HYLN

Image source: The Motley Fool. Wednesday, Aug. 12, 2026 at 11:00 a.m. ET Chief Accounting Officer - Greg Standley Chief Executive Officer - Thomas J. Healy Chief Financial Officer - Jon T. Panzer Operator: Hello, everyone. Thank you for joining us, and welcome to the Hyliion Holdings Second Quarter 26 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Greg Standley, chief accounting officer. Greg? Please go ahead. Greg Standley: Thank you, and good morning, everyone. Welcome to Hyliion Holdings Second Quarter 26 Earnings Conference Call. Joining us today are Thomas J. Healy, Chief Executive Officer and Jon T. Panzer, Chief Financial Officer. A slide presentation accompanying today's call is available on Hyliion's Investor Relations website at investors.hyliion.com. Please note that during today's call, we will be making 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. As such, are subject to risk and uncertainties. Many factors could cause actual results to differ materially from forward-looking statements made on this call Factors that may cause such differences are discussed in our presentation and press release as well as our filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on forward-looking statements and we undertake no duty to update this information except as required by applicable law. With that, I will turn the call over to Thomas. Thomas J. Healy: Hello, and thank you for joining us for Hyliion's second quarter 26 earnings call. This was a strong quarter for Hyliion, and we have a lot to cover on today's call. I will organize my remarks around 3 topics. Military progress, product progression towards initial customer site deployments, along with customer demand, and speed improvements in additive manufacturing. First, a few highlights. We were awarded a $41.7 million contract with the US Navy, our largest military contract to date, and we still expect to secure additional military contracts before year end. We are raising our full year revenue guidance from $10 million to 15 million Finally, we have identified additive manufacturing speed improvements that we believe have the potential to increase print speed and throughput by up to 3x. I will cover our progress against the 26 milestones we laid out at the start of the year update our 3-year outlook, and then turn the call over to Jon for the financial results. Starting with the military. Last month, we announced a $41.7 million contract with the US Navy to scale the KARNO power into multi-megawatt systems. Under the contract, we expect to deliver 2 power modules, 1 rated above 2 megawatts and the other rated above 3 megawatts. Both are built on the same modular 800 kilowatt architecture we are developing today for data centers and the USX 1 DEFIANCE autonomous navy ship, which means we are scaling an existing building block rather than creating a new system. These larger modules expand the range of Navy applications from larger vessels to powering military bases. The contract also includes funding to further advance our additive manufacturing capabilities. Coming into the year, we set a goal of securing $40 to $50 million in new military contracts. This Navy award on its own achieves that goal. However, we expect to close additional military awards this year including 1 from a different service branch for approximately $7 million. We expect these additional awards to bring us close to $50 million in new military contracts for 2026. The performance periods on these contracts run 2 to 3 years depending on the specific contract and our pace of execution. We expect additional military contracts next year and in the years to follow. Some will be cost plus development contracts similar to what we are executing on today. And increasingly, others will be for delivery of complete commercial power systems. The result is a steadily growing base of military and government contracts that support revenue growth in future years. This quarter, we engaged Abdul Sabani, as a strategic adviser for military opportunities. Abdul serves as civilian aid to the secretary of the army for Texas, distinguished chair of innovation and senior adviser to the intendent of the United States Military Academy at West Point, and US technology adviser to the British Military Academy. Abdul is assisting us with building relationships with new contacts throughout the military particularly within the US Army, to broaden awareness of our CARNO technology and build on our contract pipeline. Our engagements across all branches of the military increased significantly this past quarter. We held numerous meetings with senior level officers to the potential of our power system. We were also invited to participate in senator McCormick's defense and innovation summit, where president Trump, energy secretary Chris Wright, and secretary of war Pete Hegseth, all participated. Overall, it was a terrific quarter for defense progress, with more engagements and business opportunities expected in the quarters ahead. Shifting to product development. I will cover where we stand with our development work and deployment of early adopter units. Overall, commercial interest remains strong as we near initial customer site deployments. Ahead of moving units to customer sites, we are completing a block of design enhancements that capture improvements from what we have learned from initial operation. The block consists of changes spanning airflow and cooling improvements, upgraded insulation blankets, and improved piston, and software and controls enhancements. Together, we are expecting to increase system durability, performance, and power. We have recently completed updating our first commercial customer unit with these upgrades, and that will be the first system deployed to a customer site. We are building a number of power modules in parallel including the 800 kilowatt Navy system, which is now in assembly. We are accumulating run hours across multiple systems simultaneously, and performing extended duration runs to build operating hours and validate durability. We are also expanding our manufacturing capacity including moving key assembly operations from Cincinnati to Austin. We continue to expect to complete the remaining early adopter units approximately 10 KARNO Cores in total, this year. We expect our first customer site deployment to begin over the next quarter with multiple units going to that initial site, We are planning a data center deployment to follow, and the balance of units are navy assets including the 800 kilowatt system for the USX 1 DEFIANCE. Autonomous navy ship. We also recently announced the successful operation of multiple KARNO power modules functioning together as a single scalable power unit. This matters for customers who will run more than 1 system at a site, and it completes another of the 26 milestones we set out at the start of this year. We also continue to make progress towards our 200 kilowatt target and expect to reach that power level by year end. We are testing improvements across several components, with our primary focus on continuing to iterate the design of the regenerator. Which we believe is the remaining key enabler to achieve full power. Shifting to customers, our 2 largest segments of opportunities are data centers and the military. In that order. Data centers represent our largest area of customer interest. Driven by AI related power demand and the sheer size of the market. Over time, we expect a significant portion of our production capacity to be directed towards this segment. We have quantified part of that interest through nonbinding LOIs representing approximately 750 KARNO Cores which are subject to the execution of definitive purchase agreements. Most of the interest we are hearing from customers is not yet reflected in LOIs or purchase contracts. And while we have not announced new data center LOIs since our last update, we are engaged with a growing number of companies discussing interest in deployments ranging from 10s to 100s of megawatts. We are seeing 3 buckets of data center projects. Low tens of megawatts, around 100 megawatts, and gigawatt scale. For the small and medium sites, our discussion center on the KARNO power module as the primary power solution, given its efficiency, scalability, and compact footprint. For gigawatt scale build, a combined cycle gas turbine will likely provide baseload power, and we are being considered to handle 10% to 20% of the overall need specifically to handle transient loads. Across all 3, there is a strong interest in our system's native 800 volt DC capability which is the architecture data centers are moving towards. On the military side, interest spans autonomous vessels, base power, and forward operating installation driven by mobility, fuel flexibility, and low maintenance requirements. These opportunities include both R&D programs, like our current navy work, and, over time, deliveries of production systems. Turning to 27 deployments. We will focus on military deliveries against contracts we already hold which generates near term revenue. For data center customers, we plan to deploy 200 kilowatt power modules at their AI test facilities so they can experience the technology firsthand. Which we believe is the fastest path to larger volume orders of our multi-megawatt system that we plan to have initially ready in 2028. These early deployments may be structured as outright sales, loaned units, or power purchase agreements. With this sequencing, we believe it will enable greater revenue in the near term It will move commercialization of the 200 kilowatt power module into 2027, but we believe it allows us to start deploying units sooner in the data center space and to build a substantially larger long term customer pipeline. Now switching to scaling and manufacturing. As we discussed previously, 1 of the key milestones we set for 2026 was to work on improving the speed and throughput of the additive manufacturing process. I am pleased to report that we are making significant progress We have determined how to take advantage of the full laser power and capabilities available in the printers, implementing software enhancements that optimize how parts are printed, and are continuing to refine part design, including evaluating material changes where appropriate. Together, we believe these initiatives have the potential to increase overall printer speed and manufacturing throughput by up to 3x. Depending on the part. We have already begun demonstrating some of these speed improvements in print we are making today. Separately, we recently signed a beta machine agreement with Colibrium Additive a GE aerospace company, and the manufacturer of the additive printers we use at Hyliion. Through this collaboration, we are working together on the next generation of additive manufacturing systems. Up to this point, we have not yet sized our production capacity expectation because we were still assessing the capabilities of our fleet of 30 printers spanning different generations sizes, and capabilities. Now that we have a better assessment of print speed capabilities, we have determined that our existing base of installed printers will be able to produce up to 15 megawatts per year of KARNO Core capacity. With the optimization work I described, we are now in a better position to share high-level view on the relationship between carno output and printer investment for printers we plan to purchase going forward. Based on our current manufacturing road map, we believe the advancements we are working on will significantly improve the capital efficiency of scaling KARNO production once fully implemented. We currently estimate that approximately $1.5 million worth of investment in printers and related manufacturing equipment can support approximately 1 megawatt of annual KARNO power module production capacity, Based on our current pricing expectations, that 1 megawatt of annual capacity represents approximately $2.5 to $3 million worth of annual revenue. We believe this ratio of investment to output will provide an attractive return on investment once we reach efficient production volumes. It is still too early to determine exactly when we will achieve that level of production volume, but we now have an additive platform capable of throughput that justifies further investment. As a note of caution, the approximate 3x improvement in printer speed that I discussed earlier is still being validated and will require additional testing. However, we have gained enough confidence in the improvements we are seeing that we now believe there is an opportunity to accelerate additional printer investment into 2027 that we have previously expected to make in 2028. We look forward to providing additional updates on printer throughput improvements and our manufacturing investment plan in the coming quarters. Finally, I would like to remind everyone that buyers of the KARNO power module are eligible for a 30% investment tax credit on both the purchase price of the system and qualifying investments required for its installation. Under current law, that credit is available to customers through 2036. Turning to the 2026 performance milestones that we laid out for the year. We checked off 3 more this quarter. New military contracts, printer speed enhancements, and demonstrating multipower module operation. We are just over halfway through the year and have completed half of the milestones we set. By our next earnings call, we expect to check off at least 2 more including surpassing our $10 million revenue milestone and completing our initial customer site deployment with 2 additional milestones expected by year end. As mentioned before, we will be prioritizing military opportunities and delivering 200 kilowatt systems to data center test facilities which will move commercialization of the 200 kilowatt system into 2027. We believe this plan will drive higher near term revenue and larger long term volume opportunities. On our 3-year outlook, the overall trajectory remains the same, although the sequencing of our deployments has changed some. Our 2027 expectations include commercialization and ramp up of 200 kilowatt deliveries. The development of a multi-megawatt Karno system for the US Navy, and the resumption of printer acquisitions that will drive future production growth. For 2028, we plan to accelerate system deliveries and capital investment in growth assets while delivering our first multi-megawatt Karno system to data center customers. With that, I will turn the call over to Jon to walk through the financial results for the quarter. Jon T. Panzer: Thank you, Thomas, and good morning, everyone. In the second quarter, we recorded revenue of $4.9 million from research and development services. This compares with revenue of $1.5 million in the second quarter of 25 and 2.8 million in the first quarter of this year. Revenue growth this year is primarily attributable to increased production of components for the 800 kilowatt power module we are building for the Office of Naval Research, including the 4 KARNO Cores that will power the system and other power module components. Cost of revenue was $4.6 million resulting in gross profit of 366 thousand. Operating expenses for the second quarter were 15.7 million approximately flat compared to the second quarter of 25. R and D spending in the quarter was $9.5 million down 6% from $10.1 million a year ago. The year over year decrease primarily reflects a shift in spending towards revenue generating services for the Navy with the associated costs of that work reflected in cost of revenue. SG&A expenses were $6.4 million in the quarter, up approximately $0.5 million or 8% compared to the second quarter of 25. On the powertrain exit and termination expense line, we recorded a credit of $258 thousand related to asset sales. Our net loss for the second quarter was $13.9 million compared with a net loss of 13.4 million in the second quarter of 25. Turning to our year to date results, revenue for the first half of 26 was $7.8 million up significantly from $2 million in the first half of 25. Cost of revenues was 7.2 million resulting in gross profit of $576 thousand. Compared with a $143 thousand the same period of 2025. Operating expenses for the first half were $29.1 million down 18% compared with the first half of 25 primarily reflecting a 23% reduction in R&D expenses. Our year to date net loss was $25.7 million, a 16% improvement compared with the $30.7 million net loss we recorded in the first half of 25. Turning to our cash and investment position, we spent $6.9 million during the second quarter compared with $13.5 million in the second quarter of 25 and $13.1 million in the first quarter of this year. The key drivers of the lower cash spend compared with last year were a lower net loss and lower capital spending. Capital spending was approximately $200 thousand in the second quarter and $2.1 million year to date. This compares with 11.6 million in the first half of 25 when we had significantly higher spending on additive printing machines and related investments. Cash generated from asset sales was $1.9 million year to date. We finished the second quarter with $132 million of cash and short and long term investments on our balance sheet. Next, I would like to update our outlook for the remainder of the year. Our research and development services work with the Navy has ramped up more quickly this year than we initially expected. We began the year projecting approximately $10 million of R&D services revenue for this year. But in the first half alone, we have recorded nearly $8 million of revenue. The work scope and funding under our existing Navy contracts will begin to wind down during the second half of the year with a significant milestone expected completion of the 800 kilowatt KARNO power module around the end of the year. As that work nears completion, we will begin ramping up activity under the new $41.7 million Navy contract we signed a few weeks ago although most of the work under that contract is expected to be performed in 2027 and 2028. Consequently, we now expect third quarter revenue to be approximately in line with the second quarter at just under $5 million and total revenue for the year to be approximately $15 million. As Thomas noted earlier, this represents a 50% increase from our previous 2026 revenue outlook and compares with total revenue of $3.5 million 2025. Turning to capital spending. Over the last couple of years, our investments have been directed primarily toward additive printing machines, related facility investments, and CNC machining equipment. As Thomas noted, this year, our focus has shifted towards optimizing our existing printer fleet and increasing the speed and throughput of those machines. As a result, we expect capital spending in the second half of this year to be approximately in line with the $2 million spent during the first half. This represents a significant decrease from total spending of nearly $24 million in 2025. We have also previously discussed our expectation to enter into an equipment financing arrangement to monetize a portion of the value of our printer assets through either a sale leaseback or secured debt financing. We continue to expect this to close this year and generate between 10 million and 15 million of cash proceeds. The combination of higher revenue, lower expected capital spending, and the anticipated equipment financing has resulted in a meaningful improvement in our cash outlook for the year. We previously expected to spend approximately $50 million during 2026 net of the equipment financing, and to finish the year with approximately 100 million of cash and investments on our balance sheet. We now expect to finish the year with between $115 million and $120 million reflecting net cash spending during the year including equipment financing of approximately $30 million to 35 million This improved outlook highlights the strength of our balance sheet and our continued focus on the careful deployment of capital as we begin deliveries. of Karno Power module systems and continue to grow revenue. Next, as Thomas discussed earlier, are gaining confidence in the ability of advancements in additive printing technology to deliver greater speed and throughput. This is the outcome we were targeting and a reason we slowed printer acquisitions this year. Previously, we expected the next phase of the capital build out of our additive printer fleet to begin in 2028. Based on the progress we are seeing, we now see an opportunity to restart printer purchases sometime next year enabling a faster ramp up in production capacity. We expect to be able to finance these growth investments with some combination of leases, debt, and cash. As we have stated in the past, we continue to believe that capital we have on hand today is sufficient to carry us through commercialization of the KARNO power module. At the same time, additional capital will ultimately be required to support production growth. Finally, as part of our ongoing capital planning process, we are establishing an at the market equity program to provide additional financial flexibility. The program will allow us to raise capital opportunistically when market conditions are favorable and when we believe doing so supports our priorities and long term shareholder value. We intend to be disciplined in our use of the program carefully considering both our capital requirements and the potential dilution to shareholders. Now I will turn the call back over to Thomas. Thomas J. Healy: To wrap up, the second quarter advanced all 3 of the areas I opened with. We signed our largest military contract to date, at 41.7 million and expect to close very near $50 million worth in new military awards this year. We increased our revenue guidance for 2026 by 50% from $10 million to about $15 million and we unlocked additive manufacturing improvements that we believe support up to a threefold increase in throughput will enable us to begin scaling faster to meet the demand we are seeing. For the remainder of 2026, our focus is on completing the early units, deploying the first systems to customer sites, closing the remaining military contracts, and building the 800 kilowatt Navy system for the USX 1 DEFIANCE autonomous Navy ship. We are excited about the opportunity ahead and about the position we are in to capture it. I will now hand the call over to the moderator to open up for Q and A. Operator: We will now begin the question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Sean Milligan with Needham and Company. Sean, your line is open. Please go ahead. Sean Milligan: Hey, Thomas and John. Good morning. Thanks for taking the questions. I guess just real quick on the current capacity of the 30 printers, want to clarify. Did you say 15 megawatts a year or 50 megawatts per year? Thomas J. Healy: Morning, Sean. So it was 15, 15 megawatts per year. We see that the existing installed base and the printers that we already have on order and expected to come in, that will be able to produce up to 15 megawatts a year. Now with that, that is a rolling in all the advancements that we discussed throughout today's call. Sean Milligan: Okay. Great. And then on the data center side, I think you said, like, roughly half of your LOIs are data centers today, but you are engaged with a growing number of customers. Just curious, like, how you see that progressing with the customers in your pipeline. Do you see the opportunity to sign additional LOIs or MOUs or are you going to move more to, like, test orders? Just trying to think through, potential catalysts for the rest of the pipeline there. Thomas J. Healy: Sure. So maybe just to start, so we have the about 750, KARNO Cores worth of LOIs that are executed. That represents, around $400 million of potential revenue opportunity at current pricing. What I will say though is, that is only a fraction of the engagements and customer interests that we are seeing and engaging in. As we announced on today's call, we are working with multiple hyperscalers as well as numerous additional data center builders. And we are in discussions with them of and, you know, some of the questions we have been getting, from them are, like, how do you get to 100 megawatts a year of production capacity just for me? Or 1 of them is even at 400 megawatts of production capacity just for me. So they wanna understand really how are we going to scale the additive manufacturing side of things. that is 1 of the big reasons why we were excited today to be able to share more about what that looks like and the capital efficient path that we have ahead of us. But the demand we are seeing from, the data center sector, the military sector, as well as the base commercial customers that we have been working with, is phenomenal, frankly. And, you know, the big focus right now is how are we gonna be able to scale to meet that demand. Sean Milligan: Okay. that is really helpful. And kind of along those lines, you gave the numbers, the $1.5 million for printers and manufacturing equipment to support 1 megawatt of KARNO per year course per year. Just curious about the supply chain there. So on the especially on the printer side, I guess, like, how quickly, you know, can you order printers? Can you bring printers in? Is there any constraints on like, in terms of the number of printers you could bring in a year? Because to your point, like, it seems like the power And Power Space Is Accelerating. The Demand From Data Centers Is Accelerating To Just Curious About The Ability To Accelerate Your Supply Chain, Especially On The Additive Manufacturing Side. Thomas J. Healy: Sure. So Maybe Let's Start With The, Infrastructure That We Have In Place. So In Our Austin, Texas facility, the existing square footage that we already have under lease that has the capability of adding hundreds of additional printers to it. So we have plenty of space there. that is not gonna be our issue. The next question is, what does the supply chain look like in order to be able to source these? And get them in. As you are aware, we the systems from, Colibrium Additive, which is a GE company. The great thing is these are the same printers that they use in aerospace. They are selling into the healthcare industry. And it even is being brought into other industries as well. And so these are not unique printers that are just for Hyliion. These are standard printers that they are scaling for other customers as well. Now in terms of their ability to deliver on those, you know, they have been in production of additive machines for over a decade. And so, you know, it is something that they have confidence, and we have had discussions with them that as our capacity is scaling up, they will be able to deliver towards them. We do anticipate that, you know, it is in the we anticipate lead times on printers getting into the low number of quarters even potentially months of lead time as we go forward, but that is obviously something we will work closely with. GE on. Sean Milligan: Okay. Great. I will hand it back over. Thank you so much. Operator: As a reminder, if you would like to ask a question, please press *1 to raise your hand. Your next question comes from the line of Edward Jackson with Northland. Edward, your line is open. Please go ahead. Edward Jackson: Very much. Morning, Thomas. Good morning, John. Thomas J. Healy: Morning. Edward Jackson: So I wanted to start out just to make sure I understood you talked about the 10 units that you are going to-- well, roughly 10 units that, you are still on track for. And you are going to have a chunk of that being the US Navy. So 800 kilowatts, you know, that takes care of 4 of them. And then you said that you were gonna have an initial customer site with the data center. Is that for a 200 kilowatt or is that for more systems? Given the fact that it is going in there and they are gonna be knocking it around, I assume there is no, like, product revenue associated with that. So that I wanted to make sure that I understood that right. And then am I correct then that the remaining, you know, kind of half of the units you are gonna be sort of using to do validation work with other data center opportunities? Is that the way to think about those 10 units? Thomas J. Healy: Yeah. So a few different parts to the question. So maybe first is the data center opportunity we are targeting for this year. So that will be with a 200 kilowatt system as you mentioned. So the base smaller enclosure, that customer ultimately has long term interest in the multi megawatt product. But the great thing is that technology on the inside of the box is the same. it is more of just a scaling equation. So that was 1 of the things we wanted to convey on today's call is, over the early adopter units as well as units that will be getting out into the field next year that are going into data center sites. They will be taking the 200 kilowatt and it is really to build confidence in the technology and get to experience it firsthand. For a roadmap of multi megawatt systems going forward. In terms of the revenue on these early systems, so until we get to actual commercialization on the unit, we would not have recognized revenue for them. However, when we are selling these units to customers, we are charging them for them. it is more from a accounting standpoint that it does not go to revenue recognition, which John can obviously share more on. But then in terms of the additional units, so the remainder of the 10 are actually all Navy assets. And it is the couple of customer units that we have or customer couple of customer sites, and then the remainder are going to the Navy. Edward Jackson: Okay. Got that 1 from you. Regards to I mean, the prior question with regards to printer availability and, you know, the volume of getting them ramped in. You know, if it is going to take, you know, months or quarters where you can, you know, get printers from order When do you think you will have you finalize your kind of CapEx needs for 2027 and be able to highlight that more. I mean, it seems that you know, you are you expecting to have that done, you know, in the near term or by the year? You are just trying to get a sense of when that spend is gonna kick in for next year. I mean, obviously, you are doing it because, you know, you are you are coming up to the point where you wanna be, which is, you know, selling product. But just to kinda get a little better sense in terms of timing because there was obviously a runway before you can, get those units in and put in new work Yeah. Jon T. Panzer: Hi, Ed. This is John. I will take that 1. So while we have not finalized 2027 capital spending needs yet, We do think that these print speed improvements are going to enable us to start spending again on printer acquisitions. So I think if you do the math on what I projected on capital spending this year, it is gonna be $4 million compared to, like, you know, 23 million I think it was, in 2025. So next year, we would start to ramp that back up again. And what is gonna dictate that? You know, the initial step is what you know, when you place orders, you put deposits down, You know, there are there could be an opportunity to actually get printers delivered. Some of it depends, on just when some of the technology will be available, but we certainly, you know, we will certainly wanna send the message that, we are going to restart that effort next year and whether the deliveries happen late next year or into 2028, middle of next year is yet to be determined. But I think that, you know, the good news of the messaging is that we have an opportunity to pull ahead our ability to bring the printers in that will drive production capacity growth in the future. So I guess, stay tuned, but it is certainly going to be you know, closer than we previously had expected. Edward Jackson: And then you have made a comment, John, that you were going to look at some equipment financing, and you thought you would get $10 to $15 million in cash proceeds. from