Good day and thank you for standing by. Welcome to the Hyliion Holdings Fourth Quarter and Full Year 2021 Earnings Conference call. At this time, all participants are in a listen-only mode. After the speakers’ prepared remarks, there will be a question-and-answer session. I would now like to turn the conference over to Adam Bresser, Director of Financial Planning and Analysis. Please go ahead.

Thank you and good morning, everyone. Welcome to the Hyliion Holdings fourth quarter and full year 2021 earnings conference call. On the call today are Thomas Healy, our Chief Executive Officer; and Sherri Baker, our Chief Financial Officer. The slide presentation accompanies this conference call is available on Hyliion Investor Relations website, investors@hyliion.com. Please note that during today's call, we will make certain forward-looking statements regarding the company's business outlook. Forward-looking statements are predictions, projections, and other statements about anticipated events that are based on current expectations and assumptions, and as such are subject to risk and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements on this call. For more information about factors that may cause the company's results to differ materially from such forward-looking statements, please refer to the earnings press release as well as our filings with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. You are cautioned not to put undue reliance on forward-looking statements and we take no duty to update this information unless required by applicable law. With that, I will turn the call over to Thomas.

Thank you Adam and hello, everyone. Thank you for joining us today. Our fourth quarter capped off what was a transformational year for Hyliion in our pursuit to becoming the leading provider of electrified solutions for the commercial vehicle industry. Looking back on our first full year as a public company reached many significant milestones in the continued growth of Hyliion. We launched our new Hybrid eX powertrain and completed the first major product development milestones of our Hypertruck ERX. We also more than doubled the size of the team and expanded our Board of Directors with individuals who bring critical expertise to help us achieve our long-term vision. In Q4, we reached another major milestone by recognizing revenue on our improved Hybrid eX Powertrain solution. Sherri will walk you through the financial details. But this achievement marks a significant progress in our technology, with learnings that we continue to incorporate into our future product offering, including the Hypertruck ERX. As we discussed last quarter, November marks the formal launch of our Ride and Drive series, which consists of ride along opportunities and in-depth product education for the Hypertruck ERX, and hosted multiple fleets here at our headquarters in Austin over the past several months. In addition to being a showcase for how the Hypertruck ERX can deliver practical solutions for a wide range of customer needs and use cases, our Ride and Drive events are an opportunity to gain insight regarding our customers' real world challenges. Such input is invaluable to our development process as we make continuous improvements to our product specs and the feedback we received has been overwhelmingly positive. Participants have cited that Hypertruck ERX is benefits of speed, power and noise reduction. Furthermore, I'm thrilled to announce that, earlier this week, as a result of…

Thank you, Thomas. And good morning, everyone. I will now review our financial highlights from the fourth quarter and full year. As Thomas mentioned, in the fourth quarter, we began recognizing revenue on our Hybrid Ex Powertrain solution and we've recorded $200,000 in revenue. We continue to invest in R&D in support of our product development roadmap. In the fourth quarter, R&D spending was $17.4 million, down $800,000 sequentially and up $12.9 million year-over-year. For the full year 2021, R&D spending totaled $58.3 million compared with $12.6 million in 2020. SG&A spend, which included the expansion of key infrastructure for our commercialization initiatives and operations was $9.2 million in the fourth quarter, up $500,000 sequentially and up $3.3 million year-over-year. For the full year 2021, SG&A spend totaled $35.3 million, compared with $9.6 million in 2020. Operating expenses for the full year 2021, totaled $93.6 million, compared with $22.2 million in 2020, as our product development and company expansion gained momentum. Overall, Hyliion reported a net loss from operations of $29.1 million for the fourth quarter, compared with a net loss from operations of $26.8 million in Q3 and a net loss from operations of $10.3 million in Q4 of 2020. For the full year 2021, the company reported a net loss from operations of $96.1 million, compared with $22.2 million in 2020. Turning to the balance sheet. We ended the fourth quarter with over $557 million available to fund our commercialization plans for both the Hybrid eX and the Hyper truck ERX. This figure includes $258.4 million in cash and cash equivalants, $118.8 million in short-term investments and $180.2 in long-term investments. Our short-term and long-term investments are high-quality credit instruments with no maturities beyond 36 months and a weighted average maturity of 14 months across our portfolio. Our long-term investments are designed to preserve capital, while providing liquidity to meet the companies operating requirement. Turning to our outlook for 2022, we expect to generate revenue in the range of $2 million to $3 million in Hybrid eX sales. The actual amount of revenue recognized will be dependent upon the number of units we sell and the type of trucks and use case of the trucks that we install the Hybrid eX system in. We expect full year operating expenses to be between $135 million and $145 million, driven primarily by an increase in R&D cost to support commercialization of the Hypertruck. Beyond 2022, we expect to remain well-capitalized through the key development milestones we have discussed on today's call. With that, we will open the call to Q&A. Operator, please go ahead.

