Hyliion (HYLN) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Hyliion Holdings Corp. as of June 30, 2025, and for the three and six-month periods then ended. It includes the balance sheets, statements of operations, changes in stockholders' equity, statements of cash flows, and accompanying notes, which detail the company's financial position and performance Condensed Consolidated Balance Sheets As of June 30, 2025, the company's total assets decreased to $229.2 million from $263.0 million at year-end 2024, primarily due to a reduction in investments. Total liabilities also decreased to $13.3 million from $18.7 million. The decline in total stockholders' equity to $215.9 million from $244.4 million was mainly driven by the accumulated deficit from net losses Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $229,210 | $263,046 | | Cash and cash equivalents | $15,591 | $9,227 | | Total investments | $169,709 | $210,502 | | Total Liabilities | $13,340 | $18,657 | | Total Stockholders' Equity | $215,870 | $244,389 | Condensed Consolidated Statements of Operations For the second quarter of 2025, the company generated $1.5 million in revenue from R&D services, a new revenue stream. However, the net loss widened to $13.4 million from $10.9 million in the prior-year quarter, driven by increased R&D expenses. For the six-month period, net loss increased to $30.7 million from $26.4 million year-over-year Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,515 | $— | $2,004 | $— | | Gross Profit | $131 | $— | $143 | $— | | Research and development | $10,137 | $8,311 | $22,367 | $16,279 | | Loss from operations | $(15,623) | $(14,017) | $(35,345) | $(33,008) | | Net loss | $(13,414) | $(10,856) | $(30,668) | $(26,448) | | Net loss per share | $(0.08) | $(0.06) | $(0.18) | $(0.15) | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased by $28.5 million during the first six months of 2025, falling from $244.4 million to $215.9 million. The primary driver for this reduction was the net loss of $30.7 million incurred during the period, which was partially offset by $2.7 million in share-based compensation - The decrease in total stockholders' equity from $244.4 million at the end of 2024 to $215.9 million at June 30, 2025, was primarily caused by the net loss of $30.7 million for the six-month period[15] Condensed Consolidated Statements of Cash Flows For the first six months of 2025, net cash used in operating activities was $24.0 million, an improvement from $33.4 million in the prior year period. Net cash provided by investing activities was $30.9 million, mainly from the sale and maturity of investments. Financing activities used $0.5 million. Overall, cash and cash equivalents increased by $6.4 million during the period Six Months Ended June 30, Cash Flow Summary (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(23,999) | $(33,396) | | Net cash provided by investing activities | $30,895 | $46,027 | | Net cash used in financing activities | $(532) | $(14,297) | | Net increase (decrease) in cash | $6,364 | $(1,666) | Notes to Condensed Consolidated Financial Statements The notes provide context to the financial statements, detailing the company's strategic shift to focus on the KARNO Power Module after winding down its powertrain business. Key details include the basis of presentation, accounting for the powertrain business disposal, revenue recognition from new R&D service contracts with the U.S. government, and details on investments and share-based compensation - The company is winding down its powertrain business to focus on the commercialization of its KARNO Power Module technology, with wind-down activities expected to be complete in Q4 2025[19] - Hyliion began recognizing revenue from R&D service contracts with the U.S. government in Q4 2024. For the six months ended June 30, 2025, two customers (Customer A and Customer B) accounted for 77% and 23% of revenue, respectively[42][45][46] - The company believes it has sufficient funds to execute its business strategy for the next twelve months, with total equity of $215.9 million, including $15.6 million in cash and $169.7 million in investments as of June 30, 2025[26] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategic focus on the KARNO Power Module, a fuel-agnostic power generator targeting various markets from data centers to defense. The analysis covers R&D progress, including overcoming production challenges with key components. The financial review details an increase in net loss due to higher R&D spending, despite new revenue from government contracts. The company confirms sufficient liquidity for the next year, projecting to end 2025 with approximately $155 million in cash and investments Overview and Strategy Hyliion is focused on its primary product, the KARNO Power Module, a fuel-agnostic generator designed for clean and efficient electricity production. The company is targeting diverse markets including data centers, prime power, defense, EV charging, and biogas. Management highlights the technology's key advantages over conventional generators, such as higher efficiency (up to 50%), lower maintenance, fuel flexibility (over 20 sources), and low emissions - The company's primary focus is the KARNO Power Module, a fuel-agnostic power generating solution targeting commercial, industrial, and utility-scale applications[66] - Key competitive advantages of the KARNO Power Module include high efficiency, low