doing this year. And then I thought you made another comment with regards to, like, another $30 or $35 million in equipment financing. What was Yeah. Jon T. Panzer: Let me yeah. Yeah. Yeah. Sorry, Ed. Yeah. Let me clarify. So initially, our projections this year were to consume and spend net $50 million. So that would have left us with a 100 million of cash and investments at the end of the year. So that included $10 million of equipment financing. So now what we are changing is that our actual cash forecast of spending is improving by $15 million, and I am also projecting that we may upsize that equipment financing from $10 to $15 million. So that is where you get up to a $20 million improvement in our total cash forecast. So that cash forecast was 50, and now it is somewhere of net spending and now it is somewhere between $30 and $35 million. So I did not mean to imply that the financing would be in the $30 to $35 million range. The financing will be 10 to 15. Does that make sense? Edward Jackson: Yep. It does. Yeah. So, again, I just wanna reiterate that because of higher revenue lower spending overall, and lower capital spending, our net, cash burn is going to be about $15 million better than we previously expected. Got it. And then my last question, and I will get out of the line, is on the Navy contract, you have got, let's call it, $42 million in. You commented on it being rolling in and starting to contribute in 2027 and 2028. And so when we think about those 2 years, you know, basically, we should think about some however the cadence is we are putting at least $42 million of developmental revenue into the model. Across 2.73 thousand. And then I wanna verify with the commentary of the ramp and the original contract. There will be no revenue from that original contract carrying forward into 2027? Jon T. Panzer: Yeah. Yeah. Let me try and unpack that a bit. So we had a roughly $20 million of military contracts preceding the 1 that we just signed for 41.7. And we have been spending on those contracts since the end of 24. I think we had $1.5 million in 2024, 3.5 in 2025. And then and so we have we have already booked almost $10 million. So that is gonna start to wind down by the end of the next quarter, this quarter that we are in now. At the same time, we are gonna be ramping up spending on new contracts including the 1 we just signed, and then we are anticipating additional contracts to be signed this year as well. So I think the answer to your last question is yes. The old contracts, if I can call them that, will start to wind down this quarter. Because we will have spent that money, and the new contracts will start up in Q4 of this year. And then those will accelerate in 2027 and 2028. But I do wanna reiterate, we do expect to sign more contracts in 2027 and 2028 So what we expect to see is layering of incremental government military contracts on top of each other, which will enable steady continuous revenue growth on our R&D services line over time. And then maybe 1 other caveat some of those contracts will turn into more it will not be R&D. They will actually be commercial systems. You know, for example, base power or forward operating base power, those will be R&D initially, but then that will just turn into commercial units of special types for the military. So, again, we should see growing revenue over time. So, yeah, the 41.7 million contract we just signed the bulk of that will be spent over 27 and 28. Edward Jackson: Okay. Alright. Thanks for all the clarifications. Congrats on the quarter. Jon T. Panzer: Yeah. Thanks, Ed. Operator: As a reminder, if you would like to ask a question, please press *1 to raise your hand. We have reached the end of our Q and A session. I will now turn the call back to Thomas for closing remarks. Thomas J. Healy: Thank you all for joining today's call. As we highlighted, a lot of exciting work happening. Customer demand both with military commercial customers, specifically the data center front. We are seeing data centers really viewing this as a viable technology to meet this power need that they have. And we are excited to get some of our early units out there into their operations to really showcase the product benefits. And then coupling to that, being able to highlight more on the road map ahead of what scaling additive manufacturing looks like. We believe with these breakthroughs, have had a very economical way to scale the business going forward. And we are excited about the state of the art nature of what these machines are looking like. So with that, thank you for joining this quarter, and we look forward to updating further on quarter on earnings calls ahead. 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This article first appeared on GuruFocus. Release Date: August 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Hyliion Holdings Corp (HYLN) was awarded a $41.7 million contract with the US Navy, its largest military contract to date, and expects to secure additional military awards, bringing total new military contracts for 2026 to nearly $50 million. The company raised its full-year 2026 revenue guidance by 50% to approximately $15 million, driven by faster-than-expected ramp-up of R&D services work with the Navy. Hyliion Holdings Corp (HYLN) identified additive manufacturing speed improvements that have the potential to increase print speed and throughput by up to three times, improving capital efficiency for scaling production. The company completed multiple 2026 milestones, including demonstrating multi-power module operations and securing new military contracts, with expectations to complete initial customer site deployments in the coming quarter. Hyliion Holdings Corp (HYLN) improved its cash outlook for 2026, now expecting to finish the year with $115-$120 million in cash and investments, reflecting higher revenue, lower capital spending, and anticipated equipment financing proceeds. Commercial interest remains strong, particularly in the data center sector, with non-binding LOIs representing approximately 750 KARNO cores and engagements with multiple hyperscalers and data center builders. Hyliion Holdings Corp (HYLN) continues to report net losses, with a net loss of $13.9 million in Q2 2026, though slightly improved year-over-year. The company's revenue is heavily dependent on government contracts, and the existing Navy contracts will begin to wind down in the second half of 2026, creating potential revenue gaps before new contracts ramp up in 2027 and 2028. The approximately three times improvement in printer speed is still being validated and requires additional testing, introducing uncertainty into the production scaling timeline. Hyliion Holdings Corp (HYLN) is establishing an at-the-market equity program, which could lead to shareholder dilution if the company raises capital opportunistically. The company has not yet achieved efficient production volumes, and it remains too early to determine exactly when it will reach the level of production volume needed to justify further investment. The commercialization of the 200-kilowatt power module has been pushed into 2027, delaying potential revenue from data center customers. Warning! GuruFocus has detected 2 Warning Signs with HYLN. Is HYLN fairly valued? Test your thesis with our free DCF calculator. Q: Can you clarify the current production capacity of the 30 printersis it 15 megawatts per year or 50 megawatts per year? A: Thomas Healy, CEO: It is 15 megawatts per year. Our existing installed base of printers, along with those already on order, will be able to produce up to 15 megawatts per year, incorporating all the advancements we discussed today. Q: How do you see the data center pipeline progressing? Do you expect to secure additional LOIs or move toward test orders, and what are the potential catalysts? A: Thomas Healy, CEO: We have about 750 KARNO cores worth of executed LOIs, representing roughly $400 million in potential revenue. However, this is only a fraction of our customer engagements. We are working with multiple hyperscalers and data center builders, with some asking how we can scale to 100 or even 400 megawatts of annual production capacity just for them. The demand is phenomenal, and our focus is on scaling additive manufacturing to meet it. Q: Regarding the supply chain for printers, how quickly can you order and bring in new printers, and are there constraints on the number you can acquire in a year? A: Thomas Healy, CEO: Our Austin facility has space for hundreds of additional printers. We source from Calibrium Additive, a GE company, which uses the same printers for aerospace and healthcare, so they are standard and scalable. They have over a decade of production experience, and we anticipate lead times of a few quarters, potentially even months, as we scale. Q: Can you clarify the deployment of the 10 early adopter units? Is the initial customer site for a 200-kilowatt system, and will there be product revenue? How should we think about the remaining units? A: Thomas Healy, CEO: The data center deployment this year will be a 200-kilowatt system, as the internal technology is the same as the multi-megawatt product. We won't recognize revenue on these early systems until commercialization, though we do charge customers for them. The remainder of the 10 units are all Navy assets, including the 800-kilowatt system for the USX-1 Defiant ship. Q: When will you finalize your 2027 CapEx needs, and when will printer spending kick in next year? A: John Panzer, CFO: We haven't finalized 2027 capital spending yet, but the print speed improvements will enable us to restart printer acquisitions next year. This year's CapEx is projected at $4 million versus $23 million in 2025. We'll ramp back up next year, with deliveries potentially in late 2027 or into 2028, pulling ahead our production capacity growth. Q: Can you clarify the equipment financing commentsis it $10-15 million in proceeds, and what does the $30-35 million figure refer to? A: John Panzer, CFO: The equipment financing will generate $10-15 million in cash proceeds. Our net cash spending forecast for 2026 has improved by $15 million due to higher revenue and lower spending, bringing total net spend to $30-35 million, including the financing. We now expect to end the year with $115-120 million in cash. Q: With the $41.7 million Navy contract, should we expect at least $42 million in development revenue across 2027 and 2028, and will the original contract wind down with no revenue carrying into 2027? A: John Panzer, CFO: Yes, the old contracts will wind down this quarter, and new contracts, including the $41.7 million one, will ramp up in Q4 2026 and accelerate in 2027 and 2028. We expect to sign more contracts, layering incremental revenue for steady growth. Some contracts will transition from R&D to commercial systems, like base power, further driving revenue. Q: Can you elaborate on the additive manufacturing speed improvements and how they impact the capital efficiency of scaling production? A: Thomas Healy, CEO: We've implemented software enhancements and design refinements that could increase printer speed and throughput by up to three times. We estimate that $1.5 million in printer and equipment investment can support 1 megawatt of annual production capacity, representing $2.5-3 million in annual revenue. This provides an attractive ROI and justifies accelerating printer investments into 2027. Q: What is the status of the 200-kilowatt power target, and how does the sequencing of deployments affect commercialization? A: Thomas Healy, CEO: We're on track to reach 200 kilowatts by year-end, focusing on regenerator design improvements. We're prioritizing military deliveries and deploying 200-kilowatt systems to data center test facilities, moving commercialization to 2027. This sequencing enables sooner deployments and a larger long-term customer pipeline, driving higher near-term revenue. Q: Can you provide more details on the new Navy contract and its scope, including the power modules and additive manufacturing funding? A: Thomas Healy, CEO: The $41.7 million Navy contract scales the KARNO power module into multi-megawatt systems, delivering two modules rated above 2 and 3 megawatts, built on our modular 800-kilowatt architecture. This expands Navy applications from larger vessels to base power. The contract also includes funding to advance our additive manufacturing capabilities, and we expect additional military awards this year, bringing total new contracts to nearly $50 million. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Secured a $41.7 million US Navy contract to scale KARNO technology into multi-megawatt systems, achieving the full-year military contract goal with a single award. Identified additive manufacturing software and design enhancements that potentially increase print speed and throughput by up to 3x, significantly improving capital efficiency for scaling. Shifted data center strategy to deploy 200kW modules at AI test facilities in 2027 as a 'fast track' to secure larger multi-megawatt orders planned for 2028. Reported strong commercial interest in data centers driven by AI power demand, with nonbinding LOIs representing approximately 750 KARNO Cores and $400 million in potential revenue. Completed a block of design enhancements including airflow, cooling, and piston upgrades to increase system durability and performance ahead of initial customer deployments. Transitioned key assembly operations from Cincinnati to Austin to expand manufacturing capacity and leverage existing facility space for future printer fleet expansion. Raised full-year 2026 revenue guidance to approximately $15 million, a 50% increase driven by faster-than-expected ramp-up in Navy R&D services. Expects to finish 2026 with $115 million to $120 million in cash, aided by a planned $10 million to $15 million equipment financing arrangement. Anticipates restarting printer acquisitions in 2027—ahead of the previous 2028 timeline—due to confidence in validated throughput improvements. Estimates that $1.5 million in manufacturing investment can now support 1 megawatt of annual capacity, representing $2.5 million to $3 million in annual revenue potential. Plans to reach the 200kW power target by year-end 2026, with primary development focus remaining on the regenerator design as the final power enabler. Commercialization of the 200kW power module moved to 2027 to prioritize military deliveries and data center test facility deployments. The 3x improvement in printer speed is still undergoing validation and requires additional testing before full implementation. Established an at-the-market (ATM) equity program to provide financial flexibility, though management emphasized a disciplined approach to minimize shareholder dilution. Noted that while LOIs are significant, they remain nonbinding and subject to the execution of definitive purchase agreements. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the existing fleet of 30 printers can produce up to 15 megawatts per year when incorporating all recent speed advancements. The 15 megawatt figure includes printers currently on order and expected to be delivered soon. Hyperscalers are inquiring about the path to 100-400 megawatts of annual production capacity specifically dedicated to their individual needs. Current LOIs represent only a fraction of total engagement; discussions now include 10% to 20% transient load support for gigawatt-scale builds. Printers are sourced from Colibrium Additive (a GE company) and are standard units used in aerospace and healthcare, reducing unique supply risks. Lead times for new printers are expected to be in the range of a few quarters or even months as the partnership scales. Legacy Navy contracts will wind down in late 2026, with the new $41.7 million contract primarily contributing to revenue in 2027 and 2028. Management expects a 'layering' effect where new contracts are signed annually, creating a steady base of R&D and eventually commercial system revenue.