[Operator Instructions] Our first question is from Andreas Shepherd with Cantor Fitzgerald.

Good morning guys. Congrats on the quarter. Couple quick questions for me. So, regarding the order for the 100 units which are backed by deposits, does that mean that these are final? And simply when -- can you give us a sense of when roughly you expect to recognize revenue for these? I mean my guess is they're going to be ramping up, it's going to be 100 and say, one quarter, so any color you can provide there?

Yeah, absolutely. So these orders that we announced are really to secure production slots. So we've been working with the fleet on getting their commitment to adopt these vehicles, so then we can have the confidence to go ahead and procure all the parts needed in order to assemble these vehicles. So you are correct, though, in terms of how these will actually roll out. As we announced on the call, we plan on starting production in the latter part of '23. And we've made commitments with these fleets that we'd have all of the units delivered back to them by the end of the first quarter in '24.

And maybe one follow-up. On the guidance, you provided that's about 2 million to 3 million for 2022. Can you -- are you able to give us any sense of what that translates roughly in terms of units, of hybrid units?

Yeah, thank you for that question. So we expect that we'll be shipping over 100 units. And the reason why we're focusing more on revenue as opposed to units is because we really have key different use cases. One, the pricing depends on whether or not a new install or a restaurant fits, and it's also based off of the type of truck. So we are confident based off of the inbound interest that we have currently that we're going to be able to achieve that 2 million to 3 million, but it's more about that blended average, which currently is a little bit heavier on the retrofit side versus the new install.

Our next question is from Steven Fisher with UBS.

Just to follow-up on the timing of the Hypertruck deliveries. I presume late '23 means Q4, just wondering if you're thinking sort of late in the quarter? And then I guess, are those 100 units that you planned for those, -- Q4 and Q1 of the subsequent year? Is that kind of all you are thinking about for those two quarters or could some of those other 225 reservations still make it into that time period for some time in '23 and early part of '24?

Yeah, so as we said late '23, I'll say Q4 is correct, I wouldn't say that implies at the end of Q4 of '23. Our goal is in Q4 we will actually start ramping up, start deliveries. As we mentioned, the commitment to the fleet is that all of those vehicles would be delivered back to them by the first quarter of '24. But we're not saying that that would be all the units, we would be able to do during that time. We're really doing this as the initial ramp up and one of our goals as we go through these Ride and Drive events that we've been mentioning is not only to secure these orders, but also to build the backlog in reservation. And then as that backlog of reservations is building then we'll start converting those into orders with confirmed production slots, which you saw with these 100 trucks. So we plan to continue to do that over the months and quarters ahead and then start delivering those in Q4 of '23.

And then given your comments about the competitive landscape on the Hybrid I’m just wondering how we should be modeling that when we think over the next few years? Would you think maybe a ramp up in '23 and maybe again in '24 before coming down in '25, is some of those alternative the electric only trucks really start to make their way into the market? And if so that sort of a ramp down, do you think some of the new products and services that Cheri Lantz is going to be conferring on, what's the timing of the ramp up of those -- some of those to maybe mitigate potential downstream in the hybrids?

Sure. So on the last earnings call, we had mentioned with the hybrid products, we were going to be the kind of analyzing what we saw the addressable market being. We did that over this past quarter. On the last earnings call, we had noted the announcement of the 15 liter natural gas engine, and we had forecast that we did see that impacting market demand, as well as the discussions with these Ride and Drives, it was great to hear from fleets and really get their feedback. But what we heard was fleets want full electric vehicles. Now whether that BEV plug-in, local delivery type vehicles, or electric range extender vehicles like the Hypertruck ERX or hydrogen fuel cell vehicle. So we do expect that the market is going to shift more towards full electric vehicles like those solutions, like the Hypertruck ERX, and the hybrid is going to be more of a start into electrification. But it's not the end all be all, like these full electric vehicles will be. And then in terms of Cheri Lantz, we're super thrilled to have her joining the team. As we mentioned, she's going to be really driving the business efforts on the fuel agnostic and fuel cell solutions. And we want to make sure that people understand that we view those as a very critical part of our story. While we're starting with the Hypertruck ERX and natural gas solution a day, we want to make sure we are future proofed into hydrogen. And when hydrogen becomes available that our power train’s a logical solution to use, because we'll already have millions and millions of miles deployed on natural gas to then be able to use in hydrogen. And we see hydrogen starting with kind of local delivery type applications versus we see the Hypertruck ERX starting with more long haul applications, sort of thousand miles in between refills. And I think no one can really tell when hydrogen is going to happen. There's a lot of development going towards it. But it is a technology that a lot of infrastructure still needs to be built out in order to get there to make it a true long haul solution. So Cheri will be driving those, we have already kicked off developments on both of those ends on the fuel agnostic and fuel cell side, which we plan to share more on as we go through this year.

