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HH

Hyliion Holdings Corp. (HYLN)·Q4 2024 Earnings Summary

Executive Summary

  • Recognized first revenue: $1.509M from research and development services; gross profit of $0.100M. Net loss narrowed YoY to $14.4M and EPS improved to $(0.08) versus $(0.16) in Q4 2023, though net loss widened vs Q3 on higher R&D spend .
  • Commercial traction accelerated: secured commitments for over 100 KARNO generators and executed an LOI with a leading data center developer for a 2 MW deployment in 2026 with a multiyear opportunity up to 70 MW (≈350 units); delivered the first Early Adopter Customer Unit in early 2025 .
  • Guidance: 2025 revenue of $10–$15M (generator sales + R&D) and cash expenditures ~$60M; capex ~$25M with ~$10M equipment financing; breakeven gross margins on a cash basis targeted near end of 2026 .
  • Balance sheet remains strong: ended Q4 with $219.7M in cash and investments after Q4 cash use of $17.8M; share repurchases totaled 10.6M shares for $14M in 2024 .
  • Potential stock reaction catalysts: data center LOI and DOE methane-reduction grant ($6M) validate demand; early adopter deliveries and second-half commercialization timing are key milestones; backlog >100 units and international LOIs (Saudi Arabia) expand optionality .

What Went Well and What Went Wrong

What Went Well

  • Delivered first Early Adopter Customer Unit; management: “We are pleased to report significant achievements in building customer backlog and delivering our first Early Adopter Customer Unit of the KARNO generator” .
  • Multiyear data center opportunity: LOI for initial 2 MW deployment in 2026 and potential up to 70 MW; Healy: “We have signed our first LOI in the data center sector… up to 70 megawatts or 350 of our KARNO 4-shaft systems” .
  • First revenue and gross profit: $1.509M R&D revenue and $0.100M gross profit recognized in Q4; Panzer: “we recorded revenue of $1.5 million… cost of sales was $1.4 million, resulting in operating income of $100,000 [gross profit]” .

What Went Wrong

  • Supply chain and process challenges delayed deliveries from late 2024 to early 2025 (contract manufacturer ramp for linear electric motor; residual metal powder cleaning); revised timeline acknowledged by management .
  • Operating expenses rose Q/Q to $17.2M (vs $14.2M in Q3), driven by higher R&D and a $0.9M write-down on assets held for sale (powertrain), partially offset by asset sale gains; net loss widened Q/Q to $(14.4)M (vs $(11.2)M) .
  • Revenue mix remains non-product: Q4 revenue entirely from R&D services; product sales still zero, underscoring reliance on commercialization in H2’25 for product revenue recognition; LOIs are non-binding pending performance and definitive agreements .

Financial Results

Income Statement Comparison

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$0.000 $0.000 $1.509
Gross Profit ($USD Millions)$(0.041) $(0.581) $0.094
Operating Expenses ($USD Millions)$32.588 $14.181 $17.204
Net Loss ($USD Millions)$(29.130) $(11.202) $(14.398)
Diluted EPS ($)$(0.16) $(0.06) $(0.08)

Revenue Breakdown

MetricQ4 2023Q3 2024Q4 2024
Product Sales & Other ($USD Millions)$0.000 $0.000 $0.000
Research & Development Services ($USD Millions)$0.000 $0.000 $1.509
Total Revenues ($USD Millions)$0.000 $0.000 $1.509

Margins

MetricQ4 2023Q3 2024Q4 2024
Gross Margin %N/A (no revenue) N/A (no revenue) 6.2% (0.094/1.509)

Cash & Investments and Cash Use

MetricQ1 2024Q2 2024Q3 2024Q4 2024
Cash & Investments ($USD Millions)$264.0 $249.0 $237.5 $219.7
Qtr Cash Use ($USD Millions)—$15.2 $11.2 $17.8

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025“Low double-digit millions” (Q3’24) $10–$15M (Q4’24) Clarified range
Total Cash Expenditures ($USD Millions)FY 2025“Grow modestly vs 2024; ~break-even gross margin late 2025/early 2026” (Q3’24) ~$60M; breakeven gross margins on cash basis near end of 2026 (Q4’24 call) Slightly higher spend; timeline pushed
Capital Expenditures ($USD Millions)FY 2025Not specified~$25M, offset by ~$10M equipment financing (Q4’24 call) New detail
Cash & Investments (EoY) ($USD Millions)FY 2025Not specified~$160M (Q4’24 call) New detail
Commercialization TimingFY 2025Initial deliveries in late 2024; commercialization with capital on hand (Q3’24) Commercialize in H2’25; recognize early adopter unit sales subject to certification/performance (Q4’24 call) Timing specified