Interested in Hyliion Holdings Corp.? Here are five stocks we like better. Revenue and outlook improved: Q2 revenue rose to $4.9 million from $1.5 million a year earlier, driven primarily by U.S. Navy research and development work. Hyliion raised its 2026 revenue forecast to approximately $15 million and expects to end the year with $115 million to $120 million in cash and investments. Major Navy contract secured: Hyliion won a $41.7 million contract to scale its KARNO Power Modules into systems exceeding 2 megawatts and 3 megawatts, achieving its annual military-award target. Work is expected to ramp in Q4, with most activity occurring in 2027 and 2028. Commercialization remains underway: The company expects its first customer-site KARNO deployment next quarter, including a 200-kilowatt data-center system. Hyliion also identified potential additive-manufacturing improvements that could triple print throughput, while letters of intent represent roughly 750 cores and $400 million in potential revenue, subject to final agreements. Hyliion (NYSEAMERICAN:HYLN) reported second-quarter revenue growth driven by research and development services for U.S. Navy work, raised its full-year revenue outlook and highlighted a new $41.7 million Navy contract as it advances commercialization of its KARNO Power Module technology. Revenue for the quarter was $4.9 million, compared with $1.5 million in the second quarter of 2025 and $2.8 million in the first quarter of 2026. Chief Financial Officer Jon Panzer said the increase primarily reflected production of components for an 800-kilowatt KARNO Power Module being built for the Office of Naval Research. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat The company posted gross profit of $366,000 on cost of revenue of $4.6 million. Its net loss was $13.9 million, compared with a $13.4 million net loss a year earlier. Operating expenses were $15.7 million, roughly flat year over year, while research and development spending declined 6% to $9.5 million. Chief Executive Officer Thomas Healy said Hyliion secured its largest military contract to date during the quarter: a $41.7 million award from the U.S. Navy to scale KARNO Power Modules into multi-megawatt systems. → AST SpaceMobile Earnings Just Reminded Investors How Risky Space Can Be Under the contract, Hyliion expects to deliver two modules, one rated above 2 megawatts and another above 3 megawatts. Healy said both systems will use the company’s existing modular 800-kilowatt architecture, which is also being developed for data-center applications and the USX-1 Defiant autonomous Navy ship. The award alone fulfills Hyliion’s prior goal of securing $40 million to $50 million in new military contracts during 2026. The company said it expects to close additional awards before year-end, including an approximately $7 million contract from another military service branch, bringing total new awards close to $50 million for the year. → First Solar’s Profit Engine Faces a New Policy Test in Washington Panzer said the company’s earlier military contracts, totaling roughly $20 million before the latest award, are expected to wind down during the current quarter. Work under the new Navy contract is expected to begin ramping in the fourth quarter, with most activity occurring in 2027 and 2028. He added that Hyliion expects future government contracts to layer onto existing work and, over time, include deliveries of commercial power systems rather than solely R&D services. Hyliion said it is completing a set of design enhancements before moving early systems to customer locations. The changes include airflow and cooling improvements, upgraded insulation blankets, an improved piston, and software and controls updates. The first commercial customer unit has been upgraded and is expected to be the first deployed at a customer site. The company continues to expect to complete approximately 10 KARNO cores in early adopter units this year. Its first customer-site deployment is expected to begin during the next quarter, with multiple units going to the initial site. Hyliion also plans a subsequent data-center deployment, while the remaining units are primarily Navy assets, including four cores for the 800-kilowatt system intended for the USX-1 Defiant. Healy said the initial data-center deployment this year will use a 200-kilowatt system. The customer ultimately has interest in a multi-megawatt product, he said, but the smaller deployment is intended to allow customers to evaluate the technology before larger-scale orders. Hyliion expects to reach its 200-kilowatt power target by year-end, with regenerator design work remaining a key focus. The company said it has non-binding letters of intent representing about 750 KARNO cores, which Healy said equates to roughly $400 million of potential revenue at current pricing. Those LOIs remain subject to definitive purchase agreements. Healy said the company is also in discussions with hyperscalers and data-center builders about potential deployments ranging from tens of megawatts to hundreds of megawatts. For 2027, Hyliion plans to prioritize military deliveries and deploy 200-kilowatt modules at data-center AI test facilities. The company said those deployments may be structured as sales, loaned units or power purchase agreements. Its first multi-megawatt KARNO system for data-center customers is planned for 2028. Hyliion said it identified software, printer-operation and part-design improvements that it believes could increase additive manufacturing print speed and throughput by as much as three times, depending on the part. The company cautioned that the potential improvement remains under validation and will require further testing. Healy said Hyliion’s existing fleet of 30 printers, including printers already on order, could support up to 15 megawatts of annual KARNO core production capacity once the improvements are incorporated. The company estimated that about $1.5 million of investment in printers and related manufacturing equipment could support roughly 1 megawatt of annual KARNO Power Module capacity. At current expected pricing, Hyliion said that 1 megawatt of annual capacity represents approximately $2.5 million to $3 million in annual revenue. The company signed a beta machine agreement with Colibrium Additive, a GE Aerospace company and the manufacturer of Hyliion’s printers, to collaborate on next-generation additive manufacturing systems. Healy said Hyliion has enough leased space at its Austin, Texas, facility to add hundreds of additional printers and expects printer lead times could fall to a low number of quarters or potentially months. Panzer said the manufacturing progress could enable Hyliion to restart printer purchases in 2027, earlier than its previously expected 2028 timing. The company has not finalized its 2027 capital spending plan. Hyliion raised its 2026 revenue outlook to about $15 million from a prior range of $10 million to $15 million. Panzer said the new forecast reflects a faster-than-expected ramp in Navy R&D services. The company recorded $7.8 million in revenue during the first half, compared with $2 million in the first half of 2025. Third-quarter revenue is expected to be approximately in line with the second quarter, at just under $5 million. The company generated $3.5 million in total revenue during 2025. Hyliion ended the second quarter with $132.4 million in cash and short- and long-term investments. Cash use during the quarter was $6.9 million, down from $13.5 million a year earlier. The company expects second-half capital spending to be about $2 million, similar to its first-half spending, compared with nearly $24 million in total capital spending in 2025. The company continues to expect an equipment-financing transaction this year, potentially generating $10 million to $15 million in proceeds. It now expects to finish 2026 with $115 million to $120 million of cash and investments, compared with its prior expectation of approximately $100 million. Panzer also said Hyliion is establishing an at-the-market equity program to provide financial flexibility, while stating that the company intends to consider capital needs and potential shareholder dilution carefully. Hyliion Holdings Corp. develops electrified powertrain solutions aimed at reducing fuel consumption and emissions for Class 8 commercial vehicles. Its flagship offerings include the Hypertruck ERX electric axle and hybrid powertrain systems that integrate battery packs with onboard natural gas generators. These modular solutions are designed to retrofit existing diesel trucks or to be incorporated by original equipment manufacturers, allowing fleets to transition toward lower-carbon operations without replacing entire fleets. Founded in 2015 by Thomas Healy and based in Austin, Texas, Hyliion went public in 2020 via a special purpose acquisition company (SPAC) merger. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Hyliion Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

AUSTIN, Texas, August 11, 2026--(BUSINESS WIRE)--Hyliion Holdings Corp. (NYSE American: HYLN) ("Hyliion"), a developer of modular power plant technology, today reported financial results for the second quarter ended June 30, 2026, and provided key updates on the development of the KARNO™ Power Module platform. Key Business Highlights Awarded a $41.7 million U.S. Navy contract for multi-megawatt KARNO Power Modules for shipboard and military base power, with additional contracts anticipated in 2026 Announced the U.S. Navy's USX-1 Defiant vessel as the platform for KARNO Core sea trials, supporting both ship propulsion and auxiliary power Achieved significant additive manufacturing advancements expected to deliver up to a 3 times improvement in printing speed and throughput depending on the component Introducing a capital efficient manufacturing scale up plan, in which each megawatt of annual production capacity requires approximately $1.5 million of one-time capital investment and supports $2.5 million to $3.0 million of annual revenue at current pricing Executed a beta machine agreement with Colibrium Additive, a GE Aerospace company, to develop the next generation of additive manufacturing systems Demonstrated multi-KARNO Power Module operation, enabling multiple systems to function as a single larger power plant On track to complete the approximately 10 early adopter units in 2026 Increasing full-year 2026 revenue guidance from $10 million to $15 million, following second-quarter revenue of $4.9 million, up more than threefold from Q2 2025 Finished the quarter with $132.4 million in cash and investments and improved the year-end 2026 outlook to $115 to $120 million from prior guidance of $100 million Executive Commentary "This quarter, we signed the largest military contract in our history, increased our revenue outlook by 50%, and achieved additive manufacturing advancements that we believe can improve printer throughput by up to 3x," said Thomas Healy, Founder and CEO of Hyliion. "At the same time, interest from data center customers continues to accelerate, with demand now being discussed at a scale of tens to hundreds of megawatts. We believe the progress we are making positions our KARNO Power Modules to address these increasingly large opportunities." Military and Government Progress Hyliion was awarded a $41.7 million contract with the U.S. Navy to scale the KARNO Power Module into multi-megawatt systems. Under the contract, Hyliion will deliver two systems, one rated above 2 megawatts and the other rated above 3 megawatts, both based on the same modular 800-kilowatt architecture the Company is developing today. The larger systems are expected to broaden the range of military applications for KARNO to include larger vessels and military bases. The contract also includes funding to advance Hyliion’s additive manufacturing capabilities, with work under the program expected to occur primarily in 2027 and 2028. The Company anticipates additional military contract awards this year, including a potential award from another branch of the U.S. military. If awarded as expected, these contracts would bring total new military funding awarded to Hyliion in 2026 to nearly $50 million, reaching the high end of the Company’s objective of $40 million to $50 million. Hyliion also announced that the U.S. Navy’s USX-1 Defiant will serve as the platform for KARNO Core sea trials, supporting both ship propulsion and auxiliary power. The 800-kilowatt KARNO Power Module being developed for the vessel under existing Office of Naval Research contracts is currently in assembly, with completion expected in 2026. KARNO Commercial Updates Hyliion believes it remains on track to complete the approximately 10 early adopter customer units during 2026 and the Company is accumulating run hours across multiple systems in parallel in preparation for field deployment. The Company expects to begin delivering units to customer sites over the next quarter. Looking ahead to 2027, Hyliion plans to prioritize deliveries under existing military contracts while deploying additional 200 kW KARNO Power Modules with commercial customers, particularly data center operators, to demonstrate the product’s capabilities. Hyliion believes this strategy will support near-term revenue from military programs while accelerating data center adoption and building a larger long-term customer pipeline. As a result, commercialization of the 200 kW KARNO Power Module is now expected in 2027. Customer interest continues to strengthen across both military and commercial applications, with data center interest growing at an accelerating pace. Hyliion is currently engaged with multiple hyperscalers and leading independent data center developers regarding potential demand ranging from tens to hundreds of megawatts. The Company has executed non-binding letters of intent representing approximately 750 KARNO Cores, more than half of which are with data center providers. To support larger-power configurations, Hyliion demonstrated the ability to operate multiple KARNO Power Modules together as a single scalable power unit during the quarter, completing a key milestone established for 2026. This capability enables multiple Power Modules to operate together as a larger power plant and is an important requirement for the multi-megawatt