Hyliion Holdings Corp. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report. Hyliion develops electrified powertrains for Class 8 trucks; Hybrid was its only product generating reported revenue, while Hypertruck ERX remained in development.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $2.1 million | $0.2 million |
| Cost of revenue | $8.8 million | $2.7 million |
| Gross loss (gross margin) | $6.7 million (approximately -317%) | $2.5 million (approximately -1,269%) |
| Research and development | $110.4 million | $58.3 million |
| Selling, general and administrative | $42.0 million | $35.3 million |
| Operating loss | $159.0 million | $96.1 million |
| Net loss | $153.4 million; $0.87 per share | $96.0 million; $0.56 per share |
| Operating cash used | $116.9 million | $80.5 million |
Revenue growth reflected Hybrid sales, but cost of revenue exceeded sales; it included $3.2 million of inventory write-downs, $2.2 million of product and truck costs, and $0.6 million of warranty costs. Interest income rose to $5.7 million from $0.8 million, partly offsetting the larger operating loss.
At year-end, cash and cash equivalents were $119.5 million; investments were $302.3 million at amortized cost ($297.96 million fair value). Current assets were $324.2 million and current liabilities $14.7 million. Total liabilities were $23.2 million, including operating lease liabilities; the filing reports no outstanding borrowings. Cash, cash equivalents and restricted cash decreased by $139.0 million during 2022. Management said available resources should fund operations and strategy for at least the next 12 months.
Material changes and notable items
- Revenue increased by $1.9 million year over year, but net loss widened by $57.3 million and operating cash use rose by $36.4 million.
- R&D expense rose $52.1 million, including $28.8 million expensed for acquired in-process research and development related to GE Additive’s KARNO generator technology and higher Hypertruck development costs.
- Hyliion acquired KARNO-related assets for $32.3 million in total consideration, comprising $15.0 million cash, 5.5 million shares valued at $16.1 million, and $1.2 million transaction costs. The acquisition was accounted for as an asset acquisition.
- Outstanding shares increased to 179.8 million from 173.5 million, including shares issued for the acquisition.
Outlook, commentary and risks
- Management expected Hybrid demand in 2023 to remain broadly consistent with 2022, while noting supply constraints and customer truck-installation downtime had limited deliveries.
- Management targeted Hypertruck ERX commercialization in the second half of 2023, subject to testing and CARB, EPA and NHTSA requirements. Customer deliveries for the initial 210 production slots were expected by the end of Q1 2024. The orders were from 11 fleet customers and were described as deposit-backed.
- The company reported completing summer testing, beginning winter testing, conducting controlled fleet trials and releasing the third-generation ERX design. It planned further testing and up to one million operating miles before production.
- Management expected the KARNO variant to launch a few years after ERX. These plans are forward-looking and depend on technical development, certification, supply availability and financing needs.
- Key risks include continuing losses and cash consumption; product performance, reliability and certification; dependence on OEM chassis and single- or limited-source suppliers; supply-chain delays; uncertain customer conversion and cancellable orders; competition; and the need to establish scalable manufacturing and service support.
- The filing identifies a Delaware corporate-capitalization issue: Hyliion petitioned the Delaware Court of Chancery in February 2023 to validate a 2020 charter amendment and related actions. An adverse outcome could impair stock-based compensation, strategic transactions and future financing until resolved.
- The 2022 financial statements received an unqualified audit opinion, and management and the auditor concluded internal control over financial reporting was effective at year-end.
Important facts for investors to verify
- Whether ERX achieves required emissions, vehicle-safety and other certifications on time, and whether commercialization and customer deliveries meet the stated schedule.
- How many of the 210 initial ERX slots convert to completed purchases and deliveries; deposits and orders do not guarantee revenue.
- Whether Hyliion can improve unit economics: FY2022 revenue was $2.1 million against $8.8 million in cost of revenue, before substantial operating expenses.
- Actual cash burn, investment liquidity and the duration of available capital as ERX production and KARNO development require funding.
- Resolution and potential consequences of the Delaware Section 205 petition, along with future dilution from equity awards or financing.