And lastly, wondering what you think about the impact of the Cummins acquisition of Meritor or what that can mean for Hyliion. I guess, both from a competitive perspective, but also, on the flip side, perhaps there's some opportunity that you could work more collaboratively with Cummins, given they're increasingly becoming an important part of your supply chain?

Sure. So we're obviously excited for Meritor to see the acquisition come through with Cummins. Subsequent to that we did have discussions with Cummins about, does this going to have any impact over the supply chain for Hyliion and we were assured that it would not, and we would have continuity of supply on those axles and continue on the relationship as we had established. So we don't see any threat to the business plan, at this stage from a supply chain standpoint. And then with Cummins, we've got a strong collaborative work with -- working relationship with them. We continue to plan to carry that forward and it's exciting to see that now se'll be sourcing axles from them as well.

Our next question is from Jason [Indiscernible] with Barclays.

Hi. It's Brian Johnson on with Jason. In terms of the -- with specs, we’re very focused on cash in the bank versus spend rates. You ou talked about 135 million to 145 million of OpEx this year. When does CapEx need to ramp up, and then how tightly will that CapEx be required, tied to firm orders, as opposed to build that it may will come kind of capacity.

Yeah. So great question. And first, I'd like to just remind everyone that, we really have an asset-light approach. So CapEx spend for us is a very minor spend. And this year we expect really to be in a range of call it $10 million to $20 million. And that's really more focused on the facility expansion and the building out of our tech lab, which should be more one-time in nature and specific to 2022. So going forward, you shouldn't see a significant amount of investment on the CapEx side. We will be doing low volume installations here at Austin, as we are ramping up the ERX, but then we still have the ability to do installations, both growing at mod centers. And then with the ultimate goal that we will be on the OEM line. So, low volume on the CapEx side. But also as you are thinking about us from a liquidity perspective, very important that, it's not just looked at from a cash and cash equivalent perspective, but you also have to include the short-term and long-term investments, which as we said, ended the year, really close to $560 million. So we feel that we are very well-positioned to get through all of the commercial milestones that we talked about today.

Okay. And so, it looks like that means cash could easily last well through '23 given these milestones.

Exactly.

Okay. And then would you need to raise more cash towards the tail end of that with the milestones under your belts, or is there a point -- I guess it gets to my second question, how are you thinking about cash flow breakeven for the business?

So, we currently do not anticipate that we are going to have to raise any of additional funds. Right now it will also be dependent on what the ramp up of the Hypertruck is, although we are incredibly encouraged by the recent order announcement and the feedback that we have been receiving from other fleets so far. So looking forward to hopefully announcing more orders in the near future. But we do not expect have to raise any additional capital at this time for the foreseeable future.

Next question is from Mark Delaney with Goldman Sachs.

Yes. Thank you very much for taking my questions. First, on the orders versus the reservation and some of the differences there. Thank you for all the color you provided on that topic already, I had a little bit more something to learn on that front. So, for an order you mentioned deposits are required, maybe you could discuss how large a deposit is needed in order to put an order down? And also our orders, are those binding or is that one of the differences versus a reservation or can orders still be canceled?

Yeah. Great question. So, the deposits are in the thousands of dollars per unit that are being ordered. And so, we see this as a pretty substantial amount that fleets are putting down to commit to these production slots. And I think that's the big difference is, with the orders that fleets are confirming their actual build slots, very conventional in the industry. When a fleet goes to buy a new truck, they confirm a build slot. That is what we are doing as well. We are adopting that same process. Reservations are more fleet's indication and commitment to this is how many they see they could adopt in the years ahead, but we're not actually identifying build slots for them with a reservation. So that's really the differentiator with the orders. And as mentioned in one of the previous calls, going forward, we plan to both expand the number of orders we have to confirm those production slots so that as we go into production, we're really building to a backlog of built slots, and then the reservations, we plan to grow to continue to show the level of interest that we're receiving from fleets in the Hypertruck.