deployments being sought by data center customers. Additive Manufacturing and Production Scaling Following the installation of approximately 30 additive printers over the past several years, Hyliion’s focus in 2026 has shifted from acquiring additional machines to increasing the speed and throughput of its existing fleet. These efforts are focused on three areas: more fully utilizing the available laser power and capabilities of the printers, implementing software enhancements that optimize how parts are printed, and further refining part designs. Collectively, these initiatives have the potential to increase printer speed and manufacturing throughput by up to 3x, depending on the component, with initial improvements already demonstrated in production printing. These advancements provide a capital efficient path to scaling KARNO production. Based on its current manufacturing roadmap, Hyliion estimates that approximately $1.5 million of manufacturing capital investment can support one megawatt of annual production capacity, representing approximately $2.5 million to $3.0 million of annual revenue at current product pricing. These estimates remain subject to further testing and validation. With a viable and capital-efficient roadmap now in place, Hyliion expects to begin accelerating its production scale-up and printer purchases in 2027, earlier than previously anticipated. The Company intends to fund future manufacturing capacity through a combination of equipment financing, potential customer financing, and balance sheet cash. Hyliion also executed a beta machine agreement with Colibrium Additive, a GE Aerospace company and the manufacturer of the additive printers used at Hyliion. Through this collaboration, the companies are working together on the next generation of additive manufacturing systems. Financial Highlights and Guidance Hyliion recorded second-quarter 2026 revenue of $4.9 million from research and development services, compared with $1.5 million in the second quarter of 2025. The increase primarily reflects accelerated work under the Company's contracts with the Office of Naval Research, including production of components for the 800-kilowatt Power Module. Cost of revenue was $4.6 million, resulting in gross profit of $0.4 million. Operating expenses for the second quarter were $15.7 million, approximately flat with the second quarter of 2025. R&D expenses were $9.5 million, down 6% year-over-year, primarily reflecting a shift of activity toward revenue-generating work for the Navy. SG&A expenses were $6.4 million, up approximately 8% year over year. Hyliion reported a second-quarter 2026 net loss of $13.9 million, compared with $13.4 million in the second quarter of 2025. For the first six months of 2026, revenue was $7.8 million, compared with $2.0 million in the first half of 2025. Operating expenses were $29.1 million, down 18% year-over-year, and the net loss was $25.7 million, a 16% improvement compared with $30.7 million in the first half of 2025. Net cash spending was $6.9 million during the second quarter, compared with $13.5 million in the second quarter of 2025. Capital spending was $2.1 million year to date, compared with $11.6 million in the first half of 2025. Hyliion ended the second quarter with $132.4 million in cash and short- and long-term investments. Hyliion is increasing its full year 2026 revenue guidance to approximately $15 million, a 50% increase from its previous outlook. The Company also continues to expect to complete an equipment financing transaction during 2026, with anticipated proceeds of $10 million to $15 million. As a result of higher revenue, lower capital spending, and planned equipment financing, Hyliion now expects net cash use of $30 million to $35 million during 2026, resulting in a year end cash and investments balance of $115 million to $120 million, compared with its previous outlook of approximately $100 million. About Hyliion Hyliion is committed to creating innovative solutions that enable clean, efficient, and flexible electricity production. The Company's primary product, the KARNO™ Power Module, is a modular, fully enclosed, fuel-agnostic power generation platform enabled by additive manufacturing. The KARNO Power Module generates heat through the flameless oxidation of fuels, achieving near zero emissions without aftertreatment systems, and can operate on natural gas, hydrogen, propane, diesel, and other fuel sources to future-proof against an ever-changing energy economy. Headquartered in Cedar Park, Texas, Hyliion is initially targeting stationary power applications, including data centers, military and government installations, and commercial and industrial facilities, with future applications to include mobile and marine uses. For further information, please visit www.hyliion.com. Forward Looking Statements The information in this press release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included in this press release, regarding Hyliion and its future financial and operational performance, as well as its strategy, future operations, estimated financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward looking statements. When used in this press release, including any oral statements made in connection therewith, the words "could," "should," "will," "may," "believe," "anticipate," "intend," "estimate," "expect," "project," the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Except as otherwise required by applicable law, Hyliion expressly disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements herein, to reflect events or circumstances after the date of this press release. Hyliion cautions you that these forward-looking statements are subject to numerous risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Hyliion. These risks include, but are not limited to, our status as an early stage company with a history of losses, and our expectation of incurring significant expenses and continuing losses for the foreseeable future; our ability to develop key commercial relationships with suppliers and customers; our ability to retain the services of Thomas Healy, our Chief Executive Officer; the expected performance of the KARNO generator and system; the execution of the strategic shift from our powertrain business to our KARNO business; our ability to comply with governmental regulations related to defense spending and procurement; the suitability of our products for defense applications; and the other risks and uncertainties described under the heading "Risk Factors" in our SEC filings including in our Annual Report (See item 1A. Risk Factors) on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 25, 2026 for the year ended December 31, 2025 and in our subsequently filed Forms 10-Q. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Should one or more of the risks or uncertainties described in this press release occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. Additional information concerning these and other factors that may impact Hyliion’s operations and projections can be found in its filings with the SEC. Hyliion’s SEC Filings are available publicly on the SEC’s website at www.sec.gov, and readers are urged to carefully review and consider the various disclosures made in such filings. View source version on businesswire.com: https://www.businesswire.com/news/home/20260811972223/en/ Contacts Hyliion Holdings Corp. [email protected] Investor Relations [email protected]

In the last week, the United States market has stayed flat, yet it has seen a remarkable 25% increase over the past year with earnings forecasted to grow by 17% annually. In this thriving environment, growth companies with high insider ownership can be particularly appealing as they often indicate strong confidence from those closest to the business in its potential for continued success. Click here to see the full list of 187 stocks from our Fast Growing US Companies With High Insider Ownership screener. Below we spotlight a couple of our favorites from our exclusive screener. Simply Wall St Growth Rating: ★★★★★☆ Overview: Aeluma, Inc. develops optoelectronic and electronic devices for sensing, communication, and computing applications in the United States with a market cap of $488.06 million. Operations: The company's revenue is primarily derived from its Semiconductor Equipment and Services segment, which generated $5.23 million. 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Simply Wall St Growth Rating: ★★★★★☆ Overview: Hyliion Holdings Corp. designs and develops power generators for stationary and mobile applications, with a market cap of approximately $477.92 million. Operations: Hyliion Holdings Corp. focuses on the design and development of power generators for both stationary and mobile applications, although specific revenue segments are not detailed in the provided information. Insider Ownership: 22.5% Earnings Growth Forecast: 54.3% p.a. Hyliion Holdings shows promising growth potential, with revenue expected to rise 75.2% annually, significantly outpacing the US market. Recent earnings reveal a substantial increase in revenue to US$2.83 million, though net losses persist at US$11.74 million. The successful demonstration of its KARNO reactor's multi-fuel capability highlights technological advancements that could drive future sales and market expansion. 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This article first appeared on GuruFocus. Release Date: May 13, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Hyliion Holdings Corp (HYLN) successfully completed the UL certification non-recurring test milestone for the KARNO power module, enabling the delivery of early adopter units to customer sites. The company recorded a significant increase in revenue, reaching $2.8 million this quarter, a four-fold increase from the prior quarter. Hyliion Holdings Corp (HYLN) signed a new strategic partnership with VFG Holdings to deploy up to 250 KARNO cores over the next five years, enhancing its presence in the data center market. The company demonstrated true multi-fuel flexibility, successfully switching between diesel, natural gas, and hydrogen without shutting down the system. Hyliion Holdings Corp (HYLN) is on track to secure $40 million to $50 million in additional military contracts this year, reflecting strong demand for its technology from the military sector. Operating expenses for the first quarter were $13.4 million, although down from the previous year, they still represent a significant cost. The company recorded a net loss of $11.7 million in the first quarter, highlighting ongoing financial challenges. Hyliion Holdings Corp (HYLN) anticipates additional capital will be required to support production growth, particularly for purchasing additional additive manufacturing equipment. The company is still in the early stages of commercialization, with full-scale production and deployment expected to ramp up in 2027 and beyond. There are potential risks associated with the supply chain, particularly concerning the sourcing of high-strength magnets, although progress has been made in finding alternate sources. Warning! GuruFocus has detected 4 Warning Sign with HYLN. Is HYLN fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more details on the $20 million Navy contract and the expected additional $40 to $50 million in military contracts? A: John Panzer, CFO: We have made significant progress with the $20 million Navy contract, booking nearly $3 million this quarter. We expect to sign additional military contracts worth $40 to $50 million in the second half of the year, which will help maintain momentum into 2027. The military is a significant opportunity for us, and we are seeing strong traction on the revenue side. Q: What progress has been made towards achieving the 200-kilowatt certification for the KARNO power module? A: Thomas Healy, CEO: We have made advancements in testing, achieving double-digit kilowatt improvements. We are on track to reach the 200-kilowatt power rating by year-end. The UL non-recurring testing we completed means we do not need to redo testing as we increase power levels, which positions us well for scaling production next year. Q: How does the military's interest in stationary power applications compare to on-ship applications? A: Thomas Healy, CEO: The Navy contract includes both on-ship and stationary deployments. We are working on stationary deployments this year and next. The additional $40 to $50 million in military contracts will cover both applications. Stationary deployments can be accelerated as they use commercial boxes we've already developed. Q: What is the timeline for commercial customers to test and potentially order KARNO generators? A: Thomas Healy, CEO: Testing timelines vary, with some customers needing three months and others up to nine months. We have nearly 750 units of interest in LOIs. This year, we aim to deploy initial units with commercial customers and expect repeat orders and new customer deployments next year. Q: What are the unique selling points of the KARNO power module for data center customers? A: Thomas Healy, CEO: Data centers need reliable power, and the KARNO module offers high efficiency, low maintenance, and fuel-agnostic capabilities. It can run on both natural gas and diesel, eliminating the need for separate generators. The 800-volt architecture aligns with industry trends, reducing the need for transformers and copper lines. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Hyliion Holdings (NYSE:HYLN) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call. This content is powered by Benzinga APIs. For comprehensive financial data and transcripts, visit https://www.benzinga.com/apis/. The full earnings call is available at https://events.q4inc.com/analyst/954135636?pwd=U3P78Fhs HYLN reported a significant increase in revenue, achieving $2.8 million this quarter, a fourfold increase from the previous quarter, primarily driven by military contracts. The company successfully completed the UL certification non-recurring test for the Karno Power Module, paving the way for early adopter unit deployment. HYLN signed a strategic partnership with VFG Holdings to deploy up to 250 Karno cores over the next five years, enhancing its presence in the data center market. The company anticipates signing additional military contracts worth $40 to $50 million by the end of the year, expanding its engagement with various branches of the US Military. HYLN demonstrated dynamic fuel switching capabilities for the Karno reactor, enhancing its appeal for both commercial and military applications. The company is on track to achieve its full 200-kilowatt design power rating by year-end, with plans to scale production in 2027. HYLN plans to execute equipment financing for up to $10 million later this year, with an expected year-end cash and investment balance of approximately $100 million. OPERATOR Hello everyone. Thank you for joining us and welcome to Hyliion Holdings first quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, Please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Greg Standley, Chief Accounting Officer. Please go ahead. Greg Standley (Chief Accounting Officer) Thank you and good morning everyone. Welcome to Hyliion Holdings first quarter 2026 earnings conference call. Joining us today are Thomas Healy, Chief Executive Officer and John Panzer, Chief Financial Officer. A slide presentation accompanying today's call is available on Hyliion Investor Relations website at investors.hyliion.com Please note that during today's call we will be making 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 as such are subject to risks and uncertainties. Many factors could cause actual results to differ materially from forward looking statements made on this call. Factors that may cause such differences are discussed in our presentation and press release as well as our filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on forward looking statements and we undertake no duty to update this information except as required by applicable law. With that, I'll turn the call over to Thomas. Thomas Healy (Chief Executive Officer) Hello and thank you for joining us for Hyliion's first quarter 2026 earnings call. On our last call we had said 2026 would be the year we shifted from development to deployment of the Karno Power Module. The first quarter delivered tangible progress. Against that plan. We successfully completed the UL certification non recurring tests milestone for the Karno Power Module. We signed a new data center partnership with VFG Holdings, broadened our military engagement and further demonstrated multi-fuel flexibility. We also saw a significant increase in revenue growth, recording $2.8 million this quarter, a fourfold increase from the prior quarter. This growth reflects the accelerating pace of work with the military. Today I'll walk through each of these areas in more detail then turn the call over to John for the financial update. Starting with UL certification, this was a high priority milestone for us and I am pleased to share that we successfully passed the UL certification non recurring test for the Karno Power Module. This is the gating item we discussed last quarter and clearing it now enables us to begin delivering early adopter units to customer sites. To frame what this means going forward, each individual power module will still undergo a final operating test prior to receiving its nameplate certification, but the foundational testing we have completed does not need to be repeated. As a reminder, this testing covers the electric motor battery system and the complete power module with each subsystem undergoing separate UL certification. As we continue working towards our full 200 kilowatt design power rating, we expect to move to facility level certification and after which we will no longer need to certify each unit independently. That progression is an important step towards enabling production at scale. Turning to Deployments we continue to operate Karno units at our Cincinnati facility while building additional systems. We remain on track to complete the approximately 10 early adopter units this year ahead of commercialization which we expect around year end depending on the timing of the early deployments. With UL non recurring testing now complete, we are beginning to work with customers to move these systems to their sites. This is an important transition. Until now, customer units have been operating at our facility under controlled conditions. Over the next couple of quarters we expect these same units to begin operating in real world customer environments. We continue to see strong interest from the military in deploying our Karno technology. We are now in active discussions not only with the Navy and Air Force, but with additional branches of the U.S. Military as well. This interest is being driven by the platform's differentiated capabilities including true fuel agnostic operation, low maintenance requirements and low acoustic and thermal signature which are particularly important for applications such as autonomous operation and mobile power generation. We continue to expect to sign 40 to 50 million dollars of additional military contracts this year on top of the approximately $20 million in ONR contracts we are currently executing. We are also seeing strong and growing demand from data center customers. The need for on site fuel flexible power generation is becoming increasingly important and we are actively engaging with the leading players in the market. In that context, I am pleased to announce a new strategic partnership with VFG Holdings. Hyliion and VFG Holdings have executed a non binding letter of intent to deploy up to 250karno cores or approximately 50 megawatts of power over the next five years. VFG Holdings is a developer of advanced next generation data centers and offers turnkey solutions including power infrastructure, compute and financing. The team at VFG Holdings is comprised of industry veterans from some of the largest data center companies and is planning multiple gigawatts of power production in the years ahead. Under this partnership, the parties plan to deploy Karno Power modules at VFG data center sites to demonstrate the unique benefits of the Karno platform, including lower than grid electricity production costs, true fuel agnostic operation and direct 800-volt DC integration. We plan to share more details on the partnership in the periods ahead. The LOI between HYLIION and VFG Holdings is subject to the execution of a definitive purchase agreement. Building on our partnership with ABM Industries, which we announced in early 2026, we have been engaging prospective customers alongside ABM. The opportunities span light and heavy commercial applications, from single unit 200 kilowatt deployments to multi megawatt installations. ABM brings deep capabilities in site engineering, integration, construction and ongoing site management, which complements our focus on advancing and commercializing the Karno Power Module. Now shifting to updates on our product development, we continue to make progress towards our full 200 kilowatt design power rating. During the quarter, the team conducted isolated testing on new software and component improvements that yielded additional power and efficiency gains. We plan to incorporate these and other advancements into the product over the coming quarters and remain on track to reach the full design power rating by year end. Beyond the broader fuel flexibility we have previously demonstrated, the first quarter included a particularly meaningful product development milestone. We successfully demonstrated dynamic fuel switching within the Karno reactor across diesel, natural gas and hydrogen without shutting the system down. Said differently, the system can operate on both gaseous and liquid fuels with very different characteristics. This achievement validates true fuel flexibility on the platform, not just dual fuel, but the ability to operate on liquid fuel, pipeline gas and zero carbon fuel through a single architecture with the ability to transition seamlessly between them during operation. The strategic significance of this capability is meaningful as many of our target applications desire this kind of flexibility. For example, data center operators often prefer pipeline natural gas as their primary fuel source while maintaining diesel fuel on site as a backup in the event of a disruption in natural gas supply. The Karno Power module enables both within a single platform, eliminating the need for separate primary and backup generation systems. This capability also expands our addressable market in defense applications where mission requirements frequently depend on fuel availability and the ability to adapt in real time. With diesel fuel operation now demonstrated, we have commenced building an 800 kilowatt Karno power module for the US Navy. This system will be deployed on an unmanned Navy vessel as part of our existing ONR program. We expect to complete this build during 2026 alongside other Navy product performance and reliability milestones. Importantly, the 800 kilowatt system we are building for the Navy serves as the same architectural building block for our data center offering. By combining multiple 800 kilowatt units, we can scale to 1.6 megawatts, 2.4 megawatts, 3.2 megawatts and higher, aligning with the modular power configurations required by data center customers. On manufacturing capacity Our focus today remains on building systems, establishing the supply chain to meet our quality requirements and continuing to scale print capacity. We are continuing to make meaningful progress with our additive printers, particularly in improving part production speeds. We expect to install a few additional printers this year and with those additions our existing fleet is expected to support our planned production needs for 2026, 27 and into 2028. We remain on track to take delivery of and begin testing one or more printers equipped with the latest laser technology from GE Colibrium later this year. We believe that technology has the potential to further improve print speed and throughput on supply chain. We noted last quarter that magnet supply was a potential risk given export constraints from China. I'm pleased to share that during the first quarter we began to see progress with alternate sourcing options for the high strength magnet magnets. We require increasing our confidence in our ability to support planned production. To recap our 2026 milestones, at the start of the year we outlined a clear set of objectives. With 1/4 complete, we are making solid progress. We have completed UL non recurring testing on the Karno power module. We have demonstrated multi fuel switching including liquid fuel operation and have begun building the 800 kilowatt Navy system. Looking ahead, we remain on track to achieve our full 200 kilowatt design power rating complete. Our remaining early adopter unit deployments secure 40 to $50 million in additional military contracts and deliver approximately $10 million of revenue for this year. Looking beyond this year, our three year outlook remains unchanged. In 2027, we expect to ramp commercial deliveries and expand the range of Karno deployments, specifically with the military and data center customers. We view 2027 as the year we transition from initial commercialization into meaningful production scale. By 2028 and beyond, we expect to accelerate commercial growth as production capacity enables us to serve a broader portion of customer demand, including expansion into multi megawatt configurations for data center customers. With that, I'll turn the call over to John to walk through the financial results for the quarter. John Panzer (Chief Financial Officer) Thank you Thomas and good morning everyone. In the first quarter we recorded revenue of $2.8 million from research and Development Services. This compares with revenue of about a half a million dollars in the first quarter of 2025 and $700,000 last quarter. The significant growth reflects an acceleration of work under our contracts with the Office of Naval Research. Cost of revenues was $2.6 million, resulting in a gross margin gain of 210,000. As a reminder, R and D services revenue with the Navy reflects the sale of Karno Cores and systems, including the 800 kilowatt power module we are building and the work we performed to test and validate these units. Operating expenses for the first quarter were $13.4 million, down from 19.7 million in the first quarter of 2025. The decrease was driven primarily by lower research and development spending. R and D spending in the first quarter was 7.7 million, down 37% from the 12.2 million we spent a year ago. While the absolute level of R and D spending was down compared to a year ago, most of the year over year decrease related to a shift to revenue generating services for the Navy versus other research and development work. This shift included approximately $1.9 million in lower R and D expenses this quarter as we capitalized inventory and utilized less labor and materials performing R and D activities. This inventory is primarily work in process components that we expect to utilize in future periods. For building Karno Systems for the Navy on the powertrain exit and termination expense line, we recorded a credit of $414,000 compared to an expense of 1.4 million in the first quarter last year. This credit reflects ongoing asset sales related to our former powertrain business to during the quarter and is not expected to be recurring. SG&A costs were relatively flat with an increase of $100,000 attributable to higher personnel expense, partly offset by lower spending in other areas. Our total net loss in the first quarter was $11.7 million, down 32% from the $17.3 million loss we recorded in the first quarter of 2025. Turning to our cash and investment position, we spent $13 million during the first quarter. Capital spending was 1.9 million and consisted primarily of payments for additive printing machines along with some facility investments to support printer operations. Cash generated from asset sales for the quarter was $1.6 million. Asset sales related to the monetization of equipment previously used in our powertrain division and are largely complete. We finished the first quarter with $139.3 million of cash and short and long term investments on our balance sheet. We are reaffirming our guidance for 2026, including approximately $10 million in revenue this year from both R and D services and possibly some commercial customer sales. Also, as