Hyliion Holdings Corp. (HYLN) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals multiple negative factors: delayed commercialization of the KARNO Power Module, reduced revenue forecasts, and increased net losses. The Q&A section did not alleviate concerns, as major issues like LEMs and regen redesigns were only recently addressed, with commercialization pushed to 2026. Although new military contracts and tax credits offer some positives, the overall financial outlook and manufacturing challenges lead to a negative sentiment.
Key Financial Performance
Revenue $1.5 million from research and development services related to contracts with the Office of Naval Research. This is a new revenue stream as there was no revenue recorded in the second quarter of 2024.
Cost of Sales $1.4 million, resulting in a gross profit of $131,000. This is also a new figure as there was no cost of sales recorded in the second quarter of 2024.
Operating Expenses $15.8 million compared to $14 million in the second quarter of 2024, an increase driven by higher research and development costs ($10.1 million compared to $8.3 million in 2024). The increase reflects a ramp-up in R&D work and growth in the production of additive components.
SG&A Expenses $6 million, down from $6.3 million in 2024, due to lower facilities, insurance, and professional services expenses, partly offset by higher labor costs.
Interest Income $2.2 million, down from $3.1 million in the prior year quarter, due to a lower level of investments this year.
Net Loss $13.4 million, up from $10.9 million in the second quarter of 2024, but down from $17.3 million in the first quarter of 2025. The increase year-over-year is attributed to higher operating expenses.
Year-to-Date Revenue $2 million, all from R&D services, with no revenue recorded in the first half of 2024.
Year-to-Date Operating Expenses $35.5 million compared to $33 million in the first half of 2024, an increase due to higher R&D expenses.
Year-to-Date Net Loss $30.7 million compared to $26.4 million last year, reflecting higher operating expenses.
Cash and Investments $185.3 million at the end of the second quarter, with $13.5 million spent during the quarter, down from $20.9 million in the first quarter of 2025. The reduction in cash use was partly due to lower capital spending.
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Operating Highlights
KARNO Power Module: Highlighted as a major development with increased customer interest due to a 30% investment tax credit under the One Big Beautiful Bill Act. Delivered the second Early Adopter unit to the U.S. Navy and plans to deliver 10 units in 2025. Full commercialization expected in 2026.
Linear Electric Motor (LEM): Transitioned production in-house due to quality issues with contract manufacturers. Successfully assembling LEMs internally and scaling production for 2026.
Regen Component: Achieved a technical milestone by confirming the effectiveness of a new powder removal process, enabling a more complex and efficient design for the KARNO Core.
U.S. Navy and Air Force Partnerships: Awarded a $1.5 million Phase II research contract with the U.S. Navy and achieved awardable technology status with the U.S. Air Force for critical operations.
Saudi Arabia Deployment: Signed a $1 billion MOU with Alkhorayef Industries for KARNO Power Modules deployment in Saudi Arabia, with initial units expected in 2026.
MMR Group Partnership: Signed an LOI with MMR Group for the purchase of 3 KARNO Power Modules, with deployments expected in the second half of 2026.
Manufacturing Transition: Fully transitioned LEM production in-house to address quality issues, ensuring better control over production timelines and quality.
Inventory Build-Up: Building an inventory of printed components for KARNO Power Modules to support 2026 commercialization.
Tax Credit Impact: The 30% investment tax credit under the One Big Beautiful Bill Act is expected to accelerate customer adoption of KARNO technology.
Focus on Quality and Execution: Prioritizing in-house production and technical advancements to minimize risks and delays in commercialization.
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Risk or Challenges
Manufacturing Challenges: Persistent quality issues and delays with the contract manufacturer for Linear Electric Motors (LEMs) led to a full transition of production in-house, which could strain resources and delay scaling efforts.
Product Commercialization Delays: The commercialization of the KARNO Power Module has been delayed to 2026, which could impact revenue forecasts and customer confidence.
Technical Challenges: Issues with the regen component of the KARNO Core required redesign and validation, potentially delaying production and increasing costs.
Revenue and Financial Performance: Revenue forecasts for 2025 have been reduced from $10-15 million to $5-10 million due to delays in commercialization, and the company reported a net loss of $13.4 million in Q2 2025.
Economic and Regulatory Risks: EU tariffs on equipment imports are expected to increase capital spending, and the company is relying on favorable equipment financing terms to offset costs.
Non-Binding Agreements: The MOU with Alkhorayef Industries and LOI with MMR Group are non-binding, creating uncertainty around the realization of these potential deals.
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Guidance & Outlook
Revenue Forecast for 2025: The company has adjusted its 2025 revenue forecast to $5 million to $10 million, down from the previous forecast of $10 million to $15 million, due to the shift in commercialization of KARNO Power Modules to 2026.
Commercialization Timeline: Full commercialization of the KARNO Power Module is now expected to begin in 2026, following the delivery of all 10 Early Adopter units in 2025.