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Data centers & AI power needsGrowing AI strain on grid; plan for 2 MW product deployed in 2026 (Q2) and (Q3) LOI with leading data center developer; initial 2 MW deployment in 2026; up to 70 MW multiyear opportunity (≈350 units) Strengthening commercial pipeline
Supply chain & manufacturing scaleInstalled additive printers; doubling printing capacity (Q2) ; first M Line delivery soon (Q3) First M Line delivered; more on order; 2–4x parts throughput; 6–12 month lead times (call) Capacity scaling
Process/quality challengesNot highlightedContract manufacturer ramp; residual metal powder cleaning; delivery timeline slipped to early 2025 Execution risk surfaced and addressed
Defense (ONR/Navy)SBIR grant for multi-MW Navy system (Q2) ; up to $17.2M ONR revenue including up to seven units (Q3) $1.5M R&D revenue recognized; first early adopter unit going to U.S. Navy; program extended Revenue realization begins
International expansionJardine MoU (Asia-Pacific) (Q2) LOI with Al Khorayef for up to 12 units in Saudi Arabia; LPG/natural gas fuels Broadening reach
Revenue & margins outlookProceeds from sales/R&D in low double-digit millions; ~break-even gross margin late 2025/early 2026 (Q3) $10–$15M revenue; breakeven gross margin (cash basis) by end 2026; positive R&D gross margin expected Slightly more conservative timing

Management Commentary

  • Thomas Healy: “We have executed contracts and nonbinding LOIs with customers for more than 100 KARNO units… we signed our first LOI in the data center sector… up to 70 megawatts or 350 of our KARNO 4-shaft systems” .
  • Healy on delays: “Transferring our learnings to the contract manufacturer took longer than anticipated… we identified traces of residual metal powder… parts underwent additional cleaning” .
  • Jon Panzer: “We expect capital expenditures for 2025 will be approximately $25 million… offset… with around $10 million of equipment financing… current outlook for achieving breakeven gross margins on a cash basis is near the end of 2026” .
  • Healy on defense: “We have begun recognizing revenue for R&D services… totaling $1.5 million… associated with… U.S. Office of Naval Research” .

Q&A Highlights

  • Competitive positioning vs fuel cells/nat gas gensets: Healy emphasized compact footprint, fuel flexibility, low emissions and maintenance; pricing “between conventional nat gas engines ($1,000–$1,500/kW) and fuel cells ($3,000–$3,500/kW)” with superior long-run ROI .
  • Manufacturing scale and cost-down: More M Line printers ordered for 2025; 2–4x throughput; 6–12 month lead times; focus shifting to supplier agreements and volume commitments for greater cost reductions .
  • Middle East opportunity: LOI with Al Khorayef for up to 12 units; region accustomed to generator prime power; fuels like diesel/LPG; potential broader adoption .
  • Service model: Initial field maintenance by Hyliion, with goal to partner long-term or have customers assume maintenance to avoid heavy brick-and-mortar build-out .
  • Execution risks: Confidence improving post-resolution of contract manufacturing ramp and enhanced depowdering/cleaning processes; continued refinement expected .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 and FY 2024 were unavailable due to request limit constraints at retrieval time; therefore, no beat/miss vs Wall Street consensus can be assessed in this recap. Where estimate comparisons would normally appear, they are noted as unavailable at this time.

Key Takeaways for Investors

  • Commercial validation is building: backlog >100 units, data center LOI up to 70 MW, and DOE grant support demand; watch for conversion of LOIs into binding agreements and initial 2 MW deployment planning .
  • Execution is the near-term swing factor: early adopter deliveries shifted to early 2025; monitor resolution of contract manufacturing throughput and printed-part cleaning improvements .
  • Revenue mix should pivot in H2’25: product sales recognition contingent on commercialization, certification, permitting and performance; Q4 revenue entirely R&D services .
  • Cash runway supports scale-up: $219.7M cash/investments at Q4; 2025 spending ~ $60M with capex ~$25M partially financed; EoY 2025 cash/investments ~ $160M expected .
  • Cost curve likely improves: additive manufacturing capacity (M Line) and supplier agreements underpin cost-down; breakeven gross margins (cash basis) targeted by end 2026 .
  • International and defense optionality: Saudi agricultural deployments via Al Khorayef and multi-megawatt Navy applications broaden potential end markets and revenue streams .
  • Trading setup: Near-term catalysts include additional early adopter deliveries, commercialization milestone in H2’25, data center LOI progression, and further grant/contract wins; stock likely sensitive to execution updates and conversion of LOIs to firm orders .