Overview of Financial Performance

Hyliion Holdings Corp. (the “Company”) reported its financial results for the year ended December 31, 2024. The Company’s focus has shifted from its previous electrified powertrain systems business to the development and commercialization of its fuel-agnostic KARNO generator technology.

In 2024, the Company generated $1.5 million in revenue, primarily from R&D services contracts. This represented a 124.6% increase from the $0.7 million in revenue recorded in 2023. The increase was due to the Company beginning to recognize revenue for R&D services performed as both a prime and subcontractor to the United States government.

The Company reported a net loss of $52.0 million in 2024, compared to a net loss of $123.5 million in 2023. The decrease in net loss was driven by a $45.2 million reduction in R&D expenses and an $18.2 million decrease in selling, general and administrative (SG&A) expenses, partially offset by a $1.6 million decline in interest income.

Revenue and Profit Trends

The Company’s revenue in 2024 was entirely derived from R&D services, as it has discontinued its previous hybrid powertrain systems business. Revenue from R&D services increased by $1.5 million, while revenue from product sales and other sources decreased by $0.7 million.

The shift in the Company’s business focus is reflected in the changes to its cost structure. Cost of revenues related to R&D services increased by $1.4 million, while cost of revenues for product sales and other sources decreased by $1.7 million. This resulted in a gross profit of $94,000 in 2024, compared to a gross loss of $1.0 million in 2023.

R&D expenses decreased by $45.2 million, or 55.0%, primarily due to a $63.6 million decrease in costs related to the design and testing of the Hypertruck ERX system, which was partially offset by an $18.4 million increase in costs for the development of the KARNO generator. SG&A expenses decreased by $18.2 million, or 42.8%, mainly due to reductions in personnel and benefits, professional services, marketing, and insurance costs as a result of the wind-down of the powertrain business.

The Company’s net loss decreased by $71.5 million, or 57.9%, to $52.0 million in 2024. This improvement was driven by the significant reductions in R&D and SG&A expenses, partially offset by the decline in interest income.

Strengths and Weaknesses

Strengths:

• Successful transition of business focus to the development of the KARNO generator technology, which aligns with the Company’s long-term strategic goals
• Significant reduction in operating expenses, particularly in R&D and SG&A, as a result of the wind-down of the powertrain business
• Strong liquidity position, with $131.0 million in current assets and an additional $99.6 million in longer-term investments, providing the Company with the resources to execute on its strategic initiatives

Weaknesses:

• Lack of revenue from the KARNO generator technology, as it is still in the development and testing phase, with initial customer deployments expected in 2025
• Continued net losses, although significantly reduced from the prior year, indicating the Company’s need for additional funding to support its operations and growth plans
• Reliance on R&D services revenue, which may be subject to fluctuations and uncertainty, as the Company’s primary source of revenue in the near term

Outlook and Future Prospects

The Company’s focus in the near future will be on continuing the development and testing of the KARNO generator, as well as planning for the deployment of initial units with customers in 2025. The Company expects to continue investing significant resources in R&D activities to achieve its operational and commercial goals.

The amount and timing of the Company’s future funding requirements will depend on various factors, including the pace of KARNO generator development and testing, the pace of investments in additive manufacturing assets, the Company’s manufacturing strategy (in-house or outsourced), and the range of product offerings it plans to bring to market. The Company regularly evaluates its funding needs and sources of capital, and may seek external funding as appropriate.

Based on current projections, the Company expects to have approximately $160 million in cash, short-term, and long-term investments remaining on its balance sheet at the end of 2025. However, the Company’s actual results could vary materially and adversely due to various factors, including those discussed in the “Risk Factors” section of the report.

In summary, Hyliion Holdings Corp. has made significant progress in its strategic transition to the KARNO generator technology, as evidenced by the reduction in operating expenses and the improvement in its financial performance. The Company’s strong liquidity position and focus on the development and commercialization of the KARNO generator suggest that it is well-positioned to execute on its long-term goals, although it will need to continue to manage its cash resources and seek additional funding as necessary to support its growth plans.