Thomas noted, we plan to slow capital spending in 2026 compared to 2025 as we work to optimize the output of the printers that we have on hand Today we are planning to execute equipment financing for up to $10 million later this year, although that amount may shift up or down based on terms and availability of lease capital. Overall for 2026, higher revenue expense control, lower capital spending and planned equipment financing are expected to result in a lower level of total spending compared to 2025. Our current forecast is for net spending of just over $50 million during the year, resulting in a year end cash and investment balance of approximately $100 million. We continue to believe that the capital we have on hand today is sufficient to carry us through commercialization of the Karno Power Module. Also, we anticipate additional capital will eventually be required to support production growth, particularly for the purchase of additional additive manufacturing equipment to more rapidly ramp up production in future years. Now I'll turn the call back over Thomas Healy (Chief Executive Officer) to Thomas to wrap up the first quarter delivered against the deployment and commercialization plan we outlined at the start of the year. We completed UL non recurring testing, signed a meaningful data center partnership with VFG Holdings and generated four times the revenue of the prior quarter. We also broadened our engagement across the U.S. Military, demonstrated true multi fuel flexibility, and commenced the build of our first 800 kilowatt Navy system. The themes we identified last quarter, namely the shift toward 800 volt DC architecture in next generation AI data centers and the demand for resilient mission critical power across the U.S. Military became more tangible in the first quarter. The VFG Holdings partnership positions us within the next generation data center deployments where 800 volt DC native operation is a clear architectural advantage while expanding military engagements reflect strong demand for the platform's differentiated capabilities. For the remainder of 2026, our focus is execution, delivering the remaining early adopter units, completing the 800 kilowatt Navy system, securing 40 to 50 million dollars of additional military contracts, achieving full 200 kilowatt design power, and commercializing the Karno Power Module by year end. We are excited about the opportunity ahead and the position we are in to capitalize on it. I will now hand the call over to our moderator to open up for Q and A. OPERATOR We will now begin the question and answer session. If you would like to ask a question, please press Star one To raise your hand. To withdraw your question, press Star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please unmute your device. Please stand by while we compile the Q and A roster. Your first question comes from Edward Jackson with Northland. Please go ahead. Edward Jackson Thanks. Good Morning, John. Good morning, Thomas. Good morning. Congratulations. Congratulations on all the progress towards commercialization. You really kind of change, if you would, down the field. I got a series of questions for you. I wanted to start out on, you know, some of the R and D and contracting stuff around the Navy. So you had $12 million. I mean, you have $20 million contract. You've got about 12 million of it left, and you had a pretty big number for it this quarter. How do we think about how that. It seems like it's, you know, from your own conversation, like, you know, the activity around that contract is accelerating. So can we expect similar kind of numbers in terms of progress, you know, as we go through the remainder of this year against that contract and then kind of tying in that into the 40 to 50 million of additional military opportunity in front of you? You know, what's the timing for you to, you know, maybe bring some of that home in terms of contract? And would it be fair to assume that, given the progress you had with the Navy, that the ability for you to, you know, kind of bring that revenue into the P and L would be a little quicker, you know, because you're. You're building on a foundation that's already been laid. That's my first question. Questions. Thanks. John Panzer (Chief Financial Officer) So, Ted, this is John.. I'll try and answer that. So the first part was just about the 20 million in contracts that we have today and the pace of that revenue. So last year, I think we. Last year and the year before, I think we booked somewhere around 5 million total. And so, you know, just under 3 million this quarter. It's a good. It's a really good start to the year, especially on our forecast of 10 million. We do expect that strength to continue. And it's really been a matter of us getting a lot of traction with that, with that contract and getting work done, particularly around the 800 kilowatt power module that we talked about. And then leading into later in the year, we do expect to sign additional contracts, as you mentioned, somewhere between 40 and 50 million. That would be a second half of the year expectation in terms of when those get signed. And so that will allow us to continue that momentum into the fourth quarter quarter and into 2027. So we, you know, we feel very good about our military opportunities. I think that's one thing Thomas was really trying to emphasize during his prepared remarks today, is we do see the military as a huge opportunity, and we are starting now get some big traction on the revenue side. So you should expect that to continue Edward Jackson to grow okay, and then my next question, and then I'll add more, but I'll step aside, you know, not be a hog, is on the efforts to get to, you know, the certification for 200 kilowatt. You know, I know it's, it's kind of like a whack-a-mole you kind of go through and make different changes. But maybe you can talk a bit about, you know, what you've accomplished towards that end during the first quarter and you know, where we, you know, stand in the current second quarter and what you need to finish to get to that 200 watt kilowatt rate and be able to certify. Thomas Healy (Chief Executive Officer) Yeah, happy to share more on that one. So maybe I'll start with where we were last quarter. We had shared that we have produced a gross of 175 kilowatts out of the dyno. And that was about three months ago. The focus over this quarter was around actually independently testing some advancements. And in great news, I mean we were seeing double digit kilowatts of improvement out of those independent tests that we were running. And so now what we'll work on over the next quarter as well as the quarters ahead by year end is rolling in those improvements. We've got other ones that we're working on as well that we'll be rolling in. But ultimately it's all pointing towards we should be at that 200kW of power rating by the year end. One nice thing is with the UL testing that we've done, the non recurring testing, even with improved power levels, we do not need to go back and redo any of that testing. So that's a big win. And it's just that isolated final test that happens on each system which will have the power rating of it. So it's not like as we increase power, we need to go back and redo all of ul. So, so that puts us on a good trajectory to be going into next year starting to scale production, get more units out there and have them be at that higher power level. Edward Jackson Okay, I'll step out and get back in line for more questions. Thanks Thomas. OPERATOR Your next question comes from Martin Molloy with Johnson Rice. Please go ahead. Martin Molloy Good morning. Congratulations on your progress. Good morning, Marty.. Good morning. I want to talk about the military applications. And if you, if with respect to the stationary power military applications, if we could see those, the testing and, and the move in the orders, could that be quicker than what you're seeing with the Navy? And then also on that, are you Seeing any change in the interest from the US Military following the recent conflict in the Middle East? Thomas Healy (Chief Executive Officer) Yeah, let me start with the first one of stationary power. So this Office of Naval Research or Naval Research contract that we have, we often talk about the on ship platform in this 800 kilowatt. One thing that we probably underemphasize is that contract also has stationary deployments planned into it as well. And so that's something that, you know, as we go through this year into next year, we'll be working on those stationary deployments as well. We also, as you know, John, highlighted a little bit earlier the 40 to 50 million of additional military contracts that is both for on ship applications as well as stationary applications as well. So to your point, the stationary does have an accelerated factor to it where it really is just that commercial box that we've already been working on and developed that we'd be deploying. And then the military has plans to put it into hot weather environments, put it into very humid environments. They've got cold weather environments they're going to be operating it in. So they're really looking to run it through its paces in order to ensure that it's suitable for any type of operation that they might need to be able to be producing power in. So then going into the second part of your question. Yeah, so around the conflict and is that accelerating, you know, the demand? So what I would say is, I think I would kind of look at it outside of the conflict itself. I would say that the interest from the military is just growing overall. Just over the last quarter, I've had a handful of meetings with various generals of both, you know, in the military. I was up at West Point just recently, was up at Fort Hood recently. And we're seeing that, you know, this product just touches a lot of the pain points that have, whether it's not knowing what fuel is going to be available. And so our system can run on various fuels. Whether it be that they need a low heat signature, low noise profile, we deliver that also just even the low maintenance. One of the generals expressed that where the military often struggles is in logistics and moving parts around and getting assets to where they're needed. And so if you can move to a lower maintenance system, a system that requires less parts now you've improved the logistics of the military. So I think overall we're seeing very fast growth in interest and demand out of the military. And I suspect that next year the military will be where we actually focus a lot of our deployments with them. Martin Molloy That's Very helpful. And then for a follow up question, just wanted to focus on the commercial non military side and the placement of the Karno generators this year. Can you maybe help us in how to think about the timetable for testing with the customers, how much time that they'll need before those pilot tests turn into orders? Is it a, a three month testing process or six or nine months with these customers? And this is all, you know, assuming it works as, as expected. Thomas Healy (Chief Executive Officer) The numbers you threw out were spot on. So we've got some that have said it's in the three month. We've got some that have told us it's more than nine month time frame. But you know, as we highlighted in today's call, We've got nearly 750 units of interest in LOIs signed with various customers. And so what I envision happening is that this year we'll get some initial units out with various components, commercial customers and then we'll start deploying initial units with other customers as well. And then we'll start layering in repeat orders from those first customers. But we'll also be deploying new units with new customers as well. And so I don't think, you know, backlog interest. That's not our issue. Our issue right now is how do we get these units out into the field? How do we start scaling production and hopefully, you know, deliver more units to customers, customers next year, whether that be through repeat orders or through just a brand new opportunity. And I think next year we're going to be focusing heavily on both military, as I just mentioned, but then also the data center side of things. We've been engaging with many of the key players in the data center space and they're excited and eager to see our product and they're doing trips up to our Cincinnati facility. We've had one this week. We've got multiple this week. We've got more next week visits happening with various data center players. And so I think that's going to be a long term growth opportunity for us. Martin Molloy That's great. Thank you. I'll turn it back. OPERATOR Your next question comes from Sean Milligan with Needham and company. Please go ahead. Thomas Healy (Chief Executive Officer) Hey Thomas, great update today. You hit on the printer side and just the capacity you have for this year, next year. Curious about the human element in terms of the assembly kind of what the plans are to scale up there and do you see any headwinds on the assembly side? You know, I guess personnel and then also maybe like changes you're making to the system to make it easier and quicker to assemble. Great question. So we're working on all the above. So maybe just walking you through the journey. Initially, all the very first assemblies were happening and all the very first printing was all happening out of our Cincinnati R&D facility. The first thing that we started to scale was printing, and that's where we set up. We probably got about 3x of print capacity in Texas that we do in Cincinnati now, and we moved that to our larger facility here and built up the team around it over the last handful of months. We also then moved power module assembly to Texas. So that was happening in Ohio, now it's happening here in Texas. The next stage of the journey will be moving the actual Karno core assembly to Texas. That's something that we've already started building out. The team, they're actually traveling to Cincinnati learning how to build the system properly and then we'll move that operation here. So I think we have a very good setup where we kind of go through the learnings, the hurdles, the development in our Cincinnati facility that allows the engineers to be alongside the assembly line and kind of