My next question was on the OpEx and it came in under guidance. And I was hoping for some more color, was that all timing related, and these expenses will show up in '22 and that's part of the '22 outlook, or was there some efficiencies that the company is founded on these spending?

It was exactly what you said, it was more timing than anything else really related to just the number of installs that we completed in Q4 versus Q1, as well as just the timing of some of the truck purchases that we are procuring to complete the next phase of our development on the Hypertruck. So those expenses are already embedded in the guidance that we provided today.

Just last thing for me just on the hybrid program, the company's focus is on other products, right? In nuclear, you’re searching more growth and things like the ERX rather than the hybrid. With the outlook for 2 million or 3 million of sales in the hybrid this year, maybe talk about the ROI to support that program, I imagine its pretty limited profitability is any 2 million to 3 million in sales. So just trying to think through how you guys are thinking about the investments to still support the hybrid program, and is it worthwhile relative to longer term outlook that you’re thinking for that product line?

Sure. So, I think the view that we've had is the learnings from deploying these solutions out there, getting them in fleet, and actually recognizing revenue out of our huge milestones for the company and learnings that are going to carry over to one we've launched, the Hypertruck ERX as well. And so with the deployment of these, we have the customer interest there to go ahead and deploy the 2 million to 3 million this year. We have a high confidence level on that end. And we want to take that as an opportunity to also really run through the learnings of kind of growing and scaling the company, having things like actually recognizing revenue, service capabilities in place, interacting with the customers. And also one of the big things is having units deployed out in the field, traveling millions of miles. There's learnings that come from that and reliability. So, for instance, I'll give you one example to it. With our hybrid product, we created wiring specifications. I know that sounds like a minor detail, but wiring specifications of how the product needs to be built in order to be robust enough to last in the classic commercial vehicle space. We're now able to carry those exact specifications over and deploy that with the Hypertruck product so that when we go ahead and launch the Hypertruck, we have a high confidence in the reliability of that system.

[Operator Instructions] Our next question is from Noel Parks with Tuohy Brothers.

Just a couple things. You mentioned the controlled fleet trials that you're going to have underway. I'm wondering, could you sort of maybe break out some of the steps and milestones of your customer evaluation process. I think, it can be a little bit confusing, because there are customers that are sort of involved at the pre commitment point, piloting or testing out for the vehicles. And then they're the ones, that once they're signed customers they're involved in empowering. So if you could maybe just sort of [fill onward] with that, that would be helpful.

Sure. So let me start with the kind of the progression from where we are now to the start of production on the customer base. And then we can talk about fleets, level of commitments that they're making. So the first is where we're at today is we're doing the ride and drive events that we had mentioned. So this is really for the fleets first opportunity to get in the vehicle, experience it themselves. Some of the fleets -- actually a lot of fleets that have come in and experienced it are also bringing drivers from their operations along with them, so they can give their true and honest feedback. And it's been a very, very successful couple of months in interacting with fleets on that end. And that's where you're seeing fleets starting to make those commitments. As we mentioned on the last earnings call and follow it up on this one, se are on track to do controls fleet deployments of the Hypertruck in fleet operations later in 2022. So that'll actually be moving goods and trailers of our customers of these fleets we're mentioning, to let them actually run the trucks in their operations. We will then continue those trials into 2023 and then we'll finalize our certifications with CARB, the EPA, and NHTSA. And then now put us on track to be able to start production of the Hypertruck in late '23. So in terms of the kind fleet’s level of comfort with actually going ahead and placing orders, it varies based on what a fleet’s normal adoption cycle is for new technologies. Some fleets are going to start with one or two units just to really be able to run it in their operations, analyze how it performs, and then grow from there. Others are willing to make larger commitments right from the start, which we're seeing was with the 100 units that were ordered across the fleet that we mentioned today. So, it is expected that we're going to see varying levels of orders from fleets. And I don't think that shouldn't be read into a kind of a level of fleets’ interest in the technology, it's more just what their adoption cycle of how they bring new technology into their operations. And ultimately, our goal is to be their powertrain of choice in the years ahead as they continue to buy more and more trucks.

And sort of a housekeeping question and I apologize, if you touched on this already. But for the fourth quarter and as a result for the year operating expense came in pretty decently below the piece I expected from the last revision to that – to your expectations for that number. So if you talk a little bit about what the gap was, I’m not complaining -- just never bad really to see few costs be lower than expected, but just wanted some insight on that?

