Hyliion Holdings Corp. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Hyliion is shifting from its Class 8 powertrain business to development and commercialization of the KARNO generator for stationary power applications.
Financial results and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Revenue | $0 | $0.31 million |
| Gross profit (loss) | $0 | $(0.38) million |
| Research and development | $7.97 million | $20.92 million |
| Selling, general and administrative | $6.59 million | $10.98 million |
| Exit and termination costs | $4.43 million | None |
| Operating loss | $(18.99) million | $(32.28) million |
| Interest income | $3.40 million | $3.46 million |
| Net loss / loss per share | $(15.59) million / $(0.09) | $(28.83) million / $(0.16) |
| Operating cash flow | $(22.70) million | $(33.24) million |
At March 31, 2024, cash and cash equivalents were $14.7 million; short- and long-term investments totaled $249.2 million at amortized cost ($248.7 million fair value). Current assets were $154.1 million and current liabilities $10.5 million. Total liabilities were $17.2 million, primarily accounts payable, accruals and lease liabilities; the filing reports no borrowings. Total assets were $297.7 million.
Investing activities provided $27.9 million, mainly from investment maturities and sales. Financing activities used $11.3 million, principally for share repurchases. The company repurchased 8.68 million shares for approximately $11.3 million during the quarter. No meaningful current-quarter gross margin is available because revenue was zero.
Material changes and business developments
- Revenue ceased following the planned wind-down of the powertrain business; management does not anticipate revenue until KARNO commercialization begins.
- R&D fell $13.0 million year over year, reflecting a $17.5 million reduction in Hypertruck ERX work, partly offset by $4.5 million more KARNO development spending. SG&A fell $4.4 million, mainly from lower personnel and professional-service costs.
- The powertrain wind-down generated $4.43 million of reported exit and termination costs. The company also recorded a $5.56 million carrying-value adjustment on property and equipment classified as held for sale; $5.97 million of assets held for sale remained on the balance sheet at quarter-end. Management’s estimates of sale proceeds and related costs may differ from actual results.
- Management reported construction and testing of a 125 kW KARNO ALPHA generator and said design of the 200 kW BETA unit was in its final stages.
Outlook, liquidity and risks
- Management expects initial, revenue-generating KARNO customer deployments in late 2024. These deployments are intended to test and validate performance, including efficiency, emissions, reliability, maintenance and durability. The filing describes these as plans, not completed commercial results.
- The company expects continued near-term net losses and says it has sufficient funds to execute its strategy for at least 12 months from issuance of the financial statements. It does not expect to need additional equity capital for the foreseeable future.
- Based on current projections, management expects $220 million to $230 million in cash and investments at year-end 2024. This outlook depends on operating expenses, capital spending, working capital and repurchases and could vary materially.
- Key risks include successful KARNO development and commercialization, customer deployment timing, manufacturing strategy and costs, supplier concentration, and liquidity or valuation effects from investment-market conditions. The company’s projected generator efficiency and emissions benefits remain expectations requiring validation.
- A Cedar Park economic-incentive agreement provides for grants of up to $1.1 million subject to occupancy, investment and employment conditions through 2029. The agreement also requires refunding $0.7 million of prior grants and allows retention of $0.4 million subject to performance; the EDC may obtain a security interest in company assets.
- Management concluded disclosure controls were effective at quarter-end and reported no material change in internal control over financial reporting. The company reported no material legal proceedings and no material changes to the risk factors in its 2023 Form 10-K.
Investor facts to verify
- Whether the planned late-2024 customer deployments occur, generate revenue, and meet performance and reliability targets.
- How quickly KARNO development and commercialization consume liquidity, and whether the year-end cash-and-investment projection remains achievable.
- Actual proceeds and timing from sales of powertrain assets held for sale, and final wind-down costs and obligations.
- Progress toward manufacturing scale, unit economics, customer demand, and validation of stated efficiency and emissions claims.
- Remaining authorization and subsequent activity under the $20 million share-repurchase program; $8.86 million remained available at March 31, 2024.