educating and iterating that process. And then once it's more stable, then we move it to Texas and it's more of a focus of let's start scaling and growing it. And to that point, as I mentioned, we've already started building out team to work on that. So, you know, do feel confident the facility, you know, has the space and the infrastructure we need in order to scale. And you know, we'll be hiring the team as we need it appropriately. And then we'll also be, you know, adding in parallel assembly lines as well, which is something we've already started exploring. Sean Milligan Awesome. And then on that you mentioned you're having like a lot of conversations with data center customers today. Curious, kind of what they see as the most unique or like in demand piece. Is it the 800 volt architecture? Is it the fuel agnostic? Like, just curious about what do you think they view as like the differentiator for hyliion? Thomas Healy (Chief Executive Officer) Yeah, so first is they just need power. So I think any data center provider you talk to, if you had even an old used turbine sitting around, they would buy it right now. It is unbelievable the need for power that they have. And then outside of that, I mean, that's actually one of the things that they wish we had more of. They would love to have more capacity out of us. Obviously we're just scaling up, as we've talked about. So what they're seeing as unique about the Karno power module is one it truly enables behind the meter or on site power generation. It's got very high efficiency for its form factor as well as it's got very low maintenance. So those are exciting factors. And then the other things that you touched on, let's talk about fuel agnostic at first. So pipeline natural gas is going to be what data centers run on 99% of the time. But the reliability standards that the data centers are held to, pipeline natural gas doesn't actually meet those reliability metrics. So that then forces the data center to have fuel stored on site as well. And normally in most data centers the on site fuel storage is diesel. And so what data centers are being forced to do right now is not only buy a set of natural gas generators, they also then have to go buy a set of diesel generators to be able to handle both those requirements. With the Karno power modules, you can run both of those fuels off of the same power module and have redundancy built in. So that's a big win. And then the last one that you highlighted, the 800 volt architecture, so just coincidentally had the opportunity to meet both Jensen Huang from Nvidia this past weekend as well as Lit Bhutan, the CEO of Intel. And that was discussions I had with both of them. They see 800 volt architecture as where the industry is heading. Nvidia has been probably the most kind of progressive on that end of saying that this is where data centers are going to head. And so right now you would normally have to convert the 480 volt AC power from the grid, convert that into DC to go into the racks, versus with the Karno power module, you can go straight 800 volt DC power out straight into the actual rack. So that's going to reduce your need for transformers, it's going to reduce your need for copper lines in the facility. And so it's just all around a better solution, more efficient solution. Sean Milligan That's great. Thank you. Thank you for the update today. OPERATOR Your next question comes from Edward Jackson with Northland. Please go ahead. Edward Jackson Thank you very much. Thomas. One way to talk about your pipeline and your growth prospects is you know that a year ago your LOI covered 100 car notes and now it's at 750. So that's in 12 months. Just you might have missed yourself. My follow up question there, I got that out there for you. My follow up question for you is, you know, when you're moving towards commercialization and the data center opportunity and you know we're talking roughly 10 units, you know, you had indicated earlier in the year that because of the data center opportunity and the evaluations and trials, that you were really going to hold back, you know, call it two or three units, and just maybe be able to use them for demonstration. You know, with regards to this data center opportunity, you assigned a contract with the VFG or an LOI with dfge, which really expanded your pipeline in terms of. Or backlog or whatever you want to call it. In terms of Karno units that are under loi, is there any tie in between those two or are they mutually exclusive? And I guess, you know, where I'm going with it is, you know, given the relationship with VFG and what they do, I mean, is that, you know, where you are looking at perhaps putting, you know, some of these units where you're wanting to have them for data center, potential data center customers to, you know, kind of kick around. That's my first question. Thomas Healy (Chief Executive Officer) Yeah, so I do see some overlap with those. You know, what we're envisioning with these couple of demonstration units, we're actually already in the process of. You know, one of them is going to be mounted on a trailer. It can be moved around from location to location. What we've seen is when people actually get a chance to see the product, I'll kind of try to put a story to it. Like up in our Cincinnati facility, you walk out of the building, you can see the Karnos there. You're maybe 30ft away. You can't tell whether the product is on or off because of how quiet it is. It's not until you actually get closer to the system that then you can actually, here are some of the fans running. And that's not the experience that people normally have with an internal combustion engine or a turbine. Data centers are actually running into problems of neighbors complaining about how loud systems are. And so when people get to experience the product, see it firsthand, see how easy it is to operate and how simple it is, you truly just feed fuel in and you're going to get electrons out. The product in a lot of ways sells itself. And so from that end, whether it's with VFG Holdings or other data centers, just yesterday another data center provider was in and they were talking about, let's take a system, put it in their AI test facility. All these data center providers have not only the true data centers they're building, they also have facilities where they're testing new technologies, new architecture architectures like the 800 Volt. And so they want to get systems deployed and really Prove out the use cases we're talking about. So as we go into 27, you know, as mentioned, whether it's with VFG Holdings and or others, the plan will be to be showcasing some of those demonstrations. Edward Jackson Well, and I, having been to your facilities, I mean, I stood and had a full conversation with you, not like, I mean, literally right next to a unit and we didn't have to yell. So I mean, they are definitely. They aren't that loud. The next question is, you know, you're talking about 27 being the year of kind of ramp in 28 and that you have capacity to handle, you know, what you view as your needs until you kind of get through 28. Can you perhaps, you know, give us some kind of sense with regards to what you think your, you know, your current capacity level is or, you know, some kind of range in terms of you kind of what you, your capacity level will be in 27? I mean, I assume we're talking units and, you know, just, just, it doesn't have to be exact. I mean, maybe kind of like a low and a high and just kind of, you know, frame out what we could, we could think of in terms of your ability to produce Sukarno. Thomas Healy (Chief Executive Officer) Yeah. So I'll start with apologizing. We're not ready to share that just yet. We do anticipate later this year we'll, we'll start leaning, sharing more on what we expect capacity for next year and the year after to be. But we obviously are expecting growth behind it. The reason that we don't want to lean in just yet and share those expected numbers is because we want to see how these initial units go when we get them out to customer sites. I mean, just being transparent, it would be naive for us to think that there won't be any learnings and it will just be full steam ahead. Right. I mean, they're definitely will be learnings. Every new technology has it. And the question is going to be what are they and how fast can we respond and adapt and fix them? So our focus right now, let's get these approximately 10 early adopter units out there, depending on how those are performing. That's what will then set what we expect production to be next year. But obviously our goal is to accelerate it and get a good bit more units out there next year and so on in 2028. We're just not ready to actually put numbers to that yet. Edward Jackson Well, I had to ask my last question is when you think about your revenue, you know, there's kind of, you know, Right now, the revenue that you're putting out there is, you know, really coming. It's coming, you know, really from, you know, like development work for the military at what point? And I know that there's, you know, there's actually KANO units kind of within that. Is there like, will that always be. Will your revenue from the military, as you move forward always kind of be in that sort of other revenue bucket or as you hit commercialization, will we see another revenue line that will have revenue for your commercial customers? And will your military revenue, or at least some portion of it, shift into that line? John Panzer (Chief Financial Officer) John. I'll take a shot at that. So I think it's more of the latter. Our initial contract with the Navy is more R and D. And if you can imagine a new ship platform, they're going to do a lot of R and D work before they put a new power source in that. But then as Thomas was talking about, there's a lot of interest for mobile power, for example, in the army and the Air Force and those types of systems, they could initially be R and D, but those will certainly turn into some kind of commercial, commercial unit. So it won't all be R and D. You know, I think from our standpoint, at least now we're happy to have revenue on both lines. It is beneficial both ways and is a good signal of interest in the system and also us making progress and offering these types of R and D services to the military. So it should continue to grow in both areas. Thomas Healy (Chief Executive Officer) And Ted, just to add to that one, so last week we had a gentleman in from the military and it's still on our whiteboard here in the conference room that we're all sitting in. He walked us through the how do you move from the R and D phase with the military into actually just being purchase orders that are being placed and how to effectively do that? So it's obviously something we're thinking about and do expect that it's long term. This isn't just R and D. This is just we want it to be a product that they just purchase. Edward Jackson Yeah, that would be ideal. So. Okay, well, thanks for taking all the questions and congrats again on the progress in the quarter. Thomas Healy (Chief Executive Officer) Thank you. OPERATOR If you would like to ask a question, please press star one to raise your hand to withdraw your question, Press star one again. And we ask that you pick up your handset when asking a question to allow for optimum sound quality as well. If you are muted locally, please remember to unmute your device, Your Next question comes from Martin Molloy with Johnson Rice. Please go ahead. Martin Molloy Thank you. I just had one quick follow up question just regarding the UL testing. Does that clear the way for what you've done so far? Does that clear the way for placing the Karno units at the customer sites or is there some final certification that is needed? Thomas Healy (Chief Executive Officer) Yeah, so we've done all the non recurring tests in just a little more detail. It's both on the linear electric motor,, the battery pack as well as then the full power module.. The last thing that we need to do in order to put it at a customer's site is just go through a final run of the system and and then that will then put the nameplate on it for UL certification. So the way that UL structures this is until you get facility level certification, every unit you produce still needs to go through a final end of line run. It does not need to redo all those reoccurring tests I mentioned. It's just a final end of line run and then that will get the nameplate once later this year we move into the facility level certificate. Then we no longer have to independently run every single system prior to nameplate being put on it. So the way for you to really look at this is we've hit those UL tests that were needed in order we've successfully passed those UL tests that were needed in order to move to the next phase of customer sites. And then each one that we build will just go through a final run prior to to that nameplate being put on them. Martin Molloy Got it. Great. Thank you very much. Appreciate it. OPERATOR We have reached the end of the Q and A session. I will now turn the call back to Thomas for closing remarks. Thomas Healy (Chief Executive Officer) Thank you all for joining today's call. Hopefully you can see a lot of excitement on our end. A huge milestone for us to get through that UL certification. Certification testing. It's been something we've been talking about for a few quarters now. Obviously excited about the collaboration with VFG and moving the signed LOIs non binding LOIs to potential of about 400 million of revenue at today's current pricing. And then you know, we talked about a lot as well the opportunities ahead of us with the U.S. military and excited to get those 40 to 50 million of contracts signed and executed and then be able to share a little bit more of what some of those opportunities are with all of you. So once again thanks for joining for this quarter and we look forward to sharing more on the next earnings call. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice. UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga: HYLIION HOLDINGS (HYLN): Free Stock Analysis Report This article Hyliion Holdings Reports Q1 2026 Results: Full Earnings Call Transcript originally appeared on Benzinga.com ﾩ 2026 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.