 2022. Expenses in 2022 include $28.8
million of one-time charges associated with the purchase of KARNO
generator technology from GE. Cash expenditures for 2023 were $131
million, including net losses and capital investments. The company
ended the year with $291 million in unrestricted cash, and
short-term and long-term investments.
For 2024, total cash consumed by the KARNO generator business is
expected to be between $40 and $50 million, down compared to $131
million in capital consumed by the company in 2023. This estimate
excludes cash payments associated with the stock repurchase
program, payments associated with the ongoing wind-down of
powertrain operations, and cash generated from the sale of
powertrain assets and technology. Hyliion expects to achieve
commercialization of the KARNO generator with the capital on
hand.
Projections for 2025 include growth of KARNO generator
deliveries with proceeds from sales in the low double-digit
millions of dollars. The company also projects gross margins to be
approximately break-even or slightly negative and cash spending to
grow modestly compared to 2024.
About Hyliion
Hyliion is committed to creating innovative solutions that
enable clean, flexible and affordable electricity production. The
Company’s primary focus is to provide distributed power generators
that can operate on various fuel sources to future-proof against an
ever-changing energy economy. Headquartered in Austin, Texas, and
with research and development in Cincinnati, OH, Hyliion is
addressing the commercial space first with a locally-deployable
generator that can offer prime power, peak shaving, and renewables
matching. Beyond stationary power, Hyliion will address mobile
applications such as vehicles and marine. The KARNO generator is a
fuel-agnostic solution, enabled by additive manufacturing, that
leverages a linear heat generator architecture. The Company aims to
offer innovative, yet practical solutions that contribute
positively to the environment in the energy economy. For further
information, please visit www.hyliion.com.
Forward Looking Statements
The information in this press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
present or historical fact included in this press release,
regarding Hyliion and its future financial and operational
performance, as well as its strategy, future operations, estimated
financial position, estimated revenues, and losses, projected
costs, prospects, plans and objectives of management are forward
looking statements. When used in this press release, including any
oral statements made in connection therewith, the words “could,”
“should,” “will,” “may,” “believe,” “anticipate,” “intend,”
“estimate,” “expect,” “project,” the negative of such terms and
other similar expressions are intended to identify forward-looking
statements, although not all forward-looking statements contain
such identifying words. These forward-looking statements are based
on management’s current expectations and assumptions about future
events and are based on currently available information as to the
outcome and timing of future events. Except as otherwise required
by applicable law, Hyliion expressly disclaims any duty to update
any forward-looking statements, all of which are expressly
qualified by the statements herein, to reflect events or
circumstances after the date of this press release. Hyliion
cautions you that these forward-looking statements are subject to
numerous risks and uncertainties, most of which are difficult to
predict and many of which are beyond the control of Hyliion. These
risks include, but are not limited to, our status as an early stage
the Company with a history of losses, and our expectation of
incurring significant expenses and continuing losses for the
foreseeable future; our ability to develop key commercial
relationships with suppliers and customers; our ability to retain
the services of Thomas Healy, our Chief Executive Officer; the
expected performance of the KARNO generator and system; the
execution of the strategic shift from our powertrain business to
our KARNO business, and the other risks and uncertainties described
under the heading “Risk Factors” in our SEC filings including in
our Annual Report (See item 1A. Risk Factors) on Form 10-K filed
with the Securities and Exchange Commission (the “SEC”) on February
13, 2024 for the year ended December 31, 2023. Given these risks
and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. Should one or more of
the risks or uncertainties described in this press release occur,
or should underlying assumptions prove incorrect, actual results
and plans could differ materially from those expressed in any
forward-looking statements. Additional information concerning these
and other factors that may impact Hyliion’s operations and
projections can be found in its filings with the SEC. Hyliion’s SEC
Filings are available publicly on the SEC’s website at www.sec.gov,
and readers are urged to carefully review and consider the various
disclosures made in such filings.