It was really just strictly a timing issue, really related to the number of installations that we did in Q4 versus our initial expectations, but we expect to complete all of those by Q1. So those are all embedded in the guidance as well as just some timing of truck purchases that we need and what we're anticipating for the next phase of the build out of our samples. So more timely than anything else, but are already embedded into the guidance that we gave you day.

And then just one more on timing. Discussing the reasons mentioned today that you've added these four trucking industry veterans to our sales force. And I'm just curious about the timing of they coming on. Was any of the expense for them embedded in the fourth quarter expense numbers or are they going entirely in 2022?

There was a very small amount that was embedded in Q4, its primarily in Q1.

Our next question is from Bill Peterson with JP Morgan.

Hi. Good morning, and thanks for taking the questions. I was hoping to go in a little bit more detail on I guess, a recent road show feedback. You discussed it a little bit. But I guess, can you provide some specific examples on some of the feedback that you've received, that you are applying here, to the work here in 2022, any issues that remain uncovered?

Sure. So one that we saw is a huge positive was, one of those goals with the Hypertruck Innovation Council members and other fleet to bring in is, we expect that these fleets are operating other alternative fuel vehicles as well. And so, one of the really interesting pieces of feedback was that, a couple of fleets actually operate BEV early deployment vehicles in their operations, and they were commenting to us about just how well the integration was done in our truck and how smooth our truck was compared to some of the other electric vehicles that they are trying out. So, that was obviously a big positive. Something like, just to give you a very nitpicky one, like, we had a fleet in, a gentleman was wearing bifocals and where we mounted our screen in the truck messed with his bifocal. So, it's like that level of feedback that now we are taking that and we are adjusting where we actually mount the screen inside the vehicle. So, it's a wide range of feedback that we are getting, but it's so much better to know that now as opposed to when we actually are in the starting of production phase in '23. So, great feedback thus far from fleets.

Yeah. And I guess maybe -- the innovation council, you have number of members in that -- Wegmans and Werner, and the Wegmans I think was a company you talked about here last year. But I guess the initial order book doesn't seem to have anyone from that. Maybe that's more on the -- I'm curious on the status of some of the pilots at the Innovation Councils and why they're not showing kind of up in the reservation or order book?

Yeah. Great question. And timing is impeccable. Just yesterday, actually yesterday afternoon we received an order from one of our Innovation Council members for the Hypertruck. And so, we plan on showcasing that in the days ahead and sharing a little bit more details. But, the level of engagement from the innovation council has been very strong, but we don't see this as a technology that's just going to be for those fleets. We see it as a great solution for other fleets as well. So, stay tuned for that update on some follow-on orders as well as level of interest growing from fleets outside the innovation council as well.

Okay, great. And the last question for me is, obviously supply constraints are pretty prevalent still. It doesn't -- it seems like you are kind of a reiterating a lot of your timing and not delaying it. But I guess, I'm just curious on you mentioned before, like trucks are, I think more than 12 month lead time, want to see if that's still the case, any improvement there, or if it's even gotten worse? And then other areas like semiconductors batteries, just confirming you have everything you need to meet your 2022 milestones. But more importantly, what are you keeping your eye out or really trying to ensure you have in place such that you can begin your ramp in 2023, the latter half of 2023?

Sure. So, we definitely still see that there are supply chain hurdles out there across the industry, not unique to Hyliion. But as we had linked in a little on a last call and just to reconfirm it on this call, that we have confirmed production delivery slots from our suppliers that meet the timelines that we've laid out on the last call and on this call, so we are confident in those. I think one of the big things we highlighted was just the backlog of trucks as you were mentioning. This has a carry-on effects of both the hybrid and the ERX. The ERX, we need these trucks for development purposes. For the hybrid, that's one of the reasons that you saw some of our deliveries of hybrid shift from Q4 into Q1 of this year, it was just because fleets were waiting receiving the trucks from the OEMs. So, but here once again, to reiterate it, we have strong confidence that we've got the supplies you need for 2022 parts and trucks, all the above, to be able to go ahead and hit these milestones.

I am showing no further questions at this time. I'll now turn the call over to Thomas Healy, Founder and CEO of Hyliion for closing remarks. Please go ahead, sir.

Well, thank you everyone for joining the call today. This is very exciting quarter for us. Great to see the level of interest from fleets in the Hypertruck product starting to be confirmed with orders and additional reservation as well as the growth of both our board and our team here at Hyliion, and we look forward to a very exciting 2022 and connecting again on the next earnings call. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you again for your participation and have a wonderful day. You may now disconnect.