maintenance, fuel flexibility, low noise, and modularity[82] - Target markets are broad, including data centers, microgrids, defense, EV charging, biogas conversion, and mobile applications[84][86] KARNO Power Module Development R&D activities are concentrated on testing and validating the 200 kW KARNO Power Module. The company has addressed earlier delays caused by design and production issues with a key printed component (the regenerator) and has insourced linear electric motor production to improve quality control and ramp-up speed. As of the report date, two of the ten planned early adopter units for 2025 have been delivered under an R&D contract with the Office of Naval Research (ONR) - The company has overcome initial production delays related to a key component (the regenerator) and has insourced linear electric motor production to accelerate ramp-up[90][91][92] - Two of the ten planned early adopter units for 2025 have been delivered and are undergoing testing under the ONR contract[89] - The company was awarded a cost-plus-fixed-fee contract of up to $16.0 million by the ONR to assess the KARNO Power Module for Navy applications[94] Results of Operations For Q2 2025, the company recorded $1.5 million in R&D services revenue, which was not present in 2024. R&D expenses rose 22% to $10.1 million, driving an increased operating loss of $15.6 million. For the six-month period, R&D expenses increased 37.4% to $22.4 million, and the operating loss grew to $35.3 million. The increases in R&D spending are attributed to the design, testing, and production ramp-up for the KARNO Power Module Comparison of Three Months Ended June 30 (in thousands) | Account | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $1,515 | $— | $1,515 | N/A | | Research and development | $10,137 | $8,311 | $1,826 | 22.0% | | Loss from operations | $(15,623) | $(14,017) | $(1,606) | 11.5% | | Net loss | $(13,414) | $(10,856) | $(2,558) | 23.6% | Comparison of Six Months Ended June 30 (in thousands) | Account | 2025 | 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $2,004 | $— | $2,004 | N/A | | Research and development | $22,367 | $16,279 | $6,088 | 37.4% | | Loss from operations | $(35,345) | $(33,008) | $(2,337) | 7.1% | | Net loss | $(30,668) | $(26,448) | $(4,220) | 16.0% | Liquidity and Capital Resources As of June 30, 2025, Hyliion held $114.5 million in current assets, including $15.6 million in cash and $93.0 million in short-term investments, against $10.3 million in current liabilities. The company believes its current assets and $76.7 million in long-term investments are sufficient to meet capital requirements for the next twelve months. Management projects ending 2025 with approximately $155 million in total cash and investments - The company projects to have approximately $155 million in cash, short-term, and long-term investments remaining on its balance sheet at the end of 2025[120] - Hyliion has paused its $20 million share repurchase program, with up to $6.1 million remaining authorized for repurchases[120] - Primary short-term cash needs are for KARNO Power Module development, initial deployment units, and capital investments in additive printer acquisitions[120] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Hyliion is not required to provide the information for this item - The company is exempt from providing quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company[134] Item 4. Controls and Procedures Management, including the Principal Executive Officer and Principal Financial Officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025. There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[135] - No material changes to the company's internal control over financial reporting occurred during the quarter ended June 30, 2025[136] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not currently involved in any material legal proceedings - Hyliion is not currently a party to any material legal proceedings[139] Item 1A. Risk Factors This section highlights a specific risk related to changes in U.S. tariff policies. The company notes that it imports components from overseas, including Germany and China, and the imposition of tariffs could increase costs for these items, which may not be passable to customers, potentially harming business operations and financial condition - The company identifies potential adverse effects from changes in U.S. tariff policies, as it imports parts and supplies from countries like Germany and China[141] - Increased tariffs could raise component costs, and the company may be unable to pass these costs on to customers, which could materially affect financial results[141][142] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no repurchases of its Common Stock during the quarter ended June 30, 2025. The share repurchase program announced in December 2023, which has approximately $6.1 million remaining, is currently paused Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1 - 30, 2025 | — | $— | | May 1 - 31, 2025 | — | $— | | June 1 - 30, 2025 | — | $— | | Total | — | $— | - The company's share repurchase program has been paused. The maximum approximate dollar value of shares that may yet be purchased under the program is $6,144,349[143] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable Item 5. Other Information The company reported no other information for this item - None Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, and XBRL data files