Production Scaling: The company plans to scale in-house production of Linear Electric Motors (LEMs) to support larger volumes of KARNO systems in 2026.
Tax Credit Impact: A 30% investment tax credit under the One Big Beautiful Bill Act will apply to KARNO Power Module projects starting in 2026, expected to drive customer adoption and offset upfront costs.
Military and Commercial Partnerships: The company has signed a strategic MOU with Alkhorayef Industries for a potential $1 billion opportunity in Saudi Arabia, with initial deployments expected in 2026. Additionally, an LOI with MMR Group outlines plans to purchase 3 KARNO Power Modules for deployment starting in the second half of 2026.
Technical Milestones: The company has achieved key technical milestones, including transitioning LEM production in-house and finalizing the depowdering process and regen design, which are critical for achieving targeted power and efficiency levels.
Financial Position: The company expects to end 2025 with approximately $155 million in cash and investments, assuming $65 million in total expenditures for the year.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you share more on the 30% tax credit, and how does this compare to previous ITC credits?
A:The 30% tax credit is significant for Hyliion and its customers, showcasing KARNO's role in energy resiliency and security. Unlike previous ITC credits, which had fuel dependency and thresholds starting at 6% and going up to 30%, the new credit is a flat 30% without fuel stipulations and is valid for 10 years. This simplifies adoption for customers.
Q:On product development, you spoke about LEMs and depowdering. Are there other large issues that need to be resolved prior to shipping?
A:The main issues, LEMs and regens, have been addressed. LEMs production has been brought in-house, and regen redesigns have improved performance. The focus now is on manufacturing components for KARNO Core and deploying 10 Early Adopter units for customer feedback. Commercialization has been shifted to 2026 to incorporate learnings.
Q:On the Navy contract, can you share more on how the Navy is planning to use the KARNO? And are you pursuing other military contracts as well?
A:The Navy plans to use KARNO in autonomous unmanned vessels and stationary applications at military bases. The relationship with the military is growing, with a new SBIR Phase II award and awardable criteria from the U.S. Air Force, enabling streamlined acquisition by government branches. Further military applications are being explored.
Q:Review of Unclear Management Responses
A:None of the questions appeared to be avoided or lacked clarity. All responses were detailed and addressed the questions directly.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Adopter unit
Air Force
Beautiful Bill
Big Beautiful
Bill Act
KARNO Core
KARNO Cores
KARNO Power
KARNO system
KARNO technology
KARNO unit
LEM
MMR
MOU
Navy
Power Module
Power Modules
Powertrain
RD service
component KARNO
contract
credit generator
manufacturing challenge
operation
powder
power technology
product commercialization
progress Adopter
regen
tax credit
testing
work
HYLN Transcript
Hyliion Holdings Corp. (HYLN) Q1 2026 Earnings Call Transcript
Positive5-13
The earnings call summary and Q&A indicate positive developments: reduced operating expenses, significant progress on military contracts, and interest in the KARNO Power Module from data centers. While net loss decreased and cash position is strong, the lack of specific future capacity numbers is a minor concern. Overall, the company's strategic advancements and optimistic guidance suggest a positive stock price movement in the short term.
Hyliion Holdings Corp. (HYLN) Q4 2025 Earnings Call Transcript
Unknown2-25
The earnings call presents a mixed picture: while the commercialization of the KARNO Power Module and partnerships like ABM are positive, financial metrics show increased losses and cautious guidance. The Q&A reveals some uncertainties, particularly around manufacturing capacity and cost details. Despite increased revenue, the overall financial health remains concerning, and the lack of specific guidance on production capacity adds uncertainty. Given these mixed signals, a neutral sentiment is appropriate, anticipating limited stock price movement.
Hyliion Holdings Corp. (HYLN) Q3 2025 Earnings Call Transcript
Unknown11-12
The company has revised its revenue forecast downwards and delayed the commercialization of its key product, KARNO Power Module, to 2026. Despite achieving technical milestones and signing significant partnerships, the financial performance has been weak, with increased net losses and reduced interest income. The Q&A session revealed some uncertainties, including delays in customer acceptance and manufacturing scale-up challenges. These factors, combined with a lack of immediate positive catalysts, suggest a negative sentiment, likely leading to a stock price decline of -2% to -8% over the next two weeks.
Hyliion Holdings Corp. (HYLN) Q2 2025 Earnings Call Transcript
Unknown8-13
The earnings call reveals multiple negative factors: delayed commercialization of the KARNO Power Module, reduced revenue forecasts, and increased net losses. The Q&A section did not alleviate concerns, as major issues like LEMs and regen redesigns were only recently addressed, with commercialization pushed to 2026. Although new military contracts and tax credits offer some positives, the overall financial outlook and manufacturing challenges lead to a negative sentiment.
HYLN Slides
HYLN Report
Frequently Asked Questions
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