Hyliion Holdings Corp. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023; filed November 8, 2023. Hyliion was developing its KARNO fuel-agnostic generator and, during the quarter, continued operating its electric powertrain business. After quarter-end, the board approved winding down that business and focusing on KARNO.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0.096 million | $0.499 million | $0.672 million | $1.011 million |
| Gross loss | $0.581 million | $2.417 million | $1.003 million | $6.149 million |
| Operating expenses | $33.301 million | $62.942 million | $103.737 million | $120.798 million |
| Operating loss | $33.882 million | $65.359 million | $104.740 million | $126.947 million |
| Net loss | $30.322 million | $63.387 million | $94.380 million | $123.970 million |
| Net loss per share | $0.17 | $0.36 | $0.52 | $0.71 |
- Revenue was minimal and came from Hybrid systems and related products; Q3 revenue fell 80.8% year over year. Gross losses persisted, with cost of revenue exceeding sales.
- Lower operating losses chiefly reflected the absence of $28.8 million of acquired in-process R&D expense recorded in 2022, plus lower expenses; KARNO development spending increased.
- Interest income was $3.5 million in Q3 and $10.3 million for the nine months, up from $1.9 million and $3.1 million, respectively, in 2022.
- Nine-month operating cash outflow was $92.4 million, versus $83.4 million in 2022. Investing activities provided $1.6 million, primarily reflecting investment maturities and purchases; financing cash flow was approximately zero.
- At September 30, cash and cash equivalents were $28.6 million; short- and long-term investments totaled $294.9 million. Current assets were $194.0 million versus current liabilities of $13.2 million. Total assets were $356.1 million and stockholders’ equity was $334.4 million.
- No borrowings are presented in the balance sheet; liabilities include operating leases, accounts payable and accrued expenses. The filing does not identify a funded debt balance.
Material changes, outlook and risks
- Powertrain exit: On November 7, 2023, the board approved winding down the Powertrain Business, retaining its technology and exploring possible asset or technology sales. Hyliion no longer expects revenue from Hybrid or Hypertruck ERX products after the wind-down. Completion was expected by the end of fiscal Q1 2024.
- Restructuring estimates: The company expected approximately $18.4 million of total charges and expenses, primarily in Q4 2023, and a workforce reduction of about 175 people, or 67%. Disclosed components include $1.4 million in severance and retention, $0.9 million of noncash stock compensation and $13.9 million in contract-termination cash expenditures, with up to a further $9.0 million depending on negotiations and other uncertainties. Actual costs and timing may differ.
- KARNO plans: The company was testing a 125 kW ALPHA generator and designing a 200 kW BETA model. Initial stationary generator deployments were anticipated in late 2024. Efficiency, emissions, reliability, durability, maintenance needs, manufacturing scale and customer adoption remained to be validated; stated performance claims are expectations, not established results.
- Liquidity outlook: Management said available funds were sufficient for at least the next 12 months and that it did not expect to raise additional capital in the foreseeable future. It projected approximately $285 million in cash and investments at year-end 2023. The company expected continuing near-term losses. These projections are subject to execution, spending and market risks.
- Other risks and contingencies: The KARNO strategy may fail to achieve commercial scale or positive margins; commercial deliveries could be delayed or never occur. The company also cited competition, emerging-market uncertainty, manufacturing and supplier dependence, and potential investment-market liquidity or valuation volatility. It reported no material legal proceedings.
- NYSE listing: On November 2, 2023, the NYSE notified Hyliion that its 30-trading-day average share price was below $1.00. The company had six months to regain compliance; failure could lead to suspension or delisting. The filing reported 182,789,454 shares outstanding as of October 31, 2023.
Key facts for investors to verify
- Progress, customer commitments, validation results and delivery timing for the KARNO generator, including whether late-2024 deployments remain achievable.
- Actual powertrain wind-down costs, cash payments, workforce reductions, supplier settlements and any proceeds from asset or technology sales; reconcile the stated $18.4 million estimate with listed cost components and possible additional expenditures.
- Quarterly cash burn and investment balances against management’s year-end liquidity projection and 12-month funding assessment.
- Whether Hyliion regained NYSE’s $1.00 minimum-price compliance within the cure period.
- Actual KARNO manufacturing costs, margins, efficiency, emissions, reliability and market demand compared with management’s forward-looking claims.