HYLIION HOLDINGS CORP.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollar amounts in thousands,
except share and per share data)
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(Unaudited)
Revenues
Product sales and other
$
—
$
1,095
$
672
$
2,106
Total revenues
—
1,095
672
2,106
Cost of revenues
Product sales and other
41
1,618
1,716
8,778
Total cost of revenues
41
1,618
1,716
8,778
Gross loss
(41
)
(523
)
(1,044
)
(6,672
)
Operating expenses
Research and development
8,768
21,827
82,240
110,370
Selling, general and administrative
12,346
9,733
42,611
41,988
Exit and termination costs
11,474
—
11,474
—
Total operating expenses
32,588
31,560
136,325
152,358
Loss from operations
(32,629
)
(32,083
)
(137,369
)
(159,030
)
Interest income
3,463
2,658
13,808
5,724
Gain (loss) on impairment and disposal of
assets
—
70
1
(19
)
Other income (expense), net
36
(32
)
50
(32
)
Net loss
$
(29,130
)
$
(29,387
)
$
(123,510
)
$
(153,357
)
Net loss per share, basic and diluted
$
(0.16
)
$
(0.16
)
$
(0.68
)
$
(0.87
)
Weighted-average shares outstanding, basic
and diluted
182,885,328
179,719,018
181,411,069
175,400,486
HYLIION HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(Dollar amounts in thousands,
except share data)
December 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
$
12,881
$
119,468
Accounts receivable, net
40
1,136
Inventory
—
74
Prepaid expenses and other current
assets
18,483
9,795
Short-term investments
150,297
193,740
Total current assets
181,701
324,213
Property and equipment, net
9,987
5,606
Operating lease right-of-use assets
7,070
6,470
Intangible assets, net
—
200
Other assets
1,439
1,686
Long-term investments
128,186
108,568
Total assets
$
328,383
$
446,743
Liabilities and stockholders’
equity
Current liabilities
Accounts payable
$
4,224
$
2,800
Current portion of operating lease
liabilities
847
347
Accrued expenses and other current
liabilities
10,051
11,535
Total current liabilities
15,122
14,682
Operating lease liabilities, net of
current portion
6,792
6,972
Other liabilities
203
1,515
Total liabilities
22,117
23,169
Commitments and contingencies
Stockholders’ equity
Common stock, $0.0001 par value;
250,000,000 shares authorized; 183,071,317 and 179,826,309 shares
issued and outstanding at December 31, 2023 and 2022,
respectively
18
18
Additional paid-in capital
404,045
397,810
Treasury stock, at cost; 37,062 and no
shares as of December 31, 2023 and 2022, respectively
(33
)
—
(Accumulated deficit) retained
earnings
(97,764
)
25,746
Total stockholders’ equity
306,266
423,574
Total liabilities and stockholders’
equity
$
328,383
$
446,743
HYLIION HOLDINGS CORP.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Dollar amounts in
thousands)
Year Ended December
31,
2023
2022
Cash flows from operating
activities
Net loss
$
(123,510
)
$
(153,357
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,511
1,227
Amortization and accretion of investments,
net
(2,868
)
1,250
Noncash lease expense
1,496
1,244
Inventory write-down
1,139
5,641
(Gain) loss on impairment and disposal of
assets
(1
)
19
Share-based compensation
6,217
6,979
Provision for doubtful accounts
—
114
Acquired in-process research and
development
—
28,752
Change in operating assets and
liabilities, net of effects of business acquisition:
Accounts receivable
1,096
(1,180
)
Inventory
(1,065
)
(5,601
)
Prepaid expenses and other assets
463
(571
)
Accounts payable
1,356
(4,660
)
Accrued expenses and other liabilities
(3,020
)
4,571
Operating lease liabilities
(1,776
)
(1,305
)
Net cash used in operating activities
(116,962
)
(116,877
)
Cash flows from investing
activities
Purchase of property and equipment and
other
(7,401
)
(2,885
)
Proceeds from sale of property and
equipment
2
152
Purchase of in-process research and
development
—
(14,428
)
Payments for security deposit, net
(45
)
—
Purchase of investments
(189,670
)
(268,584
)
Proceeds from sale and maturity of
investments
215,422
263,723
Net cash provided by (used in) investing
activities
18,308
(22,022
)
Cash flows from financing
activities
Proceeds from exercise of common stock
options
257
79
Taxes paid related to net share settlement
of equity awards
(239
)
(157
)
Repurchase of treasury stock
(33
)
—
Net cash used in financing activities
(15
)
(78
)
Net decrease in cash and cash equivalents
and restricted cash
(98,669
)
(138,977
)
Cash and cash equivalents and restricted
cash, beginning of period
120,133
259,110
Cash and cash equivalents and restricted
cash, end of period
$
21,464
$
120,133
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version on businesswire.com: https://www.businesswire.com/news/home/20240213373401/en/
Hyliion Holdings Corp. press@hyliion.com
Investor Relations ir@hyliion.com
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